Nashville’s Entry Into Private Security Not Antitrust Violation

Written on 07/09/2022
Will Aitchison

Comprehensive Security, Inc., As­sociated Protective Service, Inc., and OnTrac Security, Inc. (the Companies), are three private companies that operate in Davidson County, Tennessee. They offer security services to the public, including site security, asset security, traffic control, crowd control, and individual protection, among other services.

Prior to 2013, the Companies rou­tinely hired off-duty police officers who worked for the Metropolitan Nashville Police Department (MNPD) or other state or local government law enforce­ment agencies as part-time employees and on an as-needed basis. Those officers received their benefits and training by virtue of their regular employment, so the Companies incurred virtually no training cost or other expense in hiring those individuals. In addition, many of the off-duty officers were commissioned by the Tennessee Peace Officer Standards & Training Commission (POST), which allowed those officers to make arrests and direct traffic on public streets – a feature that is important to many event organizers.

Employment of these police officers was available only through MNPD’s secondary employment policies and procedures. By virtue of those practices, an MNPD officer who desired to work part-time for a private security company could submit a secondary employment work request and approval was all but certain. That process was streamlined in 1997, when MNPD established the Secondary Employment Unit to facilitate approval of secondary employment requests. In turn, private se­curities companies benefited greatly from this accessible pool of qualified labor.

In April 2013, then-MNPD Chief Steve Anderson announced a five-year transition plan that would alter these prac­tices. Chief Anderson explained that there was “little or no regulation or oversight as to how, or even where, officers used their police authority in off-duty employment,” such that there was “the real potential for the reality of inappropriate conduct, favoritism, misbehavior, and/or corruption.” As a result, Chief Anderson implemented a program that would restrict the ability of MNPD officers to acquire secondary employment by requiring that all private security services work be approved by MNPD. Moreover, Chief Anderson also intended that MNPD itself would enter the private security services market by providing its officers to staff com­munity events and explained that he wanted MNPD to “give the Nashville community and event organizers an affordable way to have Metropolitan Nashville police officers staff their events.”

On March 2, 2018, Anderson issued a new memorandum, this time ending MNPD’s approval of its officers’ requests to perform off-duty work for private security companies. The Companies then had to rely solely on non-MNPD officers to staff their private security services contracts. At the same time, MNPD’s Special Employment Unit department was fully operating as a private security company. MNPD obtained a number of lucrative contracts previously held by the Companies and offered com­petitive pricing, a departure from its prior practices of offering services at above-market prices. In some cases, however, it offered its services at a discounted rate or even for free.

The Companies sued, contending that MNPD’s actions violated federal antitrust laws. The federal Sixth Circuit Court of Appeals rejected the lawsuit.

The Court held that “the first part of the threshold inquiry requires the Com­panies to establish the definition of the relevant product and geographic markets in which they compete with the alleged monopoly. The disagreement between the parties involves whether the Com­panies established the product or service market. The service market proposed by the Companies was the supply of security services ‘that require POST-commissioned officers.’ This does not suffice to establish the relevant market because it does not provide any proof about what services are being sold, what the market concentration is, or what the individual shares of sales are – which are the core inquiries for the market analysis.

“We agree with the district court that the proffered expert witness testimony and report lends no additional help in precisely defining the relevant product market. Dr. Mathis focused his analysis entirely on the labor market effects of MNPD’s actions that, he opined, ultimately reduced the available labor market needed by the Companies.

“But the Companies’ claim is not that they lack the available labor to stay in business because of MNPD’s actions. They argue that they lost contracts as a result of MNPD’s alleged control over the market of private security services that require POST-commissioned officers. Thus, Dr. Mathis’s testimony offers little or no sup­port for the market proposed that would be relevant to the claim at issue here. With no other evidence in the record to support the proposed definition, the district court correctly determined that the Compa­nies failed to define a relevant market with the requisite precision.”

Comprehensive Security, Inc. v. Met­ro. Gov’t of Nashville & Davidson County, 2022 WL 670135 (6th Cir. 2022).

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