Trailways of New England Inc. v. Civil Aeronautics Board

412 F.2d 926 (1969) | Cited 30 times | First Circuit | June 13, 1969

ALDRICH, Chief Judge:

* Of the Third Circuit, sitting by designation.

1. The only petitioner before the Board was Transcontinental Bus System, Inc. In this court its wholly-owned subsidiary, Trailways of New England, Inc., filed the first petition for review of the Board's decision (No. 7112). Transcontinental then filed a similar petition in the Court of Appeals for the Fifth Circuit. Later, that petition was transferred to this court and docketed here (No. 7162). For compilers of statistics, this is a clear case of forum shopping, a fact that we note with no pleasure. See P. Carrington, Crowded Dockets and the Courts of Appeals: The Threat to the Function of Review and the National Law. 82 Harv. L. Rev. 542, 596-600 (1969).

2. The carriers named in petitioner's complaint were: Allegheny Airlines, Inc., Aloha Airlines, Inc., American Airlines, Inc., Bonanza Airlines, Inc., Braniff Airways, Inc., Central Airlines, Inc., Continental Air Lines, Inc., Delta Air Lines, Inc., Eastern Air Lines, Inc., Frontier Airlines, Inc., Hawaiian Airlines, Inc., Lake Central Airlines, Inc., Mohawk Airlines, Inc., National Airlines, Inc., North Central Airlines, Inc., Northeast Airlines, Inc., Northwest Airlines, Inc., Pacific Air Lines, Inc., Pacific Northern Airlines, Inc., Pacific Western Airlines, Inc., Piedmont Airlines, Inc., San Francisco & Oakland Helicopter Airlines, Inc., Southern Airways, Inc., Trans Caribbean Airways, Inc., Trans Texas Airways, Inc., Trans World Airlines, Inc., United Air Lines, Inc., West Coast Airlines, Inc., and Western Air Lines, Inc.

3. See note 8, infra.

4. In its complaint Transcontinental charged that the fares are unjust in that persons traveling on the family fare plan in coach service received a larger percentage discount from full fare than persons traveling on the first class family plan. This contention is now moot since the carriers have filed and the Board has accepted family fare tariffs with uniform discounts in coach and first class service.(Order E-26925 (1968)).

5. The family fare tariffs presently in effect for the domestic trunk carriers provide a discount of 25% from the regular coach or first class fare for the spouse (or first accompanying minor child); a 50% discount for additional children aged 12 through 21; and a two-thirds discount for children under twelve (as compared with the standard 50% discount applicable to the fare of any child aged two through eleven, traveling with any adult). Regardless of whether the family fare is utilized, children under two who do not occupy a seat travel free.

6. The family members are required to travel a certain portion of the trip together and must utilize identical routings. Moreover, on the trunk carriers, weekend travel may not commence between noon and midnight on Friday or between noon Sunday and noon Monday.

7. The full text of section 404 reads as follows: "(a) It shall be the duty of every air carrier to provide and furnish interstate and overseas air transportation, as authorized by its certificate, upon reasonable request therefor and to provide reasonable through service in such air transportation in connection with other air carriers; to provide safe and adequate service, equipment, and facilities in connection with such transportation; to establish, observe, and enforce just and reasonable individual and joint rates, fares, and charges, and just and reasonable classifications, rules, regulations, and practices relating to such air transportation; and, in case of such joint rates, fares, and charges, to establish just, reasonable, and equitable divisions thereof as between air carriers participating therein which shall not unduly prefer or prejudice any of such participating air carriers. "(b) No air carrier or foreign air carrier shall make, give, or cause any undue or unreasonable preference or advantage to any particular person, port, locality, or description of traffic in air transportation in any respect whatsoever or subject any particular person, port, locality, or description of traffic in air transportation to any unjust discrimination or any undue or unreasonable prejudice or disadvantage in any respect whatsoever." 49 U.S.C. § 1374.

8. Section 1002 provides in relevant part: "(a) Any person may file with the Administrator or the Board, as to matters within their respective jurisdictions, a complaint in writing with respect to anything done or omitted to be done by any person in contravention of any provisions of this chapter, or of any requirement established pursuant thereto. If the person complained against shall not satisfy the complaint and there shall appear to be any reasonable ground for investigating the complaint, it shall be the duty of the Administrator or the Board to investigate the matters complained of. Whenever the Administrator or the Board is of the opinion that any complaint does not state facts which warrant an investigation or action, such complaint may be dismissed without hearing. . . . "(b) The Administrator or Board, with respect to matters within their respective jurisdictions, is empowered at any time to institute an investigation, on their own initiative, in any case and as to any matter or thing within their respective jurisdictions, concerning which complaint is authorized to be made to or before the Administrator or Board by any provision of this chapter, or concerning which any question may arise under any of the provisions of this chapter, or relating to the enforcement of any of the provisions of this chapter. . . . "(d) Whenever, after notice and hearing, upon complaint, or upon its own initiative, the Board shall be of the opinion that any individual or joint rate, fare, or charge demanded, charged, collected or received by any air carrier for interstate or overseas air transportation, or any classification, rule, regulation, or practice affecting such rate, fare, or charge, or the value of the service thereunder, is or will be unjust or unreasonable, or unjustly discriminatory, or unduly preferential, or unduly prejudicial, the Board shall determine and prescribe the lawful rate, fare, or charge (or the maximum or minimum, or maximum and minimum thereof) thereafter to be demanded, charged, collected, or received, or the lawful classification, rule, regulation, or practice thereafter to be made effective * * *. "(e) In exercising and performing its powers and duties with respect to the determination of rates for the carriage of persons or property, the Board shall take into consideration, among other factors -- (1) The effect of such rates upon the movement of traffic; (2) The need in the public interest of adequate and efficient transportation of persons and property by air carriers at the lowest cost consistent with the furnishing of such service; (3) Such standards respecting the character and quality of service to be rendered by air carriers as may be prescribed by or pursuant to law; (4) The inherent advantages of transportation by aircraft; and (5) The need of each air carrier for revenue sufficient to enable such air carrier, under honest, economical, and efficient management, to provide adequate and efficient air carrier service.

9. Indeed, we note the Board's citation in note 10 of its order of earlier investigations instituted by complaints from competing airlines upon the filing of new family fare proposals by other competing airlines.

10. A footnote to the order makes it clear that the Board knew how to state such a conclusion if it had reached it. In n. 10 the Board quoted the reason it gave for abandoning, in 1962, a family fare investigation then in progress: " . . . in the light of the priority of other matters now before the Board, the Board finds that it is not in the public interest to proceed with investigations at this time." Order No. E-19121, Dec. 20, 1962.

11. See Lowry v. Chicago, B. & O.R.R., 8 Cir., 1891, 46 F. 83, 85-86; Hewitt v. New York, N.H. & H.R.R., 1940, 284 N.Y. 117, 29 N.E. 2d 641; Pennsylvania R.R. v. Puritan Coal Mining Co., 1915, 237 U.S. 121, 59 L. Ed. 867, 35 S. Ct. 484. See also Texas & P.R.R. v. ICC, 1896, 162 U.S. 197, 211, 16 S. Ct. 666, 40 L. Ed. 940; Fitzgerald v. Pan American World Airways, 2 Cir., 1956, 229 F.2d 499. If, as we will assume without deciding, the common law right to challenge as discriminatory the fare or service of a carrier has been extinguished by the administrative procedure before the CAB insofar as the challenge is to a filed tariff on its face, see Pennsylvania R.R. v. Puritan Coal Mining Co., supra, but not as to damage suits for the discriminatory application of a tariff, see, e.g., Fitzgerald v. Pan American World Airways, supra ; Wills v. Trans World Airlines, Inc., S.D. Cal., 1961, 200 F. Supp. 360; but cf. Town of East Haven v. Eastern Airlines, Inc., D. Conn., 1968, 282 F. Supp. 507; then it would be quite unfair for the remedy before the CAB to be available only at the total discretion of the Board. We think that the wiser course is to demand that the administrative remedy be more readily available, rather than expanding the scope of original judicial actions, and thus avoid the serious misallocation of expertise that would occur if the courts were led, by a too restrictive attitude of the Board, to accept broader claims of discrimination.

12. The sentence in 49 U.S.C. § 1482(a) describing the duty to investigate was patterned upon section 13 of the Interstate Commerce Act, 49 U.S.C. § 13(1), which has been described as imposing upon the Interstate Commerce Commission "mandatory jurisdiction" to investigate complaints. See Nebraska Dep't of Aeronautics v. CAB, 8 Cir., 1962, 298 F.2d 286, 295-96; Davis, Administrative Law Treatise § 4.07; Jaffe, The Individual Right to Initiate Administrative Process, 1940, 25 Iowa L. Rev. 485, 513. See also Brotherhood of Ry. & S.S. Clerks, etc., Employees v. Association for the Benefit of Non-Contract Employees, 1965, 380 U.S. 650, 14 L. Ed. 2d 133, 85 S. Ct. 1192 (duty of National Mediation Board to investigate). Thus the role of the second sentence, allowing for discretion and dismissal, has raised a continuing and difficult problem of interpretation. See Nebraska Dep't of Aeronautics v. CAB, supra ; Pan American World Airways v. CAB, 1968, 129 U.S. App. D.C. 159, 392 F.2d 483, 495 n. 22; Flying Tiger Line, Inc. v. CAB, supra ; Davis, supra ; Jaffe, supra.

13. This rule is analogous to the rule which, at least in ICC proceedings, places upon the carrier the burden of disproving discrimination by the affirmative defense of competitive need, once the complaining party establishes a prima facie case of discrimination. See Atchison, T. & S.F. Ry. v. United States, N.D. Ill., 1963, 218 F. Supp. 359, 374. See also American Trucking Ass'n v. FCC, 1966, 126 U.S. App. D.C. 236, 377 F.2d 121, 133, cert. denied, 386 U.S. 943, 87 S. Ct. 973, 17 L. Ed. 2d 874.

14. In contrast, in dismissing the 1957 instituted investigation of family fares the CAB was explicit in pointing out that the dismissal "will not constitute a determination of any of the issues relating to the family fare plans under investigation in the subject dockets, and will be without prejudice to any pending or future proceedings." Order No. E-19121, Dec. 20, 1962, at p. 2. And again in 1964, the Board dismissed a family fare investigation, stating, "That this proceeding is dismissed without prejudice." Order No. E-21617, Dec. 28, 1964. See generally note 5 infra. It should be noted, however, that both of these were dismissed after an initial order to investigate.

15. "Discrimination can exist in two forms: (1) by charging different rates to different passengers who are afforded the same or like service, or (2) by offering special services only to a select group of patrons." 46 Texas L. Rev. 254, 255 (1967). A variant of the latter is charging the same fare for different services.

16. The first was instituted by the Board on October 11, 1957, under Order No. E-11867, since the Board felt that the Examiner's finding of illegal discrimination as to one airline's family tariffs in Capital Family-Plan Case, 1957, 26 C.A.B. 8, 13 "was based on industrywide considerations which we do not believe were sufficiently developed in this record. . . ." This industrywide investigation was dismissed by Order No. E-19121, Dec. 20, 1962: "Upon review of the status of these investigations, and in consideration of the fact that family fare plans have been in effect since 1948, have been adopted generally in the industry and appear to serve a useful purpose, and in light of the priority of other matters now before the Board, the Board finds that it is not in the public interest to proceed with these investigations at this time." Id. at p. 2. The second was initiated by Order No. E-20099, Oct. 16, 1963, and other orders in 1963 and 1964, due to the extension of a 50 percent family-fare rate to classes of traffic other than first class: "Absent some prompt, constructive step by the industry, it is clear that an over-all investigation of the family-fare tariffs is required. . . . The family-fare discounts have always presented a serious question of unjust discrimination which is now magnified by the apparent diminution of the economic basis for the fares." Id. at p. 3. This investigation was dismissed, Order No. E-21617, Dec. 28, 1964, when the airlines voluntarily changed the reduction from 50 to 25 percent.

17. For examples of Board treatment of competitive justification for rate discrimination, see Military-Tender Investigation, 1959, 28 C.A.B. 902; Free and Reduced-Rate Transportation Case, supra ; Tour Basing Fares, supra.

18. In contrast, in cases of simple discrimination in fares available to all persons, usually the fare of the mode of competition whose competition is being met is presumably a reasonable and just fare. But here there is no presumption that the family fares of either of the competing surface modes would be fair and reasonable.

19. We are not sure from the Board's analysis exactly how prevalent the family fares are in railroad passenger tariffs. The Board states that railroads in the Eastern and Western Territories have family fare structures, but does not indicate what other territories and railroads do not.

20. Compare the statement in Free and Reduced-Rate Transportation Case, supra, at 483: "We do not believe we should approve free or reduced-rate transportation merely on the ground that competitive surface carriers are illegally granting such transportation. . . ."

21. It is to be noted that according to the Board's own order the airlines began the present type of family tariffs in 1948, the railroads did not follow until 1952-54, and the bus companies not until 1965. If the airline fare is unsound it is not persuasive to say that it must be continued to "meet" the competition which it itself engendered.

22. Thus, the Board may often be somewhat fickle in its invocation of this particular talisman. See, e.g., Frontier Rate Matter, 1963, 39 C.A.B. 415, 419 ("If Frontier were allowed to attract Western's traffic by the inducement of lower prices a corresponding derogation of Western's ability to develop the market would be effected.")

23. The Board's analysis and findings in the final part of its decision, dealing with the reasonableness of the fares, seem adequate, assuming that effect on profits is the proper test. The validity of this assumption, however, depends upon the correctness of the rest of the Board's order.

* * *" 49 U.S.C. § 1482.

1. Section 404(b) provides: "No air carrier or foreign air carrier shall make, give, or cause any undue or unreasonable preference or advantage to any particular person, port, locality, or description of traffic in air transportation in any respect whatsoever or subject any particular person, port, locality, or description of traffic in air transportation to any unjust discrimination or any undue or unreasonable prejudice or disadvantage in any respect whatsoever." 49 U.S.C. § 1374(b).

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