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DeCamp, Inc. v. New Jersey Transit

396 N.J. Super. 151, 933 A.2d 37 (Law Div. 2007)

BUSES; COMPETITION; TAKINGS — In order for an economic interest to constitute property, one must show a legitimate entitlement to that interest under law and a bus company has not cognizable property right in its revenues until they are deposited in the “fair box,” so an increase in competition from a state operated railroad does not effectuate the taking of a private bus company’s revenues.

A private bus company provided bus services to commuters in Northern New Jersey. Several of its bus routes, which ran from Northern New Jersey into midtown Manhattan, accounted for nearly three-quarters of the company’s revenues. No other bus companies were granted certificates to run the same routes. A time came when a State owned railroad developed a rail connection that afforded commuters the opportunity to commute from various stops in Northern New Jersey into Manhattan by rail service. The bus company was invited to participate in the hearings, but did not do so and voiced no objections. When the rail connection opened, the route intersected several of the bus company’s routes, and resulted in the loss of hundreds of thousands of riders per year. The bus company requested that it be able to replace the lost riders with additional routes, but the request was denied. The bus company sued the railroad. It claimed that New Jersey Transit was guilty of destructive competition and inverse condemnation. The Court rejected the bus company’s condemnation claim. It noted that takings come in two categories: (a) the physical invasion and appropriation of property; and (b) the execution of laws that adversely affect a recognized economic interest. The Court concluded that it was undisputed that no appropriation of property occurred. As to the second category, the Court found that the bus company had no protected property right in the bus route. In order for an economic interest to constitute property, one must show a legitimate entitlement to that interest under law. The bus company could not show a legitimate claim of entitlement to ridership since ridership is unpredictable and loss of ridership could be attributable to other factors, including the economy. Therefore, there is no cognizable property right in the revenues until they are deposited in the “fare box.” The Court also rejected the bus company’s claim that it had been granted an exclusive right to operate the bus routes, and that constituted a property right. It found that none of the certificates granted to the bus company either explicitly or implicitly granted exclusive routes to the bus company. The Court noted that, even if the bus company had a protected property right, its claim still failed. In order to find a regulatory taking, the government needed to go “too far.” Competition, by itself, does not constitute a regulatory taking. The Court rejected the bus company’s argument that New Jersey Transit’s fair structure, a product of its ability to operate at a deficit due to the government subsidies it receives, was evidence of a regulatory taking. The Court found that the railroad’s fair structure, along with its comfort level of service, points of origin and destinations were merely a form of competition that did not preclude commuters from choosing rail or bus transportation. The Court noted that the commuters’ preferences, not government actions, resulted in the loss of ridership. The Court also noted that the bus company had also received subsidies from the government.

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