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USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 1 of 12
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`PUBLISHED
`
`UNITED STATES COURT OF APPEALS
`FOR THE FOURTH CIRCUIT
`
`
`No. 19-1977
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`
`
`
`
`
`
`Plaintiff – Appellant,
`
`
`
`v.
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`WESTERN STAR HOSPITAL AUTHORITY INC., d/b/a Metro Health EMS,
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`
`
`
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`CITY OF RICHMOND, VIRGINIA; RICHMOND AMBULANCE AUTHORITY,
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`
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`Defendants – Appellees.
`
`
`Appeal from the United States District Court for the Eastern District of Virginia, at
`Richmond. John A. Gibney, Jr., District Judge. (3:18-cv-00647-JAG)
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`
`
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`Argued: December 10, 2020
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`
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`Decided: January 19, 2021
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`
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`Before MOTZ, THACKER, and QUATTLEBAUM, Circuit Judges.
`
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`Affirmed by published opinion. Judge Motz wrote the opinion, in which Judge Thacker
`and Judge Quattlebaum joined.
`
`
`
`
`ARGUED: Luke Andrew Hasskamp, BONA LAW PC, La Jolla, California, for
`Appellant. Craig Thomas Merritt, CHRISTIAN & BARTON, LLP, Richmond, Virginia;
`Wirt Peebles Marks, IV, RICHMOND CITY ATTORNEY’S OFFICE, Richmond,
`Virginia, for Appellees. ON BRIEF: Aaron R. Gott, Jarod M. Bona, BONA LAW PC,
`La Jolla, California, for Appellant. David P. Corrigan, Melissa Y. York, HARMAN
`CLAYTOR CORRIGAN & WELLMAN, Glen Allen, Virginia; David B. Lacy,
`CHRISTIAN & BARTON, LLP, Richmond, Virginia, for Appellees.
`
`
`
`
`
`

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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 2 of 12
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`
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`DIANA GRIBBON MOTZ, Circuit Judge:
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`For almost thirty years, the Richmond Ambulance Authority (“RAA”), a public
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`body created by the Commonwealth of Virginia and governed by the City of Richmond
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`(“the City”), has provided nonemergency medical transportation services to the Hunter
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`Holmes McGuire Veteran’s Administration Medical Center (“the VA Medical Center”).
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`In 2018, however, the VA Medical Center requested quotes from other service providers.
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`One quote came from Western Star Hospital Authority, Inc., doing business as Metro
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`Health EMS (“Metro Health”). The VA Medical Center selected Metro Health’s bid on
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`the condition that Metro Health could obtain a permit from the City to operate emergency
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`medical services (“EMS”) vehicles. When the City refused to grant Metro Health a permit,
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`it brought this action against the City and the RAA, alleging violations of the Sherman
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`Antitrust Act and the Supremacy Clause of the United States Constitution. The district
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`court dismissed the case with prejudice, concluding that the defendants enjoy immunity
`
`from federal antitrust liability and that federal law does not preempt their actions. We
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`agree and so affirm.
`
`
`
`
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`Like many municipalities, the City operates its EMS system through a public utility
`
`I.
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`model. Under this model, the City contracts with a single provider to manage all EMS
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`vehicle operations in the City. This ensures that the City’s EMS system does not neglect
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`costly, but essential emergency response services in favor of more profitable
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`nonemergency services. Critically, however, the economic feasibility of the public utility
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 3 of 12
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`model depends on the EMS provider’s exclusivity in the marketplace. This is so because
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`revenues generated by profitable, nonemergency transports are needed to offset the cost of
`
`providing emergency services to all, including those without health insurance.
`
`
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`In Richmond, this model owes its existence and governance to two state laws. First,
`
`in 1979, the Virginia General Assembly passed a statute granting “governing bodies” of
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`municipalities wide berth to regulate EMS vehicle services. Va. Code Ann. § 32.1-111.14.
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`Such “governing bodies” are empowered to: prohibit the operation of EMS vehicles
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`without a city-issued franchise, license, or permit; limit the number of EMS vehicles
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`allowed to operate in the city; fix the charges for EMS vehicle services; and establish other
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`necessary regulations relating to the operation of EMS vehicles. Id. § 32.1-111.14(A). The
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`legislature stated that these powers were “necessary to assure the provision of adequate and
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`continuing emergency medical services and to preserve, protect and promote the public
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`health, safety and general welfare.” Id. § 32.1-111.14.
`
`
`
`Subsequently, in 1991, the General Assembly enacted the Richmond Ambulance
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`Authority Act, creating the RAA as a “public instrumentality exercising public and
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`essential governmental functions.” 1991 Va. Acts 645. The legislature granted the RAA
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`authority to “[p]rovide emergency ambulance service originating in the City,” as well as
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`“nonemergency service within the Commonwealth.” Id. This act further provided that the
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`RAA be governed by eleven members: the Richmond City Manager, the Richmond
`
`Director of Finance, and nine persons appointed by the Richmond City Council for two-
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`year terms. Id. The Richmond City Council subsequently organized the RAA and granted
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`it an indefinite franchise to operate EMS vehicles in the City.
`3
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 4 of 12
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`
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`Since its inception in 1991, the RAA has held the City’s sole EMS vehicle franchise.
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`Thus, the RAA has provided all services in the City that utilize EMS vehicles, including
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`nonemergency interfacility medical transport services for VA Medical Center patients. In
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`2018, the VA Medical Center considered contracting with other service providers and
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`opened a bidding process to receive competing quotes. In its request for quotes, the VA
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`Medical Center conditioned any resulting contract on “conformance with . . . all applicable
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`Federal, State and Local laws,” and specified that “[b]efore award of a contract, the Service
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`Provider must provide an official City Franchise Permit required to operate patient
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`transport services in the City of Richmond.” J.A. 249, 252. Notwithstanding its lack of
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`the necessary permit, Metro Health submitted a bid.
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`
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`In June 2018, the VA Medical Center conditionally selected Metro Health’s bid but
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`simultaneously reiterated that no contract would result unless Metro Health first obtained
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`a permit from the City. Metro Health pressed the City to create a process for entertaining
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`permit applications from private firms. In response, the City posted a permit application
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`on the Richmond Fire Department website. Metro Health perceived the application as
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`unfair and deliberately engineered to prevent it from obtaining a permit. Accordingly,
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`rather than submitting an application, Metro Health immediately filed this suit, seeking a
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`temporary restraining order to prevent interference with its prospective contract. After a
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`hearing, the district court stayed the litigation so that Metro Health could apply for a permit
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`and receive a determination from the City.
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`
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`Metro Health did so and the Richmond Fire Department initially recommended that
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`Metro Health be granted a permit. But the City Council disagreed; indeed, the Council
`4
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 5 of 12
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`voted unanimously to strike a proposed ordinance that would have granted Metro Health a
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`permit.
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`Metro Health then filed an amended complaint against the City and the RAA,
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`alleging numerous violations of federal and state law. The district court granted the
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`defendants’ motion to dismiss, concluding, in relevant part, that the state action immunity
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`doctrine shields the City and the RAA from federal antitrust liability and that their conduct
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`does not offend the Supremacy Clause. Metro Health timely noted this appeal. We review
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`the district court’s dismissal of Metro Health’s complaint de novo, accepting all well-
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`pleaded allegations as true and construing the facts in the light most favorable to Metro
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`Health. In re Willis Towers Watson PLC Proxy Litig., 937 F.3d 297, 302 (4th Cir. 2019).
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`
`
`
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`Metro Health primarily contends that the City and the RAA have run afoul of the
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`II.
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`Sherman Act prohibition on monopolization and attempted monopolization. See 15 U.S.C.
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`§ 2. If, as the defendants assert and the district court found, the state action immunity
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`doctrine shields them from federal antitrust liability, Metro Health cannot succeed on these
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`claims.
`
`
`
` Under the state action immunity, or Parker, doctrine, federal antitrust laws do “not
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`apply to anticompetitive restraints imposed by the States ‘as an act of government.’” City
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`of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365, 370 (1991) (quoting Parker v.
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`Brown, 317 U.S. 341, 352 (1943)). At bottom, the Parker doctrine embodies “the
`
`federalism principle that the States possess a significant measure of sovereignty under our
`5
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 6 of 12
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`Constitution.” Cmty. Commc’ns Co. v. City of Boulder, 455 U.S. 40, 53 (1982). Thus,
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`sovereign states may “confer exclusive or shared rights to dominate a market, or otherwise
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`limit competition to achieve public objectives.” N.C. State Bd. of Dental Examiners v.
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`F.T.C., 574 U.S. 494, 503 (2015) [hereinafter N.C. Dental]. Were it otherwise, “federal
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`antitrust law would impose an impermissible burden on the States’ power to regulate,”
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`strong-arming states into “promoting competition at the expense of other values a State
`
`may deem fundamental.” Id.
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`
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`“Because municipalities and other political subdivisions are not themselves
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`sovereign,” the Parker doctrine “does not apply to them directly.” F.T.C. v. Phoebe Putney
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`Health Sys., Inc., 568 U.S. 216, 225 (2013). Rather, municipalities and “substate
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`governmental entities” are immune from federal antitrust claims only “when they act
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`‘pursuant to state policy to displace competition with regulation or monopoly public
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`service.’” Id. (quoting City of Lafayette v. La. Power & Light Co., 435 U.S. 389, 413
`
`(1978)). The Supreme Court has long held that such a state policy must be “clearly
`
`articulated and affirmatively expressed.” City of Boulder, 455 U.S. at 54.
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`
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`In Town of Hallie v. City of Eau Claire, the Court explained just “how clearly a state
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`policy must be articulated for a municipality to be able to establish that its anticompetitive
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`activity constitutes state action.” 471 U.S. 34, 40 (1985). There, the Court clarified that
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`state action immunity will lie where anticompetitive activity is the “foreseeable result” of
`
`a state policy — that is, where it is “clear that anticompetitive effects logically would
`
`result” from a given policy or where a regulatory structure inherently displaces unfettered
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`business freedom. Id. at 42. A legislature need not, however, “expressly state in a statute
`6
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 7 of 12
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`or its legislative history that the legislature intends for the delegated action to have
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`anticompetitive effects.” Id. at 43.
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`
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`Here, the City and the RAA easily satisfy Hallie’s clear-articulation test. The
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`Virginia legislature has expressly conferred broad authority on local governing bodies to
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`engage in anticompetitive conduct in the EMS vehicle services market. See Va. Code Ann.
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`§ 32.1-111.14(A). A local government may make it unlawful to operate EMS vehicles
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`without a permit, control the issuance of permits, determine where EMS vehicles can and
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`cannot operate, and fix the prices of EMS vehicle services. Id. As one court observed over
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`two decades ago, these provisions “expressly authorize anticompetitive conduct.” Forest
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`Ambulance Serv., Inc. v. Mercy Ambulance of Richmond, Inc., 952 F. Supp. 296, 300 (E.D.
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`Va. 1997). Far from granting localities “simple permission to play in a market,” Phoebe
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`Putney, 568 U.S. at 231 (internal citation omitted), the Virginia statute greenlights
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`regulation and service provision
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`that necessarily supplants unrestrained market
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`competition. In these circumstances, anticompetitive conduct is the “foreseeable result” of
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`the state’s policy. Hallie, 471 U.S. at 42. Accordingly, the City and the RAA are entitled
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`to state action immunity.
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`
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`Metro Health offers several arguments in an attempt to avoid this straightforward
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`conclusion. First, Metro Health argues that § 32.1-111.14 only authorizes localities to
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`regulate “emergency medical services,” not “non-emergency service[s]” like pre-
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`scheduled interfacility transports. Opening Br. at 25–27. Not so. In fact, multiple
`
`provisions of the statute make clear that localities may regulate “emergency medical
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`services vehicles,” irrespective of whether the vehicles are engaged in emergency or non-
`7
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 8 of 12
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`emergency services. See, e.g., Va. Code Ann. § 32.1-111.14(A)(3) (conferring power to
`
`limit the number of vehicles that may be operated within the city); § 32.1-111.14(A)(8)
`
`(granting power to establish necessary regulations relating to the operation of such
`
`vehicles); see also Forest Ambulance, 952 F. Supp. at 300 (“It is the vehicle, rather than
`
`the use, which is being regulated.”).
`
`
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`Second, Metro Health contends that Phoebe Putney announced a heightened clear-
`
`articulation test that the defendants cannot meet. This argument also fails. To be sure, the
`
`Phoebe Putney Court warned against applying “the concept of foreseeability from [the]
`
`clear-articulation test too loosely.” 568 U.S. at 229 (quotation marks omitted). But there,
`
`the Court considered a Georgia law that merely granted hospital authorities “general
`
`corporate powers,” not “permission to use those powers anticompetitively.” Id. at 220.
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`Here, by contrast, the Virginia General Assembly not only empowered the RAA to provide
`
`emergency and nonemergency services, see 1991 Va. Acts 644, it also expressly authorized
`
`the RAA to fix prices and control entry into the EMS vehicle services market, see Va. Code
`
`Ann. § 32.1-111.14(A). Thus, the defendants’ invocation of the Parker doctrine fits
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`comfortably within Phoebe Putney’s reiteration of Hallie’s clear-articulation test. See
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`Phoebe Putney, 568 U.S. at 229.
`
`
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`Third, Metro Health maintains that both the City and the RAA must, and cannot,
`
`demonstrate that their conduct was “actively supervised by the State.” N.C. Dental, 574
`
`U.S. at 504 (quoting Cal. Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S.
`
`97, 105 (1980)). But courts only demand this additional showing from “nonsovereign
`
`actor[s] controlled by active market participants,” like “private trade associations vested
`8
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 9 of 12
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`by States with regulatory authority.” Id. at 503, 511 (emphasis added). In N.C. Dental, for
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`example, the Court required this heightened showing from a state board dominated by
`
`active private dentists who, in their role as board members, excluded nondentists from the
`
`teeth whitening market. Id. at 501.
`
`
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`Municipalities — like the City — and “substate governmental entities” — like the
`
`RAA — “are not subject to the ‘active state supervision requirement’ because they have
`
`less of an incentive to pursue their own self-interest under the guise of implementing state
`
`policies.” Phoebe Putney, 568 U.S. at 225–26 (quoting Hallie, 471 U.S. at 46–47). As the
`
`Supreme Court has long recognized, these entities — unlike private parties — are “exposed
`
`to public scrutiny” and “checked” by “the electoral process.” Hallie, 471 U.S. at 45 n.9.
`
`Moreover, as “arm[s] of the State,” they are entitled to the presumption “that [they] act[]
`
`in the public interest.” Id. at 45. While Metro Health insinuates that the RAA has
`
`improperly “pursue[d] its own interests” by adhering to the City’s public utility model,
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`Opening Br. at 35, it provides no evidence that the RAA is involved in “a private price-
`
`fixing arrangement,” Midcal, 445 U.S. at 106, or that its actions are motivated by anything
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`other than “governmental interests,” Hallie, 471 U.S. at 47. Thus, the concerns that
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`animate the active state supervision requirement are wholly absent from this case.
`
`
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`Finally, in a last-ditch attempt to thwart the defendants’ invocation of the Parker
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`doctrine, Metro Health proposes that we adopt a novel “market participant” exception to
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`state action immunity. The Supreme Court has never recognized such an exception; in
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`fact, it has suggested only that it might possibly exist. See Omni, 499 U.S. at 379 (“We
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`reiterate that, with the possible market participant exception, any action that qualifies as
`9
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`

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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 10 of 12
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`state action is ipso facto [] exempt from the operation of the antitrust laws.”) (emphasis
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`added); see also Phoebe Putney, 568 U.S. at 226 n.4 (explicitly declining to consider
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`whether a market participant exception exists). Nor have any of the Courts of Appeals ever
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`concluded that this proposed exception frustrates the invocation of state action immunity,
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`though some have noted that it would, if recognized, introduce considerable tension into
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`federal antitrust law. See, e.g., Automated Salvage Transp., Inc. v. Wheelabrator Envtl.
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`Sys., Inc., 155 F.3d 59, 81 (2d Cir. 1998). Indeed, as Metro Health’s counsel conceded at
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`oral argument, the municipality at issue in the seminal Hallie case successfully invoked the
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`Parker doctrine notwithstanding its status as a “market participant.” See Oral Arg. at 5:21–
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`6:12. Given this unmistakable friction with longstanding Supreme Court precedent, we
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`decline Metro Health’s invitation to steer federal antitrust law into uncharted waters.
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`
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`Accordingly, we conclude that the City and the RAA acted pursuant to a clearly
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`articulated state policy and are therefore entitled to immunity from federal antitrust
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`liability.
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` Metro Health also contends that by “thwart[ing] the [VA Medical Center’s]
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`III.
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`competitive bidding process,” Opening Br. at 44, the City and the RAA have violated the
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`Supremacy Clause. In Metro Health’s telling, the defendants’ conduct conflicted with the
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`Competition in Contracting Act (“CICA”), 41 U.S.C. § 3301(a), which provides that “an
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`executive agency in conducting a procurement for property or services shall obtain full and
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`
`
`10
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`

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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 11 of 12
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`open competition through the use of competitive procedures.” We must reject this
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`argument.
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`
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`The Supremacy Clause renders federal law “the supreme Law of the Land.” U.S.
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`Const. art. VI, cl. 2. Federal law may preempt state law in three ways: by “express
`
`preemption,” “field preemption,” and “conflict preemption.” H & R Block E. Enterprises,
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`Inc. v. Raskin, 591 F.3d 718, 722 (4th Cir. 2010). For its contention that the CICA preempts
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`defendants’ conduct, Metro Health invokes “conflict preemption,” which can occur when
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`“‘state law stands as an obstacle to the accomplishment of the full purposes and objectives’
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`of federal law.” Anderson v. Sara Lee Corp., 508 F.3d 181, 191–92 (4th Cir. 2007)
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`(quoting Worm v. Am. Cyanamid Co., 970 F.2d 1301, 1305 (4th Cir. 1992)). But here,
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`state law posed no obstacle at all.
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`Rather, as the VA Medical Center repeatedly made clear — both when it initially
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`requested quotes and when it conditionally selected Metro Health’s bid — there would be
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`no contract unless Metro Health first obtained a permit from the City. In an almost identical
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`situation, the U.S. Comptroller General determined that “[e]ven under [CICA’s] full and
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`open competition standard,” the VA Medical Center may require a vendor to obtain “a
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`franchise or permit from the City of Richmond granting authority to provide emergency
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`ambulance services.” Lifeline Ambulance Servs., Inc., B-277415, 97-2 CPD ¶ 83 (Comp.
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`Gen. Sept. 22, 1997); see also Pac. Legal Found. v. Goyan, 664 F.2d 1221, 1227 (4th Cir.
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`1981) (noting that “[t]he opinion of the Comptroller General is . . . entitled to weight as he
`
`is the auditing agent of Congress”). The Comptroller General reasoned that “the
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`requirement is necessary to ensure timely performance of the emergency ambulance
`11
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`USCA4 Appeal: 19-1977 Doc: 46 Filed: 01/19/2021 Pg: 12 of 12
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`services by precluding the possibility that the services will be interrupted by the city’s
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`enforcement attempts against an unlicensed contractor.” Lifeline Ambulance Servs., 97-2
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`CPD ¶ 83. Where, as here, a federal agency, of its own volition, imposes a contract
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`condition consistent with federal law, the Supremacy Clause is not implicated.
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`
`
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`
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`For these reasons, the judgment of the district court is
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`IV.
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`AFFIRMED.
`
`12
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`

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