Petition for Writ of Certiorari — Zimomra v. Alamo Rent-A-Car, Inc.
Supreme Court brief1997
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OrFiuce UF THE CLERK
In The
Supreme Court of the United States
oe
October Term, 1996
DAVID CHARLES ZIMOMRA, On Behalf Of Himself And All
Others Similarly Situated,
Petitioner,
vs.
ALAMO RENT-A-CAR, INC., AVIS, INC., BUDGET RENT
A CAR CORPORATION, DOLLAR RENT-A-CAR SYSTEMS,
INC., HERTZ CORPORATION, NATIONAL CAR RENTAL
SYSTEM, INC., THRIFTY RENT-A-CAR SYSTEMS, INC.,
VALUE RENT-A-CAR, INC., ENTERPRISE LEASING CO.
OF DENVER, NATIONAL CAR RENTAL, RESORT RENT-
A-CAR, INC., STEAMBOAT SPRINGS RENTAL AND
LEASING, INC., TRYND, INC., TIARA ENTERPRISES,
INC.,
Respondents.
On Petition for Writ of Certiorari to the United States
Court of Appeals for the Tenth Circuit
PETITION FOR WRIT OF CERTIORARI
DAVID BOIES GERALD BADER
BOIES & McINNIS Counsel of Record
5408 Port Royal Road STEVEN M. FEDER
Springfield, Virginia22151 BADER, VILLANUEVA & FEDER
(703) 764-8700 1660 Wynkoop Street
Suite 1100
Denver, Colorado 80202
(303) 534-1700
Attorneys for Petitioner
utz
eat (800) 3 APPEAL « (800) 5 APPEAL « (800) BRIEF 21 L
i
QUESTIONS PRESENTED
1. Is the enactment of a municipal ordinance adopting a
price-fixing agreement among private competitors sufficient in
and of itself to confer antitrust immunity on private parties under
the state action immunity doctrine?
2. Is a private party seeking immunity for price-fixing under
the state action doctrine required to demonstrate that the state
has clearly contemplated and intended the displacement of price
competition in the particular market in which the price-fixing
occurred?
3. Does the Noerr-Pennington doctrine immunize a price-
fixing agreement among private parties when those private
parties would have carried out the price-fixing agreement
irrespective of whether the municipal ordinance they were
lobbying for was ultimately enacted?
4. Should courts apply both the clear articulation and active
supervision prongs of the state action doctrine to a municipal
ordinance which regulates private parties and purports to
immunize a private price-fixing agreement?
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TABLE OF CONTENTS
Page
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Table of Citations ...0:00<4ssnueawen ene eeeas ili
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Statement Of JurisGicMOW 2c cccessedcnssesecvsess l
Statutory Provisions Involved ..................08. l
Statement of the Case «ssssdeuvuaanseeaenes veins l
A. Background of the Case ......ciccccecseess 2
B. The Proceedings Belew .....cccsvcsvsscce. 4
C. Hesential POs «6 sccckaceseukavay wears ece 5
Reasons for Granting the Writ .......cccsccccscees 6
I. The Petition Should Be Granted Because The
Opinion Below Conflicts With This Court’s Prior
Rulings On The Importance Of Both Prongs Of
The State Action Immunity Test. ............ 6
Il. The Petition Should Be Granted Because The
Opinion Below Fundamentally Misinterprets This
Court’s Holding In Town of Hallie. .......... 9
il
Contents
Page
III. The Petition Should Be Granted Because The
Opinion Below Conflicts With This Court’s Most
Recent State Action Immunity Decision. ..... 13
IV. The Petition Should Be Granted Because The
Opinion Below Conflicts With This Court’s Prior
Rulings On The “Clear Articulation And
Affirmative Expression” Prong Of The State
I SE, vctevecveesiaeendses 15
VY. The Petition Should Be Granted Because The
Opinion Below Mistakenly Applies The Noerr-
Pennington Doctrine To This Case. .......... 20
a wb ene ee-e 21
TABLE OF CITATIONS
Cases Cited:
California Retail Liquor Dealers Assn. v. Midcal
Aluminum, Inc., 445 U.S. 97 (1980) ...9, 10, 11, 12, 13, 14
City of Columbia v. Omni Outdoor Advertising, Inc., 499
ce ease abevevedess €eéseees 15
City of Lafayette v. Louisiana Power & Light Co., 435
ee 6, 7, 8, 15
FTC v. Ticor Title Insurance Co., 504 U.S. 621 (1992)
ee ibe eeeeesee 7, 13, 14, 19, 22
iv
Contents
Page
Hoover v. Ronwin, 466 U.S. 558 (1984) ............ 8
Parker v. Brown, 317 U.S. 341 (1943) .............. 2
Patrick v. Burget, 486 U.S. 94 (1988) .............. 14
Southern Motor Carriers Rate Conference, Inc. v. United
States, 471 U.S. 48 (1985) ........ cece 10, 11, 12, 13
Town of Hallie v. City of Eau Claire, 471 U.S 34 (1985)
Pe Oye ren PE eee ee 8,9, 10, 11, 12, 13, 14
Statutes Cited:
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Colorado Revised Statutes:
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Bt, ORT ETET CUTE TOOT TET CTE ere 16, 17
owed at ell
Contents
Rule Cited:
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APPENDIX
Appendix A — Opinion of the United States Court of
Appeals for the Tenth Circuit Filed April 22, 1997 .
Appendix B — Order of the United States District Court
for the District of Colorado Filed February 23, 1996
Appendix C — Excerpts of Ordinance 863, Series 1993,
City and County of Denver, Colorado ............
Appendix D — Excerpts from Colorado Revised Statutes
§§ 29-3-101, et seg. (County and Municipality
Development Revenue Bonds) ..................
Appendix E — Excerpts from Colorado Revised Statutes
§§ 41-3-101, et seg. and 41-4-101, et seg. (Public
PINES. ..cs-a.'k a hws danse mika caeeeee
Page
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27a
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Petitioner David Charles Zimomra respectfully requests that
a writ of certiorary be issued to review the judgement of the United
States Court of Appeals for the Tenth Circuit in this case.
OPINIONS BELOW
The opinion of the United States Court of Appeals for the Tenth
Circuit is reported at Zimomra v. Alamo Rent-A-Car, Inc., 111 F.3d
1495 (10th Cir. 1997) (App. A). The opinion of the United States
District Court for the District of Colorado in Zimomra v. Alamo
Rent-A-Car, Inc., No. 94-S-2148 (D.Colo. Feb. 23, 1996) is
unpublished (App. B).
STATEMENT OF JURISDICTION
The judgement of the United States Court of Appeals for the
Tenth Circuit was entered on April 22, 1997.
The jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
STATUTORY PROVISIONS INVOLVED
Ordinance No. 863 Series 1993, City and County of Denver,
Colorado (App. C);
Colorado Revised Statutes §§ 29-3-101, et seg. (App. D);
Colorado Revised Statutes §§ 41-3-101, et seg. (App. E);
Colorado Revised Statutes §§ 41-4-101, et seq. (App. E).
STATEMENT OF THE CASE
The fundamental issue in this petition is whether a private
antitrust defendant must satisfy both prongs of the state action
2
immunity test as established by this Court in Parker v. Brown, 317
U.S. 341 (1943), and its progeny. This issue arises in the context
of a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) filed by
defendants, granted by the United States District Court for the
District of Colorado (“District Court”) prior to the taking of any
discovery, and affirmed by the United States Court of Appeals for
the Tenth Circuit (“Court of Appeals”).
A. Background of the Case
The material facts in this case are straightforward and, for
purposes of this petition, uncontroverted.
In the late 1980’s, the City of Denver decided to replace
Stapleton International Airport (“Stapleton”) with the larger Denver
International Airport (“DIA”). Faced with the prospect of having
to pay for new facilities at DIA, the defendant rental car companies
met privately among themselves, exchanged pricing and other
business information, and discussed ways to finance their new
facilities. As a result of these meetings, and to avoid competing
with each other over how much of the cost of their new facilities
would be passed on to their customers, the defendants agreed among
themselves to add a uniform $2.98 per day surcharge to each of
their respective customers’ bills. Neither the City of Denver nor
the State of Colorado participated in, or even was aware of, these
discussions or the resulting agreement to add the $2.98 per day
surcharge. '
After having been advised by counsel that the agreement they
had entered into was a per se violation of the Sherman Antitrust
1. Indeed, officials of the City of Denver have repeatedly, uniformly,
and unequivocally stated, both before and after passage of Denver Ordinance
863, that the surcharge was the result of a private, voluntary agreement among
the defendants. Recognizing the obvious antitrust implications of defendants’
price fixing agreement, the City insisted upon, and ultimately obtained,
complete indemnity by the defendants for all costs and liabilities, including
attorney fees, in connection with any antitrust claims relating to the Ordinance.
3
Act, the defendants then sought, and ultimately obtained, passage
of Denver Ordinance 863 (the “Ordinance”) in an effort to
retroactively immunize their anticompetitive conduct, including
their agreement to impose the uniform surcharge on their customers.
The Ordinance was drafted by defendants and their counsel and
set the initial amount of the surcharge at the exact amount that the
defendants had privately agreed among themselves to charge. Prior
to the enactment of the Ordinance, the City of Denver never
conducted any study, performed any analysis, or made any finding
relating to the reasonableness of the surcharge or its amount.
Indeed, other than enacting the Ordinance, the City of Denver did
absolutely nothing to actively supervise defendants’ conduct either
before or after the Ordinance went into effect, but instead merely
passively adopted the private price fixing arrangement previously
entered into by the defendants.
Though the Ordinance contains a provision by which future
changes in the amount of the surcharge are determined, the City of
Denver has absolutely no power or authority under the Ordinance
to change the amount of the surcharge no matter how high or
unreasonable it may become. Rather, the defendants themselves
have exercised, and continue to exercise, control over the amount
of the surcharge in a number of direct and indirect ways. First, of
course, the initial amount of the surcharge was determined entirely
by a private agreement among the defendants without any oversight
or control by the City of Denver. Second, the ultimate power to
change the amount of the surcharge rests in the hands of a consultant
(App. C at 50a-52a) chosen by the defendants themselves and who
reports to a managing committee (App. C at 45a-46a) consisting
entirely of the defendants? (no City of Denver official even has the
2. This managing committee is granted broad authority under the
ordinance in addition to the power oversee the consultant, including the power
to: (a) direct the investment of the proceeds of the surcharge; (b) review
“confidential” pricing and other business information of competing
defendants; (c) oversee the expenditure of the $65,000,000 in bond proceeds;
(d) replace or substitute members of the committee; and (e) retain legal
counsel, financial consultants, and other service providers.]
4
authority under the Ordinance to attend, let alone actively participate
in, the meetings of this managing committee). Third, the guidelines
used by defendants’ consultant to adjust the amount of the surcharge
include a provision for “Administrative Expenses” (App. C at 41a-
43a) over which the defendants have broad discretion.’ By
increasing the amount of “Administrative Expenses” incurred (such
as by shifting otherwise ordinary business expenses into the
Administrative Expense accounts), defendants can trigger an
increase in the amount of the surcharge, again without any
supervision or control by the City of Denver. (App. C at 50a). Fourth,
the consultant is required by the Ordinance to consult with the
defendant-controlled managing committee before making a
proposal concerning any changes to the amount of the surcharge.
(App. C at 51a). The consultant is also required under the Ordinance
to “tak[e] into account as deemed appropriate” any objections that
any of the defendants have to any changes in the amount of the
surcharge. (App. C at 50a-52a).
B. The Proceedings Below
In July 1994, petitioner David C. Zimomra filed suit in the
United States District Court for the Eastern District of Virginia
(the “Virginia Court”) against eight rental car companies operating
at Stapleton Airport for damages and injunctive relief under the
Sherman Antitrust Act and various state causes of action. The
Virginia Court transferred the case to the United States District
Court for the District of Colorado (the “Colorado District Court’)
in September 1994. In November 1994, petitioner filed a
substantially similar complaint against six additional rental car
3. The defendants’ manipulation of this Administrative Expense
provision is significant. Since 1993, at least $5,000,000 (and possibly much
more) in proceeds from the surcharge have been spent on Administrative
Expenses. Moreover, because the definition of Administrative Expenses under
the Ordinance is so broad, defendants can convert what would otherwise be
ordinary business expenses into costs paid directly by their customers through
the imposition of the surcharge.
5
companies and the Colorado District Court consolidated both
actions. Concluding that defendants’ conduct was immune from
antitrust scrutiny under the state action doctrine, the Colorado
District Court dismissed plaintiff’s complaints pursuant to Fed. R.
Civ. P. 12(b)(6) against all but one of the defendants in February
1996 and against the remaining defendant in April 1996. The
Colorado District Court did not permit any discovery, hold an
evidentiary hearing, or permit oral argument prior to dismissing
the case. Petitioner timely filed an appeal to the United States Court
of Appeals for the Tenth Circuit. The parties submitted their
respective appellate briefs in the latter part of 1996 and oral
argument was made in March 1997. The Tenth Circuit issued a
written opinion affirming the judgement of the Colorado District
Court on April 22, 1997. Petitioner timely filed this writ of certiorari
seeking review the Court of Appeals decision.
C. Essential Facts
This case ultimately rests on five essential and uncontested
facts. First, the defendant rental car companies privately met among
themselves, exchanged pricing information, and agreed to impose
a uniform surcharge on their respective customers without the
participation or knowledge of the City of Denver. Second, defendant
rental car companies agreed among themselves that the initial
amount of the surcharge would be $2.98 per day, again without the
participation or knowledge of the City of Denver. Third, the
defendant rental car companies and their consultant are private
parties who exercise at least some degree of control over future
increases in the amount of the surcharge and how the proceeds of
the surcharge are spent. Fourth, subsequent to defendants agreement
to impose the surcharge, the City of Denver enacted Ordinance
863 which “compels” defendants to charge and collect the surcharge
from their customers. Fifth, the City of Denver has not taken a
single concrete step to actively supervise defendants’ conduct other
than the enactment of the Ordinance.
6
In sum, this case involves a classic horizontal price-fixing
scheme wholly orchestrated by defendants to shift the entire cost
of their new facilities (and then some) onto the traveling public to
avoid competing with each other over how much of such costs
would be passed on to their customers and how much absorbed as
a business expense. As the court below and defendants themselves
concede, there is no doubt that, in the absence of state action
immunity, defendants conduct would constitute a clear per se
violation of the Sherman Antitrust Act.
This case thus turns on the answer to a single simple question:
Is the mere enactment of Ordinance 863 sufficient in and of
itself to confer antitrust immunity on the defendants and thereby
allow this price-fixing arrangement among private competitors to
escape antitrust scrutiny?
REASONS FOR GRANTING THE WRIT
I.
THE PETITION SHOULD BE GRANTED BECAUSE
THE OPINION BELOW CONFLICTS WITH THIS
COURT’S PRIOR RULINGS ON THE IMPORTANCE OF
BOTH PRONGS OF THE STATE ACTION IMMUNITY
TEST.
In a long and unbroken chain of state action cases, this Court
has made clear that private parties seeking immunity for violations
of the federal antitrust laws must satisfy two requirements. First,
the statute or ordinance purportedly conferring immunity must be
enacted pursuant to a clearly articulated and affirmatively expressed
State policy to displace competition in the relevant market. Second,
the city or state must actively supervise the private parties’ anti-
competitive conduct. City of Lafayette v. Louisiana Power & Light
Co., 435 U.S. 389, 410 (1978) (“Lafayette”) (Private parties seeking
7
immunity must show that the anti-competitive restraint was “clearly
articulated and affirmatively expressed as state policy, and that the
state’s policy was actively supervised”). FTC v. Ticor Title Insurance
Co., 504 U.S. 621, 636 (1992).
In a striking departure from this Court’s well settled precedent,
the court below eliminated the second prong of the state action
immunity test by holding that active supervision is not required in
this case “because there is little, if any, risk of defendants doing
anything other than complying with the City and County’s
mandate.” (App. A at 10a). But as this Court has uniformly
emphasized, the fact that private parties are purportedly compelled
to comply with acity or county’s mandate is only the beginning of
the state action analysis, not the end of it. FTC v. Ticor Title
Insurance Co., 504 U.S. 621, 637 (1992)
As this Court has repeatedly and without exception held, the
anti-competitive conduct of private parties can only escape antitrust
scrutiny if both prongs of the state action test are satisfied. Indeed,
in the nearly twenty years since the two-prong test was first
established in Lafayette, this Court has decided no fewer than five
state action cases involving private parties, and every one them
required both clear articulation and active supervision:
California Retail Liquor Dealers Assn. v.
Midcal Aluminum, Inc, 445 U.S. 97, 105
(1980) (“Midcal’) (This Court’s state action
“decisions establish two standards for
antitrust immunity under Parker v. Brown.
First, the challenged restraint must be ‘one
clearly articulated and affirmatively
expressed as state policy’; second the policy
must be ‘actively supervised’ ”).
Southern Motor Carriers Rate Conference,
Inc. v. U.S., 471 U.S. 48, 57 (1985)
8
(“Southern Motor Carriers”) (“We set forth
a two prong test for determining whether
‘ state regulation of private parties is shielded
from the federal antitrust laws’’).
321 Liquor Corp. v. Duffy, 479 U.S. 335, 343
(1986) (“Our decisions have established a
two prong test for determining immunity
under Parker v. Brown”).
Patrick v. Burget, 486 U.S. 94, 100 (1988)
(“Patrick”) (This Court has “established a
rigorous two-pronged test to determine
whether anticompetitive conduct engaged in
by private parties should be deemed state
action and thus shielded from the antitrust
laws”).
FTC v. Ticor Title Insurance Co., 504 U.S.
621, 636 (1992) (“Ticor”) (This Court’s
“insistence on real compliance with both
parts of the Midcal test will serve to make
clear that the state is responsible for the price
fixing it has sanctioned”).
Moreover, even in this Court’s decisions relating to conduct
exclusively engaged in by state and local governmental units,
the applicability of the two-prong test to private parties has not
been questioned. Hoover v. Ronwin, 466 U.S. 558, 568 (1984).
Town of Hallie v. City of Eau Claire, 471 U.S 34, 46 (1985)
(“Town of Hallie’).
In sum, the lower court’s failure to apply both prongs of the
State action immunity test to this case, where the involvement of
private parties is clear and pervasive, disregards every state action
decision of this Court since Lafayette. If this opinion is allowed to
EE
rr
9
stand, the active supervision requirement — heretofore considered
essential to the effective enforcement of the nation’s antitrust laws
— will be substantially weakened. Indeed, at least in the Tenth
Circuit, the active supervision requirement will disappear altogether
in cases involving private price-fixing arrangements which have
been adopted, and purportedly immunized, by municipal ordinance.
Il.
THE PETITION SHOULD BE GRANTED BECAUSE
THE OPINION BELOW FUNDAMENTALLY
MISINTERPRETS THIS COURT’S HOLDING IN TOWN OF
HALLIE.,
As discussed above, this Court has established a black letter
rule governing whether the two-prong Midcal test or the single-
prong Town of Hallie test applies to a particular case: if private
parties are involved, courts must apply both prongs of the state
action doctrine; if the case involves only unilateral municipal action
| without any participation of, or regulation over, private parties,
: courts need only examine whether the state has a clearly articulated
and affirmatively expressed policy to replace competition with
regulation in the relevant market.
The opinion below has now rejected this rule. In its place, the
court below offers a new rule of its own creation: active supervision
of private price-fixing agreements which have been purportedly
immunized by municipal ordinance is not required where there is
“little, if any, risk of defendants doing anything other than
complying with the [municipality’s] mandate.” (App. A at 10a).
An even more troubling corollary to this new rule is that active
supervision of private parties is never required when an antitrust
plaintiff could have named a municipality as a defendant in addition
to the private parties that were named. (App. A at 10a-12a).
The court below arrives at these startling new rules by
Lissa
10
improperly extending this Court’s holding in Town of Hallie (where
there was no involvement by private parties whatsoever) to every
case involving a municipal ordinance purporting to immunize not
only anticompetitive conduct by the municipality itself (as was the
case in Town of Hallie), but conduct of private parties as well.
Critical to the lower court’s decision was the erroneous (and
chronologically impossible) proposition that for every case
involving municipalities, Town of Hallie “does away with the active
supervision prong” (App. A at 24a) established in Midal and
reaffirmed in numerous Supreme Court cases subsequent to Town
of Hallie, as well as the Southern Motor Carriers case decided the
very same day.
Due to its critical role in the opinion below, this court’s holding
in Town of Hallie merits close examination. In Town of Hallie, this
Court addressed the issue of whether a municipality’s unilateral
anti-competitive conduct must be supervised by the state in order
for the municipality to receive antitrust immunity. The case was
brought by the Town of Hallie and other Wisconsin townships
against the City of Eau Claire alleging that Eau Claire’s refusal to
provide sewer services to the townships was a violation of the
Sherman Antitrust Act. Finding that the State of Wisconsin had a
clear and affirmatively expressed policy permitting Eau Claire to
refuse to provide sewer services to the townships, this Court went
on to consider the active supervision prong of the state action
doctrine. Reasoning that it would be superfluous to require the state
to supervise a municipality’s unilateral conduct when the state had
already implicitly approved of the municipality’s activities by
passing a state law permitting it to do what it did, this Court held
that municipalities acting unilaterally and without any involvement
of private parties only had to satisfy the first prong of the state
action doctrine. Crucial to this Court’s decision was the fact that
there was no danger that Eau Claire was “involved in a private
price-fixing arrangement” or that private parties were advancing
their own interests rather than the interests of the public. (Town of
Hallie at 47).
11
The lower court’s application of the Town of Halliz single-
prong test to the present case is fundamentally flawed for at least
three important reasons. First, the Town of Hallie decision itself
makes clear that its holding applies only to municipalities (and
possibly other political subdivisions), not to private parties. By
reaffirming this Court’s holdings in Midcal and Southern Motor
Carriers, the Town of Hallie Court expressly recognized that where
private parties are involved, “active supervision must be shown”.
(Id. at 46). In the present case, it can scarcely be denied that the
rental car defendants are private parties and that they were involved
in extensive anticompetitive conduct.‘ The defendants collectively
determined the initial amount of the surcharge; the defendants met,
and still meet, privately among themselves and exchange pricing
and other business information; the defendants’ consultant, not a
city employee, has the power to increase the amount of the
surcharge; a managing committee consisting entirely of the
defendants is granted broad oversight powers under the Ordinance;
the defendants collectively decided to separately itemize the
surcharge on their customers bills after the Ordinance was passed.
In short, to characterize the defendants surcharge scheme as
- anything other than “essentially a private price-fixing arrangement”,
and to characterize the Ordinance as anything other than a “gauzy
cloak of state involvement”, is to exalt form and deny substance.
ee ee
Second, this Court’s decision in Southern Motor Carriers
(issued the very same day as Town of Hallie) unequivocally held
that whenever private parties seek to shield themselves from
antitrust scrutiny they must satisfy both prongs of the state action
test. (Southern Motor Carriers at 57). Moreover, even if private
parties play no role whatsoever in determining “price or rate
structures” (App. A at 9a), the active supervision prong must still
4. The court below explicitly recognized that the defendants participated
in setting future adjustments in the amount of the surcharge through the
“interaction of a ‘Managing Committee’, which is composed of a
representative from each car rental company” and the defendants’ consultant.
(App. A at 3a).
12
be applied. All that is required to trigger the application of the
active supervision prong is that a city regulate private parties. It
does not make any difference how much “discretionary authority”
defendants have or whether the city is the “effective decision maker”
(App. A at 9a) — the proper test to apply whenever a city regulates
private parties is the two prong Midcal test, not the single prong
Town of Hallie test applied by the court below:
We set forth a two-pronged test for
determining whether state regulation of
private parties is shielded from the federal
antitrust laws. First, the challenged restraint
must be one clearly articulated and
affirmatively expressed as state policy.
Second, the state must supervise actively any
private anticompetitive conduct.
(Emphasis added) (internal quotation marks and citations
omitted) (Southern Motor Carriers at 57).
Third, the lower court’s reasoning that it should apply the single
prong Town of Hallie test to this case because that is the test it
would have applied to the City of Denver if petitioner had sued the
City is fatally flawed. As the court recognizes (albeit in support of
the contrary conclusion) (App. A at 1 1a), the identity of the named
defendants is, under most circumstances, immaterial for a
determination as to which test to apply; what is important is whether
or not private parties are involved. Thus, even if petitioner had sued
the City of Denver, the proper test to apply to both the rental car
defendants and the City would be the Midcal two-prong test because
there is clearly private involvement in the surcharge regime and
the Ordinance clearly regulates private parties. (“We set forth a
two-pronged test for determining whether state regulation of private
parties is shielded from the federal antitrust laws.” (Southern Motor
Carriers at 57). Moreover, even if the proper test to apply to a
municipal defendant is the single-prong Town of Hallie test, there
13
is nothing necessarily “illogical” (App. A at 11a) about applying a
different test to a private defendant — courts and legislatures
routinely provide cities and other governmental units with powers,
privileges, and immunities that are not available to private parties.
In short, the court below was led to its “anomalous result”
(App. A at 26a) by fundamentally misinterpreting this Court's
holding in Town of Hallie, ignoring the plain meaning of every
Supreme Court state action case dealing with private parties, and
reducing its analysis of the present case to the “purely formalistic
inquiry” (Town of Hallie at 39) explicitly rejected by this Court in
that decision (though even a purely formalistic inquiry would have
revealed that the Denver Ordinance regulated private parties and
that, therefore, the proper test to apply was the two-prong Midcal
test).
III.
THE PETITION SHOULD BE GRANTED BECAUSE
THE OPINION BELOW CONFLICTS WITH THIS
COURT’S MOST RECENT STATE ACTION IMMUNITY
DECISION.
The opinion below reveals a remarkable disregard for this
Court’s most recent state action case — the 1992 decision in Ticor.
Inexplicably, the opinion of the court below did not even mention
this decision (indeed, the concurring opinion cites Ticor only to
cast doubt on the normative wisdom of the court’s decision).
Though it is understandable that the court below found little in
Ticor to support its opinion, the applicability and importance to
the present case of this Court’s holding in Ticor is obvious and
overwhelming. In particular, Ticor reaffirms three bedrock
principles of the state action doctrine that, had they been faithfully
applied by the lower court to the present case, would have inexorably
led to the contrary result.
14
First, Ticor reaffirms the long-standing rule of this Court that
“where private parties participate in a price-fixing regime”, the two-
prong Midcal test, not the single-prong Town of Hallie test, is
applied (Ticor at 633). That the rental car defendants “participated”
in the “price-fixing regime” challenged here is, of course,
undeniable.
Second, Ticor reaffirmed and solidified this Court’s unanimous
holding in Patrick that a city or state must not only possess the
power to actively supervise the anticompetitive conduct of private
parties, but it must as factual matter exercise that power. (/d. at
634) (“In the absence of active supervision in fact, there can be no
State action immunity for what were otherwise private price-fixing
arrangements”) (emphasis added) (/d. at 638). Because the court
below found that the mere passage of the Ordinance was sufficient
in itself to immunize defendants’ price-fixing agreement, it did not
even look at what the City of Denver actually did to exercise
whatever power the City supposedly possessed under the Ordinance.
Indeed, because petitioner was denied any discovery whatsoever
in the proceedings below, the only “evidence” of active supervision
the court below could have examined was the judicially noticed
Ordinance itself.
Third, this Court in Jicor made clear that state action immunity
is disfavored and must be construed narrowly. (/d. at 635-636).
Had the court below embraced this Court’s admonition against
broadly interpreting state action immunity, it would have been far
less eager to expand the single-prong Town of Hallie test to a case
that so clearly involves private parties.
15
IV.
THE PETITION SHOULD BE GRANTED BECAUSE
THE OPINION BELOW CONFLICTS WITH THIS
COURT’S PRIOR RULINGS ON THE “CLEAR
ARTICULATION AND AFFIRMATIVE EXPRESSION”
PRONG OF THE STATE ACTION IMMUNITY TEST.
This Court has made clear that a municipal ordinance
purportedly immunizing a price-fixing agreement among private
competitors must be enacted pursuant to a clearly articulated and
affirmatively expressed state policy to displace competition in the
relevant market. (Southern Motor Carriers at 64). Although it is
not required that a state statute specifically state that competition
may be displaced in the particular market, the challenged conduct
must be clearly contemplated by the state (Lafayette at 415), and
be the clearly foreseeable result of the state authorization. City of
Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 373
(1991).
Applying this standard to the present case, the respondents
must show that the state of Colorado clearly contemplated that the
rates that rental car companies charge their customers would be
displaced at least in part by municipal regulation, and that the
municipal adoption of a private price-setting agreement among
competitors was the clearly foreseeable result of some state statute.
The court below purportedly found this requisite state
authorization in several provisions of the Colorado Revised Statutes.
The first provision cited by the court below is C.R.S. 41-3-102,
(App. E at 65a) which “provides cities, towns, and counties in
Colorado with the right to create ‘airport authorities’ for the ‘purpose
of acquiring and improving airports, .. . and related facilities.’ ”
(App. A at 13a). Though clearly authorizing counties and cities to
acquire and improve airports and related facilities, this provision
says absolutely nothing about authorizing municipalities to set the
16
rates charged by vendors such as rental car companies at those
airports.
The second provision cited by the court below, C.R.S. 41-3-
106(e), (App. E at 65a) “provides airport authorities in Colorado
with the power to ‘borrow money and .. . issue bonds payable in
whole or in part from the income of the authority and otherwise
secured to the extent provided by law.’” (App. at 13a). At first
glance this provision may appear to authorize the City of Denver
to enact the Ordinance and issue the bonds at the heart of this case
(and that is precisely how the court below read it). However, a
close reading of Article 3 together with a reading of the Ordinance
clearly shows that the bonds at issue in this case are altogether
different than the bonds authorized by this provision. The bonds at
issue in this litigation are fully taxable Special Facilities Bonds
whereas the bonds authorized under Article 3 specifically provide
that “bonds issued under this article and the income therefrom shall
be free and exempt from taxation by the state.” C.R.S. 41-3-107.
Thus, it is a legal impossibility that the bond ordinance at issue in
this case was authorized by the statute cited by the court below.
Moreover, even if the bonds were authorized under Article 3, there
is nothing in that provision that remotely indicates that the State of
Colorado intended that rental car prices would be set by municipal
ordinance.
The third provision cited by the court below (App. At at 13a)
declares that various airport activities engaged in by airport
authorities are deemed “public governmental functions, exercised
for a public purpose, and matters of public necessity.” C.R.S. 41-
4-101. (App. E at 68a). Again, there is absolutely nothing in this
provision expressing (clearly, affirmatively, or otherwise) any
intention by the State of Colorado to displace competition in the
rates that airport vendors charge their customers.
The fourth provision, C.R.S. 41-4-106, (App. E at 69a) is the
provision most heavily relied on by the court below as authorizing
the anticompetitive conduct at issue in this case:
17
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, when acting singly,
or by agreement, when acting jointly with any
| other county, city and county, city, or town,
| to regulate the receipt, deposit, and removal
. and the embarkation of passengers or
7 property to or from such airports; to exact
| and require charges, fees, and tolls, together
with a lien to enforce their payment; to lease
or assign for operation such space or area,
appurtenances, appliances, or other
conveniences necessary or useful in
connection therewith; to own and operate
aircraft; to employ pilots; to provide rules and
regulations governing the use of such airport
and facilities and the use of other property
and means of transportation within or over
said airport, landing field, and navigation
facilities; to perform any duties necessary or
consistent for the regulation of air traffic; to
enter into contracts or otherwise cooperate
with the federal government or other public
or private agencies; and to exercise such
powers as may be required or consistent in
the promotion of aeronautics and the
furtherance of commerce and navigation by
air.
Although the above provision clearly grants to the City and
County of Denver the power “to exact and require charges, fees,
and tolls”, it is clear from the second part of that phrase (“together
with a lien to enforce their payment”) that what the State of
Colorado was authorizing was the county’s charging of “charges,
18
fees, and tolls” to those who use airport facilities. It is one thing to
charge the taxicabs, buses, and other service providers at airports
fees and tolls for their use of airport facilities. It is another thing
altogether to set by municipal ordinance the prices that those service
providers in turn charge their customers. There is simply nothing
in this provision that indicates that the State of Colorado “clearly
contemplated and intended” that the prices that rental car companies
charge their customers would be set by anything other than
competition in an open market. To interpret this provision as broadly
as the court below did is to eliminate the clear articulation and
affirmative expression prong altogether. Under the lower court’s
reading of this provision, the rental car companies would be free to
seek municipal ordinances blessing all manner of private
anticompetitive restraints, including, for example, minimum rates
for certain types of cars and collectively set refueling charges.
Indeed, competitors in every one of the scores of industries that do
business at any of Colorado’s airports would be “clearly and
affirmatively” authorized to seek whatever type of anticompetive
price restraints their political clout would enable them to obtain
from a municipality.
The court below also cites several provisions of the State of
Colorado County and Municipality Revenue Bond Act, C.R.S. 29-
3-101, et seq., (App. D) (the “Bond Act”) as supplying a clearly
articulated and affirmatively expressed state policy permitting the
anticompetitive conduct at issue in this case. But again, the bonds
that the Bond Act authorizes are tax exempt bonds (C.R.S. 29-3-
106(5)), (App. E at 62a-63a) not the fully taxable Special Facilities
Bonds at issue in this case. And again, to read the Bond Act as
broadly as the court below did would eviscerate the clear articulation
prong: in addition to the sweeping scope of the language cited by
the court below (App. A at 14a), the Bond Act would also authorize
anticompetitive municipal ordinances relating to “hospital care”,
“residential housing”, “sewage”, “recreation activities”,
“conventions”, “trade shows”, “storage or training facilities”,
“sports and recreation facilities”, and “research, product testing,
19
and administrative facilities.” (App. D at 55a-56a). If the lower
court’s reading of this provision is correct, the State of Colorado
through the Bond Act has clearly articulated its intent to displace
price competition with regulation in each of these broad areas of
commerce. Such an interpretation would create precisely the type
of “attractive nuisance in the economic sphere” that motivated this
Court in Ticor to narrowly construe state action immunity. (Ticor
at 637).
But perhaps the clearest indication that the State of Colorado
did not intend for the Bond Act to provide broad authority for
municipalities to sanction price-fixing of consumer prices can be
found in the Act at C.R.S. 29-3-114 (App. D at 63a-64a):
Prior to the issuance of any bonds authorized
by this article, the county or municipality
shall enter into a financing agreement with
respect to the project with a user providing
for payment to the county or municipality . . .
and to pay the costs of maintaining the
project in good repair and keeping it properly
insured, unless the financing agreement
obligates the user to pay for the maintenance
of and insurance on the project.
(Emphasis added). It is clear from this provision that “user”
means the company that leases or otherwise occupies the project
financed by the revenue bonds, not the customers of that
company. Indeed, notwithstanding defendants’ attempts
throughout this litigation to characterize this price-fixing regime
as just another garden variety bond financing, respondents have
not brought to the attention of either the District court or the
court below a single example of a similar bond ordinance that
requires the customers of the beneficiaries to pay the principal
and interest on the bonds (much less to be forced to do so as a
result of a private agreement among supposed competitors).
20
In short, there is nothing in any of the state statutes cited by
the court below that suggests, let alone clearly articulates and
affirmatively expresses, any intention by the State of Colorado to
displace price competition as the means by which rental car rates
are determined or even to subject those rates to regulation.
V.
THE PETITION SHOULD BE GRANTED BECAUSE
THE OPINION BELOW MISTAKENLY APPLIES THE
NOERR-PENNINGTON DOCTRINE TO THIS CASE.
The Noerr-Pennington doctrine has nothing to do with this
case. As petitioner has maintained throughout this litigation, the
First Amendment right of defendants to lobby the City of Denver
has never been challenged. What petitioner has challenged is the
private agreement among the rental car defendants to impose an
anticompetitive surcharge on the traveling public.
As the evidence in this case will clearly demonstrate,
defendants met privately among themselves, shared pricing and
other business information, and agreed to collectively impose a
$2.98 per day surcharge on each of their customers. As the evidence
will further show, defendants entered into this arrangement and
agreed to carry it out prior to, and entirely independent of, any
decision to seek or lobby for a municipal ordinance. Moreover,
even after defendants started lobbying for the Ordinance, they
intended to go forward with the surcharge even if the Ordinance
was ultimately not enacted. While this decision appears ill advised
from an antitrust perspective, defendants had some powerful reasons
to proceed with their surcharge scheme even in the absence of an
ordinance immunizing their conduct. First, defendants believed (and
argued in the proceedings below), that the surcharge was not
anticompetitive, and therefore not illegal even without the
Ordinance because the prices to which the surcharge were added
were supposedly set by competition. (While the District Court based
21
its decision in part on its acceptance of this argument, the court
below did not address it). Second, the enormous amount of money
generated by surcharge was, in defendants view, worth whatever
antitrust risk it entailed.
Even if defendants did not intend to proceed with the imposition
of the surcharge in the absence of the Ordinance, the Noerr-
Pennington doctrine is still irrelevant to this case. Either the state
action doctrine immunizes the surcharge regime at issue in this
litigation or it does not. If it does, defendants actions are beyond
the reach of the antitrust laws, and there is no need for any further
protection under Noerr-Penningion. If it does not (because either
the Ordinance was not enacted pursuant to a clearly articulated
and affirmatively expressed state policy to displace competition or
the City did not actively supervise), the fact that defendants lobbied
for the Ordinance does not somehow bring the regime back within
the protection of the state action doctrine. Either way, the Noerr-
Pennington doctrine adds nothing to the analysis of the issues before
this Court.
CONCLUSION
In a long line of state action cases, this Court has carefully
balanced the parochial interests of local governments with the
national interest in free and open markets as reflected in the federal
antitrust laws. Critical to the striking of that balance has been this
Court’s insistence on real compliance with both prongs of the state
action doctrine whenever private parties have sought anticompetitive
bargains through their influence on the workings of local
government. That balance has been fundamentally altered by the
opinion of the court below.
If allowed to stand, the opinion below would greatly expand
the ability of private parties to obtain antitrust immunity for
anticompetitive conduct under the state action doctrine and severely
hamper the enforcement of this nation’s antitrust laws. The
combination of the lower court’s elimination of the active
22
supervision prong for municipally blessed private price-fixing
agreements together with its expansive reading of the clear
articulation prong could produce a virtual explosion of wholly
unsupervised anticompetitive county and municipal ordinances and
regulations.
There are over 60,000 local governmental units in the United
States, all of which have been granted some authority by the states
to regulate certain aspects of the economy. If the opinion below
becomes the law of the land and not just the law of the Tenth Circuit
as it is today, those local governmental units will be besieged by
powerful interests seeking non-market-based advantages at the
expense of their competitors, consumers, and the economy as a
whole. And as the judicial barriers to these anticompetitive
arrangements are eroded by decisions like the opinion below, local
and regional economies will be increasingly dominated by
government blessed price-fixing arrangements. Competing gas
stations will get together and agree to collectively impose a ten-
cent-per-gallon surcharge to offset the costs of maintaining their
underground tanks. Restaurants will get together and collectively
impose a $1.00 per customer seating charge to offset the costs of
complying with local health regulations. Landlords will get together
and agree to collectively impose a $10.00 per month fee to offset
the costs of complying with fire and safety codes. The only way to
prevent this potent combination of powerful interests from
restraining the economic life of the country is the vigorous
enforcement of the antitrust laws.
Coming more than five years after this Court’s last state action
decision in Ticor, this case presents the Court with a timely
opportunity to reaffirm the importance of both the active supervision
and clear articulation prongs of the state action doctrine, as well as
to correct the Tenth Circuit’s wayward decision below.
For the reasons set forth above, petitioner David C. Zimomra
respectfully requests that his petition for writ of certiorari be granted.
23
Respectfully submitted,
GERALD BADER
Counsel of Record
STEVEN M. FEDER
BADER, VILLANUEVA & FEDER
1660 Wynkoop Street
Suite 1100
Denver, Colorado 80202
(303) 534-1700
DAVID BOIES
BOIES & McINNIS
5408 Port Royal Road
Springfield, Virginia 22151
(703) 764-8700
Attorneys for Petitioner
la
APPENDIX A — OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE TENTH CIRCUIT
FILED APRIL 22, 1997
PUBLISH
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
No. 96-1120
No. 96-1203
DAVID CHARLES ZIMOMRA, on behalf of himself and all
others similarly situated.
Plaintiff-Appellant,
v.
ALAMO RENT-A-CAR, INC.; AVIS, INC.; BUDGET RENT
A CAR CORPORATION; DOLLAR RENT-A-CAR SYSTEMS,
INC.; HERTZ CORPORATION; NATIONAL CAR RENTAL
SYSTEM, INC.; THRIFTY RENT-A-CAR SYSTEMS, INC.;
VALUE RENT-A-CAR, INC.; ENTERPRISE LEASING CO.
OF DENVER; NATIONAL CAR RENTAL, named as National
Car Rental, Inc.; RESORT RENT-A-CAR, INC.; STEAMBOAT
SPRINGS RENTAL AND LEASING, INC.; TRYND, INC.:
TIARA ENTERPRISES, INC.,
Defendants-Appellees.
Appeal from United States District Court
for the District of Colorado
(D.C. No. 94-S-2148)
David Boies, of Boies & McInnis, Fairfax, Virginia (Steven M.
2a
Appendix A
Feder, of Bader, Villanueva & Feder, Denver, Colorado, with
him on the brief), for the appellant.
Terrence C. Gill (Stanley L. Garnett and Stephen D. Gurr with
him on the brief), of Brownstein Hyatt Farber & Strickland, P.C.,
Denver, Colorado, for the appellees.
Before SEYMOUR, Chief Judge, HENRY and BRISCOE,
Circuit Judges.
BRISCOE, Circuit Judge.
Plaintiff David C. Zimomra appeals the district court’s
dismissal of his consolidated class action complaints alleging
federal antitrust claims, as well as various state law claims,
against fourteen car rental companies operating at Stapleton
International Airport (Stapleton) and Denver International
Airport (DIA). We affirm.
‘.
On November 8, 1993, the City and County of Denver
enacted Denver Bond Ordinance No. 863 to help fund
construction of car rental facilities at DIA. Pursuant to the
ordinance, the City and County issued special facilities revenue
bonds in the amount of $65,579,000 to fund construction. To
ensure repayment of the bonds (repayment period runs from
1993 through 2000), Ordinance 863 requires all car rental
companies awarded rights to operate at DIA, all of whom entered
into special facilities and ground leases for their respective
facilities, to charge and collect “usage fees” from their
customers. Specifically, Section 3.4(a) of the ordinance provides
that
3a
) Appendix A
a Usage fee shall be charged and collected
by each Company from the person entering
into each motor vehicle rental agreement
with the Company at Stapleton International
Airport [predecessor to DIA] prior to the
opening date of Denver International Airport
for commercial business as established by the
City, and after such opening date.
Appellant’s append. at 81.
The daily usage fee was initially set at $2.98 and was to
remain at that amount until October 1, 1994. Subsequent daily
usage fees are to be established through the interaction of a
“Managing Committee,” which is composed of a representative
from each car rental company and an “Independent Consultant”
appointed by the Managing Committee with the approval of the
Manager of Public Works of the City and County of Denver or
his designee. Section 3.4(b) of the ordinance provides:
The Usage Fee for each 12-month period
commencing October 1, 1994 shall be an
amount determined by the Independent
Consultant to be sufficient to produce
revenues which, together with available
Reserve Balances in the respective Company
Revenue Accounts in the Car Rental Special
Facilities Revenue Fund equal, in the
aggregate, to 115% of the sum of the
principal of and interest on the Bonds coming
due in such 12-month period plus the
reasonably expected Administrative
Expenses for such 12-month period,
4a
Appendix A
deficiencies then existing in the Special City
Reserve Fund, and payments to the City
under [the provisions of Ordinance 863] for
such period. In determining the amount of
the Usage Fee for any period the Independent
Consultant shall evaluate such factors as it
shall deem necessary which may include,
among other things, the number of
transaction days experienced by the
Companies for one or more previous years
for the rental of motor vehicles subject to the
payment of Concession Fees (or comparable
information at Stapleton International
Airport), the number of transaction days
estimated by [the car rental companies] for
such period for the rental of motor vehicles
subject to the payment of Concession Fees,
and an estimate of the number of origination
and destination passengers at [DIA] for such
period.
Appellant's append. at 82-83.
By July 1 of each year, the Independent Consultant is
required to furnish a report to the City and County of Denver,
the car rental companies, and the banks involved in funding the
special revenue bonds, setting forth the amount of the proposed
daily usage fee for the next 12-month period “which, in the
opinion of the Independent Consultant, is necessary to produce
the required Usage Fee receipts ..., together with an
explanation of the basis for determining such amount.”
Appellant’s append. at 83 (Section 3.4(c)). Any recipient of the
report is then allowed a two-week period in which to comment
Sa
Appendix A
upon the proposed daily usage fee and, if there is no objection,
the fee becomes effective on October 1 of that year. If there is
an objection, the Independent Consultant evaluates the objection
and decides whether to recalculate the proposed daily usage fee.
The car rental companies deposit their collected usage fees
in a “Car Rental Special Facilities Revenue Fund” on a monthly
basis. Appellant’s append. at 82 (Section 3.4(a)). In turn, the
Car Rental Special Facilities Revenue fund is used to pay the
principal and interest on the bonds, as well as associated
expenses. Any amounts remaining after the bonds are retired
(in the year 2000) will go to the City and County of Denver and
will constitute gross revenues of the airport system. Appellant’s
append. at 78-79, 91 (Sections 3.1 and 3.13).
Plaintiff is a resident of Fairfax, Virginia. On unspecified
dates in 1993 and 1994, he allegedly rented cars at Stapleton
and was charged a $2.98 daily usage fee in addition to the agreed-
upon daily rental rates. On July 11, 1994, plaintiff filed a
complaint in the United States District Court for the Eastern
District of Virginia purporting to sue on behalf of “all persons
in the United States . . . who have rented cars from any defendant
at Denver’s Stapleton Airport and were charged a $2.98 per day
charge during the period from and including 1993 to present.”
Appellees’ supp. append. at 6. Named as defendants in the
complaint were eight car rental companies doing business at
Stapleton. Plaintiff asserted claims under Section 1 of the
Sherman Antitrust Act and Sections 4 and 6 of the Clayton Act,
as well as state law claims of fraud and deceit, unjust enrichment,
and negligent misrepresentation. He alleged the defendant car
rental companies violated federal and state law by jointly
agreeing to charge airport customers a uniform $2.98 daily usage
fee in addition to their quoted rental prices.
6a
Appendix A
The action was transferred to federal district court in
Colorado on September 9, 1994. Plaintiff filed a second
complaint in Colorado federal district court on November 9,
1994, naming six additional car rental companies as defendants.
The allegations of the second complaint were substantially
similar to those in the first complaint.
Defendants moved to dismiss both complaints. Although
defendants acknowledged imposing a $2.98 daily usage fee on
airport customers, the contended they were required to do so by
Ordinance 863. Accordingly, defendants sought dismissal of
plaintiff’s antitrust claims on state action immunity grounds.
After consolidating both actions, the district court issued an
order on February 23, 1996, granting the pending dispositive
motions and dismissing plaintiff’s claims against all but one of
the named defendants (Tiara Enterprises, Inc.). In so doing, the
district court concluded plaintiff’s antitrust claims against
defendants were barred by the state action immunity doctrine.
Having concluded defendants were immune from plaintiff’s
antitrust claims, the court declined to exercise supplemental
jurisdiction over plaintiff’s supplemental state law claims. On
April 12, 1996, the remaining defendant, Tiara Enterprises, Inc.,
filed a motion to dismiss and the court granted the motion on
April 17, 1996 for the same reasons as in its February 23, 1996
order.
Il.
State action immunity
Plaintiff contends the district court erred in concluding
defendants were immune from federal antitrust claims under
the state action immunity doctrine. In particular, he contends
Ta
Appendix A
Ordinance 863, upon which defendants and the court relied, was
not enacted pursuant to a clearly articulated and affirmatively
expressed state directive to displace price competition in the
car rental market. Further, he contends even if the ordinance
was enacted pursuant to such a state policy, defendants’ conduct
is not immune from antitrust laws because the City and County
of Denver does not actively supervise the setting or modification
of the daily usage fee.
The “state action immunity” doctrine originated in Parker
v. Brown, 317 U.S. 341 (1943), and “ ‘exempts qualifying state
and local government regulation from federal antitrust, even if
the regulation at issue compels an otherwise clear violation of
the federal antitrust laws.’ ” Cost Management Services vy.
Washington Natural Gas Co., 99 F.3d 937, 941 (9th Cir. 1996)
(quoting Hovenkamp, Federal Antitrust Policy; The Law of
Competition and its Practice § 20.2, at 673 (West 1994)).
Although the doctrine was aimed at protecting state legislatures
and state supreme courts acting in their legislative capacities, it
can provide protection to other individuals or entities acting
pursuant to state authorization. See Hoover v. Ronwin, 466 U.S.
558, 568 (1984). In such situations, however, “closer analysis
is required” to determine whether antitrust immunity is
appropriate. Id. ; Porter Testing Laboratory v. Board of Regents,
993 F.2d 768, 770 (10th Cir.), cert. denied, 510 U.S. 932 (1993).
In California Retail Liquor Dealers Ass’n v. Midcal
Aluminum, 445 U.S. 97 (1980), the Supreme Court established
a two-part test to determine whether alleged anticompetitive
conduct on the part of a private party is immunized under the
State action immunity doctrine. First, “the challenged restraint
must be ‘one clearly articulated and affirmatively expressed as
State policy.’ ” Jd. at 105 (quoting City of Lafayette v. Louisiana
8a
Appendix A
Power & Light Co., 435 U.S. 389, 410 (1978)). Second, “the
policy must be ‘actively supervised’ by the State itself.” Jd.
Application of this “rigorous” test ensures that Parker immunity
is applied only where the “private party’s anticompetitive
conduct promotes state policy, rather than merely the party’s
individual interests.” Patrick v. Burget, 486 U.S. 94, 101 (1988).
In Town of Hallie v. City of Eau Claire, 471 U.S. 34, 46-47
(1985), the Supreme Court modified the Midcal test for cases
involving municipalities, specifically holding municipalities
need not satisfy the Midcal active state supervision requirement
because “there is little or no danger that [a municipality] is
involved in a private price-fixing arrangement.” Jd. The result
is that a municipality can obtain exemption under the state action
immunity doctrine by satisfying only the first prong of the
Midcal test, i.e., by demonstrating it acted pursuant to “clearly
articulated and affirmatively expressed” state policy. Jd.
Here, the district court applied the two-part Midcal test and
concluded the defendant car rental companies were entitled to
state action immunity from plaintiff’s federal antitrust claims.
In reviewing the district court’s decision, we apply a de novo
standard. See F-T.C. v. Hospital Bd. of Directors of Lee County,
38 F.3d 1184, 1187 (11th Cir. 1994) (application of state action
immunity doctrine is a question of law reviewed de novo);
Buckley Const. v. Shawnee Civic & Cultural Development
Authority, 933 F.2d 853, 855 (10th Cir. 1991).
Which test to apply
Our initial inquiry is whether this case should be analyzed
under the two-prong Midcal test, which typically applies to
private actors, or the single-prong Town of Hallie test, which
9a
Appendix A
applies to municipalities. Although the district court applied the
Midcal test without discussing the municipality/private actor
issue, defendants argue on appeal that the Town of Hallie test is
appropriate because the challenged usage fee is the result of
action on the part of a municipality, i.e., the City and County of
Denver. More specifically, defendants argue “the anticompetitive
conduct, if any, occurred when [the City and County of] Denver
set the amount of the Usage Fee in the Bond Ordinance and
required its collection from each car rental customer, not by
way of the private car rental companies’ compliance with the
law.” Appellees’ br. at 26. Further, defendants contend the Town
of Hallie test is appropriate because Ordinance 863 “does not
permit any discretion on the part of the car rental companies in
assessing or determining the amount of the Usage Fee.” /d.
We agree with defendants that state action immunity in this
case is properly determined according to the Town of Hallie test.
In Patrick, the Supreme Court noted the active supervision prong
of the Midcal test “requires that state officials have and exercise
power to review particular anticompetitive acts of private parties
and disapprove those that fail to accord with state policy.” 486
U.S. at 101. Such active state review is clearly necessary where
private defendants are empowered with some type of
discretionary authority in connection with the anticompetitive
acts (€.g., to determine price or rate structures). Here, however,
the named defendants have no such discretionary authority.
Rather, the provisions of Ordinance 863 make clear that the City
and County of Denver is the “effective decision maker” with
respect to both the amount of the daily usage fee and imposition
of the fee. City Communications v. City of Detroit, 660 F.Supp.
932, 934-35 (E.D.Mich. 1987), aff’d, 888 F.2d 1081 (6th Cir.
1989). Although plaintiff claims defendants have input into the
amount of the daily usage fee in 1994-2000, the provisions of
—_
10a
Appendix A
the ordinance make it clear that ultimate control over the amount
of the fee rests with the City and County of Denver. Specifically,
the amount of the fee for those years must equal “115% of the
sum of the principal of and interest on the Bonds coming due‘in
such 12-month period plus the reasonably expected
Administrative Expenses for such 12-month period, deficiencies
then existing in the Special City Reserve Fund, and payments
to the City under the [provisions of Ordinance 863].” Appellant’s
append. at 82. In our view, application of the active supervision
prong is of little value under these circumstances because the
challenged conduct is mandated and strictly controlled by the
City and County of Denver via Ordinance 863. Stated differently,
we see no need for the state to supervise defendants’ conduct
(and no need for the second prong of the Midcal test) because
there is little, if any, risk of defendants doing anything other
than complying with the City and County’s mandate.
We further note that plaintiff could have named the City
and County of Denver as a defendant (or even the sole defendant)
in this action. Had he done so, it is clear we would have applied
the single-pronged Town of Hallie test rather than the double-
pronged Midcal test to determine whether the City and County
of Denver was entitled to state action immunity. See Allright
Colorado v. City and County of Denver, 937 F.2d 1502 (10th
Cir.) (City and County of Denver named as defendant; court
applied Town of Hallie test to determine immunity), cert. denied,
502 U.S. 983 (1991). We therefore find it inconsistent, when
the same conduct is at issue (i.e., imposition of the daily usage
fee), to apply one test to the City and County of Denver (the
Town of Hallie test), and apply a different, more stringent test
(the Midcal test), to the private defendants. Were we to apply
different tests, the result could be that the City and County of
Denver would be entitled to immunity but the private defendants
lla _
Appendix A
would not. More specifically, the City and County of Denver,
the entity that enacted the ordinance and imposed the daily usage
fee, could be immune from antitrust damages, while the car
rental companies, all of whom were compelled to comply with
the ordinance in order to lease space at DIA, could be liable to
plaintiff for antitrust damages. Such a result would be illogical
and inconsistent with Supreme Court precedent.
In Southern Motor Carriers Rate Conference v. United
States, 471 U.S. 48, 58-59 (1985), the Supreme Court
specifically emphasized that “[t}he success of an antitrust action
should depend upon the nature of the activity challenged, rather
than on the identity of the defendant.” The implication of this
holding, we believe, is that in cases such as the one at bar, where
private parties are acting under the compulsion of a municipality
or other political subdivision, the same test should apply to
determine state action immunity regardless of who the named
defendants are.
In somewhat similar circumstances, several circuit and
district courts have held that once a municipality (or other
governmental unit) is determined to be immune from antitrust
liability, the immunity should be extended to include private
parties acting under the direction of the municipality. Cine 42nd
Street Theater Corp. v. Nederlander Organization, 790 F.2d
1032, 1048 (2d Cir. 1986) (holding private party theater operators
acting in concert with urban development corporation which
acquired and leased theaters for urban redevelopment project
enjoyed corporation’s state action immunity from antitrust
liability; court did not conduct separate state action analysis for
private parties); Charley’s Taxi Radio Dispatch Corp. v. SIDA
of Hawaii, 810 F.2d 869, 878 (9th Cir. 1987) (association of
individual taxi owner-operators could not be held liable under -—_--—-
12a
Appendix A
Sherman Act for possessing exclusive franchise to provide taxi
service from Oahu airport where state department of
transportation had been granted state action immunity to grant
franchise); City Communications, 660 F.Supp. at 935 (“once it
is determined that the municipality is entitled to immunity from
the antitrust laws, the private parties who are regulated by the
municipality are also entitled to immunity as long as the
‘effective decision maker’ is the municipality rather than the
private parties”). “Recognizing that the state action doctrine
protects state action, not state actors, these courts reason that to
allow suits against private parties for actions immunized as to
municipalities would allow plaintiffs to circumvent the state
action doctrine and challenge protected municipal decisions
through artful pleading.” Bloom v. Hennepin County, 783 F.Supp.
418, 427 (D.Minn. 1992) (extending state action immunity from
state governmental unit to private party). Admittedly, there is a
difference between the above-cited cases and the instant case in
that the City and County of Denver has not been named as a
defendant in this case. Nevertheless, we conclude plaintiff’s
“artful pleading” should not control which test we apply in
determining antitrust immunity for the challenged conduct.
Applying the Town of Hallie test
In analyzing whether the State of Colorado articulated a
clear and affirmative policy to allow the conduct at issue here,
the district court looked to Articles 3 and 4 of Title 41 of the
Colorado Revised Statutes, and to the County and Municipality
Development Revenue Bond Act, C.R.S. § 29-3-101 et seq. We
proceed to review these same statutes.
Article 3 of Title 41 of the Colorado Revised Statutes is
known as the “Public Airport Authority Act” and provides cities,
towns, and counties in Colorado with the right to create “airport
13a
Appendix A
authorities” for the “purpose of acquiring and improving
airports. ... and related facilities.” C.R.S. § 41-3-102 (1996).
The Act further provides airport authorities in Colorado with
the power to “borrow money and ... issue bonds payable in
whole or in part from the income of the authority and otherwise
secured to the extent permitted by law.” C.R.S. § 41-3-
106(e)(1996).
Article 4 of Title 41 of the Colorado Revised Statutes (which
has no short title) governs airports in the State of Colorado.
C.R.S. § 41-4-101 (1996) provides:
The acquisition of any lands for the purpose
of establishing airports or other air navigation
facilities; the acquisition of airport protection
privileges; the acquisition, establishment,
construction, enlargement, improvement,
maintenance, equipment, and operation of
airports and other air navigation facilities;
and the exercise of any other powers granted
in this part 1 [of the Act] to any county, city
and county, city, or town are ... public
governmental functions, exercised for a
public purpose, and matters of public
necessity.
C.R.S. § 41-4-106 (1996) provides that counties in Colorado
have the “power and jurisdiction,” in connection with the
erection, maintenance, and operation of any airport.
to regulate the receipt, deposit, and removal
and the embarkation of passengers or
property to or from such airports; to exact
l4a
Appendix A
and require charges, fees, and tolls, together
with a lien to enforce their payment; to lease
or assign for operation such space or area,
appurtenances, appliances, or other
conveniences necessary or useful in
connection therewith; ... to provide rules
and regulations governing the use of such
airport and facilities and the use of other
property and means of transportation within
or over said airport.
C.R.S. § 41-4-112 (1996) authorizes any county in Colorado
to rent or lease ... any lands or interest in
lands acquired by the county for the purposes
set forth in this part 1 to any person,
partnership, association, or corporation,
either public or private, for commercial,
industrial, or other purposes, for such periods
of years and upon such terms and conditions
as are deemed in the best interests of the
county by the board of county
commissioners.
The second general statute cited by the district court was
the County and Municipality Development Revenue Bond Act
(Bond Act), C.R.S. § 29-3-101 et seq. C.R.S. § 29-3-102(1)
(1996) provides it was the intent of the Colorado General
Assembly “to authorize counties and municipalities to finance,
acquire, own, lease, improve, and dispose of properties to the
end that such counties and municipalities may be able to promote
industry and develop trade or other economic activity.” Similarly,
C.R.S. § 29-3-102(3) provides it was the intent of the General
15a
Appendix A
Assembly to vest Colorado counties and municipalities “with
all powers that may be necessary to enable them to accomplish
such purposes, which powers shall in all respects be exercised
for the benefit of the inhabitants of this state for the promotion
of their health, safety, welfare, convenience, and prosperity.”
Finally, C.R.S. § 29-3-104(1)(a), (b), (c) (1996) specifically
grants Colorado counties and municipalities with a variety of
general powers, including the power to “improve and equip.” to
“finance” projects, to “enter into financing agreements with
others for the purpose of providing revenues to pay the bonds
authorized by” the Bond Act, and to “issue revenue bonds for
the purpose of defraying the cost of financing, refinancing,
acquiring, improving, and equipping any project, including the
payment of principal and interest on such bonds.”
In Allright, we found state action immunity in an identical
section of Title 41, C.R.S. § 41-4-106, 937 F.2d at 1506-11. The
plaintiffs in Allright, operators of off-airport shuttle bus parking
services, filed suit against the City and County of Denver
contending regulations governing shuttle bus services at
Stapleton violated federal antitrust laws. The district court
dismissed plaintiffs’ claims, concluding defendants were entitled
to state action immunity. On appeal, we affirmed the district
court’s decision. In so doing, we cited C.R.S. §§ 41-4-101, 41-
4-106, and 41-4-205, and specifically noted that 41-4-106
“confer[red] upon counties a broad authority to regulate airport
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 connection therewith; . . . to provide rules
and regulations governing the use of such airport and facilities
and the use of other property and means of transportation within
l6a
Appendix A
or over Said airport.’ ” 937 F.2d at 1508. We concluded the City
and County of Denver, in regulating shuttle bus services at the
airport, had done precisely what was allowed by 41-4-106.
Moreover, we concluded displacement of competition in the
provision of shuttle bus services was a foreseeable result of the
City and County of Denver’s broad authority to regulate.
Here, citing the above-quoted statutes and relying heavily
upon Allright, the district court held:
Not only do state statutes specifically
authorize cities and municipalities to take
authority over airports, but they also allow
for the issuance of bonds to finance and
improve airports. The statute also gives the
authority to establish a means to ensure
repayment of those bonds. The City and
County of Denver enacted the Denver Bond
Ordinance pursuant to state authority,
therefore the first part of the state action
immunity test is met.
Plaintiff argues that the Colorado Airport
Act does not specifically refer to car rental
activities. While this is true, the Court notes
that the Colorado Airport Act does not
specifically refer to shuttle bus services
either. Nevertheless, the Tenth Circuit found
that the Colorado Airport Act provided the
necessary authority to displace competition.
The case at hand involves “related activities”
as referred to in Allright Colorado. The City
and County of Denver clearly had the
17a
Appendix A
authority to issue bonds to finance new car
rental facilities at DIA. Once the City and
County of Denver issued bonds to finance the
DIA facilities, it was within the best interest
of the inhabitants of the State of Colorado
and the City and County of Denver that those
bonds be repaid. Therefore, under the
authority of the Colorado Airport Act and the
County and Municipality Development
Revenue Bond Act, it is reasonably
foreseeable that the City and County of
Denver would enact anticompetitive
legislation for the purpose of ensuring the
principal and interest of the airport bonds be
paid.
Appellant’s append. at 31-32 (internal citations omitted). We
agree. The above-cited statutes gave the City and County of
Denver authority to construct car rental facilities at DIA, to issue
bonds to cover the costs of construction, and to lease facilities
to defendants. Further, although Ordinance 863 specifically
refers only to the Bond Act, it is clear the City and County of
Denver had authority, pursuant to C.R.S. § 41-4-106, to require
defendants to impose the daily usage fee on their car rental
customers. As we noted in Allright, 41-4-106 gives the City and
County of Denver authority “to regulate the receipt, deposit,
and removal and the embarkation of passengers . . . to or from”
both Stapleton and DIA, “to exact and require charges, fees,
and tolls,” and “to provide rules and regulations governing the
use of such airport and facilities . . . and means of transportation
within or over said airport.” As in Allright, this is precisely what
the City and County of Denver did when it enacted the daily
usage fee. Further, as in Allright, it is reasonably foreseeable
18a
Appendix A
that implementation of such authority could displace competition
in the area of car rental services.
Because the Jown of Hallie test has been satisfied we
conclude defendants are entitled to state action immunity from
plaintiff’s antitrust claims.
Noerr-Pennington doctrine
Defendants argue the Noerr-Pennington doctrine also
provides them with immunity from plaintiff’s antitrust claims.
The Noerr-Pennington doctrine is based upon the protections
of the First Amendment and exempts from antitrust liability any
legitimate use of the political process by private individuals,
even if their intent is to eliminate competition. United Mine
Workers v. Pennington, 381 U.S. 657 (1965); Eastern R.R.
Presidents Conference v. Noerr Motor Freight, 365 U.S. 127
(1961); Oberndorf v. City and County of Denver, 900 F.2d 1434,
1439-40 (10th Cir.), cert. denied, 498 U.S. 845 (1990).
“Immunity under the Noerr-Pennington doctrine is designed to
protect the right to petition and engage in political activity.”
Oberndorf, 900 F.2d at 1440. In particular, the doctrine “protects
rights of association and petition, which would be denied if
groups with common interests could not, without violating the
antitrust laws, use the channels and procedures of government
agencies to advocate their causes and points of view respecting
resolution of their business and economic interests vis-a-vis their
competitors.” Jd. (citing California Motor Transport Co. v.
Trucking Unlimited, 404 U.S. 508, 510-11 (1972)); see
Professional Real Estate Investors v. Columbia Pictures
Industries, 508 U.S. 49, 56 (1993) (doctrine encompasses private
actions that “attempt to persuade the legislature or the executive
to take particular action with respect to a law that would produce
a restraint or a monopoly”).
19a
Appendix A
Although the district court did not address this argument,
we conclude the Noerr-Pennington doctrine exempts defendants
from antitrust liability to the extent plaintiff is challenging their
efforts to convince the City and County of Denver to enact
Ordinance 863 and impose the daily usage fee requirement.'
Findings of fact contrary to allegations in plaintiff's complaints?
Plaintiff contends the district court erred by making findings
of fact which were contrary to the allegations in his two
complaints, and without permitting any discovery or holding an
evidentiary hearing. According to plaintiff, the court was
obligated to take all facts pled in the complaints as true, as well
as all inferences that could be reasonably drawn therefrom.
Plaintiff also argues the court erred in concluding, based solely
upon the provisions of Ordinance 863, that the City and County
of Denver actively supervises the daily usage fee. More
specifically, plaintiff argues that, in deciding whether the second
prong of the Midcal test is satisfied, the court’s inquiry “is
incomplete if it does not include a close examination of what
the municipality actually did in furtherance of its duty to actively
supervise.” Appellant’s br. at 30 (underlining in original).
We conclude it was entirely appropriate for the district court
to take judicial notice of the provisions of Ordinance 863.
1. Neither the original complaint nor the amended complaint specifically
identified whether plaintiff was challenging defendants’ successful efforts at
lobbying the City and Count of Denver to pass Ordinance 863. However,
because the amended complaint alleges defendants “sought, and ultimately
obtained, a city ordinance purporting to ‘compel’ them to charge” the daily
usage fee, appellant’s append. at 6, we will assume for purposes of this appcal
that plaintiff is challenging defendants’ lobbying activities.
20a
Appendix A
Federal Rule of Evidence 201 authorizes a federal court to take
judicial notice of adjudicative facts at any stage of the
proceedings, and in the absence of a request of a party. See
Clemmons v. Bohannon, 918 F.2d 858, 865 n. 5 (1990), vacated
on other grounds, 956 F.2d 1523 (1992); Melton v. City of
Oklahoma City, 879 F.2d 706, 724 (10th Cir. 1989), modified
on other grounds, 928 F.2d 920 (10th Cir.) (en banc), cert.
denied, 502 U.S. 906 (1991). This includes taking notice of
provisions in municipal ordinances. Clemmons, 918 F.2d at 865
n. 5; see Melton, 879 F.2d at 724 (taking notice of Oklahoma
City Charter). Where, as here, a party requests a court to take
judicial notice of adjudicative facts and supplies the court with
the necessary information, Rule 201(d) requires the court to
comply with the request. Thus, the district court, having been
presented with Ordinance 863 by defendants, was required to
take judicial notice of its provisions. To the extent that plaintiff’s
allegations conflicted with the provisions of the ordinance,
plaintiff’s allegations were appropriately rejected or ignored.
See Fed. R. Evid. 201. Although plaintiff is entitled “to an
opportunity to be heard as to the propriety of taking notice and
the tenor of the matter noticed.” Fed. R. Evid. 201(e), the instant
appeal has certainly given him that opportunity. Notably, there
is nothing in his brief that effectively controverts or calls into
question any of the provisions of Ordinance 863.
Because we have concluded the Jown of Hallie test, rather
than the Midcal test, is applicable here, we find it unnecessary
to address plaintiff’s argument that the provisions of Ordinance
863, considered alone, are insufficient to satisfy the active state
supervision prong of the Midcal test.
The judgment of the district court is AFFIRMED.
2la
Appendix A
J. Henry, concurring.
I concur in the majority decision, writing separately only
to briefly note that though statute and precedent compel the
above result, several scholars and judges, and perhaps even the
ghost of Adam Smith, seem to warn that the policy behind our
laws may need to be re-examined by appropriate local, state,
and national legislative bodies.
Recent studies by Law and Economics scholars have
questioned the wisdom of interfering with the marketplace under
the state action exemption, set forth in Parker v. Brown, 317
U.S. 341, 350-52 (1943), from national antitrust law. See
generally William H. Page, Interest Groups, Antitrust, & State
Regulation; Parker v. Brown in the Economic Theory of
Legislation, 1987 Duke L.J. 618, 625 (1987) (noting that “state
economic regulation is frequently in sharp conflict with
[economic efficiency], largely because of the problem of rent
seeking by interest groups”); John Shepard Wiley, Jr., A Capture
Theory of Antitrust Federalism, 99 Harv. L. Rev. 713, 723 (1986).
But cf. Merrick B. Garland, Antitrust & State Action; Economic
Efficiency & the Political Process, 96 Yale L.J. 486, 519 (1987)
(critiquing approaches of Law and Economics scholars). Though
the state action exemption may be “grounded in principles of
‘ederalism,” a bedrock principle of our political system, it is
certainly also true that “[t]he preservation of the free market
and of a system of free enterprise without price fixing or cartels
is essential to economic freedom.” F-.T.C. v. Ticor Title Ins. Co.,
504 U.S. 621, 632 (1992).
Where the principles of federalism and the free market
collide, great caution is warranted in the balance we strike. As
Justice Kennedy observed for the majority in Ticor:
22a
Appendix A
Federalism serves to assign political
responsibility, not to obscure it. Neither
federalism nor political responsibility is well
served by a rule that essential national
policies are displaced by state regulations
intended to achieve more limited ends. For
States which do choose to displace the free
market with regulation, our insistence on real
compliance with both parts of the [California
Retail Liquor Dealers Ass'n v. \Midcal
[Aluminum, 445 U.S. 97 (1980),] test will
serve to make clear that the State is
responsible for the price fixing it has
sanctioned and undertaken to control.
Id. at 636. Indeed, in Ticor, 36 states filed amici curiae briefs
urging that broad application of the doctrine would not serve
the states best interests. Jd. at 635.
Certainly the market has been tinkered with before in order
to provide such vital public services as airports. But one wonders
why the car-renting consumer should have to pay for the facilities
of those less efficient car rental companies who cannot compete
with companies that can rent both facilities and automobiles
competitively. Indeed, the small-desk car rental companies might
as well have a desk as big as the companies that are trying harder
since the hapless tourist is going to have to pay for it anyway.
The litigation-spawning capabilities of state-sanctioned,
anticompetitive bargains have been prophesied and questioned.
See Frank E. Easterbrook, Foreword: The Court & the Economic
System, 98 Harv. L. Rev. 4, 18 (1984) (“[A]nticompetitive
bargains embedded in state legislation will become targets for
challenge under the antitrust laws; the deference due toward a
23a
Appendix A
statute that corrects ‘market failures’ is not due toward a statute
that creates them.”).
As the majority opinion makes clear, the state action
immunity doctrine once suggested two safeguards before
allowing disruption of the market. First, a city or state must
have clearly articulated and affirmatively expressed the state
policy to supplant competition in this area. See City of Lafayette
v. Louisiana Power & Light Co., 435 U.S. 389, 410 (1978);
Parker, 317 U.S. at 350-52. With respect to this requirement,
where private individuals or municipalities acted pursuant to
state authorization, “[cJloser analysis [wa]s required.” Hoover
v. Ronwin, 466 U.S. 558, 568 (1984); Porter Testing Lab. v. Board
of Regents, 993 F.2d 768, 770 (10th Cir. 1993). (Here, a not so
close analysis reveals that the city’s criterion seems to have
included a clearly articulated agreement on the part of the rental
companies to hold the city harmless in the event of a finding of
anticompetitive activity. Aplt’s Reply Br. at 1-2.) Second, the
policy had to be “actively supervised” by the state itself. Midcal,
445 U.S. at 105.
This Midcal test remains the test for actions taken by states,
but in Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985),
the Court noted:
In Midcal, we stated that the active state
supervision requirement was necessary to
prevent a State from circumventing the
Sherman Act’s proscriptions “by casting...
a gauzy cloak of state involvement over what
is essentially a private price fixing
arrangement.” 445 U.S., at 106 [sic]. Where
a private party is engaging in the
24a
Appendix A
anticompetitive activity, there is a real danger
that he is acting to further his own interest,
rather than the governmental interests of the
State. Where the actor is a municipality, there
is little or no danger that it is involved in a
private price-fixing arrangement. The only
real danger is that it will seek to further
purely parochial public interests at the
expense of more overriding state goals. This
danger is minimal, however, because of the
requirement that the municipality act
pursuant to a clearly articulated state policy.
Once it is clear that state authorization exists,
there is no need to require the State to
supervise actively the municipality’s
execution of what is a properly delegated
function.
Id. at 46-47 (emphasis in original).
Given that Hallie does away with the active supervision
prong for municipalities, we are left with an interference with
competition based on the lobbying ability of those few who
benefit from it. See John Cirace, An Economic Analysis of the
“State-Municipal Action” Antitrust Cases, 61 Tex. L. Rev. 481,
488 (1982) (“The ‘clearly articulated and affirmatively
expressed’ criterion involves the Court in the morass of
legislative intent and makes the applicability of federal antitrust
turn on whether the statute’s proponents had the ‘skill [or]
influence to generate proper legislative history.’ ”) (quoting
Cantor v. Detroit Edison Co., 428 U.S. 579, 610 (1976)
(Blackmun, J., concurring)); see also Fisher v. City of Berkeley,
475 U.S. 260, 269 (1986) (“There may be cases in which what
25a
Appendix A
appears to be a state- or municipality-administered price
stabilization scheme is really a private price-fixing conspiracy,
concealed under a ‘gauzy cloak of state involvement.’ This might
occur even where prices are ostensibly under the absolute control
of government officials.”) (quoting Midcal, 445 U.S. at 106).
Professor Wiley suggests the state action doctrine be
replaced with a doctrine that examines whether the market has
been “captured” by a few players to the detriment of competition,
99 Harv. L. Rev. at 743. Though, like Justice Scalia, “I am
skeptical about [ ] Parker v. Brown.” Ticor, 504 U.S. at 640
(Scalia, J., concurring), I believe that rending the veil of the
gauzy cloak may not require the adoption of Professor Wiley’s
intriguing model. Rather, we could insist that Midcal’s “clear
articulation” be very clear, and that even in the case of
municipalities, that there be active supervision (hopefully a bit
more active than we have here), and that finally, we could
require, a la Hoover, close analysis where private individuals
are acting under state action immunity.
Noting our country’s well-placed fealty to the free market,
the persuasive criticism of noted scholars and judges, and even
statements like that in Ticor that “state-action immunity is
disfavored, much as are repeals by implication,” 504 U.S. at
636, this doctrine has an amazing staying power. I am staying
with it today because it is the law. As Judge Easterbrook
observed, “Judges must be honest agents of the political
branches. They carry out decisions they do not make.” 98 Harv.
L. Rev. at 60. The ultimate resolution of this issue is properly
left to either the Supreme Court, which could overrule Hallie
and return to a test of greater scrutiny, or to the States and
localities, which could reject these blandishments in honor of
the invisible hand, or to Congress, which could fine-tune the
26a
Appendix A
Sherman Act. The obligation of this panel is to resolve the
dispute before it, which the majority opinion correctly
accomplished. But judges also have the opportunity if not the
obligation to call attention to anomalous results. This seems to
be one.
27a
APPENDIX B — ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF COLORADO
FILED FEBRUARY 23, 1996
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Daniel B. Sparr
Civil Action No. 94-S-2148
DAVID CHARLES ZIMOMRA, on Behalf of Himself and All
Others Similarly Situated,
Plaintiff,
v.
ALAMO RENT-A-CAR, INC., AVIS, INC., BUDGET RENT
A CAR CORPORATION, DOLLAR RENT-A-CAR SYSTEMS,
INC., THE HERTZ CORPORATION, NATIONAL CAR
RENTAL SYSTEM, INC., THRIFTY RENT-A-CAR SYSTEM,
INC., VALUE RENT-A-CAR, INC.; ENTERPRISE LEASING
CO. OF DENVER; NATIONAL CAR RENTAL, INC.: RESORT
RENT-A-CAR, INC.; STEAMBOAT SPRINGS RENTAL AND
LEASING, INC.; TIARA ENTERPRISES, INC. and TRYND,
INC.,
Defendants.
ORDER
THIS MATTER comes before the Court on Defendants
Alamo Rent-A-Car, Inc., Avis, Inc., Budget Rent A Car Corp.,
Dollar Rent-A-Car Systems, Inc., The Hertz Corp., National Car
Rental System, Inc., Thrifty Rent-A-Car System, Inc.-and Value
28a
Appendix B
Rent-A-Car, Inc.’s Motion to Dismiss Pursuant to Federal Rule
of Civil Procedure 12(b)(6), filed August 19, 1994; Defendant
National Car Rental, Inc.’s Motion to Dismiss Pursuant to
Fed.R.Civ.P. 12(b)(6), filed December 22, 1994; Defendant
Resort Rent-A-Car, Inc.’s Motion to Dismiss Pursuant to
12(b)(6), F.R.C.P., filed December 29, 1994; Defendant
Enterprises Leasing Co. of Denver’s Motion to Dismiss Pursuant
to Fed.R.Civ.P. 12 (b)(6), filed January 3, 1995; Defendant
Steamboat Springs Rental and Leasing Inc.’s Motion to Dismiss
Pursuant to Fed.R.Civ.P. 12(b)(6), filed January 6, 1995;
Defendant Trynd Inc.’s Motion to Dismiss Pursuant to Federal
Rules of Civil Procedure Rules 12(b)(6) and 9(b), filed January
23, 1995; and Plaintiffs Motion for Leave to File Supplemental
Memorandum in Support of Plaintiff’s Opposition to
Defendant’s Motion to Dismiss, filed November 15, 1995. The
Court has reviewed the Memorandum in Support of Defendants’
Motion to Dismiss, Defendant National Car Rental, Inc.’s
motion, Plaintiff’s Memorandum in Opposition, and Defendants’
Reply as well as Plaintiff’s Motion for Leave to File
Supplemental Memorandum and Defendants’ Responses in
Opposition.
The issue in this case involves whether either state action
immunity or the Local Government Antitrust Act of 1984 shields
car rental companies that operated out of Stapleton International
Airport (SIA) and who currently operate out of Denver
International Airport (DIA) from liability under the Sherman
Antitrust Act for charging and collecting a uniform fee from
consumers entering into car rental contracts at those locations.
Plaintiff’s contention is that since 1993, Defendants jointly
agreed to, and have in fact charged individuals into entering
into rental car contracts at SIA and DIA a uniform $2.98 daily
29a
Appendix B
fee in addition to their quoted rental prices. Plaintiff contends
any agreement for a uniform fee is in violation of the Sherman
Antitrust Act. Defendants admit that they have added a per-day
uniform fee of $2.98 to every car rental contract since November
1, 1993. Defendants, however, contend that they are required to
charge and collect this fee pursuant to Denver Bond Ordinance
No. 863. Plaintiff does not deny the existence of the Bond
Ordinance, but asserts that Defendants have sole control over
the amount of the fee and in fact are not required to charge and
collect any amount; that the ordinance simply asserts the
companies pay a fee for each car rental contract entered into
with consumers at SIA and DIA.
The Sherman Antitrust Act prohibits combinations and
agreements that result in anticompetitive activity. 15 U.S.C. § 1
(1995). However, the general prohibition is not without
exception. In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307 (1943)
[hereinafter Parker], the United States Supreme Court
recognized Congress’ intent to provide antitrust immunity for
State directed action by noting that “an unexpressed purpose to
nullify a state’s control over its officers and agents is not lightly
to be attributed to Congress.” 371 U.S. at 351. The Parker Court
found “nothing in the language of the Sherman Act or in its
history which suggests that its purpose was to restrain a state or
its officers or agents from activities directed by its legislature.”
317 U.S. at 350-51. Private parties may assert state action
immunity if their challenged activity is compelled and
supervised by the state. Southern Motor Carriers Rate
Conference, Inc. v. United States, 471 U.S. 48, 105 S.Ct. 1721
(1985) [hereinafter Southern Motor).
While municipalities, and private parties compelled to act
upon the directive of municipal ordinances, are not
30a
Appendix B
unequivocally allocated the same immunity as are states, when
a municipal ordinance is enacted pursuant to a clearly articulated
and affirmatively expressed state directive to replace competition
with regulation, the Parker doctrine shields municipalities and
individuals acting upon municipal compulsion from antitrust
liability. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105
S.Ct. 1713 (1985) [hereinafter Hallie].
A private party, acting at the direction of a municipal
ordinance, is immune from antitrust liability under state action
immunity if that party’s actions satisfy two requirements. First
the state must have articulated a clear, affirmative policy
allowing municipalities to engage in anticompetitive conduct.
California Retail Liquor Dealers Ass'n. v. Midcal Aluminum,
Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943 (1980) [hereinafter
Midcal}. Second, the state or municipality must actively
supervise the anticompetitive conduct. Jd. This two part test
ensures such anticompetitive activity is pursuant to a deliberate
state economic policy and is not solely for the benefit of the
private party. Federal Trade Commission v. Ticor Title Ins. Co.,
504 U.S. 621, 634-35, 112 S.Ct. 2169, 2177 (1992).
A. Colorado Has Articulated an Affirmative Policy
Allowing Anticompetitive Conduct
Defendants assert the collection of usage fees from their
customers is required by the Denver Bond Ordinance. In order
to ascertain whether the Denver Bond Ordinance is the result of
a Clearly articulated state policy, the applicable state statutes
must be analyzed. The City and County of Denver must have
had state authorization to enact ordinances, which accepting
Plaintiff’s argument, have resulted in anticompetitive conduct.
While express authorization of the anticompetitive action is not
3la
Appendix B
required, the conduct must be either a foreseeable result of state
policy or it must be “clear that anticompetitive effects logically
would result from [the] broad authority to regulate.” Hallie, 471
U.S. at 42. “As long as the State as sovereign clearly intends to
displace competition in a particular field with a regulatory
structure, the first prong of the Midcal test is satisfied.” Southern
Motor, 471 U.S. at 65.
The Colorado Airport Act gives the City and County of
Denver authority to limit competition within the operation of
an airport. Colo. Rev. Stat. (C.R.S.) § 41-4-101 et seg. (1993).
Specifically, the Colorado legislature authorized cities and
counties to gain: ;
acquisition of any lands for the purpose of
establishing airports or other air navigation
facilities; .. . the acquisition, establishment,
construction, enlargement, improvement,
maintenance, equipment, and operation of
airports ...; 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 government functions ...
C.R.S. § 41-4-101 (1993).
Additionally, the Colorado legislature specifically granted
counties the authority:
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, together
32a
Appendix B
with a lien to enforce their payment; to lease
or assign for operation such space or area,
appurtenances, appliances, or other
conveniences necessary or useful in
connection therewith ...
C.R.S. § 41-4-106 (1993).
Through the Colorado Airport Act, the General Assembly
has also granted cities and towns the authorization to create
“airport authorities” for the “purpose of acquiring and improving
airports, ... and related facilities.” C.R.S. § 41-3-102 (1986).
The General Assembly also authorized counties to rent or lease
such facilities “upon such terms and conditions as are deemed
in the best interests of the county by the board of county
commissioners.” C.R.S. § 41-4-112 (1986).
The County and Municipality Development Revenue Bond
Act specifically allows for the issuance of bonds for special
projects. C.R.S. § 29-3-101 et seq. (1986 & Supp. 1995). The
General Assembly expressly indicated such an intent by stating
[i]t is the intent of the general assembly by the passage of this
article to authorize counties and municipalities to finance, ...
[and] improve . . . properties to the end that such counties and
municipalities may be able to promote industry.” C.R.S. § 29-3-
102(1) (1986).
Additionally, the General Assembly specifically indicated
that it is the intention of the assembly “to vest such counties
and municipalities with all powers that may be necessary to
enabie them to accomplish such purposes, which powers shall
in all respects be exercised for the benefit of the inhabitants of
this state for the promotion of their ... welfare, convenience,
i ee
33a
Appendix B
and prosperity.” C.R.S. § 29-3-102(3) (1986). The General
Assembly authorized counties and municipalities (1) “to
improve and equip; and to finance, [and] refinance . . . projects.”
C.R.S. § 29-3-104(1)(a) (1986); (2) “[t]o enter into financing
agreements with others for the purpose of providing revenues
to pay the bonds authorized by this article,” C.R.S. § 29-3-
104(1)(b) (1986); and (3) “[t]o issue revenue bonds for the
purpose of defraying the cost of financing, refinancing,
acquiring, improving, and equipping any project, including the
payment of principal and interest on such bonds.” C.R.S. § 29-
3-104(1)(c) (1986).
The statute which authorizes the issuance of bonds is the
County and Municipality Development Revenue Bond Act.
C.R.S. § 29-3-101 et seq. (1986 & Supp. 1995). Such bonds are
“special limited obligations.” C.R.S. § 29-3-105(1) (1986).
“[T]he principal of and interest on such bonds shall be payable,
subject to the mortgage provisions in this article, solely out of
the revenues derived from the financing, refinancing, sale or
leasing of the project.” Jd.
Upon such authority, the City and County of Denver passed
the Denver Bond Ordinance on November 8, 1993. The
ordinance states that the Special Facilities Leases shall require
that:
a Usage Fee shall be charged and collected
by each [car rental] company from the person
entering into each motor vehicle rental
agreement with the Company at Stapleton
International Airport prior to the opening date
of Denver International Airport for
commercial business as established by the
34a
Appendix B
City, and after such opening date .... The
amount of the Usage Fee for the period from
the date of issuance of the Bonds to October
1, 1994 shall be $2.98 per transaction day
and shall be the same in each Special
Facilities Lease.
City and County of Denver, Co. Bond Ordinance 863, § 3.4(a)
(Nov. 8, 1993) (emphasis added). Additionally, the Ordinance
mandates the car rental companies to remit the collected fees to
the city’s Paying Agent to be applied to the Bond payment. /d.
The Tenth Circuit has considered the Colorado Airport Act
in Allright Colorado, Inc. v. City and County of Denver, 937
F.2d 1502 (10th Cir. 1991) [hereinafter Allright Colorado]. In
that case, a group of off-site parking operators offering shuttle
bus service to their parking lots claimed that the city’s preference
for city-owned shuttle services disadvantaged them and resulted
in anticompetitive conduct. 937 F.2d at 1505. To determine if
state action immunity applied, the court analyzed the Colorado
Airport Act. The court found that the statutory authority of the
Airport Act “clearly and affirmatively express[es] a state policy
to displace competition in the operation of airports and related
activities .. .” 937 F.2d at 1509.
The court in Allright Colorado found the initial authority
under the Colorado Airport Act to expressly authorize the
anticompetitive conduct because the state authority expressed
the intention of cities and municipalities to regulate economic
policy regarding airports. 937 F.2d at 1508-09. Not only do state
statutes specifically authorize cities and municipalities to take
authority over airports, but they also allow for the issuance of
bonds to finance and improve airports. C.R.S. § 29-3-101 et
35a
Appendix B
seq. (1986 & Supp. 1995). The statute also gives the authority
to establish a means to ensure repayment of those bonds. C.R.S.
§ 29-3-104(1)(d) (1986). The City and County of Denver enacted
the Denver Bond Ordinance pursuant to state authority, therefore
the first part of the state action immunity test is met.
Plaintiff argues that the Colorado Airport Act does not
specifically refer to car rental activities. While this is true, the
Court notes that the Colorado Airport Act does not specifically
refer to shuttle bus services either. Nevertheless, the Tenth
Circuit found that the Colorado Airport Act provided the
necessary authority to displace competition. The case at hand
involves “related activities” as referred to in Allright Colorado.
The City and County of Denver clearly had the authority to issue
bonds to finance new car rental facilities at DIA. Once the City
and County of Denver issued bonds to finance the DIA facilities,
it was within the best interest of the inhabitants of the State of
Colorado and the City and County of Denver that those bonds
be repaid. Therefore, under the authority of the Colorado Airport
Act and the County and Municipality Development Revenue
Bond Act, it is reasonably foreseeable that the City and County
of Denver would enact anticompetitive legislation for the
purpose of ensuring the principal and interest of the airport bonds
be paid.
B. The City and County of Denver Actively Supervise
the Anticompetitive Conduct
The second prong of the state action immunity doctrine
requires that the anticompetitive conduct is actively supervised.
Midcal, 445 U.S. at 105 (1980). This ensures that the conduct
continues in the interest of the state and the policy expressly
indicated by the state authority.
36a
Appendix B
Plaintiff contends there is inadequate supervision to meet
this prong. The Denver Bond Ordinance, however, expressly
authorizes the method of fee determination, as well as its
collection and application to the Bond payment. First, the amount
of the Usage Fee is determined by an Independent Consultant
appointed by a Managing Committee with the approval of the
Manager. Bond Ordinance 863 § 1.3, p.14 & 3.4(b). While the
Managing Committee is comprised of authorized rental car
company representatives, the Manger is identified as, first the
Manager of Public Works of the City or his designee, and then
at a later date, as the Manager of Aviation of the City or his
designee. Jd. § 1.3, p.17. Therefore, the Independent Consultant
can not be appointed without the approval of the City. Indeed,
the Bond Ordinance specifies a certain company as the original
Independent Consultant.
Second, the amount of the usage fee is not within the sole
discretion of the Independent Consultant. The Special Facilities
and Grounds Lease referred to in the Denver Bond Ordinance
expressly sets out a formula to guide the determination of the
amount of the fee. (Exhibit B to Memorandum in Support of
Defendants’ Motion). Specifically, the Special Facilities and
Grounds Lease, as well as the Bond Ordinance, mandate that
the usage fees shall equal 115 percent of the sum of the principal
of and interest on the Bonds maturing within the current twelve
month period, along with reasonably projected Administrative
Costs. Special Facilities and Grounds Lease, § 6.3(c) and Bond
Ordinance 863 § 3.4(b). The City has a set period to comment
on the proposed amount of the Usage Fee and retains the ability
to object to any proposal the Independent Counsel submits. Bond
Ordinance 863 § 3.4(c).
Third, if the amount proposed by the Independent
SSA, renee LANGA ele SIN en dt Sa glE eRe GE ORI IEE Pes Ie mae
Sie pA Ph enpot
37a
Appendix B
Consultant does not cover the principal and interest plus costs
as directed by the Bond Ordinance, the City can charge and
collect any additional amounts from the car rental companies.
Id. § 3.4(b). Consequently, while Plaintiff argues that the City’s
supervision is “toothless,” it is clear that the City retains ultimate
control over the amounts paid by the car rental companies to
repay the bonds. Therefore, the City retains control over the
amount of the usage fee, requires the usage fee to be charged,
provides instructions on how such monies are paid to the City
and mandates the steps to be taken if the monies paid to the
City are not enough to cover the principal and interest on the
bonds.
The City and County of Denver meets the minimal
requirements for active supervision of this conduct. The Denver
Bond Ordinance specifically requires rental car companies to
charge and collect a fee from their customers. Those companies
then must pay the City. The City actively engages in the
committee that oversees the analysis of the amount of the usage
fee required and has the authority to compel any car rental
company to pay additional costs if the projections of the
Independent Consultant do not meet the Bond expenses.
Conclusion
The acts complained of constitute a method of repaying
the bonds which allows the car rental companies to have some
input into paying the debt for which they are legally responsible.
The arrangement also benefits the City and County of Denver
which has an arranged method for the repayment of its bonds.
The City and County of Denver devised a state authorized
method by which the users of the facilities pay the bond
payments through a usage fee. In effect, this activity does not
38a
Appendix B
result in anticompetitive conduct. Plaintiff does not contend that
the Defendants raised their quoted rental prices to an amount
that is uniform. Instead the Defendants simply added a uniform
fee to those differing price quotes. Therefore, the competition
remains the same between the car rental companies.
Additionally, the monies collected from the added usage fee is
not the property of the rental car companies, and therefore does
not result in an increase of profit for any car rental company.
Specifically those monies, as per the Special Facilities and
Ground Leases, “are property in which the [rental car] Company
holds only a possessory interest and not an equitable interest.”
Special Facilities and Grounds Lease, § 6.3(e).
Therefore, the state action immunity doctrine shields the
Defendant car rental companies from antitrust liability. To hold
otherwise would punish the Defendants for complying with local
laws. The key is that these Defendants imposed a fee on the
rental transactions pursuant to a legitimate ordinance. In that
the Denver Bond Ordinance was passed with the express
authority of the State, to the extent that it results in
anticompetitive effect, the Defendants are shielded by the Parker
state action immunity doctrine.
Due to the applicability of the state action immunity doctrine
to this case, the Court need not look to the Local Government
Antitrust Act to find further immunity for the defendants.
The Court finds that it is not necessary to consider Plaintiff's
supplemental documents. The issues in this case rest on the fact
that the Defendants acted pursuant to a current municipal
ordinance. A plain reading of the Denver Bond Ordinance shows
Defendants’ actions are required by the City and County of
Denver. In addition, the date of the documents submitted makes
them irrelevant to the issues in this case.
39a
Appendix B
Jurisdiction over Plaintiff’s remaining claims is conferred
by 28 U.S.C. § 1367 which is a codification of the doctrine of
supplemental jurisdiction. Supplement?l iurisdiction is a
Statutory invention which supplanted the noticns of pendent and
ancillary jurisdiction, and was codified as part of the Judicial
Improvements Act of 1990. Section 1367 gives jurisdiction over
“all other claims that are so related to claims in the action within
such original jurisdiction that they form part of the same case
Or controversy under Article III of the United States
Constitution.” 28 U.S.C. § 1367(a). That statute also states that
“[a] district court may decline to exercise supplemental
jurisdiction over a claim in subsection (a) if the district court
has dismissed all claims over which the district court has original
jurisdiction.” 28 U.S.C. § 1367(c)(3).
Because the only claim over which this Court has original
jurisdiction is being dismissed, this Court declines, pursuant to
28 U.S.C. § 1967(c)(3), to exercise supplemental jurisdiction
over the remaining state law claims.
It is, therefore, ORDERED that
1. Defendants’ Motions to Dismiss are GRANTED. Count
I of Plaintiff’s complaint is dismissed with prejudice.
2. Plaintiff’s second, third and fourth claims for relief are
dismissed without prejudice.
3. Plaintiff’s Motion For Leave to File Supplemental
Memorandum in Support of Plaintiff’s Opposition to
Defendant’s Motions to Dismiss is DENIED.
Finally the Court notes that no appearance has been entered
40a
Appendix B
on behalf of Tiara Enterprises, Inc. The Court also notes that
Defendant Tiara has been served. Plaintiff is given until March
4, 1996 to file a motion for default judgment against Tiara
Enterprises, Inc. or the Court will dismiss that Defendant for
failure to prosecute.
DATED at Denver, Colorado, this 23rd day of February,
1996.
BY THE COURT:
s/ Daniel B. Sparr
Daniel B. Sparr
United States District Judge
tanh ahi Medea ton Iney a 5
7 4la
APPENDIX C — EXCERPTS OF ORDINANCE 863, SERIES
1993, CITY AND COUNTY OF DENVER, COLORADO
CITY AND COUNTY OF DENVER
STATE OF COLORADO
Certification
I, Arie P. Taylor, Clerk and Recorder, Ex-Officio Clerk of
the City and County of Denver, do hereby certify that the attached
is a true and correct copy of Ordinance No. 863 Series 1993
I have hereunto set my hand and
affixed the Seal of the City and County
of Denver, State of Colorado, this 12th
day of August A.D. 1994
Arie P. Taylor
Clerk and Recorder, Ex-officio
Clerk of the City and County of Denver
s/ Donna Verris
Deputy
* * *
Section 1.3. Definitions. Terms defined in the Recitals to
this Ordinance shall have the meanings assigned to them in the
Recitals, except that if any term is defined in both the Recitals
and in this Section 1.3, the definition of such term in this Section
1.3 shall control. For all purposes of this Ordinance, except as
otherwise expressly provided or unless the context otherwise
requires:
“Administrative Expenses” means (a) any fees charged or
42a
Appendix C
expenses incurred by the City in connection with the Facilities,
the Special Facilities Leases, the Concession Agreements, this
Ordinance, the issuance and sale of the Bonds, and any event or
act with respect to or in furtherance of the transactions
contemplated hereby or thereby, including but not limited to
(i) fees charged by the City for services performed by the
Treasurer or other officers or employees of the City, and his and
their designees and agents, with respect to the holding,
investment and disbursement of moneys, giving and receiving
notices or other information and taking other actions required
or permitted to be taken by the City or the Treasurer pursuant to
the Special Facilities Leases, the Concession Agreements or this
Ordinance, which fees shall not exceed fees charged by the City
for the performance of comparable services in similar
transactions, (ii) any reasonable fees and expenses incurred by
the City (including reasonable fees and expenses of Counsel to
the City) in connection with the items referred to in this clause
(a); and (iii) any taxes or governmental charges payable by the
City in connection with the Facilities, the Bonds or any of the
other items referred to in this clause (a); (b) the fees, including
an initial or acceptance fee and the annual fee, and the reasonable
expenses of the Credit Facility Issuer under the Reimbursement
Agreement and each of the Credit Support Banks under the
separate Credit Support Agreements between such Credit
Support Banks and the respective Companies; (c) the fees,
including any initial or acceptance and any annual fee, and the
reasonable expenses of the Paying Agent (including reasonable
fees and expenses of Counsel to the Paying Agent), the Bond
Registrar and the Independent Consultant for ordinary services
rendered by them under this Ordinance, and the reasonable fees
and expenses of the Paying Agent, the Bond Registrar and the
Independent Consultant for extraordinary services rendered by
them under this Ordinance; (d) any fees and expenses similar
VEN RNR) OP eA eee
PPE PSE iP tats ates Rr sn, SIH WT NEE
OF SARS, TI MAE OPE Leh RAEN NIE Ht
.
&
3
3
a
an
43a
Appendix C
to those described in clause (c) of this definition for other persons
retained by the City, the Managing Committee or a Company to
perform services in connection with any of the foregoing; and
(e) any reasonable costs incurred by any Registered Owner in
connection with any proposed amendment, consent or waiver
requested under this Ordinance, the Credit Facility or any
document related thereto, including the fees of any special
counsel, if and to the extent approved by the Treasurer and the
Managing Committee; provided, however, that all fees, expenses
or other charges included in Administrative Expenses shall be
subject to any agreement, other arrangement or law specifying
or limiting the same; and provided further that, subject to any
contrary provision or any agreement, other arrangement or law
referred to in the preceding proviso, Administrative Expenses
do not include any fees or expenses that would not have been
charged or incurred but for the negligence or misconduct of the
person charging or incurring the same.
* * *
“Company” or “Companies” means the following entities,
and any surviving resulting or transferee entity permitted under
Section 7.3 of each Special Facilities Lease; in addition, each
Company’s Share and Percentage of the Bonds shall be as set
forth below:
Company’s Company's
Share Percentage of
Company ofBonds — Bonds
Steamboat Springs Rental and $ 959,092 1.462499%
Leasing, Inc. d/b/a Advantage
Advantage Rent-A-Car, Inc.
(“Advantage”)
44a
Appendix C
Alamo Rent-A-Car, Inc.
(“Alamo”)
Avis Rent-A-Car System, Inc.
(“Avis”)
Budget Rent a Car Systems, Inc.
(“Budget”)
Trynd, Inc. d/b/a Dollar Rent-A-
Car (“Dollar”)
Enterprise Leasing Co. of
Denver (“Enterprise”’)
The Hertz Corporation
(“Hertz”)
National Car Rental Inc.
(“National”)
Tiara Enterprises, Inc. d/b/a
Payless Car Rental (“Payless”)
Resort Rent-A-Car, Inc.
(“Resort”)
Thrifty Rent-A-Car System, Inc.
(“Thrifty”)
Value Rent-A-Car, Inc.
(“Value”)
8,247,275
10,864,307
7,562,004
4,915,160
1,432,458
18,185,333
6,310,313
1,051,358
1,009,873
1,861,583
3,180,244
12.57609 1
16.566747
11.531136
7.495021
2.184320
27.730421
9.622460
1.603193
1.539934
2.838688
4.849485
45a
Appendix C
“Cost” or “Costs” means any cost made or incurred in
respect in respect of the Facilities or the Terminal Improvements
permitted under the Act or the Charter. Without limiting the
generality of the foregoing, such costs may include: (i) amounts
payable to contractors and suppliers (including fees for designing
the Facilities and the Terminal Building Premises where the
designs are provided by the contractor or supplier); (ii) costs of
labor, services, materials, supplies and equipment furnished by
a Company or by Company personnel (including shipping costs
and such Company’s standard, reasonable allowances for
overhead); (iii) architectural, engineering, legal and other
professional fees; and (iv) Administrative Expenses.
“Counsel” means an attorney at law or a firm of attorneys
(who may be an employee of or counsel to the City, a Company
or the Paying Agent) duly admitted to the practice of law before
the highest court of any state of the United States of America.
* * *
“Independent Consultant” means David M. Griffith &
Associates or other independent accountant or consultant or
accounting or consulting firm appointed from time to time by
the Managing Committee with the approval of the Manager, who
has a favorable reputation for special skills and knowledge which
enable it to perform its duties under this Ordinance.
* * *
“Managing Committee” means a committee by such name
composed of one Authorized Company Representative for each
of the following Companies: Alamo, Avis, Budget, Dollar, Hertz
and Payless; provided that any such Company may be replaced
46a
Appendix C
in accordance with written notice given by at least 66 2/3% of
the members of the Managing Committee to the City, the Paying
Agent and the Credit Facility Issuer. The Authorized Company
Representatives on the Managing Committee and the Chair of
such Committee serving from time to time shall be as set forth
in written notices filed with the City, the Paying Agent and the
Credit Facility Issuer.
“Usage Fees” means the amounts to be charged pursuant to
each motor vehicle rental contract which is subject to the Airport
concession and collected by each respective Company under
Section 6.3 of the Special Facilities Leases as the same may be
in effect from time to time, which Usage Fees are to be credited
against Facilities Rentals and Administrative Expenses to the
extent set forth in the respective Special Facilities Leases.
* * *
Section 1.15. Certain Determinations and Findings. In
accordance with the Act, the following determination and
findings are hereby made:
(a) The maximum amount necessary in each year to
pay the principal of and the interest on the Bonds (based on
the interest rate(s) on the Bonds and assuming that interest
is paid semiannually and assuming no redemptions, other
than mandatory sinking fund redemptions, prior to maturity)
is as follows:
PT OR Fire RT 0) 5
47a
Appendix C
Annual Period to
and Including Annual Debt Service
December 31 Requirement
1994 $11,550,205.21
1995 11,550,556.40
1996 11,551,026.10
1997 11,550,639.00
1998 11,550,915.70
1999 11,550,206.10
2000 11,550,860. 10
(b) Other than the establishment and maintenance of a
Reserve Balance in the Car Rental Special Facilities
Revenue Fund and the deposit to the Special City Reserve
Fund, no amounts are required to be paid into any reserve
fund in connection with the issuance of the Bonds.
(c) Each Special Facilities Lease requires that a
Company maintain, or cause to be maintained, the Facilities
leased to it and to carry, or cause to be carried, all proper
insurance with respect thereto.
(d) The revenues and other amounts payable under the
Special Facilities Leases are sufficient to pay, in addition
to all other requirements of the Special Facilities Leases
and this Ordinance, all sums referred to in subsections (a),
(b) and (c) of this Section 1.15.
48a
Appendix C
(e) The revenues and other amounts payable under the
Special Facilities Leases are sufficient to pay, in addition
to all other requirements of the Special Facilities Leases
and this Ordinance, all taxes or payments in lieu of taxes
levied upon the Facilities.
* * *
ARTICLE II
THE BONDS
Section 2.1. Authorized Amount of Bonds; Deposit of
Proceeds. No Bonds may be issued under the provisions of this
Ordinance except in accordance with this Article II. The total
principal amount of Bonds issued hereunder shall be
$65,579,000, except as provided in Section 2.7 hereof. From
the proceeds of the sale of the Bonds, the City shall (a) deposit
with the Paying Agent in an Issuance Expense Account such
amounts to be paid to such persons as shall be directed by the
Treasurer in writing at the time of the issuance of the Bonds,
(b) pay to the City the amount of $1,979,587 for certain design
and construction expenditures made by the City in respect of
certain improvements originally expected to be used by the
Companies, (c) deposit to the Capitalized Interest Account in
the Car Rental Special Facilities Revenue Fund the amount of
$1,461,482.66 or such other amount as shall be directed by the
Treasurer, as required by Section 3.1(c) hereof, and (d) deposit
the balance into the respective Company Construction Accounts
in the Construction Fund as shall be directed by the Treasurer
in writing at the time of issuance of the Bonds.
* * *
49a
Appendix C
(ii) Administrative Expense Account. On the first
day of each month, commencing January 1, 1994, the
Paying Agent shall transfer $100,000 from the Car
Rental Special Facilities Revenue Fund to such Account
and such additional amounts as from time to time may
be necessary to pay Administrative Expenses as the same
become due; provided, that the amount of such monthly
transfer may be increased or decreased as shall be
directed by the Managing Committee with the approval
of the Treasurer and the Credit Facility Issuer.
oe * *
Section 3.4. Usage Fees.
(a) Under Section 6.3 of each Special Facilities Lease,
commencing on the date of original issuance and delivery of
the Bonds, a Usage Fee shall be charged and collected by each
Company from the person entering into each motor vehicle rental
agreement with the Company at Stapleton International Airport
prior to the opening date of Denver International Airport for
commercial business as established by the City, and after such
opening date, which is subject to the requirements set forth in
Section 6.2 of the Concession Agreements with respect to the
payment of Concession Fees. The amount of the Usage Fee for
the period from the date of issuance of the Bonds to October 1,
1994 shall be $2.98 per transaction day and shall be the same in
each Special Facilities Lease. Usage Fees collected by each
Company shall be paid monthly to the Paying Agent for deposit
in that Company’s Revenue Account in the Car Rental Special
Facilities Revenue Fund for credit against such Company’s
obligations to pay Facilities Rentals and Administrative
Expenses. In the event that the Usage Fees collected by a
50a
Appendix C
Company and paid to the Paying Agent for any six-month period
ending on April 1 or October 1, when added to other moneys
available in such Company’s Revenue Account, are not sufficient
to pay when due the principal of and interest on such Company’s
Percentage of the Bonds and the portion of the Administrative
Expenses corresponding to such Company’s Percentage of the
Bonds during such six-month period, the Paying Agent shall
notify such Company of the expected deficiency at least 15 days
before the next Interest Payment Date, and the Company is
required to pay, or cause to be paid, an amount equal to such
deficiency pursuant to Section 6.1 or 6.5 of its Special Facilities
Lease. As required under the Special Facilities Leases, the
amount of such deficiency shall be paid not later than five days
prior to such Interest Payment Date.
(b) The Usage Fee for each 12-month period commencing
October 1, 1994 shall be an amount determined by the
Independent Consultant to be sufficient to produce revenues
which, together with available Reserve Balances in the respective
Company Revenue Accounts in the Car Rental Special Facilities
Revenue Fund equal, in the aggregate, to 115% of the sum of
the principal of and interest on the Bonds coming due in such
12-month period plus the reasonably expected Administrative
Expenses for such 12-month period, deficiencies then existing
in the Special City Reserve Fund, and payments to the City under
Section 3.1(d) hereof, for such period. In determining the amount
of the Usage Fee for any period the Independent Consultant
shall evaluate such factors as it shall deem necessary which may
include, among other things, the number of transaction days
experienced by the Companies for one or more previous years
for the rental of motor vehicles subject to the payment of
Concession Fees (or comparable information at Stapleton
International Airport), the number of transaction days estimated
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Appendix C
by the Companies for such period for the rental of motor vehicles
subject to the payment of Concession Fees, and an estimate of
the number of origination and destination passengers at the
Airport for such period.
(c) The Independent Consultant shall consult with the
Manager and the Managing Committee and shall furnish to the
City, the Companies, the Paying Agent and the Credit Support
Banks a report not later than July 1 of each year, commencing
July 1, 1994, setting forth the Usage Fee for the immediately
succeeding 12-month period beginning October 1 which, in the
opinion of the Independent Consultant, is necessary to produce
the required Usage Fee receipts (including any deficiencies in
the balance in the Administrative Expense Account, in the
Special City Reserve Fund, and in the amounts required to be
paid to the City under Section 3.1(d) hereof for the 12-month
period), together with an explanation of the basis for determining
such amount. The City, the Companies and the Credit Support
Banks shall have until July 15 of such year to comment upon
the proposed amount of the Usage Fee recommended in such
report and the assumptions, projections and other criteria
evaluated by the Independent Consultant in its determination of
such amount. If the City, the Managing Committee and none of
the Credit Support Banks object to the amount of the proposed
Usage Fee set forth in such report by July 15 of such year, such
usage Fee shall be charged and collected by such Company for
the immediately succeeding 12-month period commencing on
October 1. In the event that the City, the Managing Committee
or any Credit Support Bank furnishes to the Independent
Consultant and the City, the Paying Agent, the other Companies,
and the other Credit Support Banks, as the case may be, a written
notice objecting to the amount of the proposed Usage Fee and
setting forth tue basis for such objection, the Independent
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Appendix C
Consultant shall evaluate the objection to the amount of the
proposed Usage Fee, including the basis for such objection, and
if it deems any adjustments are necessary to the amount of the
proposed Usage Fee shall recalculate the amount of the proposed
Usage Fee for such 12-month period taking into account, as
deemed appropriate by the Independent Consultant, the basis
for the objection to the proposed Usage Fee as set forth in such
notice and such other information which may be furnished by
the City, the Companies, and any Credit Support Bank. The
Independent Consultant shall furnish to the City, the Paying
Agent, the Companies and the Credit Support Banks a report
not later than August | of such year setting forth the amount of
the recalculated Usage Fee which shall be charged and collected
by each Company in accordance with Section 6.3 of its Special
Facilities Lease for the immediately succeeding 12-month period
commencing on October 1. The Paying Agent shall send a copy
of all reports of the Independent Consultant to each Registered
Owner requesting same.
Section 3.5. Creation of the Construction Fund. There is
hereby created and ordered established with the Paying Agent a
special fund to be designated “City and County of Denver,
Colorado, Taxable Airport Special Facilities Revenue Bonds
(Rental Car Projects), Series 1993, Construction Fund” (the
“Construction Fund”), for the payment of Costs of the Facilities.
A separate account (a “Company Construction Account”) shall
be established in the Construction Fund for each Company. The
Construction Fund shall be maintained and kept by the Paying
Agent separate from all other moneys, funds and accounts. After
depositing and paying the amounts required under Section 2.1
hereof, the City shall forthwith deposit the balance of the net
proceeds of the Bonds in the respective Company Construction
Accounts in Construction Fund in accordance with instructions
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from the Treasurer. The Construction Fund shall consist of the
amounts deposited therein pursuant to this Ordinance and any
other amounts any Company may deposit therein. The amounts
in the Construction Fund, until applied as hereinafter provided,
shall be held for the security of all Bonds outstanding hereunder.
The Paying Agent shall maintain a record of the income on
investments and interest earned on deposit of amounts held in
each Company Construction Account within the Construction
Fund and on proceeds of the Bonds in respect of accrued or
capitalized interest held by the Paying Agent as Pledged
Revenues. Such income or interest may be expended at any time
or from time to time to pay Costs of the Facilities in the same
manner as the proceeds of Bonds deposited in the Construction
Fund are expended, and for no other purpose.
. * *
Section 5.3. Alternate Credit Facilities. The Managing
Committee may, at its option, and with the consent of at least
66-2/3% in aggregate principal amount of the Bonds then
outstanding, provide for the delivery to the Paying Agent of an
Alternate Credit Facility having administrative terms acceptable
to the Paying Agent. The Registered Owners may, upon a
downgrade of the rating of the Credit Facility Issuer by Moody’s
or S&P below A or A-2, respectively, at their option (which may
be exercised only upon approval by Registered Owners holding
at least 66 2/3% in aggregate principal amount of the Bonds
then outstanding), provide for the delivery to the Paying Agent
of an Alternate Credit Facility having administrative terms
acceptable to the Paying Agent.
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Appendix C
ARTICLE VI
INVESTMENT OF MONEYS
Section 6.1. Investment of Bond Fund, Construction Fund,
Special City Reserve Fund and Car Rental Special Facilities
Revenue Fund Moneys. Any moneys held as part of the Car
Rental Special Facilities Revenue Fund, the Bond Fund, or the
Company Construction Accounts in the Construction Fund shall
be invested and reinvested by the Paying Agent, at the written
direction (or oral direction confirmed in writing) of the
Managing Committee, in accordance with Section 5.7 of the
Special Facilities Leases. Investments of moneys held in the
Special City Reserve shall be invested and reinvested by the
Paying Agent at the written direction of the Treasurer in
accordance with Section 3.9. Investments of the Car Rental
Special Facilities Revenue Fund and Company Construction
Accounts in the Construction Fund shall be made in Investment
Securities maturing or subject to redemption by the holder at
such time or times when such moneys are reasonably anticipated
to be needed for construction and acquisition of the Facilities,
but in no event shall such Investment Securities have a maturity
of more than 18 months. Investments of the Bond Fund and the
Special City Reserve Fund shall be made in Federal Securities
with maturities not exceeding six months.
55a
APPENDIX D — EXCERPTS FROM COLORADO
REVISED STATUTES §§ 29-3-101, et seg. (COUNTY AND
MUNICIPALITY DEVELOPMENT REVENUE BONDS)
zs * «*
29-3-102. Legislative declaration. (1) It is the intent of
the general assembly by the passage of this article to authorize
counties and municipalities to finance, acquire, own, lease,
improve, and dispose of Properties to the end that such counties
and municipalities may be able to promote industry and develop
trade or other economic activity by inducing profit or nonprofit
corporations, federal governmental offices, hospitals, and
agricultural, manufacturing, industrial, commercial, or business
enterprises to locate, expand, or remain in this State, to mitigate
the serious threat of extensive unemployment in parts of this
State, to secure and maintain a balanced and stable economy in
all parts of this state, or to further the use of its agricultural
products or natural resources.
(2) It is further intent of the general assembly to authorize
counties and municipalities to finance, refinance, acquire, own,
lease, improve, and dispose of Properties to the end that pollution
may be ameliorated and controlled more adequate hospital care
may be provided, more adequate residential housing facilities
for low- and middle-income families and persons may be
provided, more adequate facilities for disposing of sewage and
solid waste and furnishing water, energy, and gas may be
provided, more adequate facilities for Sports events and activities
and recreation activities, conventions, and trade shows may be
provided, more adequate airports, mass commuting facilities,
parking facilities, or storage or training facilities may be
provided, and more adequate research, product-testing, and
administrative facilities may be provided, all of which promote
the public health, welfare, safety, convenience, and prosperity.
(3) It is therefore the intention of the general assembly to
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Appendix D
vest such counties and municipalities with all powers that may
be necessary to enable them to accomplish such purposes, which
powers shall in all respects be exercised for the benefit of the
inhabitants of this state for the promotion of their health, safety,
welfare, convenience, and prosperity.
(4) It is not intended by this article to authorizeany county
Or municipality to operate any manufacturing, industrial,
commercial, or business enterprise, or any research, product-
testing, or administrative facilities of such enterprise, nor to
prohibit the operation of utility plants, residental housing
facilities, hospitals, sewage or solid waste disposil facilities,
facilities for the furnishing of water, energy, or gas sports and
recreation facilities, convention or trade show facilites, airports,
mass commuting facilities, parking facilities, or storage or
training facilities by any county or municipality.
(5) This article shall be liberally construed inconformity
with this legislative declaration.
29-3-103. Definitions. As used in this article unless the
context otherwise requires:
(1) “Bonds” or “revenue bonds” means bond, notes, or
other securities evidencing an obligation and issue: under this
article by a county or municipality.
(2) “County” means any county within this stde.
(3) “Finance” or “financing” means the issuim of bonds
by a county or municipality and the use of substanially all of
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Appendix D
the proceeds therefrom pursuant to a financing agreement with
the user to pay (or to reimburse the user or its designee) for the
costs of the acquisition or construction of a project, whether
these costs are incurred by the county, the municipality, the user,
or a designee of the user. Title to or in the project may at all
times remain in the user, and, in such case, the bonds of the
county or municipality may be secured by mortgage or other
lien upon the project or upon any other property of the user, or
both, granted by the owner or by a pledge of one or more notes,
debentures, bonds, or other secured or unsecured debt
obligations of the user, as the governing body deems advisable,
but no county or municipality shall be authorized hereby to
pledge any of its property or to otherwise secure the payment of
any bonds with its property; except that the county or
municipality may pledge the property of the project or revenues
therefrom.
(4) “Financing agreement” include a lease, sublease,
installment purchase agreement, rental agreement, option to
purchase, or any other agreement or any combination thereof,
entered into in connection with the financing or refinancing of
a project pursuant to this article.
(5) “Mortgage” means a deed of trust or any other security
device for both real and personal property.
(6) “Municipality” means any city, including without
limitation any city or city and county operating under a home
rule or special legislative charter, or town within this State.
(7) “Ordinance” means an ordinance of a city, town, or city
and county.
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Appendix D
(8) “Pollution” means any form of environmental pollution,
including but not limited to water pollution, air pollution,
pollution caused by solid waste disposal, thermal amen
radiation contamination, or noise pollution.
(9) “Pollution control facilities” means any land, building,
or other improvement and all real or personal property, and any
undivided or other interest in any of the foregoing, including
without limitation structures, equipment, pipes, pumps, dams,
reservoirs, improvements, or other facilities useful for the
purpose of reducing, abating, preventing, controlling, or
eliminating pollution caused or produced by the operation of
any manufacturing, industrial, or commercial enterprise or any
utility plant or useful for the purpose of removing or treating
any substance in processed material, which material would cause
pollution if used without such removal or treatment.
(10) “Project” means any land, building, or other
improvement and all real or personal properties, and any
undivided or other interest in any of the foregoing, except
inventories, raw materials, and other working capital, whether
or not in existence, suitable or used for or in connection with
any of the following:
(a) Manufacturing, industrial, commercial, agricultural, or
business enterprises (including, without limitation, enterprises
engaged in storing, warehousing, distributing, selling, or
transporting any products of agriculture, industry, commerce,
manufacturing, or business), or any utility plant;
(b) Hospital, health-care, or nursing-home facilities
(including, without limitation, clinics and out-patient facilities
and facilities for the training of hospital, health-care, or nursing-
home personnel);
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Appendix D
(c) Pollution control facilities;
(d) Residential facilities for low- and middle-income
families or persons intended for use as the sole place of residence
by the owners or intended occupants. “Low- and middle-income
persons and families” means persons and families determined
by a county or municipality (which determination shall be
conclusive) to lack the financial ability to pay prices or rentals
sufficient to induce private enterprise in such county or
municipality to build a sufficient supply of adequate, safe, and
Sanitary dwellings without the special assistance afforded by
this article;
(e) Sewage or solid waste disposal facilities;
(f) Facilities for the furnishing of water, if available on
reasonable demand to members of the general public;
(g) Facilities for the furnishing of energy or gas;
(h) Sports and recreational facilities available for use by
members of the general public either as participants or spectators
and functionally related and subordinate residential housing
facilities, including residential facilities, without regard to the
limitations contained in paragraph (d) of this subsection (10),
for employees of the persons or entities owning or operating
such sports and recreational facilities and facilities located in
proximity to and in connection with sports and recreational
facilities providing treatment, therapy, or recreational
Opportunities for mentally an physically handicapped persons
and families of such persons;
(i) Convention or trade show facilities;
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Appendix D
(j) Airports, facilities for the loading or unloading of
unprocessed agricultural products or raw materials, mass
commuting facilities, railroad facilities, parking facilities, or
storage or training facilities directly related to any of the
foregoing;
(k) Research, product-testing, and administrative facilities;
and
(1) Facilities for private institutions of higher education.
(10.5) “Refinance” or “refinancing” means the issuing of
bonds by a county or municipality and the use of all or
substantially all of the proceeds therefrom pursuant to a
financing agreement with the user to liquidate any obligations
previously incurred to finance or aid in financing of a project
specified in paragraphs (b) to (1) of subsection (10) of this section
which would constitute such a project had it been originally
undertaken and financed by a county or municipality pursuant
to this article. Title to or in the project may remain at all times
in the user, and in such case, the bonds of the county or
municipality may be secured by mortgage or other lien upon
the project granted by the owner or by a pledge of one or more
notes, debentures, bonds, or other secured or unsecured debt
obligations of the user, as the governing body deems advisable.
(11) “Resolution” means a resolution of a county.
(12) “State means the state of Colorado.
(13) “User” means one or more persons who enter into a
financing agreement with any county or municipality relating
to a project; except that the user need not be the person actually
occupying, operating, or maintaining the project.
6la
. Appendix D
(14) “Utility plant” means any facility used for or in
connection with the generation, production, transmission, or
distribution of electricity; the production, manufacture, storage,
or distribution of gas; the transportation or conveyance of gas,
oil, or other fluid substance by pipeline; or the diverting,
developing, pumping, impounding, distribution, or furnishing
of water.
29-3-104. General powers. (1) In addition to any other
powers, each county and municipality has the following powers:
(a) To acquire, whether by construction, purchase, gift,
devise, lease, or sublease; to improve and equip; and to finance,
refinance, sell, lease, or otherwise dispose of one or more
projects or part thereof. If a county issues revenue bonds as
provided in this article to finance, refinance, or acquire projects,
such projects shall be located within said county, or, if a
municipality issues revenue bonds as provided in this article to
finance, refinance, or acquire projects, such project shall be
located within the municipality or within eight miles from the
nearest point of its corporate limits.
(b) To enter into financing agreements with others for the
purpose of providing revenues to pay the bonds authorized by
this article; to lease, sell, or otherwise dispose of any or all of
its projects to others for such revenues and upon such terms and
conditions as the governing body may deem advisable; and to
grant options to renew any lease or other agreement with respect
to the project and to grant options to buy any project at such
price as the governing body deems desirable;
(c) To issue revenue bonds for the purpose of defraying
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Appendix D
the cost of financing, refinancing, acquiring, improving, and
equipping any project, including the payment of principal and
interest on such bonds for not exceeding three years, funding
any reserve funds which the governing body may deem advisable
to establish in connection with the retirement of the proposed
bonds or the maintenance of the project, and all other incidental
expenses incurred in issuing such bonds;
(d) To secure payment of such bonds as provided in this
article.
(2) To further implement section 18 or article XIV of the
state constitution and to supplement part 5 of article 25 of title
31, C.R.S., any county or municipality may delegate, by
resolution or ordinance as the case may be, to any other county
or municipality authority to act on its behalf in the financing,
refinancing, acquisition, leasing, ownership, improvement, and
disposal of projects. Any such delegation may be general or
limited in scope and time and may be irrevocable for the term
or terms of any financing agreement or bond issue, all as
provided in said ordinance or resolution.
* * *
29-3-106. Form and terms of bonds — exemption from
Colorado income tax. (1) The bonds shall be authorized by
resolution of the county commissioners or by ordinance of the
municipality; shall be subject to such maximum net effective
interest rate; and shall be in such denominations, bear such date,
mature at such time not exceeding forty years from their
respective dates, bear such interest at a rate, be in such form,
carry such registration privileges, be executed in such manner,
be payable at such place within or without the state, and be
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Appendix D
subject to such terms of redemption as the authorizing resolution
or supplemental resolution of the county commissioners or the
ordinance or supplemental resolution of the municipality may
provide.
(2) The bonds may be sold in one or more series at par, or
below or above par, at public or private sale, in such manner
and for such price as the county or municipality, in its discretion,
shall determine; but the county or municipality shall not sell
such bonds at a price such that the net effective interest rate of
the issue of bonds exceeds the maximum net effective interest
rate authorized. As an incidental expense of the project, the
county or municipality, in its discretion, may employ financial
and legal consultants in regard to the financing of the project.
(3) The county or municipality may exchange all or a part
of its bonds for all or an equivalent part of the project for which
the bonds are issued, the exchange to be preceded by
determination of the fair value of the project or part of the project
exchanged for the bonds. Such determination shall be by
ordinance of the municipality or by resolution of the governing
body of the county and shall be conclusive.
(4) The bonds shall be fully negotiable under the terms of
article 8 of title 4, C.R.S.
(5) Interest on bonds issued on or after July 1, 1979,
pursuant to this article shall be exempt from Colorado income
tax.
29-3-114. Financing of project. Prior to the issuance of
any bonds authorized by this article, the county or municipality
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Appendix D
shall enter into a financing agreement with respect to the project
with a user providing for payment to the county or municipality
of such revenues as, upon the basis of such determinations and
findings, will be sufficient to pay the principal of and interest
on the bonds issued to finance the project, to build up and
maintain any reserves deemed advisable by the governing body
in connection therewith, and to pay the costs of maintaining the
project in good repair and keeping it properly insured, unless
the financing agreement obligates the user to pay for the
maintenance of and insurance on the project.
* * *
29-3-120. Payment in lieu of taxes. (1) Pursuant to section
4 of article X of the state constitution, all property owned by a
county or municipality pursuant to this article shall be and
remain exempt from taxation. Nevertheless, any county or
municipality acquiring or extending any project as provided in
this article shall annually pay, solely out of the revenues from
the project and not from any other source, to the state of Colorado
and to the city, town, school district, and any other political
subdivision or public body corporate wherein such project is
located, authorized to levy taxes, a sum equal to the amount of
tax which the taxing entity would annually receive if the property
were owned by any private person or corporation, any other
statute to the contrary notwithstanding... .
* * *
65a
APPENDIX E — EXCERPTS FROM COLORADO
REVISED STATUTES §§ 41-3-101, et seq.
AND 41-4-101, et seg. (PUBLIC AIRPORTS)
ARTICLE 3
Public Airport Authority Law
* * *
41-3-102. Legislative declaration. The purpose of this
article is to authorize the creation by cities and towns, and
counties, and the state of Colorado, through their joint action,
and by counties acting by independent action or jointly with the
State, of airport authorities, corporate and politic, and
constituting political subdivisions of the state of Colorado, for
the purpose of acquiring and improving airports, air navigation
facilities, and related facilities, and the financing of the cost of
such acquisition by the issuance of bonds or other obligations
of such authorities payable from the income of any such
authorities and otherwise secured to the extent permitted by law
without the incurrence of an indebtedness by the state of
Colorado, or by...
* * *
41-3-106. Powers of the authority. (1) An authority has
the following powers:
* x* *
(e) To borrow money and to issue bonds payable in whole
or in part from the income of the authority and otherwise secured
to the extent permitted by law; but, before any money shall be
borrowed or any bonds issued, such borrowing or sale shall first —
be approved by the board of county commissioners of any county
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Appendix E
independently creating an authority under the provisions of this
article. Said bonds shall be authorized by resolution of said board
without the necessity of submitting the question of their issuance
to the qualified electors of the municipalities or countres
constituting members of the authority. Said resolution shall
prescribe the form of said bonds, the manner of their execution,
which may be effected by the use of the facsimile signatures of
the officers of the authority in accordance with the laws of the
state in effect at the time of their execution, shall provide for
the terms thereof, including the maximum net effective interest
rate for the issue of bonds, and the security for their payment,
may authorize the issuance of additional bonds having a lien on
a parity with or junior thereto on the income of the authority,
provide for the redemption of said bonds prior to their respective
maturities with or without premium, and direct that said bonds
shall be sold at public or private sale at or below par, but such
bonds shall not be sold at a price such that the net effective
interest rate of the issue of bonds exceeds the maximum net
effective interest rate authorized. The board shall prescribe other
details in connection with the issue of bonds. The bonds so
authorized shall mature serially over a period of not exceeding
thirty years and shall bear interest at a net effective interest rate
not exceeding the maximum net effective interest rate authorized.
Said resolution and bonds may also include such other terms or
recitals which in the judgment of the board are necessary or
proper to render the same marketable. Nothing in this article
shall be construed as authorizing the authority or any county to
assess and levy taxes for the payment of said bonds, nor shall
said bonds be construed to be an indebtedness of the
municipalities or counties constituting members of the authority
or of the county independently creating such authority within
the meaning of any constitutional, charter, or statutory limitation.
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Appendix E
(f) To purchase, trade, exchange, acquire, buy, sell, and
otherwise dispose of and encumber real and personal property
of the authority and any interest therein, including leases and
easements;
x * *
(i) To pledge all or a part of the income of the authority to
the payment of the bonds authorized to be issued pursuant to
the terms of this article and to otherwise secure the payment of
said bonds to the extent permitted by law including, but not
limited to, a conveyance in trust of any or all of the properties
or facilities of the authority as a part of such security;
Gj) To have and exercise the power of eminent domain in
the manner provided by law for the condemnation of private
property for public use and to take any property necessary to
exercise the powers in this article granted, either within or
without the boundaries of the municipalities or counties
constituting members of the authority. In exercising the power
of eminent domain, the procedure established and prescribed
by articles 1 to 7 of title 38, C.R.S., shall be followed. Nothing
in this article shall be construed to limit the power of a county
otherwise to acquire property through the exercise of the power
of eminent domain under and in accordance with the laws of
the state.
(k) To construct and maintain works and establish and
maintain facilities, within or without the boundaries of the
municipalities or counties constituting members of the authority
or within or without the boundaries of the county independently
creating an authority pursuant to the provisions of this article,
across or along any public street or highway or in, upon, under,
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Appendix E
or over any vacant public lands, which public lands are now, or
may become
(b) That bonds issued under this article and the income
therefrom shall be free and exempt from taxation by the sate, or
any political subdivision of the state, with the exception of
transfer, inheritance, and estate taxes.
* * *
PART I
COUNTY AIRPORTS
41-4-101. Operation a governmental function. The
acquisition of any lands for the purpose of establishing airports
or other air navigation facilities; the acquisition of airport
protection privileges; the acquisition, establishment,
construction, enlargement, improvement, maintenance,
equipment, and operation of airports and other air navigation
facilities; and the exercise of any other powers granted in this
part 1 to any county, city and county, city, or town are hereby
declared to be public governmental functions, exercised for a
public purpose, and matters of public necessity; and such lands
and other property, easements, and privileges acquired and used
in the manner and for the purposes enumerated in this part 1 are
hereby declared to be acquired and used for public purposes
and as a matter of public necessity.
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Appendix E
* * x
41-4-105. Authority to incur indebtedness. The board of
county commissioners of any county, either acting singly or
jointly with any other county, city and county, city, or town, has
the power to incur indebtedness on its behalf for any of the
purposes mentioned in this part 1 and to issue bonds for the
acquisition, construction, and improvement of airports, landing
fields, air navigation facilities, and airport protection privileges
in the same form and manner as debt is incurred and bonds issued
for other county purposes; except that such indebtedness may
also be approved at a special election called for that purpose by
the board of county commissioners, which election shall be
conducted insofar as practicable in the manner set forth in section
30-26-101, C.R.S.
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,
when acting singly, or by agreement, when acting jointly with
any other county, city and county, city, or town, 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, together with a lien to enforce their payment; to
lease or assign for operation such space or area, appurtenances,
appliances, or other conveniences necessary or useful in
connection therewith; to own and operate aircraft: to employ
pilots; to provide rules and regulations governing the use of such
airport and facilities and the use of other property and m
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