J.C. Penney Life Insurance Company v. Christian J. Pilosi James C. Pilosi

McKEE, Circuit Judge

concurring.

I agree that we must reverse the order granting summary judgment in favor of the insureds because they are not entitled to coverage under Part I of the insurance policy. I therefore join Parts I.B and I.C of the majority opinion. I also agree that the insureds have not made out their bad faith claim under 42 Pa.C.S. § 8371, and I therefore agree that we must affirm the district court’s grant of summary judgment in favor of J1C. Penney Life on the insureds’ bad faith claim. However, I write separately because I do not agree that the plane that crashed qualifies as a “public conveyance,” under the terms of the insurance policy. Accordingly, I can not agree with the analysis in Part I.A. of the majority opinion.

I.

According to' J.C. Penney Life, Caesars Casino controlled who could board charter flights like the one at issue here. No one could make a reservation for those flights. Rather, Caesars’ Pennsylvania marketing representative was responsible for the required coordination and arrangements. In order to travel on one of these charter flights, a person had to meet Caesars’ definition of a qualified player for its gambling business, or be a guest of someone Caesars deemed a “qualified player.” Although it was not favored, Caesars would also allow passengers who, in Caesars’ estimation, had the potential to qualify as a “qualified player”- or- someone who was a guest of a “qualified player.” However, even some of Caesars regular customers might not qualify to travel on these char*369ters. J.C. Penney Life says that Caesars used the flight for its own interests to increase its gambling business.

According to J.C. Penney Life, no passenger ever paid a fare for any of these flights, and Caesars never sold any seats or packages in connection with the flights. Obviously, the flights were never advertised. Rather, the flights were exclusively a “complimentary” perquisite that Caesars created and controlled, and doled out to those it defined as “high rollers” based upon its own customer ratings. Given these restrictions, and the near total exclusion of the public, the Executive Airlines (“EA”) flight at issue here simply can not qualify as a “public conveyance.”

II.

The majority’s conclusion that EA’s flight does qualify as a public conveyance for purposes of Mrs. Pilosis insurance policy rests in large part upon Terminal Taxicab Co., Inc. v. Kutz, 241 U.S. 252, 36 S.Ct. 583, 60 L.Ed. 984 (1916). Although the analysis in Terminal Taxicab is similar to the inquiry required of us here, I believe that it is of less value than at first appears. Moreover, to the extent that the discussion in Terminal Taxicab does assist our inquiry, I believe that the Court’s holding there counsels that the charter flight at issue here was not a public conveyance within the meaning of J.C. Penney’s life insurance policy.

Before discussing Terminal Taxicab, I think it important to note that the issue there was not whether a given cab was a “public conveyance.” Rather, the issue was whether the taxicab company was subject to the jurisdiction of the Public Utilities Commission of the District of Columbia. 241 U.S. at 253, 36 S.Ct. 583 (identifying the issue as “whether the plaintiff is a common carrier under the definition in the act.”). In order to resolve that inquiry, the Court first noted that the cab company basically conducted three different kinds of business.

Thirty-five percent of the company’s business involved the cab company’s “exclusive right to solicit ... taxi cab business from all persons passing to or from trains in the Union Station ... ”. Id. at 254, 36 S.Ct. 583. Insofar as that portion of the cab company’s business was concerned, the Court “assumed that a person taking a taxicab at the station would control the whole vehicle both as to contents, direction, and term of use, although not, so far as indicated, in such a sense as to make the driver of the machine his servant ... ”. Id. The Court reasoned that this portion of the taxicab company’s business was “an agency for public use for the conveyance of persons ... and nonetheless that it only conveys one group of customers in one vehicle.” Id. (Internal quotation marks omitted).

“The next item of plaintiffs business” consisted of “contracts with hotels by which [the cab company] agrees to furnish enough taxicabs .within certain hours reasonably to meet the needs of the hotel, receiving the exclusive right to solicit in and about the hotel but limiting its service to guests of the hotel.” Id. at 254-55, 36 S.Ct. 583. This arrangement with hotels constituted approximately 25 percent of the company’s business. Although the public’s access was limited by the terms of the company’s exclusive arrangement with the hotel, that limitation did not remove the public character of the cab company’s service because “[n]o carrier serves all the public. His customers are limited by place, requirements, ability to pay and other acts.” Id. at 255,' 36 S.Ct. 583. The Court stressed that “the public is generally free to go to hotels if it can afford to, and through the hotel door to call on the plaintiff for a taxicab.” Id. Significantly for our *370purposes, the Court was reluctant to conclude that “either its contract or its public duty allowed it arbitrarily to refuse to carry a guest upon demand.” Id. The Court went further and stated: “[w]e can only assume that in its own interest it does not attempt to do so.” Id. Moreover, the Court added that, despite limitations arising from the exclusive nature of the company’s contract with hotels, “[t]he service affects so considerable a fraction of the public that it is public in the same sense in which any other may be called so.” Id.

Here, of course, EA not only “arbitrarily ... refuse[s] to carry a guest upon demand,” it refuses to carry anyone upon demand. That decision is the exclusive province of Caesars. Furthermore, it can hardly be said that the charter service provided to Caesars “affects so considerable a fraction of the public that it is public in the same sense in which any other may be called so.”

This distinction is evident from the Court’s analysis of the third part of Terminal Taxicab’s business. As to the two parts I have mentioned thus far, the Court concluded that the cab company was “a common carrier” subject to the jurisdiction of the District of Columbia Public Utilities Commission.

The court reached a contrary conclusion as to the remaining portion of the .company’s business. That 40 percent of the company’s business “consists mainly in furnishing automobiles from its central garage on orders, generally by telephone.” Id. The Court noted that the cab company “asserts the right to refuse the service, and no doubt would do so if the pay was uncertain, but it advertises extensively, and, we must assume, generally accepts any similarly solvent customer.” Id. at 585. Significantly for our purposes, the Court noted “[tjhere is no contract with a third person to serve the public generally.” Id. at 585-86. The absence of a contract to serve the public generally and the authority to arbitrarily refuse service to anyone gave the Court pause in determining whether the company maintained its public character as to that portion of its business. Id. at 585. (“The question whether, as to this part of its business, it is an agency for public use within the meaning of the statute, is more difficult”). However, the Court concluded that insofar as this remaining portion of the business was concerned, Terminal Taxicab was not a public utility because the company retained the right to arbitrarily refuse its services to any .member of the public. The fact that the company advertised its services to the public did not cause the Court to find that the company was therefore a public utility because “[a]n invitation to the public to buy does not -necessarily entail an obligation to sell.” Id. at 585. As noted above, the Court focused on the company’s ability to refuse those services to the public. It concluded, “[i]t is assumed ... that an ordinary shopkeeper may refuse his wares arbitrarily to a customer whom he dislikes, and although that consideration is not conclusive, it is assumed that such a calling is not public as the word is used. In the absence of clear language to the contrary it would be assumed that an ordinary livery stable stood on the same footing as a common shop, and there seems to be no difference between the plaintiffs service from its garage and that of a livery stable.” Id. at 256, 36 S.Ct. 583. Accordingly, the Court held that the taxicab company was not a public utility to the extent of the 40 percent of its business that was comprised of hiring cabs from its central garage.

Thus, I believe the majority’s focus on testimony that EA was “open to ‘anyone who had money and wanted to fly’ ” misses the point. See Maj. Op. at 361. The flights *371that Caesars chartered were clearly not open to anyone with money who wanted to fly. The fact that Mrs. Pilosi’s plane “could be hired by anyone with the ability to pay, either before or after the Caesar flight,” does not establish that the particular flight that Mrs. Pilosi was on was a “public conveyance” while it was under the exclusive use and control of Caesars Resort. See Maj., Op. at 361. The fact that the plane was a public conveyance sometime does not establish that it was a public conveyance all of the time. This is particularly true when it was totally inaccessible to the general public. This is not to say that a charter loses its -public nature merely because it is hired by a particular person anymore than a taxicab loses its public nature when transporting a fare-paying passenger and under his/her direction. However, where, as here, a contract with a private party so restricts access to a charter as to arbitrarily place it beyond the reach of the general public, it can no more be considered public than that portion of Terminal Taxicab’s business that allowed it to arbitrarily refuse service to members of the public.

Furthermore, Caesar’s charter fails to qualify as “public” even if we compare it to the public components of Terminal Taxicab’s business. The majority believes that Terminal Taxicab establishes that “passenger limitations imposed by any particular customer with regard to any particular taxi ride i.e. designating the passengers, the destination, and the schedule of the trip — do not negate the public character of the conveyance.” Maj. Op. at 362.1 do not disagree. However, the restrictions here constitute a total and arbitrary exclusion of the general public to such an extent that no member of the public can exercise any control over the flights because Caesars has rendered them unto itself.

The flight in question was reserved for the exclusive use of high rollers whom Caesars identified. Those persons were then permitted to board a flight which was to depart at a time of Caesars’ choosing, from a location of Caesars’ choosing, to the destination of Caesars choosing. In Terminal Taxicab, any member of the general public with the ability to pay could reserve a room at a hotel under contract with the cab company and thereafter hire a cab so long as the hotel customer had the ability to pay. The same is true of those passengers hiring a taxi leaving a train station. Any member of the public with ability to pay could ride the train, and upon leaving the train station could hire a taxi to go to a location he/she desired. Here, unlike in Terminal Taxicab, “[tjhere is no contract with a third person to serve the public generally.” Terminal Taxicab, 241 U.S. at 255, 36 S.Ct. 583. Rather,. here, the contract with the third person allows the public to be totally and arbitrarily excluded.

The majority states that “the plane qualifies as .public because it can be assessed by any member of the public who has the financial means to rent it.” Maj. Op. at 362. That statement is simply not supported by the record. A billionaire may well have been "refused transportation if he/she only, patronized one of Caesars’ competitors and informed Caesars that he/ she had absolutely no intention of visiting its casino. The Court in Terminal Taxicab merely assumed that the company could arbitrarily exclude members of the public from its livery services. Here, there is no need to assume. The right to exclude is endemic in the very nature of the these flights.

The majority also relies upon Primrose v. Casualty Co. of America, 232 Pa. 210, 81 A. 212 (1911). There, Primrose was killed when the car he had hired from a taxi company crashed. At the time of the acci*372dent, Primrose was covered by an insurance policy that included a double indemnity for injuries “received while riding as a passenger in a public conveyance provided for passenger service ... Id. On appeal, the Pennsylvania Supreme Court had to determine whether the taxicab constituted a “public conveyance” within the meaning of decedent’s insurance policy. The court concluded that it did because “Anybody at all, who was financially responsible could hire [a cab].... They would be hired to any one for rides or for other personal transportation as passengers, from wherever they might get them to wherever they might want to go.” Id. at 215, 81 A. 212 (internal quotation marks omitted). Although all the rest of the public was obviously excluded while the car was hired by a given passenger, “[t]he use of no one of the [cabs] was limited to any particular person, but anyone able to pay the price for the privilege of riding in it, [was able to do so].” Id. I have already explained why that is simply not the case here.

Similarly, I do not agree that Brill v. Indianapolis Life Ins. Co., 784 F.2d 1511 (11th Cir.1986) supports the majority’s conclusion that the chartered flight here was a “public conveyance.” In Brill, a chartered helicopter crashed while carrying passengers from a hotel to an airport. A clause in the applicable insurance policy required that the amount of the death benefit be doubled if an insured sustained an injury while a “fare paying passenger in a public conveyance ... ”. Id. at 1512 (italics in original). The court relied upon Terminal Taxicab in holding that the helicopter was a public conveyance within the meaning of the insurance policy. Although the passengers received no tickets, checked no baggage, and were charged a flat hourly rate, the charter company regularly advertised its charter services to the public. This included advertisements in “[the] equivalent of the yellow pages, business and trade journals, as well as newspapers [intended for general circulation].” Id. at 1512. The court held that the limitations placed on the helicopter as to time and place were no more restrictive than the limitations placed on the taxicab in Terminal Taxicab and that the helicopter was therefore a public conveyance despite the limitations and exclusions that resulted from it being used as a charter. The court reasoned that, although the decedent and his employer “had the exclusive use of the helicopter as to its contents, direction and time of use. The control was not so pervasive ... as to negate the public character of [the charter company’s] service.” 784 F.2d at 1514.

It is beyond dispute that the limitations here exceed the usual limitations inherent in charters that can be hired by any member of the public with ability to pay. Rather, the limitations here are more analogous to (and greatly exceed) the third component of Terminal Taxicab’s business. As noted above, the Court there held the livery portion of the company’s business was not a public utility because the company could arbitrarily refuse to serve any member of the paying public. Indeed, unlike the exclusive contracts between a taxi company and a hotel or a train station where exclusion is a convenience that assures availability to a broad and potentially unlimited sampling of the public, exclusion here is the raison d’etre of Caesars’ charter. It is the exclusion of the public that makes Caesars’ charters valuable. Moreover, the charter flight benefitted Caesars and a select few high rollers that Caesars chose for its own purposes. The flight did not benefit the universe of Caesars’ patronizing public. Accordingly, I conclude that availability of Caesars’ charter was so limited and exclusive that it can not be deemed a “public conveyance.”