Pinehurst Airlines, Inc. v. Resort Air Serv., Inc.

• Decision Date: 01 November 1979
• Docket Number: C-78-372-R.,No. C-77-565-R,C-77-565-R
• Citation: 476 F. Supp. 543
• Parties: PINEHURST AIRLINES, INC., Plaintiff, v. RESORT AIR SERVICES, INC., Moore County Board of Commissioners, Moore County Airport Committee, W. Sidney Taylor, Dr. Charles Phillips, W. P. Davis, Wilton Brown, and E. C. Timberlake, Defendants. PINEHURST AIRLINES, INC., Plaintiff, v. Marie McKENZIE, Defendant.
• Court: U.S. District Court — Middle District of North Carolina

476 F. Supp. 543

PINEHURST AIRLINES, INC., Plaintiff, v. RESORT AIR SERVICES, INC., Moore County Board of Commissioners, Moore County Airport Committee, W. Sidney Taylor, Dr. Charles Phillips, W. P. Davis, Wilton Brown, and E. C. Timberlake, Defendants.

PINEHURST AIRLINES, INC., Plaintiff, v. Marie McKENZIE, Defendant.

Nos. C-77-565-R, C-78-372-R.

United States District Court, M. D. North Carolina, Rockingham Division.

June 12, 1979.

As Amended November 1, 1979.

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Noel Lee Allen, Raleigh, N. C., H. M. Burwell, Gen. Counsel, for Pinehurst Airlines, Inc.

James R. Van Camp and Vance A. Derby, Southern Pines, N. C., for Resort Air Services, Inc. and Marie McKenzie.

William F. Womble, Jimmy H. Barnhill and Joseph T. Carruthers, Winston-Salem, N. C., for other defendants.

MEMORANDUM ORDER

GORDON, Chief Judge.

These cases were noticed for hearing in the United States Courtroom, Greensboro, North Carolina, on January 23, 1979, on motions to dismiss by the defendants and on plaintiff's motion to consolidate. Noel Lee Allen, Raleigh, N. C., and H. M. Burwell appeared as counsel for the plaintiff; William F. Womble, Jimmy H. Barnhill, Joseph T. Carruthers, Winston-Salem, N. C., and James R. Van Camp, Southern Pines, N. C., appeared as counsel for the defendants. Having heard the oral arguments and studied the briefs submitted by the parties, the Court concludes that the defendants' motions to dismiss should be granted in part and denied in part and that the plaintiff's motion to consolidate should be granted.

DISCUSSION

Defendants' Motions to Dismiss

In this action Pinehurst Airlines ("Pinehurst") has alleged violations of federal antitrust statutes, state statutory and constitutional antimonopoly provisions, and federal and state constitutional rights of due process and equal protection. The allegations are based on various disputes that arose out of the relationship between the plaintiff and the defendants during the course of plaintiff's operations at the Southern Pines, North Carolina, Airport ("Airport"). The gravamen of the complaint is Pinehurst's claim of unfair and favored treatment that Resort Air Service, Inc. ("Resort") allegedly received, such that it enjoyed a monopoly at the airport as its only Fixed Base Operator ("FBO").¹ It also claims that a conspiracy existed among all the defendants, the purpose of which was to prevent the plaintiff from obtaining a similar FBO status, or, at the least, from expanding its operations to service and maintain its own aircraft. Pinehurst also claims the conspiracy manifested itself through various acts of harassment. Pinehurst seeks treble damages, injunctive relief, costs and attorneys fees.

All defendants in both cases have filed motions to dismiss under Fed.Rules Civ. Proc. 12(b)(1) and (6). Where the arguments of the defendants are the same, they will be treated together, but where that is not the case, the Court will identify the party advancing the argument in question. Since McKenzie's 12(b) motions incorporate the contentions asserted by the other defendants, what is said as to their motions applies to McKenzie's as well.

I. Jurisdiction

(a) Generally

Several preliminary arguments have been advanced which the Court will now consider. Resort contends that the complaint should be dismissed for lack of standing. In Warth v. Sedlin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), the Supreme Court stated that, in considering a motion to dismiss for lack of standing, a trial court "must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Id. at 501, 95 S.Ct. at 2206. Although there are distinctions between the concept of standing and those of exhaustion of remedies and primary jurisdiction, see 3 K. Davis, Administrative Law Treatise §§ 19.01, 20.01 (1958), the similarities between them are strong enough to call for them to be treated alike procedurally, and the Court will do so.^1a

(1) Standing

Resort argues that Pinehurst lacks standing due to the claimed failure of the plaintiff to allege that it would have succeeded as an FBO operator and to compute how it has lost the profits it claims to have lost. Pinehurst has brought the present action pursuant in part to Section 4 of the Clayton Act, 15 U.S.C. § 15. That statute states in pertinent part that suit may be brought for violation of the antitrust laws by anyone injured in his business or property "without respect to the amount in controversy." Thus, although the plaintiff has yet to prove its allegations of damage in sum certain, the allegations in the complaint, taken as true, are sufficient to sustain the plaintiff's burden at this point of showing some injury. For the same reasons, Resort's argument that plaintiff has failed to show injury to its business or property must be rejected, and the Court concludes that Pinehurst has standing to bring the instant antitrust action.

(2) Exhaustion of Remedies

Defendants argue that Pinehurst has failed to seek administrative redress of all its alleged injuries from the FAA and thus is barred from bringing the present action until it does so. Pinehurst claims, and the Court accepts as true, that it has sought such redress but to no avail, and for a period of some three years before and until the present suit was filed. Moreover, it is undeniable that that agency's remedial powers are limited to cease and desist orders which can only proscribe future violations. See 49 U.S.C. § 1482, et seq. It cannot grant damages for past wrongs, so that if the Court were to stay the present proceedings for administrative action, plaintiff would in effect be seeking nugatory relief. Accord, Niswonger v. American Aviation, Inc., 411 F.Supp. 763, 768 (E.D. Tenn.1975). For these reasons the defendants' exhaustion of remedies argument is unpersuasive.

(3) Primary Jurisdiction

The doctrine of primary jurisdiction comes into play in cases which raise issues of fact not within the conventional experience of judges or which require the exercise of administrative discretion. Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 96 L.Ed. 576 (1952). The doctrine functions not to determine whether the court or agency will finally decide an issue; rather it serves to delay the judicial decision until the court can take advantage of the agency's expertise. It also promotes uniform decision making in cases involving regulated industries. Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 303-04, 96 S.Ct. 1978, 48 L.Ed.2d 643 (1976). Neither of these policies would be served by issuance of a stay in the present case. All of the plaintiff's contentions except one² are grounded in antitrust concepts, a field in which the FAA has no special expertise. Nor are there issues of fact present that are not within the conventional experience of judges. Even with regard to the cause of action based on an alleged violation of the Federal Aviation Act,³ it appears that the FAA has determined such a violation occurred.⁴ Construing the complaint in favor of Pinehurst, the Court concludes that to stay the present action while the plaintiff returns to the FAA would be pointless. The motions to dismiss as they are based on this argument should, therefore, be denied.

(b) Subject Matter Jurisdiction

(1) Interstate Commerce

Resort argues that the interstate commerce component of the plaintiff's federal antitrust claims is not present in this case. "The general rule is that this jurisdictional requirement is met if the acts in question are either `in the flow of interstate commerce' or substantially `affect' interstate commerce." Woolen v. Surtran Taxicabs, Inc., 461 F.Supp. 1025, 1033 (N.D.Texas 1978); Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 420, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978) (Burger, C. J., concurring). Moreover, the Court notes that it has often been held that Congress, in enacting the Sherman Act, intended to avail itself of the full constitutional reach of the commerce power. 461 F.Supp. at id. Here the acts complained of are the alleged conspiracy among the various defendants, acts of harassment, and the denial of various requests for expansion of plaintiff's facilities at the airport, which denials allegedly caused plaintiff to bear increased costs and reduced profits from its interstate cargo transport service. Thus, Resort's argument that mere FBO activity alone will not supply the interstate component of the antitrust claim is off the mark. Plaintiff does not contend that Resort's status as such caused it to suffer harm, but rather that the acts of the owners and operators of the Airport damaged its business. Cf. Rachal v. Allen, 376 F.2d 999, 1004 (5th Cir. 1967). Construing the complaint favorably to the plaintiff,⁵ the Court concludes that the interstate commerce element of the plaintiff's federal antitrust claims is present.

(c) Failure to State a Claim

(1) Statute of Limitations

It is now agreed that a party may raise the defense of limitations by means of a 12(b) motion. See generally, 2A Moore's Federal Practice ¶ 12.10. Suit against Marie McKenzie was not filed until August 10, 1978, nearly a year after Pinehurst sued the defendants in No. C-77-565-R. She is the only defendant to raise the statute of limitations argument. She contends that the federal antitrust claims are time-barred as to her by the four year limitations period set out in 15 U.S.C. § 15b.⁶ Pinehurst's complaint charges that the defendant McKenzie engaged in the alleged conspiracy with the other defendants named in No. C-77-565-R "to establish and maintain Resort Air Service in a monopoly position." The statute of limitations under 15 U.S.C. § 15b begins to run when the defendant commits an act which injures the plaintiff's business. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, ...