Capital Leasing of Ohio v. Columbus Mun. Airport, C2-98-356.

CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
Citation13 F.Supp.2d 640
Docket NumberNo. C2-98-356.,C2-98-356.
Decision Date15 July 1998

Page 640

13 F.Supp.2d 640
No. C2-98-356.
United States District Court, S.D. Ohio, Eastern Division.
July 15, 1998.

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Laurence Edward Sturtz, Carlile, Patchen & Murphy, Columbus, OH, for Plaintiff.

John Ryan Gall, Squire Sanders & Dempsey, Columbus, OH, for Defendant.


HOLSCHUH, District Judge.

I. Procedural History

This case originated in the Common Pleas Court of Franklin County, Ohio on March 18, 1998, when plaintiff filed a complaint and a motion for a temporary restraining order and preliminary injunction. On March 18, 1998, a judge of the state court denied plaintiffs motion for a temporary restraining order. On March 31, 1998, plaintiff filed an amended complaint for a temporary restraining order and injunction and for a declaratory judgment. On April 3, 1998, defendant filed an answer to plaintiffs amended complaint and a notice of removal of this action to this Court based on federal question jurisdiction. On April 20, 1998, plaintiff filed in this Court a new motion for preliminary injunction. On April 23, 24, and 28, 1998, this Court held an evidentiary hearing on plaintiff's motion for preliminary injunction, which hearing, by agreement of the parties, was consolidated with the trial on the merits under Fed. R.Civ.P. 65(a)(2).

Subsequent to the hearing, post-hearing briefs were filed by plaintiff and defendant on May 13, 1998 and May 14, 1998, respectively, and on May 18, 1998, reply briefs were filed by the parties. In a conference with counsel on June 25, 1998, the Court requested that certain documents missing from the record be submitted as a part of the record and that the parties submit supplemental briefs regarding the applicability of Int'l Soc'y for Krishna Consciousness, Inc. v. Lee, 505 U.S. 672, 112 S.Ct. 2701, 120 L.Ed.2d 541 (1992). The parties were in agreement that this be done, and on June 30, 1998, the additional documents and briefs were filed. The defendant further agreed that the present concession agreement with plaintiff and other car rental companies would be extended to August 1, 1998 in order for the Court to render its decision in this case. The Court, having considered the record and the arguments of the parties, now renders this decision on the merits of the issues raised by plaintiff's amended complaint and its motion for an injunction.

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II. Factual Background

The facts which form the background for the issues raised in this action are essentially not in dispute. The following narration is based partially on a stipulation of facts agreed to by the parties.

Defendant, Columbus Municipal Airport Authority (Port Authority), is a governmental entity created in 1990 by the City of Columbus, pursuant to the laws of Ohio,1 to manage the operations of the Port Columbus International Airport.2

Plaintiff, Capital Leasing of Ohio, Inc., d.b.a Budget Rent-A-Car of Columbus (Budget), a licensee of Budget Rent A Car Corporation,3 is engaged in the business of renting motor vehicles at various locations in the City of Columbus. It is one of a number of car rental companies that do business either inside the Columbus airport terminal or near the airport terminal. Those companies that are engaged in the business of renting automobiles to travelers using the airport facilities are divided into two general categories, "on-airport" operators and "off-airport" operators.

On-airport operators, including Budget, are car rental companies that have entered into agreements with the Port Authority whereby they obtain space inside the airport terminal for the location of counters and large signs to attract air travelers who desire to rent vehicles before leaving the terminal. In many cases, a reservation for the rental may have been made in advance by the customer or by a travel agent calling a telephone number for a local Budget office or a toll-free number for a national reservation office servicing various Budget Rent A Car locations throughout the United States.

Because the Columbus airport has had no garage for the storage of rental vehicles, it has been necessary for the on-airport operators to store and maintain their vehicles at office locations near the terminal. Customers in the terminal who enter into rental agreements at the terminal counters are then transported by the car rental companies in their shuttle buses to their other facilities in order to obtain the vehicle the customer has rented. Customers can also proceed by shuttle buses directly to the other facility, enter into rental agreements at that office location and obtain their rental vehicles. Although some car rental companies have leased space from the Port Authority for the location of their storage, maintenance and office facilities entirely on airport property, Budget has not done so. For this purpose, Budget primarily uses its office located on private property leased by Budget at 1441 Stelzer Road, Columbus, Ohio, which is adjacent to the airport's property and is a short distance from the terminal. Budget does, however, lease adjoining property from the Port Authority solely for the storage and maintenance of its vehicles. At its Stelzer Road office, Budget rents cars to both travelers who have arrived at the airport and also to non-airport related or "local" customers.

On-airport rental car companies, like other companies engaged in different business inside the terminal, are referred to as concessionaires and have entered into concession agreements with the Port Authority. The car rental concession agreement, whereby a car rental company obtains counter and sign space inside the airport terminal, requires the company to pay for this space a "privilege fee," an amount based upon the concessionaire's gross revenues. The terms and conditions of the concession agreements are

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set forth in detail and, until recently, have been for a term of five years. Budget entered into such an agreement in 1987 and in 1993. The current agreement expired April 15, 1998, but, by agreement of the parties, has been extended until August 1, 1998.

Off-airport car rental companies are companies that have no agreements with the Port Authority and have no counter space inside the terminal. They have access, however, to the Port Authority's property for the purpose of transporting customers with their shuttle buses between their off-airport offices and the airport terminal. They are permitted to obtain access to the Port Authority's facilities by the payment of an "access fee" which, together with other detailed terms and conditions, is fixed by regulations adopted by the Port Authority's board.4

Some car rental companies in recent years have engaged in the practice of passing on to their customers the charges imposed on the car rental companies for doing business at airport facilities by carving out or "unbundling" this overhead cost and adding it to the amounts charged on their invoice to the customer for time and mileage, together with charges for other services the customer may desire to purchase, such as insurance, cellular telephones, childrens' seats, and taxes imposed by governmental entities. For example, since December, 1997, Hertz System, Inc. (Hertz), an on-airport operator, adds this charge as "Apt Conc Fee 10%" (meaning Airport Concession Fee) on its invoice to its Columbus airport customers. (Budget's exhibit 0.) The invoice is placed in an envelope (Budget's exhibit N) which contains the "Rental Agreement Terms and Conditions" applicable to "the Hertz Corporation or the independent Hertz System, Inc. licensee identified on the Rental Record." (the Columbus Hertz Rent-A-Car Company is identified on the invoice as a "Hertz System Licensee.") Paragraph 7 of the rental terms and conditions on the envelope concerns "Computation of Charges," and section 7(e) recites that: "Sales/use/excise taxes, tax reimbursement and airport related fees are charged as and where required or permitted by applicable law."5

Budget also has engaged in this practice. In September, 1997, Budget added this expense to the customer's invoice as an "airport fee." (See, e.g., Budget invoice and rental agreement CMH 18741, October 11, 1997 describing the charge as "10% AP Fee," attached to the stipulations of facts, and Port Authority's Exhibit 15, p. 1, describing the charge as "10% Airport Fee.")6 When this practice came to the attention of Susan Warner-Dooley, general counsel and director of properties and administration of the Port Authority, she sent a letter on October 9, 1997, notifying the car rental concessionaires that the Port Authority did not consent to the use of the terms "airport fee" as part of

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any separate statement of the charge on their customers' car rental contracts. (Joint Exhibit 13.) Ms. Warner-Dooley was subsequently contacted by Kevin Miles, General Manager of Budget, who asked whether Budget could use the words "access fee" to describe the separately stated charge. Ms. Warner-Dooley testified that she informed Mr. Miles that "access fee" was not prohibited by her October 9, 1997 letter.7 (Tr. Vol. III pp. 75-83.)

Since that time, Budget has described this charge on its invoice as "10% Access Fee." (See, e.g., Budget invoice and rental agreements in October, November, and December 1997, attached to stipulation of facts, and Port Authority's exhibit 15, pp. 2-5.) Budget, unlike Hertz, prints the terms and conditions of the rental agreement on the back of the invoice form and not in a separate envelope. There is no reference to or description of this added "access fee" in the terms and conditions printed on the back of the invoice form.8 The "10% Access Fee" appears on Budget's list of charges below its total time and mileage charge — appearing sometimes in the space entitled "Drop Charge" — and just before the "Sub Total" and...

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