Lebron v. National Railroad Passenger Corp. , 12 F.3d 388 ( 1993 )

MAHONEY, Circuit Judge:

Defendant-appellant National Railroad Passenger Corporation (Amtrak) (“Amtrak”) appeals from a judgment entered February 11, 1993 in the United States District Court for the Southern District of New York, Pierre N. Leval, then-Disirici Judge.^** The judgment of the district court enjoined Amtrak and an advertising agency that performs services for Amtrak, defendant-counterelaim-ant Transportation Displays, Incorporated (“TDI”), to display a political advertisement prepared by plaintiff-counter-defendant-ap-pellee Michael A. Lebrón on a large billboard known as the Spectacular in New York City’s Pennsylvania Station (“Penn Station”). Le-brón had entered into a contract with TDI to lease the Spectacular for January and February 1993.

The district court ruled that because of the pervasive involvement of the federal government in Amtrak’s structure and operations, Amtrak’s conduct in controlling speech on its billboards must be deemed governmental, rather than private, in nature, and that Amtrak had violated the First Amendment by refusing to display Lebron’s advertisement. Lebron v. National R.R. Passenger Corp. (Amtrak), 811 F.Supp. 993 (S.D.N.Y.1993).

We conclude that Amtrak is not a governmental actor subject to the strictures of the First Amendment, and accordingly reverse.

Background

In August 1991, Lebrón, an artist who creates billboard displays (frequently involving commentary on public issues), first contacted TDI, which manages the leasing of many of Amtrak’s billboards, about contracting for billboard space in Penn Station. The Spectacular, a curved back-lit display space approximately 103 feet wide by ten feet high, dominates the west wall of the rotunda on the upper level of Penn Station where thousands of passengers pass each day. Lebrón and TDI eventually agreed that Lebrón would pay $16,500 per month to rent the Spectacular for January and February 1993. On November 30, 1992, Lebrón and TDI signed an agreement (the “Lease”) to that effect.

In negotiating' the Lease, Lebrón dealt primarily with William B. Schwartz, a TDI account executive, who informed Lebrón that displays for the Spectacular containing obscenity or violence were unacceptable. Schwartz asked Lebrón about the content of the advertisement that Lebrón intended for the Spectacular, but Lebrón declined to disclose it, explaining that while his work was generally political, he wanted to keep the specific nature of his advertisement for the Spectacular confidential prior to its display. Schwartz did not then suggest that there might be a problem with political advertisements on the Spectacular.

- Although Amtrak authorized TDI to manage the leasing of Amtrak’s billboard space, Amtrak at all times retained the right to approve or reject all advertising copy that would appear on its billboards. (In practice, Amtrak only reviewed displays that were to appear on the Spectacular.) Thus, the Lease contained the following language:

All advertising copy is subject to approval of TDI and [Amtrak] as to character, text, illustration, design and operation.

If for any cause beyond its control TDI shall cease to have the right to continue the advertising covered by this contract, or if [Amtrak] should deem such advertising objectionable for any reason, TDI shall have the right to terminate the contract and discontinue the service without notice.

On December 2, 1992, Lebrón submitted a color photocopy of the work he intended to display on the Spectacular tó TDI, which TDI promptly forwarded to Amtrak. Le-brón characterizes the advertisement as “an allegory about the destructive influence of a powerful, urban, materialistic and individualistic culture on rural, community based, family-oriented and religious cultures.” The district court described it as follows:

The work is a photomontage, accompanied by considerable text. Taking off on a widely circulated Coors beer advertisement which proclaims Coors to be the “Right Beer,” Lebron’s piece is captioned “Is it the Right’s Beer Now?” It Includes photographic images of convivial drinkers of Coors beer, juxtaposed with a Nicaraguan village scene in which peasants are menaced by a can of Coors that hurtles towards them, leaving behind a tail of fire, as if it were a missile. The accompanying text, appearing on either end of the montage, criticizes the Coors family for its support of right-wing causes, particularly the contras in Nicaragua. Again taking off on Coors’ advertising which uses the slogan of “Silver Bullet” for its beer cans, the text proclaims that Coors is “The Silver Bullet that aims The Far Right’s political agenda at the heart, of America.”

811 F.Supp. at 995.

Anthony DeAngelo, Amtrak’s vice president for real estate and operations development, viewed the photocopy and disapproved the display of'Lebron’s advertisement on the Spectacular. In a letter dated December 23, 1992, Amtrak notified TDI of its rejection, stating that “Amtrak’s policy is that it will not allow political advertising on the [S]pec-tacualar advertising sign.”

Lebrón then commenced this action against Amtrak and TDI, claiming violations of his First and Fifth Amendment rights as well as his contractual rights under the Lease. He sought equitable relief to compel Amtrak and TDI to display his ad on the Spectacular, or alternatively, damages for breach of the Lease. After expedited discovery and a trial on documentary submissions, the district court ruled that “in rejecting [Lebron’s] contract to display his art on its billboard Amtrak was engaged in governmental action and ... the standards employed by Amtrak in rejecting his work violated its obligations under the First Amendment.” 811 F.Supp. at 1005. In view of this conclusion, the district court did not reach Lebron’s contractual claim. Id. at 1005 n. 5. Judgment was entered enjoining Amtrak and TDI to display Lebron’s advertisement on the Spectacular “for two months beginning on the date that follows by six (6) business days the denial or expiration of any stay of [the district court’s] judgment by the highest court having jurisdiction to issue such a stay.”

Amtrak applied to the district court for a stay of its judgment pending appeal to this court. The district court denied the application, but “permitted] delay in compliance with the judgment” for fourteen days to allow an application for a stay to this court, while recommending against the grant of any such application.

This appeal followed. In response to a motion by Amtrak, this court stayed the execution of the district court’s judgment pending appeal and expedited the appeal.

Discussion

The First Amendment’s directive “[t]hat ‘Congress shall make no law ... abridging the freedom of speech, or of the press’ is a restraint on government action, not that of private persons.” Columbia Broadcasting Sys. v. Democratic Nat’l Comm., 412 U.S. 94, 114, 93 S.Ct. 2080, 2092, 36 L.Ed.2d 772 (1973) (plurality opinion) (citing Public Utilities Comm’n v. Pollak, 343 U.S. 451, 461, 72 S.Ct. 813, 820, 96 L.Ed. 1068 (1952)). Thus, in considering Lebron’s claim that Amtrak violated his right to free speech, the threshold inquiry is whether Amtrak’s refusal to run Lebron’s advertisement on the Spectacular constitutes government action.

Government action is most readily found when the conduct at issue is performed by a government entity. However, that is not the case here. The Rail Passenger Service Act of 1970 (the “Act”), 45 U.S.C. § 501 (1988) et seq., created Amtrak as a private, for-profit corporation under the District of Columbia Business Corporation Act. See 45 U.S.C. § 541 (1988). This legislation rejected earlier suggestions that the nation’s passenger rail service be nationalized. See Laurence E. Tobey, Costs, Benefits, and the Future of Amtrak, 15 Transp.L.J. 245, 252-53 (1987). Accordingly, the Act specifies that Amtrak is “not ... an agency, instrumentality, authority, or entity, or establishment of the United States Government.” § 541; see also National R.R. Passenger Corp. v. Atchison T. & S.F. Ry. Co., 470 U.S. 451, 454-55, 105 S.Ct. 1441, 1445-46, 84 L.Ed.2d 432 (1985).

The government action inquiry is more difficult when the challenged conduct is performed not by the government itself, but by a private entity. The Supreme Court has articulated a variety of approaches for discerning the presence of government action in the activities of private entities. See Blum v. Yaretsky, 457 U.S. 991, 1004, 102 S.Ct. 2777, 2786, 73 L.Ed.2d 534 (1982) (private conduct deemed government action when government coerces or significantly encourages that conduct); Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 158-59, 98 S.Ct. 1729, 1734-35, 56 L.Ed.2d 185 (1978) (private entity may be deemed government actor when performing role traditionally performed exclusively by government); Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974) (private action deemed governmental when “there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself’); Burton v. Wilmington Parking Auth., 365 U.S. 715, 725, 81 S.Ct. 856, 862, 6 L.Ed.2d 45 (1961) (private action deemed governmental when the government “has so far insinuated- itself into a position of interdependence with [a private entity] that it must be recognized as a joint participant in the challenged activity”).¹

As the Supreme Court has noted, “formulating an infallible test” of government action is an “ ‘impossible task.’ ” Reitman v. Mulkey, 387 U.S. 369, 378, 87 S.Ct. 1627, 1632, 18 L.Ed.2d 830 (1967) (quoting Burton, 365 U.S. at 722, 81 S.Ct. at 860). Rather, “[o]nly by sifting facts and weighing circumstances can the nonobvious involvement of the State in private conduct be attributed its true significance.” Burton, 365 U.S. at 722, 81 S.Ct. at 860.

In this case, the district court concluded that “based on examination of the federal government’s deep and controlling entwinement in Amtrak’s structure and operation, ... when Amtrak undertakes to control the content of speech on its billboards, its conduct must be deemed 'governmental rather than private.” 811 F.Supp. at 997. Supporting this assessment, the district court described Amtrak as “a corporation whose directors are appointed by the President, whose operations are financed by the federal government, and whose properties, in major part, are mortgaged to the federal government.” Id. at 998.

We need not reiterate the details underlying this description, see id. at 997-98 and nn. 3-8, because we do not take issue with this aspect of the district court’s opinion, but rather with the legal conclusion that is derived from it. As the district court pointed out, there are “a number of cases in which discharged employees charged either Amtrak or the similarly structured Consolidated Rail Corporation (‘Conrail’) with unconstitutional governmental action ... [in which] the courts held that Amtrak’s (or Conrail’s) actions in dealing with its employees were not deemed to' be governmental action.” Id. at 999 (collecting cases).

One of these- cases was Myron v. Consolidated Rail Corp., 752 F.2d 50 (2d Cir.1985). In that case, we held that:

[D]espite federal funding, regulation, stock ownership and representation on the board of directors, there is nothing resembling federal supervision of day-to-day activities. In sum, we conclude that despite an obviously close relationship, the federal government has not “so far insinuated itself into a position of interdependence” with Conrail that the latter’s personnel decisions can be considered federal action.

Id. at 55-56 (footnote omitted) (quoting Burton, 365 U.S. at 725, 81 S.Ct. at 862). .

The district court distinguished Myron and the similar precedents cited by the district court as follows:

The fact that Amtrak is considered a private employer in administering its employment of personnel does not mean it will be deemed private when it regulates speech. Whether conduct of a particular entity will be deemed governmental action can vary with the type of action at issue. As Judge Friendly explained in Wahba v. New York University, 492 F.2d 96, 100 [(2d Cir.), cert. denied, 419 U.S. 874, 95-S.Ct. 135, 42 L.Ed.2d 113 (1972) ], “we do not find decisions dealing with one form of state involvement and a particular provision of the Bill of Rights at all determinative in passing upon claims concerning different forms of governmental involvement and other constitutional guarantees.” See also Weise v. Syracuse University, 522 F.2d 397, 404 (2d Cir.1975).

811 F.Supp. at 999 (footnote omitted).

We are not persuaded by this analysis. Myron addressed the “government action” issue in the specific context of a “claim that Conrail violated [Myron’s] First and Fifth Amendment rights by discharging him for representing various people with interests adverse to Conrail.” 752 F.2d at 54. . We therefore decline to regard Myron as a precedent confined to employee matters that does not provide strong guidance, if not controlling authority, for our decision in this First Amendment case.

Wahba also, involved an assertion of First Amendment claims, but we were nonetheless “unable to discern the government action necessary to sustain ... them.” 492 F.2d at 98. Weise ruled that a less stringent standard for finding state action should be applied when racial or sexual discrimination is at issue, as is so often the case in employment litigation, than when there is a claim of a First Amendment violation. 522 F.2d at 405. Specifically, although we reversed and remanded the dismissal of plaintiffs’ § 1983 claims that they were denied employment or had their employment terminated because of sex discrimination, 522 F.2d at 400, 413, we explicitly stated that: “If our concern in this case were with discipline and the First Amendment, the alleged indicia of state action — funding and regulation — would most likely be insufficient.” 522 F.2d at 405.

The district court expressed concern that in the absence of First Amendment restraints flowing from a finding of government action, Amtrak could post its own political advertisements on the Spectacular, postulating the example that Amtrak “would be free under the First Amendment’to donate its billboards to the support of the incumbent President’s election.” 811 F.Supp. at 1000. Whatever its constitutional implications, which we do not address, such conduct would constitute a criminal violation of federal law. See 2 U.S.C. §§ 441b, 437g(d) (1988); see also Stern v. Federal Election Comm’n, 921 F.2d 296, 297 (D.C.Cir.1990) (noting § 441b prohibition of corporate political contributions).

Our opinion in Myron accords with numerous cases that have concluded that Amtrak and Conrail are not -subject to constitutional restraints upon government action. See, e.g., Andrews v. Consolidated Rail Corp., 831 F.2d 678, 682-83 (7th Cir.1987) (following Myron); G. & T. Terminal Packaging Co. v. Consolidated Rail Corp., 830 F.2d 1230, 1236 (3d Cir.1987) (“Every court that has considered the matter has concluded that Conrail is not a governmental actor for purposes of constitutional analysis.”), cert. denied, 485 U.S. 988, 108 S.Ct, 1291, 99 L.Ed.2d 501 (1988); Morin v. Consolidated Rail Corp., 810 F.2d 720, 722-23 (7th Cir.1987) (per curiam) (following Myron); Anderson v. National R.R. Passenger Corp. (Amtrak), 754 F.2d 202, 204-05 (7th Cir.1984) (per curiam); Verdon v. Consolidated Rail Corp., 828 F.Supp. 1129, 1137 (S.D.N.Y.1993); Wilson v. Amtrak Nat’l R.R. Corp., 824 F.Supp. 55, 57-58 (D.Md.1992); Railway Labor Executives’ Ass’n v. National R.R. Passenger Corp., 691 F.Supp. 1516, 1524 n. 11 (D.D.C.1988); Marcucci v. National R.R. Passenger Corp., 589 F.Supp. 725, 727-29 (N.D.Ill.1984); Kimbrough v. National R.R. Passenger Corp., 549 F.Supp. 169, 172-73 (M.D.Ala.1982).

• In view of this unvarying line of authority, and the fact- that our pertinent precedent addressed an issue of First Amendment retaliation, see Myron, 752 F.2d at 54, we conclude that Amtrak’s refusal to run Le-bron’s advertisement on the Spectacular was not government action, and accordingly is not to be tested against the requirements of the First Amendment. Thus, we do not reach the merits of Lebron’s First Amendment claim.

In view of the dismissal of Lebron’s only federal claim, it will not be appropriate for the district court to address his contract claim on remand.² See United Mine Workers v. Gibbs, 383 U.S. -715, 726-27, 86 S.Ct. 1130, 1139-40, 16 L.Ed.2d 218 (1966); Eatz v. DME Unit of Local Union No. 3, 973 F.2d 64, 67 (2d Cir.1992). Lebrón is free to pursue that claim in state court. Under N.Y.Civ.Prac.L. & R. 213 (McKinney 1990), Lebron’s contract claim is subject to a six year statute of limitations. See also id. 205(a) (McKinney Supp.1993), id. cmt. 205:2 (McKinney 1990) (in any event, Lebrón may sue in state court within six months of dismissal in federal court).

Conclusion

The judgment of the district court is reversed and the case is remanded with the instruction to dismiss the complaint. As stated at oral argument, Lebron’s motion to strike pages from the joint appendix and for double costs and attorney fees is denied; his motion to file a supplemental volume of exhibits is granted.

** Judge Leval became a member of the Second Circuit Court of Appeals on November 8, 1993.

1 . Some commentators have suggested that more recent Supreme Court cases, and especially the Court’s ruling that the United States Olympic Committee is not a governmental actor subject to constitutional restraints in San Francisco Arts & Athletics, Inc. v. United States Olympic Committee, 483 U.S. 522, 542-47, 107 S.Ct. 2971, 2984-87, 97 L.Ed.2d 427 (1987), have curtailed Burton 's precedential authority. See Laurence H. Tribe, American Constitutional Law § 18-3, at 1701 n. 13 (2d ed. 1988); Marcia Berman, An Equal Protection Analysis of Public and Private All-Male Military Schools, 1991 U.Chi.Legal F. 211, 225-26; see also Jackson, 419 U.S. at 358, 95 S.Ct. at 457 (“actual holding" of Burton limited to lessees of public property); Adams v. Vandemark, 855 F.2d 312, 317 n. 7 (6th Cir.1988) ("The more recent Supreme Court cases in this area appear to have limited the broad realm of state action Burton suggested.”), cert. denied, 488 U.S. 1042, 109 S.Ct. 868, 102 L.Ed.2d 992 (1989); Imperiale v. Hahnemann Univ., 776 F.Supp. 189, 195-96 (E.D.Pa.1991) (same), aff'd, 966 F.2d 125 (3d Cir.1992) (per curiam).

2 . Correspondingly, TDI’s counterclaim for a declaratory judgment that it is entitled to terminate the Lease will not be decided in this action.