# Petition for Writ of Certiorari — Century Air Freight, Inc. v. American Airlines, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_2374%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1984 - **Citation:** 469 U.S. 1073 ## Text Office - Supreme Court, U.S. 84 = 69 FILED OCT 5 j004 N In The Supreme Court of the United States October Term, 1984 CENTURY AIR FRE:iGHT, INC., Petitioner, -VS.- AMERICAN AIRLINES, INC., Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT MILTON HOROWITZ Counsel for Petitioner 15 Park Row New York, N.Y. 10038 (212) 267-0606 MICHAEL E. VEVE Of Counsel for Petitioner O’CONNOR & HANNAN 1919 Pennsylvania Avenue, N.W. Washington, D.C. 20006 (202) 887-1455 Di hk Bur ley Bunter -» 203 Richmond Avenue @ Staten Island, New York 10302 Tel.: (212) 447-5358 — (516) 222-2470 — (914) 682-0848 i QUESTIONS PRESENTED 1. Was it proper for the Court of Appeals to affirm the holding of the District Court herein that §404 of the Civil Aviation Act; 49 U.S.C. §1374, mandating a duty on airline operators to furnish air transportation to those making reasonabie request therefor and pro- hibiting undue preferencing and unjust discrimination in air transportation, was not intended by Congress, and therefore never did imply a right of action by private parties to recover for executed acts of miscon- duct violative of §404 of the Act? That holding effectively overrules Fitzgerald v. Pan American World Airways, Inc., 229 F. 2d 499 (2d Cir. 1956) which found that §404 implied such a right since the Civil Aeronautics Board was powerless to grant reparation in money for past misconduct, and that to deny such right of suit to injured parties in those instances would render §404 unenforceable. Un- til the instant ruling, Fitzgeraid was followed without dissent in scores of cases in all Circuits. And now the shipping public, despite §1002(k) of the Act; 49 U.S.C. §1482(k), enacted November 9, 1977 for the era of deregulation and expressly prescribing common car- riage and therefore public service as the regime for the air transportation of goods, has been abruptly depriv- ed of the right of enforcement which it had enjoyed for close to 30 years. 2. Could the district court, before the filing of an answer responsive to the complaint, validly dismiss, as presenting no triable issue, a complaint charging violation by an airline operator of section 404 of the Civil Aviation Act of 1958; 49 U.S.C. §1374, and sec- tions 1 and 2 of the Sherman Antitrust Act; 15 U.S.C. ii §§ 1 and 2, where a concededly total denial, sustained tainerized goods aboard respondent's Flight 841—the only daily, fully containerized all-freight, overnight flight from metropolitan New York to Puerto freight forwarder competitor of petitioner of an alloca- tion of space aboard the flight of never less than two thirds of the aircraft’s container capacity? The dismissal disregards the conclusion of the in- vestigatory and enforcing Bureau of the Civil Aeronautics Board, in the course of its exercise of primary jurisdiction of the case and after investiga- tion, that respondent had v.olated section 404 of the Aviation Act and section 1 of the Sherman Antitrust Act. The caption of the case in this Court contains the names of all the parties to the proceedings in the Court below. ii TABLE OF CONTENTS Page Ee eNO eNO i Parties ............. siilsahdelelclcehattinnteaneiniensnnnensteunnennnnnnannnnnnnnn ii ST sions hacia anenntndninnnnenebnnennainnntia 1 SII sccictbisicinssintictancenbinnacnenncasannenecncneccecazeseseercesesass 2 Reasons for Granting the Writ .....................ccccceeeeeees 2 Statutes which the Case Involves ...........s:..ssssseesseeen 3 SII Or GENE GRIND ee secracescnreccceecsscccnscccenanscnnpeonceonens 9 Century’s Case Against American ......................00008 12 Be ne BND GID GIR cccesccecccssesecescecccencceccccenecenses 15 Argument: 1. Fitzgerald v. American World Airways, Inc., 229 F.2d 499 (2d Cir. 1956) is valid prevailing authority for allowing private suit under Section 404(b) of the Aviation Act by qualified suitors il- legally injured by carrier discrimination in air TT CN ene eT TTT 22 2. The legal predicate of the undisputed exclusion of Century’s goods from American’s freighter flight sustained for six years is that it was a gross violation of §404 of the Aviation Act and an il- legal restraint of trade. In those circumstances, iv the mere presence of a beneficiary and preferencee made the possibility of antitrust violation too strong to allow summery dismissal on antitrust ......28 Conclusion ...........ssssssseseeseesessnsensennenrannenvensensnsansensensnes 30 APPENDICES 1. Order of Court of Appeals Denying Petition for Rehearing in Banc, July 10, 1984 ........-v-+-ssererssssreeee la 2. Court of Appeals’ Summary Affirmance of District Court Judgment on Opinion Below, May 31, 1984 ..cccccccsscscsssssescsesssnssenenenssnsnenonssensesensssananenenses 3a 3. District Court Judgment Dismissing Com- plaint, January 10, 1984 ..........ssss»-svsenssnnsesisnsensennenneess 5a 4. District Court Opinion, January 5, LOBE ...ccccccccceee 7a 5. Letter of Civil Aeronautics Board Director of Consumer Protection to Counsel for American Airlines, Inc. Announcing Intention to Institute Enforcement Proceeding, June 22, 1979 .........-+++++ 30a CASES CITED Allied Air Freight, Inc. v. Pan American World Airways, Inc., 393 F.2d 441 (2d Cir. 1968), cert. denied 393 U.S. 846 (1968) ........crsserserrenrenennnenees 14,23 Caceres Agency, Inc. v. Trans World Airways, Inc., 594 F.2d 932 (2d Cir. 1979) .......s-s-sereeeererenererenrers 27 Century Air Freight, Inc. v. Civil Aeronautics Board, Vv 738 F.2d 418 (D.C. Cir. 1982) cert. denied 459 U.S. 943 SPEED However, combination service is timed to passenger schedules. 4. This fact, originally stated to the Bureau by Century, was corroborated in our interviews with American’s personnel held in June of 1978. 5. Usually, this calls for late evening departures, a fact attested tc by the scheduling of American's freighter. 37a In addition, although other carriers have periodically offered freighter service in this market, no other car- rier matches American's frequency, service, or depen- dability.6 For these reasons, American’s long- standing exclusion of Century and its restriction on the amount of space ultimately provided were in- jurious to Century’s development of a southbound operation. LEGAL DISCUSSION Prior to the passage of P.L. 95-163 and the development of new policies during deregulation, there was no question that American’s standing preference in favor of Profit-By-Air and the resulting exclusion of Century constituted unlawful discrimina- tion under Section 404(b) of the Federal Aviation Act. Under prior law, the proscription against unjust discrimination: precludes different treatment of like traffic for like and contemporaneous service under substantially similar circumstances and conditions. (Citation omit- ted.) Such discrimination may result from the charg- ing of different rates to different shippers or passengers afforded the same service . . . or from the offering of specific services to only a select patron or group of patrons (citation omitted). In either situa- tion, the result is that the carrier is giving preferential treatment to one person or group of persons to the pre- judice of another and contrary to the requirement that all those who seek the service of a carrier must be 6. The same is true of the other carriers now in the market. Airlift’s service is often chartered to other destinations without advance warning, and Flying Tiger's new operation is limited to Saturday only. 38a treated alike. Transcontinental Bus System, Inc. v. Civil Aeronautics Board, 383 F.2d 466 at 481-82 (5 Cir. 1967); cert. denied, 390 U.S. 920 (1968). Guided by these principles, the Board explicitly found that an agreement giving Emery Air Freight a stand- ing priority over other forwarders in having its cargo boarded on commuter carriers was unduly preferential and refused to approve it under Section 412. Emery Air Freight and Air Midwest, Inc., et al., Order 73-4-8. pp. 1, 2, 6. Thus, prior to the enactment of the P.L. 95-163, American’s practice clearly violated the probi- tions of Section 404(b). After reviewing several Board decisions and regulations issued since that time, the Bureau has concluded that the requirements of equal treatment enunciated in Transcontinental Bus System, Inc., supra, are largely unchanged with regard to boarding preferences and that American’s practice remains unlawful. In ER-1080 (November 9, 1978), the Board began reviewing the obligations of freight carriers with a view toward amending them to conform to the new law. After a full rule-making proceeding, the Board decided that it would be in the public interest to utilize its power under Section 416(a) to exempt car- riers from several statutory obligations, such as the duty to carry upon reasonable request arising under Section 404(a). However, the Board explicitly provid- ed that this exemption did not alter obligations aris- ing under Section 404(b), stating that: This exemption, however, does not relieve the carriers of their service obligations as common carriers, and does not apply to a carrier’s duty to refrain from pro- viding preferential treatment to particular companies 39a or persons. Carriers having certificates under Section 401 or 418 remain, by definition, common carriers. ER-1080, p. 12. Accordingly, although the Board codified sweeping changes in carriers’ duties in Part 291 of its regula- tions, it has never exempted carriers from the re- quirements of Section 404(b). See, eg. 14 C.F.R. §§291.30-35.’ The Board has shown that it will continue to adhere to the longstanding interpretation of Section 404(b) in cases involving standing service preferences. In the matter of the application of Trans- Mediterranean Airways, S.A.L., Docket 30255, the Board specifically found a contract under which TMA had agreed to give the freight of one particular ship- per a standing delivery priority over other freight to be unlawful. In its own words: The Board has rejected similar priority arrangements in interstate air transportation and we see no per- suasive reason for adopting a different policy.... Order 78-5-67, p. 12.° 7. Nothing in the Board’s Proposed Policy Satement on Price Discrimination, PSDR-58, which specifically concerns price discrimination and not service preferences, excuses American's discriminatory actions either. In fact, the proposed statement provides further support for finding these practices to be unlawful since American's discrimination caused Century severe financial injury which the force of free entry did not dilute over a substantial period of time. See, 14 C.F.R. §399.34(b) (proposed). 8. See also, the matter of the application for a foreign air carrier permit submitted by P.7. Merpati Nusantara Airlines (Air Bali), Docket 30826, in which the Board found that a proposal to offer one- way charters on the basis of nationality was discriminatory and violated Section 404(b), citing Transcontinental Bus System with approval. Order 78-6-217, p. 3. 40a On the basis of this precedent, the Bureau has con- cluded that American’s treatment of Century which resulted from a standing preference in favor of Profit- By-Air is unjustly discriminatory and must be discon- tinued.® We have also concluded, on the basis of informa- tion presently available, that there are reasonable grounds to believe that American's practice con- stituted a violation of Section 1 of the Sherman Act. Specifically, we find that it is inconsistent with the “essential facility’ doctrine perhaps best enunciated in Hecht v. Pro-Football, Inc., 570 F.2d 982 (D.C. Cir. 1977). The relevant market at issue here is confirmed air freight traveling from New York City to San Juan, Puerto Rico on regularly scheduled cargo service. American's service constituted a facility essential to successful operations in this market. Since, as a prac- tical matter, air freight forwarders are unlikely to be able to duplicate these services, they should be allocated on fair terms. Therefore, in foreclosing the use of American’s services, both American and Profit- By-Air may have violated the antitrust laws. Hecht, supra, 570 F. 2d at 992; see also, Otter Tail Power Co. v. United States, 410 U.S. 366 (1972). By implication, 9. As you know, the Bureau was of the opinion that the outcome of PRAFRI might affect our interpretation of Section 404(b). In PRAFRI, the questions of whether the rates charged for priority freight were discriminatory and whether the Board had jurisdic- tion to make such a determination were raised. In his initial deci- sion, presiding Judge Yoder found that priority rates were unlawfully discriminatory and that the Board still had jurisdic- tion over such matters even in light of cargo deregulation. In reaching his decision, Judge Yoder relied on the interpretation of Section 404(b) advanced in Transcontinental Bus System, Inc., supra, showing that it is still current. I.D. at 57-58. Thus, based on the long-awaited outcome of PRAFRI, this interpretation of car- riers’ obligations is still valid. 4la any such violations would also constitute unfair methods of trade within the meaning of Section 411 of the Federal Aviation Act. See, Federal Trade Commis- sion v. Cement Institute, 333 U.S. 683 (1948). CONCLUSION For the reasons stated above, the Bureau has con- cluded that American violated Section 404(b) of the Federal Aviation Act in excluding Century from its New York City-San Juan freighter service and by con- tinuing to restrict the availability of this service as a result of preferences given other forwarders. These ac- tions not only injured Century's business, but also caused great harm to the general public. American prevented a small forwarder from offering new, in- novative service to the public in competition with the incumbent. Such a result is directly contrary to the aims of deregulation and current Board policies. By July 20, 1979, the Bureau will determine what further course of action should be taken here.'® On the basis of the evidence presently available, we have con- cluded that American must begin allocating space on its freighter in a different manner. If you wish to dispute this conclusion by drawing additional evidence or legal precedent to our attention, please contact Robert C. Seldon, the Bureau's attorney responsible for the case's development, prior to the 20th. 10. We have already decided to take no action of our own in response to Century's antitrust claim. Our reasons for doing so are stated more fully in our letter to Century's counsel, a copy of which is attached here. 42a I must advise you that unless we are presented with a contrary view of the facts or applicable prece- dent, the Bureau is prepared to institute an ad- ministrative proceeding to ensure that, in che future, American will allocate space on its freighter in a non- discriminatory manner. In addition, if American's practices were found to be unlawful, American could also be subject to civil penalty liability under Section 90 l(a) of the Act. We would prefer to resolve these and other ancillary matters without resort to litigation. If American is amenable to such a solution, I suggest you discuss this matter as well with Mr. Seidon prior to July 20th. In particular, I believe it would be fruit- ful to discuss future practices in the market as well as remedies for American's past activities. Very truly yours, s/ Reuben B. Robertson Reuben B. Robertson Director Bureau of Consumer Protection Attachment cc: Milton Horowitz, Esq. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_2374%3A1. Public record. Not legal advice.