## Facts

- SolarCity Corporation sold and leased rooftop solar photovoltaic systems to customers in the Phoenix, Arizona area.
- Salt River Project Agricultural Improvement and Power District (SRP) provided retail electric service in the Phoenix metropolitan area as a political subdivision of Arizona.
- SRP previously offered incentives for customer-installed rooftop solar systems, but discontinued those incentives around 2013.
- In December 2014, SRP announced new retail rate plans (SEPPs) imposing substantial new charges on “self-generating” customers who installed rooftop solar but continued to use SRP’s grid.
- SolarCity alleged the SEPPs imposed a new demand charge and an effective rate increase of roughly 65% for solar customers compared to similarly situated non-solar customers.
- SolarCity alleged the rate design made rooftop solar uneconomic for most SRP customers and sharply reduced new installations in SRP’s territory.
- SolarCity defined the relevant market as supplying electricity to end-use customers in SRP’s service territory via SRP sales or rooftop solar systems and related services.
- SolarCity alleged SRP held monopoly power because customers largely lacked practical alternatives to SRP’s retail electricity service and could not economically disconnect from SRP’s grid.

## Issues

1. Whether the complaint plausibly alleged federal and state antitrust claims against SRP, including a properly pleaded relevant market, monopoly power, and antitrust injury.
2. Whether the complaint plausibly alleged antitrust liability against the Salt River Valley Water Users’ Association, given the asserted lack of involvement in adopting or enforcing the rate plan.
3. Whether the Local Government Antitrust Act of 1984 (LGAA) barred SolarCity’s federal antitrust damages claims against SRP because SRP is a “special function governmental unit.”

## Decision

- The court granted the Association’s Rule 12(b)(6) motion and dismissed all claims against it for failure to plead actionable involvement in adopting or enforcing the SEPPs.
- The court granted SRP’s motion to dismiss in part and denied it in part.
- The court held SolarCity plausibly alleged a relevant market, SRP’s monopoly power, and antitrust injury sufficient to proceed past the pleading stage on core antitrust theories seeking equitable relief.
- The court held the LGAA barred SolarCity’s federal antitrust claims for damages against SRP because SRP qualified as a “special function governmental unit” established by state law.
- The court allowed SolarCity to proceed against SRP on claims seeking declaratory and injunctive relief, which the LGAA does not bar.

## Legal Principles

- At the motion-to-dismiss stage, an antitrust plaintiff must plead a plausible relevant market; precise market boundaries may be resolved after factual development.
- A market definition is not facially implausible where the complaint plausibly alleges that customers reasonably substitute between two ways of meeting the same demand (here, purchasing more grid electricity versus installing rooftop solar and purchasing less grid electricity).
- Antitrust injury requires harm flowing from exclusionary or competition-reducing conduct, not merely harm to a competitor; allegations that a rate structure targets a rival method of supply and reduces competitive options can satisfy this element at the pleading stage.
- The LGAA bars recovery of damages (and related monetary relief) under federal antitrust law from a qualifying local government or “special function governmental unit,” but does not bar declaratory or injunctive relief.

## Conclusion

The court dismissed claims against the water users’ association, permitted SolarCity’s antitrust case for declaratory and injunctive relief against SRP to continue based on plausible allegations of a relevant market, monopoly power, and antitrust injury, and held that federal antitrust damages were unavailable against SRP under the LGAA.


SolarCity Corp. v. Salt River Project Agric. Improvement & Power Dist., No. CV-15-00374-PHX-DLR, 2015 WL 6503439 (D. Ariz. Oct. 27, 2015)