Petition for Writ of Certiorari — Allright, Colorado, Inc. v. City & County of Denver
Supreme Court brief1991
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October Term, 1991
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ALLRIGHT COLORADO, INC.; CONTINENTAL
AIRPORT PARKING, INC.; ENNIS, INC., d/b/a
MONACO PARKING; PHCHODAUX HOWDY
INTERNATIONAL GROUP, INC., d/b/a
PREMIER PARKING, INC.;
Petitioners,
VS.
THE CITY AND COUNTY OF DENVER, a
governmental subdivision of the State of Colorado,
d/b/a SMART; JOHN MROZEK, in his capacity as
Manager of Public Works; GEORGE DOUGHTY, in his
capacity as Director of Aviation of Stapleton,
Respondents.
¢
Petition For A Writ Of Certiorari To The
United States Court Of Appeals For The
Tenth Circuit
4
PETITION FOR WRIT OF CERTIORARI
¢
RicHARD L. SHEARER
Counsel of Record
LANGDON J. JORGENSEN
NorMaN F. Kron, Jr.
CALKINS, KRAMER, GRIMSHAW &
Harrina, P.C.
1700 Lincoln Street
Suite 3800
Denver, Colorado 80203
(303) 839-3800
Attorneys for Petitioners
September 27, 1991
COCKLE LAW BRIEF PRINTING CO., (800) 225-4964
OR CALL COLLECT (402) 342-2833
QUESTION PRESENTED
When a city is a commercial participant in the mar-
ketplace, what test should a court use to determine the
applicability of the state action immunity defense from
liability under the Sherman Antitrust Act?
ii
TABLE OF CONTENTS
Page
OFFICIAL AND UNOFFICIAL REPORTS OF OPIN-
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STATEMENT OF THE CASE................00000e-
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II. BASIS FOR JURISDICTION IN THE COURT
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ARGUMENT: REASONS- FOR GRANTING THIS
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I. THE LAW CONCERNING THE STATE
ACTION IMMUNITY DEFENSE TO SHER-
MAN ANTITRUST ACT LIABILITY IS
CO oie ehscetcacanene ebenigekenianes
Il. THIS CASE AFFORDS AN OPPORTUNITY
FOR THIS COURT TO PROVIDE A CLEAR
ARTICULATION OF THE TEST TO BE USED
TO DETFRMINE THE AVAILABILITY OF
THE STATE ACTION IMMUNITY DEFENSE
TO A MUNICIPALITY WHEN THE MUNICI-
PALITY IS A COMMERCIAL PARTICIPANT
IN THE MARABITUAGCS «0. eccccscssncsccs
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APPENDIX 1: Appellate Court Opinion, Order, and
Conclusions of Law............ App.
APPENDIX 2: Trial Court Ruling of the Court:
Transcript of Proceedings....... App. 28
APPENDIX 3: Portions of the “Coddington Report”
incorporated by reference into the
Trial Court’s Ruling............ App. 48
ili
TABLE OF AUTHORITIES
Page
CASES
Allright Colorado, Inc. v. City and County of Denver,
far fae teen (10th Civ. 1991)................. 1, 4,9
City of Columbia v. Omni Outdoor Advertising, Inc.,
111 S. Ct. 1344, 113 L. Ed. 2d 382 (1991)...... passim
City of Lafayette v. Louisiana Power & Light Co., 435
U.S. 389, 98 S. Ct. 1123, 44 L. Ed. 2d 364 (1978) .... 12
Community Communications Co. v. City of Boulder,
630 F.2d 704 (10th Cir. 1980), reversed, 455 U.S.
40, 102 S. Ct. 835, 70 L. Ed. 2d 810 (1982)...... 10n.
Limeco, Inc. v. Division of Lime of the Mississippi
Department of Agriculture and Commerce, 546 F.
ES) ee 7
Paragould Cablevision, Inc. v. City of Paragould, 930
a , ) 7, 8, 11
Parker v. Brown, 317 U.S. 341, 63 S. Ct. 307, 87 L.
ee eck c secs cece cscs cscscess 8
Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105
an ere, oe a. mee. oe 26 (1965)................. 8
Union Pacific Railroad Co. v. United States, 313 US.
450, 61 S. Ct. 1064, 85 L. Ed. 2d 1453 (1941)...... 10
STATUTES
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ES eS
:
OFFICIAL AND UNOFFICIAL REPORTS
OF OPINIONS
The opinion and judgment of the United States Cir-
cuit Court of Appeals, Tenth Circuit, is printed at Appen-
dix 1. It has been published by West Publishing Company
as Allright Colorado, Inc. v. City and County of Denver, 937
F.2d 1502 (10th Cir. 1991). Unofficial reports include
Allright Colorado, Inc. v. City and County of Denver, 1991
U.S. App. (LEXIS) 13557, and Allright Colorado, Inc. v. City
and County of Denver, 1991-1 Trade Cas. (CCH) 969,484.
The judgment and decree of the United States District
Court for the District of Colorado, printed at Appendix 2,
is unreported.
JURISDICTION
The opinion of the United States Circuit Court of
Appeals for the Tenth Circuit was entered on July 1, 1991.
No rehearing was sought. No extension of time to file this
Petition for Writ of Certiorari was sought. The jurisdic-
tion of this Court is invoked under 28 U.S.C. § 1254.
Petitioners seek relief under the antitrust laws of the
United States, 15 U.S.C. §§ 2, 15, and 26 and 28 U.S.C.
§ 1337.
STATUTES
The Sherman Antitrust Act, 15 U.S.C. §§ 2, 15(a), 26
and 35(a), states in part:
§ 2. Monopolizing trade a felony; penalty
Every person who shall monopolize, or
attempt to monopolize, or combine or conspire
with any other person or persons, to monopol-
ize any part of the trade or commerce among the
several States, or with foreign nations, shall be
deemed guilty of a felony, and, on conviction
thereof, shall be punished by fine not exceeding
$10,000,000 if a corporation, or, if any other
person, $350,000, or by imprisonment not
exceeding three years, or by both said punish-
ments, in the discretion of the court.
§ 15. Suits by persons injured
(a) Amount of recovery; prejudgment interest
[A]ny person who shall be injured in his
business or property by reason of anything for-
bidden in the antitrust laws may sue therefor in
any district court of the United States in the
district in which the defendant resides or is
found or has an agent, without respect to the
amount in controversy, and shall recover three-
fold the damages by him sustained, and the cost
of suit, including a reasonable attorney’s fee. .. .
§ 26. Injunctive relief for private parties; exception;
costs
Any person, firm, corporation, or associa-
tion shall be entitled to sue for and have injunc-
tive relief, in any court of the United States
having jurisdiction over the parties, against
threatened loss or damage by a violation of the
antitrust laws, including sections 13, 14, 18, and
19 of this title, when and under the same condi-
tions and principles as injunctive relief against
threatened conduct that will cause loss or dam-
age is granted by court of equity, under the rules
governing such proceedings, and upon the exe-
cution of proper bond against damages for an
injunction improvidently granted and a showing
that the danger of irreparable loss or damage is
immediate, a preliminary injunction may issue:
.... In any action under this section in which
the plaintiff substantially prevails, the court
shall award the cost of the suit, including a
reasonable attorney’s fee, to such plaintiff.
§ 35. Recovery of damages, etc., for antitrust viola-
tions from any local government, or official or
employee thereof acting in an official capacity
(a) Prohibition in general
No damages, interest on damages, costs, or
attorney’s fees may be recovered under section
15, 15a, or 15c of this title from any local govern-
ment, or official or employee thereof acting in
an official capacity.
¢
STATEMENT OF THE CASE
I. FACTS
The Petitioners! are operators of private shuttle bus
parking lots located near Stapleton International Airport
in Denver, Colorado. Petitioners rent parking space in
their lots to airline passengers who then use Petitioners’
shuttle buses to travel to the airport terminal. Upon their
return, these customers are shuttled back to Petitioners’
1 The names of all parties appear in the caption of the
case. Sup. Ct. R. 16.1(b). Allright Colorado, Inc., is a wholly
owned subsidiary of Allright Corporation. Sup. Ct. R. 29.1.
parking lots to pick up their vehicles. Respondent City
and County of Denver? owns and operates Stapleton
International Airport. The City also operates remote shut-
tle bus parking lots which provide the same service as the
Petitioners’ lots and which are in direct competition with
the Petitioners.? See Allright Colorado, Inc. v. City and
County of Denver, 937 F.2d 1502, 1504 (10th Cir. 1991);
App. 3.
Through 1983, Petitioners Allright and Monaco
shared 100% of the airport shuttle bus parking business.
The City entered the shuttle bus parking business in 1983.
In the first five full years after its entry into the shuttle
bus parking market, the City increased its share of the
market from 0% to 45%, and is now by far the largest
market participant. Allright, 937 F.2d 1502, 1504, 1504 n. 4
(App. 4-5). See also App. 53-58. The appellate opinion sets
forth a materially accurate description of the most
obvious instances where Denver has used its govern-
mental power to hinder its private competitors in its
attempt to monopolize a market in which it is now the
leading market participant. Allright, 937 F.2d 1502,
1504-1505 (App. 3-4).
2 The individual defendants are employees of the City and
County of Denver who manage airport operations.
3 As stated by the trial court in its findings of fact: “[I]t
seems to me that for purposes of an antitrust analysis Denver
is a player on the board, as any private operator of an airport
would be.” App. 36.
5
II. BASIS FOR JURISDICTION IN THE COURT OF
FIRST INSTANCE
The Complaint in this case was filed on June 20, 1989.
The jurisdiction of the district court for the subject of this
Petition was based upon 28 U.S.C. §§ 1331 and 1337, and
the antitrust laws of the United States, 15 U.S.C. §§ 2, 15
and 26.
¢
ARGUMENT: REASONS FOR GRANTING
THIS PETITION
I. THE LAW CONCERNING THE STATE ACTION
IMMUNITY DEFENSE TO SHERMAN ANTITRUST
ACT LIABILITY IS UNCLEAR.
Presently there is no clear test to establish when the
state action immunity defense is available to a city which
is acting as a market participant. Numerous antitrust
cases are filed against local governments each year, and
the state action immunity defense is asserted in nearly
every such case. Establishing a clear test for the availabil-
ity of the state action immunity defense in cases involv-
ing claims that a local governmental market participant
violated the Sherman Antitrust Act is an issue of national
importance.
Il. THIS CASE AFFORDS AN OPPORTUNITY FOR
THIS COURT TO PROVIDE A CLEAR ARTICULA-
TION OF THE TEST TO BE USED TO DETER-
MINE THE AVAILABILITY OF THE STATE
ACTION IMMUNITY DEFENSE TO A MUNICI-
PALITY WHEN THE MUNICIPALITY IS A COM-
MERCIAL PARTICIPANT IN THE MARKET-
PLACE.
The Tenth Circuit decision in this case misapplied
this Court’s articulation of the “commerciai participant”
doctrine expressed in City of Columbia v. Omni Outdoor
Advertising, Inc., __ U.S. __, 111 S. Ct. 1344, 1351, 113 L.
Ed. 2d 382 (1991).
In City of Columbia, this Court, speaking through
Justice Scalia, expressly recognized that the state action
immunity defense may not apply where the city is itself a
“commercial participant” and wields power or performs
activities in direct competition with private enterprise in
an otherwise private market:
[State action antitrust] immunity does not neces-
sarily obtain where the State acts not in a regu-
latory capacity but as a commercial participant
in a given market.
City of Columbia, 111 S. Ct. 1344, 1351, 113 L. Ed. 2d 382.
This Petition involves a case that fits squarely within
the limitation to the state action immunity doctrine set
forth in City of Columbia. Unlike the run-of-the-mill
municipal antitrust case, the central issue in the instant
case is not federalism. Federalism concerns exist when
the application of federal law interferes with a state’s
ability to impose legitimate regulations upon private
activities. Petitioners have no quarrel with the need of the
sovereign states and their subdivisions to exercise their
legitimate regulatory powers. But when a city, such as
Denver in the instant case, undertakes to enter a mar-
ketplace, and then uses its governmental powers to prey
upon its lawful competitors, the city goes beyond the
realm of mere regulation and instead occupies the status
of a private market participant that unlawfully seeks
monopoly power. If a city participates in a private mar-
ket, the city should be subject to the same federal anti-
trust laws as the private market participant.* See Limeco,
Inc. v. Division of Lime of the Mississippi Department of
Agriculture and Commerce, 546 F. Supp. 868, 870-871 (N.D.
Miss. 1982) for an excellent analysis concluding that fed-
eralism concerns do not bar application of federal anti-
trust law when the state acts as a competitor, rather than
as sovereign.
Only three reported cases have considered the “com-
mercial participant” doctrine: City of Columbia, the instant
case, and Paragould Cablevision, Inc. v. City of Paragould,
930 F2d 1310 (8th Cir. 1991). In Paragould, however, the
Eighth Circuit Court declined to apply the “commercial
participant” doctrine to facts where it would appear
applicable, because:
As yet, the market participant exception is
merely a suggestion and is not a rule of law.
Until such a transformation occurs, we will con-
tinue to use the necessary and reasonable test
established by this Circuit.
Paragould, 930 F.2d at 1312-1313.
4 Petitioners recognize that municipalities are immune
from damages claims for antitrust violations, 15 U.S.C. § 35(a),
and no damages have been sought in this case.
The commercial participant doctrine articulated by
Justice Scalia on behalf of this Court is an excellent tool to
lead the courts out of the legal thicket that presently
exists with respect to when a local government engaging
in anticompetitive business practices may assert state
action immunity as a defense to an antitrust claim. How-
ever, the commercial participant doctrine articulated by
this Court in City of Columbia was ignored by the Eighth
Circuit in Paragould and was misapplied by the Tenth
Circuit in this case. Petitioners believe that City of Colum-
bia will continue to be ignored and misapplied unless this
Court fleshes out the legal test for the commercial partici-
pant cases. It appears that if the municipal commercial
participant doctrine is to be given meaning, that meaning
must come from this Court or the doctrine will remain
forever “merely a suggestion.”
Legitimate regulation and predatory conduct by
municipal competitors are substantially different. The test
for whether immunity applies when legitimate regulation
is involved is clear: state and local governments have
limited immunity from Sherman Act liability when regu-
lating pursuant to a clearly expressed state policy, even
where displacement of private competition by the local
government is a foreseeable result of the regulation. Town
of Hallie v. City of Eau Claire, 471 U.S. 34, 39-40, 105 S. Ct.
1713, 1716-1717, 85 L. Ed. 2d 24 (1985), explaining Parker
v. Brown, 317 U.S. 341, 63 S. Ct. 307, 87 L. Ed. 2d 315
(1943). This limited immunity is necessary to protect state
and local governments from antitrust liability each time a
legitimate regulation has an anticompetitive effect. In
contrast, while the existence of a separate test for
whether such immunity applies when the municipality is
a market participant has been articulated by this Court in
City of Columbia, the Court has not yet provided any
guidance on how this test should be applied.
The Tenth Circuit opinion in this case demonstrates
the current confusion. In this case, the test applied by the
Tenth Circuit to the City, undisputedly a market partici-
pant, was the same as would be applied if the City were
acting in a legitimate regulatory capacity.° While noting
the existence of City of Columbia, the Tenth Circuit incor-
rectly applied the commercial participant analysis, stat-
ing:
The fact that the City is also in some sense a
competitor of plaintiffs does not alter the basic
test for state action immunity nor does it dimin-
ish the City’s regulatory authority over the Air-
port and plaintiffs’ activities. The question
remains whether there is-a clear and express
state policy to displace competition with regula-
tion and authorizing the challenged activities.
Allright, 937 F.2d 1502, 1510 (App. 20). This analysis is
incorrect. As Justice Scalia noted in City of Columbia, the
fact that a city is a competitor does alter the basic test, or
at least adds to it. Once a city has decided to become
more than a mere regulator, and has chosen to
> The trial court did not make this error, but instead recog-
nized the fundamental difference in city as competitor vs. city
as regulator: “[Hlere we must draw the distinction clearly
between applying the law of antitrust to the City and County
of Denver as a competitor with the plaintiffs and governmental
action by the City and County of Denver.” App. 35. The trial
court found that state action immunity did not shield the City
from Sherman Act liability.
10
become an active player in the market, it must comply
with federal antitrust law. Once a city becomes an active
market participant in a market that has not, by state
policy, been awarded to the governmental subdivision,
the city should not, as a matter of law, be allowed to use
its extraordinary governmental powers to crush its com-
petition.
City of Columbia recognizes the fundamental differ-
ence between how a city should be treated for Sherman
Act purposes when the city itself is a market participant,
and how it should be treated when the city merely regu-
lates private conduct. Although not stated in terms of
waiver, the effect of the exception is that a city waives its
state action immunity when it ceases to act solely as a
government and launches a private enterprise. See Union
Pacific Railroad Co. v. United States, 313 U.S. 450, 61 S. Ct.
1064, 85 L. Ed. 2d 1453 (1941) (active interference in a
market by a municipality does not enjoy blanket state
action immunity from federal antitrust law). In deciding
this case, the Tenth Circuit ignored the important distinc-
tion stated by this Court in City of Columbia.®
6 Previously, the Tenth Circuit has acted to eradicate
needed constraints upon local governments by its expansive
interpretation and application of the state action immunity
doctrine. The Supreme Court has previously reined in the
Tenth Circuit in this area of the law. In Community Communica-
tions Co. v. City of Boulder, 630 F.2d 704, 708 (10th Cir. 1980),
reversed, 455 U.S. 40, 56-57, 102 S. Ct. 835, 843, 70 L. Ed. 2d 810
(1982), the Tenth Circuit attempted to expand the concept of
unbridled governmental power and state action immunity by
allowing general home rule authority to be used as authority
(Continued on following page)
—
1]
This Court’s articulation of the fundamental differ-
ence in the roles of municipalities as regulators and as
market participants, and, perhaps, use of the suggested
waiver analysis, would clarify the limitation on the state
action immunity defense stated in City of Columbia and
send a clear message to the circuit and district courts that
cities which abuse their governmental powers when act-
ing as market participants are not protected by state
action immunity.
II. CONCLUSION
This case is a classic example of the type of case that
the Court may consider under Sup. Ct. R. 10.1(c). This
case also presents an excellent opportunity to clarify the
law in an area of significant national concern. Clarifica-
tion of the legal analysis required in a municipal commer-
cial participant case is needed, as within the last few
months at least two courts, the Tenth Circuit and the
Eighth Circuit, have already misapplied the law by ignor-
ing Or misunderstanding the guidance offered by this
Court’s recent decision in City of Columbia. This case and
the Paragould case are the first circuit court opinions to
cite City of Columbia. If this issue is not promptly resolved
by this Court, these cases are likely to obscure a
(Continued from previous page)
for anticompetitive conduct in the cable television market. This
Court, reversing the Tenth Circuit, stated that there must be a
clear articulation of state policy, inter alia, before a city may
displace competition with regulation. Once again, guidance
from this Court will help the circuits in the application of the
Sherman Act.
12
significant doctrine that the Supreme Court obviously
intended to be used in antitrust cases involving munici-
palities. It also appears that unless this Court intercedes
to flesh out the commercial participant doctrine set forth
in City of Columbia, the state action immunity defense is
likely to become more confused than it was immediately
following City of Lafayette v. Louisiana Power & Light Co.,
435 U.S. 389, 98 S. Ct. 1123, 44 L. Ed. 2d 364 (1978).
City of Columbia set forth an important tool which
may help courts, counsel and the citizens of our country
find their way out of the proprietary/governmental
thicket. This case presents the opportunity for this Court
to develop the commercial participant doctrine and clar-
ify the law of state action immunity. The ultimate result,
Petitioners respectfully suggest, would be for this Court
to explain and apply the commercial participant limita-
tion on the state action immunity doctrine, then remand
the case to the Tenth Circuit for further proceedings not
inconsistent with this Court’s opinion.
Respectfully submitted,
CALKINS, KRAMER, GRIMSHAW &
Harrinc, P.C.
RicHArD L. SHEARER
Counsel of Record
LANGDON J. JORGENSEN
NorMaN F. Kron, Jr.
1700 Lincoln Street
Suite 3800
Denver, Colorado 80203
Telephone: (303) 839-3800
Attorneys for Petitioner
ee
No.
In The
Supreme Court of the United States
October Term, 1991
¢
ALLRIGHT COLORADO, INC.; CONTINENTAL
AIRPORT PARKING, INC.; ENNIS, INC., d/b/a
MONACO PARKING; PHiCHODAUX HOWDY
INTERNATIONAL GROUP, INC.; d/b/a PREMIER
PARKING, INC.,
Petitioners,
VS.
THE CITY AND COUNTY OF DENVER, a
governmental! subdivision of the State of Colorado,
d/b/a SMART; JOHN MROZEK, in his capacity as
Manager of Public Works; GEORGE DOUGHTY, in his
capacity as Director of Aviation of Stapleton,
Respondents.
Petition For A Writ Of Certiorari To The
United States Court Of Appeals For The
Tenth Circuit
*
APPENDIX TO PETITION
FOR WRIT OF CERTIORARI
1 nannies a
APPENDIX TABLE OF CONTENTS
APPENDIX 1: Appellate Court Opinion, Order, and
Conclusions of Law.............. App. 1
APPENDIX 2: Trial Court Ruling of the Court:
Transcript of Proceedings....... App. 28
APPENDIX 3: Portions of the “Coddington Report”
which was incorporated by reference
into the Trial Court Ruling of the
Court: Transcript of Proceedings... App. 48
EEE
App. 1
ALLRIGHT COLORADO, INC.; Continental
Airport Parking, Inc.; Ennis, Inc., dba Monaco
Parking; Phchodaux Howdy International
Group, Inc., dba Premier Parking Inc., Plain-
tiffs-Appellants, Cross-Appellees,
Vv.
The CITY AND COUNTY OF DENVER, a gov-
ernmental subdivision of State of Colorado dba
SMART; John Mrozek, in his capacity as manager
of Public Works; George Doughty, in his capacity
as director of Aviation of Stapleton, Defendants-
Appellees, Cross-Appellants.
Nos. 89-1379, 90-1003.
United States Court of Appeals,
Tenth Circuit.
July 1, 1991.
Richard L. Shearer (Langdon J. Jorgensen, with him
on the briefs), Calkins, Kramer, Grimshaw & Harring,
Denver, Colo., for plaintiffs-appellants, cross-appellees.
Helen Eckardt Raabe, Asst. City Atty. (Dean Speirs,
Asst. City Atty., and B. Lawrence Theis, Walters & Theis,
with her on the briefs), Denver, Colo., for defendants-
appellees, cross-appellants.
Before McKAY, ANDERSON, Circuit Judges, and
CHRISTENSEN,” District Judge.
STEPHEN H. ANDERSON, Circuit Judge.
Plaintiffs, four corporations which provide remote lot
parking and courtesy shuttle bus service to airline
* Honorable A. Sherman Christensen, Senior Judge, United
States District Court, District of Utah, sitting by designation.
App. 2
customers at Stapleton International Airport (“Stapleton”
or “Airport”) in Denver, Colorado, appeal the dismissal
of their antitrust and 42 U.S.C. § 1983 suit against the City
and County of Denver (“Denver” or “City”) and two city
employees. They alleged that Denver’s proposed adop-
tion of new Rules and Regulations imposing certain fees
on the operation of their shuttle buses and requiring
them to sign certain agreements, in conjunction with
other alleged restrictions on plaintiffs’ operations at Sta-
pleton, violated section two of the Sherman Act, 15 U.S.C.
§ 2, as well as the equal protection, due process and
commerce clauses of the United States Constitution and
certain provisions of Denver’s City Charter. Upon the
conclusion of plaintiffs’ case in their trial to the court, the
district court granted defendants’ Fed.R.Civ.P. 41(b)
mction to dismiss. Plaintiffs appealed that dismissal, and
defendants cross-appealed the district court’s refusal to
find their actions immune from suit under the antitrust
laws. We affirm.
BACKGROUND
Plaintiffs (Allright Colorado, Inc., Continental Air-
port Parking, Inc., Ennis, Inc. d/b/a Monaco Parking,
and Phchodaux Howdy International Group, Inc., d/b/a
Premier Parking, Inc.) are Colorado corporations engaged
in the business of operating remote parking lots at Sta-
pleton and providing a courtesy shuttle bus service
between those lots and the terminals at Stapleton.
Allright has been engaged in that business since 1978.
The other plaintiffs entered the business in 1985 and 1986.
Stapleton is a proprietary enterprise owned and operated
by Denver, a governmental subdivision of the State of
ee
App. 3
Colorado. Defendant John Mrozek was the Manager of
Denver’s Department of Public Works at the time of trial.
His duties included the management and operation of the
Airport and the public roads adjacent to the Airport.
Defendant George Doughty was the Director of Aviation
for Stapleton. Doughty’s responsibilities included the
immediate management and operation of the Airport,
including adjacent public roads. Mrozek was Doughty’s
supervisor.
This case concerns Denver’s operation of parking lots
and an accompanying shuttle bus service at Stapleton. In
its early stages, the shuttle bus parking service at Sta-
pleton was exclusively offered by private parties such as
plaintiffs.' In 1983, Denver began operation of Shuttle Lot
#1 with accompanying shuttle bus service. It established
Shuttle Lot #2 in 1984 and Shuttle Lot #3 in 1985. Shuttle
Lot #1 was dedicated to other uses in 1986. Its shuttle bus
service is called SMART (Stapleton Mass Rapid Transit).
While SMART and plaintiffs now charge comparable
prices for daily parking, evidence at trial showed that in
1985 and 1986, SMART charged somewhat less than
plaintiffs.
Initially, plaintiffs had unrestricted access to the Sta-
pleton terminal, using the roads adjacent to the airport.
Although the evidence was not clear as to exact dates, at
some point after plaintiffs commenced business, Denver
! There was some testimony that the City had for some
time operated a remote parking lot which was used as an
overflow lot at peak times.
2 Those roads are public rights-of-way. See City and County
of Denver v. Publix Cab Co., 135 Colo. 132, 308 P.2d 1016 (1957).
App. 4
imposed restrictions on all commercial operators at Sta-
pleton, requiring them to use certain designated commercial
lanes and pick-up locations. In late 1984 or early 1985, Sta-
pleton imposed permit fees on plaintiffs’ activities at the
Airport. SMART buses were exempted from the permit fees.
Subsequently, Denver required plaintiffs to use different
access routes than its own shuttle buses used, and allocated
pick-up locations at the terminal. Plaintiffs allege, and the
district court found, that SMART buses have the more favor-
able pick-up locations. Additionally, the district court found
that the routes imposed on plaintiffs’ shuttle buses are less
favorable.* In 1988, Denver installed access gates on the
commercial lanes and required all commercial operators to
use electronic cards to access the commercial lanes.
In addition to the above restrictions on plaintiffs’
activities at Stapleton, Denver has allegedly further dis-
advantaged plaintiffs by granting to its own SMART
buses the exclusive right to advertise on Stapleton prop-
erty, the exclusive right to use public rights-of-way for
sign. directing travellers to its own lots, the exclusive
right to use the Stapleton information radio to advertise,
and a more favorable representation on the Airport direc-
tory. The evidence presented at trial established that,
during this time period, SMART experienced a significant
increase in its share of the remote shuttle bus parking
market, whereas plaintiffs experienced a decline.
3 The district court found that “there’s a doubling back
which both affects the time, the convenience of the passengers,
and the costs to the plaintiffs of running those shuttles.” Tran-
script of Ruling of the Court at 9.
4 Plaintiffs’ expert, Dean C. Coddington, prepared a “Mar-
ket Analysis and Impact Assessment of Shuttle Bus Parking,
(Continued on following page)
Habe
App. 5
In 1989, defendants took the actions which prompted
this lawsuit. By letter dated May 17, 1989, they informed
plaintiffs that they planned to adopt new Rules and Reg-
ulations which would: (1) impose access fees on commer-
cial operators at the airport, including plaintiffs; and (2)
require commercial operators such as plaintiffs to sign
permit agreements in which they would consent to pay
the new access fees or lose their access cards and be
thereby barred from the airport terminal. Denver’s own
SMART buses would not be required to pay any such
fees. The fees were based upon the time spent at the
lower level of the Airport terminal building where pas-
sengers were picked up. Thus, plaintiffs’ shuttle buses
incurred added costs if they lingered at the terminal to
assure that their buses were always available for trav-
ellers. Because it was exempt from the fees, SMART could
always have a bus waiting for travellers. The access fee
imposed on plaintiffs was approximately 50% higher than
(Continued from previous page)
Stapleton International Airport.” Plaintiffs’ Exhibit 100,
Addendum Tab 100. The district court incorporated by refer-
ence the relevant portions of that Exhibit. That Exhibit showed
that, in 1984, plaintiff Allright had 62.1% of the off-site parking
market, plaintiff Monaco had 37.4% of that market, and
SMART and plaintiffs Premier and Continental had 0%. By
1989, SMART’s share had increased to 45%, whereas Allright’s
had declined to 24.1%, Monaco’s had declined to 18.3% and
Premier and Continental had market shares of 4.9% and 7.7%
respectively. Mr. Coddington projected that by 1994, SMART
would have more than 50% of that market, whereas the four
plaintiffs would have less than 30%. The Exhibit also included
an analysis of the impact of SMART on plaintiffs’ revenues,
and an analysis of the marketing efforts of SMART and plain-
tiffs.
App. 6
that imposed on certain other private shuttle bus opera-
tc ’s (i.e. shuttle bus operators between hotels, ski resorts,
car rental companies or other comparable businesses and
the airport) who use the same commercial lanes and
routes. The permit agreement also required plaintiffs to
disclose financial information and customer lists to the
Manager of Public Works, and imposed certain other
allegedly onerous burdens on plaintiffs. The Department
of Public Works adopted the Rules and Regulations on
June 12, 1989 and they were to take effect on July 1, 1989.
Plaintiffs filed this lawsuit on June 20, 1989, alleging
that, by all of the above actions, “the City has consistently
used its governmental authority and power to system-
atically bestow unfair and illegal competitive advantages
upon SMART, to the detriment and exclusion of the Plain-
tiffs.” Complaint at 5, R.Vol. I Tab 1. Plaintiffs argue that
defendants engaged in those activities in order to monop-
olize or attempt to monopolize the Airport parking mar-
ket in violation of section two of the Sherman Act, 15
U.S.C. § 2.° They further allege that the permit and access
fees constitute an undue burden on interstate commerce,
and that the allegedly unfavorable treatment of plaintiffs
violates the due process and equal protection clauses of
the Fourteenth Amendment. Finally, they argue that the
fees are in fact taxes which were not properly enacted
under the City Charter, and that the permit agreements
are adhesion contracts invalid as contrary to public
° They initially also alleged a violation of Colorado state
antitrust laws, but voluntarily dismissed that claim before trial.
App. 7
policy. They sought injunctive relief, damages and attor-
neys’ fees and costs.®
Defendants filed a Fed.R.Civ.P. 12(b)(6) motion to
dismiss, followed by a motion for summary judgment.
Trial to the court was held on November 20-22, 1989. At
the close of plaintiffs’ case, the court granted defendants’
Fed.R.Civ.P. 41(b) motion to dismiss on the ground that
plaintiffs had “shown no right to relief.” It ruled that
plaintiffs had failed to establish that there was a dan-
gerous probability of success in monopolizing the rele-
vant market and that defendants had a specific intent to
monopolize. Plaintiffs’ attempt to monopolize claim was
therefore dismissed. The court held that plaintiffs’
monopolization claim failed apparently because plaintiffs
failed to prove monopoly power.”
* Simultaneously with their complaint, plaintiffs filed a
motion for a temporary restraining order, which resulted in a
hearing, converted by agreement of the parties to a hearing for
a preliminary injunction. The hearing was, however, continued
because the parties reached an interim agreement to not
require payment of the new fees or require plaintiffs to sign the
permit agreement until January 1, 1990. The fees are nonethe-
less accruing.
? The court ruled from the bench and did not reduce its
ruling to writing. The court’s reasoning for rejecting plaintiffs’
monopolization claim is not completely clear. The court stated:
Now, the evidence does not establish that Denver is
a monopolist here and in this aspect of the analysis,
it is important, I think, to bring in the limitations on
what Denver can do as a government, so in this
sense there is a necessity. I think, to overlap the
principles and recognize that Denver can’t be a
(Continued on following page)
ie
App. 8
The court rejected plaintiffs’ due process and equal
protection claims because it concluded defendants’ classi-
fication of commercial operators for the purposes of dif-
ferent fee schedules and other disparate treatment
satisfied the rational basis test. Plaintiffs do not appear to
challenge the dismissal of their interstate commerce claim
or their pendent state law claims. The court found against
defendants, however, on their claim of immunity under
the state action immunity doctrine of Parker v. Brown, 317
U.S. 341, 63 S.Ct. 367, 87 L.Ed. 315 (1943). Plaintiffs timely
(Continued from previous page)
monopolist and, as I said in colloquy with plaintiffs’
counsel, Denver doesn’t claim and certainly doesn’t
have the power to simply preclude the plaintiffs
from accessing this airport by saying, “We are going
to be the exclusive shuttle parking services provider
for Stapleton International Airport.” It can’t do that
because of other limitations on it as a government,
which, of course, involves the concepts in these other
claims.
So in a very real sense, here I have to accept the
plaintiffs’ view that there is a confluence of princi-
ples because they can’t become a monopoly in that
way, and additionally, as we'll see in a moment, they
can’t use their ability to extract charges as conditions
for the entry here to an extent that is unreasonable;
in other words, there are limits to the rates that they
can charge, the fees for access and they’re the very
limits that are being claimed in the other claims for
relief, and that’s another reason why the city can’t be
in the position of a monopolist with respect to this
service in this market. Therefore, plaintiffs have
failed to prove a Section II, a Sherman II violation in
this case.
Transcript of Ruling of the Court at 11-12.
ee
App. 9
appealed the dismissal of their claims and defendants
cross-appealed the court's decision that defendants were
not immune from antitrust suit.
DISCUSSION
I. State Action Immunity.
Defendants cross-appeal the district court’s refusal to
hold them immune on state action immunity grounds
from an antitrust suit, arguing that the state has expressly
authorized local entities to own and operate airports,
including all facilities and operations, such as parking,
necessary thereto.
Municipalities are shielded from antitrust liability for
allegedly anticompetitive acts “authorized by the State
‘pursuant to state policy to displace competition with
regulation or monopoly public service.’ ” Hallie v. City of
Eau Claire, 471 U.S. 34, 39, 105 S.Ct. 1713, 1716, 85 L.Ed.2d
24 (1985) (quoting City of Lafayette v. Louisiana Power &
Light Co., 435 U.S. 389, 413, 98 S.Ct. 1123, 1137, 55 L.Ed.2d
364 (1978)); see also Community Communications Co. v. City
of Boulder, 455 U.S. 40, 51-52, 102 S.Ct. 835, 840-841, 70
L.Ed.2d 810 (1982); Buckley Constr., Inc. v. Shawnee Civic &
Cultural Dev. Auth., 933 F.2d 853 (10th Cir.1991); Jacobs,
Visconsi & Jacobs Co. v. City of Lawrence, 927 F.2d 1111,
1120 (10th Cir.1991); Oberndorf v. City and County of
Denver, 900 F.2d 1434 (10th Cir.), cert. denied, Us. _.
111 S.Ct. 129, 112 L.Ed.2d 97 (1990). This court follows a
two-part test for evaluating municipal state action immu-
nity. “First, the state legislature must have authorized the
action under challenge. Second, the legislature must have
intended to displace competition with regulation.” Jacobs,
App. 10
Visconsi & Jacobs Co., 927 F.2d at 1120; see also Buckley
Constr., Inc., 933 F.2d at 855; Oberndorf, 900 F.2d at 1438.8
Express authorization of the allegedly anticompetitive acts
is not required. Hallie, 471 U.S. at 42, 105 S.Ct. at 1718
(“[i]t is not necessary . . . for the state legislature to have
stated explicitly that it expected that City to engage in
conduct that would have anticompetitive effects”). It is
8 Oberndorf was the first opinion in this circuit to frame the
municipal immunity question in terms of two parts. We there
noted that “we must consider two prerequisites to proper
application of the state action exception to municipal action.”
900 F.2d at 1438. Because in that case the Colorado Urban
Renewal Law manifestly evidenced a clearly articulated and
expressly stated policy to displace competition, we focused our
inquiry on whether the City’s actions were authorized by that
law. In Jacobs, Visconsi & Jacobs Co., we called the inquiry a
“two-part test.” 927 F.2d at 1120. !n practice, of course, the two
parts will not always have equal prominence. See Oberndorf,
900 F.2d at 1438-39. In City of Columbia v. Omni Outdoor Adver-
tising, Inc., __ U.S. __, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991),
the Supreme Court recently stated that the inquiry into munici-
pal “authority to regulate” will not be an exacting one:
[I!n order to prevent Parker from undermining the
very interests of federalism it is designed to protect,
it is necessary to adopt a concept of authority
broader than what is applied to determine the legal-
ity of the municipality’s action under state law. ... It
suffices for the present to conclude that here no more
is needed to establish, for Parker purposes, the city’s
authority to regulate than its unquestioned zoning
power over the size, location, and spacing of bill-
boarcs.
111 S.Ct. at 1350. The two parts of the inquiry are designed to
answer the central question — whether there is a “clearly articu-
lated and affirmatively expressed policy” to displace competi-
tion. Hallie, 471 U.S. at 44, 105 S.Ct. at 1719.
el
App. 11
sufficient if the anticompetitive conduct “is a foreseeable
result” of the stated policy or it is “clear that anticompeti-
tive effects logically would result from [the] broad
authority to regulate.” Id. Nonetheless, there must be a
“clearly articulated and affirmatively expressed” state
policy to displace competition. Id. at 44, 105 S.Ct. at 1719.
The two most recent Supreme Court decisions on this
subject help define the parameters of the municipal
immunity inquiry. In Hallie, Wisconsin statutes granted
the authority to cities to construct, add to, alter and
repair sewage systems, to determine the areas in which
the sewage systems would operate and to refuse to pro-
vide service outside those areas. The statutes further
empowered the State Department of Natural Resources to
require cities to construct their sewage systems so that
unincorporated areas could connect to them provided the
landowners in the unincorporated areas agreed to
become annexed to the cities. Four unincorporated towns
adjacent te the city of Eau Claire alleged that the city
violated the antitrust laws by refusing to supply sewage
treatment services to the residents of the towns unless a
majority of those residents voted to become annexed to
the city and to use the city’s sewage collection and trans-
portation services. The Court held that the city was
immune.
[T]he statutes clearly contemplate that a city
may engage in anticompetitive conduct. Such
conduct is a foreseeable result of empowering
the City to refuse to serve unannexed areas... .
[I]t is sufficient that the statutes authorized the
City to provide sewage services and also to
determine the areas to be served. We think it is
App. 12
clear that anticompetitive effects logically would
result from this broad authority to regulate.
Hallie, 471 U.S. at 42, 105 S.Ct. at 1718.
By contrast, in Boulder, the Court held that the Home
Rule Amendment of the Colorado constitution conferring
upon municipalities the general authority to govern local
affairs was merely a “neutral” expression of state policy,
which did not sufficiently articulate a state policy to
displace competition:
But plainly the requirement of “clear articula-
tion and affirmative expression” is not satisfied
when the State’s position is one of mere neu-
trality respecting the municipal actions chal-
lenged as anticompetitive. A State that allows its
municipalities to do as they please can hardly be
said to have “contemplated” the specific anti-
competitive actions for which municipal liability
is sought. Nor can those actions be truly
described as “comprehended within the powers
granted,” since the term, “granted,” necessarily
implies an affirmative addressing of the subject
by the State. The State did not do so here: The
relationship of the State of Colorado to Boul-
der’s moratorium ordinance is one of precise
neutrality.
Boulder, 455 U.S. at 55, 102 S.Ct. at 842 (emphasis origi-
nal). Thus, an ordinance passed by the city of Boulder
imposing a moratorium on a cable television company’s
expansion was not protected from antitrust challenge by
the state action doctrine.
We therefore examine the relevant statutes to deter-
mine whether they authorized the actions challenged and
App. 13
whether they evidence a “clearly articulated and affirma-
tively expressed” policy to displace competition in the
provision of off-airport shuttle bus parking.?
Those statutes provide as follows:
41-4-101. Operation a governmental func-
tion. The acquisition of any lands for the pur-
pose of establishing airports or other air
navigation facilities; . . . the acquisition, estab-
lishment, construction, enlargement, improve-
ment, maintenance, equipment, and operation of
airports ...j; and the exercise of any other
powers granted in this part 1 to any county, city
and county, city ... are hereby declared to be
public governmental functions... .
Colo.Rev.Stat. § 41-4-101. Section 41-4-106 authorizes the
operation of airports by counties:
41-4-106. Operation of airports. In connection
with the erection, maintenance, and operation of
any such airport or navigation facilities, any
county has the power and jurisdiction . . . to
9 We reject plaintiffs’ argument that Denver is authorized
to own and operate Stapleton by Article XX of the Colorado
constitution, the “home rule” provision, instead of by other
statutory provisions more specifically relating to airports. In
Sterling Beef Co. v. City of Fort Morgan, 810 F.2d 961 (10th
Cir.1987), this court noted that the home rule provision in the
constitution “roundjs] out the basic authority” contained in the
particular statute conferring upon the city of Fort Morgan, a
home rule city, the authority to engage in the allegedly anti-
competitive acts challenged there. The primary focus of our
opinion in Sterling Beef was on the particular statutes, not the
home rule provision. Under Boulder, it is clear that the grant of
home rule authority by itself is an insufficient expression of
state policy to displace competition.
App. 14
regulate the receipt, deposit, and removal and
the embarkation of passengers or property to or
from such airport; to exact and require charges,
fees, and tolls, . . . ; to lease or assign for
operation such space or area. . . necessary or
useful in connection therewith; . . . to provide
rules and regulations governing the use of such
airport and facilities and the use of other prop-
erty and means of transportation within or over
said airport... .
Colo.Rev.Stat. § 41-4-106.!9 Sections 41-4-201 and 41. 4-204
generally provide comparable authority to cities to own,
maintain and operate airports. Colo.Rev.Stat.
§ 31-15-711(f) provides authority for cities to maintain
and operate public parking facilities.
Defendants assert that those statutes clearly and
affirmatively express a state policy to displace competi-
tion in the operation of airports and related activities,
including off-airport shuttle bus parking. We agree.
As the Supreme Court did in Hallie, we turn to the
specific language of the statutes. Section 41-4-106 clearly
confers upon counties a broad authority to regulate air-
port activities, including the power “to regulate the
receipt, deposit, and removal and the embarkation of
passengers or property to or from such airports; to exact
and require charges, fees, and tolls .. . ; to lease or assign
for operation such space or area . . . necessary or useful in
10 It appears that the city and county of Denver is consid-
ered a “county” under the Public Airport Authority Law,
Colo.Rev.Stat. §§ 41-3-101 to -108.
App. 15
connection therewith; . . . to provide rules and regula-
tions governing the use of such airport and facilities and
the use of other property and means of transportation
within or over said airport.” See also § 41-4-204 (same
authority granted to cities). That is precisely what the
City has dene in this case — it has regulated the removal
and embarkation of passengers to and from the airport; it
has exacted fees and charges; it has assigned areas of
operation to plaintiffs; it has provided rules and regula-
tions governing the use of the airport and the means of
transportation within the airport. Further, it is certainly a
“forseeable result” of that broad authority to regulate that
competition in the provision of shuttle bus services
between the Airport Termina! and off-airport parking lots
would be displaced. Caselaw supports our conclusion.
As indicated, in Hallie itself, the Court found it “suffi-
cient that the statutes authorized the City to provide
sewage services and also to determine the areas to be
served. We think it is clear that anticompetitive effects
logically would result from the broad authority to regu-
late.” Hallie, 471 U.S. at 42, 105 S.Ct. at 1718.
In Sterling Beef v. City of Fort Morgan, 810 F.2d 961
(10th Cir.1987), this court found immunity in an equally
broad statutory scheme. The city of Fort Morgan, Colo-
rado had a natural monopoly in the provision of natural
gas. When Sterling Beef Company attempted to purchase
natural gas for its meat processing plant at a cheaper
price from a private company by connecting to that com-
pany’s gas distribution system outside the city limits,
Fort Morgan passed an ordinance making it unlawful for
any person, without a permit or franchise from the city, to
erect or operate “any natural gas pipeline... or system
App. 16
... Within the city in order to sell or distribute or provide
non-municipal gas... to any user or consumer within the
city; or... to interconnect any building ... to any natural
gas pipeline or system... other than to the natural gas or
electrical system of the City of Fort Morgan.” Sterling
Beef, 810 F.2d at 962.
In holding that the enactment of the ordinance was
protected state action, this court relied largely on
Colo.Rev.Stat. § 31-15-707(a)(1) which granted munici-
palities the power:
[t]o acquire . . . gasworks, and gas distribution
systems for the distribution of gas of any
kind .. . or to authorize the erection, ownership,
operation, and maintenance of such works and
systems by others.
We held that that statute, along with “the related powers
of the city provided by the state constitution and by
statute on this same subject combine to detail all the
powers necessary to permit the city to attain a monopo-
listic position as to gas distribution.” Sterling Beef, 810
F.2d at 964. The challenged ordinance was “a forseeable
consequence of the municipality’s power over natural gas
distribution.” Id.
Similarly, Denver’s challenged rules and regulations
governing shuttle bus services are a foreseeable conse-
quence of its statutory power to regulate access to and
use of the airport. See also Interface Group, Inc. v. Mass.
Port Auth., 816 F.2d 9, 13 (1st Cir.1987) (statutes permit-
ting Port Authority to “contract with any person .. . de-
siring the use of any part of [the] airport rates or charges
for such use... ” authorized policies-governing “which
App. 17
airlines are to use which terminals, where and how they
are to be serviced, and whether or when they can taxi
from one terminal to another”); Commuter Transp. Sys.,
Inc. v. Hillsborough City Aviation Auth., 801 F.2d 1286, 1289
(1ith Cir.1986) (“The Authority was authorized by the
state to negotiate contracts with businesses as it may
deem necessary for the development and expansion of
the airport and to grant concessions, upon such terms
and conditions as it shall deem proper. It is clear that The
Authority’s actions [restricting the number of contracts
with limousine operators] was contemplated by the state
legislature and under Parker, The Authority is immu-
nized.”); Montauk-Caribbean Airways, Inc. v. Hope, 784 F.2d
91, 96 (2nd Cir.) (“In view of this broad statutory author-
ity to enter into exclusive or non-exclusive contracts, it
was a forseeable result that the Town would assert the
authority to deny appellant year-long operating rights.”),
cert. denied, 479 U.S. 872, 107 S.Ct. 248, 93 L.Ed.2d 172
(1986); Indep. Taxicab Drivers’ Employees v. Greater Houston
Transp. Co., 760 F.2d 607, 610 (5th Cir.) (“While the [statu-
tory] provision falls short of expressly mentioning the
establishment of ground transportation services, the stat-
ute’s broad phrasing is a strong indication of the state’s
desire to abdicate in favor of municipal prescience with
regard to airport management.”), cert. denied, 474 U.S.
903, 106 S.Ct. 231, 88 L.Ed.2d 230 (1985); Hillman Flying
Serv., Inc. v. City of Roanoke, 652 FSupp. 1142, 1145-46
(W.D.Va. 1987) (statute granting municipalities the
authority to “acquire, construct, maintain, and operate
airports and related structures, properties and facilities”
App. 18
immunized grant of the exclusive right to sell aviation
fuel to one vendor), aff'd, 846 F.2d 71 (4th Cir. 1988)."
1! Defendants also rely on our opinion in Pueblo Aircraft
Serv. v. City of Pueblo, 679 F.2d 805 (i0th Cir.1982), cert. denied,
459 U.S. 1126, 103 S.Ct. 762, 74 L.Ed.2d 977 (1983), in which we
held that the city of Pueblo, Colorado was immune from anti-
trust liability in its dealings with fixed base operators at its
municipal airport. We did so in reliance upon Colo.Rev.Stat.
§ 41-4-101, upon which defendants in this case also rely, and
which, as indicated above, states that the maintenance and
operation of airports are “public governmental functions, exer-
cised for a public purpose, and matters of public necessity.”
While noting that typically a municipal airport is properly
viewed as a “proprietary” activity, in the face of an explicit
statute such as section 41-4-101, we felt compelled in Pueblo
Aircraft to recognize immunity for the operation of the Pueblo
airport as a “public governmental function.”
We do not base our finding of immunity in this case on
that statute or on the rationale of Pueblo Aircraft. The distinc-
tion between proprietary activities and governmental functions
upon which our Pueblo Aircraft opinion was based has at times
formed the basis for determinations of immunity. See, e.g., City
of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct.
1123, 55 L.Ed.2d 364 (1978) (Burger, C.J., concurring) (state
authorization necessary for immunity because defendant
municipalities in that case were engaged in “proprietary”
activities); Padgett v. Louisville and Jefferson County Air Board,
492 F.2d 1258 (6th Cir.1974) (Air Board’s award of contract to
one taxicab company immune from antitrust challenge because
Board “was exercising a valid governmental function to which
the antitrust laws do not apply”); E.W. Wiggins Airways, Inc. v.
Mass. Port Auth., 362 F.2d 52 (1st Cir.) (decision by Port Author-
ity to enter into exclusive lease with fixed base operator was
immune from antitrust challenge as “the exercise of a valid
governmental function”), cert. denied, 385 U.S. 947, 87 S.Ct. 320,
17 L.Ed.2d 226 (1966). It appears to us that the distinction
between proprietary and governmental functions has not been
(Continued on following page)
App. 19
Plaintiffs make much of the fact that in this case, the
City is also in some sense a competitor of plaintiffs.'?
They also suggest that the City’s activities here go far
beyond what may have been authorized by statute with
respect to airport parking, and that the defendants’
motivations may have been anticompetitive. None of
these arguments persuade us that the City should be
subject to antitrust liability for its actions in this case.
(Continued from previous page)
pursued in recent Supreme Court opinions. In Hallie, for exam-
ple, the Court simply considered whether the relevant statutes
contained the requisite clear and express authorization. It did
not consider whether the city’s actions were proprietary or
governmental. See also P. Areeda & H. Hovencamp, Antitrust
Law, 4212.2e (Supp.1990) (in criticizing Chief Justice Burger’s
position in his Lafayette concurrence, the authors noted that
“decisions since Lafayette have essentially ignored any distinc-
tion between proprietary and other functions”); In Re Airport
Car Rental Antitrust Litigation, 521 F.Supp. 568, 583 (N.D.Cal.
1981) (“municipal antitrust liability does not turn on the dis-
tinction between commercial/proprietary and governmental
activities. ... If the opinions in Lafayette make anything clear, it
is that this distinction was unacceptable to eight of the nine
members of the Court.”), aff'd, 693 F.2d 84 (9th Cir.1982), cert
denied, 462 U.S. 1133, 103 S.Ct. 3114, 77 L.Ed.2d 1368 (1983). Cf
City of Columbia v. Omni Outdoor Advertising, Inc., _. U.S. __,
111 S.Ct. 1344, 1351, 113 L.Ed.2d 382 (1991) (no conspiracy
exception to state action immunity, with possible exception of
when state acts “not in a regulatory capacity but as a commer-
cial participant in a given market”).
'2 Plaintiffs shuttle buses and the City’s SMART buses do
not, however, perform identical services. As the district court
found, SMART buses perform the additional job of transport-
ing passengers between concourses, and not just to remote
parking lots.
App. 20
The fact that the City is also in some sense a competi-
tor of plaintiffs does not alter the basic test for state
action immunity nor does it diminish the City’s regula-
tory authority over the Airport and plaintiffs’ activities.
The question remains whether there is a clear and express
state policy to displace competition with regulation and
authorizing the challenged activities. We have held that
there is. The City’s additional status as a possible compet-
itor, or its possible engagement in a “proprietary” activ-
ity, is not determinative. See note 11, supra. Cf. City of
Columbia v. Omni Outdoor Advertising, Inc., 111 S.Ct. at
1351 (“this [state action] immunity does not necessarily
obtain where the State acts not in a regulatory capacity
but as a commercial participant in a given market”).
Similarly, plaintiffs’ allegation that defendants may
have gone beyond the statutory authority granted them,
or that they may have been motivated by anticompetitive
intentions, is unpersuasive. See City of Columbia v. Omni
Outdoor Advertising, Inc., __ U.S. __, 111 S.Ct. 1344, 113
L.Ed.2d 382 (1991). As we noted in Buckley Constr., Inc.,
933 F.2d at 856, “[o]nce a municipality establishes it is
entitled to state action immunity, the subjective motiva-
tion of the actors involved in the decisionmaking process
should not come into play.” We agree with the Ninth
Circuit, which has stated:
The availability of Parker immunity . . . does not
depend on the subjective motivation of the indi-
vidual actors, but rather on the satisfaction of
the objective standards set forth in Parker and
authorities which interpret it. This must be so if
the state action exemption is to remain faithful
to its foundations in federalism and state sover-
eignty. A contrary conclusion would compel the
“
App 21
federal courts to intrude upon internai state
affairs whenever a plaintiff could present color-
able allegations of bad faith on the part of
defendants.
Boone v. Redevelopment Agency, 841 F.2d 886, 892 (9th Cir.),
cert. denied, 488 U.S. 965, 109 S.Ct. 489, 102 L.Ed.2d 526
(1988) (quoting Llewellyn v. Crothers, 765 F.2d 769, 774 (9th
Cir.1985)); see also Omni Outdoor Advertising, Inc., 111
S.Ct. at 1352-53. For the same reason we reject the argu-
ment that alleged errors or abuses in the implementation
of state law should expose the City to antitrust liability.
See Omni Outdoor Advertising, Inc., 111 S.Ct. at 1349-50;
Buckley Constr., Inc., 933 F.2d at 856; Interface Group, Inc. v..
Mass. Port Auth., 816 F.2d 9, 13-14 (Ist Cir. 1987);
Llewellyn, 765 F.2d at 1334; Scott v. City of Sioux City, 736
F.2d 1207 (8th Cir.1984), cert. denied, 471 U.S. 1003, 105
S.Ct. 1864, 85 L.Ed.2d 158 (1985); P. Areeda & H. Hoven-
camp, Antitrust Law, 212.3b (Supp.1990); cf. Lease Lights,
Inc. v. Pub. Serv. Co. of Oklahoma, 849 F.2d 1330, 1334 (10th
Cir.1988) (“The constitutional invalidity of the attempted
state regulation is not an appropriate basis for disregard-
ing state action immunity.”), cert. denied, 488 U.S. 1019,
109 S.Ct. 817, 102 L.Ed.2d 807 (1989).
We therefore reverse the district court’s conclusion
that defendants’ activities were not immune from anti-
trust challenge. Accordingly, we need not address the
merits of the antitrust claims
I]. Equal Protection and Due Process Claims
Plaintiffs claim that the City created three different
classifications of shuttle bus service plaintiffs’ private
snes
App. 22
off-airport parking shuttle bus service; hotel, motel, ski
resort and other comparable facility shuttle bus service;
and SMART shuttle bus service. The evidence showed,
and the district court found, that the challenged rules and
regulations imposed on plaintiffs a fee which was 50%
higher than the fee imposed on the hotel, motel and ski
resort shuttle bus services. SMART buses were assessed
no fee. Plaintiffs claim that this disparate treatment of
similarly situated shuttle bus services was arbitrary and
capricious and violates the equal protection and due pro-
cess clauses. The district court rejected this argument,
concluding that the City had a rational basis for treating
the three groups differently. We affirm.
When a plaintiff challenges economic or commercial
legislation as violating the equal protection or due pro-
cess clauses, the state or municipal defendant need only
show that the regulation is rationally related to a legiti-
mate state interest. See City of Cleburne v. Cleburne Living
Center, 473 U.S. 432, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985);
New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513,
2516, 49 L.Ed.2d 511 (1976) (per curiam); Nebbia v. New
York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940 (1934);
Buckley Constr., Inc., 933 F.2d at 859; Jacobs, Visconsi &
Jacobs Co. v. City of Lawrence, 927 F.2d 1111 (10th Cir.
1991); Alamo Rent-A-Car, Inc. v. Sarasota-Manatee Airport
Auth., 825 F.2d 367 (11th Cir.1987), cert. denied, 484 U.S.
1063, 108 S.Ct. 1022, 98 L.Ed.2d 987 (1988); Murphy v.
Matheson, 742 F.2d 564 (10th Cir. 1984). Governmental
bodies have “wide latitude in enacting social and eco-
nomic legislation; the federal courts do not sit as arbiters
of the wisdom or utility of these laws.” Alamo Rent-A-Car,
Inc., 825 F.2d at 370; see also Silverstein v. Gwinnett Hosp.
ican nial
™
App. 23
Auth., 861 F.2d 1560, 1564 (11th Cir.1988); Murphy v. Math-
eson, 742 F.2d at 575. We also note we need not satisfy
ourselves that the challenged rules will in fact further
their articulated purposes; it is sufficient if “the legisla-
ture could rationally have concluded that the purposes
would be achieved.” Alamo Rent-A-Car, 825 F.2d at 372
(citing Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456,
101 S.Ct. 715, 66 L.Ed.2d 659 (1981)); see also Clements v.
Fashing, 457 U.S. 957, 963, 102 S.Ct. 2836, 2843, 73 L.Ed.2d
508 (1982) (“Classifications are set aside only if they are
based solely on reasons totally unrelated to the pursuit of
the State’s goals and only if no grounds can be conceived
to justify them.”); Swin Resource Sys., Inc. v. Lycoming
County, 883 F.2d 245, 255-56 (3rd Cir.1989), cert. denied, __
U.S. __, 110 S.Ct. 1127, 107 L.Ed.2d 1033 (1990).
We consider first whether the challenged classifica-
tions have a legitimate purpose. The challenged rules and
regulations state that they were enacted “to ensure the
traveling public access to an efficient and orderiy ground
transportation system and to ensure efficient use of the
limited capacity of Airport roadways and parking and
loading facilities;”
Denver Municipal Airport System including without lim-
to “meet the needs for operating the
itation the expenses for bonded indebtedness of the sys-
tem, its operating expenses, and expenses for
construction, reconstruction, replacement, repair and any
similar activity for any facility within the system;” “to
retire debts” and to “pay for Airport construction, recon-
struction, replacement, repair and operating expenses;”
to “reasonably apportion these expenses among conces-
sionaires, businesses and other users of the facilities;”
and “to recoup revenue the Airport may be losing and
App. 24
preserve its existing revenue.” These are legitimate gov-
ernmental purposes. See Alamo Rent-A-Car, 825 F.2d at 373
(raising revenue is a legitimate and substantial govern-
mental objective); Gannett Satellite Information Network v.
Metro. Transp. Auth., 745 F.2d 767 (2d Cir.1984); Astro
Limousine Serv., Inc. v. Hillsborough County Aviation Auth.,
678 F.Supp. 1561, 1565 (M.D.Fla. 1988), aff'd, 862 F.2d 877
(11th Cir.1988). Promoting the efficient use of Airport
space and facilities is undoubtedly a legitimate govern-
mental purpose.
Accordingly, we must determine whether there is a
rational basis for believing that the classifications
employed will further those legitimate purposes. There
are two relevant comparisons here: plaintiffs vis-a-vis
hotel, motel and ski resort shuttle bus operators and
plaintiffs vis-a-vis SMART buses. We consider first the
different treatment of plaintiffs and hotel, motel and ski
resort services.
Plaintiffs argue there is no rational basis for charging
them a fee 50% higher than the fee imposed on those
other shuttle bus operators, whose use of the Airport,
plaintiffs argue, is identical. The district court found that
plaintiffs’ shuttle bus service is “different” from the ser-
vice provided by buses connecting the Airport with
hotels, motels and ski resorts. Defendants argue and the
district court also found that plaintiffs derive a “greater
benefit” from the Airport than do hotel/motel/ski resort
shuttle bus services. Plaintiffs contend it is irrational to
make such an assumption without engaging in studies to
prove the greater benefit. We disagree.
———————————
App. 25
A very similar contention was made in Alamo Rent-
A-Car, 825 F.2d 367 (11th Cir.1987), where an off-airport
car rental company challenged the imposition of higher
user fees on its own operations than on hotel and motel
courtesy vehicles. The court held such different fees did
not violate the equal protection clause:
Differences in the types of business conducted
by these companies is certainly a factor in equal
protection analysis, and in some cases this dis-
tinction alone may be sufficient to uphold the
challenged legislation.
Alamo Rent-A-Car, 825 F.2d at 370. Even assuming the
businesses were not materially different for the purpose
of imposing the challenged fees, the court concluded that
“{t}he distinctions .. . drawn are based upon [the Airport
Authority’s] rational assessment of the relative benefits
and the extent of use of each category of vehicles that
enter the airport. In establishing these classifications, the
Authority need not achieve perfection or mathematical
exactitude.” Id. at 371.'> See also Vance v. Bradley, 440 U.S.
93, 99 S.Ct. 939, 59 L.Ed.2d 171 (1979). We reach the same
conclusion here.
We review the district court’s factual findings under
the clearly erroneous standard. Woods v. North Am. Rock-
well Corp., 480 F.2d 644, 646 (10th Cir.1973). We cannot say
13 For example, the court noted that the Airport Authority
could rationally conclude that hotel and motel operators would
discontinue service if they were charged any higher fee, since
the airport courtesy vehicle service is not an indispensible part
of their business.
|
App. 26
that the findings that plaintiffs are engaged in a “differ-
ent” service and that they derive a “greater benefit” from
the Airport are clearly erroneous.'4 Given those findings,
there is a rational basis for believing that the different
treatment of plaintiffs’ service compared with other shut-
tle bus services furthers the City’s legitimate interests of
“reasonably apportion[ing] [airport] expenses among
. users of the facilities” and “ensur[ing] the traveling
public access to an efficient and orderly ground transpor-
tation system.” See Alamo Rent-A-Car, 825 F.2d at 370-71.
Plaintiffs also challenge the imposition of fees on
their services as compared with the exemption from any
fees of the City’s own SMART vehicles. We also affirm the
district court’s conclusion that there is a rational basis for
believing that this distinction will further the City’s legit-
imate interests. As the district court specifically found,
SMART buses perform additional functions in that they
also transport passengers between concourses. Thus,
SMART buses are arguably engaged ina “different line[ ]
of business.” Alamo Rent-A-Car, 825 F.2d at 370.
4 As a further explanation for why it concluded that
plaintiffs derive a greater benefit from the Airport, the district
court noted that “[t]he plaintiffs clearly wouldn’t be in busi-
ness at all but for this airport, and their whole business is to
provide the parking services for people explaning at this air-
port.” Transcript of Ruling of the Court at 19-20. Shuttle bus
services to hotels, resorts and ski resorts, by contrast, would
still be in business even if the Airport, for example, banned all
private shuttle bus services from the premises. Although they
could not pick up passengers at the Airport, they could still
provide a service to people travelling to hotels, motels or ski
resorts, albeit from a different pick-up location.
rl
App. 27
Furthermore, the City as a governmental entity can
be treated differently for equal protection purposes than
a private commercial entity. See Puget Sound Co. v. City of
Seattle, 291 U.S. 619, 54S.Ct. 542, 78 L.Ed. 1025 (1933); see
also City of Pittsburgh v. Alco Parking Corp., 417 U.S. 369, 94
S.Ct. 2291, 41 L.Ed.2d 132 (1974).'5
Finally, as defendants argue, they could rationally
conclude that SMART buses should be exempt from the
fee because the City already receives substantial revenue
from the City’s parking operations at the airport. Thus,
no equal protection violation follows from the decision
not to impose an additional user fee on the City’s parking
lot shuttle service. See Evansville-Vanderburgh v. Delta Air-
lines, 405 U.S. 707, 718-19 and note 13, 92 S.Ct. 1349,
1356-57 and note 13, 31 L.Ed.2d 620 (1972).
CONCLUSION
For the foregoing reasons, we AFFIRM the district
court’s grant of defendants’ Rule 41(b) motion to dismiss.
1S Additionally, as airport officials testified, defendants
believed that it would be illogical to charge SMART buses the
user fee because there would be no net gain of funds. Rather,
the fee would be paid out from one part of the City’s opera-
tions and paid into another. Exempting SMART buses from the
fee is therefore consistent with the legitimate governmental
objective of raising revenue.
App. 28
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
ALLRIGHT COLORADO, INC.,
Plaintiff
vs.
DENVER, ET AL.,
)
)
)
)
CITY AND COUNTY OF ;
)
)
89-M-1071
Defendant.
RULING OF THE COURT
TRANSCRIPT OF PROCEEDINGS
Proceedings held before the HONORABLE RICH-
ARD P. MATSCH, U.S. District Judge, for the District of
Colorado, beginning at 9:00 a.m. on the 22nd day of
November, 1989, in Courtroom A, United States Court-
house, Denver, Colorado.
APPEARANCES
For the Plaintiff:
For the Defendants:
Richard Shearer, Esq.
Scott Myren, Esq.
Calkins, Kramer, Grimshaw &
Harring
1700 Lincoln Street, Suite 3800
Denver, Colorado 80203
Helen Eckardt Raabe, Esq.
Dean Speirs, Esq.
Assistant City Attorneys
Stapleton International Airport
Room 406, Main Terminal Bidg.
Denver, Colorado 80207
ieee
App. 29
B. Lawrence Theis, Esq.
Walters & Theis
2015 York Street
Denver, Colorado 80205
Proceedings recorded by electronic sound recording,
transcript produced by transcription service.
PROCEEDINGS
THE COURT: I’m ready to rule on the matter
and I’m going to grant the defendant’s motion. Under
Rule 41(b), in doing so it’s necessary for me now to find
the facts and make the conclusions of law, just as if the
trial had been completed.
The basic facts in this case, of course, essential facts
are not really disputed in terms of what has happened
here. The matter at issue concerns the Stapleton Interna-
tional Airport, which is operated - ownef and operated
by the City and County of Denver and as a part of that
airport facility, the city provides parking service as a
necessary service for air travelers.
It’s clear from the evidence that as Stapleton Airport
grew, the on-site parking facilities provided there became
inadequate to the volume of traffic, and it’s clear that
Allright saw the opportunity that was presented by that
situation to open up an off-site private parking facility
several miles away, and provided shuttle bus service
from that parking lot to the airport for enplaning and
deplaning passengers so they could be transported frorn
the parking lot to the airport and reverse.
The history of the shuttle parking business is set out
in the plaintiff’s expert’s report here, which is Exhibit
App. 30
100, Mr. Coddington’s report and in his testimony, and
rather than prolong the findings of fact I’m going to
simply incorporate by reference the relevant portions of
that exhibit.
The Section 1, development of parking at Stapleton
International Airport, I accept as being accurate with
respect to when these other facilities came on line and
when Stapleton Airport’s shuttle lots were also estab-
lished in their capacities. Also, for purposes of this legal
analysis, I’m going to accept the other portions of that
report dealing with the volume of the parking business
and particularly the figures that are attached, Figure II-1
and II-2, and also the table II-1.
What that shows, of course, is an increase of growth
in the market and for the purposes of all of the necessary
analysis of the claims in this case, the market being talked
about is the airport, Stapleton International Airport shut-
tle parking services. That’s really both geographical and
product definition or service definition, Stapleton Airport
shuttle bus parking. And it shows, particularly Figure
Il-2, graphically the growth of that market over time,
with some leveling off, of course, which is also, according
to the testimony, coincident with a reduction in passenger
flow at Stapleton Internationa! Airport.
There is also in the report and in the testimony of Mr.
Coddington the testimony with respect to the impact on
the plaintiff’s business, and Figure II-5 is his illustration
of his analysis of the effects of the expansion by the city
of the Smart lots, the operation of the Smart shuttles and,
I suppose, also, the pricing strategies of the city. And of
course, the pricing strategy included its coming into the
aX
App. 31
market at a significantly lower price than the competi-
tors, and then its current pricing.
Now, the city has in the past charged the plaintiffs a
fee of - a monthly fee of $30 a vehicle, which hasn’t been
complained about by the plaintiffs and has been
accepted, I guess, as a fair charge for access. But the city,
in adopting through the Department of Public Works its
new policies and the rules and regulations that are now
in evidence as Plaintiff’s Exhibit 44, has significantly
changed the rules for access by the plaintiffs. They’ve
also changed the rules for access by others in commercial
traffic, but the focus of this lawsuit, of course, is on the
plaintiffs as the parking lot operators, remote parking lot
operators who provide shuttle bus services.
The principle thing in the regulations that were
focused on here are the fees for parking lot operators,
which are at page 100101, using the Beta or whatever it’s
called, page-numbering system here, which is Class 1
vehicles, 42 cents for the first 15 minutes with a charge of
$1.13 for each additional ten minutes. That’s the classi-
fication applicable to the plaintiff’s shuttle vehicles. And
of course, there are other vehicle classifications in here
with different rates. It’s also, according to the evidence
now, the situation that the vehicles operated by the city
through its management contract would be a Class 3
vehicle because of its different size and that if that were a
private company, it’d be charging $1.35 for 25 minutes
and $2.63 for additional ten minutes.
Additionally, as a requirement under those rules and
regulations, the plaintiffs are required to enter into a
App. 32
permit agreement identified as a non-tenant parking com-
pany permit, a copy of which is Plaintiff's Exhibit 42, and
the requirements there are something that the plaintiffs
had no choice about if they choose to conduct their
business as it is, as it has been. They have to sign this
agreement, like it or not.
It’s also clear that in looking at the other charges in
Exhibit 44, that those other commercial vehicles who are
involved in using the same commercial lane at the lower
level of the airport terminal building, the drive lanes, are
charged the Class 1 vehicles and the classifications are the
same here by length of the vehicle — 28 cents for the first
15 minutes, 75 cents for each additional ten minutes for
Class 1 vehicles, the same class as the plaintiffs. So the
plaintiffs are paying, or being required to pay 50 per cent
more than the other commercial users of the same access
lanes.
It's also in the evidence that there are some 240,
approximately 240 different companies making use of
these commercial lanes and they represent a variety of
enterprises which include vans running people up to ski
resorts and other places. They include limousine service.
They include rental car shuttles; that is, shuttle buses to
take people to rental car facilities; couriers, and a number
of other users.
Now, the plaintiffs’ challenge to the regulations and
the permit agreements come in several different claims.
The plaintiffs assert a violation of Section II of the Sher-
man Act. The plaintiffs assert that the regulations and
fees are invalid as an unreasonable burden on interstate
te ely RE TR PS Ane ei ee, GL eee
BB iti inte sr
App. 33
commerce, that the fees and regulations violate the plain-
tiffs’ property rights in contravention of the due process
and equa! protection clauses of the 14th Amendment, that
there’s been a usurpation of legislative power in the city
by an administrative agency, that these contracts are per-
mit agreements or contracts of adhesion that are contrary
to the law of the State of Colorado, and that the fees
amount to an excise tax which must be under the charter
of the City and County of Denver enacted by iegislation
with the City Council. The claims must each be analyzed
separately. I do not agree with the contention made by
the plaintiffs, both here in argument and in the plaintiffs’
brief in opposition to the motion for summary judgment
that these are inextricably linked alternative and concur-
rent claims under the federal antitrust laws and the equal
protection, due process and commerce clauses.
I don’t agree with that because that’s just not the way
in which the Court must function. It’s not appropriate for
a Court to simply meld together a number of different
legal doctrines and say that under this aggregation of
claims the plaintiffs have some new claim not previously
recognized in the law. | think that’s the principal problem
with the analysis in the Park-N-Fly of Texas case, that in
reading that Court’s opinion, it’s difficult for me to
understand whether the result is bottomed in equal pro-
tection, due process, or exactly what doctrine other than
the conclusory paragraphs which say, essentially, you
ought to settle this matter.
Now, I think it’s important to emphasize the need to
give discrete evaluation of each claim for relief because it
does say something about what is the proper institutional
role of the Court in any controversy. If we were to blur
————————————————
App. 34
the distinctions that are made in the law in these various
claims, we are, of course, doing that which Courts have
been criticized for, federal courts in particular, that
they're stepping outside the institutional role and sort of
putting some sort of visceral standards of fairness into
play as rules of the game. That’s not right. I have to
analyze the claims and exercise the power of this Court in
accordance with well-established legal principles.
We begin, then, with the antitrust claim under the
Sherman Act. A Sherman II violation requires proof of the
elements that are mentioned on page six of the defen-
dant’s memorandum supporting the motion to dismiss
that claim. Here there is a relevant market. I’ve already
alluded to it as the Stapleton Airport parking shuttle
service which, as I’ve already said, includes both geo-
graphic limitations and product or, in this case, | think
more appropriately, service in which the alleged attempt
occurred.
There is also a case made for the fourth element,
conduct in furtherance of an attempt to monopolize, and
that, of course, refers not only to the plaintiffs’ evidence
concerning the fact that the City and County of Denver
does not charge itself in its Smart role the same fees that
would be required of another Class 3 user, or even con-
sidering itself a Class 1 user as the plaintiffs are, commer-
cial users. So the plaintiffs contend, and the evidence
supports that in that sense, the defendants have an eco-
nomic advantage. It’s also true that there is a significant
difference with respect to the route followed by the Smart
shuttles and the plaintiffs’ shuttles as they’re restricted,
and particularly as it affects the red zone, the pickup
which requires shutties to leave the airport, go down and
——
App. 35
then return, go through another access gate, I guess it is,
pick up passengers and go back. So there’s a doubling
back which both affects the time, the convenience of the
passengers, and the costs to the plaintiffs of running
those shuttles.
There’s also evidence supporting that the door, the
locations for the pickups favor the Smart buses, partic-
ularly given the difference in volume here with respect to
the doors that are in between the north and south pickup
zones that the plaintiffs can use.
The failure of the claim under Sherman II is the
failure to show that there’s a dangerous probability of
success to monopolizing any relevant market and the
failure to prove specific intent to monopolize. Now,
there’s a difference between an intent to monopolize and
an intent to use certain advantages that a competitor has,
and here we must draw the distinction clearly between
applying the law of antitrust to the City and County of
Denver as a competitor with the plaintiffs and govern-
mental action by the City and County of Denver.
I have disagreed with the City’s contention that it’s
immune from this claim under the Parker v. Brewn gov-
ernmental immunity or exemption doctrine. There is no
doubt in my mind that the operation of Stapleton Interna-
tional Airport given as a whole is something that’s
approved by the State of Colorado under state policy. The
policy of this state authorizes cities and counties - and
Denver is both — to run an airport, and there’s no doubt
in my mind that for a number of purposes, the Parker v.
Brown applies to Denver and the airport. I don’t think
that the doctrine is dependent upon - the application of
App. 36
the doctrine is dependent upon looking at Denver as a
proprietary action - in its proprietary capacity as com-
pared with its governmental capacity, and I think the
Supreme Court of Colorado stated very effectively in
Denver v. Mountain States Telephone & Telegraph Com-
pany in the 1988 en banc decision at 754 Pacific 2d 1172
that — and particularly at 1173 — that the governmental
proprietary distinction is neither a single nor a simple
rule. It’s a cluster of rules used in diverse contexts for a
variety of purposes, and the Court criticizes the use of the
doctrine as some general proposition, and I agree with
that.
The point is simply this: That there is nothing in state
policy that says to an airport operator, a governmental
airport operator that you should regulate the airport
parking shuttle services in any way, or that you should
displace competition with regulation, and that’s what the
doctrine’s bottomed in and there just isn’t any such as it
applies to this narrow aspect of the operation of the
airport. So it is in that focus that I disagree with the city’s
contention of immunity.
Now, at the same time, it seems to me that for pur-
poses of the antitrust analysis Denver is a player on the
board, as any private operator of an airport would be. So
you look to the —- Denver’s activities here for purposes of,
first of all, the specific intent to monopolize, which is not
shown in this record; and the dangerous probability of
success in monopolizing, and I need only look to — on
that latter one, the dangerous probability of success — to
the plaintiffs’ own expert’s testimony, Coddington, and
indeed, to the history of Denver’s market entry here, that
Denver, under these practices, is not going to be able to
ttle Crate aD
ee ee ee eee
App. 37
drive the plaintiffs out of business ard, additionally,
there is no sufficient evidence to establish that Denver's
purpose in these rules and regulations and in this permit
agreement to drive the plaintiffs out of business. Indeed,
it would be irrational for Denver to do it given the need
for Denver in its total operation of the airport to provide
parking services beyond its own capacities as they exist. |
mean, as the plaintiffs have pointed out, there’s a benefit
to the city as the airport operator in the plaintiffs having
this business out — these businesses out there and provid-
ing this service to the flying public.
Now, the evidence does not establish that Denver is a
monopolist here and in this aspect of the analysis, it is
important, I think, to bring in the limitations on what
Denver can do as a government, so in this sense there is a
necessity, I think, to overlap the principles and recognize
that Denver can’t be a monopolist and, as I said in collo-
quy with plaintiffs’ counsel, Denver doesn’t claim and
certainly doesn’t have the power to simply preclude the
plaintiffs from accessing this airport by saying, “We are
going to be the exclusive shuttle parking services pro-
vider for Stapleton International Airport.” It can’t do that
because of other limitations on it as a government, which,
of course, involves the concepts in these other claims.
So in a very real sense, here I have to accept the
plaintiffs’ view that there is a confluence of principles
because they can’t become a monopoly in that way, and
additionally, as we'll see in a moment, they can’t use their
ability to extract charges as conditions for the entry here
to an extent that is unreasonable; in other words, there
are limits to the rates that they can charge, the fees for
access and they’re the very limits that are being claimed
App. 38
in the other claims for relief, and that’s another reason
why the city can’t be in the position of a monopolist with
respect to this service in this market. Therefore, the plain-
tiffs have failed to prove a Section II, a Sherman II viola-
tion in this case.
The second claim for relief that I wish to address in
the order in which I am addressing them is the plaintiffs’
contention that this is a violation, the permit agreement
and the fee system is a violation of the United States
Constitution with respect to imposing a burden on inter-
state commerce. Interstate commerce is, of course,
involved in this case. There’s no doubt about that, and
the analysis of this claim is directed by the Supreme
Court opinion in Evansville Airport against Delta Air-
lines.
That opinion is instructive in a number of ways.
There the Supreme Court said, at page 714 of the opinion
as it’s reported in 405 U.S. Reports, “We regard it as
settled that a charge designed only to make the user of
state-provided facilities pay a reasonable fee to help
defray the costs of their construction and maintenance
may constitutionally be imposed on interstate and
domestic users alike.” Going on, “The facility provided at
public expenses aids rather than hinders the right to
travel. A permissible charge to help defray the costs of
the facility is, therefore, not a burden in the constitutional
sense.”
The Court goes on to discuss what is permissible, and
page 707 refers to its decisions concerning highway tolls
wherein it was recognized that states could develop uni-
form, fair and practical standards for this type of fee and
ee
App. 39
then the opinion goes on to discuss toll — types of toll
charges that have been invalidated and those that have
been validated, which include some rather unusual ones
including a 2 per cent charge on the fair market value of
motor vehicles used in commerce. And the Court further
notes that the tax should — tax as it was in the toll cases —
should be judged by the result, not the formula, and must
stand unless proven to be unreasonable in amount for the
privilege, the privilege granted.
It goes on to cite an earlier case that talks about
rcugh approximation rather than precision, and says at
716: “Thus, while state or iocal tolls must reflect a uni-
form, fair and practical standard relating to public expen-
ditures, it is the amount of the tax, not its formula, that is
of central concern, at least so long as the toll is based on
some fair approximation of use or privilege for use as
was that before us in Capital Greyhound and is neither
discriminatory against interstate commerce, nor excessive
in comparison with the governmental benefit conferred.
It will pass constitutional muster even though some other
formula might refiect more exactly the relative use of the
state facilities by individual users.”
Now that, as I say, is instructive here because Mr.
Moss has presented his analysis the there is really no
question, I think, that if you adopted the — his view, the
charge would be significantly less. He said 22 cents based
on his analysis of the city’s costs of the - providing this
lane that the plaintiffs use. He didn’t testify under gener-
ally accepted accounting principles, but | suppose maybe
there aren’t any for this particular type of application. |
don’t know. We may learn that in other litigation.
App. 40
However, looking at it - and we don’t have to look at
it in generally accepted accounting principles, I accept
that, looking at it in terms of what’s fair, what’s reason-
able in making this decision. Now here I think, too, it’s
important to recognize the limits of the Court’s role
because we could adopt - running with this language — a
standard of well, it’s - you know, and also, it’s what’s
reasonable. I guess everything that’s not unreasonable is
reasonable, and everything that’s not arbitrary is fair
because the words we use for the two sides of the coin are
just those words; arbitrary on the one side, fair on the
other. Reasonable on one side, unreasonable on the other,
and the plaintiffs’ got the burden of proof, of course, so
we're really looking at whether we’re talking about arbi-
trary and unreasonable charges.
We can look at that and do this type of cost account-
ing that Mr. Moss offered, and then it seems to me the
Courts, under that doctrine, are going to be exercising the
same kind of a role as a public utility commission in
saying, weil, you’ve got to justify by cost analysis every
fee that you charge in this type of application. There is
disagreement about what are true components. What’s an
appropriate component of cost when you're talking about
a facility as large, as inter-related and as expensive as this
airport?
So we can quarrel about components of costs. I sup-
port, you know, it maybe somewhat easier to say landside
versus the airside here and deal with the landside costs,
although I’m not so sure that that should be required
because there is the inter-relationship, obviously, if we
look at it in terms of the benefit conferred because if it
weren’t for the airside, we wouldn’t be out there. Planes
iti etesemia eerie, eran 2s ction’
App. 41
wouldn’t be out there. The whole facility wouldn’t be out
- there. So components of costs are areas in this analysis,
they’re areas of dispute as well as the amounts and the
accounting system used, and I believe it would put us
into a very dense thicket, indeed, if we were to involve
the Court in making careful analysis of components and
amounts as Mr. Moss has.
It seems to me what the Supreme Court of the United
States has said in Evansville Airport is, “Dont get
involved in that. Rough approximations. Reasonable rela-
tionships. And leave these determinations for the govern-
mental entities that are involved, and simply evaluate
their conduct under a more generalized standard. is it
arbitrary? Is it unreasonable?” Now here again there is
some blurring into the equal protection analysis and the
equal protection claim.
The plaintiffs assert and have in Mr. Shearer’s argu-
ment that the equal protection —- and I believe he said
equal protection and due process clauses require that
people similarly situated must be treated uniformly. That
isn’t the law. It’s not the law under the equal protection
clause. It’s not the law under due process. Government -
these are limitations on governmental power and these
limitations recognize an area of discretion for govern-
ments.
What the equal protection clause requires is that
when you make classifications there has to be a rationale
basis for the classification, so long as there’s no invidious
discrimination and, of course, this case doesn’t involve
the plaintiffs as a class being identified in some way with
the kinds of things that would make discrimination or
App. 42
classification of them prohibited on some other constitu-
tional ground. I mean, that it’s race, religion or any of
those things that are prohibited. So it’s a rational basis
test.
Now, there are two comparators here. One is - as
groups. One is the plaintiffs as the off-site parking lot
operators against Smart, the city. The other is the plain-
tiffs against the other 250 companies, the limousines, the
vans, the rental cars, shuttles and the like, and whether
the city’s treatment of these classes differently is sup-
ported by some rational basis.
Here we have, first of all addressing the city as the
comparator, tue city’s Smart facility functions differently
from the plaintiffs’. That’s been shown in the evidence.
The shuttle facilities of Smart are used for more than
parking in Lots 2 and 3. They are used to transport
persons from — to concourses and from one concourse to
another, including the remote concourses, I guess, A+ or
whatever it’s called, and I think one other maybe, but at
any rate, the Smart shuttles are doing more than taking
people to the city’s remote parking lots.
Also, the — I think law doesn’t say that the, under the
equal protection analysis, that the city has to treat itself
the same by imposing some charge on itself and then
recovering it. I mean, moving money from one pocket to
another seems not rational. So I don’t consider, while
they are competing in terms of customers with each other,
they are certainly in different categories in who they are
and what they’re doing.
Now with respect to the other companies, there are
certainly differences here as pointed out in the course of
oe — ———eae"__oe~*rror
Ae tate t0
App. 43
the testimony. As far as the — for example, the vans that
take people to the ski resort areas, that’s a different kind
of service. The ski resort areas are there to provide an
entertainment opportunity or a sports opportunity -
however you want to classify it - an experience for peo-
ple who want to go skiing, and that’s different from
providing parking for enplaning passengers at Stapleton
The same is true with respect to hotels. Much has been
made here of that the hotels run shuttle services and that
people are staying at the hotels who are flying in and out
of Stapleton — I guess mostly in. I’m not — I don’t know
why people who would be leaving Denver as their home
would be staying at a hotel, too, but then there are a lot of
reasons for human conduct. But at any rate, the hotels
seem to me to be in a different category
The basic thing that has driven the defendant's deci-
sion in this case to make this classification is the view -
and it was first expressed in this Peat Marwick study and
in Hall’s testimony and it’s been repeated here by other
witnesses, the perception that the city is subsidizing the
plaintiffs, and the city’s view that the plaintiffs have been
at a competitive advantage over the city because it — they,
the plaintiffs, don’t have the burden of the costs that the
city does. So what the city has done is in making the
classification, analyzed this in terms of the benefit
conferred and has viewed the plaintiffs, whose sole busi-
ness really here — as far as it’s relevant to this case at any
rate — is to provide this parking service. The plaintiffs
clearly wouldn’t be in business at all but for this airport,
and their whole business is to provide the parking ser-
vices for people enplaning at this airport.
App. 44
So the city has a rational basis for believing that it is
conferring a greater benefit on these parking lot opera-
tors than on hotels, limousines, rental car, shuttles or the
other users who come under the classification of commer-
cial users of the lanes and who are in different —- who are
treated differently in Exhibit 44.
Moving on to due process, I suppose we’re talking
about substantive due process in the case in the sense of
abuse of power, the governmental power that the city
has, and I suppose you can frame it in terms of whether
there is an abuse of governmental power here to enhance
proprietary business of the city, if we want to do that. My
answer to that is I believe the analysis must be the same
as it is under the equal protection clause in terms of the -
determining the reasonableness of the city’s conduct, and
the plaintiffs’ claim fails in that the city has, of course, an
interest in making Stapleton cost-effective and, indeed, in
making it revenue-producing. It has a debt burden. It
must meet that debt burden and I presume that the city
can. have a legitimate interest in having revenues in
excess of costs in functioning in this way. I assume that’s
one of the reasons the city’s in the business and, of
course, we know and it’s been alluded to here that the
city also has the intention of replacing this facility and
has an interest in obtaining revenues from the users of
this facility to generate some funds useful for replace-
ment.
But we’re not here to decide what the upper limits of
the city’s fee structure might be. I don’t know what they
are. What they are is the point where they become unrea-
sonable and arbitrary, and whatever point that is, 44 and
the rates charged there aren’t it. So under this - these
App. 45
claims, the plaintiffs simply fail to prove a violation of
the antitrust laws, deprivation of property without due
process of law, or a denial of equal protection of the laws.
Plaintiffs contend that permit agreement, Exhibit 42, is an
adhesion contract. I don’t agree. Here again, as I asked
Mr. Shearer what provision in this contract would permit
the total intrusion into proprietary information by the
city and he cited: “The permittee further agrees to submit
any report or reports or information regarding its opera-
tions hereunder that the city’s Manager of Public Works
or his authorized representative may request.”
1 leave to another day - and I hope another Court -
the specific analysis of that language, but the language in
that, as in any agreement, has to be viewed in the context
of the whole of the agreement and if I were interpreting it
under some dispute about proprietary information, |
would consider what is the city’s legitimate purpose in
seeking information and rule in that context. So to call
this an adhesion contract would be requiring me to look
under the bed and to ascribe a lot of sinister purposes to
the city which I’m not prepared to do. The city has to
interpret the contract reasonably and with a sense of its
purpose, and accordingly, I view it in that way.
Viewed in that way, all of the requirements of the
permit seem to me to be reasonably related to the pur-
pose of governing the way in which the plaintiffs can
access the airport, and that includes the insurance provi-
sions and the indemnification. This is, as the evidence
shows, highly congested, a lot of people, and as one of
our witnesses testified, there is a very real concern for
safety, and particularly pedestrian safety at these levels.
So these are, in my judgment, reasonable requirements
App. 46
for the purpose of the agreement and do not sink to the
level of an adhesion contract.
Now, with respect to the other state claims — and
obviously by dealing with them I am exercising pendant
jurisdiction because that’s the only basis upon which this
subject matter is before this Court, but | believe it impor-
tant to do so, so that this dispute can be resolved in its
entirety. The usurpation of legislative power by adminis-
trative agency I don’t think holds water here. This is the
operation of the airport. It’s done as an executive func-
tion. We don’t have, really, in analyzing the charter of the
City and County of Denver, I think, the three branches of
government analysis that we would put on the United
States Constitution, but there’s nothing been put forth
here that shows to me that the conduct here by the
Department of Public Works is not authorized as part of
this administrative responsibility in running this airport.
And on the question of whether this is a tax as
opposed to a charge for a benefit conferred, the view that
I take is that it is not a tax. It’s not an excise tax or any
kind of a tax. It is a fee for a benefit conferred. There is a
reasonable relationship to that benefit.
So on all of these claims I find for the defendant, and
in accordance with these findings and conclusions, the
claims are dismissed. The case is dismissed. Judgment
will enter for the defendants on all claims with its costs,
their costs to be recovered on the filing of a bill of costs
within ten days from the entry of judgment.
Either counsel have anything further?
MS. RAABE: Nothing further, Your Honor.
App. 47
MR. SHEARER: Nothing, Your Honor
THE COURT: All right.
Court’s in recess.
(Whereupon, the Court’s ruling was concluded.)
I certify that the foregoing is a correct transcript from
the record of proceedings in the above-entitled matter.
November 28, 1989
/s/ Carolyn Dahl
J]. Ford & Associates, Inc.
991 Ursula Street
Aurora, Colorado 80011
(303) 364-5776
App. 48
CODDINGTON REPORT (PLAINTIFF’S EXHIBIT 100)
AS INCORPORATED INTO TRIAL COURT RULING,
CASE NUMBER 89-M-1071
Confidential & Priviledged
SHUTTLE BUS PARKING,
STAPLETON INTERNATIONAL AIRPORT
¢ Market Analysis
* Impact Assessment
Prepared by
Dean C. Coddington and Kenneth E. Feterson
BBC, Inc.
155 South Madison Street
Denver, Colorado 80209
303-321-2547
Prepared for
Calkins, Kramer, Grimshaw & Harring
Suite 3800, United Bank Center
1700 Lincoln Street
Denver, Colorado 80203
303-839-3800
November 13, 1989
App. 49
SECTION I. THE DEVELOPMENT OF PARKING AT
STAPLETON INTERNATIONAL AIR-
PORT
In our view, the broad Stapleton International Air-
port parking market includes the main parking structure
immediately adjacent to the airport, SMART and its two
lots, and the four private shuttle bus parking operators -
Allright, Monaco, Premier and Continental. The location
of these seven parking facilities is shown on Figure I-1.
The purpose of this section of the report is to provide
an overview of the broad short and long-term parking
market as background for the detailed market analysis of
shuttle bus parking in the vicinity of Stapleton.
Capacity of Parking Facilities in the Stapleton Area
The parking structure at Stapleton, which offers both
short-term and daily rates, has approximately 5,500 park-
ing spaces available.
The first shuttle bus parking near Stapleton was
developed in 1978 by Allright Parking at its lot at Smith
Road and Monaco Parkway. The lot accommodates 1,475
cars. In 1985, the owners of Allright sold this lot to Ennis,
Inc.; this lot is now known as Monaco Parking. It is 1.9
miles and five minutes driving time from the main termi-
nal (All distances and travel times were measured by
BBC.)
Stapleton International Airport operated shuttle bus
parking with Lot #1 from 1983 to July, 1986. Lot #1 was
located in the area now used for commuter flights.
App. 50
Allright Parking started a second lot, with capacity
for 2,200 cars, at 4001 Quebec Street in 1982. This lot is 1.6
miles (five minutes) from the terminal.
Stapleton Airport established Shuttle Lot #2 in
November, 1984; it has a capacity for approximately 2,300
cars. Lot #2 is 2.1 miles (six minutes) from the terminal.
Shuttle Lot #3, established in December, 1985, has
room for an estimated 4,800 parked cars, and it is 1.2
miles (three minutes) from the terminal.
The lot currently operating at 6800 Smith Road was
purchased by Continental in early 1986. It is also believed
to have been operated as a shuttle parking lot dating back
to the early 1980s by United Investment. This lot has a
capacity of 648 spaces and is 1.7 miles (four minutes)
from the terminal.
Premier Parking established its lot at 4241 Monaco
Parkway in January, 1986. This lot has a capacity of 433
cars, of which 333 spaces are covered. Premier is 2.1 miles
(six minutes) from the terminal.
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App. 52
There is a limited amount of shuttle bus parking pro-
vided from time to time by other private operators such as
the hotels in the vicinity of Stapleton. However, the share of
the market captured by these firms is not significant, and we
have not included them in our analysis.
Trends in Parking Days
At the time this report was prepared we had
requested, but not received, data on parking days for the
main terminal parking structure. Parking days are the
number of vehicles parked per 24-hour period. Had the
City provided the requested data, we would have plotted
trends in parking days for the 1982 to 1989 period and
calculated the share of the market for the main terminal
parking facility, SMART and the four private shuttle bus
parking operators.
SECTION II. THE AIRPORT SHUTTLE BUS PARK-
ING MARKET
The previous section provided an overview of all
commercial parking in and around Stapleton Interna-
tional Airport, 1982 to the present. This section iocuses on
the shuttle bus portion of the parking market. For the
purposes of estimating the economic impacts of SMART
on the four private operators, this is the more relevant
portion of the airport parking market.
Trends in Utilization, Shuttle Bus Parking
Figure II-1 shows the trend in utilization of the four
private and two SMART lots for the period 1982 through
App. 53
mid-year, 1989. Figure II-2 shows the same information
on a cumulative basis forecast through 1994. The projec-
tions are based upon a continuation of past trends, espe-
cially those trends established since 1987.
Prior to the opening of SMART lots #2 and #3, the
rate of growth in parking days of the two privately
owned lots - Allright and Monaco - averaged a combined
16.3 percent per year from 1982-85. Since the SMART lots
opened in 1985, both Allright and Monaco have experi-
enced significant declines in use. Their combined average
drop from 1986-89 has been 5.2 percent per year. Looking
ahead, the forecast decline in usage of the four privately-
owned lots is expected to be a minus 1.5 percent per year
through 1994.
Table II-1 shows the distribution of the shuttle bus
parking market from 1982-1989. (Lot #1 data are excluded
from these comparisons; no data were available). In terms
of market share, in 1984 the private lots had 100 percent
of the off-site market. In mid-1989, the share of the mar-
ket was as follows:
Parking
Operator 1984 1989
SMART 0 45.0%
Allright 62.1% 24.1
Monaco 37.9 18.3
Premier 0 4.9
Continental 0 7.7
Total 100.0% 100.0%
App. 54
Note: Limited shuttle bus airport parking was
available at the site currently operated by Conti-
nental; however, no financial or utilization data
are available about the site prior to 1986.
Looking ahead to 1994, SMART will have over half of the
shuttle bus parking market and the four private operators
will have a combined market share of less than 50 per-
cent.
App. 55
FIGURE Il-1. AVERAGE DAILY PARKING DAYS, SMART AND FOUR
) PRIVATE OPERATORS, 1982 - 1989
3000
: (BBC Estimate)
4
SMART —_——™ |
2500 - Shuttle Lots #2 and #3. —-——— |
| | _-*- |
iP
A | |
/R 2000 + |
iK | |
, | |
| Allright Parking = |
N 1500 + +———— —— Ri, | =:
G | ii hina ——, | z
ee | =
| | 9
v a Monaco Parking 7 _ all oe
1 + inc |
: A 1000 — 2
Y LY — >
S —— é Fg re
: 500 + yA _. Continental Parking =|
| WP Premier Parking | B
| J - * — | <=
| 0 on — 4 a . a — —<—<— — } a | SS a ' | On
1982 1983 1984 1985 1986 1987 1988 1989 G)
YEAR | Oo
Source: See discussion in text.
|
|
S
App. 56
FIGURE Il-2. AVERAGE PARKING DAYS, SHUTTLE BUS PARKING,
SMART AND FOUR PRIVATE FIRMS, 1982-1989,
WITH PROJECTIONS TO 1994
6,500
Total
6.000 - Ne
0 + Sueeete ntl LE oni . HULL : /
1982 1983 1984 1985
i ilk LLL L
= SESS ES ESSESERSES EE: i
1986 1987 1988 1989 1990 1991 1992 1993 1994
ee YEAR
Source: See discussion in text.
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App. 57
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App. 59
Impact of Stapleton Lots #2 and #3 on Private Lots
Assuming no capacity constraints on the private lots,
Figure II-4 shows a projection of demand for shuttle bus
parking if SMART had not come into being as a competi-
tor to the private lots. BBC’s forecast is based upon the
trend established from 1982 through 1986. This shows
that the four private lots combined would have accom-
modated an average of 4,500 cars per day by mid-1989, or
an annual average rate of growth of 7.7 percent over the
past three years.
The impact of SMART of privately-owned shuttle bus
parking lots is the difference between the volume of
business the private lots would have been able to carry
out absent competition vs. what they actually have
accomplished. This is shown in Figure II-5. As a point of
reference, Figure II-5 also shows BBC estimates of overall
shuttle bus parking, including SMART, through 1994.
On an annual basis, the loss in parking days due to
competition from SMART has been:
Average Number
of Daily Parking
Year Days Lost
1985 207
1986 163
1987 496
1988 961
1989 (estimated) 1,272
In terms of revenues, assuming that each parking day
lost equals $4.00 (the average price charged for open,
App. 60
basic parking services by the private operators), total
annual lost revenues for the 1985-1989 period by the
private operators has been:
Total Lost
Year Revenues
1985 $302,220
1986 237,980
1987 724,160
1988 1,406,904
1989 1,857,120
Total Lost Revenues,
1985-89 $4,528,384
Conclusions on Impact of SMART on Private Shuttle
Bus Parking Lots
There is no question that SMART has had a signifi-
cant negative impact on the volume of business available
to the four private operators, particularly Monaco and
Allright. And, based upon the projections contained in
Figure II-5, the losses will grow larger over the next five
years.
G3IDITAIYd °9 IWILN3GISNOO
App. 62
—___——
FIGURE !I-5. CUMULATIVE AVERAGE PARKING DAYS, SHUTTLE
BUS PARKING, FOUR PRIVATE FIRMS,
WITH OR WITHOUT SMART, 1982 - 1994
|
6,500 I
6,000 Total Na
5,500 + 7
Additional Parking Days Generated by SMART
P 5,000
A
R 4,500
K 4,000 +
Loss of Parking Days Due to Competition fro
N 3,500
G
D
A
7
2)
—s
on
=)
—)
0
1986 1987
1982 1983 1984 1985
Source: BBC projections; see discussion in text. _ TEM 3
eae |
m SMART
ae
“ GIOTIANA WILNSGL4NGS
App. 63
SECTION III. OVERVIEW OF MARKETING
EFFORTS BY SMART AND -PRI-
VATE OPERATORS
As part of our analysis of the impact of SMART on
the four private operators, we have assessed available
information on the marketing efforts of all the operators
of shuttle bus parking services at Stapleton International
Airport.
The marketing efforts described in this section
include:
(1) Pricing policies
(2) Advertising
(3) Signage (both external to the airport and
internal)
(4) Access to airport passengers
(5) Special promotions
Pricing
The pricing policies of the private operators and
SMART were described in Section II. In effect, it appears
that because of its dominant market position today,
SMART is the price leader; whatever it charges, the pri-
vate companies are obliged to approximate. It is also
evident that SMART used low prices and other marketing
efforts described in this section during the 1985-1986
period to build volume and market share.
Present pricing policies by the private operators are
comparable with the charges by SMART. At present,
SMART charges $4.00 for 24 hours, and the two largest
App. 64
private firms, Allright and Monaco, charge $4.00 and
$3.75 respectively for the same time period. Continental
also charges $4.00 while Premier charges $3.75 for its
basic service.
Advertising
The private operators are not actively engaged in
traditional media advertising. However, their company-
painted shuttle buses circulating through the airport pro-
vide advertising to passengers arriving at or leaving the
airport. Most of the private operators also provide dis-
count coupons to selected travel agencies which are
passed along to their customers within their airline ticket
packet. And, all private operators have signage on their
lots.
SMART advertises in the same way; its buses are
visible to passengers, especially those exiting the airport
from the lower level. However, SMART also follows a
policy of maintaining the physical presence of one of its
buses in front of the airport terminal at all times. This has
significant advertising value, especially with its exclusive
pickup location visible from the main exiting doors on
the lower level of the airport terminal (see Figure III-1).
App. 65
FIGURE Ill-1. SHUTTLE BUS PICKUP LOCATIONS
Se
2
ve
s,
p
until 9/15/89
Stapleton International Airport
Lower Level
nite
“Rake
Se
Private ‘A
Operators <7
O39S1AlNd 8 WILNSGIA4NOO
6L
App. 66
On the other hand, shuttle buses used by the four
private firms can not pick up passengers in the prime
pickup areas; they are required to drive past the location
used by SMART, pick up their customers at the more
outlying locations, and leave as quickly as possible.
(based on testimony by Dan Bragassa, manager of opera-
tions for Allright Parking, June 27, 1989, p. 104).
SMART advertises in other ways. The availability of
parking in lots #2 and #3 is broadcast over the airport
information radio. AM station 530, beamed at persons
approaching the airport. There are numerous signs along
heavily travelled routes to Stapleton suggesting that trav-
elers tune in this low-powered station. The City will not
allow the private shuttle bus parking operators to pro-
vide similar information on this station.
Signage
~ There are signs along the main approaches to Sta-
pleton notifying motorists of the availability of remote
parking in lots #2 and #3. There are large ground trans-
portation signs on both the inside and outside of each
exiting door, and at the exclusive SMART bus stops on
the lower level, prominently displaying the SMART logo.
The City prohibits the private shuttle bus parking
companies from using similar signage on the public right-
of-way and on airport premises. The only signage dis-
played by the four private shuttle bus parking companies
is on their parking lots. There are no signs along Monaco
Parkway, Quebec Street, or Smith Road providing infor-
mation concerning shuttle bus parking lots, other than
what the airport has posted for the SMART lots.
App. 67
Accessibility
SMART has, in the past, enjoyed a significant com-
petitive advantage over the four private shuttle bus park-
ing companies by virtue of its more visible and accessible
pick up points in front of the most heavily used lower
level airport doors. With 85 percent of the passengers
departing Stapleton using baggage claim carousels near
doors 1 through 9, SMART’s pick up points have been in
front of doors 4 through 7. These pick up locations are
shown on Figure III-1.
With the changes made in September, 1989, SMART
may have lost some of its competitive advantage in terms
of accessibility. The south pick up point, formerly near
door 5, has been moved to the area near door 1 (see
Figure III-1).
Even with the recent changes, SMART’s pick up loca-
tions are superior to those of the private operators. The
four private shuttle bus parking companies are allowed
to pick up their customers only at locations near doors 1
and 12 near either end of the terminal.
Using the terminology of retail analysis, SMART has
had, and continues to enjoy, an intercepting location.
Many customers, or potential customers, of the four pri-
vate operators walk by SMART’s buses to get to their
own shuttle buses. In retailing, this is a significant factor
in the ability of a business to attract and retain customers.
The inability of the private shuttle bus parking oper-
ators to pick up customers at locations other than the
designated areas near doors 1 and 12 appears to have had
a negative impact on customers’ attitudes.
App. 68
Related to the accessibility differences, SMART uses a
“bumping” system - its buses do not leave until another
arrives — with no penalty for length of stay. On the other
hand, the private companies incur financial penalties
beyond the trip fee if it takes them longer than 15 min-
utes to pick up passengers at their two locations.
Special Marketing Efforts
In addition to the marketing efforts described above,
at certain peak periods of customer usage Stapleton
advertises parking availability through the public media
without mentioning private parking availability.
SMART has also, upon occasion, made extensive use
of commercial radio and daily newspaper advertising.
The Trip Fee
Another aspect of competitive advantage enjoyed by
SMART comes from the higher costs imposed on private
competitors in the form of trip fees. It is our understand-
ing that this fee was increased from $30 per month per
vehicle to 42 cents per trip. The increase in this fee
reduces the price competitiveness of the private firms by
restricting their ability to respond to future price initia-
tives by SMART. SMART has previously shown a willing-
ness to cut prices to increase volume; private operators
have less capability to match SMART’s pricing moves.
The access and penalty fees constitute an added cost
that reduces profitability for the private operators.
SMART’s exclusion from paying trip and penalty fees
App. 69
while waiting in the loading zones has the effect of lower-
ing its costs compared with its competitors, the four
private shuttle bus parking companies.
Summary of Marketing Efforts
It appears that SMART has three major competitive
advantages over the four privately-owned shuttie bus
parking operators. The first competitive advantage is the
City’s preferred intercepting location at the front of the
terminal. Secondly, SMART has radio messages and signs
notifying potential customers of the locations of its lots,
and the availability of parking spaces. And third, the
distinctively-painted SMART buses waiting in front of the
lower level of the terminal have significant advertising
value.
From a pricing point of view, the differences between
SMART and the private operators are small. The signage
inside the terminal is not viewed as a significant factor
favoring SMART.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.