Petition — Texas International Airlines, Inc. v. Southwest Airlines Co.

ome Court, U.

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1} JUN |

| ICHAEL RODAK. Jp

ad ”» CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1976

t6-1773

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No.

TEXAS INTERNATIONAL AIRLINES, INC.; DELTA AIR LINES,

INC.; AMERICAN AIRLINES, INC.; FRONTIER AIRLINES,

INC.; OZARK AIR LINES, INC.; EASTERN AIR LINES,

INC.; AND CONTINENTAL AIR LINES, INC.,

Petitioners,

V.

SOUTHWEST AIRLINES Co. AND

THE TEXAS AERONAUTICS COMMISSION,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

CHARLES ALAN WRIGHT

2500 Red River Street

Austin, Texas 78705

Attorney for Petitioners

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WILSON - EPES PRINTING Co.. INC. - RE 7-6002 - WASHINGTON. DC. 20001

TABLE OF CONTENTS

Page

PETITION FOR A WRIT OF CERTIORARI ................ 1

RE HRT NRL ARS RE a 2

acai ceeinccdiesisneuicininnniaitinen 3

QUESTIONS PRESENTED 2222222222 eeeeeeeeneeeneee eee 3

CONSTITUTIONAL AND STATUTORY PROVI-

ee SONU nin desiiiseibanepitlabincentictcsesntintcrincilpliicnbiibicliots 8

STATEMENT OF THE CASE ...0022..2...--------- 4

Background of the Controversy .........................--...-. 4

i csrinseunecionis 5

Be I bnsistiicinicintisinicnisbiigetilitinstiarenpiesnidianin 7

I i iceeale x

REASONS FOR GRANTING THE WRIT .................... 8

he Be Ne PE chtcrteneiicicsensicDMbicnicsccnsenititaiiesitobintes 9

TU I iicnccscccsccccscescesiceneeee 17

II

TABLE OF AUTHORITIES

Cases: Page

Blonder-Tongue Laboratories, Ine. Vv. University

of Illinois Foundation, 402 U.S. 313, 329 (1971) .. 10

Boehning v. Indiana State Employment Ass’n.

Inc., 423 U.S. 6, 7 (1975) .. 22

Burford V. Sun Oil Co., 319 U. s. 315, 354 (1948). 20

City of Chicago V. Fieldcrest Dairies, Inc., 316 U.S.

A, SIE sais ncrciiteiiccctts teepnedinibichdiadgnstniniebinnsictianes 19, 20

Colorado River Water Conservation District Vv.

United States, 424 U.S. 800, 814 (1976) -.......... 19

Hansberry v. Lee, 311 U.S. 32 (1940) -............... 9, 10, 15

Harris County Commissioners Court v. Moore, 420

°° &. 4 f, ae renee 19

Kersh Lake Drainage District v. Johnson, 309

A TITIIE . icnscdicnniempnahecdiacnpdbatianmepdabdianiacabaeine 13

Lamb Enterprises, Inc. v. Kiroff, 549 F.2d 1052

Sn ao itinadeamigtdeiiinieasinns 18

Louisiana Power & Light Co. v. City of Thibodauz,

ke ee ST a eee 19

Mitchum V. Foster, 407 U.S. 225, 243 (1972) -....... 18

Patterson v. Burns, 327 F. Supp. 745 (D. Haw.

I = iniehcthchin tee a a ae 12

Railroad Commission of Texas vy. Pullman Co., 312

i eS kt eee ees 19

Texas Aeronautics Commission V. Braniff Airways,

Inc., 4564 S. W. 2d 199 (Tex. Sup. 1970) -.......... 22

Toucey Vv. New York Life Ins. Co., 314 U.S. 118

| RESIDE RS toe Rte Semen en SOD MEE est ee a 17

Trbovich v. United Mine Workers of “America,

i I ia a sortasniepteieiainnion 14

Statutes, Rules and Ordinances:

Anti-Injunction Act, 28 U.S.C. § 2283 _......... 9, 17, 18

I a stsieiintntne 2

I a iiselipeenes 5

EE | AES a 16

Texas Municipal Airports Act, TEX. REV. CIV.

STAT. ANN. art. 46d-7 (1969) 0000. 21, 22

TABLE OF AUTHORITIES—Continued

Page

Texas Aeronautics Commission Act, TEX. REV.

CIV. STAT. ANN. Art. 46c-6, Subdivision 3

Fe Rasa Se cr SERS Seen 21, 22

Texas Aeronautics Commission, Minute Order No.

&

*

LS)

—_

Cities of Dallas and Fort Worth, 1968 Regional

Airport Concurrent Bond Ordinance .................. 4

Miscellaneous :

American Law Institute, Restatement Second of

ERS ave 10, 11, 12, 18, 15, 16, 17

Comment, The Expanding Scope of the Res Judi-

cata Bar, 54 Texas L. Rev. 527, 528 (1976) ...... 18, 17

Wright, Federal Courts 222 (3d ed. 1976) ............ 19

ee ee eee

IN THE

Supreme Court of the United States

OCTOBER TERM, 1976

No.

TEXAS INTERNATIONAL AIRLINES, INC.; DELTA AIR LINES,

INC.; AMERICAN AIRLINES, INC.; FRONTIER AIRLINES,

INC.; OZARK AIR LINES, INC.; EASTERN AIR LINES,

INC.; AND CONTINENTAL AIR LINES, INC.,

Petitioners,

Vv.

SOUTHWEST AIRLINES Co. AND

THE TEXAS AERONAUTICS COMMISSION,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioners Texas International Airlines, Inc.; Delta

Air Lines, Inc.; American Airlines, Inc.; Frontier Air-

lines, Inc.; Ozark Air Lines, Inc.; Eastern Air Lines,

Inc.; and Continental Air Lines, Inc., pray that a writ

of certiorari issue to review the opinion and judgment

of the United States Court of Appeals for the Fifth

Circuit entered on January 28, 1977, which affirms an

injunctive order from the District Court for the Northern

District of Texas enjoining and restraining petitioners

2

from litigating in state court or in other court action

certain matters said to have been determined by a prior

judgment of the federal court.

OPINIONS BELOW

The opinion of the Court of Appeals, review of which

is sought, is reported at 546 F.2d 84 and is set forth

at page la of the separately-bound Appendix to this peti-

tion. Earlier opinions in this and related litigation, also

set forth in the Appendix, are reported as follows:

(1) The opinion of the District Court for the North-

ern District of Texas, dated June 21, 1973, granting a

declaratory judgment in favor of Southwest Airlines Co.

in a suit against it by the Cities of Dallas and Fort

Worth and by the Dallas-Fort Worth Regional Airport

Board, is reported as City of Dallas, Texas v. Southwest

Airlines Co., 371 F.Supp. 1015. (App. 1d).

(2) The opinion of the Court of Appeals for the Fifth

Circuit, dated May 31, 1974, affirming the District Court’s

grant of a declaratory judgment, is reported as City of

Dallas, Texas v. Southwest Airlines Co., 494 F.2d 773.

(App. 1c).

(3) The opinion of the District Court for the North-

ern District of Texas, dated June 5, 1975, enjoining

the present petitioners from litigating certain issues in

state court, is reported as Southwest Airlines Co. V.

Texas International Airlines, Inc., 396 F.Supp. 678.

(App. 1b).

JURISDICTION

The judgment of the Court of Appeals for the Fifth

Circuit was entered on January 28, 1977. Timely pe-

titions for rehearing were filed on February 11, 1977,

and denied on March 17, 1977. The jurisdiction of this

Court is invoked under 28 U.S.C. § 1254(1).

PO EC re Eee

3

QUESTIONS PRESENTED

1. Is it permissible under the Due Process Clause to

hold that a judgment in a suit brought by a govern-

mental unit precludes subsequent litigation by private

parties who did not participate in the prior suit, when

those private parties have separate and distinct interests

different from thu~e of the general public?

2. Do principles of equity, comity, and federalism

permit a federal court to enjoin state court litigation on

unclear questions of state law, dealing solely with the

internal regulatory systems of a state, in order to pro-

tect and effectuate an earlier federal court judgment

that made a forecast of the state law on the point?

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The constitutional and statutory provisions involved

are set forth in the separately-bound Appendix beginning

at page le. They include the following:

1. United States Constitution, Amendment V. (App.

le).

2. United States Code, Title 28, Section 2283. (App.

1f).

3. Texas Constitution, Article 11, Section 5. (App.

lg).

4. Texas Aeronautics Commission Act, Texas Revised

Civil Statutes Annotated, Article 46c-6, Subdivisions 1

and 3. (App. 1h).

5. Texas Municipal Airports Act, Texas Revised Civil

Statutes Annotated, Article 46d-7. (App. li).

6. 1968 Regional Airport Concurrent Bond Ordinance

of the Cities of Dallas and Fort Worth, Sections 2.1G

and 9.5A. (App. 1j).

4

STATEMENT OF THE CASE

Background of the Controversy

This dispute began with a Civil Aeronautics Board

(“CAB”) order in 1964, requiring the Cities of Dallas

and Fort Worth to designate a single airport for CAB-

approved service in their region. To comply with this

order, the cities agreed to construct the Dallas-Fort

Worth Regional Airport (“DFW”) at a point midway

between them. In implementing the agreement, the)

adopted the 1968 Regional Airport Concurrent Bond

Ordinance. Besides authorizing the issuance of revenue

bonds, the ordinance provided for a phase-out of scheduled

air service at Love Field, Dallas (the “phase-out provi-

sion”). In 1970 the eight airlines certificated by the CAB

to serve Dallas and Fort Worth, including the present

petitioners, executed Letter Agreements with the Dallas-

Fort Worth Regional Airport Board agreeing to “move

all of [their] Certificated Air Carrier Services serving

the Dallas-Fort Worth area to the [new] airport * * *

to the extent required under the terms of the 1968 Re-

gional Airport Concurrent Bond Ordinance.” The Letter

Agreements also provided that the carriers that entered

into them agreed to pay rentals, fees, and charges to the

Regional Airport Board that, together with amounts paid

by other users of the airport, would be sufficient to pro-

duce enough revenue to pay the operating and main-

tenance expenses of the airport plus 1.25 times the debt

requirements on the Regional Airport revenue bonds.

Thus the CAB carriers agreed to underwrite the costs

of DFW on the understanding that scheduled services

would be precluded at Love Field.’

1 All parties recognized that unless Love Field was substantially

closed to scheduled traffic it would be impossible to generate revenue

at DFW sufficient to pay its cost because of the tendency of the

public to use the airport closest to the largest population center.

For this and other reasons, the Federal Aviation Administration

5

In 1971 Southwest Airlines, a purely intrastate car-

rier, began scheduled air service from Love Field under

a certificate of public convenience and necessity issued

by the Texas Aeronautics Commission (“TAC”). The

certificate authorized Southwest to provide service be-

tween the points Dallas/Fort Worth, Houston, and San

Antonio “at any airports serving those points named

herein.” The certificate did not mention Love Field. On

November 12, 1971, the TAC, without notice of hearing

to anyone, adopted Minute Order No. 22. It provided:

“From and after the date hereof, no air carrier operat-

ing under a Certificate of Public Convenience and Neces-

sity issued by the Commission shall, without the prior

written approval of the Commission, discontinue all air

service to any airport through which such carrier pres-

ently provides air service.” * The order did not mention

Southwest or Love Field.

The City of Dallas Case

Southwest refused to enter into a Letter Agreement

with the Regional Airport Board and made known its

intention to continue operating from Love Field: In

1972 the cities and the Airport Board filed suit in federal

court requesting a declaratory judgment of their right

to exclude Southwest from Love Field. Southwest counter-

claimed for a declaration of its right to remain at the

field and for an injunction to enforce that right.

The CAB carriers were not parties to this action, al-

though Southwest could have joined them as parties on

its counterclaim as provided by Fed. R. Civ. P. 13(h).

When the case came on for hearing, Southwest moved te

insisted that it would not grant federal funds to DFW unless Love

Field was closed to scheduled flights. See 5th Cir. No. 73-2748,

App. Vol. 3, p. 942.

? The minutes of the TAC meeting reflect that the adoption of

Minute Order No. 22 was one of seven items of business at a meet-

ing that lasted exactly 60 minutes.

6

‘hold in abeyance for want of indispensable parties,” ex-

plaining twice to the court that the reason for its mo-

tion was that unless the CAB carriers were joined, any

determination in the case would not be binding on them.*

Counsel for Southwest also told the court: “This is why

any decree entered herein will begin rather than end

litigation for all parties at interest over what is a single

controversy over the meaning of that ordinance.” * The

court refused to hold the case in abeyance and ruled

that it would not “let any new parties be brought in

at this time.” °

The District Court then ruled for Southwest on a

variety of grounds, some based on federal law and others

on state law. It held that the cities and the Board could

“not lawfully exclude the defendant, Southwest Airlines

Co., from the use of Love Field, Dallas, Texas, and its

airport facilities so long as Love Field remains open as

an airport.” 371 F.Supp. at 1035 (App. 34d).

In 1974 the Fifth Circuit affirmed this judginent.

That court found it “unnecessary to discuss” any of the

federal grounds that were the basis for federal jurisdic-

tion and that had been relied on in part by the District

Court. 494 F.2d at 777 (App. 7c). It rested its de-

cision solely on its understanding that the power of the

TAC under Texas law includes the power to determine

the points of origin and destination of flights, that

“Southwest has been certificated by the Commission into

Love Field and directed to continue service there until

told otherwise,” and that “Dallas being Texas’ creature,

it may not declare otherwise.” 494 F.2d at 777 (App.

6c).

35th Cir., No. 73-2478, App. Vol. 2, pp. 466, 468, 473.

* Id. at 469.

5 Id. at 480.

7

The State Litigation

Other litigation, not presently relevant, then followed.’

The next relevant litigation is a suit instituted by Texas

International on December 10, 1974, in the 200th Dis-

trict Court in Austin, Texas. Texas International con-

tended that the phase-out provision of the 1968 Bond

Ordinance is valid under Texas law and that the TAC

certificate and order, under Texas law, did not and could

not have the effect attributed to them by the federal

courts in the City of Dallas case. In the alternative,

Texas International urged that if the phase-out provision

was invalid, the CAB carriers should be held to be

excused from their obligation under the Letter Agree-

ments to transfer their services to DFW and from their

financial obligation. The complaint in the state action

named as principal defendants the Regional Airport

Board, the Cities of Dallas and Fort Worth, and the

TAC. Joined also as defendants because of their in-

terest in the subject matter of the litigation were the

other CAB airlines and Southwest. Most of the CAB

carriers admitted most of the allegations of the com-

plaint, though some of them also prayed that Dallas

be required to close Love Field as an airport if this was

the only way to comply with the phase-out provision.

Southwest and the TAC filed pleas in abatement and

to the jurisdiction as well as answers. They fully par-

ticipated in the state court case by filing briefs and par-

ticipating in extensive oral argument of their pleas at

a hearing in the state court on February 21, 1975. In

this hearing they argued that the state action was fore-

closed by the federal judgment in the City of Dallas

case. Their pleas were overruled.

That litigation is briefly described in the most recent opinion

from the Fifth Circuit. 546 F.2d at 88 (App. 3a).

8

The Present Litigation

One month after the state court hearing Southwest

filed the present action in the District Court for the

Northern District of Texas seeking to enjoin so much

of the state court proceeding as attempted to exclude

Southwest from Love Field so long as it remains open

as an airport. The District Court held that the CAB

carriers were bound by the judgment in the earlier case

to which they were not parties, on the alternative theories

that litigation by the cities made the doctrine of “vir-

tual representation” applicable or that the Letter Agree-

ments between the CAB carriers and the Regional Air-

port Board created a “privity relationship” between

them. 396 F.Supp. at 684-686 (App. 10b-16b).

The case then went to the Fifth Circuit and produced

the judgment of which review is now being sought. The

exercise of federal jurisdiction was upheld on the ground

that this action was “supplemental or ancillary” to the

City of Dallas case. 546 F.2d at 89-90 (App. 7a-9a). The

Fifth Circuit expressly rejected the theories of “privity

by letter agreement” and “virtual representation” that

had been relied on by the District Court. 546 F.2d at

96-97 (App. 2la-24a). Nevertheless, the judgment below

was affirmed on the theory that “[b]ecause legal interests

of the carriers do not differ from those of Dallas in

Southwest I, we hold that they received adequate rep-

resentation in the earlier litigation and should be bound

by the judgment in that litigation.” 546 F.2d at 100

(App. 30a-31la).

REASONS FOR GRANTING THE WRIT

This case, in its present posture, raises no issue about

whether Southwest Airlines should fly from Love Field or

DFW. Instead it raises fundamental due process issues

on the extent to which one may be bound by a judg-

ment in an action to which he is not a party. It raises

also issues of federalism and comity concerning the ex-

9

tent to which a federal court may use the “relitigation”

exception to the Anti-Injunction Act, 28 U.S.C. § 2283,

to protect a federal judgment that rested solely on a fore-

cast of what state law might be on an unclear issue of

internal state affairs. These questions of due process

and of federalism are issues on which only this Court

can speak with authority, and they are issues of such im-

portance to the constitutional scherne that this Court has

a particular responsibility to provide authoritative guid-

ance about them.

The Fifth Circuit has decided important questions of

federal law that either have not been, but should be,

settled by this Court or that were decided below in a way

in conflict with applicable decisions of this Court and of

another court of appeals. These questions should be heard

here.

1. Due Process Denied

It is beyond dispute that the extent, if any, to which a

judgment can be given preclusive effect on one not a party

to the action is not a mere nicety of the law of res

judicata but is a constitutional question, controlled by the

Due Process Clauses. Hansberry v. Lee, 311 U.S. 32

(1940).’ This Court has recently summarized the ap-

plicable doctrine.

Some litigants—those who never appeared in a prior

action—may not be collaterally estopped without liti-

gating the issue. They have never had a chance to

present their evidence and arguments on the claim.

Due process prohibits estopping them despite one or

more existing adjudications of the identical issue

which stand squarely against their position.

7Even on res judicata issues that do not reach constitutional

proportions, the court below was surely right in holding that the

binding effect of a federal court judgment is determined by federal

law. 546 F.2d at 94 (App. 17a). See Degnan, Federalized Res

Judicata, 85 YALE L.J. 741 (1976).

10

Blonder-Tongue Laboratories, Inc. v. University of Il-

linois Foundation, 402 U.S. 318, 329 (1971). Some of

the issues presented by the CAB carriers in the state

action are identical to issues decided by the federal courts

in the City of Dallas case. That fact alone cannot de-

prive them of their constitutional right to their own day

in court on these issues, since they were not parties to

that case.

The CAB carriers can be precluded by the prior judg-

ment only if the relation of the cities and the Board, the

parties in the first case, to the CAB carriers “is such as

legally to entitle the former to stand in judgment for

the latter.” Hansberry v. Lee, 311 U.S. 32, 43 (1940).

That kind of question has traditionally been phrased in

terms of “privity,” but, as Judge Wisdom writing for the

court below correctly recognized, “ ‘privity’ denotes a

legal conclusion rather than a judgmental process.” 546

F.2d at 95 (App. 19a). A current project of the

American Law Institute, Restatement Second of Judg-

ments, offers a more sophisticated analysis that avoids

the use of conclusory terms such as “privity”—and “vir-

tual representation”—and attempts instead to identify the

various relationships that may permit an absentee to be

bound by a judgment. Sections 78 to 88 of that work

speak to the effect of judgments on parties and persons

represented by parties, while §§ 89 to 111 take up sub-

stantive legal relationships resulting in preclusion.*

The court below rejected the arguments on which the

District Court had held the CAB carriers bound. It found

8 The fruits of this work so far appear in four Tentative Drafts,

No. 1 (1973), No. 2 (1975), No. 3 (1976), and No. 4 (1977). When

references are made to particular sections of Restatement Second,

the draft in which it appears will be identified. All of the portions

of Restatement Second referred to in this petition have been ap-

proved by the Institute, subject only to editorial changes, most

recently with the approval of Tentative Draft No. 4 on May 18,

1977.

11

no merit in the contentions that the Letter Agreements

between the carriers and the Airport Board created either

“concurrent privity” or “successive privity” and it did

not believe that a generalized doctrine of “virtual rep-

resentation” was a legitimate basis on which to bind the

CAB carriers. 546 F.2d at 96-98 (App. 2la-24a). In-

stead the court, while recognizing that “the federal ju-

diciary has never faced the precise question posed by

the instant facts” 546 F.2d at 98 (App. 27a), thought

it found in § 85(d) of Restatement Second of Judgments

(Tent. Dr. No. 2, 1975), and in Comment d to that

section, support for the proposition that the CAB car-

riers were adequately represented by the governmental

agencies that brought and lost the first action. It seems

clear, however, that the court misconstrued and misap-

plied both § 85(d) and the law that it restates.

Section 85(d) of Restatement Second, on which the

Fifth Circuit relied, provides in relevant part:

A person is represented by a party who is:

(d) An official or agency invested by law with au-

thority to represent the person’s interests.

Comment d, at 61, expands on that by saying that “a

public official may have authority to maintain or defend

litigation on behalf of individuals or of a collective public

interest.” The Comment goes on to distinguish three

classes of cases, of which the court found the second was

applicable to the present case. The second category in-

cludes cases in which “the authority of the public of-

ficial or agency is coexistent with that of individuals or

members of the public, such as citizens or taxpayers,”

but “the official or agency’s authority to maintain or

defend litigation concerning the interest should be con-

12

strued as preempting the otherwise available opportunity

of the individual or members of the public to prosecute

***” Td. at 62. The court found that it should be so

construed in this case on the basis that the “legal in-

terests of the carriers do not differ from those of Dallas”

in the City of Dallas case. 546 F.2d at 100 (App. 30a).

There are several difficulties with holding that this

rule can be applied to preclude the CAB carriers in the

present case. The first is that there is very little case

authority to support it, particularly as applied to the

present facts. As the court below noted, 546 F.2d at 99

n. 55 (App. 28a), the only federal case mentioned in

the Reporter’s Note on this second category of Comment

d, id. at 68, is Patterson v. Burns, 327 F.Supp. 745 (D.

Haw. 1971). It is precedent against preclusion in this

category of cases and is so cited by the Reporter. Of the

four state cases cited by the Reporter in support of pre-

clusion, two are distinguished by the Fifth Circuit it-

self as cases in which private parties lacked standing to

sue, 546 F.2d at 99 n. 56 (App. 29a), while in the

other two the present ground was either an alternative

basis for decision or, though arguably present, was not

discussed by the court. 546 F.2d at 99-100 (App. 29a-

30a).

A second and conceptually more important problem is

that Restatement Second itself makes clear that it does

not reach the facts of this case. The Reporter’s Note is

explicit that an action by a public official may be held

preemptive of private remedies and a preclusive effect

given to it only where “the interest to be protected is

one held by members of the public at large.” Restate-

ment Second (Tent. Dr. No. 2, 1975), at 68. There is

nothing in the Restatement rules that would extend pre-

clusion to a case like this where the interest of the car-

riers, who have underwritten the costs of the airport

and its financing, is quite distinct from that of the mem-

13

bers of the public at large.* Indeed the Fifth Circuit

recognized this when it said that the pecuniary in-

terest of the CAB airlines

surpasses the interests possessed by members of the

general public or taxpayers. If Southwest directs

business away from the new facility, the other air-

lines will face higher per flight landing charges,

which could damage their competitive positions in the

Dallas-Fort Worth market. Members of the general

public or taxpayers would suffer no corresponding

risk because they have assumed no responsibility to

finance the airport.

546 F.2d at 98-99 (App. 27a).

Under the Restatement analysis, and under sound prin-

ciples of law, the cities and the Board who brought the

first suit can fairly be regarded as representatives of

the citizens and taxpayers generally of the Dallas-Fort

Worth area. They cannot be regarded as the represen-

tatives of the airlines who, unlike the cities and the Board,

have a direct and substantial financial stake in whether

Southwest is allowed to use Love Field.”

An instructive case is Kersh Lake Drainage District

v. Johnson, 309 U.S. 485 (1940). Creditors of a drainage

district successfully sued to establish their claim against

the district, and then sought to enforce their judgment

®*The Reporter for Restatemeni Second had commented that to

try to bring the present case within §85 “would attenuate the

concept of representation to a point where it would be as amorphous

as ‘privity,’ and we would be back where we were before.” Com-

ment, The Expanding Scope of the Res Judicata Bar, 54 Texas L.

REV. 527, 544 n. 92 (1976). At the Annual Meeting of the Ameri-

can Law Institute on May 18, 1977, the Reporter, Professor Geof-

frey C. Hazard, Jr., of the Yale Law School, said of the decision

below in the present case: “The decision is wrong.”

‘’ An affidavit submitted in the District Court shows that the

cost to the CAB carriers from landing fees and concession reve-

nues diverted to Love Field is in the range of $1 million per year.

14

by requiring the district to assess and collect taxes

against property owners in the district. One defense

unsuccessfully asserted by the district in the enforce-

ment proceeding was that some of the property owners

had already fully paid their obligations to the district.

This Court ruled unanimously that the district repre-

sented all landowners in the litigation on the total col-

lective obligation of the district as an entity, but that

even though it attempted to protect the interest of the

particular owners who had fully paid, their interest was

personal and peculiar to them and they could not be pre-

cluded by the district’s unsuccessful efforts on their be-

half.

In a somewhat different context, this Court has re-

cently noted that when “two distinct interests” are “re-

lated but not identical,” then “they may not always

dictate precisely the same approach to the conduct of liti-

gation,” and a union member, who had only one of the

interests, was not adequately represented by the Secre-

tary of Labor, who was charged by law with protecting

both. Trbovich v. United Mine Workers of America, 404

U.S. 528 (1972). The financial interest of the CAB car-

riers in enforcing the phase-out of Love Field service is

not the same as the governmental interest that motivated

the cities and the Board. The carriers are entitled to

be heard in support of their own interest.

The significance of this divergence in interest, in * »xrms

of due process, is highlighted by the fact that in iF» Cit~

of Dallas case the District Court refused to wuside:

arguments from the cities and the Board about the

financial effect of not excluding Southwest from Love

Field. It noted that under the Letter Agreements

the Regional Airport receives the same amount of

revenues annually whether Southwest Airlines is

there or at Love Field. Any diversion which occurs

constitutes, at most, an added cost to the CAB car-

Se erence -a

15

riers. It does not penalize the Regional Airport

Board or the citizens of Dallas and Fort Worth.

371 F.Supp. at 1025 (App. 15d). In Hansberry this

Court said that due process is violated “in cases where it

cannot be said that the procedure adopted fairly insures

protection of absent parties who are bound by it.” 311

U.S. at 42. In this case no procedure at all was adopted

to protect the absent CAB carriers and their interest

was explicitly disregarded.

Indeed, even if the airlines could be said to have been

represented by the governmental agencies within § 85 (d)

of the Restatement, this case would fall into an estab-

lished exception to preclusion. Under § 68.1(e) (i) of

Restatement Second (Tent. Dr. No. 4, 1977), preclusion,

though otherwise applicable, does not apply if “[t]here

is a clear and convincing need for a new determination

of the issue (i) because of the potential adverse im-

pact of the determination on * * * the interests of per-

sons not themselves parties in the initial action * * *.”

Comment A to that section, at 40, says in part:

There are many instances in which the nature of an

action is such that the judgment will have a direct

impact on those who are not themselves parties. For

example, an agency of government may bring an ac-

tion for the protection or relief of particular per-

sons or of a broad segment of the public * * *.

In such cases, when a second action is brought, due

consideration of the interests of persons not them-

selves before the court in the prior action may

justify relitigation of an issue actually litigated and

determined in that action.

The state suit is by the only persons with a direct finan-

cial interest in the outcome. The financial consequences

were deliberately excluded from consideration in the first

suit, to which they were not parties. That in itself is a

convincing reason to allow these persons to litigate the

issue and argue their interest, but the situation is made

even more compelling since the District Court refused to

16

allow joinder of the CAB carriers, even though their

joinder would appear to have been required under Civil

Rule 19(a) on Southwest’s motion explaining the in-

terests of the CAB carriers.

Yet another reason for not precluding the CAB car-

riers, even if it could be held that they were represented

in the first action, is that Southwest never expected the

CAB carriers to be bound and was exposed to no unex-

pected burden by the state court suit. Even as between a

single plaintiff and a single defendant, there can be

multiple litigation, though preclusion would ordinarily

apply, if the “defendant has acquiesced therein.” Re-

statement Second of Judgments § 61.2(a) (Tent. Dr. No.

1, 1973). At the outset of the City of Dallas case,

Southwest repeatedly asserted that any determination in

that case would not be binding on the CAB carriers.”

As late as January 1975, after the City of Dallas case

had been fully decided and Texas International had be-

gun the state court litigation, Southwest, in a brief in

federal court in a related action, said:

The intervenor-defendants Delta and American were

not parties to the original action—either before this

Court or the Court of Appeals—and, consequently,

are not prevented by principles of res judicata from

asserting the validity of the ordinance.

Brief in Support of Plaintiff’® Motions for Summary

Judgment, at 14, Southwest Airlines Co. v. City of

Dallas, N.D. Tex., C.A. No. 3-74-344-C. It is too late

now for Southwest to claim that the CAB carriers were

bound after its many representations that they would

not be bound.”

11 See p. 6 above at n. 3.

** For the same reason, § 111 of Restatement Second of Judgments

(Tent.Dr. No. 4, 1977) has no application. Southwest cannot con-

tend that it “was reasonably induced to believe that” the CAB

carriers “would govern [their] conduct by the judgment in the

original action” when it said over and over that they would not

be bound by the judgment. See also n. 9 at p. 13 above.

SS OS OAS TTT, SO ES

17

In short, the court below incorrectly applied § 85(d)

of Restatement Second to the facts of this case and over-

looked compelling reasons why the CAB carriers should

not be precluded in any event. The result falls short

of the minimum requirements of due process.

The fact that, as the Fifth Circuit said, “the federal

judiciary has never faced the precise question posed by

the instant facts,” 546 F.2d at 98 (App. 27a), does

not mean that the issue presented is so unique, so un-

likely to be repeated, that it does not merit the atten-

tion of this Court. These exact facts may not be re-

peated, but questions of preclusion by a judgment to

which one was not a party arise every day, both in

federal courts and in state courts, to which the due

process limitations are also applicable. A commentator

has detected in recent decisions

an alarming judicial tendency to suspend the indi-

vidual litigant’s due process right to a “day in

court” in favor of the public’s interest in judicial

finality, resulting in a dramatic expansion of the

scope of the res judicata bar.

Comment, The Expanding Scope of the Res Judicata

Bar, 54 TEXAS L. REV. 527, 528 (1976). The de-

cision below, if allowed to stand, will give increased im-

petus to that tendency. If due process of law is to be

eroded in favor of what is thought to be judicial ef-

ficiency, this Court should say so, and should define

the limits to which this development can be taken.

2. Federalism Forsaken

Ever since the Reviser of the Judicial Code persuaded

Congress in 1948 to overrule, in 28 U.S.C. § 2283, the

decision of this Court in Toucey v. New York Life Ins.

Co., 314 U.S. 118 (1941), it has been clear that a federal

court is not barred by the Anti-Injunction Act from

staying proceedings in a state court “to protect or ef-

18

fectuate its judgments.” But the fact that a case fits

one of the exceptions to the Anti-Injunction Act does not

mean that an injunction must, or even should, issue.

“In so concluding, we do not question or qualify in any

way the principles of equity, comity, and federalism that

must restrain a federal court when asked to enjoin a

state court proceeding.” Mitchum v. Foster, 407 U.S.

225, 243 (1972).

Thus in Lamb Enterprises, Inc. v. Kiroff, 549 F.2d

1052 (6th Cir. 1977), it was held that those principles

of equity, comity, and federalism made it error for a

federal court to enjoin relitigation in a state court of a

claim that was arguably barred by a prior federal court

judgment. In the Lamb Enterprises case, unlike this one,

the state court litigation involved precisely the same

parties as had the federal court suit that had gone to

judgment, and there was not involved there, as there is

in the present case, a difficult question of state law on the

allocation of power as between municipalities and a state

agency. If it was wrong, as the Sixth Circuit held, to

enjoin the state proceeding in the Lamb Enterprises

case, then a fortiori it was wrong to enjoin the state

court proceedings here.

The decision of the Fifth Circuit in the City of Dallas

case rested wholly on a question of state law. That court,

in an opinion by Judge Thomas Gibbs Gee, held that

Texas law gives the TAC power to determine what air-

port within a city an intrastate carrier may use, and

that this power in the Commission overrides any power

of a city to make this decision for itself. 494 F.2d at

776-777 (App. 6c-7c). In the District Court in that

case, Judge William M. Taylor, Jr., had made a similar

determination as one of a number of grounds of de-

cision. 371 F.Supp. at 1030-1031 (App. 25d-26d). Judge

Gee and Judge Taylor are highly respected products of

the Texas bar, “versed in the idiosyncrasies of Texas

19

law.” Harris County Commissioners Court v. Moore,

420 U.S. 77, 90 (1975) (dissenting opinion). But as

this Court said long ago in another Texas case:

[Wje should hesitate long before rejecting their

forecast of Texas law. But no matter how seasoned

the judgment of the district court may be, it cannot

escape being a forecast rather than a determination.

The last word on the meaning of Article 6445 of the

Texas Civil Statutes, and therefore the last word

on the statutory authority of the Railroad Commis-

sion in this case, belongs neither to us nor to the

district court but to the supreme court of Texas.

Railroad Commission of Texas v. Pullman Co., 312 US.

496, 499-500 (1941).

If this were a routine diversity case, the “forecast”

of state law by a federal court is an acceptable resolu-

tion and ought to write an end to that litigation as

between the parties to the case. So long as diversity

jurisdiction remains, it is workable only if a federal court

is deemed competent to determine state law for purposes

of a particular case. But a long line of cases recognizes

the impropriety of relying on a federal forecast where

this would cause “needless conflict with the administra-

tion by a state of its own affairs,” WRIGHT, FEDERAL

COURTS 222 (3d ed. 1976), or, as this Court has for-

mulated it, “where there have been presented difficult

questions of state law bearing on policy problems of

substantial public import whose importance transcends

the result in the case then at bar.” Colorado River Water

Conservation District v. United States, 424 U.S. 800,

814 (1976). Here, as in City of Chicago v. Fieldcrest

Dajries, Inc., 316 U.S. 168, 172 (1942), “the dispute in

its broad reach involves a question as to whether a city

has trespassed on the domain of a State.” Later, in

Louisiana Power & Light Co. v. City of Thibodaux, 360

U.S. 25, 28 (1960), where again the question was whether

20

state law barred a city from taking certain action, the

Court cited the Fieldcrest Dairies case for the proposi-

tion that “where the issue touched upon the relationship

of City to State, * * * we have required District Courts,

and not merely sanctioned an exercise of their discre-

tionary power, to stay their proceedings pending the

submission of the state law question to state determina-

tion.” This Court has been particularly mindful of the

damage that can be done to state policies by federal

courts intervening in a state’s systems of regulation

such as Texas’s systems for regulating air carriers and

airports. As was said in Burford v. Sun Oil Co., 319

U.S. 315, 334 (1943): “Conflicts in the interpretation

of state law, dangerous to the success of state policies,

are almost certain to result from the intervention of the

lower federal courts.”

The Fifth Circuit finds this line of authority not

controlling on the ground that all of those cases “in-

volved truly unsettled questions of state law on in-

ternal affairs” and thus “distinguishes them from the

instant case in which a Texas Supreme Court ruling, the

Texas Constitution, and Texas statutes clearly dictated

the federal decision.” 546 F.2d at 93 (App. 15a). Per-

haps Texas law does in fact give the TAC power to

determine what municipal airport an intrastate carrier

may use. If so, allowing the state litigation to proceed

will confirm the forecast the federal courts have made

and end the controversy. But if what seemed clear to

the federal courts is not the reading the Texas courts

would give to their local law, then the decision in the

City of Dallas case has interfered with an allocation of

function between state agency and city that Texas is en-

titled to make for itself, and the decision below, enjoining

state court litigation, has prevented the petitioners from

getting an answer that is authoritative rather than

merely a forecast.

a ee ee

21

The fact is that Texas has two statutes bearing on

this dispute, neither of which has ever been construed

by any state court on any of the issues this controversy

presents. The Texas Aeronautics Commisison Act was

first adopted in 1945. It authorizes the TAC to cer-

tificate scheduled intrastate carriers, TEX. REV. CIV.

STAT. ANN. art. 46c-6, Subdivision 3 (Supp. 1976)

(App. lh-6h), but with regard to airports its only power

to “control, administer, and have jurisdiction thereover”

is limited to those “donated or given to the state, or to

the Texas Aeronautics Commission to be held by it in

trust for the state.” Jd., Subdivision 1 (App. 1h). The

Texas Municipal Airports Act was first adopted in 1947.

It provides for municipal ownership of airports and al-

lows the municipality “to adopt, amend and repeal such

reasonable ordinances, resolutions, rules, regulations and

orders as it shall deem necessary for the management,

government and use of such airport’ se long as they are

not “inconsistent with, or contrary to, any Act of the

Congress of the United States or laws of this State, or

to any regulations promulgated or standards established

pursuant thereto.” TEX. REV. CIV. STAT. ANN. art.

46d-7 (1969) (App. 1i).

If the Aeronautics Commission Act in fact gives the

TAC power to authorize an intrastate carrier to use a

particular municipal airport, regardless of consent of the

municipality, and if the TAC has in fact so authorized

Southwest to use Love Field, though neither the cer-

tificate of public convenience and necessity nor Minute

Order 22 makes any reference to Love Field,’* then it is

apparent from the language last quoted from the Munici-

pal Airports Act that the cities could not interfere with

that use. But neither of the Texas statutes says that the

TAC has that power. The language in the Aeronautics

Commission Act limiting the TAC’s jurisdiction over air-

ports to those owned by the state argues strongly against

13 See p. 5 above.

22

it, as does the language of the Municipal Airports Act

giving cities the power to determine “government and

use” of their airports.

The only Texas decision even colorably in point is

Texas Aeronautics Commission Vv. Braniff Airways, Inc.,

454 $.W.2d 199 (Tex. Sup. 1970). That case held that

the TAC, not the CAB, has the power to certify intrastate

carriers, and that the TAC had not erred in finding that

the public convenience and necessity justified certifying

Southwest to operate to Dallas. That opinion contains

not even a word of obiter on the power of the TAC to

compel a city to allow a carrier to use its airport, or on

the relationship between the Aeronautics Commission

Act and the Municipal Airports Act.

“It may be that the Court of Appeals is correct in its

‘forecast,’” Boehning v. Indiana State Employment

Ass’n, Inc., 423 U.S. 6, 7 (1975), on how the Texas

statutes will be construed—but it also may be that it is

wrong. Surely it is turning upside down usual principles

of equity, comity, and federalism to say that a federal

court should use the extraordinary remedy of an injunc-

tion to prevent litigation in the state court to find out

authoritatively whether the forecast was sound or un-

sound and to prevent the courts of Texas from determin-

ing the meaning of Texas statutes. The fact that this

injunction runs against those who were not parties to

the litigation in which the forecast was made merely

emphasizes the unusual character of what has happened

below, and underlines the need for review here.

23

CONCLUSION

For the reasons stated, this writ should be granted

and the judgment of the Court of Appeals for the Fifth

Circuit reversed.

Respectfully submitted,

CHARLES ALAN WRIGHT

2500 Red River Street

Austin, Texas 78705

Attorney for Petitioners