Opinion
CIVIL ACTION NO. 06-11246-RGS.
July 27, 2007
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO STAY
On July 20, 2006, plaintiff Rectrix Aerodome Centers, Inc. (Rectrix), filed a thirteen-count Complaint in the federal district court against defendants Barnstable Municipal Airport Commission (BMAC or Airport), and five Commissioners. The first three counts allege violations of the federal anti-racketeering statute (RICO), 18 U.S.C. § 1962, et seq. Plaintiff additionally alleges a violation of section 2 of the Sherman Act (count IV); violation of the Massachusetts Antitrust Act, Mass. Gen. Laws c. 93, § 1 (Count V); denial of due process and equal protection in violation of the Federal Civil Rights Act, 42 U.S.C. § 1983 (Count VI); and retaliation for the exercise of free speech (Count VII). Defendants filed a motion to stay these proceedings in order to give the Federal Aviation Administration (FAA) the opportunity to review and rule on various of plaintiff's allegations. A hearing on the stay request was held on December 18, 2006. At the close of oral argument, the court instructed defendants to submit a list of proposed questions to be referred to the FAA. On January 18, 2007, defendants complied. Rectrix filed a response on March 9, 2007.
The named Commissioners are Michael Denning, Bruce Gilmore, Larry Wheatley, Quincy Mosby, and Francisco Sanchez.
Count I asserts that all defendants except BMAC comprised an association-in-fact; Count II is asserted against BMAC as the RICO enterprise; Count III alleges a conspiracy to commit RICO violations against all defendants with the exception of BMAC.
Also alleged are: civil conspiracy; two counts of tortious interference with contractual and prospective business relations; two counts of breach of the covenant of good faith and fair dealing; and a demand for specific performance of a Memorandum of Understanding (MOU).
DISCUSSION
The gist of the Complaint is that the BMAC defendants illegally exploited their political oversight of Airport operations to prevent Rectrix from competing with the Airport's monopoly over the sale of jet fuel. Rectrix additionally claims that defendants have diverted revenues from Airport operations for use by the Town of Barnstable for nonairport-related purposes, in violation of federal law. Moreover, according to Rectrix, the defendants fraudulently obtained millions of federal dollars during the years from 2000 to 2005 by making false grant assurances to the FAA. Defendants are accused of concealing and misrepresenting airport regulations, improperly favoring tenants who had relationships with a law firm associated with defendant Dunning, deliberately delaying the opening of Rectrix's hangar, and improperly thwarting Rectrix's efforts to compete in the sale of aviation fuel.
Defendants argue that the core claims made by Rectrix implicate statutes and regulatory requirements that only the FAA has the power to enforce. Defendants urge the court to stay the action in accordance with the primary jurisdiction doctrine so that the FAA can make a determination whether the BMAC is in fact in violation of federal aviation law. They argue that Rectrix cannot avoid FAA jurisdiction simply by withdrawing the latest complaint it filed with the agency, as all of the claims asserted are inextricably intertwined with federal aviation law. In particular, defendants contend that Rectrix's claims must be considered in relation to the rules set out in 49 U.S.C. § 47107 governing airport sponsors, including the BMAC. Defendants note that the predicate acts for Rectrix's RICO claims are based on allegations that the BMAC submitted fraudulent grant applications and financial reports to the FAA. While defendants recognize that the FAA lacks the authority to adjudicate a RICO or Sherman Act claim, they argue that an agency determination that the BMAC complied with its statutory obligations may nonetheless be dispositive of both claims.
Prior to filing this action, Rectrix twice filed complaints with the FAA (alleging that defendants were violating federal grant assurances by restricting Rectrix's right to self-fuel, discriminating against Rectrix, and diverting funds to the Town of Barnstable). Rectrix withdrew both complaints, and then somewhat inexplicably filed a third complaint with the FAA on August 9, 2006, only twenty days after it filed this Complaint. In its third FAA filing, Rectrix sought an order from the FAA barring the BMAC from continuing to monopolize the sale of jet fuel, diverting Airport revenue to the Town, and discriminating against Rectrix. Rectrix claimed that defendants were violating 49 U.S.C. § 47107(a) and several of the FAA's interpretive statements of policy. On September 12, 2006, Rectrix withdrew its latest FAA filing.
Defendants argue that Rectrix's claims necessarily implicate 49 U.S.C. § 47107(a)(4), which provides that a person providing aeronautical services may not be given an exclusive right to do so. This prohibition does not apply to airport owners, who are entitled to exercise, but not grant, such an exclusive right. If an airport sponsor engages in the proprietary and exclusive sale of jet fuel, however, it may not impose "unreasonable restrictions" on the ability of aircraft owners to fuel their own aircraft. In addition, defendants argue that FAA rules relating to revenue use are also implicated. Airport sponsors must submit annual reports (on two standard financial forms) to the FAA certifying compliance with the rule that airport revenue may be used only for airport operating and capital costs. Section 47107(a)(19)(A). Finally, defendants argue that section 47107(a)(1) is implicated. It provides that an airport sponsor must make its airport available "for public use on reasonable terms, without unjust discrimination."
Rectrix, on the other hand, argues that the aviation laws, to the extent that they are applicable, do not raise technical or complex issues that might require the "special" expertise of the FAA, Massachusetts v. Blackstone Valley Elec. Co., 67 F.3d 981, 992 (1st Cir. 1995), and that the court is "at least [as] equally competent" as the FAA to resolve them.
The First Circuit has identified the following three factors to be considered when evaluating a question of primary jurisdiction: (1) whether the agency determination lies at the heart of the task assigned the agency by Congress; (2) whether agency expertise is required to unravel intricate, technical facts; and (3) whether the agency determination would materially aid the court. Mashpee Tribe v. New Seabury Corp., 592 F.2d 575, 580-581 (1st Cir. 1979). "The decision [regarding primary jurisdiction] usually depends on whether a reference will advance the sound disposition of the court case and whether failure to refer will impair the statutory scheme or undermine the agency to which the reference might be made." U.S. Pub. Int. Research Grp. v. Atlantic Salmon of Maine, 339 F.3d 23, 34 (1st Cir. 2003).
Defendants rely principally on New England Legal Foundation v. Massachusetts Port Auth., 883 F.2d 157 (1st Cir. 1989). In that case, plaintiffs brought a challenge to landing fees at Logan Airport, claiming violations of several federal aviation statutes, and section 1983 claims of violations of due process and equal protection. Id. at 161. The court case was filed after a complaint was lodged with the FAA. While the FAA's investigation was still pending, Judge Mazzone ruled that the fees were reasonable and non-discriminatory. He also ruled that there was no section 1983 violation, and no viable private right of action under the Airway Improvement Act. Id. Several months later, the FAA determined that the fee structure was unreasonable and contrary to federal law.
Addressing the conflict between the decisions of the court and the FAA, the First Circuit observed that, "the issue is not one of power to decide the controversy, the question is whether the court should have exercised it in view of the pending administrative proceedings. Whenever both the courts and an administrative agency appear to have jurisdiction over a particular controversy, the question arises as to which forum should speak first on the matter." Id. at 171. Applying theMashpee factors, the Court ruled that "we believe the evidence is overwhelming that there is pervasive administrative regulation and control of the field of aviation." Id. at 173.
Plaintiff, meanwhile, relies on Scott Aviation, Inc. v. Dupage Airport Auth., 393 F. Supp. 2d 638 (N.D. Ill. 2005). In Scott, plaintiffs alleged that the airport authority issued an ordinance unlawfully preventing them from selling aviation fuel. Plaintiffs had already received an adverse ruling on the issue from the FAA.Id. at 644. The issue before the district court was whether in light of the FAA ruling, plaintiffs were barred from bringing Sherman Act, section 1983, and related state-law claims premised on the same ordinance. The court held that the plaintiffs could maintain the claims, as "the FAA is not the primary jurisdiction for claims such as Section 1983 civil rights claims or Sherman Act anti-trust claims and the FAA does not have special competence in regards to resolving such claims." Id. at 646.
This case can be distinguished from New England Legal Foundation in two ways. First, Rectrix does not assert any specific claim premised on the violation of an aviation statute or rule. Second, unlike the situation in New England Legal Foundation (and Scott), there is currently no pending FAA proceeding to which the court could defer. Nor has there been any prior determination by the FAA on the substance of plaintiff's claims.
Rectrix is therefore entitled to pursue its claims in this court. At some point in the litigation, it may become appropriate for the court to refer specific questions to the FAA for guidance. "[W]hether or not [the airport's] actions were guided by or authorized by FAA rulings or regulations may be a consideration in determining [defendant's] liability" on the RICO and Sherman Act claims. Scott Aviation, Inc., 393 F. Supp. 2d at 644. A referral to the FAA at this juncture, however, would be premature. Accordingly, the motion to stay will be DENIED. Defendants will, within thirty (30) days of the date of this Order, file Answers to the Complaint.
SO ORDERED.