Cedarhurst Air Charter, Inc. v. Waukesha County, 99-C-1199.

• Citation: 110 F.Supp.2d 891
• Decision Date: 30 March 2000
• Docket Number: No. 99-C-1199.,99-C-1199.
• Parties: CEDARHURST AIR CHARTER, INC., Plaintiff, v. WAUKESHA COUNTY, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

110 F.Supp.2d 891

CEDARHURST AIR CHARTER, INC., Plaintiff, v. WAUKESHA COUNTY, Defendant.

No. 99-C-1199.

United States District Court, E.D. Wisconsin.

March 30, 2000.

John L. Kirtley, Arthur J. Harrington, Godfrey & Kahn, Milwaukee, WI, for plaintiff.

Robert F. Johnson, Raymond D. Jamieson, Cook & Franke, Milwaukee, WI, Eric J. Van Vugt, Kevin M. Long, Quarles & Brady, Milwaukee, WI, for defendants.

DECISION AND ORDER

MYRON L. GORDON, District Judge.

Plaintiff Cedarhurst Air Charter, Inc. ["CAC"] operates its business out of Waukesha County Airport, which is owned by defendant Waukesha County. The county leases space at the airport to a "fixed base operator" ["FBO"], a private business that manages and operates the airport pursuant to a contract with the county. The county requires all owners who store their aircraft at the airport to buy fuel from the FBO; owners are not permitted to fuel their own planes, and fuel vendors other than the FBO are not allowed to do business at the airport.

These allegations, which are taken from the plaintiff's complaint and accepted as true only for present purposes, form the basis for CAC's claims that the county violated federal antitrust laws by conspiring with the FBO to monopolize the market for aircraft fuel (Sherman Act § 2, 15 U.S.C. § 2) and creating an illegal tying arrangement (Sherman Act § 1, 15 U.S.C. § 1). The plaintiff also contends that the county is liable under 42 U.S.C. § 1983 for the denial of CAC's rights under Airport and Airway Improvement Act ["AAIA"], Federal Aviation Administration ["FAA"] regulations and the Commerce Clause. The county has moved to dismiss all of these claims pursuant to Rule 12(b)(6), Fed. R.Civ.P.

I. FEDERAL ANTITRUST CLAIMS

The county asserts that CAC's antitrust claims are barred by the state action immunity from antitrust liability established by the Supreme Court in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). In Parker the Court held that the Sherman Act did not apply to anticompetitive restraints imposed by the States "`as an act of government.'" City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 370, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991) (quoting Parker, 317 U.S. at 352, 63 S.Ct. 307). This immunity does not directly apply to local governments, unless the municipality's restriction of competition is pursuant to a state policy. Columbia, 499 U.S. at 370, 111 S.Ct. 1344. For the immunity to apply, there must be a "clear articulation of a state policy to authorize anticompetitive conduct by the municipality". Id. at 372, 111 S.Ct. 1344. However, the relevant state statute need not explicitly permit the displacement of competition; it is enough if the displacement is the foreseeable result of what the statute authorizes. Id. at 372-73, 111 S.Ct. 1344.

In the present case, Wisconsin statutes grant the county broad authority to establish, operate and regulate a local airport. Wis.Stats. §§ 114.11(1) and 114.14(1). The county has the authority to "adopt regulations, and establish fees or charges for the use of the airport". § 114.14(1). The county has established an airport commission pursuant to § 114.14(2)(a), and the commission is empowered to "make such contracts or other arrangements as may be deemed necessary for the construction, improvement, equipment, maintenance or operation of the airport." § 114.14(3). The county argues that these airport statutes constitute a "sweeping grant of authority [that] anticipates anticompetitive conduct by local governments with respect to local airports, and therefore affords the County state action immunity to antitrust claims arising out of such conduct."

The plaintiff disagrees and argues that several statutes demonstrate the legislature's intent to forbid the allegedly anticompetitive conduct challenged here. One set of statutes relied upon by CAC is found in Wisconsin's antitrust laws, § 133.03 et seq., Wis.Stats. Section 133.03 forbids, in language similar to that of the Sherman Act, agreements or conspiracies to restrain or monopolize trade, and its prohibitions apply to municipal governments. § 133.02(3); American Medical Transport of Wisconsin, Inc. v. Curtis-Universal, Inc., 154 Wis.2d 135, 148, 452 N.W.2d 575 (1990) (hereafter "AMT"). The Wisconsin legislature has mandated that the statute be interpreted liberally to promote competition (id. at 151, 452 N.W.2d 575 (citing § 133.01)), and it has instructed "state regulatory agencies [to] regard the public interest as requiring the maximum level of competition in any regulated industry consistent with the other public interest goals established by the legislature." § 133.01.

I conclude that CAC's argument is correct. The county's claim of state action immunity is based only on the broad, general grant of authority by the legislature to the county with respect to airports. However, it is often difficult to distinguish between "a [state] regulatory program designed to supplant the operation of the free market [and] ... one that can coexist happily with the full enforcement of federal antitrust principles". Hardy v. City Optical Inc., 39 F.3d 765, 768 (7th Cir.1994). The state antitrust statutes cited by the plaintiff suggest that the state legislature intended the latter as opposed to the former.

The county has failed to explain how its claims of state action immunity can be reconciled with state antitrust laws. The county criticizes the cases relied on by the plaintiff as irrelevant or too old, but a recent Wisconsin Supreme Court case (1990), not cited by the parties, supports the plaintiff's view. See AMT, 154 Wis.2d at 148-154, 452 N.W.2d 575. AMT discussed the interaction between broad grants of regulatory authority to municipal governments, on the one hand, and state antitrust law on the other. AMT involved a claim under state rather than federal antitrust law; therefore the defense of state action immunity, grounded in principles of federalism, was technically inapplicable. See id. at 145-46, 452 N.W.2d 575. Nevertheless, the ultimate question in that case was, just as it is here, whether the legislature intended to authorize the alleged anticompetitive conduct challenged by the plaintiffs. Id. at 146, 452 N.W.2d 575. See also Town of Hallie v. City of Eau Claire, 471 U.S. 34, 44 n. 8, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985) (noting, in analyzing a claim of state action immunity under federal antitrust law, that a Wisconsin Supreme Court case applying state antitrust law was instructive on the question of the Wisconsin legislature's intent).

The plaintiffs in AMT were three ambulance companies who alleged that the defendant City of Milwaukee violated state antitrust law by assigning most of its ambulance work to four preferred companies (also defendants), thereby relegating the plaintiffs to back-up status. The trial court dismissed the complaint and the appellate court affirmed, holding that pursuant to the city's broad home-rule powers granted by § 62.11(5), the city had the authority to implement its ambulance system despite its anticompetitive effects.

The Wisconsin Supreme Court reversed, holding that the home-rule statute could not be construed as authorizing the city's anticompetitive, monopolistic regulation of ambulance service. Id. at 150-51, 452 N.W.2d 575. The court relied heavily upon the state's antitrust statutes and the strong pro-competitive policy that they reflected. Id. at 151, 452 N.W.2d 575. The court reasoned that "extraneous statues" must "quite clearly indicate" an intent to authorize anticompetitive conduct before it could find a municipality immune from state antitrust law. Id. at 151-52, 452 N.W.2d 575.

The home-rule statute at issue in AMT is more general than the airport statutes relied upon by the county in the present case. However, the court in AMT also opined that §§ 59.07 and 60.565, which grant towns and counties more specific authority to contract for ambulance services, do not authorize anticompetitive conduct. Id. at 152, 452 N.W.2d 575. Those statutes are similar to the statutes at issue here, and I reach the same conclusion as to the latter.

CAC argues that there is more statutory evidence to refute the county's claim that its actions are authorized by the state legislature. CAC contends that the same statutes which grant the county the authority to operate the airport also forbid the county from exercising that authority in a manner contrary to federal law. For example, § 114.11, which permits local governments to regulate local airports, provides that such regulations "shall not be in conflict with such rules and regulations as may be made by the federal government." Section 114.105, which authorizes local governments to enact ordinances for the regulation of airports, states that "[n]o local authority shall enact any ordinance governing aircraft or aeronautics contrary to or inconsistent with ... federal law."

According to CAC, the county's policy of requiring aircraft owners to purchase fuel from the FBO is contrary to several FAA regulations. One source of regulations, FAA Order 5190.6A, prohibits the county from refusing to permit an air carrier, air taxi, or flight school to fuel its own aircraft.... [A]ircraft owners should be permitted to fuel ... their own aircraft. A restriction which has the effect of diverting such business to a commercial operator amounts to an exclusive monopoly of aeronautical activity contrary to law.

FAA Order 5190.6A, Section 2 at § 3-9d(1) and § 3-9e(1). The conduct at issue here could not have been intended by the state legislature, CAC argues, because federal regulations incorporated by §§ 114.11 and 114.105, Wis.Stats., specifically forbid it.

The county has not responded to the plaintiff's contention in its reply brief. Because I find no obvious flaws in the argument, I will credit it. See Hardy v. City Optical Inc., 39 F.3d 765, 771 (7th Cir. 1994) (accepting appellee's plausible...