The Supreme Court, in a major victory for local governments, decided yesterday that cities have broad power to regulate local businesses without running afoul of antitrust laws.
Acting in a rent-control dispute from Berkeley, Calif., the court ruled 8 to 1 that a broad array of common city regulatory actions are virtually immune from lawsuits charging that they violate federal laws against price-fixing.
Justice Thurgood Marshall, writing for the majority in Fisher v. City of Berkeley, said the 1890 Sherman Antitrust Act was aimed at conspiracies or "concerted action" by businesses to control markets, not city regulatory actions on private businesses. Berkeley's law, Marshall said, was "unilaterally imposed by government upon landlords to the exclusion of private control," and there was no indication of a "conspiracy among landlords or between the landlords and the municipality."
The ruling was hailed as a victory for local governments still reeling from the effects of Supreme Court rulings that exposed cities and city officials to triple damages in the event they lost antitrust suits.
The court said in 1978 that cities could be held liable for unfair practices unless they could show that those practices had state approval.
That ruling, along with one in 1982 involving cable television in Boulder, Colo., prompted hundreds of lawsuits claiming violations of antitrust laws by local governments and officials. The high court last year increased municipal immunity from such suits. Yesterday's ruling went further, to the delight of city officials.
"It is a major ruling for cities dealing not only with rent control but all other kinds of regulations such taxicabs, trash collection, parking, ambulances, airport operations and other municipal services," said Joyce Holmes Benjamin, an attorney for the National League of Cities.
"The decision should free cities from the fear of litigation every time they enact some regulatory ordinance setting taxicab rates, for example, or granting franchises," she said.
The ruling provoked a strong dissent from Justice William J. Brennan Jr., who said the "court is holding that a municipality's authority to protect the public welfare should not be constrained by the Sherman Act," and that the decision "discards over 40 years of carefully considered precedent."
In another action, the justices, handing a setback to right-to-work groups and the Reagan administration, unanimously struck down a National Labor Relations Board ruling that allowed nonunion workers a vote in union decisions about whether to affiliate with an international union or merge with another union. Brennan said the NLRB, controlled by appointees of President Reagan, "exceeded its authority" by trying to give "the employer the power to veto an independent union's decision to affiliate, thereby allowing the employer to directly interfere with union decision-making."
AFL-CIO lawyer David Silberman said the ruling is significant because there is a growing tendency among smaller unions to merge. Had the NLRB's decision been upheld, such mergers would have been more difficult, he said.
Silberman said the ruling in National Labor Relations Board v. Financial Institution Employees of America, Local 1182 is unusual because in recent years the court rarely has overridden an NLRB ruling favoring employers.
In a second labor case, the court unanimously overturned a Wisconsin statute that prohibited state agencies from doing business with companies that repeatedly violated federal labor laws. Justice Harry A. Blackmun, writing for the court in Wisconsin v. Gould, said that the state law improperly acted as a supplemental punishment for violations of the National Labor Relations Act and that federal law preempted the state regulation.