Four T's Inc. v. Little Rock ( 1997 )

No. 95-3409
Four T's, Inc., doing *
business as Dollar Rent *
A Car of Little Rock, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the Eastern
* District of Arkansas.
Little Rock Municipal *
Airport Commission, *
*
Appellee. *
Submitted: April 10, 1996
Filed: March 13, 1997
Before McMILLIAN and FAGG, Circuit Judges, BURNS,* District
Judge.
BURNS, District Judge.
Four T's, Inc., doing business as Dollar Rent A Car of Little Rock
(Dollar), appeals the district court's1 dismissal of each of Dollar's
federal causes of action against Little Rock Municipal Airport Commission
(Commission).
Dollar contends the district court erred when it found Dollar failed
to state a claim under the Commerce Clause of the United States
Constitution, Art. 1, § 8, cl. 3; the Sherman Act, 15 U.S.C. §§ 1, 2, and
26; 49 U.S.C. § 47107 of the Airport and Airway
*The HONORABLE JAMES M. BURNS, United States District Judge
for the District of Oregon, sitting by designation.
The Honorable Susan W. Wright, District Judge for the Eastern
District of Arkansas.
Improvement Act of 1982, previously codified at 49 U.S.C. App. § 2210; and
42 U.S.C. § 1983.
The district court had jurisdiction under 28 U.S.C. § 1331, and we
have appellate jurisdiction pursuant to 28 U.S.C. § 1291. We AFFIRM the
judgment of the district court.
PROCEDURAL AND FACTUAL BACKGROUND
Dollar executed an Automobile Rental Concession Agreement (Agreement)
with the Commission on August 15, 1990, in which the parties agreed Dollar
could operate a car rental business at the Little Rock Regional Airport.
The Commission agreed to lease Dollar counter space area in the airport
terminal and thirty automobile parking spaces in an area adjacent to the
terminal. Article I, Part C, Paragraph 3 of the Agreement also
specifically provided:
That the Concession granted by this Agreement is not exclusive
and Lessor shall have the right to deal with and perfect
arrangements with any other individual company or corporation
for engaging in like activity at the Airport; provided,
however, no other concession for auto rental operation shall be
granted on more favorable terms and conditions than granted to
the Concessionaire herein.
Dollar agreed to pay three types of fees or rents:
(1) $154.15 per month as rental for the counter space;
(2) $33.37 per month as rental for the parking spaces; and
(3) A "concessionaire fee" computed at the rate of $.076 per
deplaning airline passenger for the first 30,000 passengers per month and
$.071 per deplaning airline passenger for all passengers in excess of
30,000.
During November 1992, Dollar complained to the Commission and airport
management about the Commission's method of calculating concession fees.
The larger companies paid a much smaller
2
percentage of sales in concession fees than the smaller companies because
the concession fee was based on the number of deplaning passengers without
regard to the sales or other indicia of market strength of each rental car
company. Dollar asserted this discrepancy was unfair, unreasonable,
arbitrary, and unjustly discriminatory against Dollar, one of the smaller
companies.
During the next several months, the Commission, Dollar, and other
rental car companies discussed the concession fee structure. The
Commission acknowledged that other airports use a method based on a
percentage of base revenue rather than the number of deplaning passengers.
Dollar contends airport management informally agreed to change the method
of calculating the concession fee; however, changes were never made and the
dispute continued.
The Commission eventually filed an unlawful detainer action in state
court against Dollar for back rent, damages, and possession of property.
Dollar, in turn, filed an action against the Commission in the United
States District Court. The state court action was removed to federal court
at Dollar's request, and the two actions were consolidated.
The Honorable Henry L. Jones, Jr., United States Magistrate Judge,
found Dollar failed to state a claim under the Commerce Clause; the Sherman
Act; the Airport and Airway Improvement Act of 1982; and 42 U.S.C. § 1983.
Magistrate Judge Jones, therefore, recommended dismissal of Dollar's
federal claims pursuant to Fed. R. Civ. P. 12(b)(6). Magistrate Judge
Jones also recommended the district court decline to exercise supplemental
jurisdiction over the remaining state contract claims as permitted by 28
U.S.C. § 1367(c)(3) and remand those claims to state court.
The district court reviewed the record de novo and adopted the
magistrate's proposed findings and recommendations in their entirety.
Accordingly, the district court found Dollar failed to
3
state a claim pursuant to the requirements of Fed. R. Civ. P. 12(b)(6) in
the four federal causes of action and dismissed Dollar's complaint. The
2
district court also remanded the contract claims to state court. Dollar
appealed.
STANDARD OF REVIEW
We review de novo a district court's dismissal of a cause of action
under Fed. R. Civ. P. 12(b)(6). First Commercial Trust Co., N.A. v. Colt's
Mfg. Co., Inc., 77 F.3d 1081, 1083 (8th Cir. 1996).
DISCUSSION
Dollar asserts the Commission's method of charging concession fees
imposes an impermissible burden on interstate commerce; unreasonably
restrains trade and competition; restrains new, smaller entrants from
locating a rental car business at the airport; is unfair, unreasonable, and
arbitrary; and unjustly discriminates against Dollar. Dollar contends,
therefore, the Commission's method of charging concession fees violates the
Commerce Clause, the Sherman Act, the Airport and Airway Improvement Act
of 1982, and 42 U.S.C. § 1983.
COMMERCE CLAUSE
Dollar contends the rental fees for the counter space and parking
spaces should be considered separately from the concession fees that are
based on the number of deplaning passengers. Although Dollar concedes the
Commission is a market participant when it provides concession areas such
as counter space and parking
2
In addition, the district court rescinded the order that
consolidated the Commission's unlawful detainer action against
Dollar and the causes of action brought by Dollar. The district
court also remanded the unlawful detainer action to state court.
Neither party appealed those rulings.
4
spaces, Dollar maintains the Commission is a market regulator when it
assesses concession fees based on the number of deplaning airline
passengers. As a market regulator, the Commission would be subject to
restraints under the Commerce Clause.
The Commerce Clause, which grants Congress the power to regulate
commerce among the states, also limits the power of the states to erect
barriers against interstate trade. Lewis v. BT Inv. Managers, Inc., 447
U.S. 27, 35 (1980). This limitation, commonly referred to as the dormant
Commerce Clause, has an exception known as the market-participant doctrine.
SSC Corp. v. Town of Smithtown, 66 F.3d 502, 510 (2d Cir. 1995), cert.
denied, 116 S. Ct. 911 (1996). Both state and local governments can be
market participants. Id. at 510 n.18 (citing White v. Massachusetts
Council of Constr. Employers, 460 U.S. 204 (1983)).
"[I]f a state is acting as a market participant, rather than a market
regulator," the dormant Commerce Clause does not limit its activities.
South-Central Timber Development v. Wunnicke, 467 U.S. 82, 93 (1984).
Dollar relies on Airline Car Rental v. Shreveport Airport Authority,
667 F. Supp. 303 (W.D. La. 1987), to support its contention that the
Commission is acting as a market regulator when it assesses concession
fees. In Airline Car Rental, the airport authority imposed a fee on rental
car businesses that transported customers from the airport to the
businesses' off-site facilities. The fee was calculated as seven percent
of gross business receipts derived from the rental of cars to passengers
picked up at the airport by the off-site rental car businesses. The court
held the airport authority was not a market participant because it had only
created a suitable marketplace for rental car services rather than entering
the market itself. Id. at 306. Dollar's situation differs, however, from
that of an off-site rental car business because Dollar actually operates
from the airport terminal itself and rents counter space and parking spaces
from the Commission.
5
Dollar also relied upon the Fifth Circuit's reasoning in Smith v.
Department of Agr. of State of Ga., 630 F.2d 1081 (5th Cir. 1980), cert.
denied, 452 U.S. 910 (1981). In Smith, the state of Georgia operated and
partially financed a farmers' market. When space at the market grew tight,
the state decided to assign selling spaces based on residence and gave
preference to Georgia residents. The court concluded the state was a
market regulator because it did not produce goods to be sold at the
farmers' market and did not buy or sell goods there. Id. at 1083. We,
however, find Judge Randall's dissent in Smith more persuasive. Judge
Randall noted the state had "entered into the economic market for the
provision of physical marketplaces" and, as such, was acting in its
proprietary role as "a participant in the market for marketplace space.
It . . . [was] selling a service rather than a good." Id. at 1088. In the
case before us, we find the Commission's conduct is aptly characterized in
a similar fashion.
The district court found the Commission acted in a proprietary
capacity and, therefore, was not subject to the restraints of the Commerce
Clause as a market participant. The district court's decision was based
primarily on the analogous facts and persuasive reasoning of the court in
Transport Limousine of Long Island, Inc. v. Port Auth. of N.Y. and N.J.,
571 F. Supp. 576 (E.D.N.Y. 1983). In Transport Limousine, the Port
Authority charged limousine services eight percent of gross receipts in
exchange for a permit to use counter space and telephone locations in the
airport terminal. The court held the Port Authority was a participant in
the market for ground transport services because it provided facilities to
limousine services. Id. at 581. In the case before us, the Commission is
participating in the rental car market in a similar manner. Although
Dollar attempts to distinguish the Commission's role from that of the Port
Authority in Transport Limousine by arguing the Commission's concession and
rental fees should be considered separately, we are not persuaded by
Dollar's argument. The Commission chose to divide the fee required of car
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rental businesses operating out of the terminal into three components: Two
components based on the size of the physical facilities used by the company
and one component based on the number of deplaning passengers. We are not
aware of any rationale underlying the Commerce Clause that prevents the
Commission from structuring its fees in this manner nor are we persuaded
that such a fee structure subverts the Commission's role as a market
participant.
Accordingly, we hold the Commission is a market participant and is
not, therefore, subject to the restraints of the Commerce Clause.
SHERMAN ACT
The Commission asserts Dollar's cause of action brought under the
Sherman Act is barred by the doctrine of state action immunity. In Parker
v. Brown, the Supreme Court concluded the Sherman Act is directed against
"individual not state action" and, therefore, does not nullify state
powers. 317 U.S. 341, 352 (1943). Dollar, however, contends the
Commission is a group of private individuals and, therefore, the Commission
is only entitled to state action immunity if its conduct meets the
standards set forth in the two-pronged test established in California
Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105
(1980): (1) The challenged anticompetitive conduct must be supported by
a clearly articulated and affirmatively expressed state policy; and (2) the
state must actively supervise the policy.
Under Arkansas law, cities that own and operate an airport have the
authority to create a commission "for the purpose of
operating and managing the airport and its relative properties and
facilities." Ark. Code Ann. § 14-359-103. The Commission, in effect, acts
as "an agency of the city with the power and authority
7
to operate, manage, maintain and improve" the airport unless the statute
explicitly provides otherwise. L.C. Eddy, Inc. v. City of Arkadelphia, 303
F.2d 473, 475 (8th Cir. 1962). Thus, as the district court concluded, the
Commission is entitled to be treated as a municipality.
State action immunity shields municipalities from antitrust liability
under the Sherman Act when the municipality has the authority to regulate
and to suppress competition. City of Columbia v. Omni Outdoor Advertising,
Inc., 499 U.S. 365, 370 (1991). See also Parker v. Brown, 317 U.S. at 352
(The Sherman Act was not intended to "restrain a state or its officers or
agents from activities directed by its legislature."). Whether a
municipality is entitled to state action immunity is determined by
scrutinizing the municipality's conduct solely under the first prong of the
Midcal test. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 47 (1985).
See also Paragould Cablevision, Inc. v. City of Paragould, Ark., 930 F.2d
1310, 1312 (8th Cir.), cert. denied, 502 U.S. 963 (1991). We find,
therefore, the district court employed the correct analysis when it
scrutinized the Commission's conduct to determine whether it was supported
by a clearly articulated and affirmatively expressed state policy.
Ark. Code Ann. § 14-359-109 provides:
(a)(1) The commissioners appointed under this chapter shall
have full and complete authority to manage, operate, improve,
extend, and maintain the municipal airport and its related
properties and facilities.
(2) The commissioners shall have full and complete charge of
the airport and its related properties and facilities, including the
right to employ or remove any and all assistants and employees of
whatsoever nature, kind, or character and to fix, regulate, and pay
their salaries.
(b) It is the intention of this chapter to vest in the
commissioners unlimited authority to operate, manage, maintain,
improve, and extend the municipally owned airport and its
related properties and facilities, and to have full and
complete charge of it.
8
The statute clearly and affirmatively grants the Commission "unlimited
authority" to operate the airport, its facilities and related properties,
which would include renting counter space and parking spaces and imposing
concession fees.
Dollar argues, however, the Commission is not entitled to state
action immunity because its anticompetitive conduct is not a necessary and
reasonable consequence of engaging in the authorized activity. See
Paragould Cablevision, Inc., 930 F.2d at 1312. Dollar asserts the Arkansas
legislature could not foresee the Commission would use its authority to
establish a discriminatory concession fee structure that suppresses
competition.
"[T]he Supreme Court has made clear that a specified, detailed
legislative authorization of monopoly service need not exist to infer the
necessary state intent." City of Lafayette v. Louisiana Power & Light Co.,
435 U.S. at 415. "It is sufficient that 'the legislature contemplated the
kind of action complained of.'" Paragould Cablevision, Inc., 930 F.2d at
1312 (citations omitted). "[T]he state policy to displace competition can
be inferred 'if the challenged restraint is a necessary and reasonable
consequence of engaging in the authorized activity.'" Scott v. City of
Sioux City, 736 F.2d 1207, 1211 (8th Cir. 1984), cert. denied, 471 U.S.
1003 (1985) (citing Gold Cross Ambulance & Transfer v. City of Kansas City,
705 F.2d 1005 (8th Cir. 1983), cert. denied, 471 U.S. 1003 (1985)). See
also City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. at 372
(anticompetitive conduct is sufficiently articulated as state policy if
"suppression of competition is the 'foreseeable result'" of the conduct
authorized by statute).
A reasonable and necessary part of the Commission's airport
management is to provide a marketplace for rental car agencies to provide
transportation for passengers deplaning at the airport. It is a reasonable
and foreseeable consequence that the Commission
9
will impose rental and/or concession fees for the use of airport property.
The Commission was granted unlimited authority by the state to determine
those rental and/or concession fees. Although the Commission may not have
used the most common method of computing concession fees when it based its
charges in part on the number of deplaning passengers, we see no reason to
consider the Commission's method of calculating fees unreasonable or
unacceptable. Dollar cites no authority that requires the Commission to
use a different method to calculate concession fees for rental car agencies
that operate on site. We, therefore, find suppression of competition was
foreseeable as a consequence of the Commission's exercise of its unlimited
authority to operate the airport.
In summary, we hold a clearly-articulated and affirmatively-expressed
state policy exists that grants the Commission unlimited authority to
formulate and to impose concession fees on rental car companies that
operate from the airport terminal; therefore, the first prong of the Midcal
test is satisfied and the Commission is entitled to state action immunity
from antitrust liability.
AIRPORT AND AIRWAY IMPROVEMENT ACT OF 1982
The Commission contends a private right of action is not available
under 49 U.S.C. § 47107 of the Airport and Airway Improvement Act of 1982
(AAIA), previously codified at 49 U.S.C. app. § 2210; therefore, the
district court did not err when it dismissed Dollar's cause of action under
the AAIA. Dollar, however, argues assurances that prohibit discrimination
are required by the AAIA, and those assurances are intended to protect
concessionaires such as Dollar as well as to benefit aeronautical
businesses and the Federal Aviation Administration; therefore, a private
right of action is implied in the statute.
In Cort v. Ash, the Supreme Court established the test for
10
determining whether a private right of action is implicit in a statute that
does not expressly provide one:
First, is the plaintiff "one of the class for whose
especial benefit the statute was enacted," -- that is,
does the statute create a federal right in favor of the
plaintiff? Second, is there any indication of
legislative intent, explicit or implicit, either to
create such a remedy or to deny one? Third, is it
consistent with the underlying purposes of the
legislative scheme to imply such a remedy for the
plaintiff? And finally, is the cause of action one
traditionally relegated to state law, in an area
basically the concern of the States, so that it would be
inappropriate to infer a cause of action based solely on
federal law?
422 U.S. 66, 78 (1975) (quoting Texas & Pacific Ry. Co. v. Rigsby, 241 U.S.
33, 39 (1916)) (emphasis in the original) (internal citations omitted).
"The critical inquiry . . . is whether Congress intended to create a
private cause of action." Labickas v. Arkansas State University, 78 F.3d
333, 334 (8th Cir.), cert. denied, 117 S. Ct. 395 (1996) (citing
Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 24 (1979)).
A private right of action cannot be implied on the basis of the third and
fourth factors alone. Interface Group, Inc. v. Massachusetts Port
Authority, 816 F.2d 9 (1st Cir. 1987) (citing Transamerica Mortgage
Advisors, Inc., 444 U.S. at 23).
The district court found no private right of action exists under the
AAIA and dismissed the cause of action brought by Dollar under the AAIA.
Although this is a case of first impression in the Eighth Circuit, the
district court agreed with and adopted the reasoning in Northwest Airlines,
Inc. v. County of Kent, 955 F.2d 1054 (6th Cir. 1992), aff'd on other
grounds, 510 U.S. 355 (1994); Interface Group, Inc. v. Massachusetts Port
Authority, 816 F.2d 9 (1st Cir. 1987); and Arrow Airways, Inc. v. Dade
County, 749 F.2d 1489 (11th Cir. 1985). In each of these cases, the courts
found none of the AAIA's provisions, including the requirement of various
assurances of nondiscrimination, suggest the AAIA was intended to
11
benefit nonaeronautical parties such as car rental concessionaires;3 the
AAIA lacked language that "could run in favor of private plaintiffs"; and
the AAIA's enforcement scheme did not suggest Congress intended to create
a private right of action. Interface, 816 F.2d at 15; Arrow Airways, Inc.,
749 F.2d at 1490-91; Northwest Airlines, Inc., 955 F.2d at 1058-59. See
also Western Air Lines v. Port Auth. of N.Y. & N.J., 817 F.2d 222, 225 (2d
Cir. 1987) (no private right of action exists unde the Airport and Airway
Improvement Act of 1982), cert. denied, 485 U.S. 1006 (1988). We agree
with out sister circuits and find it unnecessary to repeat the analysis set
forth in these cases and elaborated on by the district court.
Dollar also contends the administrative remedy found in the AAIA is
not inconsistent with a private right of action. Section 47107(g) rests
enforcement authority with the Secretary of Transportation. We find the
Sixth Circuit's reasoning persuasive: The fact that § 47107 requires the
various written assurances of nondiscrimination to be given to the
Secretary of Transportation "indicates that Congress intended to establish
an administrative enforcement scheme" rather than a private right of
action. Northwest Airlines, Inc., 955 F.2d at 1058.
In summary, we find the district court did not err when it found
Dollar was not one of the class "for whose especial benefit" the AAIA was
enacted.4 We also find the district court did not err
3
For example, car rental firms are mentioned in § 47107(e) in
a provision that allows airport owners to require car rental
firms to purchase or to lease goods and services from
disadvantaged business enterprises. This provision, however,
benefits disadvantaged business enterprises rather than car
rental agencies.
4
The district court also noted the Federal Aviation
Administration (FAA), in response to a complaint filed by Dollar,
informed Dollar by letter dated February 3, 1994, that the AAIA
was intended to benefit aeronautical users rather than
nonaeronautical users such as car rental agencies.
12
when it found the statute contained no explicit or implicit legislative
intent to create a private remedy under the AAIA. Accordingly, we hold the
AAIA does not create a private right of action; therefore, the district
court appropriately dismissed Dollar's cause of action brought under the
AAIA.
42 U.S.C. § 1983
Dollar contends the district court erred when it found Dollar had no
cause of action to enforce the AAIA under 42 U.S.C. § 1983.
A plaintiff may bring a private cause of action under § 1983 for
violations of federal statutes. Maine v. Thiboutot, 448 U.S. 1, 7-8
(1980). In Howe v. Ellenbecker, this Court synthesized the Supreme Court
holdings in Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 509 (1990), and
Suter v. Artist M., 503 U.S. 347, 363 (1992), to create a comprehensive
test for evaluating whether a federal statute is enforceable under § 1983.
8 F.3d 1258, 1262-63 (8th Cir. 1993), cert. denied, 114 S. Ct. 1373 (1994).
To be enforceable under § 1983, the statute at issue must intend to
benefit the "putative plaintiff" and such an intent must be expressed in
specific and mandatory terms. Howe, 8 F.3d at 1262 (citation omitted).
In addition, the statute itself must provide "a comprehensive remedial
scheme which leaves no room for additional private remedies." Howe, 8 F.3d
at 1263 (citation omitted). Plaintiff's interest cannot be so "'vague and
amorphous"' that it is beyond the power of judicial enforcement." Howe,
8 F.3d at 1262 n.5. (citations omitted).
Dollar contends it has a § 1983 remedy because the AAIA was intended
to benefit rental car companies, the statute creates a
13
binding obligation, and the interest asserted by Dollar is not too vague
to enforce. Dollar further contends the district court erroneously used
the Cort test as the basis for its determination that Dollar did not have
a cause of action under § 1983 to enforce § 47107 of the AAIA. Dollar,
however, misreads the district court's analysis.
When the district court considered whether a private right of action
exists under the AAIA, it found the AAIA was not intended to benefit
concessionaires such as Dollar and other rental car businesses and (2) the
legislative history and the statute itself contained no indication of a
legislative intent, either explicit or implicit, to create a private remedy
under the AAIA. Thus, the threshold factors under Cort and Howe for
determining whether an implied private right of action exists under the
AAIA and for determining whether § 1983 provides a remedy for alleged
violations of the AAIA are identical. When the district court reached the
§ 1983 issue, it found it unnecessary to repeat its analysis. We find the
district court's approach reasonable and agree that Dollar's arguments fail
under the threshold inquiries of both Howe and Cort. We hold, therefore,
the district court did not err when it dismissed Dollar's cause of action
to enforce the AAIA under
§ 1983.
Dollar further contends it is entitled to enforce its rights under
the Commerce Clause through § 1983. See Dennis v. Higgins, 498 U.S. 439
(1991) (claims for violation of the Commerce Clause may be brought under
§ 1983). We earlier found the Commission was a market participant and, as
a result, not subject to the restraints of the Commerce Clause. Dollar,
therefore, has no rights under the Commerce Clause to enforce.
14
CONCLUSION
Based on the foregoing, we AFFIRM the judgment of the district court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
15