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From Antitrust Law Daily, July 9, 2014

Connection to interstate commerce missing from towing company's federal antitrust claims

By Jeffrey May, J.D.

The operator of a towing company that provided services on a stretch of Interstate 15 in Utah failed to allege a sufficient connection to interstate commerce to support federal antitrust claims against a county and a county towing association, the federal district court in Salt Lake City has ruled. The court dismissed the plaintiff's Sherman Act claims without prejudice. The complaining tow truck operator, who had not alleged that his service area extended across state boundaries, was given an opportunity to assert facts demonstrating the requisite nexus between the challenged conduct and a relevant aspect of interstate commerce, and a not insubstantial effect on interstate commerce (Adams v. Davis County, July 7, 2014, Stewart, T.).

The tow truck operator's antitrust claims arose from the defending county’s use of an exclusionary towing-rotation list for its towing referrals. The plaintiff alleged that his application to be included in the rotation list was denied and that, as a result, he was excluded from the towing markets in the county. The plaintiff suggested that the county’s list was influenced by the members of the Davis County Towing Association, which also was a defendant.

The Sherman Act requires that challenged activity either occur in the flow of interstate commerce or substantially affect interstate commerce, the court explained. The tow truck operator alleged that the challenged towing rotation list impacted interstate commerce because it applied to services provided on interstate highways, including Interstate 15. As a result of the challenged conduct, the complaining tow truck operator was allegedly excluded from consent and non-consent towing on interstate highways.

The plaintiff failed to plead sufficient facts demonstrating that the defendants’ allegedly unlawful conduct met the Sherman Act’s jurisdictional element under the “in-commerce” test. To satisfy the jurisdictional hurdle, it was not enough that the plaintiff merely provided services on the interstate highway. The plaintiff had not pleaded facts demonstrating that his services were, in any practical sense, part of the generation, transport, or distribution of goods or services for interstate markets. In addition, the plaintiff failed to plead facts demonstrating that his services were an inseparable element of a larger program dependent for its success on activity that affects interstate commerce, the court explained.

Even under the broader scope of the “effect-on-commerce” test generally applied in current Sherman Act cases, the plaintiff’s jurisdictional allegations were lacking. The court questioned the theory that interstate highways were so fundamentally emblematic of interstate commerce that any conduct touching upon the interstate highways necessarily affected interstate commerce.

The plaintiff's towing services originated on the side of the interstate highway and terminate at a local towing yard. It was not clear how a towing company’s proximity to the interstate highway affected interstate commerce, thereby bringing otherwise wholly intrastate activity into the reach of federal antitrust laws, the court noted. The presence of the interstate highway by itself was inadequate to create federal jurisdiction where the plaintiff was involved in wholly intrastate activity, according to the court.

This is Case No. 1:13-CV-111 TS.

Attorneys: Mary J. Woodhead (Mary J. Woodhead, Attorney at Law) for Bill Adams. Linette B. Hutton (Hutton Law Associates PC) for Davis County. Jeffery J. Owens (Owens Law Firm PLLC), Jesse Allen Frederick (Frankenburg Jensen), and William B. Ingram (Strong & Hanni) for Davis County Towing Assn.

Companies: Davis County Towing Assn.

MainStory: TopStory Antitrust UtahNews

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