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Capital City Cab Service, Inc. v. Susquehanna Area Regional Airport Authority

November 27, 2006

CAPITAL CITY CAB SERVICE, INC., AND AYAL SALAME PLAINTIFFS,
v.
SUSQUEHANNA AREA REGIONAL AIRPORT AUTHORITY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Yvette Kane, Chief Judge United States District Court Middle District of Pennsylvania

Chief Judge Kane

MEMORANDUM

Plaintiff Capital City Cab Service, Inc. ("Capital City") is a Pennsylvania corporation that provides call-and-demand taxi services in Cumberland, Dauphin, and York counties. Plaintiff Ayal Salame is the president and owner of Capital City. Defendant Susquehanna Area Regional Airport Authority ("SARAA") is a municipal authority enacted pursuant to the Municipal Authorities Act of 1945, as amended, 53 Pa. Cons. Stat. § 5601 et seq., and charged with the operation of Harrisburg International Airport ("HIA"), located in Dauphin county. At all relevant times, Defendants Alfred Testa and Randy Hicks were both employees of SARAA, with Defendant Testa serving as Director of Aviation. Defendant Salgals, Inc., is the owner-operator of American Taxi, a competitor of Capital City.

Before this Court is Defendants' motion to dismiss Plaintiffs' amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1 (Doc. No. 11.) The motion has been fully briefed and is ripe for disposition.

I. BACKGROUND

A. Factual Background*fn2

The dispute before the Court involves outbound taxicab fares originating at Harrisburg International Airport. Until April 1, 2004, cabs seeking outbound fares would freely enter the HIA garage facility and wait for passengers in a queue-line. However, on August 2, 2004, SARAA and American Taxi entered into a contract that conveyed exclusive rights to American Taxi to "pick up passengers at the terminal building." (Doc. No. 9-2, at 1.) In exchange for fees "based upon a percentage of gross revenues," SARAA agreed to provide American Taxi with exclusive access to the HIA terminal as well as a number of parking spaces in the garage facility for off-duty taxicabs. (Id. at 2.) Although Capital City submitted a bid on the exclusive contract, the Plaintiffs allege that [SARAA] illegally collud[ed] with Salgals in its contract "negotiations," as evidenced by SARAA manipulating its "insurance requirements" by, first requiring Capital City and all providers to demonstrate an [sic] level of insurance both overwhelmingly expensive and difficult to acquire, and then, once the contract was granted to American Taxi, dropping those required insurance levels, over eighty percent, to those initially offered by Capital City. This was to ensure that Salgals would be the "winning bidder." (Doc. No. 9, ¶ 22(c).)

The exclusive operating agreement, according to Plaintiffs, gives American Taxi such a competitive advantage over other common carriers that it precludes effective competition at HIA.*fn3 Plaintiffs' amended complaint includes allegations that SARAA has enforced the contract on several occasions by preventing Capital City from using the queue-line and garage facilities. (Doc. No. 9, ¶¶ 15-17.) Moreover, Capital City alleges that the contract had the effect of denying "Capital City access to outbound fares at the HIA facility, relegating Capital City to an area of HIA's multitiered garage where such fares are difficult, if not impossible to acquire." (Doc. No. 9, ¶ 11.) Finally, Capital City alleges that it, like other common carriers, must pay a $10 fee to use the HIA garage facility, thereby giving American Taxi a commercial advantage. (Doc. No. 9, ¶ 24.)

Plaintiffs allege that Capital City had a legal right to operate a taxicab service because the Pennsylvania Public Utilities Commission had certified it do so irrespective of the exclusive operating agreement between SARAA and American Taxi. (Doc. No. 9, ¶ 14.) Furthermore, the amended complaint includes an assertion that "[Plaintiff] Salame is an Israeli-born American citizen, and many of Plaintiff's drivers speak Arabic as their first language, though Citizens or legal resident aliens themselves." (Doc. No. 9, ¶ 37.) Plaintiffs contend that the Defendants' actions to "deny [Capital City] lawful access to public facilities on the HIA property" (Doc. No. 9, ¶ 40) despite Plaintiffs' legal right to operate a taxicab service and purported membership in a protected class, effectively "den[ied] both Capital City and Salame the equal protection of the laws" (Doc. No. 9, ¶ 41).

B. Procedural Background

On March 31, 2006, Plaintiffs filed a complaint with this Court. (Doc. No. 1.) On June 6, 2006, Defendants moved to dismiss Plaintiffs' complaint pursuant to Rule 12(b)(6) and moved for sanctions pursuant to Rule 11(c). (Doc. Nos. 7, 8.) On June 16, 2006, Plaintiffs filed an amended complaint. (Doc. No. 9.) Because Defendants had not filed briefs in support of either motion as required by Local Rule 7.5, the Court deemed both motions withdrawn on June 28, 2006. (Doc. No. 10.) On July 6, 2006, the Defendants filed a motion to dismiss Plaintiffs' amended complaint pursuant to Rule 12(b)(6). (Doc. No. 11.) The motion has been fully briefed by both parties (Doc. Nos. 16, 19, 21) and is ripe for disposition. On September 6, 2006, the Court heard oral argument. For the following reasons, the Court will grant the motion and dismiss Plaintiffs' amended complaint.

II. STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is properly granted when, taking all factual allegations and inferences as true, the moving party is entitled to judgment as a matter of law. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). The burden is on the moving party to show that no claim has been stated. Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir. 1980). A court must "examine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Hill v. Borough of Kutztown, 455 F.3d 225, 233 (3d Cir. 2006) (quoting Delaware Nation v. Pennsylvania, 446 F.3d 410, 415 (3d Cir. 2006)). However, "a court need not credit a complaint's 'bald assertions' or 'legal conclusions' when deciding a motion to dismiss." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906, 908 (3d Cir. 1997). Rather, a court must only determine "whether the claimant is entitled to offer evidence to support the claims." Pennsylvania Psychiatric Soc. v. Green Spring Health Servs., Inc., 280 F.3d 278, 283 (3d Cir. 2002) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997)).

III. DISCUSSION

Plaintiffs allege two separate claims against the Defendants. First, Plaintiffs allege that the Defendants acted in violation of the federal Sherman and Clayton Acts, 15 U.S.C. § 1 et seq., and seek monetary relief. Second, Plaintiffs allege that Defendants violated Plaintiffs' right to equal protection under the Fourteenth Amendment. This Court has jurisdiction pursuant to 28 U.S.C. § 1331. Defendants seek to dismiss both counts, and this Court will address both in turn.

A. Count I - Antitrust

In Count I of the amended complaint, Plaintiffs allege that Defendants violated federal antitrust laws by entering into an anticompetitive, exclusive operating agreement with American Taxi. Defendants move to dismiss the Plaintiffs' antitrust claims on three grounds. First, Defendants argue that they are shielded from antitrust liability under the judicially fashioned "state action" doctrine. Second, Defendants contend that Plaintiffs cannot state a claim for relief under the federal antitrust laws. Third, Defendants assert that the Local Government Antitrust Act of 1984 ("LGAA"), Pub. L. No. 98-544, 15 U.S.C. §§ 34-36, bars Plaintiffs from seeking monetary relief in an antitrust action.*fn4

1. State-Action Doctrine

Defendants maintain that the state-action doctrine exempts SARAA from federal antitrust liability. The state-action doctrine, as first established by the Supreme Court in Parker v. Brown, 317 U.S. 341 (1943), is a recognition that Congress did not intend federal antitrust laws to restrain state action.*fn5 A.D. Bedell Wholesale Co. v. Philip Morris Inc., 263 F.3d 239, 255 (3d Cir. 2001). The doctrine is "grounded in federalism and respect for state sovereignty," Mariana v. Fisher, 338 F.3d 189, 201 (3d Cir. 2003), and has "evolved based upon 'the principle of freedom of action for the States, adopted to foster and preserve the federal system.'" Yeager's Fuel, Inc. v. Pennsylvania Power & Light Co., 22 F.3d 1260, 1265 (3d Cir. 1994) (quoting FTC. v. Ticor Title Ins. Co., 504 U.S. 621, 633 (1992)). The Third Circuit has explained that "[w]hen a state clearly acts in its sovereign capacity it avoids the constraints of the Sherman Act and may act anticompetitively to further other policy goals. For example, state governments frequently sanction monopolies to ensure consistent provision of essential services like electric power, gas, cable television, or local telephone service." Bedell, 263 F.3d at 255 (internal citations omitted).

Local governmental entities, although they are not themselves exempt from antitrust liability under Parker, are shielded by the state-action doctrine when a state authorizes their actions. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 412-13 (1978). A local governmental entity is exempt from federal antitrust laws when "it is engaging in the challenged activity pursuant to a clearly expressed state policy." Town of Hallie v. City of Eau Claire, 471 U.S. 34, 40 (1985). Yet to enjoy the exemption, "[i]t is not necessary . . . for the state legislature to have stated explicitly that it expected the [entity] to engage in conduct that would have anticompetitive effects." Id. Action of a local government entity is protected as long as the "suppression of competition is the 'foreseeable result' of what the [enabling] statute authorizes." City of Columbia v. Omni Outdoor Advertising, 499 U.S. 365, 373 (1991). For SARAA to enjoy protection under the state-action doctrine, it must therefore show that its actions were authorized by state law, and prove that it acted "pursuant to state policy to displace competition." Hallie, 471 U.S. at 38-39 (quoting Lafayette, 435 U.S. at 413).

The key issues under the state-action doctrine are therefore whether: (1) SARAA had the power to enter into exclusive contracts; and (2) it was "foreseeable" that anticompetitive action would occur under the established regulatory framework. To resolve these questions, the Court must turn to the statutory authority under which SARAA operates.

a. The Municipality Authorities Act

It is undisputed that SARAA is a municipal authority enabled pursuant to the Municipal Authorities Act, 53 Pa. Cons. St. §§ 5601-5622 ("MAA"). The specific enabling provision of the MAA for SARAA provides that:

(a) 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 and providing financing for insurance reserves: . . . (3) Transportation, marketing, shopping, terminals, bridges, tunnels, flood control projects, ...


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