National Car Rental System, Inc. v. Fazzano

• Decision Date: 20 July 1973
• Docket Number: No. 1803-A,1803-A
• Parties: NATIONAL CAR RENTAL SYSTEM, INC. v. Francis J. FAZZANO, Director of Transportation, et al. ppeal.
• Court: Rhode Island Supreme Court

Page 770

307 A.2d 770

112 R.I. 56

NATIONAL CAR RENTAL SYSTEM, INC. v. Francis J. FAZZANO, Director of Transportation, et al.

No. 1803-Appeal.

Supreme Court of Rhode Island.

July 20, 1973.

[112 R.I. 61] John F. McDonough, John F. Sheehan, Providence, for plaintiff.

Richard J. Israel, Atty. Gen., W. Slater Allen, Asst. Atty. Gen., Providence, for defendants.

OPINION

ROBERTS, Chief Justice.

This civil action was brought by National Car Rental System, Inc. (National) to enjoin the Director of Transportation, the Assistant Director of Transportation for Airports, and the State Purchasing Agent from opening bids for car rental concessions at the Theodore Francis Green Airport in Warwick. A justice of the Superior Court, after hearing, denied both preliminary and permanent injunctions, and National is now prosecuting an appeal from the judgment denying the injunctive relief.

National is a Nevada corporation which operates car rental concessions throughout the world. At the time this action was brought, it had car rental concessions in almost every major airport in the United States, including Green Airport. National advertises nationwide by newspaper, magazine, radio, television, and through tie-in promotions with airlines and railway systems. It accepts all major credit cards. As part of its service, National allows a customer to pick up an automobile at any one of its concessions and return it to any of its other concessions.

Green Airport is subject to the direction and supervision of the Department of Transportation, and the Department has imposed a limit of three car rental concessions at Green Airport. In the opinion of the Department, the available facilities, the probable business volume, and the space required for the storage, pick-up and drop-off of automobiles limited the reasonable capacity of the airport to no more than three concessions.

In October, 1971, the Department distributed bid proposals to several rental car companies, inviting them to bid for the three car rental concessions at the airport. The following provision was contained in each bid proposal:

'Upon the terms and conditions hereinafter set forth, the State, acting through its Department of Transportation, will grant two (2) concessions for the conduct of car rental activity at the Theodore Francis Green State Airport to operators whose scope of activity is national in character which are not operated under a franchise agreement and which are owned, managed and operated by a national car rental company, and one (1) concession to an operator, who may or may not be a franchise operator, which is owned, managed and operated by a Rhode Island car rental company, for a total of three (3) car rental concessions.

'One will be awarded to the highest and best bidder whose operation is national in scope, one will be awarded to the second highest and best bidder whose operation is national in scope, and one will be awarded to the highest and best bidder whose operation is local in scope.'

The bids were to be opened on November 2, 1971. On November 1, 1971, National brought this action, alleging that the limitation of two national car rental operators was an invidious classification in violation of the equal protection clause of the fourteenth amendment of the United States Constitution.

Albert R. Tavani, Assistant Director of the Department of Transportation for Airports, testified in the lower court that a national operator was a company that had concessions in most major airports, that provided a toll-free reservation service, that allowed a customer flying from one city to another to reserve an automobile at his point of departure, and that allowed a customer to return a rented car to any one of the company's other concessions. A local company was defined as one which had its principal place of business in Rhode Island and, in most cases, one which did not provide for toll-free reservations or the privilege of dropping a rented automobile off at a point other than the concession where it was rented. Thus, if one rented an automobile from a concession at Green Airport, he would have to return it there when he no longer needed it.

,Mr. Tavani testified further that his department had conducted destination surveys which indicated that '* * * a very respectable per cent of people who come through Green Airport as a terminus have local business.' These travelers arrive at Green Airport, conduct their business within 30 miles of the airport, and then leave the area from Green Airport. Mr. Tavani pointed out that the rationale behind the national/local classification was to offer these travelers a choice of service. Since the local operator had lower overhead because he did not offer as wide...