Westport Taxi Service, Inc. v. Westport Transit Dist.

• Decision Date: 15 August 1995
• Docket Number: No. 15199,15199
• Citation: 235 Conn. 1,664 A.2d 719
• Court: Connecticut Supreme Court
• Parties: , 64 USLW 2182, 1995-2 Trade Cases P 71,180 WESTPORT TAXI SERVICE, INC. v. WESTPORT TRANSIT DISTRICT.

Page 719

664 A.2d 719

235 Conn. 1, 64 USLW 2182, 1995-2

Trade Cases P 71,180

WESTPORT TAXI SERVICE, INC. v. WESTPORT TRANSIT DISTRICT.

No. 15199.

Supreme Court of Connecticut.

Argued April 21, 1995.

Decided Aug. 15, 1995.

George J. Markley, with whom, on the brief, was Gregory C. Hammonds, Bridgeport, for the appellant (defendant).

David S. Golub, with whom was Jonathan M. Levine, Stamford, for the appellee (plaintiff).

Before CALLAHAN, BORDEN, BERDON, NORCOTT and SCHALLER, JJ.

BERDON, Associate Justice.

In this appeal, we must decide whether the trial court properly imposed liability upon the defendant under the Connecticut Antitrust Act (act); General Statutes § 35-24 et seq.; and, if so, whether the trial court properly awarded the plaintiff treble damages, including lost profits, business value and prejudgment interest, totaling $1,048,260.96.

The plaintiff, Westport Taxi Service, Inc., brought this action against the defendant, Westport Transit District, claiming that the defendant had intentionally engaged in monopolistic practices in violation of the act. The plaintiff sought treble damages, attorney's fees and costs pursuant to General Statutes § 35-35 ¹ of the act. ² The trial court found that the defendant had engaged in monopolistic practices, and awarded damages to the plaintiff for lost profits, the value of the plaintiff's business and prejudgment interest. ³ The court then trebled the total damage award. We affirm the trial court's judgment except as it pertains to the award of prejudgment interest.

The trial court found the following relevant facts. From 1969 until 1978, the plaintiff provided taxi services to the Weston and Westport areas ⁴ pursuant to a certificate of public convenience and necessity issued by the Connecticut public utilities commission (commission) pursuant to General Statutes (Rev. to 1958) § 16-320. ⁵ Anthony and Michael Gilbertie each owned 50 percent of the plaintiff corporation's stock and served as president and vice president, respectively. The Gilberties actively managed the business and regularly worked as dispatchers.

Under § 16-320, no person, association or corporation was permitted to operate a taxi service without first obtaining a certificate of public convenience and necessity from the commission. ⁶ Before it issued a certificate, the commission was required to determine the number of taxicabs and the type of taxi service that the community needed, and it was also required to limit the service authorized according to the community's needs. The plaintiff's certificate permitted it to provide three types of taxi service: premium ride service involving the transportation of a single fare; shared ride service involving the transportation of multiple fares; and package delivery. During the 1970s, there was a substantially larger demand for shared ride service, and this constituted the major part of the plaintiff's business.

In addition to regulating the number of taxis permitted to operate, the commission regulated the rates that were chargeable within a given locality. General Statutes (Rev. to 1958) § 16-319 et seq. The commission adopted the regulatory philosophy that competition among taxi operators was to be with regard to quality of service rather than price. Therefore, the commission required all operators within a given locality to charge the same rates. In determining the appropriate rate structure, the commission considered whether, given the number of vehicles, the rates would permit a reasonable return to the operator on its investment. Certified taxi services were not permitted to charge rates that were lower than those approved by the commission. The last fare increase that the plaintiff had requested was granted by the commission on September 15, 1970, and permitted the plaintiff to charge $1.70 for a three mile one-way trip. In addition, beginning in the fall of 1975, the commission permitted all taxi services in Connecticut to charge an additional ten cents per fare.

The defendant was formed in 1969, pursuant to General Statutes (Rev. to 1966) § 7-273b. ⁷ Initially, pursuant to a financial grant from the federal Urban Mass Transportation Authority (transportation authority), the defendant had intended to establish only a fixed route bus service in Westport.

Because the Gilberties were aware of these plans, they did not seek additional fare increases from the commission. The Gilberties hoped that, by maintaining the plaintiff's rates, they would remain competitive and minimize the negative impact they predicted that the bus service would have on the local private taxi operators. On August 11, 1974, the defendant instituted its "Minnybus" service, and the plaintiff's ridership and revenues initially decreased. The plaintiff expanded its services within the Westport area, however, and, in 1976, as a result, increased its revenues over those earned in 1973 and 1974. The trial court determined, therefore, that the defendant's implementation of the Minnybus service did not ultimately cause the plaintiff to go out of business. The plaintiff's increase in revenues, however, was at the expense of Teddy's Taxi, the only other taxi service in the Westport area.

When the defendant first commenced the Minnybus service, both the plaintiff and Teddy's Taxi complained to the defendant about the deleterious effects that the Minnybus initially had on their businesses. In response, in 1975, the defendant applied for, and obtained, an additional $25,000 grant from the transportation authority ostensibly to conduct a study to determine how to remedy that initial negative impact its bus service was having on the private taxi operators. The plaintiff cooperated fully, permitting the defendant access to all its records and books. The information that was made available to the defendant included equipment and employee records, trip data, operating and capital costs, revenue data and ridership data. The study revealed that together the plaintiff and Teddy's Taxi averaged between 200 and 250 trips per day but that, because the companies were operating under a 1970 fare schedule during a highly inflationary period, the companies were subsisting at a marginal level.

The results of the study prompted the defendant to apply for an additional grant from the transportation authority to fund a project for a proposed transportation system that would integrate bus and taxi services under the defendant's auspices and provide all the services that the plaintiff offered. In its application, the defendant represented that it intended substantially to take over all the private taxi business in Westport and assume the regulatory powers of the commission under General Statutes (Rev. to 1975) § 7-273d. ⁸ The defendant represented that it intended to revoke the certificates of the private companies and issue new certificates to them that would exclude shared ride service. Under General Statutes (Rev. to 1977) § 7-273e(c), if the defendant were to acquire by eminent domain the plaintiff's right to provide shared ride service, the defendant would have been required to compensate the plaintiff. ⁹ Furthermore, the defendant represented that it intended to consolidate the dispatching services of the plaintiff and Teddy's Taxi into one service provided by the defendant. The defendant also represented that for the first year of its operations, it would offer the contract for providing shared ride service to one of the two private taxi companies then operating in Westport. Because the transportation authority was concerned about the impact that a government subsidized transit authority could have on private operators, the defendant's representation in its application about its intended treatment of the existing franchises was critical to the defendant's ability to obtain the federal grant.

After the defendant completed its study and before it received the federal grant to expand its services, the defendant's executive director, Richard H. Bradley, notified the Gilberties of the defendant's intentions to establish a taxi service, which eventually became known as the "Maxytaxy," and to eliminate the plaintiff's certificate of public convenience and necessity. Bradley informed the Gilberties that the defendant proposed to hire them as salaried employees, but neither Bradley nor any other representative of the defendant ever offered to compensate the Gilberties for the proposed elimination of the plaintiff's certificate or the value of their business. The Gilberties informed Bradley that they were unwilling to give up their business without compensation and that they chose to remain independent businessmen. The trial court found that "[w]hen the Gilberties expressed their unwillingness to give up their own business without compensation and their desire to remain independent businessmen, Mr. Bradley stated, 'We are going to run this thing at below cost fares. You can't compete with us.... We are going to put you out of business....' "

In the summer of 1976, the transportation authority approved a $635,000 grant to fund the defendant's project, and in December, 1976, the defendant executed a contract with the federal government for the implementation of the project, including the Maxytaxy. The contract included a clause that obligated the defendant to comply with the terms of its application, which were incorporated by reference into the contract.

In early 1977, pursuant to a complaint from the private operators that the defendant intended to operate taxis without the commission's authority, an investigator from the commission visited the defendant and the private taxi operators of Westport. The investigator, Robert L. Cumpstone, concluded that the services the defendant intended to provide were the same as those provided by the private taxi operators but that, under General Statutes (Rev. to 1977) § 7-273b(g), ¹⁰ the defendant was exempt from regulation by the...