Mark Aero v. Trans World Airlines

California Anti-SLAPP Project

Mark Aero, Inc. v. Trans World Airlines, Inc.

Cite as: 580 F.2d 288

MARK AERO, INC., d/b/a Missouri Air Commuter Company, Appellee,
v.
TRANS WORLD AIRLINES, INC. and Frontier Airlines, Inc., Appellants.

Nos. 77-1760, 77-1761.
United States Court of Appeals, Eighth Circuit.
Submitted January 12, 1978.
Decided July 6, 1978.

COUNSEL:
Kent E. Whittaker of Hillix, Brewer, Hoffhaus & Whittaker, Kansas City, Mo. (argued), Terrence Ahern and William D. Calkins, Kansas City, Mo.; and Wilbur L. Fugate of Morison, Murphy, Abrams & Haddock, Washington, D. C., on brief, for appellant Frontier Airlines, Inc.

Alvin D. Shapiro of Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, Mo. (argued), and Sheryl B. Etling, Kansas City, Mo., on brief, for appellant Trans World Airlines, Inc.

Richard D. Rhyne, Kansas City, Mo. (argued), Harold L. Fridkin and John R. Cleary, Kansas City, Mo., on brief, for appellee.

Before BRIGHT and HENLEY, Circuit Judges, and TALBOT SMITH,[FN*] Senior District Judge.

[FN*] TALBOT SMITH, Senior District Judge, Eastern District of Michigan, sitting by designation.

TALBOT SMITH, Senior District Judge.

This is a private civil antitrust action. The basic question presented is the use to be made of the old Kansas City Municipal Airport. The plaintiff, Mark Aero, Inc., is a chartered air taxi operator. It wants to reopen the old airport, now closed to commercial operations, to begin a new scheduled air passenger service between Kansas City and St. Louis, Missouri. The defendants, scheduled air carriers, Trans World Airlines, Inc. (TWA) and Frontier Airlines, Inc. (Frontier) maintain scheduled air passenger service between Kansas City and St. Louis, Missouri. They oppose the reopening. The plaintiff's efforts before the Kansas City municipal government having been unsuccessful over a period of time, it invites us to resolve the matter through the application of the antitrust acts. We decline to do so and order the case dismissed. This is a governmental problem, to be solved by the electorate through its proper officials. There is no warrant for our intervention on plaintiff's theory that the antitrust statutes control.

The District Court denied defendants' motions to dismiss the plaintiff's antitrust action. [FN1] This is an appeal, upon certification, of the interlocutory order thereupon entered. [FN2] We find that the District Court erred in its application of the Noerr-Pennington [FN3] doctrine, the sole issue presented, [FN4] and we remand with directions to dismiss the complaint.

[FN1] Each of plaintiff's three successive complaints has charged that Frontier and TWA violated s 1 of the Sherman Act, 15 U.S.C. s 1, by conspiring to unreasonably restrain trade. Other allegations assert that the defendants conspired and combined to monopolize trade, and monopolized that trade, in violation of s 2 of the Sherman Act, 15 U.S.C. s 2, and that the defendants' practices violated the Missouri antitrust laws. Damages are sought in the amount of $25,000,000.

District Court jurisdiction was asserted under 28 U.S.C. s 1337 and 15 U.S.C. s 15.

[FN2] 28 U.S.C. s 1292(b); Fed.R.App.P. 5.

[FN3] Eastern R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) and United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965).

[FN4] The Application for Leave to Appeal states: The question involved is "Under Noerr-Pennington, is denial of 'free and meaningful access' to a city council and to a municipal agency, without more, a sufficient overt act to support a claim for conspiracy to violate the antitrust laws?" * * * If this Court should decide the District Court was in error in refusing to apply Noerr-Pennington to plaintiff's second amended complaint, it will to all intents and purposes dispose of this litigation, * * *. App., at 182-83.

The City of Kansas City operates two airports, the Kansas City International Airport, which was opened to airline traffic in 1972, and the Kansas City Municipal Airport, an older and smaller facility located much closer to the downtown area. Since 1972, when all of Kansas City's scheduled air passenger service was transferred to Kansas City International, the Municipal Airport has served the City's other, general aviation, needs.

In the implementation of the City's policy concerning the opening or closing of its airports, the City is exercising part of the broad powers of self- government granted to it as a chartered home-rule city under the Missouri Constitution. Article 6, s 19(a) of the Missouri Constitution provides:

Any city which adopts or has adopted a charter for its own government, shall have all powers which the general assembly of the state of Missouri has authority to confer upon any city, provided such powers are consistent with the Constitution of this State and are not limited or denied either by the charter or adopted or by statute. Such a city shall, in addition to its home rule powers, have all powers conferred by law.

In particular, Missouri statutes specifically authorize "the local legislative body of any city * * * to * * * establish, * * * own, * * * operate, and regulate * * * airports" [FN5] and to vest the authority to operate such an airport "in any suitable officer, board or body of such city * * *." [FN6]

[FN5] Mo.Rev.Stat. s 305.170 provides as follows:

The local legislative body of any city, including cities under special charter, village or town in this state is hereby authorized to acquire, by purchase or gift, establish, construct, own, control, lease, equip, improve, maintain, operate, and regulate, in whole or in part, alone or jointly or concurrently with others, airports or landing fields for the use of airplanes and other aircraft either within or without the limits of such cities, villages, or towns, and may use for such purpose or purposes any property suitable therefor that is now or may at any time hereafter be owned or controlled by such city, village, or town.

[FN6] Mo.Rev.Stat. s 305.210 provides as follows:

The local legislative body of a city, including cities under special charter, village, town or county which has established an airport or landing field and acquired, leased, or set apart real property for such purpose may construct, improve, equip, maintain and operate the same, or may vest jurisdiction for the construction, improvement, equipment, maintenance, and operation thereof, in any suitable officer, board or body of such city, village, town or county, or may by franchise or contract authorize others, in whole or in part, to construct, equip, maintain, and operate the same. The expense of such construction, improvement, equipment, maintenance and operation shall be a city, village, town or county charge, in whole or in part, as the case may be. The local legislative body of a city, village, town, or county may adopt regulations and establish fees or charges for the use of such airport or landing field.

The excerpts of the Kansas City Charter before us indicate that the City's legislative powers are exercised by the City Council, acting through passage of ordinances. [FN7] Administration of city policies is entrusted to a professional City Manager, who serves at the pleasure of the Council. [FN8] In turn, the City Manager appoints the directors of the departments in the city administration. One such department is the Aviation Department.

[FN7] Article II, s 6 of the City Charter vests the powers of the City in a thirteen-member City Council.

Article I, s 2 of the Charter provides:

All powers conferred upon the city by this charter, or by the general laws of the state, shall be exercised by ordinance, except as otherwise provided by this charter or by law.

[FN8] Article III, s 20 of the Kansas City Charter.

The Director of the Aviation Department is "responsible for the management and operation of all the buildings and fields owned and operated by the city for the purposes of serving aviation," [FN9] and for study of, and recommendations respecting, the direction of City policy to the City Manager, and ultimately, to the "local legislative body" authorized under Mo.Rev.Stat. ss 305.170 and 305.210, Supra, the City Council.

[FN9] Administrative Code of Kansas City, Missouri, s A 5.4 provides as follows:

The director of aviation shall be responsible for the management and operation of all the buildings and fields owned and operated by the city for the purpose of serving aviation; shall negotiate all leases for the facilities under his control; shall study and make recommendations to the city manager concerning the regulation and development of aviation, including proposals for the enlargement of existing, or the addition of new, facilities to serve the aviation industry adequately; shall make recommendations to the city manager of programs for the promotion and growth of aviation; and shall perform such other related duties as required by the city manager or the council.

Mark Aero's efforts to obtain the use of the old Municipal Airport for its new air operations have been opposed by the City on several grounds. The Director of Aviation summarized the bases for his opposition as (1) the FAA Regional Director's desire to confine all scheduled air carrier operations to Kansas City International, (2) fear that air carrier competition between the more accessible Municipal Airport and Kansas City International would endanger the economic position of Kansas City International, and (3) the opposition of the City bond advisors, who were concerned about the revenue bond financing of Kansas City International. [FN10] One major obstacle to reopening lay in the fact that the Municipal Airport was not in compliance with Federal Aviation Administration regulations governing security for scheduled air passenger operations. [FN11]

[FN10] Mr. Delbert F. Karmeier, Acting Director of Aviation, explained his opposition in detail in a letter to the Director of the Federal Aviation Administration, dated March 20, 1975:

Kansas City does not generate sufficient air traffic to support two air carrier airports. Such competition between two airports in Kansas City's airport system we see as endangering the viability of both. Kansas City International Airport, located 18 miles from downtown, has been developed with revenue bond funds and federal air grants. In competition with an airport closer to the center of population and more familiar to Kansas City residents, KCI could suffer a crippling economic blow. We have been warned of such by our bond advisors * * *. It has taken us two years to see a recovery from the depression in our traffic at KCI caused, as we are told by our transportation consultant, by the transfer from the close-in Municipal Airport to the more remote Kansas City International Airport. The transfer to the new airport was made possible only through the commitment of the City and the carriers to remove all air carriers operations from Municipal Airport. This move was recognized by all as being demanded by the physical restraints present at Municipal Airport the inability to extend its runways, the proximity of residential and commercial developments and the hazards caused by the levees at both ends of the principal runway, to name only a few of the more obvious. App., at 51.

[FN11] 14 C.F.R. s 107, the so-called antihijacking regulations.

In February, 1974, plaintiff made a formal demand on the City, asking it to order the City Aviation Department to act upon plaintiff's request that the City submit an appropriate security plan to the FAA. A resolution was introduced before the Kansas City City Council which would have ordered the Aviation Department to comply with plaintiff's request to reopen the Municipal Airport, but the record does not disclose action upon the resolution. The City continued its policy that all scheduled airline traffic be routed through Kansas City International Airport.

The proposal to reopen the older airport to scheduled passenger service raises a governmental policy question, which, as the record makes clear, involves risks to the new airport, risks as to airport financing, and a shift in airport activity. In determining this policy, a governmental, nonadjudicatory function is being exercised. The resolution of such questions is a matter of city government.

The original complaint in this suit, filed October 1, 1975, asserted that defendants, Frontier and TWA, had violated the Sherman Act by conspiring to unreasonably restrain the trade in transportation of air passengers in interstate commerce. To further this conspiracy, TWA and Frontier had allegedly "induced others to make false and misleading statements to the City of Kansas City," and coerced the City Aviation Department to refuse to apply to the FAA for approval of security measures at Kansas City Municipal Airport. [FN12]

[FN12] Paragraph 14 of the Complaint stated that the defendants committed the following acts in furtherance of the alleged conspiracy.

(a) Engaged in acts of unfair competition for the purpose and effect of destroying MARK AERO as a competitor and rendering it incapable of competing as an air carrier between Kansas City, Missouri, and St. Louis, Missouri;
(b) Induced others to make false and misleading statements to the City of Kansas City, Missouri, with the intention that said statements would be relied upon by the City to plaintiff's detriment;
(c) Induced and coerced the Aviation Department of the City of Kansas City, Missouri, to refuse to make application to the FAA for approval of a Master Security Plan pursuant to FAR 107, (said system to be financed by plaintiff) as requested by plaintiff in its attempt to initiate operations out of Kansas City Municipal Airport;
(d) Exchanged and acted upon information regarding schedules, fares and other matters in order to disadvantage and injure MARK AERO; and
(e) Undertook a boycott of MARK AERO by measures designed to prevent passengers from cancelled TWA and FRONTIER flights between Kansas City, Missouri and St. Louis, Missouri, from traveling on MARK AERO flights.

On February 15, 1976, the District Court held that the application of principles of primary jurisdiction required that the action be stayed pending outcome of plaintiff's resort to administrative remedies before the Civil Aeronautics Board. [FN13] The court noted that this disposition of the case made it unnecessary to address the application of the Noerr-Pennington doctrine.

[FN13] The decision is reported at Mark Aero, Inc. v. Trans World Airlines, 411 F.Supp. 610 (W.D.Mo.1976).

With the court's permission, plaintiff subsequently filed its first amended complaint. This complaint mirrored the original but omitted PP 14(d) and (e), those allegations which had led the District Court to apply the doctrine of primary jurisdiction.

After arguments on reconsideration of the stay, the District Court concluded that the deletion of paragraphs 14(d) and (e), Supra, from the original complaint made the doctrine of primary jurisdiction inapplicable. The court also held that the allegations remaining in the complaint averred conduct beyond the reach of the antitrust laws, concluding, correctly, that "both paragraphs (14(b) and (c)) at most allege attempts by defendants to induce unnamed legislative and executive officials of the City of Kansas City to take certain actions which have an anti-competitive impact on plaintiff. This is essentially the type of political activity protected from the antitrust laws by the Noerr-Pennington doctrine." [FN14] Both paragraphs were stricken and it was held that P 14(a), standing alone, was too conclusionary to state a valid antitrust claim.

[FN14] Mark Aero, Inc. v. Trans World Airlines, Inc., No. 75 CV 659-W-3, slip op. at 10 (W.D.Mo. August 16, 1976) (unreported).

In January, 1977 the plaintiff filed its second amended complaint, now before us. The allegations of acts done in furtherance of a conspiracy to unreasonably restrain trade were rewritten. To the first amended complaint, allegations were added: that both the Aviation Department of Kansas City and the City Council were "adjudicatory bodies" and that the defendants' actions "prevented plaintiff from enjoying free and meaningful access" to those bodies. [FN15]

[FN15] Paragraph 14 of the second amended complaint states as follows:

In furtherance of the aforesaid combination and conspiracy, the defendants, and each of them, have done those things which they combined and conspired to do, including, inter alia:
(a) Engaged in a publicity campaign involving the media and various citizen groups which was undertaken with the intent to prevent plaintiff from enjoying free and meaningful access to the Aviation Department of Kansas City, Missouri and to the City Council of Kansas City, Missouri in order to prevent plaintiff from providing services as an air carrier between Kansas City, Missouri and St. Louis, Missouri to its customers and to the air traffic public in general.
(b) Prevented plaintiff from enjoying free and meaningful access to the Aviation Department of the City of Kansas City, Missouri, an adjudicatory body, by inducing and coercing said agency to refuse to make application to the FAA for approval of a Master Security Plan pursuant to FAR 107 as requested by plaintiff. Said actions were undertaken by the defendants with predatory intent to prevent plaintiff from providing service as an air carrier between Kansas City, Missouri and St. Louis, Missouri to its customers and to the air traffic public in general.
(c) Prevented plaintiff from enjoying free and meaningful access to the City Council of the City of Kansas City, Missouri, an adjudicatory body, by intentionally making and inducing others to make false and misleading statements to, and by the use of economic coercion on, that body and members thereof. Said actions were taken with predatory intent to prevent plaintiff from providing service as an air carrier between Kansas City, Missouri and St. Louis, Missouri to its customers and to the air traffic public in general.
(d) Engaged in the acts described in paragraphs 14(a), 14(b), and 14(c), and other acts of unfair competition, for the purpose and effect of destroying MARK AERO as a competitor and rendering it incapable of competing as an air carrier between Kansas City, Missouri and St. Louis, Missouri.

The defendants renewed their motions to dismiss the complaint for failure to state a claim, but the motions were denied. The District Court held that by the allegations now made, that defendants have conspired "to deny the plaintiff free and meaningful access to the City Council and the Aviation Department," the "plaintiff has sought to invoke the 'sham' exception to the Noerr-Pennington doctrine announced in California Motor Transport, [FN16]" [FN17] (hereafter California Motor ). The District Court subsequently granted defendant Frontier's motion to certify that the applicability of the Noerr-Pennington doctrine to the facts alleged involves a controlling question of law meriting an interlocutory appeal pursuant to 28 U.S.C. s 1292(b). This Court subsequently granted defendants' petitions for leave to take an interlocutory appeal.

FN16. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972) (footnote ours).

FN17. Mark Aero, Inc. v. Trans World Airlines, Inc., No. 75 CV 659-W-3, slip. op. at 5 (W.D.Mo. May 20, 1977).

Note! This case is continued in Part Two

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