Federal court judge dismisses Star Marianas suit vs CPA

The federal court dismissed yesterday the lawsuit filed by Star Marianas Air Inc. against the Commonwealth Ports Authority for allegedly assessing the company unreasonable user fees.

U.S. District Court for the NMI designated Judge Frances M. Tydingco-Gatewood ruled that Star Marianas is required to exhaust its administrative remedies and the Anti-Head Tax Act (AHTA) claim must be dismissed.

Tydingco-Gatewood, however, granted Star Marianas’ request to amend its breach of contract claim.

“Because the court has concluded that there is no private right of action under the AHTA and the federal question claim must be dismissed, the court will also dismiss the breach of contract claim for lack of jurisdiction,” the judge said.

However, this case is in the early stages of litigation and no answer to Star Marianas’ complaint has been filed, said Tydingco-Gatewood as she allowed the airline to amend its breach of contract claim.

Robert T. Torres, counsel for CPA, said yesterday that CPA appreciates the court’s decision dismissing this case.

“While we have a fundamental disagreement with Star Marianas on its claims which were dismissed, the agency continues to believe that measured efforts at resolution may be more productive,” Torres said.

In the meantime, Torres said, the court’s ruling addresses the authority that there is no private right of action for an Anti-Head Tax claim by Star Marianas.

In its lawsuit filed last year, Star Marianas sued CPA and five unnamed co-defendants for breach of contract, violation of Anti-Head Tax, and for unreasonable user fees.

Star Marianas, through counsel Timothy H. Bellas, asked the court to hold CPA liable to pay the company damages in an amount to be proven at trial, court costs, and attorney’s fees.

Star Marianas entered in 2009 an agreement with CPA, which controls and operates the airports in the CNMI, to lease and use areas of the commuter terminals on Saipan, Tinian, and Rota.

Under the agreement, Star Marianas agreed to adhere to the CPA Airport Rules and Regulations, and to pay a departure facility charge, international arrival facility charge, and in-transit passenger service charge.

In Star Marianas’ lawsuit, Bellas argued that the charges calculated on a per-passenger basis violate the AHTA.

Under the AHTA, a state actor “may not levy or collect a tax, fee, head charge, or other charge” on individuals traveling in air commerce.

In CPA’s motion to dismiss, Torres asserted that the AHTA does not provide a private right of action and Star Marianas failed to exhaust its administrative remedies, and without a federal claim, the court lacks supplemental jurisdiction over the breach of contract claim.

In Star Marianas’ response, Bellas argued that there is a private right of action and there is no requirement to exhaust administrative remedies.

In her decision, Tydingco-Gatewood said the court finds that there is no private right of action under the AHTA and Star Marianas may not maintain its claim.

Tydingco-Gatewood said without a private right of action, the only method through which a plaintiff could eventually seek judicial review is to first lodge a complaint with the Secretary of Transportation and proceed with the administrative enforcement process.