Petition — North Shore Travel Service, Inc. v. Hintersehr

ee

i

Sup. 2Me Court, U, S.

FILE D

| J s3 1977 |

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—

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1977

NORTH SHORE TRAVEL SERVICE, INC.

Plaintiff-Petitioner,

- against -

JOSEPH F. HINTERSEHR, etc., et al.,

Defendants-Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

HAROLD WARREN

Counsel for Petitioner

16 Court Street

Brooklyn, New York

(212) 643-1335

BERNARD MEYERSON

On the Petition

TABLE OF CONTENTS

Questions Presented, . . . .. e« e

Statement of Facts

The Law

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Reasons for Granting the Writ

1. The Court of Appeals for the

Second Circuit has misconstrued and

misconceived the opinion of this Court,

in Erie v. Thompkins [304 U.S, 64],

when it held a Replevin Judgment is

Res Judicata and refused te apply the

law enunciated by the highest court of

the State of New York . . .« e« e« e e

2. There is a direct conflict be-

tween the Judgment here of the Court

of Appeals, Second Circuit and the

United States Court of Appeals,

District of Columbia Circuit, which

in the case of Grueninger Interna-

tional Travel aE Teac!

Association, 14 aviation case 17,

622 hold that "Section 414 does not

grant immunity to the ATC or its

member air carriers, except to the

extent that their actions are auth-

orized or approved. Its protection

plainly does not extend to acts taken

in violation of the very procedural

28

safeguards imposed by the CAB to

ensure that the ATC actions would be

taken on approved grounds " [note,

judgment in above case was affirmed

only because no damages resulted.

Here the "life or death proposition!"

ended with the death of the Petitioner

travel agency]. “ane oe a ae ae

3. There is direct conflict be-

tween the Court of Appeals, Second

Circuit and the 8th Circuit as to the

requirements for summary judgment,

[ Ozark Milling Corp., v. Allied

Mills, Inc., 480 F 2d 1014] since

here the motion was really a demur-

rer and made prior to examination

or discovery under rules of the

Federal Court, Rule 26[b], there-

fore, admitting the allegations ofthe

complaint showed a controversy which

deprived appellee of the extreme

remedy of summary judgment. . . .

4. The Court of Appeals, Second

Circuit, has refused to follow the rule

of this Court [Fay v. Nora, 372 U.

S. 391, 83 S. Ct. 822, - Ed. 2d

837], that a void judgment can be

collaterally impeached as it ignored

the action of the District Court on

newly discovered evidence [Appendix

130a] which indicated the judgment

was void, but the District Court

granted judgment before same could

be clarified * . a. ° . * . *

Geneiumi@fMie «© © © eee ee

Appendix A —- Order and Judgment of

the United States Court of Appeals

for the Second Circuit. . .« « -«

- 28

Appendix B - Final Judgment of the

United States District Court, Eastern

District of New York .

Appendix C - Opinion of Judge

Jacob Mishler. . . .«

TABLE OF CASES

owe Trustee v. International Air

Transport Association, etal., 13

aviation case 18, 214 .

Hughes Tool Co., v. Trans World

Airlines, Inc., 409 U.S, 363

Roach v. Curtis, 191N,Y, 387.

Antar vw. T,.W.A., 66 Misc. 2d

93 affirmed 37 App. Div. 2d 921.

LaPrease v. Raymours Furniture

Company, 315 F.S. 716.

Sanks v. Georgia, 399 U.S, 922;

400 U.S, 914; 401 U.S, 144.

Proctor & Gamble v. Lawrence Am,

Field Warehouse Corp., 16N.Y,.

2d 344 2. © © «© -«

Erie ve. ‘Thompkins, 304 U.S, 64

Grueninger International Travel

Air Transport Association, 14

aviation case 17, 622 .

Ve

22

27

28

28

iv

Ozark Milling Corp., v. Allied Mills,

inc., 460 F 2d 1014 . . « e« -«

Fay v. Nora, 372 U.S, 391, 83S.

Ct. 822, 9L. Ed. 2d 837. . . .

Other Authority

Moore's Federal Practice - Vol. l.,

"Res Judicata defined’. . . . -«

Carmody-Wait, Second Edition,

Chapter 82, Section 82:187, "Con-

clusiveness on, and effect as res

judicata against defendant" . . ,

The New York Civil Practice Law &

Rules, Section 2104 . . . . «

i EG er te a sg

29

29

17,18

19

2

IN THE States District Court for the Eastern District

SUPREME COURT OF THE UNITED STATES : of New York on April 25, 1977 by the Honorable

October T ' | Jacob Mishler, District Judge, which grants

ober Term 977

: summary judgment [before the joinder of is sue]

and dismisses the Complaint.

NORTH SHORE TRAVEL SERVICE, INC,, i There was no opinion of the Court of Appeals

Plaintiff—Petitioner,

reported. The said Court affirmed on the opinion

of Chief Judge Mishler, dated September 21, 1976,

even though the opinion contains a wrong inter-

- against -

JOSEPH F, HINTERSEHRR, etc.

peiedied ° pe et al., pretation, that a reference to a date of a bul-

efendants-

S-Respondents. letin [Aug. 9th] in the telegram from American

Airlines [161a] was the date that the telegram

was sent [136a], when the telegram was ac tual ly

sent on the 16th day [Aug. 20th] or one day after

Petition for a Writ of Certiorari to the

United States Court of Appeals for the

Second Circuit.

the 15 day period of suspension had expired [54a].

Involved is the question whether the deliberate,

vicious acts of the agents of the Air Traffic Con-

To the Honorable Chief Justice and the Associate

Justices of the Supreme Court of the United

States:

ference [ATC], which put appellant out of busi-

ness, are exempt from the Anti-trust Law by

i irtue of Section 414 of the Federal Aviation

Petitioner, North Shore Travel Service, Inc. , awe

; Act.

prays that a writ of certiorari be issued to review ‘

the decision and judgment of the United States

QUESTIONS PRESENTED

Court of Appeals for the Second Circuit, which

affirmed a final judgment entered in the United oe oF Se Pacers Lanes’ on

Law give the Air Traffic Conference [ATC] immu-

nity from the Anti-trust Laws when it:

[a] Violates its own rules as to suspension

P edge of the defendants, and that such evidence

and refuses to lift the suspension because of an :

: can only be procured by an examination before

unexplained personal grievance, which was sent

: : : trial ?

and received after the time limit expired ?

[b] Started a replevin proceeding with a tl, Can a judgment in a replevin action, that

void writ of seizure (undertaking not ex ecuted holds that because of a 15 day suspension the

the newspaper, then sends its representative . res jucicata of an Anti-trust action where the

with the newspaper release to North Shore's trial court had excluced any evidence of anti -

accounts to panic its customers to start a "run! | trust practices, as not within the issues ?

for refunds, and then refuses to redeem the re-

funded tickets returned to them in order to im-

poverish Petitioner ?

[c] Allows only one insurance company to

bond its agents, then dictates to the company

and has it do wrongful acts such as cancelling

an Irrevocable Letter of Credit without the

knowledge of North Shore Travel [a viol ation

of Section 5-106[2] of the Uniform Comme rcial

Code], and suddenly cancelling North Shore's

ATC Bond without returning the unused p re-

mium so as to aid the ATC in destroying North

Shore Travel ?

Il, Can summary judgment be granted before the

joinder of issue where the evidence necess ary to

prove a plaintiff's case is solely within the knowl-

STATEMENT OF FACTS.

Plaintiff travel agency brought this action

against the Air Transport Association of America

[ATA] anc a number of airlines who are part of

this association of air carriers, seeking treble

damages on the basis of violations of the Sherman

Act, 15 USC, Sections 1 anc 2 on the ground that

the termination of plaintiff's right to do business

was a group boycott.

The events herein started when counse! for

the ATA vowed to get North Shore Travel [76a].

This was done by rushing North Shore's check

to the bank instead of through the usual channels,

and having the check returned marked "drawn on

uncollected funcs" while a Notice was sent to

North Shore stating that the check was pai d [78a].

A Replevin Action was commenced with a writ of

Seizure and Plaintiff was then suspended for 15

days. The value of the blank tickets (which were

of no value [Antar v. T.W.A,, 66 Misc. 2d 93

aff'd. 37 App. Div. 2d 921] ) was fixed in the

writ as worth $452,000 thus North Shore would

have needed a bond of nearly one=-million dollars

to get these tickets back [this was unconstitutional].

The demand was made by North Shore Travel's

counsel that a bond be filed before the writ of

seizure be issued [127a]. The writ recited that

the bond was filed [127a]. However, the bond

was never filed and the Sheriff was frauculentl y

induced to seize these useless blank tickets. This

seizure was put into the newspaper [160a] anc

some individual, on behalf of ATA, who kn ew

who plaintiff's clients were, went to these clients

with the newspaper clipping [73a]. This, of

course, created panic among the clients and

they ran to plaintiff for refunds in the amount of

over $9,000. As part of the scheme to deprive

plaintiff of funds, ATA has refused to refund this

money. It claims more is owed to it but has

never given plaintiff any specific proof of s ame

[126a].

Piaintiff applied to te reinstated when sus-

pended and not one airline opposed it within the

required fifteen (15) day period. On the 16th

day, however, American Airlines sent a teletype

requesting that North Shore's reinstatement be

held off. [It was admitted on trial that no moneys

were owed American Airlines and that the telet ype

was sent out of spite (54a, 97a) J.

All agencies must be bonded and Marsh &

McLennan of Washington, D.C, have the monopoly

of these bonds, known as ATC Schedule Bond,

and thus must take their orders from the Air

Traffic Conference [ATC] [76a], a division of

ATA. Marsh & McLennan first aided ATC in its

replevin suit [77a] and then it cancelled its bond

at the request of ATC so plaintiff could be i ncef-

initely suspended [87a]. However, this cancell ation

of bord was void [87a, 88a] and thus this indef-

inite suspension also was a violation of the

Sherman Anti-trust Act but it hed the effect of

putting plaintiff out of business.

THE LAW,

The Sherman Anti-trust Law is well known

to the bench and bar. However, these defendants

normally come uncer the exceptions to the Law.

A similar case came before the Judge Stewart in

the Southern District Court, in the case of Lowe

Trustee v. International Air Transport Asso-

ciation, et al., 13 Avi 18, 214. This opinion, in

great detail, covers all the statutes and cases

that deal with this subject and, in the opinion of

the writer of this Petition, it is the best treatise

on this specialized part of the law that is avail —-

able at this time. Some excerpts of the opinion

will be quoted for the convenience of this Court:

"Shortly thereafter it appears that Pan

Am informed the IATA that it had declared

Hefler in default. This triggered a review

of Hefler's status by the Agency Adminis tra-

tion Board ["AAB"], the subcommittee of the

IATA authorized under Resolution 810a to

approve or disapprove travel agents. "'

u* * * The testimony is in complete agree-

ment that there was no ciscussion of Fefier's

rebuttal materials or any consideration. of the

issues Hefler raised, at this meeting. "'

The other important parts of the Opinion are

as follows:

"When considering whether the afore-

mentioned violations of the CAB requirements

result in a loss of defendants! statutory grant

of antitrust immunity, we note that the courts

have consistently demanded strict compliance

with prescribed procedures in order for immu-

nity to attach. 3/ United States v. Socony -

Vacuum Oil Co., 310 U.S, 150 (1939); Chicago

& NW. Ry. Co. v. Peoria & PU, Ry. Co.,

201 F. Supp. 241 (S.D. Ill. 1962). As the

Supreme Court said in Socony,

"Congress had specified the precise

manner and method of securing immunity.

Nore other would suffice." (310 U.S. at

226-7).

"3/ Our situation is very different from that

in Flughes Tool Co. v. Trans World Airlines,

Inc., 409 U.S, 363 (1973), reh. den. 410 U.S,

975 (1973), where the proper CAB approval pro-

cedures had been carefully followed, and the

Court was faced with the question of whether

statutory immunity from the operations of the

antitrust law did not apply to defendants! actions

because they involved matters beyond the scope

of the CAB's Congressional mandate and thus

beyond its power to epprove and confer immunity.

"In the instant case, the method by which

defendants could have secured antitrust immu-

nity for their action of cancelling a travel

agent's approval has been specified by the CAB

which hes set forth the particular proce dures

which have to be followed. 29 CAB 264-4; 33

CAB 170; Resoiution 810a-C. The CAB also

detailed the reasons for requiring strict com-

pliance with these procedures:

It must always be realized that this entire

system of joint carrier screening of tr avel

agencies is a substantial departure from the

normal free competitive practices of our econ-

omy, anc that it would be clearly in viola-

tion of the Federal antitrust laws were it.

not for the immunity extended by section 414

10

of the Act. This is not a situation, there-

fore, where we can grant to the carriers

on the basis of management expertise or dis-

cretion substantial freedom to make decisi ons

without detailed Board supervision and con-

trol.

29 CAB at 264-5.

"The particular importance of the CAB

mandated due process 4 requirements was

underscored when the Boerd stated:

Through the ATC [and IATA] system the

carriers hold life and death power over the

travel agencies and it is unthinkable that

the carriers should exercise these powers

without giving full notice of their reasons anc

providing ample opportunity for appeal.

29 CAB at 264-5.

"4/in this connection, we are aware of the im-

portance placed on procedural safeguards by the

Supreme Court when considering whether cer-

tain actions could be covered by an implied

repeal of the antitrust laws. Silver v. New

York Stock Exchange, 373 U.S. 341 (1963).

11

"Further, less than six months be fore

the IATA began its review of Hefler, the District

Court concluded in Caceres, supra, in which the

IATA were defendants, that antitrust immunity

would be eliminated where the notice which the

IATA sent a rejected agent failed to comply with

the terms of the CAB approval of Resol ution

810a. 46 F.R.D. at 93. Defendants had thus

been instructed as to the probable consequence

to their antitrust immunity should they fail to

comply with the CAB procedures.

un * * * IATA, have adopted Resolution 8 10a in

which they agreed that agents like Hefier must

have IATA approval in order to be eligible to

receive commissions from the air carriers on

international air ticket sales, and in order to

conduct business with the carriers on a credit

basis (Resolution 810a-1 (1); tr. at 11-14, 249-

53). Pursuant to the terms of Resolution 810a,

defendants have further agreed that "cancel! a-

tion of approval of any agent ... by the appro-

priate [LATA] Agency Sub-Committee shall be

honored by ali Members of IATA" [Reso lution

810a-C (9) ].

"Since no one may sell air transporta-

tion tickets at arate other than that approved

by the CAB (49 U.S.C. Section 1373), travel

12

agents only make money from such sales through

commissions paid by tke air carriers (tr. at 11-

14). Thus, the cancellation of Hefler's approval

by the IATA, and the honoring of this decision

by the member carriers, effectively prec luded

Hefler from doing business as a retailer of

international air transportation (Caceres , supra,

46F.R.D. at 90; 29 CAB at 264-5).

"Clearly, the fact that all defendant

carriers are bound to honor the AAB!s decision

to cancel deprives them of the freedom to de-

cide independently whether they want to deal

with Hefler, and if so, under what terms. Con-

sequently, defendants! implimentation of their

Resolution 810a agreement constitutes a con-

certed refusal to deal with Hefler under the

xe Ke

"* * * terms and conditions extended to

other travel agents, and thus constitutes a

group boycott by competitors. Klor's Inc. v.

Broadway-Hale Stores, Iinc., 359 U.S. 207,79

S, Ct. 705, 3L. Ed. 2d 741 (1959); Radiant

Burners, inc. v. Peoples Gas Co., 364 U.S.

656, 81 S. Ct. 365, 5L Ed. 2d 358 (1961);

Vandervelde v. Put and Call Erokers and

Dealers Ass'n., 344 F. Supp. 118,139 (S.D.

N.Y. 1972). Such boycotts have been gen-

13

erally held to be per se violations of Section

1 of the Sherman Act. Klor's, supra; Northern

Pacific Ry. v. United States, 356 U.S, 1,78

S. Ct. 514, 2L. Ed. 2d 545 (1958).

"Exceptions to the per se rule have been

recognized where trade association boycotts

have been determined to be reasoneble in fur-

therance of legitimate policies. Deesen v.

Professional Golfers! Ass'n. of America, 358

F. 2d 165 (Cth Cir. 1966), cert. denied 385

U.S. 846 (1966), reh. denied 385 U.S, 1032

(1967), Bridge Corp. of America v. America

Contract Bridge League, Inc., 428 F. 2d1365

(9th Cir. 1970), cert. denied 401 U.S, 940

(1971). In the instant case, however, the CAB

has already determined that public policy is

only furthered when defendants afford ag ents

like Hefler procedural safeguarcs before they

exercise their power to review and terminate

an agent's approval (29 CAB at 262-65; 33 CAB

170-71). Thus no doctrine of reasonab! eness

can save the boycott here. As the court in

Caceres, supra, reasoned:

"[W]hether redeeming social good flows

from the IATA arrangements has already

been considered by the CAB which has set

a.

14

limits to the manner in which these useful

purposes may be carried out. See 33 CAB

262-65. If the airlines, through IATA, have

exceeded these limits, they cannot, it s eems,

fall back on the same justifications they relied

or. to obtain the Boerd's [original ] app roval...!!

46 F.R,D, at 92-3n. 1. See Denver Rockets

V.

All-Pro Management, Inc., 325 F. Supp.

1049 (C.D, Cal. 1971) anc McCreery Angus

Farms v. American Angus Ass'n. 379 F.

Supp. 1008 (S,D,. Ill. 1974) where the | ack

of procedural safeguards was a pivotal factor

in finding alleged boycotts unreasonable and

violative of Section 1.

"We conclude, therefore, that def en-

dants! actions constitute violations of Section 1

of the Sherman Act.

"As interpreted by the courts, the

offense of actual monopolization under Section

2 of the Act requires that the defendants pos-

sess (1) monoply power in the relevant mar-

ket, and (2) the intent anc purpose to exercise

that power to exclude competition. United

States v. Griffith, 334 U.S, 100, 107, 68

S. Ct. 941, 92 L. Ed. 1236 (1948); United

States v. Grinnell Corp., 384 U,S, 563,

15

86 S. Ct. 1698, 16 L. Ed. 2d 778(1966); United

States v. Aluminum Co. of America, 148 F. 2d

416 (2d Cir. 1945)."

"Monopoly power is defined as the power

to control prices or exclude competition from

the relevant market. Grinnell, supra, 384 U,

S. at 571; United States v. E. I, DuPont

xe Ke

In Hughes Tool Co., v. Trans World Air-

lines, 40S U.S, 363 the opinion of this Court, on

page 38° stated:

"We by no means hold that the Federal

Aviatior. Act completely displaces the antitrust

laws, * * ¥u

POINT I.

The trial in the New York Supreme Court

was limited to the issue whether North Shore

Travel had earned enough demerits to warrant

a fifteen (15) day suspension. But North Shore

Travel is still out of business so how can the

judgment in the Supreme Court be res jucicata

[142a] of the fact that North Shore Travel is

still denied the right to do business more than

two (2) years later.

The originel suspension was only for fifteen

16

(15) days [133a], and the statement contained in

the Opinion of Judge Mishler, that:

"the telegram was received from American

Airlines only 12 days later" [136a],

is erroneous. Judge Mishler was unaware that

the telegram, from American Airlines to Darl ene

Dolan at the ATC [161a], was sent on August 20th,

not on August 9th, and mistook the date of a

bulletin (August 9th) referenced in the first line

of the message, sent to ATC [161a], as being the

date of the telegram:

"RE A,B.634 AUG 9 NORTH SHORE TVL

svc * ** wu

It has never been denied, through the dif-

ferent proceedings, that the telegram was sent

and received on the sixteenth (16th) day [54a], nor

has it been denied that the Replevin trial re-

vealed that no moneys were owed American Air-

lines and that the telegram was sent as the result

of personal spite [97a]. Certainly this act alone

was a violation of the Sherman Anti-trust Act.

It was not denied below that travel agents

must secure a bond to maintain the right to sell

airline tickets. That this bond could oniy be

secured through Marsh & McLennan, Washington,

D.C., and that because of this tie, the ATC has

great influence with the company [76a]. Conse-

17

quently, the actions of the bonding company were

the actions of ATC [76a]. Therefore, when it was

necessary to aid ATC, to get the Bank in Nassau to

cooperate, the bonding company, suddenly and

without notice to appellant, cancelled the 6b ank's

Irrevocable Letter of Credit issued on beh alf of

North Shore Travel against its ATC Bond [77al.

(This is in violation of Uniform Commercial Code

of New York State, Section 5-106[2] ). Then,

in furtherance of the scheme to put North Shore

out of business, ATC had its subservant insur-

ance company attempt to cancel North Shore's

ATC Bond, which purported to give ATC the

right to revoke North Shore Travel's right to

do business. However, the revocation of the bonc

was a nullity [87a, 88a] and the acts of ATC was

another violation of the Sherman Anti-trust Law.

POINT Il.

The replevin actior was not res judicata

of the instant action.

In Moore's Federal Practice, Vol. l.,

"Res Judicata defined", the following is found on

page 24:

"If the judgment is in rem or quasi in

rem, the jucgment does not merge any in per-

sonam claim its plaintiff may have, not operate

18

as a bar to such claim 22 "

The Judgment of Replevin was rendered in a

New York State Court, and the New York Court

of Appeals held to the same effect in Roach v,

Curtis, 191 N.Y. 387, where the opinion of

Willard Bartlett contained the following, at page

390:

"We are of the opinion that the judgment

in replevin did not preclude the vendee from

maintaining this suit. The action of repl evin

is essentially possessory in its nature. (Sinnott

v. Feiock, 165N.Y. 444). The issue |i tigated

in a replevin suit is the present right to the

possession of the property in controversy.

Under the contract of sale on the instal! ment

plan between these parties, no title whatever

had vested in the vendee at the time when the

vendors thus sued her for the recovery of the

goods (Empire State T.F. Co. v. Grant, 114

N.Y. 40), and hence she had no cefense to that

action. The judgment therein simply determined

that the vendors were entitled to the possessior.

of the property which was the subject of the

conditional sale and that cetermination h adc no

tearing, directly or indirectly, upon her ri ght’

under the statute to recover what she had paid

on account of the purchase, in the event of the

19

vencors! failure to sel! the same after they had

retaken it. The adjudication in the rep! evin

suit was, therefore, no bar to her present

claim and the tria! court properly declined to

sive it effect as such. "

The foremost authority in New York State is

that of Carmocy-Wait, Second Edition where the

following is found in Chapter 82, Section 82: 187:

"Conclusiveness on, and effect as res

judicata against, defendant.

The defendant in an action to recover a

chattel is not barred by judgment against him

from pursuing any other rights he may have

aside from those based upon the right of pos-

session. Thus, a judgment for possession of

conditionally sold goods in favor of the vendor

did not preciude the defendant purchaser from

pursuing his statutory right to recover install-

ments paic if the seller failed to resell the

goods for the buyer's benefit in manner anc

time as then prescribed by law. * * * "

The Justice who tried the replevin action in

the Supreme Court, Nassau County was well aware

of this law as he refused to allow North Shore

Travel to use violations of the Anti-trust Law as

a defense in the replevin action:

20.

"THE COURT: In order that the record

may reflect a conference that was held in

chambers, I have advised the attorney for the

defendant that | am not going to permit him to

enter testimony relative to the Civil Aero-

nautics Board's attitude towards the ATC as to

whether their practices are regular or irreg-

ular, because | feel that it has no probative

value in the case at all. You may have your

exception accordingly, Mr. Broderick.

You may proceed, counselor. "' [83a].

POINT Ill.

The defendants are liable to plaintiff for

failing to lift the suspension after no one pro-

tested against same with the fifteen (15) day

period,

The suspension was based upon a check

being returned for "uncollected funds'' after

this check was rushed to the appellant's bank

ahead of time, and instead of through the usual

channels (check was processed differently from

other agent's checks). But the bank had mis-

led North Shore Travel by sending them a Notice

stating that the check had been "'paid'"' and thus

prevented North Shore from going to the bank

>

21

and demanding that same be paid at a time b efore

Nor'h Shore's Bankbook and hypothecation had

been subpoenaed to court and deliberately de-

stroyed by the person who had received tk is

vital evidence from another employee of the bank

[106a]. North Shore asked to be reinstated [133a]

on this ground, and within fifteen (15) days not

one airline opposed the reinstatement. However,

in spite of the rules, North Shore Travel was not

reinstated because on the sixteenth (16th) day

American Airlines opposed same without ex pl ana-

tion, although to the knowledce of plaintiff's

officers this opposition was based on pers onal

grievances and not on reasonable grounds [97a]

(this is not denied by appellee, see Complaint

[152a] ). Testimony at the trial showed that the

American Airlines representative admitted receiv-

ing full payment from North Shore and that

North Shore did not owe American Airlines one-

cent [97a]. This certainly was an action that

deprived defendants, the ATC, of their immunity

under the Sherman Law.

POINT IV.

The writ of seizure in terms violated the

constitution of the United States, however, this

question cannot be pressed because exec ution

was fraudulently issued in defendants! haste

to destroy North Shore's business.

22

The Court below stated that North Shore

Travel's challenge on the valitity of the writ

could be challenged on certeorari[143a]. Ac tu-

ally, the time to do so has not even matured so

the court could have granted such relief. The

reason that same is unconstitutional is that under

New York State Law, appellant had to provide a

double bonc, which was an impossibility for any

ordinary travel agency, like North Shore, to

raise a one-million dollar bonc. (Actually, the

blark tickets were useless and had no value;

Antar v. T,W.A., 66 Misc. 2d 93 aff'd. 37

App. Div. 2d 921). In the case of LaPrease v.

Raymours Furniture Co., 315 F.S,. 716, the

three-man Constitutional Court held that such

a bonc took them "into a murky and uncertain

area!' but it withheld judgment because the same

question was before the Supreme Court of the

United States in Sanks v. Georgia. However,

before the Supreme Court could decide, the

Legislature of the State of Georgia changed the

law and made the question academic, so the

Supreme Court saw no reason to rule or the

subject:

Sanks v. Georgia, 399 U.S, 922; 400

U.S, 914; 401 U.S, 144.

23

However, there has been a shocking revela-

tion herein [86a] that, although the demand was

made by North Shore's counsel that a bond be

filed before the writ of seizure be issued [127a]

and that the writ recited that the bond was filed

[127a], no bond was posted by appellee and no

stipulation waiving same was offered by appell ees!

counsel. Counsel for North Shore moved on this

ground and under the assumption that, Hintersehr,

etc., had posted a bond [86a]. The minutes of the

hearing on the preliminary proceeding to granting

the writ of Replevin read:

NMR, BRODERICK: I! won't cons ent

to anything. Plaintiff has to submit the bond.

[to] the Sheriff pursuant to Court order, the

Sheriff is to hold these bonds [the chattels]

pending determination of the trial. " [127].

This was followed by the Order of Sei zure

of the Honorable Beatrice S. Burstein, dated

August 1, 1974, and that this Order contained

the following:

"AND, it further appearing that an

undertaking executed by sufficient surety as

required by lew having been submitted h ere-

with, " [127a].

24

Further, the New York Civil Practice Law

ard Rules, Section 2104, reads as follows:

"An agreement between parties or their

attorneys relating to any matter in an action,

other than one made between counsel in open

court, is not binding upon a party unless it

is in a writing subscribed by him or his attor-

ney or reduced to the form of an order and

entered, "!

No such order or stipulation was offered by

defendants herein, the ATC's counsel. Thus, the

Sheriff was fraudulently induced to go out with

the writ to appellant's place of business [8 6a].

The reason for this fraud and rush was to

get the information,regarding the seizure, in

the newspapers [160a] for the purpose of causing

a "run! on appellant to redeem issued tickets

(after appellees! agent showed this newspaper

release to North Shore's accounts [73a] ), which

this appellant did to the extent of $9,000[73al.

The Appellees have refused to refund this

money to appellant, end their opposition c are-

fully only states generalities and refuse to spe-

cifically point out a single dollar owed to them

[126a]. Consequently, this was another method

illegally employed to put the plaintiff out of busi-

ness by causing them to lose their monetar y

assets.

25

POINT V.

By making a motion for summary judgment,

before serving their answer, appellees have

prevented Petitioner from discovery proceed-

ing and then claimed that Petitioner only has

suspicions, when they well know that the

knowledge of its acts, that is necessary to

defeat the motion for summary judgment, can

only be gained by discovery and interroga-

tories.

Rule 26[b] reads as follows:

"74

12

13

14

15

16

17

18

19

(b) Scope of Discovery. Unless other-

wise limited

by order of the court in acccrdance

with these rules,

the scope of discovery is as foll ows:

(1) In General, Parties may obtain

discovery regard-

ing any matter, not privileged, which

is relevant to the

subject matter involved in the p ending

action, whether

it relates to the claim or cefense of

the party seeking

discovery or to the claim or defense

of any other party,

including the existence, descrip tion,

26

nature, custody, con-

20 dition and location of any bocks , doc-

uments, or other

21 tangible things and the identity anc

iocation of persons

22 having knowledge of any disccv erable

matter. It is not

23 ground for objection that the infor-

- mation sought will

24 be inadmissible at the trial if the

information sought

25 appears reasonably calculated to | ead

to the discovery

26 of admissible evidence. "!

In March, 1933, the Seconc Circuit Court

held that an action for damages under the Anti-

trust Law is not for a penalty, ard a bill of dis-

covery may be maintained. But, of what use is

the rule if a defendant can make a motion for a

summary judgment before the answer is served,

and thereby prevent the plaintiff from bringing

discovery proceeding or demanding interro Ga-

tories ?

There is no doubt that the answers to the

Court's claim, that there were allegations of

suspicions, only referred to material solely in

the knowledge and possession of appellees, and

27 28

the motion should have been denied on that ground. REASONS FOR GRANTING THE WRIT

The New York Court of Appeals has held to this

effect, in the case of Proctor E Gamble v. | 1. The Court of Appeals for the Second Circuit

Lawrence Am. Field Warehouse Corp., 16 NY 2d

has misconstrued and misconceived the opinion of

344, (the famous "'salad oi!" case) where the this Court in Erie v. Thompkins [304 U.S. 64]

opinion of Van Voorhis J., contained the fol-

when it held a Replevin Judgment is Res Judicata

lowing, on Page 362; and refused to apply the law enunciated by the

tah N

n * * *® We have held that summary judgment highest court of the State of New York

is not justified where there are likely to be 2. There is a direct corflict between the

defenses that depend upon knowledge in the judgment here of the Court of Appeals, Secon

possession of the party moving for judgment, Circuit anc the United States Court of Appeals,

which might well be disclosed by cross- exam- District of Columbia Circuit, which in the case

ination or examinetion before trial (Kamen v.

Metropolitan Life Ins. Co., 6 AD 2d 406,

aff'd. 6 NY 2d 737; Suslensky v. Metro-

politan Life Ins. Co., 180 Misc. 624, aff'd.

267 App. Div. 812; West Virginia Pulp &

Paper Co., v. Merchants Mut. Ins. Co.,

10 AD 2d 451; 5 Carmody-Wait, New York

Practice, P. 145). For this reason, we hold

of Grueninger International Travel v. Ajir

Transport Association, 14 aviation case 17,

622 hold that''Section 414 does not grant i mmu-

nity to the ATC or its member air carriers,

except to the extent that their actions are auth-

orized or approved. Its protection plainly does

not extend to acts taken in violation of the very

procedural safeguards imposed by the CAB to

that the Appellate Division correctly dec ided ensure that the ATC actions would be taken on

that a triable issue is presented on the second approved grounds "' [note, judgment in above

, _—

cause of action whether plaintiff's vegetable case was affirmed only because no damages

oil was converted by the transfer of cus tocy

xe *

resulted. Were the "life or death proposition!

ended with the death of the Petitioner trave|!

agency. |

29

3. There is direct conflict between the Court

of Appeals, Second Circuit and the 8th Circuit

as to the requirements for summary judgment,

[Ozark Milling Corp., v. Allied Mills, Inc.,

480 F 2d 1014] since here the motion was really

a demurrer and made prior to examination or

discovery under rules of the Federal Court,

Rule 26[b], therefore, admitting the allegations

of the complaint showed a controversy which

deprived appellee of the extreme remedy of

summary judgment.

4. The Court cf Appeals, Second Circuit,

has refused to follow the rule of this Court

[Fay v. Nora, 372 U.S. 391, 83 S. Ct. 8 22,

9L. Ed. 2d 837 l, that a void judgment canbe

collaterally impeached as it ignored the action

of the District Court on newly discovered evi-

dence [p. 130a in Appendix] which indicated the

judgment was void, but the District Court

granted judgment before same could be clari-

fied.

30

CONCLUSION

WHEREFORE, the petitioner prays that a

Writ of Certiorari should be issued to rev iew

the judgment of the Second Circuit.

Respectfully submitted,

Harold Warren

Counsel for Petitioner

Bernard Meyerson

On the Petition

A-1 A-2

APPENDEX A

This cause came on to be heard on the tran-

United States Court of Aspesis for lee script of record from the United States District

Court for the Eastern District of New York, and

was argued by counsel.

Second Circuit

ON CONSIDERATION WHEREOF, it is now

At a stated Term of the United States Court hereby ordered, adjudged, and decreed that the

of Appeals for the Second Circuit, held at the judgment of said District Court be and it hereby

United States Courthouse in the City of NewYork, is affirmed on the opinion of Chief JudgeMi shi er,

on the twenty-fifth day of April, one thousand nine dated September 21, 1976.

huncred and seventy-seven.

A, DANIEL FUSARO

Present: HON, STERRY R, WATERMAN Clerk

HON, J. JOSEPH SMITH

HON, WILFRED FEINBERG

Circuit Judges,

NORTH SHORE TRAVEL SERVICE, INC,,

Plaintiff-Appell ant,

- against -

JOSEPH F, HINTERSEHR, as Treasurer of

the Air Transport Association of America,et °

al.,

Defendants—Appe llees.

Appeal from the United States District Court

for the Eastern District of New York.

A=3

APPENDIX B

(144a)

FINAL JUDGMENT

UNITED STATES, DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

NORTH SHORE TRAVEL SERVICE, INC.,

Plaintiff,

= against -

JOSEPH F, HINTERSEHR, as Treasurer of

the Air Transport Association of America, et

al.,

Defendants.

A memorandum and order of Honorable

Jacob Mishler, United States District Jucge,

having been filed on September 22, 1976, granting

defendants! motion for summary judgment and

denying plaintiff's cross-motion for partial

summary judgment, it is

ORDERED AND ADJUDGED that plaintiff

take nothing of the defendants and that defendants!

motion for summary judgment is granted and

plaintiff's cross=-motion for partial summary

judgment is denied,

Dated: Brooklyn, New York

September 22, 1976

LEWIS ORGEL

Clerk

APPENDIX C

(131a)

es

CPINION OF JUDGE JACOB MISHLER

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

NORTH SHORE TRAVEL SERVICE, INC,,

- against -

Plaintiff,

JOSEPH F, HINTERSEHR, as Treasurer of

the Air Transport Association of America, et

al.,

September 21, 1976

MISHLER, CH,

J.

Defendants.

(132a)

Plaintiff commenced this action seeking damages

resulting from alleged antitrust violations committed by

defendants, and requesting the empaneling of a three-judge

court, pursuant to 28 U.S.C. §2281, to determine the con-

stitutionality of New York State's statutory replevin pro-

cedures, CPLR §7101 et seq. Pursuant to Rule 56, defend-

ants have moved for summary judgment, and plaintifi has

cross-moved for partial summary judgment.

Plaintiff, a New York corporation, operates as

a travel agency in Syosset, New York. The defendants

collectively are officers of the Air Transport Asscciation

of America (ATAA), an association of air carriers, and

officers of the Air Traffic Conference of America (ATC),

and Airline Finance and Accounting Conference (AFC), both

of which are divisions of ATAA. The ATAA exists as a non-

governmental organization operating with Civil Aeronautics

Board (CAB) authorization. The ATC division acts as agent

for the airlines in their transactions with travel agencies,

which reserve and sell airline transportation to individual

customers. Governing the relationships of the parties is

a resolution, authorized by the CAB, known as the ATC Sales

Agency Agreement. These agreements in short, operate to

A-6

~ (133a)

appoint travel agencies such as North Shore, trustees of

the airlines, empowering them to hold the airline's tickets

for sale to the public. Under the agreement proceeds of an

agency's sales, less commissions, are to be remitted to the

airlines three times monthly. The contract further provides

for the suspension and termination of a travel agency's

certification upon breach of the agreement's operating

terms; four late remittances within any twelve month period

constitute sufficient grounds. Upon suspension, the agency

must surrender the airline tickets it holds until reinstate-

ment.

Pursuant to 49 U.S.C. §1382, the agreements and

resolutions were filed with and approved by the CAB. In

accordance with 49 U.S.C. §1384, such approval ordinarily

serves to immunize the authorized groups from operation of

the “antitrust laws," thereby enabling them to engage in

activities consistent with the agrement that might otherwise

be unlawful. However, such statutory immunity is not ab-

solute. If a claim is made that the procedures thus approved

are subsequently perverted to accomplish some result not

within the Board's contemplation, it is arguable that the

statutory protections should fall. See Hughes Tool Co. v.

A-7

A-8.

sieeticeas (135a)

Trans World Airlines, Inc., 409 U.S. 363, 93 S.Ct. 647 | This suspension notice, however, had been pre-

(1973), rehearing denied, 410 U.S. 975, 93 S.Ct. 1434 (1973); ceded by an attempt to cancel North Shore's privileges after

Caceres v. International Air Transport Assn., 46 F.R.D. 89 the May 3lst reporting period. When North Shore had refused

(1969). Putnam v. Air Transport Assn. of America, 112 F. : to surrender its tickets pursuant to the Agency Agreement,

Supp. 885 (S.D.N.Y. 1953). It is plaintiff's contention the ATC commenced an action in Nassau County Supreme Court

that certain of defendants’ actions exceeded the scope : to recover possession of airline tickets and related sales

of procedures authorized by the CAB and therefore, the paraphernalia which was in North Shore's possession. ATC

statutory immunity otherwise afforded by 49 U.S.C. §1384 had based that suspension upon North Shore's alleged accumu-

should fail. As such, plaintiff argues, defendants should lation of four "late remittance charges" within a twelve-

be held liable for damages caused by alleged violations of month period. North Shore counterclaimed alleging that ATC

the antitrust laws. had acted in a willful, intentional and malicious manner in

Pursuant to contractual notice provisions, ’ suspending North Shore's privileges and that ATC had breached a

a letter dated July 29, 1974, was forwarded from ATC fiduciary relationship in initiating the replevin action

offices apprising North Shore Travel of ATC's decision before notifying North Shore.

to suspend the then existing Agency Agreement. The ATC An opinion by Justice DePaolo held that only

stated as its basis for the suspension, North Shore Travel's the "late remittance charges" for the periods ending April

accumulation of five "late remittance nergee™” within 30, 1974 and May 31, 1974 were proper. Finding, therefore,

a twelve-month period. -- that only three" late remittance charges"remained outstanding,

| one less than was required by the agreement in order to sus-

oe agent could be charged with a "single late remittance pend North Shore's operations, the court dismissed ATC's

charge" if he failed to timely remit proceeds or could

be charged with two “late remittance charges" should a action. Justice DePaolo also dismissed the counterclaims

check be dishonored.

. as North Shore failed to establish any of its claims.

ose

(136a)

The July 29th letter cited the three charges

found valid by Justice DePaolo, as well as two "late remit-

tance charges" incurred during July 1974, as the basis for

suspending North Shore's operations. In response, North

Shore filed an immediate request for reinstatement in

accordance with Agency Agreement aeiaia In con-

junction with the suspension, ATC again commenced a replevin

action in Nassau County Supreme Court when a demand for the

surrender of the ticket stock was refused.

On August 1, 1974, after a hearing at which both

the ATC and North Shore were present, Justice Burstein signed

an order authorizing seizure of the airline tickets in North

Shore's possession. Justice Burstein found that ATC had

shown sufficient facts to satisfy the due process require-

ments of the fourteenth amendment and as such, seizure was

proper.

/2

~ Under the terms of the operating Sales Agency Agreement,

a suspended travel agent may file a request for reinstate-

ment. Such a request is immediately transmitted to the

member airlines, and they are asked to forward their ob-

jections. If within fifteen days no member airline re-

quests the matter be held for review, automatic rein-

statement is effected. Herein, North Shore filed for re-

instatement on the same date it received the suspension

notice, July 29, 1974. Twelve days later, on August 9,

1974, American Airlines teletyped ATC offices requesting

reinstatement be held up.

A-10

(1372)

North Shore next impleaded into the action, the

Hempstead Bank, where it retained its checking account. North

Shore alleged that the ATC induced the bank to breach its

contract with North Shore, and that as a result, the bank

willfully and maliciously dishonored the checks leading to

the citation of the "late remittance charges" and the sus-

pension. A short time later, during trial preparations, ATC

was informed by the Insurance ompany of Nurth America that

North’ Shore's surety bond, required by the Sales Agency Agree-

ment, was to be cancelled. ATC, by letter dated August 7,

1974, informed North Shore, that, pursuant to the provisions

of the Sales Agency Agreement, ATC would terminate North

Shore's privileges unless the bond was reinstated or replaced.

North Shore subsequently failed to effect reinstatement or

replacement, and a termination notice issued on October 11,

1974.

The second replevin trial was held in October,

1974, before Justice Lynde. The court, in a written

opinion held that:

(1) the previous decision by Justice DePaolo as

to the validity of the "late remittance charges" for

the April 30 and May 31, 1974, reporting periods was

res judicata;

(138a)

(2) that the “late remittance charges" for

the July 10, 1974 period were proper;

(3) that because North Shore had incurred

five"late remittance charges"within a twelve-

month period, automatic suspension of North

Shore by ATC was rightful and proper; and

(4) that the bank's actions in not honoring

North Shore's checks was justifiable, and that the

bank had not agreed to pay overdrafts.

North Shore subsequently appealed to the New York

Appellate Division for the Second Department which affirmed

Justice Lynde's decision. North Shore's motion for leave

to appeal to the New York Court of Appeals on the ground

that the New York replevin statutes, N.Y.C.P.L.R. §§7101 et

seq., are unconstitutional was denied.

The hesitancy with which the courts should pro-

ceed before granting summary judgment has been consistently

emphasized within this circuit, see Heyman v. Commerce and

Industry Insurance Company, 527 F.2d 1317 (2d Cir. 1975),

Arnstein v. Porter, 154 F.2d 464 (2d Cir. 1946). It is an

extreme remedy demanding the clearest establishment of a

A-12

(139a)

right to judgment before it is to issue. Ozark Milling Co.

v. Allied Mills, Inc., 480 F.2d 1014, 1015 (8th Cir. 1973).

Only where the record disclosed the absence of genuine

issues as to material facts, and only issues of law rerain

is summary judgment proper. Heyman v. Commerce and Industry

Insurance Company, supra at 1319-1320. The fact that cross-

motions for the remedy are before the court does not lead to

the conclusion that the standards should be lowered; the

same caution should be employed, Heyman _v. Commerce anc

Industry Insurance Company, supra at 1320. Applying the

above notice principles to the instant matter, it is apoarent

that summary judgment is appropriate.

In Lowe v. International Air Transport Association

Civil No. 69-4788 (S.D.N.Y. January 9, 1976), cited by

plaintiff, the defendants’ failure to consider relevant

rebuttal evidence at a hearing to review a trevel agency's

suspension, and its subsequefit failure to issue a partic-

ularized motice of termination was held to have exceeded

the procedural guidelines of the Agency Agreement authorized

by the CAB. Noting that courts have consistently demanded

strict compliance with prescribed procedures in order that

immunity attach, the court concluded that @efendant's

e

A-13

(140a)

failings served to deprive them of the statutory immunity

otherwise afforded by 49 U.S.C. §1384. Plaintiff contends

that certain conspiratorial acts between the ATC, the bank,

and the insurance company enabled defendants to circumvent

the prescribed procedures in terminating North Shore and

that such acts exceeded the intended scope of CAB authori-

zation. As such, plaintiffs argue, statutory immunity should

be wichiewn and its claim for damages allowed.

North Shore once again raises allegations of a

conspiracy between the ATC and Hempstead Bank to drive it

out of business. Arguing the “suspicious” circumstances

under which checks to the ATC were dishonored, plaintiff

claims the"late remittance charges'and the suspension of

July 29, 1974 were unwarranted. It is not necessary to once

again recount the details cited by plaintiff in support of

its assertion. This matter was fully litigated in the state

courts. Justice Lynde found the checks were appropriately

dishonored and that no agreement existed for the bank to pay

overdrafts. Moreover, the Appellate Division specifically

held that North Shore's allegations were founded on sus-

picion and not evidence. Hence the doctrine of res judicata

bars relitigation of the claim. The fact that judgmert was

A-14

(141 a)

rendered by a state court is not an impediment to the appli-

cation of this rule as that judpment is enritled to full faith

and credit. Durfee v. Duke, 375 U.S. 106, 84 S.Ct. 242 (1963).

Plaintiff, by affidavit of Frank Monello, sworn

to June 1, 1976, suggests that ATC improperly applied pres-

sure on the Insurance Company of North America te cancel the

surety bond. North Shore argues that this alleged overreach

permitted termination thereby circumventing review of the

propriety of the suspension letter. Yet, plaintiff offers

nothing in support of this bare allegation. A bald assertion

is insufficient to raise a material issue of fact barring

summary judgment. Rule 56(e) F.R.C.P. Nor can such an un-

supported claim be the basis of an alleged antitrust violation.

North Shore further alleges the insufficiency

of the termination notice. Plaintiff argues that the de-

fendant's failure to remit the unused portion of the bond

premium rendered termination ineffective. Defendant on

the other hand, asserts the amount was deducted from the sum

due and owing ATC because of the dishonored checks. This

inconsistency, however, does not raise a material issue of

fact. A failure to refund the unused amount at rost zives

A-15

(142a)

rise to a contract claim. Plaintiff, therefore, has failed

to show that the procedural requirements of the Agreement

have been breached by defendants and that immunity should

fail.

North Shore also attacks the constitutionality of

New York State's replevin statute. N.Y.C.P.L.R. §7101 et

seq., and seeks the convening of a three-judge court to

determine the issue. More specifically, plaintiff asserts

that CPLR 7102(e) prescribing the undertaking to be furnished

in a replevin action, fixing it at "not less than twice the

value of the chattel stated in plaintiff's affidavit,"

violates the Equal Protection Caluse of the fourteenth amend-

ment. Collateral issues having been litigated in the state

court, it was entirely possible and wholly appropriate for

plaintiff to have asserted this contention simultaneously.

The doctrine of res judicata bars relitigation of issues

that were or could have.been tried in the initial action.

Blankner v. City of Chicago, ‘ F.2d 1037 (7th Cir. 1974),

cert. denied, 421 U.S. 948, 95 S.Ct. 1678, rehearing denied,

U.S. , 95 S.Ct. 2618 (1975). North Shore's challenge

to the validity of the state court judgment on constitutional

grounds was available through application for certiorari

BEST COPY AVAILABLE

A-16_—

(143 a)

to review the New York Court of Appeals! denial

of leave to appeal. See Mitchell v. W. T. Grant

Co., 415 U.S, 600, 94S, Ct. 1895 (1974).

For the reasons heretofore cited, def en-

dants' motion for summary judgment is granted and

Plaintiff's cross-motion for partial summary

judgment is denied, and it is

SO ORDERED,

s/JACOB MISHLER

u,. Be Be J.