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Commonwealth v. Susquehanna Area Regional Airport Authority

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA


March 21, 2006

COMMONWEALTH OF PENNSYLVANIA, PLAINTIFF
v.
SUSQUEHANNA AREA REGIONAL AIRPORT AUTHORITY, DEFENDANT

The opinion of the court was delivered by: Christopher C. Conner United States District Judge

(Judge Conner)

MEMORANDUM

The Commonwealth of Pennsylvania, through the Office of Attorney General, initiated this action as parens patriae, to enjoin the defendant, Susquehanna Area Regional Airport Authority ("SARAA"), from acquiring, by eminent domain, a tract of land adjacent to the Harrisburg International Airport ("HIA"). This land is the site of a private parking enterprise servicing HIA. In its complaint, the Commonwealth invokes federal antitrust laws, seeking to enjoin SARAA's "conduct in unlawfully obtaining and maintaining a monopoly for airport parking services." (Doc. 1 ¶ 52.)

Presently before the court is a motion to dismiss (Doc. 6) filed by SARAA. Based upon clear application of Parker*fn1 immunity, the court is constrained to grant defendant's motion.

I. Statement of Facts*fn2

In 1967, the Cramer family purchased a tract of land located on West Harrisburg Pike in Lower Swatara Township, Dauphin County, Pennsylvania. (Doc. 1 ¶¶ 8-9.) Although the Cramer tract is adjacent to property owned by SARAA, it is pro tanto separated from SARAA property by a road and railroad tracks. (Doc. 1 ¶¶ 10, 22.)*fn3

For over twenty-five years, the Cramer family has used their land for airport parking. (Doc. 1 ¶¶ 8, 11.) Cramer Airport Parking currently offers 1,000 parking spaces, which are approximately 0.8 miles from HIA, with the capacity to expand to 2,000 parking spaces. (Doc. 1 ¶ 12.) Parking rates are $5 per day or $28 per week and discount coupons are available. (Doc. 1 ¶ 12.) Customers are shuttled between Cramer Airport Parking and HIA. (Doc. 1 ¶ 12.)

SARAA is a joint municipal authority created in 1997 pursuant to the Pennsylvania Municipality Authorities Act ("MAA"), as amended, 53 PA. CONS. STAT. ANN. §§ 5601-5623. (Doc. 1 ¶ 4.) SARAA offers 2,474 garage parking spaces at the terminal in Lot A and 3,100 parking spaces approximately 0.5 miles from HIA in Lot B (Economy Long-Term Parking, "SmartPark").*fn4 (Doc. 1 ¶ 13-14.) SARAA purportedly has the capacity to expand to 9,000 parking spaces. (Doc. 1 ¶ 15.) The parking rates for Lot A are $1 per hour for the first two hours and $2 for each additional hour, up to a daily maximum rate of $14. (Doc. 1 ¶ 13.) The rates for SmartPark are $5 per day and $30 per week. (Doc. 1 ¶ 14.) A shuttle takes customers from SmartPark to HIA. (Doc. 1 ¶ 14.)

On March 30, 2005, SARAA filed a Declaration of Taking in the Court of Common Pleas for Dauphin County to acquire the Cramer property through eminent domain. (Doc. 1 ¶ 18.) SARAA claims that it intends to use this property to "construct appropriate facilities thereon and/or utilize such property in a manner which will service, improve, promote and maintain the continued practices conducted by the Airport." (Doc. 1 ¶ 19.)

On September 8, 2005, the Commonwealth commenced the instant action (Doc. 1) against SARAA pursuant to 71 PA. CONS. STAT. ANN. § 732-204(c) ("The Attorney General shall represent the Commonwealth and its citizens in any action brought for violation of the antitrust laws of the United States and the Commonwealth."). The complaint alleges antitrust violations under Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 2 of the Sherman Act, 15 U.S.C. § 2, and seeks: (1) a permanent injunction to prevent SARAA from acquiring the assets of Cramer through eminent domain proceedings or any other means; (2) a permanent injunction to prevent SARAA from interfering with Cramer's operation of an airport parking business serving HIA; (3) a declaratory judgment that SARAA's proposed acquisition of Cramer's assets violates Section 7 of the Clayton Act; (4) a declaratory judgment that SARAA's proposed acquisition of Cramer's assets violates Section 2 of the Sherman Act; (5) costs and reasonable attorneys' fees; and (6) "other just and proper relief."

In its complaint, the Commonwealth asserts that SARAA has no actual plans for the Cramer property and that, absent agreements from Amtrak and Norfolk Southern to move the railroad tracks and provide a means of access between the property and the airport, acquisition of the property provides no benefit to SARAA for aviation-related development. (Doc. 1 ¶¶ 20, 22.) The Commonwealth contends that SARAA's true motives for taking the property are to aid SARAA in a tax dispute pending with the Middletown Area School District and to eliminate Cramer Airport Parking as a competitor. (Doc. 1 ¶ 24.)

SARAA filed the instant motion to dismiss (Doc. 6) on September 28, 2005. SARAA argues that dismissal is appropriate because: (1) the state action doctrine (i.e., Parker immunity) shields SARAA, a municipal authority, from antitrust claims; (2) the Anti-Injunction Act*fn5 bars the relief requested; (3) the NoerrPennington doctrine*fn6 protects SARAA from antitrust challenge; (4) this case lacks the requisite nexus with interstate commerce, thereby depriving the court of subject matter jurisdiction; and (5) eminent domain proceedings cannot be restrained by another governmental actor under federal antitrust laws. The parties have fully briefed these issues and the motion is now ripe for disposition.

II. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of claims that fail to assert a basis upon which relief can be granted. FED. R. CIV. P. 12(b)(6).

In the context of a motion to dismiss under Rule 12(b)(6), the court must accept as true all of the factual allegations in the complaint and all reasonable inferences that can be drawn therefrom. Langford v. City of Atlantic City, 235 F.3d 845, 847 (3d Cir. 2000) (citing Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996)). Although the court is generally limited in its review to the face of the complaint, it "may also consider matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).

Federal notice pleading rules do not require plaintiffs to allege affirmatively every aspect of their claims, but only to present sufficient facts to allow the opposing party to conduct discovery and prepare a defense. See FED. R. CIV. P. 8(a) (stating that the complaint should include "a short and plain statement of the claim showing that the pleader is entitled to relief"); see also Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Thus, courts should not dismiss a complaint for failure to state a claim unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id.; see Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002). Under this liberal pleading policy, courts should generally grant plaintiffs leave to amend their claims before dismissing a complaint that is merely deficient. See Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000).

III. Discussion

A. The State Action Doctrine and Parker Immunity

Federal antitrust laws recognize the importance of free markets and competition and prohibit the restraint of such competition. This prohibition, however, is generally applicable only to private, not governmental, conduct. The state action doctrine provides immunity-often referred to as Parker immunity- from federal antitrust laws for actions taken by a state government. See Mariana v. Fisher, 338 F.3d 189, 198 (3d Cir. 2003) (citing Parker v. Brown, 317 U.S. 341 (1943)).*fn7

The origin of this doctrine is the Supreme Court's decision in Parker v. Brown:

We find nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature. In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress.

The Sherman Act makes no mention of the state as such, and gives no hint that it was intended to restrain state action or official action directed by a state. . . .

There is no suggestion of a purpose to restrain state action in the Act's legislative history.

Parker, 317 U.S. at 350-51. Parker immunity "is grounded in federalism and respect for state sovereignty." Mariana, 338 F.3d at 201. ("[T]he 'interest in protecting the acts of the sovereign state, even if anticompetitive, outweighs the importance of a freely competitive marketplace.'" (quoting A.D. Bedell Wholesale Co. v. Philip Morris Inc., 263 F.3d 239, 254-55 (3d Cir. 2001))).

Unlike actions of a state legislature, state supreme court, or state executive department, actions of a municipality are not automatically immune from federal antitrust laws under the state action doctrine. See Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38 (1985); see also City of Lafayette, La. v. La. Power & Light Co., 435 U.S. 389, 410 (1978).*fn8 Instead, a municipality will be immune from such laws only if it engaged in "the challenged activity pursuant to a clearly expressed state policy."*fn9 Town of Hallie, 471 U.S. at 40. Legislation enabling a municipality's actions need not explicitly authorize activity with anticompetitive effects to satisfy the "pursuant to a clearly expressed state policy" standard. See id. at 43-44 ("[Explicit authorization of anticompetitive effects] embodies an unrealistic view of how legislatures work and of how statutes are written. No legislature can be expected to catalog all of the anticipated effects of a statute . . . ."). Rather, legislation need only authorize activity that "foreseeably will result in anticompetitive effects." Id. at 43; see also Wheeler v. Beard, No. Civ.A. 03-4826, 2005 WL 1217191, at *3 (E.D. Pa. May 19, 2005) ("A policy is considered to be 'clearly articulated' if state statutes create a regulatory structure that would logically result in anti-competitive effects."); Pa. Coach Lines, Inc. v. Port Auth. of Allegheny County, 874 F. Supp. 666, 671 (W.D. Pa. 1994).*fn10 In sum, a municipal authority will ordinarily*fn11 be immune from federal antitrust laws under the state action doctrine if it acts pursuant to a clearly expressed state policy with potentially anticompetitive results.

Therefore, the controlling questions in this case are whether the MAA empowers municipal authorities to engage in activities with foreseeable anticompetitive effects and whether any limitations in the MAA or exceptions to Parker immunity apply to the instant matter.

B. The Municipality Authorities Act and Potential Anticompetitive Activities

In the matter sub judice, SARAA is a joint municipal authority created pursuant to the MAA, as amended, 53 PA. CONS. STAT. ANN. §§ 5601-5623. The MAA is enabling legislation, conferring upon local municipalities broad power to form authorities for a variety of enumerated projects and purposes, including the ownership and operation of a public airport.

Scope of projects permitted.-Every authority incorporated under this chapter shall be a body corporate and politic and shall be for the purposes of financing working capital; acquiring, holding, constructing, financing, improving, maintaining and operating, owning or leasing, either in the capacity of lessor or lessee, projects of the following kind and character . . .

(3) Transportation, marketing, shopping, terminals, bridges, tunnels, flood control projects, highways, parkways, traffic distribution centers, parking spaces, airports and all facilities necessary or incident thereto.

Id. § 5607(a)(3).

In addition, the MAA specifically confers upon municipal authorities the power of eminent domain:

Powers.-Every authority may exercise all powers necessary or convenient for the carrying out of the purposes set forth in this section, including, but without limiting the generality of the foregoing, the following rights and powers:

(15) To have the power of eminent domain. Id. § 5607(d)(15).

The above-quoted language provides the statutory basis for development of authority-owned and authority-operated airports, including development through condemnation. Thus, a municipal authority such as SARAA may operate and expand airport facilities pursuant to a clearly articulated state policy.

That anticompetitive effects are a foreseeable result of an authority's power to take property by eminent domain is obvious. It cannot reasonably be disputed that the exercise of this power may result in the displacement of competitive facilities. Indeed, the topography or characteristics of a tract of land may make it uniquely suited for particular projects or facilities. Logically, private and public entities may be equally enamored with a specific location because of its suitability for a particular purpose.

In fact, two reported cases, involving authorities incorporated under the MAA, provide clear illustrations of anticompetitive conduct sanctioned by the MAA. In In re Condemnation of 49.0768 Acres (Thompson Appeal), 233 A.2d 237, 239 (Pa. 1967), an airport authority incorporated under the MAA used the power of eminent domain to eliminate the only privately-operated airport. Similarly, in Dauphin County Gen. Auth. v. Dauphin County Bd. of Assessments, 768 A.2d 895, 898 (Pa. Commw. Ct. 2001), another authority incorporated under the MAA acquired properties that competed with existing businesses serving substantially the same purpose. In both cases state courts upheld the authorities' anticompetitive activities.

Moreover, the Pennsylvania legislature specifically acknowledged the potential anticompetitive effects of the broad powers it granted to municipal authorities under the MAA when it enacted the following anticompetitive provision:

The purpose and intent of this chapter being to benefit the people of the Commonwealth by, among other things, increasing their commerce, health, safety and prosperity and not to unnecessarily burden or interfere with existing business by the establishment of competitive enterprises; none of the powers granted by this chapter shall be exercised in the construction, financing, improvement, maintenance, extension or operation of any project or projects or providing financing for insurance reserves which in whole or in part shall duplicate or compete with existing enterprises serving substantially the same purposes. 53 PA. CONS. STAT. ANN. § 5607(b)(2).

It is undisputed that SARAA is a municipal authority formed by a group of three counties, two cities, and two townships for the purpose of owning and operating Harrisburg International Airport and Capitol City Airport. Pursuant to the provisions of the MAA, SARAA is vested with the power of eminent domain and may exercise this power in the operation of its airports and "all facilities necessary or incident thereto." Id. § 5607(a)(3), (d)(15). Based upon the foregoing, the court finds that SARAA is a municipal authority operating an airport, as expressly contemplated by state statute, and that the exercise of its statutory powers may have anticompetitive effects.

C. Limitations in the Municipality Authorities Act

The Commonwealth contends that the anticompetitive provision of the MAA, 53 PA. CONS. STAT. ANN. § 5607(b)(2), expressly limits an authority's power to displace existing competition, thereby disaffirming Parker immunity. The Pennsylvania Supreme Court in Thompson Appeal previously rejected this argument and the court finds Thompson Appeal dispositive.*fn12

In Thompson Appeal, a municipal authority condemned a private airport for use as a municipal airport and eliminated the only private provider of airport services. See 233 A.2d at 238-39. The Pennsylvania Supreme Court held that the purpose of the anticompetitive provision was "to protect businesses which will be competing with the condemnor's operations, because any loss of business resulting from such competition is not compensable under the Eminent Domain Code." Id. at 239. The court concluded that the anticompetitive provision of the MAA did not limit the authority's power of eminent domain. It opined that the state legislature's "deliberate omission of the power to acquire and hold property [from the anticompetitive provision] shows a clear legislative design that the proviso was not to be a restriction upon the authority's right to condemn."*fn13 Id. (emphasis added). Compare 53 PA. CONS. STAT. ANN. § 5607(b)(2) (prohibiting "the construction, financing, improvement, maintenance, extension or operation of any project . . . which in whole or in part shall duplicate or compete with existing enterprises"), with id. § 5607(a) (including "acquiring" and "holding" in the list of powers of an authority).

The court is persuaded that the analysis of the anticompetitive provision of the MAA set forth by the Pennsylvania Supreme Court in Thompson Appeal is controlling.*fn14 As in Thompson Appeal, the challenged conduct sub judice is SARAA's exercise of the power of eminent domain. And, just as the Thompson Appeal authority eliminated the only other provider of airport services in the area, SARAA's condemnation of the Cramer property will ostensibly eliminate the only other provider of airport parking.

The Commonwealth contends that the holding in Thompson Appeal does not apply because the Commonwealth represents consumers who will receive no compensation from the taking. See Thompson Appeal, 233 A.2d at 239 ("Where, as here, [the challenger-the condemnee] . . . will have received full compensation for the taking the [anticompetitive provision's] raison d'etre disappears."). This argument is without merit. Application of Parker immunity depends upon the challenged conduct, not the challenger of the conduct. See Town of Hallie, 471 U.S. at 40, 43. Accordingly, the Commonwealth's status as challenger in the instant action and its inability to receive compensation for the taking do not alter the court's analysis of whether SARAA engaged in "the challenged activity pursuant to a clearly expressed state policy" with anticompetitive effects as a foreseeable result.*fn15 See id.

For the foregoing reasons, the court finds that the anticompetitive provision of the MAA does not limit SARAA's power of eminent domain. Accordingly, SARAA is entitled to Parker immunity.

D. Market Participant Exception*fn16

Citing Bedell, the Commonwealth argues that Parker immunity does not apply because SARAA is using its power of eminent domain for improper purposes, to wit: to eliminate its only competitor for airport parking services and to gain leverage in an ongoing dispute with a local school district.*fn17 The Commonwealth contends that SARAA's motives for the taking transform SARAA into a market participant. The court finds that, regardless of SARAA's motives, SARAA's actions are decidedly governmental and, therefore, SARAA is entitled to Parker immunity.

In Bedell, the Third Circuit discussed a market participant exception to Parker immunity by analogizing it to Dormant Commerce Clause jurisprudence. See Bedell, 263 F.3d at 265 n.55. Under the Dormant Commerce Clause, a state is prohibited from imposing regulations that benefit the economic interests within the state at the expense of such interests outside the state. See Cloverland-Green Spring Dairies, Inc. v. Pa. Milk Mktg. Bd., 298 F.3d 201, 210 (3d Cir. 2002) (citing W. Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 192-93 (1994)). The market participant exception to this prohibition recognizes the dichotomy between the state's role as a rulemaker and its role as a competitor: "[The market participant exception] differentiates between a State's acting [i]n [i]ts distinctive governmental capacity, and a State's acting in the more general capacity of a market participant; only the former is subject to the limitations of the [Dormant] Commerce Clause." New Energy Co. v. Limbach, 486 U.S. 269, 277 (1988), cited in Bedell, 263 F.3d at 265 n.55. In the context of Parker immunity, a market participant exception would eliminate a municipal authority's immunity from antitrust laws when it acts simply as another competitor in the marketplace.

The Commonwealth's market participant/improper motive argument ignores the distinctly governmental nature of the challenged conduct. Eminent domain is a power unique to the government: the federal government derives this power from the Takings Clause of the Fifth Amendment; state governments derive this power from the Fourteenth Amendment. See STEVEN J. EAGLE, REGULATORY TAKINGS § 1- 1, at 5 & n.4 (3d ed. 2005). A state legislature may choose to exercise this power directly or indirectly, as in the instant matter, by delegating it. See 29A C.J.S. Eminent Domain § 22 (2005). In exercising this delegated power by filing a Declaration of Taking, SARAA must comply with specific statutory requirements set forth in the Pennsylvania Eminent Domain Code.*fn18 See Nw. Lehigh Sch. Dist. v. Agric. Lands Condemnation Approval Bd., 559 A.2d 978, 980 (Pa. Commw. Ct. 1989) ("[The power of eminent domain] can only be called into operation by the authority of the legislature and must be exercised . . . in the manner and with the limitations provided by law." (citing Interstate Cemetary Co. Appeal, 222 A.2d 906 (Pa. 1966))).

Moreover, the Supreme Court previously addressed the issue of improper motive in City of Columbia v. Omni Outdoor Advertising, Inc., albeit in the context of conspiracy allegations. In Omni, the Supreme Court specifically rejected a conspiracy exception to Parker immunity that would require an examination of "corrupt or bad faith decisions" and "selfish or corrupt motives" and a determination "not whether the action was in the public interest, but whether the officials involved thought it to be so." 499 U.S. 365, 374-76 (1991) ("[Such an inquiry] would require the sort of deconstruction of the governmental process and probing of the official 'intent' that we have consistently sought to avoid."). Similarly, allegations of an improper purpose cannot transform the exercise of the power of eminent domain-a distinctly governmental action-into the action of a market participant. To do so would make all eminent domain proceedings vulnerable to a claim of ill motives, an accusation common to most condemnation actions. See id. at 374-75 (rejecting a conspiracy exception to Parker immunity because "such an exception would virtually swallow up the Parker rule" as "[a]ll anticompetitive regulation would be vulnerable to a 'conspiracy' charge"). The purpose for the taking of the Cramer property is properly before the state court in the condemnation proceedings*fn19 and it does not alter the court's conclusion that SARAA is a governmental actor in the instant matter.

IV. Conclusion

SARAA engaged in conduct-exercising its power of eminent domain to take the Cramer property-pursuant to a clearly expressed state policy with anticompetitive effects as a foreseeable result. The anticompetitive provision of the MAA does not restrict SARAA's power of eminent domain. The taking is a governmental action and does not qualify as a form of market participation. Accordingly, under the state action doctrine, SARAA is immune from federal antitrust laws and the court will grant SARAA's motion to dismiss.*fn20

The court would be remiss if it did not acknowledge the obvious anticompetitive impact of the taking. It is not unsympathetic to the concerns expressed in the complaint. However, these concerns must be addressed in the eminent domain proceedings and the court is confident that the Court of Common Pleas of Dauphin County will ensure that the taking satisfies constitutional requirements of public use and just compensation.*fn21 Parker immunity precludes this court from further review under the antitrust laws.

An appropriate order will issue.

ORDER

AND NOW, this 21st day of March, 2006, upon consideration of the motion to dismiss (Doc. 6), and for the reasons set forth in the accompanying memorandum, it is hereby ORDERED that:

1. The motion to dismiss (Doc. 6) is GRANTED.

2. Plaintiff's complaint (Doc. 1) is DISMISSED.

3. Leave to amend is DENIED as futile. See Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002).

4. The Clerk of Court is directed to CLOSE this case.


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