Biekarck v. Warren-Forest Counties Economic Opportunity Council, Inc.

574 F. Supp. 647, 1983 U.S. Dist. LEXIS 11419
CourtDistrict Court, W.D. Pennsylvania
DecidedNovember 23, 1983
DocketCiv. A. No. 83-269 ERIE
StatusPublished

This text of 574 F. Supp. 647 (Biekarck v. Warren-Forest Counties Economic Opportunity Council, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Biekarck v. Warren-Forest Counties Economic Opportunity Council, Inc., 574 F. Supp. 647, 1983 U.S. Dist. LEXIS 11419 (W.D. Pa. 1983).

Opinion

OPINION

WEBER, District Judge.

This case presents an interesting combination of questions on federal jurisdiction, standing to sue, and private causes of action.

Plaintiff is the owner of an established mercantile business in Warren, Pennsylvania. The defendant is a non-profit organization formed to foster economic development in the two-county area. To revitalize the Warren downtown commercial area, defendant, along with two similar non-profit organizations, acquired a large building which was renovated and remodeled to make it suitable for several small businesses. The declared goal of this enterprise was to attract new businesses and jobs to downtown Warren without displacing existing businesses.

One of the three joint ventures in this enterprise is Uniform Region Nine Certified Development Company (U.R.9) which pledged a contribution of $53,625 of equity capital to the project. This capital contribution of U.R.9 is derived from a grant to U:R.9 from the Appalachian Regional Commission, a federal agency, for use in this project. The plaintiff contends that this use of the funds is prohibited by the provisions of the Appalachian Regional Development Act of 1965, as amended, 40 U.S.C. App. § 1. Plaintiff claims that this alleged illegal use of the federal grant injures him in his business because it subsidizes competing business enterprises under conditions in which he and similar local merchants are barred.

Plaintiff brought suit in the Common Pleas Court of Warren County, Pennsylvania, stating a cause of action under the Appalachian Regional Development Act, 40 U.S.C.App. § 1. He named as the sole defendant the Warren-Forest Counties Economic Opportunity Council, Inc., which held title to the real estate involved.

[649]*649Defendant removed the action to the United States District Court under 28 U.S.C. § 1441, because the plaintiff claimed rights arising under a federal statute. The face of the complaint reveals that such claim is made and the action was properly removed. Westmoreland Hospital Assoc, v. Blue Cross of Western Pennsylvania, 605 F.2d 119 (3d Cir.1979).

Upon removal defendant filed a motion to dismiss on the grounds that (1) the Appalachian Regional Development Act does not create a private cause of action; (2) plaintiff lacks standing to bring this action; and (3) plaintiff has failed to join indispensable parties.

Plaintiff filed a motion to remand the action to the state court, but now concedes jurisdiction in this court. Jurisdiction, having been established by the face of the complaint, is not defeated by a later determination of no cause of action. This is a judgment on the merits and is only decided after the court has assumed jurisdiction. Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946).

Congress passes a lot of laws each session, but the violation of the provisions of any federal statute does not automatically give a right to sue to any person alleging injury by reason of the violation. Cannon v. University of Chicago, 441 U.S. 677, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979); Lechtner v. Brownyard, 679 F.2d 322 (3d Cir.1982): United States v. F.M.C., 717 F.2d 775 (3d Cir.1983).

A statute may create a private cause of action by express terms, such as “any person claiming injury because of a violation of any provision of this act may bring suit in the United States District Court.” There is no such provision in this Act.

Many cases have construed statutes as creating an implied private cause of action. In Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1976) the Supreme Court set four standards for determining an implied cause of action from a statute:

(1) Is the plaintiff one of the class for whose especial benefit the statute was passed?
(2) Is there any indication of legislative intent to create such a remedy?
(3) Does the underlying purpose of the legislation imply such a remedy?
(4) Is the cause of action one traditionally relegated to state law?

There is no indication in this statute that the legislative scheme was intended to protect businessmen from unfair competition. The purpose of the Act is to foster economic development in the Appalachian region. There is no indication of any legislative intent in the Act itself or in its legislative history to foster enforcement of the Act through private lawsuits. The Act is designed to alleviate an economic syndrome by the universal remedy, federal funds, with certain limitations on their use.

We conclude that no private cause of action is implied in the Act.

We also cannot find that plaintiff has any standing to bring this action. The injury which he alleges is that defendant and its tenants will unfairly compete with plaintiff because of the subsidy enjoyed by the availability of federal funds. However, the Act does not reflect a legislative purpose to protect a competitive interest. It is not alleged that such competition is in any sense unlawful. The plaintiff here does not stand within any “zone of interest” which the statute is intended to protect. Association of Data Processing Service Organization, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). The limitations in the Act on how the money is to be spent reveal no intent to protect competitors.

Having determined these prime contentions of defendant we find no need to consider whether plaintiff has joined all parties necessary for full adjudication.

Plaintiff, in its brief, raises an issue not previously raised in the complaint. It argues that the facts recited give support to a claim of violation of its civil rights [650]*650under 42 U.S.C. § 1983. It argues in its brief that defendant is a corporation formed and doing business in Pennsylvania and that it uses both federal and state funds in its projects. The extent of state funding is nowhere explained in the complaint. We do not find any infusion of state funds into the project sufficient to satisfy the state action requirement of Section 1983.

In Bethel v. Jendoco Construction Corp., 570 F.2d 1168 (3d Cir.1978), the Court of Appeals stated that there must be a sufficient nexus between the state and the challenged action so that the action of the defendant may be fairly treated as that of the state itself, or that the state itself is a joint participant in the challenged activity, citing Jackson v.

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Related

Bell v. Hood
327 U.S. 678 (Supreme Court, 1946)
Burton v. Wilmington Parking Authority
365 U.S. 715 (Supreme Court, 1961)
Moose Lodge No. 107 v. Irvis
407 U.S. 163 (Supreme Court, 1972)
Jackson v. Metropolitan Edison Co.
419 U.S. 345 (Supreme Court, 1974)
Cort v. Ash
422 U.S. 66 (Supreme Court, 1975)
Cannon v. University of Chicago
441 U.S. 677 (Supreme Court, 1979)
Rendell-Baker v. Kohn
457 U.S. 830 (Supreme Court, 1982)
Samuel Weaver and Alice Weaver v. Marine Bank
683 F.2d 744 (Third Circuit, 1982)
Bethel v. Jendoco Construction Corp.
570 F.2d 1168 (Third Circuit, 1978)

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Bluebook (online)
574 F. Supp. 647, 1983 U.S. Dist. LEXIS 11419, Counsel Stack Legal Research, https://law.counselstack.com/opinion/biekarck-v-warren-forest-counties-economic-opportunity-council-inc-pawd-1983.