Amicus Curiae Brief — Fisher v. Berkeley

Be

NO. 84-1538

In The

Supreme Court of the Gnited States

October Term, 1985

ALEXANDRA FISHER, MARGUERITE JACOBS, MORT BAKER,

RICHARD LAWHORN and ANTHONY KERSHAW, individuals; and

LEVIN-ZEMEL, a California corporation,

Appellants,

CITY OF BERKELEY, CALIFORNIA, a municipal corporation; BER-

KELEY CITY COUNCIL, and BERKELEY RENT STABILIZATION

BOARD,

Appellees.

ON APPEAL FROM THE SUPREME COURT OF THE STATE OF

CALIFORNIA

BRIEF FOR THE STATE OF NEW JERSEY DEPARTMENT OF >

THE PUBLIC ADVOCATE AS AMICUS CURIAE IN SUPPORT OF j-=

APPELLEES. i—

ie

RICHARD E. SHAPIRO, * ALFRED A. SLOCUM, —

Director Acting Public Advocate ——

Division of Public Interest Department of the Public foe)

Advocacy Advocate — «

DAVIDG. SCIARRA, Richard J. Hughes ;

Assistant Deputy Public Justice Complex a

Advocate CN 850 <r

Trenton, NJ 08625 —

(609) 292-1693 <r

* Counsel of Record

—

C9

handled

-i-

TABLE OF CONTENTS

STATEMENT OF INTEREST OF

AMICUS CURIAE_............... 2

SUMMARY OF ARGUMENT ........ 9

ARGUMENT

THE ANTITRUST PRINCIPLES

GOVERNING PRIVATE BUSINESS

ACTIVITY SHOULD NOT BE

MECHANICALLY APPLIED TO

MUNICIPAL RENT CONTROL

ORDINANCES DESIGNED TO

PROMOTE THE GENERAL

DET ctuu ceeGboec Cee cet ence 13

A Pe Tee 33

-ii-

TABLE OF AUTHORITIES

CASES Page

Ake v. Oklahoma,

U.S. , 105 S. Ct.

1087 (1985) _—........... 3

AMN, Inc. v. So.Bruns. Tp. Rent

Leveling Board, 93 N.J. 518, 461

A.2d 1138 (1983) . 7

Brunetti v. Borough of New Milford,

68 N.J. 576, 350 A.2d 19

SED maesesscece 15

City of Lafayette v. Louisiana Power

and Light Company, 435 U.S.

| irre 19, 25, 32

Community Communications Company,

Inc. v. City of Boulder,

Colorado, 4.9 U.S. 40

i 12, 19, 22, 30, 31

Dome Realty v. Paterson,

83 N.J. 211, 416 A.2d

334 (1980) _.......... 28

Eastern Railroad Presidents Conference

v. Noerr Motor Freight, 365 U.S.

St} 21

Fisher v. City of Berkeley,

693 P.2d 261, 278 (Cal.

| rere rere 19, 23

Harry's Village, Inc. v. Egg Harbor

., 89 N.J. 576,

446 A.2d 862 (1982).. 16

Hutton Park Gardens v. West Orange

‘Town Council, 68 N.J. 543, 350

A.2d 1 (1975) ...... 2

~iii-

TABLE OF AUTHORITIES-Continued

Inganamort v. Borough of Fort

Lee, 120 N.J. Super. 286,

293 A.2d 720, (Law Div.

1972), affirmed, 62 N.J.

521, 303 A.2d 298, (1973)

appeal after remand, 72

N.J. 412, 371 A.2d 34

CE Lt hn a pits ae 6 5, 13, 14, 15, B, BB

Jones v. United States,

ae FP , we

S.Ct. 3043 (1983).... 3

Klein v. Califano,

986 F.2d 250 (3d Cir.

RE Ce GN 6 oa. s 3

Kremens v. Bartley,

431 U.S. 119 (1977). 4

Matter of Egg Harbor Associates,

185 N.J. Super. 507, 449 A.2d

1324 (App. Div. 1982), aff'd.,

94 N.J. 358, 464 A.2d 1115

EE 6

Mt. Laurel Twp. v. Dept. of the

Public Advocate, 83 N.J. 522,

416 A.2d 886 (1980). 4

N.J. Builder's Association v.

Mayor of East Brunswick,

60 N.J. 222, 287 A.2d

WEED ‘Vveee cee « 28

Orange Taxpayers Council, Inc. v.

Orange, 83 N.J. 246, 416

A.2d 353 (1980)..... 17

Overlook Terrace v Management Corp.

v. Rent Control Bd., 71 N.J. 451,

366 A.2d 321 (1976). 3

Parham v. J.R.,

442 U.S. 584 (1974). 4

lem oly li pew:

-iv-

TABLE OF AUTHORITIES-Continued

Pennhurst State School v. Halderman,

451 U.S. 1 (1981)... 3

Property Owners Ass'n. of N. Bergen

v. Tp. of N. Bergen, 74 N.J.

327, 378 A.2d 25

Re: PhO os a 7

Pruneyard Shopping Center

v. Robins, 477 U.S. 74,

Be Mc ccccccccece 29

Silkwood v. Kerr McGee Corp.,

_ _ U.S. __, 10458.Ct.

615 (1984) _............ 3

So. Burlington Cty. NAACP v. Tp.

of Mt. Laurel, 67 N.J. 151,

336 A.2d 713 (1975), cert.

denied, 423 U.S. 808

(1975) (Mt. Laurel I).. 2, 6, 16

So. Burlington Cty. NAACP

v. Tp. of Mt. Laurel,

92 N.J. 158, 456

A.2d 390 (1983)

(Mt. Laurel II)...... 3, 6, 7, 16, 26, 29

Summer v. Teaneck,

53 N.J. 548, 251 A.2d

761 (1969)........... 14, 18

Sunrise Village Associates

v. Borough of Roselle

Park, 181 N.J.Super.

565 (App. Div.

BELA easccevececers 28

Town of Hallie v. City of Eau

Claire, U.S. .

105 S. Ct. 1713

0 See re Terre 20, 25, 27

ee ee

-V-

TABLE OF AUTHORITIES--Continued

United Building Construction and

Trades Ccuncil of Camden

County v. City of Camden,

U.S. , 104 S. Ct. 1020

I tata aie

Van Ness v. Borough of Deal,

78 N.J. 174, 393 A.2d

i: errr

N.J.S.A. §§2A:42-74 and

a re

N.J.S.A. 51:27E-2 ......

N.J.S.A. 52:27E-28

Re

N.J.S.A. 52:27E-29 ......

N.J.S.A. 52:37E-30 ......

N.J.S.A. 52:27E-31 ......

N.J.S.A 52:27E-41.1

re

im U.8.G. Geiev-- ......

42 U.S.C. §6012_.........

Barr, “Guidelines For

Drafting Rent Control Laws:

Lessons of A Decade," 35

Rutgers L. Rev. 723,

TC Caddeu cs buces

Barr, “Rent Control In

The 1970's: The Case

of the New Jersey Tenants'

Movement," 28 Hastings

L.J. 631 (1977)......

14, 15

15

-vi-

TABLE OF AUTHORITIES-Continued

Brennan, "State Constitution

and the Protection of

Individual Rights," 90

Harv. L. Rev. 489

30

No. 84-1538

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1985

ALEXANDRA FISHER, MARGUERITE JACOBS,

MORT BAKER, RICHARD LAWHORN and

ANTHONY KERSHAW, individuals;

and LEVIN-ZEMEL, a California corporation,

Appellants,

vs.

CITY OF BERKELEY, CALIFORNIA, a

municipal corporation ;

BERKELEY CITY COUNCIL, and

BERKELEY RENT STABILIZATION BOARD,

Appellees.

ON APPEAL FROM THE SUPREME COURT

OF THE STATE OF CALIFORNIA

BRIEF FOR THE STATE OF NEW JERSEY

DEPARTMENT OF THE PUBLIC ADVOCATE

AS AMICUS CURIAE IN SUPPORT

OF APPELLEES

ee

-2-

STATEMENT OF INTEREST

OF AMICUS CURIAE

The New Jersey Department of the Public

Advocate (Department), an independent and

unique cabinet-level agency of New Jersey state

government, N.J.S.A. 51:27E-2,! has, for al-

most eleven years, litigated extensively on

behalf of New Jersey citizens in major cases

2

affecting "the public interest."" During this

: The Department is specifically empowered to

"represent the public interest in such adminis-

trative and court proceedings....as the Public

Advocate deems shall best serve the public

interest." N.J.S.A. 52:27E-29. "Public

interest" is defined as "an interest arising from

the Constitution, decisions of the court, common

laws or other laws of the United States or of

this state inhering in the citizens of this State

or in a broad class of such citizens." N.J.S.A.

52:37E-30. See also N.J.S.A. 52:27E-31

(factors to be considered in deciding whether

to represent a particular public interest).

2 The Department provides legal representation

in a wide range of "public interest" cases through

its Division of Public Interest Advocacy, N.J.S.A.

52:27E-28 to 32. See, e.g., So. Burlington Cty.

NAACP v. Tp. of Mt. Laurel, 67 N.J. 151, 336 A.

(footnote continued on next page)

<_s

period, the Department has participated in a wide

variety of proceedings involving issues relating

to housing, employment, nuclear power and the

rights of the mentally handicapped.° The cri-

(footnoted continued from previous page)

2d 713 (1975), cert. den., 423 U.S. 808 (1975)

(Mt. Laurel I) So. Burlington Cty. NAACP v

of Mt. Laurel, 92 N.J. 158, 456 A.2d 390

Tas} (Mt. Laurel II) (fair share housing) ;

Klein v. Califano, 586 F.2d 250 (3d Cir 1977)

(nursing home funding); Overlook Terrace

Management Corp. v. Rent t Control Bd., 71 N.J.

451, 366 A.2d 321 (1976) (rent control) ; Van

Ness v. Borough of Deal, 78 N.J. 174, 393 A.2d

571 (1978) (applicability of public trust doctirne

to beach access).

s The Department has filed several amicus curiae

briefs on behalf of the interests of New Jersey

citizens in matters pending before the Court.

See, e.g., Ake v. Oklahoma, U.S. ,

105 S. Ct. 1087 (1985); United Building Con-

struction and Trades Council of Camden County

v. City of Camden, U.S. . 104 S.

Ct. 1020 (1984); Silkwood v. Kerr McGee Corp..,

U.S. __, 104 S. Ct. 615 (1984); Jones v.

United States, U.S. __, 103 S. Ct. 3043

(1983) ; Pennhurst State School v. Halderman,

451 iv. S- 1 (1981) (amicus brief filed by Division

of Advocacy for Developmentally Disabled of the

Department of the Public Advocate, see N.J.S.A.

(footnote continued on next page)

-4-

tically important role of the Department as a

representative of the public interest of New

Jersey citizens has been frequently

acknowledged. 4

The present case raises the issue of

whether a city's rent control ordinance that

does not result from specific state enabling

legislation conflicts with and is, therefore,

preempted by the Sherman Antitrust Act

(15 U.S.C. §§1-7).

(continued from previous page)

52:27E-41.1 to 41.5, along with "protection and

advocacy systems," see 42 U.S.C. §6012, of

forty-four individual states and territories) ;

Kremens v. Bartley, 431 U.S. 119 (1977);

Parham v. J.R., 442 U.S. 584 (1974).

‘ For example, the New Jersey Supreme Court

has characterized the Department as a "shining

example of that commitment [by the government

to the public interest,]" Mt. Laurel Twp. v.

Dept. of the Public Advocate, 83 N.J. 522, 535,

416 A.2d 886, 893 (1980), and of "admirably

further[ing] the principles embodied in our

Constitution," id. at 536, 416 A.2d at 893, as

it fulfills the role of "nourishing and revitalizing

our political system," id.

a§-

The resolution of this case is particularly

important for the municipalities and citizens of

New Jersey, since no explicit enabling legis-

lation authorizing local governments to pro-

mulgate rent control measures has been

enacted in this State.°

Furthermore, over

100 municipalities in New Jersey have rent

control ordinances in effect at the present time.

The magnitude of the affordable housing crisis

° Appellants incorrectly represent that the New

Jersey Legislature has authorized local govern-

ments in the State to enact rent controls, citing

N.J.S.A. §§2A:42-74 and 42-77. (App. Br. at

41, n. 20). That is simply not the present state

of the law in New Jersey. The thrust of these

statutes is directed toward authorizing munici-

palities to control the rents of substandard

dwellings. Contrary to the appellants’ repre-

sentation, these statutory provisions have not

been construed to establish a general state

policy authorizing municipalities in New

Jersey to impose rent control measures in

other circumstances. Inganamort v.

Borough of Fort Lee, 120 N.J. Super. 286,

309-10, 293 A.2d 720, 732-33 (Law Div. 1972),

affirmed, 62 N.J. 521, 303 A.2d 298, appeal

after remand, 72 N.J. 412, 371 A.2d 34 (1977).

aG=

in New Jersey was explicitly described in

the Mt. Laurel I decision, So. Burlington

Cty. NAACP v. Tp. of Mt. Laurel, 67 N.J.,

at 158-59, 336 A.2d, at 716-17, and, if

anything, has been exacerbated since that

time. 92 N.J. at 211-212, 456 A.2d at

416-17.

The Department of the Public Advocate

has a lengthy involvement and considerable

experience in matters relating to the afforda-

bility of housing and the legality of rent con-

trols in New Jersey. For example, the De-

partment has represented citizens of New

Jersey in cases establishing the constitutional

obligation of the State and municipalities to

provide realistic opportunities for low and

moderate income housing. See, e.g., Matter

!

of Egg Harbor Associates, 185 N.J. Super.

507, 449 A.2d 1324 (App. Div. 1982), aff'd,

va

oGFa

94 N.J. 358, 464 A.2d 1115 (1983) (State);

Southern Burlington County N.A.A.C.P. v.

Tp. of Mt. Laurel, 67 N.J. 151, 336 A.2d 713,

cert. den. 423 U.S. 808 (1975) (Mt. Laurel I);

Southern Burlington County N.A.A.C.P. v.

Tp. of Mt. Laurel, 92 N.J. 158, 456 A.2d

390 (1983) (Mt. Laurel II) (municipalities).

Additionally, the Department has repre-

sented New Jersey citizens in support of rent

control measures designed to address the

housing shortage and the economic reality

that the housing market is not functioning in

the public interest in this State. See, e.g.,

AMN, Inc. v. So. Bruns. Tp. Rent Leveling

Board, 93 N.J. 518, 461 A.2d 1138 (1983);

Property Owners Ass'n. of N. Bergen v. Tp.

of N. Bergen, 74 N.J. 327, 378 A.2d 25

(1977); Hutton Park Gardens v. West Orange

Town Council, 68 N.J. 543, 350 A.2d 1 (1975).

SRNReteenntcteneeew caer enn an es oe ~

-8-

Vital interests of numerous New Jersey muni-

cipalities and their citizens will be directly

affected by the decision of this Court on

whether local rent control measures are in-

consistent with the provisions of the Sherman

Antitrust Act.

Consequently, the Department anpears as

amicus curiae to address the impact upon New

Jersey municipalities and, indeed, the entire

structure of government in this State if the

antitrust standards governing private

businesses or cartels are rigidly applied to

municipal rent control.

Consent to the filing of amicus curiae

briefs has been granted by the parties. A

letter to that effect is on file with the Clerk

of this Court.

=9-

SUMMARY OF ARGUMENT

The New Jersey Legislature has not adopted

any explicit statute generally authorizing muni-

cipalities to adopt rent controls. Nonetheless,

the Supreme Court of New Jersey has held that

New Jersey municipalities possess the authority,

even without a specific State enabling act, to

enact rent control ordinances in response to

their clear responsibility to prctect the general

welfare of their citizens. To date, over 100

municipalities in New Jersey have promulgated

rent control ordinances under their police

powers.

In enacting these rent control measures,

municipalities have been motivated by the

existence of an acute housing shortage in this

State, the widespread imposition of exorbitant

rents ("rent gouging"), and monopoly control

of the rental housing market. Municipal

-10-

rent control ordinances have emerged as a

major tool in local efforts to address the

acute shortage of decent and affordable

housing that plagues many areas of New

Jersey. Such ordinances now play a sig-

nificant role in determining the quality and

affordability of housing in New Jersey.

The ability of New Jersey munici-

palities to promote the general welfare of

their citizens will be crippled if antitrust

standards developed in the context of private

business activity and private conspiracies

are held applicable to municipal rent control

ordinances in this State. The adverse effects

upon local efforts to address the shortage

of decent and affordable housing and upon

tenants throughout New Jersey would be

direct and immediate. Moreover, such a hold-

ing would strike at the heart of the ability

a ee

elie

of municipalities in New Jersey to take ap-

propriate steps to protect the best interests

of their inhabitants in a wide variety of

contexts. Additionally, traditional notions

of local government would be radically altered,

the federal courts would inevitably become

extensively entangled in the day-to-day acti-

vities of municipalities, and local officials in

the proper exercise of their governmental

responsibilities would face the daunting, and

in many instances, insurmountable obstacle

of seeking specific legislative authorization

every time they attempt to remedy a local

problem by displacing competition with

regulation.

Instead of crippling in this fashion the

ability of municipalities in New Jersey and

elsewhere to respond to demonstrable housing

crises or other serious problems within their

het

-12-

borders -- a result that is neither compelled

nor contemplated by Community Communications

Company, Inc. v. City of Boulder, Colorado,

455 U.S. 40 (1982) or any other decision --

the Court should uphold the judgment of the

Supreme Court of California dismissing the

claim that the Berkeley rent control ordinance

is, on its face, in conflict with the Sherman

Act.

019

ARGUMENT

THE ANTITRUST PRINCIPLES

GOVERNING PRIVATE BUSINESS

ACTIVITY SHOULD NOT BE

MECHANICALLY APPLIED TO MUNICIPAL

RENT CONTROL ORDINANCES

DESIGNED TO PROMOTE THE

GENERAL WELFARE

In New Jersey, there is no explicit state

legislative authorization for local governments

to enact general rent control ordinances .°

Notwithstanding the absence of a state enabling

act, New Jersey's municipalities possess the

authority under their police powers to adopt

rent control mezsures "to deal with the evil

of inordinate rent arising out of a housing

shortage." Inganamort v. Fort Lee, 62 N.J.

521, 527, 303 A.2d 298, 301 (1973). ”

C The appellants' assumptions to the contrary

about New Jersey law are clearly wrong.

(supra at n. 5).

, In upholding the rent control ordinances at

issue in Inganamort, the New Jersey Supreme

(footnote continued on next page)

on A at

ee

-14-

Presently, over 100 municipalities in this

State, or roughly one fifth of all New Jersey

municipalities, have enacted rent control ordi-

8 ,

nances. Such ordinances represent a local

(footnote continued from previous page)

Court recognized that rent control was clearly

a proper subject for local government:

There is no inevitable need for

a single statewide prohibition or

for a single statewide enforcing

authority. On the contrary, it

may be useful to permit muni-

cipalities to act, for, being nearer

to the scene, they are more likely

to detect the practice and may be

better situated to devise an approach

to their special problems. Inganamort

v. Fort Lee, 62 N.J., at 529, 303 A.2d,

at 302 (quoting Summer v. Teaneck,

53 N.J. 548, 553, 251 A.2d 761, 764

(1969).

8 Rent Control Survey of New Jersey

Municipalities (July 1985) prepared by the

Office of Landlord and Tenant Information,

Division of Housing and Development, State

of New Jersey Department of Community

Affairs. See also Barr, "Guidelines for

Drafting Rent Control Laws: Lessons of A

Decade," 33 Rutgers L. Rev. 723, 725 n. 1

(1983).

-15-

response by the municipality to the general

welfare of its inhabitants. The rationales for

these ordinances include the existence of an

acute housing shortage, the widespread im-

position of exorbitant rents ("rent gouging"),

and monopoly control of the rental housing

market. Brunetti v. Borough of New Milford,

68 N.J. 576, 594, 350 A.2d 19, 28 (1975) .?

See also, Barr, supra, 35 Rutgers L. Rev.

726. Indeed, the "desperate need for hous-

ing, especially of decent living accommodatiuns

economically suitable for low and moderate in-

come families" has long been recognized in

° For background information on the develop-

ment of municipal rent control in New Jersey as

a means of addressing the "exploitation of a

housing shortage" in the State, Inganamort v.

Fort Lee, 62 N.J., at 531, 303 A.2d at 303,

see generally Barr, "Rent Control In The 1970's:

The Case of the New Jersey Tenants' Movement,"

28 Hastings L.J. 631 (1977).

-16-

New Jersey. So. Burlington County NAACP

v. Tp. of Mt. Laurel, 67 N.J., at 158-60,

336 A.2d., at 716-17; Mt. Laurel II, 92 N.J.

at 211-212, 456 A.2d 416-17.

Regardless of the reasons for their

enactment, however, the berefical impact of

rent control upon the general welfare and

public interest of New Jersey citizens has

been evident. Rent control in this State has

emerged as an important tool to address the

shortage of decent and affordable housing that

has chronically plauged portions of New Jersey

-- a shortage most recently decried in So.

Burlington Cty. NAACP v. Mt. Laurel Tp.,

92 N.J., at 212 n. 6, 456 A.2d, at 417 n.6.

Rent control ordinances have been variously

characterized as a means "to assure fairness

in the landlord-tenant relationship," Harry's

Village, Inc. v. Egg Harbor Tp., 89 N.J.

Oe BB mn we ri ks eee

me at

Wits em ER

-17-

576, 584, 446 A.2d 862, 866 (1982); "to

regulate the forces of the marketplace

to help [the municipality's] residents

obtain decent housing within their means,"

Orange Taxpayers Council, Inc. v. Orange,

83 N.J. 246, 257, 416 A.2d 353, 359 (1980);

and to address the fact that "the free housing

market was not functioning in the public

interest." Hutton Pk. Gardens v. West Orange

Council, 68 N.J. 543, 564, 350 A.2d 1, 12

(1975). In short, rent control is one of the

most significant weapons in the arsenal avail-

able to New Jersey's municipalities to cope

with a severe housing shortage and with

pressing local problems affecting the general

welfare of their citizens.

The adoption of appellants’ position, urg-

ing the unprecedented application of anti-

trust principles fashioned in the context of

-18-

private business activity to municipal regu-

lations designed to promote the public wel-

fare, would have a widespread and devas-

tating impact on New Jereey's municipalities

and citizens. The ability of municipalities in

a state like New Jersey -- one that is partly

urban, partly suburban and partly rural --

to promote the welfare of their citizens

would be radically eroded by any of the fol-

lowing developments. Yet, all of these

directly flow from the approach to the

Sherman Act urged by appellants.

First, the capacity of municipalities to

respond to the diversity of local problems

would be crippled if their legitimate regu-

latory activities for the public welfare are

equated under antitrust laws with the

actions or agreements of private cartels. As

the California Supreme Court correctly ob-

a htt

-19-

served, municipalities are unlike a private

business: the latter is motivated by a

quest for greater profit while a muni-

cipality is "generaliy motivated by the

purpose of furthering local health, safety

or welfare." Fisher v. City of Berkeley,

693 P.2d 261, 278 (Cal. 1984). Because tne

principles of antitrust law are fashioned for

regulating private business, such standards

cannot be mechanically applied to local

regulatory actions serving legitimate govern-

mental objectives. The Court itself has

recognized that "certain activities which

might appear anticompetitive when engaged

in by private parties, take on a different

complexion when adopted by local govern-

ment." Community Communications Com-

pany v. City of Boulder, 455 U.S. 40, 56

n. 20 (1982), citing City of Lafayette v.

el RR ee NE tL At

eo Ms re Oe

-20-

Louisiana Power and Light Company, 435

U.S. 389, 417 n. 48 (1978).

Furthermore, this Court has also

reiterated the fundamental distinction

between private parties and municipalities:

We may presume, absent a showing

to the contrary, that the munici-

pality acts in the public interest

[footnote omitted]. A private

party, on the other hand, may be

presumed to be acting primarily

in his or its own behalf."

Town of Hallie v. City of Eau Claire,

U.S. _—, «105 S. Ct. 1713, 1720 (1985).

Consequently, appellants' simplisitic attempt

to equate a municipal regulatory regime with

the private market would strike a severe, if

not fatal, blow at the ability of municipalities

to take appropriate steps to protect the gen-

eral welfare, and would do so without pro-

viding any principled analysis of the im-

portant differences between municipal actions

-21-

and private business activity.

Second, the effect of treating a munici-

pality's regulatory decisions as conspiracies

under antitrust laws would be equally

destructive. A municipality would be effect-

ively disabled from performing its lawful

responsibilities as a democratically elected

local unit of government if its displacement

of competition with regulation for the public

welfare were construed as a vertical con-

spiracy, in violation of the Sherman Act,

between the municipality and those regu-

lated or those who were successful in

securing the regulatory action. It clearly

would be a legally unprecedented step to

apply antitrust principles to those individuals

who persuade a local governing body to act

or who are victorious in local initiative or

referenda. Eastern Railroad Presidents

ee el i AD ey Dg EL CETL ACME ALAS SOLOS

cat! ee ee

-22-

Conference v. Noerr Motor Freight, 365 U.S.

127, 136 (1961). On the other hand, it would

place a straitjacket upon the municipality if

the Sherman Act treated as a conspiracy the

compulsion of private parties by local govern-

ment under lawfully enacted municipal regu-

lations. Any regulation of competition in

the municipality, such as laws concerning

licensing, the regulation of tradesmen, or

taxicab charges, would be immediately suspect

under the federal antitrust law, however

legitimately motivated, and "a municipality's

power to regulate the economy would be all

but destroyed." Community Communications

Co. v. City of Boulder, Colo., 455 U.S., at

67 (Rehnquist, J., dissenting).

Third, municipal governments would be

totally disrupted if they were denied the op-

portunity to present a potent public welfare

RS C8 ee ER te

CR en Me Atl ee

mews

-23-

defense in the event that the merits of an

antitrust action are reached. To limit a muni-

cipality's defense of an ordinance solely to the

effects on competition, and to divest the local

government of the general welfare defense,

would wholly eviscerate the municipality's

ability to exercise its lawful police powers.

The consequences of such an approach are

completely illogical. Although the public

welfare and the best interests of a muni-

cipality's inhabitants are the motives behind

municipal action, Fisher v. City of Berkeley,

693 P.2d, at 278, these issues would be

deemed wholly irrelevant to an antitrust

defense.

The California Supreme Court's decision

quite properly avoids this disastrous result by

recognizing that "[a]nticompetitive conduct by

a municipality in exercise of its legitimate police

-24-

power is indeed of a ‘different complexion' than

similar conduct engaged in by private enter-

prises" and that "courts must adopt or modify

the application of traditional antitrust rules

when reviewing the acts of municipal defend-

ants." Id. at 277. Consequently, the

appellants' position in this Court, which seek

the mechanical application to municipalities of

rules of law fashioned in the context of

private business regulation, should be re-

jected as an unrealistic and inflexible ap-

proach to the legitimate governmental

objectives that underlie municipal regulation.

Fourth, the inevitable consequence of

appellants’ approach to antitrust law would

be a dramatic expansion of the involvement

of federal judges in the affairs of local

government. Indeed, appellants’ position

can only lead to the hopeless and excessive

ee A Ce Se

-25-

entanglement of federal courts in the

day-to-day operations of a municipality.

The demands on local officials who are con-

fronting the realities of the pressing problems

of their communities, including the critical

housing shortage in New Jersey, are over-

whelming enough without judges scrutinizing

every regulatory action to ensure its con-

sistency with the procompetitive policies of

the Sherman Act. Not only would this have

a substantial detrimental impact upon the

local autonomy of municipalities and their

authority to govern themselves, City of

Lafayette v. Louisiana Power and Light Co.,

435 U.S. 389, 434-35 (1978) (Stewart, J.,

dissenting), but also it would be undesirable,

since such a close appraisal of the justifica-

tions for municipal regulatory activities

would "embroil the federal courts in.

at Re 2

arietin - -

-26-

unnecessary interpretation." Town of Hallie

v. City of Eau Claire, U.S. :

105 S. Ct. 1713, 1719 n. 7 (1985).

Fifth, municipalities in New Jersey would

be completely hamstrung if they were forced

to seek specific legislative authorization every-

time they were faced with a local housing or

economic problem that required municipal regu-

lation. The reality in a State like New Jersey

is that the Legislature is part-time, has many

other concerns and must be largely responsible

to a suburban constituency . 1° Indeed, as the

New Jersey Supreme Court observed:

10 The New Jersey Supreme Court has care

fully documented the "great movement of

commerce, industry and people out of the

inner cities and into the suburbs." So.

Burlington Cty. NAACP v. Mt. Laurel Tp.,

92 N.J., at 210 n. 5, 456 A.2d, at 415 n. 5.

Thus, the suburban and rural constituency

in this State has greatly expanded while there

has been a corresponding decline in the popu-

lation, and legislative influence, of urban

areas.

-27-

It is well to keep in mind that

our legislators are elected from

districts rather than at large.

This is a source of strength,

but it holds the weakness that

a localized problem is less apt

than a general one to invite

prompt action at the State level.

Inganamort v. Borough of Fort Lee, 62 N.J.,

at 533, 303 A.2d at 304. For these reasons,

the state Supreme Court has emphasized the

need to ensure that "local government be

equiped to deal with matters of local con-

cern which, if left to state action, might not

be met expeditiously or at all." Id.

Forcing municipalities to go to the legisla-

ture to obtain specific authorization for

every regulatory action with possible anti-

competitive consequences would not only

pose an insurmountable burden, but

also would have detrimental effects upon

en ee en ee ere =

-28-

the municipality's local autonomy. Cf.

Town of Hallie v. City of Eau Claire,

_ v.s. , M8. Ct. a 1719.

If anything, the experience in New

Jersey has been that while the state

legislature leave power in the hands of

the cities to act in order to foster safe,

decent and affordable housing, it is

ordinarily unwilling to provide specific

grants of authority. See e.g., Dome

Realty v. Paterson, 83 N.J. 211, 230, 416

A.2d 334 (1980) (municipal ordinance con-

ditioning grant of certificates of occupancy

in rental housing in compliance with housing

codes); Inganamort v. Fort Lee, 62 N.J.

521, 303 A.2d 298 (municipal rent control);

N.J. Builders' Assocation v. Mayor of East

Brunswick, 60 N.J. 222, 287 A.2d 725

(1972) (municipal regulation of building

-29-

contractors); Summer v. Teaneck Township,

53 N.J. 548, 251 A.2d 761 (1969) (muni-

cipal antiblockbusting ordinance); Sunrise

Village Associates v. Borough of Roselle

Park, 181 N.J. Super. 565 (App. Div.

1981) (municipal ordinance requiring

security measures in apartment buildings);

Apartment House Council v. Mayor of Ridge-

field, 123 N.J. Super. 87 (Law Div. 1973),

aff'd., 128 N.J. Super. 192 (App. Div. 1973)

(municipal ordinance requiring security

deposits by landlords).

This approach is particularly evident

where the obligations and burdens imposed

upon the municipality are created by the

state court's interpretation of the State's

own constitution, and the legislature has

still failed to act. So. Burlington Cty.,

NAAPC v. Tp. of Mt. Laurel, 92 N.J.,

-30-

at 212, 456 A.2d, at 417. (Legislature has

failed for eight years to act on Court's 1975

decree establishing the obligation of muni-

cipalities to provide opportunities for low

and moderate income housing). In these

circumstances, the requirement of express

authorization for every municipal regulatory

action would signify a disrespect on the

part of federal courts for the separate and

distinct obligations imposed on municipalities

by state constitutions. Cf. Pruneyard

Shopping Center v. Robins, 477 U.S. 74,

81 (1980). See also, Brennan, "State

Constitution and the Protection of

Individual Rights," 90 Harv. L. Rev. 489

(1977).

The above five factors provide power-

ful and compelling reasons why antitrust

standards governing private business

ET

Ant ee at ae NO ae

-31-

activity should not be mechanically applied

to municipal rent control ordinances de-

signed to promote the public welfare.

In closing, amicus curiae must em-

phasize that uphold‘ng the judgment below

will not result in a blanket exemption for

municipalities from the antitrust laws.

This Court has already held that cities,

unlike states, may not exempt themselves

from the provisions of the Sherman Antitrust

Act. Community Communications Company v.

City of Boulder, 455 U.S. 40 (1982). How-

ever, in rejecting the use by cities of the

"state action" exemption as a shield from

federal antitrust policy, the Court certainly

did not intend, and nothing in Boulder pro-

vides, that the Sherman Antitrust Act was

converted into a sword to strike down every

municipal rent control ordinance or other

-32-

legitimate governmental regulation promul-

gated without a specific state enabling

statute. Indeed, appellants' efforts to

transform Boulder into an automatic federal

veto of the legitimate exercise of local

authority in response to the public welfare

is fundamentally at odds with this Court's

express admonition that "certain activities

which might appear anticompetitive when

engaged in by private parties, take on a

different complexion when adopted by a

local government." Boulder, 455 U.S.,

at 57 n. 20 (quoting City of Lafayette

v. Louisiana Power and Light Co., 435

U.S., at 417 n. 48.

=33-

ly aN

CONCLUSION

For the reasons stated above, amicus

curiae, the State of New Jersey Department

of the Public Advocate respectfully submits

that the judgment of the Supreme Court of

California should be affirmed.

ALFRED A. SLOCUM

ACTING PUBLIC ADVOCATE

STATE OF NEW JERSEY

Z

BY:

RICHARD E. SHAPIRO