Supreme Court May Soon Tell You Whether a Denial Of State Action Immunity Is Immediately Appealable

By Nathan Standley

The U.S. Supreme Court has granted a petition for certiorari in the case of Salt River Project Agricultural Improvement & Power District v. SolarCity Corp., No. 17-368 (U.S. Sept. 7, 2017).  If you advise state agencies or local governments, you will want to take note of what the court determines.

In this case, SolarCity Corporation sells and leases rooftop solar energy panels in the Phoenix, Ariz., vicinity.  It claimed that when the defendant power district instituted a new pricing structure, it effectively created a monopoly over the supply of electricity in its territory and devastated SolarCity’s business.  In addition to supplying power, the power district is also considered a political subdivision of Arizona.  On June 12, 2017, the U.S. Court of Appeals for the Ninth Circuit rejected the power district’s interlocutory appeal of its motion to dismiss SolarCity’s Sherman and Clayton Act claims based on state-action immunity.  (SolarCity Corp. v. Salt River Project Agricultural Improvement & Power District, 859 F.3d 720 (9th Cir. 2017)).  The court’s rationale for dismissing the appeal was that the collateral-order doctrine did not allow immediate appeal of such an order because it was not considered a final decision.

The question presented in the power district’s petition to the U.S. Supreme Court was whether orders denying state-action immunity to public entities are immediately appealable under the collateral-order doctrine.  There is a split among the federal circuit courts on this issue.  The Fifth and Eleventh Circuits have held that state action immunity constitutes immunity against suit rather than a mere defense against liability.  Therefore, those circuits have concluded that if a denial of state action immunity cannot be appealed immediately, it, in effect, cannot be appealed at all.  The Fourth, Sixth, and Ninth Circuits, on the other hand, have held that the interlocutory denial of state action immunity to a public entity is not immediately appealable.

One of the primary inquiries that the Supreme Court is likely to dive into is whether a denial of state action immunity is a “final” decision or order.  The court has held that finality turns on whether the order or decision “[1] conclusively determine[s] the disputed question, [2] resolve[s] an important issue completely separate from the merits of the action, and [3] [is] effectively unreviewable on appeal from a final judgment.”  Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978) (restating Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949)).  Of course, the third prong is the one that is likely to be hotly contested as public entities often argue (as does the power district does in this appeal) that a deferral of review of their state action denial makes the order effectively unreviewable.

If this case was not interesting enough on its face, one interesting aspect is that it will implicate an important, yet not widely publicized law known as the Local Government Antitrust Act (LGAA), 15 U.S.C. 34 et seq.  Signed by President Reagan in 1984, the LGAA shields local government entities and local government officials (think county boards of commissioners or local government-created agencies such as those created via contract pursuant to N.C.G.S. § 158-7.4) from damages, interest on damages, costs, and attorneys’ fees (under the Clayton Act) when they are found to have violated most federal antitrust laws.  The LGAA takes the concern of monetary damages off the table and helps to narrow the focus of this appeal and, ultimately, the underlying merits of the case.  It also may factor in to the Supreme Court’s analysis of whether Congress intended for local units of government to be able to immediately appeal denials of state action immunity.

Going forward, Salt River Project Agricultural Improvement & Power District v. SolarCity Corp. has the potential to set the standard for when local governments and their officials can appeal a denial of state action immunity.