Area Transportation, Inc. v. Ettinger

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-4141
Area Transportation, Inc.,
Plaintiff-Appellant,
v.
Joel P. Ettinger, Regional Administrator
of the Federal Transit Administration for Region
V, United States Department of Transportation,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 3287--Ruben Castillo, Judge.
Argued April 18, 2000--Decided July 18, 2000
Before Flaum, Ripple, and Williams, Circuit Judges.
Flaum, Circuit Judge. Area Transportation, Inc.
("Area Transport") filed suit against the Federal
Transit Administration ("FTA"), seeking (1) a
declaration that a non-party bus service is
ineligible for future grants due to past
violations of a grant condition; and (2) an order
directing the federal agency to require the non-
party grantee to repay all transit assistance
funds that it received while in violation of the
grant agreement. The district court dismissed the
suit for lack of standing, and we affirm.
Background
Area Transport is a privately-owned provider of
school bus services in the Flint, Michigan area.
The FTA awards grants to assist state and local
agencies in financing the implementation and
operation of mass transportation facilities. To
receive a grant, a recipient must comply with
various conditions, including an agreement that
the recipient will not provide exclusive school
bus service in competition with a private (non-
grant recipient) school bus company. See 49
U.S.C. sec. 5323(f)(1).
On August 18, 1998, Area Transport filed an
administrative complaint with the FTA Region V
Administrator. Area Transport alleged that a
grant recipient, Mass Transportation
Administration of Flint, Michigan ("MTA"), was
providing exclusive school bus service in
violation of the applicable prohibition.
Following investigation, the FTA issued a
written decision on May 5, 1999, concluding that
MTA had violated the bus service prohibition. The
FTA ordered MTA "to cease and desist in providing
illegal service," and further held that failure
to comply with this order could lead to
additional penalties.
Shortly thereafter, Area Transport filed suit in
district court under the federal transit laws and
the Administrative Procedure Act, 5 U.S.C. sec.
701. The complaint alleged that the FTA did not
appropriately sanction MTA. Specifically, Area
Transport requested a declaration that MTA is
ineligible for future FTA grants and also sought
to have the district court compel the FTA to
order MTA to repay all grant funds received
during the period that it was in violation of the
non-compete grant agreement. The FTA moved to
dismiss, and the district court granted the
dismissal for lack of standing, finding that Area
Transport’s purported injury is not fairly
traceable to the FTA decision under review and
that the requested relief would not redress the
particular injury of which Area Transport
complains. Area Transport now appeals.
Discussion
To establish standing under the Administrative
Procedure Act, a plaintiff must satisfy the
Article III constitutional standing requirements
and also fall within the "zone of interests" to
be protected or regulated by the regulatory
statute at issue. See Association of Data
Processing Serv. Orgs., Inc. v. Camp, 397 U.S.
150, 153 (1970); City of Evanston v. Regional
Transp. Auth., 825 F.2d 1121, 1123 (7th Cir.
1987). The district court in this case concluded
that Area Transport is in the class of entities
protected by sec. 5323(f), but then concluded
that Area Transport failed to meet the Article
III standing requirements.
Article III standing requires a party to
demonstrate three elements: (1) that it suffered
an "injury in fact"--an invasion of a legally
recognized interest that is concrete and
particularized, actual or imminent, and not
conjectural or hypothetical; (2) that there is a
causal link between that injury and the
defendant’s action, such that the injury is
fairly traceable to the action complained of and
not the result of actions by some third party not
before the court; and (3) that a favorable
decision will likely redress the injury. See
Friends of the Earth, Inc. v. Laidlaw Env.
Servs., Inc., 120 S. Ct. 693, 704 (2000);
Wisconsin v. FERC, 192 F.3d 642, 646 (7th Cir.
1999). The district court found that Area
Transport has adequately shown an injury in fact-
-that it suffered harm to its "competitive
interest" because of the improper federal grants
to MTA-- but it found Area Transport’s showing
with respect to the second and third standing
requirements lacking. Although the FTA disputes
on appeal whether Area Transport’s purported
injury is legally cognizable, we need not reach
that issue because we agree with the district
court that Area Transport has failed to meet the
causation and redressability prongs of standing.
Area Transport’s argument begins with its
allegation that MTA unfairly built a strong
competitive position in the Flint area school bus
service market because for a period of time it
was able both to receive federal grants and to
operate a school bus service. According to Area
Transport, because MTA has improperly obtained a
strong market position, the FTA’s failure to go
beyond a cease and desist order and to require
repayment of previous, unlawfully obtained grants
is a cause of Area Transport’s ongoing injury to
its "competitive interests." Only a declaration
that the FTA must seek from MTA repayment of
prior grants and must deny MTA any future grants
will level the competitive playing field.
In this case, the propositions that the FTA’s
decision and remedy cause Area Transport economic
injury and that imposing harsher penalties
against MTA will alleviate this injury are too
speculative to satisfy the standing requirements.
See Simmons v. ICC, 900 F.2d 1023, 1026 (7th Cir.
1990) (holding that the petitioners failed to
make a sufficient showing that their competitive
injury was fairly traceable to the ICC’s action).
The FTA’s ruling already requires MTA to cease
providing illegal school bus service if it wants
federal grants. Assuming for the purposes of
argument that Area Transport still demonstrates
a continuing injury in fact, causation in this
case requires showing that such injury is fairly
traceable to the FTA’s decision not to impose
harsher sanctions than it did. There is no
indication in the record that, since the FTA
issued its cease and desist order, MTA is still
even competing with Area Transport./1
Presumably--and Area Transport’s complaint and
other filings below leave us in the position of
having to presume--Area Transport is concerned
that MTA can now compete with Area Transport in
the exclusive school busing market having already
fattened its coffers with improper federal funds.
But to the extent that such an outcome requires
not only that MTA react to the FTA’s cease and
desist order by forgoing future federal grants in
favor of continuing its school bus service, but
also that MTA do so successfully, this scenario
is both highly speculative and dependent on
uncertain actions by MTA, who is not before us.
See Perry v. Village of Arlington Heights, 186
F.3d 826, 829 (7th Cir. 1999) (explaining that
standing requires "a causal relationship between
the injury and the challenged conduct, such that
the injury can be fairly traced to the challenged
action of the defendant and not from the
independent action of some third party not before
the court").
Area Transport’s failure to demonstrate
redressability also stems from the vagueness and
severe uncertainty of this causal chain. The
requirement of "’actual injury redressable by the
court,’ . . . tends to assure that the legal
questions presented to the court will be resolved
. . . in a concrete factual context conducive to
a realistic appreciation of the consequences of
judicial action." Valley Forge Christian College
v. Americans United for Separation of Church and
State, Inc., 454 U.S. 464, 472 (1982) (citations
omitted). As the district court pointed out, any
potential repayment of grant monies would go to
the FTA, not to Area Transport. Perhaps the
disgorgement of MTA’s improper monies would
negatively impact MTA’s business, but the
prospect that Area Transport will at that point
find itself in a stronger position to win future
service bids is pure conjecture. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992)
("it must be ’likely,’ as opposed to merely
’speculative,’ that the injury will be ’redressed
by a favorable decision’"); Harp Advertising
Ill., Inc. v. Village of Chicago Ridge, 9 F.3d
1290, 1292 (7th Cir. 1993) (stating that a key
ingredient of standing is a demonstration by the
plaintiff that his injury likely will be
redressed by a favorable decision)./2
Ironically, the remedy Area Transport seeks--that
MTA be barred from receiving future federal
transportation grants--might very well undermine
Area Transport’s market position. As it stands,
MTA is currently prohibited under the statute and
the FTA’s order from providing exclusive school
bus services so long as it continues to receive
federal grants. If MTA were barred from receiving
those grants, it would have greater freedom to
compete with Area Transport. We agree with the
district court that Area Transport has not
established causation or redressability, and
accordingly the case was properly dismissed./3
Conclusion
For the reasons stated herein, we AFFIRM the
decision of the district court.
/1 Area Transport refers us to Bradford School Bus
Transit, Inc. v. Chicago Transit Authority, 537
F.2d 943 (7th Cir. 1976), where we held that a
private bus company had standing to sue a city
transit authority and the Urban Mass
Transportation Administration (UMTA), seeking a
declaration that the transit authority was
engaged in school bus operations in violation of
the Urban Mass Transportation Act. That case
differs from this one, among other reasons,
because Bradford could point to particular
contracts for which it had bid but that were
awarded to CTA and because the UMTA was
continuing to provide grants to CTA when CTA was
still providing school bus service in violation
of the non-compete agreement. Here, Area
Transport does not claim that the FTA is
overlooking a current violation of federal
regulations by MTA.
/2 This case is distinguishable from such cases as
American Federation of Gov’t Employees v. Cohen,
171 F.3d 460 (7th Cir. 1999), and Safir v.
Gibson, 417 F.2d 972 (2d Cir. 1969), in which
this Court and the Second Circuit concluded that
injuries to competitive interests were
redressable through re-bidding on contracts and
disgorgement, respectively. The Cohen court so
concluded only after finding that the plaintiff’s
allegations established "a good chance of gaining
some of this work," and distinguishing that case
from the D.C. Circuit’s decision in National
Maritime Union of America v. Commander, Military
Sealift Command, 824 F.3d 1228 (D.C. Cir. 1987),
which was read to stand for the proposition that
the redressability requirement was not met where
the record did not even suggest that the employer
of union members would participate in re-bidding
after the union challenged the bidding process.
171 F.3d at 467. The Safir opinion deals only
with standing to sue under the statute at issue,
not the constitutional standing requirements, and
the court in that case based its rulings on
several particular factual allegations by the
plaintiff regarding its future business
activities. 417 F.2d at 977-78.
/3 Having concluded that Area Transport lacks
standing, we need not consider the FTA’s claims
on appeal that there is no private right of
action under sec. 5323(f) to seek review of
sanctions imposed against a competitor or that
the FTA’s decision is discretionary and
unreviewable under the APA.