Justiciability, constitutional and prudential standing: predatory pricing statute does not protect governmental "competitors" not engaged in "commerce".

 Franklin County Sheriff's Office v. St. Albans City Police Department (2011-266) (03-Aug-2012) (Reiber, C.J.)  

In this predatory pricing suit, the Franklin County Sheriff’s Office appeals the trial court’s judgment in favor of the St. Albans City Police Department.  The Sheriff’s Office contends that the City Police Department engaged in an unfair method of competition with the intent to harm competition under the Vermont Consumer Fraud Act’s (VCFA) predatory pricing provision, 9 V.S.A. § 2461c.  Specifically, the Sheriff’s Office argues that the City Police Department submitted an “artificially low” bid in response to the Town of St. Albans’s request for proposals for law enforcement services.  We affirm because the Sheriff’s Office was not denied something in which it had a legally protected interest, nor is its claim within the zone of interests protected by the statute, and it therefore lacks both constitutional and prudential standing.

Because it is a threshold requirement, we first address the question of standing.  Vermont courts are limited to deciding actual cases or controversies.   An element of the case-or-controversy requirement is that a plaintiff must have standing—that is, “must have suffered a particular injury that is attributable to the defendant and that can be redressed by a court of law.”  To bring a case, a plaintiff must show “(1) injury in fact, (2) causation, and (3) redressability.”  Standing also embodies a prudential component of self-imposed judicial limits under which a plaintiff’s complaint must “‘fall within the zone of interests protected by the law invoked.’”

The claim does not meet  the injury-in-fact element of constitutional standing.  This element requires an invasion of a legally protected interest, not a generalized harm to the public.  The VCFA prohibits engaging in predatory pricing because it is an unfair method of competition in commerce. The Town was under no obligation to entertain bids for police services in the first instance, or to award the contract to the lowest bidder.  Fundamentally,  the provision of police services in Vermont occurs outside the realm of commerce because it involves no interchange of goods or commodities on the open market.  It is a governmental function provided only by governmental entities for the benefit of the public.  We conclude that no commerce existed in this case. The Sheriff’s Office has no legally protected right to “fair competition” with other statutorily created government entities to provide police services to the Town.

Second, the claim does not meet the requirements of prudential standing, which demands that the Sheriff’s Office’s complaint fall within the zone of interests protected by the predatory pricing statute.  Predatory pricing in its orthodox form exists where a single firm, having a dominant share of the relevant market, cuts its prices in order to force competitors out of the market, or perhaps to deter potential entrants from coming in. Here, the “competitors” are all statutorily created entities, meaning that one entity cannot put another out of business. There is no threat of monopolization by any one of them.  Thus, the Sheriff’s Office’s injuries alleged in the complaint do not fall within the zone of interests to be protected by Vermont’s predatory pricing statute.