Antitrust Fight Over Georgia City Utilities Hits 11th Circuit

ATLANTA (CN) — An attorney for a Georgia-based electric provider asked an 11th Circuit panel Tuesday to uphold a ruling refusing to dismiss the company’s claim that one Peach State city’s utility policies violate antitrust laws, while the city argued for immunity from the lawsuit.

In February 2018, a federal judge found that Diverse Power’s lawsuit alleging unlawfully anticompetitive actions by LaGrange, Georgia, which owns and operates its own water and natural gas utility services, could move forward.

Diverse Power, which provides electrical services in Alabama and Georgia, competes with LaGrange’s natural gas utility service.

The company alleged that a LaGrange city ordinance requiring customers to install natural gas appliances on their property in order to access city water utility services “creates an unlawful tying arrangement” in violation of federal and state antitrust laws because the city conditions the sale of water utility services on customers also purchasing natural gas.

According to the district court ruling, Diverse Power claims the ordinance coerces residents into buying natural gas from the city and reduces the demand for electrical services.

U.S. District Judge Timothy Batten, Sr. denied LaGrange’s motion to dismiss the complaint and rejected the city’s argument that it is “acting within the bounds of its legislative authorization from the state of Georgia.”

“The city argues that because the ordinance relates to the water utility service, it therefore must be blanketed in the immunity of state action. However, the court sees no limiting principle to this assertion. If true, the city would have immunity to take anticompetitive actions affecting any industry so long as the demand were made as a condition of refusing water service,” the ruling states.

On Tuesday, attorneys representing the city asked the 11th Circuit to reverse the district court’s decision.

“In this case, LaGrange enjoys full immunity from antitrust laws,” attorney Allison Thompson with Alston & Bird told the three-judge panel.

“Do you think there is any principle limit to your position? Can a municipality tie water to other industries? Can they say they’ll give you water if you buy sewage services from them? Can a municipality tie water services to anything else?” U.S. Circuit Judge Adalberto Jordan asked.

“The legislature has not put any principle limit in place. The city enjoys immunity to the full extent that the state would,” Thompson responded.

Thompson added that the state antitrust statute “is the state Legislature coming forward and saying we are immune from tying claims… If it wanted to exempt those claims, it could have.”

But attorney James McGibbon of Eversheds Sutherland, arguing on behalf of Diverse Power, urged the panel to follow the district court’s interpretation of the statute and called the city’s argument “tenuous.”

“The Legislature can’t say that whatever a city wants to do, it can do,” McGibbon said, adding that state lawmakers cannot grant “blanket immunity” to cities.

Jordan was joined on the panel by U.S. Circuit Judge Gerald Tjoflat and Senior U.S. Circuit Judge R. Lanier Anderson.

The panel did not indicate when it might reach a decision in the case.

LaGrange’s utilities policies are also at the center of another case pending in the 11th Circuit. The Georgia chapter of the NAACP claims the city discriminates against minorities in violation of the Fair Housing Act by requiring new customers to supply a Social Security number and a government-issued photo ID to open an account. 

The NAACP and four LaGrange residents also sued over the city’s court debt policy, which requires customers to pay all debts owed to the city before they can get utilities. They claim both policies are discriminatory and disproportionately affect LaGrange’s Latino and black residents, many of whom are immigrants and cannot provide the necessary documents, or are too poor to pay their court-related debts.

The Atlanta-based appeals court heard oral arguments in the NAACP case in December.

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