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Montauk-Caribbean Airways Inc. v. Hope

February 14, 1986

MONTAUK-CARIBBEAN AIRWAYS, INC., D/B/A LONG ISLAND AIRLINES, PLAINTIFF-APPELLANT,
v.
JUDITH HOPE, RANDALL PARSONS, ANTHONY BULLOCK, MICHAEL J. FINAZZO, AND HUGH KING, INDIVIDUALLY AND AS THE TOWN BOARD OF THE TOWN OF EAST HAMPTON, CHARLES T. SMITH, RUSSELL STEIN, EAST HAMPTON AIRE, INC., AND FRANK LA VIGNA, DEFENDANTS-APPELLEES



Appeal by Montauk-Caribbean Airways, Inc. from a judgment entered October 1, 1985 in the Eastern District of New York, Henry Bramwell, District Judge, dismissing federal claims against the Town of East Hampton and East Hampton Aire, Inc. for alleged violations of the federal antitrust laws, the Federal Aviation Act and the Federal Civil Rights Act, and also dismissing pendent state claims. Affirmed.

Author: Timbers

Before: TIMBERS, PIERCE and MINER, Circuit Judges.

TIMBERS, Circuit Judge:

Appellant Montauk-Caribbean Airways, Inc., d/b/a Long Island Airlines, appeals from a judgment entered October 1, 1985 in the Eastern District of New York, Henry Bramwell, District Judge, dismissing, pursuant to Fed. R. Civ. P. 12(b)(6), federal claims and pendent state claims.

Appellant commenced this action on February 8, 1985 against members of the Town Board of East Hampton, New York; the Town's attorney; the manager of the Town's airport; East Hampton Aire, Inc. ("EHA"), a competitor airline; and the latter's chief executive officer. The complaint alleged violations of the Sherman Act, 15 U.S.C. §§ 1, 2 (1982); the Clayton Act, 15 U.S.C. §§ 15, 26 (1982); the Federal Aviation Act, 49 U.S.C. §§ 1305(a), 1349(a), 2210(a) (1982); and the Federal Civil Rights Act, 42 U.S.C. § 1983 (1982). The complaint also alleged pendent state claims for breach of contract and conspiracy. The action was based on the Town's refusal to allow appellant to serve as an air carrier and fixed-base operator at the East Hampton Airport on a year-round basis. Appellant alleged that the Town and EHA conspired to create a monopoly during the off-season months for the benefit of EHA.

In an order dated May 28, 1985, the district court, pursuant to Fed. R. Civ. P. 12(b)(6), dismissed the Clayton Act, § 1983 and Federal Aviation Act claims. After the Supreme Court's decision in Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S. Ct. 1713, 85 L. Ed. 2d 24 (1985), and after reargument before the district court, Judge Bramwell dismissed appellant's Sherman Act claim for injunctive relief and the pendent state law claims, and reaffirmed dismissal of the § 1983 claim.

We entered an injunction prohibiting interference with appellant's operations pending this appeal. For the reasons set forth below, we dissolve the injunction which we entered pending appeal and we affirm the judgment of the district court dismissing appellant's claims.

I.

This dispute arises from appellant's desire to obtain a lease permitting it to serve as a year-round fixed-base air carrier operator at the East Hampton Airport owned and operated by the Town of East Hampton. In 1978, appellant and the Town entered into a lease under which appellant was to operate as a fixed-base operator and air carrier at the airport. In December 1979, appellant and the Town entered into a ten-year lease which did not require appellant to provide year-round services. Appellant thereafter operated on a seasonal basis between May 1 and September 30 of each year. In 1983 and 1984, apparently after the arrival of new management, appellant sought permission to operate after September 30. The Town Board informed appellant that the lease did not authorize such post-seasonal operations.

In the fall of 1984, appellant filed a complaint with the Federal Aviation Administration (FAA) under 49 U.S.C. § 1349, claiming that the Town of East Hampton unjustly discriminated against appellant. The FAA concluded that the failure to grant a full-year lease was discriminatory. The Town, however, did not act on the FAA decision in favor of appellant.

On February 8, 1985, appellant commenced the instant action, seeking the relief set forth above. Appellees, pursuant to Fed. R. Civ. P. 12(b)(6), moved to dismiss the claims. On May 28, 1985 the district court dismissed the Clayton Act claims for damages on the basis of the Local Government Antitrust Act of 1984, 15 U.S.C. § 35 (Supp. II 1984) (the Act).*fn1 The court also dismissed the claims asserted under the Federal Aviation Act and § 1983. The court thereafter granted the appellees' motion for written reargument pursuant to Local Rule 3(j). In its decision of September 4, 1985, the court, applying the Supreme Court's recent decision in Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S. Ct. 1713, 85 L. Ed. 2d 24 (1985), dismissed the remaining antitrust claims under the state action doctrine. The court also reaffirmed its decision to dismiss the § 1983 claims; and, finding no private cause of action under the Federal Aviation Act, dismissed those claims as well.

II.

The principal issue raised on appeal is whether the Act or the state action doctrine, or both, bar appellant's antitrust action against a municipality which owns and operates a local airport. In determining whether the district court, pursuant to Rule 12(b)(6), properly dismissed appellant's federal claims, we must view the factual allegations in the complaint as true. Jones-Bey v. Caso, 535 F.2d 1360, 1362 (2nd Cir. 1976).

The complaint alleged that appellees Town and EHA conspired to restrain trade and create a monopoly in favor of EHA in violation of the Clayton and Sherman Acts. Appellant submitted to the Town Board a proposed lease amendment which provided for the elimination of any seasonal restriction on appellant's operation. The Board held a public hearing but reached no formal decision. The lease has not been modified. Appellant argues that EHA has usurped a significant share of appellant's air carrier business.

Judge Bramwell held that the Act barred appellant's antitrust claim for treble damages under the Clayton Act. The Act insulates municipalities and their representatives from monetary claims arising under the ...


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