Supreme Court to Hear Issue Relating to Solar Developer’s Antitrust Challenge to Public Power Provider’s Retail Rate Design

UPDATED 03.12.2018 The parties filed a joint letter notifying the Court that they are trying to negotiate a settlement.  The case is now scheduled to be argued on April 17, 2018.

UPDATED 03.05.2018 The Petitioner’s reply brief is available here. The motions of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument have been granted.

The Supreme Court will hear arguments in Salt River Project Agricultural Improvement & Power District v. Tesla Energy Operations, Inc., fka SolarCity Corp. on March 19.  This case involves an antitrust challenge to Salt River Project’s retail rate changes that impact customers with rooftop solar.  Tesla alleges that the rate changes impose an almost 65% rate increase on these customers (versus the prior rate structure) and that solar panel retailers received 96% fewer applications for new systems in Salt River Project’s territory after the new rates went into effect.

There has not yet been a decision on the merits of Tesla’s antitrust claims; Salt River Project moved to dismiss the lawsuit in district court on several grounds, including an argument that state-action immunity, which exempts state and local government regulation from federal antitrust laws in some cases, bars the suit.  The district court declined to dismiss the lawsuit on these grounds, and on appeal, the Ninth Circuit ruled that the district court’s decision was not yet reviewable.

The Supreme Court is considering an even more narrow aspect of legal doctrine in this appeal: can Salt River Project immediately appeal the denial of state-action immunity under the collateral-order doctrine, or must the parties fully litigate the case before this issue can be reviewed on appeal?  An appeal usually requires a final court order, but the collateral-order doctrine permits immediate review of issues that (1) are conclusive, (2) are analyzed separately from the merits, and (3) would be effectively unreviewable after final judgment. Circuit courts of appeals have disagreed with one another on whether denial of state-action immunity should be immediately appealable under the collateral-order doctrine.

In its opening brief to the Supreme Court, Salt River Project argues that an order that denies state-action immunity (as a class of orders) to a public entity falls within the collateral-order doctrine.  Salt River Project contends that rather than involving a merits analysis, state-action immunity assumes the conduct to be anticompetitive and looks only to whether the state authorized the conduct to displace competition.  Salt River Project further argues that the important interests of state sovereignty and the freedom of local decisionmakers to serve the public interest are threatened here.

Multiple groups filed briefs amici curiae in support of Salt River Project: State & Local Legal Center*, American Public Power Association, and a group of 24 states, including Arizona (where Salt River Project is located).

Tesla argues in its brief that state-action immunity shields conduct from liability, rather than defendants from litigation, and is therefore not the sort of immunity that requires immediate appeal to be meaningful. Tesla also claims that the analysis of whether state-action immunity applies is tied up in the merits of the underlying antitrust dispute.  Tesla further contends that state sovereignty and local discretion are involved in other cases, such as preemption claims, where courts have not generally found immediate appeal to be appropriate.

Amici in support of Tesla include: Center for Biological Diversity, Federal Courts Scholars, Public Citizen, American Antitrust Institute, and National Federal of Independent Business Small Business Legal Center.  The United States also filed a brief supporting Tesla, arguing on behalf of the Department of Justice and the Federal Trade Commission, and has asked the Court to grant it a portion of Tesla’s time at oral argument (with Tesla’s consent).

Salt River Project is expected to file a reply brief before argument on March 19.

The Court’s decision in this case will impact whether Tesla’s suit against Salt River Project proceeds on the merits of the rate design.  But the decision may well have broader implications relating to the vulnerability of municipal utility and local government actions to antitrust challenges.

*Spiegel & McDiarmid LLP attorneys Tim Lay, Katie Mapes, Jessica Bell, and Amber Martin authored the brief for amici State & Local Legal Center (National Governors Association, National Conference of State Legislatures, Council of State Governments, National Association of Counties, National League of Cities, U.S. Conference of Mayors, International City/County Management Association, and International Municipal Lawyers Association) in this case.

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