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Tri-State Coach Lines, Inc. v. Metropolitan Pier and Exposition Authority

June 30, 2000

TRI-STATE COACH LINES, INC., ET AL., PLAINTIFFS-APPELLANTS, CROSS-APPELLEES,
v.
METROPOLITAN PIER AND EXPOSITION AUTHORITY, A BODY POLITIC AND MUNICIPAL CORPORATION, DEFENDANT-APPELLEE, CROSS-APPELLANT.



The opinion of the court was delivered by: Justice Burke

Appeal from the Circuit Court of Cook County.

Honorable John A. Ward, Judge Presiding.

Plaintiffs Tri-State Coach Lines, Inc., and certified members of Class B(1) and Class B(2) (Class B), appeal from an order of the circuit court granting summary judgment against them and in favor of defendant Metropolitan Pier and Exposition Authority (MPEA) in a class action lawsuit filed by plaintiffs, ultimately certified by the court as Class A and Class B members, who sought, inter alia, a declaration determining whether MPEA's imposition of an airport departure tax on plaintiffs' ground transportation services violated section 14505(2) of the Interstate Commerce Commission Termination Act of 1995 (49 U.S.C. §14505(2) (Supp. II 1997)), which forbids state and local taxation on certain interstate travel. MPEA cross-appeals from the same order granting summary judgment against it and in favor of Class A. For the reasons set forth below, we affirm in part and reverse in part.

In 1992, the Illinois General Assembly, in enacting Public Act 87--733 (Pub. Act 87--733, eff. July 1, 1992), amended the Metropolitan Pier and Exposition Authority Act (MPEA Act) (70 ILCS 210/1 et seq.) (West 1994)) to authorize a $1 billion expansion of Chicago's McCormick Place. To finance the expansion, the General Assembly directed MPEA, a political subdivision of local government, a body politic, and a municipal corporation responsible for, inter alia, the construction of facilities at McCormick Place, to issue bonds. See 70 ILCS 210/13.2 (West 1994). To repay the bonds, the General Assembly authorized MPEA to impose certain new local taxes, including "an occupation tax on all persons, other than a governmental agency, engaged in the business of providing ground transportation for hire to passengers in the metropolitan area." 70 ILCS 210/13(f) (West 1994). The General Assembly then directed MPEA to levy this occupation tax at a specified rate upon each "taxi or livery vehicle [or bus or van] departure with passengers for hire from [Chicago's] commercial service airports." 70 ILCS 210/13(f) (West 1994).

In accordance with the MPEA Act, MPEA enacted the MPEA Airport Departure Tax Ordinance (Ordinance), which became effective January 1, 1993. The Ordinance requires the levying of an airport departure tax, otherwise known as the MPEA Airport Departure Tax, upon the following specific categories of providers of ground transportation: "(i) Category 1. For each taxi or livery vehicle departure from a commercial service airport with passengers for hire: $2 per departure. (ii) Category 2. *** [F]or each departure from a commercial service airport with passengers for hire: $9 per bus or van with a capacity of 1-12 passengers; $18 per bus or van with a capacity of 13-24 passengers; and $27 per bus or van with a capacity of over 24 passengers. (iii) Category 3. For each departure from a commercial service airport with passengers for hire in a bus or van operated by a person regulated by the Interstate Commerce Commission or the Illinois Commerce Commission, and operating scheduled service from the airport, and charging fares on a per passenger basis: $1 per passenger." Ordinance §1-3.

Shortly after its imposition, the airport departure tax became the subject of two separate constitutional challenges. In Allegro Services, Ltd. v. Metropolitan Pier and Exposition Authority, 172 Ill. 2d 243, 665 N.E.2d 1246 (1996), a case filed by some of the same plaintiffs who have filed this action, our supreme court held that the airport departure tax, as applied to suburban and out-of-state ground transportation operators providing passenger service from Chicago's airports to destinations beyond the city limits, does not violate the equal protection clause of the United States Constitution (U.S. Const., amend. XIV), the interstate commerce clause of the United States Constitution (U.S. Const., art. I, §8), or the uniformity clause of the Illinois Constitution (Ill. Const. 1970, art. IX, §2). Allegro, 172 Ill. 2d at 260, 269. In Terry v. Metropolitan Pier and Exposition Authority, 271 Ill. App. 3d 446, 648 N.E.2d 1047 (1995), this court rejected similar constitutional claims made by vehicle operators who were being taxed under the Ordinance pursuant to their ground transportation of passengers into Chicago's city limits. Terry, 271 Ill. App. 3d at 452-56.

On February 7, 1996, plaintiffs in the present case, all ground transportation operators engaged in the business of transporting passengers for-hire by bus, taxi, or livery from Chicago's O'Hare International Airport (O'Hare) and Midway Airport (Midway) to destinations in Illinois, northern Indiana, and southern Wisconsin, filed a class action lawsuit on behalf of themselves and others similarly situated, challenging the levying of the airport departure tax upon them, not on any constitutional basis, but on a new statutory provision contained in the Interstate Commerce Commission Termination Act of 1995 (ICCTA), Pub. L. No. 104-88, 109 Stat. 803 (codified at 49 U.S.C. §13101 et seq.) (Supp. II 1997)), which became effective January 1, 1996. Section 14505(2) of the ICCTA, upon which plaintiffs rely, provides that "[a] State or political subdivision thereof may not collect or levy a tax, fee, head charge, or other charge on *** the transportation of a passenger traveling in interstate commerce by motor carrier." 49 U.S.C. §14505(2) (Supp. II 1997).

In their class action complaint, as amended, and numerous subsequent pleadings, plaintiffs alleged that the clear language of section 14505(2) protects from local taxation the commercial ground transportation activities of plaintiffs' proposed class members. Plaintiffs' proposed Class A consisted of commercial operators providing for-hire ground transportation to passengers departing from O'Hare and Midway and destined for locations beyond Illinois' border. Plaintiffs' proposed Class B consisted of those commercial operators providing for-hire ground transportation to passengers departing from O'Hare and Midway and destined for locations within Illinois' border who prearranged their ground transportation as one component of an interstate journey by air. Plaintiffs maintained that both proposed Class A and Class B are transporting passengers traveling in interstate commerce and, thus, the airport departure tax, as applied against each class, violates section 14505(2)'s prohibition against state and local taxation of "the transportation of a passenger traveling in interstate commerce by motor carrier." Stated another way, plaintiffs alleged that section 14505(2) of the ICCTA, as applied against them, preempts and prohibits imposition of the airport departure tax. Accordingly, plaintiffs sought, inter alia, a court order declaring the airport departure tax, as applied against them, invalid and an injunction restraining MPEA from collecting the airport departure tax.

In its response to plaintiffs' class action complaint and request for injunctive relief, MPEA argued, inter alia, that the legislative history of section 14505 indicates that Congress had intended to preempt only state and local taxation of tickets purchased by passengers traveling interstate on buses. Therefore, MPEA argued, section 14505(2) applied, if at all, to only a small fraction of plaintiffs' ground transportation activities taxed under the Ordinance. MPEA, consequently, filed a motion for judgment on the pleadings with respect to the allegations brought on behalf of proposed Class B.

The trial court granted MPEA's motion, finding that plaintiffs had not stated a cause of action with respect to Class B but had with respect to Class A. The court determined that section 14505(2) prohibits levying the airport departure tax on departures from O'Hare and Midway to destinations located beyond Illinois' border but does not prohibit levying the airport departure tax on departures from O'Hare and Midway to destinations located within Illinois. Upon the parties' agreement, the court subsequently vacated its order awarding judgment on the pleadings in favor of MPEA as to Class B so that the issue could be resolved by summary judgment.

The trial court ordered the case to proceed as a class action, and it certified Class A and Class B, dividing Class B into Classes B(1) and B(2). Class A consists of those ground transportation operators who provide for-hire passenger transportation from O'Hare and Midway to destinations located in northern Indiana and southern Wisconsin. Class B consists of those operators who provide service to destinations located within Illinois "where the passengers have prearranged *fn1 their ground transportation as part of their interstate and/or foreign travel by air" (Class B(1)) or are "traveling on a through ticket pursuant to a motor carrier and airline master purchase of service agreement" (Class B(2)). Plaintiffs and MPEA then filed cross-motions for summary judgment, and the trial court granted summary judgment in favor of plaintiffs and against MPEA as to Class A (those operators providing service to destinations outside Illinois) and against the plaintiffs and in favor of MPEA as to Class B (operators providing prearranged service to destinations within Illinois). This appeal and cross-appeal followed.

Given the procedural posture of this case, we initially address the question of whether the trial court should have dismissed plaintiffs' action for lack of jurisdiction based on plaintiffs' failure to exhaust their administrative remedies. According to our supreme court: "It is well established that, in cases which seek to avoid the statutory procedures relating to the assessment and collection of taxes, relief by way of declaratory judgment should not be afforded in a tax case that did not merit relief in chancery by way of injunction. [Citations.] Although the existence of another remedy does not ordinarily preclude bringing an action for declaratory judgment, in revenue cases it is the rule, applying general equitable principles, that relief by way of declaratory judgment is not available if the statute provides an adequate remedy at law." People ex rel. Fahner v. American Telephone & Telegraph Co., 86 Ill. 2d 479, 484-85, 427 N.E.2d 1226 (1981). Judicial scrutiny by way of equity is improper where administrative review is available under the Administrative Review Law (735 ILCS 5/3--101 et seq. (West 1996)). See Illinois Bell Telephone Co. v. Allphin, 60 Ill. 2d 350, 353-57, 326 N.E.2d 737 (1975) (overturning Owens-Illinois Glass Co. v. McKibbin, 385 Ill. 245, 52 N.E.2d 177 (1943); accord County of Knox ex rel. Masterson v. Highlands L.L.C., 188 Ill. 2d 546, 551-52, 723 N.E.2d 256 (1999). As explained in Allphin, the rationale underlying the doctrine of exhaustion of administrative remedies (exhaustion doctrine), which includes administrative review in the circuit court, is that "(1) it allows full development of the facts before the agency; (2) it allows the agency an opportunity to utilize its expertise; and (3) the aggrieved party may succeed before the agency, rendering judicial review unnecessary." Allphin, 60 Ill. 2d at 358. The Administrative Review Law applies to, and governs, "every action to review judicially a final decision of any administrative agency where the Act creating or conferring power on such agency, by express reference, adopts the provisions of *** this [Law] or its predecessor, the Administrative Review Act. *** In all such cases, any other statutory, equitable or common law mode of review of decisions of administrative agencies heretofore available shall not hereafter be employed." 735 ILCS 5/3--102 (West 1996). See e.g., Midland Hotel Corp. v. Director of Employment Security, 282 Ill. App. 3d 312, 317-19, 688 N.E.2d 82 (1996) (exhaustion doctrine applied because the agency had exclusive jurisdiction in the case and administrative review was the sole remedy for challenging the agency's orders).

Pursuant to our request during oral arguments, the parties briefed the applicability of the exhaustion doctrine in this appeal, and we are persuaded that the trial court had jurisdiction to reach the merits. First, as plaintiffs' correctly argue, the MPEA Act (70 ILCS 210/13(f) (West 1996)), the legislation conferring power to MPEA to impose the airport departure tax, did not expressly adopt the Administrative Review Law provisions. *fn2 Rather, the Ordinance enacted by MPEA pursuant to MPEA's authority under the MPEA Act, merely provides that plaintiffs await determinations by the MPEA collector in accordance with the procedures provided in the Ordinance (MPEA Airport Departure Ordinance, Article V, Procedures).

Secondly, we find that exceptions to the general requirement of strict compliance with the exhaustion doctrine exist in the instant case. See generally, Northwestern University v. City of Evanston, 74 Ill. 2d 80, 86-88, 383 N.E.2d 964 (1978); Allphin, 60 Ill. 2d at 358. The one we find applicable here is that a party need not exhaust his administrative remedies before seeking judicial relief if his complaint attacks the constitutionality of a statute, ordinance, or administrative rule on its face. See Northwestern University, 74 Ill. 2d at 86; see, e.g., County of Kane v. Carlson, 116 Ill. 2d 186, 198-99, 507 N.E.2d 482 (1987) (statute); Phillips v. Graham, 86 Ill. 2d 274, 289, 427 N.E.2d 550 (1981) (statute); City of Chicago v. ...


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