In the post-Seminole Tribe world, the legal analysis in situations where states have chosen regulation over competition, supplanting the free functioning of markets, will diverge depending upon the identity of the defendant. If a state, its agencies, or departments are the named defendants, the broader Eleventh Amendment analysis controls and claims for damages against government entities must be dismissed on the ground of sovereign immunity. If the defendant is a private firm, the narrower State Action Doctrine, which has been crafted to balance true exercise of state sovereignty against the goal of competition, provides immunity for private defendants. As a policy matter, the State Action Doctrine should continue to protect private parties operating pursuant to a state regulatory scheme because immunity for those regulated is essential for the success of any state regulatory program, although the risk of agency capture may be increased. Finally, the more limited State Action immunity available to private firms will force them to monitor the state regulators to ensure that the balancing process between sovereign exercise and competition contemplated by the State Action Doctrine is performed.
Susan Beth Farmer, Altering the Balance between State Sovereignty and Competition: The Impact of Seminole Tribe on the Antitrust State Action Immunity Doctrine, 23 Ohio N.U. L. Rev. 1403 (1997).