Airline Car Rental v. Shreveport Airport Authority, Civ. A. No. 85-1201.

Decision Date28 July 1987
Docket NumberCiv. A. No. 85-1201.
Citation667 F. Supp. 303
CourtU.S. District Court — Western District of Louisiana

Charles W. Strickland, Frances Baker Jack, Shreveport, La., for plaintiff.

John M. Madison, Jr., Wiener, Weiss, Madison and Howell, Shreveport, La., for defendant.

VERON, District Judge.


The plaintiff, Airline Car Rental, Inc. ("Airline"), brought suit against the Shreveport Airport Authority ("the Authority") challenging its "Resolution Establishing Regulations and Fees for Rental Car Businesses Operating at the Shreveport Regional Airport Without a Lease." The matter is now before the court on cross-motions for summary judgment. After considering the pleadings and memoranda of law, as well as oral argument heard November 25, 1986, the court determines that the plaintiff's motion for summary judgment should be denied and the defendant's motion granted in part and denied in part.


The material facts are undisputed and are as follows:

Airline, a rental car business located near the airport, operates a free shuttle service between the airport and its business premises. Airline's shuttles pick up and drop off customers at designated loading zones on Claude Hamel Drive, a circular roadway servicing the airport terminals. Airline's shuttle drivers do not solicit customers or engage in car rental transactions. They provide transportation to customers only upon request. A large majority of Airline's customers pre-arrange their car rentals through the national reservation system of Avis, of whom Airline is a licensee.

Prior to 1977 Airline leased one of three concession areas within the terminal facilities. In 1977 Airline lost its lease when three competing rental car businesses outbid it. Airline then moved to its present location near the airport, expending approximately $748,000 on the new facilities. Since 1977 Airline has not bid on leases for concession areas, despite construction of a fourth area which has remained vacant.

Currently three rental car businesses, The Hertz Corp., National Rent-a-Car, and Budget Rent-a-Car, lease counter space within the airport terminal and vehicle service and storage areas on airport grounds. In addition to rental fees, these tenant rental car businesses pay ten percent of their gross receipts derived from car rental transactions consummated in the airport.

On April 1, 1985 the Authority adopted its "Resolution Establishing Regulations and Fees for Rental Car Businesses Operating at the Shreveport Regional Airport without a Lease" (hereinafter cited as "Resolution"), which imposes on non-tenant rental car businesses a fee of seven percent of all gross business receipts derived from the rental of vehicles to passengers picked up at the airport. Resolution § 7(3)(F). Non-tenant rental car businesses must also comply with various disclosure, reporting, and operating requirements. Resolution § 7.

The Resolution's stated purpose is "to retire Authority debts incurred for the construction of Airport facilities, pay for Airport operation and maintenance, manage the Airport, pay for Airport equipment, protect the public, preserve order, provide for the public health, safety and welfare, enchance the welfare of the Authority, and govern the Airport." Resolution § 1. In briefs and oral argument before this court, the Authority has contended it adopted the Resolution to protect revenue derived from current tenant car rental businesses by discouraging their movement to off-premises locations.

Airline brought suit challenging the Resolution on April 30, 1985. The case is now before the court on cross motions for summary judgment. The Authority requests summary judgment dismissing each of Airlines remaining claims that the Authority adopted the Resolution in violation of the Commerce Clause, in violation of state and federal Equal Protection Clauses, in violation of state and federal anti-trust laws, and without lawful authority. Airline seeks summary judgment only on the grounds that the Resolution violates state and federal Equal Protection clauses and was adopted without lawful authority. The merits of the motions will be discussed as to each of Airline's remaining claims in turn.

I. Commerce Clause Claim.

The Authority bases its argument for summary judgment as to Airline's Commerce Clause claim on the market participant doctrine established by the United States Supreme Court in Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 96 S.Ct. 2488, 49 L.Ed.2d 220 (1976). Under the doctrine, "when a state or local government enters the market as a participant it is not subject to the restraints of the Commerce Clause." White v. Massachusetts Council of Construction Employers, 460 U.S. 204, 208, 103 S.Ct. 1042, 1044, 75 L.Ed.2d 1 (1983). As the Court explained, "The Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national marketplace. There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market." Reeves, Inc. v. Stake, 447 U.S. 429, 436-37, 100 S.Ct. 2271, 2277, 65 L.Ed.2d 244 (1980) (citations omitted). Because this court finds that the Authority acts as a market regulator rather than a market participant in the car rental market, the Authority's motion must be denied as to Airline's Commerce Clause claim.

The Supreme Court has defined the scope of the market participant doctrine, stating, "The limit of the market-participant doctrine must be that it allows a State to impose burdens on commerce within the market in which it is a participant, but allows it to go no further." South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82, 97, 104 S.Ct. 2237, 2245, 81 L.Ed.2d 71 (1984). In the present case the Authority's Resolution imposes a burden directly on the car rental market; therefore, to determine whether the Authority's Resolution is subject to scrutiny under the Commerce Clause, this court must determine whether the Authority is a participant in that market.

In Smith v. Department of Agriculture of the State of Georgia, 630 F.2d 1081 (5th Cir.1980), cert. denied 452 U.S. 910, 101 S.Ct. 3040, 69 L.Ed.2d 412 (1981), the United States Court of Appeals for the Fifth Circuit faced a closely analogous situation. In Smith the State owned and operated the Columbus Farmers Market, leasing out space therein to individual growers who sold their produce to the general public. The plaintiff challenged a rule by which non-residents of Georgia were assigned inferior sales locations. Finding that the market-participant doctrine did not shield Georgia from the limitations of the Commerce Clause, the Fifth Circuit reasoned:

Admittedly, the market is owned, operated and partially financed by the State of Georgia. On the other hand, it is significant that appellants neither produce the goods to be sold at the market, nor engage in the actual buying or selling of those goods. In essence, the State of Georgia has simply provided a suitable marketplace for the buying and selling of privately owned goods. ... Accordingly, the State of Georgia cannot be deemed an actual market participant at the Columbus Farmers Market. Rather, its essential role is that of market regulator.

Smith, 630 F.2d at 1083.

In the present case the Authority argues that by providing concession areas to rental car businesses for a fee, the Authority has entered the market for ground transportation services. Concededly, as the producer and provider of concession areas, the Authority does act in a proprietary capacity, and may impose burdens on the market for such concession areas without being subject to Commerce Clause scrutiny. See, e.g., Transport Limousine of Long Island, Inc. v. Port Authority, 571 F.Supp. 576 (E.D.N.Y.1983); Salem Transportation Co. of New Jersey v. Port Authority, 611 F.Supp. 254 (S.D.N.Y.1985). But the Authority "may not impose conditions, whether by statute, regulation, or contract, that have a substantial regulatory effect outside of that particular market. Unless the `market' is relatively narrowly defined, the doctrine has the potential of swallowing up the rule that States may not impose substantial burdens on interstate commerce." South-Central Timber Development, Inc., 467 U.S. at 97-98, 104 S.Ct. at 2245.

The Authority has not entered the market for rental car services. The Authority neither provides nor purchases these services. Rather, the Authority has simply created a suitable marketplace for the buying and selling of these services by private individuals. In the market for rental car services, the Authority's role, then, is essentially that of a market regulator. As such, the Authority's Resolution is subject to scrutiny under the Commerce Clause.* For this reason the Authority's motion for summary judgment must be denied as to Airline's Commerce Clause claim.

II. Antitrust Claims.

The Authority claims entitlement to summary judgment dismissing Airline's federal antitrust claims under the state action doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). "In Parker, relying on principles of federalism and state sovereignty, the Court refused to construe the Sherman Act as applying to the anticompetitive conduct of a State acting through its legislature." Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38, 105 S.Ct. 1713, 1716, 85 L.Ed.2d 24 (1985).

Municipalities, however, are not beyond the reach of federal antitrust laws by virtue of their status because they are not themselves sovereigns. "Before a municipality will be entitled to the protection of the state action exemption from the antitrust laws, it must demonstrate that it is engaging in the challenged activity pursuant to a clearly expressed state policy." Town...

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