United States Court of Appeals
For the First Circuit
No. 09-2173
RECTRIX AERODROME CENTERS, INC.,
Plaintiff, Appellant,
v.
BARNSTABLE MUNICIPAL AIRPORT COMMISSION, MICHAEL A. DUNNING,
BRUCE P. GILMORE, FRANCISCO SANCHEZ and QUINCY MOSBY,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Lynch, Chief Judge,
Boudin and Lipez, Circuit Judges.
Marc E. Kasowitz with whom Kasowitz, Benson, Torres & Friedman
LLP was on brief for appellant.
Scott P. Lewis with whom Kevin D. Batt, Melissa C. Allison and
Anderson & Kreiger LLP were on brief for appellees.
June 23, 2010
BOUDIN, Circuit Judge. Rectrix Aerodrome Centers, Inc.
("Rectrix") is a tenant at the Barnstable Municipal Airport that
provides certain aviation services to planes using the airport. It
sued the Barnstable Municipal Airport Commission ("BMAC"),1 two
airport commissioners, two airport managers, and its outside
counsel, claiming that they prevented Rectrix from competing with
BMAC in the sale of jet fuel. The district court dismissed some of
Rectrix's claims and on others granted summary judgment against
Rectrix. The facts are as follows.
Beginning in 2002, Rectrix operated a hangar at the
Barnstable Municipal Airport for private jets. Rectrix's lease
with BMAC provided that it could apply to BMAC to expand the scope
of Rectrix's operations and become what is known in the industry as
a "fixed base operator" or "FBO"--a service center that provides
such things as fuel, oil, and hangar storage. At the time, BMAC
had in place a code of rules and regulations, which the parties
refer to as the "minimum standards," that imposed standards of
operation and maintenance on FBOs at the airport. Rectrix says it
did not see a copy of the minimum standards until 2004.
1
Any city or town that establishes an airport must also
establish an airport commission, "which shall have the custody,
care and management of the municipal airport of said city or town."
Mass. Gen. Laws ch. 90, § 51E (2010). Massachusetts law confers
upon such commissions various powers relating to airport
operations, including, among other things, the powers to lease
land, acquire property, set charges and rentals, expend funds, and
promulgate rules and regulations. Id. §§ 51F-51J.
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These standards (which have since been altered) provided
in Article III.e as follows:
A Fixed base operator shall provide all fuel
services, including the sale and storage of
80-octane, 100-octane, and jet fuel, for as
long as these grades are normally available
for resale. The Barnstable Municipal Airport
Commission may limit the types of fuel to be
sold.
Not surprisingly, in this controversy about Rectrix's ability to
sell jet fuel, Rectrix relies heavily on the first sentence;
Barnstable, on the second.
According to BMAC, at least since 1979 it has reserved
for itself the right to sell jet fuel at the airport, has declined
to allow FBOs to do so, refused specifically on a prior occasion in
1983 to allow another FBO (Griffin Avionics, Inc.) to sell jet
fuel, and has the blessing of both Massachusetts law and the
Federal Aviation Administration ("FAA") for its right to follow
this policy. Rectrix claims that revenues generated by jet fuel
sales were illegally diverted to help support the town as well as
the airport, but BMAC disputes any charge of unlawful conduct.
BMAC also asserts that when Rectrix first became a tenant
in 2002, it had full notice of this reservation. BMAC points to a
set of so-called "self service standards"--which are distinct from
the minimum standards referenced above--dated August 15, 2000, that
Rectrix received prior to signing its lease; this document says
that "[a]s the proprietor of the Barnstable Airport, the Airport
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Commission reserves the exclusive right unto itself to sell jet
fuel on the Barnstable Airport." The lease thereafter signed with
Rectrix in August 2002 gave it the right to operate a hangar for
corporate jets, but not to conduct FBO operations, and contained
the following terms:
2a. It is further agreed that Lessee
shall not conduct or permit to be conducted on
said premises any flight schools, or aircraft
refueling activities specifically related to,
and including resale of aviation or jet fuels,
all subject to (2b) below.
2b. Lessee may at any time during the
term of this Lease or additional terms
thereof, submit in writing to the Barnstable
Municipal Airport Commission, Lessee's desire
to modify or expand its scope of operation.
Lessee agrees that any change in its scope of
operation may be subject to negotiable rates
and charges, with agreed upon terms and
conditions to be executed by both parties on
separate letters of agreement.
Rectrix says it first learned of the minimum standards
(as opposed to the self-service standards) in May 2004 and that it
obtained a copy of those standards only in June 2004. Soon after,
in October 2004, Rectrix requested permission to expand its
operations and become a full-service FBO; it says it wanted to
become a full-service FBO at this point because it believed that
the minimum standards would give it the right to sell jet fuel.2
2
There is no evidence that Rectrix was granted permission to
become a full-service FBO, but Rectrix's agreement with BMAC was
modified to expand the size of its leasehold and the parties agreed
to terms for Rectrix's self-fueling of aircraft it owned (or
managed or leased under an exclusive contract of least 60 days);
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Rectrix says that to prevent it from selling jet fuel,
BMAC refused to give proper consideration to its application to
become an full-service FBO, delayed approval on other applications
as well, and imposed operating restrictions that complicated
Rectrix's ability to serve its customers. It says that it in
various respects has been treated, to its disadvantage, differently
than Griffin Avionics. After arguments back and forth with BMAC,
Rectrix began the law suit that has led to this appeal.
In its complaint filed in federal district court, Rectrix
asserted a variety of claims against BMAC and the individuals named
above arising under the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. (2006), the
Constitution and section 1983, 42 U.S.C. § 1983 (2006), and federal
and state antitrust laws, 15 U.S.C. § 2 (2006); Mass. Gen. Laws ch.
93, §§ 1-14A (2010), along with various common law claims.
The district court granted a motion to dismiss Rectrix's
antitrust claims, Rectrix Aerodome Ctrs., Inc. v. Barnstable Mun.
Airport Comm'n, 534 F. Supp. 2d 201 (D. Mass. 2008) ("Rectrix I"),
and later granted summary judgment in favor of Barnstable on its
RICO and section 1983 claims, Rectrix Aerodome Ctrs., Inc. v.
Barnstable Mun. Airport Comm'n, 632 F. Supp. 2d 120 (D. Mass. 2009)
("Rectrix II"). The district court then declined to retain
the memorandum specifically precluded Rectrix from selling fuel to
third parties.
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supplemental jurisdiction over the remaining state law claims. Id.
at 132.
Rectrix now appeals both the grant of the motion to
dismiss and the grant of summary judgment, both rulings being
subject to de novo review. Gargano v. Liberty Int'l Underwriters,
Inc., 572 F.3d 45, 48 (1st Cir. 2009); Paparo v. M/V Eternity, 433
F.3d 169, 172 (1st Cir. 2006). We address first the RICO and
antitrust claims, both of which directly attack BMAC's restriction
on jet fuel sales; the remaining claim, complaining of a civil
rights violation under section 1983 and the Constitution, is
considered thereafter.
RICO. Rectrix's first, and most detailed, argument on
appeal is that the district court erred in rejecting Rectrix's RICO
claim. A civil RICO claim, 18 U.S.C. § 1962(c), requires proof of
several elements including the existence of a racketeering
"enterprise" and its conduct through a "pattern" of racketeering
activity, which requires at least two acts of racketeering so
related, id. § 1961(4)-(5); the acts are ones specified in the
statute and include mail and wire fraud as possible predicate acts.
Id. §§ 1961(1), 1962(c).
Rectrix's claim of fraud rests at bottom on the
proposition that it was entitled under the minimum standards then
in force to sell jet fuel, that the defendants falsely represented
that Rectrix lacked that right and concealed the minimum standards
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until they were discovered by Rectrix in mid-2004, and that these
acts of misrepresentation and concealment reflected a pattern of
fraudulent acts that damaged Rectrix and are within the purview of
the RICO statute. Rectrix also says that the defendants diverted
revenues thus gained to Barnstable for its municipal use in
violation of law and sought to conceal this as well.
The answer, as the district court ruled, Rectrix II, 632
F. Supp. 2d at 126-27, is that the minimum standards did not
entitle Rectrix to sell jet fuel. Those standards provide that an
FBO operator must supply fuel, including jet fuel, but qualify this
in the next sentence by saying that BMAC "may limit the types of
fuels to be sold." Before the lease was signed, and before Rectrix
ever sought FBO status, the self-service standards BMAC gave to
Rectrix told it that BMAC "reserves the exclusive right unto itself
to sell jet fuel on the Barnstable Airport," and the lease itself
expressly forbade Rectrix from selling any fuel.
Rectrix counters that the first sentence of the minimum
standards describes jet fuel as a "grade" and the second sentence
merely reserves BMAC's right to limit the particular "types" within
the grade (Rectrix claiming there are separate "types" of jet fuel,
such as Jet A-1, Jet A, and Jet B); but the straightforward reading
is that the word "types" refers to the varieties given in the prior
sentence, i.e., 80-octane, 100-octane, and jet fuel. In addition,
the lease itself forbids Rectrix from providing any fuel.
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It appears that the FAA itself is content to have
municipal airports reserve jet fuel sales to themselves, seemingly
so as to allow airports to fund maintenance and improvements.3
Rectrix says that it was improper for BMAC to funnel any of the jet
fuel profits for municipal use and that BMAC committed further acts
of fraud by concealing this diversion from the FAA. But whether or
not the diversion occurred or was improper--the district court made
no finding--it was the reservation to BMAC of exclusive rights, not
the diversion of BMAC profits, that caused damage to Rectrix.
Finally, Rectrix complains that when it sought FBO
status, BMAC engaged in delays, proposed burdensome terms and
otherwise hindered its application and operations. But nothing in
the lease compels BMAC to surrender its exclusivity, and so long as
BMAC maintained its exclusive rights, the premise of the RICO
claim--that BMAC had no such exclusive rights--fails.
BMAC's minimum standards could have stated expressly its
position that no one except itself could sell jet fuel at the
airport instead of leaving this to the self-service standards and
the lease. The lack of such a statement may explain some of its
other actions, including its alleged delay in turning over the
3
See FAA Advisory Circular No. 150/5190-6, ¶ 1.3(b)(1) (Jan.
4, 2007); FAA Advisory Circular No. 150/5190-5 , ¶ 1-3(a) (June 10,
2002); see also Jet 1 Ctr., Inc. v. Naples Airport Auth., FAA
Docket No. 16-04-03, Final Agency Decision, at 13 (July 15, 2005),
available at http://part16.airports.faa.gov/pdf/16-04-03.pdf.
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minimum standards and in processing Rectrix's request for FBO
status. But given the qualification in the minimum standards, the
explicit restrictions in the self-service standards and the lease
with Rectrix amply establish that Rectrix never had a right under
its lease or airport regulations to sell jet fuel at the airport.
Antitrust law. Alternatively, Rectrix claims that
restricting Rectrix from selling jet fuels at the airport violates
section 2 of the Sherman Act, which forbids monopolization,
attempted monopolization and conspiracies to monopolize. 15 U.S.C.
§ 2. The district court rejected this claim without reaching the
merits, relying on federal antitrust law's so-called state action
doctrine (quite different from the constitutional doctrine that
shares the same name) and a leading precedent of this court.
Rectrix I, 534 F. Supp. 2d at 203-06.
The state action doctrine was originally adopted by the
Supreme Court in Parker v. Brown, 317 U.S. 341, 347-52 (1943), to
immunize from attack under the federal antitrust laws a regulatory
scheme, adopted by statute, by which California required raisin
growers to deliver the majority of their raisins into a common pool
in exchange for set payments--a practice that might be treated as
unlawful price fixing if arranged without state approval. The
Sherman Act, said the Court, does not automatically forbid the
state from imposing restrictions on competition that private
citizens could not have adopted for themselves. Id. at 351-52.
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From this decision has flowed a host of refining decisions, one
subset of which is concerned with actions taken by municipalities.
Although not automatically treated as states, municipal
entities (like BMAC) can invoke state action immunity--as can
municipal officials acting for them, Fisichelli v. Town of Methuen,
956 F.2d 12, 15-16 (1st Cir. 1992) (Breyer, C.J.)--if they act
pursuant to a "clearly articulated and affirmatively expressed"
state policy to displace competition with regulation.4 The policy
must authorize the municipal entity both to regulate the conduct
and to "suppress competition," City of Columbia v. Omni Outdoor
Adver., Inc., 499 U.S. 365, 372 (1991); but the latter purpose is
inferred if suppression is a foreseeable result of a broad
delegation, id. at 373; Town of Hallie, 471 U.S. at 42-43;
Fisichelli, 956 F.2d at 14.
The defendants' claim of immunity rests on the language
of Mass. Gen. Laws ch. 90, §§ 51D-51M, the Massachusetts statute
governing municipal airports. One provision grants the power to
"airport commission[s]" to "adopt rules and regulations for the use
of municipal airports," id. § 51J; others grant airports authority
to "determine the charges or rentals for the use of any properties,
facilities, installations, landing fees, concessions, uses and
4
Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38-39
(1985); City of Lafayette v. La. Power & Light Co., 435 U.S. 389,
410, 413 (1978) (plurality opinion); Hovenkamp, Federal Antitrust
Policy §20.6, at 753-54(3d ed. 2005).
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services," id. § 51H, and to lease airport land for up to 20 years
"under such terms and conditions as it may prescribe, for hangars,
shops, storage, industrial purposes, offices and other space
rental, and for concessions," id. § 51F.
This may seem a rather bland basis for attributing to the
state legislature a purpose to allow the suppression of
competition, but the case law has interpreted the protection
hospitably. Hovenkamp, supra, §20.6, at 753-54 & n.12. In all
events, the Massachusetts statute involved here goes out of its way
to include a section specifically prohibiting exclusive contracts
related to transportation to and from the airport, id. § 51M, which
surely suggests that the legislature did perceive that the airport
might otherwise employ exclusivity restrictions (and chose to ban
only this narrow set).
The most direct precedent is this court's reading of very
similar language in the enabling statute that governs the
Massachusetts Port Authority--the entity that runs Boston's Logan
Airport--as conferring state action immunity on the authority.
Interface Group, Inc. v. Mass. Port Auth., 816 F.2d 9, 12-14 (1st
Cir. 1987); Mass. Gen. Laws ch. 91 app., §§ 1-3, 1-14 (2010).
Cases from other circuits have similarly found that municipal
airports can benefit from state action immunity; of course, these
decisions involved different statutes, but the operative language
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was in many instances similar and, anyway, their basic outlook is
consistent with our reading of the Massachusetts statute.5
District court cases are in some tension in their
construction of like statutes. New York Airlines, Inc. v. Dukes
County, 623 F. Supp. 1435, 1451 (D. Mass. 1985), said that
Massachusetts law governing municipal airports "[did] not on [its]
face demonstrate a clear intent on the part of the state to
displace competition . . . in the management of [airports]." But
this case preceded both the Supreme Court's Omni decision and our
decision in Interface, which control this panel. Williams v.
Ashland Eng'g Co., 45 F.3d 588, 592 (1st Cir. 1995).
In its reply brief and at oral argument, Rectrix argued
that provisions in Mass. Gen. Laws ch. 90, §§ 51H, 51J, say that in
the contracts airports execute "the public shall not be deprived of
its rightful, legal and uniform use of such properties, facilities
and installations" and that airports' "rules and regulations shall
conform to and be consistent with the laws of the commonwealth."
5
E.g., Montauk-Caribbean Airways, Inc. v. Hope, 784 F.2d 91,
96 (2d Cir.), cert. denied, 479 U.S. 872 (1986); Indep. Taxicab
Drivers' Employees v. Greater Houston Transp. Co., 760 F.2d 607,
610-11 (5th Cir.), cert. denied, 474 U.S. 903 (1985); Four T's,
Inc. v. Little Rock Mun. Airport Comm'n, 108 F.3d 909, 914-15 (8th
Cir. 1997); Cal. Aviation, Inc. v. City of Santa Monica, 806 F.2d
905, 907-08 (9th Cir. 1986); Allright Colo., Inc. v. City & County
of Denver, 937 F.2d 1502, 1508-09 (10th Cir.), cert. denied, 502
U.S. 983 (1991); Commuter Transp. Sys., Inc. v. Hillsborough County
Aviation Auth., 801 F.2d 1286, 1290 (11th Cir. 1986); see also
Hillman Flying Serv., Inc. v. City of Roanoke, 652 F. Supp. 1142,
1145-46 (W.D. Va. 1987), aff'd mem., 846 F.2d 71 (4th Cir. 1988).
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Apart from the rule that arguments not made in the opening brief
are waived, e.g., Sandstrom v. ChemLawn Corp., 904 F.2d 83, 86 (1st
Cir. 1990), this language does not negate an expectation that
exclusivity arrangements might be employed.
Cases like Omni reflect an ambivalence, shared by
Congress as well, e.g., 15 U.S.C. §§ 34-36 (restricting damages in
antitrust suits against local governments and their officials
acting in an "official capacity"), as to how far municipalities
ought to be restricted by the antitrust laws. States and their
subordinate units commonly mingle governmental services, regulation
and financial self-interest, while being subjected in some measure
to restrictions that do not apply to private entities engaged in
the same activities.6
The evolution of the state action doctrine as applied to
municipalities is far from over, but our own Interface decision is
sufficient to resolve this case. It is worth adding that Rectrix
is mistaken in its notion that its antitrust claim would otherwise
face fair sailing. How far the antitrust laws require property
owners to allow outsiders onto their property to compete with them
in selling goods or services is disputable, and private owners--for
6
For example, in this case, as already noted, Massachusetts
has a statute that governs municipal airports that would not apply
to a private airport. Mass. Gen. Laws ch. 90, §§ 51D-51M. See
also Town of Hallie, 471 U.S. at 45 n.9 (noting that municipal
entities may be subject to disclosure regulations that do not apply
to private entities).
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example, shopping centers--commonly enter into leases with clauses
that limit competition.7
Civil rights. Rectrix's remaining federal claim was
brought under 42 U.S.C. § 1983, which creates civil liability for
civil rights violations by state and local governments, and the
right invoked by Rectrix is the right of equal protection
guaranteed under the Fourteenth Amendment, U.S. Const. amend. XIV,
§ 1. This claim differs from the RICO and antitrust claims because
its main target is not the restriction of jet fuel sales but other
alleged disparities in the treatment of Rectrix and other airport
tenants.
The specifics of Rectrix's claim have evolved over time.
In the district court, Rectrix claimed that another tenant--Griffin
Avionics--was allowed to use a public ramp to which Rectrix was
denied access and claimed that a third tenant Silvia Aviation
received various forms of preferential treatment. Rectrix II, 632
F. Supp. 2d at 129. On appeal, Rectrix makes no mention of Silvia
but tries to add two further alleged instances of discrimination
7
See Christy Sports, LLC v. Deer Valley Resort Co., 555 F.3d
1188, 1194-95 (10th Cir. 2009); Elliott v. United Ctr., 126 F.3d
1003, 1005 (7th Cir. 1997) (Wood, J.), cert. denied, 523 U.S. 1021
(1998); III Areeda & Hovenkamp, Antitrust Law ¶ 703b, at 152-57 (2d
ed. 2002); XI Hovenkamp, Antitrust Law ¶ 1800a2, at 5-6 (2d ed.
2005); XII id. ¶ 2033c, at 195-97 (1999); XIII id. ¶ 2134d1, at
204-07 (2d ed. 2005); Handler & Lazaroff, Restraint of Trade and
the Restatement (Second) of Contracts, 57 N.Y.U. L. Rev. 669, 695-
703 (1982).
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favoring Griffith, which were at best only partially developed in
the district court.8
The Equal Protection Clause is usually deployed in cases
involving state or local curtailment of personal constitutional
rights (e.g., against racial discrimination) and ordinarily against
generic distinctions made in statutes or regulations. But economic
interests can also be protected, although more latitude is allowed
to the government; and individual inequalities, as opposed to ones
imposed generically, are potentially--although not easily--reached
by so-called "class of one" discrimination claims. E.g., Vill. of
Willowbrook v. Olech, 528 U.S. 562, 564 (2000) (per curiam); Wojcik
v. Mass. State Lottery Comm'n, 300 F.3d 92, 104-05 (1st Cir. 2002).
The single clearly developed and specific claim of
alleged discrimination was supported by only one sentence in an
affidavit from Rectrix's CEO that reads (in full):
Additionally, on occasions where Rectrix needs
additional space to park aircraft (an issue
necessitated in part by defendants' refusal to
grant Rectrix's request for additional ramp
8
First, Rectrix complains that the airport discriminated
between Griffin and Rectrix with respect to fuel tank usage.
However, Rectrix never developed this claim below: rather, Rectrix
complained that BMAC allowed third parties to use Griffin's fuel
tank while not allowing Rectrix to use Air Cape Cod's fuel tank;
but at most these allegations would indicate discrimination between
Air Cape Cod and Griffin or between other third parties and
Rectrix--not between Griffin and Rectrix. Second, Rectrix says the
airport refused to provide timely fuel service to Rectrix's
customers and imposed on it a fueling policy that did not apply to
Griffin. But below, Rectrix did not mention Griffin in connection
with these allegations, much less show discrimination.
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space), Rectrix has been told that it cannot
use various public areas of the Airport,
although Griffin Avionics and other Airport
tenants have been able to use the same space.
The district court, Rectrix II, 632 F. Supp. 2d at 129-30, said
that this claim failed because Rectrix did not show that it was
similarly situated to the other, allegedly favored tenants or
users--a settled requirement for equal protection claims, e.g.,
Vill. of Willowbrook, 528 U.S. at 564; Buchanan v. Maine, 469 F.3d
158, 177-78 (1st Cir. 2006).
In claiming that Griffin (and unnamed other companies)
was allowed greater use of airport space outside its leased
premises, Rectrix provided no details about the comparability of
Griffin to itself and the precise circumstances of the episodes; it
cites letters it wrote asking for more ramp space, but none even
mentions Griffin's supposed better treatment. Still fewer details
were provided on the other allegations Rectrix now says were
instances of pro-Griffin discrimination. See note 8, above.
The district court properly relied on holdings in our
earlier cases that place the burden on the plaintiff in class-of-
one cases to show such identity of entities and circumstances to a
high degree. See Rectrix II, 632 F. Supp. 2d at 130. Rectrix
argues that the principal case cited--Cordi-Allen v. Conlon, 494
F.3d 245, 251-52 (1st Cir. 2007)--was a land-use case and so its
language should not apply here. But core equal protection concerns
aside, class-of-one plaintiffs face the same burden outside of the
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land-use context as well. See, e.g., Buchanan, 469 F.3d at 178;
Pagan v. Calderon, 448 F.3d 16, 34-37 (1st Cir. 2006).
Further, the reason articulated in Cordi-Allen for
requiring a strict showing of comparability applies with full force
here. Drawing distinctions is what legislators and regulators do
every day: without this comparability sieve, every routine
governmental decision at the state and local level--of which there
are millions every year--could become a class-of-one case in
federal court. Cf. Engquist v. Or. Dep't of Agric., 128 S. Ct.
2146, 2156-57 (2008); Vill. of Willowbrook, 528 U.S. at 565-66
(Breyer, J., concurring in result); Pagan, 448 F.3d at 34-35.
To sum up, Rectrix was a commercial tenant of the airport
and, given the self-service standards and lease terms, had no right
and no reasonable expectation of being able to sell jet fuel at the
airport and so no fraud claim whatever. The antitrust claim,
dubious on the merits, is barred by the state action doctrine given
the Massachusetts statute. And so far is its equal protection
claim is aimed to secure a general right to make jet fuel sales, no
private entity at the airport has the privilege sought by Rectrix.
Affirmed.
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