Antitrust Law Daily Wrap Up, ANTITRUST—6th Cir.: Preliminary injunction partly vacated in Mackinac Island ferry service antitrust suit, (Mar 13, 2026)

By Steven D. Cole, J.D.

Neither party showed a strong likelihood of success in their dispute over the City’s authority to regulate ferry operations because the franchise agreements’ competition clause was ambiguous; though the ferry companies were likely to succeed on the parking issue.

The City of Mackinac Island (City) did not demonstrate a strong likelihood of proving at trial that it possessed the authority to unilaterally regulate the ferry operations provided to and from Mackinac Island based on a lack of lack of competition, held the Sixth Circuit Court of Appeals. The core disagreement stemmed from the interpretation of the City’s Franchise Agreements with the prior ferry boat operators, which had recently come under common ownership. Both parties set forth reasonable interpretations, meaning that each demonstrated some likelihood of success. This, as well as other factors, rendered preliminary injunctive relief inapposite on this issue. The ferry companies did, however, show that they were likely to prevail in showing that the City lacked authority to regulate parking at the ferries’ mainland terminals, prompting the Court to affirm the district court’s grant of a preliminary injunction with regard to this issue (Shepler’s Inc. v. City Of Mackinac Island, No. 25-1668 (6th Cir. Mar. 12, 2026)).

Mackinac Island, located in northwestern Lake Huron, is a popular tourist destination. No bridges or tunnels connect it to the mainland; instead, the Island is accessible by passenger ferries from both Mackinaw City in Michigan’s Lower Peninsula and St. Ignace in the Upper Peninsula. In its 1899 founding Charter, the State of Michigan granted the City authority to regulate ferry services to any “place of landing [on] the opposite shore,” including “prices for the transportation of persons and property thereon.” Pursuant to this authority, the City implemented the Ferry Boat Code, which has required all ferry operators to obtain a franchise from the City since 1977. In 2012, the City entered into materially identical Franchise Agreements with three ferry operators, which run through June 30, 2027. By 2024, Hoffman Family Companies (Hoffman), a private equity firm, had acquired all of the ferries and ran them as two companies. Though some facts pointed to them operating as separate brands in the market, the City maintained that the common ownership amounted to a lack of competition. And because of this, the City passed several resolutions and ordinances to stifle the impact of the recent consolidation.

More specifically, the City opposed the companies’ decision to raise passenger fares by $2 and increase parking fees at their mainland terminals for the 2025 season. In May 2025, the City adopted Ordinance 629, which upended the existing regulatory scheme (repealing and replacing Ordinance 465) and gave the City unilateral power to determine the charges, schedules, and all other matters related to the Island’s ferry boat services. The City pointed to Section 9 in the Franchise Agreements as the basis for its authority, which reads: “In the event that no competition is found to exist in ferry boat service to and from the City, the City has the right to assert its jurisdiction over schedules and fares to the extent permitted by present law.”

Procedural history. The two ferry companies sued the City in federal district court, seeking a declaratory judgment that the City’s action was ultra vires. The City counterclaimed for a judicial declaration that it held the power to regulate fares and parking rates under the Franchise Agreements and the Charter. The district court found that the City’s enactment of Ordinance 629 constituted “a textbook breach of contract,” and that the City could not exercise jurisdiction over the ferry companies based merely on its conclusion that there was no competition. The district court placed significant emphasis on the use of the passive voice in Section 9, reasoning that the condition precedent to the City’s exercise of authority—“[i]n the event that no competition is found to exist”—likely required this determination to be made by a third party. Therefore, the district court granted the ferry companies’ motion for a preliminary injunction enjoining the City from enforcing Ordinance 629.

Regulation of ferry services. On appeal, the Sixth Circuit conceded that the interpretation posited by the ferry companies and endorsed by the district court was reasonable, but held that it was not the only reasonable interpretation. The City also reasonably posited that the Franchise Agreements incorporate the Charter, which, in turn, grants broad authority to the City to regulate ferry services. Accordingly, the Court of Appeals concluded that Section 9 was ambiguous. As there was no evidence in the record as to the parties’ contemporaneous understanding of the agreement when it was signed, whether the City had the authority to regulate ferry rates under the Franchise Agreements remained an open question. Consequently, neither party showed a strong likelihood of success on this issue.

The ferry companies also argued that since Section 9 limited the City’s authority to regulate ferry services “to the extent permitted by present law,” its enactment of Ordinance 629 was ultra vires in that it went beyond what was permissible under the regulatory scheme as it existed in 2012 under Ordinance 465, particularly with respect to: (1) the regulation of ancillary services, such as parking, priority boarding, and luggage fees; (2) the imposition of new regulatory fees; and (3) the requirement to disclose financial information. But the ferry companies’ reliance on Ordinance 465 to establish “present law” was misplaced; the Charter determined what authority the City had been granted. And with one exception, the Charter covered all of these challenged provisions.

Regulation of parking. The City was mistaken in its insistence that it could regulate all ancillary charges related to ferry services pursuant to the State’s grant of authority in the 1899 Charter. Specifically, it overlooked the fact that customers are not required to park at the ferry companies’ mainland lots in order to purchase a ferry ticket, even if most do. And a parking lot does not fit within the definition of “landing” in the dictionaries of the era in which the Charter was adopted. Furthermore, it was hard to believe that the State intended to give the City broad extraterritorial authority over substantial portions of land without explicitly saying so. Accordingly, the Court concluded that the ferry companies possessed a strong likelihood of success in proving that the City lacked the authority to regulate parking at the companies’ two mainland lots.

Preliminary injunctive relief. With regard to parking, therefore, the Court of Appeals affirmed the district court’s grant of a preliminary injunction. But the Court vacated this order with respect to the other aspects of Ordinance 629, based on its conclusion that both parties demonstrated some likelihood of success in that each proposed reasonable interpretations of Section 9 in the Franchise Agreements.

Concurrence. Judge McKeague joined the court’s opinion in full, and wrote separately to opine that neither the Court of Appeals nor the district court adequately addressed the question of whether the City had made a procedurally sufficient finding that no competition in ferry services to Mackinac Island existed after Hoffman’s acquisitions. Whether common ownership, and nothing else, merited a finding of lack of competition was not clear from the record.

The Case is No. 25-1668.

Judge: Griffin, R.

Attorneys: William J. Dorsey (Blank Rome LLP) for Shepler's Inc. Larry J. Saylor (Miller Canfield PLC) for City of Mackinac Island.

Companies: Shepler's Inc.

Cases: Antitrust KentuckyNews MichiganNews OhioNews TennesseeNews