Niagara Frontier TA v. Eastern Airlines

• Citation: 658 F. Supp. 247
• Decision Date: 21 April 1987
• Docket Number: No. Civ-85-1393C.,Civ-85-1393C.
• Parties: NIAGARA FRONTIER TRANSPORTATION AUTHORITY, Plaintiff, v. EASTERN AIRLINES, INC., United Airlines, Inc., American Airlines, Inc., USAir, Inc., Defendants.
• Court: U.S. District Court — Western District of New York

658 F. Supp. 247

NIAGARA FRONTIER TRANSPORTATION AUTHORITY, Plaintiff, v. EASTERN AIRLINES, INC., United Airlines, Inc., American Airlines, Inc., USAir, Inc., Defendants.

No. Civ-85-1393C.

United States District Court, W.D. New York.

April 21, 1987.

Moot & Sprague (Gary F. Kotaska, of counsel), Buffalo, N.Y., for plaintiff.

Saperston & Day (Frank T. Gaglione and Kenneth W. Africano, of counsel), Buffalo, N.Y., for defendants.

CURTIN, Chief Judge.

Plaintiff Niagara Frontier Transportation Authority NFTA, a public benefit corporation for the State of New York, seeks recovery from four airline companies for breach of lease agreements and failure to pay certain fees levied by plaintiff pursuant to its authority under New York State law. Jurisdiction is based upon diversity of citizenship.

The NFTA was constituted to develop and improve transportation and related services by railroad, bus, marine, and air. NY Public Authorities Law NYPAL § 1299-d(1). The NFTA is granted the authority to enter into contracts and leases and to charge such fares, fees, rentals, and other charges as it may deem necessary. NYPAL § 1299-e, f.

In its 12-count complaint, the NFTA claims that each of the defendant airlines is breaching the lease agreement which entitles them to occupy space and receive other benefits at the Greater Buffalo International Airport. The NFTA also claims that each defendant is paying only a portion of the landing charges levied for their use of the runway, taxiway, and apron space at the airport.

Each defendant, in its amended answer, raised similar affirmative defenses and counterclaims. Plaintiff has moved to strike the affirmative defenses numbered 5, 7, and 8, and to dismiss the second counterclaim of each defendant's amended answer. The defenses and counterclaims at issue are based on the Airport and Airway Improvement Act of 1982 (49 U.S.C. § 2210); the Anti-Head Tax Act (49 U.S.C. § 1513);¹ the Commerce Clause, Article I, § 8, of the United States Constitution; and the Niagara Frontier Transportation Act, §§ 1299, et seq.

1. Airport and Airway Improvement Act

Although defendant airlines had initially urged that they had a private right of action under the Airport and Airway Improvement Act of 1982, this argument was withdrawn by counsel for the airlines at oral argument. Several courts, in persuasive analysis with which this court agrees, have held that there is no private right of action under 49 U.S.C. § 2210. See Interface Group v. Massachusetts Port Authority, 816 F.2d 9 (1st Cir.1987), Arrow Airways, Inc. v. Dade County, 749 F.2d 1489 (11th Cir.1985), citing Hill Aircraft and Leasing Corp. v. Fulton County, 561 F.Supp. 667 (N.D.Ga.1982), aff'd without opinion, 729 F.2d 1467 (1984).

The Airport and Airway Improvement Act is removed as a basis for the affirmative defenses and counterclaims.

2. The Anti-Head Tax Act

Plaintiff also claims that the Anti-Head Tax Act, 49 U.S.C. § 1513, affords no private right of action to airlines. The Act provides, in relevant part:

(a) No State ... shall levy or collect a tax, fee, head charge, or other charge, directly or indirectly, on persons traveling in air commerce or on the carriage of persons traveling in air commerce or on the sale of air transportation or on the gross receipts derived therefrom....

At the time of argument, only one court had directly addressed the issue of whether the Anti-Head Tax Act provides a private right of action for air carriers, and concluded that it does not. Interface Group, Inc. v. Massachusetts Port Authority, 631 F.Supp. 483 (D.Mass.1986). That decision was recently reversed by the United States Court of Appeals for the First Circuit, which concluded that section 1513 impliedly confers a private right of action on air carriers. Interface, supra. See also Indianapolis Airport Authority v. American Airlines, 733 F.2d 1262 (7th Cir.1984), and Island Aviation, Inc. v. Guam Airport Authority, 562 F.Supp. 951 (D.Guam 1982), which assumed, without discussion, that airlines have a private right of action under the Act.² For the reasons below, I find that there is a private right of action under the Act and deny plaintiff's motion to strike the affirmative defenses and dismiss the counterclaim.

In Interface, the First Circuit discussed the traditional test for determining whether a federal statute creates an implied private right of action, as set forth in Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 48 L.Ed.2d 26 (1975). Under the Cort analysis, four relevant factors are considered: 1) Is the plaintiff one of a class for whose special benefit the statute was enacted? 2) Is there any explicit or implicit indication of a legislative intent to create a private remedy? 3) Is it consistent with the underlying principles of the legislative scheme to imply such a remedy? 4) Is the cause of action traditionally regulated to state law, such that it would be inappropriate to infer a cause of action based solely on federal law? Id. at 78, 95 S.Ct. at 2087.

Subsequent Supreme Court cases have emphasized the second of these factors — whether Congress intended to create a private right of action — as the central issue. TransAmerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15-16, 100 S.Ct. 242, 245, 62 L.Ed.2d 146 (1979). All of the Cort factors are relevant to this inquiry. Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77, 91, 101 S.Ct. 1571, 1580, 67 L.Ed.2d 750 (1981).

The first three factors discussed in Cort — the language and focus of the statute, its legislative history, and its purpose, see 422 U.S. at 78 95 S.Ct. at 2087—are ones traditionally relied upon in determining legislative intent.

Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76, 99 S.Ct. 2479, 2488-89, 61 L.Ed.2d 82 (1979). See also Pryor v. United States Steel Corp., 794 F.2d 52, 57 (2d Cir.1986).

As for the first Cort factor, the Act identifies a class to be protected from the proscribed conduct: not only persons traveling in air commerce, but also those companies who carry persons in air commerce or sell air transportation. It is clear from a reading of the legislative history that the intended beneficiary is primarily air travelers. However, it is equally clear that Congress was aware that the interests of the air-traveling public and the airlines are frequently aligned on this issue. "Whether the passenger pays the head tax, or whether it is absorbed by the airlines, the end result is to raise the cost of air travel." S.Rep. No. 12, 93rd Congress, 1st Session, reprinted in 1973 U.S. Code Congressional and Admin. News 1434, 1451. Under these circumstances, it is fair to conclude that airlines receive a "special benefit," although perhaps collaterally, from the Act. See also Interface, at p. 16.

The second and third Cort factors also weigh in favor of defendants. Congress's intent to create a private cause of action can be inferred from the most significant factor, the directly prohibitive language of subsection (a) of the Act. States and their political subdivisions are prohibited from collecting "tax, fee, head charge or other charge, directly or indirectly...."

The Anti-Head Tax Act is distinguishable from those statutes which neither confer rights on private parties nor proscribe any conduct as unlawful, Touche Ross, supra, 442 U.S. at 569, 99 S.Ct. at 2485. In Touche Ross, the statute at issue was section 17(a) of the Securities Exchange Act of 1934. The Court noted that the section was regulatory in nature, requiring broker-dealers to maintain such records as prescribed by the rules and regulation of the SEC. It did not proscribe any conduct or confer rights on any class.

Similarly, the Airport and Airway Improvement Act of 1982, 49 U.S.C. § 2210, neither directly proscribes any conduct by airport authorities nor affords any rights to a class. It requires the Secretary of Transportation to receive certain written assurances from airport authorities before approving airport development plans. Hill Aircraft, 561 F.Supp. at 672. It is forward-looking, in that it seeks to prevent expenditures of federal funds on airports which engage in certain practices. (See Touche Ross, 442 U.S. 560, 570, 99 S.Ct. 2479, 2486, 61 L.Ed.2d 82).³

The language and focus of the statute, which forbids states to impose certain taxes on a defined class, indicate that Congress intended to provide a private cause of action.

Furthermore, providing a private remedy to airlines would advance the purposes of the Act. Congress was aware that if the tax or charge were assessed to the airline, it would, in all probability, be passed on to the airline passengers. In that event, the passenger might not be aware of the tax or, because the amount charged would be low, he might be unwilling to challenge the tax. In such cases, the airlines would be best able to enforce the Act.⁴

The fourth Cort factor is also in favor of the defendant airlines, since air transportation and aviation matters are governed by federal law.

Finally, the Anti-Head Tax Act was passed pursuant to Congress's powers under the Commerce Clause. In Evansville-Vanderburgh Airport v. Delta Airlines, 405 U.S. 707, 92 S.Ct. 1349, 31 L.Ed.2d 620 (1972), two airlines brought an action against airport authorities claiming a head tax, in one case imposed on the airline and in another on the passengers, violated the Commerce Clause. The airlines had standing to bring the action. The Senate Report for the Anti-Head Tax Act cites the Evansville case as the impetus for the passage of the Act, id. at 1446. It seems unlikely, given all of the above, that Congress intended to revoke the airlines' standing to raise the proscriptions of the Commerce Clause, as codified in the Act.

In the alternative, plaintiff claims that the charges of which the airlines complain do not violate the Act, since they are primarily negotiated rents and other reasonable fees permitted by subsection (b) of the Act, 49 U.S.C....