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AMERICAN AIRLINES, INC. v. CITY OF PHILADELPHIA

June 29, 1976

AMERICAN AIRLINES, INC., et al
v.
CITY OF PHILADELPHIA



The opinion of the court was delivered by: BY THE COURT; HERBERT A. FOGEL

MEMORANDUM AND ORDER

 FOGEL, J.

 June 29, 1976.

 Before us is a challenge by the plaintiffs, *fn1" (airlines), to certain rates and charges imposed by defendant, (City), for the use of facilities at the Philadelphia International Airport and North Philadelphia Airport. The airlines contend that the rates imposed by the City, under Airport Rates and Charges Regulation No. 1, are confiscatory, discriminatory, an unauthorized burden on interstate commerce, and in violation of Title 11, § 1113 of the Federal Aviation Act, 49 U.S.C. § 1513, and § 18 of the Federal Airport and Airways Development Act of 1970, 49 U.S.C. § 1718.

 From the outset of this litigation in June, 1974, the parties have attempted, in earnest, to amicably settle their differences. However, these efforts aborted on March 10, 1976, when the City stated that it could not consummate the settlement upon the terms and conditions the parties had before them.

 As a direct result of the termination of these negotiations, there are now three motions pending before us. First: a motion filed by the airlines to enforce a settlement agreement (Motion to Enforce), in which the airlines contend that the settlement negotiations in fact resulted in a binding and enforceable agreement, which, but for reduction to a single writing, was in fact consummated in all respects. Second: a Motion for Summary Judgment filed by the City in opposition to the Motion to Enforce. Third: a motion by the airlines to stay the imposition of the City's latest rate regulation, *fn2" pending our determination of the airlines' Motion to Enforce and the City's Motion for Summary Judgment (Motion to Suspend).

 We have reviewed all of the documents, including the briefs submitted to us, and have had extensive argument by the parties on all three motions. We have taken the City's Motion for Summary Judgment and the airlines' Motion to Enforce under advisement. We will, however, grant the airlines' Motion to Suspend, subject to the ensuing terms and conditions which will be reflected in our Order. All of the parties agree that the critical date is July 1, 1976, when regulation 2, which supersedes regulation 1, goes into effect. Hence, it is vital, pending final disposition of the matter, that a course be charted for the parties.

 I. PROCEDURAL HISTORY AND FACTS OF THE CASE

 Plaintiffs filed their complaint in this action on June 20, 1974, together with a request for a preliminary injunction. After numerous conferences, the parties agreed to an interim settlement pending a permanent injunction hearing; that settlement was recorded in open court on July 17, 1974, with our approval. Trial upon issues raised by the request for a permanent injunction was scheduled for October 15, 1974, although the parties expressed optimism with respect to an amicable resolution before that date.

 They then embarked upon a course of negotiations which, as they evolved, extended over the following twenty months; the culmination of that effort has been the resuscitation of the litigation, as evidenced by the motions before us. During this period, numerous conferences were held by the court with the parties, with trial dates set and reset several times at their behest, on the strength of their continual assurances to us, on each occasion, that the light at the end of the tunnel was just around the bend.

 On November 19, 1974, the date set for a pretrial conference prior to the November 25, 1974 trial date, the litigants, through counsel for the airlines, informed us that the case was, in effect, settled, but that it would take six months for preparation and execution of a formal final agreement by all of the parties. On the basis of that representation, the November 25th trial date was rescheduled for April 2, 1975, as a failsafe measure, in the event that the final agreement was not in fact consummated. By letter dated March 26, 1975, counsel for the airlines requested an additional sixty days for preparation and execution of the final document. We postponed the April trial date and set a conference for June 2, 1975, on the basis of that request. Six days before this conference, on May 27, 1975, counsel requested an additional two month extension. We insisted, however, that the parties report to us on June 2nd with respect to the progress in concluding the final draft of the agreement. At that conference, we discussed the problems which the parties were having in consummating their documentation; on the basis of the statements of counsel, we concluded that they were, in fact, minimal, and that the process realistically could be completed by July 28, 1975. We therefore scheduled another conference for that date, and clearly impressed upon the parties that the July date was, in fact, a deadline.

 Although that deadline was not met, counsel reported to the court on September 10, 1975, that all disputes had been resolved, and that the stage of final memorialization had been reached. Again, at their urging, we continued the matter and set another conference for November 20, 1975, in order to afford the parties the necessary time to complete the final draft and to have that instrument executed. The airlines attach as Exhibit "A" to their Motion to Enforce, a document, which they contend represents the agreement reached by the parties in September, 1975. This instrument was not executed, however, because of numerous problems raised by the City's bond counsel. The review by bond counsel, and the ensuing negotiations with respect to the points raised, caused further delays in connection with the consummation of the agreement.

 On February 24, 1976, the parties appeared before us at another conference, and reported that all remaining issues had finally been resolved. We established a firm date of April 1, 1976, to iron out minor language changes which we were informed still remained to be resolved, and for procurement of commitments of agreement from the respective airline authorities. At that same conference, we established time frames for the litigation between Altair Airlines and the City, and set June 1, 1976 as the trial date. *fn3" We scheduled another conference for April 6, 1976, and informed counsel that we would not tolerate any further delays in the settlement negotiations; we stated that if an agreement was not executed by April 6th, we would set that case for trial on June 1st, as well.

 On March 10, 1976, the parties had before them a document, (a copy of which was attached to the Motion to Enforce as Exhibit "B"), which the airlines contend reflected the essential terms of the agreement the parties had then reached. The refusal of the City to execute that instrument has prompted the motions now before us.

 At an initial hearing on the Motion to Enforce, on May 3, 1976, the parties stated that an immediate problem had developed as a result of the City's refusal to execute the alleged agreement, and its concomitant decision to proceed with the relocation of the air field taxi-way and roadway system in accordance with existing plans for the new terminal facilities. The airlines were reluctant to move into their new facilities without an enforceable agreement with the City as to rates and charges for the use of those facilities. We inquired about the feasibility of agreement upon a stipulation under which the City would calculate its rates in accordance with the alleged settlement agreement, pending our disposition of the airlines' Motion to Enforce. We were then and there informed by counsel for the City as follows:

 
In order to induce them to move I called [counsel for the airlines] and suggested a stipulation whereby, until Your Honor would order that the Agreement was not binding upon the City, in order to induce them to move we would be bound by the financial terms of the Agreement if they would move and then only after Your Honor were to decide against them, i.e., that there is no agreement which is binding upon the ...

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