Petition for Writ of Certiorari — AmeriCare MedServices, Inc., Petitioner v. City of Anaheim, California, et al.

No. _________

================================================================

In The

Supreme Court of the United States

-----------------------------------------------------------------AMERICARE MEDSERVICES, INC.,

Petitioner,

vs.

CITY OF ANAHEIM, et al.,

Respondents.

-----------------------------------------------------------------On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

-----------------------------------------------------------------PETITION FOR WRIT OF CERTIORARI

-----------------------------------------------------------------JAROD M. BONA

Counsel of Record

AARON R. GOTT

BONA LAW PC

4275 Executive Square, Suite 200

La Jolla, CA 92037

(858) 964-4589

jarod.bona@bonalawpc.com

aaron.gott@bonalawpc.com

Counsel for Petitioner

================================================================

COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

i

QUESTIONS PRESENTED

1. A state statute governing ambulance services

allows one type of competition displacement. Is a municipality that is not authorized by that statute or any

other displacement under state law nevertheless exempt from federal antitrust liability in the ambulance

services market?

2. Can a government entity in its capacity as a

commercial market participant rather than its regulatory capacity invoke state action immunity from federal antitrust law?

3. Is a municipality that is acting in its capacity

as a commercial market participant rather than its

regulatory capacity subject to the active-supervision

requirement to invoke state action immunity from federal antitrust law?

ii

PARTIES TO THE PROCEEDING

The Petitioner is AmeriCare MedServices, Inc.

The Respondents are City of Anaheim, Care Ambulance Service, Inc., City of Laguna Beach, City of La

Habra, City of Garden Grove, City of Fullerton, City of

Buena Park, City of Costa Mesa, City of Orange, City

of Fountain Valley, City of Huntington Beach, City of

Newport Beach, and City of San Clemente.

RULE 29.6 STATEMENT

Petitioner AmeriCare MedServices, Inc. states

that there is no parent corporation or any publicly held

corporation that owns 10% or more of its stock.

iii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ................................

i

PARTIES TO THE PROCEEDING ......................

ii

RULE 29.6 STATEMENT ....................................

ii

TABLE OF CONTENTS ......................................

iii

TABLE OF AUTHORITIES .................................

v

OPINIONS BELOW.............................................

1

JURISDICTION ...................................................

1

STATUTORY PROVISIONS INVOLVED ...........

1

STATEMENT .......................................................

2

REASONS FOR GRANTING THE WRIT............ 11

I. THE NINTH CIRCUIT ERRED IN TREATING CALIFORNIA’S EMS POLICY AS

CLEARLY ARTICULATING A STATE POLICY TO DISPLACE COMPETITION.......... 12

A. The State Policy Merely Grants Permission to Play in the Market ............. 15

B. The State Policy Did Not Apply to Respondents by Its Terms ....................... 16

C. The Decision Imperils the Fundamental Values the State Action Immunity

Is Designed to Protect ......................... 18

II. THE COURT SHOULD ADOPT THE MARKET PARTICIPANT EXCEPTION TO STATE

ACTION IMMUNITY .................................. 20

iv

TABLE OF CONTENTS – Continued

Page

III.

HALLIE’S “NARROW EXCEPTION” TO

ACTIVE SUPERVISION SHOULD NOT

APPLY TO ACTIVE MARKET PARTICIPANTS .......................................................... 24

CONCLUSION..................................................... 26

APPENDIX

Memorandum, United States Court of Appeals

for the Ninth Circuit, August 7, 2018.............. App. 1

Order Granting Defendant’s Motion to Dismiss,

United States District Court for the Central

District of California, April 21, 2017 ............... App. 5

Order Granting Defendants’ Motion to Dismiss,

United States District Court for the Central

District of California, March 28, 2017 ........... App. 17

Order Denying Petition for Rehearing, United

States Court of Appeals for the Ninth Circuit,

August 7, 2018................................................ App. 50

Statutory Provisions Involved........................... App. 51

v

TABLE OF AUTHORITIES

Page

FEDERAL CASES

A.D. Bedell Wholesale Co. v. Philip Morris Inc.,

263 F.3d 239 (3d Cir. 2001) .....................................21

Air Evac EMS, Inc. v. Cheatham, 910 F.3d 751

(4th Cir. 2018)..........................................................21

American Needle, Inc. v. Nat’l Football League,

560 U.S. 183 (2010) .................................................24

Automated Salvage Transp., Inc. v. Wheelabrator

Envtl. Sys., Inc., 155 F.3d 59 (2d Cir. 1998) ............22

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .........17

California Retail Liquor Dealers Ass’n v. Midcal

Aluminum, Inc., 445 U.S. 97 (1980) ................ 3, 4, 13

City of Columbia v. Omni Outdoor Advertising,

Inc., 499 U.S. 365 (1991)............................ 2, 9, 12, 21

City of Lafayette v. Louisiana Power & Light Co.,

435 U.S. 389 (1978) .................................................20

Eastman Kodak Co. v. Image Tech. Servs., Inc.,

504 U.S. 451 (1992) .................................................24

FTC v. Phoebe Putney Health System, Inc., 588

U.S. 216 (2013) ................................................ passim

FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992) .... passim

Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931

(Fed. Cir. 1993), abrogated on other grounds

by Wilton v. Seven Falls Co., 515 U.S. 277

(1995) .......................................................................22

Goldfarb v. Virginia State Bar, 421 U.S. 773

(1975) .......................................................................13

vi

TABLE OF AUTHORITIES – Continued

Page

Jefferson County Pharmaceutical Association,

Inc. v. Abbott Laboratories, 460 U.S. 150 (1983) ...... 20

Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322

(1955) .......................................................................19

Minn. Mining & Mfg. Co. v. N.J. Wood Finishing

Co., 381 U.S. 311 (1965) ..........................................19

N.C. State Board of Dental Examiners v. FTC,

135 S. Ct. 1101 (2015) ..................................... passim

Paragould Cablevision, Inc. v. City of Paragould,

930 F.2d 1310 (8th Cir. 1991) ..................................22

Parker v. Brown, 317 U.S. 341 (1943) ................. 3, 4, 13

Shames v. Cal. Travel & Tourism Comm’n, 626

F.3d 1079 (9th Cir. 2010) ...........................................4

Town of Hallie v. City of Eau Claire, 471 U.S. 34

(1985) ......................................................... 2, 4, 12, 26

United States v. State of California, 297 U.S. 175

(1936), overruled on other grounds by Garcia

v. San Antonio Metro. Transit Auth., 469 U.S.

528 (1985) ................................................................21

United States v. Topco Assocs., Inc., 405 U.S. 596

(1972) .........................................................................3

VIBO Corp. v. Conway, 669 F.3d 675 (6th Cir.

2012) ........................................................................21

STATE CASE

County of San Bernardino v. City of San Bernardino, 15 Cal. 4th 909 (1997) ................................ 8, 15

vii

TABLE OF AUTHORITIES – Continued

Page

CONSTITUTIONAL PROVISION

U.S. Const. amend. X ....................................................3

FEDERAL STATUTES

28 U.S.C. § 1254(1) ........................................................1

Sherman Act § 1 ...........................................................1

Sherman Act § 2 ....................................................... 1, 9

STATE STATUTES

Cal. Health & Safety Code § 1797.1.............................6

Cal. Health & Safety Code § 1797.1 et seq............... 1, 4

Cal. Health & Safety Code § 1797.102.........................6

Cal. Health & Safety Code § 1797.201............... passim

Cal. Health & Safety Code § 1797.224..................... 5, 6

OTHER AUTHORITIES

Bryan K. Toma, The Decline of Emergency Medical Services Coordination in California: Why

Cities are at War with Counties over Illusory

Ambulance Monopolies, 23 Sw. U. L. Rev. 285

(1994) .......................................................................23

Jarod M. Bona & Luke A. Wake, The Market Participant Exception to State-Action Immunity

from Antitrust Liability, 23 Comp. J. Anti. &

Unfair Comp. L. Sec. St. B. Cal. 156 (2014) ............23

1

AmeriCare MedServices, Inc. respectfully petitions for a writ of certiorari to review the judgment of

the United States Court of Appeals for the Ninth Circuit in this case.

------------------------------------------------------------------

OPINIONS BELOW

The opinion of the Court of Appeals for the Ninth

Circuit (App. 1–4) is unreported. The orders of the district court (App. 5–49) are unreported, but one order

(App. 17–49) is available at 2017 WL 1836354.

------------------------------------------------------------------

JURISDICTION

The Ninth Circuit entered judgment on August 27,

2018 and denied timely rehearing en banc on October

10, 2018. App. 50. Jurisdiction to review the judgment

rests on 28 U.S.C. § 1254(1).

------------------------------------------------------------------

STATUTORY PROVISIONS INVOLVED

The appendix reproduces relevant provisions of

the Sherman Act 15 U.S.C. §§ 1, 2, and Cal. Health &

Safety Code § 1797.1 et seq.

------------------------------------------------------------------

2

STATEMENT

This case presents the remarkable scenario in

which the court of appeals granted state action immunity from antitrust liability to municipalities despite the fact that the State of California expressly

explained—as amicus curiae—that it did not authorize

any municipal anticompetitive conduct. The state not

only declined to accept the anticompetitive conduct as

its own, but warned about its disastrous consequences

to its comprehensive policy that, by contrast, relies on

market competition.

More specifically:

•

Both courts below held that respondents’

conduct was exempt from antitrust liability, concluding it was not the federal

courts’ place to determine whether respondents were authorized to exclude

their competitors under state law.

•

Both courts also expressly declined to apply the market participant exception,

which was previewed by the Court in City

of Columbia v. Omni Outdoor Advertising,

Inc., 499 U.S. 365, 379 (1991), left open in

FTC v. Phoebe Putney Health System,

Inc., 588 U.S. 216, 226 n.4 (2013), and is

the subject of a split of authority among

the courts of appeals.

•

Both courts also applied the “narrow exception” of Town of Hallie v. City of Eau

Claire, 471 U.S. 34 (1985), to relieve the

respondents of the active supervision

3

requirement despite this Court’s more recent holding that active supervision “is

an essential condition of state-action immunity when a nonsovereign actor has

‘an incentive to pursue [its] own self-interest under the guise of implementing

state policies,’ ” see N.C. State Board of

Dental Examiners v. FTC, 135 S. Ct. 1101,

1113 (2015) (citations omitted).

1. The federal antitrust laws are the “central

safeguard for the Nation’s free market structures” and

have been for more than a century. N.C. Dental, 135

S. Ct. at 1109. They “guarantee[ ] each and every business, no matter how small, [the] freedom to compete.”

United States v. Topco Assocs., Inc., 405 U.S. 596, 610

(1972). This “national policy in favor of competition”

has existed and been reaffirmed consistently for more

than a century. California. Retail Liquor Dealers Ass’n

v. Midcal Aluminum, Inc., 445 U.S. 97, 106 (1980). It is

so important to the national interest that Congress

trusts its adjudication to the federal courts alone.

States do not have the power to set aside the wellsettled judgment of Congress, but they do have the residual power to regulate under the Tenth Amendment.

So the Court carved out a narrow exemption for state

action: the Sherman Act does not “bar States from imposing market restraints ‘as an act of government.’ ”

Phoebe Putney, 568 U.S. at 224–25 (quoting Parker v.

Brown, 317 U.S. 341, 352 (1943)).

Like all antitrust exemptions, the state action immunity is strictly limited, narrowly circumscribed, and

4

“disfavored.” Id. at 225 (quoting FTC v. Ticor Title Ins.

Co., 504 U.S. 621, 636 (1992)); see also Shames v. Cal.

Travel & Tourism Comm’n, 626 F.3d 1079, 1084 (9th

Cir. 2010) (“The state-action immunity doctrine is ‘disfavored,’ and is to be interpreted narrowly, as ‘a broad

interpretation of the doctrine may inadvertently extend immunity to anticompetitive activity which the

states did not intend to sanction.’ ”) (citations omitted).

In fact, it is not an immunity at all. Its sole purpose is

to protect the sovereign states’ interests to regulate.

Ticor Title, 504 U.S. at 636. Indeed, a state may not

simply declare that its political subdivisions or residents are exempt from federal antitrust liability. Hallie, 471 U.S. at 39 (citing Parker, 317 U.S. at 351).

An antitrust defendant “may not invoke Parker

immunity unless the actions in question are an exercise of the State’s sovereign power.” N.C. Dental, 135

S. Ct. at 1110. Thus, the defendant invoking immunity

has the burden to show that it (1) acted pursuant to a

clearly articulated state policy to displace competition,

and (2) was actively supervised by the state itself.

Midcal, 445 U.S. at 105. Municipal actors are exempt

from the latter requirement, at least where they perform traditional regulatory functions on behalf of the

state. See Hallie, 471 U.S. at 46.

*

*

*

2. In 1981, California enacted the EMS Act, Cal.

Health & Safety Code § 1797.1 et seq., which established a comprehensive regulatory policy that places

the coordination of EMS services in the hands of the

5

California Emergency Medical Services Authority

(EMSA) and county EMS agencies to ensure that California citizens receive prompt prehospital emergency

transport. The EMS Act was enacted because the last

municipal-based system failed that objective.

California’s EMS policy is a carefully crafted

scheme that expressly mandates and relies upon competition. The EMS Act requires that EMSA approve an

annual statewide EMS plan that delineates functional

zones for ambulance services (or “operating areas”)

and determines whether each such zone (1) should be

a non-exclusive operating area subject to open competition (the default rule under the EMS Act) (2) should

be an exclusive operating area subject to competitive

bidding, or (3) meets the requirements of the exception,

which “continues the use of existing providers operating within [the] area in the manner and scope in which

the services have been provided without interruption

since January 1, 1981.” Cal. Health & Safety Code

§ 1797.224.

The EMS Act also allows certain municipalities

and fire districts to continue providing services as they

did at the time it was enacted if the municipality was

“contracting or providing for” prehospital EMS as of

June 1, 1980. Cal. Health & Safety Code § 1797.201.

The provision, which was designed to be transitional,

allowed existing municipal programs to continue to operate until it reached an agreement with the county

EMS agency. Importantly, the EMS Act does not give

municipalities any regulatory powers. It simply allows

those municipalities who had been playing in the

6

market to continue to do so as a reliance accommodation (and only a transitional one) under the new, stateadministered EMS scheme.

Instead, EMSA is “responsible for the coordination

and integration of all state activities concerning emergency medical services.” Cal. Health & Safety Code

§ 1797.1. It administers the EMS Act: it has the power

to enact rules and regulations, issue guidance, and

make determinations that impact the statewide EMS

plan. Indeed, each year, it must assess each EMS operating area to determine its need of additional emergency medical services, coordination of those services,

and the effectiveness of those services. Cal. Health &

Safety Code § 1797.102. And it must ultimately approve a statewide EMS plan. For purposes of the state

action immunity, EMSA’s determinations are controlling because it is the state agency delegated the power

to implement, direct, and supervise state EMS policy

and has the specific responsibility of making determinations under Sections 1797.201 and 1797.224 in approving the statewide EMS plan.

EMSA issued interpretative guidance and created

an administrative process through which municipalities and fire districts can seek eligibility determinations under Section 1797.201. An entity only qualifies

if it:

•

Is a city or fire district that existed on

June 1, 1980.

7

•

Is the same entity that existed on the

date of the 1797.201 eligibility evaluation.

•

Provided service on June 1, 1980, at one

of these types: ALS, LALS, or emergency

ambulance services.

•

Operated or directly contracted for the

same type of service continuously since

June 1, 1980.

•

Never entered into a written agreement

with the county EMS agency for the type

of service that was provided in 1980, including ALS, LALS, or emergency ambulance services.

EMS System Coordination and HS 1797.201 in 2010,

C.A. Dkt. 51-6, ER912.

Under the EMS Act, EMSA has the obligation to

approve a detailed plan every year that determines

whether each individual zone is subject to open competition or whether it should be deemed exclusive (based

on specific statutory preconditions). EMSA specifically

determined that each of the zones in which these cities

are located do not meet the requirements for exclusivity each year when it reviewed and approved the

statewide plan. (See ER88–89 ¶ 34; ER112–113 ¶ 33;

ER136 ¶ 30; ER165 ¶ 30; ER189 ¶ 30; ER218 ¶ 29;

ER247 ¶ 30; ER275–276 ¶ 32; ER 303 ¶ 31; ER331 ¶ 29;

ER358 ¶ 30; ER386 ¶ 31) [C.A. Dkts. 51-2, 51-3]; see also

Brief of the California Emergency Medical Services

Authorities as Amicus Curiae (“EMSA Br.”) at 15–16,

8

C.A. Dkt. 53-2 (“Consistent with AmeriCare’s allegations, the State Authority has determined that all

twelve City Appellees are to be operating ‘non-exclusive zones.’ ”). Moreover, it established a process by

which cities can seek an eligibility determination under Section 1797.201. None of the appellee cities has

been deemed eligible. The complaints alleged detailed

facts showing that none of the twelve municipal respondents met those requirements.

Even if the respondents would have passed

EMSA’s qualification process, Section 1797.201 does

not authorize them to act anticompetitively. EMSA’s

official agency guidance states that Section 1797.201

“does not grant exclusivity for ALS, LALS, or ambulance services.” EMS System Coordination and HS

1797.201 in 2010, C.A. Dkt. 51-6, ER911. The California Supreme Court has also held that Section 1797.201

does not allow “cities or fire districts . . . to expand

their services, or to create their own exclusive operating areas.” County of San Bernardino v. City of San

Bernardino, 15 Cal. 4th 909, 932 (1997).

*

*

*

3. In 2015, petitioner, an eligible and licensed

EMS provider, sought to operate in each of the twelve

subject zones consistent with the statewide EMS plan.

Petitioner sought authorization from the county EMS

agency, which directed it to make a request to each of

the municipal respondents because they had each asserted the authority to control prehospital EMS within

their boundaries. Each of the twelve municipalities

9

denied petitioner’s requests, asserting that they are

exclusive providers, or have contracted with exclusive

providers, under Section 1797.201.

*

*

*

4. Petitioner filed its complaints against each of

the municipal respondents between August 29, 2016

and October 6, 2016 for monopolization under Section

2 of the Sherman Act. In eight cases, it also named

Care Ambulance, Inc. as a defendant and made claims

for conspiracy to restrain trade under Section 1 of the

Sherman Act. All twelve cases were consolidated. The

respondents each moved to dismiss invoking, inter

alia, the state action immunity.

*

*

*

5. The district court dismissed the complaint

with prejudice for failure to state a claim. App. 17. It

concluded the municipal respondents were entitled to

the state action immunity because “the EMS Act (1)

contemplates the provision of prehospital emergency

medical services by cities; and (2) contains a clear and

express intention by the state to immunize from antitrust liability local government conduct in furtherance

of the EMS Act. . . .” App. 42. It further held that it was

irrelevant whether the respondent cities were actually

eligible under Section 1797.201, stating it was enough

that “the state intended the authorizing statute to

have anticompetitive effects” and reasoning that Omni

“reject[ed] the contention that a municipality needs to

be in compliance with the state law authorizing anticompetitive conduct for Parker immunity to apply.”

10

App. 44. It also declined to apply a market participant

exception to the state action immunity or to consider

whether the active supervision requirement applies to

municipalities acting as commercial market participants rather than as regulators. App. 45.

In a separate order, the district court also granted

Care’s motion to dismiss. App. 5. The order held that

the active supervision requirement did not apply to

Care, despite being a private party, because “it is the

[municipal respondents] who are empowered to act

anti-competitively under the California EMS Act, and

CARE’s monopoly is simply a byproduct of the [municipal respondents’] actions pursuant to this power.”

App. 11. It also held that Care’s monopoly was the result of protected petitioning activity under Noerr-Pennington immunity. App. 13.

*

*

*

6. On appeal, EMSA and the California Attorney

General’s Office filed an amicus curiae brief supporting

reversal, stating unequivocally that the municipal respondents were not acting pursuant to the state policy;

that the municipal respondents were not among those

entities eligible under Section 1797.201; that regardless, Section 1797.201 provides permission to play in

the market, not to act anticompetitively; and that if the

decision stands, it “will throw California’s complex

EMS system into chaos.” EMSA Br. at 2 (C.A. Dkt. 532).

*

*

*

11

7. Nevertheless, the court of appeals affirmed.

App. 1–4. The memorandum opinion rejected any inquiry into whether the state intended to authorize the

respondents to act anticompetitively or that it intended to displace competition in the particular markets at issue, stating that “[w]hether § 1797.201

properly applies to each city appellee is a question for

California courts—not us.” App. 2 n.2. It further held

that because the municipal respondents are immune,

Care is as well. App. 3. It also affirmed the district

court’s application of Noerr-Pennington immunity. Id.

------------------------------------------------------------------

REASONS FOR GRANTING THE WRIT

The court of appeals found California’s grant of

authority for certain eligible municipalities to play in

the market sufficient to shield all California municipalities and their private contractors from antitrust liability regardless of whether the challenged conduct

was actually authorized by the state. In fact, it held

respondents are entitled to state action immunity over

the objection of the state itself. This was error.

1. The court of appeals refused to engage in any

inquiry to determine whether the challenged conduct

could fairly be attributed to the state as sovereign. Erring on the side of “recognizing immunity . . . is inconsistent with the principle that ‘state-action immunity

is disfavored.’ ” Phoebe Putney, 568 U.S. at 235–36.

That is doubly true here, where the court found immunity over the objection of the state itself.

12

2. The Court should formally adopt the market

participant exception to state action immunity, a question it previewed in Omni and expressly left open in

Phoebe Putney, which has resulted in a split of authority among the courts of appeal.

3. The court of appeals erred in applying Hallie’s

“narrow exception” to active supervision based on “nomenclature alone.” N.C. Dental, 135 S. Ct. at 1114. Active supervision is “essential” any time “a nonsovereign

actor has ‘an incentive to pursue [its] own self-interest

under the guise of implementing state policies[,]’ ” id.

at 1113 (citations omitted) because the “first requirement—clear articulation—rarely will achieve that goal

by itself.” Id. at 1112.

I.

THE NINTH CIRCUIT ERRED IN TREATING

CALIFORNIA’S EMS POLICY AS CLEARLY

ARTICULATING A STATE POLICY TO DISPLACE COMPETITION

In holding that the California legislature clearly

articulated a state policy to displace competition, the

Ninth Circuit relied exclusively on a grant of permission to play in the market for which the respondents

were not even eligible. It misapplied this Court’s precedents to reach this result. First, it found that a 35year-old transitional statute allowing some local government entities to continue to operate their EMS programs provided authorization for municipalities to

exclude other EMS providers that compete with their

programs, contrary to this Court’s holding in Phoebe

13

Putney. Second, it refused to determine whether the respondents met the prerequisites of that statute, citing

Hallie for the proposition that it is up to state courts to

determine whether the respondents met the eligibility

requirements of the statute. If the policy is so unclear

as to require state court intervention, it cannot be a

clearly articulated policy to displace competition. The

Ninth Circuit’s decision brushes state and federal interests aside in deference to the proprietary interests

of nonsovereign actors.

The state action immunity is the exception, not

the rule. It overcomes “the fundamental national values of free enterprise and economic competition . . .

embodied in the federal antitrust laws” only where

they would otherwise “bar States from imposing market restraints ‘as an act of government.’ ” Phoebe Putney, 568 U.S. at 225 (quoting Parker, 317 U.S. at 352).

This Court applies exacting scrutiny to ensure that the

challenged conduct can fairly be attributed to the state

itself, as sovereign.

Municipalities are not sovereign, and thus cannot

invoke immunity unless they meet their burden to

show they were acting pursuant to a “clearly articulated and affirmatively expressed state policy” to displace competition. Midcal, 445 U.S. at 105; see also

Goldfarb v. Virginia State Bar, 421 U.S. 773, 791 (1975)

(“It is not enough that . . . anticompetitive conduct is

‘prompted’ by state action; rather, anticompetitive activities must be compelled by direction of the State acting as a sovereign.”). Clear articulation is satisfied only

where the proponent of immunity shows “that it has

14

been delegated authority to act or regulate anticompetitively” and that the particular challenged conduct is

the “inherent, logical, or ordinary result of the exercise

of authority delegated by the state legislature.” Phoebe

Putney, 548 U.S. at 228–29.

In Phoebe Putney, the Court reversed a decision

granting immunity to a local government hospital authority that was authorized by state law to participate

in the market and, more specifically, to acquire hospitals. Id. at 220–21. It rejected arguments that where

there is “any doubt about whether the clear-articulation test is satisfied . . . federal courts should err on

the side of recognizing immunity to avoid improper

interference with state policy choices” because the

state action immunity is disfavored. Id. at 235–36.

“[F]ederalism and state sovereignty are poorly served

by a rule of construction that would allow ‘essential national policies’ embodied in the antitrust laws to be displaced by state delegations of authority ‘intended to

achieve more limited ends.’ ” Id. at 236 (quoting Ticor

Title, 504 U.S. at 636).

In accepting clear articulation here, the court of

appeals erred in two respects. First, it found that Section 1797.201 delegated authority to act anticompetitively where it only provided permission to play in the

market. Second, it found that Section 1797.201 authorized all municipal respondents to act anticompetitively

where the statute clearly “ ‘intended to achieve more

limited ends.’ ” Id. (quoting Ticor Title, 504 U.S. at 636).

15

A. The State Policy Merely Grants Permission to Play in the Market

Like the hospital authority’s general statutory authority to play in the market, Section 1797.201 does

not contemplate the displacement of competition.

There is nothing inherently anticompetitive about operating or contracting for an ambulance service, or

even administering prehospital EMS. Monopolization

of the market is thus neither the “inherent, logical, or

ordinary result” of the provision. Phoebe Putney, 548

U.S. at 229.

Nevertheless, the court of appeals found, over the

strenuous objection of the state itself, that Section

1797.201’s authorization to “maintain control of the

[emergency medical] services they operated or contracted for” and “make decisions as to the appropriate

manner of providing those services” was sufficient authority to displace competition. App. 2. But the California Supreme Court has interpreted the statute and

determined that Section 1797.201 does not allow “cities or fire districts . . . to create their own exclusive operating areas.” San Bernardino, 15 Cal. 4th at 932; see

also EMSA Br. at 18 (“[N]othing in the statutory

scheme supports the conclusion that Section 201 cities

or fire districts can self-designate as the ‘sole deciders’

of EMS services.”).

“A state law or regulatory scheme cannot be the

basis for antitrust immunity unless, first, the State has

articulated a clear policy to allow the anticompetitive

conduct. . . .” Ticor Title, 504 U.S. at 631. Immunity is

16

only “conferred out of respect for ongoing regulation by

the State.” See id. at 633. In other words, the question

is “whether an anticompetitive policy is indeed the policy of a State.” N.C. Dental, 135 S. Ct. at 1112.

The EMS Act articulated a policy that requires—

in fact, relies on—competition except in certain limited

circumstances. The state has consistently reaffirmed,

through its ongoing regulation, that its policy with respect to the geographic markets in question is one requiring competition. Even if it authorizes some

anticompetitive conduct in some markets by certain eligible entities, that authorization is not imputed to

other anticompetitive conduct in other markets by

other entities. Phoebe Putney, 568 U.S. at 235 (“[R]egulation of an industry, and even the authorization of

discrete forms of anticompetitive conduct pursuant to

a regulatory structure, does not establish that the

State has affirmatively contemplated other forms of

anticompetitive conduct that are only tangentially related.”).

B. The State Policy Did Not Apply to Respondents by Its Terms

The court of appeals ended its inquiry without

looking to whether the authorization extended to the

municipal respondents and the particular restraints

at issue. In the court of appeals’ view, it was enough

that the statute allowed some municipalities to administer prehospital EMS for any of California’s nearly

500 municipalities to invoke the state action immunity

17

regardless of whether they meet the criteria established under the statute or EMSA’s ongoing regulation

because that “is a question for California courts—not

us.” App. 2 n.2. That is clearly not what the state intended when it replaced the municipal-based system

with a statewide scheme that relies upon competition.

To the contrary, the question of whether the state

action immunity applies is exclusively reserved for the

federal courts. If a state policy is so unclear that a

question requires resolution in state court, it cannot

serve as a clearly articulated policy to displace competition. Moreover, the complaint pleaded facts showing

that none of the municipal respondents could have

been eligible under Section 1797.201 (App. 22–27),

which the court was required to accept as true in deciding a motion to dismiss—that is, in deciding

whether the respondents were among those the state

intended to displace competition. See Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 556 (2007) (factual allegations

must be accepted as true on a motion to dismiss).

The state already answered the question with respect to each municipal respondent: First, EMSA created a process through which municipalities and fire

districts can seek an eligibility determination, and

none of the municipal respondents have been deemed

eligible. Second, each year it has also exercised its authority to designate each zone in the state as exclusive

or non-exclusive, and it has determined that each such

zone is non-exclusive subject to open competition under the standards set forth in the EMS Act. See EMSA

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Br. at 15–16 (“Consistent with AmeriCare’s allegations, the State Authority has determined that all

twelve [municipal respondents] are to be operating

‘non-exclusive zones.’ ”). By ignoring these facts, the

court of appeals served neither federalism nor state

sovereignty. Phoebe Putney, 568 U.S. at 236 (“[F]ederalism and state sovereignty are poorly served by a rule

of construction that would allow ‘essential national

policies’ embodied in the antitrust laws to be displaced

by state delegations of authority ‘intended to achieve

more limited ends.’ ” (citations omitted)); Ticor Title,

504 U.S. at 633 (“Immunity is conferred out of respect

for ongoing regulation by the State. . . .”).

C. The Decision Imperils the Fundamental

Values the State Action Immunity Is

Designed to Protect

The court of appeals’ decision turns the fundamental principles underlying the state action immunity on

their head. It fails to accommodate either of the two

values it was tasked to balance—supremacy of the antitrust laws and a state’s interest in its regulatory policy—and instead defers to the private interests of

nonsovereign actors who flouted state policy for their

own self-interest.

The decision harms the state interest by ignoring

what the California legislature intended when it

passed the EMS Act—it returns the state policy to the

patchwork city-by-city approach to EMS coverage. This

is not conjecture: EMSA and the California Attorney

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General’s Office cautioned the court of appeals that if

state action immunity is granted to the respondents, it

would “throw the carefully crafted EMS statutory

scheme into disorder.” EMSA Br. at 21.

If left uncorrected, the court of appeals’ decision

will also encourage other nonsovereign municipal actors to engage in anticompetitive conduct that diverges

from the state’s intent—which is exactly what the

state action immunity test is supposed to prevent. N.C.

Dental, 135 S. Ct. at 1112 (purpose is to “determin[e]

whether anticompetitive policies and conduct are indeed the action of a State in its sovereign capacity”).

The decision is at odds with the longstanding policy of robust antitrust enforcement and the values

underpinning the state action immunity. The “public

interest in vigilant enforcement of the antitrust laws”

is fundamentally important to the national economy.

See Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 329

(1955). The state action immunity, on the other hand

is “disfavored.” Phoebe Putney, 568 U.S. at 225. The

court of appeals’ decision creates a presumption of

municipal immunity in cases where state policy is

anything but plain and clear and will serve to disincentivize private litigants—who are often small businesses—from suing to enforce antitrust violations as

Congress intended. Minn. Mining & Mfg. Co. v. N.J.

Wood Finishing Co., 381 U.S. 311, 318 (1965) (explaining congressional policy that “private antitrust litigation is one of the surest weapons for effective

enforcement of the antitrust laws”). This will only further embolden municipal actors like the respondents,

20

who flouted state law and profited at the expense

of the statewide EMS system and the patients it

serves.

II.

THE COURT SHOULD ADOPT THE MARKET PARTICIPANT EXCEPTION TO STATE

ACTION IMMUNITY

This case presents a clean opportunity for the

Court to decide whether it should adopt the market

participant exception to state action immunity that it

left open in Phoebe Putney.

This Court’s holdings have consistently suggested

that the state action immunity does not apply to market conduct. In City of Lafayette v. Louisiana Power &

Light Co., 435 U.S. 389, 391 (1978), the Court rejected

an argument that the antitrust laws are intended to

protect the public from only private abuses and not local government activity. “Every business enterprise

public or private, operates its business in furtherance

of its own goals.” Id. at 403.

In Jefferson County Pharmaceutical Association,

Inc. v. Abbott Laboratories, 460 U.S. 150, 156–57 (1983),

the Court again applied this reasoning in rejecting an

argument that “state purchases for the purpose of competing with private enterprise” were exempt from the

Sherman Act. In separating commercial activity from

traditional government functions, the Court explained

it “is too late in the day to suggest that Congress cannot regulate States under its Commerce Clause powers

when they are engaged in proprietary activities.” Id. at

21

154 n.6. In Omni, the Court reaffirmed that the federal

antitrust laws apply “where the State acts not in a regulatory capacity but as a commercial participant in a

given market.” 499 U.S. at 374–75.

The Supremacy Clause demands this limitation

on the state action immunity because the Commerce

Clause assigns the power to regulate interstate commerce to Congress. See United States v. State of California, 297 U.S. 175, 184 (1936) (“The sovereign power

of the states is necessarily diminished to the extent of

the grants of power to the federal government in the

Constitution.”), overruled on other grounds by Garcia

v. San Antonio Metro. Transit Auth., 469 U.S. 528, 530

(1985).

Nevertheless, the Court has yet to formally recognized a categorical market participant exception to the

state action immunity. Phoebe Putney, 568 U.S. at 226

n.4 (declining to consider market participant exception

argument because it was not raised by the parties). It

should do so now: the issue has been fully briefed and

argued by the parties to these proceedings at each level

of review, and a number of circuits have had an opportunity to address the matter: the Third, Fourth, Sixth

and Federal Circuits have recognized or favorably endorsed a market participant exception. See Air Evac

EMS, Inc. v. Cheatham, 910 F.3d 751, 754 (4th Cir.

2018) (endorsing market participant exception in federal preemption analysis); VIBO Corp. v. Conway, 669

F.3d 675, 687 (6th Cir. 2012) (state acting as “commercial participant in a given market” is not protected);

A.D. Bedell Wholesale Co. v. Philip Morris Inc., 263 F.3d

22

239, 265 n.55 (3d Cir. 2001) (recognizing market participant exception but declining to apply it because

state was not acting as buyer or seller); Genentech, Inc.

v. Eli Lilly & Co., 998 F.2d 931, 948 (Fed. Cir. 1993)

(Parker extends only to “sovereign capacity” and not

market participant conduct), abrogated on other

grounds by Wilton v. Seven Falls Co., 515 U.S. 277, 289

(1995). The Second and Eighth Circuits have decided

against it. See, e.g., Paragould Cablevision, Inc. v. City

of Paragould, 930 F.2d 1310, 1312–13 (8th Cir. 1991)

(“[T]he market participant exception is merely a suggestion and is not a rule of law.”); Automated Salvage

Transp., Inc. v. Wheelabrator Envtl. Sys., Inc., 155 F.3d

59, 81 (2d Cir. 1998) (concurring with Eighth Circuit).

The Ninth Circuit here expressly “decline[d] to adopt

. . . a market-participant exception” to the state action

immunity. App. 2 n.1.

The municipal respondents act as service providers (joint service providers with a private partner in

some cases) rather than as regulators. (ER89 ¶ 35;

ER166 ¶ 31; ER189 ¶ 34; ER219 ¶ 35; ER248 ¶ 34;

ER276 ¶ 35; ER304 ¶ 35; ER331 ¶ 31; ER359 ¶ 35; ER

387 ¶ 36.) [C.A. Dkts. 51-2, 51-3]. They have no regulatory role under California’s EMS scheme, and thus

there is no regulatory interest that would otherwise

implicate the state action immunity. As market participants, they are inherently self-interested such that

their “private anticompetitive motives [blend] in a way

difficult even for [them] to discern.” N.C. Dental, 135

S. Ct. at 1111. Under the functional analysis that features in this Court’s recent state action immunity

23

jurisprudence (and in its antitrust jurisprudence more

generally), their conduct should not be so lightly attributed to that of the state, as sovereign.

Indeed, the Court’s development of the doctrine

never contemplated that states and municipalities

could use state action immunity as a shield for their

anticompetitive conduct when they are active market

participants. Jarod M. Bona & Luke A. Wake, The Market Participant Exception to State-Action Immunity

from Antitrust Liability, 23 Comp. J. Anti. & Unfair

Comp. L. Sec. St. B. Cal. 156, 163 (2014). Rather, the

doctrine is intended to discourage market participants

from acting in their own interests or freely exercising

their discretion. Ticor Title, 504 U.S. at 634 (“[W]here

a private party is engaging in anticompetitive activity,

there is a real danger that he is acting to further his

own interests, rather than the governmental interests

of the State.” (citations and internal quotations omitted)).

Immunizing market participant conduct from antitrust scrutiny undermines federal antitrust policy.

State and local entities with a free pass to violate the

antitrust laws have a financial incentive to participate

in commercial markets in anticompetitive ways—and

that conduct is often very profitable. See Bona & Wake,

supra at 163. Indeed, profit is exactly why California

municipalities have become commercial participants

in the market for prehospital EMS services. See Bryan

K. Toma, The Decline of Emergency Medical Services

Coordination in California: Why Cities are at War

with Counties over Illusory Ambulance Monopolies, 23

24

Sw. U. L. Rev. 285, 289 (1994) (“Unfortunately, this

revenue-enhancing agenda pits cities and fire districts

in direct competition with private ambulance companies.”).

Applying the market participant exception under

these circumstances would ensure that a limited and

disfavored doctrine remains true to its purpose of balancing Congress’ plenary power to regulate commerce

with the states’ residual power.

III. HALLIE’S “NARROW EXCEPTION” TO ACTIVE SUPERVISION SHOULD NOT APPLY

TO ACTIVE MARKET PARTICIPANTS

This Court’s jurisprudence has increasingly applied a functional approach to state action immunity

such that quasi-public market participants are subject

to antitrust scrutiny unless they can prove the state,

as sovereign, adopted and supervised their anticompetitive conduct. N.C. Dental, 135 S. Ct. at 1114. Formalistic designations of an entity as “public” no longer

matter. Id.; see also American Needle, Inc. v. Nat’l Football League, 560 U.S. 183, 193 (2010) (rejecting formalistic approach because “the [Sherman] Act is aimed at

substance rather than form.” (citation and internal

quotations omitted)); Eastman Kodak Co. v. Image

Tech. Servs., Inc., 504 U.S. 451, 466–67 (1992) (“Legal

presumptions that rest on formalistic distinctions rather than actual market realities are generally disfavored in antitrust law.”).

25

Active supervision “is an essential condition of

state-action immunity when a nonsovereign actor has

‘an incentive to pursue [its] own self-interest under the

guise of implementing state policies[,]’ ” see N.C. Dental, 135 S. Ct. at 1113 (citation omitted), because the

“first requirement—clear articulation—rarely will

achieve that goal by itself.” Id. at 1112. Active supervision avoids “resulting asymmetry . . . by requiring the

State to review and approve interstitial policies made

by the entity claiming immunity.” Id. No longer can a

municipality rely on “nomenclature alone” to qualify

for Hallie’s “narrow exception.” Id. at 1113–14.

The municipal respondents’ briefing in the courts

below underscores the “high level of generality” they

exploited to rationalize and excuse their monopolization of the market: they rely on their own self-serving

interpretations of a 35-year-old transitional statute

that doesn’t apply to them to enter a commercial market and obtain monopoly rents. (ER423–424, 443–444,

456, 473, 493–494, 527–528, 552, 570–571, 605, 625–

626, 649–650, 674–675.) [C.A. Dkts. 51-4, 51-5]. EMSA

has indicated that it flatly disagrees with the city appellees’ reading of the statute, and they have avoided

all supervision by exempting themselves from the

statewide EMS planning scheme. (ER88–89 ¶ 33;

ER112 ¶ 32; ER136 ¶ 29; ER165 ¶ 29; ER189 ¶ 29;

ER218 ¶ 28; ER247 ¶ 29; ER275 ¶ 31; ER303 ¶ 30;

ER331 ¶ 28; ER358 ¶ 29; ER386 ¶ 30.) [C.A. Dkts. 512, 51-3]. The “resulting asymmetry” between their conduct and the intentions of the state’s EMS policies

26

demonstrate that active supervision should apply under these circumstances.

Regardless of whether this Court revisits Hallie’s

“narrow exception,” the court of appeals erred in holding that Care, a private, nonmunicipal party, does not

need to show active supervision by the state itself. Active supervision “is manifest” where active market participants are concerned. N.C. Dental, 135 S. Ct. at 1114.

Care cannot possibly qualify for the “narrow exception”

from active supervision under any set of circumstances—even if this Court determines the cities themselves qualify for that exception. Since the state itself

is not supervising Care, Care cannot invoke state action immunity.

------------------------------------------------------------------

CONCLUSION

For the foregoing reasons, this Court should grant

the petition.

Respectfully submitted,

JAROD M. BONA

Counsel of Record

AARON R. GOTT

BONA LAW PC

4275 Executive Square,

Suite 200

La Jolla, CA 92037

(858) 964-4589

Counsel for Petitioner