Maher Terminals, LLC v. Port Auth. of N.Y. & N.J.

• Decision Date: 01 October 2015
• Docket Number: No. 14–3626.,14–3626.
• Parties: MAHER TERMINALS, LLC, Appellant v. The PORT AUTHORITY OF NEW YORK AND NEW JERSEY; Patrick Foye, in his official capacity as Executive Director of the Port Authority of New York and New Jersey.
• Court: U.S. Court of Appeals — Third Circuit

805 F.3d 98

MAHER TERMINALS, LLC, Appellant

v.The PORT AUTHORITY OF NEW YORK AND NEW JERSEY; Patrick Foye, in his official capacity as Executive Director of the Port Authority of New York and New Jersey.

No. 14–3626.

United States Court of Appeals, Third Circuit.

Argued June 3, 2015.

Filed: Oct. 1, 2015.

James S. Richter, Esq., Winston & Strawn, Newark, NJ, Lawrence I. Kiern, Esq., Argued, Gerald A. Morrissey, III, Esq., Winston & Strawn, Washington, DC, Counsel for Appellant.

Adam B. Banks, Esq., Jared R. Friedmann, Esq., Richard A. Rothman, Esq., Weil, Gotshal & Manges, New York, N.Y., Peter D. Isakoff, Esq., Argued, Weil, Gotshal & Manges, Washington, DC, Counsel for Appellees.

Before: FISHER, JORDAN, and SHWARTZ, Circuit Judges.

OPINION OF THE COURT

FISHER, Circuit Judge.

Although Maher Terminals, LLC (“Maher”) challenges the rent it must pay under its lease agreement (“the Lease”) with the Port Authority of New York and New Jersey (“the Port Authority”), this case is not a typical landlord-tenant dispute. Maher, a landside marine terminal operator, asserts that the rent due under the Lease violates the U.S. Constitution's Tonnage Clause, U.S. Const. art. I, § 10, cl. 3, as well as two related federal statutes, all of which historically have concerned taxes and fees imposed on vessels, their owners, and their passengers and crews. The District Court dismissed Maher's complaint in its entirety, reasoning that Maher's rent obligations did not violate the Tonnage Clause or its related statutes, and that Maher failed to establish admiralty jurisdiction for its remaining tort claim. We agree and hold that landside service providers like Maher are not within the class of plaintiffs that the Tonnage Clause or its related federal statutes were intended to protect, that is, they are outside each law's zone of interests. Accordingly, we will affirm.

I.

Maher is a marine terminal operator with its principal place of business in Elizabeth, New Jersey. Maher's primary business is to load and unload cargo on vessels—also known as stevedoring—and to berth vessels at its terminal. The Port Authority is an entity created by a compact between New York and New Jersey with the consent of Congress. The Port Authority oversees various transportation systems and, of most relevance to this appeal, the Port of New York and New Jersey, the third largest seaport in North America and the largest maritime cargo center on the eastern seaboard.¹

The Port Authority leases many of its marine terminal facilities at the Port of New York and New Jersey to private companies like Maher, which in turn directly manage the terminals and provide stevedoring services to ships using those terminals. In October 2000, Maher signed a thirty-year lease with the Port Authority to rent the largest marine terminal at Port Elizabeth, consisting of 445 acres of improved land including structures and a berthing area.

The Lease divides Maher's rent into two categories. First, the “Basic Rental” charges Maher a fixed rate per acre of the terminal. When the complaint was filed in 2012, the Basic Rental was $50,413 per acre, totaling $22,433,612 for the year. The second form of rent—and this is the crux of the case—is the “Container Throughput Rental” (“Throughput Rental”), which is a variable charge based on the type and volume of cargo that is loaded and unloaded at Maher's terminal. For the first eight years of the Lease's term, Maher was exempted from paying any Throughput Rental. Since 2008, the Throughput Rental has been calculated based on the following formula: the first 356,000 containers loaded and unloaded by Maher are exempted from any fees; for containers 356,001 to 980,000, Maher pays a per-container fee set forth by a schedule in the Lease ($19.00 per container when the complaint was filed); and for each container over 980,000, Maher pays a lower fee ($14.25 per container when the complaint was filed).

In addition, Maher must load and unload a minimum amount of cargo annually as a condition of maintaining the Lease (420,000 containers when the complaint was filed, which is subject to increase to 900,000 containers upon completion of certain harbor improvements), and Maher must pay an annual guaranteed minimum Throughput Rental equivalent to loading and unloading 775,000 containers (subject to the exemption for the first 356,000 containers), regardless of the number of containers Maher actually handles. All told, Maher paid roughly $12.5 million in Throughput Rental in 2010, and it expected the 2012 Throughput Rental to increase to $14 million.

According to Maher, the Port Authority profits from the Lease. The Port Authority also allegedly uses revenue from the Lease to fund harbor-improvement projects as well as projects wholly unrelated to the services that the Port Authority provides to Maher or vessels using the port.

In September 2012—nearly twelve years after the Lease's effective date—Maher sued the Port Authority in the U.S. District Court for the District of New Jersey. Maher's complaint alleged violations of the U.S. Constitution's Tonnage Clause, U.S. Const. art. I, § 10, cl. 3 ; the Rivers and Harbors Appropriation Act (“RHA”), 33 U.S.C. § 5(b) ; and the Water Resources Development Act (“WRDA”), 33 U.S.C. § 2236. Maher also asserted a negligence claim against the Port Authority for the way it established and collected fees.

The Port Authority moved to dismiss the complaint under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, and in July 2014, the District Court granted the motion. The District Court reasoned that Maher lacked standing to bring its Tonnage Clause and RHA claims because it was not a protected vessel. Even if Maher had standing, the Tonnage Clause and RHA claims still failed, the District Court held, because Maher did not adequately plead that any fees imposed on vessels were not for services rendered. The District Court also dismissed Maher's WRDA claim because Maher had not shown that the Port Authority imposed fees on vessels or cargo and because the WRDA did not prohibit the Port Authority from using revenue from the Lease to finance harbor-improvement projects. Finally, the District Court decided that it lacked admiralty jurisdiction over Maher's negligence claim and declined to exercise supplemental jurisdiction over the claim. Maher filed this timely appeal.²

II.

The District Court exercised jurisdiction only under 28 U.S.C. § 1331, concluding that it lacked admiralty jurisdiction over Maher's negligence claim under 28 U.S.C. § 1333(1) and declining to exercise supplemental jurisdiction over that claim under 28 U.S.C. § 1367. We have jurisdiction under 28 U.S.C. § 1291.

Regardless of whether the District Court dismissed Maher's complaint for failure to state a claim or for lack of jurisdiction, our standard of review is the same: we exercise plenary review over the District Court's order. Kaymark v. Bank of Am., N.A., 783 F.3d 168, 174 (3d Cir.2015) (failure to state a claim); Constitution Party of Pa. v. Aichele, 757 F.3d 347, 356 n. 12 (3d Cir.2014) (lack of jurisdiction, including lack of standing). And because any jurisdictional challenge here is facial, in either circumstance, we apply the same standard the District Court did, accepting as true the facts alleged in the complaint and drawing reasonable inferences in Maher's favor. Kaymark, 783 F.3d at 174 ; Aichele, 757 F.3d at 356 n. 12, 358 (distinguishing facial attacks on jurisdiction from factual ones). We also may consider documents that are “integral to or explicitly relied upon in the complaint,” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997) (internal quotation marks omitted), such as the Lease here.

With respect to Maher's negligence claim, we review the District Court's determination of its own admiralty jurisdiction de novo, Sinclair v. Soniform, Inc., 935 F.2d 599, 601 (3d Cir.1991), but we review the Court's refusal to exercise supplemental jurisdiction over state law claims for abuse of discretion, Figueroa v. Buccaneer Hotel Inc., 188 F.3d 172, 175 (3d Cir.1999).

III.

The central question on appeal is whether fees imposed on landside entities like Maher can support claims under the Tonnage Clause, the RHA, and the WRDA. A secondary question is whether the District Court correctly decided that it lacked admiralty jurisdiction, and declined to exercise supplemental jurisdiction over Maher's negligence claim. We address these issues in turn.

A.

The U.S. Constitution prohibits states from “lay[ing] any Duty of Tonnage” without the consent of Congress. U.S. Const. art. I, § 10, cl. 3. Maher alleges that several fees imposed by the Lease, but principally the Throughput Rental, violate the Tonnage Clause.³ Maher contends that the District Court incorrectly concluded that Maher lacked standing to bring a Tonnage Clause claim and that Maher did not adequately plead a violation of the Tonnage Clause.

Standing involves “constitutional limitations on federal-court jurisdiction” on the one hand and “prudential limitations” on the other.

Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). Here the District Court concluded that Maher's Tonnage Clause claim failed for lack of standing, but the Court did not explain whether its holding was based on constitutional or prudential limitations. We read the District Court's opinion as relying on prudential limitations, not constitutional ones.⁴ The District Court made no reference to the requirements of constitutional standing, instead explaining that Maher lacked standing because it was “not a vessel or other protected entity under the Tonnage Clause.” Maher Terminals, LLC v. Port Auth. of N.Y. & N.J., Civ. No. 2:126090 KM, 2014 WL 3590142, at *8 (D.N.J. July 21, 2014). In other words, the District Court concluded that Maher fell outside the class of plaintiffs who are protected by the Tonnage Clause. In so doing, the District Court effectively conducted a...