Appeal
from the United States District Court for the Northern
District of Georgia D.C. Docket No. 3:17-cv-00003-TCB
Before
TJOFLAT, JORDAN and ANDERSON, Circuit Judges.
TJOFLAT, Circuit Judge:
This
interlocutory appeal asks us to determine whether the City of
LaGrange, Georgia, enjoys state-action immunity when it ties
its water-utility service to its natural-gas service for
customers in unincorporated Troup County, Georgia. The
District Court held that LaGrange was not entitled to
state-action immunity and, for the reasons explained below,
we affirm.
I.
LaGrange
owns and operates a water-utility system that serves
customers within LaGrange's city limits as well as
customers beyond its city limits in unincorporated Troup
County. For much of unincorporated Troup County, LaGrange is
the only provider of water-utility service. LaGrange
maintains this monopoly through explicit, market-dividing
agreements with other municipalities in the area. In addition
to water, LaGrange provides natural gas to customers inside
and outside its city limits. As with water, LaGrange's
gas is the only game in town for much of unincorporated Troup
County.
Diverse
Power is a Georgia corporation that provides electric service
throughout much of unincorporated Troup County. While
LaGrange also provides electric service, it does so primarily
within its city limits. Where Diverse Power's electric
service and LaGrange's gas service overlap-in much of
unincorporated Troup County-the two entities are in direct
competition for retail energy customers.
In
2004, the LaGrange City Council enacted Ordinance No. 4-29
(the "Ordinance"), now codified at § 20-15-6
of the LaGrange Code of Ordinances. Titled "Water
service outside city limits," the Ordinance provides:
For all new construction outside of the corporate limits of
the city, . . . water service as set forth in this chapter
shall be available only to those customers who install at
least one (1) natural gas furnace, one (1) natural gas water
heater, and at least one (1) additional natural gas outlet
sufficient for potential future use for a clothes dryer,
range, grill, pool heater or outdoor lighting fixture.
LaGrange, Ga. Code § 20-15-6 (2004). LaGrange enforces
the Ordinance by sending form letters to prospective builders
and developers in the area informing them of the
Ordinance's conditions. The letter, headed
"IMPORTANT NOTICE CONCERNING WATER SERVICE OUTSIDE THE
CITY LIMITS," states:
This letter is to inform you of a utility policy that applies
to all new water connections outside of the city limits of
LaGrange. In areas where natural gas service is available,
new homes or businesses must install gas appliances in order
to receive water service from the City. Specifically, at
least one gas furnace, one gas water heater, and one gas
outlet for a future appliance such as a dryer or stove must
be installed. Builders that do not comply with this policy
will be denied permanent water service.
The
purpose of the Ordinance is clear. As LaGrange's utility
director stated in a 2008 email, "[LaGrange] decided to
use water as leverage to require gas" in developments
outside LaGrange's city limits. But for subdivisions
within LaGrange's city limits, the utility director
explained that LaGrange "can't use water as leverage
to require gas." For these intracity developments, the
director continued, LaGrange uses a combination of rebates
and incentives to encourage developers to install gas
appliances.
The
effect of the Ordinance is equally clear. Consider the
Cameron Pointe subdivision, which sits on the north and south
sides of Cameron Mill Road in unincorporated Troup County.
The houses on the south side of the road were built before
the enactment of the Ordinance, and the houses on the north
side were built afterward. Predictably, the houses on the
south side of the road were built to use electricity for all
appliances, while the houses on the north side of the road
were built for natural-gas appliances. To be sure, this
temporal relationship doesn't prove that developers
switched to natural gas because of the Ordinance.
But lest one suspect that market forces drove this strange
arrangement, the developer told Diverse Power that, but for
the Ordinance, it would have built the houses on the north
side of the road to use electric rather than natural-gas
appliances.
On
March 3, 2017, Diverse Power filed suit against LaGrange for
violations of the Sherman and Clayton Antitrust Acts.
Specifically, Diverse Power alleged that LaGrange's
practice of conditioning water service on the installation of
natural gas appliances constituted an unlawful tying
arrangement. LaGrange moved to dismiss the complaint under
Federal Rule of Civil Procedure 12(b)(6) on several bases,
including immunity under the state-action doctrine. The
District Court denied LaGrange's motion. Diverse
Power, Inc. v. City of LaGrange, No. 3:17-v-00003-TCB,
slip op. at 25 (N.D.Ga. Feb. 21, 2018). LaGrange timely
appealed the District Court's order denying state-action
immunity, which we have jurisdiction to review under the
collateral order doctrine. See Commuter Transp. Sys.,
Inc. v. Hillsborough Cty. Aviation Auth., 801 F.2d 1286,
1289-90 (11th Cir. 1986) (holding that denial of state-action
immunity is an appealable collateral order under Cohen v.
Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct.
1221 (1949)).[1]
II.
We
review de novo the denial of a motion to dismiss
based on state-action immunity. Danner Constr. Co. v.
Hillsborough County, 608 F.3d 809, 812 (11th Cir. 2010).
"On a motion to dismiss, the factual allegations in the
complaint are taken as true, even if they are subject to
dispute." Devengoechea v. Bolivarian Republic of
Venezuela, 889 F.3d 1213, 1220 (11th Cir. 2018). But we
are not "bound to accept as true a legal conclusion
couched as a factual ...