When antitrust met eminent domain

S.M. Oliva

Last week, a judge in Harrisburg, Pennsylvania, dismissed one of the stranger antitrust cases of recent years. The Commonwealth of Pennsylvania sued one of its own political subdivisions in federal court under federal antitrust law. The underlying dispute involves eminent domain. The subsequent litigation demonstrates the dangers of reacting out-of-context to the Supreme Court's decision in Kelo v. New London.

In March 2005, a privately-owned parking garage near the Harrisburg International Airport was scheduled for seizure by the airport's operating authority, an entity created by seven local governments under state law. The airport invoked eminent domain without articulating a specific use for the garage. According to the garage's owner and Pennsylvania Attorney General Tom Corbett, the airport has no need for the land and simply wanted to eliminate private competition with airport-owned parking facilities.

The garage had already filed a petition in state court challenging the eminent domain action when Attorney General Corbett filed a federal lawsuit against the airport authority. Corbett said the taking of the garage violated the Sherman Act by attempting to monopolize the parking services market in and around the airport. The airport replied that since it was a subdivision of the Commonwealth, it was immune from antitrust suit under the Supreme Court's decision in Parker v. Brown (1943), which exempts most “state action” from the Sherman Act.

U.S. District Judge Christopher Conner dismissed Corbett's complaint. He held that Parker immunity applied, because the airport acted “pursuant to a clearly expressed state policy.” Regardless of the airport's motives, Conner said, the airport's “actions are decidedly governmental.” The Pennsylvania legislature delegated its eminent domain power to the airport authority, and Conner said that it was up to the state's legislature and courts to deal with the consequences rather than federal courts invoking antitrust policies.

This is all quite interesting.Will Wal-Mart sue city councils that deny it building permits because that's a restraint on interstate commerce? Will the "commerce clause is elastic" judges act on something like that?