Jackson v. W. Indian Co.

Decision Date17 October 1996
Docket NumberCivil No. 1995–151.
Citation35 V.I. 269
PartiesDavid JACKSON, Duncan Connor, Albert Benjamin, and Narvel Fleming, for themselves and others similarly situated, Plaintiffs, v. The WEST INDIAN COMPANY, LTD., a corporation; Virgin Islands Taxi Association, an unincorporated association, Defendants.
CourtU.S. District Court — Virgin Islands


Licensed taxi drivers who were not members of association sued cruise ship operator, an instrumentality of Virgin Islands government, and taxi association claiming that agreement granting association members exclusive right to pick up all “independent” cruise ship passengers from operator's dock violated antitrust laws, commerce clause, and driver's due process and equal protection rights. Cruise ship operator filed motion to dismiss or in alternative for summary judgment. The District Court, Moore, Chief Judge, held that: (1) operator was not immune from antitrust liability under either federal or Virgin Islands law; (2) agreement did not violate dormant commerce clause; (3) operator's agreement did not violate drivers' rights to equal protection of laws; and (4) agreement did not deny drivers of their due process rights.

Motion granted in part and denied in part.

James Derr, St. Thomas, U.S.V.I., for plaintiffs.

Maria Tankensohn Hodge, Hodge & Francois, St. Thomas, U.S.V.I., for defendant West Indian Company, Ltd.

Rhys S. Hodge, St. Thomas, U.S.V.I., for defendant Virgin Islands Taxi Association.


MOORE, Chief Judge.

This matter is before the Court on a motion to dismiss or in the alternative for summary judgment filed by defendant West Indian Company, Ltd. [WICO]. For the following reasons WICO's motion is granted in part and denied in part.


This suit arises from a Taxi Concession Agreement [“the 1995 Agreement”], entered into on August 3, 1995 by WICO and the Virgin Islands Taxi Association [VITA], which grants to VITA members the exclusive right to pick up all “independent” cruise-ship passengers from WICO's dock. Taxi drivers who are not members of VITA retain the right to pick up passengers who have arranged for pre-paid tours operated by various independent tour operators. Under the agreement, VITA is responsible for providing dispatchers and assuring that all the taxi drivers comply with the rules and regulations concerning orderly conduct, proof of insurance coverage, etc. Before the 1995 Agreement, the Taxi Concession agreements between WICO and VITA allowed all licensed taxi drivers to pick up both independent and pre-paid tour passengers.

David Jackson, Duncan Connor, Albert Benjamin and Narvel Fleming [plaintiffs], licensed taxi drivers who are not members of VITA, brought this suit on September 11, 1995. The complaint alleges that the 1995 Agreement violates the Sherman anti-trust laws (15 U.S.C. §§ 1–7), as well as the Virgin Islands anti-monopoly law (V.I.Code Ann., tit. 11, §§ 1501–1518). Plaintiffs also allege “restraint of trade in violation of public policy,” “tortious interference with business relations” and violation of the Fourteenth Amendment. Finally, plaintiffs allege, against WICO only, violation of the Virgin Islands competitive bidding statute (31 V.I.C. § 235), and violation of the Commerce Clause of the United States Constitution ( U.S. Const. art. I, § 8, cl. 3). This Court has jurisdiction pursuant to 28 U.S.C. § 1331 (federal question), and 28 U.S.C. § 1337(a) (commerce and antitrust regulations), as authorized by section 22(a) of the Revised Organic Act of 1954, 16 U.S.C. § 1612(a).1

Plaintiffs moved for a preliminary injunction on October 25, 1995 to enjoin enforcement of the new agreement, which had not gone into effect as scheduled on October 1, 1995 due to the arrival of Hurricane Marilyn on September 15, 1995 which caused the cancellation of all cruise ships calls to St. Thomas. Plaintiffs prayed for an injunction before the expected return of cruise ships in the beginning of November. Because a hearing could not be scheduled until November 20, 1995, the new agreement had been in effect for approximately two weeks at the time of the hearing. The Court denied plaintiffs' motion for a preliminary injunction at the end of the presentation of evidence after considering (1) the extent to which the movant would suffer irreparable harm if the injunction were denied, (2) the extent to which the nonmovant would suffer if the injunction were issued, (3) the likelihood of success on the merits by the movant, and (4) the public interest. Opticians Ass'n v. Independent Opticians, 920 F.2d 187, 191–192 (3d Cir.1990). A key factor in the ruling was the Court's finding that the plaintiffs would not likely succeed on the merits of their claim because WICO and VITA were most likely immune from anti-trust liability. After the hearing, WICO filed the instant motion to dismiss or in the alternative for summary judgment.

II. DISCUSSIONA. Anti-trust claims

In their first through fifth causes of action, plaintiffs allege that the defendants' actions constitute an unlawful restraint of trade in violation of both federal and Virgin Islands anti-trust laws. It is well established that all government instrumentalities, whether state or federal, enjoy some level of immunity from anti-trust suits under the Sherman Act. Federal instrumentalities enjoy absolute immunity from anti-trust suits. See, e.g., Sea–Land Service v. Alaska Railroad, 659 F.2d 243 (D.C.Cir.1981), cert. denied,455 U.S. 919, 102 S.Ct. 1274, 71 L.Ed.2d 459 (1982). Instrumentalities of a state or municipal government are immune where the challenged conduct is undertaken pursuant to a “clearly articulated and affirmatively expressed state policy to displace competition with regulation.” Hallie v. City of Eau Claire, 471 U.S. 34, 40, 105 S.Ct. 1713, 1717, 85 L.Ed.2d 24 (1985). A finding that WICO is immune from federal anti-trust liability means that WICO is also immune from liability under the local statute. See11 V.I.C. § 1518 (“when the language of this Chapter is the same or similar to the language of a Federal Antitrust Law, the District Court in construing this chapter shall follow the construction given the Federal Law by the Federal courts.”); Sea Air Shuttle Corporation v. Virgin Islands Port Authority, 782 F.Supp. 1070, 1077 (D.V.I.1991).

This Court concludes that the more appropriate immunity doctrine is the one applicable to state governments and state governmental entities rather than the immunity doctrine applied to federal instrumentalities. This conclusion contrasts with Judge Huyett's reasoning in Sea Air Shuttle, which held that the Virgin Islands Port Authority was immune from anti-trust suit under both federal immunity and state action immunity doctrines. While Sea Air Shuttle rested its holding alternatively on the state action theory, Judge Huyett stated that we do not believe that state action doctrine should be applied to the Government of the Virgin Islands....” 782 F.Supp. at 1076, n. 10. We respectfully disagree.

1. Federal Immunity v. State Action Immunity

It is well established that the United States may not be sued for antitrust violations under the Sherman Act. United States v. Cooper Corp., 312 U.S. 600, 61 S.Ct. 742, 85 L.Ed. 1071 (1941). In Cooper, the Supreme Court noted that the Sherman Act prohibits contracts, combinations or conspiracies in restraint of trade or commerce and monopolization or attempts or conspiracies to monopolize trade or commerce by any “persons.” 15 U.S.C. §§ 1, 2. The Court held that Congress did not intend for the Sherman Act to expose the United States to liability and that the United States was not included in the term “persons.” 2

The prohibition against suits against the United States has been expanded to federal instrumentalities. The leading case espousing the doctrine of anti-trust immunity for federal instrumentalities is Sea–Land Service, Inc. v. Alaska R.R., 659 F.2d 243 (D.C.Cir.1981). In Sea–Land, the court of appeals, relying on the Supreme Court's analysis in Cooper, held that since the Alaska Railroad was owned and operated by the federal government, it too could not be considered a “person” under the antitrust laws. The Sea–Land court thus established that federal instrumentalities are outside the scope of the anti-trust laws and are absolutely immune from suit.

The absolute immunity afforded federal instrumentalities contrasts with the limited immunity of state and municipal instrumentalities. States, unlike the federal government, are considered “persons” for purposes of the anti-trust laws. Georgia v. Evans, 316 U.S. 159, 62 S.Ct. 972, 86 L.Ed. 1346 (1942). Nevertheless, the Supreme Court has held that the anticompetitive actions of states acting as sovereigns are not prohibited by the anti-trust laws. Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). The Court reasoned that the statutory history and language of the Sherman Act demonstrates that the Act was mainly concerned with business combinations of private individuals, and that state directed actions did not seem to fit the statutory requirement that there be a “contract, combination or conspiracy” in restraint of trade. Id. at 351, 63 S.Ct. at 313–14. The Court was also concerned with federalism and adopted a rule of statutory construction that

[i]n a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress.

Id. For these reasons, state governments may not be held liable for the anticompetitive actions it may take.

Parker immunity, however, does not automatically extend to the actions of state or municipal instrumentalities. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 394, 98 S.Ct. 1123, 1127, 55 L.Ed.2d...

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