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

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Supreme Court, U. 8

— FILED

| JUN 13 1977

| MICHAEL RODAK, JR., CLERK

—

IN THE

Supreme Court of the United States

OCTOBER TERM, 1976

ve. 6 "1773

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,

SOUTHWEST AIRLINES Co. AND

THE TEXAS AERONAUTICS COMMISSION,

Respondents.

APPENDIX TO

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

— ’ on

WILSON - EPES PRINTING Co. INC. - RE 7-GOO? - WASHINGTON. D.C. 20001

Appendix A,

Appendix B,

Appendix C,

Appendix D,

Appendix E,

Appendix H,

Appendix I,

Appendix J,

TABLE OF CONTENTS

Opinion of the Court of Appeals in South

west Airlines Company v. Texas Inter-

national Airlines, Inne

Opinion of the District Court in South-

west Airlines Co. v. Texas International

Opinion of the Court of Appeals in City

of Dallas, Texas v. Southwest Airlines

Opinion of the District Court in City of

Dallas, Texas v. Southwest Airlines Co...

United States Constitution, Amendment

F è ...

Texas Aeronautics Commission Act,

Texas Revised Civil Statutes Annotated,

Article 46c-6, Subdivisions 1 and 33

Texas Municipal Airports Act, Texas

Revised Civil Statutes Annotated, Article

D ..

1968 Regional Airport Concurrent Bond

Ordinance of the Cities of Dallas and

Fort Worth, Sections 2.18 and 9.5 K

Page

APPENDIX A

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 75-2539

SOUTHWEST AIRLINES COMPANY,

Plaintiff-A ppellee,

TEXAS INTERNATIONAL AIRLINES, ET AL.,

Defendants-A ppellants,

TEXAS AERONAUTICS COMMISSION,

Intervenor-A ppellee.

Jan. 28, 1977

Appeals from the United States District Court for the

Northern District of Texas.

Before WISDOM and INGRAHAM, Circuit Judges,

and GROOMS,” District Judge.

WISDOM, Circuit Judge:

Southwest Airlines Co. has returned to the federal

courts for the second time in two years to preserve a

1973 judgment in a federal district court. The recur-

ring litigation concerns Southwest’s right to continue

its air passenger services at Love Field in Dallas, Texas,

and to avoid a forced move to the new Dallas-Fort Worth

Regional Airport. The district court granted Southwest

a preliminary injunction against relitigation in state

court of the issues decided in 1973. We affirm.

*Senior District Judge for the Northern District of Alabama,

sitting by designation.

I. FACTS

The complicated procedural history, recounted in three

previous opinions, deserves brief repetition. The dis-

pute began with a Civil Aeronautics Board order in 1964,

requiring the Cities of Dallas and Fort Worth to desig-

nate a single airport for CAB-approved service in their

region. The cities agreed to construct a new airport

midway between them. To carry out the plan, they

adopted the 1968 Regional Airport Concurrent Bond Or-

dinance. Besides authorizing the issuance of revenue

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

mercial passenger air service at Love Field.“ In 1970

eight CAB-certified air lines, appellants in this case,

executed letter agreements with the Dallas/Fort Worth

Regional Airport Board agreeing to “move all of [their]

certified Air Carrier Services serving the Dallas-Fort

Worth area to the [new] airport . . . to the extent re-

quired under the terms of the 1968 Regional Airport

Concurrent Bond Ordinance.” *

1 City of Dallas v. Southwest Airlines Co., N.D.Tex. 1973, 371

F.Supp. 1015, aff’d, 5 Cir. 1974, 494 F.2d 773, rehearing denied,

496 F.2d 1407, cert. denied, 1974, 419 U.S. 1079, 95 S.Ct. 668, 42

L.Ed.2d 674, rehearing denied, 420 U.S. 913, 95 S.Ct. 837, 42 L.Ed.

2d 845; Southwest Airlines v. Texas International Airlines, N.D.

Tex. 1975, 396 F.Supp. 678.

2 Section 95 of the Ordinance states that the cities:

. shall take such steps as may be necessary, appropriate and

legally permissible (without violating presently outstanding

legal commitments or covenants prohibiting such action), to

provide for the orderly, efficient and effective phase-out at Love

Field, Redbird, GSIA and Meacham Field, of any and all Cer-

tificated Air Carrier Services, and to transfer such activities

te the Regional Airport effective upon the beginning of opera-

tions at the Regional Airport.

The Agreement also required each CAB airline:

to pay rentals fees and charges for its use, operations and

occupancy of the Airport premises and facilities and the serv-

ices appertaining thereto in an amount which, together with

the rentals, fees and charges paid by other Airlines and others

Southwest Airlines began its intrastate commercial

air service from Love Field in 1971 under a certificate

issued by the Texas Aeronautics Commission (TAC).*

The certificate authorized service from any airport in

the area. On November 12, 1971, however, the TAC

ordered all certified airlines not to change airports with-

out written approval from the Commission.’ After noti-

fying the Regional Airport Board in 1971 of its intention

to remain at Love Field, Southwest petitioned the Board

for a waiver of the 1968 ordinance. Instead of determin-

ing whether the ordinance phase-out provisions applied

to the airline, the Board concluded that the original CAB

proceedings deprived the Board of jurisdiction.

The cities and the Airport Board then filed the first

federal court suit (Southwest I), requesting a declara-

tory judgment of their right to exclude Southwest from

Love Field. Southwest counterclaimed for a declaratory

judgment of its right to remain at the field and for an

injunction to enforce that right. The TAC intervened

as a party-defendant and adopted Southwest’s position.

On both federal and state law grounds,’ the district

using the Airport premises and facilities, will be sufficient to

produce total gross revenues required to satisfy the Airport

Board’s obligation

plus enough money to maintain the facility and to accumulate 1.25

times the debt service requirements on the Regional Airport reve-

nue bonds.

* Because Southwest offers only intrastate service it is not li-

censed by the CAB, nor subject to CAB jurisdiction. See City of

Dallas v. Southwest Airlines Co., N.D.Tex. 1973, 371 F.Supp. 1015.

5 Texas Aeronautics Commission Minute Order No. 22.

City of Dallas v. Southwest Airlines Co., N.D.Tex. 1973, 371

F.Supp. 1015, aff'd, 5 Cir. 1974, 494 F.2d 773, rehearing denied, 496

F.2d 1407, cert. denied, 419 U.S. 1079, 95 S.Ct. 668, 42 L.Ed.2d 674,

rehearing denied, 420 U.S. 913, 95 S.Ct. 887, 42 L.Ed.2d 845.

The district court concluded that the Ordinance, if applicable

to Southwest, would violate the federal prohibition “against unjust

discrimination and the grant of an exclusive right” of access to

court declared 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 air-

port facilities so long as Love Field remains open as an

airport.” City of Dallas v. Southwest Airlines Co., N.D.

Tex. 1974, 371 F.Supp. 1015, 1035. This Court affirmed

the holding, but only on the state law grounds. City

of Dallas v. Southwest Airlines Co., 5 Cir. 1974, 494

F.2d 773, 776-77.“

Dallas responded to the district court’s judgment by

passing a criminal ordinance that levied a two-hundred-

dollar fine for each takeoff or landing at Love Field

by an airplane of a certified airline. Southwest then

brought another suit in federal court (Southwest II) to

enjoin enforcement of that ordinance. Braniff inter-

vened as party-plaintiff. Southwest II was then con-

solidated with yet another action brought by Delta and

American against Braniff and the cities over violations

some carriers and not others. 371 F.Supp. at 1026, citing 49 U.S.C.

§§ 1110(1), 1718(1), 1349 (a). The discrimination resulted from

the phase-out provisions in Section 2.1G of the Ordinance, which

would have allowed continued service at Love Field by commercial

air taxis, unscheduled charters, unscheduled cargo planes, and even

intrastate planes of the CAB carriers. 371 F.Supp. at 1027. If

Southwest were banned the district court concluded, the ordinance

would discriminate even though the CAB carriers had chosen to

move all of their services to the Regional Airport. Jd. at 1028.

Furthermore, the district judge found that “the Cities’ only reason

for barring Southwest Airlines from Love Field is to avoid the

potential competitive effect on the regional airport“, a violation of

“the federal prohibition of the grant of an exclusive right at air-

ports upon which federal funds have been expended”. Id. at 1029.

The Ordinance violated state law by usurping the power of the

TAC. After construing the TAC certification and order as author-

ization to serve Love Field specifically, the court held that the cities

had no authority to order contrary performance. 371 F.Supp. at

1033, citing Tex.Const. art. 11, §5; Vernon’s Ann.Tex.Stat. art 46d-

7(b) and 1165.

8 Southwest Airlines Co. v. City of Dallas, N.D.Tex. 1974, No.

CA3-3-74-344-C.

of the 1970 Letter Agreements.’ After Southwest moved

for summary judgment, however, the district court sev-

ered the ordinance dispute from the case and enjoined

Dallas from enforcing the ordinance against either South-

west or Braniff.“ The remaining parties then voluntarily

dismissed their respective causes of action and refiled

them in the state court case that is the object of this

suit (Austin).

The pleadings in Austain raised questions identical

with those decided in Southwest J. After recounting

Southwest’s refusal to leave Love Field, Texas Interna-

tional expressed its primary concern that Southwest’s

continued service at Love Field would put Texas Inter-

national at a competitive disadvantage. Consequently,

the plaintiff alleged:

A justiciable controversy exists as to the meaning

and effect of Southwest’s TAC certificate of con-

venience and necessity and the TAC Minute Order

No. 22. The TAC and Southwest contend that under

the Texas Aeronautics Act and the Texas Municipal

Airports Act (Articles 456 and 45d [sic., 466 and

46d] Vernon’s Texas Civil Statutes), the TAC has

the statutory authority to adopt orders regulating

» Braniff and Texas International had continued to serve Love

Field. Fort Worth brought Texas International into the litigation

by a third party complaint.

10 The district court had assumed the good faith of the City of

Dallas in Southwest I:

As this Court is confident that Plaintiffs will abide by its

ruling in this case and not attempt to interfere with or burden

Southwest’s right tc use Love Field, an injunction to enforce

its decree is deemed unnecessary.

The district court issued the injunction, then, only after Dallas

demonstrated that the court had misplaced its confidence.

11 Texas International Airlines, Inc. v. Dallas-Fort Worth Re-

gional Airport Board, 200th D.Ct.Tex., No. 227349 (filed Dec. 10,

1974). '

and controlling the City of Dallas in the operation

of Love Field so as to prevent Dallas from closing

Love Field to TAC certificated service without the

approval of the TAC and that Southwest’s certificate

of convenience and necessity and TAC Minute Order

No. 22 prohibiting TAC certificated air carriers from

changing airports without TAC approval constitute

regulatory orders with this effect. The United States

District Court for the Northern District of Texas,

Dallas Division, and the United States Court of

Appeals for the Fifth Circuit have upheld this in-

terpretation of the Texas statutes in an action to

which none of the signatory airlines is a party. The

judgment in said action is not final, but in any event

this interpretation of the Texas statutes is not bind-

ing of the courts of Texas. Texas International

denies that Southwest’s certificate and TAC Minute

Order No. 22 have this meaning or effect, but con-

tends that such regulatory orders are void for lack

of statutory authority. Alternatively, Texas Inter-

national contends that such TAC Minute Order is

void for lack of notice and hearing.

An attorney for Continental then argued orally before

the state court:

This is [not] an effort to undermine the federal de-

cision. ... This is a frontal attack on it. The word

undermine implies something covert about it. We

come in with flags flying.“

The federal district court has preliminarily enjoined

this “frontal attack”, thereby precluding the CAB air-

lines, the cities, and the airport board:

from relitigating in state court... or in any other

court action the validity, effect or enforceability of

12 Southwest Airlines Co. v. Texas International Airlines, Inc.,

N.D.Tex. 1975, 396 F.Supp. 678, 683, citing Defense Exhibit No.

15.

the 1968 Regional Airport Concurrent Bond Ordi-

nance of the Cities of Dallas and Fort Worth inso-

far as it may affect the right of plaintiff Southwest

Airlines Co. to the continued use and access to

Love Field, so long as Love Field remains open.

Southwest’s right of access to Love Field arises from

the declaratory judgment in Southwest I, a suit in which

the CAB airlines were not parties. But the district court

found that Delta, American and Continental had filed

amicus briefs with this Court in Southwest I. Several

of the same attorneys for those parties appeared before

the district court in Southwest II and before the Texas

court in Austin.“ Lawyers for Texas International and

Braniff also participated in Southwest II, and attorneys

for the other CAB lines apparently observed those proceed-

ings.“ We now face the question whether the judgment

in Southwest I can support the preliminary injunction

against not only the cities and the airport board, the

plaintiffs in Southwest I, but also the eight CAB car-

riers.

II. JURISDICTION

The appellants challenge the jurisdiction of the district

court by arguing that none of the statutory bases claimed

by Southwest should apply. They correctly assert that no

diversity of parties exists and that the Anti-injunction

Act, 28 U.S.C. § 2283, does not establish an independent

basis of jurisdiction. Tyler v. Russell, 10 Cir. 1969, 410

F.2d 490, 491; Baines v. City of Danville, 4 Cir. 1964,

337 F.2d 579, 593; aff'd, 1966, 384 U.S. 890, 86 S.Ct.

13 Jd. at 18.

14 Jd. at 5.

15 Id. at 8-9.

1915, 16 L.Ed.2d 966, rehearing denied, 385 U.S. 890,

87 S.Ct. 12, 17 L.Ed.2d 121; Schell v. Food Machinery

Corp., 5 Cir. 1937, 87 F.2d 385, 387, cert. denied, 300

U.S. 679, 57 S.Ct. 670, 81 L.Ed. 883. The appellants also

deny the existence of federal question jurisdiction because

Southwest presents no federal issues that were not liti-

gated in Southwest I.

In response, Southwest cites four cases“ but does not

explain any basis for jurisdiction. Although none of the

recent cases cited provides an explanation. Berman v.

Denver Tramway Corp., 10 Cir. 1952, 197 F.2d 946, does

suggest that an action for an injunction to enforce a

federal judgment is “supplemental” to the original case.

Id. at 950. Early Supreme Court decisions termed this

equity power “ancillary”. In Dugas v. American Surety

Co., 1937, 300 U.S. 414, 57 S.Ct. 515, 81 L.Ed. 720, re-

hearing denied, 301 U.S. 712, 57 S.Ct. 787, 81 L.Ed.

1365, a federal judgment had relieved the Company of

future liability to Dugas. Later, he brought a state court

suit that could have contravened the federal judgment.

When the company filed a federal action to enjoin the

state proceeding, the Supreme Court held that federal

jurisdiction extended to the later suit:

The jurisdiction to entertain the supplemental bill is

free from doubt. Such a bill may be brought in a

federal court in aid of and to effectuate its prior

decree may be carried into execution or that it may

be given fuller effect. . Such a bill is ancillary

and dependent, and therfore the jurisdiction follows

that of the original suit, regardless of the citizen-

16 International Ass’n of Mach. & Aero Wkrs. v. Niz, 5 Cir. 1975,

512 F.2d 125; Donelon v. New Orleans Terminal Co., 5 Cir. 1973,

474 F.2d 1108, cert. denied, 414 U.S. 855, 94 S.Ct. 157, 38 L.Ed.2d

105; Johnson v. Redford, 5 Cir. 1971, 449 F.2d 115; Berman v.

Denver Tramway Corp., 10 Cir. 1952, 197 F.2d 946.

ship of the parties to the bill or the amount in

controversy.“

Without this doctrine, judgments of federal courts

would have little effect whenever later circumstances

would preclude a party from reestablishing independent

jurisdiction. Diversity of citizenship or the jurisdictional

amount in controversy could easily change with time.

Yet such changes should not enable parties to overturn

federal judgments by relitigating issues in state courts.

We therefore consider this action as supplemental or an-

cillary to Southwest I, over which the district court prop-

erly asserted federal question jurisdiction. A state court

judgment in Austin could contravene Southwest’s rights

as defined by the district court in 1973. To effectuate the

prior decree, then, the district court had jurisdiction to

address the merits of Southwest’s claims.

III. FEDERALISM

The appellants argue that the Anti-injunction Act, 28

U.S.C. § 2283, and the judicial doctrine of abstention

should preclude an injunction of the Austin proceedings.

17 300 U.S. at 428, 57 S.Ct. at 521. See Root v. Woolworth, 1893,

150 U.S. 401, 14 S.Ct. 186, 37 L.Ed. 1123, in which Woolworth sued

in equity to enforce an earlier decree quieting title. The Court

said:

The jurisdiction of courts of equity to interfere and effectuate

their own decrees by injunctions or writs of assistance, in

order to avoid the relitigation of questions once settled be-

tween the same parties is settled.

Id. at 411-12, 14 S.Ct. at 139, 37 L.Ed. at 1126. Hamilton v. Nakai,

9 Cir. 1972, 453 F.2d 152, cert. denied, 406 U.S. 945, 92 S.Ct. 2044,

32 L.Ed.2d 332, demonstrates the current vitality of this doctrine.

18 The section states:

A court of the United States may not grant an injunction

to stay proceedings in a State court except as expressly au-

thorized by Act of Congress, or where necessary in aid of its

jurisdiction, or to protect or effectuate its judgments.

10a

Cast in terms of federalism, the argument posits that

the district court should have abstained in Southwest I

to avoid disruption of the internal affairs of the State

of Texas. See Burford v. Sun Oil Co., 1943, 319 US.

315, 63 S.Ct. 1098, 87 L.Ed. 1424, rehearing denied, 320

U.S. 214, 63 S.Ct. 1442, 87 L.Ed. 1851; Barrett v. At-

lantic Richfield Co., 5 Cir. 1971, 444 F.2d 38; W. S.

Ranch Co. v. Kaiser Steel Corp., 1968, 391 U.S. 593, 88

S. Ct. 1753, 20 L.Ed.2d 835. Because the court should

have abstained, the argument continues, Southwest I fore-

casts Texas law on the respective authority of the cities

and the TAC to regulate Love Field. See Chicago v. Field-

crest Dairies, Inc., 1942, 316 U.S. 168, 62 S.Ct. 986, 86

L.Ed. 1355; Railroad Commission v. Pullman Co., 1941,

312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971. As only a fore-

cast, the judgment in Southwest I should not receive the

protection of a federal injunction, the appellants con-

clude, because the Texas courts should still be able to

decide the state law questions. We would preclude such

resolution by sustaining the injunction because only

Southwest’s case can presert the peculiar factual clash

litigated in Southwest I between the cities and the TAC.”

To evaluate the appellants’ argument, we must apply

the principles of federalism to the unusual facts of this

case. We begin with the instruction of the Supreme Court

that

The district court injunction applies, quite narrowly, to reliti-

gation of the Love Field controversy only as it affects Southwest.

The CAB airlines can continue to litigate their rights to serve

Love Field even if the injunction is affirmed. Because the CAB

rather than the TAC regulates them, however, they will not be able

to present a TAC-City of Dallas clash directly to the Texas courts.

Nevertheless another set of facts could present to the Texas courts

the question of the relative powers of the TAC and local govern-

ments to regulate airports. The district court injunction would not

reach such a case as long as the state decision did not attempt to

contravene Southwest’s rights under the 1973 judgment..

lla

few public interests have a higher claim upon the

discretion of a federal chancellor than the avoidance

of needless friction with state policies, whether the

policy relates to the enforcement of the criminal law

. . or the final authority of a state court to

interpret doubtful regulatory laws of the state.“

We have applied this admonition not only in abstention

cases, but also in cases under the Anti-Injunction Act.

For instance, International Association of Machinists and

Aerospace Workers v. Nix, 5 Cir. 1975, 512 F.2d 125,

noted that the purpose of section 2283 is to “avoid un-

seemly conflict between the state and federal courts.”

Congress has decided that frequent injunctions against

state proceedings by the federal judiciary would not en-

gender the harmonious relations necessary to the func-

tioning of our federal system.

Whether an “unseemly conflict” disturbs the har-

mony of the system, however, turns on the facts of each

case. Here, we conclude that the preliminary injunction,

rather than damaging federal-state relations, would begin

to restore the harmony interrupted by the filing of

Austin. First, Congress has specifically excepted from

the ban of section 2283 all injunctions “to protect or ef-

fectuate . . . judgments” of the federal judiciary. This

unqualified exception recognizes that the states, as well as

the federal government, have a responsibility to maintain

the harmony we cherish. As we first said in Jackson-

20 Railroad Comm’n v. Pullman Co., 1941, 312 U.S. 496, 500, 61

S.Ct. 643, 645, 85 L.Ed.2d 971, 974, quoted in Alabama Pub. Serv.

Comm'n v. Southern Ry. Co., 1951, 341 U.S. 341, 350, 71 S.Ct. 762,

95 L.Ed. 1002, 1009.

21 F. g., Barrett v. Atlantic Richfield Co., 5 Cir. 1971, 444 F.2d

38; Harris v. Samuels, 5 Cir. 1971, 440 F.2d 748, cert. denied, 404

U.S. 832, 92 S.Ct. 77, 30 L.Ed.2d 62; Creel v. City of Atlanta, 5

Cir. 1968, 399 F.2d 777.

12a

ville Blow Pipe v. Reconstruction Finance Corp., 5 Cir.

1957, 244 F.2d 394, 400:

[Nothing would be as productive of friction be-

tween the state and federal courts as to permit a

state court to interpret and perhaps to upset such a

judgment of a federal court.”

Friction is also avoided by an injunction that:

prevents multiple litigation of the same cause of

action and . . . assures the winner in a federal court

that he will not be deprived of the fruits of his

victory by a later contrary state judgment which

the Supreme Court may or may not decide to re-

view.

These policies support an injunction here, for the appel-

lants have admittedly launched in Austin a “frontal at-

tack” on the judgment of the federal court. Furthermore,

the preliminary injunction would temporarily thwart the

purpose of the assault and thereby guarantee to South-

west the fruits of its victory in Southwest I.

Second, the Supreme Court has instructed that absten-

tion “is an extraordinary and narrow exception to the

duty of a District Court to adjudicate a controversy prop-

erly before it. Abdication of the obligation to decide

cases can be justified under this doctrine only in

exceptional circumstances.” Alleghany County v. Frank

Mashuda Co., 1959, 360 U.S. 185, 188-89, 79 S.Ct. 1060,

1063, 3 L.Ed.2d 1163, 1166, see Baggett v. Bullitt, 1964,

377 U.S. 360, 84 S.Ct. 1316, 12 L.Ed. 377. In other

words, before our deference to federalism can justify

deviation from routine federal procedures—be they ex-

22 Quoted in International Ass'n of Mach. & Aero. Wkrs. v. Niz,

5 Cir. 1975, 512 F.2d 125, 130.

Woods Exploration & Prod. Co. v. Aluminum Co. of America,

5 Cir. 1971, 438 F.2d 1286, 1312, cert. denied, 404 U.S. 1047, 92

S.Ct. 701, 30 L.Ed.2d 736.

13a

ercises of jurisdiction or the protection of rights gar-

nered in federal judgments—we must confront a signifi-

cant disruption of federal-state relations.“ That a fed-

eral court must interpret state law does not by itself

threaten such a disturbance.“ A contrary rule would be

stroy diversity jurisdiction and would render obsolete

theories of pendent jurisdiction. This Court has there-

fore followed the instruction of Harman v. Forssenius,

1965, 380 U.S. 528, 85 S.Ct. 1177, 14 L.Ed.2d 50, and

Reetz v. Bozanich, 1970, 397 U.S. 82, 90 S.Ct. 788, 25

L.Ed.2d 68, that courts should refuse to abstain where the

issue of state law is clear. Moreno v. Henckel, 5 Cir. 1970,

431 F.2d 1299, 1308. These decisions are consistent with

the numerous cases in which courts have abstained only

after deciding that they faced unclear questions of state

law.“

24 Markham v. Allen, 1946, 326 U.S. 490, 495, 66 S.Ct. 296, 299,

90 L.Ed. 256, 260 (an alien property custodian after World War II

raised questions of state probate law in his suit to determine his

appropriate share of the decedent’s estate).

25 This case does not fall within the Pullman line of cases in which

courts have abstained in order to avoid deciding constitutional

questions. Railroad Comm’n v. Pullman Co., 1941, 312 U.S. 496,

61 S.Ct. 643, 85 L.Ed. 971; see Reetz v. Bozanich, 1970, 397 U.S. 82,

90 S.Ct. 788, 25 L.Ed.2d 68; Gray Line Motor Tours, Inc. v. City of

New Orleans, 5 Cir. 1974, 498 F.2d 293; Freda v. Lavine, 2 Cir. 1974,

494 F.2d 107; Harris v. Samuels, 5 Cir. 1971, 440 F.2d 748.

26 For example in City of Meridian v. Southern Bell Tel. & Tel.

Co., 1959, 358 U.S. 639, 79 S.Ct. 455, 3 L.Ed.2d 562, the company

challenged a Mississippi tax on public utilities. The state law

issue concerned whether the statute applied to the petitioner. After

noting that “the state law problems are delicate ones, the resolution

of which is not without substantial difficulty,” the Court ordered

abstention. In Freda v. Levine, 2 Cir. 1974, 494 F.2d 107, a state

regulation on eligibility for Aid to Families with Dependent Chil-

dren lacked clarity. Consequently, the Court referred the issue to

the state before considering the constitutional issues in the case.

la Romero v. Coldwell, 5 Cir. 1972, 455 F.2d 1163, the appellants

challenged the selection of Justices of Peace in El Paso County,

Texas. The state attorney general had said that the selection process

might have violated the state constitution. We ordered abstention

in part because of the confused nature of the state law.

14a

In Southwest I, however, the federal courts faced an is-

sue of Texas law with a clear answer. The issue con-

cerned the relative authority to the TAC and the City of

Dallas to control access to Love Field, and Judge Gee

responded :

It has a simple answer. In a recent decision, the

Texas Supreme Court had occasion to consider the

powers of the Texas Aeronautics Commission

“The decision as to where the public interest lies

and what air service is best for Texas must be made

by the Texas Aeronautics Commission.” .. .

. . . Indeed, to hold that a city could deny the

use of public facilities to an airline certificated

to it by the Texas Aeronautics Commission would

cripple, if not destroy, the Commission’s powers to

control intrastate routes.

City of Dallas v. Southwest Airlines, 5 Cir. 1974, 494

F.2d 773, 776-77, quoting Texas Aeronautics Commission

v. Braniff Airways, Inc., Tex. Sup. Ct. 1970, 454 S.W.2d

199, cert. denied, 400 U.S. 943, 91 S.Ct. 244, 27 L.Ed.2d

247. As both the district and circuit opinions explain, to

rule otherwise would disregard the plain language of the

Texas Constitution, the Texas Municipal Airports Act, the

Texas Aeronautics Act, and statutes regulating home

rule cities, all of which support TAC authority over the

controversy. 494 F.2d at 777; 371 F.Supp. at 1032-34.

Because the state law is so clear, the federal courts did

not violate any principles of federalism by proceeding to

judgment without abstention in Southwest I.

Third, the appellants also submit that the earlier case

breached federalism policy in that the federal courts de-

cided a state law question bearing upon internal state

affairs. The carriers cite the line of cases following

Burford v. Sun Oil Co., 1948, 319 U.S. 315, 63 S.Ct.

1098, 87 L.Ed. 1424, to support the proposition. Al-

15a

though this Court has followed Burford, e.g., Barrett v.

Atlantic Richfield Co., 5 Cir. 1971, 444 F.2d 38, its doc-

trine does not apply in this case. To begin with, all of

the cases cited by appellants involved truly unsettled

questions of state law on internal affairs.“ This dis-

tinguishes them from the instant case in which a Texas

Supreme Court ruling, the Texas Constitution, and Texas

statutes clearly dictated the federal decision. Further-

more, the decision in Southwest I did not disrupt the

harmonious relations between the state and federal gov-

ernments; the state agencies themselves requested the

federal decision. The cities, not Southwest, brought the

federal suit. The TAC intervened voluntarily in the ac-

27 City of Meridian v. Southern Bell Tel. & Tel. Co., 1959, 358

U.S. 639, 79 S.Ct. 455, 3 L.Ed.2d 562, concerned the constitutionality

of a tax statute under an ancient, rarely used state constitutional

provision. In United Gas Pipeline Co. v. Ideal Cement Co., 1962, 369

U.S. 134, 82 S.Ct. 676, 7 L.Ed.2d 623, the Louisiana License Code

provision under which the state taxed national gas sales had not

been construed by a state court. Kaiser Steel Corp. v. W. S. Ranch

Co., 1968, 391 U.S. 593, 88 S.Ct. 1753, 20 L.Ed.2d 835, posed the

“truly novel” question of the meaning of the term “public use” in

the New Mexico Constitution’s eminent domain provision. 391 U.S.

at 594, 88 S.Ct. 1753. This Court held in Romero v. Coldwell, 5 Cir.

1972, 455 F.2d 1163, 1165:

[A]ppellants contend that each justice of the peace has county-

wide jurisdiction, and they acknowledge that this is the linchpin

of their case. It appears that this is a question that is neither

settled nor clear under Texas law.

And we also noted in Barrett v. Atlantic Richfield Co., 5 Cir. 1971,

444 F.2d 38, 42, that no Texas court had ever attempted to reconcile

conflicting claims for different minerals on the same land and

that the legislature had ne. provided a solution either.

We must also reject appellants’ attempt to apply Louisiana Power

& Light Co. v. Thibodaux, 1959, 360 U.S. 25, 79 S.Ct. 1070, 3

L.Ed.2d 1058, rehearing denied, 360 U.S. 940, 79 S.Ct. 1442, 3

L.Ed.2d 1552, to the Southwest facts. Again the Court considered

the law truly unsettled. Jd. at 30, 79 S.Ct. 1070. Only through

the specious legal argument f the appellants can Texas law on the

comparative authority of cities and the TAC be considered

unclear. We have rejected that argument repeatedly and also re-

ject their corollary use of Thibodauz.

16a

tion. No agency raised the issue of abstention.“ Even

if the question of comparative authority had been less

clear, it cannot be said that a federal court disrupts har-

monious relations with a state by responding to a request

by the bickering state agencies to resolve their dispute.

In summary, then, an injunction to protect South-

west’s federal judgment will not disrupt policies of fed-

eralism. The district court correctly declined to abstain

in Southwest I. Abstention would not have been an ap-

propriate response to the invocation by the state agencies

themselves of federal court jurisdiction to resolve what

turned out to be a clear question of state law. Because

the original holding violated no principle of federalism, it

deserves the protection of the federal chancellor. These

facts reveal only one disruption of state-federal relations

—the filing of Austin by the CAB carriers. Enjoining the

state proceeding therefore removes, rather than exa-

cerbates, discord between the sovereigns.”

28 Had the cities wanted a state court determination, they could

have brought a suit in the Texas courts on both the federal and

state grounds. If Southwest had then removed the case to federal

court, the cities could have asked for abstention. Similarly, the

TAC could have raised the abstention question after intervening.

29 Preventing this affront to the federal judgment will not pre-

clude Texas courts from addressing the legal issues that underlie

this dispute. See footnote 19. Under Pullman and its progeny, the

resolution of legal issues in Southwest I does not bind the Texas

judiciary on those questions of law. In this case, we hold only that

the CAB carriers cannot assail a federal judgment by relitigation

in state courts. If the Texas courts or legislature should establish

legal rules incongruous with the legal principles that controlled

Southwest I, then relief from the federal judgment may be justi-

fied under Rule 60(b) of the Federal Rules of Civil Procedure.

See Glenn v. Field Packing Co., 1933, 290 U.S. 177, 54 S.Ct. 138,

78 L.Ed. 252; Oliver v. Monsanto Co., S.D.Tex. 1972, 56 F.R.D. 370,

aff d., 5 Cir. 1973, 487 F.2d 514; 7 Moore’s Federal Practice

§ 60.26[4] (1971); C. Wright and A. Miller, 11 Federal Practice

and Procedure § 2283 (1973). Of course, we do not reach the 60(b)

question today. But we do suggest that by allowing the federal

courts to determine the continuing effectiveness of their judgments,

the Rule provides an approach more consistent with the above

policies of federalism than the “frontal attack” launched by the

CAB carriers in Austin.

17a

IV. PRECLUSION

An injunction to protect a federal judgment can re-

strain only those bound by the judgment.“ Because the

CAB airlines did not appear as parties in Southwest I,

they now argue that the holding of that case cannot pre-

clude them from relitigating issues there decided. They

present the question whether the 1968 ordinance can be

enforced by private parties against Southwest after a

federal court has held public enforcement of the ordinance

invalid.

A. CHOICE OF LAW

Federal law of res judicata controls this case. Even

though the holding of Southwest I relied on state law, the

effect of the case on parties and nonparties presents a

question of federal law distinct from the local issues de-

cided. This conclusion is consistent with Aerojet-General

Corp. v. Askew, 5 Cir. 1975, 511 F.2d 710, 715-718, re-

hearing denied, 514 F.2d 1072, cert. denied 423 U.S. 908,

96 S.Ct. 210, 46 L.Ed.2d 137, in which the Court held that

the res judicata effect of a diversity judgment also de-

pended upon federal law. Aerojet stressed the importance

of preserving rights generated by federal judgments:

If state courts could eradicate the force and effect of

federal court judgments through supervening inter-

8° The term “preclusion” denotes the principle of res judicata.

Section 2283 cases have traditionally sustained injunctions only

against parties bound by a judgment in a res judicata sense. ZE. g.

International Ass’n of Mach. & Aero. Wrkrs. v. Nix, 5 Cir. 1975,

512 F.2d 125 (a party to the first action was bound by the judg-

ment therein) ; Donelon v. New Orleans Terminal Co., 5 Cir. 1973,

474 F.2d 1108 (a party to the first action was bound by the judg-

ment therein) ; Johnson v. Radford, 5 Cir. 1971, 449 F.2d 115 (heirs

of party to first suit were considered “in privity” with the de-

ceased and therefore bound by the first suit); 1B Moore’s Federal

Practice § 0.408[2], [3] (1965).

18a

pretations of the state law of res judicata, federal

courts would not be a reliable forum for final ad-

judication of a diversity litigant’s claims.”

This reasoning applies a fortiori in a non-diversity set-

ting where the Erie doctrine has even less force than in

Aerojet.

B. BACKGROUND

The principle of res judicata serves several policies im-

portant to our judicial system. By declaring an end to

litigation, the doctrine adds certainty and stability to

social institutions.* This certainty in turn generates

public respect for the courts.** By preventing relitigation

of issues, res judicata conserves judicial time and re-

sources.“ It also supports several private interests, in-

cluding avoidance of substantial litigation expenses,“ pro-

tection from harassment or coercion by lawsuit,“ and

avoidance of conflicting rights and duties from incon-

sistent judgments.”

Recognizing the importance of these policies, federal

courts have repeatedly held that judgments can bind per-

sons not party to the litigation in question. Chicago,

31 Aerojet-General Corp. v. Askew, 5 Cir. 1975, 511 F.2d 710, 716.

32 Semmell, Collateral Estoppel, Mutuality and Joinder of Parties,

68 Colum.L.Rev. 1457 (1968); Comment, Nonparties and Preclusion

by Judgment: The Privity Rule Reconsidered, 56 Calif.L.Rev. 1098

(1968).

Comment, supra note 32, at 1099.

34 Semmell, supra note 32, at 1457; Vestal, Res Judicata Pre-

clusion: Expansion, 47 So.Cal.L.Rev. 357, 379 (1974); Comment,

supra note 32, at 1099.

35 Semmell, supra note 32, at 1457.

36 Comment, supra note 32, at 1099.

37 Id. at 1098, 1105.

19a

Rock Island & Pacific Railway Co. v. Schendel, 1926, 270

U.S. 611, 46 S.Ct. 420, 70 L.Ed. 757; Heckman v. United

States, 1912, 224 U.S. 413, 32 S.Ct. 424, 56 L.Ed. 820;

Aerojet-General Corp. v. Askew, 5 Cir. 1975, 511 F.2d

710; Dudley v. Smith, 5 Cir. 1974, 504 F.2d 979, rehear-

ing denied, 1975, 507 F.2d 1280; Astron Industrial As-

sociates, Inc. v. Chrysler Motors Corp., 5 Cir. 1968, 405

F.2d 958. At common law this preclusive effect extended

only to those in privity with the parties. 1B Moore’s

Federal Practice § 0.41111] (1965). But federal cases

have recognized that “privity” denotes a legal conclusion

rather than a judgmental process.** Professor Vestal has

explained:

Thus, the term privity in itself does not state a

reason for either including or excluding a person

from the binding effect of a prior judgment, but

rather it represents a legal conclusion that the re-

lationship between the one who is a party on the

record and the non-party is sufficiently close to af-

ford application of the principle of preclusion.**

Federal courts have deemed several types of relation-

ships “sufficiently close” to justify preclusion. First, a

non-party who has succeeded to a party’s interest in

property is bound by any prior judgments against the

party. Golden State Bottling Co. v. NLRB, 1973, 414

U.S. 168, 179, 94 S.Ct. 414, 38 L.Ed.2d 388; United

88 Judge Prettyman found the concept elusive and concluded:

It is sufficient that the word designates a person so identi-

fied in interest with a party to former litigation that he rep-

resents precisely the same right in respect to the subject matter

involved.

Jefferson School of Social Science v. Subversive Activities Control

Brd., 1963, 118 U.S.App.D.C. 2, 331 F.2d 76; accord, Bruszewski

v. United States, 3 Cir. 1950, 181 F.2d 419, 423, (Goodrich, J.,

concurring) cert. denied, 340 U.S. 865, 71 S.Ct. 87, 95 L.Ed. 632.

8° Vestal, Preclusion/Res Judicata Variables: Parties, 50 lowa

L.Rev. 27 (1964).

20a

States v. New York Terminal Warehouse Co., 5 Cir. 1956,

233 F.2d 238, 241. Second, a non-party who controlled

the original suit will be bound by the resulting judgment.

Dudley v. Smith, 5 Cir. 1974, 504 F.2d 979 (president

and sole shareholder controls his corporation); Kreoger

v. General Electric Co., 2 Cir. 1974, 497 F.2d 468, cert.

denied, 419 U.S. 861, 95 S.Ct. 111, 42 L.Ed.2d 95-96;

rehearing denied, 419 U.S. 1041, 95 S.Ct. 530, 42 L.Ed.2d

319 (president and sole shareholder controls his corpora-

tion) ; Astron Industrial Associates, Inc. v. Chrysler Mo-

tors Corp., 5 Cir. 1968, 405 F.2d 958 (parent corporation

controls subsidiary). Third, federal courts will bind a

non-party whose interests were represented adequately

by a party in the original suit.“ Heckman v. United

States, 1912, 224 U.S. 418, 445-46, 32 S.Ct. 424, 434-35,

56 L.Ed. 820 (United States represents interests of Amer-

ican Indians); Kerrison v. Stewart, 1876, 93 U.S. 155,

160, 23 L.Ed. 843, 845 (trustee represents interests of

beneficiaries) ; Aerojet-General Corp. v. Askew, 5 Cir.

1975, 511 F.2d 710 (state represents interests of a home-

rule county) ; Berman v. Denver Tramway Corp., 10 Cir.

1952, 197 F.2d 946 (local government represents in-

terests of the public).

Because res judicata denies a non-party his day in

court, the due process clauses prevent preclusion when the

relationship between the party and non-party becomes too

attenuated. Hansberry v. Lee, 1940, 311 U.S. 32, 61 S.Ct.

115, 85 L.Ed. 22; cited with approval, Blonder-Tongue

Laboratories v. University of Illinois Foundation, 1971,

402 U.S. 313, 329, 91 S.Ct. 1434, 28 L.Ed.2d 788. Al-

though Hansberry involved a class action suit, its due

process principles also control res judicata cases. In

Humphreys v. Tann, 6 Cir. 1973, 487 F.2d 666, cert.

0 Common law principles of res judicata classified many of these

cases under the label of concurrent interest privity. The federal deci-

sions have correctly disregarded the label and analyzed the repre-

sentative relationship between the parties. See part IV E.

21a

denied, 1974, 416 U.S. 956, 94 S. Ct. 1970, 40 L. Ed. 2d

307, for instance, the Court permitted a plaintiff to sue

the owner of an airplane involved in a mid-air collision

even though an earlier suit had relieved the owner of

liability. The first suit, to which the plaintiff was not a

party, was not a class action. Even though the attorney

for the plaintiff had participated in pretrial discovery

and litigation conferences for the first trial, the Court

of Appeals for the Sixth Circuit permitted him a sep-

arate day in court to try his theory of liability. Id. at

667, 671. The Southwest litigation also raises questions

of both res judicata and due process.

C. PRIVITY BY LETTER AGREEMENT

The district court decided to bind the CAB airlines

by Southwest I in part because it found in the Letter

Agreements a contractual privity between the airlines and

Dallas. Although the opinion does not specify the nature

of this privity, the concurrent rights established in the

new airport by the Letter Agreements apparently form

the basis of the relationship. Concurrent privity between

private persons, as a legal principle, is well established

at common law,“ but it does not apply to the facts before

us. Section 85 of the Restatement of the Law Second-

Judgments (tentative draft No. 2, 1975)* identifies the

411B Moore’s Federal Practice f 0.411112] (1965). See Kersh

Lake Dist. v. Johnson (1940) 309 U.S. 485, 60 S.Ct. 640, 84 L.Ed.

881 (trustee under mortgage and deed of trust has concurrent

interest in property with a secured bond holder); McCrocklin v.

Fowler, E.D.Wisc. 1968, 285 F.Supp. 41, aff'd. 7 Cir. 1969, 411

F.2d 580 (administrator of an estate has concurrent interest with

a beneficiary).

2 Section 85 states:

(1) A person who is not a party to an action but who is

represented by a party is bound by and entitled to the benefits

of the rules of res judicata as though he were party. A person

is represented by a party who is:

{ Footnote continued on page 22a]

22a

contractual and representative essence of the doctrine.

The party trustee or administrator or executor in the

suit represents the non-party bondholder or beneficiary,

who is to be bound by the judgment against the party.

The lessor-lessee nexus created by the Letter Agreements

is not included in the list of private representative re-

lationships requiring preelusion.“ Its absence results

from the nature of most lessor-lessee agreements, which

do not inherently provide a representative role to either

party.“ The CAB agreements do not indicate any in-

42 [Continued]

(a) The trustee of an estate or interest of which the person

is a beneficiary; or

(b) Invested by the person with authority to represent him

in an action; or

similar fiduciary manager of an interest of which the person

is a beneficiary; or

(d) An official or agency invested by law with authority

to represent the person’s interests; or

(e) The representative of a class or persons similarly situ-

ated, designated as such with the approval of the court, of

which the person is a member.

(2) A person represented by a party to an action is bound

by the judgment even though the person himself does not have

notice of the action, is not served with process, or is not sub-

ject to service of process.

Furthermore, theories of successive relationships in the same

property rights do not establish privity here; Dallas and CAB lines

executed the Letter Agreements before, not after the judgment

in Southwest J. Radio Corp. v. Radio Eng. Lab., 1934, 293 U.S. 1,

54, S.Ct. 752, 79 L.Ed. 163, rehearing denied, 293 U.S. 522, 55

S.Ct. 66, 79 L.Ed. 634; see Kruger & Birch, Inc. v. Du Boyce, 3

Cir. 1957, 241 F.2d 849, 854 (lessee held in privity with lessor

as to issue litigated before the lease); 1B Moore’s Federal Prac-

tice ſ 0.411111) nn. 13-20 (1965) ; 46 Am. Jur.2d § 533 (1969).

As the comment to Section 85 suggests, the private representa-

tive role is extended only to those whom the parties intended, either

expressly or impliedly, to exercise it:

The method of designating the representative may be adjudi-

cative or contractual .... In any case, however, the effect is

to confer on the representative the requisite authority, and

generally exclusive authority, to participate as a party on behalf

of the represented person.

23a

tent to the contrary, as the signatories limited discussion

to the scope and cost of the airport, use of it by the air-

lines, and rental charges. Consequently, the Letter Agree-

ments do not create private contractual privity between

Da'las and the CAB carriers.

D. VIRTUAL REPRESENTATION

Southwest and the district court, citing Aerojet,“

partly rely on the doctrine of virtual representation to

bind the CAB airlines. This doctrine offers little ana-

lytical assistance here because of its wide and incon-

sistent application. In Aerojet most of the cases cited

represent factual settings with little relevance to the

Southwest dispute because they involved only private

parties: estate beneficiaries bound by administrators,“

presidents and sole stockholders by their companies,“

parent corporations by their subsidiaries,“ and a trust

beneficiary by the trustee.“ In fact, the doctrine closely

resembles the theory of concurrent privity which our

Court, as noted, has rejected. Although Southwest ar-

gues that the representation of private interests by gov-

8 511 F.2d at 719.

1 Chicago R. I. & P. Ry. Co. v. Schendel, 1926, 270 U.S. 611, 46

S. Ct. 420, 70 L.Ed. 757; Robison v. Sidebotham, 9 Cir. 1957, 243

F.2d 16, cert. denied, 355 U.S. 867, 78 S.Ct. 115, 2 L.Ed.2d 74.

47 Dudley v. Smith, 5 Cir. 1974, 504 F.2d 979; Kreager v. Gen-

eral Electric Co., 2 Cir. 1974, 497 F.2d 468.

48 Pan American Match, Inc. v. Sears, Roebuck and Co., 1 Cir.

1972, 454 F.2d 871, cert. denied, 409 U.S. 892, 93 S.Ct. 113, 34 L.Ed.

2d 149; Astron Indus. Associates, Inc. v. Chrysler Motors Corp., 5

Cir. 1968, 405 F.2d 958.

% Kerrison v. Stewart, 1876, 93 U.S. 155, 23 L.Ed. 843. One

cited case did involve representation by a government. Heckman

v. United States, 1912, 224 U.S. 413, 32 S.Ct. 424, 56 L.Ed. 820.

The res judicata effect was a function of the substantive federal

law on the relationship between the federal government and Amer-

ican Indians.

24a

ernment agencies comprises one branch of the doctrine,

the proposition bears little relation to the primary ques-

ion about the propriety of barring the private interests

from relitigation.” Federal case law requires that we

direct our analysis toward answering that specific ques-

tion, rather than toward identifying the doctrinal scope

of virtual representation.” Consequently, we turn to the

relationship between the government agency that litigated

Southwest I and the private parties that would re-

litigate the same issues in Austin.

E. REPRESENTATION BY GOVERNMENT

AUTHORITIES

In their attempt to apply the 1968 Bond Ordinance

to Southwest, the CAB airlines assume the role of pri-

vate attorneys-general. In effect, they would enforce

o The importance of the proposition diminishes further because

of the confusion surrounding the doctrine. Although in one Texas

case courts expressly involved the theory to bar private parties from

relitigating issues already decided in a government suit, Cochran

County v. Boyd, Tex.Civ.App. 1930, 26 S.W.2d 364, other Texas

cases analyze similar situations without reference to the doctrine.

Hovey v. Shepard, 1912, 105 Tex. 237, 147 S.W. 224; City of Pale-

stine v. City of Houston, Tex.Civ.App. 1924, 262 S.W. 215. The

commentators also do not agree on the essence of the doctrine. One

has stressed the special legal relationships that traditionally have

existed between the party and the represented non-party. Com-

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

527 (1976). Another has emphasized the element of necessity,

which requires the application of res judicata when non-parties

could not possibly have been joined in the original action. Com-

ment, Non-Parties and Preclusion by Judgment: The Privity Rule

Reconsidered, 56 Calif.L.Rev. 1098 (1968), citing Restatement of

Judgments § 87 (1942).

51 See Battle v. Cherry, N.D.Ga. 1972, 339 F.Supp. 186, holding

that a suit by a school board to enforce a state educational program

binds taxpayers and parents of school children. See also Smith v.

Illinois Bell Tel. Co., 1926, 270 U.S. 587, 46 S.Ct. 408, 70 L.Ed. 747;

In Re Engelhard & Sons Co., 1914, 231 U.S. 646, 34 S.Ct. 258, 58

L.Ed. 416, both involving the representative capacity of a public

utility.

—

25a

the ordinance’s phase-out provision by excluding South-

west from Love Field. The City of Dallas has already

failed in its attempt to effect such an exclusion. We

hold that the carriers should be bound by that failure.

As noted above, res judicata does not follow here from

concurrent privity or the theory of virtual representa-

tion. Successive privity does not apply, because the car-

riers did not succeed to the interests of Dallas at Love

Field. Nor did the airlines in any sense control the

litigation in Southwest I. On the facts of this case, how-

ever, res judicata applies because Dallas, as a govern-

ment, represented in Southwest I the only legal interests

the airlines possess regarding the enforcement of the 1968

ordinance against Southwest. In other words, the re-

lationship between the city as public enforcer of the

ordinance and the airlines as private enforcers is close

enough to preclude relitigation.

Although the doctrine of “virtual representation”

seems cloudy, the proposition that governments may rep-

resent private interests in litigation, precluding relitiga-

tion, is clear. In Berman v. Denver Tramway Corp.,

10 Cir. 1952, 197 F.2d 946, for instance, a citizen and

taxpayer could not challenge the tramway fares once the

city had already lost a suit on the issue.“ Similarly in

Battle v. Cherry, N.D. Ga. 1972, 339 F.Supp. 186, the

court refused to allow parents to enforce a state law

once their school board had already failed to achieve

52 In Berman the court cited in Re Engelhard & Sons Co., 1914,

231 U.S. 646, 34 S.Ct. 258, 58 L.Ed. 416. That was a case in which

the Supreme Court refused to allow a private party to intervene

in a suit between a city and the local telephone company. The

Court assumed that the city would vigorously pursue the action

and would therefore adequately represent both the public and the

subscribers to phone service. Although this case does not identify

the type of relationship necessary for res judicata, it does deny a

day in court both to members of the public and to private persons

with pecuniary interests in the dispute.

26a

enforcement.** On the other hand, this Court has re-

cently held that litigation by a government agency will

not preclude a private party from vindicating a wrong

that arises from related facts but generates a distinct,

individual cause of action. In Rodriguez v. East Texas

Motor Freight, 5 Cir. 1974, 505 F.2d 40, cert. granted,

1976, 425 U.S. 990, 96 S.Ct. 2200, 48 L.Ed.2d 814, Mexi-

can-American drivers charged their employer with job

discrimination in violation of the Civi! Rights Act of

1964, 42 U.S.C. § 2000e-2, and 42 U.S.C. § 1981. Before

the termination of that suit, the United States chal-

lenged similar discrimination in a nation-wide “pattern

and practice” suit and procured a consent decree with

guidelines for future hiring and optional remedies for

individual workers. 505 F.2d at 65. The individual reme-

dies, however, were not complete and did not consider

the specific discrimination against any employee. The

government therefore could not assure that the general,

nationwide remedies could actually vindicate the dam-

age suffered by individuals. This Court allowed the in-

dividual plaintiffs to continue their private actions. As

the leading case in support of the decision, Williamson

v. Bethlehem Steel Corp., 2 Cir. 1972, 468 F.2d 1201,

cert. denied, 1973, 411 U.S. 931, 93 S.Ct. 1893, 36 L.

Ed.2d 390, reasoned, the Civil Rights Act intended to be-

stow on individual employees legal rights distinct from

the more general public interests vindicated by govern-

ment suits. Employers therefore may be subject to li-

ability for violation of legal duties owed the public as

well as for violation of distinct legal duties owed in-

dividual employees. Furthermore, to correct the indi-

58 Several states have adopted similar positions, including Texas,

where citizens could not sue to prevent a railroad from moving its

facilities once their city had already lost an identical suit. See

Holvey v. Shepard, 1912, 105 Tex. 237, 147 S.W. 224, cited with

approval, City of Palestine v. City of Houston, Tex.Civ.App. 1924,

262 S.W. 215, holding that a city could properly represent its citi-

zens’ interests in litigation over the movement of railroad facilities.

——̃ñ — — —

27a

vidual injustices, the statutory scheme contemplates pri-

vate remedies different from those available to the Jus-

tice Department.

Despite these cases, the federal judiciary has never

faced the precise question posed by the instant facts.

The CAB carriers correctly distinguish Berman by argu-

ing that their pecuniary interest in the success of the

new airport, surpasses the interests possessed by mem-

bers of the general public or taxpayers. If Southwest

directs business away from the new facility, the other

airlines 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 air-

port. On the other hand, Southwest is on sound ground

in arguing that the CAB carriers have not suffered a

private legal wrong independent from the violation of

the ordinance. Consequently, their condition differs from

that of the job discrimination victims who could claim

that under the Civil Rights Acts the employers had

breached legal duties owed specifically to them, not just

to the general public. Furthermore, in Rodriguez and

Williamson the workers claimed remedies distinct from

the relief imposed in the government litigation. In the

Southwest case, however, the CAB airlines attempt only

to exclude Southwest from Love Field, the remedy al-

ready denied the City of Dallas. The carriers do not

claim any other recovery from Southwest because South-

‘west owes no legal duty apart from the general respon-

sibility to obey valid public ordinances. So this case

falls between Berman and Rodriguez, and requires us to

refine the preclusive effect of government litigation.”

Despite the urging of the appellants, F. B. Elliott Advertising

Co. v. Metropolitan Dade County, 5 Cir. 1970, 425 F.2d 1141, cert.

denied, 400 U.S. 805, 91 S.Ct. 12, 27 L.Ed.2d 35, cannot assist in

the refinement. In Elliott a private plaintiff challenged the consti-

28a

The American Law Institute has recently completed

such a refinement in its Restatement of the Law Second-

Judgments § 85 (tentative draft No. 2, 1975). The com-

ment to subsection 85d analyzed representation by public

officials through three categories. First, it recognizes that

private suits to vindicate public interests raise standing

issues. Second, it establishes a category of cases in which

“an agency’s authority to maintain or defend litigation

. . . should be construed as preempting the otherwise

available opportunity of the individual or members of

”

the public to prosecute. Third, it recognizes cases

such as Williamson which “remedies that a public

official is empowere“ . pursue may be interpreted as

being supplemental w those which private persons may

pursue themselves. In that circumstance, the official’s

maintenance of an action does not preclude other litiga-

tion by the persons affected.”

The reporter’s note on subsection 85d includes no fed-

eral cases in support of the second category, and most

tutionality of a city ordinance after another private litigant had

lost a similar challenge. The question was whether in the first

suit the private litigant had represented the interests of the later

challenger. Representation by a government authority never came

up because both of the private parties opposed the city. As a re-

sult, the case has no bearing on the Southwest litigation, in which

the later private litigants support, not oppose, the government

position thereby raising the question of whether the government

represented their interests in the earlier suit.

55 The reporter did cite Patterson v. Burns, D.Haw. 1971, 327

F.Supp. 745, as precedent against preclusion in category two cases.

In that case the court permitted a private citizen to challenge the

appointment of a senator to fill a vacancy even though the lieuten-

ant governor had previously challenged the appointment. Because

of its unusual facts, however, the case differs from the others in

the category. The lieutenant governor had not adequately repre-

sented the private litigant because he merely tested a state law

interpretation of his election rules. The private citizen, on the

other hand, claimed that the appointment violated his constitutional

right to equal protection of the laws, an issue never raised in the

29a

of the state cases do not present facts analogous to the

case at hand.“ In Rynsburger v. Dairymen’s Fertilizer

Cooperative, Inc., Ct. of App. 1968, 266 Cal. App. 2d

269, 72 Cal. Rptr. 102, however, the court precluded

landowners from litigating a nuisance action similar

to one prosecuted by the public authorities. The land-

owners alleged individual harms to their property and

could have argued that the nuisance statutes established

a scheme to protect both their rights and public inter-

est. After concluding that the landowners had advanced

a public nuisance theory of recovery, however, the court

bound them to the previous judgment on the same

theory.“ Again, in Town of Burnsville v. City of Bloom-

inc ton, 1962, 264 Minn. 133, 117 N.W.2d 746, the litiga-

tion of the validity of an annexation by a municipality

barred the affected landowners from trying a similar

case. Id. at 754. Although the court did not discuss the

difference between the landowners and the general pub-

lic, the landowners could have argued that including

first suit. Patterson therefore cannot apply to the Southwest case

in which the private litigant raises precisely the same legal claim

litigated by the public agency.

56 In Stuart v. Winslow Elementary School Dist. No. 1, 1966, 100

Ariz. 375, 414 P.2d 976; and Greene v. Art Institute of Chicago,

1957, 16 III. App. 2d 84, 147 N.E.2d 415, cert. denied, 1958, 358 U.S.

838, 79 S.Ct. 62, 3 L.Ed.2d 74, members of the public were pre-

cluded from relitigating issues previously tried by public authori-

ties. Because the private parties claimed no interest in the out-

come besides their interests as citizens and taxpayers, perhaps

they lacked standing to sue. See 147 N.E.2d at 418. Viewed in this

manner, Berman may be properly classified in class one rather than

class two.

57 In Rynsburger the court also supported preclusion by a modi-

fied class action analysis. The earlier suit by the public authority

included other landowners as plaintiffs. Thus, the later plaintiffs

were represented in the first action not only by the government

but also by similarly situated landowners. In Southwest I, several

of the CAB airlines also participated, but only by filing amicus

briefs.

30a

their property in a jurisdiction with higher taxes and

different municipal services inflicted a special pecuniary

injury not experienced by the public. Yet the state court

refused tu permit them a day in court. Consequently,

under the Restatement Second system of preclusion, a

private party must show more than a special pecuniary

interest when attempting to vindicate the breach of a

public duty already litigated by a government agency.

Permission to relitigate appears reserved for the pri-

vate plaintiff who would vindicate a breach of duty

owed specifically to the plaintiff or who would recover

under a “statutory system of remedies [that] may con-

template enforcement of private interests both by a pub-

lic agency and the affected private parties.” Restate-

ment of the Law Second-Judgments § 85 (1975) (Re-

porter’s Note to comment d).

To apply the Restatement categories to this case, the

standing of the CAB carriers to sue Southwest has not

been challenged. The issue before us is whether the case

falls within category two, in which government litiga-

tion precludes private relitigation or category three, in

which the relitigation could occur. The facts here best

fit the second category of the Restatement. First, the

CAB carriers do not claim a breach of legal duty by

Southwest, apart from the alleged violation of the gen-

eral duty to obey valid ordinances. Second, the carriers

request the same remedy denied the City of Dallas,

namely the enforcement of the phase-out provision of

the ordinance to exclude Southwest from Love Field.

Third, the ordinance does not establish a statutory

scheme looking toward private enforcement of its re-

quirements. Because legal interests of the carriers do

not differ from those of Dallas in Southwest I, we hold

that they received adequate representation in the earlier

———

31a

litigation and should be bound by the judgment in that

litigation.”

We have adopted the Restatement approach because

it promotes the policies of res judicata in this factual

setting. To allow relitigation by any private litigant

with a pecuniary interest in the success of the new air-

port would open the door to recurrent, burdensome liti-

gation. Besides the CAB carriers, all of the individuals

and companies that provide goods and services at the

new airport have a pecuniary interest, distinct from

that of the general public, not only in the ultimate sur-

vival of the facility, but also in the volume of air traffic

attracted to the airport. More planes means more pas-

sengers, more sales, more jobs, more profits for all of

the businesses involved. Furthermore, a pecuniary inter-

est could be claimed by investors, developers, hotels,

restaurants, and other retail interests attracted to the

vicinity by the new facility. Even the businesses at or

near Love Field could claim a similar, although con-

verse, interest. To allow relitigation by all of these

parties would surely defeat the res judicata policies iden-

tified above. First, it would add uncertainty to the status

not only of Southwest but also of the other businesses

and government operations. If courts could second guess

another court each time a new litigant, dissatisfied with

58 The appellants argue that the interests of Dallas and the CAB

carriers differ over whether Love Field should close. They submit

that Dallas prefers to retain commercial service at Love Field as

a convenience to its citizens, whereas the carriers prefer closing

Love Field. The argument lacks force because it does not examine

the congruence of their legal interests. Both Dallas and the car-

riers are attempting to enforce the ordinance and to overturn TAC

authority over intrastate air services, thereby giving Dallas control

of access to Love Field. Furthermore, the argument neglects the

presence of Fort Worth and the Airport Board as Dallas’s coparties

in Southwest I. The alliance of the two cities and the Board indi-

cates the frivolity of the suggestion that the representation by

these government authorities somehow betrayed the carriers’ inter-

est in the success of the new airport.

32a

the previous judgment, filed a new complaint, the re-

spect of the previous parties or of the public toward the

courts would inevitably decrease. Third, relitigation

would continue to waste judicial resources and time, as

it has already in the three post-judgment suits in this

controversy. Fourth, Southwest and subsequent litigants

would suffer the harassment and expense of still later

lawsuits, as well as the possibility of numerous conflict-

ing judgments. Although these horrors may not occur,

we see no reasoned basis on which to distinguish the

CAB airlines from numerous parties with pecuniary in-

terests in the Southwest controversy. We can best sup-

port the public interest by applying the Restatement’s

approach to preclude relitigation by all persons, includ-

ing the carriers, who claim nothing more than a pecuni-

ary interest in the dispute.

F. DUE PROCESS

Appellants submit that binding them by the judgment

in Southwest I violates due process of law because it de-

nies them a day in court. Their argument arises from

the landmark case of Hansberry v. Lee, 1940, 311 U.S.

32, 61 S.Ct. 115, 85 L.Ed. 22° in which the Court ad-

dressed the preclusive effect of a class action suit. The

original suit in Hansberry upheld the validity of a ra-

cially restrictive covenant in a series of property deeds.

The covenant’s validity depended upon whether the own-

ers of ninety-five per cent of the frontage of the prop-

erty had signed the agreement. The litigants in the first

suit stipulated the collection of a sufficient number of

signatures. In a later action to enforce the covenant,

however, the Court allowed the defendants to assail

% Hansberry retains its vitality, as indicated by the Supreme

Court’s approving citation in Blonder-Tongue Laboratories, Inc. v.

University of Illinois Foundation, 1971, 402 U.S. 313, 329, 91 S.Ct.

1434, 28 L.Ed.2d 788.

33a

the validity of the agreement despite the earlier judg-

ment. According to the Court, “there has been a failure

of due process only in those cases where it cannot be said

that the procedure adopted fairly ensures the protection

of the interests of absent parties who are bound by it.”

311 U.S. at 42, 61 S.Ct. at 118. After adopting a case

by case approach to examining the procedural protec-

tion,” the Court held that preclusion on the facts of

Hansberry violated due process. Not only were the de-

fendants not parties or common law privies to the first

action, but also their legal interests were not represented

by the property owners who led the first class. The prop-

erty owners in the first suit attempted to uphold the

covenant while the defendants tried to invalidate it.

Consequently, the class represented legal interests in di-

rect opposition to the position of the defendants.

An analysis of the facts before this Court demon-

strates that due process will not be violated by binding the

CAB carriers to the judgment in Southwest I. Even

though they were not parties to that action and have

never presented evidence on the validity of the 1968

Ordinance, their interests were sufficiently represented

by the public authorities to guarantee due process. Most

6° Several student commentaries have recently suggested that

this case by case due process consideration should dominate the

analysis of res judicata questions. See Comment, Non-Parties and

Preclusion by Judgment: The Privity Rule Reconsidered, 56 Calif.

L.Rev. 1098, 1132, 1968; Note, Collateral Estoppel of Non-Parties,

87 Harv.L.Rev. 1485, 1500; Note, The Expanding Scope of the Res

Judicata Bar, 54 Texas L.Rev. 527, 528, 534 (1976). These com-

mentators suggest a balancing of due process factors: participation

by the precluded party in the prior proceeding through intervention,

combined discovery, amicus submissions, presence of counsel at

hearings, testifying as a witness, advising previous parties; the

extent of congruence between the legal interests and positions of

the party to the earlier suit and those of the precluded party; the

quality of representation of the precluded party’s interests; the

burdens relitigation poses to the judicial system; the costs and

harassment that relitigation poses to parties.

34a

importantly, their legal interests precisely coincide with

those of the cities and the regional airport board. All of

them assert that the TAC cannot thwart the phase-out

provision of the ordinance. The situation presented in

Hansberry, therefore, is not presented here. The appel-

lants assert the contrary by arguing that the interests

of the cities in Southwest I differs from the pecuniary

interests of the carriers. This argument misreads Hans-

berry, a case that looks to the congruence of the legal

interests of the parties and non-parties not to their finan-

cial stake in the litigation. The pecuniary interest of the

airlines is legally immaterial to the judgment of South-

west I as affirmed by this Court. The judgment ad-

dresses the validity under Texas law of the 1968 ordin-

ance, and on that issue no conflict exists between the cities

and the CAB carriers.

The quality of the plaintiff’s litigation in Southwest I

also satisfies due process. A review of the record in that

case reveals that the plaintiffs lost their suit only be-

cause both the district and appellate courts found the

Texas law to be clearly against them.“ The CAB car-

riers have not demonstrated, nor can we find, any de-

ficiency in the performance of the plaintiffs’ counsel.

Consequently, this factor adds no weight that could tip the

scales towards finding a violation of due process.

Several other factors also cut against finding a viola-

tion. First, the district court found as a matter of fact

61 A commentator has criticized the district court decision in this

case in part because “the quality of the representation of the absent

parties claims was left purely to chance.. . This procedure hardly

satisfies the principles inherent in the constitutional guarantee

of due process.” 54 Tex.L.Rev. at 543. This argument disregards

the perspective from which the due process judgment is made. To

the extent that quality of representation is a factor in the due

process balance, its weight corresponds to the actual quality of liti-

gation demonstrated in the first trial. We see nothing in the

record of the Southwest I to indicate any inadequacy in the ad-

vocacy of the plaintiffs’ counsel.

— — —_————a

35a

that lawyers for the CAB carriers closely followed all

of the Southwest litigation and attended the various

hearings in the cases. Second, three of the airlines sub-

mitted amicus briefs to this Court in Southwest I. Their

views on the state law issues therefore received full con-

sideration. Third, the due process balance must include

the damage relitigation would visit upon the judicial

system and Southwest. As discussed above,” relitigation

would constitute a blatent disregard for the decision of

this Court and for the judgment of the federal district

court in Southwest I. It would damage the public’s in-

terest in the most efficient allocation of judicial resources

in both the state and federal systems of justice. It would

impose substantial relitigation costs upon Southwest. It

would threaten the rights granted Southwest by the

Southwest I judgment. And finally, it would subject

Southwest to the possibility of conflicting judgments.

Denial of the opportunity to bring a suit raises a seri-

ous due process question. We conclude, however, that

the factors against allowing the carriers to sue outweigh

the carriers’ interests in relitigation. Preclusion of their

private enforcement of a public ordinance does not vio-

late due process when their legal interests were more

than adequately represented by the public authorities that

promulgated the ordinance and had the primary re-

sponsibility to enforce it.

V. CONCLUSION

This is the eighth time in three years that a federal

court has refused to support the eviction of Southwest

Airlines from Love Field. Precisely worded holdings

and deference to state authorities by the federal judiciary

have only generated more suits, appeals, and petitions

for rehearings. Once again, we repeat, Southwest Air-

62 See text at notes 22-23.

36a

lines Co. has a federally declared right to the continued

use of and access to Love Field, so long as Love Field

remains open. The narrowly drawn preliminary injunc-

tion of the district court correctly protects that right. It

does so without violating principles of federalism, the

federal law of res judicata, or the dictates of due process.

The judgment of the district court is

AFFIRMED.

APPENDIX B

UNITED STATES DISTRICT COURT,

N. D. Texas, Dallas Division

No. CA 3-75-0340-C

SOUTHWEST AIRLINES Co., PLAINTIFF,

TEXAS AERONAUTICS COMMISSION, INTERVENOR

TEXAS INTERNATIONAL AIRLINES, INC., et al.

June 5, 1975

OPINION

WILLIAM M. TAYLOR, Chief Judge.

Plaintiff Southwest Airlines Co. (Southwest) applies

to this court to enjoin defendants from undertaking to

relitigate in a suit pending in a state district court of

Travis County, Texas, certain rights and public duties

previously litigated and determined by this court. The

defendants are Texas International Airlines, Inc. (Texas

International or T.I.); Delta Air Lines, Inc. (Delta) ;

American Airlines, Inc. (American); Braniff Airways,

Inc. (Braniff) ; Ozark Air Lines, Inc. (Ozark) ; Frontier

Airlines, Inc. (Frontier); Continental Air Lines, Ince.

(Continental) ; Eastern Air Lines, Inc. (Eastern), which

airline defendants are sometimes hereinafter collectively

referred to as CAB carriers or “signatory airlines”, and

the City of Fort Worth, Texas (Fort Worth); City of

Dallas, Texas (Dallas), and Dallas-Fort Worth Regional

Airport Board (Airport Board). Texas Aeronautics Com-

mission (TAC) has intervened as a plaintiff.

On March 21, 1975, this court, on sworn allegation that

defendants intended to rush to trial and judgment in the

Austin suit, restrained and enjoined defendants from

prosecuting that portion of the state court suit pending

in Austin, Texas, which attempted to exclude Southwest

Airlines from Love Field while Love Field remains open

and from otherwise directly or indirectly interfering with

the judgment of this court-rendered on May 11, 1973.

Plaintiff's application for preliminary injunction pending

final trial was heard on April 3, 1975, with notice to and

appearance by the defendants. By letter dated May 15,

1975, the court advised all counsel of record that pending

final trial defendants would be enjoined “from relitigat-

ing in state court issues which had previously been liti-

gated, determined and adjudicated by this court affecting

the right of Southwest Airlines to use Love Field.” De-

fendants Continental, Dallas, Braniff, Regional Airport

Board, and T. I., individually, and Delta American, Fron-

tier, Ozark and Eastern, collectively, have filed motions

to dismiss, asserting various grounds therefor such as

lack of federal question jurisdiction, lack of diversity,

abstention, unsettled questions of state law, and attempt

by Southwest to secure an interlocutory appeal from an

adverse ruling in state court. The court is of the opinion

that such motions and grounds stated therefor are wholly

without merit and are denied for the reasons hereinafter

stated.

A history of this litigation made at the April 3, 1975,

preliminary injunction hearing, and as appears from ju-

dicial notice which this court can take of its own records,

is appropriate.

In 1972, in Cause 3-5927-C, the City of Dallas, Texas,

the City of Fort Worth, Texas, and the Dallas-Fort Worth

Regional Airport Board sought declaratory judgment de-

claring their right under federal and state law to ex-

clude Southwest, a purely intrastate air carrier, from

Love Field on and after the opening of the new Dallas-

Fort Worth Regional Airport. Defendant Southwest an-

swered and counterclaimed against the Cities and the

Regional Airport Board, seeking a declaration of its right

under federal and state law to remain at Love Field and

an injunction to protect that right. On May 11, 1973, in

that case, hereinafter referred to as Southwest I, this

court entered an order declaring that plaintiffs therein

“could not exclude Southwest Airlines Co. from the use of

Love Field, Dallas, Texas, and its airport facilities so long

as Love Field remains open.” An exhaustive opinion dis-

cussing all matters raised by the parties was filed on June

21, 1973, and at the end of that opinion this language was

used: “As the Court is confident that Plaintiffs will abide

by its ruling in this case and not attempt to interfere

with or burden Southwest’s right to use Love Field, an

injunction to enforce its decree is deemed unnecessary.”

That opinion appears in 371 F.Supp. 1015, and reference

is made thereto. That case was appealed to the Court of

Appeals for the Fifth Circuit.

Braniff, which was competing with Southwest for in-

trastate commuter traffic between Houston, Texas, San

Antonio, Texas, and Dallas, Texas, continued to operate

flights out of Love Field even after the new Dallas-Fort

Worth Regional Airport opened for business in January

1974. Texas International secured from state court an

injunction authorizing its operation of intrastate flights

out of Love Field so long as Braniff remained at Love

Field.

While Southwest I was still on appeal and before the

Fifth Circuit had rendered its judgment, the City of Dal-

las adopted Ordinance No. 14505 by which it sought to

exclude all commercial airlines from Love Field, making

it an offense for certificated airlines to land at Love Field

and levying a fine of $200 per landing or takeoff. South-

west filed suit against Dallas in Cause 3-73-344-C, pend-

ing in this court, to enjoin the enforcement of that ordi-

nance. Since the ordinance flew squarely in the face of

the order entered by this court in Southwest I, prelimi-

nary injunction was granted. That case is hereinafter

referred to as Southwest IJ. Braniff intervened in that

case, likewise seeking to enjoin the enforcement of Ordi-

nance 14505 and the Court likewise enjoined the enforce-

ment of the ordinance insofar as Braniff was concerned.

On May 31, 1974, the Court of Appeals for the Fifth

Circuit affirmed the judgment of this court. On June 24,

1974, it denied petitions for rehearing and rehearing en

banc. On December 17, 1974, the Supreme Court denied

petition for writ of certiorari (43 USLW through 4339)

and thereafter on January 28, 1975, (43 USLW 3416),

overruled the motion for rehearing of that denial. The

opinion of the Court of Appeals for the Fifth Circuit

appears in 494 F.2d 773.

It is interesting to note and worthy of comment here

that Delta, American and Continental apparently recog-

nized mutuality of interest in the outcome and filed ami-

cus curiae briefs in the Fifth Court supporting the posi-

tion of the Cities of Dallas and Fort Worth and the Re-

gional Airport Board. Some of the same attorneys repre-

senting those parties have appeared in this court in South-

west II, as well as in the state court case pending at Aus-

tin, Texas, and in the case at bar.

Further identification of the airlines that are defend-

ants here and their relation to and interest in all of this

litigation seems to be in order at this point.

In early 1970, in order to insure that sufficient reve-

nues would be available to maintain and operate the

Regional Airport and meet all debt service requirements

on the Airport Revenue Bonds, Regional Airport Board

executed Letters of Agreement with the eight CAB-certi-

ficated air carriers then serving the Dallas-Fort Worth

area. The air carriers executing that Letter Agreement

are defendants here: American, Braniff, Continental,

Delta, Eastern, Frontier, Ozark and T.I., hence, their des-

ignation herein also as “signatory airlines”.

By these Letter Agreements the signatory airlines

agreed to move all of their certificated services serving

the Dallas-Fort Worth area to the Regional Airport to

the extent required under the terms of the 1968 Regional

Airport Concurrent Bond Ordinance. Each of the CAB

carriers contracted to pay rentals, fees, and charges for

its use, operations and occupancy of the D-FW Airport in

an amount which together with rentals, fees and charges

paid by other airlines and others using the airport prem-

ises and facilities would be sufficient to produce total

gross revenue required to satisfy the Airport Board’s ob-

ligations to collect each year monies sufficient to maintain

and operate the Airport plus 1.25 times the debt service

requirements of the Regional Airport Revenue Bonds plus

an amount equal to any other obligations required to be

paid from the revenues of the Airport.

After some three and one-half years of hearings, litiga-

tion and appeals occasioned by competing CAB-certificated

carriers, on June 18, 1971, Southwest commenced its pure-

ly intrastate operations between Love Field, Dallas, and

Houston and San Antonio, having consistent!y refused to

execute the Letter Agreement. By virtue of these Letter

Agreements it would appear that defendant CAB carriers

are in privity with defendants Dallas, Fort Worth and

Airport Board.

The history of the D-FW/Love Field controversy was

further complicated in 1974 when the two Cities brought

an action in the Fort Worth Division of the United States

District Court for the Northern District of Texas against

T.L, Braniff and American Airlines. Initially the two

Cities sought relief against American for its refusal to

pay certain landing fees at D-FW. They also claimed

relief against Braniff and T.I. for operating at Love

Field in violation of the 1970 Letter Agreements. In

March 1974, Delta intervened as plaintiff in that case and

also sued Braniff and T. I. for damages due to increased

landing fees at D-FW allegedly resulting from illegal use

of Love Field by those two airlines. Procedural difficul-

ties immediately developed when T.I. moved to dismiss

the original complaint on grounds that neither federal

question nor diversity jurisdiction existed. The alleged

jurisdictional deficiencies triggered four of the parties to

that case to voluntarily file a dismissal motion on March

22, 1974. Dismissal order was entered on March 26, 1974,

and on the same day Delta and American brought anoth-

er suit, this time suing Braniff, Dallas and Fort Worth

for alleged breach of the 1970 Letter Agreements. Texas

International was excluded as a defendant to that com-

plaint. However, Fort Worth, by way of third-party com-

plaint, brought in T.I. as a third-party defendant, claim-

ing ancillary jurisdiction in the federal court.

Shortly after these procedural maneuverings, this court,

believing that it was in the best interest of all concerned

—the airlines, the Cities and the public generally, not to

mention the interest of justice and conservation of judi-

cial time—consolidated the Fort Worth litigation into

Southwest’s suit against the City of Dallas. This court

was of the opinion that a more proper and just resolution

of the controversy could be effected. Toward that end this

court advised CAB, Federal Aviation Commission (FAA),

TAC, and the CAB carriers of the pending consolidated

litigation and requested their participation. None of the

CAB carriers except those already named in the lawsuits

actively participated or intervened but did observe the

proceedings through courtroom appearances of their rep-

resentatives. Texas International again moved to dismiss

the case, alleging that diversity citizenship between the

parties had been improperly and collusively invoked in vio-

lation of 28 U.S.C. 1359. This motion to dismiss was

denied but the court certified it to the Fifth Circuit as

a controlling question of law under 28 U.S.C. 1292(b).

—— cern Rennes ee

Southwest moved for summary judgment in its portion of

Southwest II and the court thereupon severed the ordi-

nance dispute from the case originally filed in the Fort

Worth Division of this court and on February 11, 1975,

permanently enjoined the City of Dallas from enforcing

Ordinance 14505 against Southwest. Within two weeks

of that order all the remaining parties voluntarily dis-

missed their respective causes of action, undertaking

thereby to terminate all of the South st II airport con-

troversy insofar as the federal cousts were concerned.

The same controversy still raged, however. The parties

simply changed the forum from the federal courts where

they had enjoyed little success to a state court where

they apparently hoped for a different result and are now

pursuing their respective claims in Cause No. 227,349,

styled Texas International Airlines, Inc., v. Dallas-Fort

Worth Regional Airport Board, et al, in the 200th Dis-

trict Court, Austin, Texas.

This court is fully aware of the Anti-Injunction Stat-

ute, to wit, Title 28, Section 2283, United States Code,

which provides:

A court of the Umied States may not grant an in-

junction to stay proceedings in a State court except

as expressly authorized by Act of Congress, or where

necessary in aid of it jurisdiction, or to protect or

effectuate its judgments.” (Emphasis added)

This court is of the opinion that the question presented

here comes squarely within the emphasized part of that

statute.

A reading of the pleadings thus far filed in the Austin

suit clearly demonstrates that a proper alignment made

according to every one’s true interest would have all the

parties except TAC suing Southwest. Texas International

and some of the other parties (except the Cities and Re-

gional Airport Board which have so far kept a low pro-

file in this case) contended that the relief desired in the

Austin case encompasses something altogether apart from

Southwest’s eviction from Love Field. However, para-

graph 15 of T. I.'s petition purposes that the Austin

court interpret the legal meaning of the Concurrent Bond

Ordinance provision 2.1(g) defining “certificated air car-

rier service” and 9.5(A) stating the Love Field “phase-

out” covenants insofar as they relate to Southwest’s use

of Love Field, all of which this court has previously

passed upon. The petition also asserts that TAC’s au-

thority to certificate Southwest’s flights into Love and to

issue Minute Order No. 22 is properly a subject for re-

investigation by the Austin court which was, of course,

before this court and before the Fifth Circuit. The Fifth

Court, speaking through Judge Gee in this case, said:

“The power to designate ‘routes’ has, from times

antedating any relevant to this case, been confided to

that Commission. It deems self-evident that points

of origin and destination are part of every ‘route,’

particularly short-haul ones. Indeed, to hold that a

city could deny the use of public facilities to an air-

line certificated to it by the Texas Aeronautics Com-

mission would cripple, if not destroy, the Commis-

sion’s powers to control intrastate routes. Any city

having only municipal airports would have an abso-

lute veto power over routes to and through it—

routes which involve the convenience and necessity

of the state public, not merely that of the city. And

a partial veto would exist even where other facilities

existed. Southwest has been certificated by the Com-

mission into Love Field and directed to continue

service there until told otherwise. At a minimum,

this constitutes Texas’ exercise of its power to deter-

mine that Southwest’s is not an improper use of

Love Field. Dallas being Texas’ creature, it may not

declare otherwise. The cities’ road to relief passes

by the Texas Aeronautics Commission. They cannot

reroute it by enacting ordinances in varying forms

of words on a subject which is beyond their powers.

494 F.2d at 777.

In making this ruling the court relied upon the holding

of the Supreme Court of Texas in Texas Aeronautics

Commission v. Braniff Airways, Inc., 454 S.W.2d 199

(Tex. Sup. 1970).

By its brief filed in this case T.I. asserts that the

principal issues raised in the Austin case include (1)

the validity and meaning of the term “certificated air

carrier service” as used in the 1968 Regional Airport

Concurrent Bond Ordinance, (2) the right of T. I. to

enforce the 1968 Bond Ordinance against those entities

which violated its terms, (3) whether TAC’s Minute

Order No. 22 was intended to or may be construed to

regulate the operation of Love Field, (4) the statutory

power and authority of TAC to enact Minute Order No.

22, and (5) the validity of the financing agreement be-

tween T.I. and the Airport Board in the event that 1968

Bond Ordinance is found to be invalid or ineffectual to

remove all scheduled air carrier service from Love Field

which operate in violation of its terms. A casual read-

ing of this court’s opinion and order as well as the

opinion of the Fifth Court would demonstrate that T. I.

simply seeks to relitigate many of the propositions of

law already determined by this court.

Additionally, one of the attorneys for Continental ar-

gued to Judge Matthews of the Austin court: .. . Mr.

Kelleher in his brief and to some extent in his argu-

ment talks about that this is an effort to undermind

[sie] the federal court decision. That is not really an

accurate characterization. Your Honor. This is a frontal

attack on it. The word undermind [sic] implies some-

thing covert about it. We come in with flags flying.”

(Emphasis added). See T fendant T.I.’s Exhibit No. 15

introduced at the April 3, 1975, hearing in this court.

That part of the argument was made in the hearing

on Defendant Southwest’s pleas in abatement filed in

the Austin court and which pleas were overruled by Judge

Matthews by order dated February 21, 1975.

10b

The concepts of cooperative federalism and comity

although providing reason for federal courts to hesitate

interfering with state court proceedings nevertheless do

not prevent the undesirable friction created by the two

court systems when a state court is allowed to reinter-

pret and perhaps upset a binding federal court judgment.

Jacksonville Blow Pipe Co. v. Reconstruction Finance

Corporation, 244 F.2d 394 (5th Cir. 1957); American

Radio Association v. Mobile Steamship Association, 483

F.2d 1 (5th Cir. 1973). It seems appropriate here to

point out also that the “exquisite friction” produced by

collisions and near collisions between state and federal

authority are most frequently produced when disgruntled

litigants hop from one court to the other in hope of

securing a contrary result. The Cities, the Airport Board

and all of the airlines, whether actually parties in South-

west II or interested observers cheering on the efforts

of the Cities and the Airport Board in Southwest I, are

now on the playing field seeking a relitigation in state

court of issues already determined by this court.

Ever since this court decided in Southwest I, some or

all of the defendants have insisted that this court should

abstain on the grounds that only state affairs were in-

volved. It is to be recalled that the Cities and the Air-

port Board resorted to this court because a federal ques-

tion was involved and this court proceeded to hear and

decide that question as well as other questions related

to it. It was even suggested that this court abstain in

Southwest II where Dallas had adopted an ordinance

in direct contravention of this court’s judgment in South-

west I, I share the concern of all of the federal courts

for the values of federalism and comity which in normal

circumstances preclude federal court intervention with

state proceedings and the abstention doctrine as ex-

pounded in Railroad Commission of Texas v. Pullman

Company, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed 971

—— ee ee

11b

(1941) ; Huffman v. Pursue, Ltd., (Supreme Court) 420

U.S. 592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975) ; Younger

v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669

(1971), as well as Dresser Industries v. Insurance Com-

pany of North America, 358 F.Supp. 327, aff'd 475 F.2d

1402. In citing Dresser to this court, defendants wholly

overlook the facts of that case. In that case there was

no judgment nor order of the federal court involved.

The parties there were not seeking to relitigate an issue

already determined in the federal court. The plaintiff's

petition in Dresser sought from this court a declaratory

judgment in effect telling the state court how to there

try the pending case. In my opinion the general pro-

hibition of Huffman v. Pursue and Younger v. Harris

are not apposite in this case since an injunction against

the trial in state court would fall within the “protec-

tive jurisdiction” exception of the Anti-Injunction Act.

For the same reasons the abstention doctrine can have

no application here.

Plaintiff Southwest relies on the doctrines of “virtual

representation”, “res judicata” and “collateral estoppel”.

In support of its “virtual representation” doctrine,

plaintiff cites Berman v. Denver Tramway Corporation,

197 F.2d 946 (10th Cir. 1952). In that case Berman,

a resident of the City and County of Denver, brought

suit in state court seeking to enforce city ordinances

limiting the fares to be charged by the local company.

Denver Tramway Corporation, defendant in that proceed-

ing, filed an action in federal court for an injunction

against the state court proceeding on the ground that

it constituted an impermissible relitigation of matters

determined twenty-four years previously in a federal

suit between Denver Tramway and the City and County

of Denver. In that prior litigation the federal court had

found the ordinances in question to be invalid and had

permanently enjoined the local government from enforc-

12b

ing them. The federal district court enjoined Berman

from prosecuting the state court action, finding it to be

the relitigation of a matter finally settled in the prior

federal suit. The Tenth Circuit, in response to Berman’s

claim that the district court had been without jurisdic-

tion, said:

“A federal court is clothed with power to secure

and preserve to parties the fruits and advantages

of its judgment or decree. In the appropriate exer-

cise of that power, the court has jurisdiction through

means of a supplemental proceeding to enjoin the

relitigation in a state court of a matter litigated,

determined, and adjudicated by its valid decree reg-

ularly entered, if the result of the relitigation would

be to destroy the effect of the decree rendered in the

United States Court. And jurisdiction of the court

to entertain such a supplemental proceeding is not

lost by the intervention of time or the discharge

of the res from the custody of the court. A sup-

plemental proceeding of that kind may be enter-

tained where the relitigation in the state court would

result in nullifying the judgment or decree of the

United States Court, or would render doubtful the

rights of the parties in respect to the effectiveness

of such judgment or decree. (Citing cases.) And

for the purpose of protecting the effectiveness of

its judgment or decree, a United States Court may

entertain an independent action rather than a sup-

plemental proceeding in the original action to en-

join the relitigation in a state court of matters al-

ready fully adjudicated in the United States Court.

(Citing authority.) Viewed in the light of these

cases, it is clear that for the purposes of effectuat-

ing and protecting the final decree rendered in 1924,

the court had jurisdiction to entertain the supple-

mental proceeding to enjoin Berman from relitigat-

13b

ing in the state court issues and controversies pre-

viously litigated and adjudicated in such final de-

cree.”

Defendants argue that Berman is old, worn-out, and no

longer viable authority for this court’s consideration

Defendants, however, overlook the fact that on April

21, 1975, the Fifth Court bridged this gap in Aerojet-

General Corporation v. Askew, 511 F.2d 710, in which

the court determined the rights of a state agency to

contest the title to certain lands before the Florida

Supreme Court after a United States District Court and

the Circuit Appeals Court had already ruled on the sub-

ject. In upholding the United States District Court

which enjoined mandamus proceedings pending in the

Florida Supreme Court, the Fifth Court said:

“Federal law clearly governs the question whether

a prior federal court judgment based on federal ques-

tion jurisdiction is res judicata in a case also

brought, as this one was, under federal question

jurisdiction . . . Under the federal law of res ju-

dicata, a person may be bound by a judgment even

though not a party if one of the parties to the suit

is so closely aligned with his interests as to be his

virtual representative.” (Emphasis added.)

The fact that the CAB carriers are neither private citi-

zens of Texas nor affiliated governmental bodies is recog-

nized; however, as above stated, the 1970 Letter Agree-

ments show the identity and mutuality of interests be-

tween the Airport Board, the Cities, and the airlines.

Defendants’ argument that their private business inter-

ests cannot be analogized to the Denver citizens in the

Berman case is without merit. The economic interests

of the Airport Board, the Cities, and the signatory air-

lines were fully developed before this court in South-

west I and argued before the Fifth Court and rejected

as not being sufficient to justify the “unjust discrimina-

tion“ under the 1958 Federal Aviation Act that would

result if Southwest were evicted from Love Field while

that airport continued its other air service. It seems

obvious that the interests, business or otherwise, of the

CAB carriers were merged into those interests held by

the Cities as enforcers of the public’s right. Whether

a party’s interests in a case are virtually representative

of the interests of a non-party is one of fact for the

trial court.” Aerojet-General v. Askew, supra.

The condition of the CAB carriers is candidly and

clearly expressed at page 17 of the “Brief in Opposition

to Preliminary Injunction on Behalf of Delta Air Lines,

Inc., American Airlines, Inc., Frontier Airlines, Inc.,

Ozark Air Lines, Inc., and Eastern Air Lines, Inc.“:

„. . . the CAB carriers. . . are therefore entitled to seek

judicial enforcement of the (1968 Bond) Ordinance.” It

is difficult to understand how defendant airlines can

bootstrap themselves to claim some right or power greater

_than Dallas and Fort Worth which enacted the 1968

Ordinance. The CAB carriers can have no contract right

with Southwest; they have no property right in Love

Field; they have no order from CAB or TAC. The mu-

tuality of interests of the CAB carriers with the Cities

and the Airport Board must be held to have been estab-

lished by the execution of the 1970 Letter Agreements.

The right of the CAB carriers can only be a derivative

right, and they take the 1968 Ordinance as they find it.

The doctrine of “collateral estoppel” almost appears

to be another name for the doctrine of “virtual repre-

sentation”. The doctrine of “collateral estoppel” has also

been reviewed and applied by the Court of Appeals for

the Fifth Circuit in several cases in recent years. As

above stated, the 1970 Letter Agreements created a

“privity relationship” between the Airport Board and

the Cities on the one hand and the CAB airlines on the

other. As related to the collateral estoppel doctrine,

—

— tpee

— u

15b

“privity” often refers to a non-party’s interests in some

litigation being so elosely aligned or identified with the

actual litigant’s interests that the latter in fact represent

the same legal rights. The most recent case by the Fifth

Court is International Association of Machinists and

Aerospace Workers, et al, v. Franklin W. Nix, 512 F.2d

125 (1975), in which the United States District Court at

Atlanta enjoined further prosecution of certain counts

of a state court action and Judge Gewin, in affirming

the judgment of the trial court, made an exhaustive

analysis of the authorities, including the “relitigation

exception” of the Anti-Injunction Statute as well as the

principle of collateral estoppel. Other cases by the Fifth

Court include Cauefield v. Fidelity and Casualty Com-

pany, 378 F.2d 876 (5th Cir. 1967), cert. denied 389

U.S. 1009, 88 S.Ct. 571, 19 L.Ed.2d 606 (1967), in which

the doctrine was held applicable to a non- party; Segu-

ros Tepeyac, S.A., Compania Mexicana v. Jernigan, 410

F.2d 718; Wilson v. Retail Credit Co., 474 F.2d 1261

(5th Cir. 1973); Donelon v. New Orleans Terminal Co.,

474 F.2d 1108 (5th Cir. 1973); Cheramie v. Tucker,

493 F.2d 586 (5th Cir. 1974) (see footnote 10 as to non-

parties).

This court is of the opinion that under the doctrine of

“virtual representation”, “res judicata’, “collateral es-

toppel”, by whatever label we call it (“that which we

call a rose—by any other name would smell as sweet”),

1This case is a graphic illustration of the important interests

which estoppel of non-parties may serve. It seems obvious that in

a transaction involving 41 potential plaintiffs who might litigate

identical claims against the same alleged tort feasor, the defendant’s

interests in avoiding vexatious, lengthy and costly relitigation of

the issues as well as the judiciai system’s interest in economy and

avoiding inconsistent results are extremely powerful.

2In which Judge Goldberg heli that a federal district court

properly enjoined Louisiana Parish officials from proceeding with a

state court suit where the injunction was needed in aid of the

federal court’s jurisdiction.

16k

and the facts of this case, plaintiff Southwest is entitled

to an injunction enjoining and restraining defendants

from relitigating in state court or in any other court ac-

tion the validity, effect or enforceability of the 1968 Re-

gional Airport Concurrent Bond Ordinance of the Cities

of Dallas and Fort Worth insofar as it may affect the

right of plaintiff Southwest Airlines to the continued use

of and access to Love Field so long as Love Field re-

mains open. As was so aptly said in Wilson v. Retail

Credit Co., supra,

“Every citizen is entitled to his day in court; how-

ever, our judicial system was not designed as an

experimental laboratory to license losing parties to

bring vexatious and repetitive claims based on the

same transaction.”

Order granting preliminary injunction will be filed

herewith.

APPENDIX C

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 73-2478

THE CITY OF DALLAS, TEXAS, THE CITY OF FORT WoRTH,

TEXAS, AND THE DALLAS-FORT WORTH REGIONAL AIR-

PORT BOARD,

Plaintiffs-Appellants,

SOUTHWEST AIRLINES Co.,

Defendant-A ppellee,

and

TEXAS AERONAUTICS COMMISSION,

Intervenor-A ppellee.

May 31, 1974

Rehearing and Rehearing En Banc

Denied June 24, 1974

Before ALDRICH, Senior Circuit Judge,* and BELL

and GEE, Circuit Judges.

GEE, Circuit Judge:

This is a suit for declaratory judgment brought by

the cities of Dallas and Fort Worth and their joint

agent, an airport board created by intercity compact,

to determine their right to close Dallas’ Love Field to

scheduled passenger service by a state-certificated, in-

* Hon. Bailey Aldrich, Senior Circuit Judge of the First Circuit,

sitting by designation.

trastate commuter line, Southwest Airlines Co. From a

judgment that, so long as Love Field remains open as

an airport, appellants may not exclude Southwest from

it, plaintiffs appeal. We affirm.

Dallas and Fort Worth, large cities in north-central

Texas about thirty miles apart, have been rivals over the

years. Perhaps partly as a result of this, each developed

its own airport. These lie more or less between the two

cities and are themselves only twelve miles apart. In

consequence of federal Civil Aeronautics Board hearings

commenced in 1962, the cities were given to understand

that, if they were unable to agree within a reasonable

time on a single port for interstate air service to the

Dallas-Fort Worth area, the CAB felt obliged to designate

one.

The handwriting being thus upon the wall, the cities

found themselves, after all, able to agree. In due course,

and with CAB blessing and encouragement, they con-

structed a new airfield and persuaded all interstate,

CAB-certificated carriers then serving the area to agree

to move their services there.’ Southwest, an intrastate

commuter line certificated by the Texas Aeronautics Com-

mission to serve Love, did not agree and has refused to

move. By various ordinances, the validity and effect of

which is our concern here, Dallas has sought to compel

Southwest to vacate Love Field.’

1 Despite its contract, Braniff has refused to close operations from

Love, and Texas International has now reopened there under the

umbrella of a state-court injunction.

2 The major ordinance which was before the court below and on

which it based its decision was the 1968 Regional Airport Concur-

rent Bond Ordinance. This provides, in pertinent part, that the

cities are to phase out Certificated Air Carrier Services to their

existing airfields such as Love to the extent “legally permissible”

and not in violation of “presently outstanding legal commitments or

covenants prohibiting such action.” The ordiance defines the opera-

tions to be phased out as follows:

[Footnote continued on page 3c ]

—— 2. ee ——

—

2 [Continued ]

“‘CERTIFICATED AIR CARRIER SERVICES’ mean air-

craft operations of the following types when operating on a

regular and continuing basis, to wit:

“(1) interstate services conducted by commercial air carriers

according to published flight schedules and holding certificates

of public convenience and necessity or similar evidences of

authority issued by the Civil Aeronautics Board of the United

States of America or any successor agency thereto:

“(2) services conducted by foreign air carriers according

to published flight schedules holding permits or similar evi-

dences of authority issued by the Civil Aeronautics Board or

any successor agency thereto or by any other agency or de-

partment of the United States of America; and

“(3) intrastate services conducted by commercial air carriers

according to published flight schedules and holding certificates

of public convenience and necessity or similar evidences

of authority issued by the Texas Aeronautics Commission of

the State of Texas or by any successor agency.

“It is provided, however, that this term shall not include

services provided by commercial ‘air taxi’ operators meeting the

requirements for examination provided from time to time by any

rules and regulations of the Civil Aeronautics Board, by the

Texas Aeronautics Commission or by any other agency of the

United States of America or the State of Texas having juris-

diction to provide such exemptions.”

Southwest urges, and the court below found, that the ordinance

is artfully worded to eliminate its intrastate scheduled service

only, since Texas does not regulate intrastate service of CAB-

certificated interstate carriers and the ordinance does not require

that these be moved. This seems correct, since none of the intrastate

runs of Southwest’s interstate competitors is certificated by the

TAC and hence (3) of the above ordinance, while applying to

Southwest, has no effect on them. At oral argument, this Court

commented somewhat on this curious and unpleasant feature of the

ordinance. Thereafter, both cities enacted and furnished to us

ordinances closing their individual municipal airports to a broader

range of uses. Dallas’ provides, in pertinent part:

“From and after May 1, 1974, Dallas Love Field and Redbird

Airport will be closed to all regularly scheduled flights of air-

craft that transport passengers or property for hire, except

regularly scheduled flights of aircraft that transport passengers

or property for hire between only Dallas Love Field or Red-

bird Airport and Dallas/Fort Worth Regional Airport.”

Even so, we note that charter passenger flights by any size or

type of plane remain untouched.

Were Love Field a private airfield, constructed without

public funds, it may be assumed that its owner could

exclude anyone he liked. Love, however, received substan-

tial federal assistance and therefore must “. . be avail-

able for public use on fair and reasonable terms and with-

out unjust discrimination, . . .” 49 U.S.C. § 1718 (1),

formerly 49 U.S.C. § 1110. In addition, the Supreme

Court of Texas long ago held that a Texas Home Rule

municipality might not, by denying to common carriers

use of its streets built in part at state and federal ex-

pense, interfere with their use of state highways passing

through the city. Such actions were seen, in their extra-

municipal effect, as going beyond the power of local gov-

ernment. City of Arlington v. Lillard, 116 Tex. 446, 294

S. W. 829 (1927); City of Fort Worth v. Lillard, 116 Tex.

509, 294 S.W. 831 (1927). The analogy seems close and

valid.

Appellant cities urge that reasonable classification of

uses—as distinguished from selection of users—does not

constitute unjust discrimination. We assume, without

deciding, that this is so.*

If so, the question becomes, as to Texas intrastate

flights, who is to make these just discriminations by use

classifications? * It has a simple answer. In a recent de-

See Aircraft Owners & Pilots Ass'n v. Port Authority of N. V.,

305 F.Supp. 93 (E. D. N. v. 1969).

If it is not so, then clearly neither Dallas nor any other authority

can require Southwest to move from Love so long as it remains

open to any use by aircraft.

As to interstate flights, of course it would be the CAB, which

appellants admit is authorized to, and does, designate points of

origin and destination. The CAB has not, however, undertaken

to assert jurisdiction, if any it has, over purely intrastate carriers

such as Southwest, and indeed appears presently to acquiesce in

state licensing of intrastate portions of interstate routes. See

People v. Western Airlines, Inc., 42 Cal.2d 621, 268 P.2d 723, appeal

dismissed, 348 U.S. 859, 75 S.Ct. 87, 99 L.Ed. 677 (1954).

—— — 4 —

G am:

cision, the Texas Supreme Court had occasion to consider

the powers of the Texas Aeronautics Commission. It first

correctly noted:

In all matters of flying safety, such as the air

worthiness of the aircraft and the skill of its oper-

ators, Air Southwest would be regulated by the Fed-

eral Aviation Agency. All Air Southwest aircraft

and pilots would have federal certificates. However,

by flying only in intrastate commerce and by not in-

terlining with any CAB certificated carrier, making

no connection for passengers or baggage, Air South-

west will not require a certificate from the federal

agency in charge of economic regulations, the Civil

Aeronautics Board. Congress has not pre-empted the

field of the economic regulation of air carriers, and

the states have the power to act so long as there is

no conflict with federal law. 49 U.S.C.A. § 1301(3)

and (10), and § 1371; Western Air Lines Inc. v. Cal-

ifornia, 42 Cal.2d 621, 268 P.2d 723 (1954), cert.

denied, 348 U.S. 859, 75 S.Ct. 87, 99 L.Ed. 677; see

Island Airlines, Inc. v. C.A.B., 331 F.2d 207 (9th

Cir. 1964) ; Comment, 47 Texas L.Rev. 275 (1969).

Our Brethren of the District of Columbia Circuit emphat-

ically agree and have so held in a case involving this gen-

eral controversy. Texas Int'l Airlines, Inc. v. C.A.B., 154

U.S.App.D.C. 113, 473 F.2d 1150 (1972). And having

determined that regulatory power over Texas intrastate

air carriers still reposed with the State of Texas, the Tex-

as Court further noted:

The decision as to where the public interest lies

and what air service is best for Texas must be made

by the Texas Aeronautic Commission.

Texas Aeronautics Com’n v. Braniff Airways, Inc.,

454 S.W.2d 199 (Tex. Supp.1970).

The power to designate “routes” has, from times ante-

dating any relevant to this case, been confided to that

Commission.* It seems self-evident that point of origin

and destination are part of every “route,” particularly

short-haul ones.’ Indeed, to hold that a city could deny

the use of public facilities to an airline certificated to it

by the Texas Aeronautics Commission would cripple, if

not destroy, the Commission’s powers to control intra-

state routes.“ Any city having only municipal airports

would have an absolue veto power over routes to and

through it—routes which involve the convenience and ne-

cessity of the state public, not merely that of the city.

And a partial veto would exist even where other facili-

ties existed. Southwest has been certificated by the Com-

mission into Love Field and directed to continue service

there until told otherwise. At a minimum, this consti-

tutes Texas’ exercise of its power to determine that South-

west’s is not an improper use of Love Field. Dallas being

Texas’ creature, it may not declare otherwise.“ The cities’

* Art. 46c-6, sub. 3, Vernon’s Ann. Texas St., as amended.

The Attorney General of Texas has ruled that the Commission’s

powers extend to routes entirely within one city. Op.Att’yGen’l

of Texas, September 2, 1969. Here, little but designating points of

take-off and landing is involved.

Cf. City of Arlington v. Lillard, 116 Tex. 446, 294 S.W. 829

(1927); City of Fort Worth v. Lillard, 116 Tex. 509, 294 S. W. 831

(1927). Town of Ascarate v. Villalobos, 148 Tex. 254, 223 S.W.2d

945 (1949), is not to the contrary in upholding, as it does, reason-

able regulation by the municipality of pickup and discharge points

within the town for passengers of state-certified buslines.

Dallas is a Home Rule City. The Texas Constitution, Art. 11,

§ 5, provides that no ordinance of such a city may be inconsistent

with the State’s general laws. Such a law is the Texas Municipal

Airports Act, which grants to municipalities power to establish

and control the use of airports, but provides in the same breath:

“No ordinance, resolution, rule, regulation or order adopted

by a municipality pursuant to this Act shall be inconsistent

with, or contrary to, any Act of the Congress of the United

road to relief passes by the Texas Aeronautics Commis-

sion. They cannot reroute it by enacting ordinances in

varying forms of words on a subject which is beyond their

powers.“

Other grounds are urged in support of the judgment of

the court below, including the asserted diseriminatory

effect on Southwest of the 1968 Regional Airport Concur-

rent Bond Ordinance noted at footnote 2 above and the

effect of covenants in outstanding airport revenue bonds

that Love will be kept open for scheduled airlines and

general use so long as the bonds are unpaid. In view

of our disposition of the case, we think it unnecessary to

discuss these.

Affirmed.

States or laws of this State, or to any regulations promulgated

or standards established pursuant thereto.” (footnote omitted;

emphasis added) Art. 46d-7, V. A. T. S.

10 The question whether an ordinance entirely closing Love Field

to air traffic would be within Dallas’ powers is not presented here,

and we, of course, imply no view upon it.

—7

APPENDIX D

UNITED STATES DISTRICT COURT

N.D. TEXAS

DALLAS DIVISION

No. CA 3-5927-C.

THE CITY OF DALLAS, TEXAS ET AL.,

Plaintiffs,

SOUTHWEST AIRLINES COMPANY,

Defendant,

TEXAS AERONAUTICS COMMISSION,

Intervenor Defendant.

June 21, 1973.

MEMORANDUM OPINION

WILLIAM M. TAYLOR, Jr., Chief Judge.

This case involves the right of access of Southwest

Airlines Co. (hereinafter sometimes referred to as

“Southwest”) to Love Field, a public airport owned and

operated by the City of Dallas, Texas. Plaintiffs, the City

of Dallas, the City of Fort Worth, and the Dallas-Fort

Worth Regional Airport Board, seek a declaratory judg-

ment, pursuant to 28 U.S.C. Sec. 2201, declaring their

right under federal and state law to exclude Southwest,

a purely intrastate air carrier, from Love Field on and

after the opening of the new Dallas-Fort Worth Regional

Airport. The Regionai Airport, which is scheduled to

open in the fall of 1973, is a joint undertaking by the

Cities of Dallas and Fort Worth, each of which presently

owns and operates its own airports. Plaintiff, the

gional Airport Board, is an administrative body, created

by contract and agreement between the cities, to which

‘he cities have delegated certain operating powers over

the Regional Airport. In conjunction with their joint

effort on the Regional Airport, the Cities of Dallas and

Fort Worth have convenanted to phase-out all Certificated

Air Carrier Services (as defined in their 1968 Concurrent

Bond Ordinance) at their respective wholly owned air-

ports, including Love Field, to the extent that they may

legally do so, and to transfer such services to the new

Regional Airport upon its completion.

Defendant, Southwest, has answered and counter-

claimed against the Cities and the Regional Airport

Board seeking, pursuant to 28 U.S.C. Sec. 2201 and

Sec. 2202, a declaration of its right under federal and

state law to remain at Love Field and an injunction to

protect that right. The Texas Aeronautics Commission

(hereinafter sometimes referred to as the TAC“), the

state agency charged with the economic regulation of

intrastate air carriers, has intervened as a Defendant

in this case, adopting the contentions of Southwest Air-

lines and specifically urging that the attempted ouster

of Southwest from Love Field usurps the TAC’s exclu-

sive regulatory power over intrastate air carriers; is

invalid under state law; and is contrary to, and beyond

the scope of, the powers delegated to Texas Home Rule

cities by the State of Texas.

Jurisdiction in this case is founded on the existence

of a Federal question and the amount in controversy, 28

U.S. C., Sec. 1831; on an act of Congress regulating com-

merce, 28 U.S.C. Sec. 1337; on 28 U.S.C. Sec. 1343 (3)

and (4); and on the pendent jurisdiction of the Court.

The Federal causes of action arise under the Federal

Aviation Act of 1958, 49 U.S.C. Sec. 1301 et seq.; the

Civil Aeronautics Act of 1938, 49 U.S.C., Sec. 401 et seq. ;

the Airport and Airways Development Act of 1970, 4¢

— —ꝙ et a —

U.S. C., Sec. 1701, et seq.; 42 U.S. C., Sec. 1983 and Sec.

1958 (3); and the Fifth and Fourteenth Amendments to

the United States Constitution. The state causes of ac-

tion are based on the Texas Aeronautics Act, Art. 46c-1

et seq., Vernon’s Ann.Civ.St.; on the Municipal Airports

Act, Art. 46d-1 et seq., V.A.C.S.; and on the Texas Con-

stitution. The state causes of action are based on a com-

mon nucleus of operative fact with the Federal causes of

action.

For many years the Cities of Dallas and Fort Worth

were engaged in a fierce, intense and sometimes bitter ri-

valry for the business of commercial aviation and com-

mercial air carriers. Dallas enlarged and improved its

Love Field, which is approximately five to six miles

north-northwest of the downtown business district of the

City and Forth Worth, rather than undertaking the en-

larging and improving of its inadequate Meacham Field,

which is approximately five to six miles north of down-

town Fort Worth, constructed a fine large airport,

now known as Greater Southwest International Air-

port (GSIA), midway between the two cities. The down-

town business districts of Dallas and Fort Worth are

about 31 miles apart, and the two cities with the passage

of time have grown, extended their limits, and in some

places are almost contiguous. Only 12 miles separate

Love Field and GSIA. Serving two airports which were

so close together resulted in unnecessary expense to the

carriers as well as the taxpayers and inadequate and in-

complete air service to both cities. Happily, the two cities

have now joined hands and are well on the way to the

construction of what promises to be the finest airport in

the world. The two cities joined together in the bringing

of the lawsuit. This congenial alliance was not exactly

the result of a shotgun wedding but more than a gentle

nudge was provided by the Federal Government’s Civil

Aeronautics Board, hereinafter sometimes referred to

as CAB, which in August of 1962 instituted an investiga-

tion known as the Dallas-Fort Worth, Texas Regional

Airport Investigation, Docket No. 13959, for the purpose

of determining whether or not the certificates of public

convenience and necessity of interstate airlines under the

CAB’s jurisdiction should be amended so as to designate

a specific airport as the single point through which all

interstate air carrier service to Dallas and Fort Worth

must be provided. Finally, after many hearings, the

CAB in 1964 entered an interim order giving the two

cities a period of 180 days in which to arrive at a volun-

tary agreement to designate the single airport through

which the CAB-regulated carriers would serve the Dallas-

Fort Worth area. It indicated that if the parties were un-

able to agree on the designation of the airport to serve

the area, it would then proceed to issue a final determina-

tion and amend the certificates of the interstate “air car-

riers” under its jurisdiction so as to cause them to serve

either Love Field or Fort Worth’s GSIA. The CAB has

entered no further orders in the investigation and none

of the certificates of the carriers under CAB jurisdiction

have been amended.

Rather than designating an existing municipal airport

to serve the Dallas-Fort Worth area, the cities agreed to

construct and operate a new regional airport to be located

approximately midway between Dallas and Fort Worth

at Grapevine, Texas. Thereafter, on November 11 and

12, 1968, the cities jointly adopted the 1968 Regional

Airport Concurrent Bond Ordinance authorizing the issu-

ance of Dallas-Fort Worth Regional Airport Joint Reve-

nue Bonds for the financing of the new airport. The 1968

Ordinance provides, among other things, that the cities:

„. .. Shall take such steps as may be necessary, ap-

propriate and legally permissible (without violating

presently outstanding legal commitments or coven-

ants prohibiting such action), to provide for the or-

——— — . —— —— — OE OE eee —

— — ——— g

derly, efficient and effective phase-out at Love Field,

Redbird, GSIA and Meacham Field, of any and all

Certified Air Carrier Services, and to transfer such

activities to the Regional Airport effective upon the

beginning of operations at the Regional Airport.”

Section 9.5.

The Ordinance also provides, in Section 9.5, for a waiver

of the phase-out provision if eight (8) members of the

eleven (11) member Regional Airport Board determine

that a waiver is necessary “(1) in the interest of the

publie safety; (2) in the interest of prudent and efficient

operations at the Regional Airport; or (3) in the interest

of satisfying an overriding public need for decentralized

Certificated Air Carrier Services in the Dallas-Fort

Worth metropolitan region considered as a whole,” In

addition, the Ordinance specifies that if the grant of a

waiver by the Regional Airport Board results in a reduc-

tion in Regional Airport revenues, the city benefiting from

the waiver must pledge to transfer back to the Regional

Airport such amount as will justly compensate such Air-

port for its loss of revenue.

In early 1970, in order to insure that sufficient revenues

would be available to maintain and operate the Regional

Airport and to meet all debt service requirements on the

Airport Revenue Bonds, the Regional Airport Board exe-

cuted Letters of Agreement with the (8) eight CAB cer-

tificated air carriers then serving the Dallas-Fort Worth

area.’ These letter agreements provide that each signa-

tory airline will“. . . move all of its Certificated Air Car-

rier Services serving the Dallas-Fort Worth area to the

Airport . . . to the extent required under the terms of

the 1968 Regional Airport Concurrent Bond Ordinance.”

These air carriers are American Airlines, Inc.; Braniff Airways,

Incorporated; Continental Airlines, Inc.; Delta Air Lines, Inc.;

Eastern Air Lines Incorporated; Frontier Airlines, Inc.; Ozark

Air Lines, Inc.; and Texas International Airlines, Inc.

Each of the CAB carriers also contracts “to pay rentals,

fees and charges for its use, operations and occupancy of

the Airport premises and facilities and the services ap-

pertaining thereto in an amount which, together with the

rentals, fees and charges paid by other Airlines and

others using the Airport premises and facilities, will be

sufficient to produce total gross revenues required to

satisfy the Airport Board’s obligation . . .” to collect each

year monies sufficient to maintain and operate the Air-

port, plus 1.25 times the debt service requirements on the

Regional Airport revenue bonds, and plus an amount

equal to any other obligations required to be paid from the

revenues of the Airport.

On June 18, 1971, after some three and one-half years

of hearings, litigation and appeals occasioned by competi-

tive CAB certificated air carriers, Defendant Southwest

Airlines Co. commenced its purely intrastate operations,

as a “commuter airline,” between Love Field, Dallas, and

Houston and San Antonio, pursuant to Certificate of

Public Convenience and Necessity No. 22 issued by the

Texas Aeronautics Commission (TAC). Southwest’s Cer-

tificate stated that it was authorized to serve the Dallas-

Fort Worth region through “any” airport in the area.

On November 12, 1971, however, the TAC issued a gen-

eral order and regulation, styled “Minute Order No.

22,” which directed all TAC certificated airlines not to

change the airports from which they were then conducting

their intrastate services unless they first obtained writ-

ten approval from the TAC to do so. On and before

November 12, 1971, Southwest was operating from Love

Field, as it continues to do today.

On October 20, 1971, Southwest Airlines formally ad-

vised the Regional Airport Board that it intended to stay

at Love Field when the eight (8) CAB certificated air-

lines moved their operations from Love Field to the

Regional Airport, Southwest also withdrew from its brief

participation in planning sessions regarding the transfer

of services from Love Field to the Regional Airport, and

declined to execute the letter agreement with the Airport

Board that had previously been signed by the CAB car-

riers.

On March 6, 1972, Southwest Airlines filed with the

Regional Airport Board an instrument called a “Petition

for Exemption, or Alternatively, Application For Waiv-

er,” by which it sought a determination from the Airport

Board that Southwest was not required by the 1968

Concurrent Bond Ordinance, and could not lawfully be

required, to move to the Regional Airport, or alternative-

ly, that a waiver of the transfer requirement should be

granted under Section 9.5(A) of the Ordinance on the

basis of an “overriding public need.” After holding this

Petition for three months without acting upon it, the Air-

port Board decided, on June 6, 1972, that the CAB rul-

ings in the Dallas-Fort Worth Regional Airport Investiga-

tion deprived the Airport Board of jurisdiction to consider

and act upon Southwest’s Petition. That same day the

two Cities and the Airport Board filed their Complaint

against Southwest, commencing this lawsuit.

Among other contentions Plaintiffs argued in their

Complaint that they were required by the ruling of the

Civil Aeronautics Board in the Dallas-Fort Worth Re-

gional Airport Investigation to transfer all certificated

air carrier services to the new Regional Airport, includ-

ing the intrastate services of Southwest Airlines. While

Plaintiffs seem to have abandoned this position in their

closing arguments and brief, the Court, nevertheless, finds

their contention in this regard without merit because,

among other reasons: (1) the Civil Aeronautics Board has

no jurisdiction over a purely intrastate airline such as

Southwest; (2) it never attempted to assert any such

jurisdiction in its interlocutory orders entered in the

Regional Airport Investigation; (3) it has jurisdiction

only over “air carriers” engaged in “interstate air trans-

portation”; and (4) it has no jurisdiction over cities or

their airports, as such.

Pursuant to the Federal Aviation Act of 1958, the

Civil Aeronautics Board is authorized to exercise regula-

tory jurisdiction only over air carriers engaged in “inter-

state air transportation” as that term is defined in the

Act.“ Western Air Lines, Inc. v. California, 42 Cal.2d

621, 268 P.2d 723 (1954), appeal dismissed, 348 U.S.

859, 75 S.Ct. 87, 99 L.Ed. 677. Because Southwest does

not engage in, and is not authorized to engage in, “inter-

state air transportation,” the CAB itself has held that it

has no jurisdiction over Southwest Airlines (then known

as “Air Southwest Co.“). See CAB Orders 71-6-79 and

71-9-23 (1971), in Texas International Airlines, Inc. v.

Air Southwest Co., Docket 23047, and Braniff Airways,

Inc. v. Southwest Co., Docket 23122. The CAB’s position

that it lacks jurisdiction over Southwest has been repeat-

edly upheld by the Court. Texas International Airlines,

Inc. v. CAB, 154 U.S. App. D.C. 113, 473 F.2d 1150, 1152

(1972); Braniff Airways, Inc. v. CAB, ibid; Texas Aero-

nauties Commission v. Braniff Airways, Inc., 454 S. W. 2d

199, 200 (Tex. Supp. 1970), cert. denied, 400 U.S. 943, 91

S.Ct. 244, 27 L.Ed2d 247 (1970). Under the law, no

orders or rulings by the Civil Aeronautics Board in the

Dallas-Fort Worth, Texas, Regional Airport Investiga-

tion could be binding on, or in any way applicable to,

The Federa! Aviation Act defines “interstate air transporta-

tion” as “the carriage by aircraft of persons or property as a com-

mon carrier for compensation or hire or the carriage of mail by

aircraft, in commerce between, respectively

(a) a place in any State of the United States... and a place

in any other State of the United States .; or between places

in the same State of the United States through the airspace

over any place outside thereof. 49 U.S.C. Sec. 1801(21).

Southwest Airlines does not carry any mail. It does not fly be-

tween Texas and any other State. It does not fly through any air-

space outside of the State of Texas.

Southwest Airlines. Furthermore, there is nothing in

the language of the CAB orders which would indicate

that any of them were directed to intrastate airlines such

as Southwest.“

As used in the CAB Orders, air carrier“ is a term of art and

not of general description. It is defined in 49 U.S.C. Sec. 1301 (3)

to mean “any citizen of the United States who undertakes, whether

directly or indirectly or by a lease or any other arrangement, to

engage in air transportation. (emphasis added).

“Air transportation,” in turn, is defined as “interstate, overseas,

or foreign air transportation or the transportation of mail by air-

craft.” 49 U.S.C. Sec. 1801(10) (emphasis added). The Court finds

no indication that the CAB in its Orders intended to apply the

term “air carriers” to purely intrastate airlines, i. e., in a manner

at variance with the definition of that term in the Federal Avia-

tion Act.

Defendant Southwest has also contended, in answer to Plaintiffs’

argument of federal compulsion arising from the CAB Orders in

the Dallas-Fort Worth Regional Airport Investigation, that such

Orders are non-coercive, speaking only in terms of a “voluntary

agreement” between the Cities; that the CAB’s power to designate

a single airport for the Dallas-Fort Worth area derives not from

any CAB power over the Cities of Dallas and Fort Worth, but

solely from the CAB’s power to amend the certificates of public

convenience and necessity of the CAB carriers, which certificates

remain unamended to this date; and, finally, that Plaintiffs them-

selves admit in their Complaint that “no order terminating the

investigation has ever been entered and the entire proceeding re-

mains open to this date, and under the continuing jurisdiction of

the Civil Aeronautics Board.” Southwest argues that, under these

circumstances, the CAB has not yet actually ordered any airline,

interstate or intrastate, to leave Love Field, and, consequently, that

there is no substance to Plaintiffs’ argument that they are seeking

to exclude Southwest pursuant to CAB Orders. Southwest has also

pointed out that it has never been accorded either notice or hearing

with respect to the Regional Airport Investigation, and that, conse-

quently, any application to Southwest of Orders emanating from

that Investigation would be in direct violation of the Federal Avia-

tion Act, 49 U.S.C. Sec. 1871(g), as construed in American Air—

lines, Inc. v. Civil Aeronautics Board, 123 U.S.App.D.C. 310, 359

F.2d 624 (1966), cert. denied, 385 U.S. 848, 87 S.Ct. 73, 17 L.Ed.2d

75; the Administrative Procedure Act, 5 U.S.C. Secs. 554 and 556;

and the Fifth and Fourteenth Amendments to the United States

10d

Plaintiffs’ next argument rests on the premise that

the CAB has ordered all CAB “air carriers” to move to

the Regional Airport, and that, since Love Field and

the Regional Airport have both received federal funds

pursuant to federal airport aid programs, the Plaintiffs

are required to exclude Southwest from Love Field in

order to avoid unjustly discriminating against the CAB

carriers in violation of 49 U.S.C. Secs. 1110 and 1718.*

This argument misconceives the function, purpose, and

application of the federal anti-discrimination statutes.

The federal prohibition against unjust discrimination

is designed to insure that the airport owner or operator

(referred to as the “sponsor” in both the statutes and

the grant agreements) provides potential users of the

Constitution, see Civil Aeronautics Board v. Delta Air Lines, Inc.,

367 U.S. 316, 81 S.Ct. 1611, 6 L.Ed.2d 869 (1961). Although the

Court is of the opinion that each of these contentions is valid, it

does not deem it necessary to discuss them extensively in light of

its conclusion that the CAB Orders were not directed to purely

intrastate airlines and its further conclusion that the CAB lacks

jurisdiction over Southwest.

* The Federal Airport Act, 49 U.S.C. Sec. 1110. provided in perti-

nent part:

“The Administrator shall receive assurances in writing, satis-

factory to him, that—

“(1) the airport to which the project relates will be available

for public use on fair and reasonable terms and without unjust

discrimination.”

This provision was subsequently transferred to, and now ap-

pears in, the Airport and Airway Development Act of 1970, 49

U.S.C. Sec. 1718, which provides:

“As a condition precedent to his approval of an airport devel-

opment project under this subchapter, the Secretary shall re-

ceive assurances in writing, satisfactory to him, that—

“(1) the airport to which the project for airport development

relates will be available for public use on fair and reasonable

terms and without unjust discrimination ;”

As discussed more fully hereafter, Dallas has received federal

aid pursuant to both statutes.

11d

airport with a fair and nondiscriminatory “opportunity”

to use its facilities, provided the user can lawfully do

so. If the potential user cannot, or does not, choose to

avail itself of the “opportunity” to use the airport, the

airport operator is obviously not required to exclude

those who can and do choose to use such facilities. There-

fore, even if the Plaintiffs were correct in arguing that

the CAB has excluded the interstate carriers from Love

Field, there would still be no merit to their contention

that, consequently, they must eject Southwest Airlines.

The forbidden discrimination can occur only as between

parties that are legally able to serve Love Field and

are desirious of so doing. To hold otherwise would lead

to exceedingly incongruous results.

Suppose, for example, the reverse situation existed

and a state regulatory agency had ordered an airline

under its jurisdiction to cease operations at a particular

airport. Under Plaintiffs’ view of the law, the airport

owner would then be required by federal law to exclude

all CAB carriers who remained there. Similarly, sup-

pose the CAB ordered some carriers under its jurisdic-

tion to leave Love Field, but not others. Under Plain-

tiffs’ argument, the airport operator would then have

to exclude the remaining carriers in order not to dis-

criminate against those that had been ordered to leave.

Presumably, the same line of reasoning would apply to

voluntary abandonments by airport users. Obviously, the

Congress did not intend so bizarre an interpretation of

its anti-discrimination statutes. The Court concludes

that the removal of Southwest Airlines is not required

by any prohibition against unjust discrimination.

The Plaintiffs have similarly contended that allowing

Southwest to use Love Field, after the opening of the

Regional Airport, would violate 49 U.S.C. Sec. 1349 (a),

which provides:

12d

“There shall be no exclusive right for the use of any

landing area or air navigation facility upon which

federal funds have been expended.”

In interpreting this Statute, the Federal Aviation Ad-

ministration has pointedly observed:

“The presence on an airport of one person engaged

in an aeronautical activity as herein defined will

not itself be considered a violation of this policy if

there is no intent by express agreement, imposition

of unreasonable standards or requirements, or by any

other means to exclude others. This would occur

when the volume of business may not be sufficient

to attract more than one person. As long as the

opportunity to engage in an aeronautical activity is

available to those meeting reasonable qualifications

and standards relevant to such activity, the fact that

only one person takes advantage of the opportuniiy

does not constitute the grant of an exclusive right.”

(emphasis added) 30 F. R. 13, 661.

The Plaintiffs have again attempted to use a statute

to justify conduct which that statute expressly prohibits.

If the CAB carriers are precluded from serving Love

Field after the opening of the Regional Airport, such

preclusion results from action by the CAB, which has

no jurisdiction over Southwest, or from the voluntary

Letter Agreements between the Plaintiffs and the CAB

carriers. The CAB carriers have not been excluded from

Love Field by the Plaintiffs, and, therefore, Southwest’s

presence at Love Field after the opening of the Regional

Airport can in no way be considered the prohibited grant

of an exclusive right. Southwest has not voluntarily

relinquished its right to serve Love Field and that right

has not been limited or restricted by any regulatory

agency with authority over Southwest.

Plaintiffs next argue that the Regional Airport is part

of the National Airport System Plan and is “totally

13d

consistent with” the Airport and Airway Development

Act of 1970, 49 U.S.C. See. 1701 et seq. Plaintiffs ap-

pear to argue that since they have received $60,484,031.27

in federal funds from the Federal Aviation Administra-

tion for the Regional Airport, and the Secretary of

Transportation has acted jointly with the Cities of Dallas

and Fort Worth in planning the Regional Airport, the

actions of the two Cities are somehow rendered immune

from, or supreme to, the law.

The Court notes preliminarily that the Airport and

Airway Development Act was passed by Congress in

1970, five years after the Plaintiffs had received FAA

Commitments for the Regional Airport Project and two

years after the enactment of the 1968 Ordinance which

required the termination of Certificated Air Carrier

Services at Love Field upon the opening of the Regional

Airport. Whether or not Plaintiff’s actions herein are

“consistent” with this subsequent federal legislation is

immaterial. The important consideration, and the one

which is fatal to Plaintiffs’ contention in any and all

events, is that the Airport and Airway Development Act

could not have authorized the phase-out provision of the

1968 Ordinance. That Act, while containing a prohibi-

tion against unjust discrimination by airport owners re-

ceiving federal funds, see 49 U.S.C. Sec. 1718, and while

establishing a mechanism for the disbursement of such

funds, does not confer upon either the Federal Avia-

tion Administration or the Plaintiffs herein any economic

regulatory power over air carriers. The purpose of the

Act is to promote the planning and construction of air-

ports, not to confer upon cities the power to decide the

routes of air carriers, which involves determinations of

public convenience and necessity.’ It should also be men-

Nothing herein is intended to imply that the FAA may not ex-

clude particular aircraft from an airport pursuant to its power to

regulate safety in civil aeronautics; see Sub-chapter VI of the Fed-

eral Aviation Act of 1958, 49 U.S.C. Secs. 1421-1430. However,

14d

tioned that the only funds allotted to the Cities of Dallas

and Fort Worth under this Act have been allocated to

the Regional Airport and not to Love Field. Plaintiffs

have not shown that the FAA has taken any action under

the Act with respect to Love Field.

Finally, Plaintiffs apparently contend that if South-

west Airlines is permitted to remain at Love Field after

the opening of the Regional Airport, the ability of the

Regional Airport Board to operate that Airport and to

retire the outstanding debt on the Airport Revenue Bonds

will be jeopardized due to diversion of needed revenue

to Love Field. It is not seriously argued by Plaintiffs

that the revenues from Southwest Airlines’ three present

aircraft and the passengers they carry are, in and of

the:selves, essential to the operation of the Regional

Airport. Instead, Plaintiffs maintain that Southwest’s

continued presence at Love Field will, to some extent,

induce the CAB carriers to retain service there (an

argument that Southwest has characterized as the

“domino theory”) and that the cumulative loss of reve-

nue from Southwest and these other carriers will have a

significant impact on the financial security of the Re-

gional Airport.

In the opinion of the Court, the following evidence,

among other items, demonstrates that Plaintiffs have

as testified to by Mr. Henry Newman, the Regional Administrator

of the FAA, there are no safety considerations which require the

exclusion of Southwest Airlines from Love Field at this time and

there are no foreseeable safety problems at Love Field after the

opening of the Regional Airport. Therefore, the Court concludes

that matters of safety are not involved in this case.

Mr. Newman also sponsored an Environmental Impact Statement

which pertained to the Regional Airport, rather than to Love

Field, and which was adopted five years after the FAA had com-

mitted funds to the Regional Airport. The relationship of this

Statement to Southwest’s right to remain at Love Field was never

explained or pressed by Plaintiffs, and no environment issues

relevant or material to this matter were ever raised by Plaintiffs.

15d

over-stated their fears concerning the financial impact

upon the Regional Airport of Southwest’s remaining at

Love Field:

1. The eight (8) CAB carriers executing the Letter

Agreements have agreed to pay any deficit resulting

from the operation of the the Regional Airport, includ-

ing 1.25 times the annual debt service on the Regional

Airport Revenue Bonds. Plaintiffs’ Exhibits purport-

ing to show diversion of funds from the Regional Air-

port to Love Field in fact show that the Regional Air-

port 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 carriers. It does not penalize the Re-

gional Airport Board or the citizens of Dallas and Fort

Worth.

2. The outstanding Love Field “Senior Lien Bonds”

are a first lien upon Regional Airport revenues and

must be paid even before the Regional Airport Revenue

Bonds themselves. Thus, any revenue generated at Love

Field by Southwest Airlines defrays the costs and ex-

penses of the Regional Airport, if the income from Love

Field is insufficient to pay its maintenance and operat-

ing expenses and debt service.

3. The Plaintiffs’ “diversion” exhibits were basically

predicated upon the assumption that all Dallas/Fort

Worth intrastate air service would be provided through

Love Field if Southwest Airlines remained there. It was

‘orceably demonstrated by Defendants that this assump-

tion was erroneous and that the “diversion” figures in

question were therefore overestimated. Plaintiffs’ own

conduct and opinions confirm this. First Southwest

Company, an investment banking firm under contract

to the Regional Airport Board as its financial advisor,

gave its written opinion on March 10, 1972, that South-

west Airlines’ refusal to go to the new airport was not

16d

a fact of any material financial significance to the $12

million in revenue bonds issued on March 29 of that year,

and Thomas Sullivan, the Executive Director of the Re-

gional Airport Board, concurred in that judgment in a

written opinion of March 16, 1972, pointing out that the

new airport had never included any projected revenues

from Southwest Airlines in its own revenue projections.

Similar statements of lack of “materiality” were made

in the Official Statements pertaining to bonds issued

significant to the institution of this lawsuit and were

concurred in by Mr. Decker Jackson of First Southwest

Company during his testimony.

Although not pleaded by Plaintiffs, this Court is not

indifferent to the financial needs of the Regional Air-

port. However, the evidence which Plaintiffs have pre-

sented on this point is at best inconclusive, and its rele-

vance to the fundamental legal issues in this case has

never been explained. Financial necessity can neither

legitimize an unjust discrimination nor augment the

basic power of municipalities as granted to them by the

State. Plaintiffs have wholly failed to establish that

Southwest Airlines is required by law to remove its op-

erations to the Regional Airport upon its opening. The

Court now turns its attention to the question of whether

the Plaintiffs may directly or indirectly exclude South-

west from Love Field when the Regional Airport opens.

It is the conclusion of this Court that none of the

Plaintiffs have the power to deny Southwest access to

Love Field for any aspect of its operations. It is like-

wise beyond the power of Plaintiffs, or any of them, to

require Southwest to provide any services through the

Regional Airport upon its opening. The bases for this

conclusion are numerous, but their number should not

detract from the fact that each ground is, in and of it-

self, sufficient to preclude Plaintiffs from denying South-

west access to Love Field.

17d

Love Field is public facility and installation. There

is no dispute among the parties to this case that Love

Field has over the years been the recipient of federal

funds, property and land through various federal aid

programs, and that it is subject to federal prohibitions

against unjust discrimination and the grant of an ex-

clusive right.“ In the early 1940’s, Love Field was the

recipient of federal funds through WPA grants. Dur-

ing World War II, the United States Government en-

larged the field, improved the runways, and established

various facilities there. Following the War, in 1949

and again in 1955, the United States conveyed equip-

ment, buildings and land to Love Field pursuant to the

Surplus Property Act, and in 1950 and 1951 (and by

subsequent amendments), grants in aid of approximately

$429,603.95 were made to Love Field pursuant to grant

agreements between the City of Dallas and the Civil

Aeronautics Administration acting under the Federal

Airport Act. In addition, the Federal Aviation Admin-

istration has spent in excess of $29,000,000 for its gen-

eral operations at Love Field and for navigational aids.

Finally, as previously noted, the Regional Airport has

received, since 1966, in excess of $60,000,000 in federal

aid pursuant to the Federal Airport Act and the Airport

and Airway Development Act of 1970. In accordance

with present FAA policy, the receipt of such aid subjects

all airports under the operation and ownership of the

recipients thereof to the aforementioned statutory prohibi-

tions. See 30 F.R. 18, 661 and grant agreements to the

Regional Airport. Since both Dallas and Fort Worth are

recipients of federal funds through the grants-in-aid to

the Regional Airport, all of their municipal airports are

subject to federal restrictions.

® See 49 U.S.C. Secs. 1110(1) and 1718(1); 50 App. Sec. 1622080

and 49 U.S.C. Sec. 1349 (a).

18d

In order to properly assess Southwest’s argument that

its exclusion from Love Field will violate federal law,

it is necessary to examine Plaintiffs’ present plans for

the use of Love Field after the Regional Airport becomes

operational.

As discussed above, the 1968 Concurrent Bond Ordi-

nance provides for the phase-out of all “Certificated Air

Carrier Services” from Love Field after the opening

of the Regional Airport. The term “Certificated Air

Carriers Services” is defined in Section 2.1G of the Ordi-

nance as follows:

„G. ‘CERTIFICATED AIR CARRIER SERVICES’

mean aircraft operations of the following types when

operating on a regular and continuing basis, to wit:

(1) interstate services conducted by commercial

air carriers according to published flight schedules

and holding certificates of public convenience and

necessity or similar evidences of authority issued by

the Civil Aeronautics Board of the United States of

America or any successor agency thereto;

(2) services conducted by foreign air carriers ac-

cording to published flight schedules holding permits

or similar evidences of authority issued by the Civil

Aeronautics Board or any successor agency thereto

or by any other agency or department of the United

States of America; and

(3) intrastate services conducted by commercial

air carriers according to published flight schedules

and holding certificates of public convenience and

necessity or similar evidences of authority issued

by the Texas Aeronautics Commission of the State

of Texas or by any successor agency.

It is provided, however, that this term shall not in-

clude services provided by commercial ‘air taxi’ op-

19d

erators meeting the requirements for exemption pro-

vided from time to time by any rules and regula-

tions of the Civil Aeronautics Board, by the Texas

Aeronautics Commission or by any other agency of

the United States of America or the State of Texas

having jurisdiction to provide such exemptions.”

It should be noted that subsection (3) of the definition

of “Certificated Air Carrier Services” clearly includes

Defendant herein, Southwest Airlines Co. However, “air

taxi” operators are expressly excluded from the defini-

tion, and therefore not subject to the phase-out require-

ment, despite the fact that such operators carry pas-

sengers for hire on a scheduled basis; are certificated

by the TAC with respect to their intrastate services;

and are competitors of Southwest Airlines. Moreover,

the phase-out requirement is also inapplicable to all

unscheduled charter flights, even when conducted by CAB

certificated air carriers; to general aviation (i.e., private

and corporate aircraft) ; and to unscheduled cargo flights,

all of which fall outside the definition of “Certificated

Air Carrier Services.” The purely intrastate services

of the eight CAB carriers presently operating at Love

Field are likewise outside the scope of the Ordinance,

inasmuch as the only intrastate services covered by the

Ordinance are those certificated by the TAC and the

intrastate services of the CAB carriers are not so covered.

Thus, with respect to intrastate air services, the 1968

Concurrent Bond Ordinance is applicable only to South-

west, since, except for the specifically exempted air taxis,

Southwest Airlines provides the only TAC certificated

intrastate air service to Love Field.

Plaintiffs contend that after the opening of the new

Regional Airport, Love Field will become a general avia-

tion facility due to the exclusion of all scheduled com-

mercial operations, and that the classification scheme that

has been adopted to accomplish this end is a reasonable

one. The Court must disagree.

20d

In the first place, Plaintiffs have not excluded all

scheduled commercial operations from Love Field, but

have expressly exempted air taxi operators from the

phase-out requirement of the Ordinance. Whether the

air taxi operators actually choose to remain at Love

Field is not important; the controlling consideration is

that under the Ordinance they are eligible to do so.

Moreover, the purely intrastate operations of the CAB

carriers are also not included in the definition of the air

carrier services to be excluded from Love Field. The

Ordinance by its express terms phases out air carrier

“services” (emphasis added). The only intrastate air

carrier services to which the phase-out provision of the

Ordinance applies are those services performed by car-

riers certificated by the TAC. With respect to carriers

certificated by the CAB, however, the only air carrier

“services” covered by the Ordinance are interstate air

carrier services. The Ordinance, therefore, fails to ex-

clude from Love Field any intrastate services conducted

by the CAB carriers.

Since the phase-out provision of the 1968 Ordinance

applies only to intrastate services provided by Southwest

Airlines, and not to such intrastate services provided by

others, it must be deemed to be unjustly discriminatory.

Once again, what is important in assessing Plaintiffs’

contention of reasonableness is whether the purely intra-

state services of carriers other than Southwest are ac-

tually excluded from Love Field by the Ordinance, not

whether by choice, contract, or regulatory order, those

carriers will, in fact, operate from the Regional Airport

in whole or in part. These considerations inexorably

lead the Court to the conclusion that the phase-out pro-

vision of the 1968 Concurrent Bond Ordinance would be

unjustly discriminatory if applied to Southwest Airlines.

21d

Secondly, even if the classification scheme involved in

the 1968 Ordinance accomplished what Plaintiffs con-

tend, this Court would still have to find it unreasonable

in other respects.

The evidence shows that after the Regional Airport

becomes operational, aircraft of every size and descrip-

tion will be permittéd to continue using Love Field.

There will be no restriction placed on the frequency of

flights at Love, which is presently certificated for I. F. R.

and V. F. R. operations and will not be downgraded after

the opening of the Regional Airport. Braniff will con-

tinue to use its Love Field maintenance base for main-

tenance work on its fleet. All sizes of planes can use Love

Field for ferry flights and refueling stops, and private

aircraft of all sizes and kinds will be positively encour-

aged to use Love Field. Moreover, charter flights carry-

ing passengers for hire on an unscheduled basis will

continue to operate out of Love Field without restric-

tion on the size of the aircraft they may use or on the

frequency of their flights. As already noted, the sched-

uled commuter air services (intrastate and interstate)

furnished by air taxi operators will be permitted to con-

tinue at Love after the move to Regional. In short, some

of the operations to remain at Love Field will use planes

larger than Southwest’s; some will use planes noisier than

Southwest’s; some will use planes identical to South-

west’s; and, indeed, some of the aircraft operations may

be on a scheduled basis and compete in markets which

Southwest presently serves. The question before the Court

is whether, under these circumstances, Plaintiffs can ex-

clude Southwest from Love Field in the face of the ex-

press statutory prohibitions against both unjust discrimi-

nation and the grant of an exclusive richt to use the

facilities of Love Field.

The “unjust discrimination” and “exclusive right” pro-

hibitions were considered in Judge Dooling’s decision in

Aircraft Owners and Pilots Association v. Port Authority

of New York, 305 F.Supp. 93 (E.D.N.Y. 1969), a case

involving the exaction of a $25.00 fee for General Avia-

tion aircraft landing or taking off during the peak traffic

periods at the three major airports in the New York

metropolitan area. The suit was brought by owners of

private aircraft to invalidate the landing fee on the

grounds that it “unjustly discriminated” against gen-

eral aviation in favor of commercial airlines. While the

Court ruled that the landing fee was not unjustly dis-

criminatory on the facts of the case before it the rationale

for its decision makes it abundantly clear that, on the

facts of th

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