Antitrust Law Daily Wrap Up, ANTITRUST—M.D. Ala.: University official immune from flooring contractor’s claims over bidding practices, (Jan 22, 2014)

By Jeffrey May, J.D.

The state action immunity doctrine barred a flooring contractor’s antitrust claim against the vice-chancellor of financial affairs at Auburn University Montgomery (AUM) for allegedly participating in a conspiracy to rig the specifications on various AUM renovation projects, the federal district court in Montgomery, Alabama, has ruled (Builders Flooring Connection, LLC v. Weiss Flooring, Inc., January 16, 2014, Thompson, M.).

Flooring contractor Builders Flooring Connection, LLC filed the action following a dispute over bidding for flooring contracts. Builders Flooring alleged that competitor Weiss Flooring, Inc. colluded with architecture firms and individual architects to fix the bidding process to ensure Weiss Flooring would be awarded contracts. The company also alleged that the university official conspired with an architecture firm “to rig the bid specifications so that Weiss Flooring would receive a substantial advantage toward being awarded the contracts.”

The state action immunity doctrine provides an exemption from federal antitrust regulation for actions taken by a state as a sovereign. AUM, as a public university, was an arm of the State of Alabama, the court noted. Because the suit arose out of the university official’s actions as vice-chancellor, the official was entitled to share in AUM’s immunity, it was decided. Allegations that the official privately conspired with the architects would not affect her entitlement to immunity, the court also noted.

The court rejected the complaining contractor’s contention that a precedent that was factually and legally directly on point was no longer good law. Builders Flooring unsuccessfully argued that that a Fifth Circuit decision in Saenz v.Univ. Interscholastic League, 487 F.2d 1026, 1973-2 Trade Cases ¶74,803, which granted ipso facto immunity to a director of the Texas University Interscholastic League Slide Rule Contest accused of conspiring to rig contest regulations, had been overruled by subsequent Supreme Court cases. Builders Flooring asserted that only state legislatures and supreme courts were ipso facto entitled to immunity and that all others had to make the additional showing of at least a clearly articulated and affirmatively expressed state policy directing anticompetitive behavior.

The district court said that it was sympathetic to Builders Flooring’s concerns that the Fifth Circuit (and Eleventh Circuit) precedent might have been undercut by Supreme Court dicta during the intervening 40 years. However, the High Court had never decided what analysis was appropriate to determine whether a state-level executive-branch official or agency was entitled to state action immunity. To overcome the prior precedent rule, the Supreme Court’s decision would have had to actually overrule or conflict with the prior precedent. Further, every appeals court that had addressed the issue had held that state-level executive officials and agencies were ipso facto immune.

State Law Claim. The court refused to dismiss a state law claim against the university official for interference with business relations. The official was not entitled to Eleventh Amendment immunity or Alabama’s state-sovereign immunity for the challenged conduct. Further, the court denied the university official’s request that it decline supplemental jurisdiction on the ground that the federal claim had been dismissed against her.

This is Case 2:11-cv-00373-MHT-CSC.

Attorneys: Stewart Davidson McKnight, III (Baxley, Dillard, McKnight & James) for Builders Flooring Connection, LLC. Carla Cole Gilmore (Kaufman Gilpin McKenzie Thomas Weiss PC) for Weiss Flooring, Inc.

Companies: Builders Flooring Connection, LLC; Weiss Flooring, Inc. Auburn University Montgomery

Cases: Antitrust AlabamaNews