The Supreme Court of the United States announced on Friday, December 1 that it would hear an Arizona utility’s appeal of a Ninth Circuit Court of Appeals decision[1] ruling that a rooftop solar company’s antitrust lawsuit against the utility may move forward. SolarCity, a wholly owned subsidiary of Tesla Motors, sued Salt River Project, a utility regulated by Arizona, over the utility’s 2015 decision to charge a fee for solar power systems operated by individuals, many of which are installed by SolarCity. In the lawsuit, SolarCity claimed that these fees were implemented to make rooftop solar systems too expensive to be competitive, in violation of federal antitrust laws. Salt River Project moved to dismiss the lawsuit on the basis that its rates and fees were determined by a statutory pricing process, and it was therefore immune from federal antitrust laws under the doctrine of state-action immunity.[2]

The district court denied the motion to dismiss based on state-action immunity and refused to certify that ruling for interlocutory appeal. On appeal, the Ninth Circuit held that the utility could not invoke the narrow collateral-order doctrine to immediately appeal the district court’s rejection of its state-action immunity defense, because the state-action immunity doctrine provided immunity from liability, not immunity from suit. This decision was in line with prior decisions by the Sixth and Fourth Circuits, but in contrast to opposite holdings by the Fifth and Eleventh Circuits.[3] The Supreme Court granted certiorari to resolve this circuit split and decide the issue of whether orders denying state-action immunity to public entities are immediately appealable under the collateral-order doctrine.

Although neither the Ninth Circuit nor Supreme Court decisions will resolve the merits of the underlying lawsuit, the case is being closely watched by the solar power industry for its future ramifications for similar lawsuits. The Supreme Court case is expected to be heard Court early next year and decided by the end of June 2018.

For more information, contact Steve O’Day or Vickie Rusek.

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[1] SolarCity Corporation v. Salt River Project Agricultural Improvement and Power District, 692 Fed. Appx. 458 (9th Cir. 2017), cert. granted, 2017 WL 3980792 (U.S. Dec. 1, 2017) (No. 17-368).

[2] The state-action immunity doctrine, also known as the “Parker immunity doctrine,” protects states and public entities from antitrust liability for anticompetitive behavior that is the product of sovereign state action. Parker v. Brown, 317 U.S. 341 (1943).

[3] Huron Valley Hospital, Inc. v. City of Pontiac, 792 F.2d 563 (6th Cir. 1986) (holding that immediate appeal under collateral-order doctrine was not available to review denial of state action immunity); South Carolina State Board of Dentistry v. FTC, 455 F.3d 436 (4th Cir. 2006) (same); Commuter Transportation Systems, Inc. v. Hillsborough County Aviation Authority, 801 F.2d 1286 (11th Cir. 1986) (holding that state-action immunity was comparable to qualified immunity and immediately appealable as collateral order); Martin v. Memorial Hospital at Gulfport, 86 F.3d 1391 (5th Cir. 1996) (same).