The opinion of the court was delivered by: LEVAL
This is a motion for a preliminary injunction by plaintiff Rosenbalm Aviation, Inc. ("RAI") seeking to enjoin the Port Authority of New York and New Jersey from interfering with RAI's operation of its customers' planes at John F. Kennedy International Airport ("JFK") and Newark International Airport ("Newark"). Defendant contends that RAI's operations are prohibited by a contract it made with the Authority in 1982. Plaintiff contends that the 1982 agreement does not apply to this situation and is, in any case, preempted by federal regulation.
RAI is a Nevada corporation with its principal place of business in Ypsilanti, Michigan. At the present time, RAI is in the business of operating aircraft for Emery Air Freight Corporation ("Emery") and Burlington Northern Air Freight, Inc. ("Burlington Northern"). Defendant Port Authority is a joint agency of the States of New York and New Jersey which, among much else, owns and operates JFK and Newark airports.
The parties first appeared on plaintiff's application for a temporary restraining order on April 15, 1986. At the hearing on that motion, the Port Authority consented to certain conditions allowing RAI to continue its Emery operations at Newark Airport pending the preliminary injunction hearing. Over the following three weeks the parties submitted depositions, affidavits and exhibits constituting the preliminary injunction hearing. RAI is scheduled to begin its Burlington Northern operations into JFK on June 2. The Port Authority has refused to consent to this operation pending decision of the motion, thus necessitating a hasty adjudication.
In order to qualify for a preliminary injunction in this Circuit, plaintiff must show "(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary injunctive relief." Jackson Dairy v. Hood, 596 F.2d 70, 72 (2d Cir. 1979). Considering all the proofs and circumstances, I find that plaintiff has demonstrated serious issues as to the merits, irreparable harm and a balance of hardships decidedly in its favor. It is entitled to a preliminary injunction.
In 1976 the Federal Aviation Administration ("FAA") announced its Fleet Compliance Program, 14 C.F.R. §§ 91.301-.311, designed to bring air carriers into compliance with previously promulgated aircraft noise standards, 14 C.F.R. Part 36. The Part 36 standards categorized large aircraft by the noise they produce as either Stage 1, Stage 2, or Stage 3, Stage 1 being the noisiest and Stage 3 the least noisy. The Fleet Compliance Program established a gradual phase out of Stage 1 aircraft, with interim goals set in terms of fleet composition for January 1, 1981 and January 1, 1983, culminating in the near total elimination of Stage 1 aircraft by January 1, 1985. 14 C.F.R. §§ 91.303, 91.305.
On April 7, 1982, the Port Authority adopted its own Aircraft Noise Restrictions, imposing stricter standards on air carriers using any of the Port Authority airports. These restrictions included the Interim Rule, § 520/0-00, which required 75% of all aircraft movements of operators of four-engine airplanes exceeding 75,000 pounds (all aircraft relevant to this case) to be made with Stage 2 or Stage 3 airplanes, and the Nighttime Rule, § 530/0-00, which banned all takeoffs and landings of Stage 1 airplanes between 11 p.m. and 6 a.m. Both rules were to take effect on January 1, 1983, but the Interim Rule was delayed by litigation until March 7, 1984. The 1982 Port Authority regulations also provided for exemptions from the Interim and Nighttime Rules under certain circumstances. As of January 1, 1985, the Port Authority Final Rule limited all landings and takeoffs at Port Authority airports to Stage 2 and Stage 3 planes.
At the time the Port Authority promulgated its Aircraft Noise Restrictions, Rosenbalm Aviation owned a fleet of DC-8 cargo planes, all Stage 1, which it used almost exclusively to fly freight for Emery. Since RAI's contract with Emery required flights during the hours covered by the Nighttime Rule, and since its fleet composition did not allow for compliance with the Interim Rule, RAI sought an exemption from the Port Authority. On November 29, 1982 William Rosenbalm, president, general manager, and sole stockholder of RAI signed an agreement pursuant to § 560/0-04 of the Port Authority rules in which the Port Authority stated it "offers to treat your Stage 1 DC-8 airplane operations at ... [JFK and Newark] as Stage 2 airplane operations at such airports, subject to the following:
1. This exemption shall be effective as of January 1, 1983, and shall continue with respect to your Stage 1 DC-8 airplane operations at the designated airports until the earlier of the following dates: January 1, 1985 or the date(s) of actual delivery to you in accordance with the Aircraft Lease appended hereto between Southern Air Transport Inc. and Rosenbalm Aviation Inc. dated August, 1982 (the "Aircraft Lease") of the two Stage 3 airplanes that will replace the airplane operations covered by this exemption. . . .
2. By executing this agreement you hereby represent that you have ordered two Stage 3 airplanes to be delivered by December 1, 1984 and that immediately upon delivery each such airplane will be placed in operation at the designated airports, that each such Stage 3 airplane will be used for scheduled movements at the designated airports until it is replaced by another Stage 3 airplane;
In September 1983, Emery announced its intention of acquiring its own fleet of DC8-73F cargo aircraft (Stage 3) for use in its air freight system. Emery engaged RAI to provide pilot service to fly Emery's planes on its routes. Thereafter, RAI disposed of its fleet of Stage 1 DC-8s and cancelled its lease with Southern Air Transport Inc. at the end of 1984 . Throughout 1985 (or at least until October 1985), Emery provided RAI with Stage 3 airplanes to be used for Emery's New York area operations.
In August 1985, RAI contracted to provide pilot service to Burlington Northern's airplanes on three Burlington routes, including one into JFK. RAI then requested permission of Port Authority to fly Burlington's Stage 2 DC-8-63F into JFK and Newark. On November 25, 1985, Port Authority denied this request citing the November 1982 "Stage 3 exemption agreement with the Port Authority." Port Authority's letter of denial specified that "operations by [RAI] must be performed with Stage 3 equipment." (Letter of Robert Aaronson, Port Authority Director of Aviation.)
Representatives of RAI explained that they no longer owned or chose their aircraft but merely provided pilot service. RAI sought unsuccessfully to have the Port Authority reconsider its denial.
In the meantime, Emery replaced the Stage 3 plane it was providing to RAI for the Dayton-Newark route with a Stage 2 plane. On March 26, 1986, the Port Authority ordered the vendors at Newark Airport to deny fuel, air, and power to this plane, effectively preventing it from departing the airport. In order to obtain the release of the plane, RAI executed an undertaking stating "that Rosenbalm Aviation Inc. agrees to be bound by the terms of the Agreement between itself and The Port Authority of New York and New Jersey (the "Port Authority") dated November 19 ...