Continental Bus System, Inc. v. City of Dallas

• Decision Date: 17 December 1974
• Docket Number: Civ. A. No. 3-7511-F.
• Parties: CONTINENTAL BUS SYSTEM, INC. v. The CITY OF DALLAS and the City of Fort Worth.
• Court: U.S. District Court — Northern District of Texas

386 F. Supp. 359

CONTINENTAL BUS SYSTEM, INC. v. The CITY OF DALLAS and the City of Fort Worth.

Civ. A. No. 3-7511-F.

United States District Court, N. D. Texas, Dallas Division.

December 17, 1974.

Ralph Pulley, Jr., D. Paul Stafford, Dallas, Tex., for plaintiff.

S. G. Johndroe, City Atty., Arthur R. Petersen, Asst. City Atty., Fort Worth, Tex., N. Alex Bickley, T. Alex Eastus and Joseph G. Werner, Dallas, Tex., for defendants.

MEMORANDUM OPINION

ROBERT W. PORTER, District Judge.

Planning, constructing and operating the world's largest airport equidistant between them has markedly attenuated the traditional rivalry of the cities of Dallas and Fort Worth. The new airport has spawned considerable litigation, however, and the cities that jointly own and operate it consequently often find themselves aligned on the same side of the "versus" in lawsuits arising from their joint venture.

This, one of those numerous suits, requires the cities to defend their joint operation of a bus line between the airport and the downtown areas of both cities, and their prohibition of competition from the Plaintiff, Continental Bus System, Inc. (known to the public as Continental Trailways).

The parties, agreeing that there are no questions of fact, have placed before the Court several questions of law on cross-motions for summary judgment. The principal issue is whether Dallas and Fort Worth, by jointly operating their bus line, Surtran,¹ and by enacting identical ordinances prohibiting unlicensed competition with Surtran, are illegally restraining interstate commerce.

A careful examination of the authorities convinces me that while one could question the wisdom of the cities' decision, one cannot question their legal right to implement that decision. Therefore, the Court will grant the cities' motions for summary judgment and deny the plaintiff's motion for summary judgment. My reasons will be detailed below in this opinion, which is submitted in lieu of findings of fact and conclusions of law.

I. THE HISTORIAL BACKGROUND

Another judge of this Court, in a case involving these two cities and their new airport, has traced the evolution of civil animosity into partnership. City of Dallas, Texas, v. Southwest Airlines Co., 371 F.Supp. 1015 (N.D.Tex.1973) (Taylor, C. J.), aff'd, 5th Cir., 494 F.2d 773, rehearing denied 496 F.2d 1407 (5th Cir. 1974), cert. denied, 43 U.S.L.W. (U.S. Dec. 16, 1974) (No. 74-324). The interested reader will find more details in Judge Taylor's opinion, but it is enough for our purposes to know that after operating competing airports for many years, Dallas and Fort Worth jointly constructed a huge regional airport between the two cities. In large part, the airport is a tribute to farsighted leaders from both cities, but the role of the Civil Aeronautics Board should not be underestimated. It was the CAB that let it be known it would designate either Fort Worth's or Dallas' airport as the sole facility for both cities unless they agreed upon a solution. Unlike Dallas' Love Field and Fort Worth's Greater Southwest International Airport, which were within the city limits of the respective cities, D/FW Regional Airport sprawls over parts of Grapevine, Euless and Irving. A very small portion lies within Fort Worth's city limits. All terminal buildings are in Grapevine, as is the "spine road" which is the only highway entering the airport.

When D/FW Regional opened to traffic in January of 1974, Surtran commenced regularly scheduled shuttle service between the airport and downtown Dallas and Fort Worth. Surtran's fleet consists of 45 new intercity-type buses purchased for more than $2.3 million.²

Continental, as authorized by a permit, operated sight-seeing buses through D/FW Regional while it was under construction. But apparently the owning cities intended from the very first that once the airport opened, Surtran and only Surtran would provide bus service there. (When Love Field was the principal Dallas airport, both Continental and the Dallas Transit System ran buses there.)

This lawsuit previously was assigned to my colleague Judge Mahon and was transferred to me shortly after my appointment to this Court. Judge Mahon used the Court's good offices to urge the parties to negotiate in good faith to attempt to reconcile their dispute. Continental and Surtran did negotiate, and Continental submitted a formal application for a permit to load passengers at D/FW, accompanied by proposed time-tables for twelve buses daily. The proposed fare was $1.30 between Dallas and the airport and $1.40 from Fort Worth to the airport, plus in each case the amount of the per-passenger charge made by airport authorities to Continental for the privilege of discharging and picking up passengers at the airport. This charge was never worked out. (Surtran fares, by contrast, are $2.50 between the airport and either city. Airport employees — whether they work for one of the cities, Surtran, an airline, a concessionnaire, or whomever — ride for only $1.00.) Ultimately, Continental's application was denied.

II. JURISDICTION AND CAUSES OF ACTION

In its amended complaint, Continental invokes this Court's federal question jurisdiction and claims that more than $10,000 is in controversy. 28 U.S.C. § 1331. The causes of action, Continental continues, arise under the Federal Aviation Act of 1958, 72 Stat. 731, 49 U.S.C. § 1301 et seq.; the National Transportation Policy Act of 1940, 54 Stat. 899; 42 U.S.C. § 1983; the Commerce Clause and the fifth and fourteenth amendments to the Constitution, U.S.Const. art. I, § 8, cl. 3 and amend. V and XIV; the Sherman Antitrust Act, 15 U.S.C. §§ 1-7; and Part II of the Interstate Commerce Act, 49 U.S.C. § 301 et seq. In addition, Continental has pleaded state causes of action under Texas statutes and the Texas Constitution which are based on a common nucleus of operative fact with the federal causes of action. Continental requests a declaratory judgment pursuant to 28 U.S.C. § 2201 and an injunction against the cities pursuant to 28 U.S.C. § 2202.

There is no serious question of this Court's jurisdiction, although the City of Fort Worth has urged the Court to abstain and both cities vigorously insist that Continental has no cause of action. I find that an actual controversy exists between the parties, and that this Court has jurisdiction under 28 U.S.C. § 1331 to resolve it. The alleged causes of action will be discussed one by one (although not in the order listed in the complaint).

III. NATIONAL TRANSPORTATION POLICY ACT AND INTERSTATE COMMERCE ACT

Continental maintains that the cities' exclusion of it from the airport prevents it from serving routes that the Interstate Commerce Commission has authorized it to serve, and therefore is an unlawful violation of the National Transportation Policy Act of 1940 and Part II of the Interstate Commerce Act, 49 U.S.C. § 301 et seq. In the Statutes at Large (but not in the codification) is found the congressional policy "to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Interstate Commerce Act . . . ." 54 Stat. 899, the full text of which is quoted in the margin.³ Assuming for the moment, without deciding, that Congress intended to create a cause of action in this statute, the question becomes whether Surtran's airport-to-downtown shuttle is a mode of transportation subject to the Interstate Commerce Act. The question is answered in the negative by National Bus Traffic Assn. v. United States, 249 F.Supp. 869 (N.D.Ill.1965), aff'd 382 U. S. 369, 86 S.Ct. 538, 15 L.Ed.2d 422 (1966). That case, like this one, involved specialized transportation of airline passengers and their baggage from airports. The three-judge district court wrote: "Surely the final phase of the journey on land from the airport where the plane descends to the city where the air trip ends is incidental to the transportation by air." 249 F.Supp. at 873. Similarly, I find that Surtran's operations are incidental to air transportation and thus are exempted from coverage of the Interstate Commerce Act by 49 U.S. C. § 303(b), which provides in part an exclusion for "transportation of persons or property by motor vehicle when incidental to transportation by aircraft . . ." Thus I conclude that Continental's attempted action under the National Transportation Policy Act must fail.

IV. SHERMAN ANTITRUST ACT

Continental complains that the cities have violated the Sherman Antitrust Act by creating a monopoly through granting an "exclusive franchise" to Surtran. Eliminating all competition and charging a higher fare than Continental proposed to charge constitutes an illegal combination and conspiracy between the defendants, according to Continental. The result, it continues, is harm to the traveling public in interstate commerce.

Congress has outlawed certain contracts, trusts and conspiracies in restraint of trade. At first glance, it would appear that 15 U.S.C. § 1, the opening section of the Sherman Act, would encompass what the cities have done with Surtran. Moreover, 15 U.S.C. § 2 prescribes a criminal penalty for anyone who monopolizes "any part of the trade or commerce among the several States." Unfortunately for Continental, the Supreme Court, after examining the Sherman Act's words and history, pronounced it "a prohibition of individual and not state action." Parker v. Brown, 317 U.S. 341, 352, 63 S.Ct. 307, 314, 87 L.Ed. 315, 326 (1943). Lower courts consistently have followed this rule exempting governmental activities from the congressional ban on monopolistic enterprises. See Ladue Local Lines, Inc. v. Bi-State Development Agency, 433 F.2d 131 (8th Cir. 1970), a case brought by a private bus company against an agency created by the states of Missouri and Illinois. The court held that the agency's entry into transportation was authorized by the states' legislatures and therefore was not subject to the antitrust...