Diverse Power, Inc. v. City of LaGrange, Georgia

Court: 11th Circuit
Case Number: 18-11014
Decision Date: August 20, 2019
Case Type: Immunity - Sovereign

The electric utility brought an action under the Sherman Act and the Clayton Act alleging that a city ordinance requiring new homes or businesses in developments outside the city limits to install gas appliances in order to receive water service from the city constituted an unlawful tying arrangement. The United States District Court for the Northern District of Georgia denied the city's motion to dismiss based on state-action immunity, and the city filed an interlocutory appeal. The United States Court of Appeals, Eleventh Circuit held that the city's use of its water monopoly to increase its share of the energy market was not an inherent, logical, or ordinary result of a legislative scheme permitting city to provide water service, and thus the city was not entitled to state-action immunity from liability under federal antitrust laws. The Court noted that if we adopted the city’s read of Georgia law this would give the city “astonishingly vast power”, as under the city’s interpretation of its immunity there would be “no limiting principle” which, if true, “would [give the city] immunity to take anticompetitive actions affecting any industry so long as the demand were made as a condition of refusing water service.”