Attorneys for Appellant Attorney for Appellee
James S. Stephenson Thomas A. Pastore
Wayne E. Uhl Indianapolis, Indiana
Indiana Supreme Court
Brownsburg Community School
Appellant (Defendant below),
Appellee (Plaintiff below).
Appeal from the Marion Superior Court, No. 49D05-0305-PL-906
The Honorable Gary L. Miller, Judge
On Petition To Transfer from the Indiana Court of Appeals, No. 49A02-0310-CV-871
March 17, 2005
We hold that the Indiana Antitrust Act does not create a civil treble
damage remedy against an arm of government.
Factual and Procedural Background
The following facts are alleged in the complaint. We take them as
true for purposes of this interlocutory appeal of the denial of a motion
by a defendant for judgment on the pleadings.
The School Corporation undertook a building project for Brownsburg High School that included
a fine arts addition and a swimming pool. The School Corporation hired
ssociates as its architect, and Schmidt retained Spear Corporation as a pool
consultant. Spear is a distributor for Myrtha Pools USA, which manufactures prefabricated
pools. Specifications were published for general contractors to bid on the entire
project. Included were specifications derived from language provided by Spear calling for
a concrete and tile cast-in-place pool and alternate specifications for a prefabricated pool
tank. Plaintiff, Natare Corporation, a supplier of prefabricated pools based in Indianapolis,
claims that the specifications included language that only a Myrtha prefabricated pool could
meet. In addition to the pool tank, the specifications also called for
a moveable bulkhead. Natare claims that the bulkhead specifications were based on a
Myrtha design and excluded Natares product from consideration. The School Corporation responds
that its specifications were drawn to get the best product at the lowest
cost. We of course express no opinion on the validity of either
The bid documents contemplated submission of proposals that did not meet the specifications,
but only if any variations from specifications were approved by the architect.
ttempted to gain approval of its products, including its prefabricated pool tank
and moveable bulkhead, as meeting this or equal requirement. Schmidt responded that
Natares prefabricated pool tank with a PVC liner system was not equal to
the specified panelized heat bonded PVC laminated system. Schmidt also noted that
Natare had not identified any completed projects using Natares proposed system. Schmidt
ultimately also rejected the Natare bulkhead design, which utilized foam materials in the
buoyancy chambers, as not equal to the specified stainless steel movable bulkhead.
After this exchange, three general contractors submitted bids for the entire project.
Each relied on bids for the pool from either a local contractor or
In March 2003 Natare sued the School Corporation, Schmidt, and Spear, alleging that
the three had conspired to exclude Natare from consideration as a supplier for
the pool and bulkhead in violation of the provision of the Indiana Antitrust
Act prohibiting combinations in restraint of trade, Indiana Code section 24-1-2-3 (2004).
Natare alleged that the wording of the specifications unreasonably limited competition by requiring
bidding contractors to use Myrtha Pool materials and equipment supplied by Spear, and
that Spear had a significant role in determining whether other products were equal.
Pursuant to Indiana Code section 24-1-2-7, the complaint sought treble damages, costs,
and attorney fees for violations of the Indiana Antitrust Act.
The School Corporation answered the complaint and moved for judgment on the pleadings
under Indiana Trial Rule 12(C), alleging that it was not a person as
that term is used in the Indiana Antitrust Act, and, therefore, was not
an entity subject to the civil treble damages remedy provided by that statute.
The trial court denied the motion but granted the School Corporations petition
to certify the order for interlocutory appeal. The Court of Appeals affirmed,
holding that a school corporation is a person who can sue and be
sued under the Indiana Antitrust Act. Brownsburg Cmty. Sch. Corp. v. Natare
Corp., 808 N.E.2d 148, 154 (Ind. Ct. App. 2004). We granted transfer.
Brownsburg Cmty. Sch. Corp. v. Natare Corp., 2004 Ind. LEXIS 786 (Ind.
Sept. 9, 2004).
I. Public Purchasing
The Public Purchasing laws include provisions addressing contracts by school corporations, and requiring,
inter alia, that the contract be awarded to the lowest responsible and responsive
See footnote Ind. Code § 5-22-7-8 (2004). Only a citizen or a
taxpayer of a municipa
lity may challenge the award of a government contract under
Indianas Public Purchasing Statute. See All-Star Constr. & Excavating, Inc. v. Bd.
of Pub. Works, 640 N.E.2d 369, 370 (Ind. 1994); Shook Heavy & Envtl.
Constr. Group v. City of Kokomo, 632 N.E.2d 355, 358 (Ind. 1994).
Natare is neither a citizen nor a taxpayer of Brownsburg, and therefore has
no claim under that statute. However, this Court has observed that [o]ne
need not be a citizen or a taxpayer of the municipality . .
. to maintain an action for fraud or collusion in the award of
a contract. Ind. Code § 24-1-2-7. All-Star, 640 N.E.2d at 370.
Accord Shook, 632 N.E.2d at 358. The statutory reference is to
the treble damages provision in the Indiana Antitrust Act.
II. Indiana Antitrust Act
Because Natare has no claim for damages under the Public Purchasing Statute, it
seeks to bring its claim under the Indiana Antitrust Act. Ind. Code
§ 24-1-2-112 (2004). The principal issue is whether a governmental entity is
subject to the private treble damages remedy provided for violation of the antitrust
A. The Statutory Framework
Sections 1 and 2 of the Indiana Antitrust Act, I.C. § 24-1-2-1, et
seq., are comparable to the federal Sherman Act, 15 U.S.C. sections 1 and
2, respectively. Like section 1 of the Sherman Act, Indiana Code section
24-1-2-1 addresses combinations in restraint of trade. Similarly, section 2 of the
Sherman Act and Indiana Code section 24-1-2-2 both deal with monopolization. Indiana
has two additional provisions for which there is no federal counterpart. Section
3, I.C. § 24-1-2-3, prohibits the restraint of bidding for letting of contracts
whether public or private, and Section 4, I.C. § 24-1-2-4, addresses remedies for
collusion or fraud among contract bidders. Specifically, Section 4 of the Indiana
Antitrust Act provides that in cases of collusion or fraud . . .
among the bidders at the letting of any contract or work as provided
in [Section 3] . . . the principal who lets the contract .
. . shall not be liable for such letting or on account of
said contract . . . Section 4 thus frees the principal who
lets a contract tainted by collusion or fraud among bidders from liability on
the contract. By its terms, Section 4 applies only if there is
collusion or fraud . . . as provided in [Section 3]. It
thus does not prohibit any conduct. Rather, it deals with remedies for
violations of Section 3.
Section 3 of the Indiana Antitrust Act does not use the term collusion
or fraud, but does prohibit certain conduct. It provides:
A person who engages in any scheme, contract, or combination to restrain or
restrict bidding for the letting of any contract for private or public work,
or restricts free competition for the letting of any contract for private or
public work, commits a Class A misdemeanor.
I.C. § 24-1-2-3. Natare alleges that the defendants violated Section 3 by
denying Natares products equal status under the specifications and thereby restraining Natares ability
to bid. The School Corporation responds that because it is a governmental
entity it not subject to the Indiana Antitrust Acts criminal and civil penalties.
B. Indiana Case Law
Three appellate decisions have referred to the treble civil damage provision of the
Indiana Antitrust Act in the context of a claim against a governmental entity,
but none was faced with the question whether or not a remedy existed
against the entity itself.
In City of Auburn v. Mavis, 468 N.E.2d 584, 585 (Ind. Ct. App.
1984), the Court of Appeals affirmed a jury award of treble damages and
attorney fees against the City of Auburn. Mavis was a losing bidder
for a public contract to provide radio communications equipment to the Auburn Fire
Department and brought an action against the City and D & L Communications,
Inc. for violation of Section 3, which makes unlawful acts which operate to
restrain open and free competition in bidding to obtain contracts for private or
public work. Id. At trial the City of Auburn and D
& L conceded that they violated this statute when they contrived to develop
specifications favoring equipment sold by D & L before the City solicited bids.
Id. at 586. On appeal, the City did not contend that
it was immune from treble damages under the Indiana Antitrust Act. The
issue, though assumed, was not debated in either the trial court or the
Court of Appeals.
In Shook Heavy & Environmental Construction Group v. City of Kokomo, 632 N.E.2d
355 (Ind. 1994), an unsuccessful bidder claimed that the City of Kokomo violated
Indianas Public Purchasing Statute by failing to award the contract to the lowest
bidder. Kokomo had solicited bids for the construction of a municipal sludge
composting facility. When the bids were opened, Kokomo awarded the contract to
the lowest responsible and responsive bidder. Shook Heavy & Environmental Construction Group,
a losing bidder, filed suit in federal court seeking an injunction against the
award of the contract on the basis that deficiencies in the bid of
the apparent low bidder caused that bidders bid to not be lower than
Shooks. Id. at 357. In response to a certified question from
the federal district court, we held that because Shook was not a citizen
or taxpayer of Kokomo, Shook could not challenge the award under the Public
Purchasing Statute. Id. at 358. Citing Auburn, we noted that Section
7 of the Indiana Antitrust Act allows an unsuccessful bidder to challenge the
award of a contract by the city if the plaintiff alleges collusion or
The unsuccessful bidder in Shook sought only an injunction and asserted its claims
under the Public Purchasing Act. In making this passing reference to remedies
under Section 7, we were not faced with the question of who among
the potential defendants might be subject to a challenge under this section.
Nor were we concerned with precisely what form that challenge might take.
A combination in restraint of trade necessarily involves at least two parties.
Lawrence Anthony Sullivan, Antitrust 323 (West 1976). And an entity cannot combine
with its own employees or subsidiaries. See Schwimmer v. Sony Corp. Am.,
677 F.2d 946, 953 (2d Cir. 1982) (collaborative action between a corporation and its
employees, or among employees within a corporation, is not regarded as joint action
within the meaning of § 1 of the Sherman Act); Univ. Life Ins.
Co. v. Unimarc Ltd., 699 F.2d 846, 852 (7th Cir. 1983) (conspiracy between
a corporation and its officers not actionable under Section 1 of the Sherman
Cf. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752,
778 (1984) (A parent corporation and its wholly owned subsidiary are incapable of
conspiring with each other for purposes of § 1 of the Sherman Act.);
Rep. of the Attorney Generals Natl Comm. to Study the Antitrust Laws, 30-36
(1955). Accordingly, at least one nongovernmental entity will ordinarily be a party
to a combination in which a governmental entity is also a player.
In short, Shook was not faced with, and did not consider, whether all
parties, including the governmental entity, could be held liable for treble damages under
the antitrust law.
Shook took its reference to Section 7 remedies directly from All-Star Construction &
Excavating, Inc. v. Board of Public Works, 640 N.E.2d 369 (Ind. 1994).
Like Shook, All-Star merely observed that some remedy existed, without exploring precisely what
remedy was available against which entities. In All-Star, the lowest bidder for
construction of a citys economic development project sued when the city awarded the
contract to a competitor because it was a local contractor and a minority
contractor. 640 N.E.2d at 370. We held that there was no
evidence that the City was engaged in collusion or fraud, and the constructive
fraud claim failed for that reason. Id.
In sum, the issue in this case, whether a local or municipal government
is susceptible to a claim for treble damages under Indiana Code section 24-1-2-7,
is a matter of first impression.
C. Criminal Liability of Governmental Entities
By their terms, the only portions of the Indiana Antitrust Act that contain
substantive prohibitions are Sections 1, 2, and 3. These sections are framed
similarly to provisions of the Criminal Code and provide that it is a
Class A Misdemeanor to engage in the actions prohibited. We think the
legislature, when writing this statute in 1907, did not contemplate a governmental entity
as a potential violator of its prohibitions. First, on the only occasion
where the issue has been addressed by an Indiana appellate court, the Court
of Appeals held that the State could not be criminally responsible, even where
the statute prohibited acts by persons and defined person to include governmental entities.
In State v. Ziliak, 464 N.E.2d 929 (Ind. Ct. App. 1984), landowners
alleged that state employees committed criminal property offenses when the state employees entered
upon the landowners property and removed certain Indian artifacts without permission. The
landowners sought damages under Indiana Code section 34-4-30-1, which provides civil remedies to
See footnote The Court of Appeals held: A criminal offense is
an offense against a sovereign state.
Id. at 930 (citing Reed v.
Carrigan, 190 Ind. 29, 129 N.E. 8 (1920)); 8 I.L.E. Criminal Law §
2 (1971); 21 Am. Jur. 2d Criminal Law § 1 (1981); 22 C.J.S.
Criminal Law § 1 (1961). A crime is said to be an
offense against the sovereignty. 21 Am. Jur. 2d Criminal Law § 1 (1981).
Because a crime is an offense against the sovereign, it is axiomatic
that the sovereign cannot commit a crime. Ziliak, 464 N.E.2d at 930.
The court noted that the criminal code, I.C. § 35-41-1-22, defined person
as a human being, corporation, partnership, unincorporated association, or governmental entity. Id.
(emphasis in original). Despite this definition, the Court of Appeals concluded that
the State was a person as that term is used in the Indiana
Criminal Code only for purposes of its status as a victim.
Natare argues, and the Court of Appeals agreed, that Ziliak is inapposite here
because it dealt with a claimed crime by the State itself, and did
not address whether a subdivision of the State could commit a crime.
Brownsburg Cmty. Sch. Corp. v. Natare Corp., 808 N.E.2d 148 153 (Ind. Ct.
App. 2003). We find no authority supporting such a distinction. For
the reasons expressed below we believe neither the State nor any other governmental
entity is subject to criminal provisions of Indiana statutes without the legislation making
that result absolutely clear.
Indiana law as reflected in Ziliak is consistent with other United States jurisdictions
in rejecting the possibility of a crime by the government. Relevant federal
cases and statutory authority are sparse. One federal statute carrying criminal penalties
(regulating prices and profits for commodities in emergencies) defines person as an individual,
corporation, partnership, association, or any other organized group of persons . . .
and includes the United States or any agency thereof, or any other government,
or any of its political subdivisions, or any agency of the foregoing.
Emergency Price Control Act of 1942, c. 26, Title III, § 302(h), c.
26, 56 Stat. 36. Section 205 of the Act provides for injunctive
remedies and criminal fines and imprisonment for convictions. However, the definition of
person also explicitly states that: no punishment provided by this Act shall
apply to the United States, or to any [federal, state, or local] government,
political subdivision, or agency. Id. This definition has been interpreted to
mean that governmental agencies are exempt from the acts criminal liabilities, but not
necessarily its remedial sanctions. See 1 Working Papers of the Natl Comm.
on Reform of Fed. Criminal Laws 175 (1970), typically known as the Brown
Commission. The Brown Commission also noted that though the Emergency Price Control
Act specifically extended its prohibitions to governmental entities, no case has been found
in which a court has held such an agency subject to the Act.
Id. The Brown Commission concluded by recognizing that although there is
nothing in the nature of a municipal corporation which would make it inherently
incapable of committing a crime, there does not appear to be a Federal
case holding a governmental entity as such criminally liable. Id. at 176.
State law also finds the concept of a crime by the sovereign to
be an alien notion. We have found no criminal code in this
country that imposes criminal liability on the sovereign and only one that would
permit a fine on an arm of the government.
See footnote The Model Penal
ically excludes from its definition of corporation any entity organized as or
by a governmental agency for the execution of a governmental program. American
Law Institute, Model Penal Code § 2.07(4)(a) (P.O.D. 1962). The commentary to
section 207(4)(a) observes that [l]iability in such cases would seem entirely pointless, although
of course the liability of individuals involved in criminal activity is preserved.
1 American Law Institute, Model Penal Code § 207(5)(a), at 345 (1985).
At least five states have adopted a version of 2.07(4)(a).
See footnote Most states,
however, like Indiana, co
ntain no express treatment of the issue in their general
criminal laws. In the absence of specific legislative direction, we think the
Court of Appeals correctly concluded in Ziliak that the legislature did not contemplate
a violation of a criminal prohibition by a governmental entity.
D. Specific Provisions of the Indiana Antitrust Act
Natare claims a violation of Section 3, and seeks treble damages for its
lost time in preparing a useless bid and attorney fees, under Section 7
of the Indiana Antitrust Act.
See footnote That se
ction, tracking section 15 of the
Clayton Act, provides treble damages and attorneys fees for those injured in their
business or property by a violation of the Indiana Antitrust Act. This
section purports to give a right to treble damages to any person injured
by any person doing any thing forbidden or declared to be unlawful by
any of the first three sections of the Indiana Antitrust Act.
See footnote Consistent
with the usual legislative silence on the application of criminal laws to governmental
entities, the Indiana Antitrust Act neither defines person to include a gover
nor specifically excludes the possibility of a crime by such an entity.
The School Corporation argues that it is not a person as that term
is defined in the antitrust act. Indiana Code section 24-1-2-10 provides definitions
similar to those found in the Sherman Act, 15 U.S.C. § 7 (2000):
The words person or persons whenever used in this chapter shall be deemed
to include corporations, associations, limited liability companies, joint stock companies, partnerships, limited or
otherwise, existing under or authorized by the laws of the state of Indiana,
or of the United States, or of any state, territory, or district of
the United States, or of any foreign country.
I.C. § 24-1-2-10. Natare argues that the School Corporation can be liable
for treble damages and attorney fees because person is defined by the statute
to include corporations, and school corporations are not explicitly exempt from this definition.
School corporations, like general business corporations, are creatures of statute. In
the case of school corporations, they are created pursuant to Indiana Code section
20-4-1. Reflecting that statute, the Brownsburg School Corporation uses the term corporation
as a part of its legal name. The Court of Appeals found
this persuasive and agreed with Natare that a school corporation is a person
subject to the treble damages remedy provided by the antitrust act. We
disagree for reasons grounded in the text of the Antitrust Act as well
as the general assumption that criminal laws are not applicable to governmental entities.
The School Corporation first argues that the term corporation is ambiguous and that
the General Assembly did not intend the term to include governmental entities.
As originally enacted in 1907, the antitrust laws definition of person included, corporations,
associations, companies and partnerships. The School Corporation points out that the other
entities included in this definition as persons are all private business entities, and
argues that this implies all persons are from the private sector. Moreover,
in contrast to the silence of the Antitrust Act on this point, the
School Corporation offers a number of statutes where the General Assembly has treated
political subdivisions as distinct from corporations and subjected public bodies to the same
treatment as private corporations by express language.See footnote
We do not believe the definition of person is the central issue in
determining whether the School Corporation, or any arm of government, is susceptible to
a claim for treble damages. Although we recognize the maxims of statutory
construction involved here, we find them at best suggestions, and not directives.
It would be anomalous indeed if a private business overcharged as a result
of price fixing can recover treble damages but a school corporation cannot.
We agree that municipal corporations are persons as that term is used in
the Indiana Antitrust Act. They therefore can sue under Section 7 if
injured in their business or property by an antitrust violation. But it
does not follow that they are also potential treble damage defendants. In
order to be sued under Section 7, a person must have done something
forbidden by the Indiana antitrust law. The substantive prohibitions of the antitrust
laws are criminal in nature. Accordingly, we think the legislation did not
contemplate the possibility of a governmental entity engaging in an action forbidden by
the statute. Rather, as Section 4 reflects, the statute views governmental entities
as victims, not perpetrators, and explicitly relieves them of liability from a contract
that was the result of collusive bidding.
Natare also asserts that when the General Assembly first enacted the statute that
created school corporations, I.C. § 20-4-1-26.1 (formerly I.C. § 20-4-1-26), it expressly included a
provision that school corporations could sue and be sued. We think this
is of no relevance to the issue before us. The power to
sue and be sued simply confers general legal capacity on the entity.
It says nothing about what kinds of suits the entity may bring or
what liabilities it may incur. Natare also points out that the Antitrust
Act was amended by the General Assembly in 1986 and in 1993 and
did not exempt municipal corporations form the act.
See footnote From this, Natare reasons
that the General Assembly legislatively acquiesced in the municipal corporations liabi
lity to suit.
These amendments merely provided updated and uniform terms. They do not
suggest that the General Assembly revisited the liability of municipal or local government
E. Governmental Immunity
Rejecting a treble damage remedy against a governmental entity is fortified by the
fact that at the time the Indiana Antitrust Act was enacted there was
no prospect of civil liability on the part of a governmental entity.
Indiana recognized the common law doctrine of sovereign immunity until 1972, when this
Court abolished sovereign immunity in most areas. Campbell v. State, 259 Ind.
55, 61-62, 284 N.E.2d 733, 736-37 (1972). In response to Campbell, in
1974, the Indiana legislature enacted the Indiana Tort Claims Act, which identified a
list of governmental activities that are immunized by statute from tort liability.
See I.C. § 34-13-3-3.
Natare argues that the Court of Appeals correctly concluded that because the General
Assembly has increasingly allowed the government to be sued for wrongdoing the 1907
presumption of immunity has been eroded. Brownsburg Comty. Sch. Corp., 808 N.E.2d
at 152-53. The Court of Appeals noted that since 1974, the Tort
Claims Act permits public entities to be held liable for negligence, I.C. §§
34-13-3-125 (formerly I.C. § 34-4-16.5-1). The School Corporation points out that
in the late nineteenth century it was presumed that school corporations were immune
from suit. Freel v. Sch. City of Crawfordsville, 142 Ind. 27, 28,
41 N.E. 312, 312 (1895) (where subdivisions of the state are organized solely
for a public purpose, by a general law, no action lies against them
for an injury received by a person on account of the negligence of
the officers of such subdivision, unless a right of action is expressly given
by statute). A statute in derogation of the common law is presumed
to be enacted with awareness of the common law. Cook v. Whitsell-Sherman,
796 N.E.2d 271, 275 (Ind. 2003). In the legal environment of 1907
there was no need to provide explicitly that governmental entities could not be
subjected to treble damages. It was assumed they were immune from suit.
And, as explained by Part G, at that time the federal antitrust
laws, which served as the prototype for the Indiana law, made the same
F. Public Policy
Public policy considerations support our reading of the statute. This Court
has recognized that treble damages are punitive in nature. Obremski v. Henderson,
497 N.E.2d 909, 911 (Ind. 1986) (referring to the treble damages remedy for
crime victims provided by Indiana Code section 34-4-30-1 (now I.C. § 34-24-3-1)).
The Tort Claims Act prohibits an award of punitive damages against a governmental
entity. I.C. § 34-13-3-4(b). Courts have also been reluctant to impose
punitive damages on government entities in part because the penalty falls ultimately on
innocent taxpayers. See State v. Carter, 658 N.E.2d 618, 624 (Ind. Ct.
App. 1995) (sanction of attorney fees against State disfavored because it is the
citizen taxpayers who would bear the burden of this punitive award); City of
Gary v. Falcone, 169 Ind. App. 295, 297, 348 N.E.2d 41, 42 (1976)
(if punitive damages were allowed against municipalities, the group for whose protection such
damages were purportedly awarded, the citizens and taxpayers, would be the identical group
who would bear the burden of the award. Such a result is
anomalous, indeed.). Moreover, it is far from clear that municipal officials .
. . would be deterred from wrongdoing by the knowledge that large punitive
awards could be assessed based on the wealth of their municipality. City
of Newport v. Fact Concerts, Inc., 453 U.S. 247, 268 (1981); see also
Gares v. Willingboro Township, 90 F.3d 720, 736 (3d Cir. 1996) (the reasoning
that punitive damages serve as a deterrent becomes less sensible when applied to
It is one thing to visit civil penalties on individuals who violate the
law. And if a private organization employs persons who transgress, imposing penalties
on the organization places the loss on those who voluntarily associated themselves with
it. In the case of a for-profit organization, those individuals within the
organization ordinarily stood to gain from the illegal activity. But imposing treble
damages on a governmental entity visits the loss on wholly innocent taxpayers.
Moreover, the treble damages remedy under the antitrust law is designed to deter
unlawful competitive activity presumably undertaken to enhance the profits of the violators.
But in this case of a violation of the antitrust laws by a
governmental entity, the government will typically be a victim, not a beneficiary.
That is the situation presented here if Natares allegations are correct. For
these reasons as well, we conclude that a governmental entity was not contemplated
as a defendant under Section 7, and hold that the School Corporation cannot
be held liable for treble damages.
G. Federal Antitrust Liability of Governmental Entities
We also find instructive the history of government liability under the federal antitrust
laws. It too points in the direction of nonliability.
The Clayton Act allows any person to be a plaintiff. The term
is defined to include corporations and associations existing under or authorized by federal,
state or foreign law. 15 U.S.C. § 12. As early as
1906 it was held that a municipality could be a plaintiff. Chattanooga
Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 396 (1906) (a
municipality is a person entitled to sue under § 7 of the Sherman
Act). Chattanooga did not address, and apparently was not presented with any
of the issues discussed in Parts C, E, and F of this opinion.
Similar rulings as to states and foreign nations followed. See Pfizer,
Inc. v. Govt of India, 434 U.S. 308, 320 (1978) (a foreign nation
otherwise entitled to sue in our courts is entitled to sue for treble
damages under the antitrust laws to the same extent as any other plaintiff);
Georgia v. Pa. R.R. Co., 324 U.S. 439, 447 (1945) (State of Georgia
was a person within provision of § 26 of the Clayton Act authorizing
any person to sue for injunctive relief and to recover damages).
Whether an entity of local government could be sued for damages under the
Sherman Act did not arise until many years later. In 1978, a
four-Justice plurality of the Supreme Court held that a municipal utility, which had
brought a treble damage claim against a competitor, could be subject to a
counterclaim for treble damages. City of Lafayette v. La. Power & Light
Co., 435 U.S. 389, 412-13 (1978). The plurality concluded that the Parker
doctrine exempts only anticompetitive conduct engaged in as an act of government by
the State as sovereign or, by its subdivisions, pursuant to a state policy
to displace competition with regulation or monopoly public service. Id. at 413.
Chief Justice Burger agreed that the municipal utility could be sued for
treble damages but based his opinion on the nature of the entity as
a competitor in a market place, not on its status as an arm
of government. Id. at 419. Four Justices dissented specifically complaining that
exposure to treble damages could be ruinous to local governments. Id. at
440. The dissenters took the view that a state can authorize its
arms of government as it chooses, and the state action doctrine announced in
Parker v. Brown
See footnote should exempt any government actor from the antitrust law.
City of Lafayette, the Court held that Parker immunity extended to
a municipality only if its actions were in furtherance of a clearly articulated
and affirmatively expressed state policy. Cmty. Communications Co. v. City of Boulder,
455 U.S. 40, 51 (1982). The general grant of authority under Home
Rule legislation, such as Indianas, codified at Indiana Code section 36-1-3-19, was not
a sufficiently articulated state policy to guarantee immunity.
Although no treble damage award had yet been entered against a governmental entity,
after City of Lafayette and City of Boulder, that result was seen as
a realistic possibility. Congress promptly responded to these decisions by enacting the
Local Government Antitrust Act of 1984, codified at 15 U.S.C. §§ 34-36.
That statute left governmental entities subject to injunctive or declaratory relief but prohibited
recovery of antitrust damages from any local government, or official or employee thereof
acting in an official capacity.
See footnote 15 U.S.C. § 35(a). A l
government within the meaning of the Act includes any city, county, parish, town,
township, village or any other general function governmental unit established by state law,
and also a school district, sanitary district, or any other special function governmental
unit established by State law. 15 U.S.C. § 34(1)(A)-(B). The House
Judiciary Committee pointed out that City of Lafayette and City of Boulder appear
to have limited the extent that antitrust immunity applicable to States will be
accorded to local governments and these decisions could undermine a local governments ability
to govern in the public interest. Most of the suits instituted by
private parties have sought treble damages from local governments. 5 U.S. Code
Congressional & Administrative News 98 Cong. 2d 1984 at 4603 (1985). The
purpose of the Act was to clarify the application of the Clayton Act
to the official conduct of local governments and eliminate antitrust damage liability for
official conduct of a local government and its officials. Id. Congress
was also concerned that local taxpayers, the very persons the antitrust laws are
designed to protect, are called upon to pay treble damage judgments rendered against
local governments. Irving Scher, Antitrust Adviser § 7.09 at 43 (Vol. 2,
4th ed. 2003).
Indiana courts have generally followed federal precedent in interpreting the Indiana Antitrust Act.
E.g. Berghausen v. Microsoft Corp., 765 N.E.2d 592, 594-96 (Ind. Ct. App.
2002); Mavis, 468 N.E.2d 584, 585-86; Rumple v. Bloomington Hosp., 422 N.E.2d 1309,
1313-14 (Ind. Ct. App. 1981); Citizens Natl Bank of Grant County v. First Natl
Bank in Marion, 165 Ind. App. 117, 125, 331 N.E.2d 471, 476 (1975).
Consistent with that approach, a few states have followed City of Lafayette
and City of Boulder.
See footnote We do not join them. Where the
vernment activity is not competition with private enterprise, even the City of Lafayette
Court lacked a majority for subjecting the municipality to treble damages. In
any event, we think the rapid congressional removal of exposure of potential liability
of municipalities under the antitrust laws also indicates that liability was simply not
contemplated by federal antitrust legislation. When the implications of this potential liability
were explored, it was promptly and soundly rejected.
We do not agree that federal precedent is appropriate in considering whether governmental
immunity is available to municipal and local government units under state antitrust laws.
Parker and its progeny turned significantly on the relationship between the federal
government and the states as dual sovereignties. Municipal and local government units,
on the other hand, are creatures of the State. As such there
is no consideration of comity or deference. The only issue is the
intention of the state legislature to impose or withhold liability. See Freitas
v. City and County of San Francisco, 92 Cal. App. 3d 913, 917
(1979); Fine Airport Parking, Inc. v. City of Tulsa, 71 P.3d 5, 11
(Ok. 2003) (The principles of federalism that govern the relationship between the two
sovereigns, the federal and state governments, do not apply to the relationship between
a state and a municipality acting pursuant to state law . . .
. The principles of federalism supporting the Parker doctrine are meaningless in an
analysis of municipal liability); Town of Hallie v. City of Chippewa Falls, 314
N.W.2d 321, 324 (Wis. 1982) (The relationship between the federal government and the
states is not parallel to the relationship between the state government and the
cities.). For the reasons already given, we do not read our statute
to provide liability of governmental agencies. In this conclusion we join Massachusetts,
New Jersey, Oklahoma and New York in rejecting the federal state action immunity
doctrine under state antitrust law. Monsanto Co. v. Dept. of Pub. Utils.,
586 N.E.2d 982, 983 (Mass. 1992); Fanelli v. City of Trenton, 641 A.2d
541, 547-49 (N.J. 1994); City of Tulsa, 71 P.3d at 12; Capital Tel.
Comp. v. New York Tel. Comp., 540 N.Y.S.2d 895, 896-99 (1989).
The order of the trial court denying the motion of Brownsburg Community School
Corporation for judgment on the pleadings is reversed. This case is remanded
with direction to grant the School Corporations motion for judgment on the pleadings.
Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ. concur.
Under Trial Rule 12(C), motion for judgment on the pleadings is to
be granted only where it is clear from the face of the complaint
that under no circumstances could relief be granted.
Forte v. Connerwood Healthcare,
Inc., 745 N.E.2d 796, 801 (Ind. 2001) (quoting Culver-Union Township Ambulance Serv. v.
Steindler, 629 N.E.2d 1231, 1235 (Ind. 1994)). When reviewing a 12(C) motion,
the reviewing court accepts as true the well-pleaded material facts alleged in the
complaint, and bases its ruling solely on the pleadings. Noblesville Redevelopment Commn
v. Noblesville Assocs. Ltd. Pship, 674 N.E.2d 558, 562 (Ind. 1996).
Paragraph 3.3.1 of AIA Document A701-1997, Instructions to Bidders provided:
The materials, products and equipment described in the bidding documents establish a standard
of required function, dimension, appearance and quality to be met by any pr
substitution. Whenever possible and without prejudice to price, quality, or other considerations,
local sources of labor, materials and services shall be given preference. Generally,
where words or equal appear, a product of another manufacturer will be acceptable,
but only if approved in writing by the Architect prior to bidding in
accordance with the provisions stated in the Contract Documents and these Instructions to
The public bidding statute, as applied to school corporations, provides the school
corporation the discr
etionary power to determine the responsible offeror that is most advantageous
to the governmental body, taking into consideration price and the other evaluation factors
set forth in the request for proposals. Ind. Code § 5-22-9-7(a) (2004).
The school corporation must have its purchase or lease available for the
public. I.C. § 5-22-18-5(b)(3). A citizen or taxpayer of that school
district may then seek to enjoin a contract attempted to be entered into
pursuant to competitive bidding where the award is arbitrary, corrupt, or fraudulent.
Budd v. Bd. of County Commrs of St. Joseph County, 216 Ind. 35,
37, 22 N.E.2d 973, 975 (1939); Bd. of Commrs of Henry County v.
Gillies, 138 Ind. 667, 673, 38 N.E. 40, 42 (1894).
Ziliak it was agreed that the acts of state employees constituted
violations of Indiana Code section 35-43-2-2 (criminal trespass), and Indiana Code section 35-43-1-2
(criminal mischief). 464 N.E.2d at 930. The Ziliaks sought damages provided
in the section now codified at Indiana Code section 34-24-3-1 (2004), which provided
for a civil action for treble damages and attorneys fees for violations ofIndiana
Code section 35-43 among others.
See City of Ludlow v. Commonwealth, 56 S.W.2d 958 (Ky. 1933), where
the city built an allegedly defective sewer that, when it rained, caused backups
in the basements of several residences, producing an odor so noisome, offensive, and
sickening that the occupants of the houses could not eat or sleep.
Id. at 958. The state prosecuted and the City was convicted of
maintaining a common nuisance and fined $1,500. Id. It appealed.
The court of appeals cited three earlier Kentucky cases in which cities had
been held criminally liable for maintaining a public nuisance. The court reversed
and remanded for a new trial on the grounds that the $1,500 fine
imposed on the City violated Kentuckys constitutional prohibition of excessive fines. Id.
See Haw. Rev. Stat. § 702-229(1) (2003); N.J. Stat. § 2C:2-7(b)(1) (2004);
N.D. Cent. Code § 51-08.1-01 (2003); Ohio Rev. Code Ann. § 2901.23(D) (2004);
18 Pa. Cons. Stat. § 307(F) (2004).
Unlike the federal antitrust laws and those of most states, the Indiana
itrust Act does not explicitly provide an injunctive remedy. Whether an injunctive
remedy is available under the Indiana Antitrust Act, and if so whether it
lies against a unit of local government are issues not presented in this
case and we express no opinion on them.
Any person who shall be injured in his business or property by
any person or corporation by re
ason of the doing by any person or
persons of anything forbidden or declared to be unlawful by this chapter may
sue therefor . . . and shall recover a penalty of threefold the
damages which may be sustained, together with the costs of suit, including a
reasonable attorneys fee. I.C. § 24-1-2-7.
The minimum wage law defines an employer as any . . .
corporation, . . . the state, or other governme
ntal agency or political subdivision.
I.C. § 22-2-2-3. The Health provisions of the Code define person
as . . . a governmental entity, or a corporation. I.C.
§ 16-18-2-274(a). The School Corporation also refers to a number of schemes
where different definitions of person expressly include or exclude government entities. E.g.,
I.C. § 4-2-6-1(11) (Ethics & Conflicts of Interest for State Officers) (person means
any . . . corporation, . . . or a governmental agency or
political subdivision); I.C. § 5-14-1.5-2(k) (Public Records & Meetings) (person means . .
. a corporation, . . . or a governmental entity); I.C. § 5-16-8-1
(Steel Procurement for Public Works) (separately defining persons as including a corporation and
public agency as including local government units); I.C. § 8-1-22.5-1(e)-(f) (Utilities: Gas Pipeline
Safety) (defining person to include corporations and municipality as a city, county, or
any political subdivision of the state); I.C. § 8-21-3-1(12) (Aeronautics: Aircraft Finance) (person
means . . . corporation, . . . or body politic); I.C.
§ 9-13-2-124 (Motor Vehicles); I.C. § 13-29-1-2(p) (Environment: Low-Level Radioactive Waste) (defining person
to include a corporation and any other legal entity either public or private,
and separately stating, Person also includes the United States, states, political subdivisions of
the state, and any department, agency, or instrumentality of the United States or
a state); I.C. § 14-8-2-202(d) (Natural Resources Dept.) (person means . . .
a corporation, or a governmental entity); I.C. § 22-9-1-3 (Labor & Industrial Safety:
Civil Rights) (separate definitions); I.C. § 22-12-1-18 (Labor and Industrial Safety: Fire
Safety & Building Equipment) (defining person to include a corporation . . .
or governmental entity).
In 1986 the General Assembly amended the Indiana Antitrust Acts internal references
to refer to chapters rather than acts. Pub. Law No. 152-1986, Sec.
12. In 1993 the General Assembly amended the def
inition of person to
include limited liability companies, a then novel form of organization. Pub. Law
No. 8-1993, Sec. 335. Neither of these amendments effected any substantive change
Parker v. Brown, 317 U.S. 341 (1943), dealt with a complaint for
injunctive relief against enforcement of a state statute regulating agricultural output. Actions
pursuant to a state regulatory scheme were held to be exempt from federal
antitrust laws as state action. The Supreme Court found nothing in the
language of the Sherman Act or in its history which suggests that its
purpose was to restrain a state or its officers or its agents from
activities directed by its legislature. Id. at 350. As a result
of this holding, state action was expressly declared to be a defense for
a wide variety of acts by governmental regulators and private citizens if done
pursuant to state law, even if they might otherwise have violated federal antitrust
It has been noted that the statutory immunity of the nonsovereign local
governments exceeds the no
nstatutory immunity of the sovereigns that created them. ABA
Antitrust Section: Monograph No. 15, Antitrust Federalism: The Role of State
Law at 72 n. 508 (1988). The immunity from damages granted to
local governments under the Act is absolute. The Act, however, does not
immunize local governments from injunctive, enforcement procedures by the Department of Justice, or
actions by the Federal Trade Commission. Id. at 72.
See Neyens v. Roth, 326 N.W.2d 294, 298 (Iowa 1982); Byre v.
City of Chamberlain, 362 N.W.2d 69, 74 (S.D. 1985). Those jurisdictions afford
immunity only if the municipal action is clearly articulated and affirmatively expressed as