Pumpkin Air, Inc. v. City of Addison

• Decision Date: 28 January 1985
• Docket Number: Civ. A. No. 3-82-1051-H,3-82-1135-H and 3-82-1860-H.
• Citation: 608 F. Supp. 787
• Parties: PUMPKIN AIR, INC., et al., Plaintiffs, v. The CITY OF ADDISON, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

608 F. Supp. 787

PUMPKIN AIR, INC., et al., Plaintiffs, v. The CITY OF ADDISON, et al., Defendants.

Civ. A. Nos. 3-82-1051-H, 3-82-1135-H and 3-82-1860-H.

United States District Court, N.D. Texas, Dallas Division.

January 28, 1985.

COPYRIGHT MATERIAL OMITTED

David R. McAtee, Timothy R. McCormick, Thompson & Knight, Dallas, Tex., William H. White, Susman Godfrey & McGowan, Houston, Tex., William W. Wilson, Witts & Wilson, G.H. Kelsoe, Jr., Kelsoe & Kelsoe, Dallas, Tex., for plaintiffs.

Dudley Chambers, Jackson Walker Winstead Cantwell & Miller, Robert L. McCallum, James E. Coleman, Jr., Elizabeth Zervopoulos, Carrington Coleman Sloman & Blumenthal, Dallas, Tex., for defendants.

MEMORANDUM OPINION AND ORDER

SANDERS, District Judge.

This case is before the Court on Defendant Addison Airport of Texas, Inc., et al.'s Motion for Summary Judgment, filed October 29, 1984; Defendant City of Addison's Motion for Summary Judgment, filed November 5, 1984; Plaintiff Pumpkin Air's Opposition and Motion to Strike, filed December 21, 1984; Plaintiff Friendly Aviation's Contest to Motion, filed December 21, 1984; Class Plaintiff's Response, filed December 31, 1984; Addison Airport's Reply, filed January 14, 1985; and Addison Airport's Response to Motion to Strike, filed January 14, 1985.

Factual Background

These actions arise out of the acquisition of Addison Airport by the City of Addison, and the subsequent arrangements between Defendants City, Addison Airport of Texas, Inc. (hereinafter "AATI"), Henry Stuart and Robert Gore in managing and operating the airport. Specifically, Plaintiffs complain of conspiratorial anticompetitive conduct aimed at excluding other entities from selling fuel and leasing space at the airport. Causes of action are premised upon federal antitrust laws, the Federal Aviation Act of 1958, and the Civil Rights Act of 1871, 42 U.S.C. § 1983, and various pendent state law claims.

State Action Immunity

Defendants contend that any anticompetitive actions allegedly engaged in are shielded from liability by the concept of state action immunity, articulated in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). The Parker court, weighing the factors of federalism and state sovereignty, concluded that Congress could not have intended by the passage of the Sherman Act to restrain a state from activities directed by its legislature. Id. at 350, 63 S.Ct. at 313. If Plaintiffs were challenging anticompetitive restraints imposed by the state itself, the inquiry in this case need go no further.

Building on Parker, the Supreme Court subsequently held that local governments are exempt from antitrust laws only when they act "pursuant to state policy to displace competition with regulation or monopoly public service". City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 413, 98 S.Ct. 1123, 1137, 55 L.Ed.2d 364 (1978). An adequate state mandate for anticompetitive activities of cities exists when it is found from the authority given a governmental entity to operate in a particular area, that the legislature contemplated the kind of action complained of. Id. at 415, 98 S.Ct. at 1138. The anticompetitive action must constitute municipal action in furtherance or implementation of clearly articulated and affirmatively expressed state policy, Community Communication Co. v. City of Boulder, 455 U.S. 40, 102 S.Ct. 835, 841, 70 L.Ed.2d 810 (1982), to replace competition with regulation. Hoover v. Ronwin, ___ U.S. ___, 104 S.Ct. 1989, 1995, 80 L.Ed.2d 590 (1984). In addition, it is also relevant to assess the degree to which the state supervises its representative in implementing the challenged policy. Hoover, 104 S.Ct. at 1995; California Retail Liquor Dealers Assoc. v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980); United States v. Southern Motor Carriers Rate Conference, 702 F.2d 532, 538 (5th Cir.1983) (en banc).

Despite its name, the state action immunity can be available under certain circumstances to private persons. Defendants AATI, Stuart and Gore apparently seek to avail themselves of this shelter. In Southern Motor Carriers, the Fifth Circuit collectively fanned smoldering embers and revived the threshold requirement that a private party demonstrate that its allegedly anticompetitive actions must be "compelled by direction of the State acting as a sovereign". 702 F.2d at 536. Although language to this effect appeared in earlier opinions, the Hoover court, over a vigorous three-Justice dissent, did not enumerate the requirement of compulsion, referring only to activities carried out pursuant to state authorization. It can likely be concluded that Hoover pried loose the straining fingers of the Fifth Circuit on the compulsion requirement.¹ See State of North Carolina ex rel. Edmisten v. P.I.A. Asheville, 740 F.2d 274, 277 (4th Cir.1984). (After Hoover, it is now "clear" that "a private party has the right to Parker immunity even when the state does not compel, but only `authorizes' or `approves' the activity".)

Clearly Articulated State Policy

Defendants argue that the Texas Municipal Airports Act, Tex.Rev.Civ.Stat. Ann. art. 46d-1 et seq. (Vernon 1969) contains the clear articulation and affirmative expression of state policy to displace competition. The relevant portions of the statute are:

Every municipality is authorized ... to plan, establish, develop, construct, enlarge, improve, maintain, equip, operate, regulate, protect and police airports ... including ... the purchase and sale of supplies, goods and commodities as an incident to the operation of its airport properties. (§ 46d-2(a)).

(a) Under Municipal Operation. In operating an airport or air navigation facility owned, leased or controlled by a municipality, such municipality may, except as may be limited by terms and conditions of any grant, loan, or agreement pursuant to Section 12 of this Act, enter into contracts, leases and other arrangements for a term not exceeding forty (40) years with any persons:

(1) granting the privilege of using or improving such airport or air navigation facility or any portion or facility thereof, or space therein for commercial purposes;

(2) conferring the privilege of supplying goods, commodities, things, services or facilities at such airport or air navigation facility; or

(3) making available services to be furnished by the municipality or its agents at such airport or air navigation facility.

* * * * * *

In each case, the municipality may establish the terms and conditions and fix the charges, rentals or fees for the privileges for services, which shall be reasonable and uniform for the same class of privilege or service and shall be established with due regard to the property and improvements used in the expenses of operation to the municipality. (§ 46d-4(a)).

* * * * * *

(b) Under Other Operation.... A municipality may by contract, lease or other arrangement ... grant to any qualified person ... the privilege of operating as agent of the municipality or otherwise, any airport owned or controlled by the municipality. (§ 46d-4(b)).

* * * * * *

No ordinance, resolution, rule, regulation, or order adopted by a municipality pursuant to this act shall be inconsistent with, or contrary to, any act of the Congress of the United States or laws of this state, or to any regulations promulgated or standards established pursuant thereto. (§ 46d-7).²

In Woolen v. Surtran Taxicabs, Inc., 461 F.Supp. 1025 (N.D.Tex.1978), Judge Higginbotham examined the application of a state action immunity claim based upon the Municipal Airport Act. The court concluded, after examination of the then-existing Supreme Court precedent that the Act did not represent a state policy "to displace competition with regulation or monopoly service":

The conclusion is all but inescapable that the Texas Legislature did not contemplate the implementation of anti-competitive activities by municipalities in their operation of airports. While it is conceivable that this latter provision 46d-7 was not intended to encompass the antitrust laws, its plain meaning cannot be ignored.

461 F.Supp. at 1031.

The fact that Woolen involved an exclusive taxicab franchise at the airport, as opposed to services more directly related to aviation, is of no consequence, given Woolen's reliance on a strict issue of statutory construction and legislative intent. Similarly, despite Defendants' unelaborated argument that "the conclusions of Woolen may not be correct in light of recent authority", Reply at 5, subsequent Supreme Court authority at a minimum has confirmed the necessity for the analysis conducted by Judge Higginbotham and may possibly impose additional requirements of compulsion and/or active supervision. There is no suggestion in the record that Defendants could satisfy either of these heightened thresholds.

Defendants rely heavily on Pueblo Aircraft Service, Inc. v. City of Pueblo, 679 F.2d 805 (10th Cir.1982), cert. denied, 459 U.S. 1126, 103 S.Ct. 762, 74 L.Ed.2d 977 (1983). In Pueblo, the Tenth Circuit found the Colorado Public Airport Authority law to be "clear, plain and unambiguous" in providing a basis for state action immunity. Although the Colorado provisions are similar in their authorizations to the Texas Act, the former does not appear to contain³ a section comparable to § 46d-7, subordinating the law's provisions to the mandates of federal law.

Accordingly, the Court is of the opinion that Defendants do not meet the requirements for Parker state action immunity.

Noerr-Pennington

The private Defendants argue that any allegedly anticompetitive arrangements existing at Addison Airport have arisen as a result of bona fide attempts to obtain or influence legislative, executive and administrative actions. As such, they argue, the resulting arrangements are immune from antitrust liability. Eastern Railroad Presidents Conference v. Noerr-Motor Freight, Inc., 365 U.S. 127, 81 S.Ct....