Brownsburg Community School Corp. v. Natare Corp.

Attorneys for Appellant Attorney for Appellee

James S. Stephenson Thomas A. Pastore

Wayne E. Uhl Indianapolis, Indiana

Indianapolis, Indiana

____________________________________________________________________________

_

In the

Indiana Supreme Court

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No. 49S02-0409-CV-406

Brownsburg Community School

Corporation,

Appellant (Defendant below),

v.

Natare Corporation,

Appellee (Plaintiff below).

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Appeal from the Marion Superior Court, No. 49D05-0305-PL-906

The Honorable Gary L. Miller, Judge

_________________________________

On Petition To Transfer from the Indiana Court of Appeals, No. 49A02-0310-

CV-871

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March 17, 2005

Boehm, Justice.

We hold that the Indiana Antitrust Act does not create a civil treble

damage remedy against an arm of government.

Factual and Procedural Background

The following facts are alleged in the complaint. We take them as

true for purposes of this interlocutory appeal of the denial of a motion by

a defendant for judgment on the pleadings.[1]

The School Corporation undertook a building project for Brownsburg

High School that included a fine arts addition and a swimming pool. The

School Corporation hired Schmidt Associates as its architect, and Schmidt

retained Spear Corporation as a pool consultant. Spear is a distributor

for Myrtha Pools USA, which manufactures prefabricated pools.

Specifications were published for general contractors to bid on the entire

project. Included were specifications derived from language provided by

Spear calling for a concrete and tile cast-in-place pool and alternate

specifications for a prefabricated pool tank. Plaintiff, Natare

Corporation, a supplier of prefabricated pools based in Indianapolis,

claims that the specifications included language that only a Myrtha

prefabricated pool could meet. In addition to the pool tank, the

specifications also called for a moveable bulkhead. Natare claims that the

bulkhead specifications were based on a Myrtha design and excluded Natare’s

product from consideration. The School Corporation responds that its

specifications were drawn to get the best product at the lowest cost. We

of course express no opinion on the validity of either party’s allegations.

The bid documents contemplated submission of proposals that did not

meet the specifications, but only if any variations from specifications

were approved by the architect.[2] Natare attempted to gain approval of

its products, including its prefabricated pool tank and moveable bulkhead,

as meeting this “or equal” requirement. Schmidt responded that Natare’s

prefabricated pool tank with a PVC liner system was not equal to the

specified panelized heat bonded PVC laminated system. Schmidt also noted

that Natare had not identified any completed projects using Natare’s

proposed system. Schmidt ultimately also rejected the Natare bulkhead

design, which utilized foam materials in the buoyancy chambers, as not

equal to the specified stainless steel movable bulkhead. After this

exchange, three general contractors submitted bids for the entire project.

Each relied on bids for the pool from either a local contractor or Spear.

In March 2003 Natare sued the School Corporation, Schmidt, and Spear,

alleging that the three had conspired to exclude Natare from consideration

as a supplier for the pool and bulkhead in violation of the provision of

the Indiana Antitrust Act prohibiting combinations in restraint of trade,

Indiana Code section 24-1-2-3 (2004). Natare alleged that the wording of

the specifications unreasonably limited competition by requiring bidding

contractors to use Myrtha Pool materials and equipment supplied by Spear,

and that Spear had a significant role in determining whether other products

were “equal.” Pursuant to Indiana Code section 24-1-2-7, the complaint

sought treble damages, costs, and attorney fees for violations of the

Indiana Antitrust Act.

The School Corporation answered the complaint and moved for judgment

on the pleadings under Indiana Trial Rule 12(C), alleging that it was not a

“person” as that term is used in the Indiana Antitrust Act, and, therefore,

was not an entity subject to the civil treble damages remedy provided by

that statute. The trial court denied the motion but granted the School

Corporation’s petition to certify the order for interlocutory appeal. The

Court of Appeals affirmed, holding that a school corporation is a “person”

who can sue and be sued under the Indiana Antitrust Act. Brownsburg Cmty.

Sch. Corp. v. Natare Corp., 808 N.E.2d 148, 154 (Ind. Ct. App. 2004). We

granted transfer. Brownsburg Cmty. Sch. Corp. v. Natare Corp., 2004 Ind.

LEXIS 786 (Ind. Sept. 9, 2004).

I. Public Purchasing

The Public Purchasing laws include provisions addressing contracts by

school corporations, and requiring, inter alia, that the contract be

awarded to “the lowest responsible and responsive bidder.”[3] Ind. Code §

5-22-7-8 (2004). Only a citizen or a taxpayer of a municipality may

challenge the award of a government contract under Indiana’s Public

Purchasing Statute. See All-Star Constr. & Excavating, Inc. v. Bd. of Pub.

Works, 640 N.E.2d 369, 370 (Ind. 1994); Shook Heavy & Envtl. Constr. Group

v. City of Kokomo, 632 N.E.2d 355, 358 (Ind. 1994). Natare is neither a

citizen nor a taxpayer of Brownsburg, and therefore has no claim under that

statute. However, this Court has observed that “[o]ne need not be a

citizen or a taxpayer of the municipality . . . to maintain an action for

fraud or collusion in the award of a contract. Ind. Code § 24-1-2-7.” All-

Star, 640 N.E.2d at 370. Accord Shook, 632 N.E.2d at 358. The statutory

reference is to the treble damages provision in the Indiana Antitrust Act.

II. Indiana Antitrust Act

Because Natare has no claim for damages under the Public Purchasing

Statute, it seeks to bring its claim under the Indiana Antitrust Act. Ind.

Code § 24-1-2-1—12 (2004). The principal issue is whether a governmental

entity is subject to the private treble damages remedy provided for

violation of the antitrust act.

A. The Statutory Framework

Sections 1 and 2 of the Indiana Antitrust Act, I.C. § 24-1-2-1, et

seq., are comparable to the federal Sherman Act, 15 U.S.C. sections 1 and

2, respectively. Like section 1 of the Sherman Act, Indiana Code section

24-1-2-1 addresses combinations in restraint of trade. Similarly, section

2 of the Sherman Act and Indiana Code section 24-1-2-2 both deal with

monopolization. Indiana has two additional provisions for which there is

no federal counterpart. Section 3, I.C. § 24-1-2-3, prohibits the

restraint of bidding for letting of contracts whether public or private,

and Section 4, I.C. § 24-1-2-4, addresses remedies for “collusion or fraud”

among contract bidders. Specifically, Section 4 of the Indiana Antitrust

Act provides that in cases of “collusion or fraud . . . among the bidders

at the letting of any contract or work as provided in [Section 3] . . . the

principal who lets the contract . . . shall not be liable for such letting

or on account of said contract . . .” Section 4 thus frees the principal

who lets a contract tainted by “collusion or fraud” among bidders from

liability on the contract. By its terms, Section 4 applies only if there

is “collusion or fraud . . . as provided in [Section 3].” It thus does not

prohibit any conduct. Rather, it deals with remedies for violations of

Section 3.

Section 3 of the Indiana Antitrust Act does not use the term

“collusion or fraud,” but does prohibit certain conduct. It provides:

A person who engages in any scheme, contract, or combination to

restrain or restrict bidding for the letting of any contract for

private or public work, or restricts free competition for the letting

of any contract for private or public work, commits a Class A

misdemeanor.

I.C. § 24-1-2-3. Natare alleges that the defendants violated Section 3 by

denying Natare’s products “equal” status under the specifications and

thereby restraining Natare’s ability to bid. The School Corporation

responds that because it is a governmental entity it not subject to the

Indiana Antitrust Act’s criminal and civil penalties.

B. Indiana Case Law

Three appellate decisions have referred to the treble civil damage

provision of the Indiana Antitrust Act in the context of a claim against a

governmental entity, but none was faced with the question whether or not a

remedy existed against the entity itself.

In City of Auburn v. Mavis, 468 N.E.2d 584, 585 (Ind. Ct. App. 1984),

the Court of Appeals affirmed a jury award of treble damages and attorney

fees against the City of Auburn. Mavis was a losing bidder for a public

contract to provide radio communications equipment to the Auburn Fire

Department and brought an action against the City and D & L Communications,

Inc. for violation of Section 3, which makes unlawful acts which operate to

restrain open and free competition in bidding to obtain contracts for

private or public work. Id. At trial the City of Auburn and D & L

conceded that they violated this statute when they contrived to develop

specifications favoring equipment sold by D & L before the City solicited

bids. Id. at 586. On appeal, the City did not contend that it was immune

from treble damages under the Indiana Antitrust Act. The issue, though

assumed, was not debated in either the trial court or the Court of Appeals.

In Shook Heavy & Environmental Construction Group v. City of Kokomo,

632 N.E.2d 355 (Ind. 1994), an unsuccessful bidder claimed that the City of

Kokomo violated Indiana’s Public Purchasing Statute by failing to award the

contract to the lowest bidder. Kokomo had solicited bids for the

construction of a municipal sludge composting facility. When the bids were

opened, Kokomo awarded the contract to the lowest responsible and

responsive bidder. Shook Heavy & Environmental Construction Group, a

losing bidder, filed suit in federal court seeking an injunction against

the award of the contract on the basis that deficiencies in the bid of the

apparent low bidder caused that bidder’s bid to not be lower than Shook’s.

Id. at 357. In response to a certified question from the federal district

court, we held that because Shook was not a citizen or taxpayer of Kokomo,

Shook could not challenge the award under the Public Purchasing Statute.

Id. at 358. Citing Auburn, we noted that Section 7 of the Indiana

Antitrust Act allows an unsuccessful bidder to challenge the award of a

contract by the city if the plaintiff alleges “collusion or fraud.” Id.

The unsuccessful bidder in Shook sought only an injunction and

asserted its claims under the Public Purchasing Act. In making this

passing reference to remedies under Section 7, we were not faced with the

question of who among the potential defendants might be subject to a

“challenge” under this section. Nor were we concerned with precisely what

form that challenge might take. A combination in restraint of trade

necessarily involves at least two parties. Lawrence Anthony Sullivan,

Antitrust 323 (West 1976). And an entity cannot combine with its own

employees or subsidiaries. See Schwimmer v. Sony Corp. Am., 677 F.2d 946,

953 (2d Cir. 1982) (“collaborative action between a corporation and its

employees, or among employees within a corporation, is not regarded as

joint action within the meaning of § 1” of the Sherman Act); Univ. Life

Ins. Co. v. Unimarc Ltd., 699 F.2d 846, 852 (7th Cir. 1983) (conspiracy

between a corporation and its officers not actionable under Section 1 of

the Sherman Act). Cf. Copperweld Corp. v. Independence Tube Corp., 467

U.S. 752, 778 (1984) (A parent corporation and its wholly owned subsidiary

are incapable of conspiring with each other for purposes of § 1 of the

Sherman Act.); Rep. of the Attorney General’s Nat’l Comm. to Study the

Antitrust Laws, 30-36 (1955). Accordingly, at least one nongovernmental

entity will ordinarily be a party to a combination in which a governmental

entity is also a player. In short, Shook was not faced with, and did not

consider, whether all parties, including the governmental entity, could be

held liable for treble damages under the antitrust law.

Shook took its reference to Section 7 remedies directly from All-Star

Construction & Excavating, Inc. v. Board of Public Works, 640 N.E.2d 369

(Ind. 1994). Like Shook, All-Star merely observed that some remedy

existed, without exploring precisely what remedy was available against

which entities. In All-Star, the lowest bidder for construction of a

city’s economic development project sued when the city awarded the contract

to a competitor because it was “a local contractor and a minority

contractor.” 640 N.E.2d at 370. We held that there was no evidence that

the City was engaged in “collusion or fraud,” and the constructive fraud

claim failed for that reason. Id.

In sum, the issue in this case, whether a local or municipal

government is susceptible to a claim for treble damages under Indiana Code

section 24-1-2-7, is a matter of first impression.

C. Criminal Liability of Governmental Entities

By their terms, the only portions of the Indiana Antitrust Act that

contain substantive prohibitions are Sections 1, 2, and 3. These sections

are framed similarly to provisions of the Criminal Code and provide that it

is a Class A Misdemeanor to engage in the actions prohibited. We think the

legislature, when writing this statute in 1907, did not contemplate a

governmental entity as a potential violator of its prohibitions. First, on

the only occasion where the issue has been addressed by an Indiana

appellate court, the Court of Appeals held that the State could not be

criminally responsible, even where the statute prohibited acts by “persons”

and defined “person” to include “governmental entities.” In State v.

Ziliak, 464 N.E.2d 929 (Ind. Ct. App. 1984), landowners alleged that state

employees committed criminal property offenses when the state employees

entered upon the landowners’ property and removed certain Indian artifacts

without permission. The landowners sought damages under Indiana Code

section 34-4-30-1, which provides civil remedies to crime victims.[4] The

Court of Appeals held: “A criminal offense is an offense against a

sovereign state.” Id. at 930 (citing Reed v. Carrigan, 190 Ind. 29, 129

N.E. 8 (1920)); 8 I.L.E. Criminal Law § 2 (1971); 21 Am. Jur. 2d Criminal

Law § 1 (1981); 22 C.J.S. Criminal Law § 1 (1961). “A crime is said to be

an offense against the sovereignty.” 21 Am. Jur. 2d Criminal Law § 1

(1981). “Because a crime is an offense against the sovereign, it is

axiomatic that the sovereign cannot commit a crime.” Ziliak, 464 N.E.2d at

930. The court noted that the criminal code, I.C. § 35-41-1-22, defined

“person” as “a human being, corporation, partnership, unincorporated

association, or governmental entity.” Id. (emphasis in original). Despite

this definition, the Court of Appeals concluded that the State was a

“person” as that term is used in the Indiana Criminal Code only for

purposes of its status as a victim.

Natare argues, and the Court of Appeals agreed, that Ziliak is

inapposite here because it dealt with a claimed crime by the State itself,

and did not address whether a subdivision of the State could commit a

crime. Brownsburg Cmty. Sch. Corp. v. Natare Corp., 808 N.E.2d 148 153

(Ind. Ct. App. 2003). We find no authority supporting such a distinction.

For the reasons expressed below we believe neither the State nor any other

governmental entity is subject to criminal provisions of Indiana statutes

without the legislation making that result absolutely clear.

Indiana law as reflected in Ziliak is consistent with other United

States jurisdictions in rejecting the possibility of a crime by the

government. Relevant federal cases and statutory authority are sparse.

One federal statute carrying criminal penalties (regulating prices and

profits for commodities in emergencies) defines “person” as “an individual,

corporation, partnership, association, or any other organized group of

persons . . . and includes the United States or any agency thereof, or any

other government, or any of its political subdivisions, or any agency of

the foregoing.” Emergency Price Control Act of 1942, c. 26, Title III, §

302(h), c. 26, 56 Stat. 36. Section 205 of the Act provides for injunctive

remedies and criminal fines and imprisonment for convictions. However, the

definition of person also explicitly states that: “no punishment provided

by this Act shall apply to the United States, or to any [federal, state, or

local] government, political subdivision, or agency.” Id. This definition

has been interpreted to mean that governmental agencies are exempt from the

act’s criminal liabilities, but not necessarily its remedial sanctions.

See 1 Working Papers of the Nat’l Comm. on Reform of Fed. Criminal Laws 175

(1970), typically known as the Brown Commission. The Brown Commission also

noted that though the Emergency Price Control Act specifically extended its

prohibitions to governmental entities, “no case has been found in which a

court has held such an agency subject to the Act.” Id. The Brown

Commission concluded by recognizing that although “there is nothing in the

nature of a municipal corporation which would make it inherently incapable

of committing a crime, there does not appear to be a Federal case holding a

governmental entity as such criminally liable.” Id. at 176.

State law also finds the concept of a crime by the sovereign to be an

alien notion. We have found no criminal code in this country that imposes

criminal liability on the sovereign and only one that would permit a fine

on an arm of the government.[5] The Model Penal Code specifically excludes

from its definition of “corporation” any entity “organized as or by a

governmental agency for the execution of a governmental program.” American

Law Institute, Model Penal Code § 2.07(4)(a) (P.O.D. 1962). The commentary

to section 207(4)(a) observes that “[l]iability in such cases would seem

entirely pointless, although of course the liability of individuals

involved in criminal activity is preserved.” 1 American Law Institute,

Model Penal Code § 207(5)(a), at 345 (1985). At least five states have

adopted a version of 2.07(4)(a).[6] Most states, however, like Indiana,

contain no express treatment of the issue in their general criminal laws.

In the absence of specific legislative direction, we think the Court of

Appeals correctly concluded in Ziliak that the legislature did not

contemplate a violation of a criminal prohibition by a governmental entity.

D. Specific Provisions of the Indiana Antitrust Act

Natare claims a violation of Section 3, and seeks treble damages for

its lost time in preparing a useless bid and attorney fees, under Section 7

of the Indiana Antitrust Act.[7] That section, tracking section 15 of the

Clayton Act, provides treble damages and attorneys fees for those injured

in their “business or property” by a violation of the Indiana Antitrust

Act. This section purports to give a right to treble damages to any

“person” injured by any “person” doing “any thing forbidden or declared to

be unlawful” by any of the first three sections of the Indiana Antitrust

Act.[8] Consistent with the usual legislative silence on the application

of criminal laws to governmental entities, the Indiana Antitrust Act

neither defines “person” to include a governmental entity nor specifically

excludes the possibility of a crime by such an entity.

The School Corporation argues that it is not a “person” as that term

is defined in the antitrust act. Indiana Code section 24-1-2-10 provides

definitions similar to those found in the Sherman Act, 15 U.S.C. § 7

(2000):

The words “person” or “persons” whenever used in this chapter shall be

deemed to include corporations, associations, limited liability

companies, joint stock companies, partnerships, limited or otherwise,

existing under or authorized by the laws of the state of Indiana, or

of the United States, or of any state, territory, or district of the

United States, or of any foreign country.

I.C. § 24-1-2-10. Natare argues that the School Corporation can be liable

for treble damages and attorney fees because “person” is defined by the

statute to include “corporations,” and school corporations are not

explicitly exempt from this definition. School corporations, like general

business corporations, are creatures of statute. In the case of school

corporations, they are created pursuant to Indiana Code section 20-4-1.

Reflecting that statute, the Brownsburg School Corporation uses the term

“corporation” as a part of its legal name. The Court of Appeals found this

persuasive and agreed with Natare that a school corporation is a “person”

subject to the treble damages remedy provided by the antitrust act. We

disagree for reasons grounded in the text of the Antitrust Act as well as

the general assumption that criminal laws are not applicable to

governmental entities.

The School Corporation first argues that the term “corporation” is

ambiguous and that the General Assembly did not intend the term to include

governmental entities. As originally enacted in 1907, the antitrust law’s

definition of “person” included, “corporations,” “associations,”

“companies” and “partnerships.” The School Corporation points out that the

other entities included in this definition as “persons” are all private

business entities, and argues that this implies all “persons” are from the

private sector. Moreover, in contrast to the silence of the Antitrust Act

on this point, the School Corporation offers a number of statutes where the

General Assembly has treated political subdivisions as distinct from

“corporations” and subjected public bodies to the same treatment as private

corporations by express language.[9]

We do not believe the definition of person is the central issue in

determining whether the School Corporation, or any arm of government, is

susceptible to a claim for treble damages. Although we recognize the

maxims of statutory construction involved here, we find them at best

suggestions, and not directives. It would be anomalous indeed if a private

business overcharged as a result of price fixing can recover treble damages

but a school corporation cannot. We agree that municipal corporations are

“persons” as that term is used in the Indiana Antitrust Act. They

therefore can sue under Section 7 if injured in their “business or

property” by an antitrust violation. But it does not follow that they are

also potential treble damage defendants. In order to be sued under Section

7, a “person” must have done something “forbidden by” the Indiana antitrust

law. The substantive prohibitions of the antitrust laws are criminal in

nature. Accordingly, we think the legislation did not contemplate the

possibility of a governmental entity engaging in an action forbidden by the

statute. Rather, as Section 4 reflects, the statute views governmental

entities as victims, not perpetrators, and explicitly relieves them of

liability from a contract that was the result of collusive bidding.

Natare also asserts that when the General Assembly first enacted the

statute that created school corporations, I.C. § 20-4-1-26.1 (formerly I.C.

§ 20-4-1-26), it expressly included a provision that school corporations

could sue and be sued. We think this is of no relevance to the issue

before us. The power to sue and be sued simply confers general legal

capacity on the entity. It says nothing about what kinds of suits the

entity may bring or what liabilities it may incur. Natare also points out

that the Antitrust Act was amended by the General Assembly in 1986 and in

1993 and did not exempt municipal corporations form the act.[10] From

this, Natare reasons that the General Assembly legislatively acquiesced in

the municipal corporation’s liability to suit. These amendments merely

provided updated and uniform terms. They do not suggest that the General

Assembly revisited the liability of municipal or local government entities.

E. Governmental Immunity

Rejecting a treble damage remedy against a governmental entity is

fortified by the fact that at the time the Indiana Antitrust Act was

enacted there was no prospect of civil liability on the part of a

governmental entity. Indiana recognized the common law doctrine of

sovereign immunity until 1972, when this Court abolished sovereign immunity

in most areas. Campbell v. State, 259 Ind. 55, 61-62, 284 N.E.2d 733, 736-

37 (1972). In response to Campbell, in 1974, the Indiana legislature

enacted the Indiana Tort Claims Act, which identified a list of

governmental activities that are immunized by statute from tort liability.

See I.C. § 34-13-3-3.

Natare argues that the Court of Appeals correctly concluded that

because the General Assembly has “increasingly allowed the government to be

sued for wrongdoing” the 1907 presumption of immunity has been eroded.

Brownsburg Comty. Sch. Corp., 808 N.E.2d at 152-53. The Court of Appeals

noted that since 1974, the Tort Claims Act permits public entities to be

held liable for negligence, I.C. §§ 34-13-3-1—25 (formerly I.C. § 34-4-

16.5-1). The School Corporation points out that in the late nineteenth

century it was presumed that school corporations were immune from suit.

Freel v. Sch. City of Crawfordsville, 142 Ind. 27, 28, 41 N.E. 312, 312

(1895) (“where subdivisions of the state are organized solely for a public

purpose, by a general law, no action lies against them for an injury

received by a person on account of the negligence of the officers of such

subdivision, unless a right of action is expressly given by statute”). “A

statute in derogation of the common law is presumed to be enacted with

awareness of the common law.” Cook v. Whitsell-Sherman, 796 N.E.2d 271,

275 (Ind. 2003). In the legal environment of 1907 there was no need to

provide explicitly that governmental entities could not be subjected to

treble damages. It was assumed they were immune from suit. And, as

explained by Part G, at that time the federal antitrust laws, which served

as the prototype for the Indiana law, made the same assumption.

F. Public Policy

Public policy considerations support our reading of the statute.

This Court has recognized that treble damages are punitive in nature.

Obremski v. Henderson, 497 N.E.2d 909, 911 (Ind. 1986) (referring to the

treble damages remedy for crime victims provided by Indiana Code section 34-

4-30-1 (now I.C. § 34-24-3-1)). The Tort Claims Act prohibits an award of

punitive damages against a governmental entity. I.C. § 34-13-3-4(b).

Courts have also been reluctant to impose punitive damages on government

entities in part because the penalty falls ultimately on innocent

taxpayers. See State v. Carter, 658 N.E.2d 618, 624 (Ind. Ct. App. 1995)

(sanction of attorney fees against State disfavored “because it is the

citizen taxpayers who would bear the burden of this punitive award”); City

of Gary v. Falcone, 169 Ind. App. 295, 297, 348 N.E.2d 41, 42 (1976) (“if

punitive damages were allowed against municipalities, the group for whose

protection such damages were purportedly awarded, the citizens and

taxpayers, would be the identical group who would bear the burden of the

award. Such a result is anomalous, indeed.”). Moreover, “it is far from

clear that municipal officials . . . would be deterred from wrongdoing by

the knowledge that large punitive awards could be assessed based on the

wealth of their municipality.” City of Newport v. Fact Concerts, Inc., 453

U.S. 247, 268 (1981); see also Gares v. Willingboro Township, 90 F.3d 720,

736 (3d Cir. 1996)   (“the reasoning that punitive damages serve as a

deterrent becomes less sensible when applied to a municipality”).

It is one thing to visit civil penalties on individuals who violate

the law. And if a private organization employs persons who transgress,

imposing penalties on the organization places the loss on those who

voluntarily associated themselves with it. In the case of a for-profit

organization, those individuals within the organization ordinarily stood to

gain from the illegal activity. But imposing treble damages on a

governmental entity visits the loss on wholly innocent taxpayers.

Moreover, the treble damages remedy under the antitrust law is designed to

deter unlawful competitive activity presumably undertaken to enhance the

profits of the violators. But in this case of a violation of the antitrust

laws by a governmental entity, the government will typically be a victim,

not a beneficiary. That is the situation presented here if Natare’s

allegations are correct. For these reasons as well, we conclude that a

governmental entity was not contemplated as a defendant under Section 7,

and hold that the School Corporation cannot be held liable for treble

damages.

G. Federal Antitrust Liability of Governmental Entities

We also find instructive the history of government liability under the

federal antitrust laws. It too points in the direction of nonliability.

The Clayton Act allows any “person” to be a plaintiff. The term is

defined to include “corporations and associations existing under or

authorized by” federal, state or foreign law. 15 U.S.C. § 12. As early as

1906 it was held that a municipality could be a plaintiff. Chattanooga

Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 396  (1906) (a

municipality is a “person” entitled to sue under § 7 of the Sherman Act).

Chattanooga did not address, and apparently was not presented with any of

the issues discussed in Parts C, E, and F of this opinion. Similar rulings

as to states and foreign nations followed. See Pfizer, Inc. v. Gov’t of

India, 434 U.S. 308, 320 (1978) (“a foreign nation otherwise entitled to

sue in our courts is entitled to sue for treble damages under the antitrust

laws to the same extent as any other plaintiff”); Georgia v. Pa. R.R. Co.,

324 U.S. 439, 447 (1945) (State of Georgia was a “person” within provision

of § 26 of the Clayton Act authorizing any person to sue for injunctive

relief and to recover damages).

Whether an entity of local government could be sued for damages under

the Sherman Act did not arise until many years later. In 1978, a four-

Justice plurality of the Supreme Court held that a municipal utility, which

had brought a treble damage claim against a competitor, could be subject to

a counterclaim for treble damages. City of Lafayette v. La. Power & Light

Co., 435 U.S. 389, 412-13 (1978). The plurality concluded that “the Parker

doctrine exempts only anticompetitive conduct engaged in as an act of

government by the State as sovereign or, by its subdivisions, pursuant to a

state policy to displace competition with regulation or monopoly public

service.” Id. at 413. Chief Justice Burger agreed that the municipal

utility could be sued for treble damages but based his opinion on the

nature of the entity as a competitor in a market place, not on its status

as an arm of government. Id. at 419. Four Justices dissented specifically

complaining that exposure to treble damages could be ruinous to local

governments. Id. at 440. The dissenters took the view that a state can

authorize its arms of government as it chooses, and the “state action”

doctrine announced in Parker v. Brown[11] should exempt any government

actor from the antitrust law. Shortly after City of Lafayette, the Court

held that Parker immunity extended to a municipality only if its actions

were in furtherance of a “clearly articulated and affirmatively expressed”

state policy. Cmty. Communications Co. v. City of Boulder, 455 U.S. 40, 51

(1982). The general grant of authority under Home Rule legislation, such

as Indiana’s, codified at Indiana Code section 36-1-3-1—9, was not a

sufficiently articulated state policy to guarantee immunity.

Although no treble damage award had yet been entered against a

governmental entity, after City of Lafayette and City of Boulder, that

result was seen as a realistic possibility. Congress promptly responded to

these decisions by enacting the Local Government Antitrust Act of 1984,

codified at 15 U.S.C. §§ 34-36. That statute left governmental entities

subject to injunctive or declaratory relief but prohibited recovery of

antitrust damages “from any local government, or official or employee

thereof acting in an official capacity.”[12] 15 U.S.C. § 35(a). A “local

government” within the meaning of the Act includes any “city, county,

parish, town, township, village or any other general function governmental

unit established by state law,” and also “a school district, sanitary

district, or any other special function governmental unit established by

State law.” 15 U.S.C. § 34(1)(A)-(B). The House Judiciary Committee

pointed out that City of Lafayette and City of Boulder “appear to have

limited the extent that antitrust immunity applicable to States will be

accorded to local governments” and these decisions “could undermine a local

government’s ability to govern in the public interest. Most of the suits

instituted by private parties have sought treble damages from local

governments.” 5 U.S. Code Congressional & Administrative News 98 Cong. 2d

1984 at 4603 (1985). The purpose of the Act was to “clarify” the

application of the Clayton Act to the official conduct of local governments

and eliminate “antitrust damage liability for official conduct of a local

government and its officials.” Id. Congress was also concerned that local

taxpayers, the very persons the antitrust laws are designed to protect, are

called upon to pay treble damage judgments rendered against local

governments. Irving Scher, Antitrust Adviser § 7.09 at 43 (Vol. 2, 4th ed.

2003).

Indiana courts have generally followed federal precedent in

interpreting the Indiana Antitrust Act. E.g. Berghausen v. Microsoft

Corp., 765 N.E.2d 592, 594-96 (Ind. Ct. App. 2002); Mavis, 468 N.E.2d 584,

585-86; Rumple v. Bloomington Hosp., 422 N.E.2d 1309, 1313-14  (Ind. Ct.

App. 1981); Citizens Nat’l Bank of Grant County v. First Nat’l Bank in

Marion, 165 Ind. App. 117, 125, 331 N.E.2d 471, 476 (1975). Consistent

with that approach, a few states have followed City of Lafayette and City

of Boulder.[13] We do not join them. Where the government activity is not

competition with private enterprise, even the City of Lafayette Court

lacked a majority for subjecting the municipality to treble damages. In

any event, we think the rapid congressional removal of exposure of

potential liability of municipalities under the antitrust laws also

indicates that liability was simply not contemplated by federal antitrust

legislation. When the implications of this potential liability were

explored, it was promptly and soundly rejected.

We do not agree that federal precedent is appropriate in considering

whether governmental immunity is available to municipal and local

government units under state antitrust laws. Parker and its progeny turned

significantly on the relationship between the federal government and the

states as dual sovereignties. Municipal and local government units, on the

other hand, are creatures of the State. As such there is no consideration

of comity or deference. The only issue is the intention of the state

legislature to impose or withhold liability. See Freitas v. City and

County of San Francisco, 92 Cal. App. 3d 913, 917 (1979); Fine Airport

Parking, Inc. v. City of Tulsa, 71 P.3d 5, 11 (Ok. 2003) (“The principles

of federalism that govern the relationship between the two sovereigns, the

federal and state governments, do not apply to the relationship between a

state and a municipality acting pursuant to state law . . . . The

principles of federalism supporting the Parker doctrine are meaningless in

an analysis of municipal liability”); Town of Hallie v. City of Chippewa

Falls, 314 N.W.2d 321, 324 (Wis. 1982) (“The relationship between the

federal government and the states is not parallel to the relationship

between the state government and the cities.”). For the reasons already

given, we do not read our statute to provide liability of governmental

agencies. In this conclusion we join Massachusetts, New Jersey, Oklahoma

and New York in rejecting the federal state action immunity doctrine under

state antitrust law. Monsanto Co. v. Dept. of Pub. Utils., 586 N.E.2d 982,

983 (Mass. 1992); Fanelli v. City of Trenton, 641 A.2d 541, 547-49 (N.J.

1994); City of Tulsa, 71 P.3d at 12; Capital Tel. Comp. v. New York Tel.

Comp., 540 N.Y.S.2d 895, 896-99 (1989).

Conclusion

The order of the trial court denying the motion of Brownsburg

Community School Corporation for judgment on the pleadings is reversed.

This case is remanded with direction to grant the School Corporation’s

motion for judgment on the pleadings.

Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ. concur.

-----------------------

[1] Under Trial Rule 12(C), motion for judgment on the pleadings is to be

granted ‘“only where it is clear from the face of the complaint that under

no circumstances could relief be granted.”’ Forte v. Connerwood

Healthcare, Inc., 745 N.E.2d 796, 801 (Ind. 2001) (quoting Culver-Union

Township Ambulance Serv. v. Steindler, 629 N.E.2d 1231, 1235 (Ind. 1994)).

When reviewing a 12(C) motion, the reviewing court accepts as true the well-

pleaded material facts alleged in the complaint, and bases its ruling

solely on the pleadings. Noblesville Redevelopment Comm’n v. Noblesville

Assocs. Ltd. P’ship, 674 N.E.2d 558, 562 (Ind. 1996).

[2] Paragraph 3.3.1 of AIA Document A701-1997, Instructions to Bidders

provided:

The materials, products and equipment described in the bidding

documents establish a standard of required function, dimension,

appearance and quality to be met by any proposed substitution.

Whenever possible and without prejudice to price, quality, or other

considerations, local sources of labor, materials and services shall

be given preference. Generally, where words “or equal” appear, a

product of another manufacturer will be acceptable, but only if

approved in writing by the Architect prior to bidding in accordance

with the provisions stated in the Contract Documents and these

Instructions to Bidders.

[3] The public bidding statute, as applied to school corporations, provides

the school corporation the discretionary power to determine “the

responsible offeror” that is “most advantageous to the governmental body,

taking into consideration price and the other evaluation factors set forth

in the request for proposals.” Ind. Code § 5-22-9-7(a) (2004). The school

corporation must have its purchase or lease available for the public. I.C.

§ 5-22-18-5(b)(3). A citizen or taxpayer of that school district may then

seek to enjoin a contract attempted to be entered into pursuant to

competitive bidding where the award is arbitrary, corrupt, or fraudulent.

Budd v. Bd. of County Comm’rs of St. Joseph County, 216 Ind. 35, 37, 22

N.E.2d 973, 975 (1939); Bd. of Comm’rs of Henry County v. Gillies, 138 Ind.

667, 673, 38 N.E. 40, 42 (1894).

[4] In Ziliak it was agreed that the acts of state employees constituted

violations of Indiana Code section 35-43-2-2 (criminal trespass), and

Indiana Code section 35-43-1-2 (criminal mischief). 464 N.E.2d at 930.

The Ziliaks sought damages provided in the section now codified at Indiana

Code section 34-24-3-1 (2004), which provided for a civil action for treble

damages and attorneys fees for violations ofIndiana Code section 35-43

among others.

[5] See City of Ludlow v. Commonwealth, 56 S.W.2d 958 (Ky. 1933), where the

city built an allegedly defective sewer that, when it rained, caused

backups in the basements of several residences, “producing an odor so

noisome, offensive, and sickening that the occupants of the houses could

not eat or sleep.” Id. at 958. The state prosecuted and the City was

convicted of maintaining a common nuisance and fined $1,500. Id. It

appealed. The court of appeals cited three earlier Kentucky cases in which

cities had been held criminally liable for maintaining a public nuisance.

The court reversed and remanded for a new trial on the grounds that the

$1,500 fine imposed on the City violated Kentucky’s constitutional

prohibition of excessive fines. Id. at 968-69.

[6] See Haw. Rev. Stat. § 702-229(1) (2003); N.J. Stat. § 2C:2-7(b)(1)

(2004); N.D. Cent. Code § 51-08.1-01 (2003); Ohio Rev. Code Ann. §

2901.23(D) (2004); 18 Pa. Cons. Stat. § 307(F) (2004).

[7] Unlike the federal antitrust laws and those of most states, the Indiana

Antitrust Act does not explicitly provide an injunctive remedy. Whether an

injunctive remedy is available under the Indiana Antitrust Act, and if so

whether it lies against a unit of local government are issues not presented

in this case and we express no opinion on them.

[8] “Any person who shall be injured in his business or property by any

person or corporation by reason of the doing by any person or persons of

anything forbidden or declared to be unlawful by this chapter may sue

therefor . . . and shall recover a penalty of threefold the damages which

may be sustained, together with the costs of suit, including a reasonable

attorney’s fee.” I.C. § 24-1-2-7.

[9] The minimum wage law defines an employer as “any . . . corporation, . .

. the state, or other governmental agency or political subdivision.” I.C.

§ 22-2-2-3. The Health provisions of the Code define “person” as “. . . a

governmental entity, or a corporation.” I.C. § 16-18-2-274(a). The

School Corporation also refers to a number of schemes where different

definitions of “person” expressly include or exclude government entities.

E.g., I.C. § 4-2-6-1(11) (Ethics & Conflicts of Interest for State

Officers) (‘“person’ means any . . . corporation, . . . or a governmental

agency or political subdivision”); I.C. § 5-14-1.5-2(k) (Public Records &

Meetings) (‘“person’ means . . . a corporation, . . . or a governmental

entity”); I.C. § 5-16-8-1 (Steel Procurement for Public Works) (separately

defining “persons” as including a corporation and “public agency” as

including local government units); I.C. § 8-1-22.5-1(e)-(f) (Utilities: Gas

Pipeline Safety) (defining “person” to include corporations and

“municipality” as a city, county, “or any political subdivision of the

state”); I.C. § 8-21-3-1(12) (Aeronautics: Aircraft Finance) (‘“person’

means . . . corporation, . . . or body politic”); I.C. § 9-13-2-124 (Motor

Vehicles); I.C. § 13-29-1-2(p) (Environment: Low-Level Radioactive Waste)

(defining “person” to include a corporation and “any other legal entity

either public or private,” and separately stating, “Person also includes

the United States, states, political subdivisions of the state, and any

department, agency, or instrumentality of the United States or a state”);

I.C. § 14-8-2-202(d) (Natural Resources Dept.) (“person” means “. . . a

corporation, or a governmental entity”); I.C. § 22-9-1-3 (Labor &

Industrial Safety: Civil Rights) (separate definitions); I.C. § 22-12-1-18

(Labor and Industrial Safety: Fire Safety & Building Equipment) (defining

person to include a “corporation . . . or governmental entity”).

[10] In 1986 the General Assembly amended the Indiana Antitrust Act’s

internal references to refer to “chapters” rather than “acts”. Pub. Law

No. 152-1986, Sec. 12. In 1993 the General Assembly amended the definition

of “person” to include limited liability companies, a then novel form of

organization. Pub. Law No. 8-1993, Sec. 335. Neither of these amendments

effected any substantive change relevant here.

[11] Parker v. Brown, 317 U.S. 341 (1943), dealt with a complaint for

injunctive relief against enforcement of a state statute regulating

agricultural output. Actions pursuant to a state regulatory scheme were

held to be exempt from federal antitrust laws as “state action.” The

Supreme Court found “nothing in the language of the Sherman Act or in its

history which suggests that its purpose was to restrain a state or its

officers or its agents from activities directed by its legislature.” Id.

at 350. As a result of this holding, “state action” was expressly declared

to be a defense for a wide variety of acts by governmental regulators and

private citizens if done pursuant to state law, even if they might

otherwise have violated federal antitrust laws.

[12] It has been noted that the statutory immunity of the nonsovereign

“local governments” exceeds the nonstatutory immunity of the sovereigns

that created them. ABA Antitrust Section: Monograph No. 15, Antitrust

Federalism: The Role of State Law at 72 n. 508 (1988). “The immunity from

damages granted to local governments under the Act is absolute. The Act,

however, does not immunize local governments from injunctive,” enforcement

procedures by the Department of Justice, or actions by the Federal Trade

Commission. Id. at 72.

[13] See Neyens v. Roth, 326 N.W.2d 294, 298 (Iowa 1982); Byre v. City of

Chamberlain, 362 N.W.2d 69, 74 (S.D. 1985). Those jurisdictions afford

immunity only if the municipal action is “clearly articulated and

affirmatively expressed as state policy.”