Petition — National Airlines, Inc. v. Civil Aeronautics Board

oe

.

2

« Kd

>, ¥ by

a ae

ik me Wao

4

*

>

"he -

- et +

2 “i

F a4 Xa? be

a ~*~ > }

foe ta

+ be

Ass <

ej S. 7 .

, Tbe .

we eee >

—- IS

Matas)

ea

7

Piast

¥ —

+ > y

v x

_ eg

oN

a

In THE

pine ra the Mite ates

OCTOBER TERM, 1977

ee | _ NATIONAL AIRLINES, INC.,

ok Petitioner,

Vv.

Civi.. AERONAUTICS BOARD, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the

~~ District of Columbia Circuit

3 BRIEF FOR RESPONDENT

PAN AMERICAN WORLD AIRWAYS, INC.,

IN OPPOSITION

JAMES F. BELL

JOSEPH M. OLIVER, JR.

Jonss, Day, Reavis & Pocus

1100 Connecticut Avenue, N.W.

Washington, D.C. 20086 __

- Attorneys for Respondent

Pan American World Airways, Inc.

Wison - Eres Painrine Co. . Inc, - Re 7-6002 - WasHINGTON. D: C. 20001

iy A

. > Sg

: tS eae macs &

-

IN THE

Supreme Court of the United States

OCTOBER TERM, 1977

No. 77-448

NATIONAL AIRLINES, INC.,

Petitioner,

| A

CIVIL AERONAUTICS BOARD, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the

District of Columbia Cireuit

BRIEF FOR RESPONDENT

PAN AMERICAN WORLD AIRWAYS, INC.,

IN OPPOSITION

QUESTION PRESENTED

Whether the Court of Appeals, having found that the

Civil Aeronautics Board committed error in unfairly up-

dating an evidentiary record as between two applicants

in selecting a carrier for route authority, erred in re-

manding only that part of the Board’s decision.

2

STATEMENT OF THE CASE

In its decision in the Miami-Los Angeles Competitive

Nonstop Case, the Civil Aeronautics Board affirmed the

finding of its Administrative Law Judge that the Miami-

Los Angeles market requires competitive nonstop serv-

ice, but refused to follow the Law Judge’s recommenda-

tion that the authority in issue be awarded to Pan

American World Airways, Inc. (Pan American) and

selected Western Air Lines, Inc. (Western) instead. Pan

American sought judicial review of the Board’s decision

to select Western. Petitioner National Airlines, Inc. (Na-

tional), the incumbent nonstop carrier in the market,

also sought judicial review, challenging the Board’s de-

termination to certificate any competition.

Before the Court of Appeals, Pan American contended

that the Board’s reversal of its Law Judge’s recommenda-

tion as to carrier selection was based upon an unfair

and prejudicial updating of the evidentiary record.

Among other things, Pan American argued that the

Board had unfairly and arbitrarily adjusted Pan Ameri-

can’s forecast of traffic and financial results based upon

post-record occurrences, but had not made necessary ad-

justments to Western’s forecasts.

National’s principal argument centered around its con-

tention that events which occurred during the period

between the closing of the evidentiary record and the

Board’s decision eliminated any evidentiary basis for

concluding that National and Western could operate

profitably in competition with each other. In its opinion,

the Board updated the traffic forecasts based upon more

recent, officially noticeable data. It found that, with com-

petition, National would have a load factor of 44.5 per-

cent, well in excess of National’s own estimate of its

break-even load factor, and that National had not pre-

sented any probative evidence that its break-even load

factor had increased. App. C-15-17.

The Court of Appeals held that the Board’s selective

updating of the evidentiary record with respect to the

comparative qualifications of Pan American and Western

had been prejudicial and unfair to Pan American, and

on that basis remanded the record “for adversarial ex-

ploration of the recent developments considered by the

Board in reaching its decision to prefer Western over

Pan American.” App. A-42. While noting that National

also challenged the Board’s updating of the record, on

the facts of the case the Court could not find that Na-

tional was “injured in any way.” App. A-29.

REASONS FOR DENYING THE WRIT

1. National suggests that the Court of Appeals ig-

nored errors in the Board’s decision prejudicial to Na-

tional simply because the Court agreed with the Board’s

finding that competition is warranted. This suggestion

is without support. Such an improper motivation does

not appear on the face of the opinion, and it should not

be imputed either by National or by this Court. What

the Court of Appeals found, in fact, was that the Board's

decision as to the need for competition was supported

by substantial evidence.

2. National contends that the Court of Appeals’ re-

mand is unduly restrictive and will prevent the Board

from permitting National to relitigate the need for com-

petition issue. At the outset it should be noted that Na-

tional’s petition is, in all likelihood, moot. The CAB

adopted an order on September 16, 1977, inviting com-

ments from the parties with respect to the scope of the

remanded proceeding and the procedures to be used. As

to the issue of whether competition should be authorized,

the Board stated that “(t]he Court did not require a re-

examination of the need for service question and we see

no public need for it.” CAB Order 77-9-62.' This ac-

1 Order 77-9-62 is attached to this brief as an Appendix. The

quoted language appears at page 3a of the Appendix.

4

tion is consistent with the Board’s policy of declining

to reopen issues other than those specifically remanded

“. . . unless compelling public interest or other con-

siderations are advanced for such reexamination.” St.

Louis-Southwest Service Case, 31 C.A.B. 377, 378 (1960).

Any other policy would produce needless relitigation of

issues correctly decided in the first instance. Thus, even

if the Court of Appeals had given the CAB the dis-

cretion which National says should have been given, the

result would have been no different.

3. National’s reliance on FCC v. Pottsville Broadcast-

ing Co., 309 U.S. 134, is misplaced. In the present case,

unlike Pottsville, the Court of Appeals’ remand does not

deprive any competing applicants of a fair comparative

hearing. All applicants have been heard contemporane-

ously. All that the remand requires is that the Board

decide anew between Pan American and Western because

Pan American was denied a fair comparative hearing.

4. Furthermore, unlike the statute involved in Potts-

ville, the Federal Aviation Act provides the courts of

appeals with broad remand powers. Section 1006(d) of

the Federal Aviation Act, 49 U.S.C. § 1486(d), provides

that courts of appeals “shall have exclusive jurisdiction

to affirm, modify, or set aside the order complained of,

in whole or in part, and if need be, to order further

proceedings by the Board.” The District of Columbia

Circuit routinely remands cases to the Board with in-

structions, and has stated that “[t]he decision whether

or not to limit the scope of the proceedings on remand

involves the sound discretion of the reviewing court.”

Braniff Airways, Inc. v. CAB, 379 F.2d 453, 468 (D.C.

Cir. 1967) (citing cases; footnote omitted).

5

CONCLUSION

For the foregoing reasons, the petition should be

denied.

October 1977

Respectfully submitted,

JAMES F. BELL

JOSEPH M. OLIVER, JR.

JONES, Day, REAVIS & POGUE

1100 Connecticut Avenue, N.W.

Washington, D.C. 20036

Attorneys for Respondent

Pan American World Airways, Inc.

la

APPENDIX

Order 77-9-62

UNITED STATES OF AMERICA

CIVIL AERONAUTICS BOARD

Washington, D.C.

[SEAL]

Adopted by the Civil Aeronautics Board

at its office in Washington, D.C.,

on the 16th day of September, 1977

Docket 24694

MIAMI-LOs ANGELES COMPETITIVE NONSTOP CASE

ORDER REOPENING PROCEEDING

Background

On March 15, 1976, the Board issued its decision in

this case authorizing Western Air Lines to compete with

National Airlines over a Miami-Los Angeles nonstop

route. In so doing, the Board affirmed the decision of

the administrative law judge that the market needs, and

can support, competitive service. The Board, however,

reversed the judge’s selection of Pan American as a

competitive carrier.‘ Requests for reconsideration and

stay of that decision were denied on June 16, 1976.?

The Board’s decision was appealed to the United States

Court of Appeals for the District of Columbia Circuit

by National, Pan American, and two other losing ap-

plicants, Delta Air Lines and American Airlines. On

+ Order 76-3-93.

* Order 76-6-120.

2a

June 23, 1977, the court issued its decision and re-

manded the record in the case to the Board “for ad-

versarial exploration of the recent developments con-

sidered by the Board in reaching its decision to prefer

Western over Pan American. ...” Delta Air Lines, Inc.

et al. v. C.A.B. (Miami-Los Angeles Route), No. 76-1241

et al. (D.C. Cir., filed June 23, 1977), slip opinion p.

42. The court was concerned that substantial delay had

occurred between the close of the record and the issuance

of the Board’s decision, that Pan American had persua-

sively argued that the Board’s updating of the record

had operated significantly to the detriment of that car-

rier, and that the Board’s consideration of beyond-seg-

ment services as a carrier selection criterion may have

constituted a departure from its 1969 decision involving

the same market. Specifically, the court directed the

Board to “give Pan American a chance to submit its

own version of changes in circumstances occurring be-

tween 1973 and 1976 and to comment upon the relevance

of those changes to the award of Miami-Los Angeles

route authority.” Id. at 28.

In all other respects the Board’s decision was upheld.

The court observed that of the various contentions pressed

upon it, only three warranted discussion and concluded

that, as to two of the contentions—namely, Delta’s argu-

ment that it was entitled to priority by reason of its

1972 merger with Northeast Airlines, and National’s

challenge to the Board’s alleged failure to comply with

the Energy Policy and Conservation Act of 1975—the

Board’s disposition should not be disturbed. Id. at 3-4.

National Airlines filed a petition for a stay of the court’s

decision pending rehearing en banc or the filing of a

petition for certiorari. On August 2, 1977, the court de-

nied National’s requests, saying:

“It is also desirable that the proceedings on remand

be carried on as expeditiously as possible, as the

3a

Board represents its purpose to do.” Delta Air Lines,

Inc. v. CAB, No. 76-1241 (D.C. Cir., filed August

2, 1977).

Discussion

We have decided to solicit comments from all parties

with respect to the proper course of action for the Board

to follow in light of the court’s remand.* In order to

focus the comments, we believe it useful to set forth two

specific questions on which the Board wishes comments.

First, we want parties to comment on the scope of the

remand required by the court’s decision. The court did

not require a reexamination of the need for service

question and we see no public need for it. As to the

carrier selection question, we note that the court’s de-

cision appears to have directly required only that the

Board “give Pan American a chance to submit its own

version of changes in circumstances occurring between

1973 and 1976 and to comment upon the relevance of

those changes to the award of Miami-Los Angeles route

authority.” Delta Air Lines, Inc. et al. v. (C.A.B. Miami-

Los Angeles Route), supra, slip opinion p. 28.5 We wish

the parties to address the Board’s power to reopen the

* The Court’s mandate was issued on August 9, 1977. A copy of

the Court’s August 2 order is attached.

*On July 1 and July 18, Eastern Air Lines filed motions urging

the Board to reopen the case for further evidentiary hearings on new

applications from all carriers and to hold such hearings in Miami.

Answers to Eastern’s motions are due shortly.

*We assume that this directive includes according Western a

reasonable opportunity to submit its version of recent events as

well. We note, however, that the court, in discussing the general

question of the updating of the record, observed that both National

and Pan American challenged this updating. The court, however,

rejected National’s claim that it had been prejudiced and did not

require the Board to accord National (and presumably others) an

opportunity for a further presentation to the Board. See slip

opinion, n. 29, note 15.

4a

case for a de novo examination of the question of car-

rier selection where the court remands only the record.

Our tentative view is that this would be neither neces-

sary nor desirable. The Board’s original decision makes

clear our opinion that, from the perspective of the trav-

eling and shipping public, no carrier appears likely to

provide appreciably better service than Western or Pan

American.® Furthermore, it must be recognized that this

matter has already occupied our attention for about a

decade, and that a commitment of Board resources to a

re-trial of this case would necessarily compromise the

Board’s concurrent ability to emply [sic] these same re-

sources to examine the needs of other markets as well

as other novel and important regulatory matters now fac-

ing the Board for the first time. Nonetheless, we do not

foreclose a fuller reexamination of the carrier selection

question if warranted.’

Second, whether this case is limited to the question

of carrier selection as between Western and Pan Ameri-

can (or, perhaps, an award to both), or is more broadly

reviewed, we wish the parties’ views as to whether the

Board could or should proceed under an expedited sched-

ule which would eliminate a new trial and a new initial

decision. In the Service to Saipan Case, Docket 24421,

and the Service to Richmond Case, Docket 24412, the

Board entertained evidentiary exhibits, rebuttal material,

and briefs, but did not hold a further oral evidentiary

hearing or require the filing of an initial decision. The

*See Order 76-3-93, pp. 19-22. The court will allow Western's

continued operation during the pendency of any remand proceeding

and we recognize that, as a result, the traveling and shipping pub-

lic will not be deprived of needed service during the pendency of

any remand.

* Eastern Air Lines has filed a request that the Board reopen the

entire carrier selection issue and hold further hearings in Miami.

Pan American has filed an answer in opposition; answers were due

September 9, 1977.

TE

5a

Board was able to complete the Saipan case in under six

months and was able to complete the Richmond case in

just over four months. See Order 75-11-59, served No-

vember 17, 1975, and Order 76-6-171, decided May 7,

1976 (Saipan); and Order 76-11-131, served November

30, 1976, and Order 77-4-29, decided April 6, 1977 (Rich-

mond).

ACCORDINGLY, IT IS ORDERED THAT: Com-

ments in response to this order shall be filed within 14

days from service and reply comments shall be due 7

days later.

By the Civil Aeronautics Board:

PHYLLIS T. KAYLOR

Secretary

[SEAL ]

All Members concurred.