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

App. 1

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AMERICARE MEDSERVICES, No. 17-55565.

INC.,

D.C. No. 8:16-cvPlaintiff-Appellant,

01703-JLS-AFM

v.

MEMORANDUM*

CITY OF ANAHEIM; et al.,

(Filed Aug. 27, 2018)

Defendants-Appellees.

Appeal from the United States District Court

for the Central District of California

Josephine L. Staton, District Judge, Presiding

Argued and Submitted August 7, 2018

Pasadena, California

Before: HAWKINS and CHRISTEN, Circuit Judges,

and HOYT,** District Judge.

AmeriCare MedServices, Inc. appeals the dismissal of its antitrust and declaratory-relief claims. We

have jurisdiction under 28 U.S.C. § 1291. Reviewing de

novo, Close v. Sotheby’s, Inc., 894 F.3d 1061, 1068 n.5

(9th Cir. 2018) (citing City of Los Angeles v. AECOM

* This disposition is not appropriate for publication and is

not precedent except as provided by Ninth Circuit Rule 36-3.

** The Honorable Kenneth M. Hoyt, United States District

Judge for the Southern District of Texas, sitting by designation.

App. 2

Servs., Inc., 854 F.3d 1149, 1153 (9th Cir. 2017)), we affirm.

Dismissal was appropriate because appellees are

immune from antitrust liability.1 See Parker v. Brown,

317 U.S. 341, 350–51 (1943). Municipalities enjoy

state-action antitrust immunity when acting “pursuant to a ‘clearly articulated and affirmatively expressed’ state policy to displace competition.’ ” FTC v.

Phoebe Putney Health Sys., Inc., 568 U.S. 216, 226

(2013) (quoting Community Commc’ns Co. v. Boulder,

455 U.S. 40, 52 (1982)). The city appellees did just that;

California law specifically authorizes cities “to maintain control of the [emergency medical] services they

operated or contracted for in June, 1980” and “make

decisions as to the appropriate manner of providing

those services.”2 County of San Bernardino v. City of

1

We decline to adopt either an active-state-supervision requirement or a market-participant exception. See Town of Hallie

v. City of Eau Claire, 471 U.S. 34, 47 (1985) (“[A]ctive state supervision is not a prerequisite to exemption from the antitrust laws

where the actor is a municipality rather than a private party.”);

Shell Oil Co. v. City of Santa Monica, 830 F.2d 1052, 1058 n.5 (9th

Cir. 1987) (suggesting that a government entity is not a market

participant when performing “integral operations in areas of traditional governmental functions” (quoting Reeves, Inc. v. Stake,

447 U.S. 429, 438 n.10 (1980))).

2

Whether § 1797.201 properly applies to each city appellee

is a question for California courts—not us. See City of Columbia

v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 372 (1991) (applying “a concept of authority broader than what is applied to determine the legality of the municipality’s action under state law”);

Kern-Tulare Water Dist. v. City of Bakersfield, 828 F.2d 514, 522

(9th Cir. 1987) (“Where ordinary errors or abuses in exercise of

state law . . . serve[ ] to strip the city of state authorization,

App. 3

San Bernardino, 938 P.2d 876, 890 (Cal. 1997); see Cal.

Health & Safety Code § 1797.201 (preserving the pre1980 status quo by allowing cities to continue “providing [emergency medical] services” until reaching an

agreement with the county). Further, since many cities

had entered into exclusive agreements prior to 1980,

an “anticompetitive effect was the ‘foreseeable result[.]’ ”3 Phoebe Putney, 568 U.S. at 227 (quoting Eau

Claire, 471 U.S. at 42). And because the city appellees

are immune from antitrust liability, CARE Ambulance

Service, Inc. (“CARE”) is as well. See Charley’s Taxi Radio Dispatch Corp. v. SIDA of Hawaii, Inc., 810 F.2d

869, 878 (9th Cir. 1987) (immunizing “state action, not

merely state actors”).

CARE is also immune under the Noerr–

Pennington4 doctrine, which shields private actors

“from antitrust liability for petitioning the government, even when the private actors’ motives are anticompetitive.” Sanders v. Brown, 504 F.3d 903, 912 (9th

Cir. 2007). CARE’s efforts to obtain or maintain

aggrieved parties should not forego customary state corrective

processes . . . in favor of federal antitrust remedies.” (citations

omitted)).

3

See also Cal. Health & Safety Code § 1797.6 (providing “for

state action immunity under federal antitrust laws for activities

undertaken by local governmental entities in carrying out their

prescribed functions”); Mercy-Peninsula Ambulance, Inc. v. County

of San Mateo, 791 F.2d 755, 758 (9th Cir. 1986) (concluding prePhoebe Putney that California’s Emergency Medical Services Act

“has a foreseeably anti-competitive effect”).

4

See United Mine Workers of Am. v. Pennington, 381 U.S. 657

(1965); E. R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365

U.S. 127 (1961).

App. 4

exclusive contracts with the city appellees falls

squarely within the scope of Noerr–Pennington. See id.

(“Noerr–Pennington immunity protects private actors

when they . . . enter contracts with the government.”

(citations omitted)).5

AFFIRMED.

5

California Emergency Medical Services Authority’s (Doc.

53) and Emergency Medical Services Administrators Association

of California’s (Doc. 54) motions to become amicus curiae are

GRANTED. CARE’s motion to take judicial notice (Doc. 77) is

DENIED.

App. 5

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES – GENERAL

JS-6

Case No. 8:16-cv-1703-JLSDate: April 21, 2017

AFMx (LEAD CASE)

Title: AmeriCare MedServices, Inc. v. City of Anaheim,

et al.

Present:

Honorable JOSEPHINE L. STATON,

UNITED STATES DISTRICT JUDGE

Terry Guerrero

Deputy Clerk

N/A

Court Reporter

ATTORNEYS PRESENT

FOR PLAINTIFF:

ATTORNEYS PRESENT

FOR DEFENDANTS:

Not Present

Not Present

PROCEEDINGS: (IN CHAMBERS) ORDER

GRANTING DEFENDANT’S

MOTION TO DISMISS (Doc.

32)

Before the Court is a Motion to Dismiss filed by

Defendant CARE Ambulance Service, Inc. (Mot., Doc.

32.) Plaintiff AmeriCare MedServices, Inc. opposed,

and CARE replied.1 (Opp., Doc. 36; Reply, Doc. 44.)

Having taken the matter under submission and

1

The Court DENIES AmeriCare’s Motion to Strike CARE’s

arguments raised in CARE’s Reply. (MTS, Doc. 48.) Upon reviewing CARE’s Reply, the Court finds that the arguments raised are

responsive to points raised in AmeriCare’s Opposition and are

proper subjects of a reply brief.

App. 6

considered the parties’ briefs, the Court GRANTS

CARE’s Motion.

I.

BACKGROUND

This action arises out of claims for relief under the

Sherman Act by AmeriCare against CARE and twelve

Orange County cities. (Anaheim FAC 7144-91, Doc.

19.)2 AmeriCare and CARE are private companies that

provide emergency ambulance services. (Id. ¶¶ 5, 7,

26–28, Doc. 19.) AmeriCare’s Sherman Act claims

against CARE are based on exclusive contracts between CARE and eight Orange County cities for

CARE’s provision of emergency ambulance services

within those cities’ geographic areas. (Id. ¶ 28; La Habra FAC ¶ 27; Fullerton FAC ¶ 27; Fountain Valley

FAC ¶ 27; Costa Mesa FAC ¶ 29; Garden Grove FAC

¶ 28; Buena Park FAC ¶ 27; San Clemente FAC ¶ 28.)

The details of AmeriCare’s factual allegations regarding how CARE entered into these exclusive contracts

with these eight cities, and AmeriCare’s efforts to be

placed into the emergency ambulance rotation for

those cities, are set forth in the Court’s previous order

2

(See also La Habra FAC, 8:16-cv-01759-JLS-AFM, Doc. 19;

Fullerton FAC, 8:16-cv-01765-JLS-AFM, Doc. 19; Fountain Valley FAC, 8:16-cv-01795-JLS-AFM, Doc. 16; Costa Mesa FAC,

8:16-cv-01804-JLS-AFM, Doc. 16; Garden Grove FAC, 8:16-cv01806-JLS-AFM, Doc. 18; Buena Park FAC, 8:16-cv-01832-JLSAFM, Doc. 18; San Clemente FAC, 8:16-cv-01852-JLS-AFM, Doc.

17; Huntington Beach FAC, 8:16-cv-01596-JLS-AFM, Doc. 14; Orange FAC, 8:16-cv-01680-JLS-AFM, Doc. 18; Newport Beach

FAC, 8:16-cv-01724-JLS-AFM, Doc. 14; Laguna Beach FAC, 8:16cv-01817-JLS-AFM, Doc. 15.)

App. 7

granting the City Defendants’ motions to dismiss. (See

MTD Order at 2–6, Doc. 47.)

The Court granted the City Defendants’ motions

to dismiss on the ground that Parker immunity protects the City Defendants from AmeriCare’s Sherman

Act claims. (Id. at 20.) CARE now moves to dismiss

AmeriCare’s Sherman Act claims on similar grounds—

Parker immunity and the Noerr-Pennington doctrine.3

(Mot., Doc. 32.)

II.

LEGAL STANDARD

In deciding a motion to dismiss under Rule

12(b)(6), courts must accept as true all “well-pleaded

factual allegations” in a complaint. Ashcroft v. Iqbal,

556 U.S. 662, 679 (2009). Furthermore, courts must

draw all reasonable inferences in the light most favorable to the non-moving party. See Daniels-Hall v. Nat’l

Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). However,

“courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’ ” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (quoting Papasan v.

Allain, 478 U.S. 265, 286 (1986)). The complaint must

contain “sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’ ”

3

AmeriCare’s claims for declaration of rights and declaratory judgment are pleaded against only the City Defendants and

not against CARE. (See Anaheim FAC ¶¶ 92–107; La Habra FAC

¶¶ 89–104; Fullerton FAC ¶¶ 90–105; Fountain Valley FAC

¶¶ 89–104; Costa Mesa FAC ¶¶ 90–105; Garden Grove FAC

¶¶ 90-105; Buena Park FAC ¶¶ 90–105; San Clemente FAC

¶¶ 91–106.)

App. 8

Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at

570). “A claim has facial plausibility when the pleaded

factual content allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).

III. DISCUSSION

CARE raises several arguments in favor of dismissal of AmeriCare’s Sherman Act claims. (See Mem.,

Doc. 32-1.) Because the Court finds that Parker immunity and the Noerr-Pennington doctrine completely

foreclose AmeriCare’s claims against CARE, it is unnecessary to address CARE’s other arguments for dismissal.

A. Parker Immunity

Parker immunity provides that the Sherman Act

does not apply to the actions of a state or the actions of

a state’s officers or agents as directed by the state’s

legislature. (MTD Order at 11 (citing Parker v. Brown,

317 U.S. 341, 350–51 (1943)).) In dismissing AmeriCare’s claims against the City Defendants, the Court

found that the City Defendants’ actions fell within the

scope of Parker immunity. (Id. at 20.) However, CARE

is neither a state agency nor a state officer or agent.

Rather, it is a private company that provides emergency medical services. (See Anaheim FAC ¶ 7.) Nonetheless, where a private company’s monopoly arises

from state authorization of anticompetitive conduct,

Parker immunity extends to the private company as

App. 9

well. In Charley’s Taxi Radio Dispatch Corp. v. SIDA of

Hawaii, Inc., a taxi fleet operator in Hawaii sued a

competing taxi company and Hawaii’s Department of

Transportation on the theory that their exclusive contract restrained trade and unlawfully monopolized the

airport and hotel taxi market in violation of the Sherman Act. 810 F.2d 869, 872 (9th Cir. 1987). After holding that the Department of Transportation had Parker

immunity to grant the defendant taxi company an exclusive franchise, the Ninth Circuit held that the taxi

company also enjoyed Parker immunity. Id. at 878. “To

hold otherwise, would allow the Parker doctrine to be

circumvented by artful pleading: ‘A plaintiff could frustrate any [Parker protected state plan] merely by filing

suit against the regulated private parties, rather than

the state officials who implement the plan.’ ” Id. (quoting Southern Motor Carriers Rate Conference, Inc. v.

U.S., 471 U.S. 48, 56 (1985)).

Consequently, Parker immunity extends to CARE

in this action. Like the private taxi company in Charley’s Taxi, CARE was granted exclusive contracts with

the City Defendants pursuant to the City Defendants’

legislative authorization to engage in anticompetitive

conduct. In light of this Court’s holding that the City

Defendants have Parker immunity, to not extend that

immunity to CARE would frustrate the purposes of

Parker immunity.

AmeriCare’s primary argument against the application of Parker immunity mirrors its opposition to

the City Defendants’ motions to dismiss. Namely,

AmeriCare argues that Charley’s Taxi and the other

App. 10

out-of-circuit cases cited by CARE are no longer good

law after FTC v. Phoebe Putney Health System, Inc.,

133 S. Ct. 1003 (2013), and North Carolina State Board

of Dental Examiners v. FTC, 135 S. Ct. 1101 (2015).

(Opp. at 19 n.3, Doc. 36.) However, these arguments address the proper standard for determining whether a

state policy has been “clearly and affirmatively expressed” and how that standard should be applied. (See

Opp. at 16–19.) Here, the Court has already determined that there is a clearly and affirmatively expressed state policy. (MTD Order at 11–16.)

AmeriCare also makes arguments regarding the

scope of Parker immunity. However, its arguments fail

to directly address why Parker immunity would not apply to a private party to a contract when the other contracting party is a state actor shielded by Parker

immunity. Instead, AmeriCare argues broadly of the

limited scope of Parker immunity; how it covers only

state actors acting in a regulatory capacity, how market participants are not immunized, and how CARE

lacks the active state supervision necessary to enjoy

Parker immunity. (See Opp. at 20-28.) With respect to

the scope of Parker immunity and the existence of any

market participant exception, the Court already addressed those arguments in its earlier MTD order.

(MTD Order at 16–20.) As for the active state supervision requirement, that requirement concerns situations where the state policy empowers private parties

to exercise anti-competitive power over the very markets in which they participate. See NC Dental, 135

S. Ct. at 1107 (concerning a state regulatory board, a

App. 11

majority of whose members were engaged in the active

practice of the profession it regulated); Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S.

97, 99 (1980) (concerning price schedules set by private

wine producers, wholesalers, and rectifiers). Here, it is

the City Defendants who are empowered to act anticompetitively under the California EMS Act, and

CARE’s monopoly is simply a byproduct of the City Defendants’ actions pursuant to this power. In this situation, the active state supervision requirement does not

apply to CARE. See Charley’s Taxi, 810 F.2d at 878

(finding private company shielded by Parker immunity

without additional analysis of whether there was sufficient state supervision).

Therefore, Parker immunity extends to CARE

with respect to its exclusive contracts with the City Defendants and CARE’s actions pursuant to those contracts.

B. Noerr-Pennington Doctrine

AmeriCare also alleges in its FACs that CARE

makes campaign contributions to members of city government “with the mutual understanding that the

contributions secure CARE’s continued role” as an exclusive ambulance service provider. (Anaheim FAC

¶ 35; La Habra FAC ¶ 33; Fullerton FAC ¶ 34; Fountain Valley FAC ¶ 33; Costa Mesa FAC ¶ 34; Garden

Grove FAC ¶ 34; Buena Park FAC ¶ 34; San Clemente

FAC ¶ 35.) To the extent AmeriCare alleges that this,

or any other alleged action by CARE to secure an

App. 12

exclusive contract, violates the Sherman Act, such

claims are barred by the Noerr-Pennington doctrine.

The Noerr-Pennington doctrine protects the right

of private entities to petition the government. See

Eastern R.R. Presidents Conference v. Noerr Motor

Freight, 365 U.S. 127, 145 (1961); United Mine Workers

v. Pennington, 381 U.S. 657, 670 (1965) (“Joint efforts

to influence public officials do not violate the antitrust

laws even though intended to eliminate competition.”).

As Parker immunity stands for the proposition that the

Sherman Act does not restrain a state actor from acting within its governmental capacity, the NoerrPennington doctrine stands for the proposition that the

Sherman Act “do[es] not regulate the conduct of private individuals in seeking anticompetitive action

from the government.” City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 379–80 (1991). The

Noerr-Pennington doctrine is broad; it “protects petitions to all departments of the government.” Sanders

v. Brown, 504 F.3d 903, 912 (9th Cir. 2007) (citations

omitted). This includes protecting private actors when

they enter into contracts with the government. Id.

Moreover, “Noerr-Pennington immunity protects a private party from liability not only for the petition, but

also for any injuries that result ‘directly’ from valid

government action taken on the petitioner’s behalf.” Id.

at 914 (citing Sessions Tank Liners, Inc. v. Joor Mfg.,

Inc., 17 F.3d 295, 299 (9th Cir. 1994)).

There is a “sham” exception to Noerr-Pennington

that applies when the petitioning activity “is actually

nothing more than an attempt to interfere directly

App. 13

with the business relationships of a competitor.” Omni,

499 U.S. at 380. However, this exception is confined to

“situations in which persons use the governmental

process—as opposed to the outcome of that process—as

an anticompetitive weapon.” Id. “A classic example is

the filing of frivolous objections to the license application of a competitor, with no expectation of achieving

denial of the license but simply in order to impose expense and delay.” Id. (citing Cal. Motor Transport Co. v.

Trucking Unlimited, 404 U.S. 508 (1972)). “A ‘sham’ situation involves a defendant whose activities are ‘not

genuinely aimed at procuring favorable government

action’ at all.” Id. (quoting Allied Tube & Conduit Corp.

v. Indian Head, Inc., 486 U.S. 492, 500 n.4 (1988)). It

does not involve a situation where the defendant “genuinely seeks to achieve his governmental result, but

does so through improper means.” Id. (quoting Allied

Tube, 286 U.S. at 508 n.10). For example, denying

meaningful access to the “appropriate city administrative and legislative fora” may constitute improper or

even unlawful lobbying, but it does not necessarily constitute a “sham.” Id. at 381.

Here, any conduct by CARE to petition the City

Defendants to grant it an exclusive contract plainly

falls within the scope of Noerr-Pennington immunity.

There are no allegations that CARE did not genuinely

seek these exclusive contracts with the City Defendants, nor can AmeriCare credibly make such allegations considering that CARE currently provides

emergency ambulance services to the City Defendants

with which it has contracts. (See Anaheim FAC ¶ 31;

App. 14

La Habra FAC ¶ 27; Fullerton FAC ¶ 30; Fountain Valley FAC ¶ 27; Costa Mesa FAC ¶ 29; Garden Grove

FAC ¶ 28; Buena Park FAC ¶ 27; San Clemente FAC

¶ 28.) It also bears noting that AmeriCare’s allegations

of harm mostly arise out of CARE’s exclusive contracts

with the City Defendants rather than the process

CARE used to procure those contracts. For the sham

exception to apply, AmeriCare has to point to the ways

in which CARE has used the process of obtaining the

contracts anti-competitively (and not for the purpose

of obtaining the contracts). See Omni, 499 U.S. at 380.

AmeriCare’s only allegation on this point is that CARE

makes campaign contributions to members of city government to secure its contractual relationships with

the City Defendants. (Anaheim FAC ¶ 35; La Habra

FAC ¶ 33; Fullerton FAC ¶ 34; Fountain Valley FAC

¶ 33; Costa Mesa FAC ¶ 34; Garden Grove FAC ¶ 34;

Buena Park FAC ¶ 34; San Clemente FAC ¶ 35.) Such

actions, without more, do not fall under the sham exception to Noerr-Pennington. See Boone v. Redevelopment Agency of City of San Jose, 841 F.2d 886, 895 (9th

Cir. 1988) (“Payments to public officials, in the form of

. . . campaign contributions, is a legal and wellaccepted part of our political process.”). Moreover, to

the extent AmeriCare is suggesting that CARE is engaging in a conspiracy with the City Defendants to perpetuate a monopoly and restrain trade, no such

“conspiracy” exception to Noerr-Pennington exists.

Omni, 499 U.S. at 383. Finally, that CARE’s efforts

have resulted in exclusive contracts with eight City

Defendants does not preclude application of NoerrPennington. See Sanders, 504 F.3d at 914

App. 15

(acknowledging that “Noerr-Pennington immunity protects a private party from liability not only for the petition, but also for any injuries that result ‘directly’

from valid government action taken on the petitioner’s

behalf ”).

AmeriCare argues that Noerr-Pennington does not

apply here because CARE is engaging in market conduct rather than petitioning activity. (Opp. at 28–29.)

In support, AmeriCare cites to cases stating that the

scope of the immunity depends on the “source, context,

and nature of the anticompetitive restraint at issue,”

Allied Tube, 486 U.S. at 499, and the “degree of political

discretion exercised by the government agency,” Kottle

v. Northwest Kidney Centers, 146 F.3d 1056, 1062 (9th

Cir. 1998). (Id. at 29.) The Court finds neither case applicable here. Allied Tube addressed whether NoerrPennington applies to the efforts of a private party to

affect the product standard-setting process of a private

association, whose standards were being widely

adopted into law by state and local governments.

Allied Tube, 486 U.S. at 495. Here, CARE directly petitioned the City Defendants, not some private thirdparty that might itself affect state action.

As for Kottle, that case addressed the scope of the

sham exception in the administrative context. 146 F.3d

at 1062. In doing so, Kottle noted that the scope of the

sham exception “depends on the branch of government

involved.” 146 F.3d at 1061. The exception is “extraordinarily narrow” for the legislative branch, but it can

become broader when the executive or judicial branch

is involved. Id. The court acknowledged that the scope

App. 16

of the sham exception “has not always been clear,” but

that “the scope of immunity depends on the degree of

political discretion exercised by the government

agency.” Id. at 1062. Here there is no question as to the

scope or degree of political discretion available to the

City Defendants—they are empowered to grant exclusive contracts for the provision of emergency ambulance services under the EMS Act. (See MTD Order at

16.) Contrary to AmeriCare’s contention, a finding that

Noerr-Pennington applies in this case does not amount

to the immunization of any private party who petitions

and obtains a monopoly contract from a municipality.

It is the legislature’s grant of power to the City Defendants through the EMS Act that makes CARE’s petitioning activity valid.

Therefore, Noerr-Pennington immunity applies to

any conduct by CARE to obtain or maintain an exclusive contract with the City Defendants.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS

CARE’s Motion to Dismiss. Because the Court finds

that AmeriCare cannot amend its complaint to state a

viable Sherman Act claim, the Court DISMISSES

AmeriCare’s Sherman Act claims WITH PREJUDICE.

Initials of Preparer: tg

App. 17

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

AMERICARE

MEDSERVICES, INC.,

Lead Case No.

8:16-cv-1703-JLS-AFMx

Plaintiff,

ORDER GRANTING

DEFENDANTS’ MOTIONS TO DISMISS

vs.

CITY OF ANAHEIM and

CARE AMBULANCE

SERVICE, INC.,

(Filed Mar. 28, 2017)

Defendants.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1596JLS-AFMx

vs.

CITY OF HUNTINGTON

BEACH,

Defendant.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

vs.

CITY OF ORANGE,

Defendant.

Consolidated With

Case No. 8:16-cv-1680JLS-AFMx

App. 18

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1724JLS-AFMx

vs.

CITY OF NEWPORT

BEACH,

Defendant.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1759JLS-AFMx

vs.

CITY OF LA HABRA and

CARE AMBULANCE

SERVICE, INC.,

Defendants.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

vs.

CITY OF FULLERTON

and CARE AMBULANCE

SERVICE, INC.,

Defendants.

Consolidated With

Case No. 8:16-cv-1765JLS-AFMx

App. 19

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1795JLS-AFMx

vs.

CITY OF FOUNTAIN

VALLEY and

CARE AMBULANCE

SERVICE, INC.,

Defendants.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1804JLS-AFMx

vs.

CITY OF COSTA MESA

and CARE AMBULANCE

SERVICE, INC.,

Defendants.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

vs.

CITY OF GARDEN GROVE

and CARE AMBULANCE

SERVICE, INC.,

Defendants.

Consolidated With

Case No. 8:16-cv-1806JLS-AFMx

App. 20

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1817JLS-AFMx

vs.

CITY OF

LAGUNA BEACH,

Defendant.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1832JLS-AFMx

vs.

CITY OF BUENA PARK

and CARE AMBULANCE

SERVICE, INC.,

Defendants.

AMERICARE

MEDSERVICES, INC.,

Plaintiff,

Consolidated With

Case No. 8:16-cv-1832JLS-AFMx

vs.

CITY OF SAN CLEMENTE,

and CARE AMBULANCE

SERVICE, INC.,

Defendants.

I.

INTRODUCTION

Before the Court are twelve separate actions

filed by Plaintiff AmeriCare MedServices, Inc. against

App. 21

twelve Orange County cities.1 In each action, the City

Defendant filed a Motion to Dismiss.2 Plaintiff AmeriCare MedServices, Inc. opposed each Motion,3 and each

of the City Defendants replied. Having taken the matter under submission and considered the parties’ briefs

and oral arguments, the Court GRANTS the City Defendants’ Motions.

II.

BACKGROUND

The nature of AmeriCare’s action against each

City Defendant is substantively the same. AmeriCare

seeks relief from the City Defendants under the Sherman Act for each City’s alleged abuse of its police and

1

In some of these actions, AmeriCare also included CARE

Ambulance Service, Inc. as a Defendant.

2

The City Defendants are the Cities of Huntington Beach,

Orange, Anaheim, Newport Beach, La Habra, Fullerton, Fountain Valley, Costa Mesa, Garden Grove, Laguna Beach, Buena

Park, and San Clemente.

3

To support AmeriCare’s Oppositions, Richard A. Narad, a

professor of Health Services Administration at California State

University Chico, has filed motions for leave to file amicus briefing in this matter. An amicus brief is normally allowed only when

(1) “a party is not represented competently or is not represented

at all,” (2) “the amicus has an interest in another case that may

be affected by the holding in the present case,” or (3) “the amicus

can present unique information that can help the court in a way

that is beyond the abilities the lawyers for the parties are able to

provide.” Gabriel Techs. Corp. v. Qualcomm Inc., No. 08CV1992

AJB (MDD), 2012 WL 849167, at *4 (S.D. Cal. Mar. 13, 2012) (citing Ryan v. Commodity Futures Trading Comm’n, 125 F.3d 1062,

1063 (7th Cir. 1997)). Because the Court finds that Professor

Narad fails to establish any of these bases, the Court DENIES his

motions for leave to file amicus briefing.

App. 22

regulatory powers in designating a single provider of

emergency ambulance service in its geographical area.

Because the history of each City’s provision of emergency ambulance service is relevant to this case, the

Court relates that history for each City as alleged in

AmeriCare’s amended complaints.

Huntington Beach. Starting in the 1960s, the City

of Huntington Beach had a de facto, unwritten agreement with Seals Ambulance Services, Inc. to provide

emergency ambulance service within Huntington

Beach city limits. (Huntington Beach FAC ¶ 23, 8:16cv-1596-JLS-AFMx, Doc. 14.)4 In 1986, Huntington

Beach entered into a contract with Orange County in

which the County would provide for the licensing and

regulation of ambulance service within Huntington

Beach. (Huntington Beach FAC, Ex. A, 8:16-cv-1596JLS-AFMx, Doc. 14-1.) Seals continued to operate exclusively within Huntington Beach until 1993. (Huntington Beach FAC ¶ 27.) In 1993, Huntington Beach

ceased using its existing provider and began providing

emergency ambulance service itself. (Id. ¶ 29.)

Orange. In 1972, the City of Orange had a de facto,

unwritten agreement with Morgan Ambulance Service, Inc. to provide emergency ambulance service

4

For ease of reference, citations to the parties’ filings will

identify the City Defendant involved in the action. Thus, “Huntington Beach FAC” refers to AmeriCare’s First Amended Complaint against Huntington Beach. Here, the relevant filing can be

found on the docket for the Huntington Beach Action, Case No.

8:16-cv-1596-JLS-AFM, at ECF No. 14.

App. 23

within Orange city limits. (Orange FAC ¶ 23, 8:16-cv1680-JLS-AFM, Doc. 18.) In 1979, Orange entered into

a contract with Orange County in which the County

would provide for the licensing and regulation of ambulance and convalescent transport services within

Orange. (Orange FAC, Ex. A, 8:16-cv-1680-JLS-AFM,

Doc. 18-1.) That contract was renewed in 1980, and

then amended in 1986. (Id.) Morgan (which later became Medix Ambulance Service) continued to operate

exclusively within Orange until 1995. (Orange FAC

¶¶ 23, 27.) In 1995, Orange ceased using its existing

provider and began providing emergency ambulance

service itself. (Id. ¶ 29.)

Anaheim. As of June 1, 1980, the City of Anaheim

had a de facto, unwritten agreement with Southland

Ambulance to provide emergency ambulance service

within Anaheim city limits. (Anaheim FAC ¶ 26, 8:16cv-1703-JLS-AFM, Doc. 19.) Southland was purchased

in 1993 and subsequently passed through several corporate owners before merging with its successor, American Medical Response, Inc. (“AMR”). (Id. ¶ 27.) AMR

served as the ambulance service provider within Anaheim until 1998. (Id.) In 1998, Anaheim ceased using

its existing provider and granted an exclusive contract

to CARE Ambulance Service, Inc. (Id. ¶ 28.)

Newport Beach. From the 1960s into the early

1990s, the City of Newport Beach had a de facto, unwritten agreement with Schaefer Ambulance Service,

Inc. and Seals to provide emergency ambulance service

within Newport Beach city limits. (Newport Beach

FAC ¶ 23, 8:16-cv-1724-JLS-AFM, Doc. 14.) In 1994,

App. 24

Newport Beach entered into an exclusive contract with

MedTrans to provide emergency ambulance service in

Newport Beach. (Id. ¶ 25.) MedTrans did so until 1996,

when Newport Beach ceased their relationship and began providing emergency ambulance service itself. (Id.

¶¶ 25, 27.)

La Habra. From 1979 until 1995, the City of La

Habra had a de facto, unwritten agreement with Emergency Ambulance Service, Inc. to provide emergency

ambulance service within La Habra city limits. (La Habra FAC ¶¶ 25–26, 8:16-cv-1759-JLS-AFM, Doc. 19.) In

1995, La Habra initiated a city-operated emergency

ambulance service program which was operated by its

municipal fire department. (Id. ¶ 26.) On June 27,

2005, La Habra disbanded its fire department and

transferred its ambulance service to its municipal police department. (Id.) In 2008, La Habra granted an

exclusive contract for emergency ambulance service to

CARE. (Id. ¶ 27.)

Fullerton. As of June 1, 1980, the City of Fullerton

had a de facto, unwritten agreement with Southland to

provide emergency ambulance service within Fullerton city limits. (Fullerton FAC ¶ 26, 8:16-cv-1765-JLSAFM, Doc. 19.) Southland eventually merged with

AMR, which continued to provide emergency ambulance service in Fullerton until 2003. (Id.) In November 2003, Fullerton ceased using its existing provider

and granted an exclusive contract to CARE for the provision of emergency ambulance service. (Id. ¶ 27.)

App. 25

Fountain Valley. As of June 1, 1980, the City of

Fountain Valley had a de facto, unwritten agreement

with Seals to provide emergency ambulance service

within Fountain Valley city limits. (Fountain Valley

FAC ¶ 26, 8:16-cv-1795-JLS-AFM, Doc. 16.) In 1998,

Fountain Valley granted an exclusive contract to

CARE, which it has renewed every year since. (Id.

¶ 27.)

Costa Mesa. As of June 1, 1980, the City of Costa

Mesa had a de facto, unwritten agreement with

Schaefer and Seals to provide emergency ambulance

services within Costa Mesa city limits. (Costa Mesa

FAC ¶ 26, 8:16-cv-1804-JLS-AFM, Doc. 16.) On August

1, 1981, Costa Mesa entered into a contract with Orange County to administer emergency response ambulance service within Costa Mesa. (Id. ¶ 27.) Schaefer

and Seals continued to operate in Costa Mesa without

a contract until the mid-1990s. (Id. ¶ 28.) In October

2000, Costa Mesa awarded an exclusive agreement for

all emergency ambulance service within city limits to

Schaefer. (Id.) That agreement was extended until September 2008. (Id.) In 2008, Costa Mesa granted an exclusive contract to CARE. (Id. ¶ 29.)

Garden Grove. As of June 1, 1980, the City of Garden Grove had de facto, unwritten agreements with

several ambulance services, including Schaefer, Southland (later acquired by AMR), and Medix, to provide

emergency ambulance services within its city limits.

(Garden Grove FAC ¶ 26, 8:16-cv-1806-JLS-AFM, Doc.

18.) In 1994, CareLine, a successor to Southland, was

awarded an exclusive contract to provide emergency

App. 26

ambulance service in Garden Grove. (Id. ¶ 27.) In 2000,

Garden Grove granted an exclusive contract to CARE.

(Id. ¶ 28.)

Laguna Beach. As of June 1, 1980, the City of

Laguna Beach had de facto, unwritten agreements

with several ambulance services, including Wind Ambulance, Inc., Scudders Ambulance Service, Inc., and

Life Care Ambulance (later acquired by AMR), to provide emergency ambulance services within its city limits. (Laguna Beach FAC ¶¶ 24–25, 8:16-cv-1817-JLSAFM, Doc. 15.) In 1996, Laguna Beach granted an exclusive contract to Doctor’s Ambulance Service for

emergency ambulance service. (Id. ¶ 26.)

Buena Park. As of June 1, 1980, the City of Buena

Park did not have a written agreement in effect with

its designated private emergency ambulance service

provider. (Buena Park FAC ¶ 26, 8:16-cv-1832-JLSAFM, Doc. 18.) In 1999, Buena Park granted an exclusive contract to CARE, which it has regularly extended

to the present. (Id. ¶ 27.)

San Clemente. As of June 1, 1980, the City of San

Clemente utilized multiple private ambulance services

such as Doctor’s, Life Care, Medix, and Scudders, to

provide emergency ambulance services within its city

limits. (San Clemente FAC ¶¶ 26–27, 8:16-cv-1852JLS-AFM, Doc. 17.) At the time, San Clemente did not

have a written agreement in effect with its providers.

(Id. ¶ 26.) In 2015, San Clemente granted an exclusive

contract to CARE for the provision of emergency ambulance service. (Id. ¶ 28.)

App. 27

On February 25, 2015, AmeriCare submitted a

written request to the Orange County Emergency

Medical Services Authority (“OCEMS”) to be placed on

rotation for emergency ambulance services within the

geographical area of each of the City Defendants. (City

Defendants FACs.)5 OCEMS replied on March 18,

2015, directing AmeriCare to contact the city manager

for each City Defendant. (Id.) AmeriCare submitted its

written request to each City Defendant on March 19,

2015, explaining its correspondence with OCEMS and

requesting that either the City Defendant arrange for

AmeriCare to be placed into the emergency ambulance

service rotation or state a position that it does not have

responsibility for the administration of prehospital

emergency medical services. (Id.) The City Defendants

refused AmeriCare’s request. (Id.)

AmeriCare then filed the instant actions against

the City Defendants. AmeriCare asserts the following

claims against all City Defendants: (1) monopolization

and attempted monopolization under Section 2 of the

Sherman Act; (2) declaration of rights under Section

1060 of the California Code of Civil Procedure; and

(3) declaratory judgment under 28 U.S.C. § 2201.

(City Defendants FACs.) In nine of the twelve actions,

AmeriCare asserts the following additional claims:

(1) conspiracy to monopolize under Section 2 of the

5

To avoid citing to each FAC every time a fact common to

each action is recited by the Court, the Court cites generally to all

the FACs. Pincites are omitted because the relevant information

is not necessarily alleged on the same page or paragraph of each

FAC.

App. 28

Sherman Act; and (2) conspiracy to restrain trade under Section 1 of the Sherman Act. (Anaheim FAC

¶¶ 71–91; La Habra FAC ¶¶ 68–88; Fullerton FAC

¶¶ 69–89; Fountain Valley FAC ¶¶ 68–88; Costa Mesa

FAC ¶¶ 69–89; Garden Grove FAC ¶¶ 69–89; Laguna

Beach FAC ¶¶ 63–81; Buena Park FAC ¶¶ 69–89; San

Clemente FAC ¶¶ 70–90.)

The City Defendants now move to dismiss AmeriCare’s claims against them.

III. LEGAL STANDARD

A. Rule 12(b)(1)

“A jurisdictional challenge under Rule 12(b)(1)

may be made either on the face of the pleadings or by

presenting extrinsic evidence.” Warren v. Fox Family

Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). In

other words, a motion to dismiss for lack of subject

matter jurisdiction pursuant to Rule 12(b)(1) can be facial or factual. Safe Air for Everyone v. Meyer, 373 F.3d

1035, 1039 (9th Cir. 2004). “In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal

jurisdiction.” Id. “Dismissal for lack of subject matter

jurisdiction is appropriate if the complaint, considered

in its entirety, on its face fails to allege facts sufficient

to establish subject matter jurisdiction.” In re Dynamic

Random Access Memory (DRAM) Antitrust Litig., 546

F.3d 981, 984-985 (9th Cir. 2008). “By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke

App. 29

federal jurisdiction.” Meyer, 373 F.3d at 1039. “In resolving a factual attack on jurisdiction, the district

court may review evidence beyond the complaint without converting the motion to dismiss into a motion for

summary judgment.” Id. When a motion is made pursuant to Federal Rule of Civil Procedure 12(b)(1), the

plaintiff has the burden of proving that the court has

subject matter jurisdiction. Tosco Corp. v. Cmtys. for a

Better Env’t, 236 F.3d 495, 499 (9th Cir. 2001) overruled

on other grounds by Hertz Corp. v. Friend, 559 U.S. 77

(2010).

B. Rule 12(b)(6)

In deciding a motion to dismiss under Rule

12(b)(6), courts must accept as true all “well-pleaded

factual allegations” in a complaint. Ashcroft v. Iqbal,

556 U.S. 662, 679 (2009). Furthermore, courts must

draw all reasonable inferences in the light most favorable to the non-moving party. See Daniels-Hall v. Nat’l

Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). However,

“courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’ ” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (quoting Papasan v.

Allain, 478 U.S. 265, 286 (1986)). The complaint must

contain “sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’ ”

Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at

570). “A claim has facial plausibility when the pleaded

factual content allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).

App. 30

IV. DISCUSSION

A. Interstate Commerce Requirement

Three of the City Defendants raise the argument

that AmeriCare’s Sherman Act claims must be dismissed for lack of subject matter jurisdiction because

AmeriCare fails to plead that City Defendants’ conduct

has any effect on interstate commerce. (Orange Mem.

at 3, Doc. 24; Buena Park Mem. at 4, Doc. 24; San

Clemente Mem. at 2, Doc. 23.) Section 1 of the Sherman Act makes unlawful “[e]very contract, combination . . . or conspiracy, in restraint of trade or commerce

among the several States.” 15 U.S.C. § 1. Section 2 of

the Sherman Act makes it unlawful for any person to

“monopolize, or attempt to monopolize, or combine or

conspire . . . to monopolize any part of the trade or commerce among the several States.” 15 U.S.C. § 2. In

McLain v. Real Estate Board of New Orleans, Inc., the

Supreme Court declared that “jurisdiction may not be

invoked under [the Sherman Act] unless the relevant

aspect of interstate commerce is identified.” 444 U.S.

232, 242 (1980). Therefore, a plaintiff must allege a relationship between the defendant’s conduct and interstate commerce in the pleadings. McLain, 444 U.S. at

242. The Ninth Circuit has interpreted McLain to

mean that the relationship to interstate commerce “is

not only an element of the alleged antitrust offense,

but also a necessary jurisdictional requirement.” U.S.

v. ORS, Inc., 997 F.2d 628, 629 (9th Cir. 1993).

To meet this requirement, the Ninth Circuit initially stated that a plaintiff must identify a relevant

App. 31

aspect of interstate commerce and show “as a matter

of practical economics” that the defendant’s activities

have a “not insubstantial effect on the interstate commerce involved.” Palmer v. Roosevelt Lake Log Owners

Ass’n, Inc., 651 F.2d 1289, 1291 (9th Cir. 1981) (quoting

McLain, 444 U.S. at 246) (internal quotation marks

omitted). The Ninth Circuit has more recently stated,

however, that a plaintiff must show that the defendant’s conduct has a “substantial effect on interstate

commerce.” Freeman v. San Diego Ass’n of Realtors, 322

F.3d 1133, 1143 (9th Cir. 2003) (quoting McLain, 444

U.S. at 242) (internal quotation marks omitted); see

also Cherrone v. Florsheim Development, No. CIV. 2:1202069 WBS CKD, 2012 WL 4891743, at *2 (E.D. Cal.

Oct. 12, 2012) (applying the “substantial effect” standard).

AmeriCare’s pleadings fail under either standard.

AmeriCare pleads only that the City Defendants have

“attempted and succeeded at maintaining an illegal

monopoly in restraint of interstate commerce.” (City

Defendants FACs.) There is no allegation of a substantial effect on interstate commerce.6 (See id.) There is no

identification of any aspect of interstate commerce that

6

Even if AmeriCare included such an allegation, the bare

allegation alone would not be enough. See Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (noting that “a formulaic recitation of the elements of a cause of action will not do” and that

“[f ]actual allegations must be enough to raise a right to relief

above the speculative level”); see also McLain, 444 U.S. at 242

(“[I]t is not sufficient merely to rely on identification of a relevant

local activity and to presume an interrelationship with some unspecified aspect of interstate commerce.”)

App. 32

was affected by the City Defendants’ conduct, nor any

allegations from which the Court can reasonably infer

that, “as a matter of practical economics,” the City Defendants’ conduct had a substantial (or not insubstantial) effect on interstate commerce.

Accordingly, the Court concludes that dismissal of

AmeriCare’s Sherman Act claims against the City Defendants is appropriate on this basis. Typically, when

a deficiency in the plaintiff ’s complaint is of a type that

can be cured by amendment, the Court will dismiss the

complaint with leave to amend. See Doe v. U.S., 58 F.3d

494, 497 (“[A] district court should grant leave to

amend even if no request to amend the pleading was

made, unless it determines that the pleading could not

possibly be cured by the allegation of other facts.”)

However, for reasons stated below, the Court finds that

granting leave to amend would be futile and inappropriate because even if AmeriCare were to adequately

plead substantial effects on interstate commerce, its

Sherman Act claims would incurably fail on other

grounds.

B. Burford Abstention

Seven of the City Defendants urge the Court to invoke Burford abstention and decline to hear this case.

(Orange Mem. at 9–11; La Habra Mem. at 19–20, Doc.

28; Fullerton Mem. at 18–19, Doc. 28; Costa Mesa

Mem. at 19–20, Doc. 25; Garden Grove Mem. at 15–16,

Doc. 25; Buena Park Mem. at 15–17; San Clemente

Mem. at 10–12.) Burford abstention allows a court to

App. 33

“decline to rule on an essentially local issue arising

out of a complicated state regulatory scheme.” U.S. v.

Morros, 268 F.3d 695, 705 (9th Cir. 2001). Its purpose

is to protect complex state administrative processes

from undue federal interference. See New Orleans Public Service, Inc. v. Council of City of New Orleans, 491

U.S. 350, 362 (1989). In the Ninth Circuit, invocation

of Burford abstention requires (1) “that the state has

chosen to concentrate suits challenging the actions of

the agency involved in a particular court”; (2) “that federal issues could not be separated easily from complex

state law issues with respect to which state courts

might have special competence”; and (3) “that federal

review might disrupt state efforts to establish a coherent policy.” Id. (quoting Knudsen Corp. v. Nevada State

Dairy Comm’n, 676 F.2d 374, 377 (9th Cir. 1982)).

None of these requirements are met here. There is

no showing that California has chosen to concentrate

suits challenging municipal actions in a particular

court. At least one of the City Defendants outright admits that the first factor is not met. (Buena Park Mem.

at 15–16 (“[T]he first Morros factor is apparently absent (there seems to be no special tribunal for claims

relating to EMS exclusion). . . .”).) Nor is this a case in

which the federal issues cannot easily be separated

from state law issues or in which federal review might

disrupt state efforts to establish a coherent policy. The

mere possibility that exercise of federal jurisdiction

over federal antitrust claims might lead to a conflict

with a state court decision is not enough to require abstention. See Turf Paradise, Inc. v. Arizona Downs, 670

App. 34

F.2d 813, 820 (9th Cir. 1982). As the Supreme Court

has stated, Burford abstention represents an “extraordinary and narrow exception to the duty of the District Court to adjudicate a controversy properly before

it.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 728

(1996) (citation and internal quotation marks omitted).

Exercise of jurisdiction is particularly important here

because “federal courts have exclusive jurisdiction

over federal antitrust claims.” Turf Paradise, 670 F.2d

at 821.

The Court therefore declines to apply Burford abstention to this case.

C. Parker Immunity

All City Defendants raise the defense of Parker immunity to AmeriCare’s Sherman Act claims. (See City

Defendants Mems.) In Parker v. Brown, the Supreme

Court held that the Sherman Act does not apply to the

actions of a state or the actions of its officers or agents

as directed by its legislature. 317 U.S. 341, 350–51

(1943). However, state agencies or subdivisions of a

state are not exempt from the Sherman Act “simply

by reason of their status as such.” City of Lafayette v.

Louisiana Power & Light Co., 435 U.S. 389, 408 (1978).

Rather, Parker immunity exempts anticompetitive conduct “engaged in as an act of government by the State

as sovereign, or, by its subdivisions, pursuant to state

policy to displace competition with regulation or monopoly public service.” Id. at 413. With respect to local

governmental entities, their activities are protected by

App. 35

Parker immunity “if they are undertaken pursuant to

a ‘clearly articulated and affirmatively expressed’ state

policy to displace competition.”7 FTC v. Phoebe Putney

Health System, Inc., 133 S. Ct. 1003, 1011 (2013) (quoting Cmty. Commc’ns Co. v. Boulder, 455 U.S. 40, 52

(1982)). It is unnecessary for a state legislature to “expressly state in a statute or its legislative history that

the legislature intends for the delegated action to have

anticompetitive effects.” Id. (quoting Town of Hallie v.

Eau Claire, 471 U.S. 34, 43 (1985)). A state policy has

been clearly articulated and affirmatively expressed “if

the anticompetitive effect was the ‘foreseeable result’

of what the State authorized.” Id. (quoting Hallie, 471

U.S. at 42). An anticompetitive effect is foreseeable if it

is “the inherent, logical, or ordinary result of the exercise of authority delegated by the state legislature.” Id.

at 1012–13.

With these principles in mind, the Court analyzes

whether a state policy of anticompetitive conduct exists here.

1. California Government Code § 38794

Section 38794 of the California Government Code

states that “[t]he legislative body of a city may contract

for ambulance service to serve the residents of the city

7

“[U]nlike private parties, such entities are not subject to

the ‘active state supervision requirement’ because they have less

of an incentive to pursue their own self-interest under the guise

of implementing state policies.” FTC v. Phoebe Putney Health System, Inc., 133 S. Ct. 1003, 1011 (2013) (quoting Town of Hallie v.

Eau Claire, 471 U.S. 34, 46–47 (1985)).

App. 36

as convenience requires.” Cal. Gov’t Code § 38794.

Over thirty years ago, the Ninth Circuit relied on Section 38794 to hold that cities providing or contracting

for ambulance service were entitled to Parker immunity. In Springs Ambulance Service, Inc. v. City of Rancho Mirage, a private ambulance company brought suit

under the Sherman Act after three California cities decided to provide free municipal ambulance services

through Riverside County (which in turn engaged the

California Department of Forestry to provide the ambulance service). 745 F.2d 1270, 1271 (9th Cir. 1984).

In concluding that the exclusion of the private ambulance company did not run afoul of the Sherman Act,

the court referred to Section 38794 of the California

Government Code. Springs Ambulance, 745 F.2d at

1273 (citing Cal. Gov’t Code § 38794). Even though the

statute does not explicitly authorize cities to abolish

competition from private ambulance companies, the

court concluded that “the exclusion of private ambulance companies is a necessary or reasonable consequence of providing subsidized municipal ambulance

service, and was surely within the contemplation of the

legislature when it enacted Gov’t Code § 38794.” Id. In

doing so, the court noted that “[w]here the residents of

a city pay taxes to make emergency ambulance service

available, it would be anomalous to require that the

city also dispatch a private for-hire service with, or in

alternation with, its own.” Id. “To do so would, in effect,

force citizen users to pay twice for the same service.”

Id.

App. 37

Although Springs Ambulance has not been expressly overruled, the validity of its reasoning is in

question following the Supreme Court’s decision in

Phoebe Putney. In Phoebe Putney, the FTC filed an antitrust suit against the Hospital Authority of AlbanyDougherty County to enjoin the hospital authority

from acquiring a second hospital in Dougherty County.

133 S. Ct. at 1008. Acquisition of the hospital would

have resulted in the hospital authority owning the only

two hospitals in Dougherty County. Id. The question

before the Court was “whether a Georgia law that creates special-purpose public entities called hospital authorities and gives those entities general corporate

powers, including the power to acquire hospitals,

clearly articulates and affirmatively expresses a state

policy to permit acquisitions that substantially lessen

competition.” Id. at 1007. In holding that the Georgia

law did not express such a policy, the Court rejected

the Eleventh Circuit’s application of a “reasonably anticipated” test for determining whether an anticompetitive effect was foreseeable. Id. at 1009. Rather, the

anticompetitive effect had to be “the inherent, logical,

or ordinary result of the exercise of authority delegated

by the state legislature.” Id. at 1012–13.

In applying that standard to the facts before it, the

Supreme Court concluded that the Georgia law empowering hospital authorities to acquire hospitals did

not clearly articulate and affirmatively express a state

policy for hospital authorities to make acquisitions

that would substantially reduce competition. Id. at

1012. The Court distinguished the Georgia law from

App. 38

previous decisions finding an anticompetitive policy in

other contexts. “For example, in Hallie [v. Eau Claire],

the Wisconsin statutory law regulating the municipal

provision of sewage services expressly permitted cities

to limit their service to surrounding unincorporated

areas.” Id. at 1013 (citing Hallie, 471 U.S. at 41). In

City of Columbia v. Omni Outdoor Advertising, Inc., the

clear articulation test was “easily satisfied” because

“[t]he very purpose of zoning regulation is to displace

unfettered business freedom in a manner that regularly has the effect of preventing normal acts of competition.” Id. (quoting Omni, 499 U.S. 365, 373 (1991)).

“By contrast, ‘simple permission to play in a market’ does not ‘foreseeably entail permission to roughhouse in that market unlawfully.’ ” Id. (citation

omitted). “[T]he power to acquire hospitals . . . does not

ordinarily produce anticompetitive effects.” Id. at 1014.

The fact that a reasonable legislature could anticipate

the possibility of anticompetitive conduct fell “well

short of clearly articulating an affirmative state policy

to displace competition with a regulatory alternative.”

Id. Moreover, the fact that the state legislature intended to improve access to affordable health care to

all Georgia residents did not “logically suggest” that

the legislature intended the hospital authorities to create hospital monopolies. Id. at 1015.

In light of the Court’s reasoning in Phoebe Putney,

the Ninth Circuit’s analysis of Government Code

App. 39

Section 38794 no longer appears valid.8 Nothing in

Section 38794 explicitly confers on city governments

the authority to act anti-competitively. Nor does the

power to enter into contracts with ambulance service

providers inherently restrict competition between

those providers. A city could, after all, engage in a competitive bidding process to choose an ambulance service provider and regularly open bids for better

contracts. As the Supreme Court noted, “[w]hen a State

grants some entity general power to act . . . it does so

against the backdrop of federal antitrust law.” Phoebe

Putney, 133 S. Ct. at 1013 (citing FTC v. Ticor Title Ins.

8

The City Defendants point to United National Maintenance, Inc. v. San Diego Convention Center, Inc., 766 F.3d 1002

(9th Cir. 2014), to argue that Springs Ambulance’s interpretation

of Section 38794 is still valid. United National addressed whether

the San Diego Convention Center was empowered to hire cleaning

staff internally to the exclusion of outside cleaning companies.

The Ninth Circuit held that Sections 37506 and 37505 of the Government Code granted San Diego the authority to not just “play

in the market,” but to act anti-competitively with respect to its

convention center. United Nat’l, 766 F.3d at 1010–11. In doing so,

the court relied on the words “manage its use” in Section 37506

and Section 37505’s requirement that funds from the convention

center first pay for the center before being applied to the benefit

of the municipality. Id. The court considered “managerial authorization” to be distinct from a general grant of corporate authority.

Id. at 1010.

The Court does not find that United National conclusively affirms the holding in Springs Ambulance. The two cases examine

different sections of the Government Code that prescribe different

powers to municipalities. Moreover, Section 38794 does not address managerial authorization or any other factors that the

Ninth Circuit relied on in United National to find state authorization of anti-competitive conduct.

App. 40

Co., 504 U.S. 621 (1992)). Just because the California

legislature could reasonably anticipate that a city government could use its Section 38794 powers in anticompetitive ways does not mean that the California

legislature expressed an affirmative state policy that

cities do so. See id. at 1014. Finally, to the extent Section 38794 furthers critical state interests in the public

peace, health, and safety, see Cal. Health & Safety Code

§ 13801, these interests do not logically suggest a state

policy permitting anticompetitive conduct in furtherance of those interests. See Phoebe Putney, 133 S. Ct.

at 1015. Accordingly, Government Code Section 38794

by itself does not appear to clearly articulate and affirmatively express a state policy to displace competition in the emergency ambulance services market.

2. The California EMS Act

However, Section 38794 is not the only California

statute relevant to this issue. In 1980, the California

legislature enacted the Emergency Medical Services

System and the Prehospital Emergency Medical Care

Personnel Act (the “EMS Act”). County of San Bernardino v. City of San Bernardino, 15 Cal. 4th 909, 913,

915 (1997). The EMS Act created a comprehensive system governing virtually every aspect of prehospital

emergency medical services in California. Id. at 915.

The Act created a two-tiered system of regulation consisting of the Emergency Medical Services Authority

at the state level and local EMS agencies at the county

level. Id. at 915–16. The original draft of the EMS Act

afforded no particular role for cities, but the version

App. 41

that was ultimately enacted included a provision allowing cities that already provided prehospital emergency medical services to continue doing so. Id. at 916.

That provision stated, in relevant part, as follows:

Upon the request of a city . . . that contracted

for or provided, as of June 1, 1980, prehospital

emergency medical services, a county shall

enter into a written agreement with the city

. . . regarding the provision of prehospital

emergency medical services for that city. . . .

Until such time that an agreement is reached,

prehospital emergency medical services shall

be continued at not less than the existing

level, and the administration of prehospital

EMS by cities . . . presently providing such

services shall be retained by those cities. . . .

Cal. Health and Safety Code § 1797.201. The California Supreme Court later interpreted Section 1797.201

as permitting eligible cities to continue administering

prehospital emergency medical services9 indefinitely.

See County of San Bernardino, 15 Cal. 4th at 922–24.

In 1982, the Supreme Court issued its opinion in

Community Communications Co., Inc. v. City of Boulder, where for the first time a majority of the Court

adopted the clear articulation test for extending Parker

9

“Emergency medical services” are defined as “the services

utilized in responding to a medical emergency.” Cal. Health and

Safety Code § 1797.72. Emergency ambulance service plainly falls

within that definition.

App. 42

immunity to municipal activities.10 455 U.S. 40, 51

(1982). In response, the California legislature amended

the EMS Act in 1984, declaring that California’s policy

of “ensur[ing] the provision of effective and efficient

emergency medical care” had been hindered by the Supreme Court’s holding. See Cal. Health and Safety

Code § 1797.6(a). Accordingly, the legislature explicitly

stated its intention “to prescribe and exercise the degree of state direction and supervision over emergency

medical services as will provide for state action immunity under federal antitrust laws for activities undertaken by local governmental entities carrying out

their prescribed functions under this division.” Cal.

Health and Safety Code § 1797.6(b). “[T]his division”

includes Section 1797.201. Given that 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, the Court concludes that Parker immunity extends to the City Defendants in this action.

3. The City Defendants’ Compliance with

the EMS Act

Americare raises a number of arguments against

this conclusion. First, AmeriCare contends that the

EMS Act contemplates anticompetitive conduct only in

10

The clear articulation test first appeared in City of

Lafayette, but only a plurality of the Court joined that portion of

Justice Brennan’s opinion. See 435 U.S. 389.

App. 43

limited circumstances, none of which apply here. (See

AmeriCare Opps.) Specifically, AmeriCare argues that

(1) pursuant to Section 1797.224, only county EMS

agencies can create “exclusive operating areas” for

emergency ambulance services; and (2) pursuant to

Section 1797.201, cities can exclusively contract for or

provide emergency ambulance services only to the extent they contracted for or provided those services as

of June 1, 1980. (Id.) AmeriCare asserts that none of

the City Defendants meet this requirement under Section 1797.201. (Id.)

The Court does not find that Section 1797.224 precludes anticompetitive actions by cities in furtherance

of the EMS Act. Section 1797.224 explicitly states

that “[n]othing in this section supersedes Section

1797.201.” Therefore, Section 1797.224 does not limit

in any way a city’s authority to maintain a monopoly

emergency ambulance service under Section 1797.201

if that was the city’s arrangement as of June 1, 1980.

Moreover, the California legislature broadly declared

its intention to extend state action immunity to “local

governmental entities” carrying out their prescribed

functions under the EMS Act. Cal. Health & Safety

Code § 1797.6(b). Had the California legislature intended to limit state action immunity to only county

EMS agencies, or to exclude city governments from

state action immunity, it could easily have drafted Section 1797.6 to reflect that intention.

As for the City Defendants’ actual compliance

with Section 1797.201, that issue is irrelevant to determining whether Parker immunity applies to their

App. 44

actions. “The relevant question is whether the state intended the authorizing statute to have anticompetitive

effects. Thus, what the city does to implement that

statute, rightly or wrongly, reveals nothing about the

state’s intent.” Traweek v. City and County of San

Francisco, 920 F.2d 589, 593 (9th Cir. 1990). For purposes of determining whether Parker immunity applies to a city government, it is sufficient that the state

law authorizes the city to act anti-competitively. See

Omni, 499 U.S. at 371–72 (rejecting the contention that

a municipality needs to be in compliance with the state

law authorizing anticompetitive conduct for Parker immunity to apply).

4. Market Participant Exception

Next, AmeriCare urges the Court to recognize a

market participant exception to Parker immunity.

(AmeriCare Opps.) The Supreme Court has indicated

that a “possible market participant exception” might

exist where state sovereigns act “not in a regulatory

capacity but as a commercial participant in a given

market.” Omni, 499 U.S. at 374–79. Omni did not shed

much light on when exactly a state acts as a market

participant rather than as a regulator. The only example given was Union Pacific Railroad Co. v. United

States, 313 U.S. 450 (1941), in which the Court held

unlawful certain rebates and concessions made by

Kansas City, Kansas, in its capacity as the owner and

operator of a wholesale produce market. Omni, 499

U.S. at 375. The Court has not elaborated on the subject since Omni, and it has not yet held that a market

App. 45

participant exception to state action immunity exists.

See Phoebe Putney, 133 S. Ct. at 1010 n.4. Although

other circuits have discussed the issue11, the Ninth Circuit has not yet ruled on the matter.

The Court declines to recognize a market participant exception here. First, as a general matter an

inquiry into whether a city is acting as a market participant would be in tension with the Supreme Court’s

holding that a city is entitled to Parker immunity so

long as there is a state law authorizing anticompetitive

conduct in furtherance of a state regulatory scheme.

See Omni, 499 U.S. at 371–72.

11

Contrary to AmeriCare’s assertions, it is unclear whether

any circuit has in fact recognized a market participant exception.

The Federal Circuit mentioned the market participant exception

once in Genentech, Inc. v. Eli Lilly and Co., 998 F.2d 931, 948

(Fed. Cir. 1993), abrogated on other grounds by Wilton v. Seven

Falls Co., 515 U.S. 277 (1995), and never discussed the issue

again. The Third Circuit once mentioned the exception in a footnote in A.D. Bedell Wholesale Co., Inc. v. Philip Morris Inc., 263

F.3d 239, 265 n.55 (3d Cir. 2001), but district courts in the Third

Circuit have not construed the footnote as holding that a market

participant exception to Parker immunity exists in the Third Circuit. See Edinboro College Park Apartments v. Edinboro Univ.

Foundation, No. 15-121 Erie, 2016 WL 6883295, at *4 (W.D. Pa.

Mar. 1, 2016); Wheeler v. Beard, No. Civ. A. 03-4826, 2005 WL

1217191, at *6 (E.D. Pa. May 19, 2005). Similarly, the Sixth Circuit suggested in VIBO Corp., Inc. v. Conway, 669 F.3d 675, 687

(6th Cir. 2012), that a market participant exception might exist,

but a district court that later considered VIBO did not consider it

to definitively recognize a market participant exception in the antitrust context, Wooster Industrial Park, LLC v. City of Wooster,

55 F. Supp. 3d 990, 999 (N.D. Ohio, 2014).

App. 46

Moreover, in the present case, the City Defendants’ provision of emergency ambulance services does

not implicate the exception. Emergency ambulance

services are far removed from the example given in

Omni of a city acting in the capacity of an owner and

operator of a wholesale produce market. See 499 U.S.

at 375 (citing Union Pacific R. Co. v. United States, 313

U.S. 450, (1941)). Even other courts that have addressed a possible market participant exception have

found that the exception does not apply if a state entity

is performing its traditional governmental functions.

See, e.g., Wooster, 55 F. Supp. 3d at 1000 (finding that

the city defendant was not a market participant when

it contracted to build a new cell tower for use by its

safety services); Edinboro, 2016 WL 6883295, at *4

(finding that a market participant exception would not

apply where the alleged injuries stem from a public

university’s obligations to provide education and housing); Wheeler, 2005 WL 1217191, at *6 (finding that the

Pennsylvania Department of Corrections was acting in

its governmental capacity in operating prison commissaries).

Here, the California legislature has expressly declared that the local provision of emergency medical

services, including ambulance services, is “critical to

the public peace, health, and safety of the state.” Cal.

Health & Safety Code § 13801. In enacting the EMS

Act, the legislature declared its intent “to promote the

development, accessibility, and provision of emergency

medical services to the people of the State of California.” Cal. Health & Safety Code § 1797.5. The Act

App. 47

reflects the recognition that “one of the preeminent

functions of government in an organized society is the

protection of the life and health of its citizens.” Ma v.

City and County of San Francisco, 95 Cal. App. 4th 488,

508 (2002), disapproved of on other grounds by Eastburn v. Regional Fire Protection Authority, 31 Cal. 4th

1175 (2003). “Along with fire suppression and crime

prevention, the provision of emergency medical assistance to persons faced with imminent life-threatening

conditions joins with them to form a triage of public

services considered at the core of vital civic functions.”

Id. Here, the State of California and the City Defendants are operating emergency ambulance services as a

quintessential governmental function. Therefore, even

if there were a market participation exception to Parker immunity, it would not apply.

Accordingly, the Court concludes that Parker immunity applies to the City Defendants in this action

and that dismissal of AmeriCare’s Sherman Act

claims against the City Defendants is appropriate.

Because a finding of Parker immunity conclusively decides AmeriCare’s Sherman Act claims, the Court finds

it unnecessary to address the City Defendants’ arguments regarding the Local Government Anti-trust

Immunity Act or whether AmeriCare suffered an antitrust injury.

D. Other Remaining Claims

Having dismissed AmeriCare’s Sherman Act

claims, no federal claims remain to be adjudicated.

App. 48

AmeriCare’s remaining claims are for declaratory

judgment under California Code of Civil Procedure

Section 1060 and 28 U.S.C. § 2201 declaring that the

City Defendants (1) lack authority to create an exclusive operating area under California Health and

Safety Code Section 1797.224, and (2) repudiated any

rights they once had under California Health and

Safety Code Section 1797.201. (See AmeriCare FACs.)

Both of these claims are state law claims. See Skelly

Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671–72

(1950) (explaining that Congress did not impliedly repeal or modify the requirements of subject matter jurisdiction when it passed the Declaratory Judgment

Act). Given the early stage of litigation, the Court declines to exercise supplemental jurisdiction over these

claims. See Carnegie-Mellon Univ. v. Cohill, 484 U.S.

343, 350 (1988) (“[W]hen the federal-law claims have

dropped out of the lawsuit in its early stages and only

state-law claims remain, the federal court should decline the exercise of jurisdiction by dismissing the case

without prejudice.”).

V.

CONCLUSION

For the foregoing reasons, the Court GRANTS the

City Defendants’ Motions to Dismiss. Because the

Court finds that AmeriCare cannot amend its complaint in a way that would overcome the City Defendants’ Parker immunity, AmeriCare’s Sherman Act

claims against the City Defendants are DISMISSED

WITH PREJUDICE. AmeriCare’s claims for declaratory judgment against the City Defendants are

App. 49

DISMISSED WITHOUT PREJUDICE for AmeriCare

to file in state court.

DATED: March 28, 2017

/s/ Josephine L. Staton

JOSEPHINE L. STATON

UNITED STATES DISTRICT JUDGE

App. 50

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AMERICARE

MEDSERVICES, INC.,

Plaintiff-Appellant,

v.

No. 17-55565

D.C. No.

8:16-cv-01703-JLS-AFM

Central District of

California, Santa Ana

CITY OF ANAHEIM; et al., ORDER

Defendants-Appellees. (Filed Oct. 10, 2018)

Before: HAWKINS and CHRISTEN, Circuit Judges,

and HOYT,* District Judge.

Judge Christen has voted to deny the petition for

rehearing en banc, and Judges Hawkins and Hoyt have

recommended denying Appellant’s en banc petition.

The full court has been advised of the petition for rehearing en banc and no judge of the court has requested a vote on whether to rehear the matter en

banc. Fed. R. App. P. 35.

Appellant’s petition for rehearing en banc is DENIED.

The Request to Publish filed by Amicus Curiae

California Fire Chiefs Association, Inc., is DENIED.

* The Honorable Kenneth M. Hoyt, United States District

Judge for the Southern District of Texas, sitting by designation.

App. 51

15 U.S.C. § 1. Trusts, etc., in

restraint of trade illegal; penalty

Every contract, combination in the form of trust or

otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall

make any contract or engage in any combination or

conspiracy hereby declared to be illegal shall be

deemed guilty of a felony, and, on conviction thereof,

shall be punished by fine not exceeding $100,000,000

if a corporation, or, if any other person, $1,000,000, or

by imprisonment not exceeding 10 years, or by both

said punishments, in the discretion of the court.

15 U.S.C. § 2. Monopolizing trade a felony; penalty

Every person who shall monopolize, or attempt to

monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or

commerce among the several States, or with foreign

nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding

$100,000,000 if a corporation, or, if any other person,

$1,000,000, or by imprisonment not exceeding 10

years, or by both said punishments, in the discretion of

the court.

App. 52

§ 1797.1. Legislative findings and declarations

The Legislature finds and declares that it is the

intent of this act to provide the state with a statewide

system for emergency medical services by establishing

within the Health and Welfare Agency the Emergency

Medical Services Authority, which is responsible for

the coordination and integration of all state activities

concerning emergency medical services.

§ 1797.102. Assessment of service areas

The authority, utilizing regional and local information, shall assess each EMS area or the system’s

service area for the purpose of determining the need

for additional emergency medical services, coordination of emergency medical services, and the effectiveness of emergency medical services.

§ 1797.201. Contracts with cities or fire districts

for prehospital emergency medical services

Upon the request of a city or fire district that contracted for or provided, as of June 1, 1980, prehospital

emergency medical services, a county shall enter into

a written agreement with the city or fire district regarding the provision of prehospital emergency medical services for that city or fire district. Until such time

that an agreement is reached, prehospital emergency

medical services shall be continued at not less than the

existing level, and the administration of prehospital

EMS by cities and fire districts presently providing

App. 53

such services shall be retained by those cities and fire

districts, except the level of prehospital EMS may be

reduced where the city council, or the governing body

of a fire district, pursuant to a public hearing, determines that the reduction is necessary.

Notwithstanding any provision of this section the

provisions of Chapter 5 (commencing with Section

1798) shall apply.

§ 1797.224. Exclusive operating areas;

creation; local EMS plan

A local EMS agency may create one or more exclusive operating areas in the development of a local plan,

if a competitive process is utilized to select the provider

or providers of the services pursuant to the plan. No

competitive process is required if the local EMS agency

develops or implements a local plan that continues the

use of existing providers operating within a local EMS

area in the manner and scope in which the services

have been provided without interruption since January 1, 1981. A local EMS agency which elects to create

one or more exclusive operating areas in the development of a local plan shall develop and submit for approval to the authority, as part of the local EMS plan,

its competitive process for selecting providers and determining the scope of their operations. This plan shall

include provisions for a competitive process held at periodic intervals. Nothing in this section supersedes

Section 1797.201.