Pacific Gas & Electric Co. v. County of Stanislaus

BROWN, J., Dissenting.

Read against the background of historical practice, the language of Business and Professions Code section 16750 (section 16750) outlines a sensible scheme to rationalize the filing of antitrust proceedings on behalf of California’s state government. Legally speaking, that government includes not only the state itself but its many political subdivisions—statewide agencies, counties, cities, an even greater number of school districts, and many other lesser units. The statute appears designed to implement an antitrust enforcement policy with the following features: *1160First, it reaffirms the “capacity” of the state to bring Cartwright Act antitrust claims, explicitly granting political subdivisions a cause of action. Second, it confers on the Attorney General exclusive authority to institute such suits. Third, it provides an exception to that authority in the limited class of cases where the effects of an antitrust defendant’s conduct “occur primarily within [one] county.” And last, even in that limited circumstance, it requires the local district attorney to obtain presuit approval and permits the Attorney General to take charge of the litigation when the public interest makes it advisable to do so.

I

The language and history of section 16750 not only belie the majority’s construction, but demonstrate that in the amendments of 1961 and 1977, the Legislature was seeking to codify an orderly, rational decisional structure for filing multicounty antitrust claims on behalf of California governments. The division of authority settled on sensibly centralized decisionmaking at the highest level of public lawyering. As one court has written, reflecting on a similar context involving federal antitrust claims by a state’s political subdivisions: “Justice and judicial economy is best served by having the largest governmental unit sue on behalf of all its parts rather than having multiple suits brought by various political subdivisions within the State.” (State of Illinois v. Associated Milk Producers, Inc. (N.D.Ill. 1972) 351 F.Supp. 436, 440; see also Nash Cty. Bd. of Ed. v. Biltmore Co. (4th Cir. 1981) 640 F.2d 484, 496 (Nash County); State of Illinois v. Harper & Row Publishers, Inc. (N.D.Ill. 1969) 301 F.Supp. 484, 495 [6 A.L.R.Fed. 1].)

Relying on our opinion in D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1 [112 Cal.Rptr. 786, 520 P.2d 10] (D’Amico), the federal Court of Appeals for the Fifth Circuit has provided a nutshell description of the powers of the nation’s state attorneys general. In State of Fla. ex rel. Shevin v. Exxon Corp. (5th Cir. 1976) 526 F.2d 266, that court wrote “the attorneys general of our states have enjoyed a significant degree of autonomy. Their duties and powers typically are not exhaustively defined by either constitution or statute but include all those exercised at common law. There is and has been no doubt that the legislature may deprive the attorney general of specific powers; but in the absence of such legislative action, he typically may exercise all such authority as the public interest requires.” (Id. at p. 268, fns. omitted; see also Nash County, supra, 640 F.2d at p. 494 [“At common law, an attorney general, in the absence of some restriction on his powers by statute or constitution, has complete authority as the representative of the State or any of its political subdivisions ‘to recover damages . . . alleged to have been sustained . . .’ even though those subdivisions may not have *1161‘affirmatively authorized suit.’ ” (Italics added.)]; In re Armored Car Antitrust Litigation (5th Cir. 1981) 645 F.2d 488, 492.) Given the extensive historical common law powers of the office of Attorney General in the United States and in California, we ought to begin with a presumption: Unless the contrary appears affirmatively by statute, the Attorney General has exclusive authority to institute Cartwright Act antitrust proceedings on behalf of all government entities.

In other words, in sorting out who within state government has authority to represent whom in judicial proceedings, the starting point is not the assumption that counties possess authority to institute Cartwright Act suits in their own right. Instead, courts should start with the inherent authority of the Attorney General to represent all state entities. The next question is whether that authority has been withdrawn or transferred elsewhere. Has the Legislature affirmatively authorized Stanislaus County to institute the antitrust suit out of which this case arises? The majority has no difficulty arriving at the wrong answer to that question. It looks to the text of subdivision (a) of section 16750, a provision that says in substance, “Any person who is injured in his or her business or property by reason of anything forbidden or declared unlawful by [the Cartwright Act] may sue . . . .” Because subdivision (b) of the statute declares the “state and any of its political subdivisions and public agencies shall be deemed a person within the meaning of’ (italics added) section 16750, the majority concludes the County of Stanislaus is “a person” injured in its “business or property” by Pacific Gas and Electric Company’s (PG&E) conduct. Therefore, it “may sue.”

But the majority’s syllogism is doubly flawed. First, it overlooks a settled distinction of public law. Although a public entity may have “capacity” or “standing to sue,” it does not follow from that alone that the Legislature has granted it authority to institute litigation by counsel of its choosing. (See, e.g., Museum Boutique Intercontinental, Ltd. v. Picasso (S.D.N.Y. 1995) 886 F.Supp. 1155, 1159 [“ ‘[C]apacity’ and ‘authority’ are distinct concepts. See generally Black’s Law Dictionary 803, 121 (5th Ed. 1979) (defining ‘capacity’ as the ability of a particular . . . entity to use ... the courts . . . and ‘authority’ as the permission or right to exercise power).”]; Brown v. Ortho Diagnostic Systems, Inc. (E.D.Va. 1994) 868 F.Supp. 168, 170 [“[T]he question presented here is not who can sue or be sued, but rather who can represent whom in federal court.”]; 6A Wright et al., Federal Practice and Procedure (1990) § 1562, p. 454 [“A grant of capacity to a governmental corporation only means that it may sue or be sued in its own name, as opposed to that of the government. . . .”] .)

Second, subdivision (b) of section 16750 does not declare that “the state and any of its political subdivisions . . . shall be deemed [persons].” Its *1162grammar is more subtle. The statute declares that for Cartwright Act purposes, these entities “shall be deemed a person.” (§ 16750, subd. (b), italics added.) In other words, the state, its constituent agencies, the counties, all the political entities making up California’s scheme of government together comprise “a” jural person for Cartwright Act purposes. The drafter’s choice of words is suggestive. It reinforces the view that what the Legislature intended when it added subdivisions (b) and (c) to section 16750 in 1961 was the creation of both a single “unitary public plaintiff’ (as the Attorney General put it at oral argument) and the preservation of a kind of statutory pyramid that confers on the state’s chief legal officer the exclusive authority to say “yea” or “nay” to proposed multicounty Cartwright Act litigation, from the most sprawling county to the smallest water district.

II

The majority accepts the proposition that the county has the capacity to file this action. (See maj. opn., ante, at p. 1150.) Yet it rejects PG&E’s corollary argument that section 16750 grants the county nothing more than a cause of action for injuries resulting from business conduct proscribed by the Cartwright Act. Read as a whole, PG&E argues, section 16750 not only does not authorize counties to commence such proceedings, it confers that power solely on the Attorney General. I agree.

Like many other American jurisdictions, the California Constitution recognizes the Attorney General as the government’s highest legal official. (Cal. Const., art. V, § 13 [“[T]he Attorney General shall be the chief law officer of the State.”].) “As such he possesses not only extensive statutory powers but also broad powers derived from the common law relative to the protection of the public interest. [Citations.] . . . ‘[/]n the absence of any legislative restriction, [he] has the power to file any civil action or proceeding directly involving the rights and interests of the state . . . .’ [Citation.]” (D’Amico, supra, 11 Cal.3d at pp. 14-15, italics added.) In deciding who is entitled to bring suit on behalf of the state and its subdivisions, courts thus start with the presumption that the government officer authorized to represent the state and subordinate elements of government is the Attorney General. They then look for some affirmative indication that the Legislature has made a contrary designation.

At the federal level, the conclusion we reached in D’Amico, supra, 11 Cal.3d 1, is imposed by statute, reflecting a kind of nationwide template that has been around since the formative years of the republic. Section 516 of title 28 of the United States Code provides: “Except as otherwise authorized by law, the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, and securing evidence therefor, is *1163reserved to officers of the Department of Justice, under the direction of the Attorney General.” The federal Court of Appeals for the Fifth Circuit has said of section 516 that it means “when an agency is given specific authorization to proceed without the assistance or supervision of the Attorney General it may do so.” (I.C.C. v. Southern Ry. Co. (5th Cir. 1976) 543 F.2d 534, 538, italics added.) Absent specific authorization, and given the Attorney General’s “plenary power and supervision over all government litigation,” federal agencies lack the authority to proceed without Department of Justice approval and representation. (Id. at p. 535.) This principle of representational authority, the Fifth Circuit went on to say, “not only centralizes responsibility for the conduct of public litigation but enables the President, through the Attorney General, to supervise the various policies of the executive branch.” (Id. at p. 536; see also The Confiscation Cases (1868) 74 U.S. (7 Wall.) 454, 458 [19 L.Ed. 196].)

Yet according to the majority’s logic, not just the Attorney General is authorized to file multicounty Cartwright Act suits. All of the state’s 58 counties, all of its 470-plus cities, all of the 4,500 school districts, and all of the many less-well-known agencies and subunits of the state’s political organization are authorized by section 16750, subdivision (b) to file such suits as well. Finally, California’s 58 district attorneys, whose authority, as the majority acknowledges, is limited by statute to cases in which the asserted antitrust injury is “local,” must also be counted among those who may institute suit. Conflating “capacity” and “authority,” and reading subdivisions (a) and (b) as if the rest of section 16750 did not exist, the majority concludes the amendments of 1961 and 1977 were not intended to rationalize enforcement of multicounty antitrust claims on behalf of government entities by concentrating them in a central authority. They were meant, the majority concludes, to achieve the opposite result: enlarging the class of government entities authorized to file multicounty antitrust suits.

III

We do not need unpronounceable Latin phrases (“expressio unius est exclusio alterius”), string citations, or Sutherland on Statutory Construction to know a statute made up of parts ought to be read as a whole, integrating its subdivisions so that each has meaning, the statute in its entirety makes sense and is faithful to the apparent legislative purpose. The majority nevertheless insists on reading subdivisions (a) and (b) of section 16750 as “stand alone” provisions unrelated to the rest of the statute. The result is what often happens when parts of a statute are read in isolation—some are robbed of all meaning, while the content of others is distorted.

Originally enacted in 1907, section 16750 of the Cartwright Act underwent a major legislative overhaul in 1961. (Stats. 1961, ch. 1023, § 1, pp. *11642705-2706.) In that year, the Legislature added what is now subdivision (b), providing that the state and its political subdivisions are “a person” within the meaning of subdivision (a), the provision that confers a cause of action for damages on those injured by certain kinds of proscribed business conduct. (Stats. 1961, ch. 1023, § 1, p. 2706, italics added.) As the Legislature described subdivision (b) at the time it was enacted, it was “added to . . . section [16750] for the purpose of clarification only and is not to be construed or interpreted as an indication that the State or any of its political subdivisions or public agencies is not a person within the meaning of Section 16750 as originally enacted .... The Legislature hereby further declares that at the time of the original enactment of Section 16750, and at all times since, it intended that the State, its political subdivisions and public agencies be included within the meaning of the word ‘person.’ ” (Stats. 1961, ch. 1023, § 2, p. 2706.)

Also in 1961, the Legislature amended another Cartwright Act statute, section 16754, to authorize county district attorneys to file civil or criminal antitrust proceedings alleging violations “on the order of the Attorney General.” (Stats. 1961, ch. 757, § 1, p. 2013.) In 1977, however, after the Attorney General had expressed concern that the decentralization of authority to file such proceedings effected by the 1961 amendment would hobble his office’s control over antitrust litigation on behalf of the government, the Legislature again amended section 16750. The compromise it settled on is reflected in subdivision (g) as it reads today. That provision limits the authority of county district attorneys to file Cartwright Act proceedings to cases in which “it appears that the activities giving rise to [the proceeding] or the effects of such activities occur primarily within such county.” (§ 16750, subd. (g), added by Stats. 1977, ch. 540, § 1, p. 1743, italics added.)

What could have been the Legislature’s motive in enacting subdivision (g) of section 16750 if, as the majority concludes, counties and other subdivisions already had the authority to file Cartwright Act proceedings? We can hardly suppose the Legislature labored over this dense, reticulated scheme to add yet another layer to the host of government lawyers who, under the majority’s reading, were already authorized to file Cartwright Act suits. On the other hand, if as I believe, only the Attorney General was (and is) authorized to institute such proceedings, the addition of subdivision (g) is eminently sensible. Leaving intact the Attorney General’s central command over multicounty Cartwright Act government claims litigation, the 1977 amendment sensibly parceled out to county district attorneys the authority to institute suit where the effects of the proscribed business conduct are local. (§ 16750, subd. (g).) And as a check on the possibility of litigative improvidence, subdivision (g) requires district attorneys contemplating such suits to *1165file with the Attorney General an advance copy of the proposed complaint “together with a confidential memorandum and report explaining the facts giving rise to the proposed prosecution and supporting the filing of the new complaint.” (Ibid.) Finally, the 1977 amendment provides that if the Attorney General deems it “in the public interest,” he “may take full charge of any such investigation or prosecution . . . .” (Ibid.)

I am at a loss to imagine what these restraints were intended to accomplish if they do not manifest a legislative intention to insure a continuation of central control over the filing of multicounty Cartwright Act and related antitrust proceedings. Of a similar scheme enacted by another state Legislature, the federal Fourth Circuit Court of Appeals has written: “[C]ommon sense dictates that when an alleged wrong affects governmental units on a state-wide basis, the state should seek redress on their behalf as well as on its own rather than parcelling out the actions among local agencies. However, to ease the administrative burden on the Attorney General’s office, when a single local [government entity] is wronged, that unit should individually pursue the remedy .... This is the scheme, we believe, that the North Carolina Legislature had in mind when it adopted [the statute at issue].” (Nash County, supra, 640 F.2d at p. 496, fn. omitted.) That, I suggest, is this case.

Conclusion

We ought to give more thought to the potential impact of today’s ruling —on California as an organized scheme of government, on the state’s relation to its constituent political departments, on those who pay taxes and do business here. The result reached by the majority is a crazy quilt of overlapping, conflicting authority to file multicounty antitrust litigation willy-nilly, one likely to generate needless intergovernmental conflict and conclude prematurely some public antitrust claims on res judicata grounds. It amounts to a judge-drawn scheme especially inadvisable in antitrust litigation. In the entire domain of public regulatory law, the field of antitrust, with its “rule of reason” standards, sophisticated economic analysis, and often fine line between restraining predatory practices and stifling beneficial economic competition, seems the least likely candidate for the fractured and diffused litigative authority upheld by the majority.

Antitrust litigation brought by the Attorney General is more likely to be taken seriously by a targeted defendant. Not only does that office have greater investigative resources, expertise and staying power, but the fact that the state’s highest legal office has placed its imprimatur on the pleadings— implicitly representing the complaint as reflecting that office’s considered views of the public interest—adds heft to allegations of antitrust misconduct. *1166These observations, of course, have lost their force now that the majority’s view has become the law of California. In their place, we are apt to be treated to a horse race of multicounty Cartwright Act suits brought by any number of political subdivisions, a spectacle that will not only undermine the weight accorded centrally vetted antitrust filings, but one likely to generate confusion in several areas—issue preclusion, collateral estoppel, and the practicability of effective settlements among them.

Nor should we lose sight of the fact that the check on the filing of ill-conceived antitrust litigation that follows from the Attorney General’s centralized control over the decision to initiate suit strengthens the government’s hand by promoting a thorough presuit scrutiny. The unspoken proposition underlying the majority’s conclusion seems to be that the economic interests of the counties have a dignity equal to that of the state. If so, the argument might run, counties must have an equal right to decide for themselves whether to file Cartwright Act proceedings. Suppose the Attorney General declines to institute suit to challenge business practices that two or more counties believe harm their economic interests. What then? Are these units of government to be left without an antitrust remedy?

The answer may sometimes be “yes.” But that is not quite the catastrophe the majority evidently apprehends. “Counties under the scheme of California government are ‘mere subdivisions of the State.’ (Cal. Const., art XI, § 1.)” (Byers v. Board of Supervisors (1968) 262 Cal.App.2d 148, 155 [68 Cal.Rptr. 549]; see also Hicks v. Board of Supervisors (1977) 69 Cal.App.3d 228, 242 [138 Cal.Rptr. 101].) Joined to that contingent legal status is the practical reality: If government is to protect the economic security of its constituent parts and act with the deliberative fairness California’s citizens are entitled to expect, someone must be in charge. The alternative fractures the unitary system of government contemplated by our Constitution and, to borrow a still powerful metaphor from the ancient world, drives a wedge between the state’s head and its constituent body. (Plato, The Republic.) Because, unlike the majority, I do not believe the counties’ capacity to sue must inevitably trump the broader community interest in cooperation, I dissent.