Petition — City of Impact v. Whitworth
Supreme Court brief1979
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DEC 4
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IN THE
Supreme Court of the Mnited States
Ocroner Term, 1978
NOG 8=889
CITY OF IMPACT, DALLAS PERKINS, NANCY
PERKINS, his wife, R. L, PERKINS, DICKIE W,
MAXWELL, MARION TEEL, IMPACT DEVEL.
OPMENT, TOM RODEN, and PINKIE’S, INC,,
Petitioners
Ny
EDGAR E. WHITWORTH
d/b/a DINKIE’S FOOD MART
Respondent
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
POR THE FIFTH CIRCUIT
DONALD SCOTT THOMAS, JR,
PAUL J, VAN OSSELAER
Poat Office Box 1148
Avatin, Texaa 7876?
Attorneys for Petitioners,
Tom Roden and Pinkie’s, Ine,
oO; Counsel:
CLARK, THOMAS, WINTERS & SHAPIRO
BEVERLY TARPLEY
Post Office Box 356
Abilene, Texas 79604
Attorneys for Petitioners,
City of dmpact, Dallas Perding,
NVaney Perkins, R. L. Perking,
Dickie W. Maxwell, Marion Teel,
and Impact Development Corp,
Of Counsel,
SCARBOROUGH, BLACK, TARPLEY & SCARBOROUGH
Ay ‘ ' . * : u Omer, eau P?002
SUBJECT INDEX
Opinions Below peuevnccsceuesceeneceser
Jambatbetbae vcvccuvencrecccvuccccvecesccecesesnsceens
Questions Presented . 0... .,
DRANG TUVOTVEE ve vrccvcvevevcccccccnecuvcccevesens
Sratemamt OF the Case viccccscccvecccvccccseveneseser
Reasona for Granting the Writ... c cc ccc cre eee ree een
QUESTION ONE: WHETHER THE SHERMAN ACT
IS APPLICABLE TO A CETY'S OTHERWISE VALID
EXERCISE OF EPS ZONING AUTHORITY, WHERE
THE MANNER IN WHICHE EP IS BXBRCISKD IS
CONTEMPLATED BY STATE STATUTE AND
WHERE THE RESULT COMPLAINED OF BY RB.
SPONDENT IS AUTHORIZED BY STATE STATUTE?
(a) The Fifth Clreuit's decision ia in conflict with City
o/ Lafayette and other decisiona of thie Court ....
(b) The Fifth Cireult's decision permits a drastic de-
rture from the traditional and role of
‘ederal courta in state or local legislative matters
and la in conilict with the pring enunciated ip
thia Court's decisiona in Noerr Pennington ....
(c) The manner in which the Fifth Cireult reconsidered
this action on remand from this Court departed
from the waual and accepted method of reconaidera:
tion in such a complex and important area of law,
kB yey TWO, WHETHER A PRIVATE PLAIN.
TIFF HAS STANDING UNDER THE ANTITRUST
LAWS TO CHALLENGE A_ CITY'S OTHERWISE
VALID ZONING ORDINANCE WHEN THE BUSI
NESS WHICH WAS ALLEGEDLY INJURED COULD
NOT COME INTO ENISTENCE BY REASON OF
STATE LAW AND THE ORDINANCE AND WHEN
THE LOCATION POR WHICH THE BUSINESS IS
SOUGHT WAS ZONED RESIDENTIAL BEFORE ITS
PURCHASE RY PLAINTIFF? seeeter Seeeeeeeeeeee
(a) The Fifth's Cireult's decision conflicts with the
decision of other cireulta by contravening important
and well-established pring of standing, ©... 6.45
eran os ee
Page
Conclusion PETES ESE ERE ee eS seeeees i) , , 20
Appendix A PETES ESSRERE EERE EERE EERE Oe eee seeeeee 21
Appendix nu ‘ . | ‘ , | ‘ ‘ 22
Appentiin C vvevevvevesevees euneveceen pevenevencens : uN
Appendix b ee seeeee SETTER ee eeee ‘% ‘s 7) | | AT]
Appendix r SEES eeeeees | | ‘ | , seeeeeeeees 4)
LIST OF AUTHORITIES
CASES Tage
Anwerican Hankers Club, Ine, ¥, American Express Co, 1077
Trade Canen @ 01.247 (D. DG. TORR) Cocca 19
Hates v, State Har of Arizona, 44) US, A380 (107?)
TEESE ERERERRERRER RRR REESE SECT eeeeeeeeeere ?, 9, i! 2
Hrawner Huilting, Tne, vy. Shehyn, 442 Pad aa? (D.C,
Cir, er) ), Seeeeeeeeeeee SPE eeeeeeeeeaer seeeeeeert ii
C. B. Lytle Company vy, Clark, 401 Pad 884 (10th Cir,
1074) | steeteeers . ‘ | | ?
Cantor ¥, Detroit Rdison Co, 428 U8. $20 (1086) Ra
oa SEPUED cuceecendecvccece 6,7, 8,9, 10, 11, 02, 04, 14, 18, 06
Clouser v, David, 100 Pad 244, 244 (D.C. Cle, 1902)
cert, denied, AT2 US, O20 (100K) ...,, puaeunckeushs 7?
Credit, Hureau Reports, Ine, v, Retail Credit, Company,
See ee ee GOD GE, SONU wv ccecccececucececccs: 19
Delaware Valley Marine Co. v, American Tobacco
Co, 184 BS 440 (D, Pa, 1900), aff'd 207 Fld 109
_ (ied Clr, 1901) cert, demied 409 US. B19 (1062) ..., 19
Rastern Railroad Vresklenta Conference v. Noere Motor
Freight, Ine, Jos US, 127 (1961) PERHHEH RRR EERE ii
Gokifarb v. Virginia State Bar, 421 US. 225 (1078)
Matta ¥. ban, 154 Badd 3 Ch Che 1940) cok Se ee
—s 7) (9a) We seeeee Bate seee e ee *seeeeeaee duos 1a
artin ov. roleum Co, 468 Pid
Cir. 1966) seeeeaearn SPEER eee - = 18
Power & Light Co, 214 Pad 418 (Sth Clr, 1984)... 9
Ill
CASES Page
317 US. 341 (1943) .........008
seme i Ponce Beene eee a 7,8, 10, 11, 12, 13, 16,17
Peller y. International Boxing Club, 227 F.2d 593 (7th
Pe WORD nv eknns ca dccpwctadccvcecesccvcsceseess 19
Reibert v. Atlantic Richfield Company, 471 F.2d 727 (10th ws
CO, BUTS. We ove vo pedecescsacs veces veceseces =
South Gwinnett Venture v. Pruitt, 491 F.2d 5 (Sth Cir.
1974) cert. denicd 419 U.S. 837 (1974) ....eeeeeeees 14
Swain v. Board of Adjustment of City of University Park,
433 S.W.2d 727 (Tex. Civ. App.—Dallas, 1968, writ
ref'd n.r.e.) cert. denicd 396 U.S. 277 (1969) ....... i8
United Mine Workers v. Pennington, 381 U.S. 657 (1965) 13
UNITED STATES STATUTES
1S U.S.C. $1 [Section 1, Sherman Act] ...........++-. 3,11
15 U.S.C. $15 [Section 4, Clayton Act] ..........+.-. 3, 18,19
15 U.S.C. § 16 [Section 16, Clayton Act] ............+. 3,19
TEXAS STATUTES
Tex. Rev. Crv. Stat. ANN. art. 10lla ...... seeeeseees 3,7,9
Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,
Art. 666-4(a) ....cccccccceveseceseseces tteeeeeee a, , 83
Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws, aoe
EN See Maney gee 4,
Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,
ES occas aso cenncasennnensesensecses se. 3,4, 8, 11
Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,
I hs iewapervaneeentacs 3,4,7
IN THE .
Supreme Court of the Muited States
OcToBER TERM, 1978
NO.
CITY OF IMPACT, DALLAS PERKINS, NANCY
PERKINS, his wife. R. L. PERKINS, DICKIE W.
MAXWELL, MARION TEEL, IMPACT DEVEL-
OPMENT, TOM RODEN, and PINKIE’S, INC.,
Petitioners
v.
EDGAR F. WHITWORTH
d/b/a DINKIE’S FOOD MART,
Respondent
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
CITY OF IMPACT, DALLAS PERKINS, NANCY
PERKINS, his wife, R. L. PERKINS, DICKIE W. MAX-
WELL, MARION TEEL, IMPACT DEVELOPMENT
CORPORATION, TOM RODEN, and PINKIE’s, INC.,
petition for a Writ of Certiorari to review the judgment
of the United States Court of Appeals for the Fifth
Circuit in this action.
2
OPINIONS
The most recent opinion of the United States Court of
Appeals for the Fifth Circuit (Appendix “A”) is reported
at 576 F.2d 696. That opinion followed this Court’s
order of April 24, 1978 (Appendix “B”) remanding
this action to the court of appeals. The earlier opinion of
the United States Court of Appeals for the Fifth Circuit
(Appendix “C”) is reported at 559 F.2d 378. The
opinion of the United States District Court for the North-
ern District of Texas (Appendix “D”) is unreported.
JURISDICTION
The judgment of the court of appeals was entered on
July 17, 1978. The court of appeals denied the Peti-
tioners’ Petition for Rehearing and Petition for Rehearing
En Banc on September 5, 1978. This petition is filed
within 90 days of September 5, 1978. This Court has
jurisdiction under 28 U.S.C. § 1254(1).
QUESTIONS PRESENTED
QUESTION ONE: WHETHER THE SHERMAN ACT
IS APPLICABLE TO A CITY’S OTHERWISE VALID
EXERCISE OF ITS ZONING AUTHORITY, WHERE
THE MANNER IN WHICH IT IS EXERCISED IS
CONTEMPLATED BY STATE STATUTE AND
WHERE THE RESULT COMPLAINED OF BY RE-
SPONDENT IS AUTHORIZED BY STATE STATUTE?
QUESTION TWO: WHETHER A PRIVATE PLAIN-
TIFF HAS STANDING UNDER THE ANTITRUST
LAWS TO CHALLENGE A CITY’S OTHERWISE
VALID ZONING ORDINANCE WHEN THE BUSI-
3
NESS WHICH WAS ALLEGEDLY INJURED COULD
NOT COME INTO EXISTENCE BY REASON OF
STATE LAW AND THE ORDINANCE AND WHEN
THE LOCATION FOR WHICH THE BUSINESS IS
SOUGHT WAS ZONED RESIDENTIAL BEFORE
ITS PURCHASE BY PLAINTIFF?
STATUTES INVOLVED
This case involves consideration of the following
statutes (the texts of which are set forth in Appendix E):
Section 1 of the Sherman Act, 26 Stat. 209 (1890), as
amended, 15 U.S.C. § 1; Section 4 of the Clayton Act,
38 Strat. 730 (1914), as amended, 15 U.S.C. § 15;
Section 16 of the Clayton Act, 39 Stat. 737 (1914),
as amended, 15 U.S.C. § 26; Tex. Rev. Civ. STAT. ANN.
art. 10lla; The Texas Liquor Control Act, V.A.T-S.
Penal Auxiliary Laws, Arts. 666-4(a), 666-24, 666-54,
667-10-1/2 (1974).
STATEMENT OF THE CASE
This Petition arises from the district court’s entry of
summary judgment for the Petitioners, as Defendants be-
low, in an action filed by the Respondent on September
18, 1975 in the United States District Court for the
Northern District of Texas (Civil Action No. CA-l-
75-44). The Respondent has alleged that the Petitioners,
acting in violation of Section 1 of the Sherman Act, un-
lawfully prevented his entry into the retail alcoholic
beverage business in Impact, Texas, and thereby injured
him. The named Defendants are the City of Impact, its”
elected officials, retailers of alcoholic beverages, and two
other corporations.
4
In 1961 the City of Impact, Texas enacted a compre-
hensive zoning ordinance, which divided Impact into
districts zoned “R” (Residential) and districts zoned
“C” (Commercial). This ordinance, which has never
been amended or repealed, prevents the operation of
any commercial enterprise, including a retail alcoholic
beverage establishment, in a district zoned Residential.
Some six years after the enactment of this ordinance, in
1967, the Respondent Whitworth purchased a lot in
Impact which was and is located in a district zoned
Residential. Acting on an alleged desire to enter the re-
tail alcoholic beverage business on that lot, Respondent
Whitworth, in 1975, submitted to the Secretary of the
City of Impact, an “APPLICATION FOR A WINE
AND BEER RETAILERS OFF-PREMISES PERMIT.”
This state-promulgated form requires as a prerequisite
to the state’s grant of a license to engage in the liquor
business that, if the premises are located in an incor-
porated city, the City Secretary certify that the city’s
charter and ordinances do not prevent the sale of the
alcoholic beverages at the location to be licensed.’
In accordance with the city zoning ordinance and the
state liquor control statute the Secretary of the City of
Impact refused to certify that the sale of alcoholic
beverages was permitted on the property in question.
Because the City Secretary could not certify his applica-
tion consistently with state law, Respondent Whitworth
could not obtain a state license to engage in the alcoholic
beverage business on his residential lot, thereby allegedly
suffering injury. Rather than seeking the repeal or amend-
1. See Texas Liquor Control Act, V.A.T.S. Penal Auxiliary Laws,
Arts. 666-24, 666-54, 667-104 (1974).
5
ment of the 1961 zoning ordinance and instead of seek-
ing a zoning change or variance through appropriate
local procedures, Mr. Whitworth filed this Federal anti-
trust action alleging that the Petitioner-City and its
officials entered into a contract, combination or con-
spiracy to restrict competition in the retail sale of alco-
holic beverages and, in furtherance of that conspiracy,
enacted the City’s general zoning ordinance and refused
to certify his wine and beer application. The Petitioners,
who were not City officials, allegedly participated in this
conspiracy “through their outright control of certain city
council members.”
In granting the Petitioners’ motion for summary judg-
ment, the district court found the local zoning ordinance
to be in all respects valid and a proper exercise of the
City’s legislative power—thus removing the zoning ordi-
nance from federal antitrust challenge. The Respondent
did not challenge on appeal the trial court’s determination
that the ordinance was valid as a matter of state and
federal law. The court of appeals, in its first opinion in
this case, conceded the validity of the zoning ordinance
as a matter of state law but reversed the summary
judgment holding that since the enactment of the ordi-
nance was itself alleged to be part of the conspiracy,
the mere presence of the zoning ordinance did not in-
sulate the Defendants from antitrust liability. Relying
on City of Lafayette, La. v. La. Power & Light Co.,
532 F.2d 431, 434 (5th Cir. 1976), before this Court's
opinion in that case, the court of appeals directed a
factual inquiry as to whether the City’s actions in zoning
and in abiding by state liquor laws, were “comprehended
within the powers granted to it by the Legislature.”
6
The Petitioner filed a petition for a writ of certiorari
in the October 1977 term of this Court (No. 77-734).
On April 24, 1978, this Court granted the writ of
certiorari and remanded this action to the court of
appeals for reconsideration in light of City of Lafayette
v. Louisiana Power & Light Co., 435 U.S. 389 (1978).
On July 17, 1978, without the assistance of briefs or
arguments from counsel, the court of appeals, upon
apparent consideration of the complexities of the five
separate opinions in City of Lafayette, entered its two
sentence opinion (Appendix “A”), reinstating its prior
opinion.
By their current petition for a writ of certiorari, the
Petitioners seek this Court’s review of the July 17, 1978
judgment of the United States Court of Appeals for
the Fifth Circuit.
REASONS FOR GRANTING THE WRIT
QUESTION ONE: WHETHER THE SHERMAN ACT
IS APPLICABLE TO A CITY’S OTHERWISE VALID
EXERCISE OF ITS ZONING AUTHORITY, WHERE
THE MANNER IN WHICH IT IS EXERCISED IS
CONTEMPLATED BY STATE STATUTE AND
WHERE THE RESULT COMPLAINED OF BY RE-
SPONDENT IS AUTHORIZED BY STATE STATUTE?
(a) The Fifth Circuit’s decision is in conflict with
City of Lafayette and other decisions of this
Court.
In City of Lafayette v. Louisiana Power & Light Co.,
435 U.S. 389 (1978), this Court addressed the extent to
7
which cities were entitled to the protection afforded
states under Parker v. Brown, 317 U.S. 341 (1943) and
its progeny.? Because the plurality opinion in City of
Lafayette emphasizes the relationship between the city’s
acts and the state government, a review of the involve-
ment of the State of Texas in the acts of the Petitioner-
City is an appropriate foundation for an analysis of the
issues presented by the instant petition.
The decision of the City of Impact to zone the Re-
spondent’s lot residential and to prohibit the sale of
liquor thereon originates with the sovereign power of
the State of Texas. Tex. Rev. Civ. STAT. ANN. art.
101la grants to cities the power to zone in such a
manner as to “regulate and restrict . . . the location and
use of buildings, structures, and land for trade, industry,
residence, or other purpose. . . .” Even more particularly,
state statutes expressly recognize the right of an in-
corporated city to prohibit the sale of alcoholic beverages
in areas zoned residential. Texas Liquor Control Act,
V.A.T.S. Penal Auxiliary Laws, Arts. 666-24, 667-10-
1/2 (1974). Further, a city’s decision to prohibit such
sales in residential areas is enforced by the state. Texas
law prohibits any person from engaging in the liquor
business except upon receipt of a state license and upon
conditions imposed by the state. Texas Liquor Control
Act, V.A.T.S. Penal Auxiliary Laws, Art. 666-4(a)
(1974). When a liquor permit is sought for a location
in an incorporated city, one of these conditions is that
the city secretary must certify “whether or not the sale
2. E.g., Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975);
Cantor v. Detroit Edison Co., 428 U.S. 579 (1976); Bates v. State
Bar of Arizona, 433 U.S. 350 (1977).
8
of alcoholic beverages for which license or permit is
sought is prohibited by charter, ordinance, or any amend-
ment thereto.” Texas Liquor Control Act, V.A.T.S. Penal
Auxiliary Laws, Art. 666-54 (1974). Thus the bona fide
operation of state law prevented the Respondent Whit-
worth from entering into the liquor business on his lot,
which had been zoned residential well before its purchase
by him.
Although the brevity of the Fifth Circuit’s opinion
after remand from this Court renders it impossible to
ascertain the manner in which the Fifth Circuit applied
the complex guidelines of the City of Lafayette decision,
the Petitioner would show that none of the views ex-
pressed in the five opinions in the City of Lafayette de-
cision supports the refusal of the Fifth Circuit to protect
the City of Impact from antitrust liability for its exercise
of the uniquely sovereign and state-directed actions chal-
lenged by the Respondent.
In holding that cities are not automatically entitled to
the protection of the Parker doctrine, a plurality of this
Court in City of Lafayette held that “the Parker doctrine
exempts only anti-competitive conduct engaged in as an
act of government by the State as sovereign, or, by its
subdivisions, pursuant to state policy to displace competi-
tion with regulation or monopoly public service.” City of
Lafayette, 435 U.S. at 413 (1978). The plurality re-
quires that there be “evidence that the State authorized
or directed a given municipality to act as it did.” 435
U.S. at 414. Although the plurality would not go as
far as to require a city to point to a specific statutory
authorization, the Petitioners suggest that the above-
described statutory scheme is such an authorization.
9
Agreeing with the court of appeals, the plurality in City
of Lafayette hold that the requisite state mandate exists
“when it is found ‘from the authority given a govern:
mental entity to operate in a particular area, that the
legislature contemplated the kind of action complained
of.’” 435 U.S. at 415. In light of the statutory authority
given to the City of Impact relative to zoning and the
regulation of the situs of liquor sales, the Court of Ap-
peals in its earlier opinion in the instant case was in
error in doubting that the challenged zoning ordinance
was a “bona fide governmental decision” and “contem-
plated within the powers granted to it by the Legislature.”
Zoning by its very nature has anticompetitive effects
and Tex. Rev. Civ. STAT. ANN. art. 1011a, in author-
izing zoning, expressly contemplates geographic restric-
tions on land use for “trade, industry, residence or other
purpose.” That statute, especially when coupled with the
detailed provisions of the Texas Liquor Control Act
regulating all aspects of the sale of liquor (including loca-
tion), should leave no doubt but that the challenged
actions of the City of Impact were, in the words of the
plurality, “pursuant to state policy to displace competition
with regulation.” 435 U.S. at 413. Other than a takeover
of zoning functions by the State of Texas, the Petitioners
cannot imagine a clearer authorization or direction by
the State for the challenged actions of the City of Impact.
Not only is the decision of the court of appeals in
conflict with the plurality opinion in City of Lafayette
because of the extensive involvement of the State of Texas
in the challenged actions by the City of Impact, but the
Fifth Circuit’s decision similarly finds no support in the
two concurring opinions by Mr. Justice Marshall and
10
Mr, Chief Justice Burger, Mr, Justice Marshall joins in
the plurality opinion with the caution that any protection
for a city under the Parker doctrine exists only to the
extent that the anticompetitive restraint is “necessary to
effectuate governmental purposes.” 435 U.S. at 418.
Similarly, Mr. Chief Justice Burger would utilize a “com-
mercial-sovereign” distinction and apply the Parker doc-
trine only where the challenged activity serves a public
or sovereign function and not where the city engages in
a proprietary enterprise. Under either concurring opinion,
the actions of the City of Impact in zoning the lot which
Respondent eventually bought as residential and in regu-
lating the sale of liquor within its corporate limits is
uniquely governmental and does not exceed what is nec-
essary to accomplish that governmental purpose. The
enactment of the zoning ordinance of the City of Impact
was an act of government and not that of a private party
trying to characterize its acts as state action nor that of
a governmental unit competing in what is typically the
private commercial realm.’ Of course, under the view of
the dissenters in City of Lafayette, the actions of the City
of Impact would be entitled to the same protection as
the state itself under Parker.
The decision by the court of appeals in exposing the
City of Impact to antitrust liability under these circum-
stances is also in conflict with the earlier opinions of this
Court in Goldfarb v. Virginia State Bar, 421 U.S. 773
(1975) and in Bates v. State Bar of Arizona, 433 U.S.
350 (1977) which provide part of the underlying support
for the plurality’s opinion in City of Lafayette. In Gold-
3. See Goldfarb v. Virginia State Bar, supra; Cantor v. Detroit
Edison Co., supra.
farb, which held that Parker did not prevent the applica.
tion of Section | of the Sherman Act to the enforcement
of a minimum fee schedule by the state bar association,
this Court recognized that absent enforcement by the
Virginia Supreme Court of the bar association’s ethical
opinions, there could be no “state action.” In contrast
to this absence of state enforcement in Goldfarb, the City
of Impact’s zoning ordinance relative to the sale of liquor
on residential lots was authorized by the state and is
enforced by the state through the state’s statutory refusal
to grant a liquor license for a lot so zoned. Texas Liquor
Control Act, V.A.T.S. Penal Auxiliary Laws, Art. 666-4
(a), 666-54 (1974). In complaining of the City Secre-
tary’s refusal to certify the residential lot for the sale
of liquor, the Respondent Whitworth is complaining of
the City Secretary's abidance with state liquor laws.
Furthermore, in Bates v. State Bar of Arizona, 433
U.S. 350 (1977), this Court found no antitrust liability
for the Arizona Supreme Court’s adoption and enforce-
ment of rules prohibiting lawyer advertising, recognizing
that the State of Arizona was the “real party in interest.”
Distinguishing the facts of Goldfarb and Cantor v. Detroit
Edison Co., supra, this Court acknowledged that “the
regulation of the activities of the Bar is at the core of
the state’s power to protect the public,” 433 U.S. at 361
and indicated that the result in Cantor would have been
different had Detroit Edison Company been a govern-
mental unit “respon[{ding] to health or safety concerns”
with a program “essential to regulation of electrical
utilities.” 433 U.S. at 361. Finally, as the plurality
opinion in City of Lafayette found significant, this Court
imposed no antitrust liability in Bates because “the state
12
policy is so clearly and affirmatively expressed and. . .
the state's supervision is so active.” Bates v. State Bar
of Arizona, 433 U.S. at 362; City of Lafayette, 435 U.S.
at 410. The Petitioners suggest that the City of Impact’s
zoning ordinance as contemplated and enforced by the
statutes of the State of Texas are, like the activities of the
bar association in Bates, “at the core of the State’s power
to protect the public.” This case involves the operation
of two strong and clearly expressed areas of state concern,
zoning and liquor regulation, both of which bring this
case squarely within this Court’s decision in Bates.
To the extent that the Fifth Circuit has permitted the
City of Impact to be exposed to antitrust liability for the
exercise of a uniquely sovereign function under the direc-
tion and guidance of clearly expressed state law, the
decision of the court of appeals herein is in conflict with
the decision of this court in City of Lafayette, Bates,
Goldfarb, Cantor and Parker.
(b) The Fifth Circuit’s decision permits a drastic
departure from the traditional and proper role
of federal courts in state or local legislative
matters and is in conflict with the principles
enunciated in this Court’s decisions in Noerr
and Pennington.
This petition raises the issue of antitrust review by
federal courts of all regulatory functions of local and
state governments. In spite of the role of the state and
the extensive statutory basis for the action of the City of
Impact, the Fifth Circuit would nevertheless require, as
it did in its earlier opinion in this case, a judicial inquiry
into “whether there was a conspiracy” and an examina-
13
tion of the motives and intent which underlie the legis-
lative act of the City. Thus by the mere allegation of a
conspiracy, federal courts would go behind legislative
decisions of governmental bodies in order to identify and
then weigh the factors which contributed to the enact-
ment. The Petitioners suggest that such an examination
and review is in conflict with this Court’s decisions in
United Mine Workers v. Pennington, 381 U.S. 657
(1965) and Eastern Railroad Presidents Conference v.
Noerr Motor Freight, Inc., 365 U.S. 127 (1961). Fur-
thermore, because zoning always has some anticompeti-
tive effects, the decision has opened courthouse doors for
a tedious review of the motives behind all zoning ordin-
ances both at the time of their passage and, as here, at
a later time when a prospective plaintiff purchases a
residentially zoned lot. It is particularly significant in the
instant case that the Fifth Circuit is requiring such a
review without the City having ever been presented with
an opportunity to consider an amendment to the ordin-
ance or a variance. The filing of a federal antitrust action
should not excuse such a plaintiff from utilizing these
local procedures. See Brawner Building, Inc. v. Shehyn,
442 F.2d 847 (D.C. Cir. 1971).
Because of the disastrous impact which treble damage
liability would have upon the operations of innumerable
municipalities, federal antitrust review of the acts of
city governments must be carefully considered. Although
the majority of this Court rejected the dissenting view
that all actions of cities are protectible under Parker, this
4. Indeed a primary concern of Mr. Justice Blackmun, dissenting
in City of Lafayette, was the impact of treble damages on the services
provided by cities. 435 U.S. at 442.
14
Court in City of Lafayette nevertheless was careful to
delineate the circumstances under which such antitrust
review could take place. Ignoring these guidelines, the
Fifth Circuit has interposed another, and much broader,
basis for federal court review. By the mere allegation that
the legislative enactment of a municipality was part of
the conspiracy, the court of appeals would permit the
review of all municipal actions whatever their state
Statutory basis or uniquely governmental character, Tra-
ditionally the manner in which state and local govern-
ments conduct their legislative affairs has been guided
by the election process. The Fifth Circuit’s decision below
grants a potential veto power over these legislative enact-
ments to those antitrust plaintiffs whose perception of
community needs differs from that of the elected officials.
Prior to the Fifth Circuit's decisions in this case, that
court recognized the nearly universal rule that “the only
question which federal courts may consider is whether
the action of the zoning authority is arbitrary and capri-
cious and having no substantial relation to the general
welfare,” South Gwinnett Venture v. Pruitt, 491 F.2d 5
(Sth Cir. 1974) cert. denied 419 U.S. 837 (1974) [em-
phasis added]. The court of appeals opinion in the instant
case apparently creates an additional question for con-
sideration where a federal antitrust violation is alleged.
The district court reviewed the zoning ordinance of
the City of Impact and found it valid under the traditional
standards for review of zoning. This finding was unchal-
lenged on appeal and was assumed by the Fifth Circuit.
Rather than permitting the federal courts to become
zoning appeals boards, the Petitioners respectfully suggest
that federal court inquiry into the myriad of underlying
15
considerations should cease and that zoning and liquor
regulation should be returned to its proper legislative
Status in the Fifth Circuit.
(c) The manner in which the Fifth Circuit re-
considered this action on remand from this
Court departed from the usual and accepted
method of reconsideration in such a complex
and important area of law.
The importance of the issues presented by this petition
to all government entities which engage in such purely
governmental functions as zoning and liquor regulation
cannot be overstated. Especially in light of the complexi-
ties of the City of Lafayette opinion, these cities properly
looked to the court of appeals in the instant case to ad-
dress the application of City of Lafayette principles to
such a strongly governmental and state-authorized act
as zoning.
While the Fifth Circuit may very well have studied
the delicate standards of City of Lafayette and applied
them to this case, its opinion of two sentences does not
evidence such a study. Moreover, the court of appeals
entered its terse opinion without the benefit of any briefs
or argument. The Petitioners sought and still seek the
opportunity to present to the court their views on the
application of the City of Lafayette to this case, such as
set forth above. It is respectfully suggested that the
narrow affirmance by this Court in City of Lafayette does
not mean that the Fifth Circuit’s earlier decision in this
case, based upon that court’s City of Lafayette opinion,
is necessarily correct.
16
The denial to the Petitioners of an opportunity to
brief its views on the subtle changes introduced by City
of Lafayette, and, perhaps, to elicit a more detailed
opinion after the Fifth Circuit’s reconsideration, has im-
plications far beyond this case. In particular, by so
summarily adopting its earlier opinion in this case with-
out any explanation of the presumed application of -the
Court’s City of Lafayette opinion, the Fifth Circuit has
created enormous confusion among the thousands of
municipalities who regularly engage in zoning and assist
their state in the regulation of liquor sales. Because the
court of appeals did not distinguish the circumstances
of the instant case nor otherwise explain their implicit
holding that these sovereign acts of the City of Impact
are subject to antitrust liability, the only conclusion which
these governmental entities can draw from the court of
appeals’ opinion after remand is that their traditionally
governmental activities of zoning and liquor regulation
pursuant to state authority is, in the Fifth Circuit at
least, an activity outside the protection of Parker as ex-
plained in City of Lafayette. Whatever the proper result,
the Petitioners respectfully suggest that, at a minimum,
the Fifth Circuit should have explained its holding and
its views of the City of Lafayette under the unique and
compelling circumstances of this case. Because of the
central importance of zoning activities to nearly every
municipality in the country, many of which have meager
coffers, a more complete reconsideration of this case
after City of Lafayette was warranted in the interest of
justice and judicial efficiency.
17
QUESTION TWO: WHETHER A PRIVATE PLAIN-
TIFF HAS STANDING UNDER THE ANTITRUST
LAWS TO CHALLENGE A CITY’S OTHERWISE
VALID ZONING ORDINANCE WHEN THE BUSI-
NESS WHICH WAS ALLEGEDLY INJURED COULD
NOT COME INTO EXISTENCE BY REASON OF
STATE LAW AND THE ORDINANCE AND WHEN
THE LOCATION FOR WHICH THE BUSINESS IS
SOUGHT WAS ZONED RESIDENTIAL BEFORE
ITS PURCHASE BY PLAINTIFF?
(a) The Fifth Circuit’s decision conflicts with the
decision of other circuits by contravening im-
portant and well-established principles of
standing.
In granting summary judgment for the Petitioners, the
district court in part based its decision on doctrines of
causation, injury and standing. That court recognized
that Mr. Whitworth had acquired his lot six years after
that lot had been zoned as residential by the City of
Impact. Even if the Court of Appeals was correct in its
Parker analysis, its decision is in direct conflict with the
Court of Appeals for the District of Columbia in Clouser
v. David, 309 F.2d 233, 234 (D.C. Cir. 1962) cert.
denied, 372 U.S. 929 (1963). Under similar undisputed
facts, the Clouser court held that summary judgment
was appropriate for the Defendants when the “hardship,
if any, has not resulted from the location, situation, or
condition of the property, but solely from [the Plaintiff's]
appropriation of it for commercial purposes without first
having obtained the necessary change in zoning.” Sim-
ilarly, the Tenth Circuit in C. F. Lytle Company v. Clark,
491 F.2d 834 (10th Cir. 1974) refused to find that the
18
zoning ordinances resulted in any “taking” where the
Plaintiff's voluntary acts caused the hardship. By pur-
chasing a residentially zoned lot, Respondent Whitworth’s
protectable property interest never included, ab initio, a
potential for commercial use.’ Because no protectable
legal right of the Respondent Whitworth was affected by
any act of the City of Impact or its officials, the Fifth
Circuit, by allowing this case to continue, has broadened
traditional concepts of standing to an unconscionable
degree.
From a statutory perspective, the standing requirement
of Section 4 of the Clayton Act, 15 U.S.C. § 15, that a
private antitrust be “injured in his business or property”
has been seriously eroded by the Fifth Circuit’s decision.
It is fundamental that the injury required to confer
standing under Section 4 is a violation of a legal right.
Maltz v. Sax, 134 F.2d 2 (7th Cir. 1943) cert. denied,
319 U.S. 772 (1943). When as here, a plaintifl does not
have an operating business he has not suffered an injury
to his “business or property” and has no cause of action
unless he can further show that he had made substantial
preparation to enter the business and was on the threshold
of entry. Martin v. Phillips Petroleum Co., 365 F.2d
629 (5th Cir. 1966). But even if Respondent Whitworth
were to show a desire to enter the liquor business at his
location in Impact and show some preparation to do so,
it is certain that he could not, by operation of state law,
establish that business, because so long as the valid
zoning ordinance prevents the sale of liquor at that lo-
5. Texas courts have reached the same conclusion, In Swain v.
Board of Adjustment of City of University Park, 433 SW.2d 727
(Tex. Civ. App.—Dallas, 1968, writ ref'd n.re.) cert. denied 396
U.S. 277 (1969) the court held that ‘‘no vested rights were acquired
by the use of the property contrary to the purpose of the ordinance.”
19
cation he cannot obtain the necessary license from the
state. Given this factual and legal impossibility under
state law of establishing the business in question, the
Respondent can have no protectable “business or prop-
erty” within the meaning of Section 4.° Okenfenokee
Rural Electric Membership Corn. v. Florida Power &
Light Co., 214 F.2d 413 (Sth Cir. 1954); Peller v. In-
ternational Boxing Club, 227 F.2d 593 (7th Cir. 1955);
American Bankers Club, Inc. v. American Express Co.,
1977 Trade Cases + 61,247 (D. D.C. 1977). As with
the plaintiff in Okenfenokee, Respondent Whitworth had
“no legal right” without permission from the state. This
important and well-established requirement of causation
and a violation of a legal right has now apparently been
abandoned by the Fifth Circuit.
In contrast to other courts which require the plaintiff
to show that he would have been in the particular busi-
ness “but for” the defendants’ acts,’ the Fifth Circuit
has permitted Respondent Whitworth to maintain a cause
of action when the alleged injury results entirely from
the operation of state law. Petitioners respectfully urge
that when the sole cause of injury is valid state action,
it naturally follows that a plaintiff lacks standing under
Section 4 of the Clayton Act to go behind that state
action and maintain a claim against any private parties
who happen to benefit from it.
6. The standing requirements of Section 16 of the Clayton Act,
15 U.S.C. § 26 have been similarly interpreted. See, e.g., Credit
Bureau Reports, Inc. v, Retail Credit Company, 476 F.2d 989 (Sth
Cir. 1973); Reibert v, Atlantic Richfield Company, 471 F.2d 727
(10th Cir, 1973).
7, See, e.g., Delaware Valley Marine Supply Co. v. American
Tobacco Co., 184 F.Supp. 440 (D, Pa. 1960), aff'd 297 F.2d 199
(3rd Cir. 1961) cert, denied 369 U.S. 839 (1962),
For the foregoing reasons this Petition for a Writ of
20
CONCLUSION
Certiorari should be granted.
Respectfully submitted,
CLARK, THOMAS, WINTERS
& SHAPIRO
DONALD ScoTT THOMAS, JR.
PAUL J. VAN OSSELAER
Post Office Box 1148
Austin, Texas 78767
Attorneys for Petitioners,
Tom Roden and Pinkie’s, Inc.
SCARBOROUGH, BLACK, TARPLEY
& SCARBOROUGH
BEVERLY TARPLEY
Post Office Box 356
Abilene, Texas 79604
Attorneys for Petitioners,
City of Impact, Dallas Perkins,
Nancy Perkins, R. L. Perkins,
Dickie W. Maxwell, Marion Teel,
and Impact Development Corp.
21
APPENDIX “A”
EDGAR E. WHITWORTH,
d/b/a Dinkie’s Food Mart, Plaintiff-Appellant,
Vv.
DALLAS PERKINS, et al.,
Detendants-Appellees.
NO. 76-1593.
United States Court of Appeals,
Fifth Circuit.
July 17, 1978.
Appeal from the United States District Court for the
Northern District of Texas; Leo Brewster, Judge.
On Remand from United States Supreme Court.
Before TUTTLE, CLARK and RONEY, Circuit
Judges.
PER CURIAM:
The judgment of this Court reported at 559 F.2d 378
(Sth Cir. 1977) has been vacated and remanded by the
Supreme Court for further consideration in light of its
opinion in City of Lafayette v. Louisiana Power & Light
CO, aU Sue, 98 S.Ct. 1123, 55 L.Ed.2d 364
(1978).
Upon reconsideration in light of City of Lafayette, the
opinion of this Court as published is reinstated and the
judgment of the district court is reversed and remanded
for further proceedings consistent with our opinion and
that of the Supreme Court,
REVERSED AND REMANDED.
22
APPENDIX “B”
CITY OF IMPACT, et al.,
Petitioners
V.
EDGAR E. WHITWORTH, etc.
No. 77-734
Poe and opinion, Whitworth v. Perkins, 559 F.2d
8.
April 24, 1978. On petition for writ of certiorari to
the United States Court of Appeals for the Fifth Circuit.
Petition for a writ of certiorari granted, judgment va-
cated and case remanded to the Court of Appeals for
further consideration in light of City of Lafayette v.
Louisiana Power and Light Co., 435 U.S... 98
S.Ct. 1123, 55 L.Ed.2d 364 (1978).
23
APPENDIX “C”
EDGAR E. WHITWORTH,
d/b/a Dinkie’s Food Mart, Plaintift-Appellant,
V.
DALLAS PERKINS, et al.,
Defendants-Appellees,
NO. 76-1593.
United States Court of Appeals,
Fifth Circuit.
September 19, 1977.
Appeal from the United States District Court for the
Northern District of Texas.
Before TUTTLE, CLARK and RONEY, Circuit
Judges.
RONEY, Circuit Judge:
This antitrust suit charges that defendants conspired
to restrain competition in the sale of alcoholic beverages
in Impact, Texas, by preventing plaintiff from making
such sales on his property. The defendants are the town
(a municipal corporation), six individuals (sued both
individually and as aldermen of the town), and three
private Texas corporations (including the corporation
which developed this new town and those authorized to
sell liquor in the town).
The district court entered summary judgment for the
defendants. It concluded that the city’s valid zoning ordi-
24
nance, under which the operation of a liquor business on
plaintiff's property is prohibited, bars recovery regardless
of whether defendants’ actions otherwise violate the anti-
trust laws. It reasoned that the “cause” of the plaintiff's
injury would be the ordinance rather than any illegal con-
spiracy.
[1] The judgment is reversed. The mere presence of
the zoning ordinance does not necessarily insulate the
defendants from antitrust liability where, as here, the
plaintiff asserts that the enactment of the ordinance was
itself a part of the alleged conspiracy to restrain trade.
There are also significant questions concerning the avail-
ability of the “state action” exception to the antitrust
laws which may have to be legally and factually developed
and confronted on remand in the determination of this
case.
Taylor County, Texas, and its largest city, Abilene,
do not permit the sale of alcoholic beverages. In 1961
the individual defendant Dallas Perkins incorporated
the town of Impact near Abilene under the relevant
Texas statutes. Tex. Rev. Civ. Stat. Ann. art. 1133 (Ver-
non 1963). It had over the requisite 200 inhabitants but
only 31 qualified voters. After litigation, Impact was held
by the Texas courts to have been validly incorporated.
See Perkins v. State, 367 S.W.2d 140 (Tex. 1963).
Shortly thereafter, the new city authorized the sale of
alcoholic beverages under the local option provisions of
Texas law. Tex. Penal Code Ann. art. 666-32 (Vernon
1976 Auxiliary Pamphlet). Thus was created an “oasis”
on the boundary of a “dry” city in a “dry” county. At
approximately the same time the city council enacted a
comprehensive zoning ordinance. That ordinance pro-
25
hibited the sale of alcoholic beverages on lots zoned
residential.
In 1967 the plaintiff purchased a lot zoned residential.
In 1975 he attempted to secure appropriate authorization
to sell alcoholic beverages on that land. This was denied
by the city because of the ordinance. He then com-
menced this action against the City of Impact, its mayor,
secretary, and the three other aldermen of Impact, and
various other private defendants engaged in or related
to persons engaged in the sale of alcohol in Impact.
The district court determined that the zoning ordi-
nance had been enacted in accordance with Texas law.
That determination is accepted as being accurate for the
consideration of this case.
The court then stated that it had no authority to inquire
into the “motives or the integrity of the members of the
municipal legislative body in the exercise of their legisla-
tive powers” and concluded that the plaintiff would “not
be entitled to use his property in Impact for a place
to sell alcoholic beverages regardless of what the de-
fendants’ conduct has been in regard to the alleged anti-
trust violations.”
[2] Plaintiff clearly alleges that the defendants en-
acted the ordinance for the precise purpose of excluding
him from the liquor business in furtherance of their con-
spiracy:
At various times since the inception of the contract,
combination or conspiracy, the Defendants have
engaged in various overt acts in furtherance thereof,
some of which are known to the Plaintiff... .
Specifically, the Defendants, . . . in their capacity as
Aldermen of the City of Impact, have at various
26
times purportedly enacted various ordinances regu-
lating the sale of alcoholic beverages within said
City and restricting such sales to certain areas.
These ordinances include . . . an ordinance dated
December 29, 1961, entitled “Zoning Ordinance
for the City of Impact, Texas,” ... .
If the plaintiff can prove this allegation and that he
was harmed by the zoning ordinance, questions remain as
to whether the ordinance was passed as part of an illegal
conspiracy, and whether any acts violative of the anti-
trust laws are nonetheless immunized because the ordi-
nance was the product of state action.
The starting point for the latter question is Parker v.
Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315
(1943). In that case an injunction was sought against
a state agricultural marketing program for raisins. The
program had been created by state statute and reduced
the amount of competition in the market for raisins.
The Supreme Court held that “nothing in the language
of the Sherman Act or in its history . . . suggests that
its purpose was to restrain a state or its officers or agents
from activities directed by its legislature.” 317 U.S. at
350-351, 63 S.Ct. at 313. In the three decades since
that opinion the contours of this exclusion have been
constantly redefined.
It is readily apparent that there are many factual dif-
ferences between the scheme left undisturbed in Parker
and the one here at issue. Parker involved the conduct of
a state, while we are concerned with a city, acting under
state law. Parker involved a program allegedly enacted
for the public good, while here the allegation is that the
program was enacted to further private financial ob-
jectives. Finally, in Parker the questioned state program
MM rc a /
27
had been adopted “with the collaboration of officials of
the Department of Agriculture and aided by loans from
the Commodity Credit Corporation recommended by
the Secretary of Agriculture.” There is no such federal,
or even state conduct suggesting tacit approval in the
present case. In fact, this case appears to fall precisely
within a category that the Parker Court specifically re-
frained from dealing with. As the Supreme Court put
it, that case involved “no question of the state or its
municipality becoming a participant in a private agree-
ment or combination by others for restraint of trade”.
317 U.S. at 351-352, 63 S.Ct. at 314. That is the ques-
tion here.
[3] In resolving this type of question this Court
has recognized that the Parker doctrine is not to be ap-
plied automatically. A thoughtful analysis is called for to
ensure that it is a bona fide governmental decision for
which exemption is being sought.
[I]t is not every governmental act that points a path
to an antitrust shelter. We reject “the facile con-
clusion that action by any public official automatic-
ally confers exemption.” George R. Whitten, Jr.,
Inc. v. Paddock Pool Builders Inc., 1 Cir. 1970, 424
F.2d 25, 30. In Ashville Tobacco Board of Trade,
Inc. v. FTC, 4 Cir. 1959, 263 F.2d 502, 509, the
court stated: “. . . such action must be state action
not individual action masquerading as state action.
A state can neither authorize individuals to perform
acts which violate the antitrust laws nor declare
that such action is lawful.”
Woods Exploration & Pro. Co. v. Aluminum Co. of
America, 438 F.2d 1286, 1294 (Sth Cir. 1971), cert.
denied, 404 U.S. 1047, 92 S.Ct. 701, 30 L.Ed.2d 736
28
(1972). This Court’s focus on the nature of the decision
made by the governmental unit which claims the protec-
tion of Parker was reflected in Jeffrey v. Southwestern
Bell, 518 F.2d 1129, 1134 (Sth Cir. 1975), where the
activity was scrutinized to be sure that it was not “per-
functory” or “slipshod.” See also Gas Light Co. of Colum-
bus v. Georgia Power Co., 440 F.2d 1135 (Sth Cir.
1971), cert. denied, 404 U.S. 1062, 92 S.Ct. 732, 30
L.Ed.2d 750 (1972).
If, on remand, the district court reaches the state
action exemption inquiry, it will need to take careful
note of two recent Supreme Court opinions which clarify
the scope of that doctrine. Cantor v. Detroit Edison Co.,
428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976),
concerned a regulated utility which provided free light
bulbs to consumers. It could not discontinue this practice
unless it filed a new tariff with the state public service
commission. The cessation of the light bulb program with-
out governmental approval would constitute a violation
of state law. The Court nonetheless held that the state
action defense was not available. Bates v. State Bar of
Arizona, U.S. , 97 S.Ct. 2691, 53 L.Ed.2d_ __
(1977), addressed an attack on State Supreme Court
rules prohibiting lawyers from advertising. The Court
there ruled that because the allegedly anticompetitive
practice had been adopted by the affirmative act of the
state and reflected its policies, the state action defense
was available. Whether Parker might shield the defend-
ants in the instant case can only be determined by careful
consideration of these latest pronouncements.
[4] Finally, we note that where the governmental unit
concerned is other than a state itself, such as the munici-
29
pality here, a more thorough analysis is required before
Parker can be held to apply.
A subordinate state governmental body is not ipso
facto exempt from the operation of the antitrust
laws. Rather, a district court must ask whether the
state legislature contemplated a certain type of anti-
competitive restraint. . . . the connection between
a legislative grant of power and the subordinate
entity’s asserted use of that power may be too
tenuous to permit the conclusion that the entity’s
intended scope of activity encompassed such con-
duct. Whether a governmental body’s actions are
comprehended within the powers granted to it by
the legislature is, of course, a determination which
can be made only under the specific facts in each
case,
City of Lafayette, La. v. La. Power & Light Co., 532
F.2d 431, 434 (Sth Cir. 1976), cert. granted, ___US.
—___., 97 S.Ct. 1577, 51 L.Ed.2d 791 (U.S. 1977).
Based on the pleadings in this case and this line of
authority interpreting Parker, we are unable to say at
this early stage that the plaintiff could prove no set of
facts which would entitle him to relief. Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957);
Hepperle v. Johnston, 544 F.2d 201 (Sth Cir, 1976).
In the oral argument of this case, numerous factual
representations were made in defense of the district court's
decision which have no support in the record now before
us. Matters such as the number of acres in Impact which
are zoned for commercial use, who owns such land, the
relationship of these zones to each other, and the past
and present status of the parcel of land owned by the
plaintiff are all issues which do not appear in the docu-
30
ments used to come to a summary disposition. In order
to properly develop these, and other facts, and to conduct
the inquiry into the Parker question, if such an inquiry
proves necessary, the case must be remanded. Our deci-
sion does not in the least forecast the probable outcome
of this litigation. Whether there was a conspiracy, or
whether any conspiracy restrained trade or competition,
or whether the zoning provisions “fall within the limited
state action immunity doctrine [are] question[s] that
we do not reach; it is for the trial court, in the first
instance, to make this determination.” Litton Systems,
Inc. v. Southwestern Bell Tel. Co., 539 F.2d 418, 423
(Sth Cir. 1976).
REVERSED AND REMANDED.
—————
31
APPENDIX “D”
IN THE
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
ABILENE DIVISION
CA 1-75-44
EDGAR E, WHITWORTH, D/B/A
DINKIE’S FOOD MART
V.
DALLAS PERKINS, NANCY PERKINS, His Wife,
R. L. PERKINS, DICKIE W. MAXWELL, MARION
TEEL, IMPACT DEVELOPMENT CORPORATION,
TOM RODEN, PINKIE’S, INC., CITY OF IMPACT
and HFW CORPORATION
(Filed January 30, 1976)
MEMORANDUM OPINION ON MOTIONS
FOR SUMMARY JUDGMENT
This suit, brought under Section 1 of the Sherman
Anti-Trust Act (15 U.S.C. #1), charges that the de-
fendants have engaged in various acts amounting to a
contract, combination or conspiracy in restraint of trade
‘or commerce among the several states. The plaintiff claims
that such alleged conduct has prevented him from selling
alcoholic beverages on a lot in Impact owned by him.
He seeks declaratory and injunctive relief, treble damages,
32
attorneys’ fees and court costs on account of the alleged
anti-trust violations. He also alleges that certain acts of
the defendant are in violation of Texas law, and prays
for declaratory and injunctive relief in relation thereto,
The defendants are:
1, The town of Impact, Texas, a municipal corpora-
tion.
2. Dallas Perkins and his wife, Nancy Perkins, R. L.
Perkins, Dickie W. Maxwell and Marion Teeff each of
whom is sued both individually and in his official capacity
as Aldermen of the City of Impact.
3. Impact Development Corp., Pinkie’s Inc., and HFW
Corp., each of which is a private corporation chartered
under the laws of Texas.
The theory of plaintiff's case is that the town of Impact
was chartered, and has been manipulated, by the other
defendants for the purpose of enabling such defendants
to have a monopoly on the sale of alcoholic beverages
on a small “oasis” in the middle of a vast expanse of
“dry” territory.
The case is now before the Court on motions filed by
the defendants for dismissal or, in the alternative, for
summary judgment.’ Briefs have been filed and a hearing
has been held on the motions. One of the grounds relied
upon by the movants is that a zoning ordinance of the
town of Impact, adopted about six years before plaintiff
1. Three of such motions are filed. One is by the town of Impact,
Dallas Perkins, Nancy Perkins, R. L. Perkins, Dickie Maxwell and
Marion Teel. Another motion is by the defendants, Tom Roden and
Pinkie’s, Inc, A third motion is by Impact Development Corporation.
The first motion sets out the grounds relied upon, and the other
motions adopt such grounds by reference.
33
acquired his lot, limits the use of the area which includes
plaintiff's property to residential purposes only; and that
the plaintiff would therefore not be entitled to use his
property in Impact for a place to sell alcoholic beverages
regardless of what the defendants’ conduct has been in
regard to the alleged anti-trust violations. The Court is
of the opinion that this point is well taken, and that con-
sideration of the other grounds is unnecessary. The case
will be disposed of by summary judgment.
A review of the background of the town of Impact
and the liquor business there will be helpful to an under-
standing of the claims here presented. That review is
based on admissions of the parties, affidavits and docu-
ments on file herein, and the facts of which the Court
may take judicial notice.* Some of these facts are men-
tioned in the opinions of the Supreme Court of Texas
involving challenges of the legality of the incorporation
of Impact. Perkins v. Ingalsbee, 347 $.W.2d 926 (1961).
and Perkins v. State, 367 S.W.2d 140 (1963).
Impact is in Taylor County, Texas, Abilene is the
county seat of Taylor County and the hub city of the
area of Texas generally known as the “Big Country”.
The 1960 census showed that Abilene had a population
of 90,368. Three large church supported schools of higher
learning have been located in the city for many years.’
At the time of the incorporation of Impact in 1961,
Abilene and all of Taylor County and most of the voting
2, The matters judicially noticed are geographical and historical
facts of common knowldge and census figures. 600 California Corp.
v. Harjean, N.D. Tex., 284 F.Supp. 843 (1968), and cases therein
cited.
3. Abilene Christian College is supported by the Church of
Christ; Hardin Simmons University, 4 the Baptist Church; and
McMurray College, by the Methodist Church,
34
units in the surrounding counties did not allow the sale
of alcoholic beverages. Dallas Perkins, one of the defend-
ants herein, undertook to provide an alcoholic beverage
oasis through the incorporation of Impact and a subse-
quent election therein under the Texas Liquor Control
Act.*
The local option system governs the sale of alcoholic
beverages in Texas. Art. 16, Sec. 20, Constitution of
Texas; Art. 666-32, Vernon’s Ann. Texas Penal Code.°
Upon the filing with the proper county clerk of a petition
meeting the statutory requisites and containing the actual
signatures of at least 35% of the qualified voters of a
county, justice precinct or incorporated city or town, an
election is required to be called to determine whether
to make legal the sale of alcoholic beverages of one or
more of the various types and alcoholic contents in the
voting unit involved,
There was in 1960 a sparsely settled, unincorporated
area of slightly more than 600 acres, with 85 qualified
voters, known as North Park, adjoining the northwest
boundaries of Abilene. Perkins selected 47.13 acres out
of that area to incorporate as the town of Impact.®
4. The local option provisions of the Texas Liquor Control Act
permit authorization of the sale of alcoholic beverages in a municipal
corporation in a dry county. Myers v. Martinez, Tex. Civ. App.,
320 S.W.2d 862, writ refused, n.r.e., 326 S.W.2d 171,
5. Chapter 8, Title 11 of the Texas Liquor Control Act, was
originally codified as Articles 666 (intoxicating liquors) and 667
(malt liquors), Vernon’s Ann, Texas Penal Code, and that was the
citation for it at the time of the incorporation of Impact and the
liquor election therein. The new Texas Penal Code, adopted in 1973,
neither repealed nor incorporated the above provisions of the Act.
They are still in force, and are found in the Penal Auxiliary Laws
Pamphlet pending enactment of the Alcoholic Beverages Code.
6. Perkins was severely criticized by his opponents in the state
court litigation involving the incorporation of Impact for lifting only
6 et
35
Art, 1133, Vernon’s Ann. Texas Civil Statutes, permitted
the incorporation of a town having more than 209 in-
habitants. The area proposed to be incorporated as Impact
had slightly more than 200 inhabitants, 31 of whom
were qualified to vote. The vote in the election on the
issue of incorporation was 27 “for” and none “against”.
The town of Impact was declared to be incorporated on
August 2, 1961. The municipal officials were elected by
write-in votes on At ust 14, 1961. Shortly thereafter,
a local option election was held, and the voters of Impact
legalized the sale of all types of alcoholic beverages for
off-premises consumption.
The land in the Impact area was a marsh until recent
years, and the improvements on it are few and inexpen-
sive. There were no commercial or public buildings,
churches or schools there at the time of its incorporation.
There has been little growth or development since the
incorporation. Four of the five commercial buildings there
now are used in connection with the liquor and beer
businesses which plaintiff alleges are owned and operated
by some of the defendants. The other commercial building
is used solely for a grocery store. There are still no public
buildings, churches or schools in Impact.
On October 4, 1967, the plaintiff purchased from
Jimmie M. Lorenz the lot in Impact on which he now
says he wants to operate a liquor business. On December
29, 1961, the town of Impact enacted a comprehensive
zoning ordinance which is still in effect. That ordinance
restricts to residential use the area embracing the lot
a small parcel out of the larger area of North Park, It was not
unusual to expect a person with his plans to use only land that he
owned or could control, as local option elections could be held
frequently.
36
in question, There is no claim that there has ever been
any commercial use of any of that property, The plaintiff
concedes that the zoning ordinance prohibits the use of
his lot for the operation of a liquor business or for any
other commercial use. He says, however, that the zoning
ordinance is invalid for each of the following reasons.
1. It constitutes a deprivation of due process and a
taking of property without just compensation in violation
of the Fifth and Fourteenth Amendments of the federal
constitution.
2. It was enacted for the purpose of preventing com-
petition which was not within the contemplation of the
state statutes authorizing municipalities to enact such
ordinances,
3. It was enacted by a city council “comprised in
significant part of persons having such a direct or in-
direct conflict of interest as to render ordinances passed
by them relating to the regulation of the sale of alcoholic
beverages null and void.”
The validity of zoning ordinances enacted pursuant to
statutory authority has long been recognized by the Su-
preme Court of the United States and the Supreme Court
of Texas. Euclid v. Amber Realty Co., 272 U.S. 365,
47 S.Ct. 114, 71 L.Ed. 303 (1926); Lombardo vy. City
of Dallas, Tex. S.Ct., 73 S.W.2d 475 (1934). Such
ordinances are not unconstitutional merely because they
result in loss to owners of property by restricting its use.
Lombardo v. City of Dallas, supra, at p. 478. They
do not constitute a taking of property under the right
of eminent domain requiring compensation. Ellis v. City
of West University Place, Tex. S.Ct., 175 S.W.2d 396,
37
398 (1943). It is not necessary to go into detail in
describing the ordinance here involved. It is on file with
the papers in this case, There is no claim of spot zoning
or of retroactivity, The ordinance is comprehensive in
nature and within the scope of the Texas zoning statutes.
(Art, 101 1a, b, Vernon’s Ann, Tex, Civ. Statutes). There
is no claim that there was a business operation on the
property in question at the time of the passage of the
ordinance. There is no basis for the claim that the ordi-
nance was unconstitutional on the grounds set out in the
first contention, Central Bank & Trust Co. v. City of
Miami Beach, 5 Cir., 392 F.2d 549 (1968); Blackman
v. City of Big Sandy, 5 Cir., 507 F.2d 935 (1975).
The second and third grounds—the motives of the
councilmen and their conflict of interest—will be disposed
of together.
Plaintiff says that the City Council which passed the
zoning ordinance was composed of Dallas Perkins, the
owner of an interest in the liquor stores in Impact, his
wife, Nancy Perkins, his father, R. L. Perkins, and two
employees of the liquor stores owned by some of the
defendants. He argues that their connection with or rela-
tion to such liquor stores created such a conflict of interest
in regard to the zoning of Impact that the zoning ordi-
nance voted for by them was invalid.
The passage by a municipal corporation of a zoning
ordinance represents the exercise of its legislative powers.
City of Bellaire v. Lamkin, Tex. §.Ct., 317 S.W.2d 43
(1958). The courts have no authority to inquire into
the motives or the integrity of the members of the munici-
pal legislative body in the exercise of their legislative
powers. Soon Hing v. Crowley, 113 U.S. 703, 710, 5
38
S.Ct. 730, 28 L.Ed. 1145 (1884); Auto Transit Co. v.
City of Fort Worth, Tex. Civ. App., 182 S.W. 685
(1916), writ refused; City of San Antonio v. Fetzer,
Tex. Civ. App., 241 S.W. 1034 (1922), writ refused;
City of San Antonio v. Walters, Tex. Civ. App., 253
S.W. 544 (1923), writ refused; Community Natural Gas
Co. v. Southern Texas Utilities Co., Tex. Civ. App., 13
S.W.2d 184 (1929); writ dis.; Burford v. City of Austin,
Tex. Civ. App., 379 S.W.2d 671 (1964), writ refused,
n.r.e.; 2 McQuillin on Municipal Corporations, Sec. 739.
City of San Antonio v. Fetzer, supra, quoted the fol-
lowing from McQuillin on Municipal Ordinances, Sec.
257:
“Neither the motives of the members, nor the in-
fluences under which they acted, can be shown to
nullify an ordinance duly passed in legal form, with-
in the scope of their corporate powers.”
“A court has no right to sit in judgment upon
the motive or intent of such bodies in the perform-
ance of a purely legislative act whereof they have
undoubted jurisdiction. That right belongs exclu-
sively to the voters to whom the legislative body is
responsible.” City of San Antonio v. Fetzer, supra.
The following is quoted from the opinion in City of
San Antonio v. Walters, supra:
“In considering the questions involved in this
appeal, we remove from the discussion all inquiry
into the good faith or motives of the commission
government of the City of San Antonio. That is a
matter not subject to judicial inquiry.”
In oral arguments on the motions, plaintiff's counsel
stated that he had been unable to find a Texas case
39
holding an ordinance of general application invalid be-
cause it affected the interest of one or more of the
members of the municipal legislative body who voted
for its passage. The cases which he claims are most
nearly in point are Moody vy. City of University Park,
Tex. Civ. App., 278 S.W.2d 912 (1955), writ refused,
n.r.e.; and Hager v. State et rel Te Vault, Tex. Civ.
App., 446 S.W.2d 43 (1969), writ refused, n.r.e. Neither
one of those cases is in point.
In the Hager case, it was held that a member of a
city council whose recall was demanded was disqualified
to vote on the resolution which authorized notice of
appeal from judgment in mandamus action requiring
city council to call an election for such recall. That case
is distinguishable on the ground that the subject matter
voted upon directly and immediately affected the council-
man in question individually, instead of being one of
general application.
The Moody case involved members of the City Board
of Adjustment. The powers in question were quasi-
judicial, not legislative. The members of the Board were
also appointed, rather than elected.
It would be impossible for a legislative body to func-
tion if its members were required to operate under the
conflict of interest standard applied to judges, as plaintiff
here contends they should be. How many members of
Congress, state legislatures or city councils would be left
to vote on a general tax bill, if all those affected by the
taxes were disqualified? Successful business men are
constantly urged to serve on city councils. They are af-
fected by many of the ordinances of general application.
It is apparently necessary to make the test whether or
40
not the proposed legislation directly and immediately
affects the legislator individually.’
The Court is of the opinion that the zoning ordinance
bars recovery by the plaintiff as a matter of law, and
that summary judgment should be rendered in favor of
the defendants.
Signed, January 29, 1976.
/s/ LEO BREWSTER
Judge
7. Nothing herein shall be taken to mean that the Court per-
sonally endorses the conduct of the members of the City Council,
if it was as claimed by the plaintiff. The cases apparently hold that
more harm would be done by allowing — into the motives of
legislators voting on matters of general application, than by not
doing so.
Dic i et ——
41
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
ABILENE DIVISION
C.A. NO. 1-75-44
EDGAR E. WHITWORTH, D/B/A
DINKIE’S FOOD MART
Vv.
DALLAS PERKINS, NANCY PERKINS, His Wife,
R. L. PERKINS, DICKIE W. MAXWELL, MARION
TEEL, IMPACT DEVELOPMENT CORPORATION,
TOM RODEN, PINKIE’S, INC., CITY OF IMPACT
and HFW CORPORATION
* * *
SUMMARY JUDGMENT
The motions for summary judgment filed by the de-
fendants herein have been duly presented and argued
in a hearing held after proper notice, with the respective
attorneys of record for the various parties hereto present
and participating; and the Court has reached the con-
clusion that such motions should be granted for the rea-
sons set out in its memorandum opinion filed in con-
nection herewith.
It is accordingly decreed that the plaintiff, Edgar E.
Whitworth, take nothing as against any of the defendants
herein, and that the court costs of this suit be taxed
against him.
Signed, January 29, 1976.
/s/ LEO BREWSTER
Judge
42
APPENDIX “E”
APPLICABLE STATUTES
(in pertinent part)
Section One, Sherman Act, 15 U.S.C. § 1:
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. . .
Section Four, Clayton Act, 15 U.S.C. § 15:
. . . [A]ny person who shall be injured in his
business or property by reason of anything forbidden
in the antitrust laws may sue therefor . . . and shall
recover threefold the damages by him sustained... .
Section Sixteen, Clayton Act, 15 U.S.C. § 26:
Tex.
Any person, firm, corporation, or association shall
be entitled to sue for and have injunctive relief, in
any court of the United States having jurisdiction
over the parties, against threatened loss or damage
by a violation of the antitrust laws . . . when and
under the same conditions and principles as injunc-
tive relief against threatened conduct that will cause
loss or damage is granted by courts of equity, under
the rules governing such proceedings... .
Rev. Civ. Stat. Ann. art. 101la:
For the purpose of promoting health, safety,
morals, and for the protection and preservation
of . . . the general welfare of the community, the
legislative body of cities and incorporated villages
is hereby empowered to regulate and restrict . . . the
location and use of buildings, structures, and land for
trade, industry, residence, or other purpose... .
ee
Sa 4 ie ll Neat RB
ee? eet nee owe
43
Texas Liquor Control Act, V.A.T.S.
Penal Auxiliary Laws, Art. 666-4:
. . » (a) It shall be unlawful for any person to
manufacture, distill, brew, sell, possess for the pur-
pose of sale, import into this state, export from the
state, transport, distribute, warehouse, store, solicit
orders for, take orders for, or for the purpose of
sale to bottle, rectify, blend, treat, fortify, mix, or
process any liquor in any wet area without first hav-
ing procured a permit of the class required for such
privilege... .
Texas Liquor Control Act, V.A.T.S.
Penal Auxiliary Laws, Art. 666-24:
In any city where the sale of liquor as herein de-
fined is prohibited by its charter from being sold in
its residence section, or any part thereof, such charter
amendment shall remain valid and continue effective
until such time as said charter provision may be
repealed or amended as provided by law.
Texas Liquor Control Act, V.A.T.S.
Penal Auxiliary Laws, Art. 666-54:
. .. The city secretary or clerk of the city in which
an application for a license or permit is made shall
certify whether or not the location or address is in
a wet area and whether or not the sale of alcoholic
beverages for which license or permit is sought is
prohibited by charter, ordinance or any amendment
thereto.
Texas Liquor Control Act, V.A.T.S.
Penal Auxiliary Laws, Art. 667-1012:
In any incorporated city or town where the sale
of beer as defined in the Texas Liquor Control Act
is prohibited by charter or amendment thercto or
44
by any ordinance from being sold in the residential
section, such charter amendments or ordinances shall
remain valid and continue effective until such time
as such charter provisions, amendments, or ordi-
nances may be repealed or amended.
All incorporated cities and towns are hereby
authorized to regulate the sale of beer within the
corporate limits of such cities and towns by charter
amendment or ordinance, and . . . designate certain
zones in the residential section or sections of said
cities and towns where . . . such sales may be pro- |
hibited. ...
NOTE: In 1977, after the filing of the instant case, the Texas
Legislature repealed the entire Texas Liquor Control Act and sub-
stituted therefor the ALCOHOLIC BEVERAGE CODE, which made
no substantive change in the above sections.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.