Subject:  COLUMBIA v. OMNI OUTDOOR ADVERTISING, INC., Syllabus



 
    NOTE: Where it is feasible, a syllabus (headnote) will be released, as
is being done in connection with this case, at the time the opinion is
issued.  The syllabus constitutes no part of the opinion of the Court but
has been prepared by the Reporter of Decisions for the convenience of the
reader.  See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES


Syllabus


CITY OF COLUMBIA et al. v. OMNI OUTDOOR
ADVERTISING, INC.


certiorari to the united states court of appeals for the fourth circuit

No. 89-1671.  Argued November 28, 1990 -- Decided April 1, 1991

After respondent Omni Outdoor Advertising, Inc., entered the billboard
market in petitioner Columbia, South Carolina, petitioner Columbia Outdoor
Advertising, Inc. (COA), which controlled more than 95% of the market and
enjoyed close relations with city officials, lobbied these of ficials to
enact zoning ordinances restricting billboard construction.  After such
ordinances were passed, Omni filed suit against petitioners under 15 1 and
2 of the Sherman Act and the State's Unfair Trade Practices Act, alleging,
inter alia, that the ordinances were the result of an anticompetitive
conspiracy that stripped petitioners of any immunity to which they might
otherwise be entitled.  After Omni obtained a jury verdict on all counts,
the District Court granted petitioners' motions for judgment
notwithstanding the verdict on the ground that their activities were
outside the scope of the federal antitrust laws.  The Court of Appeals
reversed and reinstated the verdict.

Held:

    1. The city's restriction of billboard construction is immune from
federal antitrust liability under Parker v. Brown, 317 U. S. 341, 352 --
which held that principles of federalism and state sovereignty render the
Sherman Act inapplicable to anticompetitive restraints imposed by the
States "as an act of government" -- and subsequent decisions according
Parker immunity to municipal restriction of competition in implementation
of state policy, see, e. g., Hallie v. Eau Claire, 471 U. S. 34, 38.  Pp.
4-13.

    (a) The Court of Appeals correctly concluded that the city was prima
facie entitled to Parker immunity for its billboard restrictions.  Although
Parker immunity does not apply directly to municipalities or other
political subdivisions of the States, it does apply where a municipality's
restriction of competition is an authorized implementation of state policy.
South Carolina's zoning statutes unquestionably authorized the city to
regulate the size, location, and spacing of billboards.  The additional
Parker requirement that the city possess clear delegated authority to
suppress competition, see, e. g., Hallie, supra, at 40-42, is also met
here, since suppression of competition is at the very least a foreseeable
result of zoning regulations.  Pp. 4-7.

    (b) The Court of Appeals erred, however, in applying a "conspiracy"
exception to Parker, which is not supported by the language of that case.
Such an exception would swallow up the Parker rule if "conspiracy" means
nothing more than agreement to impose the regulation in question, since it
is both inevitable and desirable that public officials agree to do what one
or another group of private citizens urges upon them.  It would be
similarly impractical to limit "conspiracy" to instances of governmental
"corruption," or governmental acts "not in the public interest"; virtually
all anticompetitive regulation is open to such charges and the risk of
unfavorable ex post facto judicial assessment would impair the States'
ability to regulate their domestic commerce.  Nor is it appropriate to
limit "conspiracy" to instances in which bribery or some other violation of
state or federal law has been established, since the exception would then
be unrelated to the purposes of the Sherman Act, which condemns trade
restraints, not political activity.  With the possible exception of the
situation in which the State is acting as a market participant, any action
that qualifies as state action is ipso facto exempt from the operation of
the antitrust laws.  Pp. 8-13.

    2. COA is immune from liability for its activities relating to
enactment of the ordinances under Eastern Railroad Presidents Conference v.
Noerr Motor Freight, Inc., 365 U. S. 127, 141, which states a corollary to
Parker: the federal antitrust laws do not regulate the conduct of private
individuals in seeking anticompetitive action from the government.  The
Court of Appeals erred in applying the "sham" exception to the Noerr
doctrine.  This exception encompasses situations in which persons use the
governmental process itself -- as opposed to the outcome of that process --
as an anticompetitive weapon.  That is not the situation here.  California
Motor Transport Co. v. Trucking Unlimited, 404 U. S. 508, 512,
distinguished.  Omni's suggestion that this Court adopt a "con spiracy"
exception to Noerr immunity is rejected for largely the same reasons that
prompt the Court to reject such an exception to Parker.  Pp. 13-17.

    3. The Court of Appeals on remand must determine (if the theory has
been properly preserved) whether the evidence was sufficient to sustain a
verdict for Omni based solely on its assertions that COA engaged in private
anticompetitive actions, and whether COA can be held liable to Omni on its
state-law claim.  P. 18.

891 F. 2d 1127, reversed and remanded.

Scalia, J., delivered the opinion of the Court, in which Rehnquist, C. J.,
and Blackmun, O'Connor, Kennedy, and Souter, JJ., joined.  Stevens, J.,
filed a dissenting opinion, in which White and Marshall, JJ., joined.

------------------------------------------------------------------------------




Subject: 89-1671 -- OPINION, COLUMBIA v. OMNI OUTDOOR ADVERTISING, INC.

NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


No. 89-1671



CITY OF COLUMBIA and COLUMBIA OUTDOOR ADVERTISING, INC., PETITIONERS v.
OMNI OUTDOOR ADVERTISING, INC.

on writ of certiorari to the united states court of appeals for the fourth
circuit

[April 1, 1991]



    Justice Scalia delivered the opinion of the Court.
    This case requires us to clarify the application of the Sherman Act to
municipal governments and to the citizens who seek action from them.

I
    Petitioner Columbia Outdoor Advertising, Inc. (COA), a South Carolina
corporation, entered the billboard business in the city of Columbia, South
Carolina (also a petitioner here), in the 1940's.  By 1981 it controlled
more than 95% of what has been conceded to be the relevant market.  COA was
a local business owned by a family with deep roots in the community, and
enjoyed close relations with the city's political leaders.  The mayor and
other members of the city council were personal friends of COA's majority
owner, and the company and its officers occasionally contributed funds and
free billboard space to their campaigns.  According to respondent, these
beneficences were part of a "longstanding" "secret anticompetitive
agreement" whereby "the City and COA would each use their [sic] respective
power and resources to protect . . . COA's monopoly position," in return
for which "City Council members received advantages made possible by COA's
monopoly."  Brief for Respondent 12, 16.
    In 1981, respondent Omni Outdoor Advertising, Inc., a Georgia
corporation, began erecting billboards in and around the city.  COA
responded to this competition in several ways.  First, it redoubled its own
billboard construction efforts and modernized its existing stock.  Second
-- according to Omni -- it took a number of anticompetitive private
actions, such as offering artificially low rates, spreading untrue and
malicious rumors about Omni, and attempting to induce Omni's customers to
break their contracts.  Finally (and this is what gives rise to the issue
we address today), COA executives met with city officials to seek the
enactment of zoning ordinances that would restrict billboard construction.
COA was not alone in urging this course; a number of citizens concerned
about the city's recent explosion of billboards advocated restrictions,
including writers of articles and editorials in local newspapers.
    In the spring of 1982, the city council passed an ordinance requiring
the council's approval for every billboard constructed in downtown
Columbia.  This was later amended to impose a 180-day moratorium on the
construction of billboards throughout the city, except as specifically
authorized by the council.  A state court invalidated this ordinance on the
ground that its conferral of unconstrained discretion upon the city council
violated both the South Carolina and Federal Constitutions.  The city then
requested the State's regional planning authority to conduct a
comprehensive analysis of the local billboard situation as a basis for
developing a final, constitutionally valid, ordinance.  In September 1982,
after a series of public hearings and numerous meetings involving city
officials, Omni, and COA (in all of which, according to Omni, positions
contrary to COA's were not genuinely considered), the city council passed a
new ordinance resticting the size, location, and spacing of billboards.
These restrictions, particularly those on spacing, obviously benefited COA,
which already had its billboards in place; they severely hindered Omni's
ability to compete.
    In November 1982, Omni filed suit against COA and the city in Federal
District Court, charging that they had violated 15 1 and 2 of the Sherman
Act, 26 Stat. 209, as amended, 15 U. S. C. 15 1, 2, {1} as well as South
Carolina's Unfair Trade Practices Act, S. C. Code MDRV 39-5-140 (1976).
Omni contended, in particular, that the city's billboard ordinances were
the result of an anticompetitive conspiracy between city officials and COA
that stripped both parties of any immunity they might otherwise enjoy from
the federal antitrust laws.  In January 1986, after more than two weeks of
trial, a jury returned general verdicts against the city and COA on both
the federal and state claims.  It awarded damages, before trebling, of
$600,000 on the MDRV 1 Sherman Act claim, and $400,000 on the MDRV 2 claim.
{2}  The jury also answered two special interrogatories, finding
specifically that the city and COA had conspired both to restrain trade and
to monopolize the market.  Petitioners moved for judgment notwithstanding
the verdict, contending among other things that their activities were
outside the scope of the federal antitrust laws.  In November 1988, the
District Court granted the motion.
    A divided panel of the United States Court of Appeals for the Fourth
Circuit reversed the judgment of the District Court and reinstated the jury
verdict on all counts.  891 F. 2d 1127 (1989).  We granted certiorari, 496
U. S. --- (1990).

II
    In the landmark case of Parker v. Brown, 317 U. S. 341 (1943), we
rejected the contention that a program restricting the marketing of
privately produced raisins, adopted pursuant to California's Agricultural
Prorate Act, violated the Sherman Act.  Relying on principles of federalism
and state sovereignty, we held that the Sherman Act did not apply to
anticompetitive restraints imposed by the States "as an act of government."
317 U. S., at 352.
    Since Parker emphasized the role of sovereign States in a federal
system, it was initially unclear whether the governmental actions of
political subdivisions enjoyed similar protection.  In recent years, we
have held that Parker immunity does not apply directly to local
governments, see Hallie v. Eau Claire, 471 U. S. 34, 38 (1985); Community
Communications Co. v. Boulder, 455 U. S. 40, 50-51 (1982); Lafayette v.
Louisiana Power & Light Co., 435 U. S. 389, 412-413 (1978) (plurality
opinion).  We have recognized, however, that a municipality's restriction
of competition may sometimes be an authorized implementation of state
policy, and have accorded Parker immunity where that is the case.    The
South Carolina statutes under which the city acted in the present case
authorize municipalities to regulate the use of land and the construction
of buildings and other structures within their boundaries. {3}  It is
undisputed that, as a matter of state law, these statutes authorize the
city to regulate the size, location, and spacing of billboards.  It could
be argued, however, that a municipality acts beyond its delegated
authority, for Parker purposes, whenever the nature of its regulation is
substantively or even procedurally defective.  On such an analysis it could
be contended, for example, that the city's regulation in the present case
was not "authorized" by S. C. Code MDRV 5-23-10 (1976), see n. 3, supra, if
it was not, as that statute requires, adopted "for the purpose of promoting
health, safety, morals or the general welfare of the community."  As
scholarly commentary has noted, such an expansive interpretation of the
Parker-defense authorization requirement would have unacceptable
consequences.

    "To be sure, state law `authorizes' only agency decisions that are
substantively and procedurally correct.  Errors of fact, law, or judgment
by the agency are not `authorized.'  Erroneous acts or decisions are
subject to reversal by superior tribunals because unauthorized.  If the
antitrust court demands unqualified `authority' in this sense, it
inevitably becomes the standard reviewer not only of federal agency
activity but also of state and local activity whenever it is alleged that
the governmental body, though possessing the power to engage in the
challenged conduct, has actually exercised its power in a manner not
authorized by state law.  We should not lightly assume that Lafayette's
authorization requirement dictates transformation of state administrative
review into a federal antitrust job.  Yet that would be the consequence of
making antitrust liability depend on an undiscriminating and mechanical
demand for `authority' in the full administrative law sense."  P. Areeda &
H. Hovenkamp, Antitrust Law MDRV 212.3b, p. 145 (Supp. 1989).


We agree with that assessment, and believe that in order to prevent Parker
from undermining the very interests of federalism it is designed to
protect, it is necessary to adopt a concept of authority broader than what
is applied to determine the legality of the municipality's action under
state law.  We have adopted an approach that is similar in principle,
though not necessarily in precise application, elsewhere.  See Stump v.
Sparkman, 435 U. S. 349 (1978).  It suffices for the present to conclude
that here no more is needed to establish, for Parker purposes, the city's
authority to regulate than its unquestioned zoning power over the size,
location, and spacing of billboards.
    Besides authority to regulate, however, the Parker defense also
requires authority to suppress competition -- more specifically, "clear
articulation of a state policy to authorize anticompetitive conduct" by the
municipality in connection with its regulation.  Hallie, 471 U. S., at 40
(internal quotation omitted).  We have rejected the contention that this
requirement can be met only if the delegating statute explicitly permits
the displacement of competition, see id., at 41-42.  It is enough, we have
held, if suppression of competition is the "foreseeable result" of what the
statute authorizes, id., at 42.  That condition is amply met here.  The
very purpose of zoning regulation is to displace unfettered business
freedom in a manner that regularly has the effect of preventing normal acts
of competition, particularly on the part of new entrants.  A municipal
ordinance restricting the size, location, and spacing of billboards (surely
a common form of zoning) necessarily protects existing billboards against
some competition from newcomers. {4}
    The Court of Appeals was therefore correct in its conclusion that the
city's restriction of billboard construction was prima facie entitled to
Parker immunity.  The Court of Appeals upheld the jury verdict, however, by
invoking a "conspiracy" exception to Parker that has been recognized by
several Courts of Appeals.  See, e. g., Whitworth v. Perkins, 559 F. 2d 378
(CA5 1977), vacated, 435 U. S. 992, aff'd on rehearing, 576 F. 2d 696
(1978), cert. denied, 440 U. S. 911 (1979).  That exception is thought to
be supported by two of our statements in Parker: "[W]e have no question of
the state or its municipality becoming a participant in a private agreement
or combination by others for restraint of trade, cf. Union Pacific R. Co.
v. United States, 313 U. S. 450."  Parker, 317 U. S., at 351-352 (emphasis
added).  "The state in adopting and enforcing the prorate program made no
contract or agreement and entered into no conspiracy in restraint of trade
or to establish monopoly but, as sovereign, imposed the restraint as an act
of government which the Sherman Act did not undertake to prohibit."  Id.,
at 352 (emphasis added).  Parker does not apply, according to the Fourth
Circuit, "where politicians or political entities are involved as
conspirators" with private actors in the restraint of trade.  891 F. 2d, at
1134.
    There is no such conspiracy exception.  The rationale of Parker was
that, in light of our national commitment to federalism, the general
language of the Sherman Act should not be interpreted to prohibit
anticompetitive actions by the States in their governmental capacities as
sovereign regulators.  The sentences from the opinion quoted above simply
clarify that this immunity does not necessarily obtain where the State acts
not in a regulatory capacity but as a commercial participant in a given
market.  That is evident from the citation of Union Pacific R. Co. v.
United States, 313 U. S. 450 (1941), which held unlawful under the Elkins
Act certain rebates and concessions made by Kansas City, Kansas, in its
capacity as the owner and operator of a wholesale produce market that was
integrated with railroad facilities.  These sentences should not be read to
suggest the general proposition that even governmental regulatory action
may be deemed private -- and therefore subject to antitrust liability --
when it is taken pursuant to a conspiracy with private parties.  The
impracticality of such a principle is evident if, for purposes of the
exception, "conspiracy" means nothing more than an agreement to impose the
regulation in question.  Since it is both inevitable and desirable that
public officials often agree to do what one or another group of private
citizens urges upon them, such an exception would virtually swallow up the
Parker rule: All anticompetitive regulation would be vulnerable to a
"conspiracy" charge.  See Areeda & Hovenkamp, supra, MDRV 203.3b, at 34,
and n. 1; Elhauge, The Scope of Antitrust Process, 104 Harv. L. Rev. 667,
704-705 (1991). {5}
    Omni suggests, however, that "conspiracy" might be limited to instances
of governmental "corruption," defined variously as "abandonment of public
responsibilities to private interests," Brief for Respondent 42, "corrupt
or bad faith decisions," id., at 44, and "selfish or corrupt motives,"
ibid.  Ultimately, Omni asks us not to define "corruption" at all, but
simply to leave that task to the jury: "[a]t bottom, however, it was within
the jury's province to determine what constituted corruption of the
governmental process in their community."  Id., at 43.  Omni's amicus
eschews this emphasis on "corruption," instead urging us to define the
conspiracy exception as encompassing any governmental act "not in the
public interest."  Brief for Associated Builders and Contractors, Inc. as
Amicus Curiae 5.
    A conspiracy exception narrowed along such vague lines is similarly
impractical.  Few governmental actions are immune from the charge that they
are "not in the public interest" or in some sense "corrupt."  The
California marketing scheme at issue in Parker itself, for example, can
readily be viewed as the result of a "conspiracy" to put the "private"
interest of the State's raisin growers above the "public" interest of the
State's consumers.  The fact is that virtually all regulation benefits some
segments of the society and harms others; and that it is not universally
considered contrary to the public good if the net economic loss to the
losers exceeds the net economic gain to the winners.  Parker was not
written in ignorance of the reality that determination of "the public
interest" in the manifold areas of government regulation entails not merely
economic and mathematical analysis but value judgment, and it was not meant
to shift that judgment from elected officials to judges and juries.  If the
city of Columbia's decision to regulate what one local newspaper called
"billboard jungles," Columbia Record, May 21, 1982, p. 14-A, col. 1; App.
in No. 88-1388 (CA4), p. 3743, is made subject to ex post facto judicial
assessment of "the public interest," with personal liability of city
officials a possible consequence, we will have gone far to "compromise the
States' ability to regulate their domestic commerce," Southern Motor
Carriers Rate Conference, Inc. v. United States, 471 U. S. 48, 56 (1985).
The situation would not be better, but arguably even worse, if the courts
were to apply a subjective test: not whether the action was in the public
interest, but whether the officials involved thought it to be so.  This
would require the sort of deconstruction of the governmental process and
probing of the official "intent" that we have consistently sought to avoid.
{6}  "[W]here the action complained of . . . was that of the State itself,
the action is exempt from antitrust liability regardless of the State's
motives in taking the action."  Hoover v. Ronwin, 466 U. S. 558, 579-580
(1984).  See also Llewellyn v. Crothers, 765 F. 2d 769, 774 (CA9 1985)
(Kennedy, J.).
    The foregoing approach to establishing a "conspiracy" exception at
least seeks (however impractically) to draw the line of impermissible
action in a manner relevant to the purposes of the Sherman Act and of
Parker: prohibiting the restriction of competition for private gain but
permitting the restriction of competition in the public interest.  Another
approach is possible, which has the virtue of practicality but the vice of
being unrelated to those purposes.  That is the approach which would
consider Parker inapplicable only if, in connection with the governmental
action in question, bribery or some other violation of state or federal law
has been established.  Such unlawful activity has no necessary relationship
to whether the governmental action is in the public interest.  A mayor is
guilty of accepting a bribe even if he would and should have taken, in the
public interest, the same action for which the bribe was paid.  (That is
frequently the defense asserted to a criminal bribery charge -- and though
it is never valid in law, see, e. g., United States v. Jannotti, 673 F. 2d
578, 601 (CA3) (en banc), cert. denied, 457 U. S. 1106 (1982), it is often
plausible in fact.)  When, moreover, the regulatory body is not a single
individual but a state legislature or city council, there is even less
reason to believe that violation of the law (by bribing a minority of the
decisionmakers) establishes that the regulation has no valid public
purpose.  Cf. Fletcher v. Peck, 6 Cranch 87, 130 (1810).  To use unlawful
political influence as the test of legality of state regulation undoubtedly
vindicates (in a rather blunt way) principles of good government.  But the
statute we are construing is not directed to that end.  Congress has passed
other laws aimed at combatting corruption in state and local governments.
See, e. g., 18 U. S. C. MDRV 1951 (Hobbs Act).  "Insofar as [the Sherman
Act] sets up a code of ethics at all, it is a code that condemns trade
restraints, not political activity."  Eastern Railroad Presidents
Conference v. Noerr Motor Freight, Inc., 365 U. S. 127, 140 (1961).
    For these reasons, we reaffirm our rejection of any interpretation of
the Sherman Act that would allow plaintiffs to look behind the actions of
state sovereigns to base their claims on "perceived conspiracies to
restrain trade,"  Hoover, 466 U. S., at 580.  We reiterate that, with the
possible market participant exception, any action that qualifies as state
action is "ipso facto . . . exempt from the operation of the antitrust
laws," id., at 568.  This does not mean, of course, that the States may
exempt private action from the scope of the Sherman Act; we in no way
qualify the well established principle that "a state does not give immunity
to those who violate the Sherman Act by authorizing them to violate it, or
by declaring that their action is lawful."  Parker, 317 U. S., at 351
(citing Northern Securities Co. v. United States, 193 U. S. 197, 332,
344-347 (1904)).  See also Schwegmann Brothers v. Calvert Distillers Corp.,
341 U. S. 384 (1951).

III
    While Parker recognized the States' freedom to engage in
anticompetitive regulation, it did not purport to immunize from antitrust
liability the private parties who urge them to engage in anticompetitive
regulation.  However, it is obviously peculiar in a democracy, and perhaps
in derogation of the constitutional right "to petition the Government for a
redress of grievances," U. S. Const., Amdt. 1, to establish a category of
lawful state action that citizens are not permitted to urge.  Thus,
beginning with Eastern Railroad Presidents Conference v. Noerr Motor
Freight, Inc., supra, we have developed a corollary to Parker: the federal
antitrust laws also do not regulate the conduct of private individuals in
seeking anticompetitive action from the government.  This doctrine, like
Parker, rests ultimately upon a recognition that the antitrust laws,
"tailored as they are for the business world, are not at all appropriate
for application in the political arena."  Noerr, supra, at 141.  That a
private party's political motives are selfish is irrelevant: "Noerr shields
from the Sherman Act a concerted effort to influence public officials
regardless of intent or purpose."  United Mine Workers of America v.
Pennington, 381 U. S. 657, 670 (1965).
    Noerr recognized, however, what has come to be known as the "sham"
exception to its rule: "There may be situations in which a publicity
campaign, ostensibly directed toward influencing governmental action, is a
mere sham to cover what is actually nothing more than an attempt to
interfere directly with the business relationships of a competitor and the
application of the Sherman Act would be justified."  365 U. S., at 144.
The Court of Appeals concluded that the jury in this case could have found
that COA's activities on behalf of the restrictive billboard ordinances
fell within this exception.  In our view that was error.
    The "sham" exception to Noerr encompasses situations in which persons
use the governmental process -- as opposed to the outcome of that process
-- as an anticompetitive weapon.  A classic example is the filing of
frivolous objections to the license application of a competitor, with no
expectation of achieving denial of the license but simply in order to
impose expense and delay.  See California Motor Transport Co. v. Trucking
Unlimited, 404 U. S. 508 (1972).  A "sham" situation involves a defendant
whose activities are "not genuinely aimed at procuring favorable government
action" at all, Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U. S.
492, 500, n. 4 (1988), not one "who `genuinely seeks to achieve his
governmental result, but does so through improper means,' " id., at 508, n.
10 (quoting Sessions Tank Liners, Inc. v. Joor Mfg., Inc., 827 F. 2d 458,
465, n. 5 (CA9 1987)).
    Neither of the Court of Appeals' theories for application of the "sham"
exception to the facts of the present case is sound.  The court reasoned,
first, that the jury could have concluded that COA's interaction with city
officials "was `actually nothing more than an attempt to interfere directly
with the business relations [sic] of a competitor.' "  891 F. 2d, at 1139
(quoting Noerr, supra, at 144).  This analysis relies upon language from
Noerr, but ignores the import of the critical word "directly."  Although
COA indisputably set out to disrupt Omni's business relationships, it
sought to do so not through the very process of lobbying, or of causing the
city council to consider zoning measures, but rather through the ultimate
product of that lobbying and consideration, viz., the zoning ordinances.
The Court of Appeals' second theory was that the jury could have found
"that COA's purposes were to delay Omni's entry into the market and even to
deny it a meaningful access to the appropriate city administrative and
legislative fora."  891 F. 2d, at 1139.  But the purpose of delaying a
competitor's entry into the market does not render lobbying activity a
"sham," unless (as no evidence suggested was true here) the delay is sought
to be achieved only by the lobbying process itself, and not by the
governmental action that the lobbying seeks.  "If Noerr teaches anything it
is that an intent to restrain trade as a result of government action sought
. . . does not foreclose protection."  Sullivan, Developments in the Noerr
Doctrine, 56 Antitrust L. J. 361, 362 (1987).  As for "deny[ing] . . .
meaningful access to the appropriate city administrative and legislative
fora," that may render the manner of lobbying improper or even unlawful,
but does not necessarily render it a "sham."  We did hold in California
Motor Transport, supra, that a conspiracy among private parties to
monopolize trade by excluding a competitor from participation in the
regulatory process did not enjoy Noerr protection.  But California Motor
Transport involved a context in which the conspirators' participation in
the governmental process was itself claimed to be a "sham," employed as a
means of imposing cost and delay.  ("It is alleged that petitioners
`instituted the proceedings and actions . . . with or without probable
cause, and regardless of the merits of the cases.' "  404 U. S., at 512.)
The holding of the case is limited to that situation.  To extend it to a
context in which the regulatory process is being invoked genuinely, and not
in a "sham" fashion, would produce precisely that conversion of antitrust
law into regulation of the political process that we have sought to avoid.
Any lobbyist or applicant, in addition to getting himself heard, seeks by
procedural and other means to get his opponent ignored.  Policing the
legitimate boundaries of such defensive strategies, when they are conducted
in the context of a genuine attempt to influence governmental action, is
not the role of the Sherman Act.  In the present case, of course, any
denial to Omni of "meaningful access to the appropriate city administrative
and legislative fora" was achieved by COA in the course of an attempt to
influence governmental action that, far from being a "sham," was if
anything more in earnest than it should have been.  If the denial was
wrongful there may be other remedies, but as for the Sherman Act, the Noerr
exemption applies.
    Omni urges that if, as we have concluded, the "sham" exception is
inapplicable, we should use this case to recognize another exception to
Noerr immunity -- a "conspiracy" exception, which would apply when
government officials conspire with a private party to employ government
action as a means of stifling competition.  We have left open the
possibility of such an exception, see, e. g., Allied Tube, supra, at 502,
n. 7, as have a number of Courts of Appeals.  See, e. g., Oberndorf v.
Denver, 900 F. 2d 1434, 1440 (CA10 1990); First American Title Co. of South
Dakota v. South Dakota Land Title Assn., 714 F. 2d 1439, 1446, n. 6 (CA8
1983), cert. denied, 464 U. S. 1042 (1984).  At least one Court of Appeals
has affirmed the existence of such an exception in dicta, see Duke & Co. v.
Foerster, 521 F. 2d 1277, 1282 (CA3 1975), and the Fifth Circuit has
adopted it as holding, see Affiliated Capital Corp. v. Houston, 735 F. 2d
1555, 1566-1568 (1984) (en banc).
    Giving full consideration to this matter for the first time, we
conclude that a "conspiracy" exception to Noerr must be rejected.  We need
not describe our reasons at length, since they are largely the same as
those set forth in Part II above for rejecting a "conspiracy" exception to
Parker.  As we have described, Parker and Noerr are complementary
expressions of the principle that the antitrust laws regulate business, not
politics; the former decision protects the States' acts of governing, and
the latter the citizens' participation in government.  Insofar as the
identification of an immunitydestroying "conspiracy" is concerned, Parker
and Noerr generally present two faces of the same coin.  The
Noerr-invalidating conspiracy alleged here is just the Parker-invalidating
conspiracy viewed from the standpoint of the private-sector participants
rather than the governmental participants.  The same factors which, as we
have described above, make it impracticable or beyond the purpose of the
antitrust laws to identify and invalidate lawmaking that has been infected
by selfishly motivated agreement with private interests likewise make it
impracticable or beyond that scope to identify and invalidate lobbying that
has produced selfishly motivated agreement with public officials.  "It
would be unlikely that any effort to influence legislative action could
succeed unless one or more members of the legislative body became . . .
`coconspirators' " in some sense with the private party urging such action,
Metro Cable Co. v. CATV of Rockford, Inc., 516 F. 2d 220, 230 (CA7 1975).
And if the invalidating "conspiracy" is limited to one that involves some
element of unlawfulness (beyond mere anticompetitive motivation), the
invalidation would have nothing to do with the policies of the antitrust
laws.  In Noerr itself, where the private party "deliberately deceived the
public and public officials" in its successful lobbying campaign, we said
that "deception, reprehensible as it is, can be of no consequence so far as
the Sherman Act is concerned."  365 U. S., at 145.

IV
    Under Parker and Noerr, therefore, both the city and COA are entitled
to immunity from the federal antitrust laws for their activities relating
to enactment of the ordinances.  This determination does not entirely
resolve the dispute before us, since other activities are at issue in the
case with respect to COA.  Omni asserts that COA engaged in private
anticompetitive actions such as trade libel, the setting of artificially
low rates, and inducement to breach of contract.  Thus, although the jury's
general verdict against COA cannot be permitted to stand (since it was
based on instructions that erroneously permitted liability for seeking the
ordinances, see Sunkist Growers, Inc. v. Winckler & Smith Citrus Products
Co., 370 U. S. 19, 29-30 (1962)) if the evidence was sufficient to sustain
a verdict on the basis of these other actions alone, and if this theory of
liability has been properly preserved, Omni would be entitled to a new
trial.
    There also remains to be considered the effect of our judgment upon
Omni's claim against COA under the South Carolina Unfair Trade Practices
Act.  The District Court granted judgment notwithstanding the verdict on
this claim as well as the Sherman Act claims; the Court of Appeals reversed
on the ground that "a finding of conspiracy to restrain competition is
tantamount to a finding" that the South Carolina law had been violated, 891
F. 2d, at 1143.  Given our reversal of the "conspiracy" holding, that
reasoning is no longer applicable.
    We leave these remaining questions for determination by the Court of
Appeals on remand.  The judgment of the Court of Appeals is reversed, and
the case is remanded for further proceedings consistent with this opinion.
    It is so ordered.


 
 
 
 
 


------------------------------------------------------------------------------
1
    Section 1 provides in pertinent part: "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."  15 U. S. C. MDRV 1.
    Section 2 provides in pertinent part: "Every person who shall
monopolize, or attempt to monopolize, or combine or conspire with any other
person or persons, to monopolize any part of the trade or commerce among
the several States, or with foreign nations, shall be deemed guilty of a
felony."  15 U. S. C. MDRV 2.

2
    The monetary damages in this case were assessed entirely against COA,
the District Court having ruled that the city was immunized by the Local
Government Antitrust Act of 1984, 98 Stat. 2750, as amended, 15 U. S. C. 15
34-36, which exempts local governments from paying damages for violations
of the federal antitrust laws.  Although enacted in 1984, after the events
at issue in this case, the Act specifically provides that it may be applied
retroactively if "the defendant establishes and the court determines, in
light of all the circumstances . . . that it would be inequitable not to
apply this subsection to a pending case."  15 U. S. C. MDRV 35(b).  The
District Court determined that it would be, and the Court of Appeals
refused to disturb that judgment.  Respondent has not challenged that
determination in this Court, and we express no view on the matter.

3
    S. C. Code MDRV 5-23-10 (1976) ("Building and zoning regulations
authorized") provides that "[f]or the purpose of promoting health, safety,
morals or the general welfare of the community, the legislative body of
cities and incorporated towns may by ordinance regulate and restrict the
height, number of stories and size of buildings and other structures."
    S. C. Code MDRV 5-23-20 (1976) ("Division of municipality into
districts") provides that "[f]or any or all of such purposes the local
legislative body may divide the municipality into districts of such number,
shape and area as may be deemed best suited to carry out the purposes of
this article.  Within such districts it may regulate and restrict the
erection, construction, reconstruction, alteration, repair or use of
buildings, structures or land."
    S. C. Code MDRV 6-7-710 (1976) ("Grant of power for zoning") provides
that "[f]or the purposes of guiding development in accordance with existing
and future needs and in order to protect, promote and improve the public
health, safety, morals, convenience, order, appearance, prosperity, and
general welfare, the governing authorities of municipalities and counties
may, in accordance with the conditions and procedures specified in this
chapter, regulate the location, height, bulk, number of stories and size of
buildings and other structures. . . .  The regulations shall . . . be
designed to lessen congestion in the streets; to secure safety from fire,
panic, and other dangers, to promote the public health and the general
welfare, to provide adequate light and air; to prevent the overcrowding of
land; to avoid undue concentration of population; to protect scenic areas;
to facilitate the adequate provision of transportation, water, sewage,
schools, parks, and other public requirements."

4
    The dissent contends that, in order successfully to delegate its Parker
immunity to a municipality, a State must expressly authorize the
municipality to engage (1) in specifically "economic regulation," post, at
4, (2) of a specific industry, post at 7.  These dual specificities are
without support in our precedents, for the good reason that they defy
rational implementation.
    If, by authority to engage in specifically "economic" regulation, the
dissent means authority specifically to regulate competition, we squarely
rejected that in Hallie, as discussed in text.  Seemingly, however, the
dissent means only that the State authorization must specify that sort of
regulation whereunder "decisions about prices and output are not made by
individual firms, but rather by a public body."  Post, at 4.  But why is
not the restriction of billboards in a city a restriction on the "output"
of the local billboard industry?  It assuredly is -- and that is indeed the
very gravamen of Omni's complaint.  It seems to us that the dissent's
concession that "it is often difficult to differentiate economic regulation
from municipal regulation of health, safety, and welfare," post, at 9, is a
gross understatement.  Loose talk about a "regulated industry" may suffice
for what the dissent calls "antitrust parlance," post, at 4, but it is not
a definition upon which the criminal liability of public officials ought to
depend.
    Under the dissent's second requirement for a valid delegation of Parker
immunity -- that the authorization to regulate pertain to a specific
industry -- the problem with the South Carolina statute is that it used the
generic term "structures," instead of conferring its regulatory authority
industry-by-industry (presumably "billboards," "movie houses," "mobile
homes," "TV antennas," and every other conceivable object of zoning
regulation that can be the subject of a relevant "market" for purposes of
antitrust analysis).  To describe this is to refute it.  Our precedents not
only fail to suggest but positively reject such an approach.  "The
municipality need not `be able to point to a specific, detailed legislative
authorization' in order to assert a successful Parker defense to an
antitrust suit."  Hallie, 471 U. S., at 39 (quoting Lafayette, 435 U. S.,
at 415).

5
    The dissent is confident that a jury composed of citizens of the
vicinage will be able to tell the difference between "independent municipal
action and action taken for the sole purpose of carrying out an
anticompetitive agreement for the private party."  Post, at 12.  No doubt.
But those are merely the polar extremes, which like the geographic poles
will rarely be seen by jurors of the vicinage.  Ordinarily the allegation
will merely be (and the dissent says this is enough) that the municipal
action was not prompted "exclusively by a concern for the general public
interest," post, at 3 (emphasis added).  Thus, the real question is whether
a jury can tell the difference -- whether Solomon can tell the difference
-- between





Subject: 89-1671 -- DISSENT, COLUMBIA v. OMNI OUTDOOR ADVERTISING, INC.

 
SUPREME COURT OF THE UNITED STATES


No. 89-1671



CITY OF COLUMBIA and COLUMBIA OUTDOOR ADVERTISING, INC., PETITIONERS v.
OMNI OUTDOOR ADVERTISING, INC.

on writ of certiorari to the united states court of appeals for the fourth
circuit

[April 1, 1991]



    Justice Stevens, with whom Justice White and Justice Marshall join,
dissenting.

    Section 1 of the Sherman Act provides in part: "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." 15 U. S. C. MDRV 1 (emphasis added).  Although we
have previously recognized that a completely literal interpretation of the
word "every" cannot have been intended by Congress, {1} the Court today
carries this recognition to an extreme by deciding that agreements between
municipalities, or their officials, and private parties to use the zoning
power to confer exclusive privileges in a particular line of commerce are
beyond the reach of MDRV 1.  History, tradition, and the facts of this case
all demonstrate that the Court's attempt to create a "better" and less
inclusive Sherman Act, cf. West Virginia University Hospitals, Inc. v.
Casey, --- U. S. --- (1991) (slip op., at 17) is ill advised.
I
    As a preface to a consideration of the "state action" and socalled
"Noerr-Pennington" exemptions to the Sherman Act, it is appropriate to
remind the Court that one of the classic common-law examples of a
prohibited contract in restraint of trade involved an agreement between a
public official and a private party.  The public official -- the Queen of
England -- had granted one of her subjects a monopoly in the making,
importation, and sale of playing cards in order to generate revenues for
the crown.  A competitor challenged the grant in The Case of Monopolies, 11
Co. Rep. 84, 77 Eng. Rep. 1260 (Q. B. 1602), and prevailed.  Chief Justice
Popham explained on behalf of the bench:

"The Queen was . . . deceived in her grant; for the Queen . . . intended it
to be for the weal public, and it will be employed for the private gain of
the patentee, and for the prejudice of the weal public; moreover the Queen
meant that the abuse should be taken away, which shall never be by this
patent, but potius the abuse will be increased for the private benefit of
the patentee, and therefore . . . this grant is void jure Regio."  Id., at
87a; 77 Eng. Rep., at 1264.


    In the case before us today, respondent alleges that the city of
Columbia, South Carolina, has entered into a comparable agreement to give
respondent a monopoly in the sale of billboard advertising.  After a
three-week trial, a jury composed of citizens of the vicinage found that,
despite the city fathers' denials, there was indeed such an agreement,
presumably motivated in part by past favors in the form of political
advertising, in part by friendship, and in part by the expectation of a
beneficial future relationship -- and in any case, not exclusively by a
concern for the general public interest. {2}  Today the Court acknowledges
the anticompetitive consequences of this and similar agreements but decides
that they should be exempted from the coverage of the Sherman Act because
it fears that enunciating a rule that allows the motivations of public
officials to be probed may mean that innocent municipal officials may be
harassed with baseless charges.  The holding evidences an unfortunate lack
of confidence in our judicial system and will foster the evils the Sherman
Act was designed to eradicate.

II
    There is a distinction between economic regulation, on the one hand,
and regulation designed to protect the public health, safety, and
environment.  In antitrust parlance a "regulated industry" is one in which
decisions about prices and output are made not by individual firms, but
rather by a public body or a collective process subject to governmental
approval.  Economic regulation of the motor carrier and airline industries
was imposed by the Federal Government in the 1930s; the "deregulation" of
those industries did not eliminate all the other types of regulation that
continue to protect our safety and environmental concerns.
    The antitrust laws reflect a basic national policy favoring free
markets over regulated markets. {3}  In essence, the Sherman Act prohibits
private unsupervised regulation of the prices and output of goods in the
marketplace.  That prohibition is inapplicable to specific industries which
Congress has exempted from the antitrust laws and subjected to regulatory
supervision over price and output decisions.  Moreover, the so-called
"state action" exemption from the Sherman Act reflects the Court's
understanding that Congress did not intend the statute to preempt a State's
economic regulation of commerce within its own borders.
    The contours of the state action exemption are relatively well-defined
in our cases.  Ever since our decision in Olsen v. Smith, 195 U. S. 332
(1904), which upheld a Texas statute fixing the rates charged by pilots
operating in the Port of Galveston, it has been clear that a State's
decision to displace competition with economic regulation is not prohibited
by the Sherman Act.  Parker v. Brown, 317 U. S. 341 (1943), the case most
frequently identified with the state action exemption, involved a decision
by California to substitute sales quotas and price control -- the purest
form of economic regulation -- for competition in the market for California
raisins.
    In Olsen, the State itself had made the relevant pricing decision.  In
Parker, the regulation of the marketing of California's 1940 crop of
raisins was administered by state of ficials.  Thus, when a state agency,
or the State itself, engages in economic regulation, the Sherman Act is
inapplicable.  Hoover v. Ronwin, 466 U. S. 558, 568-569 (1984); Bates v.
State Bar of Arizona, 433 U. S. 350, 360 (1977).
    Underlying the Court's recognition of this state action exemption has
been respect for the fundamental principle of federalism.  As we stated in
Parker, 317 U. S., at 351, "In a dual system of government in which, under
the Constitution, the states are sovereign, save only as Congress may
constitutionally subtract from their authority, an unexpressed purpose to
nullify a state's control over its officers and agents is not lightly to be
attributed to Congress."
    However, this Court recognized long ago that the deference due States
within our federal system does not extend fully to conduct undertaken by
municipalities.  Rather, all sovereign authority "within the geographical
limits of the United States" resides with "the Government of the United
States, or [with] the States of the Union.  There exist within the broad
domain of sovereignty but these two.  There may be cities, counties, and
other organized bodies with limited legislative functions, but they are all
derived from, or exist in, subordination to one or the other of these."
United States v. Kagama, 118 U. S. 375, 379 (1886).
    Unlike States, municipalities do not constitute bedrocks within our
system of federalism.  And also unlike States, municipalities are more apt
to promote their narrow parochial interests "without regard to
extraterritorial impact and regional efficiency."  Lafayette v. Louisiana
Power & Light Co., 435 U. S. 389, 404 (1978); see also The Federalist No.
10 (J. Madison) (describing the greater tendency of smaller societies to
promote oppressive and narrow interests above the common good).  "If
municipalities were free to make economic choices counseled solely by their
own parochial interests and without regard to their anticompetitive
effects, a serious chink in the armor of antitrust protection would be
introduced at odds with the comprehensive national policy Congress
established."  Lafayette v. Louisiana Power & Light Co., 435 U. S., at 408.
Indeed, "[i]n light of the serious economic dislocation which could result
if cities were free to place their own parochial interests above the
Nation's economic goals reflected in the antitrust laws, . . . we are
especially unwilling to presume that Congress intended to exclude
anticompetitive municipal action from their reach."  Id., at 412-413. {4}
    Nevertheless, insofar as municipalities may serve to im plement state
policies, we have held that economic regulation administered by a
municipality may also be exempt from Sherman Act coverage if it is enacted
pursuant to a clearly articulated and affirmatively expressed state
directive "to replace competition with regulation."  Hoover, 466 U. S., at
569.  However, the mere fact that a municipality acts within its delegated
authority is not sufficient to exclude its anticompetitive behavior from
the reach of the Sherman Act.  "Acceptance of such a proposition -- that
the general grant of power to enact ordinances necessarily implies state
authorization to enact specific anticompetitive ordinances -- would wholly
eviscerate the concepts of `clear articulation and affirmative expression'
that our precedents require."  Community Communications Co. v. Boulder, 455
U. S. 40, 56 (1982).
    Accordingly, we have held that the critical decision to substitute
economic regulation for competition is one that must be made by the State.
That decision must be articulated with sufficient clarity to identify the
industry in which the State intends that economic regulation shall replace
competition.  The terse statement of the reason why the municipality's
actions in Hallie v. Eau Claire, 471 U. S. 34 (1985), was exempt from the
Sherman Act illustrates the point: "They were taken pursuant to a clearly
articulated state policy to replace competition in the provision of sewage
services with regulation."  Id., at 47. {5}

III
    Today the Court adopts a significant enlargement of the state action
exemption.  The South Carolina statutes that confer zoning authority on
municipalities in the State do not articulate any state policy to displace
competition with economic regulation in any line of commerce or in any
specific industry.  As the Court notes, the state statutes were expressly
adopted to promote the " `health, safety, morals or the general welfare of
the community,' " see ante, at 4-5, n. 3.  Like Colorado's grant of "home
rule" powers to the city of Boulder, they are simply neutral on the
question whether the municipality should displace competition with economic
regulation in any industry.  There is not even an arguable basis for
concluding that the State authorized the city of Columbia to enter into
exclusive agreements with any person, or to use the zoning power to protect
favored citizens from competition. {6}  Nevertheless, under the guise of
acting pursuant to a state legislative grant to regulate health, safety,
and welfare, the city of Columbia in this case enacted an ordinance that
amounted to economic regulation of the billboard market; as the Court
recognizes, the ordinance "obviously benefited COA, which already had its
billboards in place . . . [and] severely hindered Omni's ability to
compete."  Ante, at 2.
    Concededly, it is often difficult to differentiate economic regulation
from municipal regulation of health, safety, and welfare.  "Social and
safety regulation have economic impacts, and economic regulation has social
and safety effects."  D. Hjelmfelt, Antitrust and Regulated Industries 3
(1985).  It is nevertheless important to determine when purported general
welfare regulation in fact constitutes economic regulation by its purpose
and effect of displacing competition.  "An example of economic regulation
which is disguised by another stated purpose is the limitation of
advertising by lawyers for the stated purpose of protecting the public from
incompetent lawyers.  Also, economic regulation posing as safety regulation
is often encountered in the health care industry."  Id., at 3-4.
    In this case, the jury found that the city's ordinance -- ostensibly
one promoting health, safety, and welfare -- was in fact enacted pursuant
to an agreement between city officials and a private party to restrict
competition.  In my opinion such a finding necessarily leads to the
conclusion that the city's ordinance was fundamentally a form of economic
regulation of the billboard market rather than a general welfare regulation
having incidental anticompetitive effects.  Because I believe our cases
have wisely held that the decision to embark upon economic regulation is a
nondelegable one that must expressly be made by the State in the context of
a specific industry in order to qualify for state action immunity, see, e.
g., Olsen v. Smith, 195 U. S. 332 (1904) (Texas pilotage statutes expressly
regulated both entry and rates in the Port of Galveston); Parker v. Brown,
317 U. S. 341 (1943) (California statute expressly authorized the raisin
market regulatory program), I would hold that the city of Columbia's
economic regulation of the billboard market pursuant to a general state
grant of zoning power is not exempt from antitrust scrutiny. {7}
    Underlying the Court's reluctance to find the city of Columbia's
enactment of the billboard ordinance pursuant to a private agreement to
constitute unauthorized economic regulation is the Court's fear that
subjecting the motivations and effects of municipal action to antitrust
scrutiny will result in public decisionmaking being "made subject to ex
post facto judicial assessment of `the public interest.' "  Ante, at 11.
That fear, in turn, rests on the assumption that "it is both inevitable and
desirable that public officials often agree to do what one or another group
of private citizens urges upon them."  Ante, at 9.
    The Court's assumption that an agreement between private parties and
public officials is an "inevitable" precondition for official action,
however, is simply wrong. {8}  Indeed, I am persuaded that such agreements
are the exception rather than the rule, and that they are, and should be,
disfavored.  The mere fact that an official body adopts a position that is
advocated by a private lobbyist is plainly not sufficient to establish an
agreement to do so.  See Fisher v. Berkeley, 475 U. S. 260, 266-267 (1986);
cf. Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.
S. 537, 541 (1954).  Nevertheless, in many circumstances, it would seem
reasonable to infer -- as the jury did in this case -- that the official
action is the product of an agreement intended to elevate particular
private interests over the general good.
    In this case, the city took two separate actions that protected the
local monopolist from threatened competition.  It first declared a
moratorium on any new billboard construction, despite the city attorney's
advice that the city had no power to do so.  When the moratorium was
invalidated in state court litigation, it was replaced with an apparently
valid ordinance that clearly had the effect of creating formidable barriers
to entry in the billboard market.  Throughout the city's decisionmaking
process in enacting the various ordinances, undisputed evidence
demonstrated that Columbia Outdoor Advertising had met with city officials
privately as well as publicly.  As the Court of Appeals noted: "Implicit in
the jury verdict was a finding that the city was not acting pursuant to the
direction or purposes of the South Carolina statutes but conspired solely
to further COA's commercial purposes to the detriment of competition in the
billboard industry."  891 F. 2d 1127, 1133 (CA4 1989).
    Judges who are closer to the trial process than we are do not share the
Court's fear that juries are not capable of recognizing the difference
between independent municipal action and action taken for the sole purpose
of carrying out an anticompetitive agreement for the private party. {9}
See, e. g., In re Japanese Electronic Products Antitrust Litigation, 631 F.
2d 1069, 1079 (CA3 1980) ("The law presumes that a jury will find facts and
reach a verdict by rational means.  It does not contemplate scientific
precision but does contemplate a resolution of each issue on the basis of a
fair and reasonable assessment of the evidence and a fair and reasonable
application of the relevant legal rules").  Indeed, the problems inherent
in determining whether the actions of mu nicipal officials are the product
of an illegal agreement are substantially the same as those arising in
cases in which the actions of business executives are subjected to
antitrust scrutiny. {10}
    The difficulty of proving whether an agreement motivated a course of
conduct should not in itself intimidate this Court into exempting those
illegal agreements that are proven by convincing evidence.  Rather, the
Court should, if it must, attempt to deal with these problems of proof as
it has in the past -- through heightened evidentiary standards rather than
through judicial expansion of exemptions from the Sherman Act.  See, e. g.,
Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U. S. 574
(1986) (allowing summary judgment where evidence of a predatory pricing
conspiracy in violation of the Sherman Act was founded largely upon
circumstantial evidence); Monsanto Co. v. Spray-Rite Service Corp., 465 U.
S. 752, 768 (1984) (holding that a plaintiff in a vertical price-fixing
case must produce evidence which "tends to exclude the possibility of
independent action").
    Unfortunately, the Court's decision today converts what should be
nothing more than an anticompetitive agreement undertaken by a municipality
that enjoys no special status in our federalist system into a lawful
exercise of public decisionmaking.  Although the Court correctly applies
principles of federalism in refusing to find a "conspiracy exception" to
the Parker state action doctrine when a State acts in a nonproprietary
capacity, it errs in extending the state action exemption to municipalities
that enter into private anticompetitive agreements under the guise of
acting pursuant to a general state grant of authority to regulate health,
safety, and welfare.  Unlike the previous limitations this Court has
imposed on Congress' sweeping mandate in MDRV 1, which found support in our
common-law traditions or our system of federalism, see n. 1, supra, the
Court's wholesale exemption of municipal action from antitrust scrutiny
amounts to little more than a bold and disturbing act of judicial
legislation which dramatically curtails the statutory prohibition against
"every" contract in restraint of trade. {11}
IV
    Just as I am convinced that municipal "lawmaking that has been infected
by selfishly motivated agreement with private interests," ante, at 17, is
not authorized by a grant of zoning authority, and therefore not within the
state action exemption, so am I persuaded that a private party's agreement
with selfishly motivated public officials is sufficient to remove the
antitrust immunity that protects private lobbying under Eastern Railroad
Presidents Conference v. Noerr Motor Freight, Inc., 365 U. S. 127 (1961),
and Mine Workers v. Pennington, 381 U. S. 657 (1965).  Although I agree
that the "sham" exception to the Noerr-Pennington rule exempting lobbying
activities from the antitrust laws does not apply to the private
petitioner's conduct in this case for the reasons stated by the Court in
Part III of its opinion, I am satisfied that the evidence in the record is
sufficient to support the jury's finding that a conspiracy existed between
the private party and the municipal officials in this case so as to remove
the private petitioner's conduct from the scope of NoerrPennington
antitrust immunity.  Accordingly, I would affirm the judgment of the Court
of Appeals as to both the city of Columbia and Columbia Outdoor
Advertising.
    I respectfully dissent.

 
 
 
 
 

------------------------------------------------------------------------------
1
    Construing the statute in the light of the common law concerning
contracts in restraint of trade, we have concluded that only unreasonable
restraints are prohibited.
    "One problem presented by the language of MDRV 1 of the Sherman Act is
that it cannot mean what it says.  The statute says that `every' contract
that restrains trade is unlawful.  But, as Mr. Justice Brandeis
perceptively noted, restraint is the very essence of every contract; read
literally, MDRV 1 would outlaw the entire body of private contract law.
Yet it is that body of law that establishes the enforceability of
commercial agreements and enables competitive markets -- indeed, a
competitive economy -- to function effectively.
    "Congress, however, did not intend the text of the Sherman Act to
delineate the full meaning of the statute or its application in concrete
situations.  The legislative history makes it perfectly clear that it
expected the courts to give shape to the statute's broad mandate by drawing
on common-law tradition.  The Rule of Reason, with its origins in
common-law precedents long antedating the Sherman Act, has served that
purpose. . . .  [The Rule of Reason] focuses directly on the challenged
restraint's impact on competitive conditions."  National Society of
Professional Engineers v. United States, 435 U. S. 679, 687-688 (1978)
(footnotes omitted).

We have also confined the Sherman Act's mandate by holding that the
independent actions of the sovereign States and their officials are not
covered by the language of the Act.  Parker v. Brown, 317 U. S. 341
(1943).

2
    The jury returned its verdict pursuant to the following instructions
given by the District Court:
    "So if by the evidence you find that that person involved in this case
procured and brought about the passage of ordinances solely for the purpose
of hindering, delaying or otherwise interfering with the access of the
Plaintiff to the marketing area involved in this case . . . and thereby
conspired, then, of course, their conduct would not be excused under the
antitrust laws.
    "So once again an entity may engage in . . . legitimate lobbying . . .
to procure legislati[on] even if the motive behind the lobbying is anti
competitive.
    "If you find Defendants conspired together with the intent to foreclose
the Plaintiff from meaningful access to a legitimate decision making
process with regard to the ordinances in question, then your verdict would
be for the Plaintiff on that issue."  App. 81.

3
    "The Sherman Act reflects a legislative judgment that ultimately
competition will produce not only lower prices, but also better goods and
services.  `The heart of our national economic policy long has been faith
in the value of competition.'  Standard Oil Co. v. FTC, 340 U. S. 231, 248.
The assumption that competition is the best method of allocating resources
in a free market recognizes that all elements of a bargain -- quality,
service, safety, and durability -- and not just the immediate cost, are
favorably affected by the free opportunity to select among alternative
offers.  Even assuming occasional exceptions to the presumed consequences
of competition, the statutory policy precludes inquiry into the question
whether competition is good or bad."  National Society of Professional
Engineers, 435 U. S., at 695.

4
    In Owen v. City of Independence, 445 U. S. 622 (1980), this Court
recognized that "notwithstanding [42 U. S. C.] MDRV 1983's expansive
language and absence of any express incorporation of common-law immunities,
we have, on several occasions, found that a tradition of immunity was so
firmly rooted in the common law and was supported by such strong policy
reasons that `Congress would have specifically so provided had it wished to
abolish the doctrine.'  Pierson v. Ray, 386 U. S. 547, 555 (1967)."  Id.,
at 637.  Nevertheless, the Court refused to find a firmly established
immunity enjoyed by municipal corporations at common law for the torts of
their agents.  "Where the immunity claimed by the defendant was well
established at common law at the time [42 U. S. C.] MDRV 1983 was enacted,
and where its rationale was compatible with the purposes of the Civil
Rights Act, we have construed the statute to incorporate that immunity.
But there is no tradition of immunity for municipal corporations, and
neither history nor policy supports a construction of MDRV 1983 that would
justify" according them such immunity.  Id., at 638.  See also Will v.
Michigan Dept. of State Police, 491 U. S. 58, 70 (1989) ("States are
protected by the Eleventh Amendment while municipalities are not . . .").

5
    Contrary to the Court's reading of Hallie, our opinion in that case
emphasized the industry-specific character of the Wisconsin legislation in
explaining why the delegation satisfied the `clear articulation'
requirement.  At issue in Hallie was the town's independent decision to
refuse to provide sewage treatment services to nearby towns -- a decision
that had been expressly authorized by the Wisconsin legislation.  471 U.
S., at 41.  We wrote:

"Applying the analysis of Lafayette v. Louisiana Power & Light Co., 435 U.
S. 389 (1978), it is sufficient that the statutes authorized the City to
provide sewage services and also to determine the areas to be served."
Id., at 42.
    "Nor do we agree with the Towns' contention that the statutes at issue
here are neutral on state policy.  The Towns' attempt to liken the
Wisconsin statutes to the Home Rule Amendment involved in Boulder, arguing
that the Wisconsin statutes are neutral because they leave the City free to
pursue either anticompetitive conduct or free-market competition in the
field of sewage services.  The analogy to the Home Rule Amendment involved
in Boulder is inapposite.  That Amendment to the Colorado Constitution
allocated only the most general authority to municipalities to govern local
affairs.  We held that it was neutral and did not satisfy the `clear
articulation' component of the state action test.  The Amendment simply did
not address the regulation of cable television.  Under home rule the
municipality was to be free to decide every aspect of policy relating to
cable television, as well as policy relating to any other field of
regulation of local concern.  Here, in contrast, the State has specifically
authorized Wisconsin cities to provide sewage services and has delegated to
the cities the express authority to take action that foreseeably will
result in anticompetitive effects.  No reasonable argument can be made that
these statutes are neutral in the same way that Colorado's Home Rule
Amendment was."  Id., at 43.
    We rejected the argument that the delegation was insufficient because
it did not expressly mention the foreseeable anticompetitive consequences
of the city of Eau Claire's conduct, but we surely did not hold that the
mere fact that incidental anticompetitive consequences are foreseeable is
sufficient to immunize otherwise unauthorized restrictive agreements
between cities and private parties.

6
    The authority to regulate the " `location, height, bulk, number of
stories and size of buildings and other structures,' " see ante, at 5, n. 3
(citation omitted), may of course have an indirect effect on the total
output in the billboard industry, see ante, at 7, n. 4, as well as on a
number of other industries, but the Court surely misreads our cases when it
implies that a general grant of zoning power represents a clearly
articulated decision to authorize municipalities to enter into agreements
to displace competition in every industry that is affected by zoning
regulation.

7
    A number of Courts of Appeals have held that a municipality which
exercises its zoning power to further a private agreement to restrain trade
is not entitled to state action immunity.  See, e. g., Westborough Mall,
Inc. v. Cape Girardeau, 693 F. 2d 733, 746 (CA8 1982) ("Even if zoning in
general can be characterized as `state action,' . . . a conspiracy to
thwart normal zoning procedures and to directly injure the plaintiffs by
illegally depriving them of their property is not in furtherance of any
clearly articulated state policy"); Whitworth v. Perkins, 559 F. 2d 378,
379 (CA5 1977) ("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").

8
    No such agreement was involved in Hallie v. Eau Claire, 471 U. S. 34
(1985).  In that case the plaintiffs challenged independent action -- the
determination of the service area of the city's sewage system -- that had
been expressly authorized by Wisconsin legislation.  The absence of any
such agreement provided the basis for our decision in Fisher v. Berkeley,
475 U. S. 260, 266-267 (1986) ("[t]he distinction between unilateral and
concerted action is critical here . . . [t]hus, if the Berkeley Ordinance
stabilizes rents without this element of concerted action, the program it
establishes cannot run afoul of MDRV 1").

9
    The instructions in this case, fairly read, told the jury that the
plaintiff should not prevail unless the ordinance was enacted for the sole
purpose of interfering with access to the market.  See supra, at 3, n. 2.
Thus, this case is an example of one of the "polar extremes," see ante, at
9, n. 5, that juries -- as well as Solomon -- can readily identify.  The
mixed motive cases that concern the Court should present no problem if
juries are given instructions comparable to those given below.  When the
Court describes my position as assuming that municipal action that was not
prompted "exclusively by a concern for the general public interest" is
enough to create antitrust liability, ibid., it simply ignores the
requirement that the plaintiff must prove that the municipal action is the
product of an anticompetitive agreement with private parties.  Contrary to
our square holding in Fisher v. Berkeley, 475 U. S. 260 (1986), today the
Court seems to assume that municipal action which is not entirely immune
from antitrust scrutiny will automatically violate the antitrust laws.

10
    "There are many obstacles to discovering conspiracies, but the most
frequent difficulties are three.  First, price-fixers and similar
miscreants seldom admit their conspiracy or agree in the open.  Often, we
can infer the agreement only from their behavior.  Second, behavior can
sometimes be coordinated without any communication or other observable and
reprehensible behavior.  Third, the causal connection between an
observable, controllable act -- such as a solicitation or meeting -- and
subsequent parallel action may be obscure."  6 P. Areeda, Antitrust Law
MDRV 1400, at 3-4 (1986).

See also Turner, The Definition of Agreement under the Sherman Act:
Conscious Parallelism and Refusals to Deal, 75 Harv. L. Rev. 655 (1962)
(discussing difficulties of condemning parallel anticompetitive action
absent explicit agreement among the parties).

11
    As the Court previously has noted:
    "In 1972, there were 62,437 different units of local government in this
country.  Of this number 23,885 were special districts which had a defined
goal or goals for the provision of one or several services, while the
remaining 38,552 represented the number of counties, municipalities, and
townships, most of which have broad authority for general governance
subject to limitations in one way or another imposed by the State.  These
units may, and do, participate in and affect the economic life of this
Nation in a great number and variety of ways.  When these bodies act as
owners and providers of services, they are fully capable of aggrandizing
other economic units with which they interrelate, with the potential of
serious distortion of the rational and efficient allocation of resources,
and the efficiency of free markets which the regime of competition embodied
in the antitrust laws is thought to engender."  Lafayette v. Louisiana
Power & Light Co., 435 U. S. 389, 407-408 (1978) (footnotes omitted).
