Petition for Writ of Certiorari — Hausman v. Buckley

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meee) — y a Offiae-Supreme Coun US

Cis ee KI LED

: Lia: Cr i

: [MAR 97 1962

os Laas | J + CLERK

Supreme Court of the United Stale

- OcTOBER Tene, 1961.

No. ..... $2 ]

Las Vecas HacienpbA, INC., i

AP Taicy | | _, Petitioner,

; : US.

. ~ . 5 ;

_-Civit AERONAUTICS Boarp, , ; ‘

; ° Respondent.

- Petition for a Writ of Certiorari to the United

States Court of Appeals: for the Ninth Circuit.

: .

mm e

Epwarp L. Compton,

Joun W. Preston, Jr.,

Suite 1232, “Rowan Building,- oo.

\ 458 South’ Spring ‘Street,

“Los Angeles, California, :

Counsel for Petitioner.

Parker & Son, Inc, Law Printers, Los Angeles. Phone MA. 6-9171. °

at SUBJECT INDEX

ss hie : ‘PAGE

Citations ty opinions below... oe vane Vag a

SasteMitiee ic. 9 eat ae a eet

1 a |

‘e Questions presented.

eT cy a he, ERO POO TR LD OIE ET LEGO

. Statement MERON PeUEe apie ncaa aes: a

4 Beasons ior granting the writ.2 0 oe ee a 7

. ov *- I ? r “7

: The “compensation or hire” question... »....-

“I

I a Fe nha a a

2. - Decision: thglOw itm 6808 0 seaeesoecesrgernceentcccnsene WO ;

a ee ee ae

«7. 4. The scopd of review question... occ cciececcdeee ooson 20

2c) - |? Importance ...........: bounties ina rtichiet blab sition dceionas TCR

| ! RS caUCRNGNS _Aceneerencen

Tebake be — Decision’ DOW HR CFF OE a... sce ccecccceeceieceoese f.,--eape... 24

’ a : .

1. 3

. ° = ¥ a i

The “cease and desist” order question... 2B;

: Bs: ACMI sa coorcsccstiamsasiclb tance ec ceet Set re 23

Be — I eect eee ee ne

. 3. Decision below. in error... ........ ea eereerees —~ ——

- P a Ce Se ames ae

J 3 : _ ; -- ji J

. ” \

iv. .

PAGE

‘om Products Refining Co."v.. Benson, 232 F cy $54............. 20

Davies Warehouse Co. v. Bowles, v1 U. 5S. “144, 88 I. Ed.

635 poeMievecenceneneseenencesont pbnbbnnateipbenindadeeetsabepabiteypinapeeedemnnemabednetD 21 .

Duquesne Warehouse Co. v. Railroad + ee Board, 148

FL 2d 473, aff'd 326 U. S. 446, 90 L. Ed. 192. jee eeeeene 22

E. 1. DuPont de Nemours & Co., Inc. v. Kaufman .& Cher-

nick, Inc., 148 N.-E. 2d 034.000... ec ccscectecen wom aEL Het 11

Griffiri v. Murphy, 51 S. D. 50, 211 N. We 804..2..cccccsccccccseccee 12

Hacienda Hotels-U. S. Aircoach Enforcement Proceedings, ae

26. C. AL Be 372... iaaicdieainahianniiitaich nisi’ Sea a

Hughson Condensed Milk Co. v. State Board of Equaliza-

tion, 23 Cal. App. 2d 281, 73 P. 2d 2900.23. eceeeceeseeeed dD, 12

Iliinois’ Central R.R. Co. y. State Public Utilities Comm.,

245 U. S. 493,46 Le. Ed, 425.5 eneienninceen 23, 26, 30

Joiner Investigation Case, 12 C. A. Ri GW hiicepisicectiintinsigiinsesili 15

& Kroger Grocery & Baking Co. v. City of Cynthiana, 240

Ky. 701, 42 S. W. 2d 904........- ssotiesiletity Netat papevandnntes kcal 1 1, 12 -

; Larchmont Apartments, Inc., In re, 16 P. u R. 3rd 45....11, 12

a v. Atlantic Coast Line R.R. Co, ‘114 S. C. 95,

103 S$. EB. M7 in (aisinieiolgsie es ieee

M & R Investment Co: dba,Dunes Hotel-et al. © C. A. B. a

- Case No. 17314 Seacplbsieidiidipuicssadnahaceioe Baas shcuhateabhaabiaatatal 8. 25

May Department Store Co. v. Nat. Lab. ‘Rel. Bd., 326 U. S.

376, 90 L. Ed. Pet itiehsondemiahehcoeasuisiiausiies mi 25

w. 92... sosidiaescitihabitcmanbitheieiapinanetinictleinen peieliciaeintncsctnenieieniaes a

, Natiqnal Labor Relations Board v. Coca Cola Bottling Co., |

350 U. S. 264, 100 L. Ed. 285............... cecilia ginko 6, 21, 22

National Labor - hiteteis Board v. Express Publishing, 312

U.S. 426, 83 L. Ed. DID ..cooe soeicneneringoronsdedy BA,. 25, 20, 27, 2

mn ‘ ‘ ‘ - eo @ PAGE

eae Labor pares Board v. Hearst Publications, 322 °

Ss Mi. SSL. Ed. 1170 eat Ries Se ig

National I-alios Relations Board ¥. _ Larner C reamery Co., 246

National Labor Relations Board y. - Lipshutz, 140 F. 2a. 541... _ 26

- National Labor Relations Board v. Local 30 9, 240 F. 2d 539. 25

_ National Labor Relatiohs Board v. "Ochoa Fertilizer Gorp.,

fh Ae SRN AS Veniana nner

* New Hares RR. © ee a 20 U, S. 36750 L. Ed

Sea EL Ah Rae IN eR aned =| gpa woumameemee «Te ee

Nes Way rdf « Co. v. Smith, 128 Tex. 173, 9 = “W if

# oc apancreseine Mbatenaly inplicenties Starve onl eS Wee Ae SEE el ead apeosroenens A2

Pacific ‘Misdders Airlines vy. Alaska Aisles, 80 Fed. “sui

592 esacatialielastscdceliNaaaassitaa did abide Micacanhoiitatine sige ae

Page Airways Inc., Investigation, 6 C..A. B. 1061... -/ cuabeiie . 15 =

People, v. : aaaery, 92 Colu. _ 19 P. a 208 paicaeedeaces 13 |

Kountreg v. State Corporation Commission, bi K. NM. 152 2,56 .

El og ee RN aE Pedant en ital Wein, | ete

S.E.C.v. Chenery Corp., 318 U. S: at L. Ed: 626... 21.

~ Schwegnann Bris., fite. v. Hotimarétakoche Inc., 221 F.

2d Saas. APT See Mee ene ees Shaccnijuillatnasiitinldes 26

Seaboard & Western Airlines, MC. A. B. Sl PS irae 15

‘Semon v: Royal Indemnity, ihe: 279 F. 21 ffi PESSE RS)

Shields v. Utah- said case R. C., WS U. S. 177, &3 L. ie

Ss ee iecieicicenscck gece ntisckandacqatoninaahmtianacal Sinicingplinobateaiannl 6, 21, 22

‘Shores and Brow: i vion Carrier Ayplications, 26 M. C.

edge | ibaa GER seviascatilalia AE APO AE DAL War ek ee 13 .

Snuth v. Te as Farm Products, 8 S. W. 2d 520 cc 2. 13

Social Securiy Board v. Niérotka, 327 U. $. 358, 90 L. a.

5 LAPEER ee inn isiaacinle Sossipoallis ee 6, 21

— ° Sol cn,

/ | P > a ¢

os ian eee a

PAGE

State v. Manhattan bil Co., 199 Iowa 1213, 203 N. w. sol...

Swift & Co. v. _ United euapes, Puhr S. 216, 86 L. Ed. 1391... —

me s : nD, 21; (22 RA Os

Traiman v. Rappaport u F. CRS a arene eee ae tl _)

Pransocean’A. L. Enforcement Proceedings, 11 C. A. B: 350. 15

Transportation Activity of Brady Treaster & Storage Co.,

47 M. C. C. 23.......i 2% +

. Tuegto Oil Co.-v. Brewer, 66 P.-A. 359 .22.0.20c:c-ccccessecgsiccccercesecees 11

United States v. Atchison, Topeka & Santa Fe R. Co., 220 a

U. S, 37,°55 L. Ed. 361 : ‘ iceuieuniaene 19 .«

‘United States v. Bethlehem Steel Corp. 315 U. S. 289, 8 Ae ee,

Be A cece oldie sath todigell estebepipcubehcpmeiecntenecinae ae |

United States v. Wiltberger, 18 U. S. 76 (5 Wheat. 76f, iment

5 L. Ed. 73...... + REASON eateerr NES WOES EP ae -20 >

Viking Airlines, et al., Non-Certified Operations, iL c- A. B. xt:

401 + :. Sevoscsce coosdBee 15 . sd

Viking Airlines, et a, Non-Certified Operations, <. A a». We.

ge Ne NE TES te Jer RIO LNRaaP ota Le 15

Village of Brookfield v. Goldblatt, Ing. 33 P. U. R’ CN.

SE ekicaieetn anc SO ae | a |

Walker v. Kolb’s Bakery & Dairy, 176 Ma-191, 4A. 2d 130. 13

Ward Baking-Co. v. City of St. Genevieve, 342 Mo. 1011,

119 S. W. 2d 292. a 3 «. 13 .

Woitishek, Common Carrier Application, . 42 M.C. C. 193. 12, 20

of ’

Yellow Cab v. Skyways Sérvice Co., 36 P. U. R. 3rd 154... 12/

. MISCELLANEOUS .

Congressional Record, 83d Cong., PP. 6635-6637... ceecsenerenn 19

_ Hearings Before the Committee on Interstate and ‘Foreign —

Commerce, House of a wR Toth Cong., Ist Sess.,

|, on 15

72 Statute at Large, TOD <otonestinsonrnninncellet toes apea 2

72 Statintes at Large. po 734 08 et ee tte a DB

72 Stattites at Large. jp 738 Paantend steaks wee

~ United States Lule, Tithe 28, Sec. 1234: 1 ‘eee, : wceseore * .

United States Code, Title 4, See. W3ntar ‘ pAintind OO

_— Unjted States Cote, Tithe 49, See. W817)... i

“ United’ > ‘tates Cemle, Tithe 4%, See. 2d 0 ot). ~ 40.

United States Cote, Tule 49, Sec. bot 4) 2

’ ; I es : :

: ‘ oe

°. ea . ° $

i< : - SJ 5 :

se 4 ; aa Pig

‘Hearings Before Subcommittee of the ( qgumittee om Interstate —

Commerce of the United States Senate, 73th Cong.. Ist 5

Sess, P. ee eee ee PD SPRATT Bimota a

Hinsse Kejart So. 2254. Vart 1. 73th Cong. 3rd Pipa ae

Senate Keport No. 686, 75th Cong., It Sess. p. 20024. 14

Senaté Report No. 1661, 73th Cong.; Sess.c pp. Qype ecececene 14

; Kies q.-

Fedetal Rules vi’ Civil Procedure, Rule 65(d) scene 26

Rules of Practive of the Civil \eronautic Board, Rule 214... oO

STATUTES -_

* . *

U uy. \ ce : ‘

Federal Aviation Act of 158, Sec. 101445000 22 e P 4

Federal Aviationy Act 0% 1958, Sec. 101(10).......2.......... 2

Federal Aviation’ Act of 1958, See. 101(20)-.:....2, 18, 19, 20

Federal’ \viatiot Act of 195%, Sec, 10121)... eae

Federal Aviation \ct of 1958, Sec. Wiiap og... 1b, 3. 24,

Federal Aviation Act of 1938, See? 1002... CLR ONES

Interstate Conmfierce Si Oe He Ww

Interstate Commerce AG, Part Diet. ceeccceceenceceeeness ween OD

Interstate er Ge ag SACL SCREAM ey

a viii. ;

% : | : PAGE

United: States Corte. Title 49, Sec. 1301(10). tet ahaa pe ES: vies 2

United States Code, Title 49, Sec. 1301 (20) ....::...2, 18, 19, 20

United States. Code, Title 49, Sec. 21301 (21) , 2, 24

United States Code, Title 49, Sec. 1371 (a) een ae 3, 24

United States Code, Title 49, Sec. 1482... | 3

aes 4 _ ” \TrxtBooxs |

- 28 American Jurisprudence, Sec. 293.. 26

‘Davis, Administrative Law. Treatise (1958), Chap. 1. #

4 Davis, Administrative Law Treatise (1958), p. 269 ae 23 -

- 69 Harvard Law Review (1955), Jaffee, Judicial noe

Question of Law, pp. 239,.269...:

Hutchison Carriers (3rd Ed. 1906), Secs. 15,.16, 35, 47, 48... 1

~ Rhyne, Civil Aeronautics Act Annotated (1939), pp. 42-43..... 19

2 Sutherland, Statutory Constructions (1943), Sec.

_p. 414, n. 7. oa , “

4915, :

‘

* -

. ,

os *

« ake

IN THE

Supreme Court of ot the United States.

Ocrosee TERM, o—.

| Sea

Las Vecas Hacienpa, INc.,

‘ i Petitioner,

vs.

Civit AERONAUTICS BOARD,

hy . Respondent.

Petition ‘for a Writ of Certiorari to the United

’ States Court of Appeals for the Ninth Circuit.

Petitioner prays_ that a writ’ of certiorari issue. to

review the judgmen nt of the United States Court of

Appeals for the Ninth Circuit, entered in’ the above

entitled case on January 16, 1962.

Citations to Opiniggs Below.

The. opinion of the Civil, Aeronautics Board {R. 20-

58] is as yet unreported and is printed in Appendix B

hereto, infra, pp. 4-39. The opinion of the Circuit

Court of. Appeals 1 is also as yet unreported and i is printed

in Appendix B hereto, infra, pp: 40-57.

pie

Jurisdiction.

The judgment of the Circuit’ Court of Appeals was

entered on January 16, 1962 [R. Vol. Ill]. A timely

petition for, rehearing filed February 15, 1962, was

dénied on February 23, 1962 [R. Vol. III]. The juris-

diction of this Court is invoked under 28 U. S. C., Sec-

tion 1254(1).

Questions Presented.

1. Whether airplane trips furnished its patrons by a

business concern in furtherance of its prin-

cipal hotel and entertainment. business and with-

out additional charge is common carriage “for

conipensation or hire,” subject to economic regu--

lation by the Civil ‘Aeronautics Board under the

Federal Aviation Act of 1958. 7

‘Whether an opinion of the Civl Aevowamiee.

Board. determining the scope of its own statutory

jurisdiction is subject to limited or independent

judicial review.

3. Whether the Civil Aeronatuics Board’s cease and

"desist order which by its terms directs “Las Vegas

Hacienda, Inc., *: * * to cease and desist

“from violating Section 401(a) of the Act” is

invalid because too broad and uncertain. .

Statute Involved.

The statutory provisions involved are Section

101(4), (10), (20) and (21),,and Section “401(a)

- of the Federal Aviation Act of 1958, 72 Stats. 737

and 754, 49 U. S. C. Section 1301(4), (10), (20)

. and (21), and_1371(a). They are printed in Appendix °

A, infra, pp. 1-3... ieee he «

soe

Statement.

Petitioner, Las Vegas Hacienda, Inc. (Hacienda),

_ operates a resort hotel at Las Vegds, Névada. For

some time, it has advertised and seld a package “Chan

-pagne Tour’? in the Los Angelés area which includes,

among other items, a round trip airplane trip between

Los Angeles and Las Vegas [R. 25-28].

This case was ¢ mimenced on June 15, 1959, by the

filing of a petition tor enforcement and a formal com-

plaint by the Civil’ Aeronautics Board's Office of Coni-

pliance, ‘now the Bureau of Enforcement [R. 3-6].

The complaint charged Hacienda with engaging in In-

_terstate Air Transportation as a common carrier “for

compensation or hire’ without operating authority

‘from the Board in violation of Section 401(a) of the -

Federal Aviation Act of 1958, 72 Stats. 754, 49

U.S. C., Section 1371 (a). :

“The sole issue was economic regulation. Safety ‘wasz >

in no way involved. ees

. Jurisdiction of the Board was invoked under Section

1002 of.the Act, 72 Stats. 788, 49 U. S. C., Section”

1482. | one

After hearings held in Washington D. C. and Los

Angeles, California, the Trial Examiner rendered

his “Initial Decision” filed May 20, 1960 {R: 20-52],

which was stibsequently adopted by the Board on Au-,

gust 12, 1900 [R. 52-57}. The Board concluded that

petitioner was engaging in “Interstate .\ir Transporta-

tion” as a common carrier for compensation or hire in

violation of Section 401(a). Its order accordingly. pro-

- vided that petitioner “Las Végas Hacienda, Inc., and its

agents, successers, and assigns, cease and desist from

yee

violating Section 401(a) of the Act” [R. 52]. There- -

after, the Board denied-a petition for rehearing, but =

granted petitioner a stay pending the outcome of the

_case on appeal [R. 56-57]. ?

The facts are as follows:

Hacienda’s principal business is operating a hotel aid

providing entertainment tor the public [R:~25, 36].

_ Other hotels bearing the name Hacienda are located in

three cities in California and in forty-one other loca-

tion in the east. The Las Vegas and three California .

hotels,.though separately incorporated, are principally

owned by the same person who serves as the Chairman

of the Board of each [R. 25]. Tn

The “Champagne Tours” . and ‘the round-trip air-

plane trips included are designed.to promote Las Vegas

Hacienda’ s hotel and entertainment business in lieu of

‘the elaborate night club floor shows more customary in ;

Las Vegas [R. 117, 236-237, 243-244, 262-263]. Those

who take the tours account for only nine percent of

the hotel’s patrons; the vast majority use surface trans-

portation [R. 31]. |

The tours are sold by Hacienda’s own ticket offices

and: by travel arid teur agents [R. 29]. Tour patrons

are solicited «from the general public.in the Los Angeles

area through various advertising media, including ra-

dio, “newspapers, and brochures [R. 29]. Despite Ha-

-cienda’s efforts fo prevent it, some people purchase the

tours merely to obtain transportation [R. 31, 38-39].

The total price of a “Champagne Tour” is S273 i

In addition to the airplane trip, the tour package ih-

cludes: limousine transportatic mires thre airport to the

hotel ($1. 50), g round of gol on the hotel course

($4.00), a chance in. the Hacienda “hole in one’ * contest

($2.00), a bottle of champagne ($12.50), a butiet din-

ner in the hotel dining room ($2.50), and $5.00 tor

use in the hotel casino [R. 29-30]. The aggregate price

of the vther items making up a “Champagne Tour’ is

thus $27.50—the total tour: price [R. 29-30]. Those

who take the “Champagne Tours” pay exactly the same

price for the above items as those who use other means

of transportation {R. 31, 114-116, 236, 254, 267-208].

Hacienda accordingly attributes: no income to the air-

- plane trips in its bookkeeping. Expense is charged

to general overhead [R. 31. L14-116, 236, 254. 267-208,

——_-

‘The Board nevertheless” field that the tour airplane

trips were “for compensation or hire’ as. the “tour

contract is not divisible * * * and the price which .

the patron pays for the package tour must be: consid:

ered as including compensation for transport: ation.

that the airplane trips therefore “constitute. interstate

common carriage. for compensatién or hire within. the’

meaning * * * of the Act” (Appendix B; infra, ‘pp. 22,

. 25). z

‘ ° ; .

The Court vof Afipeats tor the Ninth Cireuit oa

firmed the Beard’s Aaciaics noholdie first that it wae

obliged to aceept the Joard’s holding as it had “War

rant im the record and a reasonable basis in daw.”

—6— “EF

citing .V. L. Rk. Bw. Hearst Publications, 322 U.-s.

» 111, 131 (1944). and N. LR. Bow. Coca Cola Bottling — :

. Co., 350 v. S. 264, 2 9 | L950); Suift & Co. v. United

States, 316 UL-S. D6. 234-225 (1942): Shields ~.

Utah Idaho Central R. Co., 305 Us 8. 177, 184-185

(1938). Though it stated that an agency may not fi-

nally decide the limits of its statutory power which is

a judicial function, citing. Sactal Security Board v.

Vierotka, 327 U.S. 35& 3609 (1946), the Course never

theless reasoned that the question presented involved

the application of technical kit iwledge which the Board

and not the Court was presumed ‘to ,have ( Appendix

B, infra, pp. 43-44). The Court of Appeals further

held that Hacienda was competing commercially in the.

market for the patronage of the general public and that

the Underlying policies of the Act therefore required

thet its flights he-classifiéd as common carriage “for

——

-- .

compensation or hire.” so as to bring them within the

regulatory power of the Beard (Appendix B. infra,

pp. 41-49). The Court also upheld the Board's. cease’ *

and desist order against attack on the ground it was ,

unsupportably bread and uncertain. holding that the

question was disposed of for the Ninth Circuit by its *

prior decision in Consolidated Flower Shipments, lnc. .

aC. AT Bis 213 F. 2d- 814) 818 (9th Cir, 1954), and = —

that any uncertainty could im any event be resolved by

’ reference to the “Board's complaint, investigation, and

epinion,”. The Court, however, stated that the form

ot the Be atih. order was net ‘a desirable one. and that

“it should not be too difficult for the Board to- frame

an adequate more’ specific order (Appendix B. infra,

p. 55). | res, = :

“ i

pm sy

| ad FOR GRANTING THE WRIT.

.. 1.

3 The “Compensation or Hire” Question.

1. Importance.

BOR presented is clearly of importance in

the administration of the federal aviation laws. — It

calis for imMlerpretation’ of the “for Jomipensation or

hire” language of the Federal Aviation Act, which de.

» limits the: je sons to wi hemi the Act applies and “deter

mines the scope ot the ¢ ‘ivil Ne Tumantics Board's reg. ——

ulatery powers and pre reggative . in the eeonamic sphere.

As stated by the Ninth Cirenit in mn

( Appendix B. infra, p. 43).

decision - below

“The proper interpretation “of this statutory.

term. Cair transportation’ Altimately defined as

Carriage by aircratt of persons... ° 2% aa-

commer cartier for Compensation or hire) ts

1 * * * af eracial Hnportance in the administra

tion of the act.” .

The legislative history also emphasizes the import

ance of the question ; ,

“This. section contains the definitions of the

impertant jerms used in the bill. The Myst in

portamt ternis detined in this section are ‘air car-

rer’ and ‘gir transportation’ >~ Vhese terms clebinnis

the persdns-to whom the act applies.” cE. RB.

Rep. No. 2254, Part E75 Cony. Jed Sess., at’

p. 3). (Emphasis added.) ’ °

This question has heretdfere been touched on onby

tangentially an tw other reported ‘cases: Conselidated

Flower Shipments A. CLA. Bo. Wo OA. BL 804, 819

(1953). affirmed — Fed. 24°814 69th Cir. 19054).

—k—

ond Hacienda Hotels U_S. Aircoach FE nforceme nt 4 ro-

ceeding, 20 C. APB. 72. nm. A third case. MER

Investment Co., dba Dunes Hotel, ct al. zx C. APB.,

C ase No. 17314, which, arose on snbstantially the same

facts, Is’ pre sently being held in abeyance by the Ninth

Circun pending the outcome of the instant-case. This

Court hgs,apparently never spoken directly or indirectly

“on the master.

Settlement of thy question is plainly in the public

interest. "Until this Court rules, the line marking off

common and private carriage under the Act. there-

fore the’ scope of the Board's statutory powerg and pre-

rogatives in the sphere of econ Mic regulation. will nec-

essarily r remain uncertain. :

Settlement of the question by this’ Court is further

plainly in the public interest as Petitioner's package

tour is only one of a considerable number ot similar,

though not identical, tours which provide dransporta-

tion by air te and from various cities in Nevada, ie.

‘Las Vegas. Reno. Hawthorne. Tonopah, and Search-

Hight. Some Of these tours alse invelve flights origt-

nating in the Los Xngeles ‘area: others involve flights

originating, not only in € “alifornia, but ip cities through-

out the U nited States, 2.7.. San Francisco, Salt Lake

Civy. ani Chicago. The tot al number of persons car-

ried is subst: antial. Hacienda’s figures “Show that in

-excess of 7,000 persons each mi onth. are provided trans- .

portation by such totrs.

Additionally the rationale of the decision by the id

_ Court below and the mrinciples of law relied ypon reach

far beyond the confines of the facts of the instant case.

As the Court below itself stated ( Appendix B. infra.,

p. 49n. 17):

“* * * the furnishing of private carriage

on a gratuitous basis is not at all unusual. The

carriage of. officers, employces and selected- “Cus

tomers im company: owned” planes is An example.

Even this is a matter of degree, and miscellanecus

carriage of this type could MOT nite the areca of

common carridge and become subject to the Act if

. sufficiently expande id and re rgularize ‘dd. ( Emphia-

sis added.)

In short. the pw tential : reach of the Ninth Circuit's

‘opiution encompasses not only the operation . of tours

like those here. but also the operation of “eustomer,”

_ “executive, and like aircrait by any business.

The question is also of importance to the: regular

scheduled and certilied airlines as the final decision

will détermine in part the exyent of their competitien.

This was of course the focal point of the Ninth Cir-

cuit’s opinion and has been emphasized threugheut this.

proceeding by the Bureau.ot Enforcement in‘its ‘briefs.

Significantly, two such’ airlines, Pacific Airlines Ine.

and Bonanza Airlines Inc., regarded the case. of suifi-,

cient IMmMportance ty warrant their appearing and partici

ing in the proceedings before the Board, pursuant

‘to’ Rule 214 of the Board's Rules of Practice [R. 23].

By the same token the interest of the public is involved.

Hacienda’s tour flights have received wide spread public

-acceptance as the- substantial and increasing number

of persons carried attests. People like the tours. The

service is unique. Flights: operate at off-hours when,

the scheduled carriers de net tly. They require ne gov-

ernment subsidy. Hacienda has tound that many per,

coms are intredneced to air transportation for the first

‘time thereby.

‘8

canine

Finally, settlement of this question is of ‘importance in

. the administration of the federal laws regulating other

_modes° of transportation under which the “for com-

pensation” and/or “hire” language also delimits the

_” scope pr type or regulation. See: /nterstate Com-

‘merce Act, Part 1,49 U. S. C.,. Section @(3)(a)

(rail and pipe-line carriers); Jnterstaté Commerce Act,

Part II (the so-called Motor Carrier Acty, 49 U. 9@C.,

‘ Section 303(14)(17) (truck and bus carriers) :-/nter-

state Commerce Act, Part III; 49 U. S. C., Section

902(d) (water carriers). ‘

Decisions under the various Acts are cited and re-

lied upon ‘as authority under the others interchange-

ably as evidenced by the decisions of both the Court

and Board below. See also: Arrow Aviation v. Moore,

266 F. 2d 488 (8th Cir. 1959); Semon v. Royal In-

demnity Co., 279 F. 2d 737 (5th Cir. 1960). ;

This Court has apparently not as yet considered the

- meaning ‘and effect to be given the “for compensa-

tion ar hire” language. A decisiort here would there-—

fore be of importance’ in the area of federal regula-

‘tion of a in general.

2.. Decision Below in Error.

‘tt is respectfully submitted that the decisions of the-

Board and Court below are in error. The Board's de-

cision i$ in error as it confuses “consideration” and

“compensation or hire,” and is contrary to the over-

whelming weight, ‘of. authority in the law of carriers.

_ The Court's decision is in error as it fails to apply or

give effect to the well established technical meaning

of the controlling “for compensation or hire” language.

which the legislative history and policies most specifi.

cally in point indicate Congress intendyd to adopt. More-

_ sions by this Court.

over, the decision is, instead beattomed orf the inapposite

broad underlying policies of the Act. As such, it is

contrary to the principles and re ascming ot “several deci-

The Board's decision, accepted by the Ci ircuit Court

as binding. is in error as it confuses” ‘consideration™

and “compensation of hire.” In the cases relied upon

by the Board to support its result, the issue in tach

= . * x * * ** ?

instance was whether there was “consideration” to

support one of several allegedly severable contracpual

promises, not whether there was “compensation” or

“hire.” See cited. by the Board: United States

Bethlchem Steel: Corp., 313 U.S. 289, 298, 86 L.

“Ed-855 (1942): Tuesco Oil Co. v., Brewer, OP. A.

351, 354 (1870): E. 1 DuPont de Nemours -&

Co., Inc. v. Kaufman & Chernick Inc., 148 Ne E. 24

834, 630" (ian. 1958) : Traiman ‘vy. Rappaport, 41

F. 2d 336. 338 (3rd Cir. 1930), However, a promised

performance may be supported by “consideration” in

the contractual sense: but still not be for “compensation °

or “hire?” Cf.. Re Larchmont Apastments Inc., 10 P.U.

Co. 'v. State Board of Equalization, 23 CAl. App. 2d -

Ry 3rd 45. 47 (New York Pub. Ser, Comnr, 1950). ,!

Compare: Village of Brookfic Id'z- Goldblatt, Inc., 33”

P.USRSAN, S.) 82. 92 (Militiois C. C1940). =

“Compensation” “is defined in, the. 4 carriers as

that, which. is the equivalant of, makes Whole or gewnf,

‘ or counterbdlances. in accordance with its ordinary or |

dictionary meaning. The werd ° ‘compensation’ thus im-

ge recovery of costs. « Hughson Condepised Milk

241, 73 F: 2d 290 (1937): Kroger

ocery & Bak-

1 oo en aie pe oy

ing Co. 7: City of Cynthiana, 240 Ky. 701, 42 S. W.

* 2d 904 (1931); W oitishck -Common Carrier Applica-

tion, 42 M. C. C. 193, 20]. (1943) On the other hand,

“hire” requires profit or-reward as has been held by

the Board. Consolidated . Flower Shipments Inc., 16

C. A. B. 804, 819 (1953), aff'd 213 F. 2d 814 (9th

Cir. 1954). “Consideration” which involves no inquiry

. as to adequacy, indeed precludes such inquiry, is hence

" ong thing, ° “compensation” or “hire” qnite another. ,

The Board's opinion is contrary’ to the overwhelm-

ing weight of authority. The, carrier cases with-only

~ two exceptions hold that carriage is not for ‘ ‘compensa-

tion” or “hire” ‘under the accepted meanings of those

terms. where, as here, the facts show that a business

charges its patrons the. same price and no more for its

_ gdeds and ‘services when transportation is provided, as

when it is not.’ "Bee: Passenger cascs-price the same:*

Re Larchmont Apartments Inc., 16 P. U. R. 3rd 45.

(New York P. S. C. 1956); Yellow Cab wv, Sk§ways

| Service Co., 36 P. U. R. 3rd 154 (Colorado P. U, C.

1960); Property cases-Price the same: see particu-

arly the case of Collins-Dietz-Morris Co. v. State Cor-

poration Commission, 154 Okla: 121, 7 P.. 2d 123

(1931); also Rountree v. State ‘Corporation Commis-

sioner, 40. N, M. 152, 56 P. 2d #121 (1936); Com.

pare-Price differevit: New Way Lumber Ca. v. Smith,

«> 128 Pex. 173, 96 S. W. 2d 282 (19306); Consolidated

Rock. Products v. State,.57 Cal. App. 2d 959, 135 P..

_ 2d 699 (1943); Accord: On facts, but less extended

express nepeneit -price - the same:’ K roger Grocery &

Baking o. . City of Cynthiana, 240 Ky. 701, 42.8. W.

2d 904 ( 1931); ; Hughson Condensed Milk Co. uv. State

Board of FE-qualizatioy, 23 ‘Cal. App. 2d 281, 73 P. 2d

290 (1937) ; Griffin v. Murphy, 51 S.D. 50, 211 N..W

NOM 1927 5: Murphy vt Standard Oi) of [ndiawa, aye

. 2D. 497, 207.N. W. 92 (1920): People 7 . Mentgiom

«>

ery. G2 Colo, 201, 19 9. 2d DS 4 MAD pe mnipare

price diggevent: Smith v.- lexas arm Products, &*

S’ W. 2d 32 (Test. Civ. App. 135 yr: Shores bo a

Brown Common Carricr Applications, 260 M.-C.

243 (1940); sce also holdings consistyut with ‘in.

. —— the same: C Mite Trausfer & Storage *

Co, 7. Hatch, 05° Mont. O01. Ro}: 2h 470 RAs

City of Sioux Falls 7 7, Collins, 43S . D. 311, 178 NL W.

O50 (1020); State 7. Manhattan Oil Co., 1) lowa

1213, 203 N. W. 301 628): Walker 7. Kolb’s Bakers

& Lary; oad 101, $A. 2d 130 (1030): Ward [at

ing Co. v. City of St. Genevieve, i Mo. 1011. 119

S. W. 2d 292 (1938).

The only two cases conte, both passenger: cases, are:

Chala : 7. Gordon, 20-7, U. Ry 3d 47 (Cal PU,

1958) ; Village of Brook sgl . Goldblatt Bros. hike

33. P. YR. (N.’S.) 82 (TIL é cS 1940) (but see

dissent at 97-98). ° It both the C onimissions. like the

Board here, “comtused * ‘comsideration” and “compensa- ,

tion” or “hire.” 7 ag .

The decision of the: ontrAekons is” tcliewest to dns it

error as the Court dismissed and reitised ty apply " wah

lished principles. and technical meanings Prov the Tey ge

of carriers, discussed above, which Congress itended

to adopt. The Court's decision is further. coytrary {

the decisions of the agency charged with administering

* the Act and. te prior Court decisions.

The terms “for compensation or hire” ‘are longstand:

ing technical words of grt, As’ “stated by it distin «

guished former Justice ofthis Court: : |

“No person is accommo? carrier in the sénse 0

‘, the law, Who is aot a girrier for-hire, that is, whe

. 4 °

as |

does not receive or: is not entitled to receive rec-

_ ompenge for his services.” - Opinion. by’ Story,

Citizens Bank-@. Nantucket Steamboat Ce., 5 Cas.

No. 2730, 2 Story 16, pp. 719, 725 (Cir. Ct. Mass.

1811); See also: 2 z. Atlantic Coast Line

R.R. Co., 114.8. C: 95, 103 S. E. 147, 148 (1920);

Hutchison Carriers; Section 15, 16, 35, 47, 48. (3rd ,

ed.1906). ye

The legislative history of the Act most. diréctly in |

point indicates a Congressional Intent to adopt éstab-

lished principles and meanings<?_Again. see discussion

supra. As stated in-the Senate ‘report :.

“The -recognized and accepted principles of the

regulation of public utilities as applied to other

forms of: trattsportation have been jncorporated in

* * *- (the Act).” Senate Report, No. 1661,

. 75th Cong., Sess., at p.-2.. See also: So stating

with reference to an carlier version.of the bill:

Senate” Report, No. 086, 75th Cong. Ist Sess., at

p. 2.

The testimony before the Senate Committee of Com-

‘missioner Eastman, then Chairman of the Interstate

Commerce Commission and one of ‘the draftsmen of the ©

Civil Aeronautics Act, is also pertinent :

“And you will find that much of the language’

is similar toganguage which is now already i in the

‘law with reference to railroads or with reference

to motor. carriers. That, I think, is a desirable

, thing, hecause when language has been interpreted

once it is desirable ‘to. have it used again, thus

avoiding ,many questions always arising with re-

spect | to the employment of new language.” .

—ls— =|

Pik /

Hearings before subcommittee of the Committee, on

in Y =

‘Titterstate Commerce of tie United States Se nate, 75th

Congress, Ist Se ss., p. 305,

President Gorrell of the Air Transport Association,

also active in the drafting of the various bills culminat-

ing in the Act. testified to like effeet before the House

Committee. See: Sips before the Committee on

Interstate and Foreign Commerce, House of Represen-

tatives, 75th Cong. Ist Sess. at p. 264.

“Tt would thus appear that the legislative history shows

a Congressional Intent to adopt aecepted principles and

‘established technical meanipgs so as to avoid to the

extent possible. questions with respect to, the meaning « of

new language.

* Consistent with this lewislative history and policy,

both the Board and Courts have heretofore uniformly

applied the Jaw of carriers in determining..the scope of

the Board's regulatory powers. As stated by the Board

itself in Iiking Airlines, et al., Non-Certificd Opera-

tions, 11 C. A. B. 401, 413-414 (1950): |

“The Civil Aeronauties-Act does not define com-

ot mon carriage, and what constitutes common car-

riage is to be determined in accordance’ with -the~

general law governing common carriers.” (/bid.

11.C. A. B. at 413-414).

. See also: Allustrating the Board's approach: Joiner |

‘Investigation Case, 12 C..A. B. 829, 882-880 (1951):

Seaboard & Western’ Airliies, 11_C. A. B. 372, 386

(1950); Ttansocean A. L. Enforceme nt Proceedings,

11°C. A. B, 350 (1950) Page lire vays Ine,, Iuvestiga-

fion, 6 C. A. B. 1061, 1064-1066 (1946); Alaska Air

Traits portation Investigation, é C. A. B. 785. 788

(1941): and see: Pacific Northern Airlines v. Alaska °

ees

Airlines, 80 Fed. Supp. 592, 600-601 (D. C. Alaska —

1948); Alaska Air Transport v. Alaska Airplane Char-

ter Co., 72° Féd. Supp. 609 (D. Alaska 1947). Indeed,

‘ the Bureau of Enforcement in the instant case took the

position, in which petitioner acquiesced, that “the legisla-

_ tive history shows that. (the term “common: carrier

for compensation or hire”). was intended to be merely

the common law description of a common carrier.”

‘(Brief ‘for Respondent in the Court below at pp. 16-

17). ine

: The decision of: the Court below: in failing to apply

established principles and technical meanings is accotd-

ingly not only contrary to the legislative history and .

policies of the Act most directly in point, but is contrary °

to the decisions of the agency charged with its ad-

ministration. It is also contrary to the prior Court de-

cisions. ;

It is further submitted that legislative history anc

‘Board decisions aside the Court below still erred by

construing the controlling statutory language by resort.

to the board underlying policies of the Act in disregard

of common and ordinary or established technical mean-

ings. “Its degision in this regard is contrary in principle

and reasoning to the prior .decision of this Court in

N.L. R. B. v. Coca-Cola Bottling Co., 350 U. S. 264,

100 L. Ed. 285 (1956).. In Coca-Cola Bottling Co:, the

~ Court held on’ facts strikingly parallel -to those here that -

where neither the statute itself nor its legislative history

atten 5 a definition of statutory language, then that

language is to be construed in accordance with its com-

mon and ordinary meaning, or, if it has a technical

meaning as here, in accordance with its technical mean-

ing. (/bid., 350.U. S. at 268-209, 100 L. Ed. at 290.)

-_~<—--

—|/—

In so holding, this Court rejected an argument by re.

spondent there, see” 100 1. Ed. at p. 287. that the broad

construction of the statutory language by the. Circuit

Court was necessary to effectuate the general legisla-

tive policy underlying the statute. (See ie | case be-

low, 219 F. 2d 441.) ‘

The decision of the Court below would appear to also

be contrary to, or at least inconsistent with the de-

cision: of this Court in Addison v. Holly Hill’ Fruit

Products, $22 VU. S. 607. 88 L. Ed. 1488: (1944).

There also. this Court rejected a most comipelling call

for resort to the broad underlying policies of the statute

‘and insisted ‘that the jurisdictional language of the stat-

ute, “area of production,” be given its common and ordi-

nary meaning, In the -ddison case again, there was new

express attempt at definition, either in the “Act itself or

the legislative history. ~The Court stated :

“While the judicial function in construing legisla-

tien is not a mechnical pre ess from which judg-

ment is excluded, it is nevertheless: very different |

from the- legislative function. Construction is not

legislation and must avoid ‘that retrospective ex-

pansion of meaning which properly deserves the

, stigma of judicial legislation (citation omitted).

To blur the distinctive’ functions of .the legislative

and judicial process is not conclusive to. responsi- -

ble legislation.” (Ibid., 322 U. 5. at O18, 88 Le

Ed. at 1496-1497). * |

The Court below failed to need this admonition and

improperiy entered upon the legislative domain. It de=

termined the sc pe of the Board’s regulatory powers by

recourse to its own views as to the necessity for regula-

tion in order “to foster sound econ mic conditions, pro-

™

_—

mote economical and efficient service at reasonable

charges, and avoid destructive competitive practices?”

. This was for Congress to decide. And it did decide

when it limited economic fegulation to common carriage

“for compensation’ or hire.” Under the decisions - of

this Court, it was the duty of the Court below to give

effect to-that language in accordance with its well estab-

lished technical meaning and not to enter, either. im-

plicitly or explicitly, upon a legislative inquiry as to the

possible economic impact on other PP sett and the

traveling pubkc. That is an inquiry which the Courts

with their liniited facilities and procedures for investiga-

tion are relatively ill equipped to make and which in

the instant case is unsupported by any evidence of record

whatsoever. . - ;

The decision of the Court below is believed to be

‘in error for still another reason. It is submitted that

the. Court below erred in holding petitioner's flights

to be for “compensation or hire,” as they ate provided

“in furtherance of a business.” ie., petitioner's prin-

cipal hotel and entertainment business. -The words

“carriage * * * in furtherance of a bisiness” expressly

appear in Subsection 20 of Section 101 of the Act (49

i, a ae Sec. 1301 (20) ) defining “Interstate Air Com-

merce,” which covers carriage subject to safety regu-

lation. Those words do not appear in Subsection 21,

defining “Interstate Air Transportation” which covers

carriage subject to economic regulation. Thus where

Congress intended to regulate “cargiage in furtherance

of business,” ®e., under Subsection B it said so in so

many words. In defining the scope of the Board’s

regulatory powers in the economic sphere, under Sub-

- section 21, Congress was, however, silent.

-—|9—

The legislative history shows clearly that the omission

ot * ‘carriage + # * in turthe rance’ of a’ business” from

Subsection 21 was one of ‘carefully considered and de-

liberate choice, not oversight,

In earlier versions of the bill finally enacted, the “in.

furtherance .of a> business” language was first ex-

cluded, then included, and finally excluded from the defi-

nitional subsection covering economic regulation. See:

The text of, the various prede cessor bills’ set forth in-

- Appendix C, -infra, ‘pp. 58-63, seesalso: The remarks

of Senator McCarran tracing the history of the pro-

vision, 3rd Congressional Record pp. 6035-6037, and

See Rhyne, Civil Aeronautics Act Annotated, Appendix

A (1939), Xs indicated by one eminent authority,

‘earlier proposed versions of the Act “included the regu-

lation of aircraft used in furtherance of a business in

an attempt to cover all commercial operations.” (Rhyne,

Civil Aerouaylics Act Annotated at pp. 42-43 (1939).)

But, the pri wision finally enacted, Subsection 21, carved

the pr Wiste mn down, omitting any reference to “carriage

+ * * in furtherance of a business.” thereby narrow-

ing the scope of economic regulation to exclude.

The Court below clearly erred by putting back into the

Act what Congress had taken out and by in effect lift-

ing the “in furtherance of a business” language fromm

subsection 20, where it docs appear, and reading it into

-subsection 21, where it dogs not appear. , ae

The result reached below is further contrary in prin-

ciple and reas n-to at least two prior decisions of this

Court which have applied the doctrine of “Express Men-

tion, Implied ‘Exclusion here relied upon, under like

circumstances, sec: Cited Sattes v7. Atchison, Popeka

Santa Pe RK. Co., 220 U.S. 37.44, 33 L. Ed. 361

wt) »,

‘ ww e .

—20—

C1ON1) ¢ Holmes, ‘/.), and {‘nited States 7. | Viltheraer,

IN US. 76 (3 Wheat. 76), 3 L.Ed. 73°(1820), to the

decision of the Second Cirgsit in Corn Products Refin-

ing Co. v. Benson, 232 .F. 2d 554, 501-562 (2d Cir.

1956), and. to the. parallel decistun myolving “the ‘same

language. of the Interstate Commerce Commission in

Woitishek Common Carrier Application, 42 M. Cc. C.

193 (1943): See also cases collected: 2 Sutherland,.

Statutory Constructions, Sec. 4915, p..414, n. 7 (1943).

Carriage “in furtherance of a business” is- “Inter-

state Air Commerce.” it is not ‘Interstate Air Trans-

portation.” Tf Congress had intended otherwise it

would have expressly included the “in ‘furtherance of

a business” language in Subsection 21. as it did in Sub-

section 20... aoe er

II. 3

The Scope of Review Question.

1. Importance. °

The question presented is of obvious importance to

- the proper functioning of the federal: judicial system

in so far as the recurring problem of judicial review of

- decisions by the tederat adnirmietrative agencies is Cop-

cerned. The question of ’ the proper scope of judicai

review in s° ich cases is pervasive.

— Settlément of this question is in, the. “public interest,

‘as it is certamn to be prestrmed in a substantial number .

of cases’ pending: now as well as in the future. More-

over, the present status of the law on the question is,

to say the least, unclear and reqti*es clarification by

this Court. (See: Davis. Administrative ‘Law Treatise,

CH. 30 1958); Cf. Jaffee, Judicial Review, Ouestion

of Law, 69 Harv. L. Rev. 239, 269 (1985). This is

_ illustrated -by the decision of the Court below in this

. Sea, |

case which, it is stibmitted, sacillated uncertainly be

tween the decision of this Court in Sevctal Security

- : , ”* Board v. 2. Nivrotka, 327 €. S. 35%, 309, OOD bd TIX,

727 (1946), and its decision in V. RB. 2. Hearst.

wei ne Publications, 322 U.S. 111, 131, 88 Le. Ed. 1170, 11x4

1185 1044) calee VITRO Bee Cle Bottling Co.,

.* 5350 UL'S. 2o4, 209, 100-1, Ed. 285 (1950): Sutft & .

Co. 2. United States, 310 US. 216, 224-225, 8b L. Ed!

1391, 130% (1942): Shields Utah Idahe Central R.

Co., 303 UL S.177. 1842285. 83 L.Ed. LD, TEX (1938).

2. Decision Below in Error.

The decision of the Court below ts believed ty be er

roneous as it purports te accept the Board's opinion

because of the Board's presumed Superior. technical

knowledge and competence when the Court was actually

the more knowleageable and competent. It would alse

appear to be emtrary te the decisions of this Court

most in \" it.

The single decision by this Court mest nearly in qweaint

would appear te be Maries Warehouse Conv. Bowles.

321 U.S. 144. 153.88 Lo Ed. 635-4 1944). There this

Court refused te defer to the agencies’ determination

as to the meaning and cffect to be given the words

“public utility’. Ns here, the guestion was primarily

one of. detining. technical words if art with a” long

Le standings legal comm tation. The Court below ’s déctsien

would -alse appear te he contrary te the decision of this

Court in Svctal Security Board v. Nierotha. 327 U. S5

358, 300000 1. Kd. 710: 727 728+ 1040), where the

/ question was one of giving meaning and effect te a

‘well understoad word waves” And in SL. 4

Chenery Corp BYR AOS. 8B. 87 1. Ed. 626 (1943),

this Court again exercised its own independent judg-

_99

——<_"—

‘ment without deferring to the agency where resolutian

of the question depended on a reading and analysis cf

common Jaw cases. See also: The decision of the

Second-Circuit aftirmed by this Court in Duquesne

Warehouse Co. v. Railroad Retirement Board, 148 F.

2d 473 (2d Cir. 1945), at tirmed 326 U. 5. 446, 90 L.

Ed. 192 (1946).

This case is wholly unlikeither NV. L. R. B. v. Hearst

Publications, 322 U. S. 111, 1307132, 88-L. Ed. 1170,

1184-1183 (1943). or ¥. L. RB. B. 7. Coca-Cola Bottling

Co., 350 U.S. 264, 209, 100 L. Ed. 285; 290 (1956),

‘relied upon 4elow, where everyday experience with

‘practical problenrs in the field of labor relations and

knowledge of the “peculiar” use of terminology by

those “intimate with trade union affairs” was held to

he decisive. Iw both Swift & Co. v. United States,

316 U.S. 216, 224-225, 86.1. Ed. 1391, 1398 (1941),

and Shiclds 7. Utah Idaho Central R. Co.. 305 U: S.

177, 184-185, 83 L. Ed. 111, 118 (4938). also relied

“upon by the ‘Court below, expert knowledge .as. ‘to in-

dustry practices and customs was likewise essential. Not

‘so here. where know ledge of law, not custom or prac-

tice. is’ decisive.

Moreovet, the reasoning of the Court that it was

required to defer to the Board because of presumed su-

perior technical knowledge is most questionable under

the circumstances of this case. The facts were undis-.

puted. What the Court was specifically called wpen to

do was to construe statutory: language. review legisla-

tive history. and analyze judge-made case lave. This is

w hat the Board did in its opinion and no more. These

are matters on which Courts are the e experts, not admin-

istrative agence ies.

gin

as stated by Davis in his treatise :

“Courts are the experts in such areas as constitu

tional law. commen law, ethics, overall philosophy

of law and government, judge-made law developed

through statutory interpretation, most analysis ot

legislative history, and ; problems transcending —

the agencies field,” (4 Davis, Admini$trative

Law Treatise, at p. 209 (1938).

ee "

The “Cease ~ Desist” Order Question.

e ; ‘Conflict. ;

The decision of the C oprt bel w Suicides the Board's

order to petitioner to “cease and desist. irom violating

Section 401 (a) oft the Act” against attack on the ground

it is to broad and uncertain, and the Court's decision

in Consolidated Flower Shipments Inc. v. C. A. B.,

213 F. 2d X14. 818 (9th Cir. 1954), pon the authority

- of ,which ‘the instant case was decided are in conflict

with the decisions of this Court in NV. L. R. B. vw. Ex-

— Publishing, 312 U. 8. 426, 83 L. Ed. 930 (1941);

ew Haven R.R. Co. v. 7. C. CC, ae &: Ss. &, >

4 Ed. 595 (1905); ra Ilinots Central RLR. Co. v. State

Public Utihties Comm., 245 U.S. 493. 40 Ig ted. 425

(1917). See also: May Department Store Cov. N.L.

“R. B., 326 U.S. 370, 90-1. Ed. 145° 61945): Com-

era Workers =. N. L. R. B., S02 U. S 429,

4 1. Ed. 2d 896 (1900). In the decision cited this

Court held that an order must he restricted: to conduct

. found unlawful. or reasonably related to or fairly to be

anticipated fromesuch unlawful conduct. Also that a

“cease and desist” order must be clear and definite in

_its terms. - re

“

. —24— | sf Papas

“ But the Board’s order here by its terms includes

carriage ef; “property... and mail.” (Sec. 401(a)

as qualified by Sec. 101(21), Federal Aviation Act of _

1958,.49 U. S. C., Secs. 1301(21), 1371(a)), “pas-

sengers” peindeniadhy' to charter agreement where there

- is a holding out, Pacific N orthern Airlines Inc. v.

Alaska Airlines Inc.» 80 _ Fed. Supp. 592 (Alaska™

1948); Alaska Air Traysport Inc. v. Alaska Airplane

- Charter Co., 72 Fed. Supp. 609 (Alaska 1947), and _

possibly petitioner's own “officers” ‘and “empl yees”

“if stich carriage is sufficiently expanded and fegular-

ized” (Opinion of Court below, Xppendix B infra, at

p. 49, n, 17).- Patently, such carriage is not rea-

sonably related or fairly to be anticipated from petition-

er’s package tour operations in the past. The decision

of the Couft below upholding the Board’s order is

hence in conflict with the decisions of this Court above

et See particularly the Express Publishing Co, and

' Haven R.R. cases. supra, in which the orders

7 cn re issued or sought were virtually identical in terms

~~“

and effect to the order here.

. 2. Importance. ©

Clearly,. the- question presented is of* importance.

- The issuance of cease and desist orders is an integral

part ef administrative adjudication. The question is

likely to be presented in most if ‘not virtually every

administrative regulatory case in. which a violation is

sqnd. -As to the Civil Aeronautics Board in par-

. ticular. its ‘use of cease and desist orders framed in

terms of the statutory provision found to have. been

violated’ has become widespread, if it is not the gen-

eral practicé.. See in addition to the instant case:

Consolidated Flower Shipments v. C. ASB. 16 C.

AL DB. 804 (1953), affid 213 F. 2d 814 (Oth

Cir.- 1954). Macienda ‘Hatels Motels—U.S.. Aircoach

Enforcement, 26 C. A. B. 372 (1958): and ME R

Investment Co., dba Dunes Hytel, et ale. C.-A. B..

Case No, E-16331, Docket No. 10606, decided by the |

Board February 1, 1961, now being held in abeyance

by the Ninth Circuit pending the outcome of this

case. Docket No. 17314 And resort to sich broadky

P framed orders is. of course. by no mcans lintited ‘to

the Civil Nerenantics Boord (See, for example the La-.

bor Board's orde mn Communications ‘orkers 7.

NSW. ROB... H2U, S479, 4.1L. Ed. 2d 8% (190).)

3. Decision Below in Error.

The. glecision of the Court’ belésy upholding the

Board's broadly framéd Cease and Desist order is be-

ae lieved to be erroneous as the order on its face restrains.

- conduct of petitioner wholly unrelated and not fairly. to

. be ahticipated from petitioner's past conduct, It is aces wd-

ingly in conflict with beth the reasoning and holdings —

in the following « cases? Communidations Workers 7.

N. LR. BZ 362 U. S.479)/4 LL. Efe 2d 896 (1900):

- May Department Store Ca, 7. N.LOR. B.,326,U. S.

376, 90-1. Fd, 145 (1945) NUL. R. Bs x Express

Publishing, 312-UL S. i, 85 1. Ed. 930 (1941);

New Haven RR. Co. 7. 10. C.. 208 U.S. 36, 50-1.

N 0 FAL BIB 105 NOL RL. Ochoa Fertilizer Cig

283 VF. 2d Qh chst Cir, 1): NLL. KR. ORB. te Local

249, 240 F. 2d 339 039d Cir. 1950); NL bh. Ro Boe

Larnar ‘Creamery Co., 246 F. 24 & (3th Cir. 19575; -

Bratty v. United States, VL FF. 2d 3IF eXth. Cire

1931).) . |

y« } wy 2

« sn)

oO.

:, ~26—

Petitioner was fdund to have vi lated Section 401 (a)

. of *the- Act, in transporting passengers pursuant to its

package “Champagne Tour” operations. Yet. the

Board's Cease: and Desist order by its terms also en-

joins violations having nothing whatsoever to do with”

“5:

_ such operations as detailed above., The decision of the

Court below would accordingly appear w _be in error.

, The Couft’s decition -is also believed to ‘be in error

for the related reason that the Board's: order on the’

. facts.of this case is so vague and uncertain as té

“fail to fairly apprise petitioner of the conduct sought

to be enjoined. This Coury has: ruled that a restrain-

ing order isstfed by an administrative agency must, Le

clear. and definite in its terms and has; held“ ‘inoper-

afive atid-of no effect” an ‘ler far clearer and more

- definite than that here. “Mlinois Central R.R. Co. v. ‘

’ State. Public U tilities Commi.. 245 U. 8.°493. 40 L. Ed. ©

425 (1917); see also: Eas N.L.R.B.v. Express Pub-

lishing Co., 312 U, 426, 85 L: Ed, 930 (1941);

- Cf. New Haven R.R. hie "fs C., 200 U. S. 36, 50».

L. Ed. 515 (1905). The Civcuis Courts have also rec-

_ ognized .thiw rule: NOL. R. B.-v. Lipshuts, 149 F.

24 147 (Sth Cir. 1948): Caldwell PE Bs Be Gey a

F. 2d 889 (7th Cir. 1940): Cf. Schwegnann Bros.,

ete, v. Hoffman-LaRoche Juc., 221 F. 2d 326 (5th

Cir. 1955): Cf. Rule 65(d) Federal Rules of Civil Pro-

cedure. State cases are collectéd:. 28 Am. Jur., In-

junctions. Sec. 293."

The holdings of the Contr below that any uncer-

tainty may be resclved: “by reference to the Board's

compl: Lint. investigz ation “hd opinion” ( Sce Opinion.

Appendix B, supra, pp. 40-57) is unsound. The Court

does ‘not expressly state. nér did the “Board. that the

oe —27—"'

< * piri pra i °

order is restricted to the facts founds reaschably related,

and fairl} to le anticipated. There, is therelore no

assurance that the Board's order woild be so restricted

subsequent eniercement proceeding. In. both Brady

Transfer and’ Store Ca: v. United States, 80 Fed. Supp.

(110 (S. Plow a 1948). aff'd wie, opinion 335 U.S.

.. 875, 93 L.Ed. 418 (1948), and Bin gler Vacation Tours,

Inc, @ United States, 132 Fed. Supp, 793, 798) 0D.

N,: J. 1955), aff'd wo opinion 3230 kL. Ss. 921, 100

L. Ed. 800 (1953). cited by the Court below. the

Cease and De ‘sist order capressly incorpo rated the In-’

terstate Commerce. Commission's “report.”

The Court's devision is als unsimind as reference to

the Board's complaint. investigation and opinion does

‘ nt give the required ¢larificatign or certainty as to the

terms of the Boartl’s order. While certain’ principles

were enunciated and gert ain aspects of petitioner's op-

eration were found tainted by the Board, the signifi-

cance of other relevant principles and factors is leit in

doybt: for example: it is unclear from the Board's

opinion whether all. package tour operations, ‘however -

constitued), are: b@BA unlawful: what the effect of more

effective procedures: to control tise of the fights by

so-called non- guests, would be; whatSwould constitute “

“compensation or hire” or diitergnt tacts which did

*- he ; : oce e

not include a “package concept Tequiring. purchase of

other goods and seryices. ete. Moreover, there is no

attempt at anWerall (statement of either general cri-

‘teria or factors by which petitioner might guide its

futgre conduct. Uneertainty is compounded when the,

“reasonably related” and * fairly to be. anticipated” rules

of the Lapress Publishing Cv. case are considered.

_ Petitioner is tn * short ‘told to read and inter pret the

Board's opinion, arid thas if it reads wrong in the view

of the Board ‘or some judge in/a future pri ceeding, it

will be subject to quasi-criminal ‘sanctions and penal-

ties Jor contempt. It:is submitted that the art, NOt sci-

ence, Of reading case law is too thin a reed upon which

to support a result requiring petitioner to conduct any

possible future operations however unrelated under such

“peril of-a summons for contempt.” :

Brady Transfer & Storage Co: v. United States, 80

Fed. Supp. 110, 118 (S. D. Iowa 1948), aff'd w/o”

opinion 335 U. S& 875, 93 i Ed. 418 (1918), upon

w hich the Ninth Crronit originally relied in. framing its

“reference” to the record or opinion*rule (see Consoii-

dated Flower Shipments® . C..4 828 F. 2d 814,

818 (9h Cir. 1954), is Wholly inapposite here. In

Brady, the Commission's order expressly incorporated

its. report, and recourse to the report itself ¢Transporta- |

tion, Activity of Brady Transfer & Storage Co., 47

M. €..C. 23, 56 (1947). reveals that the Conia

set Out specifically . ertatin the acts and conduct to. be

enjoined (47 M. C. C. at 56). Additionally, as the 7

District Court in the Brady casé “noted: the Commis-

sion “had, gone to considerable lengths”, ‘through past

rulings and regulations to set. out the pertinent. cri-

teria, and it would have been ihpossible to be much

more s,ecitic. The same would appear to be true in

the similar case of Bingler Vacation Tours, Jne. rw

United States, 132 Fed; Supp. ° 793, 798 (D. N. J.

$955), aff'd w/0. opinion 350 U. Si 921, 100 L. Ed.

806 (1955). also relied upon the Court ‘below. as the

| Conimission’ s report again reveals. “See. Asbury. Park-

New York Transit Corp. 7 Bingler, Vacation Tours,

. Sot it. | eee

Inc., 62 M. C. C. 731 (1954). in Bingler, the’ Com-

Mission’sepinion did not specifically set out the terms

‘of. the propused order as in. Brady, but the Commis-

~sion did expressly and specitically: ile nity the opera

tions unauthorized throughout. its opinion and again

there were ample existing Commission rules and regu-

; lations: setting forth ‘the controlling principles and

criteria. se

: Not so in the instant case. The Board has issued no

pertinent rules of regulations. Its opinion doesn’t at-

tempt an overall stetement of general principles. ner

does it specifically identify the criteria or factors en-

—— trolling. This, though on the record before it, it should -

have little, ditticulty in se doing. . As- stated by the

Court below (which was of course bound-as. it. ex-

pressly held by (its prior decision in the Consolidated

_ Flower Shipments case):

“Although we sustainsthe order of the Board

in the circumstances of this case, the form em-

ployed is not a desirable one. It should not be

too difficult for the Board to frame an order pro-

“hibiting the legal conduct in terms of criteria *

“narrower than the statute yet broader than the

precise facts of the particular case.” os ee

See Opinion of Court below, Appendix B. supra..

6. 50, 0 30. :

The. decision off the Court bel wouphelding the

Board's Cease and Desist order, is in error hecatise the

order is too broad under this Court s decision in’ [ir-

"pre ss Publishing and too unce rain under this C OUrL's:

a ¢

a ‘

decision in JIlinois Central R.R. The Board could with-

out undue difficulty, and accordingly, should, frame a_

sufficiently clear and definite more specific order.

Conclusion. —

For the foregoing reasons. this petition for writ of

certiorari should be granted.

Respectfully submitted,

Epwarp L: Compton,

Joun W. Preston, Jr.,

; By Epwarp L. Compton,

Counsel for Petitioner.

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APPENDIX A.

Statutory Provisions Cited and Quoted.

Federal clviation elect

19 U. S.'C.'A;, See. 1301 (4); (10), (20) and*(21):

*Deftiitions

As_ used in this chapter, unless the context other-

Wise réquires— - .

- (4)° Air commerce” Means iMterstate, overseas, or

foreign air. commerce or the transportation of mail by

aircraft or any operation or Navigation of aircraft, with

‘in the limits of any Federal airway or any operation or

navigation of aiferatt which directly affects, or which

may endanger satety in, interstate, os erscas, or foreign

- - oi commerce.

(10) + Nir. transportation” meatus interstate, Overseas.

or foreign air transportation or the" transportation oF

mail by aircraft. ,

(20) ‘Interstate air commerce’, ‘overseas. air com)

‘merce’, and ‘forcign air commerce’, respectively, meat

the carriage by aircraft of persons or property for

compensation or hire, or the’carriage of tail. by air-

craft, or the operation or navigation of aireraft in the’

conduct or furtherance of a business or vocation, in-com-

merce between, respectively — | °

a x” *.

outside the reot: whether such commerce Moves

Wholly bys aireralt or partly by airerat t and partly

by other Perms of oe ation.

(21) ‘Interstate air. transportation’, ‘overseas air

transportation’ and ‘foreign air transportation’, respec:

tively, mean the carriage by aircraft of persons or

property as a common carrier for compensatic m or hire

or. the carriage of mail by aircrafft,. in cormerce be-

tween, respectively—

* * *

in the United States and any place

-outside there\f; whether such commerce moves

wholly by aircrait or partly by aire raft and partly

‘ by other forms of transportation.”

_ A9U.S. CrA., Section 1371 (a):

— “Certificate of public conventence aud necessitys-Es-

sentiality

(a) No air carrier shall engage in any air transpor-

tation unless there is in force'a certificate issued by the

Board authorizing such air carrier to engage in such

transportation.”

Other Acts

19 U.S.C. A. See. 1 (3 fla): , 8

“Regulation in General; car service ; alteration of line

(3) (a) The term. ‘common carrier’ as used in this

chapter shall include all pipeline mupanies ; express com-

_ panies; sleeping-car companies; and ali persons, natural

or artificial, engaged in such transportation as afore-

said as common carriers for hire, Wherever the word

‘carrier’ is used’in this chapter it shall be held to mean

‘common carrier” * * *°

4$9°U. S. C. A. Sec. 303 (14) and, (17):

“Definitions and éxceptions—(a) Definitions

As used in this chapter— :

(14) The term ‘common carrier by motor vehicle’

means any person whith holds itselt out to the general

public to engage in the transportation by motor vehicle

pa SA

i) interstate or foreign commerce of passengers Or

property on any class or classes ther col for compensa-

tien. Whether over revular or ire ‘salar retites, except

‘fransportation by meter velicle by an express company

te the’extent that stich tratispertation has heretofore

heen subject te chapter Leo this title. to which extent

such transportation shall continue te be considéred to be

famed shall be resgul: ated ats ranapatatee subject to chap:

ter Lot this title

(17) The term ‘private carrier of property by motor

ehide’ means any person net included in the terms

‘commen carrier by meter Vehicle’ md ‘contract carrier

by meter vehicle’. wh vor, which transports in. inter-

sfate or foreign comme ree by meter vehicle property of

which such person is the owner. lessee. or bailee, when

such transportation is ter the purpose ot sale, lease,

rent. or baihpent. or in rurtherance of any ceogmmnercial

enterprise. |

90°.8.C. A. Ser. Wid

7. ofinitigns .

- For the purposes of this chapter-—

ed) ‘The term: ‘commen carrier by avater” means any

person awhich holds mselt omt te the ge neral public. +

engage in the transpertation by water’ th interstate or

toreian cominerce oft passengers oF property or any class

wo Classes theres! for COMMpCrSatien, except transporta-

tion by water by an-express company stiiect te chapter

A|oof this tithe in the conducr of its exyress business.

whieh shigit in eomsihered te he and, shall be regulates!

as Uallspertation subieet te chapter Toot this title.”

APPENDIX - 8b.

| Tithe ot Board and Cause. |

| Examiner's Initial Opinion and Order.

EKRAT \ SHEET

INITIAL DECISION OF EX.VMINER

RICILARD \. WALSH

_>erved: May 20. 19600

The parties are advised that the second vw the last line

In paragraph two ot the proposed order attached to the

Initial Decision served in the above-entitled. proceeding

on May 20. 1900, should read: ya

Sections LOLC1O) and 101K 21) an the Federal

Aviation Act of 1958. in violation. 2” ¢

ss RICHARD A> WALSH.

Hearing lxaminer.

May 23. 1960.

‘

United States of America Civil Aeronautics Board

_ * ashingten, 10 ¢

LAS VEGAS HACIENDA, INC. AND HENRY

F. PRICE ENFORCEMENT PROCEREDING

Docket 1007 1

In the matter ot the entorgcement proceeding mstituted

by complaint tiled by the sureat yet entorce

F. Price.

ANITIAL DECISION OF EXAMINER

RICHARD AO WALSH 7

Served: Miav 20. 1900

Pe ae]

Upon: John Wo Preston, Jr. Rowan Building, Los

Angeles. Calitornia. ter Las Vegas Hacienda, Ine., and

Henry F. Price $

Williams be. MeCollam. Civil Aeronautics Boasd,

Washington 25. J. C. for the Bureau.di Enforcement,

¢ Avil Acronautics Board

This decision shall become final 10 days after the

“date of service shown above and shall become: effective

upon the issuance of & Board order pursuant to Rule

2X ot the Rules of Practice, unless within such 10-day

period exceptions thereto are tiled by one of the parties

with the Docket Section, Civil Aeronautics Board,

Washington 23, D:C., and served upon all other parties.

If exceptions are Tiled and served within the period

noted: briefs may be tiled and served’ on all other par-

ties ithin A further peril of 20 days.

United Mates of America C ivil Acronauitics Board

@ Washington, 1D. <<; z

LAS VEGAS HACIENDA, INC. AND HENRY

PRICK ENFORCEMENT PROCEEDING

ee . Docket 10607

Found: Lis Vegas Hacienda, Inc; engaged in inter-

state air transportation as a common carrier for com-

pensation or hire between -Los Angeles and Burbank,

Caliternia, on the one hand and Tas Vegas, Nevada,

on the other without authority from the Board in viola-

‘tioned Section 40Lea) ot the Net.

Henry F. Price engaged in interstate air transporta-

“fen as a commen carrier for compensation ar hire be-

tween Leos Angeles and Burbank. California. on the

one hand and Las. Vegas Nevada. on the Other. with

. ‘ a

wr me

out authority from the: Board in violation of Section

401(a) of the Act.

Las Vegas Hacienda’ Ine. and its agents: successors |

and assigns and Henry F. Price. indtwidually and as

agent and/or manager of the flight’ division of Las

Vegas Hacienda, Inc. should be ordered to cease and

‘desist from violating Section 401(a) of the Act.

Appearances: John W. Preston, Jr. for Las Vegas

Hacienda, Inc.. and Henry F. Price. Theodore 1. Sea-

mon for Pacific Air Lines. Inc.- «Albert F. Grissard

and Ralston ©. Hawkins for Bonanza Air Lines, Inc.

‘William E. McCollam for Bureau of Enforcement, Civil

Aeronautics Board.

INITIAL DECISION OF EXAMINER

~~ RICHARD A. WALSH

Preliminary Statement

a. 4

This proceeding was instituted pursuant to Rule 205

of the Board's Rules of Practice by the tiling on June

15, 1959, of a vetition for enforcement by the Chief of

the Office of Compliance (now the Bureau of Eniorge-

menf—hereina {ter referred to as the Bureau), which,

petition was Aceompanied by a formal coniplaint: signed

by. a compliance attorney of the Board. The complaint

alleges that since on or about March. 4, 1938, respond-

ent Las Vegas Hacienda. Inc. ( Hacienda)-and respond-

ent Henry Price have engaged and are continuing to

engage in interstate air transportation as a common

carrier of persons for compensation or hire between .

Long Beach and Burbank. California. en the ane hand

and Las Vegas. Nevada on the other without appropri

ate authority from the Board in violation of Seetien

401(a) of the Federal Aviation Act of 1958 (formerly

\: |

; —_—I— “7

Section 401 (a) of the Civil Aeronautics Act of 1938,

as amended ). P

Pursuant to notice public hearing: was held here in

Washington. D.C. and Los Angeles California. Pa-

citi Air Lines, Inc. (Pacific) and Bonanza Air Lines,

Inc. \( Bonanza) appeared and participated in certain

phases of the hearing pursuant to Rule 214 o& the

Riles - “ant Practice. Bricts to the Exantiner

filed by the ‘parties and a Stgtement of position

filed by Pacific. .

The Issues: The issues raised -by the complaint are

whether the wperation of package tours by air between

the points in’ question by respondents Hacienda and

‘Henry F. Price are in violation of the provisions of

Section 401(4) of the Act. and, if so, whether either

or both respondents should be ordered to cease and de-

sist from committing further violations of the Act. .

Position of the: Parties: Respondents’ - position is

that they provide air transportation for guests of the

Hacienda Hotel only, that such transportation is pro--

' vided free of charge. that for this reason they are not

. engaged in the carriage of passengers for compensa-

tion or hire within the meaning of Section 101(21)

of the Act. and that the provisions of Section 401(a)

are. therefore. inapplicable and no certificate is required

for the service , .

They alse teke the position thé? the Bureau of En-

forcement has failed to sustain its burden of present- —

ing a prinia’ facie case against cither of them because

of alleged variances between the allegations of the com-

plaint and the ‘proos: Thus. they peint out that they

are charged with violating Section 401 of the Federal

Aviation Net which did net become eftectivepuntil

s+ \ ,

’

January “1,.1959, whereas the bulk’wi the evidence pre-

sented by the Bureau relates to the service which they

operated. in 1958. They assert that since they are not

charged with violating the Civil Acronautics Act and

since. Section 401 of the Federal Aviation Act has ne

retroactive effect, evidence of vielations committed in

1958 could have nu prolsative value and should not, have

been received. “In view thereot and since my, investiga-

tion was made of their operation in 1050,” ‘respondents

imply that the complaing should be dismissed. Resyond-

ents on brief resew acnotion ‘made earlier for disthissal,

of the complaint agaifist Tespondent Price on the ground

that the evidence shows him to be nothing more than

a salaried employee.of, Hacienda.

Both the Bureau and Pacific take the position that

the record conclusively establishes that-both respondents

are engaged in interstate air transportation as a com

mon carrier for compensation or hire and that the

Board should issue an order directing them to cease dnd

desist from further violations wt Section 401 (a) -of the

Act. The Bure: 1 also opposes dismissal of the com-

plaint against respondent Price on’ the ground that as

manager of Hacienda’s flight division he is in reality

_ the latter's agent in the conduct of the operation and

asks that he be enjoined both individually and in all

~ other capacities in order to prevent him from resuming

‘operatic ms in some other name,

Respondents: Las Vegas Hacienda, Inc. (Haci-

enda). a California corporation is one of @ number o°

- similarly named hotels, which is located in Las Vegas.

Nevada. Its principal business is operating an hotel

* 4. . . i

and providing entertainment fof the public. Other hotels -

bearing the name Hacforida are located, in’ Fresno,

. e os

Bakersfield, and Indio, California, and in 41 other lo-~

cations in the East. All are separately incorporated.

Mr. Warren Bayley is Chairman of the Board of the

Hacienda hetels in Lis Vegas and California and the

gambling casinv, which is separately incorporated and

which ‘operates under the name of Casion Operations,’

Inc, Respondent Henry Price is manager of the flight

division of Hacienda and is a salaried employee.

The hotel consists of ‘eight buildings, 363 rooms, a.

gambling casino, golf course. sw imming pool, and other

recreation facilities. Although separately incorporated

the gambling casin»y is physically a part of the hotel.

‘Hacienda entails an investment of approximately $6,

000,000 and being a resort hotel it is dependent: for

patronage on gu@sts coming primarily from cities in

California. = ©” ? °

Prior Method of Operation: Prior 4 to ideesti 1958

the dir transportation here in question was performed

by Hacienda Hotels-Motels. Room and Flight Reserva-

tions. Inc. (Hacienda Hotels-Motéls), which was incor-

porated. gmong other purposes, to act as agent for Ha-

cienda in the extension, promotion. and development of ’

its hotel business. Hacienda Hotels- Motels promoted

and sold champagne tours for HaciendA in the Los An-

geles area. It pertormed all ef the services incident

to the operation of the tour flights except tHe phy sical

operation of the flights which was performed under .

contract by bs. Aircoach and other carriers. . Opera-

tion of the flights was subject-to the direction and con-

trol of, Hacienda Hotels- Motels. Solicitation of. tour

patrons in. the’ Los Ang ‘les area -was accomplished |

thre meh “vari ms advertising media including news."

papers. radio. bro hnres. ete. The price generally

oo : . - c e é me re ai ’

| charged tor the ‘tour was $25.00, plus tax. The entire

Operation. was conducted under the direction and con-

trol of respondent He mry Price, president of Hacienda

ae rtels- Motels.

Hacienda Hotels-Motels continued) to operate the

tours until shortly after the decision in Hacienda Ho-

tels- Motels, Rooms and Flight - Keservation, Inc., and

U.S. Aircvach Enforcement Proceeding, Docket 8462,’

in which the Board found it-to. be operating, as an in-

‘direct air Carrier iy violation Of section 401ca) of the

Civil Aeronautics Act ot 1938, as amended, and ordered.

it to cease and desit from iurther violations of-the Act.

Present Method of Operation: On or about March,

4, 1958, Hacienda assumed “and thereafter performed

_all of the duties and services incident to the tour opera-

thon theretofore prov ided by Hacienda Hotel-Motels and

by the’ direct: air carriers and thereafter transported

all tour passengers in its own fame and in its OWwD air

eraft. Hacienda initiated, service between the Los An-

geles area and Las Vegas ona ‘Jrequency of one round-

trip with DC-3 aireratt. On or about July 3. 1958,

the DC-3 was rep diced with a DC-4 and in April 1050

it began operating two roundtrip. flights daily -utilizing

hoth DC-3 and DC-4 aircraft.

In July, 1959, the service wits extended ‘te. Santa

Ana. California, on a frequency of ‘six roundtrips per

- week and to Ontario, California, which was served. pri.

. ° « ae : ;

marily on weekends. . Beginning on “or about October,

30. 1959: it initiated flights between San Franciseo and

Las Vegas on Monday. Wednesday. Friday. ‘and Sun-

day of each week. » The latter flights are operated with °

Decided February 19, 1988, Order E-12 702.

mY ae

pressurized Gonstellation aircratt and they differ from

the regular evening tour only to the extent of previd-

= ing the San Francisco patrons with a room at Hacienda.

and two bottles Gi chanipagne instead of one.: The price

"per person double occupancy. plus tax. as compared: te

S3O.85 per person double accupancy, plus tar, between

Long Beach Burbank-I. ‘ihn Vegi.

Upoti initiation p> service by Hacienda in its own

name Hacienda Hotels-Motels. was dissolved and all wp:

“+ erations by that company and by the direct air carriers

~—Avere. discontinued. Hacienda purchased’ and operated

its own aireratt, employed its own crews, and the op-

eration thereupon became the flight division of the ho-

tel itself. The operation, was taken over by’ H tacienda

ia order to satisfy the Board's objections to the previ-

ous operation.” “and to bring it within the scope of the

“primary business” doctrine which the Board held was

inapplicable to the prev Hous operation,

Upon acquisition of the ope ration Hacienda. employed

Henry Price as manager of its ‘light division and, al-

though a salaried employee, his duties are similar tn

most respects to those which he performed as. president

of Hacienda Hotels-Motels. Mr. Price has complete

charge of the slight operation “and the 30 odd Ha-

crenda emiplovees engaged in that, activity who are sub

lect te dus direction and supervision. Mr. Price regis-

tered Haceuda’s DC-3 and DC-4 aireratt: in the ho

tel’s name wrth the Federal \viation Ageney and he

has the responstbilit, tor obtaining emergency air Ser

: “Hacienda Hotele Motels. Rooms and Flight Reserva:

: tems. Ine and ToS Ntrewach Enforcement Proceeding. -

supra . é °

of the San Francisco-Las Vegas one night tour is $40.

—12—

ice trom other carriers when Hacienda s aircraft are

unable to operate because of mechanical ditticulty. — ,

‘Hacienda perscinnel is enploved at both Hacienda on

‘tices in the Los Angeles area and in Las Vegas. They,

perform Virtually all «1 the duties and services required

by the operation including ticket sales. passenger mani

lesting, check-in of passengers and baggage. and pus

esenger ground service. All advertising is. dorie pursu

ant to’ contract by an independent advertising agency.

Fuel for aircratwis purchased directly from the Stand

ard Oil Company of California and’ aircraft Maine

_ hance is pertormed under contract by American Airny:

tive, Inc. and Long Beach Airmotive. Inc.

Tour. patrons are solicited tron the general publ

through substantially the sate media eniployed at Hi,

cienda Hotels-Motels; namely. new spapers radi. and

brochures. The service is also made kn wn te the pub--

lic by a number or travel agents who sell the pach

age tours on a cenmission basis. Advertiseme ‘nts which

appeared in the les | Angeles Tines during 1958 anc

1959 were generally headed with the phrase “Fly Free

to Vegas” in enlarged bold tvye” Underneath there ay

ared the nan “Hacienda: > the words “Chanipagne *

peared pas

Tour.” and de SCTIptied of the aireratt. and the various

features ot. the package tour, tligedit schedules, and price

of the four!

. e ‘ ’ °

Upon purchasing | he package tours patrons are ts

sued books of coupons which entitle them to. among

“other things. so-called free air transportation. between

“Laing Beach- Burbank and Las Vegas. The price ot the

evening tour. which has heen changed on several o:

castons. ranges between $2250 and S27 50 and wes

arriving in Las Veoa- each naétron ren surrender «1

é ! é '

the mdividttal « Aipniis te cives in return theretor the

partiewlar service or beners specitied therein, Two vi

the « eis are ler Transportation between the airport

and the Hacienda Pheord twee for the use of the Ha-

Cenda geolt <aourse. one ter the hh deain-one contest, one

tor a betthe fr sen dil Hacienda champagne. and

one tora butter dinner. In addition each tour patron,

is giver! SSO an cash te ssa tor ‘toad, at the bar

orm the gambling casins The, aggregate cei ot all

ot the mdividual items of the tour ameunt te $27.50,

Wiech is the price customarily charged for the tour?

Tr ciditien? te the horegoing specific lenetits tour

patrems are served champagne en rr ute to Las Vegas

The 14 passengers art onte rained with piane mits-

sic and once cach week a fashion show is held “aboar;’

. A re of ¢ » e ¥

the airorart. all without extra: charge. Patfons also re-

eee a guaranteed reservation tor the floor show at the

the New Frontier Hered which te ose and controled

by Hi tetada’s chiet excentive eae Mr Warren Bay

lev.

Uy m checking im at tie Hactends ticket counter in

Burbank patrons are.istued boarding passes which. are

surrendered tothe gute attendant hefore boarding the

“ajsetates Their names are then checked of tom the pas-

nger manttest and upen arriving in the Las Vegas

Nierpert thes are niet by a Hactenda representative whe.

Cscorte ugh ae waitng hue which transports then

e He Poweecage ts catia: 1 the Hotel in a

eetiirate ‘chick which « owned I > Hac tenda. Boar.’

e *

Thi oes i | ete ong tty ale i 1feqris if’ de “illows

(ste SS Vettle vote wrauene SI2 50. tine service

tae S43 hyde 1? Tie ceetiteet .s2 bit tey

ing passes ter the return tight to Burbank are issued

in the Hotel lobby approximately one to twe hours he

lure flight time. Hacienda as a matter of routine as-

signs 39 rooms daily to the DC-4 aireratt and patrei:

are required to pay tor tha rooms at the same time they

purchase the package tour. 4

Althyugh Hacienda advertises and ‘insists that the air

transportation: to and trom Las Vegas is free. it ‘is

noted that regardless of whether the- patron: reserves

a room at the Hotel he is not permitted passage on

Hacienda’s aircrayt without purchasing and paying: for

the package tour... The alleged purposes af this require-

ment are to: insure that only guests of the Hotel are

carried on Hacienda flights and to discontage the use

-of the flights by persons seeking only low cost trans

portation. - While conceding the possibility. that many

persons may use the service for that purpese Hacienda

still considers them as guests of the Hotel because ot

the likelihood of their taking adventage of some of the

tour -benetits, such as the free meal and. the $5.00

cash refund. __ °

Hacienda contends that the package tour is nothing

more than a promotional device to stimulate business

at the Hotel. Vhe vast majerity of the quests. utilize

suriaée transpertation traveling te and from the He

tel. The air package tours account for only nine per

cent of the Hotel's guests. ‘

Hacienda “insists that it. receives ne income from. the

tours and it regards the operating expenses of the tour

as being a part ef the . berating expenses or the Hotel

Itself. In support Gr ts lain that the transpertath 4

is tree Hacienda calls attention to the Tacts that the ag

gregate value of the-inlividual Seaterce of the teonte eX

ceeds the price charged corcthe tours that ne refund is

=. |

made of any part ot the pure hase price regardless of

whether the patron uses other Means of transportation,

and that no tratisportation tax ls paid | to-the Bureau

ot Internal Revenue. a ©

In this connection respondent notes that this is -but

one of a number of package teurs offered periodically

to guests of the Hotel. The distinguishing difference

between the instant tour and that offered guests arriv-

ing there by private automobile is that instead of be-

ing given a coupon book the latter are given trade checks.

having a value of fifty cents each.

Although the gambling casino does not contribute to

the operating expenses of the flight division, it shares

Substantially in the revenues produced by the patrons of

the champagne tours and it produces about the same

amount of revenue as all-of the other hotel facilities

combined. Hacienda has been a profitable operation.

Analysis of the Evidence: The question presented

here tor determination is whether the champagne tours

being operated by Hacienda constitute air transporta-

tion within the meaning of Section 40i(a) as that term

is defined in Section 101(21) of the Act. If so, re-

spondents are in vielation ‘Of Section 401(a)— since

neither possesses either a certificate or exemption order

— trom the Board authorizing the operation of such sery-

ice. Section 40}+a) et the Act provides:

“No air carrier shall engage in any air transporta--

tion unless there is in force a certificate issued by the

3oard anthorizing such air carrier to engage in such

transport ation.

The term “air transportation” as mused in Section:

401(4) and the term interstate air transportation is de-

fined in Svethon LOL 21) as: ; ;

the carr lage by aircrait of persons or prop-

erty as a> common carrier) jor. compensation “or hire

Hacienda contends that since ne charge Is made tor

transportation its operation simply does not come with

in the foregoing provisions of the Act and that it does.

Not constittite air transportation within the meaning of

Section 401 (a). lt states that the service Is Tet ‘ip

erated tor protit but rather is. operated for the sole

purpose of promoting and developing ts principal busi

ness of operating a hotel and pre Niding entertainment

tor its guests. The air package fours. it ora’ es. are

predicated solely on the patrons purchasing a minimum

package consisting of goods and services other than

transportation for which the patron is charged - the

same price paid by any other guest regardless of what

Means of transportation he uses in traveling te and

- from the Hotel. It contends that being a promotional

device the cost of the package tour is shared by all pa

trons of the Hotel and not just by those whe Use its

air service. Hacienda regards its transportation sery

ice as being free in the same. sense as any other item

which is given away free by other businesses in their ad

vertising programs. such as free trips. free atitemobiles,

ete. Aa

-As respondents recegnize in their brief the term “for

compensation or hire” is net detined in the Neto and

there is fe explanation of that term in the legislative

history of? the Act The Board. however has) previ

ously ‘construed the term “compensation” te mean a

payment fer service which docs net necessary inchide

an clement ef protit’ and.in the previews Haciend.

»,

‘Consolidated Plies Shipment. Bao Nvoa vtelugiost

16. CAB. 804.8396 1953),

rm | ones

case, Hacienda Hotels-Motels, supra, it rejected the -re-

spondents’ argument that if a carrier should operate at

a loss it cannot be deemed a common carrier for hire.

In so doing the Board reterred to an earlier’ decision

ot the Interstate Commerce Commission’ in which the

mater carrier operation there was held to be “for hire”

although it was-being operated at a loss. These cases

-ellectively dispel any doubts that might still remain with

respect to this aspect of the question and it can now

be clearly stated that regardless of whether such service

is being at a profit or a* a loss it has no bearing on

the quesiion of whether it is being operated. for com-

pensation or hire. |

’

Hacienda contends. nevertheless, that the above-

mentioned cases are not in point. Thus, it argues, the

tour flights are operated in furtherance of its principal

business of operating a‘ hotel and providing entertain-

ment. It asserts that the facts and circumstances in-

volved in its operation more nearly resemble those in -

several cases decided by the Interstate Commerce Com-

mission under the motor carrier Act of 1935 (Part Tl

of the Interstate Commerce Act) in which the Com-

smission found the transportation not te be for, com-

pensation and ini cach such case the Operators were found

to be a private carrier rather than a common or con-

tract carrier within the meaning of that Act.

Hacienda relies specitically on the Commission's de-

cision in Woitishek Common Carrier Application® and

. Sipperting cases reterred to therein. In that case the

‘Schenles Distillers Motor Division, Ine.. Contract

Carrier Application, 44 MCC. 171, 173 (1944).

"$2 MCC. 193, 200-201 (1943)

- —B—

applicant was engaged inthe business of purchasing

and selling buiiding materials. His headquarters and-

principal warehouses were located in Las Vegas, Nevada.

and he supplied material tor comstraction projects lo

cated at putnts in Nevada on and south of US. High-

way 40. Delivery of such material Was made from

applicant's own yard or direct’ trom supply points in

nearby states cither by tor-hire carriers. rail. or motor,

‘or by applicant in his own trucks.

_ Approximately 40 per cent of applicant's ‘yross rev

enues were realized from the direct sale of supplies upon

prior order of a contractor which were delivered

directly from the point of supply to point of ‘use in

applicant's own trucks. Applicant owned all of the

mat¢rials which he transported and the selling price

thereof Was computed by adding to their cost at the

point of supply. appheant’s profit plus an amount

deemed sufficient to cover the cost of transportation.

While the commission rec nized that each case must

be determined upon its own particular facts its decision

in the Woitishek case turned on a showing that the ap-

plicant’s principal businessawas the selling of building

materials; thai the property transported: was property ,

which he owned: that the transportation’ was not’ per

formed for profit but rather was incidental te and in

furtherance of. his principal business of selling build-

ing materials, and that there Was ne holding ma of

transportation to the general public. ~

-In holding the applicant to be a Pivate rather than

a ce minjion or contract carrier the confPission enunciated

the primary business doctrine as follows: it is

apparent that a private carrier within the meaning «of

Section 203 (a) (17) "Ss one whe transports |. prop

= =

erty of which he is the owner, lessee, or bailee when

such transportation is for the purpose of sale, lease,

rent, or bailment, by the transporter, or in the further-

ance of any conimercial enterprise of the transporter

other than transportation for corapensation.” ;

_ Notwithstanding Hacienda’s contention that its tour

service has all of the attributes of the service in the

Woitishek case. nu case has beep cited wherein the

Commission has applicd the primary business test to

cases involving the transportation of persons and al-

though the Board has never had occasion to pass aipon

this question directly it noted in its opinion in the

previous Hacienda case that even under the Interstate

Commerce Act the test appeared t be restricted to

carriers of property who furnish transportation serv-

ices in furtherance of their primary business enterprises.

_ White jt is beyond dispute that Hacienda’s principal

business is that of operating a hotel and furnishing en-

tertainment, it is*obvious that in no sense could it be

the owner, ‘bailee. or lessee of the passengers which

it transports. Although this fact alone is sufficient

to cast doubt on the applicability of the primary busi-

ness doctrine to the facts in this case. in view of Haci-

enda’ s other contentions om the subject. mentioned earl-

ier herein, and other factors which distinguish the. Woit-

ishek case frem the instant case. a further discussion

of the matter appears necessary.

Thus. one of the most impertant distinguishing dif-

ferences -between the facts"of these two cases is Haci-

enda’s holding out of ‘service to the general public. The

Commission heted in the W vitishek case that this is

one of the important attributes of common carriage and

rit can be concluded trom the full text of the Com-

- «

mission's decision im that case that it there had been

, amnion

a holding out of service to the public its decision would

have been different. Insofar as the instant case is con-

cerned there can be no dispute that Hacienda’s service

has been and is being held out to the generat public.

As has been indicated prev iously, tour patrons are pro-

cured through advertising i in newspapers, radio, and bro-

chures i in the Los Angeles area and through ‘solicitation

by travel agents and by Hacienda’s owi counter per-

sonnel. This in effect constitutes a holding out to-

the entire population of the Los Angeles area that Ha- |

cienda i is willing and able to accommodate all persons who

apply for and purchase the champagne tours.. The fact

that the Los Angeles area constitutes a substantial seg-

ment of the general public i is manifest trom the Board's :

decision in the prior ‘Hacienda case in which it concluded :

~ that “hotel patrons alone constitute such a considerable

portion of the public that services exclusively offered

such patrons are deemed to-be i in conimon carriage. In

support of this .conclusion the Board referred to sev- .

eral prior decisions of the court and the Interstate

Commerce Commission which reached the same con-

clusion.” In one such case, Shores and Brown case,’ the

facts underlying the transportation are‘on all fours

with the facts in the instant case — that in the for-

_ *Terminal Taxicab Co. - District ot Columbia, 241

U.S. 252 (1916): Shores sie Brown Common Carrier

Application, 26 M.C.C. 243 (1940): Huff Common

‘Carrier Application.- 16 M.C.C. 159 (1939). modified,

27 M.C.C. 643 (19415.

mer Case a portion of the one-price vacation admittedly

covered the cost of the motor tfip between New York

City and the Hillside Lodge Hotel.” ris

- However. regardless of the finding that hotel guests,

alone constitute a substantial segment of the public

there have been instances where nm ai-guests have used

Hacienda’s service to Las Vegas and Hacienda’s board

Chairman conceded the possibility that’ many persons

‘night purchase the tour merely to obtain: low cost

transpertation. - In addition, prospective patrons were

informed *by_ Hacienda’s travel agents that non-guests

were eligible to purchase the tour and one such agent

reminded the patron that Hacienda’s fare was less than

that of the-certificated air carriers. Hacienda’s efforts

to discourage the use of its service by non-guests which

consisted of distributing baggage arid the. issuance of

"In Shores and Brown Common Carrier Application,

supra, applicants, the owners and operators of Hillside

Lodge, a resort hote) proposed to operate a one-price

vacation for purposes of increasing patronage of the

hotel. The vacation included board. lodging, and trans-

portation between New York City and the lodge over

a scenic route in a sedan.which appliants leased for that

- purpose. Applicants employed an agent in New York

to sell the vacations on a commission basis, the driver

was an employee of the hotel, tie passengers were picked

up.or «lischarged en rente, ne person was accepted who

had net purchased the one-price vacation, and an esti-

mated $13.00 of the purchase priee was allocated to the

roundtrip transportation. The commission found that

there had been a holding out of eransportation to. the

general public as a commen carrier for compensation

and that the restriction limiting the sale of the service

to only these whe proposed te use applicant's not-

transportation facilities did not destroy the public nature

of the service. | ;

’

boarding passes for .the return trip at the’ Hotel only,

while commendaWe, do nut appe tar to be sufficiently

stringent to accomplish that ipurpose.

Hacienda ‘contends, Wrertheless. that under any in- ;

terpretation' of the language of’ Section 401 its tour

service could not possibly be found: to.bé for .ompensa-

- tion #pr the reason that no charge is made tor the |

transportat:on. This raises the question of whether

Bacienga \uany for purposes of its own convenience

“sever One oft.a nimber of items from the tour package

and elect not to. charge fpr it while charging tor all

ot, the — remaining items of the tour.” The answer to —

this question is especially significant here since the

cost of the transportation in. all probability equals. or

exceeds the aggregate cost of all of the other items of

the ‘tour. and if Hacienda were permitted to. sell its

service in wrateirrane’ sit could avoid regulation under.

‘Section 4012 : | -, :

* The weight ar authority indicates that the tour con-

oan divisible as alleged and the price which the

patronfiys for the package ‘tour must be considered

as including compensation for transportation. The

Board recognized in its opinion in the previous Haaci-

enda’ case: that the air transportation is the principal

teature ‘of the tour and the evidence here is substantial *

“that some people purchase the tour merely to obtain

transportation. - While it may be conceded that Haci-

enda does not profit directly frorf®transportation it ob-

viously hopes to profit from the tour patrons’ patron-

“age of the gambling casino since that facility accounts

‘for approximately one-half of the Hotel's reyenuess and

> it is se ai nid. In light thereof, Hacienda’s contention

that ne pre fit motive has been shown is rejected.

‘ ¢

¢ ;

Aside from the feregaing coneluston, however. the

Board stated in the Pan Ainerican Ferry Flight Case®

that when all other nece’sary clemnents or commen ¢car-

riage are present a person: cannot avoid regulation

under the: Act by the single device of noi making a

charge for transyp tation on certain flights. In this

and in a ninnber.ot other leading cases the courts have

— uniformly held that the que stion of whether a person ‘is

a common oF private carrier ip one W hich must ‘be de-

termined upon the facts and that such. determination

will be mage on the basis of what the carrier is actually

doing and not pon what it claims to. be doing.”

In other cases where ‘oh courts have *had occasion

te consider and pass directly upon the question of

separability’ of contracts they have: held in cases in-

volving Tacts:and. circumst inces siqnilar ty those. pre-

sent here that the contracts were indivisible. Thus, the

court in LF. 5. Vv. “Bethlehem Steel Corp.” stated that :

“whether a cum of pre mises constitute one contract

or more than ond is. to. be determined’ by inquiring

whether the jaitties assented. to all.the promises as a

single whole, so that there —— have been no bargain

avhatever. if any. promise, Sr set y promises were

cetruck out’ | The Supreme Gourt si Pennyslvania- in

"18 CAB 214. 219 ¢1953).° |

“Rural-Electric.Co. vy. State Bi ard of E qualization et

al.. 120 P 2d: 741 (1942) Dairymen’s Co- Op Sales

Ass'n . Pt wc Service, Comm. “34s PA.- 381. 177 A:

770) 773. (1985): Phillips v.-Pubdic Service Comm. 127

“PA. Sup: 341. 101 8641 (1957): McKay v. Public -

Utilities Commission. 104- Colo. 402, 91 -P.2d. 965

(1938): Taussig v. Maortat “Tun nel Water’& Develop-

ment Cu. 106 Colo. Bk. 100" fp 2 2nd 303° | 1940}.

375° CLS, 289, 208 (1942). . anes ,

‘~

. ‘ . ° ¢ °

Lucescu Oil Co. v. _Brewer™ stated in substantially

"the same vein: Sit -the part to be.performed by one

‘party consists, of several and ‘distinet items. and the

price to be paid by the other is apportioned to each

Litem to be performed, or is leit to be, implied by law.

such a contract will generally be held to -be severable

. ~ . But if the consideration to be paid is, single

and entire, the contract “must be held to be entire, al-

— though the subject of the contract may consist ot several,

distinct ands wholly independent items.” - In: like man-

ner the Supreme Judicial’ Court, ot Massachusetts in,

FE. 1. DuPont De Nemours & Co., Inc. v. Kauiman &

Chernick, Inc."*-held a contract of sale inseparable and

entire'in a_suit for an injunction against ‘the retailer

under the fair, trade law where the retailer. sold the

customer an automobile tiré and a gallon of Zerex anti-

freeze for the price of the tire alone. The court there

stated “The money paid the detendant by the purchaser

"Was pair! not tor the tiie alone, but for both items.

Legally and economically the transaction amounted to a

combined sale of: both the Zerex and the tire for a single

price." «

Thé facts, and circumstances upon which the courts

“based their decisions in the foregoing ci Ines are clearly

analagous to those in the instant case and there is

"66 PA 351, 354. 2h

148 NE 2d 634, 636, (1958). ;

“The court stated in another case. Traimian‘v. Rappa-

port. 41 F-2d 336, 338, “aside from the terms of fhe con-

tract and intention of the’parties a tgst_of severability is

that if thesconside ration 1s single the contract is entire.

but if the consideration is expressly or by implication —

apportioned, the contract may be. vet even’ then need

not necessarily ‘be. regarded as severable.’:

nothing in this ree: nd which would: support the cen-

cention that the champagne tof, wild be dust as at-

tractive ty and as well patronized by the public i: trans-

portatien were net erleMd as part of the jour. A

“The tact that air transportation is by tar ae Most

nrpertant ften) in the package May ‘be seen by reter-

ence to the curfent roundtrip first Class and coach fares

ot the certificated carriers. between Los Angeles and -

Las Vegas of $39.20 and $30.50. fespectively. More-

over, the. fact that Hacienda advertises the -transporta:

toni as free affords still another strong indication that

it ts. the principal indyicetent for purchase of the tour.

The weight of atthority points overw helmingly to, the

‘conclusion that the Hacienda, champagne - tour Is. one,

¢?,

sons ‘or property tor compen: ation or hire.

entire, and indivisible. and that it constitutes interstate

compen carriage for compensation or hire within the

meaning or Section. 1121) of the Act. and itis se

found. ae j :

» Hacienda argues: however. that’ even assuming the

ssupticability ot the primary business doctrine to the

Tacts ot this case. its service still cannet he found to be

for compensatfon or hire 6, broader language:

aot Secti my JO01620) of the Net whe h unlike Subsection

(21) ineluae: in the: de finition of “imterstate wir com-

tnerce’” the language “the carriage by aircratt Of per-

* * *

or the operation or nay igation of aireratt in the comedutet

of furtherance of a business or vocation. im commerce

between * * Se Although Hacienda concedes that

Section 401 ayot the Net is qualitied by the aforesaid

subsection (21)° rather than subsection oy “ht,

“Underscoring supplied

“. @Pacitic Northern Airlines v. Alaska Airlines, 80 Fe.

Supp. 292 (1948)

nevertheless, contends that since the legislative history

of the Act indicates that Congress had originally ine

tended requiring certificates for ‘all classes or carriage

falling within the provisions of subsection (20) and

having included the foregoing underscored language

therein, and having first included and. then excluded

such language from stfbsection (21) for the purpose of

giving the two subsections a different scope and effect.

it (the Congress) must have intended that’ subsequent

sections of thé Act, allegedly qualified by subsection

(20), should encompass not only carriage “tor com--

pensation or hire” but also “operation * * * of

aircraft * *° * inthe * *° * furtherance of a -

business. * For these reasons Hacienda contends that

the statutory language and underlying legislative his-

tory of the Act supports the conclusion that while its

activities May constitute interstate air commerce. they’

do not‘constitute interstate air transportation for which

‘

a certificate is required.

Contrary to Hacienda’s contention there is nothing

in the Act or for that matter the legislative history of

the Act which indicates that the Congréssintended

that Subsection (21) should be qualifiet! in~any_re-

spect by Subsection (20). It is obvious from a reading -

of the language o7 these’ subsections in light of the pro-

visions of Section 401l(a) that Congress intended. for

purposes of jurisdiction under the various provisions of

the Act. to provide for separate classifications of car-

riage, i... common carriage in, Subsection (21) ‘and

all other classes of carriage in Subsection (20). That

this is so is readily apparent from the inclusion of the

words “as a common carrier” in the detinition of inter-

state air transportation in Subsection (21) whereas |

those words are omitted trom the definition of inter-

state air conmmmerce 1) Subsection ( 2). Since the said

underscored language Was) 4ncluded in Subsection (20) .

and emitted from Subsection | Zi) & cain only be ‘as-

ssuuned that in se deing ( congress intended ‘to preclude |

any ‘possibility of considering interstate air ‘transpor-

tation as a commen carrier’ tor compensation or hire as er

heing private carriage, and it isso found. Tf Congress

had intended otherwise it may legiussuimedt that it would

Tlave used the term “air commerce” instead ° ¢ i “air

transportation” in Section 4011a). and not oie done

so there is ne’ basis w hatever for conelfiding, that Sec-

tion 401 (a) or Subsectis av(21) are in any, way -quali-

fied’ by Subsection (20). and it is so found. ff

Finally Hacienda urges adoption of the primary bus-

iness ck tring at tor no -other reason than that it.is con- -

sistent. with pertinent “ Noyistativehistery—and_tandery———

ing policies of the Act. It contends that the special- :

ized *service Which it operates js not offered by- "

certificated carriers: that its flights are operated .a

times of the day avhen the certificated carriers have no

lights: that many ot Its, passengers would + net make

ahe tripett regular fares Were charged: that many’ pas-

sengers have been intr duced to air transportati mm” tor

the first time and presumably may be expected 40 Wse~

‘air transportation to travel to other points the tu. —

ture: that the service deme limited to hotel guests 1s |

virtually nen- manana with the services of the ter-

tificated carriers: and_-that being subsidized by the >

Hotel the service tenet operated at public axpense. * :

The policy ‘considerations of the Act relied on by

respondent ce aid “net possibly Justify either the faver-

“able applicatye sypet the primary business glectrine or the-

continuanee ato an operdtion which ts unlawful. under

Section 40l¢a) ‘Che primary business doctrine has

never been used to clothe a person with authority to

operate a particular ‘service but rather has \been used

by the Commission as a test to determine the classifi-

cation of carriage in which -the ‘operator is engaged-

So far as it is known it has only been _applied in cases

involving the ‘transportation of property. and has never

beeh held to apply to® the transportation of persons:

The doctrine is clearly inapplicable to ‘the facts in this

case regardless of the fact that the service is being

-aperated to enhance Haéienda’s hotel business. While

policy considerations under Section 102 of the Act niay

play an important role in licensing proceedings under

Section 401 they cannot be’ relied upon in any manner

whatsoever to perpetuate an operation which is unlaw-

ful. That fact is sO clear as to require no further dis-_

merit; therefore. it is rejected.

Hacienda also charges error in the seceipt ef eyi-

dence with respect to violations committed in 1958 for

‘two principal reasons (1) Sectfon 401 of the Federal

~ Aviation Act of 1958 SKith respondents, are charged

“with violating did not become effective until January

14,-1959, and the Act has*no retroactive effect; and (2)

any violation which occurred in 1958 could only have’

violated Section 401 of the’ Civil Aeronautics Act of

1938. and. since that Act is “no ionger. in effect, cand.

since respondents have not been charged with violat-

Jing the provisions of that Act. they are guilty of ne

“violations. Presumabiy respondents are renewing their

earlier motion to stfike all evidence relating to the 1958

* violations not only on the foregoing grounds but for

the additional reasons that they cannot be charged

* with violating a law which is no longer in effect and

; cussion, On-thebasts "of the foregoing considerations

it is concluded that Yhe latter contention is without

’

° ae PE hee

% oS se os = 2

that the Purcaw of bntercement fas nea proved viela-

tiens by theny ti 45". Upon comside ration ot thé&fiacts

and argtments pre sented in attpport of the motion, it is

’ denied. First of ati. it ir neted that there ha~ been ne

he . change tthe language of Sectien 4Oliad and secondly.

re: Sectitay 109 Gf Title Pot rhe ee Code specifically

provides : ee :

tae - The repeal of any “sti ituite. shail not hive the elieet

to release oF extinguish any -penalty. forteiture. or la-

_ bility ‘ine ured under ste fy statute, unless the repealing :

” Act shall so expressly prov ide, and such statute shall

be treated as stil ren Lining 11 force for the purpose

of sustaining any proper action or prosecution for the

“entdrcement of stich penalty. forfeiture, oF liability

—_

eee anaae :

The Federal Aviation-Act of 1958 not * only contains

ne Such provision, but ER- 24% of the Board's Eeo-

nomic Regulations. adopted January 13. 1959, provides :

“The*term * Act’ means the Federal. Aviation Act of

. JOSR: AW orders. certificates. rules, regulati ms, neti-

s,.and other ‘documents issued by the Board-orender a ahs

ey geaericy wit referring te the Federal Aviation Act

of 1958, or tw certain provisions thereof, shall be

deemed to re fer alse te the Civil Aeronautics Ach af +)

493%. as amended, or to the corresponding previsions — \

thereof. to the extent the latter "Act. -or eae

a _

“ prow isions the rey. 1 ay he applic able.”

Respondent's contention that wall evidence of viola-

tins committed in JOSS could have ne, probative value

in this case Ise accordingly rejected, as being without -

: ‘merit. é

Ke-pendent’s content that the Bureat et FE nioree

ment has tailed te prove that they violated the Act in

a“

ne 7 _

1959 is likewise rejected forthe reason that ‘by their, sa

own admission the champagne tour wis operated con-

tinuously. throughout the year 1959 and was still being

operated at the time: of hearing herein in November

1959. Evidence ot violations subsequent to the filing

of the contplaint on June 15, 1959, was also properly

received because the complaint alleges that both re-”

spondents were continuing to. violate the law: there-

fore, they havé been: on notice since the date of the

filing of the complaint that evidence with respect. to

such violations might be presented and they have been

accorded. full opportunity to rebut such evidence.”

Respondents have also.meved to strike evidence w hich

- was received with respect tc flights operated between

Ontario, Santa Ana, and San Francisco, California,

on thé one-hand, and Las ‘Vegas on the other,” which -

they have’ not been charged with operating in . the

complaint. What respondents neglected to state in con-

nection with this moti m is that such evidence was re-

ceived only for the purpose.of showing how the tour

operation has expanded since the filing of tie complaint

and so that there might be some basis for determining

Ww hat? et fect. if any, Hacienda’s service. might have on

the operations of the certificated carriers if it were al-

lowed to continue. No showing has been made wherein

‘ srespondefts have been prejudiced by the receipt of this

- evidence: accordingly, the motion is without merit and

it is. therefore. denies. °

Respondents also moved to. dismiss .the complaint -

against. Respondent Henry Price on the grounds that

"See Arrow Airwa . Enforcement Proceeding 12.

CAB 405, 410 (1951) ; :

and that the evidence shuws that his only function is

* Haci

he is only one ola large nuiniber ot HH. iciend.: employees

‘engaged in operating the tour service: that he’ is only

a salaried emplosce ot Hac iend’i in charge of its flight

division, that he has nothing. whatever.’ to du ‘with--

soliciting, advertising, ,or selling the_ package tours;

__suipervisiag “the operation of the tour flights. In li

“thereot respondents assere thy Bureau of EnjGrce-

_ment has tailed to preve that Respondent = has

engaged in air transportatis mas agent tor Al

therefore. the complaint agaitist: him nunst dismissed.

ycienda ;

While it is true that Mr. Price is i gon on Haci-:

Qnda's payroll as ‘a salaried“ employee other evidence

of\record reveals that his duties “go. beyond that ‘of

the ordinary employee and unless/enjeined trom further.

under athuthet namie with4Respondent Price. playing

just as important a roleggh the conduct, of the service.

_as before. ~ Thus, -the record in the prev jous Hacienda

case shi wvs that priot ite becoming president ot Hacienda

Hotels- Motels on £ Jetober’ 16, 1950, Henry Price made

al of the arrapgemients for and conducted the evening

in Las Vegas tours lor the Hotel Showboat in Las

Viegas: Mier becoming president of Hacienda Hotels-

Motels Ae arranged for and conducted tours for the

ida Hotel and at*the present time performs sub-

stantially the same Qduties as an employee of Hacienda.

As indicated previously as manager of Hacienda’s -

flight division » he registered aircrait. in Hacienda’s.

name witht the: Federal Aviation: Agency: he contracts

for aireratt smaintenattce; and charters other aircraft

tw operate the tours when Hae jenda’ s aircratt are un-

able te operate. In sherp. Mr Price’s duties and con-

are) ot the. operation are cessentially "the “seme now

* . ~

io 3 /

as they were when dhe was conducting tours in his own

name as president of Hacienda Hotels: Motels.

From a review of the authorities cited by the Bu.

reau of Enforcement on brief" there appears to be no

doubt that Mr. Price acts as agent for Hacienda in

many of business ‘transactions which he. handles for ~*

it. However, even if it should appear that Mr. Price

were not an-agent of Hacienda, since he has engaged

in tour operations in several capacities during the past

‘ew years and since there is a possibility that he mayo

resume operations in some other capacity unless le-

gally restrained, the Beard should igsue an order di: a

recting him to cease and desist from’ engaging in air

transportation in any -capacity. The Board was

confronted with a similar sifuation in the Twentieth

Ceintury A.L. et al.. Cqmpliance Proceeding.” and

there it directed ‘several persons both individually and

as partners in One or more of the respondent companies

to cease and desist from engaging in their unlawful

activities. - On. the basis of: the foregoing and other

considerations of record the motion to dismiss the cori-

plaint against Respondent Price is denied. _ ;

On the basis of the foregoing facts and all of the -

evidence of record in this pre ceeding it is found: |

That Las Vegas Hacienda. Inc. is engaged in inter-

state air transportation as a common ¢arrier for com-

‘pensation, or hire between Los -Angelés and Burbank,

California, on the one hand and Las Vegas. Nevada,

on the other without authority from the Board in vio-

Jation of Section 401(a) of the Act. oa

"2 C.J.S. 1024:-Kelly v. United Sta a 258 Fed. 392.

401 (1919). |

"21 CAB 133 (1955).

aes : ;

. 5 _ * e * ¢

That Henry F: Price 1 engaged in interstate air

transportation as a COMMON Carrier: fer compensation

or hire between Laos Atigeles and Burbank, California.

om the one hand and Was Vegas. Nevdila, on the “ther

without authority from the Be ard in vielation of Sec-

ton 401(a) of the Act.

That Las Vegies Hac ienda, Inc. and its agents, suc-

cessors, and assigns.and Henry F. Price. individually |

and as agent and/or manager’ of the’ flight division

of Las Vegas Hacienda. Inc. should be ordered to cease

and desist trem viola iting Section 4011 a) of the Act.

os RICH. \RD A. AWVALSH.

Hearing Examiner.

Hearing Examiner

Proposed (rer attached.

Board’s Opinion and Order.

United States of America

~ Civil Neronautics. Board

: Washington. D.C.

Ack spted by. the Civil Aeronautics 5 Sead

at its vl fice in Washington, D.C. on the

Packet 10007.

In the Matter ot:

LAS VEGAS HACIENDA, INC.

; = cand

HENRY F. PRICE.

ke niertenent P ren ‘coding

os ORDER ’ ad

AN full public che aring baving been held in the bove

entitled proceeding and the Board, Upon consideration

of the entire record. lasing issucd its opinjon, con

- . . a

3 a rt —34

taining its findings. conclusions, and decision, which ‘is

attached hereto and made a part hereot ;

‘It is Ordered, That on and atter 12:01 am. E DS*.

Las Vegas, Hacienda, Inc., its agents, successors and

assigns, and Henry F. Price, individually and as agent

and/or manager of the flight division of Las Vegas °

Hacienda, Inc.. cease and desist from engaging directly

or indirectly in gir transportation within the meaning

of Sections 1 (10) and 1 (21) of the’Federal Aviation

Act of 1958, in violation of. Section dieses of the Act.

By the Civil Aeronautics Board: -

[ Seal | -

| Title vi Board and Cause. |

"Decided: August. 12, 1960°

lLas.Vegas Hacienda, Inc.,_ engaged in interstate air

transportation as a common carrier for compensa- °

tion or‘ hire between Los Angeles and Burbank, Cal-

ifornia, on the one hand, and Las Vegas. Nevada, —

—on the other, without authority from the Board. in

violation of Section 401 (a), of the Act”

Henry F.. Price engaged j in interstate air transportation

as a common carrier for compensation or hire be-

tween Los Angeles and Burbank. California. on the

éne hand. and Las’ Vegas, Nevada, on -the other.

without authority from the Board: ‘in violation of ¢

Section 401(a) of the Act. eee 7

Las Vegas Hacienda. Inc:. and its agents. ‘successors

and assigns and Henry F. Price, individually and -

as agent and/or manager of the flight division oF

Las Vegas Hac ienda, Inc.. ordered to cease and. de-

sist from violating dec thon 1 401 a) ot the Net.

Appearances :

~ Same as in -dmtial Decision.

oe.

. *

— sep ipiecseee aire

iy the Board: i 4 soit 4:

This is anceni@reciuient proceeding against respond:

ents Las Vegas Phuciertda. Inc. (Hacienda), whose

principal business is the operation of a resort: hotel

at Las Vegas. Nevada. afid Henry FP. Price. manager

ot Hacienda’s flight divisiom The proceeding Was in-

stituted upen ,complaint filed by the Office of Cont

pliance (presently the Bureau ef ‘Enforcement ) alleg-

sing that since about March 4. 1958, respondents have

engaged in air transportation within the meaning of

the Pederal Aviation ct. by* ‘arrving persons by air/

wee “package” tours’ between Las Vegas and Cali-

fornia points, as a common carrier for compensation

for hire. “The complaint charged that syich transporta-

tion is in violation of Section 40P(a) of the Act. in

“that respondents dor net het” appropriate certificate

authority fromthe Board, and requested: that ee

ents be ordered to cease and desist theret from.

After om LICE “and hearing. Examiner Richard A.

“AWalsh issued his Initial Decision finding that each re-

spondent is engaged in and described. air transportation,

between’ Los. Angeles and Burbank. California, on the

one had, and Las Vegas. on the other band, j in violation |

Gt Section 4a). {ie concluded that Hacienda, its

“vents, Suecessors.-and tissigns, and Henry FF. Price.

“individiially and as agent and or manager of the Hight

"The record shows that purchasers Of these “package”

tours at Long Beach or Los Angeles are j-sued coupon,

hotks which entitle them -te * “free” transportation on |.

‘ Hacienda’s own platies to Las Vegas and return, bus

transportation ‘Helween thy Las Vegas airport’ andthe

Hacienda hotel, and. atmeng other things; the use of the

Hicienda golfcourse. champagne. and a Iaffet dinnet :

‘s . i < -.%

- ©

division of Las Vewas*Hacienda should he ordered | to

cease and desist from such violatii ms.

- Exceptions to the Imual Deci: ion and a brief have

been tiled by respondents, jointly. In support of the

Initial Decision, Enforcement ‘relies upon its brief to

the Examiner r, and the intervener Pacific Air Lines,

Inc.. refers to its written statement. filed with the Kx-

aminer. “The Board has heard oral argument, and the

case Now stands submitted fors decision.

After caretul ‘consideration of respondents’ excep-

“lions and brief : and the entire record, we agree with

and ade upt as our‘own the Examiner's findings and con-

clusions‘’set forth in the Initial. Decision, attached here-

_ te as an Appendix. Therein. the Examiner discussed |

extensively the evidence and the applicable law, all of

which amply support cur decision here... Respondents”

Exceptions demonstrate no error in the Initial Decision

and. essentially, raised only ‘issués which were presented

to and considered by the Examiner, and corregtly. passed

on in the Lnitrat Decision.“

» 7

eS = i} ; ee

“One matter raised for the first time by respondents

-exceptions is the alleged) vagueness of the Examiner's

‘recotumended = cease and: desist. order, which: we are |

adopting... Respondents chain that it is so vague and

uncertain “as to tail te apprise either respondent of the >

acts or. conduct enjoined, and that in its present form

it could be construed to bar respondent Price from all

phases af the aeronautical field. a

This contention ds without merit.. The “Mnitial Deci-

sion sets terth with sufficient ‘clarity and detail. the.

tragsportation, operations which are prohibited. Any

1 issthle doubt as, ty whit constitutes the enjoined opera-

tients. or comprises any concomitant phase thereat, can

he resolved by re te rence te ttyst decision, a Sec Conseh-

dated Fluwer Shipments, Inc. Bay. Area et ab. 17

CLA. 43.4065 1953 |

37.

In view of the foregoing considerations: ‘and all the

facts of récord, we find:

1. “That las Vegas Hacienda, Inc., is engaged 1n-

interState air tralisper tation as # common carrier for |

compensation or hire between Los Angeles and Bur-

bank, California, on the one ‘hand, and Las Vegas.

Nevada. on the other, without authority from the Board,

in violation of Section 401(a) of the Act; ee

2. That Henry F. Price is engaged in interstate air

transportation. as. a common carrier for compensation

or hirt between Los’ Angeles and Burbank, California,

on the one hand; and Mas Vegas, Nevada, on the other,

without authority from the Board, in violation of Sec-

tion 401(a) of the Act; and. pie aes ;

3. That Las-Vegas Hacienda, Inc., ang its’ agents,

successors, and assigns and Henry F. Price, individ-

ually and as agent and,or manager , of the-flight divi-

Sion of Las Vegas Hacienda, Inc., should be ordered

teense and desist from violating Section 401 (a) ot

‘the Act. 1d

An appropriate orden will be issued,

Gilliland, Chairman: Gurnev. Vice ¢ ee im, Mi-

netti, Boyd and Bragdon, Members af the Board, con-

curred in the afove | On, 4

| 5B

_ [Title a Board and Cause. | :

: Board’s Order of Reconsideration.

ORDER. ’

Respondents have tiled a petition seeking reconsider-

ation of the Board's Opinion and Order (Order E-

15648) decided August 12. 1960, which. ordered re-

spondents tO cease and desist, on and after October 11.

1960, from. engaging in air transportation in viola-

tion of the 4\et. Respondents*also tiled with the Board

a petition to stay the effectiveness of such ofder pend-

ing the Board's decision on their petition for reconsid-

eration, or, in the event such petition is denied, pending

judicial review. The Board's Bureau of Enforcement

has tiled objections to the petition for a stay,

Upon consideration of the pefition for reconsidera-

tion and Entorcement’s answer, the Board finds that

respondents are not entitled to: the relief requested.

Nothing. in. the petition demonstrates error “in the

Bi ard’s Opinion and ¢ Irder. No new matters. n t pre

viously considered by the Board, are presented nor ts

it otherwise shown that reconsideration is-w arranted.

In their request for stay. respondents plead that. im-

positionset the order. even tora limited period, weuld

result inoirreparable financial ditticulties. They claim.,

among other. things, that respondent Hacienda wuld

be required te disburse some 863,000 monthly uuder

its tixed obligations on idle planes and equipment. and

tects emiplovees, ponding inal review. of the case. Jin

; il ’

: a . SS -

view et the prebable tomanetal uiteact our order wend

“4

ie.

‘have on the respondents and. in view of respondents’

pending petition tor judicial review of our Opinion as

and Order.’ we have decided to stay the effectiveness

of that order pending a final determination by the -

court! ‘

— Accordingly tt is Ordered:

> :

1. That‘ respondents’ petition for reconsideration |

herein be and it hereby is denied; and , 3

pr J : -- . 4 , , -

2. That the effectiveness of Board Order E-15648.

‘herein, be and it hereby is stayed, such stay to con-

tinue until ten days after the reviewing. court shall is

“Sue any mandate or judgment at firiping such ordef. = 7 “S

By the Civil \eronautics Board:

Secretary. | |

J Seal}

. 8

- “_

Las Vewas Pacifida. Inc. et al vs. ¢ oe She ee,

» Nee POR, ithed ej enter 4 [OOO ;

: .

Ot lm;

Opinion of the Ninth Circuit Court of Appeals.

United States Court of Appeals for the Ninth Circuit.

-Las Vegas Hacienda, Inc. and Henry F.. Price, Peti-«

tioners, vs. Civil Aeronautics Board, Respondent. No.

17,081 Jan. 16, 1962. .

On Petition for a Review of an Onder « of the Civil

Aeronautics Board. ,

Before: Merrill and Browning, Circuit Judges. and

_ James Carter, District Judge. -

Browning, Circuit Judge: 7

Las Vegas Hacienda.. Inc. operates a resort hotel at’

Las Vegas, Nevada. Over a period of years it has ad-

vertised and sold in the Los Angeles area a “package

tour” which includes a “free “ airplane ride to and from

Las Vegas. The transportation is provided in planes

owned by Hacienda and eperated by its: employees

through its “Flight Division.” managed by Henry: F.”

Price. “Fhe Civil Aeronautics Board has held that Ha-

cienda and Prige are engaged in “the carriage by air-,

craft of persons or property as’a common carrier for

compensat‘arl oPYhire” in interstate comnierce without

the certificate of public convenience and necessity re-

. - -” . . e Y

quired by the Federal Aviation Act. and has ordered -

therm to cease ‘and desist.

Petitioners challenge both the Board's power. to issue:

the order, and the term: in which the order is-cast. As

{

to the Board’s power. they argue that they are not sub-—

ject to: economic revitlation under the Act because the

transpeftation they Provide is merely incidental to their

resort hotel business. As to form. they argue that the

Board's order is so vague and general othat tit fails

wte give tain metice et the conduct which it prohibits.

We conclude that the Board's classification of Hacienda

as a “common carrier for compensation or hire’ re-

quired to he certificated is supported by substantial evi:

dence and soundly based in law, and, that the Board’s

cease and desist order provides fair notice of what it

prohibits when read in the light of the Board's opinion.

We further conclude Ahat the record does not contain °

substantial evidence to. support the Board's order with

respect to Price. ; This portion of the “Board's order is

stricken, and the Board's, order is otherwise affirmed.

‘The Federal’ “Aviation Act’, provides for broad

economic regulatign? of “air—transpertation”* ~The ~

Civil Aeronautics Board i is. under an affirmative statu--

tory duty to exercise its regulatory: powers over “air

transportation” so as/ to foster sound economic . con-

ditions, promote economical and ef ficient service at rea-

2 The Federal Aviation Act of 1958, 72 Stat 731. 49_ U.S.C.

1301 et seq. is. for PUTposes wt this case, a reciwlification of

a Civil \eronautics Net Of 1938, 52 Stat. 973. The two Acts

are referred t. interchangeably in this opinion as “the Act.”

ZEntry inty the business of air transportation: ix controled by

the Board through mae issuance of wertiticates of converiience ‘and

necessity 4 L137). air carriers ar€ requiged to estab

lish, tile, dave hi th re te aril retlecty reasonable and non-

iscrimpnaters rates. feguiation-, wd owractices (49 Wh

S$ 1373. lav 6 the Board mas suspend unjust: ca rarer in

so “AeTiCes Ts pest Y tvtal omnes 4900 S 1482

the Heard may prescribe indietry accountng: p ractices Sad peuiine

erorts 1 OPE SES FA77 0 the Boord niust approve mergers

LCOQU ESTE tts i certam ostertoc hati. wees + (49 254

1378 3 °

Medea, aft Use 4 0° Sa § $3710(a5 3.

t : i aceuiinp -'- gre ‘4 erned, states that

ea ess o'ane TPs yst Vsultea! ssithout a certs

=e - . : a) we 14] vy the Reval

‘ dd 4 ;

sonable charges, and avoid destructive competitive prac-

tices.’ The legislative history of the Act emphasizes

the importance attached by the Congress to the-achieve-

ment of these purposes.” Obviously the econpmic regu-

449 U. § 1302 reads in part: : ;

“ti on exercise and performance.of its powers arid duties .

under this chapter, the Board shall consider the following.

among other things. as being in the public interest, and in

accordance with the public oman and necessity :

: ae ae ar ae ee tyes

(bh) The regulation of air -transportation in sueh manner

as to *@ * foster sound econemic consditions in, such “trans- —

* portation * * *

(ec) The promotion of adequate. economical, and efficient

_—_setvice hy a une carriers at reasenablé charges, without unjust

discriminations, undue preferences or ee or unfair

or destructive competitive practices ; ‘

(d) Competition to the extent necessary to assure the

sound development of an air- transportation s system properly

adopted to the needs of the foreign and domestic commerce

of the United States, of the Postal Service, and of the na-

tional. defense.” 4 PRE SR Ee eS

"HAR. Report No. 2234, 73th Congress, 3d.Sess., after deserib-

ing conditions in the industry, states (p. 2): -

“The result Gi this chaotic situation of ‘the air carriers has-

hee nt shake the fiith of the investing public in their finan-

cial stability asst to prevest the flow of funds into the in-

dustry. Col. Edgar S. Gorre!l, president of the Air Trans-

port “.ssectation, representing substantially all of the sched:

uled Vmerjcan- Tae air lines, testified before your committee

duting thé public hearings on H. Ro 0738 that $120,000,000

of prigle ¢ tpital has been iivested in the present air-trans-

pert svsten) and that 30 percent of this investment’ has: been

lost. He further te stifte:l thot unfe-s légi-lation is enacted

which wonld Live the carriers reasonable assurance of the

permanency of ther operatron and would protect them, from:

catthreat competition. a iinhber of the air lines would soon

Ve jaesermius finance) trouble .

HOOK 738 Would Tashilat any person tram operatipg as a

COMsnen Carrier ly airerait unles« such jer-on holy acer.

Winate of convemence and “ecessity, and provdes that the

rates, restilathors., ath] practees ot such ait_earriers shall be

stibyect ter reguabatne Pheoscat thes legislation is enacted. the :

ur carriers will Te able tu sperate on a statle Imasis. thet

Teuttes secured dy a certificate P wcomventence and ‘necessity.

whrelomoy be ceyehed onda ter cause. and ther rates regu

Ose -

oe ee

lation contemplated. by ‘the statute can be effective only

iF the commercial activity to which it ts made aj

plicable—"‘air transportati n “represents a reasonably

discrete market in pr: wtieal business terms. “The proper

interpretation of this “statutory term is therefore of

crucial importance in the administration of the Act. Mee

* So far as here pertinent, the term net tfansportation”

is ultimately defined by the Act as “carriage by aircrait

‘of persons or property as a common, carrier for com-

(pensation or hire * * *.°* The term “common car-,

rier,” which is ceritral in this, satutory definition of

“air transportation.” is an ayicient one in our law and -

has been ‘applied in ‘many legal and factual contexts.

; It is not: surprising that the numerous decisions defin-

ing the term are somewhat less than harm« mious. The .

fact is that these precedents leave a considerable area of

choice which the Board necessarily exercises in applying

the broad definition of the statute to particular carriers —

to determine whether they are subject to regulation. |

Whether the Board has chosen correctly in any given

instance is, of course, subject to review by this court,

for “fa]n agency may not finally decide the limits of

its statutory power, That fs a judicial function.” Social z.

Security Board @: - Nicrotko, 327 U.S. 358. 309 (1946).

oIt is equally clear. however, that the Board's decisions

lated) co ge te eliminate cuttireat competion atnong the m

Pe oe # Th ‘ ‘ ’ . as ‘ “- “s

“fie . Tepvistetl i+ User Wade Tor Peeps asige ary car-

riers to cease ath dest ifegy enuacing in unfair competition

] witat coepiive practice: — ‘

oa i na” & 1Miles lio, reas "

‘ tare ortatess weans mterstate * * * ai sistent

” + ‘ ‘.° c i! ’ aveta t° M3

; *

~4 | Ps q :

¢, “5 he curriase

4 5 ‘ a curtwt %

P ' , srertatt

. .

: a is : P

in these cases involve the application of technical knowl-

edge which the Board, and not the court, is presumed

- to have. We. understand that in these circumstances

we are to affirnr the Board's action if it has ” ‘warrant

: ‘in the record’ and a reasonable basis in law.” N.L.R.B.

7. Hearst Publications, 322 U.S. 111, 131 (1944).

And seé N-L.R.B. v, Coca-Cola Bottling Co., 350 U.S.

2604, 209 (1956); Seift Bo. 7. United States, 316

“U.S. 216, 224-225 | 1942): Shields v. Utah-Idaho Cen-.’

. tral R. Co., 305 U.S. 177, 184-185 (1938).

The. Board centered its inquiry in the present case

. upon whether the alleged common carrier was engaged:

as a regular business: in offering ‘aig transportation to

.the general public in the commercial market. The Board

has taken the same approach in other cases.’ This

general emphasis is justified by the common law

‘precedents, for the dominant factor in fixing -common

carrier status at common law is the presence of a “hold-

ing out” to transport the property: or person of any

member. of ‘the public who might choose to employ the

proffered! service. Stimson Lumber Co. v. Kuykendall,

2275 US. 207. 211-212 (1927). The test which “the

Board applies i iszpuin objective one, relying upon what the

carrier actually does rather than upon the label which

the carrier attaches to its activity or the purpose which

motivates it.” So tong as the air carrier is competing

commercially in the market for the patronage of the

general public. the Board holds that ii is immaterial

—

‘( onsolidated Ploscey Nhopments Tn, le CAB. 84. &14-

SIS 19830. -atiirmed 213 F.2d S14 64% Cit 1955), and - cases

etted particularly Transoceas Ary Lime £ 1) C.V\B 350

} mo

. “Maske flue Transtort ine v Alaska Awptlane Char tr

72 F.Supp, OO, O11 «DD ARska 1947). See calse Oonted

Ntates 2. Laliorma. 207 U : 17% 181] «1936

Jee

that “the” arse witered will be attractive only, to a

limited group: or _ it may: be performed pursuant

to Special contract."” And it is also Gmmaterial that in

“terms of the carrier's “own bookkeeping the transporta-

tion may be farmiehet at cost.”’ at a Joss." * or even

without charge." The Board thus interprets the’ Act

in a way which ‘makes effective economic regulation

under the statv possible by bringing within the regu-

latory Scheme all those who compete in the commercial

market in the business of of fering aire transportation to

‘the public generally, on

“In the present case the record shows that over a_

ciel of years the petitioners have’ conducted regularly

scheduled passenger flights from the Los Angeles area:

to Las Vegas. Thie flights were conducted in planes

owned by Hac ienda. marked with its name, and operated

by uniformed Hacienda employees. They departed

om regular commercial ahagigh Passengers received

the usual air terminal serv ices: a check-in counter, board-

ing: passes. ‘light calls. and the assistance of ground,

attendants. The. fights were sometimes . identified in

"Masha ar Transport Ine. @ -Mlaska- Airplane Charter

Co, 72 Supp. 60°. eloell oD. Alaska 19479; Consolidated

Plower Shupaveat. * Tine If) az | ° \ iv S04, ae 1X { 1953 '

affirmed -213 K.2d sl4 49° Cir 1954) See. also Termial

Taxicah Co. v. Kutz, 241 US. 252 (1916) ‘

Pace Northern curliiés, [me 7" Alaska Aerlines. Inc.

ey Supp S02, col o PP Alaska Mae) Maska oir Transport

lox Jhasha ixelane Charter Co... 72 } Supp TLL

(1947 Trangocoan lar Lines tac... VACOAB 35) 353 (1950)

NP AL The Stati. of Non-acheduled Operation- unier the

Cail Aeronautic. Sot gn 138. 11 Law & Comtemp Proi? 508

547-218 « 14 . . eae

onsolutue bliunce: Shipment fit i” « VE MOH, NOE

‘7 ] =3, 1 P JI ; Jal a} ij 4) ¢ of Voss

’ .

woeca . ; , gue 4 jh ’ erative

es ’ in @ Ae pty teas

Hacienda’s advertising as “Fiesta Flight®’ The’ pack-

age tours of which the flights were a part were ad-

vertised and sold as “Champagne” Tours. "@ Patrons

were solicited from the general public in the Los Ar

geles area through advertisements in radio, newspapers,

and brochures. These used such leaders as “Fly Free

to Vegas.” described the aircraft used, and set out the

flight schedules. “Champagne Tours” were sold both

through Hacienda’s own ticket offices and through

travel and tour agents who also sold tickets on other

regularly scheduled passenger airlines. The price of the .

“Champagne Tour” was $27.50. Round trip air trans- -

portation between Las Vegas and the Los Angeles.area

by certified carrier was $39.20 first class, $30.50 coach.

As the Examiner. found, not surprisingly, “the evidence

here is substantial that some people purchase’ the tour

merely to obtain transportation.”™

Clearly the record contained substantial support for

the Board's conclusion that Hacienda was a “common

_ carrier for compensation or, hire.” as the Board correctly

defined that statutory phrase. | | :

Hacienda concedes that the record justifies the con-

clusion that it represented to the traveling public that

transportation by air from the Los Angeles area to Las _

- Vegas is available on a rtgularly scheduled basis by, the

purchase ot Hacienda’s “Champagne Tour.” Nonethe-

ie | [uoting duit eins the E Xaminer s findings: —- :

“Hacienda’s board chairman cmceded the possibility. that

many persons might purchase the tuur merely to obtain low

ecost traispertation In addition. prospective patrons were

* anfornied fy Has nda travel agent. that non-guest. were

eligihle to parchase the tour dnd one such agent reminded

the peetrets thar Hacienla’s fare was Jess than that of the

certified air carriers” ;

3 a ee Ape

less, Hacienda insists that it is net subject to economic

regulation under the, Act for a variety of reasons, all

of which rest essentially upon the facts that Hacienda

was primarily engaged in the resort hotel. business and

not the transportation busitiess. that the furnishing

of the transportation was only incidental to the promo-

tion and operation ut its resort hotel, and that it was

not interested in profiting and did not profit directly

from. the transportation.

* Petitioners, advertised the transportation portion of

their package tour as “free.” and furnished it only as a

part of a “¢ ‘hampagne Tour” ¢ msisting of other goods

wand services. the separate prices of which added up to

the ‘total price for the Tour.” Hacienda’s books at-

tributed no income te the sale of the transportation as

such and carried the expense of its transportation

activities as part of the general operating expense of the

hotel. No transportation tar was paid to the Bureau

of Internal Revenue. ' ‘.

‘ Hacienda argued to the Board that the transportation

which it providedewas entirely free and hence was not

“for compe nsatic mor hire” as required t\ bring it within

the economic coverage of the Net. However. Hacierida

has disclaied that contention in this court 4

“recognition of the Ayvienis fact that payment for the

“Tour” was payment. for all that the customer —— o

in return, including the air transpeortatic ’ Indeed. in

the present case the air transportationf was ingended to

- the other items im the “Champagne ‘Tour and the value-

assigned to ther were. fT ranpertateny letwueen the airgeort an!

the Hactonls Hemel «SiMir > tae of the Hetel. golf cotter

SAID, anicageynttstits throate wm the PHoetel-. hele in one

cortest (S200, 4 Metthe of yo aetie (SIDS Iy. ow bacffet dnsines

$ the’ 1 fel -issiserg than :82 a ‘4 ane 1 $5.00 fet st Ue '" the Hotel -

past leties adpatts tgtal S27 3 > hich. 4+ ttenl earker, was the

atl prtee at the q Tessisqeagesse f a ssc hts losis ass to asl~qo rtatiet:

apparent

—48—

be, and undoubtedly was, the principal inducement for

the purchase of the package. The Act would be inef-

fective indged if its economic regulations could be

avoided simply by, selling transportation only in com- .

‘bination with something else ‘and calling it free. The

Board was not compelled to adopt such ‘a self-defeating

construction of the statute. As we; ‘have seen, the.

- Beard’s approach, and we think it was the proper one,

was to look instead to the essence of petitioners’ opera-

tion to determine whether it involved the area of com-

petitive activity which the statute intended to subject to

‘regulationzsthe furnishing of transportation by dir to”

the general public on a commercial basis.”

The petitioners. argue that if. the requirement. that

the carriage be “for compensation or hire” is.-atisfied

whenever the carrier realizes an ultimate economic ad- ~

vantage from furnishing the transportation, the limiit- -.

ing language is effectively. read out of the Statute since.

as a practical matter. transportation will never be fur-

nished wholly, without hope of gain. But -Hacienda

did not furnish transportation for nothing more than

‘ the hope or expectation, of some generalized business

advantage ; it impesed a direct charge upon its customers

for the transport tir mim combination with other goods

and services. Aside from the present case, we agree

- . »

> RM rhe futility of follow ing the petitioners, in a search. through the

deg’ isions at common law or ander state statutes for an absolute

meaning for the phrase “compensation | of hire’ is suggested by

the fact that o* the’ four cases most Hearle in point which are

cited by the parties, two held in one direction and two in pre-

~ cisely the opposite. Compare Chala tv. Gordon, 26° PU RB

47 (Cal PULC 1958), and Iilaye of Beookficld ” Gole-

platt. Bros. Ine, 33 PACR ANS) 22. CILEC. 1940). ced |

hy sesponcdent with Re Larchmont” cifartmentS. Inc. Vo

PUR 34°45 ONY PSg, 198610 and Yellow Cab oe Sk:

ays Sertue- ‘Co Je’ K.3d 154 (Colo PUE 10D»

: cited, hy petitioners

~ «

that transportation, will rarcly he offered to the general

public on a genuinely grataitous basis, but we do not

believe ‘that. ‘this leircumstance Fr. requires the Board to |

restrict the concept of “compensation or hige” in a way

which w ould exclude from the economic. coverage of the

Act ‘carriage ‘otfered4y the — in the market on a:

COMPELILIVE 5 scommiercial basis." ‘

Clitioners assert that they are not subject to eco-

nomic. regulatic m under the Act’ because their “Cham-

_Pagne Tours” are ot fered, vin the conduct oF furtherance

‘of a business or vocation.’ The quoted language ap-

pears in the definition of “air commerce’ ** (which is

"subject to, safety regulation), but does not appear in -

‘

’

the definition of “air transportation’ ™” (which is sub-

, ject to economic regulation). Petitioners conclude that

Congress intended flights “in the conduct, or further-

ance of a basines verggion™ to be excluded from

economic regulation. “We-think this construction is un-

And, gi course, the furnishing of stg carriage on

gratuitous basis is fot at all unusual. The carriage of ‘officers,

employees and selected 1 customers’ in company-owned planes is

_ an-example, Tven this is a matter of degree, and miscellaneous

carriage ‘ot this type could a pies inte’the area of common carriage

cand beeygme subject to the: Net if sufi ierithy expanded and regu-

‘afived? bor a situation of the character referred to which the

Board held te he-onteide the scope of the statyte’s cconumic reg.’

ulations, see Mai cliecnean sherry Ff light Case, 18 C. AS

214, 21% see 153) : ie

yy v $ 1301 », teil:

Geach te air commiofoes * * * ime wale | thee carriage by

ureratt of persons or jreparty fer compensation of hire, of

the Carnage of sniail ty’ aitet alt, or the eration «ir Nave

- gation of amerait. @ the cpritict of furtherance oi a boane ~~

’

> 4

or Socatin.* 1) iniferstate ceninerce .

yo USO S$ 180T 62h) reads : : 78

Pia 4 a4

‘Ptetetuts alf tYabetartateon. Se ean | = the car

pra be attey alt ed peientis of PPeparts?a- a Cones nein carriet

etutenreation er dare vr the carriage of rricatl hy aireratt

Soa ee Late coMmiietee tite:

50—

warranted. “The coverages of safety and economic

regulation , tinder the Act are different. Economic

regulation i is limited to common carriage and the carriage

of mail, but satety * regulation is extended as tar as the

commerce powers’ will permit”. There is nothing to.

indicate that Congress ineendied that. the statutory

definitions applicable to the coverage of one should limit.

the other, and it wontld subvert the economic i as

of the Act to hold that they do.”" -

Petitioners urged the Heard to exchide them from .

the coverage of the economic regulations of the Act

through .application of thé ““primary business doc-

trine.” “which ‘was developed by the Interstate: Com- |

merce Commission under the Motor Carrier Act”? and

Which has been codified as a part of that Agt. The

Board properly declined to do so. The Board found

adequate grounds for distinguishing the present case

. ° - ¢ ,

2"In general, the safety provisions apply to any aircraft, air- .

man, or flight of aircraft.”. NIEAL, Fhe Status of Non-Scheduled

Operations under the Civil’ Aeronautics Act of 1938, 11 Law &

Contemp. Prob. 508, 509 (1946).

*'Petitioners afso point out that the phrase “operation of air-

craft 1 furtherance of a business” appeared in an early draft’ of

the dainition of “air transportation” and was later omitted.

RHYNE, Civil Aeronautics Act Annetated; pp. 42-43, 71-72

(1939). This indicates to us only that Congress decided that the

cual coverage of the Act should be co-extensive with: air

common carriage—that it should include transportation conducted

in furtherance of a business when, it wag. common carriage, and

‘shoudd exclude itewhen it was not.

#?The doctrine is fully: reviewed in the Interstate Commerce

Conpmission’s opinion, in +f oitishek ‘Common Carrier cippli-

cation, 42 * & ag 193° (1938). . :

° 3 US 303 (c), which provides in pertinent part “nor

shall any cma n engaged in any other business enterprise trans-

port property by motor vehicle in interstate or foreign commerce

fot -buginess purposes inless such transportation ts cvithin the

scope, and m furtherance, of a® primary busine ss enterprise

(other than transportation) of such+ person.” (Emphasis ‘sup-

plied.)

from ‘$otor Carrier Act cases invelying the “primary

business doctrine.” even’assuming the applicability Of

that doctrine to cases arising under: the Federal Avia-’

tion Act.» Moreover, the two’ statutes are so dis-

similar that’ die use of the doctrine in Federal Aviation

Act cases could be of Jittle help at best, and would. in-

-volve constant risk of producing results inconsistent with

the purposes and administrative scheme of that. Act.”

The Motor Carrier Act specifically defines the terms

“common: carrier,” “contract carrier.” and “private car-

rier” for the puryx ses of that Act and pre ides: separate- |

ly for the economic regulation of each of the first

two.” The “primary. business doctrine”. is used to

distinguish “common” and:* ‘contract” carriers, as de-

‘fined, from “private” carriers. also as defined, The

Federal Aviation Act. on the other hand,. contains no

definition of the common carriage to which the seinsoaieamt

regulations of that Act apply. -and neither “contract”

carriage nor “private” carriage is'detined or even nen-

tioned. It would be wholly unjustified simply to as-

sume that the two latter concepts are to be applicable

24The Board pointed but thatethese cases involved the transpor-

tation of property only. and not persons ; that the transporters

«vere the — “lessees, or. bailees of the goods transported (see

49 USC. § 303 (17)); and, most important, that there had

heen ng holding out of service to the public. —

"23)¢ven if the rélevaat provisions Of the Federal Aviation .Act

-and the Motor Carrier Act were jdentical, it ‘would .be question-,

alle wisdom for the Le ard to borrow a le gal doctrine which the

Interstate Commerce Commission and the courts have surrounded

with the complexities which now encumber the “primary business

doctrine.” One conunentater finds the decisions in the ‘area *

“Strange and baffling.” 1 IRTER, Federal Regulation’of Private

Carriers. 64 Harv. L. Rev. 84. WW2 (1O351).- Not the’ least of the

_ difficulties is that the doctrine requires an inquiry “into the cor-

_ porate psyche” to determine whether the corporation did or did

hot intend to prowt trons the gee op way as such. Id., at 903.

26 he wefinitions appear at 49 U.S.C. $ 303 (14). (15), and

17). Ane see HU S.C. $8 300 and 309

‘AS

—52—

in Federal Aviation Act cases and that they are to have

the precise meaning attached to them in the definitions

of the’ Motor Carrier Act and in the .case law under

that statute—yet an uncritical borrow ing of ‘the “prim-

ary business doctrine” would assume” just that:

The two statutes differ in another respect relevant to

this problem. The statutory schenie of the Mot wr Car,

rier Act contemplates that all “common” and “con-

tract” carriage by motor vehicle subject to’ that Ae’

will be conducted under certificates of public convenience.

and necessgy or permits issued by the Commission.

except as the statute itself specifically exempts certain

classes of these carriers.” Quite unlike the Motor Car-

rier Act, the Federal Aviation Act provides for broad |

economic regulation of common carriage without specific

7749 U.S.C. $$ 306 and 309. Because of the peculiar structure

_of the Motor Carrier Act, the application of the “primary busi-

negg doctrine’ to cases under the Federal Aviatiow Act would,

. in S8fiect; borrow a general. doctrine based upon the Motor.

Carrier Act and at the same time decline to borrow an exception

to that doctrine founded in the express provisions of the Motor

_ Carrier Act—thereby producing a result exactly: opposite to that

which would have been reached by the Interstate Commerce Com-

mission under its own Act. Section 203(b) (3) ‘of the Motor

Carrier Act (49 Stat. 543, 49 U.S.C. § 303 (b)(3)). specifically

exempts from that Act motor vehicles used to carry passengers

between hotels and common carrier stations, and the Commission

has held that this express exemption indicates a congressional

intention that the carriage of passengers between hotels and points

other than common carrier stations (as in the present case) is

within the coverage of the Motor Carrier Act, the “primary busi-

‘ ness doctrine” to the contrary notwithstanding. Shores and Brown,

26 M.C.C. 243, 244 (1940). Thus,” petitioners argue that the

“primary business de ‘esta requires their-exemption from the

Federal Aviation Act. lthough as a motor carrier conducting the

same operation they would clearly not be exempt from the Motor

Carrier Act. See als 49 U.S.C. § 303°(b)(9) which exempts

casual carriage by a person not engaged in transportation unless,

as in the present casé, the transportation is offered for sale by

brokers who also sell transportation service furnished, by certi-

ficated carriers.

ATH “sas | =

exemptions and vests in the Board ili the authority

in appropriate circumstances to exempt carriers seggn r

‘would otherwise be subject to economic regulation.”

Thus. the Federal, A\tiation Act establishes a flexible

systeitt enabling the Board to provide an initial period

in which mew types of air transportation can be de.

_ veloped free of onerous regulations, to be brought into

“the regitlatory pattern of the Act when they mature

and. under conditions consistent with their particular

needs.” This does not’ mean that the Board is left’ at

large te extend or limit. the coverage of the ecbnomic -

regulations of the Act as it may deem expedient,” but

40 USC. $ 1386.

0p arge Irregular Air Carrier Investigation, C.A.

11959), CCH Aviation Law Reporter, CAB. Cases 58- 1900,

922,247 at 14,389-90: ; See

“The Board over the years, pursuant to its promotional re-

sponsibilities, has furthered the system's evolution and growth

by the certification of new air carriers and by awarding new*

service authorizations to existing carriers. Thus, the Board

has fostered. the creation of local service carriers, all- “cargo

carriers, helicopter carriers, and has brought into the area of

international, overseas, and territcrial air transportation both

newly created carriers and those who were previously con-

fined to domestic operations only. The significant milestones,

in this evolution have been the introduction of new and often

distinctive, services or types of service to the public, regard-

less of whether they were provided thy existing carriers or

new entrants. In authorizing these services, the Board has

‘frequently emploved both its certification and its exemption

powers, with exemptions sometimes constituting a precursor

to certification-in the development of a particular service or .

field of service until its proper place in the nation’s air trans-

portation system had leen established.”

See also American lirlines, Inc. v. CAB, 231 F.2d 483 (D.C.

Cir. 1956). Under present regulations exemptions are applicable

to large irregular air carriers (14-C.17.R. § 291); Alaska air car-

riers (14 CLVLR. $292): military operations carriers (14 C.F.R.

“Nreight forwarder- «Tf! (.FLR- § 297): and air taxi operators

(14 C.F.R. § 298). + oe

“The Board may exempt a carrier from requirements: of, the

Act “only if-it first timds that enforcement of those requirements

arcs, —— ©

it does suggest that the intentionally flexible operation

of this statute ought not to be frustrated by the intro.

.ductign of a doctrine based upon a different, and much

more rigid, statutory scheme.” —_

| III°

The petitioners argued her€ and to the Board that

the Hacienda flights are in the public interest in that

the Service is unique, operates at he nurs at which sched

uled carriers do not fly, requires no government subsidy,

and serves to introduce. the public, to the advantages of

air travel. The Board properly held that. these con-—

_ siderations areirrelevant to ‘the only question in this —

enforcement proceeding—whether the operation involved

is subject to the jurisdiction of the Board under Section

1371 ‘of the Act. On the other hand, these and

similar factors would, of course, be relevant ina pro-

’ ceeding to determine whether a certificate or exemption

order shoulds issue. The Board's instructions from the

Congress include- an injunction to foster “competition

to the extent necessary to assure the sound development

of an air-transportation system * * *,”%* and the Board.

would ‘have certain specified results because of the existence of

certain specified conditions” as recited in the Act. Pan American

World Airways v. CAB, 261 F. 2d 754, 757 (D.C.Cir. 1958),

cert. denied 359 U.S. 912 (1959). : ; ,

31We have been warned of the impropriety of assuming that

“ Congress intended that judicial precedents and rules of interpre-

tation applicable to the regulation of other forms of transportation

were to be applied to the regulation of transportation by air: :

“However useful parallels with older forms of transit may be

in adjudicating private ‘rights, we see no reason why the ef-

forts of the Congress to foster and regulate development of a

revolutionary commerce that operates in three dimensions

shouldbe judicially circumscribed with analogies taken over —

from two-dimension transit.” Chicago & Southern Air Lines

Inc. v. Waterman S.S. Corp., 333 U.S. 103, 108 (1948).

*Pacific Northern Airlines, Inc. v. Alaska Airlines, Inic.,. 80

F-Supp. 592. 609 (D. Alaska 1948).

3349 U.S.C. § 1302(d). ae

? tA ‘ °

miele -

z : \

has shown itseli te be receptive te initiative and: gs

perimentation in the area subject to its regulatory con- e

trol, — ,

, ; | : IV | ewes

The petitioners’ cargument that the Board's order 14

unsupportably broad is disposed of for this Circuit by

the decision in Consolidated Flower Shipments, Inc 7.

CAB, 213 F. 2d 814. 818 (9 Cir. .1954)." ian which-a '.

similar order was upheld ‘as sutticiently particularizec

by reference to the Board's complaint, investigation, and .-

opinion. A+ reading of the complaint and opinion ot

the Board in the present record will sufficiently apprise

the petitionersof the conduct complained of, and new

enjoined.) * .

“See also Bingler Vacation Tours, Inc. v. United States, 132

FSupp. 293. 798 (D. N.J. 1935), aifirmed 350 C.S. 921; Brady

Transfer & Sterege Co. v. United States, 30 F.Supp. 110, 118

(S.D. lowa 1948), affirmed 333 °ULS. 875 ait .

“Although we sustain the order of the Board in the cireum-

stances of this case, the form employed is riot a desirable one. It

should not be too difficult for the Board to frame an order pro-

hibiting’ the illegal conduct in terms of objective criteria narrower

than the statute vet broader than the precise facts of the particular

case, Contrary to the Board's argument, te advise a respondent

what it may not «lo. in such terms, is scarcely the equivalent. of.

telling it how it may Vinlgte the law. The Board, like other regu-

latory ‘agencies, has wide latitude in framing the appropriate

remedy in a given case. . Jacob Siegel Co. v. FTC, 327 U.S.

608, O11, O13 ¢10bg). It is not confined to prohibiting the pre-

cise.conduct found the unlawful, for that. of course, would make

evasion su simple as to invite it, and would render the order futile,

L.7.C. v. Morton Salt Co.. 334 U.S. 37,. 52-53 (1948). ‘&

-Board may enjoin unlawful practices reasonably related to thiose-

in which the respondent has indulged. F.7.C. wv -Vandel Brothers,

3502 US. 385, 392-303 61959). FTC. 7. National Lead Co..

382 US. 410, 420 (1937): International Brotherhood of Electrical. - — *

Workers o NLA. 341 US. 694. 703-706 (4951). Such re-

lated acts may he enjoined in generic terins, provided that the -

conduct prohibite? i. reasonably identifie! and the injunction

is based uper properly supported findings of a proclivity to un-

tawful activity. FTL a. Beech-Nut Packing @o., 237 U.S. 441,

$86 (1922) co "ans other equivalent cooperative means off). ,

~~ —56—

SS e ane SESS: £0

~ The petitioner ‘Price ‘earnestly argues pan he acted

Pe as a salatied employee of Hacienda, and that thy

Board's cease and desist order therefore should not have

been directed against him as an individual. Ii the

Board finds that “any person has failed to comply witli

any provision” of the Act, it “shall: issue an ‘ap-

propriate order to compel such person to miply there-

with.” The Board here found. that Price * ‘is engaged

in interstate air transportation as a common carrier

for Compensation or hire * * * without authority, from

the Board in Giolation of Section 401(a) of the Act.”

We know of no authority holding that Price’s status

as a corporate employee insulated him from the require-

ments of the Act. SEC «w. Universal Service Assu.,

106 F. 2d 232, 238 (7 Cir. 1939), certiorari dented ee

308 U.S. 622, expressly holds to the contrary “under

the Securities Act of 1933 with respect to an attorney

and corporate officer: « This-court’s holding in Con-

solidated Flower Shipments. Inc. v. CAB, 213 F. 2d

‘814 (9 Cir. 1954): does not aid petitioners. Indeed.

van examination of the record in that case discloses that

the order of the- ‘GAB which | wis affirmed by this court

included an injunction against an individual officer of

the corporate petitioner.

* The question remains, however. whether the Board's -

finding that Price engaged in “air transportation” with- .

out a certificate of convenience and necessity from the ~

N.L.R.B. x. Globe Wireless -Ltd., 193 F.2d 748, 752 (9 Cir.,

1951) (“in any een fe Compare Puerto Rico Drydock &

Marine Terminals, Inc. N ee 284 F.2d 212. 216 (D.C.

Cir. 1960). cert. denied 364 U.S. 212 (“in any other manner”).

- See also ALL.R.B. . Cheney California Luinber Co.. 327 US

385; 387-389 (1946) " ‘in any other manner”).

649 U.S.C. § 1482 (c).

P ,

-—— se ral

Board Wils_suppe wrted by substantial ev idewce. The evi-

dence Was at uple th that Princ Sipervinelithy physica

operation ‘of the aircratt invelved in/the “Champagne

Pours” and. ot course, these operations admittedly were

not certificated. However, the illegality of the uncerti

tieated tights arose trom

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