State-Authorized Municipal Monopolies and Parker Immunity: Commentary on Cherry Grove Beach Gear, LLC v. City of North Myrtle Beach (4th Cir. 2025)

I. Introduction

This commentary examines the Fourth Circuit’s published decision in Cherry Grove Beach Gear, LLC v. City of North Myrtle Beach, No. 24‑2161 (4th Cir. Dec. 23, 2025), in which the court affirmed summary judgment in favor of the City of North Myrtle Beach on federal antitrust claims. The plaintiffs, Cherry Grove Beach Gear, LLC (“CGBG”) and its owners Derek and Jacqueline Calhoun, alleged that the City unlawfully monopolized the business of beach equipment rental and setup on public beaches, in violation of the Sherman Act.

The central issue was whether the City’s ordinances—effectively reserving to the City the exclusive right to professionally set up rented beach equipment on its beaches—were shielded from federal antitrust scrutiny by the state‑action immunity doctrine (also known as the Parker doctrine). The court concluded that South Carolina statutes clearly articulated a state policy authorizing municipalities to displace competition by creating exclusive franchises for on‑beach rentals linked to beach safety services, and that this delegation was broad enough to permit the City to grant that exclusivity to itself.

The opinion further rejected, as already foreclosed in the Fourth Circuit, the plaintiffs’ invitation to recognize a “market participant exception” to Parker immunity for municipalities that act as both regulator and competitor.

II. Factual and Procedural Background

A. The Parties and the Business Model

Derek and Jacqueline Calhoun own and operate Cherry Grove Beach Gear, LLC. Starting in 2020, CGBG rented beach chairs, umbrellas, and related equipment to customers who used them on beaches in and around the City of North Myrtle Beach, South Carolina. A key feature of CGBG’s service offering was delivery and professional setup: for an additional fee, CGBG staff would transport the rented equipment onto the public beach and set it up for the customer’s use.

B. City Enforcement and Ordinance Amendment

In April 2021, City officials notified CGBG that the City Code prohibited CGBG from delivering and setting up beach equipment on City beaches. CGBG disagreed with the City’s interpretation of the then‑existing ordinance and continued to perform on‑beach setup services despite:

  • Initial warning from the City in April 2021;
  • At least two additional warnings;
  • Complaints from competitors about CGBG’s continued on‑beach setup activity.

In response to continued non‑compliance and market complaints, the City adopted a new ordinance in June 2022. Both sides agreed that the 2022 ordinance expressly prohibited private entities such as CGBG from professionally setting up rented beach equipment on City beaches. Under the revised ordinance, only City officials could professionally set up such equipment on public beaches.

CGBG nonetheless continued its delivery and setup services, leading the City to issue multiple citations against both CGBG and Derek Calhoun for noncompliance.

C. Litigation in the District Court

In July 2022, CGBG and the Calhouns brought suit against the City. Among other claims, they asserted that the City had:

“unlawfully sought to impose an unlawful monopoly on the rentals of beach chairs, beach umbrellas and related beach wares on the entirety of the beaches” in North Myrtle Beach, in violation of federal antitrust law.

The City moved for summary judgment. The district court (D.S.C.) granted summary judgment in the City’s favor on the federal antitrust claims, holding that the City’s conduct was shielded by state‑action immunity under the Parker doctrine. The court reasoned that South Carolina statutes clearly authorized municipalities to grant exclusive rights related to beach equipment rental and operation on public beaches in connection with beach safety services.

CGBG appealed. The Fourth Circuit reviewed the summary judgment decision de novo (i.e., without deference to the district court’s legal conclusions) and affirmed.

III. Summary of the Fourth Circuit’s Opinion

The Fourth Circuit, in an opinion authored by Judge Gregory and joined by Chief Judge Diaz and Judge Benjamin, held that:

  1. State‑Action Immunity Applied: The City’s exclusive control over the professional setup of beach equipment on public beaches was immune from federal antitrust challenge. Two South Carolina statutes—S.C. Code Ann. § 5‑7‑30 and § 5‑7‑145—were held to be sufficiently clear articulations of state policy authorizing municipalities to displace competition in this area, including by granting exclusive franchises for beach equipment rentals.
  2. City May Be the Exclusive Franchisee: Even though § 5‑7‑145 contemplates exclusive rights in the context of a contract with a private beach safety company, the combination of § 5‑7‑145 and the broader municipal powers in § 5‑7‑30 made it foreseeable and clearly authorized that a municipality could itself be the beneficiary of an exclusive arrangement—effectively granting itself a monopoly.
  3. No Market Participant Exception: The court refused to adopt a “market participant exception” to Parker immunity. Relying on Western Star Hospital Authority, Inc. v. City of Richmond, 986 F.3d 354 (4th Cir. 2021), the panel reiterated that the Supreme Court has never recognized such an exception, and the Fourth Circuit had already declined to create one.
  4. Other Claims Abandoned: CGBG suggested that errors in the antitrust ruling tainted other claims, but the Fourth Circuit held those arguments were inadequately briefed under Federal Rule of Appellate Procedure 28 and deemed them abandoned.

The net effect is a robust reaffirmation of municipal state‑action immunity where state law expressly authorizes exclusive arrangements in a defined sector, even where the municipality itself is the exclusive market participant.

IV. Detailed Legal Analysis

A. The State‑Action (Parker) Immunity Framework

Federal antitrust laws, particularly the Sherman Act, are directed primarily at private restraints of trade. Under the Parker v. Brown doctrine, however, the Supreme Court has held that the Sherman Act does not apply to anticompetitive restraints “imposed by the States ‘as an act of government’.”

Cities and municipalities are not sovereign states. They obtain immunity only under certain conditions. To claim state‑action immunity, a municipality must show that:

  • The challenged conduct is undertaken pursuant to a clearly articulated and affirmatively expressed state policy to displace competition with regulation or monopoly public service; and
  • (For municipalities, unlike private actors) there is no separate “active supervision” requirement.

The focus in Cherry Grove is entirely on the “clearly articulated and affirmatively expressed” prong.

B. Precedents Cited and Their Influence

1. Parker v. Brown, 317 U.S. 341 (1943)

Parker is the foundational case recognizing that Congress did not intend the Sherman Act to restrain state sovereign action. In that case, a California agricultural program restricting raisin competition was held immune because it was state action. The case established the core principle that state sovereignty places limits on federal antitrust enforcement.

The Fourth Circuit relies on Parker as the starting point: federal antitrust law must coexist with state regulatory autonomy. The question is how far this immunity extends when local governments—not the state itself—act in markets in which private parties also operate.

2. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389 (1978)

City of Lafayette first squarely addressed municipal antitrust immunity. The Supreme Court held that cities are not automatically immune; they must act pursuant to a clearly articulated state policy to displace competition. The case introduced the requirement that state policy must do more than grant general power; it must “contemplate” or “foresee” the anticompetitive conduct.

The Fourth Circuit invokes Lafayette to underscore that:

  • Municipalities are not sovereigns in their own right; and
  • They must tie their conduct to a state‑level policy decision to displace the market in a defined area.

3. Community Communications Co. v. City of Boulder, 455 U.S. 40 (1982)

In City of Boulder, Colorado’s home‑rule constitutional provision gave the city general authority over local affairs. The city used that authority to temporarily block cable TV expansion, effectively shielding a local cable provider. The Supreme Court held this general grant of home‑rule power was not a “clearly articulated and affirmatively expressed” state policy to displace competition. It was too broad and unspecific.

The Fourth Circuit cites Boulder for the crucial proposition that:

  • Generic home‑rule or broad municipal authority, without more, is insufficient to invoke state‑action immunity.

This sets an important boundary: not every municipal regulation is immune simply because the state allows municipalities to legislate in general terms.

4. Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985)

Hallie is a key case clarifying how “clearly articulated” the state policy must be. Wisconsin authorized cities to:

  • Provide sewage treatment services; and
  • Refuse to provide such services to unannexed neighboring areas.

Eau Claire used this authority to coerce annexation by conditioning sewage treatment services on exclusive control of the broader sewage system (treatment, collection, transportation)—an anticompetitive practice. Even though the statute never mentioned monopolies or tying arrangements, the Supreme Court held immunity applied because:

  • Anticompetitive effects were a foreseeable result of granting such control over an essential service.
  • A state need not “catalog all of the anticipated effects” or expressly say “monopoly is allowed”; it is enough that the type of conduct is a logical and expected outcome of the delegated power.

Hallie supplies the analytical framework heavily applied in Cherry Grove: if the anticompetitive conduct is the foreseeable, logical result of the powers conferred, the “clear articulation” requirement is satisfied.

5. City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991)

In Omni, the City of Columbia adopted zoning ordinances that effectively protected an incumbent billboard company from competition. South Carolina statutes gave municipalities general zoning authority. The Supreme Court held that zoning laws inherently displace unfettered competition:

“The very purpose of zoning regulation is to displace unfettered business freedom in a manner that regularly has the effect of preventing normal acts of competition.”

Because anticompetitive effects were an inherent and foreseeable result of zoning power, state‑action immunity applied.

Omni also suggested—without deciding—that a “market participant exception” to immunity might possibly exist where the government acts purely as a commercial entity rather than regulator. Critically, the Supreme Court declined to adopt such an exception in that case.

The Fourth Circuit in Cherry Grove draws on Omni both:

  • To reinforce the “foreseeability” standard for clear articulation; and
  • To note that the Supreme Court has never actually created a separate “market participant” carve‑out to Parker immunity.

6. FTC v. Phoebe Putney Health System, Inc., 568 U.S. 216 (2013)

Phoebe Putney involved a Georgia statute authorizing hospital authorities to acquire and operate hospitals. A local authority used that statute to acquire a competing hospital, effectively creating a monopoly.

The Supreme Court held there was no immunity:

  • The statutory powers largely mirrored the general corporate powers routinely given to private companies; and
  • “Simple permission to play in a market does not foreseeably entail permission to roughhouse in that market unlawfully.”

The state did not clearly articulate a policy to displace competition in the hospital market; it merely allowed public entities to operate there like any other participant. Because private corporations routinely receive similar powers without antitrust immunity, the Court concluded that such a grant did not imply state authorization for anticompetitive conduct.

Phoebe Putney thus draws a sharp line:

  • Broad but ordinary powers to “do business” ≠ clear articulation to displace competition.
  • A statute must do more than mirror typical corporate authority; it must meaningfully authorize regulation or control that foreseeably curtails the competitive process.

In Cherry Grove, the Fourth Circuit distinguishes the South Carolina statutory scheme from Phoebe Putney, concluding that § 5‑7‑145 and § 5‑7‑30 go substantially beyond “simple permission to play in a market.”

7. Western Star Hospital Authority, Inc. v. City of Richmond, 986 F.3d 354 (4th Cir. 2021)

Western Star is the Fourth Circuit’s central precedent and the primary lens through which it evaluates state‑action immunity in Cherry Grove.

In Western Star, Virginia created a local governmental agency to provide emergency medical services (EMS) in Richmond and granted it authority to:

  • Make it unlawful to operate EMS vehicles without a permit;
  • Control permit issuance;
  • Determine operational zones; and
  • Set prices for EMS services.

These powers clearly went beyond the mere ability to “play in a market.” They were quintessential regulatory powers that “greenlighted regulation and service provision that necessarily supplanted unrestrained market competition.”

The Fourth Circuit held:

  • The statute “expressly authorized” control over entry into the EMS market and created a regulatory structure inherently displacing competition.
  • A state did not need to explicitly say “monopoly” or “exclusive provider” for immunity to apply; the foreseeable anticompetitive outcome sufficed under Hallie.
  • The court declined to adopt a “market participant exception,” even though the municipal entity was itself providing EMS services.

In Cherry Grove, the Fourth Circuit treats Western Star as directly controlling in two respects:

  1. Clear articulation: State authorization to create exclusive, tightly regulated service arrangements (here, for beach safety and rentals) foreseeably displaces competition.
  2. No market participant exception: The court again rejects the notion that immunity disappears when the municipality is the sole provider.

C. Applying the Framework to South Carolina’s Statutes

1. Relevant South Carolina Provisions

Two state statutes structure the court’s analysis:

  1. S.C. Code Ann. § 5‑7‑30: General municipal powers, including authority to “grant franchises and make charges for the use of public beaches.”
  2. S.C. Code Ann. § 5‑7‑145: A more specific provision addressing “beach safety services.” It provides that when a municipality contracts with a private beach safety company to provide “lifeguard and other safety related services on and along the public beaches,”
    “the municipality may grant the exclusive right to the beach safety company to rent only the beach equipment and sell only the items to the public on the beach that are allowed by the municipality.”

Thus, South Carolina expressly authorizes municipalities to:

  • Provide or contract out beach safety services; and
  • Grant an exclusive right to rent beach equipment on the beach in connection with those services.

2. Clear Articulation and Foreseeability

The fourth Circuit, echoing the district court, holds that these provisions “leave no doubt as to the City’s prerogative to exclusively provide on‑beach setup and rentals to support lifeguard services and displace competition.”

Several aspects of the statutory scheme are crucial:

  • Explicit exclusivity: § 5‑7‑145 expressly authorizes the grant of “the exclusive right” to rent beach equipment on the beach.
  • Connection to public services: The exclusivity is tied to “lifeguard and other safety related services,” suggesting a regulatory program that coordinates beach safety and commercial activity.
  • Franchise authority in § 5‑7‑30 reinforces that municipalities may structure the use of public beaches through franchises, including exclusive franchises.

Under Hallie and Omni, this combination plainly signals that South Carolina “affirmatively contemplated the displacement of competition” in on‑beach rental services. Granting a right to create exclusive franchises is, almost by definition, authorization to displace competitors.

This goes well beyond the kind of general corporate powers at issue in Phoebe Putney; instead, it is a targeted regulatory scheme granting municipalities control over who may operate commercially on public beaches and on what terms.

3. Can the City Grant the Exclusive Franchise to Itself?

CGBG did not seriously contest that § 5‑7‑145 allows the City to displace competition by granting an exclusive franchise for beach equipment installation. Its main statutory argument was narrower: the statute allegedly permits exclusivity only when the municipality contracts with a private beach safety company; it does not expressly authorize the City to confer that exclusivity on itself.

The Fourth Circuit rejects this argument, relying heavily on Western Star and the Supreme Court’s “foreseeability” standard:

  • As in Western Star, the state has created a regulatory structure that inherently displaces unfettered market competition.
  • Once the state authorizes the grant of an exclusive franchise and endows the municipality with broad franchise powers (§ 5‑7‑30), it is foreseeable that the City might choose to:
    • Provide the service itself using its own employees; or
    • Reserve for itself the role of exclusive provider, rather than contracting out.

The legislature is not required to say, in so many words, “the municipality may monopolize this market, including by serving as its own exclusive franchisee.” Under Hallie and Phoebe Putney, it is enough that:

the state has “affirmatively contemplated the displacement of competition,” even though it is not “expected to catalog all of the anticipated effects of a statute.”

Because creating a monopoly—whether via a private franchisee or via municipal self‑operation—is a logical extension of the exclusive franchise authority, the “clear articulation” requirement is satisfied, and the City’s on‑beach equipment monopoly is immune from federal antitrust attack.

D. Rejection of the Market Participant Exception

CGBG also argued that even if the statutory authority were sufficiently clear, the City should lose immunity because it was operating not as a neutral regulator but as an active market participant—the sole provider of professional beach equipment setup service.

This argument is based on language in Omni suggesting that an exception might exist where government acts purely in a commercial capacity. But as Western Star emphasized, the Supreme Court has:

  • Never adopted such an exception; and
  • Applied Parker immunity in settings where the municipality was itself the service provider (e.g., Hallie).

The Fourth Circuit in Western Star firmly “declined” to create a market participant exception and described recognition of such an exception as “steering federal antitrust law into uncharted waters.” That prior panel ruling binds subsequent panels in the absence of an intervening Supreme Court decision to the contrary—which has not occurred.

Accordingly, in Cherry Grove, the court:

  • Reaffirms that no market participant exception exists in the Fourth Circuit for municipal Parker immunity; and
  • Applies Parker immunity even though the City has “anointed itself the sole participant in the market” for on‑beach professional setup services.

E. Abandonment of Other Claims

CGBG attempted to argue that any error in the district court’s antitrust analysis also affected its disposition of other, unspecified claims. The Fourth Circuit treated these arguments as abandoned because:

  • They were “threadbare” and insufficient under Federal Rule of Appellate Procedure 28; and
  • The court found no error in the antitrust ruling that could operate as a foundation for further review.

The court’s handling of these subsidiary arguments underscores a recurring appellate principle: inadequate briefing can and will result in waiver.

V. Complex Concepts Explained in Plain Terms

A. State‑Action (Parker) Immunity

What it is: A doctrine that shields state and certain state‑authorized governmental conduct from federal antitrust liability. The idea is that Congress did not intend the Sherman Act to override state policy choices about economic regulation.

Why it matters here: If Parker immunity applies, a municipal monopoly—something that would normally be illegal under the Sherman Act—is lawful because it is considered an extension of the state’s own regulatory policy.

B. “Clearly Articulated and Affirmatively Expressed” State Policy

What it means: The state must have done more than just give the city a general power to regulate. It must be reasonably clear that:

  • The state contemplated the possibility that competition would be curtailed; and
  • The particular type of anticompetitive conduct at issue is a foreseeable result of the authority granted.

In this case: By explicitly authorizing:

  • “Exclusive” rights to rent beach equipment on the beach; and
  • Franchises governing commercial use of public beaches,

South Carolina clearly signaled that municipalities might lawfully exclude competitors from on‑beach rental and setup markets.

C. “Foreseeable Result” Standard

Courts do not require the legislature to spell out “this statute authorizes anticompetitive conduct X, Y, and Z.” Instead, they ask:

Is the anticompetitive behavior at issue the logical and foreseeable consequence of the powers the state gave the municipality?

If yes, then the conduct is considered to be taken pursuant to a clearly articulated state policy.

D. “Home Rule” and Why It’s Insufficient

Home rule provisions give cities broad, general authority over local matters. But under City of Boulder, home rule alone does not satisfy the “clear articulation” requirement:

  • It is too generic;
  • It does not specifically indicate the state’s willingness to displace competition in any identifiable market.

In contrast, the South Carolina statutes here specifically address beach safety and exclusive on‑beach rental rights, going well beyond generic home rule.

E. Exclusive Franchise

An exclusive franchise is a government grant that gives one entity—public or private—the sole right to provide a particular service or operate a particular business in a defined area (here, on the public beaches).

Exclusive franchises are intrinsically anticompetitive because they exclude all other would‑be competitors. However, if a state explicitly authorizes a municipality to grant such franchises, and the requirement of clear articulation is met, those arrangements are immune from federal antitrust attack under Parker immunity.

F. Market Participant vs. Regulator

A governmental entity can:

  • Act as a regulator, setting rules, issuing permits, and enforcing compliance for others; and/or
  • Act as a market participant, directly offering goods or services for sale.

CGBG’s argument was that when a city both regulates and competes in the same market, it should lose antitrust immunity. The Fourth Circuit, following Western Star, refuses to create such a carve‑out. As long as the municipality’s regulatory and market‑participation activities are within the scope of a clearly articulated state policy to displace competition, immunity still applies.

VI. Impact and Implications

A. For Municipal Regulation in the Fourth Circuit

The decision in Cherry Grove reinforces and extends Western Star in several ways:

  • Broader Confidence in Exclusive Arrangements: Municipalities within the Fourth Circuit (Maryland, Virginia, West Virginia, North Carolina, South Carolina) can be more confident that:
    • When state law expressly authorizes exclusive franchises or comparable monopolistic arrangements, and
    • The anticompetitive effects are a foreseeable result of the statutory scheme,
    they will likely enjoy Parker immunity from federal antitrust claims.
  • Municipal Self‑Operation Is Protected: Cities may choose to be the exclusive provider themselves (for example, by city staff) instead of contracting with a private vendor, without losing immunity, so long as the underlying state statute clearly authorizes the displacement of competition.

B. For Private Businesses Operating on Public Property

The decision has concrete implications for businesses that operate in spaces traditionally subject to municipal control—like beaches, parks, and streets:

  • Antitrust remedies may be unavailable where state law gives municipalities explicit authority to manage those spaces through exclusive franchises or concessions.
  • Disputes over such exclusivity may instead need to be framed as:
    • State law challenges (e.g., whether the city exceeded statutory bounds);
    • Constitutional claims (e.g., equal protection or due process, if viable); or
    • Contractual or local administrative challenges.

C. Guidance to State Legislatures

For state lawmakers, the decision provides practical drafting guidance:

  • If the legislature wants municipalities to have antitrust immunity for certain regulatory programs, it should:
    • Use explicit language authorizing exclusivity or stringent control over market entry; or
    • Otherwise make clear that displacement of competition is a likely and intended consequence.
  • If, in contrast, the legislature merely grants municipalities the same type of broad operational powers that private companies have, Phoebe Putney warns that this will generally not support antitrust immunity.

D. Doctrinal Consolidation in the Fourth Circuit

Cherry Grove helps solidify within the Fourth Circuit:

  • A consistent application of the “foreseeable result” standard under Hallie and Omni, in both public safety contexts (Western Star) and commercial/tourism contexts (here).
  • A clear rejection of a market participant exception to Parker immunity, absent explicit Supreme Court direction to the contrary.

VII. Conclusion

Cherry Grove Beach Gear, LLC v. City of North Myrtle Beach is a significant addition to the state‑action immunity jurisprudence in the Fourth Circuit. It holds that:

  • South Carolina’s statutory scheme empowering municipalities to grant exclusive rights to provide beach safety services and associated equipment rentals is a clearly articulated state policy to displace competition.
  • This authorization extends not only to exclusive private franchises but also to situations where the municipality itself becomes the sole provider of the service.
  • A market participant exception to Parker immunity remains unavailable in the Fourth Circuit.

For municipal law and antitrust practitioners, the case underscores the importance of:

  • Examining the precise text and structure of state enabling statutes;
  • Assessing whether anticompetitive effects are a logical and foreseeable result of the statutory delegation; and
  • Recognizing that, where a state has clearly contemplated displacement of competition, federal antitrust law will yield to state sovereignty, even when a city appears to be entrenching itself as a monopoly provider.

In this way, Cherry Grove confirms that state‑authorized municipal monopolies, when clearly rooted in statute, are largely beyond the reach of federal antitrust litigation in the Fourth Circuit.