Metropolitan Exp. Services, Inc. v. City of Kansas City, Mo.

Decision Date03 June 1994
Docket NumberNo. 93-2479,A-1,93-2479
Citation23 F.3d 1367
PartiesMETROPOLITAN EXPRESS SERVICES, INC., a Kansas Corporation, Plaintiff/Appellant, Sylvia B. Krieger, doing business as Overland Limousine; Furney Charters, doing business as Travelers Express, Inc., a Kansas Corporation; G & B Enterprises, doing business as KCI Roadrunner, Inc., a Kansas Corporation;City Cab Shuttle Corporation, Plaintiffs, v. CITY OF KANSAS CITY, MISSOURI, a Municipal Corporation of Missouri, Defendant/Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Thomas Brown, Kansas City, MO, argued, for appellant.

Daniel Jackson, Kansas City, MO, argued, for appellee.

Before BOWMAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and WOLLMAN, Circuit Judge.

WOLLMAN, Circuit Judge.

Metropolitan Express Services ("Metropolitan") appeals from the district court's order dismissing its claims against Kansas City, Missouri, (the "City") for lack of standing. We reverse and remand.


The City contracted with the Kansas City Area Transportation Authority (the "Authority") to provide scheduled ground transportation between Kansas City International Airport (the "Airport") and destinations in the metropolitan area. The Authority's contract permitted it to meet passengers only at one gate inside Terminal C, one of three terminal buildings. Thus, passengers who arrived at the other two terminals had to retrieve their luggage, board a shuttle bus, and travel to Terminal C before boarding the ground transportation provided by the Authority. Many potential customers had difficulty finding the Authority service, and others simply chose another form of transportation that did not require them to change terminals. To increase its number of passengers, the Authority requested permission from the City to use mobile ticket counters in all three terminals. A mobile ticket counter is an electric cart, similar to a golf cart, that can travel from gate to gate to meet passengers as they deplane. The City denied the Authority's request, and in July 1991, the Authority cancelled its contract with the City. Without greater presence in the terminals or a subsidy, the Authority did not believe that it could make a profit.

Before the Authority cancelled its contract with the City, Metropolitan, pursuant to a subcontract with the Authority, had provided scheduled ground transportation between the Airport and Johnson County, Kansas. Independent of its subcontract with the Authority, Metropolitan provided unscheduled ground transportation between the Airport and hotels throughout the metropolitan area. After the Authority cancelled its contract with the City, Metropolitan received notice that the City would open bids on August 29, 1991, for a concession agreement to provide scheduled ground transportation. According to the notice, an interested potential bidder could request a "Solicitation for Bids" package, which included (1) a notice to bid, (2) instructions to bidders, (3) a bid form, and (4) a sample concession agreement. The bid form permitted the successful bidder to have an office and three stationary ticket sale counters in each of the three terminal buildings. After examining the bid package, Metropolitan did not submit a bid because it believed that a concession agreement which did not provide for mobile ticket counters was not economically viable.

The City awarded the concession agreement to Executive Coaches, which later changed its name to KCI Shuttle. KCI Shuttle's bid provided for stationary ticket counters in only one terminal and did not mention mobile ticket counters. After awarding the concession agreement to KCI Shuttle, the City began negotiating with KCI Shuttle with respect to the City's desire that the concessionaire maintain ticket counters in all three terminals. In November 1991, the City approved an ordinance authorizing an exclusive concession agreement with KCI Shuttle. The agreement permitted KCI Shuttle to operate mobile ticket counters in each terminal.

Metropolitan then filed this action, alleging that the concession agreement between the City and KCI Shuttle was void because the City had violated the Missouri Constitution by granting an exclusive contract and had improperly bid the concession agreement by negotiating material changes with the successful bidder. After a bench trial, the district court found that Metropolitan did not have standing to raise either of its claims and dismissed the action. This appeal followed.


In a diversity case, a court will not address the plaintiff's claims unless the plaintiff has standing to sue under state law. See Westborough Mall, Inc. v. City of Cape Girardeau, 693 F.2d 733, 747 (8th Cir.1982) (looking to state law to decide whether plaintiff had standing to raise state claim in federal court), cert. denied, 461 U.S. 945, 103 S.Ct. 2122, 77 L.Ed.2d 1303 (1983); City of Moore v. Atchison, Topeka & Santa Fe Ry., 699 F.2d 507, 511 (10th Cir.1983) (stating that state law determines who has standing to challenge the constitutionality of a state statute on the ground that it violates state constitution); Owen of Ga., Inc. v. Shelby County, 648 F.2d 1084, 1088-90 (6th Cir.1981) (applying state law to determine whether unsuccessful bidder has standing to challenge award of contract to other bidder); 13A Charles A. Wright et al., Federal Practice and Procedure Sec. 3531.14 (2d ed. 1984) ("Federal courts have stated that state law of standing should be applied as to state rights ... in an original diversity action."). We recognize, however, that standing is also one aspect of the Article III case or controversy requirement. Thus, if a plaintiff does not meet the Article III standing requirements, a federal court does not have power to hear his claim. See, e.g., Highsmith v. Chrysler Credit Corp., 18 F.3d 434 (7th Cir.1994) (dismissing state law claim because plaintiff did not have standing under Article III). Although the parties and the district court did not address the requirements of Article III, we are satisfied that Metropolitan has standing under Article III to raise its claims. Accordingly, we will limit our discussion to Metropolitan's standing to raise its claims under Missouri law.

A. Constitutionality of the Concession Agreement

We first consider whether Metropolitan has standing to challenge the constitutionality of the ordinance authorizing an exclusive concession agreement. The Missouri Constitution provides that "[t]he general assembly shall not pass any local or special law granting to any corporation ... any special or exclusive right, privilege or immunity." Mo. Const. art. III, Sec. 40(28). Although the constitutional prohibition is worded in terms of laws granting exclusive rights, the Missouri Supreme Court has made it clear that municipal ordinances granting exclusive rights are also subject to a constitutional challenge. See, e.g., Carroll v. Campbell, 108 Mo. 550, 17 S.W. 884 (1891), aff'd, 110 Mo. 557, 19 S.W. 809 (1892).

In Missouri, a party has standing to challenge the constitutionality of an ordinance if "he is directly and adversely affected by the ordinance." Miller v. City of Manchester, 834 S.W.2d 904, 906 (Mo.Ct.App.1992) (citing City of Bridgeton v. Ford Motor Credit Co., 788 S.W.2d 285, 290 (Mo.1990) (en banc)). The district court held that Metropolitan did not have standing to challenge the constitutionality of the ordinance approving the concession agreement because Metropolitan was not injured by the exclusivity of the agreement, any injury to Metropolitan resulting instead from its refusal to subcontract with KCI Shuttle. We agree with Metropolitan that the district court erred in so ruling.

Metropolitan's president testified that the City's transportation consultant had asked if it might be possible for Metropolitan and the successful bidder "to work it out." An inquiry from the City's transportation consultant, however, is not evidence that KCI Shuttle offered a subcontract to Metropolitan. Although KCI Shuttle offered subcontracts to other transportation providers who were also plaintiffs in the district court, there is no evidence in the record that KCI Shuttle offered a subcontract to Metropolitan.

Pursuant to the concession agreement, the City granted KCI Shuttle exclusive access to the terminal buildings. The City prohibited Metropolitan from entering the terminals to meet its passengers, with the result that Metropolitan had to meet its passengers at the curb. Metropolitan claims that its passengers stopped using its services because they were not permitted to gather inside the terminals. As a result, Metropolitan ceased doing business at the Airport. Accordingly, we find that Metropolitan's allegation that it was injured by the exclusive concession agreement sufficient to confer standing under Missouri law to challenge the constitutionality of the ordinance authorizing the agreement. See State ex rel. City of St. Louis v. Litz, 653 S.W.2d 703, 706 (Mo.Ct.App.1983) (stating that any party that alleges it is adversely affected by an ordinance may challenge the constitutionality of the ordinance).

B. The Bidding Procedure

We turn then to Metropolitan's argument that it has standing to challenge the concession agreement because of the City's post-bid negotiations with the successful bidder. The district court, relying on Missouri cases denying standing to unsuccessful bidders, found that Metropolitan did not have standing to raise its illegal bid procedure claim.

Although the district court correctly noted that Missouri courts have denied standing to unsuccessful bidders, the cases upon which the district court and the City rely are distinguishable. In Metcalf & Eddy Services, Inc. v. City of St. Charles, for example, the court held that the plaintiff, an unsuccessful bidder, did not have standing to sue on its claim that it should have been awarded the contract because it...

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