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From Antitrust Law Daily, March 26, 2019

No reconsideration of ruling that potential Sherman Act challenge does not create standing

By Nicole D. Prysby, J.D.

Reconsideration of a prior order holding that a Michigan county failed to present an actual controversy as required to support its declaratory judgment action was not warranted. The county sought a judgment that its ambulance services ordinance is legal and could be enforced against a non-licensed provider without violating the Sherman Act, but the court did not err in prior ruling that there was no showing of an actual controversy between the parties to support a declaratory judgment jurisdiction.

The federal district court in Detroit has declined to reconsider its earlier holding that it lacked subject matter jurisdiction over a Michigan county’s claims that its ambulance services ordinance is legal and enforcing it would not violate the Sherman Act. The 2016 county ordinance required anyone seeking to provide ambulance services to obtain approval from the county. One company continued to operate ambulance services without approval and the county sought a declaratory judgment that the ordinance could be enforced against the provider without violating the Sherman Act. Reconsideration was not warranted because the court had not erred in its prior ruling denying the county’s request. The county presented no new arguments to overcome the court’s holding that the mere potential of a Sherman Act claim against the county did not create an active controversy. The court also did not err when it held that the county failed to plead adequate facts to show that its plan was legal and not in violation of the Sherman Act (Saginaw County v. STAT Emergency Medical Service, Inc., March 25, 2019, Berg, T.).

Background. Saginaw County had an exclusive contract with the Mobile Medical Response, Inc. (MMR) ambulance company to provide ambulance service in the county. It also passed an ordinance in 2016 requiring anyone seeking to provide ambulance services in the county to first obtain the approval of the County Board of Commissioners. One ambulance company (STAT Emergency Medical Services), licensed to provide ambulance services by the state, continued to operate in the county without approval.

The county sued STAT in the federal district court in Detroit, seeking a declaratory judgment that its ordinance is legal under state law and that enforcing it against STAT would not violate the Sherman Act. In a detailed opinion, the court previously held that it had no subject matter jurisdiction because the county failed to satisfy its burden of establishing that the parties have an actual controversy surrounding the Sherman Act Claim. The court also found that the Sherman Act claim was not ripe for adjudication because STAT had not filed a lawsuit challenging the ordinance and the county had not sanctioned STAT for noncompliance. The court found that the Sherman Act claims should also be dismissed for failure to state a claim, because the complaint alleged no facts that would allow the court to infer that the county was entitled to relief. For example, it alleged no facts to indicate that its method of permitting primary emergency service providers does not amount to a contract or conspiracy that unlawfully restrains trade. The county moved for reconsideration.

Court did not err. The court first rejected the county’s argument that the court was misled as to the existence of a case or controversy. The county based its argument on statements made by a STAT executive that the county’s actions were "in violation of Federal law." This argument was already made to the court and rejected, and the county presented no other arguments supporting its position that an actual case or controversy exists. The court rejected the county’s argument that it adequately pleaded that damages would occur if the suit was dismissed. This argument was presented earlier and rejected by the court in its earlier opinion, in which it found that the mere potential for a future federal antitrust lawsuit against the county did not create an "active controversy."

The court also rejected the county’s argument that the court erred when it found that the county "failed to cite policy justifications for the contract and ordinance that restrain trade in order to state a defensible anti-trust position." That was not the actual basis of the court’s ruling, the court explained. Rather, the court based its holding on the fact that the county failed to explain how its primary services contract, 911 plan, and ordinance did not violate the Sherman Act by creating an unlawful restraint of trade. Because the county could not effectively provide that explanation as to how its plans did not violate the Sherman Act, the court could not provide the declaratory judgment the county sought.

The court rejected the county’s argument that the ambulance service contracts are not subject to the Sherman Act because of the state action immunity defense, because the county never applied the state action immunity defense test to the facts of their complaint. Merely referencing the defense was not sufficient, according to the court. Vague references to a test that may or may not apply is not stating a classic state immunity defense and the court would not fill in the blanks of the county’s filings.

In conclusion, the court noted that it had made no finding whatever on the question of whether Saginaw County’s plan ran afoul of the Sherman Act, it simply concluded that, on the facts as alleged, the court could not declare as a matter of law that the plan does not violate the Act, and reconsideration was denied.

This Case No. 4:17-cv-10275.

Attorneys: Lee T. Silver (Silver & Van Essen PC) for Saginaw County. Derek S. Wilczynski (Blanco Wilczynski, PLLC) for STAT Emergency Medical Service, Inc.

Companies: Saginaw County; STAT Emergency Medical Service, Inc.

MainStory: TopStory Antitrust MichiganNews

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