Delta Air Lines, Inc. v. McCoy Restaurants, Inc., 82-5562

• Decision Date: 27 June 1983
• Docket Number: No. 82-5562,82-5562
• Citation: 708 F.2d 582
• Parties: DELTA AIR LINES, INC., Eastern Air Lines, Inc., et al., Plaintiffs-Appellants, v. McCOY RESTAURANTS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 582

708 F.2d 582

DELTA AIR LINES, INC., Eastern Air Lines, Inc., et al Plaintiffs-Appellants, v. McCOY RESTAURANTS, INC., Defendant-Appellee.

No. 82-5562.

United States Court of Appeals Eleventh Circuit.

June 27, 1983.

Gregory A. Presnell, Orlando, Fla., for plaintiffs-appellants.

Charles Evans Davis, Stephen P. Kanar, Orlando, Fla., for defendant-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before RONEY and HILL, Circuit Judges, and MORGAN, Senior Circuit Judge.

RONEY, Circuit Judge:

Ten airlines ¹ serving Orlando, Florida sought to enjoin McCoy Restaurants, Inc. from prosecuting a state court action challenging the legality of lease agreements between the airlines and the Greater Orlando Aviation Authority (GOAA). The district court denied the injunction. Faced with the Anti-Injunction Act, 28 U.S.C.A. Sec. 2283, ² the airlines assert an exception to the general proposition that federal courts cannot enjoin state court proceedings: the court should have granted the injunction "to protect or effectuate its judgment." Holding that no prior federal court judgment needed protection, we affirm, under the abuse of discretion standard of review, the district court's denial of injunctive relief, without prejudice to the right of the airlines to raise res judicata and collateral estoppel as defenses in the state court action.

This litigation has been going on for four years, this being the third time it has appeared in this Court. Six separate lawsuits, state and federal, have been filed. The central dispute concerns lease agreements between the airlines and the Aviation Authority which contain a concession policy that threatens McCoy's exclusive right under its present contract to sell food and beverages at the Orlando Airport. McCoy attempts to invalidate the agreements; the airlines seek to uphold them. The airlines contend that an injunction against McCoy's state action attacking the agreements is needed to protect the res judicata and collateral estoppel effect of prior federal judgments. A chronological description of the prior litigation is necessary to an understanding of the district court's decision and our affirmance.

McCoy has held the exclusive right to food and drink concessions at the Orlando airport with the present lease running until 1987. In 1978, Greater Orlando Aviation Authority (GOAA), a state agency, entered into a complex series of agreements with the airlines servicing Orlando, by which the airlines agreed to fund a new facility through use fees and rents, and GOAA agreed, among other things, to open future concession leases to competitive bids. McCoy became concerned about the agreements, in part because its lease required it to incur a substantial capital investment to provide facilities in the new terminal, and sought to obtain an extension of its lease past 1987 to insure a profit. GOAA seemed agreeable but one of the airlines, Delta, objected, bringing the first of numerous lawsuits between these parties.

Delta's No. 79-230 Federal Suit

In May 1979, Delta filed a complaint against GOAA in federal district court seeking a declaration that the airlines' agreements with GOAA prohibited the Aviation Authority from extending McCoy's lease without first an having appropriately-timed solicitation of competitive bids. McCoy intervened as a defendant, but to no avail, as District Judge Young entered summary judgment for Delta. The district court enjoined GOAA from inviting bids and from awarding the next lease prior to a reasonable time before the expiration of McCoy's lease in 1987. GOAA appealed this decision, but prior to any ruling by the Fifth Circuit, a new GOAA board and Delta reached a settlement resolving all disputes between them. Delta then moved that the appeal be dismissed as moot. The court of appeals granted this motion and, thereafter, directed that the judgment of the district court be vacated for mootness. See Great Western Sugar Co. v. Nelson, 442 U.S. 92, 99 S.Ct. 2149, 60 L.Ed.2d 735 (1979).

Delta's No. 80-7 Federal Suit

In January 1980, Delta again sued GOAA in federal district court, claiming that the agency was violating the agreements by failing to take the necessary steps to obtain revenue bonds to finance the new terminal. Judge Young granted Delta temporary relief, and retained jurisdiction to consider the merits. GOAA initially counterclaimed raising various antitrust defenses to the agreements, but, due to sharp public criticism, the Florida legislature installed a new board for the GOAA which agreed to dismiss with prejudice the counterclaim. Delta then voluntarily dismissed the suit. McCoy was not a party to this lawsuit.

McCoy's No. 80-87 Federal Suit

In February 1980, McCoy filed suit in federal district court alleging the airline agreements violated federal antitrust law. GOAA, named along with the airlines as defendants, originally cross-claimed against the airlines but voluntarily dismissed the pleading pursuant to the new board's settlement agreement. District Judge Young granted a motion filed by the airlines and GOAA to dismiss, reasoning that the res judicata and collateral estoppel effect of the judgment in Delta's Suit No. 79-230, which had not yet been vacated, precluded the action, that McCoy had failed to state a claim under federal antitrust law, and evidently that the state action exemption to federal antitrust law applied. The Fifth Circuit affirmed in an unpublished opinion, McCoy Restaurants, Inc. v. Greater Orlando Aviation Authority, 645 F.2d 69 (5th Cir.1981), explaining subsequently in an unpublished written order denying rehearing that it relied not "on the ground of res judicata, but on the other two grounds contained in the district court's order." McCoy Restaurants, Inc. v. Greater Orlando Aviation Authority, Appeal No. 80-5462 (5th Cir. July 14, 1981). The United States Supreme Court denied certiorari. 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982).

State Court Bond Litigation

McCoy also sought as intervenor to challenge the airline agreements in state court during the revenue bond validation hearings, claiming that the agreements violated state law. The trial court dismissed the claim as collateral to the bond validation proceeding, and the Florida Supreme Court affirmed on the same basis. McCoy Restaurants, Inc. v. City of Orlando, 392 So.2d 252 (Fla.1980).

McCoy's Present State Court Suit

In January 1981, just two weeks after the Florida Supreme Court's ruling in the bond suit, McCoy filed a separate suit against GOAA, the city of Orlando, and the airlines in state court in the hope of having the state law issues resolved on the merits. McCoy Restaurants, Inc. v. City of Orlando, Florida, No. 81-34 (Cir.Ct. for Orange County) (complaint filed January 5, 1981). McCoy claimed, among other things, that the airline agreements violated the Florida constitution, by delegating state authority to private parties, and the Florida government in the sunshine law, Fla.Stat.Ann. Sec. 286.011 (West 1975).

This Federal Suit by Delta

In February 1981, the airlines responded by filing the present action in federal district court in an effort to have the state lawsuit enjoined. The airlines argued below that the federal court judgments in Nos. 80-7 and 80-87 amount to a res judicata bar of the state court litigation, so as to warrant a federal court injunction. They properly do not rely on either the vacated judgment in federal suit No. 79-230 or the state court ruling in the bond validation proceeding. As to the federal suit, a district court ruling vacated by a court of appeals as moot has no precedential value. See United States v. Munsingwear, Inc., 340 U.S. 36, 39-41, 71 S.Ct. 104, 106-107, 95 L.Ed. 36 (1950); Lebus v. Seafarers' International Union, 398 F.2d 281, 283 (5th Cir.1968). As to the state suit, the Anti-Injunction Act authorizes a federal court to enjoin state litigation to protect one of its own judgments, not to protect a prior state court judgment.

In denying the injunction, District Judge Young properly emphasized that a federal court should be wary to interfere with the business of a coexisting judicial system. The import of the Anti-Injunction Act, as its name suggests, is that a federal court injunction of state litigation is to be the exception, not the rule. The statute provides for federal injunctions only in three limited circumstances: (1) if expressly authorized by Act of Congress, (2) where necessary in aid of a federal court's jurisdiction, and (3) to protect or effectuate a federal court's judgment. The United States Supreme Court has admonished lower federal courts to hesitate to enjoin state court proceedings: "Any doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy." Atlantic Coast Line Railroad Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 297, 90 S.Ct. 1739, 1748, 26 L.Ed.2d 234 (1970). Because of the sensitive nature of federal interference with state court litigation, the exceptions to the rule against injunctions, including the third which applies to relitigation of claims that threatens a federal court's judgment, must be narrowly construed. See International Association of Machinists v. Nix, 512 F.2d 125, 129 (5th Cir.1975). The injury to a litigant from a denial of an injunction often appears minor where the argument is one of relitigation. If the federal court is too cautious, "all is not lost. A state court is as well qualified as a federal court to protect a litigant by the doctrines of res adjudicata and collateral estoppel." Southern California Petroleum Corp. v. Harper, 273 F.2d 715, 719 (5th Cir.1960); see Lamb Enterprises, Inc. v. Kiroff, 549 F.2d 1052, 1061 (6th Cir.), cert. denied, 431 U.S. 968, 97 S.Ct. 2926, 53 L.Ed.2d 1064 (1977). Accordingly,...