Wednesday, May 09, 2012

Day Care Center’s Antitrust Claims Against State, County Officials Rejected

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

A defunct Ohio day care center, which was unable to obtain a renewal license in light of its alleged failure to provide a safe environment for children, did not allege an antitrust injury to support Sherman Act, Sec. 1 claims against officials at the Ohio Department of Job and Family Services, the U.S. Court of Appeals in Cincinnati has decided.

The day care center alleged that the state agency implemented an improper process of responding to license renewal applications as a means to control the day care market and drive disfavored businesses out of the market. However, it provided no facts, beyond mere conclusory statements, to support the allegation that the state agency’s procedures harmed competition. The day care center failed to state a claim to relief that was plausible on its face. Dismissal of claims against employees of the state agency was affirmed.

Local Government Antitrust Act

The appellate court also upheld dismissal of the center’s antitrust claim against employees of a county agency. The Local Government Antitrust Act shielded the county defendants from antitrust liability for the agency’s decision to discontinue providing public assistance for the center’s child care services. The county employees were acting in their official capacity when negotiating funding contracts with the day care center. The negotiation of the funding contracts fell within the “general responsibilities and objectives” of the county defendants’ positions, the court explained.

Although the day care center contended that the county officials undertook this general responsibility with an improper motive, the defendants’ motives were irrelevant, according to the court.

The decision is Wee Care Child Center, Inc. v. Lumpkin, 2012-1 Trade Cases ¶77,881.

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