Endsley III & Graham v. City of Chicago

• Decision Date: 12 October 2000
• Docket Number: No. 99-2859,99-2859
• Citation: 230 F.3d 276
• Parties: (7th Cir. 2000) ROY L. ENDSLEY III and STEPHEN GRAHAM, Individually and on Behalf of Those Similarly Situated, Plaintiffs-Appellants, v. CITY OF CHICAGO, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 276

230 F.3d 276 (7th Cir. 2000)

ROY L. ENDSLEY III and STEPHEN GRAHAM, Individually and on Behalf of Those Similarly Situated, Plaintiffs-Appellants, v. CITY OF CHICAGO, Defendant-Appellee.

No. 99-2859

In the United States Court of Appeals For the Seventh Circuit

Argued April 20, 2000

Decided October 12, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 C 8094--William T. Hart, Judge. [Copyrighted Material Omitted] Before Manion, Rovner, and Williams, Circuit Judges.

Williams, Circuit Judge.

Plaintiffs challenge the City of Chicago's use of tolls collected on the Chicago Skyway to pay for some of the City's non- Skyway related transportation improvements. In 1995, the Skyway began producing revenue that exceeded its operating expenses. Prior to that time, the City used Skyway tolls exclusively to operate and maintain the Skyway. In 1996, the City decided to refinance outstanding Skyway debt and raise additional revenues for non-Skyway expenses through a new bond issue ("Series 1996 Bond Issue"). Plaintiffs seek to prevent use of Skyway revenues to pay for non-Skyway expenses and challenge the City's action on four separate grounds (1) violation of federal transportation statutes; (2) violation of antitrust laws; (3) violation of the Constitution's dormant Commerce Clause; and (4) violation of various state laws. The district court dismissed plaintiffs' complaint in its entirety for failure to state a claim. Because we find that the City's use of Skyway revenue for non-Skyway projects does not amount to a constitutional violation of any sort, we affirm.

I

Roy Endsley and Stephen Graham are users of the Chicago Skyway toll bridge, a 7.8 mile long high- speed, limited access highway that joins the Indiana Tollway with the rest of Interstate 90 at the Illinois-Indiana border. The Skyway is one of two Interstate routes that connect Chicago's Dan Ryan Expressway (Interstate 90/94) to the Indiana Tollway. The other is the Borman/Kingery/Bishop Ford Expressway (Interstate 80/94). When the Skyway was constructed in the late 1950s, it was paid for with private funds raised from the sale of revenue bonds in 1955 and 1957. Under the terms of the sale, the bonds were to be repaid solely from available Skyway toll revenues and the City itself was not obligated to repay the bonds.

The revenue raised by the Skyway tolls is heavily dependent on traffic volume. When traffic on the Skyway is heavy, more drivers pay the toll and more revenue is generated. Conversely, when traffic is low, the Skyway produces less revenue. On several occasions prior to 1996 (fourteen times), the City has raised the toll rates in order to pay the Skyway's maintenance and operating costs and to make the Skyway "a self- sufficient enterprise."¹ As a result, the current toll rate schedule ($2.00 or 25.6 cents per mile for most automobiles) is higher than the rate for other highways in the area.

Over the last ten years, the Skyway has enjoyed an increase in available funds. In 1991, the Skyway received $14.2 million in federal funds. In 1994, the City refunded the aggregate principal of outstanding Skyway revenue bonds by selling new ones. And in 1995, traffic volume on the Skyway increased significantly such that net revenues were projected to be $11.5 to $17.1 million annually through the year 2000. In 1996, the City sold Skyway bonds again ("1996 Bond Sale") and proceeds of the sale were sufficient to repay the outstanding aggregate principal amount of the 1994 bonds and the related refinancing costs. The excess $52 million raised was used to fund other City transportation improvements. As with past bond sales, the 1996 bonds are to be repaid solely from revenues the Skyway generates through tolls and concessions. At no time prior to 1996 did the City use Skyway revenue for purposes other than the maintenance and operation of the Skyway.

Endsley and Graham brought a class action suit against the City challenging its use of the $52 million raised by the 1996 Bond Sale for non- Skyway improvements. The City filed a motion to dismiss the action which the district judge granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Endsley and Graham now appeal. We review the district court's decision to grant a motion to dismiss de novo. See Hentosh v. Finch Univ. of Health Sciences, 167 F.3d 1170 (7th Cir. 1999).

II

On appeal, plaintiffs maintain that the City's use of proceeds from the 1996 Bond Sale for non- Skyway improvements violated various federal transportation statutes, antitrust laws, and the Commerce Clause of the Constitution. We consider each challenge in turn.

A. Federal Transportation Statutes

Plaintiffs contend that the City has violated two federal transportation statutes, 23 U.S.C. sec. 301 and 23 U.S.C. sec. 129(a)(3)² which when read together, regulate the entities operating tollways and receiving federal funds. Section 301 generally prohibits state and local entities from charging tolls on highways that receive federal funding. Section 129 creates an exception to that rule, allowing operation of tollroads only under certain conditions. Endsley and Graham argue that the City's failure to meet the conditions required under sec. 129 gives rise to a private right of action. It is clear that the City has not violated sec. 301. However, plaintiffs insist that the City has violated sec. 129 and they try to liken the language of sec. 301, which at least one court has found does create a private right of action,³ to that of sec. 129(a)(3), which on its face does not. The district court distinguished sec. 301 from sec. 129(a)(3) and rejected this approach. "If the City has violated sec. 129, any violation may be properly redressed by the Secretary of Transportation. . . . There is no compelling reason why private persons such as plaintiffs . . . should have the right to seek federal court action to aid in enforcement of this portion of the statute." The district judge's analysis is right on point. No express or implied private right of action was created by sec. 129. Neither a review of the language nor a consideration of the statute's intended beneficiaries, its legislative history, or the purpose of the statutory scheme suggest that it was. See Cort v. Ash, 422 U.S. 66, 78 (1975).

Nothing in the express language of the statute suggests that sec. 129(a)(3) creates a private right of action. Section 129 simply requires the Transportation Secretary and the tollway operating entity (here, the City) to enter into an agreement which sets forth a list of priorities for the spending of toll revenues by entities receiving federal funding under the statute. Under such an agreement, the City would be required to use toll revenues first for debt service, then for reasonable return on private investment in the project, then for any maintenance and operation costs. Therefore, the City's use of funds for non-Tollway expenses before fulfilling these other obligations would violate the agreement between the City and the Secretary of Transportation, not sec. 129.

Furthermore, a close review of the language, structure, and history of sec. 129 suggests that no implied private right of action exists either. As we acknowledged in Mallett v. Wisconsin Division of Vocational Rehabilitation, 130 F.3d 1245, 1248-49 (7th Cir. 1997), the Supreme Court has retreated from the four-part test established in Cort v. Ash, 422 U.S. 66, 78 (1975), to determine whether an implied cause of action exists under a statute.⁴ See also, Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15-16 (1979) ("[W]hat must ultimately be determined is whether Congress intended to create the private remedy asserted."). Instead of applying the four-part test, we now focus primarily on legislative intent. "Our inquiry is whether Congress intended an implied right of action . . . in light of the statute's language, structure, and legislative history. If such inferences of intent are not present, we must conclude that the essential predicate for implication of a private remedy does not exist." Mallett, 130 F.3d at 1249 (internal citations omitted).

As we noted above, neither the language nor the structure of sec. 129 indicate that Congress intended to create a private right of action. A look at the legislative history suggests the same. Section 129 was created to authorize federal participation in, and funding for, the creation and maintenance of highways that facilitate travel among various states and cities.⁵ It is by and large an appropriations provision designed to "strengthen the highway and transit components of a national intermodal transportation" by contributing $153.5 billion in federal funds. See H.R. Rep. 102-171, at 10 (1991), reprinted in 1991 U.S.S.C.A.N. 1526. It is important to note that in enacting sec. 129, one of Congress' goals was to give state and local authorities more flexibility in spending federal highway funds. "The Committee feels that one of the most important things this legislation can do is give state and local officials the flexibility to make the crucial decisions on how their funds should be used. [Under sec. 129,] [t]hey will have the ability to choose the best transportation solution without the artificial constraints of funding categories." Id.

The provision upon which plaintiffs rely, sec. 129(a)(3), regulates the manner in which the entities operating federally funded tollways spend the revenues raised by the tolls charged. However, it does not operate to control state and local government use of tollway revenues completely. In fact, the legislative history indicates that Congress sought to encourage private investment in the nation's highways and public investment in privately operated toll roads such as the Skyway and give state and local entities more freedom to raise and use revenues as they see fit--just within certain limits.⁶ Although willing to permit...