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ENGLERT v. CITY OF MCKEESPORT

November 3, 1988

THOMAS ENGLERT d/b/a NORTHEAST ELECTRICAL INSPECTION AGENCY, Plaintiff,
v.
CITY OF McKEESPORT and MIDDLE DEPARTMENT INSPECTION AGENCY INC., Defendants



The opinion of the court was delivered by: WEBER

 Plaintiff filed this antitrust action, alleging that the City of McKeesport and the Middle Department Inspection Agency (MDIA) acted in concert to enact a city ordinance which made MDIA the exclusive electrical inspector in the City of McKeesport. After several previous skirmishes resulting in reported Opinions, *fn1" we now consider plaintiff's motion for partial summary judgment and defendants' cross motions for summary judgment. All parties have filed briefs and extensive evidentiary materials, and the motions are ripe for disposition.

 FACTS

 MDIA performs electrical inspections on construction jobs to ensure that the work is done to code specifications. Often such an inspection is a prerequisite to issuance of an Occupancy Permit.

 Plaintiff was an electrical inspector employed by MDIA until August 27, 1981 when MDIA fired him after learning that he was considering starting a competing electrical inspection business. Freed of his worker's shackles, plaintiff founded Northeast Electrical Inspection Agency and began competing with MDIA for business.

 Plaintiff appears to have had some initial success, at least in McKeesport. During his first 8 months in business plaintiff earned fees of $ 2,539 from projects in McKeesport where MDIA earned $ 3,714 over the same period.

 On May 5, 1982, the City of McKeesport passed an ordinance which made MDIA the City's exclusive electrical inspector. No Occupancy Permit would issue unless MDIA had performed the electrical inspection. The City asserts that it passed the ordinance in an effort to tighten up its enforcement of its building codes, because MDIA was uniquely well-qualified and reliable, and because MDIA's record keeping was efficient and beneficial to the City.

 The new ordinance significantly impaired plaintiff's business in McKeesport. If a project required a City Occupancy Permit, the Contractor could not employ plaintiff's firm because the City would only issue the permit upon receipt of an MDIA report. Therefore, plaintiff could only perform inspections on jobs that did not require Occupancy Permits, precluding plaintiff from a large segment of the work available in McKeesport.

 Plaintiff filed this suit alleging violations of Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1,2, and asserting other subsidiary claims. Defendants both assert various grounds for summary judgment. For the reasons stated we conclude that plaintiff cannot produce sufficient evidence of "concerted activity" or willful conduct by MDIA to sustain his antitrust claims and summary judgment is therefore appropriate.

 DISCUSSION

 Plaintiff's claims under Sections 1 and 2 of the Sherman Antitrust Act are both dependent on the assertion that MDIA participated in the passage of the ordinance at issue. Under Section 1, plaintiff must establish a "contract, combination . . . or conspiracy." 15 U.S.C. § 1. In short, concerted activity. Under Section 2, plaintiff must establish not only that MDIA had a monopoly position, but that its acquisition of that position was willful. United States v. Grinnell Corp., 384 U.S. 563, 16 L. Ed. 2d 778, 86 S. Ct. 1698 (1966). Wilfullness requires some element of bad or anticompetitive conduct. E.g., Weiss v. York Hospital, 745 F.2d 786, 828 n.73 (3d Cir. 1984); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 273-275 (2d Cir. 1979).

 To sustain either or both of his claims then, plaintiff must establish that MDIA participated in some way with McKeesport to accomplish its monopoly status. If McKeesport acted alone and MDIA acquiesced, plaintiff's claims fail because independent action, even though it creates an exclusive arrangement, is not prohibited. A party has the right to deal or refuse to deal with whomever it likes, as long as it does so independently. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 79 L. Ed. 2d 775, 104 S. Ct. 1464 (1984). As that Court recited, in the context of a distributor termination:

 
There must be evidence that tends to exclude the possibility that the manufacturer and nonterminated distributors were acting independently. As Judge Aldisert has written, the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others 'had a conscious commitment to a common scheme designed to achieve an unlawful objective.'

 465 U.S. at 764, quoting Edward J. Sweeney & Sons, Inc. v. Texaco, 637 F.2d 105, ...


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