Artist v. Virginia Intern. Terminals, Inc.

• Decision Date: 10 February 1988
• Docket Number: Civ. A. No. 87-441-N.
• Citation: 679 F. Supp. 587
• Parties: Samuel ARTIST, Plaintiff, v. VIRGINIA INTERNATIONAL TERMINALS, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

679 F. Supp. 587

Samuel ARTIST, Plaintiff, v. VIRGINIA INTERNATIONAL TERMINALS, INC., et al., Defendants.

Civ. A. No. 87-441-N.

United States District Court, E.D. Virginia, Norfolk Division.

February 10, 1988.

Neil C. Bonney, White & Selkin, Norfolk, Va., for plaintiff.

Dean T. Buckius, John M. Ryan, Vandeventer, Black, Meredith & Martin, Norfolk, Va., for defendants.

ORDER

DOUMAR, District Judge.

Plaintiff filed this action under 42 U.S.C. § 1983 and pendent jurisdiction. Count One of the complaint alleges defendants tortiously interfered with plaintiff's employment contract and seeks money damages. Count Two of the complaint alleges defendants deprived plaintiff of due process rights guaranteed by the fourteenth amendment of the United States Constitution and seeks money damages pursuant to § 1983. Significantly, plaintiff does not desire equitable relief, such as a mandatory injunction to provide notice and hearing, but simply requests money damages.¹

This case is before the Court on Cross Motions for Summary Judgment. For the reasons stated below, the plaintiff's motion is DENIED and the defendants' motion is GRANTED. Accordingly, this case is DISMISSED.

I. FACTS

In September 1985, plaintiff was employed as a tractor-trailer driver by Service Transfer, Inc., a company which transports ship containers from terminals operated by defendant, Virginia International Terminals (VIT). On September 5, 1985, plaintiff was involved in a fight on VIT's premises with one of VIT's employees. As a result of this fight, defendant Giesinger, Manager of Operations for VIT, by letter dated September 12, 1985, barred plaintiff from the terminal property pursuant to regulations promulgated by VIT. This letter was addressed to plaintiff and a copy was apparently sent to plaintiff's employer, Service Transfer, Inc.

After this debarment, plaintiff continued to work for Service Transfer until October 4, 1985 at which time plaintiff voluntarily terminated his employment. Although plaintiff was not terminated involuntarily, his utility to Service Transfer and consequently his income were diminished. By this action, plaintiff is attempting to gain compensation for this diminished income.

The Norfolk International Terminals are owned by the Virginia Port Authority (VPA) and operated by VIT. VIT is a non-stock, non-profit corporation formed pursuant to Chapter 2 of Title 13.1 of the Code of Virginia. VIT is wholly owned by VPA, an agency of the Commonwealth of Virginia. In addition, VIT's directors are selected by VPA and VPA's Executive Director is a permanent member of VIT's Board.

II. DISCUSSION

The complaint alleges two causes of action, one based on the Civil Rights Act and the other based on Virginia tort law. Each cause of action will be considered separately below.

A. Civil Rights Act.

42 U.S.C. § 1983 provides that

every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State ... subjects, or causes to be subjected, any citizen of the United States ... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress....

Plaintiff's § 1983 count is based on defendants' alleged deprivation of plaintiff's fourteenth amendment rights. In this regard, plaintiff claims that defendants deprived him of both "property" and "liberty" without due process of law.

To determine whether liability may exist under § 1983, the Court must determine first whether defendant acted "under color" of state law, and second whether plaintiff has alleged deprivation of any protected "property" or "liberty" interest. If the answer to either is negative, then § 1983, by its terms, will not apply in this case. See generally Buchanan, Challenging State Acts of Authorization under the Fourteenth Amendment: Suggested Answers to an Uncertain Quest, 57 Wash.L. Rev. 245 (Mar. 1986).

a. Under Color of State Law

This first question "is the same question posed in cases arising under the fourteenth amendment: is the alleged infringement of federal rights `fairly attributable to the State?'" Rendell-Baker v. Kohn, 457 U.S. 830, 838, 102 S.Ct. 2764, 2770, 73 L.Ed.2d 418 (1982) (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2753, 73 L.Ed.2d 482 (1982)). Therefore, the threshold issue is whether the alleged action of defendant VIT, a private corporation, is "fairly attributable to the State." Id.

In interpreting the Supreme Court's cases on the "somewhat elusive terrain of the doctrine of state action," the Fourth Circuit has indicated that the following factors should be considered: "(1) the extent and nature of public funding to the institution, (2) the extent and nature of regulation on the institution, (3) whether the institution's activity constitutes a public function `in the exclusive preogative' of the state, and (4) whether there is a `symbiotic relationship' between the institution and the state."²Hicks v. S. Md. Health Sys. Agency, 737 F.2d 399, 402 (4th Cir.1984) (citing Rendell-Baker v. Kohn, 457 U.S. 830, 839-43, 102 S.Ct. 2764, 2770-72, 73 L.Ed.2d 418 (1982)).

Plaintiff's attribution argument is based upon the fourth criteria, that a symbiotic relationship exists between VIT and VPA. Plaintiff cites Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961) in support of this contention. Burton involved racial discrimination by a privately owned restaurant which leased space within a public parking garage owned and operated by the Wilmington Parking Authority.

Under Delaware law, the parking authority had the following powers and privileges:

The Authority is granted wide powers including that of constructing or acquiring by lease, purchase or condemnation, lands and facilities, and that of leasing "portions of any of its garage buildings or structures for commercial use by the lessee, where, in the opinion of the Authority, such leasing is necessary and feasible for the financing and operation of such facilities." § 504(a). The Act provides that the rates and charges for its facilities must be reasonable and are to be determined exclusively by the Authority "for the purposes of providing for the payment of the expenses of the Authority, the construction, improvement, repair, maintenance, and operation of its facilities and properties, the payment of the principal of and interest on its obligations.... § 504(b)(8). The Authority ... may issue its own revenue bonds which are tax exempt.

Burton, 365 U.S. at 718, 81 S.Ct. at 858. Pursuant to these statutorily conferred powers, the Parking Authority entered into a twenty year lease with defendant restaurant to augment the financing of the lot construction. Id.

The Burton Court stated that "the peculiar relationship of the restaurant to the parking facility in which it is located confers on each an incidental variety of mutual benefits." Burton, 365 U.S. at 724, 81 S.Ct. at 861. Among the benefits to the restaurant were the added parking convenience to its customers and certain tax advantages by virtue of its association with the State. Id. Correspondingly, the Parking Authority benefited from added revenue derived both from rent payment and increased parking drawn by the restaurant. Id. Accordingly, the court held that because the State had "so far insinuated itself into a position of interdependence with the restaurant that it must be recognized as a joint participant in ... challenged activity" which could no longer be considered "purely private."³ Id. at 725, 81 S.Ct. at 862.

In the instant case, VPA functions under a statutory mandate almost identical to that of the Parking Authority involved in Burton. VPA is authorized to acquire and lease property, Va.Code Ann. §§ 62.1-131, 132.18-132.19 (1987); establish rates for port use, §§ 62.1-132.4, 132.16; issue revenue bonds, § 62.1-140; and to utilize revenues to pay principle and interest on bond issues as well as to pay "the cost of maintaining, repairing and operating" port facilities, § 62.1-142. Furthermore, VPA functions on a tax-exempt basis. § 62.1-145.

Also like Burton, the VPA-VIT relationship involves a variety of mutual benefits. However, unlike Burton, the benefits involved here are not merely incidental, but are significant and fundamental. VIT serves as a vital organ for VPA by actually operating the terminals owned by VPA, and but for VPA, VIT would not even exist. Here, VIT's private existence is more form than substance. Accordingly, the Court finds that, based on the symbiotic relationship between VIT and VPA, that VIT's actions were state actions within the meaning of § 1983.

The Court notes the authorities which indicate that "the Government may subsidize private entities without assuming constitutional responsibility for these actions." San Francisco Arts & Athletics, Inc. v. Olympic Comm., ___ U.S. ___, 107 S.Ct. 2971, 2985, 97 L.Ed.2d 427 (1987); Blum v. Yaretsky, 457 U.S. 991, 1010-11, 102 S.Ct. 2777, 2789, 73 L.Ed.2d 534 (1982); Rendell-Baker, 457 U.S. at 840, 102 S.Ct. at 2770. Furthermore, "that a private entity performs a function that serves the public does not make its acts governmental action." Olympic Committee, 107 S.Ct. at 2985 (quoting Rendell-Baker, 457 U.S. at 842, 102 S.Ct. at 2772). However, this case does not involve mere government subsidy or regulation, but involves actual state ownership and substantial control of the "private" entity.

Defendants introduced the opinion of the Attorney General of Virginia which states, without citation of authority, that because VIT was incorporated under the former Virginia Non-Stock Corporation Act, Chapter 2, Title 13.1, that VIT "is therefore a private entity and its employees are private employees and are not public employees of the state or any of its political subdivisions."⁴ Op.Atty.Gen. (Sept. 13, 1985).

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