EW Wiggins Airways, Inc. v. Massachusetts Port Auth.

• Decision Date: 15 June 1966
• Docket Number: No. 6694.,6694.
• Citation: 362 F.2d 52
• Parties: E. W. WIGGINS AIRWAYS, INC., Plaintiff, Appellant, v. MASSACHUSETTS PORT AUTHORITY et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

362 F.2d 52 (1966)

E. W. WIGGINS AIRWAYS, INC., Plaintiff, Appellant, v. MASSACHUSETTS PORT AUTHORITY et al., Defendants, Appellees.

No. 6694.

United States Court of Appeals First Circuit.

Heard May 3, 1966.

Decided June 15, 1966.

Arthur H. Bloomberg, Boston, Mass., with whom Grabill, Ley & Butterworth, Boston, Mass., was on brief, for appellant.

Warren F. Farr, Boston, Mass., with whom Donald R. Grant and Ropes & Gray, Boston, Mass., were on brief, for Massachusetts Port Authority, appellee.

John M. Hall, Boston, Mass., with whom Conrad W. Oberdorfer and Thayer Fremont-Smith, Boston, Mass., were on brief, for Butler Aviation-Boston, Inc., appellee.

John R. Hally, Boston, Mass., for Butler Co., appellee.

Before ALDRICH, Chief Judge, and McENTEE and COFFIN, Circuit Judges.

McENTEE, Circuit Judge.

This is a suit for alleged federal antitrust act violations brought by E. W. Wiggins Airways, Inc. under 15 U.S.C. §§ 15, 26¹ against the Massachusetts Port Authority (the Authority), Butler Aviation-Boston, Inc. (Butler-Boston), and Butler Company (Butler). It involves fixed base operations, so-called,² at Logan Airport in Boston. The complaint³ alleges that the defendants entered into a conspiracy, combination or contract in restraint of trade or commerce in that they attempted to establish a sole and exclusive fixed base operation at Logan in violation of Section 1 of the Sherman Act⁴ and that each of them attempted to monopolize and combined or conspired to monopolize said business or operation in violation of Section 2 of the Sherman Act.⁵

The district court dismissed the suit on the ground that the complaint on its face does not state a claim upon which relief can be granted. Plaintiff appeals.

The facts stated most favorably to the plaintiff are as follows. For many years prior to February 1959 when the Authority took over the ownership, management and control of Logan, plaintiff and a competitor, known as Van Dusen,⁶ conducted fixed base operations there. Both had leases from the State Airport Management Board.⁷ Plaintiff's lease expired on December 31, 1959 — Van Dusen's on December 31, 1961. Shortly before the expiration of plaintiff's lease, it asked the Authority for a renewal which was refused, but the plaintiff was allowed to continue its operation at the airport as a tenant at will on a month to month basis. The events that followed form the basis of this complaint and for that reason we relate them in some detail. In mid July 1960 the Authority wrote to a number of fixed base operators, including Van Dusen and the plaintiff, to the effect that it wished to enter into a lease for the fixed base operation at Logan and invited expressions of interest. Among those contacted was the defendant, Butler, who was conducting similar operations at several airports throughout the country. Plaintiff promptly informed the Authority of its interest and shortly thereafter submitted a proposal. In November both the plaintiff and Van Dusen appeared before the Authority and each of them expressed its readiness to undertake the operation.

In January 1961 plaintiff received another letter from the Authority stating that it had deemed it necessary that this proposed facility be conducted by a single operator but stated that it may negotiate with one or more firms before signing a lease and enclosed a list of requirements and qualifications. In response to this letter, plaintiff again advised the Authority that it was ready, able and willing to take on the operation but heard nothing further from the Authority until it received a letter dated February 10 informing it that Butler had been selected. About ten days later the Authority gave the plaintiff notice to vacate the airport premises occupied by it in not more than ninety days. Plaintiff claims that in order to comply with this eviction notice⁸ it was forced to sell its business and equipment at Logan which Butler was able to buy at a very low figure. Subsequently the defendant, Butler-Boston, was formed as a subsidiary of Butler Company. A lease was then executed between the Authority and Butler-Boston whereby the latter would take over the Wiggins hangar as of July 1, 1961, and the Van Dusen hangar as of January 1, 1962.

Shortly after the plaintiff received the eviction notice it complained to the Federal Aviation Authority that the Port Authority's decision to establish Butler as its sole and exclusive fixed base operator violated the Federal Aviation Act.⁹ Van Dusen joined in this complaint and in February 1962 the Administrator of FAA instructed the Authority to grant Van Dusen an extension allowing it to remain at Logan. In the same proceeding he also instructed the Port Authority to take steps to negotiate with all interested parties to correct the situation complained of. However, the FAA's intervention came too late to save the plaintiff. By that time it had sold its business and equipment at Logan and had departed from the airport. Shortly thereafter plaintiff endeavored to return to Logan but the Authority refused to grant it fueling privileges which rendered its return economically unwise. Van Dusen continues as a fixed base operator at Logan along with Butler-Boston.

Plaintiff contends that early in 1960 the Authority, through one of its members, contacted Butler and as a result of subsequent meetings the Authority and Butler entered into a conspiracy whereby the Authority would refuse to allow the plaintiff to remain at Logan; that the Authority would also refuse to renew the Van Dusen lease, thus excluding both of these operators from the airport and that Butler would then take over their operations and become the sole and exclusive fixed base operator at Logan.

Defendants contend that the Authority in its operation of Logan is acting as an agent of the Commonwealth of Massachusetts in the performance of a governmental function, and that a restraint or monopoly resulting from governmental action does not violate the Sherman Act. They further contend that even if the Authority were acting in a purely proprietary capacity, its agreement to make Butler-Boston the sole supplier of fixed base services at the airport would still not have violated the antitrust laws.¹⁰ This leads us to consider what sort of body the Authority really is. By statute¹¹ it has been constituted a public instrumentality and the exercise of the powers conferred upon it is deemed and held to be the performance of an essential governmental function. It also has wide powers,¹² many of which are bestowed only upon instrumentalities of government.

As stated by the Massachusetts Supreme Judicial Court in Opinion of the Justices, 334 Mass. 721, 731, 136 N.E.2d 223 (1956), the Authority "is in no sense a private or business corporation. * * It has no stockholders. No person can derive a profit through its operations. Only the public is to be benefited. * *" It is described in the act creating it as "a body politic and corporate" which expression the Court said "is appropriate to a corporation to which is entrusted some of the powers of the State for public purposes." In the opinion of the Massachusetts Supreme Judicial Court, the Authority is a corporation of that character. The court also characterized the Authority "as a purely public corporation for public purposes — an arm of the State — analogous to a municipal corporation." Logan Airport is and always has been a public project.¹³

In carrying out its responsibilities the Authority decided that it was necessary to have only one fixed base operation at Logan and pursuant to that decision, entered into the lease with Butler-Boston. It is clear that in doing so it was acting as an instrumentality or agency of the state, pursuant to the legislative mandate imposed upon it to operate and manage the airport and establish rules and regulations for its use. Plaintiff's contention that the Authority in operating Logan Airport is engaged in a purely proprietary capacity and is conducting a private business has no merit. Nor does the arrangement with Butler-Boston violate the Sherman Act. What was done here was in the exercise of a valid...