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TRANSPORT LIMOUSINE OF LONG ISLAND, INC. v. PORT A

April 20, 1983

TRANSPORT LIMOUSINE OF LONG ISLAND, INC., Plaintiff,
v.
The PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Peter Goldmark, Executive Director of the Port Authority Aviation Department, Kelsey A. Moffett, Assistant Manager of Port Authority Business Administration Division, Long Island Airports Limousine Service, Inc. and Walter Stuart, Defendants



The opinion of the court was delivered by: MISHLER

Memorandum of Decision and Order

 MISHLER, District Judge.

 Transport Limousine of Long Island, Inc. ("Transport") brought this action to challenge the fee imposed on Transport by the Port Authority of New York and New Jersey ("Port Authority") for certain services provided at John F. Kennedy International Airport ("Kennedy") and LaGuardia Airport ("LaGuardia"). Transport claims, inter alia, that the charge of eight percent (8%) on gross receipts is illegal and in violation of the Constitutions of the United States and New York State, the Sherman Antitrust Act and the Airport and Airway Development Act of 1970 ("AADA"). Transport also seeks damages for violation of its civil rights under 42 U.S.C. § 1983. Defendants (the Port Authority, the individual defendants named as officials and employees of the Port Authority, Long Island Airports Limousine Service, Inc. ("L.I. Limousine") and Walter Stuart, its president), move for summary judgment pursuant to Rule 56, Fed.R.Civ.P.

 The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331. For the reasons set forth below, we grant defendants' motion and dismiss the complaint.

 FACTS

 The following facts are not in dispute.

 The Port Authority is a bi-state agency, created in 1921 by an interstate compact between New York and New Jersey for the purpose of, inter alia, operating public transportation terminal facilities, including Kennedy and LaGuardia Airports, on a self-sustaining basis. *fn1" The Port Authority commenced operating Kennedy and LaGuardia in 1948 under a lease from the City of New York.

 Defendant, L.I. Limousine, has operated a bus line with designated stops (bus line) between points in Nassau and Suffolk Counties and Kennedy and LaGuardia Airports since 1962 under an exclusive grant of authority from the New York State Department of Transportation ("DOT"). In 1968, L.I. Limousine supplemented this service by establishing a door-to-door limousine service as a contract carrier, as authorized by DOT.

 At the time the Port Authority began operating the airports in 1948, L.I. Limousine had a permit to use counter space and phone locations at the airports for the purpose of soliciting passengers. The charge was 10% of the gross receipts. The fee was continued by the Port Authority as to L.I. Limousine and all other limousine and bus company permittees using such counter facilities and telephone service. *fn2" The Port Authority reduced the fee to 8% in or about November 1978. In contrast, all non-permittee vehicles, including buses, taxicabs and private vehicles, have unlimited free access to the airports for the purpose of discharging and picking up passengers. *fn3"

 Transport is a corporation, organized on July 21, 1976, with its principal place of business in Bohemia, Suffolk County, New York. On November 5, 1976, Transport applied to DOT for contract carriage authority (door-to-door service) between the airports and Nassau and Suffolk Counties. DOT granted a certificate of authority on March 28, 1978 respecting service between the airports and Suffolk County. On February 22, 1979, DOT granted the additional authority to include Nassau County. DOT denied Transport's application, filed in September, 1979, for authority to operate a bus line similar to that operated exclusively by L.I. Limousine. *fn4"

 On November 29, 1977, Transport applied for a permit to use counter space and telephone service at Port Authority terminals including Kennedy and LaGuardia. The Port Authority declined to act on the application until a certificate of authority was issued by DOT. When authority was granted as to Suffolk County, action on the application was withheld until it became apparent that authority would be extended to Nassau County. On January 24, 1979, in anticipation of the grant of authority respecting Nassau County, the Port Authority mailed the privilege and space permits to Transport for signature. In the meantime, airport terminal counters and phone service were made available to Transport for the solicitation of passengers at the airports. On February 21, 1979, Transport mailed a check in the amount of $7,000 to the Port Authority as an "interim payment," but failed to execute the permits which would have obligated Transport to pay 8% of its gross receipts. Transport questioned the effective date of the permit and the date it would become obligated to pay the fee on its gross receipts. On June 22, 1979, Transport remitted a payment of $9,000 to the Port Authority, noting that it represented 8% on all reciepts from February 21, 1979. On October 17, 1979, a revised privilege permit was mailed to Transport with the effective date left open. The accompanying letter advised Transport:

 
We must still agree upon the date and our agreement must be supported by evidence such as telephone company bills or telephone installations.

 The parties finally agreed on an effective date of May 1, 1979. On September 18, 1980, William E. Schoolman, president of Transport, wrote to the Port Authority advising it that Transport was not yet ready to sign the permit since it had obtained a new accounting firm to review the records. A meeting was held at the office of Patrick J. Falvey, General Counsel and Assistant Executive Director of the Port Authority with Transport's counsel. Transport was advised that eviction proceedings would be commenced if the controversy was not resolved. A letter was mailed to Transport's counsel on March 4, 1981 setting forth the Port Authority's understanding of the settlement of all differences between the parties. Transport's counsel forwarded the letter to Transport on March 11, 1981. Mr. Falvey continued to attempt to resolve any differences with John V. Lindsay of the firm of Webster & Sheffield. On May 4, 1981, Transport instituted this lawsuit, represented by Pascarella, Dehler, Illmensee & Carra.

 DISCUSSION

 The Standard For Summary Judgment

 The burden rests with the moving party "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970); United States v. One Tintoretto Painting, 691 F.2d 603, 606 (2d Cir.1982). Initially, the plaintiff is required to present "evidence on which, taken by itself, it would be entitled to a directed verdict." Donnelly v. Guion, 467 F.2d 290, 293 (2d Cir.1972). The party opposing summary judgment "must set forth specific facts showing that there is a genuine issue for trial." Rule 56(e), Fed.R.Civ.P. "The mere possibility that a factual dispute may exist, without more, is not sufficient to overcome a convincing presentation by the moving party." United States v. Potamkin Cadillac Corp., 689 F.2d 379, 381 (2d Cir.1982) citing Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980). "The court should resolve all ambiguities and inferences to be drawn from the underlying facts in the light most favorable to the party opposing the motion." United States v. One Tintoretto Painting, supra, 691 F.2d at 606.

 Generally, cases involving constitutional and civil rights questions do not lend themselves to summary disposition. See Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2732.2 (1983). This case, however, does not present issues usually present in claims of constitutional or civil rights violations (i.e., reasonableness of conduct, intent, good faith, etc.), that would preclude summary disposition. We find that the matter before us does not raise a genuine issue as to any material fact.

 All of Transport's claims arise out of the 8% charge on the gross receipts of privilege permittees, as assessed by the Port Authority. The plaintiff states:

 
The central issue in the case deals with the economic restraints resulting from the Port Authority's requirement that companies, such as Transport, execute a privilege permit fee for "non-exclusive" use of the airport roads, which obligates the permittee to pay eight percent of its gross receipts to the Port Authority. Transport maintains that the privilege permit 8 percent gross receipts requirement violates the Commerce Clause and the Equal Protection Clause of the Fourteenth Amendment to the Constitution and the Airport and Airway Development Act of 1970. Plaintiff asserts that the Port Authority's violation of the Airport and Airway Development Act and the Constitution are actionable under the Civil Rights Act, 42 U.S.C. § 1983. Transport also alleges that the restraints, coupled with the operation and effect of various agreements between, and combination of, the Port Authority and co-defendant, Long Island Airport Limousine Service, Inc. (and its president Walter Stuart) unreasonably affects commerce in the relevant geographic and service markets and violates Section One and Two of the Sherman Act.

 (Plaintiff's Brief in Opposition to the Motions at p. 17). These claims are discussed separately below.

 I. The Commerce Clause

 Count I of the complaint alleges that the fee of 8% of gross receipts as charged by the Port Authority for the use of counter space and telephones is "irrational, arbitrary, unreasonable and bears no rational relationship to the presence of the [telephone facilities and counter space] at the airports, is not fixed in accordance with a uniform, fair or practical standard, is excessive in relation to the benefit conferred by the Port Authority, and constitutes an unreasonable burden on interstate commerce." (Complaint para. Eighteenth). Transport states that approximately 65% of its revenues are derived from customers who utilize the telephone services and that if such service is denied them, Transport could become insolvent to the detriment of the public. (Complaint para. Seventeenth). This count is asserted only against the Port Authority.

 The United States Supreme Court has held that when a state or local government enters the market as a participant it is not subject to the restraints of the Commerce Clause. Reeves, Inc. v. Stake, 447 U.S. 429, 100 S. Ct. 2271, 65 L. Ed. 2d 244 (1980); Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 96 S. Ct. 2488, 49 L. Ed. 2d 220 (1976). In Reeves, supra, the Court stated:

 
The basic distinction drawn in Alexandria Scrap between States as market participants and States as market regulators make good sense and sound law. As that case explains, the Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national market place. . . . There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market.

 447 U.S. at 436-37, 100 S. Ct. at 2277. (citations omitted).

 Under the analysis of Reeves and Alexandria Scrap, it is necessary for us to determine whether the Port Authority, in dealing with concessionaires at the airport, is (a) a state agency exercising the role of a regulator and therefore subject to the limitations of the Commerce Clause or (b) a market participant and therefore immune to such limitations. We find that the Port Authority is a participant in the market for ground transport services in that it makes certain facilities available at a fee to transport companies. The Court in Reeves noted that the line between "market participant" and "market regulator" is not always bright. 447 U.S. at 440, 100 S. Ct. at 2279. Similarly, Justice Blackmun's concurring opinion in White v. Massachusetts Council of Construction Employers, Inc., et al., 460 U.S. 204, 103 S. Ct. 1042, 75 L. Ed. 2d 1 (1983) underscores the difficulty in classifying a state's activity when it is not recognizable as a traditional state function. Justice Blackmun suggests that:

 
The legitimacy of a claim to the market participant exemption thus should turn primarily on whether a particular state action more closely resembles an attempt to impede trade among private parties, or an attempt, analogous to the accustomed right of merchants in the private sector, to govern the State's own economic conduct and to determine the parties with whom it will deal.

 U.S. at , 103 S. Ct. at 1050 (Blackmun, J., concurring). Following this approach, we conclude that the Port Authority's activities in determining to whom it will provide permittee services more closely resembles the activities of a merchant in the private sector. It is clear that DOT, and not the Port Authority, is the market regulator in the present context of the door-to-door ground transportation market. Thus, we ...


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