Reply Brief — Century Air Freight, Inc. v. American Airlines, Inc.

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Office - Supreme Court. U.S

; FILED

No. 84-563 NOV 16 1984

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ALEXANDER lL, STEVAS,

Iu The CLERK

Supreme Court of the United States

October Term, 1984

CENTURY AIR FREIGHT, INC.,

Petitioner,

rVS.-

AMERICAN AIRLINES, INC.,

Respondent.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the Second Circuit

PETITIONER’S REPLY BRIEF

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

iA i, “he

fF h Bar 4 Wf FP, wfex., 203 Richmond Avenue @ Staten Island, New York 10302

Tel.: (212) 447-5358 — (516) 222-2470 — (914) 682-0848

TABLE OF CONTENTS

Page

SUtVEMENE ........ccerrrccreccrccrcccrccccccccccssccscccsccsccsscescessoosses |

Bi cnnestnencsiinccnctnocennccscncnsssanececescaansncneqesnsescetszeee 2

The Civil Aeronautics Board Sunset Act of 1984...............0008 2

COMGRIIIOR 2. cvrcccccenccccescncccesessenececcncsesesesesccscccesccecoseces 8

TABLE OF AUTHORITIES

United States v. Trans-Missouri Freight Association, 166

CID, TD Ca a onvncrccnccceccacconececseescnsssccusesewsesacsesescoceneed 6

Statutes:

Civil Aeronautics Board Sunset Act of 1984, Public Law

98-443, 98 Stat. ———, 49 U.S.C. ———... eee e cee ee cece es 1,4

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BB Vicnccsnasesasnseseccssccsncncevecatvenccsascnsnssececcnseseucesenss 6

Civil Aviation Act of 1958, as amended, inclusive of the

Airline Deregulation Act Of 1978............ccccccceceecesees eoeeeees 4

Sec. 404; 49 U.S.C. §1374........cccccceceeeeeesereneeeees 2,3,4,5

Soc. 411; 49'U.S.C. GISB1.........cccesrsccccccccsccccersececesces 6

Sec. 1002(k); 49 U.S.C. §1482(k)...........ccceeeeeeeeenees 5,6,7

Sherman Antitrust Act of 1890, as amended

Secs. 1 and 2; 15 U.S.C. §§ 1 and 2......

In the

SUPREME COURT OF THE UNITED STATES

October Term, 1984

No. 84-563

CENTURY AIR FREIGHT, INC.,

Petitioner,

-against-

AMERICAN AIRLINES, INC.,

Respondent.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the Second Circuit

PETITIONER’S REPLY BRIEF

STATEMENT

This is the reply brief of petitioner (‘‘Century’’) to the op-

position brief of respondent (‘‘American’’). It is largely evoked

by the enactment on October 4, 1984 of the Civil Aeronautics

Board Sunset Act of 1984, Public Law 98-443, 98 Stat.---, an

Act ‘‘to amend the Federal Aviation Act of 1958, to terminate

certain functions of the Civil Aeronautics Board, to transfer

certain functions of the Board to the Secretary of Transporta-

tion, and for other purposes.’’ American asserts that because of

the enactment, effective January 1, 1985, there no longer re-

mains ‘‘any issue of public importance worthy of this Court’s

consideration.’’ (Respondent’s Brief, p. 12).

We disagree and subscribe to the doctrine that stare decisis,

binding courts and judges to follow established law regardless

of any deviant views or values which they may favor, is an im-

portant enough public value to attract this Court’s attention

and, if need be, its protection. Indeed, we feel that at this junc-

ture in the case, with sweeping statutory change at hand, the

public importance of this Court’s hearing the case is, if

anything, enhanced. For however well the district court may

have anticipated a statutory change coming a year later, its ac-

complishment, as affirmed, was to overturn a thirty year old

regime where statutory beneficiaries, passengers and shippers,

had an implied right in private suit to money reparation for past

acts of carrier misconduct violative of their statutory common

carriage rights, a vast area of statutory enforcement otherwise

out of jurisdictional reach of an agency powerless to award

money reparation. We feel that the error of the courts below is

palpable, but shouid this Court decline review, there is great

danger, if we are right, that error will become the last

authoritative word on the workings of the Aviation Act of 1958.

In that case, since past is prologue to the present and is the stuff

from which the law grows and develops, a counterfeit will have

been substituted for what should have been the true past.

ARGUMENT

American’s concentration on its version of the facts cannot

obscure a case whose operative facts are beyond dispute and

whose clean-cut law issues present fundamental policy questions

under the law to which they relate.

Undisputed is the fact of American’s six year sustained

refusal to transport as much as a single container of Century’s

consolidations on its overnight freighter from New York City to

San Juan, while according no less than two-thirds of the

available space to Century’s competitor Profit By Air, Inc.

(“PBA”), and its finally breaking its embargo with an award to

Century of a one-container, or equivalent, daily allocation in

September 1977 four months after Century had filed its district

court complaint charging violation by American of both Sher-

man Act §§1 and 2 and Aviation Act § 404, 49 U.S.C. § 1374,

and seeking treble damages plus a Clayton Act injunction to

force American to furnish transportation.

Add to this that, on American’s motion, Century consen-

ting, the Civil Aeronautics Board (‘‘CAB’’) was invited to take

primary jurisdiction of the case, which it did on October 21,

1977 in a letter to the Court:

“****the undersigned Eurorcement Attorney has been

in contact with counsel for both parties in the past week.

***] have apprised them of the Board’s view of the ap-

plicable law and that the public interest warrants that the

Board conduct an investigation of its own through the

Bureau of Enforcement ***. I have advised both counsel

that, with their permission, I would suggest to the

presiding District Judge that ine stay the present proceeding

pending the outcome of this investigation. This would

avoid duplication of effort and the possibility of the court

and the Board reaching conflicting results. At the same

time, a stay, as opposed to a dismissal, would prevent

Plaintiffs monetary claim from being unfairly extinguish-

ed by the statute of limitations.

‘*T have also advised both counsel that at the conclu-

sion of the Board’s investigation, this matter, which will

now be treated as a formal complaint, will either be

dismissed or made the subject of an enforcement pro-

ceeding, depending upon the results of that investigation.

Both counsei understood the risk and the benefit that each

of these results presents to their clients. They have also

been informed and recognize that should circu:nsiances

warrant it, the Board is empowered to enforce the Act and

the antitrust laws***’’

(Joint Appendix to Court of Appeals, Vol I, p. 76a)

And the Bureau’s conclusion, after investigation, that

American had indeed violated both the Sherman Act and the

Aviation Act (Petition, Appendix 5) and the Enforcement Pro-

ceeding for violation of Aviation Act §404 (b), commenced

December 14, 1979, and settled on the basis of a civil fine and a

new allocation system effectively guaranteeing Century some

space aboard the flight; all serve to make it palpable that

American had, from 1971 to September 1977, grossly violated

its Aviation Act $404 (a) duty to furnish air transportation

aboard the flight on Century’s endless requests and thereby

violated the §404 (b) prohibition against ‘‘unjust’’, e.g., illegal,

discrimination and undue preferencing.

Thus, rather than staking any exoneration of American on

a theory of compliance with the requirements of §404 of the

Act, the district court opinion, contrary to all authority, held,

emphatically, that:

*****Congress intended no private right of action for a

violation of §404,***""

*****Indeed there is nothing in the legislative history of

either §404 (a) or §404 (b) indicating Congressional intent

to give any private party a right of action.***’’

In its statement of questions presented American seeks to

distort the holding below to make it appear that only air freight

forwarders—themselves air carriers within the meaning of the

Act—are singled out for exclusion from the rights of others,

passengers and non-forwarder shippers, to sue under the section

for past, executed acts of discrimination in air transportation.

How grossly discriminatory this would be is demonstrated by

the fact that ai/ of the shippers of containerized freight aboard

American’s flight throughout its history were air freight for-

warders.

If the probable commission of error were an ingredient re-

quired by this Court, it is abundantly clear that that the overrul-

ing in January 1984 of a thirty year policy allowing private suit

to fill in a yawning gap in the enforceability of §404 of the Avia-

tion Act coupled with a summary judgment dismissal of Cen-

tury’s antitrust cause before the filing of an answer, itself an un-

justified judicial tour de force, both done in utter disregard of

the results of an administrative investigation ucted pur-

suant to a primary jurisdiction referral of the plainly such

an ingredient would be satisfied. In the competition of causes

clamoring for review, we believe the public importance of the

issues presented here merit the scrious cons tion of the

Court. And to this we believe the enactment of the Civil

Aeronautics Board Sunset Act of 1984, P.L. 98-443, on October

4, 1984, adds another dimension.

The Civil Aeronautics Board Sunset Act of 1

Section 2 of the new Act characterizes the

et seq. It is effective January 1, 1985 and transf

of the CAB to the Department of Transportation and its

Secretary. It makes many subtantive changes by way of repeal,

amendrnent and additions. Other provisions continue without

amendment.

Section 404 of the 1958 Act continues in full force and ef-

fect with respect to overseas and foreign air carriage of goods

through the balance of this year. Thereafter, it is replaced by the

following provision of the new Act:

**Sec. 3(4) The following provisions of this Act (to the

extent such provisions relate to interstate and overseas air

transportation) and the authority of the Board with respect

to such provisions (to the same extent) shall cease to be in

effect on January 1, 1985:

ee8

tion requires air carriers to provide safe and adequate ser-

vice).”’

The new statute will, of course, have to fend for itself. But

what we do suggest is that, in the judicial and administrative in-

terpretation of ‘‘adequate service’’, it will be helpful—we feel

essential—to have an authoritative and correct interpretation of

the meaning and application of the old §404.

Section 3(5)(D) of Sunset eliminates many of the §1002

subsections, 49 U.S.C. §1482, of the 1958 Act as amended.

However, very significantly we feel, §1002 (k)—the common

carrier provision—survives; thus Sec.3(5)(D):

**Sec.3(5) The following provisions of this Act and the

authority of the Board with respect to such provisions shall

cease to be in effect on January 1, 1985:****

(D) Sections 1002(d), (e), (g), (h), and (i) of this Act

(except insofar as any of such sections relate to foreign air

transportation).

Since Respondent's Brief says of §1002 (k) at page 12, foot-

note 9:

“Section 1002(k) of the Aviation Act, 49 U.S.C.

§1482(k), which figures so prominently in Century's peti-

tion, is nothing more than a definitional section. It does

not confer or create any rights or duties.’’

We differ as to the importance of a statutory formula,

repeated twelve times, defining air carriage of property as by

*‘common carrier’’:

*****the term ‘interstate air transportation of proper-

ty’ means—

(A) the carriage by aircraft of property as a common car-

rier for compensation or hire in commerce***

To us, the phrase “‘common carrier’’ tells it all, vide

Peckham, J. in United States v. Trans-Missouri Freight

Association, 166 U.S. 290, 320, 321 (1897):

*****I¢ is said that this meaning is plainly to be infer-

red, because of fundamental differences both in an

economic way and before the ‘aw between trade and

manufacture on the one hand, and railroad transportation

on the other. Among these differences are the public

character of the railroad business, and as a result the

peculiar power of control and regulation possessed by the

State over railroad companies. The trader or manufac-

turer, on the other hand, carries on an entirely private

business and can sell to whom he pleases*** he may make

such discrimination in his business as he chooses, and he

may cease to do any business whenever his choice lies in

that direction; while, on the contrary, a railroad compaay

must transport all persons and property that come to it,

and it must do so at the same price for the same service,

end the price must be reasonable, and it cannot at its will

discontinue its business.”’

Gratifying is Section 7 of the new Act which preserves old

section 411, 49 U.S.C. §1381, as subsection (a) of the new sec-

tion 411 and adds a new subsection (6) so that they read as

follows:

**Sec. 411(a) Investigations

The Board may, upon its own initiative or upon com-

plaint by any air carrier, foreign air carrier, or ticket agent,

if it considers that such action by it would be in the interest

of the public, investigate and determine whether any a‘*

carrier, foreign air carrier, or ticket agent has been or is in-

gaged in unfair or deceptive practices or unfair methods of

competition in air transportation or the sale thereof. If the

Board shall find, after notice and hearing, that such air

carrier, foreign air carrier, or ticket agent is engaged in

such unfair or deceptive practices or unfair methods of

competition, it shall order such air carrier, foreign air car-

rier, or ticket agent to cease and desist from such practices

Any air carrier nay incorporate by reference in any

ticket or other written instrument any of the terms of the

contract of carriage in interstate and overseas air transpor-

tation, to the extent such incorporation by reference is in

accordance with regulations issued by the Board."’

Gone then, is the notion that the air freight forwarder, an

“‘air carrier’ in his own right, suffers a disability, unlike non-

forwarder shippers and passengers, from enjoying the common

carrier benefits, whether expressed in old §404 of the Act or

§1002(k), of untrammeled access to air transportation. Section

411, in fact, parallels in its coverage the actual experience of

Century from primary jurisdiction referral, the acceptance of its

complaint, the determination of public interest, and the initia-

tion of the CAB’s formal proceeding on its own administrative

complaint, and section 1002(k) of the Act, then and now, could

have been the gravamen of the unfair practices and methods of

competition substantively found. And subsection (b), marking a

departure, actually provides for a personal contract of carriage

incorporating the Board regulations which could conceivably in-

corporate §1002(k).

CONCLUSION

For the foregoing reasons, as well as those expressed in our

petition, petitioner earnestly prays for the grant of a writ of cer-

tiorari herein.

Respectfully submitted,