Bradford School Bus Transit, Inc. v. Chicago Transit Authority

• Decision Date: 09 August 1976
• Docket Number: No. 75--1958,75--1958
• Parties: BRADFORD SCHOOL BUS TRANSIT, INC., et al., Plaintiffs-Appellants, v. CHICAGO TRANSIT AUTHORITY et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 943

537 F.2d 943

BRADFORD SCHOOL BUS TRANSIT, INC., et al., Plaintiffs-Appellants, v. CHICAGO TRANSIT AUTHORITY et al., Defendants-Appellees.

No. 75--1958.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 19, 1976.

Decided July 7, 1976.

Rehearing Denied Aug. 9, 1976.

James J. Flynn, Chicago, Ill., for plaintiffs-appellants.

Samuel K. Skinner, U.S. Atty., Chicago, Ill., Joseph A. Blundon, Asst. Chief Counsel, Urban Mass Transportation, Washington, D.C., Norman J. Barry, Chicago, Ill., for defendants-appellees.

Before HASTINGS, Senior Circuit Judge, SPRECHER and TONE, Circuit Judges.

SPRECHER, Circuit Judge.

This appeal concerns a class action for declaratory and injunctive relief brought by Bradford School Bus Transit Incorporated ('Bradford') and the Illinois School Transportation Association ('ISTA'), against the Chicago Transit Authority ('CTA'), the Urban Mass Transportation Administration ('UMTA') and Judith T. Connor, Administrator of the Urban Mass Transportation Administration. The questions presented here are whether private school bus operators have standing to challenge the actions of the Urban Mass Transportation Administration and if so, whether those actions are judicially reviewable.

I

In June 1974, in accordance with the terms of the Urban Mass Transportation Act ('Act'), 49 U.S.C. § 1601 et seq., UMTA entered into a grant contract with the CTA to provide financial assistance for purchasing passenger buses, rapid transit cars and related equipment, Project No. IL--03--0040. Pursuant to Sections 1602(g) and 1602a(b) of the Act, the grant contract included a provision which under certain conditions specifically prohibited the CTA from engaging in school bus operations in competition with private bus operators. ¹ UMTA later agreed to provide additional financial assistance to the CTA and the project was expanded to include the acquisition and construction of additional capital items.

Shortly thereafter, in December 1974, the Chicago Board of Education solicited bids from various bus companies for the transportation of students attending the Chicago Public Schools. Plaintiff Bradford and defendant CTA submitted bids to provide those services. The CTA's bid was accepted and it has been providing bus transportation for Chicago school children since January 1975.

Plaintiffs then brought this suit individually and on behalf of all private school bus operators in CTA's service area seeking a declaration that the CTA is engaged in school bus operations in violation of the Act and of the grant contract. They also sought to enjoin UMTA from providing further financial assistance to the CTA. The district court, granting a defense motion, dismissed plaintiffs' complaint for lack of standing and concluded that UTMA's action was not subject to judicial review. Plaintiffs now appeal from that order.

II

We shall first consider the issue of plaintiffs' standing. In dismissing the plaintiffs' complaint for lack of standing, the district court relied solely upon South Suburban Safeway Lines, Inc. v. City of Chicago,416 F.2d 535 (7th Cir. 1969). In South Suburban, a private bus company sought to challenge a grant to the CTA for a proposed extension of its rail operations which had been authorized by UMTA. Section 1602(c) of the Act, (now § 1602(e)) prohibited UMTA from providing financial assistance to a public transit corporation for the purpose of acquiring or operating in competition with a private transit corporation, unless, among other things, the Secretary of Transportation found this operation to be essential to a coordinated urban transportation system. In that case we held that the company lacked standing to complain. In our view, the district court's reliance on South Suburban was misplaced.

The Administrative Procedure Act grants standing to persons 'suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute.' 5 U.S.C. § 702. The Supreme Court has reviewed the question of standing to challenge agency action with respect to this provision. In Hardin v. Kentucky Utilities Co., 390 U.S. 1, 88 S.Ct. 651, 19 L.Ed.2d 787 (1968), which involved a section of the TVA Act designed primarily to protect against TVA competition, the Court held that the plaintiff, Kentucky Utilities Co., had standing to sue and stated:

(I)t has been the rule, at least since the Chicago Junction Case, 264 U.S. 258 (44 S.Ct. 317, 68 L.Ed. 667) (1924), that when the particular statutory provision invoked does reflect a legislative purpose to protect a competitive interest, the injured competitor has standing to require compliance with that provision. See Alton R. Co. v. United States, 315 U.S. 15, 19 (62 S.Ct. 432, 435, 86 L.Ed. 586) (1942); City of Chicago v. Atchison, T. & S.F.R. Co., 357 U.S. 77, 83 (78 S.Ct. 1063, 1066, 2 L.Ed.2d 1174) (1958).

Id., at 6, 88 S.Ct. at 654. And, as Justice Douglas observed in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 154, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970):

Where statutes are concerned, the trend is toward enlargement of the class of people who may protest administrative action. The whole drive for enlarging the category of aggrieved 'persons' is symptomatic of that trend.

In Data Processing, which held that an association of data processors had standing as competitors to challenge a regulation of the Federal Comptroller which permitted national banks to provide data processing services, the Court announced a two-prong test for standing:

. . . whether the plaintiff alleges that the challenged action has caused him injury in fact, economic or otherwise . . . (and) whether the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.

Id., at 152--153, 90 S.Ct. at 829. ²

We are convinced that the test employed by the Supreme Court in Data Processing is controlling in the instant case. First, plaintiffs here have a personal stake and interest in the litigation which amounts to an injury in fact under 5 U.S.C. § 702. Plaintiffs have alleged that they have been adversely affected by the CTA's operation of school bus services. Specifically, plaintiff Bradford has alleged that the CTA, an illegal competitor, was awarded a contract to provide school bus services for which Bradford had bid. Secondly, plaintiffs as private bus operators clearly fall within the zone of interests to be protected by the statute. In fact, plaintiffs represent the only parties to be protected by the statutory provisions. As defendant UMTA concedes in its brief, the purpose of sections 1602(g) and 1602a(b) is to protect private school bus companies from competition by federal funded public transit systems. That intent is clearly reflected in the language of both sections 1602(g) and 1602a(b) which provide in pertinent part that:

(Unless certain exceptions apply) (n)o Federal financial assistance shall be provided . . . to any applicant . . . unless such applicant . . . (agrees) not (to) engage in school bus operations, exclusively for the transportation of students and school personnel, in competition with private school bus operators . . . A violation of an agreement under this subsection shall bar such applicant from receiving any other Federal financial assistance under this chapter.

Therefore, we conclude that plaintiffs have satisfied the two-prong test enunciated in Data Processing and thus have standing to bring this action.

III

Having determined that plaintiffs have standing, we now turn to the issue of whether UMTA's actions are judicially reviewable. The district court, in dismissing plaintiffs' complaint considered this question and concluded:

By legislating that the U.M.T.A. and assistance applicants enter into an agreement as to non-competition with private school bus operators, the Congress clearly committed the decision as to whether a breach has occurred and whether or not to act on that breach to the agency's discretion. By this device, Congress clearly precluded judicial review.

Defendants urge us to follow the reasoning of the district court.

In order to determine whether judicial review of UMTA's action is required, we must analyze Section 701(a) of the Administrative Procedure Act and the relevant case law. Section 701(a) reads:

(a) This chapter applies, according to the provisions thereof, except to the extent that--

(1) statutes preclude judicial review; or

(2) agency action is committed to agency discretion by law.

In the instant case, the statutory provisions do not expressly preclude judicial review. Consequently, we must closely examine the statutory scheme and consider whether judicial review is precluded by inference. Justice Douglas' remarks in Barlow v. Collins, 397 U.S. 159, 166--167, 90 S.Ct. 832, 837, 25 L.Ed.2d 192 (1970) are most helpful:

As we said in Data Processing Service, preclusion of judicial review of administrative action adjudicating private rights is not lightly to be inferred. See Leedom v. Kyne, 358 U.S. 184 (79 S.Ct. 180, 3 L.Ed.2d 210); Harmon v. Brucker, 355 U.S. 579 (78 S.Ct. 433, 2 L.Ed.2d 503); Stark v. Wickard, 321 U.S. 288 (64 S.Ct. 559, 88 L.Ed. 733); American School of Magnetic Healing v. McAnnulty, 187 U.S. 94 (23 S.Ct. 33, 47 L.Ed. 90). Indeed, judicial review of such administrative action is the rule, and nonreviewability an exception which must be demonstrated. In Abbott Laboratories v. Gardner, 387 U.S. 136, 140 (87 S.Ct. 1507, 1511, 18 L.Ed.2d 681), we held that 'judicial review of a final agency action by an aggrieved person will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress.' A clear command of the statute will preclude review; and such a command of the statute may be inferred from its purpose. Switchmen's Union v. National Mediation...