Ninth Circuit Court of Appeals Concluded the City Is Immune from a Claim Under the Sherman Antitrust Act as the Policy Undermining Competition Was Authorized by the State

This post was authored by Olena Botshteyn, Esq.

David Meyberg commenced this action after being denied an operating permit for his surf school, asserting violation of the Sherman Antitrust Act, as the city limited the number of permits available, as well as violation of the First Amendment rights, arguing that the City employee prevented him from operating his surf school in retaliation for prior litigation. The district court dismissed the action, and Meyberg appealed.

On appeal, the court concluded that both Meyberg’s claims fail. First, it determined that the city is immune from a claim under the Sherman Antitrust Act. The Supreme Court has previously held that local governments are immune as long as the challenged action was “undertaken pursuant to a ‘clearly articulated and affirmatively expressed’ state policy to displace competition,” authorized by the state. Both the California Government Code and the Coastal Act provide for expressly delegated zoning authority by the state to the city, and with the aim of promoting conservation of coastal zone resources the city was authorized to limit business activity on public beaches. Accordingly, the court concluded that the city was entitled to limit the number of surf school permits available.

Further, with respect to the First Amendment violation, Meyberg claimed that a City employee, Carol Scurich, was a party in a 2007 lawsuit in which he acted as counsel, and therefore, her actions in denying a permit can be regarded as retaliation. The court ultimately concluded that Meyberg failed to provide evidence that “the protected activity was a substantial or motivating factor in Scurich’s conduct.” The court thus affirmed the decision of the district court.

Meyberg v City of Santa Cruz, 2021 WL 3630226 (9th Cir CA 8/17/2021)