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Dakota Territory Tours ACC v. Sedona-Oak Creek Airport Authority Inc.

United States District Court, D. Arizona

April 10, 2019

Dakota Territory Tours ACC, et al., Plaintiffs,
Sedona-Oak Creek Airport Authority Incorporated, et al., Defendants.


          Dominic W. Lanza United Slates District Judge.


         Dakota Territory Tours ACC (“Dakota”) is a company that offers helicopter tours in northern Arizona. For years, Dakota subleased space at the Sedona Airport and ran its tours from that location. In 2014, Dakota became embroiled in litigation concerning its lease with the Sedona Oak-Creek Airport Authority, Inc. (“SOCAA”), the non-profit entity that operates the airport on behalf of Yavapai County (“the County”). In 2017, the parties entered into settlement agreement to resolve that litigation. Among other things, the settlement agreement terminated Dakota's sublease but required SOCAA to issue a request for proposal (“RFP”) so that interested parties, including Dakota, could submit new bids to use space at the airport. Dakota submitted a bid in response to the RFP but its bid wasn't accepted. Instead, SOCAA accepted a competing bid from Guidance Air Service, LLC (“Guidance”), a rival helicopter tour operator that already leased other space at the airport.

         In their amended complaint, which was filed in August 2018, Dakota and Solid Edge Aviation (collectively, “Plaintiffs”) allege the RFP process was a “sham” designed to exclude Dakota from the airport. Among other things, Plaintiffs allege that SOCAA altered the selection criteria at the last moment in an effort to disadvantage them, accepted Guidance's bid even though it was 32% lower than theirs, refused to produce Guidance's full bid during a subsequent bid protest, presented false testimony during a state-court hearing related to the bid protest, conducted a pretextual audit of their taxes, and lodged a false complaint about their operations with the Federal Aviation Administration.

         Although Plaintiffs have raised troubling allegations about how the RFP process was conducted, this case does not involve a challenge to that process in the traditional sense (ordinarily, bid protests alleging improprieties in RFP processes are governed by state law and brought in state court). Instead, the amended complaint asserts antitrust claims against four different defendants: SOCAA, SOCAA's former director Amanda Shankland (“Shankland”), Guidance, and the County (collectively, “Defendants”).

         Plaintiffs have now voluntarily dismissed their claims against SOCAA, Shankland, and Guidance (Doc. 115), but their claims against the County remain pending. The County has moved for judgment on the pleadings (Doc. 79) and, as discussed below, its motion will be granted for two independent reasons. First, time and again over the last half-century, plaintiffs have attempted to bring antitrust claims against airports and airport operators under the theory that the airport's refusal to provide a lease (or similar concession) amounted to anticompetitive conduct and/or contributed to monopolization. The courts have, almost without exception, rejected such lawsuits because (1) municipal airports generally enjoy immunity from antitrust liability in this context pursuant to the so-called “state action” doctrine, which was first established in Parker v. Brown, 317 U.S. 341 (1943), and (2) run-of-the-mill bid protests can't, in any event, be repackaged as antitrust claims. These principles generally doom Plaintiffs' attempt to transform their dissatisfaction with the RFP process into an antitrust lawsuit.

         Second, the amended complaint is devoid of any plausible allegation that the County was responsible for transforming the RFP process into a sham. Thus, although the County perhaps could have exercised more care in overseeing how SOCAA was administering the RFP process, Plaintiffs have not articulated facts that would permit the County to be sued under a conspiracy theory. It is a tertiary player in this dispute-Plaintiffs' true dispute lies with SOCAA, and that dispute doesn't sound in antitrust law.


         I. Procedural Background

         In August 2017, Dakota filed its original complaint. (Doc. 1.)

         In July 2018, the Court issued a pair of orders rejecting Dakota's claims against the County and Guidance. (Docs. 68, 69.) First, the Court concluded the County was entitled to judgment on the pleadings because its “only involvement in this matter is as owner of the Sedona Airport and landlord to SOCAA. . . . [Dakota] has not demonstrated that Yavapai County meaningfully participated in the RFP process that awarded the sublease to Guidance. . . . Yavapai County was not involved in SOCAA's decision-making process and was a passive lessor during the RFP process.” (Doc. 69 at 4-5.)[1] Second, as for Guidance, the Court similarly concluded that although Dakota “alleges that SOCAA came up with the plan to replace [Dakota] with Guidance . . . at no point does [Dakota] allege that Guidance colluded with SOCAA to do so.” (Doc. 68 at 3-5.) The Court further concluded that Dakota's allegations “demonstrate that Guidance was not involved in SOCAA's decision-making process and was a passive bidder during the RFP process” and that Dakota was seeking to improperly “blame[] Guidance for actions that, even if taken as true, could only have only been plausibly committed by SOCAA.” (Doc. 68 at 3-5.)

         In August 2018, Dakota, along with new plaintiff Solid Edge, filed an amended complaint alleging violations under sections 1 and 2 of the Sherman Act against all Defendants. (Doc. 72.)

         In September 2018, Defendants filed a trio of dispositive motions: the County filed a renewed motion for judgment on the pleadings (Doc. 79), Guidance filed a motion to dismiss under Rule 12(b)(6) (Doc. 80), and SOCAA and Shankland filed a separate motion to dismiss under Rule 12(b)(6) (Doc. 81).

         In October 2018, this case was transferred to the undersigned judge. (Doc. 94.)

         In November 2019, the three dispositive motions became fully briefed. (Docs. 85, 88, 89, 99, 100, 101.)

         On April 4, 2019, the Court issued an order setting oral argument on the dispositive motions on April 10, 2019. (Doc. 110.)

         On April 9, 2019, Plaintiffs filed a stipulation dismissing their claims against SOCAA, Shankland, and Guidance without prejudice. (Doc. 115.)

         On April 10, 2019, the Court heard oral argument on the County's motion. During the argument, Plaintiffs asked the Court to defer ruling on the motion because the parties were hoping to finalize a settlement within the next week. The County disagreed and asked the Court to rule on the motion because the potential settlement was still tentative.

         II. Factual Allegations In The Amended Complaint

         A. The Parties

         Dakota operates helicopter and fixed wing air tours out of the Sedona Airport. (Doc. 72 ¶ 5.) Solid Edge has common ownership with Dakota and serves as Dakota's Part 135 Operating Company. (Id. ¶ 6.)

         Guidance, like Dakota, operates air tours out of the airport and “is a direct competitor of . . . Dakota.” (Id. ¶ 10.)

         SOCAA is a non-profit corporation that “purports to be an independent airport authority and is empowered to operate, manage and oversee the Sedona Airport pursuant to a long-term written lease agreement with Yavapai.” (Id. ¶ 7.) SOCAA maintains subleases on buildings, aircraft parking pads, and facilities on the airport premises. (Id.) It also owns and operates the airport's only fixed base operator, Red Rock Aviation. (Id.) The airport is operated according to a Master Plan. (Id. ¶¶ 15-16.)

         Shankland was the General Manager and/or Airport Director of the airport acting on behalf of SOCAA since at least 2016. (Id. ¶ 9.)

         The County, which owns the airport, has a long-term contract with SOCAA under which SOCAA must manage the airport for the “public good” and in a prudent and businesslike manner. (Id. ¶ 8.)

         B. Dakota's Sublease with SOCAA and Litigation Involving the Sublease

         Plaintiffs had a sublease with SOCAA that originally ran until August 2014 and was later extended until April 2017. (Id. ¶ 24.) Plaintiffs ran their air tour operations out of the subleased on-airport space. (Id. ¶ 25.)

         In November 2014, Plaintiffs and SOCAA became involved in litigation over, among other things, SOCAA's ...

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