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Boston Executive Helicopters, LLC v. Maguire

United States District Court, D. Massachusetts

July 6, 2016

BOSTON EXECUTIVE HELICOPTERS, LLC
v.
FRANCIS MAGUIRE, et al.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

          Richard G. Stearns UNITED STATES DISTRICT JUDGE

         Plaintiff Boston Executive Helicopters, LLC (BEH) is a Delaware limited liability company operating as a private air carrier at the Norwood Municipal Airport. Defendant Norwood Airport Commission (NAC) is a municipal agency of codefendant Town of Norwood, Massachusetts. Defendants Mark Ryan, Kevin Shaughnessy, Martin Odstrchel, Michael Sheehan, Leslie LeBlanc, and Thomas Wynne are current or former members of the NAC. Defendant Francis T. Maguire is the Norwood Airport Manager. BEH alleges that the Airport Commissioners and Airport Manager Maguire, individually, and in their official capacity, have conspired with defendant FlightLevel Norwood, LLC (FlightLevel), the Airport's private fuel provider, to perpetuate FlightLevel's monopoly over the sale of jet fuel at Norwood Airport, and in so doing, have violated BEH's civil rights, contractual rights, and the state and federal antitrust laws.

         BACKGROUND

         Norwood Municipal Airport is a public-use general aviation facility established pursuant to the Municipal Airport Act, Mass. Gen. Laws ch. 90, §§ 51D-51M (the NAC's oversight authority is derived from the same statute). Norwood Airport has received substantial state and federal assistance over the years, conditioned on the NAC's compliance with Grant Assurances issued by the United States Department of Transportation (DOT) and the analog Massachusetts DOT.[1] To meet the requirements of the Grant Assurances, the NAC has promulgated its own set of General Regulations and Minimum Standards (NAC Standards) governing airport operations. Among other provisions, the NAC Standards commit the NAC to the promotion of fair competition among the Airport's commercial operators.

         As is typical of small airports, a single fixed-base operator (FBO), FlightLevel, has the exclusive right to provide aircraft fueling services. FlightLevel leases approximately 85% of the Airport's available ramp space. For several years, BEH, which holds a general flight operations permit, has sought to sell jet fuel at the Airport in competition with FlightLevel. The NAC Standards require an applicant for an FBO permit to make a good-faith capital investment in the Airport. To satisfy the requirement, BEH leased a 30, 000 square foot plot at the Airport, on which it built a new hangar and underground fuel tanks. Despite the investment, the NAC has refused to act on BEH's FBO application.

         BEH alleges that the refusal stems from collusion between the defendants and FlightLevel. Specifically, BEH alleges that the NAC and Maguire frustrated its permit application by demanding sensitive financial information from BEH's owners (which other FBO applicants were not required to provide); reneging on a confidentiality agreement that was to protect the production of that information; refusing to lease land to BEH of sufficient size to support an FBO operation; declining to consider evidence from a third-party financial analyst supporting BEH's fitness as a potential FBO; and refusing to comply with BEH's public records requests. BEH further alleges that the NAC, in retaliation for BEH's filing of two complaints against it with the Federal Aviation Authority (FAA), improperly tabled BEH's application for an FBO permit, threatened to revoke its permit to operate at the Airport, and refused to hold public hearings on the merits of BEH's application. BEH also alleges that the NAC and FlightLevel erected barriers to block access to BEH's hangar gates, and that when BEH obtained a preliminary injunction ordering the barriers removed, caused the Town of Norwood to file baseless criminal charges against it.

         BEH initiated this action in Norfolk Superior Court on October 2, 2015. On October 26, 2015, Maguire removed the case to the federal district court with the consent of all defendants, asserting federal question jurisdiction. Defendants then filed a motion to dismiss. On March 29, 2016, BEH responded by filing this Amended Complaint seeking a declaratory judgment determining the respective rights and obligations of BEH and the NAC (Count I). The Amended Complaint further alleges breach of contract by the NAC (Counts II and III); promissory estoppel (detrimental reliance) against the NAC based on alleged misrepresentations regarding the FBO permit application process (Count IV); claims against all defendants under the Federal Civil Rights Act, 42 U.S.C. § 1983, based on alleged denials of BEH's right to procedural and substantive due process, violation of its right to equal protection under the law, and abridgment of its First Amendment rights (Counts V, VI, and VII); a claim for interference by defendants with BEH's right to "use, enjoy and improve its property" by means of threats, intimidation, and coercion, pursuant to the Massachusetts Civil Rights Act (MCRA), Mass. Gen. Laws ch. 12, §11I (Count VIII); and finally, claims under the state and federal antitrust laws (Counts IX, X, XI, and XII). Defendants renewed their motion to dismiss on May 6, 2016.

         DISCUSSION

         To survive a motion to dismiss pursuant to Rule 12, a complaint must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This standard requires more than "labels and conclusions" or "naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). The court must accept the plaintiffs plausible factual allegations as true, but with respect to legal conclusions, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id.

         The defendants claim immunity from antitrust liability under the doctrine established in Parker v. Brown, 317 U.S. 341, 352 (1943), which shields anticompetitive restraints that have been established "as an act of [state] government." That protection extends to acts of municipalities effectuating a "state policy to displace competition with regulation or monopoly public service." City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 413 (1978). The policy must be "clearly articulated and affirmatively expressed, " id. at 410, at least to the extent that it includes an explicit delegation of authority "that foreseeably will result in anticompetitive effects." Town of Hallie v. City of Eau Claire, 471 U.S. 34, 43 (1985).

         This court addressed an almost identical set of antitrust claims in Rectrix Aerodrome Ctrs., Inc. v. Barnstable Mun. Airport Comm'n, 534 F.Supp.2d 201, 205 (D. Mass. 2008), aff'd, 610 F.3d 8 (1st Cir. 2010). In Rectrix, as here, the plaintiff air carrier, operating out of a municipal airport where it rented space, sought to expand its business by selling jet fuel. This court found that defendant Barnstable Airport, which had refused to issue Rectrix the necessary FBO permit, was entitled to immunity under Parker's state action doctrine.

         In affirming the decision, the First Circuit noted that the governing Massachusetts law permits airport commissions to "adopt rules and regulations for the use of municipal airports, " Mass. Gen. Laws ch. 90, § 51J; to "determine the charges or rentals for the use of any properties, facilities, installations, landing fees, concessions, uses and services, " id. § 51H, and to lease airport land for up to 20 years "under such terms and conditions as it may prescribe, for hangars, shops, storage, industrial purposes, offices and other space rental, and for concessions, " id. § 51F. Rectrix, 610 F.3d at 13. The Court of Appeals, like this court, read this statutory language as broadly reflective of the Legislature's "purpose to allow the suppression of competition." Id. The First Circuit also noted that the Massachusetts statute expressly rejected the suppression of competition in one specific area of operations (transportation to and from airports), indicating that it contemplated the lawful suppression of competition in others. Id. (citing Mass. Gen. Laws ch. 90, § 51M).

         Seeking to cast doubt on the continuing validity of Rectrix, BEH cites a more recent Supreme Court municipal antitrust decision, Fed. Trade Comm'n v. Phoebe Putney Health Sys., 133 S.Ct. 1003 (2013). In Phoebe Putney, the Supreme Court held that a Georgia state law permitting municipalities to create local Hospital Authorities vested with the power to acquire or lease property, set rates for services, to sue and be sued, borrow money, and otherwise exercise the powers of a private corporation, stopped short of an express delegation of the authority to act anticompetitively by failing the clear-articulation test. Id. at 1011-1012. "[W]hen a State's position ‘is one of mere neutrality respecting the municipal actions challenged as anticompetitive, ' the State cannot be said to have "'contemplated'" those anticompetitive actions." Id. at 1012 (emphasis in original), quoting Cmty. Commc'ns Co. v. Boulder, 455 U.S. 40, 55 (1982). There ...


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