# Petition for Writ of Certiorari — Hausman v. Buckley > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_0244%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1962 - **Citation:** 369 U.S. 885 ## Text 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. oe - 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 I a Fe nha a a 1 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 at 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, ‘tates Cemle, Tithe 4%, See. 2d 0 ot). ~ 40. United States Cote, Tule 49, Sec. bot 4) 2 ’ ; I es : : : ‘ oe °. ea . ° $ i 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 in 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 oC ‘ ° ; . 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, = : fo Cc “ 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). Y —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 S) 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 . y 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 business” language was first ex- cluded, then included, and finally excluded from the defi- nitional subsection covering economic regulation. See: - ee 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 . Ss . 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 —— 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 c 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—"' “> . ° . o - . . . > bad - . - a a > *» - . - . ¢’ f . - - . s - . r * . . 8 ’ . es - s . . . . « -. . . . » . . . ‘ . . « . sd - ° . °-@ ° ° , : bd ’ mn . o . “tae ae . . * . = . . ° ; - z ‘ , 1 . - ° - - = bd 2 ° ° * . . ’ ° ° . ‘ “ e - . \ id . . . *. . ° oa . . >. ” . : ’ - . ° . r . . °. - a * = . ° ° - 2 . . - . . ’ s - . . “ ° . . - ‘ ? *° e - =, . : . » . 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” *. (c) a place in the United States and any place 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 © ment against Las Vegas Hacienda. Inc. and ‘Henry 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. 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 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 =. | 2 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: ; ; © + ~-h6— 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. o », ‘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. >. me a. 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." « Pd 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.’: o- a 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 es 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- -@ j state air conmmmerce 1) Subsection ( 2). Since the said OQ 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- - oe 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 y ; 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 of 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 a 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. activity along this line the © Gation might be resumed 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 e . * . ~ 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 - ee e. 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. . * i ' | / ! of - * ? — 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 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 Served Ane © 12.1960." fe | 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: © ROBERT C. LESTER. a, 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 R 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 46 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. | | : II 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: 4 a apparent g —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 Py - ~ « . 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.) s 9 a 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 * 6 - ‘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. $249: widirect air carriers (14 ©_F.R. § 296): international air “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 u [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_0244%3A2. Public record. Not legal advice.