Zimomra v. Alamo Rent-A-Car, Inc.

                                                                              F I L E D
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                                         PUBLISH
                                                                              APR 22 1997
                       UNITED STATES COURT OF APPEALS
                                                                           PATRICK FISHER
                                    TENTH CIRCUIT                                    Clerk


 DAVID CHARLES ZIMOMRA, on
 behalf of himself and all others similarly
 situated,

        Plaintiff-Appellant,

            v.                                               No. 96-1120
                                                             No. 96-1203
 ALAMO RENT-A-CAR, INC.; AVIS,
 INC.; BUDGET RENT A CAR
 CORPORATION; DOLLAR RENT-A-
 CAR SYSTEMS, INC.; HERTZ
 CORPORATION; NATIONAL CAR
 RENTAL SYSTEM, INC.; THRIFTY
 RENT-A-CAR SYSTEMS, INC.;
 VALUE RENT-A-CAR, INC.;
 ENTERPRISE LEASING CO. OF
 DENVER; NATIONAL CAR RENTAL,
 named as National Car Rental, Inc.;
 RESORT RENT-A-CAR, INC.;
 STEAMBOAT SPRINGS RENTAL AND
 LEASING, INC.; TRYND, INC.; TIARA
 ENTERPRISES, INC.,

        Defendants-Appellees.




                         Appeal from United States District Court
                               for the District of Colorado
                                  (D.C. No. 94-S-2148)


David Boies, of Boies & McInnis, Fairfax, Virginia (Steven M. Feder, of Bader,
Villanueva & Feder, Denver, Colorado, with him on the brief), for the appellant.

Terence C. Gill (Stanley L. Garnett and Stephen D. Gurr with him on the brief), of
Brownstein Hyatt Farber & Strickland, P.C., Denver, Colorado, for the appellees.
Before SEYMOUR, Chief Judge, HENRY and BRISCOE, Circuit Judges.


BRISCOE, Circuit Judge.


       Plaintiff David C. Zimomra appeals the district court's dismissal of his

consolidated class action complaints alleging federal antitrust claims, as well as various

state law claims, against fourteen car rental companies operating at Stapleton

International Airport (Stapleton) and Denver International Airport (DIA). We affirm.

                                              I.

       On November 8, 1993, the City and County of Denver enacted Denver Bond

Ordinance No. 863 to help fund construction of car rental facilities at DIA. Pursuant to

the ordinance, the City and County issued special facilities revenue bonds in the amount

of $65,579,000 to fund construction. To ensure repayment of the bonds (repayment

period runs from 1993 through 2000), Ordinance 863 requires all car rental companies

awarded rights to operate at DIA, all of whom entered into special facilities and ground

leases for their respective facilities, to charge and collect "usage fees" from their

customers. Specifically, Section 3.4(a) of the ordinance provides that

       a Usage fee shall be charged and collected by each Company from the person
       entering into each motor vehicle rental agreement with the Company at Stapleton
       International Airport [predecessor to DIA] prior to the opening date of Denver
       International Airport for commercial business as established by the City, and after
       such opening date.

Appellant's append. at 81.

       The daily usage fee was initially set at $2.98 and was to remain at that amount

until October 1, 1994. Subsequent daily usage fees are to be established through the


                                              -2-
interaction of a "Managing Committee," which is composed of a representative from each

car rental company and an "Independent Consultant" appointed by the Managing

Committee with the approval of the Manager of Public Works of the City and County of

Denver or his designee. Section 3.4(b) of the ordinance provides:

              The Usage Fee for each 12-month period commencing October 1,
       1994 shall be an amount determined by the Independent Consultant to be
       sufficient to produce revenues which, together with available Reserve
       Balances in the respective Company Revenue Accounts in the Car Rental
       Special Facilities Revenue Fund equal, in the aggregate, to 115% of the sum
       of the principal of and interest on the Bonds coming due in such 12-month
       period plus the reasonably expected Administrative Expenses for such 12-
       month period, deficiencies then existing in the Special City Reserve Fund,
       and payments to the City under [the provisions of Ordinance 863] for such
       period. In determining the amount of the Usage Fee for any period the
       Independent Consultant shall evaluate such factors as it shall deem
       necessary which may include, among other things, the number of
       transaction days experienced by the Companies for one or more previous
       years for the rental of motor vehicles subject to the payment of Concession
       Fees (or comparable information at Stapleton International Airport), the
       number of transaction days estimated by [the car rental companies] for such
       period for the rental of motor vehicles subject to the payment of Concession
       Fees, and an estimate of the number of origination and destination
       passengers at [DIA] for such period.

Appellant’s append. at 82-83.

       By July 1 of each year, the Independent Consultant is required to furnish a report

to the City and County of Denver, the car rental companies, and the banks involved in

funding the special revenue bonds, setting forth the amount of the proposed daily usage

fee for the next 12-month period "which, in the opinion of the Independent Consultant, is

necessary to produce the required Usage Fee receipts . . . , together with an explanation of

the basis for determining such amount." Appellant’s append. at 83 (Section 3.4(c)). Any

recipient of the report is then allowed a two-week period in which to comment upon the

proposed daily usage fee and, if there is no objection, the fee becomes effective on


                                            -3-
October 1 of that year. If there is an objection, the Independent Consultant evaluates the

objection and decides whether to recalculate the proposed daily usage fee.

       The car rental companies deposit their collected usage fees in a "Car Rental

Special Facilities Revenue Fund" on a monthly basis. Appellant’s append. at 82 (Section

3.4(a)). In turn, the Car Rental Special Facilities Revenue Fund is used to pay the

principal and interest on the bonds, as well as associated expenses. Any amounts

remaining after the bonds are retired (in the year 2000) will go to the City and County of

Denver and will constitute gross revenues of the airport system. Appellant’s append. at

78-79, 91 (Sections 3.1 and 3.13).

       Plaintiff is a resident of Fairfax, Virginia. On unspecified dates in 1993 and 1994,

he allegedly rented cars at Stapleton and was charged a $2.98 daily usage fee in addition

to the agreed-upon daily rental rates. On July 11, 1994, plaintiff filed a complaint in the

United States District Court for the Eastern District of Virginia purporting to sue on

behalf of "all persons in the United States . . . who have rented cars from any defendant at

Denver’s Stapleton Airport and were charged a $2.98 per day charge during the period

from and including 1993 to present." Appellees' supp. append. at 6. Named as

defendants in the complaint were eight car rental companies doing business at Stapleton.

Plaintiff asserted claims under Section 1 of the Sherman Antitrust Act and Sections 4 and

6 of the Clayton Act, as well as state law claims of fraud and deceit, unjust enrichment,

and negligent misrepresentation. He alleged the defendant car rental companies violated

federal and state law by jointly agreeing to charge airport customers a uniform $2.98 daily

usage fee in addition to their quoted rental prices.




                                             -4-
       The action was transferred to federal district court in Colorado on September 9,

1994. Plaintiff filed a second complaint in Colorado federal district court on November

9, 1994, naming six additional car rental companies as defendants. The allegations of the

second complaint were substantially similar to those in the first complaint.

       Defendants moved to dismiss both complaints. Although defendants

acknowledged imposing a $2.98 daily usage fee on airport customers, they contended

they were required to do so by Ordinance 863. Accordingly, defendants sought dismissal

of plaintiff’s antitrust claims on state action immunity grounds. After consolidating both

actions, the district court issued an order on February 23, 1996, granting the pending

dispositive motions and dismissing plaintiff’s claims against all but one of the named

defendants (Tiara Enterprises, Inc.). In so doing, the district court concluded plaintiff’s

antitrust claims against defendants were barred by the state action immunity doctrine.

Having concluded defendants were immune from plaintiff’s antitrust claims, the court

declined to exercise supplemental jurisdiction over plaintiff’s supplemental state law

claims. On April 12, 1996, the remaining defendant, Tiara Enterprises, Inc., filed a

motion to dismiss and the court granted the motion on April 17, 1996, for the same

reasons as in its February 23, 1996 order.

                                             II.

State action immunity

       Plaintiff contends the district court erred in concluding defendants were immune

from federal antitrust claims under the state action immunity doctrine. In particular, he

contends Ordinance 863, upon which defendants and the court relied, was not enacted

pursuant to a clearly articulated and affirmatively expressed state directive to displace


                                             -5-
price competition in the car rental market. Further, he contends even if the ordinance was

enacted pursuant to such a state policy, defendants’ conduct is not immune from antitrust

laws because the City and County of Denver does not actively supervise the setting or

modification of the daily usage fee.

       The "state action immunity" doctrine originated in Parker v. Brown, 

317 U.S. 341

(1943), and "'exempts qualifying state and local government regulation from federal

antitrust, even if the regulation at issue compels an otherwise clear violation of the federal

antitrust laws.'" Cost Management Services v. Washington Natural Gas Co., 

99 F.3d 937, 941

 (9th Cir. 1996) (quoting Hovenkamp, Federal Antitrust Policy: The Law of

Competition and its Practice § 20.2, at 673 (West 1994)). Although the doctrine was

aimed at protecting state legislatures and state supreme courts acting in their legislative

capacities, it can provide protection to other individuals or entities acting pursuant to state

authorization. See Hoover v. Ronwin, 

466 U.S. 558, 568

 (1984). In such situations,

however, "closer analysis is required" to determine whether antitrust immunity is

appropriate. Id.; Porter Testing Laboratory v. Board of Regents, 

993 F.2d 768

, 770 (10th

Cir.), cert. denied, 

510 U.S. 932

 (1993).

       In California Retail Liquor Dealers Ass’n v. Midcal Aluminum, 

445 U.S. 97

(1980), the Supreme Court established a two-part test to determine whether alleged

anticompetitive conduct on the part of a private party is immunized under the state action

immunity doctrine. First, "the challenged restraint must be 'one clearly articulated and

affirmatively expressed as state policy.'" 

Id.

 at 105 (quoting City of Lafayette v.

Louisiana Power & Light Co., 

435 U.S. 389, 410

 (1978)). Second, "the policy must be

'actively supervised' by the State itself." 

Id.

 Application of this "rigorous" test ensures


                                              -6-
that Parker immunity is applied only where the "private party’s anticompetitive conduct

promotes state policy, rather than merely the party’s individual interests." Patrick v.

Burget, 

486 U.S. 94, 101

 (1988).

       In Town of Hallie v. City of Eau Claire, 

471 U.S. 34, 46-47

 (1985), the Supreme

Court modified the Midcal test for cases involving municipalities, specifically holding

municipalities need not satisfy the Midcal active state supervision requirement because

"there is little or no danger that [a municipality] is involved in a private price-fixing

arrangement." 

Id.

 The result is that a municipality can obtain exemption under the state

action immunity doctrine by satisfying only the first prong of the Midcal test, i.e., by

demonstrating it acted pursuant to "clearly articulated and affirmatively expressed" state

policy. 

Id.

       Here, the district court applied the two-part Midcal test and concluded the

defendant car rental companies were entitled to state action immunity from plaintiff’s

federal antitrust claims. In reviewing the district court’s decision, we apply a de novo

standard. See F.T.C. v. Hospital Bd. of Directors of Lee County, 

38 F.3d 1184, 1187

(11th Cir. 1994) (application of state action immunity doctrine is a question of law

reviewed de novo); Buckley Const. v. Shawnee Civic & Cultural Development Authority,

933 F.2d 853

, 855 (10th Cir. 1991).



Which test to apply

       Our initial inquiry is whether this case should be analyzed under the two-prong

Midcal test, which typically applies to private actors, or the single-prong Town of Hallie

test, which applies to municipalities. Although the district court applied the Midcal test


                                              -7-
without discussing the municipality/private actor issue, defendants argue on appeal that

the Town of Hallie test is appropriate because the challenged usage fee is the result of

action on the part of a municipality, i.e., the City and County of Denver. More

specifically, defendants argue "the anticompetitive conduct, if any, occurred when [the

City and County of] Denver set the amount of the Usage Fee in the Bond Ordinance and

required its collection from each car rental customer, not by way of the private car rental

companies’ compliance with the law." Appellees’ br. at 26. Further, defendants contend

the Town of Hallie test is appropriate because Ordinance 863 "does not permit any

discretion on the part of the car rental companies in assessing or determining the amount

of the Usage Fee." Id.

       We agree with defendants that state action immunity in this case is properly

determined according to the Town of Hallie test. In Patrick, the Supreme Court noted the

active supervision prong of the Midcal test "requires that state officials have and exercise

power to review particular anticompetitive acts of private parties and disapprove those

that fail to accord with state policy." 

486 U.S. at 101

. Such active state review is clearly

necessary where private defendants are empowered with some type of discretionary

authority in connection with the anticompetitive acts (e.g., to determine price or rate

structures). Here, however, the named defendants have no such discretionary authority.

Rather, the provisions of Ordinance 863 make clear that the City and County of Denver is

the "effective decision maker" with respect to both the amount of the daily usage fee and

imposition of the fee. City Communications v. City of Detroit, 

660 F. Supp. 932, 934-35

(E.D.Mich. 1987), aff'd, 

888 F.2d 1081

 (6th Cir. 1989). Although plaintiff claims

defendants have input into the amount of the daily usage fee in 1994-2000, the provisions


                                             -8-
of the ordinance make it clear that ultimate control over the amount of the fee rests with

the City and County of Denver. Specifically, the amount of the fee for those years must

equal "115% of the sum of the principal of and interest on the Bonds coming due in such

12-month period plus the reasonably expected Administrative Expenses for such 12-

month period, deficiencies then existing in the Special City Reserve Fund, and payments

to the City under [the provisions of Ordinance 863]." Appellant's append. at 82. In our

view, application of the active supervision prong is of little value under these

circumstances because the challenged conduct is mandated and strictly controlled by the

City and County of Denver via Ordinance 863. Stated differently, we see no need for the

state to supervise defendants’ conduct (and no need for the second prong of the Midcal

test) because there is little, if any, risk of defendants doing anything other than complying

with the City and County’s mandate.

       We further note that plaintiff could have named the City and County of Denver as

a defendant (or even the sole defendant) in this action. Had he done so, it is clear we

would have applied the single-pronged Town of Hallie test rather than the double-

pronged Midcal test to determine whether the City and County of Denver was entitled to

state action immunity. See Allright Colorado v. City and County of Denver, 

937 F.2d 1502

 (10th Cir.) (City and County of Denver named as defendant; court applied Town of

Hallie test to determine immunity), cert. denied, 

502 U.S. 983

 (1991). We therefore find

it inconsistent, when the same conduct is at issue (i.e., imposition of the daily usage fee),

to apply one test to the City and County of Denver (the Town of Hallie test), and apply a

different, more stringent test (the Midcal test), to the private defendants. Were we to

apply different tests, the result could be that the City and County of Denver would be


                                             -9-
entitled to immunity but the private defendants would not. More specifically, the City

and County of Denver, the entity that enacted the ordinance and imposed the daily usage

fee, could be immune from antitrust damages, while the car rental companies, all of

whom were compelled to comply with the ordinance in order to lease space at DIA, could

be liable to plaintiff for antitrust damages. Such a result would be illogical and

inconsistent with Supreme Court precedent.

       In Southern Motor Carriers Rate Conference v. United States, 

471 U.S. 48, 58-59

(1985), the Supreme Court specifically emphasized that "[t]he success of an antitrust

action should depend upon the nature of the activity challenged, rather than on the

identity of the defendant." The implication of this holding, we believe, is that in cases

such as the one at bar, where private parties are acting under the compulsion of a

municipality or other political subdivision, the same test should apply to determine state

action immunity regardless of who the named defendants are.

       In somewhat similar circumstances, several circuit and district courts have held

that once a municipality (or other governmental unit) is determined to be immune from

antitrust liability, the immunity should be extended to include private parties acting under

the direction of the municipality. Cine 42nd Street Theater Corp. v. Nederlander

Organization, 

790 F.2d 1032

, 1048 (2d Cir.1986) (holding private party theater operators

acting in concert with urban development corporation which acquired and leased theaters

for urban redevelopment project enjoyed corporation’s state action immunity from

antitrust liability; court did not conduct separate state action analysis for private parties);

Charley’s Taxi Radio Dispatch Corp. v. SIDA of Hawaii, 

810 F.2d 869

, 878 (9th Cir.

1987) (association of individual taxi owner-operators could not be held liable under


                                              -10-
Sherman Act for possessing exclusive franchise to provide taxi service from Oahu airport

where state department of transportation had been granted state action immunity to grant

franchise); City Communications, 

660 F.Supp. at 935

 ("once it is determined that the

municipality is entitled to immunity from the antitrust laws, the private parties who are

regulated by the municipality are also entitled to immunity as long as the 'effective

decision maker' is the municipality rather than the private parties"). "Recognizing that the

state action doctrine protects state action, not state actors, these courts reason that to allow

suits against private parties for actions immunized as to municipalities would allow

plaintiffs to circumvent the state action doctrine and challenge protected municipal

decisions through artful pleading." Bloom v. Hennepin County, 

783 F. Supp. 418, 427

(D.Minn. 1992) (extending state action immunity from state governmental unit to private

party). Admittedly, there is a difference between the above-cited cases and the instant

case in that the City and County of Denver has not been named as a defendant in this

case. Nevertheless, we conclude plaintiff’s "artful pleading" should not control which

test we apply in determining antitrust immunity for the challenged conduct.



Applying the Town of Hallie test

       In analyzing whether the State of Colorado articulated a clear and affirmative

policy to allow the conduct at issue here, the district court looked to Articles 3 and 4 of

Title 41 of the Colorado Revised Statutes, and to the County and Municipality

Development Revenue Bond Act, C.R.S. § 29-3-101 et seq. We proceed to review these

same statutes.




                                             -11-
       Article 3 of Title 41 of the Colorado Revised Statutes is known as the "Public

Airport Authority Act" and provides cities, towns, and counties in Colorado with the right

to create "airport authorities" for the "purpose of acquiring and improving airports, . . .

and related facilities." C.R.S. § 41-3-102 (1996). The Act further provides airport

authorities in Colorado with the power to "borrow money and . . . issue bonds payable in

whole or in part from the income of the authority and otherwise secured to the extent

permitted by law." C.R.S. § 41-3-106(e) (1996).

       Article 4 of Title 41 of the Colorado Revised Statutes (which has no short title)

governs airports in the State of Colorado. C.R.S. § 41-4-101 (1996) provides:

       The acquisition of any lands for the purpose of establishing airports or other
       air navigation facilities; the acquisition of airport protection privileges; the
       acquisition, establishment, construction, enlargement, improvement,
       maintenance, equipment, and operation of airports and other air navigation
       facilities; and the exercise of any other powers granted in this part 1 [of the
       Act] to any county, city and county, city, or town are . . . public
       governmental functions, exercised for a public purpose, and matters of
       public necessity.

C.R.S. § 41-4-106 (1996) provides that counties in Colorado have the "power and

jurisdiction," in connection with the erection, maintenance, and operation of any airport,

       to regulate the receipt, deposit, and removal and the embarkation of
       passengers or property to or from such airports; to exact and require
       charges, fees, and tolls, together with a lien to enforce their payment; to
       lease or assign for operation such space or area, appurtenances, appliances,
       or other conveniences necessary or useful in connection therewith; . . . to
       provide rules and regulations governing the use of such airport and facilities
       and the use of other property and means of transportation within or over
       said airport.

C.R.S. § 41-4-112 (1996) authorizes any county in Colorado

       to rent or lease . . . any lands or interest in lands acquired by the county for
       the purposes set forth in this part 1 to any person, partnership, association,
       or corporation, either public or private, for commercial, industrial, or other
       purposes, for such periods of years and upon such terms and conditions as

                                             -12-
       are deemed in the best interests of the county by the board of county
       commissioners.

.

       The second general statute cited by the district court was the County and

Municipality Development Revenue Bond Act (Bond Act), C.R.S. § 29-3-101 et seq.

C.R.S. § 29-3-102(1) (1996) provides it was the intent of the Colorado General Assembly

"to authorize counties and municipalities to finance, acquire, own, lease, improve, and

dispose of properties to the end that such counties and municipalities may be able to

promote industry and develop trade or other economic activity." Similarly, C.R.S. § 29-3-

102(3) provides it was the intent of the General Assembly to vest Colorado counties and

municipalities "with all powers that may be necessary to enable them to accomplish such

purposes, which powers shall in all respects be exercised for the benefit of the inhabitants

of this state for the promotion of their health, safety, welfare, convenience, and

prosperity." Finally, C.R.S. § 29-3-104(1)(a), (b), (c) (1996) specifically grants Colorado

counties and municipalities with a variety of general powers, including the power to

"improve and equip," to "finance" projects, to "enter into financing agreements with

others for the purpose of providing revenues to pay the bonds authorized by" the Bond

Act, and to "issue revenue bonds for the purpose of defraying the cost of financing,

refinancing, acquiring, improving, and equipping any project, including the payment of

principal and interest on such bonds."

       In Allright, we found state action immunity in an identical section of Title 41,

C.R.S. § 41-4-106. 

937 F.2d at 1506-11

. The plaintiffs in Allright, operators of off-

airport shuttle bus parking services, filed suit against the City and County of Denver

contending regulations governing shuttle bus services at Stapleton violated federal

                                            -13-
antitrust laws. The district court dismissed plaintiffs’ claims, concluding defendants were

entitled to state action immunity. On appeal, we affirmed the district court’s decision. In

so doing, we cited C.R.S. §§ 41-4-101, 41-4-106, and 41-4-204, and specifically noted

that 41-4-106 "confer[red] upon counties a broad authority to regulate airport activities,

including the power 'to regulate the receipt, deposit, and removal and the embarkation of

passengers or property to or from such airports; to exact and require charges, fees, and

tolls . . . ; to lease or assign for operation such space or area . . . necessary or useful in

connection therewith; . . . to provide rules and regulations governing the use of such

airport and facilities and the use of other property and means of transportation within or

over said airport.'" 

937 F.2d at 1508

. We concluded the City and County of Denver, in

regulating shuttle bus services at the airport, had done precisely what was allowed by 41-

4-106. Moreover, we concluded displacement of competition in the provision of shuttle

bus services was a foreseeable result of the City and County of Denver’s broad authority

to regulate.

       Here, citing the above-quoted statutes and relying heavily upon Allright, the

district court held:

       Not only do state statutes specifically authorize cities and municipalities to
       take authority over airports, but they also allow for the issuance of bonds to
       finance and improve airports. The statute also gives the authority to
       establish a means to ensure repayment of those bonds. The City and County
       of Denver enacted the Denver Bond Ordinance pursuant to state authority,
       therefore the first part of the state action immunity test is met.
               Plaintiff argues that the Colorado Airport Act does not specifically
       refer to car rental activities. While this is true, the Court notes that the
       Colorado Airport Act does not specifically refer to shuttle bus services
       either. Nevertheless, the Tenth Circuit found that the Colorado Airport Act
       provided the necessary authority to displace competition. The case at hand
       involves "related activities" as referred to in Allright Colorado. The City
       and County of Denver clearly had the authority to issue bonds to finance
       new car rental facilities at DIA. Once the City and County of Denver issued

                                               -14-
       bonds to finance the DIA facilities, it was within the best interest of the
       inhabitants of the State of Colorado and the City and County of Denver that
       those bonds be repaid. Therefore, under the authority of the Colorado
       Airport Act and the County and Municipality Development Revenue Bond
       Act, it is reasonably foreseeable that the City and County of Denver would
       enact anticompetitive legislation for the purpose of ensuring the principal
       and interest of the airport bonds be paid.

Appellant’s append. at 31-32 (internal citations omitted). We agree. The above-cited

statutes gave the City and County of Denver authority to construct car rental facilities at

DIA, to issue bonds to cover the costs of construction, and to lease facilities to

defendants. Further, although Ordinance 863 specifically refers only to the Bond Act, it

is clear the City and County of Denver had authority, pursuant to C.R.S. § 41-4-106, to

require defendants to impose the daily usage fee on their car rental customers. As we

noted in Allright, 41-4-106 gives the City and County of Denver authority "to regulate the

receipt, deposit, and removal and the embarkation of passengers . . . to or from" both

Stapleton and DIA, "to exact and require charges, fees, and tolls," and "to provide rules

and regulations governing the use of such airport and facilities . . . and means of

transportation within or over said airport." As in Allright, this is precisely what the City

and County of Denver did when it enacted the daily usage fee. Further, as in Allright, it is

reasonably foreseeable that implementation of such authority could displace competition

in the area of car rental services.

       Because the Town of Hallie test has been satisfied, we conclude defendants are

entitled to state action immunity from plaintiff’s antitrust claims.




                                             -15-
Noerr-Pennington doctrine




                            -16-
       Defendants argue the Noerr-Pennington doctrine also provides them with

immunity from plaintiff’s antitrust claims. The Noerr-Pennington doctrine is based upon

the protections of the First Amendment and exempts from antitrust liability any legitimate

use of the political process by private individuals, even if their intent is to eliminate

competition. United Mine Workers v. Pennington, 

381 U.S. 657

 (1965); Eastern R.R.

Presidents Conference v. Noerr Motor Freight, 

365 U.S. 127

 (1961); Oberndorf v. City

and County of Denver, 

900 F.2d 1434, 1439-40

 (10th Cir.), cert. denied, 

498 U.S. 845

(1990). "Immunity under the Noerr-Pennington doctrine is designed to protect the right

to petition and engage in political activity." Oberndorf, 

900 F.2d at 1440

. In particular,

the doctrine "protects rights of association and petition, which would be denied if groups

with common interests could not, without violating the antitrust laws, use the channels

and procedures of government agencies to advocate their causes and points of view

respecting resolution of their business and economic interests vis-a-vis their competitors."

Id.

 (citing California Motor Transport Co. v. Trucking Unlimited, 

404 U.S. 508, 510-11

(1972)); see Professional Real Estate Investors v. Columbia Pictures Industries, 

508 U.S. 49, 56

 (1993) (doctrine encompasses private actions that "attempt to persuade the

legislature or the executive to take particular action with respect to a law that would

produce a restraint or a monopoly").

       Although the district court did not address this argument, we conclude the Noerr-

Pennington doctrine exempts defendants from antitrust liability to the extent plaintiff is




                                              -17-
challenging their efforts to convince the City and County of Denver to enact Ordinance

863 and impose the daily usage fee requirement.1



Findings of fact contrary to allegations in plaintiff’s complaints?

       Plaintiff contends the district court erred by making findings of fact which were

contrary to the allegations in his two complaints, and without permitting any discovery or

holding an evidentiary hearing. According to plaintiff, the court was obligated to take all

facts pled in the complaints as true, as well as all inferences that could be reasonably

drawn therefrom. Plaintiff also argues the court erred in concluding, based solely upon

the provisions of Ordinance 863, that the City and County of Denver actively supervises

the daily usage fee. More specifically, plaintiff argues that, in deciding whether the

second prong of the Midcal test is satisfied, the court’s inquiry "is incomplete if it does

not include a close examination of what the municipality actually did in furtherance of its

duty to actively supervise." Appellant’s br. at 30 (underlining in original).

       We conclude it was entirely appropriate for the district court to take judicial notice

of the provisions of Ordinance 863. Federal Rule of Evidence 201 authorizes a federal

court to take judicial notice of adjudicative facts at any stage of the proceedings, and in

the absence of a request of a party. See Clemmons v. Bohannon, 

918 F.2d 858

, 865 n. 5

(1990), vacated on other grounds, 

956 F.2d 1523

 (1992); Melton v. City of Oklahoma


       1
         Neither the original complaint nor the amended complaint specifically identified
whether plaintiff was challenging defendants’ successful efforts at lobbying the City and
Count of Denver to pass Ordinance 863. However, because the amended complaint
alleges defendants "sought, and ultimately obtained, a city ordinance purporting to
'compel' them to charge" the daily usage fee, appellant's append. at 6, we will assume for
purposes of this appeal that plaintiff is challenging defendants’ lobbying activities.

                                             -18-
City, 

879 F.2d 706

, 724 (10th Cir. 1989), modified on other grounds, 

928 F.2d 920

 (10th

Cir.) (en banc), cert. denied, 

502 U.S. 906

 (1991). This includes taking notice of

provisions in municipal ordinances. Clemmons, 

918 F.2d at 865

 n. 5; see Melton, 879

F.2d at 724 (taking notice of Oklahoma City Charter). Where, as here, a party requests a

court to take judicial notice of adjudicative facts and supplies the court with the necessary

information, Rule 201(d) requires the court to comply with the request. Thus, the district

court, having been presented with Ordinance 863 by defendants, was required to take

judicial notice of its provisions. To the extent that plaintiff’s allegations conflicted with

the provisions of the ordinance, plaintiff’s allegations were appropriately rejected or

ignored. See Fed. R. Evid. 201. Although plaintiff is entitled "to an opportunity to be

heard as to the propriety of taking notice and the tenor of the matter noticed," Fed. R.

Evid. 201(e), the instant appeal has certainly given him that opportunity. Notably, there is

nothing in his brief that effectively controverts or calls into question any of the provisions

of Ordinance 863.

       Because we have concluded the Town of Hallie test, rather than the Midcal test, is

applicable here, we find it unnecessary to address plaintiff’s argument that the provisions

of Ordinance 863, considered alone, are insufficient to satisfy the active state supervision

prong of the Midcal test.

       The judgment of the district court is AFFIRMED.




                                             -19-
96-1120, -1203, Zimomra v. Alamo Rent-a-Car, Inc., et al.,
J. Henry, concurring.


         I concur in the majority decision, writing separately only to briefly note that though

statute and precedent compel the above result, several scholars and judges, and perhaps

even the ghost of Adam Smith, seem to warn that the policy behind our laws may need to

be re-examined by appropriate local, state, and national legislative bodies.

         Recent studies by Law and Economics scholars have questioned the wisdom of

interfering with the marketplace under the state action exemption, set forth in Parker v.

Brown, 

317 U.S. 341, 350-52

 (1943), from national antitrust law. See generally William

H. Page, Interest Groups, Antitrust, & State Regulation: Parker v. Brown in the

Economic Theory of Legislation, 

1987 Duke L.J. 618

, 625 (1987) (noting that “state

economic regulation is frequently in sharp conflict with [economic efficiency], largely

because of the problem of rent seeking by interest groups”); John Shepard Wiley, Jr., A

Capture Theory of Antitrust Federalism, 

99 Harv. L. Rev. 713

, 723 (1986). But cf.

Merrick B. Garland, Antitrust & State Action: Economic Efficiency & the Political

Process, 96 Yale L. J. 486, 519 (1987) (critiquing approaches of Law and Economics

scholars). Though the state action exemption may be “grounded in principles of

federalism,” a bedrock principle of our political system, it is certainly also true that “[t]he

preservation of the free market and of a system of free enterprise without price fixing or

cartels is essential to economic freedom.” F.T.C. v. Ticor Title Ins. Co., 

504 U.S. 621, 632

 (1992).

         Where the principles of federalism and the free market collide, great caution is

warranted in the balance we strike. As Justice Kennedy observed for the majority in

Ticor:
       Federalism serves to assign political responsibility, not to obscure it.
       Neither federalism nor political responsibility is well served by a rule that
       essential national policies are displaced by state regulations intended to
       achieve more limited ends. For States which do choose to displace the free
       market with regulation, our insistence on real compliance with both parts of
       the [California Retail Liquor Dealers Ass’n v. ]Midcal [Aluminum, 

445 U.S. 97

 (1980),] test will serve to make clear that the State is responsible
       for the price fixing it has sanctioned and undertaken to control.

Id at 636. Indeed, in Ticor, 36 states filed amici curiae briefs urging that broad

application of the doctrine would not serve the states best interests. Id. at 635.

       Certainly the market has been tinkered with before in order to provide such vital

public services as airports. But one wonders why the car-renting consumer should have

to pay for the facilities of those less efficient car rental companies who cannot compete

with companies that can rent both facilities and automobiles competitively. Indeed, the

small-desk car rental companies might as well have a desk as big as the companies that

are trying harder since the hapless tourist is going to have to pay for it anyway. The

litigation-spawning capabilities of state-sanctioned, anticompetitive bargains have been

prophesied and questioned. See Frank E. Easterbrook, Foreword: The Court & the

Economic System, 

98 Harv. L. Rev. 4

, 18 (1984) (“[A]nticompetitive bargains embedded

in state legislation will become targets for challenge under the antitrust laws; the

deference due toward a statute that corrects ‘market failures’ is not due toward a statute

that creates them.”).

       As the majority opinion makes clear, the state action immunity doctrine once

suggested two safeguards before allowing disruption of the market. First, a city or state

must have clearly articulated and affirmatively expressed the state policy to supplant

competition in this area. See City of Lafayette v. Louisiana Power & Light Co., 

435 U.S. 389, 410

 (1978); Parker, 

317 U.S. at 350-52

. With respect to this requirement, where

                                             -2-
private individuals or municipalities acted pursuant to state authorization, “[c]loser

analysis [wa]s required.” Hoover v. Ronwin, 

466 U.S. 558, 568

 (1984); Porter Testing

Lab. v. Board of Regents, 

993 F.2d 768

, 770 (10th Cir. 1993). (Here, a not so close

analysis reveals that the city’s criterion seems to have included a clearly articulated

agreement on the part of the rental companies to hold the city harmless in the event of a

finding of anticompetitive activity. Aplt’s Reply Br. at 1-2.) Second, the policy had to be

“actively supervised” by the state itself. Midcal, 

445 U.S. at 105

.

       This Midcal test remains the test for actions taken by states, but in Town of Hallie

v. City of Eau Claire, 

471 U.S. 34

 (1985), the Court noted:

       In Midcal, we stated that the active state supervision requirement was
       necessary to prevent a State from circumventing the Sherman Act’s
       proscriptions “by casting . . . a gauzy cloak of state involvement over what
       is essentially a private price fixing arrangement.” 

445 U.S., at 106

 [sic].
       Where a private party is engaging in the anticompetitive activity, there is a
       real danger that he is acting to further his own interest, rather than the
       governmental interests of the State. Where the actor is a municipality, there
       is little or no danger that it is involved in a private price-fixing arrangement.
       The only real danger is that it will seek to further purely parochial public
       interests at the expense of more overriding state goals. This danger is
       minimal, however, because of the requirement that the municipality act
       pursuant to a clearly articulated state policy. Once it is clear that state
       authorization exists, there is no need to require the State to supervise
       actively the municipality’s execution of what is a properly delegated
       function.

Id. at 46-47 (emphasis in original).

       Given that Hallie does away with the active supervision prong for municipalities,

we are left with an interference with competition based on the lobbying ability of those

few who benefit from it. See John Cirace, An Economic Analysis of the “State-

Municipal Action” Antitrust Cases, 

61 Tex. L. Rev. 481

, 488 (1982) (“The ‘clearly

articulated and affirmatively expressed’ criterion involves the Court in the morass of


                                              -3-
legislative intent and makes the applicability of federal antitrust turn on whether the

statute’s proponents had the ‘skill [or] influence to generate proper legislative history.’”)

(quoting Cantor v. Detroit Edison Co., 

428 U.S. 579, 610

 (1976) (Blackmun, J.,

concurring)); see also Fisher v. City of Berkeley, 

475 U.S. 260, 269

 (1986) (“There may

be cases in which what appears to be a state- or municipality-administered price

stabilization scheme is really a private price-fixing conspiracy, concealed under a ‘gauzy

cloak of state involvement.’ This might occur even where prices are ostensibly under the

absolute control of government officials.”) (quoting Midcal, 

445 U.S. at 106

).

       Professor Wiley suggests the state action doctrine be replaced with a doctrine that

examines whether the market has been “captured” by a few players to the detriment of

competition. 99 Harv. L. Rev. at 743. Though, like Justice Scalia, “I am skeptical about

[] Parker v. Brown,” Ticor, 

504 U.S. at 640

 (Scalia, J., concurring), I believe that rending

the veil of the gauzy cloak may not require the adoption of Professor Wiley’s intriguing

model. Rather, we could insist that Midcal’s “clear articulation” be very clear, and that

even in the case of municipalities, that there be active supervision (hopefully a bit more

active than we have here), and that finally, we could require, a la Hoover, close analysis

where private individuals are acting under state action immunity.

       Noting our country’s well-placed fealty to the free market, the persuasive criticism

of noted scholars and judges, and even statements like that in Ticor that “state-action

immunity is disfavored, much as are repeals by implication,” 

504 U.S. at 636

, this

doctrine has an amazing staying power. I am staying with it today because it is the law.

As Judge Easterbrook observed, “Judges must be honest agents of the political branches.

They carry out decisions they do not make.” 98 Harv. L. Rev. at 60. The ultimate


                                             -4-
resolution of this issue is properly left to either the Supreme Court, which could overrule

Hallie and return to a test of greater scrutiny, or to the States and localities, which could

reject these blandishments in honor of the invisible hand, or to Congress, which could

fine- tune the Sherman Act. The obligation of this panel is to resolve the dispute before

it, which the majority opinion correctly accomplished. But judges also have the

opportunity if not the obligation to call attention to anomalous results. This seems to be

one.




                                              -5-