Woolen v. Surtran Taxicabs, Inc.

• Decision Date: 26 September 1986
• Docket Number: No. 85-1564,85-1564
• Citation: 801 F.2d 159
• Parties: 1986-2 Trade Cases 67,292 John WOOLEN, et al., Plaintiffs, John D. Campisi, Individually and as Class Action Plaintiffs, et al., Plaintiffs-Appellants, and Carl Whorton, et al., Intervenors-Appellants, v. SURTRAN TAXICABS, INC., et al., Defendants-Appellees. Ken WHORTON, et al., Plaintiffs-Appellants, v. CITY OF DALLAS, TEXAS, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 159

801 F.2d 159

1986-2 Trade Cases 67,292

John WOOLEN, et al., Plaintiffs,

John D. Campisi, Individually and as Class Action Plaintiffs, et al., Plaintiffs-Appellants, and Carl Whorton, et al., Intervenors-Appellants, v. SURTRAN TAXICABS, INC., et al., Defendants-Appellees.

Ken WHORTON, et al., Plaintiffs-Appellants, v. CITY OF DALLAS, TEXAS, et al., Defendants-Appellees.

No. 85-1564.

United States Court of Appeals, Fifth Circuit.

Sept. 26, 1986.

Stan McMurry, Karen L. Fry, Morris Harrell, Dallas, Tex., for Surtran Taxicabs, Inc., et al.

Kent S. Hofmeister, Asst. City Atty., Dallas, Tex., for City of Dallas, Tex.

Don J. Rorschach, City Atty., Charles R. Anderson, Irving, Tex., for City of Irving, Tex.

Arthur Petersen, City Atty., Richard E. Henderson, Fort Worth, Tex., for City of Fort Worth, Tex.

Hutchison, Price, Boyle & Brooks, John F. Boyle, Jr., John M. Hill, Dallas, Tex., for City of Grapevine, Tex.

John F. Bass, John E. Kennedy, Bass & Martin, Dallas, Tex., for Carl Whorton, et al.

Kolodey, Thomas & Yeager, Tom Thomas, Dallas, Tex., for Campisi and Class Action plaintiffs, et al.

Robert F. Maris, Richard A. McKinney, Dallas, Tex., for John Woolen, et al.

Appeals from the United States District Court for the Northern District of Texas; Mary Lou Robinson, District Judge, Presiding.

Before GEE, RANDALL and DAVIS, Circuit Judges.

PER CURIAM:

We affirm the judgment of the district court on the basis of its careful opinion, 615 F.Supp. 344, which is attached as Appendix A.

AFFIRMED.

APPENDIX A

John Woolen, et al., Plaintiffs,

Vs.

Surtran Taxicabs, Inc., et al., Defendants.

Civ. A. Nos. 3-78-609, 3-78-745.

United States District Court,

N.D. Texas,

Dallas Division.

Aug. 8, 1985.

ORDER

MARY LOU ROBINSON, District Judge.

The factual allegations in these antitrust actions have already been reported twice and need not be repeated at length here. See Woolen v. Surtran Taxicabs, 461 F.Supp. 1025 (N.D.Tex.1978) (denying motions to dismiss); Woolen v. Surtran Taxicabs, 684 F.2d 324 (5th Cir.1982) (vacating order denying intervention). In a nutshell, the plaintiff taxicab drivers claim that the defendants have excluded them from the outbound taxicab market at the Dallas/Fort Worth Regional Airport since the airport's opening in 1974, in violation of the Sherman Act.

Recent antitrust law developments, most notably passage of the Local Government Antitrust Act of 1984, Pub.L. No. 98-544, 98 Stat. 2750 (Oct. 24, 1984) (to be codified in 15 U.S.C. Sec. 35), and the recent decisions in Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985); Southern Motor Carriers Rate Conference v. United States, 471 U.S. 48, 105 S.Ct. 1721, 85 L.Ed.2d 36 (1985); and Independent Taxicab Drivers' Employees v. Greater Houston Transportation Co., 760 F.2d 607 (5th Cir.1985), now require that three issues be addressed, including one previously decided in the original district court opinion in this case: ¹

I. Should these consolidated actions be dismissed because the Defendants' challenged activities are immune from scrutiny under the antitrust laws by virtue of the state action exemption?

II. Should the Plaintiffs' claims under Sec. 4 of the Clayton Act for damages, interest on damages, costs and attorney's fees against the defendant cities be dismissed under Sec. 3 of the Local Government Antitrust Act of 1984?

III. Should the Plaintiffs' claims against the private taxi company defendants be dismissed as barred under the Noerr-Pennington doctrine?

For the reasons set forth below, the Court answers each question in the affirmative.

I. The State Action Exemption

A. The Municipal Defendants

In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), the Supreme Court, relying on principles of federalism and state sovereignty, determined that the Sherman Act does not apply to the anticompetitive conduct of a state acting through its legislature. Id. at 350-51, 63 S.Ct. at 313. Thirty-five years later, the Court also held that municipalities are not beyond the reach of the antitrust laws by virtue of their status because they are not themselves sovereign. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 412, 98 S.Ct. 1123, 1136, 55 L.Ed.2d 364 (1978). These actions were filed shortly after City of Lafayette was decided.

City of Lafayette did not completely prohibit municipalities from claiming the state action exemption. Instead, the plurality opinion suggested that the state action doctrine "exempts only anticompetitive conduct engaged in as an act of government ... [by a political subdivision of the state] pursuant to state policy to displace competition with regulation or monopoly public service." 435 U.S. at 413, 98 S.Ct. at 1136. The opinion went on to explain:

This does not mean, however, that a political subdivision necessarily must be able to point to a specific, detailed legislative authorization before it properly may assert a Parker defense ... [A]n adequate state mandate foranticompetitive activities ... exists when it is found "from the authority given a governmental entity to operate in a particular area, that the legislature contemplated that kind of action complained of."

435 U.S. at 419, 98 S.Ct. at 1139 (citation omitted). Finally, "City of Lafayette suggested, without deciding the issue, that it would be sufficient to obtain Parker immunity for a municipality to show that it acted pursuant to a 'clearly articulated and affirmatively expressed ... state policy' that was 'actively supervised' by the State." Town of Hallie, 105 S.Ct. at 1717, quoting City of Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135.

Considerable debate ensued over what would constitute an adequate articulation and expression of state policy, and what would constitute active supervision. In Community Communications Co. v. City of Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), the Court held that a home rule provision of the Colorado Constitution which allocated only the most general authority to municipalities to govern local affairs did not satisfy the clear articulation component of the state action test. The opinion also suggested that whether active supervision by the state of the anticompetitive conduct was required was an open question, despite the plurality opinion in City of Lafayette. 455 U.S. at 51-52, n. 14, 102 S.Ct. at 840-841, n. 14.

Noting that "[i]t is fair to say that our cases have not been entirely clear," 105 S.Ct. at 1720, the Court resolved much of the debate in Town of Hallie. A unanimous Court reiterated that the state action exemption applies whenever the state legislature has "clearly articulated and affirmatively expressed" a state policy to displace competition in the regulated area. Id. at 1719. The Court further held that "although compulsion affirmatively expressed may be the best evidence of state policy, it is by no means a prerequisite to a finding that a municipality acted pursuant to a clearly articulated state policy." Id. Finally, the Court concluded that the "active state supervision requirement should not be imposed in cases in which the actor is a municipality." Id.

The Fifth Circuit has applied Town of Hallie in a case which is virtually indistinguishable from the instant actions. In Independent Taxicab Drivers' Employees v. Greater Houston Transportation Co., 760 F.2d 607 (5th Cir.1985), the City of Houston had entered into a contract with the Greater Houston Transportation Corporation by which the City granted an exclusive concession over passenger service at Houston Intercontinental Airport. Two groups of taxicab owners and operators filed suit under the Sherman and Clayton Acts, seeking damages and injunctive relief from the City and its private contractor. The district court dismissed the complaint on defendants' motion for summary judgment, holding that the City was immune from antitrust scrutiny under the state action exemption and that the private contractor was immune under the Noerr-Pennington doctrine. The Fifth Circuit affirmed.

The Court's analysis focused on the relevant provision of the Texas Municipal Airport Act, which authorizes municipalities to establish and operate airports both within and without their boundaries. Article 46d-4 provides:

(a) In operating an airport ... such municipality may ... enter into contracts ... and other arrangement for a term not exceeding forty (40) years with any persons:

* * *

(2) conferring the privilege of supplying goods, commodities, things, services or facilities at such airport....

* * *

In each case the municipality may establish the terms and conditions and fix the charges, rentals or fees for the privileges or services....

Tex. Rev. Civ. Stat. Ann. art. 46d-4 (Vernon 1969). The Fifth Circuit said:

While the latter provision falls short of expressly mentioning the establishment of ground transportation services, the statute's broad phrasing is a strong indication of the state's desire to abdicate in favor of municipal prescience with regard to airport management.

This indication is all we require.... We think it ... clear that the City of Houston might deem it most efficient to confer the privilege of airport taxicab operation on a single company, and that such a decision is a logical or reasonable consequence of the state's broad allocation of authority to the City to run its own airport.

760 F.2d at 610-11. The Fifth Circuit also disposed of the question concerning the impact of Article 46d-7(c)--a major stumbling block in the first district court opinion in this case, see 461 F.Supp. at 1031:

Similarly, it is of limited significance that the statute authorizing municipal airport management states that the municipality's actions shall not be "inconsistent with, or contrary to, any Act of the Congress of the United States...." (Article 46d-7(c).] The relevant question is not whether the City has transgressed federal law, but whether the Sherman &...