Sea Air Shuttle Corp. v. Virgin Islands Port Auth.

• Decision Date: 04 November 1991
• Docket Number: Civ. A. No. 1991-0009.
• Citation: 782 F. Supp. 1070
• Parties: SEA AIR SHUTTLE CORPORATION d/b/a VISS, and Sea Air Shuttle Corporation of the Virgin Islands, Plaintiffs, v. The VIRGIN ISLANDS PORT AUTHORITY and Caribbean Airboats, Inc., Defendants.
• Court: U.S. District Court — Virgin Islands

782 F. Supp. 1070

SEA AIR SHUTTLE CORPORATION d/b/a VISS, and Sea Air Shuttle Corporation of the Virgin Islands, Plaintiffs, v. The VIRGIN ISLANDS PORT AUTHORITY and Caribbean Airboats, Inc., Defendants.

Civ. A. No. 1991-0009.

District Court, Virgin Islands, D. St. Croix.

November 4, 1991.

Andrew C. Simpson, Britain H. Bryant, Christiansted, Virgin Islands, for plaintiffs.

Carey-Anne Moody, Christiansted, St. Croix, Virgin Islands, Maria Tankenson Hodge, St. Thomas, Virgin Islands, for defendants.

MEMORANDUM

HUYETT, District Judge, Sitting by Designation.

This action concerns a dispute over the purported award¹ by defendant Virgin Islands Port Authority ("VIPA") of an exclusive lease to defendant Caribbean Airboats, Inc. ("CAI") to use seaplane ramps owned by VIPA. The plaintiffs in this action, Sea Air Shuttle Corporation d/b/a VISS and Sea Air Shuttle Corporation of the Virgin Islands (referred to collectively as plaintiff "Sea Air"), raise certain contentions against defendants as a result of defendant VIPA's decision to award an exclusive lease to use VIPA's seaplane ramps to defendant CAI rather than to plaintiff Sea Air. Sea Air claims that defendants have violated the Sherman Act, 15 U.S.C. § 1 et seq., and the Virgin Islands Antimonopoly Law, 11 V.I.C. § 1501 et seq., by engaging in anticompetitive behavior. Defendant CAI moves for partial summary judgment arguing that (1) CAI is immune from Sherman Act antitrust liability because CAI only entered into negotiations for the lease of seaplane ramps and these acts are protected by the Noerr-Pennington doctrine;² (2) even if CAI and VIPA had entered into a lease, each defendant would be protected from antitrust liability by the doctrine of governmental immunity; (3) even if defendants CAI and VIPA were subject to antitrust liability, plaintiff Sea Air suffered no antitrust injury and thus possesses no standing to bring an antitrust action under the Sherman Act; and (4) neither CAI nor VIPA have violated the Virgin Islands Antimonopoly Law in light of the statute's guiding principle of following federal antitrust law. By order dated October 28, 1991, the Court granted CAI's motion for partial summary judgment. We write now to explain our reasons.

I. INTRODUCTION

Prior to September of 1989, when Hurricane Hugo struck the United States Virgin Islands, a seaplane service was operated by Virgin Islands Seaplane Shuttle ("VISS"). VISS provided passenger air service between downtown Christiansted, St. Croix, downtown Charlotte Amalie, St. Thomas, downtown San Juan, Puerto Rico, downtown Roadtown, Tortola, and St. John. As a result of destruction caused by Hurricane Hugo, VISS went out of business and seaplane service was interrupted. Among the physical structures that VISS used prior to its demise were seaplane ramps on St. Thomas and St. Croix owned by VIPA.

In early 1990, VIPA issued a request for proposals for the lease of the seaplane ramps on St. Thomas and St. Croix. Among the parties bidding were defendant CAI and Caribbean Airline Services, Inc. (hereinafter "CAS").³ VIPA accepted CAI's proposal and rejected the CAS/Sea Air proposal. As a result, VIPA agreed to enter into an exclusive lease with CAI for the use of VIPA's seaplane ramps in St. Croix and St. Thomas. In light of VIPA's decision to award the lease to CAI and not Sea Air, Sea Air brings this action alleging United States Constitutional violations, Federal Aviation Act violations, violation of Virgin Islands territorial law, and violation of federal antitrust law. In response, defendant CAI moves for partial summary judgment with respect to plaintiff's antitrust claims under the Sherman Act and the Virgin Islands Antimonopoly Law. By order dated October 28, 1991, the Court granted CAI's motion for partial summary judgment. We write now to explain our reasons.

II. DISCUSSION

A. Standard For Summary Judgment.

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). As discussed below, CAI has demonstrated that as a matter of law VIPA and CAI are immune from antitrust liability under the Sherman Act and the Virgin Islands Antimonopoly Law. Under Rule 56(c), this Court must accordingly grant defendant CAI's motion for partial summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

B. Antitrust Liability Under The Sherman Act.

CAI argues that VIPA is immune from antitrust liability under the Sherman Act as a result of the doctrine of governmental immunity. As defendant CAI correctly notes, virtually all levels of government have been granted some degree of immunity from the operation of antitrust law generally and the Sherman Act specifically. See Sea Land Service v. Alaska Railroad, 659 F.2d 243 (D.C.Cir.1981), cert. denied 455 U.S. 919, 102 S.Ct. 1274, 71 L.Ed.2d 459 (1982) (holding that a railroad owned and operated by the federal government was immune from antitrust action under the governmental immunity doctrine which protects the federal government, its agencies, and instrumentalities from the reaches of antitrust law); Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1942) (holding that a State of California agriculture program to market certain crops was immune from antitrust challenge under state immunity doctrine); Local Government Antitrust Act of 1984, 15 U.S.C. § 34 et seq. (where Congress granted limited antitrust immunity to local governments).

1. Federal Action Immunity.

CAI contends that the Government of the Virgin Islands and as a result VIPA possess federal action immunity and therefore are immune from Sea Air's claims under the Sherman Act. This argument presents an issue that has not been considered by the District of the Virgin Islands or the Third Circuit. Defendants' chief authority supporting the proposition that the Government of the Virgin Islands and VIPA possess federal action immunity is a Ninth Circuit decision holding that the Guam Airport Authority, a public corporation and autonomous instrumentality of the Government of Guam, was immune from antitrust scrutiny. Sakamoto v. Duty Free Shoppers, Ltd., 764 F.2d 1285 (9th Cir.1985), cert. denied 475 U.S. 1081, 106 S.Ct. 1457, 89 L.Ed.2d 715 (1986). We find the reasoning of the Ninth Circuit highly persuasive. It appears clear that the Government of the Virgin Islands and VIPA are immune from antitrust scrutiny.

In Sakamoto, the plaintiffs, who were in the business of selling gifts to tourists in Guam, challenged an exclusive concession agreement given to one of plaintiffs' competitors at the Guam Airport Terminal. In rejecting plaintiffs' theory that Guam should be treated as a municipality and afforded limited antitrust immunity, Sakamoto held that the Government of Guam was wholly immune from antitrust scrutiny under the federal action doctrine. The Ninth Circuit stated:

Guam's relationship to the federal government is different from Boulder's relationship to Colorado. As we have seen, the government of Guam is an instrumentality of the federal government over which the federal government exercises plenary control. Congress has granted it far fewer powers of self-government than the State of Colorado has granted the City of Boulder. There is no reason why Guam should enjoy less immunity than the federal government itself.

Sakamoto at 1288-89.

Sakamoto essentially holds that in respect to antitrust liability, the Government of Guam acts more as an arm of the federal government than as an autonomous governmental body possessing state or municipal attributes.

The plaintiffs in Sakamoto brought an action against the Government of Guam, the Guam Airport Authority, Duty Free Shoppers, Ltd., and various employees of the Guam Airport Authority and the Guam Government, alleging among other claims that the defendants engaged in "unlawful combination and conspiracy in restraint of interstate commerce by entering into contracts which conferred upon DFS a defendant exclusive rights for the sale and delivery of certain merchandise at the Guam International Airport Terminal ..." Sakamoto v. Duty Free Shoppers, Ltd., 613 F.Supp. 381, 383-384 (D.C.Guam 1983); aff'd 764 F.2d 1285 (9th Cir.1985).⁴ Similarly, plaintiff in this action alleges that defendants violated antitrust law by entering into a lease giving defendant CAI an exclusive right to utilize defendant VIPA's seaplane ramps. Further, in Sakamoto, "the Guam Legislature enacted Public Law 13-57, entitled `Guam Airport Authority Act,' creating the Guam Airport Authority (`GAA'), as a public corporation and autonomous instrumentality of the Government of Guam." Id. at 384. Here, the Virgin Islands legislature created the Virgin Islands Port Authority as a "body corporate and politic constituting a public corporation and autonomous governmental instrumentality for the Government of the Virgin Islands ..." 29 V.I.C. § 541(a). Considering the close similarity between the agencies and the subject matter (i.e. exclusive leases and contracts) in this action and Sakamoto, we find the reasoning of the District Court in Sakamoto highly pertinent. The District Court in Sakamoto succinctly stated:

It is this Court's determination that the Government of Guam, and, indirectly, the GAA, are federal agencies and instrumentalities for the purposes of the Antitrust law and that their challenged conduct is immune from antitrust scrutiny."

Id. at 387.

Plaintiff Sea Air contends that VIPA is not immune from antitrust liability under federal action doctrine. Sea Air's arguments will be addressed in the order that they are raised.

First, Sea Air argues that the Third Circuit has decided that the...