Ladue Local Lines, Inc. v. Bi-State Dev. Ag. of Mo.-Ill. Met. D., 19941.

• Decision Date: 27 October 1970
• Docket Number: No. 19941.,19941.
• Citation: 433 F.2d 131
• Parties: LADUE LOCAL LINES, INC., Appellant, v. BI-STATE DEVELOPMENT AGENCY OF THE MISSOURI-ILLINOIS METROPOLITAN DISTRICT, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

433 F.2d 131 (1970)

LADUE LOCAL LINES, INC., Appellant, v. BI-STATE DEVELOPMENT AGENCY OF THE MISSOURI-ILLINOIS METROPOLITAN DISTRICT, Appellee.

No. 19941.

United States Court of Appeals, Eighth Circuit.

October 27, 1970.

John H. Lashly, St. Louis, Mo., for appellant; William I. Rutherford and Michael C. Walther, St. Louis, Mo., on the brief.

Thomas J. Guilfoil, St. Louis, Mo., for appellee; Jim J. Shoemake, St. Louis, Mo., on the brief.

Before VAN OOSTERHOUT, MEHAFFY and LAY, Circuit Judges.

LAY, Circuit Judge.

This action was brought under the antitrust laws of the United States, 15 U.S.C.A. §§ 2 and 15. Plaintiff Ladue Local Lines, Inc., is a Missouri corporation engaged in private bus transportation in the metropolitan St. Louis area, which includes parts of eastern Missouri and western Illinois. Suit was brought against the Bi-State Development Agency of the Missouri-Illinois Metropolitan District (hereinafter Bi-State), organized and operating under the laws of Missouri and Illinois. Plaintiff claims that defendant's monopolistic control of the public transportation market has destroyed Ladue's business by excluding it from bidding and servicing schools and school systems. Bi-State moved to dismiss on the ground that it was a body politic created by and under the laws of the States of Illinois and Missouri and the United States, exercising the powers of those sovereigns and therefore not subject to suit under the antitrust laws of the United States.

The district court, 303 F.Supp. 560, the Honorable James H. Meredith, presiding, granted the motion to dismiss. The district court held that defendant's acquisitions of other bus lines¹ had been approved by the Interstate Commerce Commission and as such defendant was specifically exempted from the operation of the antitrust laws under 49 U.S.C.A. § 5(11). Ladue appeals. We affirm the dismissal. We find that Bi-State is a joint or common agency of the States of Missouri and Illinois and that its entry into the field of public transportation is conducted pursuant to legislative authorization of those states and therefore not subject to the antitrust laws.

The complaint acknowledges that Bi-State is organized as a body corporate and politic pursuant to Mo.Rev.Stat. § 70.370 and Ill.Rev.Stat. C. 127, § 63r-1. These statutory provisions enact a compact entered into by the States of Illinois and Missouri for the creation of a bi-state agency for the "faithful cooperation in the future planning and development of the bi-state metropolitan district." As established by the compact, the governing body of the Bi-State Development Agency consists of ten commissioners, five voters of each state, all of whom reside within the bi-state district. Each state reserves the right to provide by law for the veto power of its governor over the action of any commissioner. In 1949, when the compact was initiated, the defendant was given powers, inter alia, to plan, own and maintain bridges, tunnels, airports and terminal facilities; to help coordinate streets, highways, parkways, parking areas, water supply and sewerage and disposal works, recreational and conservation facilities and land use patterns. The agency was empowered to charge and collect fees for the use of the facilities and was given the general power to perform all other necessary and incidental functions. Provision was also made for the exercise of such additional powers as conferred upon it by the legislatures of the states or by act of Congress.²

In 1959 the compact was amended by identical Missouri and Illinois statutes. The Missouri statute, Mo.Rev.Stat. § 70.373 (1959), V.A.M.S., reads in part:

"In further effectuation of that certain compact between the states of Missouri and Illinois heretofore made and entered into on September 20, 1949, the Bi-State Development Agency, created by and under the aforesaid compact, is authorized to exercise the following powers in addition to those heretofore expressly authorized by the aforesaid compact:

"(1) To acquire by gift, purchase or lease, and to plan, construct, operate and maintain, or lease to others for operation and maintenance, bridges, tunnels, airports, wharves, docks, harbors, warehouses, grain elevators, commodity and other storage facilities, sewage disposal plants, passenger transportation facilities, and air, water, rail, motor vehicle and other terminal facilities."³ (Emphasis ours.)

There is no question that Bi-State operates as a nonprofit corporation in the public interest. Its properties have been ruled exempt from state taxation. Missouri Op.Atty.Gen. No. 218, State Tax Comm'n. (December 30, 1964).

The complaint alleges that Bi-State commenced operation of a public transit system on or about April 1, 1963; that it purchased most of the public service lines in the metropolitan area; that thereafter it instituted in both Missouri and Illinois a student pass plan, "the consequence of which was to exclude competition or prevent competition in the business of student bus transportation in the St. Louis metropolitan area." It is further asserted that in September 1963 Bi-State reinstated a $2.00 per week student bus pass which had previously been abandoned by St. Louis Park Serv. Co., its predecessor, because it was operated at a loss; that Bi-State has eliminated all charges for change of lines, zone fares and transfer charges; that the student rate is unreasonably low; that Bi-State has in addition acquired contracts for school bus service without competitive bidding or where competitive bids were invited without Bi-State having submitted the low bid; that by reason of these allegations plaintiff urges that Bi-State is guilty of destroying and eliminating competition and that plaintiff has been destroyed by the attempted monopolization of the school bus market, in violation of Section 2 of the Sherman Antitrust Act.

In the event that Bi-State were subject to the antitrust laws we would be required to review the basis of the district court's holding, i. e. that defendant is exempted from the antitrust law by § 5(11) of the Interstate Commerce Act. However, before a party can be said to be exempt from the operation of the antitrust laws under § 5(11) it is necessary to determine whether a state or an agency thereof is subject to regulation under the antitrust laws in the first instance.

As early as 1904, the Supreme Court, in dealing with pilotage services in and about the port of Galveston, Texas, observed:

"The contention that because the commissioned pilots have a monopoly of the business, and by combination among themselves exclude all others from rendering pilotage services, is also but a denial of the authority of the State to regulate, since if the State has the power to regulate, and in so doing to appoint and commission, those who are to perform pilotage services, it must follow that no monopoly or combination in a legal sense can arise from the fact that the duly authorized agents of the State are alone allowed to perform the duties devolving upon them by law." Olsen v. Smith, 195 U.S. 332, 344-345, 25 S.Ct. 52, 55, 49 L.Ed. 224 (1904).

In Parker v. Brown, 317 U.S. 341, 351, 63 S.Ct. 307, 313, 87 L.Ed. 315 (1943), the Supreme Court expanded this reasoning:

"The Sherman Act makes no mention of the state as such, and gives no hint that it was intended to restrain state action or official action directed by a state. The Act is applicable to `persons\' including corporations, § 7, 15 U.S.C.A., and it authorizes suits under it by persons and corporations. § 15. A state may maintain a suit for damages under it, State of Georgia v. Evans, 316 U.S. 159, 62 S.Ct. 972, 86 L.Ed. 1346, but the United States may not, United States v. Cooper Corp., 312 U.S. 600, 61 S.Ct. 742, 85 L.Ed. 1071 — conclusions derived not from the literal meaning of the words `person\' and `corporation\' but from the purpose, the subject matter, the context and the legislative history of the statute.

"There is no suggestion of a purpose to restrain state action in the Act\'s legislative history. The sponsor of the bill which was ultimately enacted as the Sherman Act declared that it prevented only `business combinations.\' 21 Cong.Rec. 2562, 2457; see also at 2459, 2461. That its purpose was to suppress combinations to restrain competition and attempts to monopolize by individuals and corporations, abundantly appears from its legislative history. See Apex Hosiery Co. v. Leader, 310 U.S. 469, 492-493, 60 S.Ct. 982, 983, 84 L.Ed. 1311, 128 A.L.R. 1044 and n. 15; United States v. Addyston Pipe & Steel Co., 6 Cir., 85 F. 271, 46 L.R.A. 122, affirmed 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136; Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 54-58 31 S.Ct. 502, 55 L.Ed. 619." (Emphasis ours.)

See E. W. Wiggins Airways, Inc. v. Massachusetts Port Authority, 362 F.2d 52 (1 Cir. 1966), cert. denied 385 U.S. 947, 87 S.Ct. 320, 17 L.Ed.2d 226 (1966). See also Eastern R. Presidents Conf. v. Noerr Motors, 365 U.S. 127, 136, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); Alabama Power Co. v. Alabama Electric Cooperative, Inc., 394 F.2d 672 (5 Cir. 1968), cert. denied 393 U.S. 1000, 89 S.Ct. 488, 21 L.Ed.2d 465 (1968); Bank of Utah v. Commercial Security Bank, 369 F.2d 19, 24 (10 Cir. 1966), cert. denied 386 U.S. 1018, 87 S.Ct. 1374, 18 L.Ed.2d 456 (1967); Pennsylvania Water & Power Co. v. FPC, 89 U.S.App. D.C. 235, 193 F.2d 230, 235 (1951), aff'd 343 U.S. 414, 72 S.Ct. 843, 96 L.Ed. 1042 (1952); Miley v. John Hancock Mut. Life Ins. Co., 148 F.Supp. 299, 302-303 (D.Mass.1957), aff'd mem. 242 F.2d 758 (1 Cir. 1957), cert. denied 355 U.S. 828, 78 S.Ct. 38, 2 L.Ed.2d 41 (1957). Thus, it appears that the proposition is settled that the antitrust laws do not apply to state government or activities undertaken pursuant to legislative mandate.

The plaintiff urges, however, that bussing of school children is not a recognized governmental function, that it is proprietary in nature and...