Four T's, Inc. v. Little Rock Mun. Airport Com'n

• Citation: 108 F.3d 909
• Decision Date: 13 March 1997
• Docket Number: No. 95-3409,95-3409
• Parties: 1997-1 Trade Cases P 71,743 FOUR T'S, INC., doing business as Dollar Rent A Car of Little Rock, Appellant, v. LITTLE ROCK MUNICIPAL AIRPORT COMMISSION, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 909

108 F.3d 909

1997-1 Trade Cases P 71,743

FOUR T'S, INC., doing business as Dollar Rent A Car of Little Rock, Appellant, v. LITTLE ROCK MUNICIPAL AIRPORT COMMISSION, Appellee.

No. 95-3409.

United States Court of Appeals Eighth Circuit.

Submitted April 10, 1996.

Decided March 13, 1997.

Scott C. Trotter, argued Little Rock, AR, for appellant.

Grant E. Fortson, argued, Little Rock, AR (Jim Hunter Birch, on the brief), for appellee.

Before McMILLIAN and FAGG, Circuit Judges, BURNS, ^* District Judge.

JAMES M. BURNS, District Judge.

Four T's, Inc., doing business as Dollar Rent A Car of Little Rock (Dollar), appeals the district court's ¹ dismissal of each of Dollar's federal causes of action against Little Rock Municipal Airport Commission (Commission).

Dollar contends the district court erred when it found Dollar failed to state a claim under the Commerce Clause of the United States Constitution, Art. 1, § 8, cl. 3; the Sherman Act, 15 U.S.C. §§ 1, 2, and 26; 49 U.S.C. § 47107 of the Airport and Airway Improvement Act of 1982, previously codified at 49 U.S.C.App. § 2210; and 42 U.S.C. § 1983.

The district court had jurisdiction under 28 U.S.C. § 1331, and we have appellate jurisdiction pursuant to 28 U.S.C. § 1291. We AFFIRM the judgment of the district court.

PROCEDURAL AND FACTUAL BACKGROUND

Dollar executed an Automobile Rental Concession Agreement (Agreement) with the Commission on August 15, 1990, in which the parties agreed Dollar could operate a car rental business at the Little Rock Regional Airport. The Commission agreed to lease Dollar counter space area in the airport terminal and thirty automobile parking spaces in an area adjacent to the terminal. Article I, Part C, Paragraph 3 of the Agreement also specifically provided:

That the Concession granted by this Agreement is not exclusive and Lessor shall have the right to deal with and perfect arrangements with any other individual company or corporation for engaging in like activity at the Airport; provided, however, no other concession for auto rental operation shall be granted on more favorable terms and conditions than granted to the Concessionaire herein.

Dollar agreed to pay three types of fees or rents:

(1) $154.15 per month as rental for the counter space;

(2) $33.37 per month as rental for the parking spaces; and

(3) A "concessionaire fee" computed at the rate of $.076 per deplaning airline passenger for the first 30,000 passengers per month and $.071 per deplaning airline passenger for all passengers in excess of 30,000.

During November 1992, Dollar complained to the Commission and airport management about the Commission's method of calculating concession fees. The larger companies paid a much smaller percentage of sales in concession fees than the smaller companies because the concession fee was based on the number of deplaning passengers without regard to the sales or other indicia of market strength of each rental car company. Dollar asserted this discrepancy was unfair, unreasonable, arbitrary, and unjustly discriminatory against Dollar, one of the smaller companies.

During the next several months, the Commission, Dollar, and other rental car companies discussed the concession fee structure. The Commission acknowledged that other airports use a method based on a percentage of base revenue rather than the number of deplaning passengers. Dollar contends airport management informally agreed to change the method of calculating the concession fee; however, changes were never made and the dispute continued.

The Commission eventually filed an unlawful detainer action in state court against Dollar for back rent, damages, and possession of property. Dollar, in turn, filed an action against the Commission in the United States District Court. The state court action was removed to federal court at Dollar's request, and the two actions were consolidated.

The Honorable Henry L. Jones, Jr., United States Magistrate Judge, found Dollar failed to state a claim under the Commerce Clause; the Sherman Act; the Airport and Airway Improvement Act of 1982; and 42 U.S.C. § 1983. Magistrate Judge Jones, therefore, recommended dismissal of Dollar's federal claims pursuant to Fed.R.Civ.P. 12(b)(6). Magistrate Judge Jones also recommended the district court decline to exercise supplemental jurisdiction over the remaining state contract claims as permitted by 28 U.S.C. § 1367(c)(3) and remand those claims to state court.

The district court reviewed the record de novo and adopted the magistrate's proposed findings and recommendations in their entirety. Accordingly, the district court found Dollar failed to state a claim pursuant to the requirements of Fed.R.Civ.P. 12(b)(6) in the four federal causes of action and dismissed Dollar's complaint. The district court also remanded the contract claims to state court. ² Dollar appealed.

STANDARD OF REVIEW

We review de novo a district court's dismissal of a cause of action under Fed.R.Civ.P. 12(b)(6). First Commercial Trust Co., N.A. v. Colt's Mfg. Co., Inc., 77 F.3d 1081, 1083 (8th Cir.1996).

DISCUSSION

Dollar asserts the Commission's method of charging concession fees imposes an impermissible burden on interstate commerce; unreasonably restrains trade and competition; restrains new, smaller entrants from locating a rental car business at the airport; is unfair, unreasonable, and arbitrary; and unjustly discriminates against Dollar. Dollar contends, therefore, the Commission's method of charging concession fees violates the Commerce Clause, the Sherman Act, the Airport and Airway Improvement Act of 1982, and 42 U.S.C. § 1983.

COMMERCE CLAUSE

Dollar contends the rental fees for the counter space and parking spaces should be considered separately from the concession fees that are based on the number of deplaning passengers. Although Dollar concedes the Commission is a market participant when it provides concession areas such as counter space and parking spaces, Dollar maintains the Commission is a market regulator when it assesses concession fees based on the number of deplaning airline passengers. As a market regulator, the Commission would be subject to restraints under the Commerce Clause.

The Commerce Clause, which grants Congress the power to regulate commerce among the states, also limits the power of the states to erect barriers against interstate trade. Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 35, 100 S.Ct. 2009, 2014-15, 64 L.Ed.2d 702 (1980). This limitation, commonly referred to as the dormant Commerce Clause, has an exception known as the market-participant doctrine. SSC Corp. v. Town of Smithtown, 66 F.3d 502, 510 (2d Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 911, 133 L.Ed.2d 842 (1996). Both state and local governments can be market participants. Id. at 510 n. 18 (citing White v. Massachusetts Council of Constr. Employers, 460 U.S. 204, 103 S.Ct. 1042, 75 L.Ed.2d 1 (1983)). "[I]f a state is acting as a market participant, rather than a market regulator," the dormant Commerce Clause does not limit its activities. South-Central Timber Development v. Wunnicke, 467 U.S. 82, 93, 104 S.Ct. 2237, 2243, 81 L.Ed.2d 71 (1984).

Dollar relies on Airline Car Rental v. Shreveport Airport Authority, 667 F.Supp. 303 (W.D.La.1987), to support its contention that the Commission is acting as a market regulator when it assesses concession fees. In Airline Car Rental, the airport authority imposed a fee on rental car businesses that transported customers from the airport to the businesses' off-site facilities. The fee was calculated as seven percent of gross business receipts derived from the rental of cars to passengers picked up at the airport by the off-site rental car businesses. The court held the airport authority was not a market participant because it had only created a suitable marketplace for rental car services rather than entering the market itself. Id. at 306. Dollar's situation differs, however, from that of an off-site rental car business because Dollar actually operates from the airport terminal itself and rents counter space and parking spaces from the Commission.

Dollar also relied upon the Fifth Circuit's reasoning in Smith v. Department of Agr. of State of Ga., 630 F.2d 1081 (5th Cir.1980), cert. denied, 452 U.S. 910, 101 S.Ct. 3040, 69 L.Ed.2d 412 (1981). In Smith, the state of Georgia operated and partially financed a farmers' market. When space at the market grew tight, the state decided to assign selling spaces based on residence and gave preference to Georgia residents. The court concluded the state was a market regulator because it did not produce goods to be sold at the farmers' market and did not buy or sell goods there. Id. at 1083. We, however, find Judge Randall's dissent in Smith more persuasive. Judge Randall noted the state had "entered into the economic market for the provision of physical marketplaces" and, as The district court found the Commission acted in a proprietary capacity and, therefore, was not subject to the restraints of the Commerce Clause as a market participant. The district court's decision was based primarily on the analogous facts and persuasive reasoning of the court in Transport Limousine of Long Island, Inc. v. Port Auth. of N.Y. and N.J., 571 F.Supp. 576 (E.D.N.Y.1983). In Transport Limousine, the Port Authority charged limousine services eight percent of gross receipts in exchange for a permit to use counter space and telephone locations in the airport terminal. The court held the Port Authority was a participant in the market for ground transport services because it provided facilities to limousine services. Id. at 581. In the case before us, the Commission is participating in the rental car market in a similar manner. Although Dollar attempts to distinguish the Commission's role from that of the Port Authority in Transport Limousine by arguing the Commission's concession and rental fees should be considered separately, we...