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MODESTO IRRIGATION DISTRICT v. PACIFIC GAS AND ELECTRIC

United States District Court, N.D. California


March 18, 2004.

MODESTO IRRIGATION DISTRICT, Plaintiff,
v.
PACIFIC GAS AND ELECTRIC COMPANY, Defendant

The opinion of the court was delivered by: MARILYN PATEL, Chief Judge, District

MEMORANDUM AND ORDER Motion for Summary Judgment

On August 3, 1998, plaintiff Modesto Irrigation District ("MID") filed a complaint in this court against defendant Pacific Gas and Electric Company ("PG&E").*fn1 In pertinent part, MID's complaint alleges that PG&E violated the Sherman Act, 15 U.S.C. § 1, 2, and related provisions of state law when it attempted to prevent MID from offering electric services in Pittsburg, California. On February 2, 1999, this court dismissed MID's clams under Federal Rule of Civil Procedure 12(b)(6), granting MID leave to amend. See Modesto Irrigation Dist. v. Pacific Gas & Elec. Co., No. C 98-3009 MHP, slip op. at 12-13 (N.D. Cal. 1999). MID filed its first amended complaint on March 4, 1999, and this court again dismissed the action under Federal Rule of Civil Procedure 12(b)(6). See Modesto Irrigation Dist. v. Pacific Gas & Elec. Co., 61 F. Supp.2d 1058 (N.D. Cal. 1999) (denying leave to amend). In an unpublished disposition, the Ninth Circuit reversed. Modesto Irrigation Dist. v. Pacific Gas & Elec. Co., 54 Fed. Appx. 24882 (9th Cir. 2002).

Two weeks after the Ninth Circuit entered its decision, MID filed a second amended complaint in this court. The parties subsequently agreed that resolution of PG&E's eleventh affirmative defense (viz., that MID failed to comply with particular provisions of California law, thus eliminating the prospect of cognizable antitrust injury) might dispose of the action in its entirety; the parties also agreed that a summary judgment motion regarding PG&E's eleventh affirmative defense could be adequately briefed on stipulated Page 2 facts and considered without additional discovery. Now before the court is PG&E's motion for summary adjudication of its eleventh affirmative defense. The court has considered the parties arguments fully, and for the reasons set forth below, the court rules as follows.

 BACKGROUND*fn2

  Pacific Gas & Electric Company, a California corporation, is authorized by the California Public Utilities Commission (PUC) to provide electric services to certain parts of California.*fn3 See Second Am. Compl., ¶¶ 3-12 (noting, inter alia, that PG&E is the predominate wholesaler and retailer of electric power in Northern and Central California, controlling most of the related facilities). An investor-owned utility ("IOU"), PG&E owns and operates facilities for the generation, transmission, and distribution of electric power throughout much of Northern and Central California, including, notably, the City of Pittsburg. See Request for Judicial Notice, Exh. 8 at p. 3. As an IOU, PG&E is required to obtain a Certificate of Public Utilities Convenience and Necessity ("CPUCN") from PUC before it may develop or extend electricity-related facilities in specific service territories. See Cal. Pub. Util. Code § 1001; see generally Greyhound Lines. Inc. v. Pub. Utilities Comm'n, 68 Cal.2d 406, 412 & n.3 (1968) (noting that this certification process prevents waste of resources and protects lOUs against improper competition). During the period at issue in this litigation, PG&E held a CPUCN that permitted it to distribute electricity to all residents of Pittburg, California. See Stip. of Facts, ¶ 8. All residential and commercial residents of Pittsburg wishing to receive electric services did, in fact, receive electric services from PG&E. See id. at ¶ 7. Praxair, Inc., a manufacturer of industrial gases and a large consumer of electric power, is located in Pittsburg; like all other Pittsburg residents, Praxair receives its electric services from PG&E. Id. at ¶ 5.

  Modesto Irrigation District is a state-recognized irrigation district organized pursuant to California Irrigation District Law. See Cal. Water Code §§ 20500, et seq. Among its utility-related ventures, MID owns and operates facilities for the generation, transmission, and distribution of electric power in a portion of Stanislaus County, California. As its name suggests, MID is a "district" under California law, see Cal. Gov't Code § 56036 (defining "district" as an "agency of the state . . . for the local performance of governmental or proprietary functions within limited boundaries . . . "); as such, MID is an entity of limited powers, and it has specifically circumscribed geographic and "sphere of influence"*fn4 boundaries. See Stip. Page 3 of Facts, ¶¶ 9 & 12.*fn5 No part of Contra Costa County, California — in which Pittsburg sits — falls within MID's existing service area or "sphere of influence." Id. at ¶ 15.

 I. The Contracts and MID's Plan

  In 1994, PG&E entered a Control Area and Transmission Service Agreement with Dynergy Power Services, Inc., a power marketer and a wholesaler of electricity. See Stip. of Facts, ¶ 16; Mayer Decl., Exh. B. Approved by the Federal Energy Regulatory Commission ("FERC"),*fn6 the agreement permitted Dynergy to use PG&E's transmission lines for wholesale electricity customers, but it did not authorize Dynergy to serve any of PG&E's retail (or "end-user") customers. Id.*fn7 In early 1996 — at a time roughly contemporaneous with a legislative effort to revamp California's retail electricity industry-MID and Dynergy developed a complicated business plan to provide electric distribution service to one or more retail customers in Pittsburg. Id. at ¶ 1. The plan involved a series of contracts between MID, the City of Pittsburg, Dynergy, and others;*fn8 and it depended on MID's acquisition of a Praxair substation, through which MID hoped to distribute power (at a retail rate) to Praxair itself. See id. at ¶¶ 17-19; see also Second Am. Compl, ¶¶ 15-18 (noting that a "substation" is a facility that receives high-voltage electric power, converting that power into lower, usable voltages for distribution to consumers); Mayer Decl., ¶ 9 (identifying the "Linde" substation as the one targeted — and as one of multiple Praxair sites); id. at Exhs. C & D (Permission Agreement and Equipment Sales Agreement).*fn9

  With these complex contractual arrangements in place, Dynergy and MID asked PG&E to enter an "interconnection agreement" which would require PG&E to commence delivery of power to the Praxair substation. See Second Am. Compl., ¶ 24; see also First Am. Compl. (alleging that PG&E had agreed to a similar agreement — with Dynergy — regarding provision of service and resale opportunities in the Port of Oakland). PG&E refused. Id.

 II. FERC Petitions and the Statutory Framework

  A round of petitions to FERC followed. PG&E filed the first petition with FERC, alleging, inter alia, that MID's plan with Dynergy constituted a "sham wholesale" transaction designed to allow MID to select (and to serve) only those retail customers that would be particularly profitable to MID. See, e.g., Page 4 Req. for Judicial Notice, Exhs. 3 & 6.*fn10 Both Dynergy and MID opposed PG&E's petition, and MID later filed its own application with FERC, asking that PG&E be compelled to interconnect the Praxair substation. See id. at Exhs. 4 & 5. PUC later intervened on PG&E's behalf, concurring with PG&E that MID's business plan contravened the terms of applicable California law, particularly the Cortese-Knox Local Government Reorganization Act. See id. at Exh. 6.*fn11

  The Cortese-Knox Local Government Reorganization Act, see Cal. Gov't Code §§ 56000, et seq. ("the Act"),*fn12 is a detailed statutory scheme governing, inter alia, control of urban sprawl. See, e.g., City of Shasta Lake v. County of Shasta, 75 Cal.App.4th 1, 6 (Cal.App. 1999). To facilitate local resource management, the Act contemplates the creation of local agency formation commissions ("LAFCOs")*fn13 in each county of California, see Cal. Gov't Code § 56325, and it empowers LAFCOs to make decisions on a variety of urban planning issues. See, e.g., id. at §§ 56001 (noting that LAFCOs are "single multipurpose governmental agencies" charged with controlling "the process of municipality expansion"), 56375, 56021. Decisions regarding the scope and potential extension of utility services (e.g., electric services), for example, fall within a county LAFCO's purview. See Cal. Gov't Code §§ 56133, 56375; see also Tillie Lewis Foods. Inc. v. City of Pittsburg, 52 Cal.App.3d 983, 995 (Cal.App. 1975).

  Many of the Act's provisions delineate LAFCO and utility-provider rights and obligations. Id. Section 56133 of the Act, for example, discusses where and when a city or district may expand the electric services it provides:

A city or district may provide new or extended services by contract or agreement outside its jurisdictional boundaries only if it first requests and receives written approval from the [LAFCO] in the affected county.
Cal. Gov't Code § 56133(a). Subsections (b) and (c) of section 56133 posit the limited contexts in which a LAFCO may authorize a city or district to provide new or extended services outside its jurisdictional boundaries: Subsection (b) allows such authorization only where the desired extension would fall "within [a district's] sphere of influence in anticipation of a later change of organization"; subsection (c) permits such authorization where the relevant extension is intended "to respond to an existing or impending threat to the public health or safety of the residents of the affected territory. . . ." Id. at § 56133(b)-(c) (adding, for subsection (c), that the entity applying for the contract must provide "documentation of a threat to the health Page 5 and safety of the public or the affected residents" and ensure that the committee has notified "any alternate service provider . . . that has filed a map and a statement of its service capabilities with the commission"). Subsection (e) of section 56133 denotes a handful of contexts in which the mandates of section 56133 do not control ex ante.

  When MID attempted to distribute electricity to Contra Costa County (that is, to Pittsburg), it did not request or receive approval from Contra Costa County's LAFCO. See Stip. of Facts, ¶¶ 22-23. Instead, MID believed that section 56133 did not apply to its electricity-distribution activities at all, so LAFCO preapproval was neither required nor sought. Id. at ¶ 24. The validity of MID's interpretation of section 56133 is the legal question at the core of this action.

 III. Procedural Posture and Analogous Litigation

  An identical legal question — based on an identical MID theory — spurred a brief round of state court litigation, albeit on minimally different facts. See PG&E v. MID, Stanislaus County Superior Court, No. 227034. In the late 1990s, MID expanded its electricity-distribution services into the so-called "Four Cities Area" of California.*fn14 MID did so without seeking or securing LAFCO preapproval. In fact, MID expanded into the Four Cities Area without complying with any of the terms of section 56133, growing outside its established "sphere of influence" boundaries into an area already served by PG&E — precisely like the move into Pittsburg.

  PG&E believed that MID's Four Cities Area expansion contravened state law (viz., section 56133), and, seeking to prevent the move, PG&E filed an action against MID in Stanislaus County Superior Court. The state trial court agreed with PG&E's interpretation of section 56133, finding that section 56133 applies to MID and that MID is not otherwise excused from the section's procedural mandates. See Req. for Judicial Notice, Exhs. 1 & 2. MID appealed. During the pendency of that appeal, the California legislature enacted California Public Utilities Code sections 9610 and 9611, which, taken together, grant MID express — and expressly limited-authority to serve customers in the Four Cities Area without LAFCO pre-approval. See Cal. Pub. Util. Code §§ 9610, 9610. California's Court of Appeal held that this intervening legislative act mooted the Four Cities Area controversy between MID and PG&E, and the appellate court reversed the trial court's decision. See Req. For Judicial Notice, Exh. 8 Page 6 (opinion filed January 7, 2003). The state appellate court's decision did not reach the substance of the section 56133 question. See id.

  As the parties litigated the Four Cities Area matter in state court, MID filed a complaint against PG&E and Dynergy in this court. In relevant part, MID's complaint alleges that PG&E's efforts to prevent MID's expansion into Pittsburg were unlawfully anti-competitive and monopolistic under the Sherman Act, 15 U.S.C. § 1, 2, and related provisions of state law. PG&E filed a timely answer, raising a number of affirmative defenses. On February 2, 1999, this court dismissed MID's clams under Federal Rule of Civil Procedure 12(b)(6), granting MID leave to amend. See Modesto Irrigation Dist. v. Pacific Gas & Elec. Co., No. C 98-3009 MHP, slip op. at 12-13 (N.D. Cal. 1999). MID filed a first amended complaint on March 4, 1999, and this court again dismissed the action under Federal Rule of Civil Procedure 12(b)(6), this time denying leave to amend. See Modesto Irrigation Dist. v. Pacific Gas & Elec. Co., 61 F. Supp.2d 1058 (N.D. Cal. 1999). In an unpublished disposition, the Ninth Circuit reversed, see Modesto Irrigation Dist. v. Pacific Gas & Elec. Co., 54 Fed. Appx. 882 (9th Cir. 2002), and MID promptly filed a second amended complaint in this court. The parties subsequently agreed that court resolution of PG&E's eleventh affirmative defense (viz., that MID failed to comply with particular provisions of California law, thus eliminating the prospect of cognizable antitrust injury) could dispose of the action in its entirety; the parties also agreed that a summary judgment motion regarding PG&E's eleventh affirmative defense could be adequately briefed on stipulated facts and considered without additional discovery. PG&E has now filed a motion for summary judgment on its eleventh affirmative defense.

 LEGAL STANDARD

  Under Federal Rule of Civil Procedure 56, summary judgment shall be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Fed.R.Civ.P. 56(c). When making a summary judgment motion, the moving party bears the initial burden of identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. To discharge this burden, the moving party must show that the nonmoving party has failed to disclose the existence of any "significant Page 7 probative evidence tending to support the complaint." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 290 (1968). If the moving party satisfies this initial hurdle, the burden then shifts to the nonmoving party to "go beyond the pleadings, and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp., 477 U.S. at 324 (citations omitted).

  Not all disputes that arise in the course of litigation constitute genuine issues of material fact. A dispute about a material fact is genuine — and thus adequate to survive a motion for summary judgment —"if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). When considering motions for summary judgment, the court views the facts — and the inferences drawn therefrom — in the light most favorable to the party opposing the motion. See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractor's Ass'a, 809 F.2d 626, 631 (9th Cir. 1987). In this process, the court does not make credibility determinations. See Anderson, 477 U.S. at 249.

  When interpreting a statute, the court must start with the statutory language itself, see Gwaltney of Smithfield v. Chesapeake Bay Found., 484 U.S. 49, 56 (1987), reading that language in appropriate context and adhering to ordinary meaning unless the statute itself indicates otherwise. See PDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2001); Perrin v. United States, 444 U.S. 37, 42 (1979); United States v. Lewis, 67 F.3d 225, 228-29 (9th Cir. 1995) (adding that statutory phrases must be "construed in light of the overall purpose and structure of the whole statutory scheme").

 DISCUSSION

  To resolve PG&E's motion for summary adjudication, the court must decide whether or not MID is subject to the terms and requirements of California Government Code section 56133. This question is, in many ways, a straightforward one, but before the court can answer it, the court must first address a series of ancillary issues. The court must determine what status MID retains as an electricity provider in California; the court must decide what statutes apply to MID as a matter of state law, assessing whether MID's rights under California law are too inconsistent to coexist; the court must resolve whether any of section 56133's exceptions or related provisions shield MID's conduct; and, finally, the court must decide Page 8 whether, in light of the court's other conclusions, MID can possibly prove antitrust injury. The court addresses each of these questions below.

 I. MID's Status, the California Constitution, and the Threshold Applicability of Section 56133

  For nearly a century, irrigation districts> in California have been permitted to produce, to distribute, and to sell electricity. See Turlock Irrigation Dist. v. Hetrick, 71 Cal.App.4th 948, 951 (Cal. App. 1999) (recounting at length the history of California's irrigation districts>; citing Stats. 1919, ch. 370, § 1, p. 788). During this time, California's courts have struggled to delimit the "exact legal nature of districts>" like MID. Id. (attributing this difficulty in part to "the hopelessness of confining districts>, public corporations, or municipal corporations within [a] neat box of definition" and in part to the many roles districts> play) (internal quotation marks omitted). As a consequence, California's courts have not formulated a "general rule" — or derived a standard label — for entities like MID. Id. Instead, California's courts have looked to the nature of the entity at issue, eschewing wholesale reliance on labels. Id.; see also California Apartment Assn. v. City of Stockton, 80 Cal.App.4th 699, 707 (Cal.App. 2000); Cucamonga County Water Dist. v. Southwest Water Co., 22 Cal.App.3d 245, 257 (Cal.App. 1971).

  Still, perhaps because the state courts have crafted no "general rule," irrigation districts> persist in arguing that they are "municipal corporations" under California's constitution, equipped, as such, with the authority and the unfettered right to provide utility service state-wide. See Id. at 950-51; see also County of Fresno v. Malaga County Water Dist., 100 Cal.App.4th 937, 944 (Cal.App. 2002); Cal. Const. Art. XI, § 9(a). MID made precisely that claim in the analogous Four Cities Area state court litigation, and it restates precisely that claim here.

  It is no great mystery why MID would prefer to be categorized outright as a "municipal corporation"*fn15 under the California Constitution. Article XI, section 9(a) of the California Constitution allows "municipal corporation[s] [to] establish, purchase, and operate public works to furnish its inhabitants with light, water, [and] power," and it permits municipal corporations to "furnish those services outside [district] boundaries. . . ." Cal. Const. Art. XI, § 9(a) (emphasis added). Were MID a true and unqualified "municipal corporation" under Article XI, section 9(a), MID's "jurisdiction" would be coextensive with California's state borders. Its unilateral expansion into Pittburg (or the Four Cities Area), Page 9 thus, would be a lawful exercise of MID's state constitutional power — not a violation of state statutory law.

  But what MID's attempt to declare itself a "municipal corporation" ignores is as significant as what it concedes. California's courts have long assured that the "municipal corporation" label is neither talismanic nor particularly instructive in this context. See, e.g. Turlock Irrigation Dist. v. Hetrick, 71 Cal.App.4th at 951 (adding that "[i]rrigation districts> are sometimes referred to as municipal corporations, but it seems that they are not municipal corporations in the strict or proper sense of that term. . . .") (citing, e.g., Whiteman v. Irrigation District, 60 Cal.App. 234, 237 (1922)) (internal quotation marks omitted). Indeed, state courts have repeatedly rejected arguments effectively identical to the one MID (re)posits here, see, e.g. County of Fresno, 100 Cal.App.4th at 944; in the Four Cities Area action, in fact, a state court rejected an identical argument on nearly identical facts. For years, California's courts have interpreted Article XI, section 9(a) not to "preclude the Legislature from otherwise regulating municipal public utilities" like MID. See, e.g., California Apartment Assn., 80 Cal.App.4th at 707; Cucamonga County Water Dist., 22 Cal.App.3d at 257. It is the nature of the entity at issue that matters, the state courts have repeatedly reminded, not otherwise meaningless appellations — whether "municipal corporation" or otherwise. Id.

  This is particularly true for irrigation districts> like MID. "[R]egardless of the legal nature of an irrigation district," the California Court of Appeals has observed, "it is universally recognized that an irrigation district has only those powers granted to it under the enabling legislation." Turley, 71 Cal.App.4th at 952-53 (emphasis added). Irrigation districts> like MID simply are not pure "municipal corporations" under Article XI, section 9(a), and they are not empowered as such.*fn16 Id.; see also DeVita v. County of Napa, 9 Cal.4th 763, 797 (Cal. 1995); Embarcadero Municipal Improvement Dist. v. County of Santa Barbara 88 Cal.App.4th 781, 786 (Cal.App. 2001); Baldwin v. County of Tehama, 31 Cal.App.4th 166, 178 (Cal.App. 1994) ("Local districts> established by statute inherently differ in kind from municipal corporations. They draw their authority from the enactments which create them. They are created for limited purposes[and] exercise limited powers. . . ."); Bottoms v. Madera Irr. Dist., 74 Cal.App. 681, 694 (Cal.App. 1925) (". . . such agency has only such powers as are given to it by the act of the Legislature under and by virtue of which it exists . . ."); Req. for Jud. Notice, Exh. 21 (Assembly Page 10 Committee on Utilities and Commerce Notes) ("In that irrigation districts> have not definitively been declared [to be] municipal corporations, and the Legislature has not been precluded from regulating municipal public utilities, the Legislature's authority in this matter does not appear to have been precluded by the Constitution.").*fn17

  Irrigation districts>, rather, are empowered by and through particularized "enabling legislation." Id. The pertinent "enabling legislation" in this context (viz., the Cortese-Knox Act) expressly defines irrigation districts> as "distric[s] of limited powers," see Cal. Gov't Code § 56037 (emphasis added), assuring that individual districts> are confined to circumscribed service areas and "spheres of influence." Id. at § 56036; see also County of Fresno, 100 Cal.App.4th at 944 ("As a district of limited powers, Malaga's authority is restricted to those powers expressed and implied in its enabling act."). Subject to a selection of limited exceptions, the same "enabling legislation" precludes public entities like MID from extending areas of service beyond existing boundaries absent prior LAFCO approval — just as MID has attempted here.*fn18 See Cal. Gov't Code § 56133; see also Req. for Jud. Notice, Exh. 16 (discussing the Sacramento Municipal Utility District's application to move outside its establish boundaries); Stats. 1993, ch. 1307, § 2 (noting that section 56133 "plugged [the] loophole" that allowed agencies to circumvent the LAFCO process).*fn19

  The Act makes plain that where an irrigation district wishes to "extend[] [its] services by contract or agreement outside its jurisdictional boundaries" the district must "first request[] and receive[] written approval from the LAFCO in the affected county." Id. MID did the former (i.e., extend its services outside its jurisdictional boundaries), but it did not do the latter (i.e., receive written LAFCO pre-approval).*fn20 MID thus failed to comply with the terms of its "enabling legislation." It has, in short, failed to satisfy the requirements of section 56133.

  In a closely analogous context, a state trial court reached the same conclusion. This court is always reluctant to second-guess California's courts on issues of California state law, and it is only more hesitant to do so where, as here, California's courts have reached a manifestly sound determination. Id. MID is not a pure "municipal corporation" under Article XI, section 9(a), and section 56133 applies to MID's provision of electric services. Thus, unless a specific section 56133 exception applies, or section 56133 is otherwise Page 11 invalid, MID is required to seek LAFCO approval for new or extended services outside its jurisdictional boundaries — something it has not done here.*fn21

 II. The Meaning of Section 22120 and Section 56133's Related Provisions

  Because the court finds that the Act's terms apply to MID, it must address two subsidiary questions: first, whether section 56133 is irreconcilably inconsistent with other provisions of state law (specifically, section 22120 of California's Water Act); and, second, whether any of section 56133's related language excuses MID's unapproved expansion into Pittsburg. The first question is easily resolved: Section 56133 does not repeal — impliedly or otherwise — Water Code section 22120. See Cal. Water Code § 22120. In pertinent part, section 22120 permits irrigation districts> to "sell, dispose of, and distribute electric power for use outside of its boundaries." Id. The language of section 22120 is permissive (i.e., "may sell. . ."), stating only that districts> can "sell, dispose of, and distribute," not that they have an uncompromised or unilateral right to do so. Id.; see also Cal. Water Code § 22115 (stating, likewise, that "[a]ny district heretofore or hereafter formed may purchase or lease electric power . . . and may provide for the acquisition, operation, leasing, and control of plants for the generation, transmission, distribution, sale, and lease of electric power . . . ") (emphasis added).*fn22 Like other provisions of California's law, section 56133 cabins districts>' right to "sell, dispose of, and distribute" utility services, specifying how and when districts> may do so but not eliminating those rights altogether. See Cal. Gov't Code § 56133. This sort of statutory qualification of preexisting statutory rights is not uncommon under California law, see, e.g., Stop Youth Addiction. Inc. v. Lucky Stores. Inc., 17 Cal.4th 553, 569 (Cal. 1998); People v. Atkinson, 115 Cal.App.2d 425, 427 (Cal.App. 1953) (discussing, in a distinct context, the "continuance of [an] old law" consistent with the "modification[s]" inserted by a new one), and nothing in California law suggests that the imposition of such procedural limitations constitutes any sort of legislative repeal, implied or otherwise. See, e.g., California State Employees Ass'n v. California Pub. Employees' Retirement Syst. Bd. of Admin., 113 Cal.App.4th 137, 144 (Cal.App. 2003) ("Repeals by implication Page 12 are disfavored and are recognized only when potentially conflicting statutes cannot be harmonized")(quoting Nickelsberg v. Workers' Comp. Appeals Bd., 54 Cal.3d 288, 298 (1991)) (emphasis added). Section 22120 and section 56133 can — and do — coexist easily; the former does not permit MID to ignore the terms of the latter.

  Nor does anything else in section 56133 — whether the limited authorizations discussed in subsections (b) and (c) or the exceptions of subsection (e) — excuse MID's unauthorized expansion into Pittsburg. Subsection (b) of section 56133, as noted, applies only where a district attempts to expand "within [that district's] sphere of influence in anticipation of a later change of organization"; in attempting to grow outside its existing "sphere of influence," MID lands outside subsection (b)'s protection. See Cal. Gov't Code § 56133(b) (emphasis added); see also Cal. Gov't Code § 56076 (defining "spheres of influence" as plans "for the probable physical boundaries and service area of a local agency" or district). Subsection (c), in turn, applies only where a district expands in response to an "existing or impending threat to public health or safety," and even then only after proper "documentation" and notice are provided; none of these factors pertain here. Id. at § 56133(c).

  And the series of exceptions listed in subsection (e) is inapplicable as well-as MID conceded during oral argument. In pertinent part, subsection (e) reads:

  This section does not apply to contracts or agreements solely involving two or more public agencies where the public service to be provided is an alternative to, or substitute for, public services already being provided by an existing public service provider and where the level of service to be provided is consistent with the level of service contemplated by the existing service provider. . . . This section does not apply to an extended service that a city or district was providing on or before January 1, 2001. This section does not apply to a local publicly owned electric utility, as defined by Section 9604 of the Public Utilities Code, providing electric services that do not involve the acquisition, construction, or installation of electric distribution facilities by the local publicly owned electric utility, outside of the utility's jurisdictional boundaries.*fn23 Page 13

 See Cal. Gov't Code § 56133(e).*fn24 Of the three relevant "does not apply" clauses, the first (viz., the clause discussing contracts) might seem to present the most difficult question, but it does not apply here. As a part of its expansion plan, MID entered a series of contracts with a variety of entities, including a permission agreement with the City of Pittsburg. The permission agreement purported to allow MID to offer electric services in the Pittsburg area, seemingly confirming Pittsburg's approval of — or acquiescence in — MID's expansion. But Pittsburg's approval of MID's move can only go so far. It cannot itself permit MID to expand absent LAFCO preapproval, and it cannot function as a surrogate for the type of agreement envisioned by subsection (e). Under subsection (e), a district need not comply with section 56133 where there exist "contracts or agreements solely involving two or more public agencies where the public service to be provided is an alternative to, or substitute for, public services already being provided by an existing public service provider and where the level of service to be provided is consistent with the level of service contemplated by the existing service provider." Id. Were Pittsburg granting MID the right to compete with (or to replace) the City of Pittsburg itself as a supplier of utilities and services, and were MID promising to offer services on a par with those already offered to Pittsburg's residents by PG&E, the relevant portion of subsection (e) might apply. But the MID-Pittsburg agreement does neither. It simply condones — and attempts to effectuate-MID's attempt to select a group of particularly profitable customers (notably, Praxair) while usurping PG&E's status as Pittsburg's state-licensed electricity provider. No guarantees are made regarding the level and extent of service MID plans to offer, and no legitimate pro-competitive benefit accrues to anyone, least of all Pittsburg's residents. Subsection (e) does not sanction the kind of end-run bargain MID and the City of Pittsburg have crafted, and the first "does not apply" clause of subsection (e) cannot excuse MID's unauthorized expansion into Pittsburg. Id.*fn25

  The same is true of the remaining two "does not apply" clauses. For one, MID never actually provided electric service to Pittsburg, delaying its project after PUC intervened at FERC on PG&E's Page 14 behalf, so it was not providing an extended service "on or before January 1, 2001." Id. For another, MID's expansion into Pittsburg required the acquisition of electric distribution facilities (viz., one of Praxair's substations), so the final clause does not protect MID's expansion, either. Id. Indeed, nothing in subsections (b), (c), or (e) permit the kind of unauthorized expansion MID has attempted. The LAFCO pre-approval provisions of section 56133 thus apply to MID's move into Pittsburg; as MID readily concedes, it has failed to abide these terms.

 III. Antitrust Injury*fn26

  Courts have long recognized that "an action under the antitrust laws will not lie where the business conducted by the plaintiff, and alleged to have been restrained by the defendant, was itself unlawful." Jenkins v. Greyhound Lines. Inc., 1971 WL 529, *1 (N.D. Cal. 1971) (Schacke, J.) (citing, e.g., Okefenokee Rural Mem. Corp. v. Florida Power & Light Co., 214 F.2d 413 (5th Cir. 1954)); Cottonwood Mall Shopping Ctr. v. Utah Power & Light Co., 440 F.2d 36, 38-40 (10th Cir. 1971). This is so, courts have reasoned, because a party cannot prove a cognizable antitrust injury when it itself engaged in unlawful conduct ex ante. See, e.g., Snake River Valley Electric Ass'n v. Pacificorp, ___ F.3d ___, 2004 WL 231235, *6 n.8 (9th Cir. 2004) ("[E]ven if PacifiCorp. acted anti-competitively by refusing to wheel [power to the association], there is no injury to [the association] because it could not have taken any of PacifiCorp's customers absent affirmative action by the PUC. . . ..") (emphasis added); see also Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) (noting that, to succeed on an antitrust claim, a plaintiff must "prove the existence of antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent") (citation and internal quotation marks omitted; first emphasis added); Vinci v. Waste Mgmt., Inc., 80 F.3d 1372, 1376 (9th Cir. 1996) (holding that a plaintiff who is neither a proper competitor nor a legitimate consumer in the relevant market cannot claim to have suffered cognizable antitrust injury): Schuylkill Energy Resources. Inc. v. Pennsylvania Power & Light Co., Page 15 113 F.3d 405, 415 (3d Cir. 1997).

  Adhering to this well-founded principle, the court finds that MID cannot prove — as opposed to allege — that it suffered antitrust injury in this instance. MID possessed neither the legal right nor the necessary LAFCO permission to expand its services into Pittburg. Id. Instead, MID attempted to enter Pittsburg unilaterally, thereby contravening controlling state law and attempting to derive income without attendant "legal right." See National Ass'n of Pharmaceutical Mfrs. v. Ayerst Labs., 850 F.2d 904, 913 (2d Cir. 1988) (citations omitted). Because MID's conduct was unlawful by its own terms, PG&E's response — however anti-competitive or seemingly monopolistic — could not inflict an cognizable antitrust injury; i.e., MID cannot prove it sustained cognizable antitrust injury here. Id.; see also Snake River Valley Electric Ass'n, ___ F.3d ___, 2004 WL 231235, at *6 n.8. Absent the ability to prove such an injury, MID's antitrust claims are untenable at their core. See Atlantic Richfield Co., 495 U.S. at 334.*fn27

 CONCLUSION

  Defendant's motion for summary judgment is GRANTED.

  IT IS SO ORDERED.


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