State law antitrust claims in North Carolina seem to go together with unfair and deceptive trade practices claims (Chapter 75 claims) like peanut butter and jelly.  Section 75-2 of the General Statutes says that “any act, contract, combination in the form of trust, or conspiracy in restraint of trade or commerce which violates the principles of the common law” is a violation of the unfair and deceptive trade practices law.

So why did Business Court Judge Robinson dismiss the UDTPA claim in the antitrust lawsuit (at the Rule 12 stage) in DiCesare v. Charlotte-Mecklenburg Hospital Auth., 2019 NCBC 13 ?

He did so because of his decision that quasi-municipal corporations are exempt from liability under Chapter 75.

Never heard of a quasi-municipal corporation?  It is defined as “a corporation vested with . . . municipal powers for the accomplishment of a limited municipal purpose.”  The Charlotte-Mecklenburg Hospital Authority, the Defendant, said that it was a quasi-municipal corporation and therefore not subject to a Chapter 75 claim.  The Plaintiff said that the Defendant didn’t have that status, and that the question of its status was a question of fact which couldn’t be resolved on a motion to dismiss.

Judge Robinson, before reaching the question of the Defendant’s legal status, decided whether quasi-municipal corporations were exempt from Chapter 75 claims.  He ruled that they were, relying on a 2018 decision from the North Carolina Court of Appeals, Badin Shores Resort Owners Ass’n v. Handy Sanitary Dist., 811 S.E.2d 198 (N.C. Ct. App. 2018).  The Badin Shores Court held that the Defendant there, “as a quasi-municipal corporation it cannot be sued for unfair and deceptive trade practices.”  Id. at 210.

What gives quasi-municipal corporations their special status?  They derive their existence from the State, and Chapter 75 applies only to persons, firms, and corporations.  N.C. Gen. Stat. § 75-16.  The State of North Carolina is none of those things, so it is exempt from the statute.  The question of the State’s exposure to unfair and deceptive trade practices claims has been decided since 1985, with the COA’s decision in Sperry Corp. v. Patterson, 73 N.C. App. 123, 125, 325 S.E.2d 642, 644-45 (1985)(“The State of North Carolina is not a ‘person, firm or corporation within the meaning of G.S. 75-16. . . .”)

Though the Badin case seemed to answer the question of the inapplicability of Chapter 75 to quasi-municipal corporations, Judge Robinson had to distinguish a possibly conflicting NC Supreme Court decision, Madison Cablevision, Inc. v. City of Morganton, 325 N.C. 634, 386 S.E.2d 200 (1989) to reach that conclusion.

The Plaintiff took a run at arguing that the Defendant wasn’t a quasi-municipal corporation anyway, and that this status was a question of fact which the Court couldn’t resolve at the Rule 12 stage.  The Business Court ruled that this was a question of law based upon statutory construction and not a question of fact.  The Defendant’s Certificate of Incorporation stated that it was “incorporated as a public body and a body corporate and politic.”  The legislation by which it was formed, the Hospital Authorities Act, declared it to be the same.  The term “body politic and corporate” encompasses quasi-municipal corporations. Op. ¶33.

With those issues decided, the Court dismissed the Plaintiff’s UDTPA claim.  But the Plaintiff’s core antitrust claim survived.

How Much Of The Market Does An Alleged Monopolist Need To Control?

The Defendant Hospital Authority argued that the Plaintiff’s antitrust claim was deficient because it did not allege that competition had been eliminated in the Charlotte area.  it further argued that the Complaint was self-defeating because it alleged that there were other healthcare providers in the Charlotte area which competed with the Defendant.

The need for total elimination of any competition is inconsistent with how the NC Supreme Court has defined an entity which holds a “monopoly.”  Judge Robinson observed that the NC Supreme Court has defined a “monopolist” as “an organization or entity so magnified that it suppresses competition and acquires a dominance in the market.” Op. at ¶38 (quoting American Motor Sales Corp. v. Peters, 311 N.C. 311, 315−16, 317 S.E.2d at 351, 355 (1985).

The Court therefore denied Plaintiff’s Motion for Judgment on the Pleadings as to the monopolization claim.  Op. ¶42.

Certification For Immediate Appeal

Judge Robinson, acting per NCRCP 54(b), certified his Opinion for immediate appellate review.  He wrote that “[t]he issue of the applicability of Chapter 75 to hospital authorities decided by the Court today has importance beyond this case.”  Op. ¶45.

I have no idea how many quasi-municipal corporations there are in North Carolina, but this decision may well have some impact.

A Notice of Appeal hasn’t been filed.  Yet.