Peerless Stages, Inc. v. Santa Clara County Transit District

Citations: 76 Cal. App. 3d 503; 142 Cal. Rptr. 892; 1978 Cal. App. LEXIS 1147Docket: Civ. No. 40908

Court: California Court of Appeal; January 4, 1978; California; State Appellate Court

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Appellant Peerless Stages initiated a legal complaint for injunctive relief against the Santa Clara County Transit District and its director, later amending the complaint to include claims for damages and fraud. Following a court trial without a jury, judgment was rendered in favor of the respondents, prompting this appeal. Peerless Stages, a bus company operating in Northern California, previously comprised five divisions, with the Santa Clara County Division generating over 40% of its revenue vehicle miles in the county prior to its sale to the respondent on December 31, 1972. Post-sale, less than 40% of Peerless's revenue vehicle miles were in Santa Clara County.

The Santa Clara County Transit District was established under the Santa Clara County Transit District Act in 1969, allowing it to acquire and operate bus lines within or partially outside the county, but prohibiting competition with an "existing system" until that system was fully purchased. The term "existing system" refers to any transit service operating entirely within Santa Clara County or at least 40% of whose revenue vehicle miles were operated within the district in the previous year, excluding charter services.

In mid-1973, the respondent began transit service between San Jose and the Fremont BART station, adversely affecting the appellant's Oakland Division, which previously served that route. The fare difference between the appellant and the respondent contributed to a decline in ridership and revenue for Peerless. The trial court concluded that Peerless was not an "existing system" in mid-1973, as it no longer operated within the parameters defined by the statute due to the sale of its Santa Clara Division. Peerless contends the trial court erred by not considering its system as it existed in 1972, arguing that this oversight indicates the respondent violated the statute by establishing a competing line without purchasing it first. The resolution of this matter hinges on a detailed analysis of the relevant code sections and the legislative intent, necessitating an exploration of the probable intent of the Legislature in the absence of available legislative history.

The legislation establishes a clear distinction between transit systems with significant presence in Santa Clara County and those with only minor contact. A system fully operating within the county is included under the statute, while a system not entirely within the county must demonstrate at least 40% of its revenue vehicle miles in the district to qualify for purchase by the transit district. The statute emphasizes the importance of this minimum presence at the start of competition, using the previous year’s mileage for assessment. The appellant’s argument to consider the prior year’s corporate structure for revenue mileage is refuted, as the statute specifies that the district cannot initiate service until it has fully purchased the existing system or any part thereof. Consequently, if a system is partially purchased, it may not meet the definition of an existing system, allowing new competition. The court affirms that the appellant, as it existed in 1973, did not qualify as an existing system under the statute, thus permitting the establishment of the San Jose-Fremont route. The judgment of the trial court is upheld, and the appellant's claims regarding the lack of fraud by the respondent are dismissed, as the evidence presented did not prove fraud. The court’s findings are accepted as there was insufficient proof of fraud by the appellant. The distinction in legislation regarding transit districts reflects the Legislature’s careful consideration of local circumstances.