Petition for Writ of Certiorari — Eastern Air Lines, Inc. v. Northeast Airlines, Inc.
Supreme Court brief1965
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In. The
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grouse 6
MAY 19 ‘1965
JOHN F. DAVIS, CLERK
Office rans Court, US.
F ILE D
_Sapceme Guirt of the ei States:
October Term Weed
EASTERN AIR LINES, INCORPORATED and
NATIONAL AIRLINES, INCORPORATED,
=n lo
Petitioners,
_ NORTHEAST AIRLINES, INCORPORATED and
THE CIVIL AERONAUTICS BOARD, :
Respondents.
-
PETITION FOR A WRIT OF CERTIORARI TO THE °
. UNITED STATES COURT OF APPEALS
as eee POR TES Sener Gee
Of Counsel
HAROLD L. RUSSELL
JAMES H. BRATTON, JR.
GAMBRELL, HARLAN, RUSSELL
& MOYE
825 Citi
Bank Bldg:
Atlanta, Ga., 30303
WILLIAM A. NELSON
National Airlines, Inc.
Miami, Florida.
ANDREW T. A: MACDONALD
CROSS MURPHY & SMITH
729 15th Street, N.W
Washington D. C. 20005
& Southern National :
JOHN W. CROSS
- 729 15th Street, N.W..
Washington D. C..20005—
E. SMYTHE GAMBRELL
825 Citizens & Southern National
Bank Bldg.
Atlanta, Ga. 30303 a
Attorneys for Petitioners
ther Picea nas xo
’ PAGE
) Gpinion Below sincatilenions zs soa i 3 . L ‘ ‘one i
: Jurisdiction to Review ibe , : a itblaihan 2.
a Questions Presented ie aes ee , 3 |
Statutes Involved ‘ : mae “s | " Raioregiecene-
‘Statement eae ne Sa | east : © st ut fe
Reasons for Granting the Writ a ed ce Se
I. The Denial of Intervention Until After Hearing
And Decision Deprived Petitioners Of Right Rec-
ognized By Controlling - Precedents | entices, 29
II. The Interpretation Placed On Section 7(d) Of The
Administrative Procedure. Aet-By- The First Cir- -
--euit Is Contrary To The Terms Of That Section,
Conflicts With Decisions Of This Court And Of ~
Other Courts Of Appeals, And With Long-Stand-.
ing Practices Of Administrative Agencies And.
Would Render Many Administrative Proceedings
Impossible. Of Completion | a1
A. Section 7(d)_ Was. Interpreted ‘ Conteary oF
————~Law: and Governing Precedent - . 21
- B.. The Statutory and Decisional Rule of Preju- |
dicial Error Was Ignored 24
©. The Effect of the Decision. Would. ‘Be. to Dis-
rupt Long-Standing Agency Procedures ......... 26
ConcLusion ......... iis , m silesdainesepulaanioes 28
é : : « ‘
ee - oo
8 s ll >.
of : : fi
ae VA _ Tass. or AUTHORITIES
pane) aoaee as Le eRe
— Cases: fs ea on
Airport Comm’n of Forsyth County 3 v. CAB,. 296 )
F.9d.95 (4th Cir. 1961) 0.2. 16.
Atlantic. Ref. Co. v. Standard Oil Co., _ F. 2d: 387 a
(D.C. Cir. 1962) .. | GPAs 18
Amalgamated Meat Cutters v. NLRB, ‘267 F.2d 169. ae ee ee
(Ist, Cir.), cert. denied, sub nom. Geilich Tanning
' Co. 'v. Amalgamated Meat Cutters, 361 U.S. 863 3
(1959) Lee Po. 18, 15
"American Airlines, Inc. v. “CAB, 178 F. 2d 903° (7th
Cir. 1949) + 16
. American, Trucking buseslation - Friseo Trois:
portation Co.,358 U.S. 133 (1958) ...:........... 23
eee FCC, 326 U.S. ‘327 (1945) 4 §
Central Minois PSC v. FPC, 338 F. 2d 682 cc i
ae 1964) ; 23
_ Chessman v. Teets, 354 U.S. 156 (1957) aE. ccccnnsene 14
- Chicago, South Shore & South Bend R. v. United» . °
States, 221 F.Supy'106 (N.D, Ind. 1963) ............. 23
Cole v. Arkansas, 333 U.S. 196 (1948) ........... spliuetia .. 14
~ Columbia Broadcasting System v. — States, 316
U.S. 407 (1942) . .. 14
Copgetes v. United States, 369. US. 438 (1962) ieee. 14
| Dallas to the West Service Case, 29 C.A.B. 23, ©
(1959), affirmed, Bramff Airwaysev. CAB, 277
“Pe OO, Oe oi ie oie ce -
._ + Delta Air Lines v. CAB, 247 F.2d 327 (5th Cir.
1957) LO:
=
- 24
ge
Delta Air Lines, Inc. v.-CAB, sir F.2d 632 (D.C.
' Cir. 1959),, cert. denied, sub nom. is Trans World ©
Airlines, Inc. vy: Delta Air: ‘Lines, sats .362 US, .
PAGE oe
_ 969" (1960) . Ribs poreeen
: Babies Air Lines, Inc. v. CAB, 271 F.2d 752 (2d
Cir. 1959), cert. ‘denied 362 U.S. 970 (1960) ............ 16
- El ie Natural Gas. Co., 23 F. P.C, 610 me: Lae ae 27
Frank v. . Mangum, 937 U.S. 309 (1915) 14
Great bakes Adilines v, CAB, 291, F.2d 354 54° (9th! a
Cir. 1961) / : iin 22, 26
Griffin v. Ulinois, 351 USS. 12 (1956 | ‘14
-Hopt aa 110 U.S. 574 (1884) .
8 Hudson Transit Lines v. United States, 82 F. Supp.
153 (S. D.N.Y. 1948), af, 338. oS 802 (1949) .. 2
hei re Bakers of Washington, Inc.; 15 P. & F. Ad.
L. 24399 (FTC 1964)... “27
In re Cabinet Mfg. Corp., 144 N.L.B.B. 82, 14 P..&
F. Ad. L. 2d 391 (1963) ; 27°
In re Loading Rules—Cantaloupes, 6 P. & F. Ad. ;
L. 2d 81 (ICC 1956) ......... ey |
In re Petitions of Eastern and National Airlines, .
376 U.S. 931 (1964) ............. 13
In re.Plant City Welding & Tank Co., 9P.&F. Ad.
_ L. 2d 264 (NLRB 1959) . ; . 27
<In re Sears Roebuck & Co., 15 P. * F. Ad. L. 2d: .
748 (FTC 1964) ...... 1. aT
International Steel & Iron Co. v: National ‘Surety
Co., 2917 U. 8. 657 (ashe) sat,
A
RIN SWEEPER eae oe GERRI ate 5 GES ce Se Ve MWD
HOR aaa
: 7 z
7
brie iv.
. BA hes 3 ” PAGE
Latin , Aangricon, Air rane. Case, 16 One. 107
(1998) dip hcadiaeprinitinn ena itinlimipetinsabaneie PESTS. <r CO 27
; Market Str eet Reilony Co. Vv. Railroad Commission,
~3BBE TB. GOB (EDD) cnncicneninininisceniccsccincesectosjnese 22; 23, 25
Morgan v. United Hlates, 298 U. S. 468 (1588) scien ae
7 - National Airline’, Ine. ve ‘CAB, 306 F.2d. 703 (D.C.
Gir, 1962) fo, CIRRUS AARP dee BS 17
National Airlines, Inc. v. CAB. 321 F.2d 380 (D.C.
' Cir. 1963) ....... “STR AMS Resale Oe AEROS 17
_ Nebraska Dep’t of Aeronautics | v. CAB, 298 F. 2d ae
SE A ARs BID hseesapoepsininsnnysssinenensneeseebiiconiiagteion 16 :-
New York-Florida Case, 24 C. AB. 94 (1956) 0c... 5.
| New York-Florida Renewal Case,. CAB Docket 12285 *-
os ee 6
» NERB v. prewar 310 F.2d 550 (6th Cir. 1962) ...:.... 26 _
Northeast Airlines v. Civil Aeronautics Board, a
F.2d 579 (1st Cir. 1964) ................. SOROS ae _—
N.Y. Central R. Co. Abandonment, 10 P. & F. Ad. L. |
- 2d 1021 (ICC 1960) - danvareaey PE Le Mer - 27.
Opp Cotton Mills v. pre Fane 312 Us. as :
(1941)... i 25
< 152.(D.D.C. 1962), rev’d sub nom. Alaska Airlines
Pan sida World Airways v. CAB; 207 F. tine
v. Pan American World Airways, 321 F.2d 394
(D.C. Cir. 1963) tel oP Toe nee 18
Price v., Johnston, 334° U.S. 266 (1948) ............ 4
- Radio. Officers Union v. NLRB, 347 U.S. 17 (1954)... 23
Reopened Delta-C € S Mail Rate Case, 28 CAB 820 .
, (1959)
i Saunders v. Shaw, 244 U. Py 317 (1917) Vicia re 14
Seaboard &° Western Air. v. CAB, 181 F.2d 515 _
(D: C. Cir. 1949), cert. denied; 339 U. §. 963 (1950) 14
Southwest Airways Co..v. CAB, 196 F.2d 937 (9th .
ii WI i ee 16
Southwest -Northeast Service Case, 23 CAB. 42
ERs eR Sab RURE eS RCO. stents 26.
Spearfish Suspension Case, 18 C.A. B. 657, (1954) ....26, 27
Spitzer v. ene, 153 F.2d 967 (8th Cir.
1946) srsccsccsseee RE : oe
State Airlines, Inc. .v. CAB Fa 510 (D. 6.’
Cir. 1949),-rev’d, 338 U.S.~
3 5 Textile Workers Union of America v. Alléndale Co.,.
' - 226. F.2d 765 (D.C. Cir. 1955), cert. denied, sub
nom. Allendale Co. v. Mitchell, 351 U.S. 909 (1956) . 18
e
(1950) eects 16
‘UAW. v. Fafnir. Bearing Co., —— U.S. ——, 85 :
S. Ct. 1087 (1965) : 13,15
UAW vv, Scofield, — US. —, 85 8. Ct. 666 |
(1965)... bs 13, 15, 16
United Air Lines, Inc: v. CAB; 198 F.2d ‘wad (7th
_ Oir. 1952) ........ 16
United States v. Louisiana, 354 US. 515 (1957): seccense BO?
United States v. Pierce Auto Freight Lines, 327 U.S.
B15 (1946) i. 7 82, 2, 25
, sicanisiasanieiias Adequacy of Service Investi
gation, 30 C.A:B. 1255 (1960), affirmed, National.
‘Air Lines v. CAB, 300 F.2d 711 (D.C. Cir. 1962) sili,
Western Airlines, Inc. v. CAB, "196 F.2d 933 (9th
Cir.), cert. denied, 344 U.S. 875 (1952) 6.
Western.Pac. R. Cera. v. Western Pac. R. ws Sid
0.8, 247 (1958) - a x a
PAGE
Weatere si v. Southern Pacific Co., 284 US. ‘AT |
2) GI Succatoas 14
» Wisconsin v. FPC, 201 F. 2d 183 (D.C. Cir. 1952),
cert. denied 345 U.S. 934 (1953) piebibuiaieicine 22, 26°
Wolpe v. Poretsky, 144 F.2d 505 (D.C. Cir. ), cert.
3 denied, 323 US. 777 (1944) .. i ssialddidalidbbed ae
Statutes: |
; Adainitabintiee Procedure Act, 60 Stat. - 237, 5
USC. 1001.
Section 7(d) 1.1, 3, 8 11, 21, 22; 23, 24, 25, 28
Section 9(b) ed co | 5
Section 10(a)> Sates -_ te | Pre 6
Section 10(b) ae inivitttedaaus Me
OR WO aerscenteencpt iain ; 26
Nescaed jehalion Act of 1958, 72° Stat. 737, 49
_* U.S.C. 1301 |
Section 40) 22... .ctecceeedeeeeee seecceeceeDy 15
Section 1006. nceccvncrcwecnensnye--6y 12, 18,17, 20°
Section 1007 .......... at, citeape SS, 18, 19
Section 1009 pee HE wre ae kc 13
BURR OE ss af. Retain Ie
UNAM Sh. 22
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‘Supreme Court of ‘the Huited States
OctosErR Tin 1964
| No. ——
Eastern AIR Lines, INCORPORATED and.
NationaL Aruines, INCORPORATED, ,
: Petitioners,
——V
. NorTHEAST ArLinzs, IncorPoRaTED and
THE Civm Agronautics Boarp, ae
: oe Respondents.
scale d
PETITION FOR A WRIT OF CERTIORARI TO THE’
UNITED STATES COURT OF APPEALS |
FOR THE FIRST CIRCUIT
$o the Honoralte the Chief Tustion ef the Gnliek Geter:
and Associate ore of the agrees Court of the
Umited States:
Petitioners, Eastern Air. Lines, re and Na?
tional Airlines, Incorporated jointly pray that a writ of
certiorari issue to review a final order of the United States
Court of Appeals for the First Circuit, entered on April
13, 1965, ‘without an opportunity for Petitioners to be
heard, which order remanded the case to the Civil Aero- .
nautics Board for further proceedings consistent with the
Court’s interpretation of the Board’s order and of the
requirements of §7(d) of the Administrative Procedure
Act, 5 U.S.C. — ;
Opinions Below
. The opinions and orders of the Court below, which are
not. yet’ reported, and of the Civil Aeronautics Board.
(Orders E-21550, ‘Dec. 1, 1964 and H-21872, Mar. 5, 1965)
which are not officially reported, are reproduced in the
separately bound Appendix hereto.’ |
Jurisdiction to Review
The date of the opinion and order of the Court of Appeals
sought to be reviewed is April 13, 1965. The dates of the
- Board’s Orders under review are December 1, . 1964
and March 5, 1965..The jurisdiction of this Court is in-~
_voked under 28 U.S. 6. §1254(1) (1958).” it
aq Review is cnlattit of the First ‘Cireuit’s April 13, 1965 opinion “and
order, which was entered in regard to the Board’s Orders E-21550 and
E-21872. For completenéss the Appendix also reproduces the Court’s
Order of October 17, 1963, denying intervention to Eastern. and National
in the review proceedings; and of November 6, 1963, allowing Eastern and
National to file briefs amici curiae; Board Order E-22084 (Apr. 26, 1965)
entered in response to the Court’s April 13, 1965 Order sought to be re-
viewed; the Court’s Order of April 28, 1965 allowing Eastern and National
to comment on the Board’s Motion filed in Court pursuant to Order
E-22084; and the Court’s Opinion and Order of May 11, 1965: An earlier
decision ‘of the Court of Appeals is reported at 331.F.2d 579 (1st, Cir.
1964). ;
- Insofar as may be necessary, Petitioners also invoke 28 U.S.C. §1651
- (1958) out of abundance of caution in view of the fact that they had
neither been granted nor denied intervention (except “sub silentio,” see
opinion of May 11, 1965 at 2, Appendix 205a) at the time the Court
‘below entered the order now complained of, one of the grounds of com-
plaint here being that Petitioners were not allowed to be. heard prior to
entry of that order, which had the effect of reversing prior Board Orders
that granted petitioners substantial and important. rights.
Questions Presented |
1. When, in a proceeding for judicial review of an Order
of the Civil Aeronautics Board denying renewal of a tem-. _
porary certificate of public convenience. and necessity, the
Court of Appeals is presented with a Motion For an.Order ©
Directing the Board to Receive Further Evidence, may,
consistent with due process, such an order be entered with- -
‘out affording air carriers, which were parties to the agency
proceeding and which actively contended for the denial of
renewal and bore a major share of the burden of develop-
ing the record there, the opportunity to be heard on the
questions of law anid fact presented!
2. Where the Civil Aecronauties Board has seaitiadl on
the basis of the evidentiary record, to deny the application
of an air carrier for renewal of a temporary, certificate,
and then takes notice of uncontested facts contained in
official air carrier reports to the Board in order to deter-
mine whether a different result be required or the record -
reopened, does §7(d) of the Administrative Procedure Act |
require that a party be permitted to show the contrary of
inferences drawn by the Board from the uncontested facts
by means of adducing additional facts through expert testi-
mony, and forecasts and by updating the record to as recent
a date as possible when there has been neither showing nor
finding of prejudicial error? 3
‘
Statutes Involved
* Section 7(d) of the Administrative Procedure Act of
1946, 60 Stat. 241; 5 U.S.C. 1006(d) :
(d) Recorp—The transcript of testimony and.- ex-
hibits, together with all papers and requests filed in
4
. the proceeding, shall constitute the exclusive record
for decision in accordance. with section 8 and, upon
payment. of lawfully prescribed costs, shall be made
available to the parties. Where any<agency decision
rests on official notice. of a material fact not appearing
in the evidence in the record, any party shall on timely
request be afforded an opportunity to show the con-
trary.
Sextion 10(e), Adeabetehvetivé Procedure Act, 60. Stat. mae
; 243 ; 5 1 .8.C. 1009(e):
Scopz or Revisw te far as necessary ‘to decision
and where presented the reviewing cqurt shall decide
all relevant questions of law, interpauk constitutional
- and statutory provisions, and determine the meaning
or applicability of the terms of any agency action. It
shall (A) compel agency action ‘unlawfully withheld
or unreasonably delayed; and: (B) hold unlawful and
set aside agency action, findings, and conclusions
found to be (1) arbitrary, capricious, an abuse of dis-
cretion, or otherwise not in accordance with law;
(2) contrary to constitutional: right, power, privilege,
or immunity; (3) in excess’ of statutory jurisdiction,
authority, or limitations, or short of statutory right;
(4) without observance of procedure required by law;
.(5) unsupported by substantial evidence in any case
subject to the requirements of sections 7 and 8 or
otherwise reviewed on the record of an agency hear- .
ing provided by statute; or (6): unwarranted by the -
facts to the extent that the facts are subject to trial
de novo by the reviewing court. In making the fore-
going determinations the court shall review the whole
record or such portions thereof as may be cited by
any party, and due account shall be taken of the
rule of prejudicial error.
+
_ Statement
= 1956, the Civil Aeronautics Board (the Board) issued
a 5-year temporary certificate of public convenience and .
necessity to Northeast Airlines, Inc. (Northeast), author- ma
‘izing Northeast to engage in air transporation beyénd its
_ then southern terminal New York to-the ' terminal Miami,
Florida via Philadelphia, Baltimore, Washington, D. C.,
Jacksonville,;,Tampa and St: Petersburg/Clearwater. New
-\ York-Florida Case, 24 C.A.B. 94 (1956). Northeast oper- -
‘ated under that certificate and, pursuant to the provisions °
- of §9 (b) of the Administrative Procedure Act and the |
stay granted by the First Circuit on October 17, 1963,
continues so to operate today. ‘Such operations are in
* direct competition with the services of Petitioners.
In June 1961, the Board set down a proceeding known
as the New York-Florida Renewal Case, CAB Docket 12285 —
et al., to determine whether public convenience and neces-
sity required continuation of a third carrier in the market.
After hearings, which were initially delayed some six
' months by the acquisition of control of Northeast by the
Hughes Tog] Company and which were lengthy, amassing
some 11,000 pages of record, the Board’s Examiner issued
an Initial Decision recommending that three carriers were
required 6n the East Coast-Florida route, but that North- _
east, which had sustained losses of about $44,000,000 be-.
tween the time of its’entry into Florida markets in 1957
and the end of 1962, was not fit, willing and able within
the meaning of §401 (d) of the Federal Aviation Act of
1958, 72 = 754, 49 ae 1371(d), to provide the ¢ ser-
vice.
By its (Seiniens and Orders E-19910 oa E-20073 of
August 15, 1963 and October 8, 1963, p OY | the
6..
Board, adopting many of the Examiner’s factual findings,
eoncluded that the public convenience and necessity did
not require the renewal of Northeast’s authority south of
New York or the certification of any other carrier in lieu
of Northeast.
Thereafter Northeast sain review by the United States .
Court: of Appeals for the First Circuit. Jurisdiction to
" review was vested in that Court by §1006 of the Federal
Aviation Act of 1958, 72 Stat. 715, 49 U.S.C. 1486, which
provides that venue to review lies: either in the Court of
Appeals for the District .of Columbia Circuit, or in the
Court of Appeals for the Cireuit in which the. petitioner
for review has /its principal place of business. In North-
east’s case, the principal place - ne was deemed
to be Massachusetts. :
The First Circuit granted a motion of Northeast to
2 stay the effective date of the Board’s denial of North- ©
east’s application. It also. denied motions of petitioners
here to intervene ( Appendix la), but permitted petition-
ers to file briefs amici curtaé (Appendix 3a). In due_
course, briefs were submitted to. the Court. Oral argu-
ment was heard from Northeast and the Board. Peti-
tioners here were not permitted to be heard on oral argu- .
~ ment. ;
Your petitioners seis writs of certiorari: from this
_Court to the First Circuit on the question of denial of
_ intervention... The’ Solicitor General and the Board sup-
ported the . contention that petitioners should have been
‘permitted to intervene, but suggested that the matter be
held in abeyance pending a determination whether the
controversy in the First Cireuit should “prove to be a
. ; : “
, &
7
‘live and significant one.?* Those petitions were thereafter re
denied, 376 U. S. 931 (1964).
On May 8, 1964, the First Circuit found the Board. had
‘not properly articulated. its reasoning and entered an
opinion and. order. remanding the proceeding to the Board —
for an explicit statement of the “issues actually decided
and a statement of relevant bases for its decision sup-
ported: by intelligible findings of fact.” That: opinion is
‘reported in Northeast Airlines v. Civil Aeronautics Board,
__331-F.2d 579 ( Ist Cir. 1964). Immediately thereafter, on -
May 13, 1964 the Board invited the views of all parties
concerning further action. Submitting their views, the
parties urged, inter alia, that developments since the. close
of the record—traffic growth: and financial prospects of
the parties, general, economic conditions, etc., none of the —
essential facts being in dispute—supported their respec-
tive positions. Eastern and National argued that those
developments showed no public interest requirement for
a third carrier, and Northeast maintained they did. On
December 1, 1964, the Board issued its Opinion On Re- .
mand, (Appendix 5a). © That Opinion, after discussing
at length the statutory standards applied by the Board -
and the evidence adduced in the proceeding, reached the
same ultimate conclusion .as the prior Board opinion and
order, ‘namely that Northeast’s authority should not be
renewed. In so concluding it stated (Appendix: Ta-8a) :
“The Court specifically declined to determine whether
the record is legally sufficient, stating that it was
uncertain as to the basis for denial ofthe application.
_ Nor do we believe that reopening of the record is.
required as, a matter of administrative discretion.
The present record is well documented and sufficiently
current. It contains actual operating experience
\'3 See Memorandum for the Civil Aetenautio Board, in Nos. 720 and
766 icin Term 1963), January 1964.
\
8”
through the: first quarter of 1963. The evidence has ;
been thoroughly analyzed by the parties, and the legal
and policy issues involved have been fully explored. :
Moreover, the Board has before it and may roperly t
consider statistical reports. filed ‘by the carriers since —
- the formal closing of the evidentiary record and other
‘stipulated materials: As hereinafter appears, these
latter materials do not ip our opinion indicate suffi-
cient change in circumstances to warrant reopening.
Accordingly, we conclude that there is presently before
the Board a firm basis for decision and that we should
‘proceed directly to a final decision in this case.”
- It then went on to detail, in a 48-page opinion accompanied
by 103 ‘miniéographed pages of appendix material, the
findings and evidence supporting its conclusion. Two of
the. five members of the Board dissented.
- Northeast sought reconsideration of the Board’s De- .
cember 1, 1964. Order, claiming that the: Board had relied
on facts reported by Northeast and by other carriers in
their official reports to the Board which were not in the
evidentiary record and that, pursuant to §7 (d) of the
Administrative Procedure Act, it wanted to introduce evi-
dence on rehearing in rebuttal to the ultimate finding of
the Board that Northeast had no reasonable prospects
for financial success in its Florida operations, and that
the Board’s—(unspecified by Northeast )—subsidiary find-
ings underlying such ultimate conclusion were based on
official’ notice of facts outside, the record and were erro-_
neous. Northeast offered to show, not the contrary of
facts noticed by. the Board, but other and more recent
alleged facts, and “expert” testimony which, it contended,
would show the opposite of the inferences which the teased,
in the exercise of its administrative expertise, had drawn.
Answers were, filed to Northeast’s petition, and. there-
- after the Board issued its Opinion and Order on Recon- ¢
Q
9
. |
sideration concluding, ‘for the fourth time, that public
convenience and necessity did not require grant of North-
east’s application, and stating, yt — that t (Appendix
- 168a-69a) : ,
“In reconsidering our decision eimai to the Court's
-mandate, the evidence upon which we based our orig-
inal determination with, respect to Northeast’s- pros-
pects for economic opera tan led us to the same con-
clusion that it had before: Before reaching a final
. conclusion, however, we deemed it appropriate to look
_to more recent operating results and traffic statistics
in order to determine whether a different result was
required or, at least, whether the proceeding should
be reopened . for further exploration of the question.
Upon the basis of Northeast’s experience through the
first quarter. of 1964 and of the East Coast-Florida -
traffic through the year 1963, we concluded that our
original judgment. was sound.” *
4“Tn our original. opinion, we had relied upon Northeast’s results .
and traffic volume through the first quarter of 1963.. We think this.
was obviously a sufficiently representative period upon which to base
reasonable judgment as to Northeast’s prospects for economic opera-
tions, embracing as it does Northeast’s actual experience and the total
traffic for the entire 644 year period subsequent to the carrier’s cer-
tification. Northeast apparently concedes this for purposes of a deci-
sion favorable to it} since its position on remand was that the Board: . | :
should, without further ado, grant the renewal application.
“Northeast"is in error when it asserts that ‘the formal record was
closed.. . . on August 30,°1962 and contained complete data only
through the first quarter of 1962’ (Petition, p. 8). While the taking
of testimony was completed on August 30, 1962, the parties continged
to supply for the record monthly traffic statistics in accordance with
‘the Bureau’s revised request for,evidence (Section II.B). This ma- a
terial was supplied through the first quarter of 1963 and both the
“ majo and the minority relied upon it in their original opinions.
” Indeed Northeast itself relied upor it iy its brief to the Board.’ *.
The Heard went on to affirm its conclusion of Deceinber °
1, 1964.
Northeast sought judicial review from the First Cireuit.
‘In addition it filed a motion to the First Circuit for ‘an
2 tase - 10
*
‘Order Directing the Board to receive Further Evidenee.
The Board filed a memorandum -in opposition.’ Eastern .
and N ational,. not ha¥ing been granted leave to intervene,
were not authorized to file any, response to. Northeast’s
motion although they had filed petitions for leave to inter-
. vene: on April 2, 1965 and April 8, 1965, respectively.
On April 13, 1965 the Court. of Appeals, ‘without afford-
| ing your Petitioners an * opportunity to be heard.despite _
the fact that motions for: leave ‘to intervene were then —
pending, entered its order remanding the matter to the
Board for further proceedings wherein Northeast was
to be permitted to “show the contrary” of the inferences
and ‘judgments of. the Board (drawn from undisputed
- facts properly subject to official notice) by means of ad-
ducing further, different and moreerecent facts and by
‘updating the record through “expert testimony”. and fore-
casts of future results (Appendix 19la). .- - “%
On April 26, ‘1965 without hearing from, 6r’ inviting ‘the |
views of} the parties to the proceeding before it, the Board |
issued its Order. B-22084 (Appendix 197a) in which it
stated that it had decided not to seek review of the Court’s
April 13, 1965 decision, and that, in view of the fact that
the.further proceedings ordered, by the Court—(ineluding.
the ‘updating of the record)—would be extensive, it had
determined to reopen the whole matter as to all issues
‘and all applications for authority in.all markets. That
' Order-was then submitted ‘to the First.Cireuit for ap- |
proval and for dismissal or remand of the petitions for
review. At that point, the First Circuit on April 28, 1965 |
issued ‘an Oraer, inviting’ from Eastern and National —
responses tp the Board’s.Motion for Dismissal or Remand.
Such ‘responses were filed May 3, 1965, in which it was
he asserted, inter alia, that Eastern and National ‘should have
il
been permitted to intervene, that, the Court’s order of
| April 13 was entered without hearing from Eastern and
- National and that Kastern and National were aggrieved
_ by that order. ‘s
On May 11, 1965, the Court. of haiaiesdi nppcned the ¥
Board’s action, granted belated leave to Eastern and
National to intervene so they might seek certiorari, stat-
ing that their intervention had earlier been denied sub
silentio, dismissed the ‘petitions pending before it and
relinquished jurisdiction. The Order was marked to be- ©
come effective May 21, 1965 aera 204a).
‘Thus, at the end of some four years of litigation at a
cost of many thousands of- dollars, Eastern, National and
- all other parties. would be put right back where they
started, and the four decisions of the Board upon the
‘question of public convenience and necessity for air trans-
portation would go for naught as a result: of a’ First Circuit
decision that specifically stated it was not a decision “on
the merits” (Appendix 193a) ‘and on which decision your
Petitioners were never afforded an opportunity to be
heard. eS ie 7
Petitioners here seek certiorari to review the important —
question whether due process of law is’ violated when
intervention (and therefore the opportunity to be heard) °
is denied and not granted until after a decision has been
- made whici, | will adversely affect petitioners’ substantial |
property’ and financial “interests. Second, and of’ perhaps
greater import, is the question of the “correctness of.
> the First Circuit’s interpretation of §7(d) of the Ad- |
ministrative Procedure Act. That interpretation. appears |
to be in ¢onflict with leading decisions of this Court on.
the matter of official notice by administrative agencies,
as well as in’ conflict with decisions of other Circuits and —
eo .- ‘
is at war with prevailing practices before agencies. If
allowed to stand; it will render it virtually impossible for
any agency finally to determine any matter in which the
hearing and decisional process require the passage of
substantial time, and will destroy, as a decisional tool,
that vital aid to the decisional process—official notice. It
is submitted that an important question of federal ad-
‘ministrative law is presented which warrants disposition
- by this Court. ©
Reasons for Granting the Writ
This Case Presents the Important and Recurrent
Issue of the Rights of Parties to Administrative Pro-
ceedings to Be Allowed to Intervene in Judicial Re-
view of Agency Action in Time to Be- Afforded a
Hearing, and the Important and Pervasive Issue of
the Extent to Which Administrative Agencies, in
Disposing of Lengthy Licensing Cases, are to be
Permitted to Take Notice of Facts Outside the Record °
Without Violating the Requirements of §7(d) of the
. Administrative Procedure Act. -
I. - :
The Denial of Intervention Until After Hearing And
Decision Deprived Petitioners Of Right Recognized By
Controlling Precedents. : | ;
_ The Federal Aviation Act of 1958 provides in Section
1006* that any person “disclosing a substantial interest”
in any order of the. Board, affirmative or negative, may
seek review thereof in a Court of Appeals where venue
- is found. The Act, however, contains no express provi-
/
_ 492 Stat. 795, 49 U.S.C. 1486.
@ y.
13
sion relating to intervention by parties who have prevailed —
before the Board and who seek to’ support the Board’s
order under judicial review.’ The thajority of the Courts
of Appeals nevertheless permit such intervention without
discussing the issue.’ Two Circuits—the First? and the
Seventh—have a conflicting policy, and refuse to permit
- intervention. Very recently, the Second Circuit has denied
_such an intervention. This Court has:now granted “cer-
tiorari to. review the decisions of the Second Circuit. and
of the Seventh Circuit: UAW v. Fafnir Bearing Co., cert.
granted, —— US. —, "85 S. Ct. 1087 (1965); UAW v.
Scofield, cert. granted, — US. — ,/85 S. Ct. 666 (1965).
The first question presented here differs from ‘the above
two cases only in that the First Circuit permitted peti-
tioners to intervene at the énd of the proceedings below—
after it had reached its decision—and solely for the pur-
pose of allowing Eastern and National to seek certiorari.
Basically, then; the same considerations are involved.
Those considerations are that denial of intervention (1)
infringes upon the Constitutional guarantees of due process
“of law, (2) presents a clear conflict’ among the Circuits, -
(3) makes fortuity controlling upon the right of interven-
tion, and (4) is’ subject to this Court’s remedial review
and correction under’ its general supervisory authority
over the administration of justice in Federal courts.
LJ
5 The Act puvislie intervention by interested persons in proceedings for
enforcement. of the. “provisions of the Act. (Section 1009; 72 Stat. 796,
49 U.S.C. 1489). It also gives. private persons the right to enforee certain
provisions (Section 1006(2) ).
® See Subpart I.B. below.
‘Amalgamated Meat Cutters v. NLRB, 267 F.2d 169 (1st Cir.), cert.
denied, sub nom. Geilich Tanning Co. v. Amalgamated Meat Cutters, 361
U.S. 863 (1959). Northeast Airlines v. CAB (printed in Appendix hereto »
at la), cert. denied sub nom. In re Petitions of Eastern and National » oO
Airlines, 376 U.S. 931 (1964), upon the representation: of the Board and —
the Solicitor ayn that certiorari was then untimely. .
14
A.. The ruling of the First Circuit infringes due process.
The Courts have always held that a competitor is entitled to
intervene before the Board and to obtain review of adverse °
Board orders. E.g., Seaboard & Western Air. vy. CAB,
181 F.2d 515 (D. C. Cir. 1949), cert. denied, 339:U. S. 963
(1950). And where due process applies .it does so from
the beginning to the end of the adjudicatory proceedings. .
It includes equal opportunity to invoke and to participate
in appellate judicial review. .
‘Thus the due process injury in denial of participation in
the Court of Appeals is clear at the stage when the case
.is heard before that Court. For, fhe party denied interven-
_ tion continues in a non-party status which is inconsistent
with this Court’s announced policy that orderly deter-
mination of issues “requires that they be adjudicated in
a proceeding in which all the interested parties, are before
the Court.” United States v. Louisiana, 354 U.S. 515 (1957).
It is no answer that the latter day intervenor may protect
his rights by participation in further agency proceedings |
at the conclusion of which he: might’ seek judicial eview
of an order running against him. The sotion” that an
“ex post facto” judicial hearing suffices to protect the
rights of a party is incénsistent with this Court’s ruling
“in Ashbacker v. FCC, 326 U.S. 327 (1945). ;
In the past, intervention has been denied. by. certain
Circuit Courts of Appeals in cases arising out of appeals
8 See Morgan v. United States, 298 U.S. 468 (1936); Saunders v. Shaw,
244 U.S. 317 (1917); Frank v. Mangum, 237 U.S. 309, 327 (1915); Hopt
v. Utah, 110 U.S. 574 (1884) ; cf>“Ashbacker v. FCC, 326, U.S. 327 (1945) ;
Columbia Broadcasting System v. United States, 316 U.S. 407 (1942);
Western Pacific v. Southern Pacific Co.,.284 U.S. 47 (1931).
* Price v. Johnston, 334 U.S. 266, 280 (1948); Saunders v. Shaw, 244.
U.S. 317 (1917), See also Coppedge v. United States, 369 U.S. 438, 447-448
(1962); Chessman v. Teets, 354 U.S. 156 (1957); Griffin v. Minoie, 351
U.S. 12 (1956); Cole v. ‘Arkansas, 333 U.S. 196, 201-202 (1948); Inter-
national Steel & Iron Co. v. National Surety Co., 297 U.S. 657, 665 (1936).
15 ;
_ of orders of the NLRB. This line of cases includes Amal-
gamated Meatcutters v. NLRB, 267 F.2d 169 (1st -Cir.),
cert, denied, sub nom. Geilich Tanning Co. v. Amalgamated
Meatcutters, 361 U.S. 863 (1959), the First Circuit’s lead-
ing precedent. Those cases had been justified on the basis
of the statutory provision making the NLRB the sole
agency for-abating’ unfair labor practices. See 29 U.S.C.
§160 (a) (1958). However, this Court has evidenced its
concern with those decisions in the Scofield and the Fafnir
Bearings cases previously mentioned, to review which it
has granted certiorari. The right of intervention on re-
view of decisions of the Civil Aeronautics Board in route -
proceedings is much clearer, inasmuch as a favorable de-
cision by the Board on a route award gives the successful
litigant before the agency definite and enforceable rights,
whereas the National.Labor Relations Act gives him none.
Section 1007 (a), of the Federal Aviation Act, 49 U.S.C.
§1487(a) (1958), provides in pertinent part:
“[I]n the case of a violation of section 401(a)** of this
Act, any party in interest. may apply to the district
court of the United States, for any district wherein
such person carries on his business or wherein the
violation occurred, for the enforcement of such provi-
sion of this Act ... and such court shall have jurisdic-
tion to enforce obedience thereto. . . .” (Footnote
added.)
Thus, ‘Petitioners here would, upon the successful de-
~ fense of the Board’s decisions in the proceedings at issue;
have had a right to go into’ a Federal district court to _
enjoin operations by Northeast over the route at igsue..
The rights Petitioners seek to protect by intervention in
“a review proceeding on the side of the Board for the pur-
“10 Section 401 (a) makes it unlawful for any person to engage in air
_ transportation without a certificate of public convenience and necessity ©
‘authorizing such transportation. See 49 U.S.C. §1371 (a) (1958).
y
16
3
” pose of ite. the Board’s wee are real, vital as
- %.
_. Important rights of—the- “Petitionors— ~thomselves-~Those- frag
"rights, as shown, are far stronger than the rights that
may be asserted by the successful litigant in an unfair
labor practice case before the NLRB.
B. Conflicts Between the Courts of Appeals Are Mani.
~ fest, There is a conflict of law among the Circuit Courts
~- on the question of intervention in appeals of orders of
the Civil Acronauties Board. So far.as we are aware, ‘no |
_ competing carrier, having a direct and substantial .inter-
est in the preservation of a CAB decision in a route case ae
has been refused leave, except by the First -Circuit here,
to intervene and protect that decision upon appeal. On
the contrary, intervention has uniformly. been allowed
-Witheut discussion or dissent. Indeed, we are aware of
no case where the matter has ever been litigated. E.g.,
Nebraska Dep't of Aeronautics v. CAB, 298 F.2d 286 (8th
Cir. 1962); Airport Comm'n of Forsyth County v. CAB,
296 F.2d 95 (4th-Cir.1961); Delta Air Lines, Inc. v. CAB,
275 F.2d 632 (D.C. Cir. 1959), cert. denied, sub. nom., Trans
World Airlines, Inc. v. Delta Air Lines, Inc., 362 U.S. 969
papel Eastern Air Lines, Inc. v. r. CAB, 271 F.2d 752 (2d ;
Cir. 1959), cert. denied, 362 U. S. 970 (1960); Delta Air
Lines v. CAB, 247 F.2d 327 (sth Cir.. -1957) ; United Air
Lines, Inc. v. CAB, 198 F.2d 100 (7th Cir. 1952) ; Western
Airlines, Inc. ¥. CAB, 196 F.2d 933 (9th Cir.), cert. denied
344 U.S. 875 (1952); Southwest Airwar ys Co. v. CAB, 196
F.2d 937. (9th Cir. 1952); State Airlines, Inc. v. CAB,.
174 F.2d 510 (D. C. Cir. 1949), rev'd on other grounds, 338
; U.S. 572 (1950) ; American Airlines, Inc. y. CAB, 178 F.2d
903 tava Cir. sen ole
1 se enough the Seventh Circuit, where the Scofield « case,
supra, arose out of that cireuit’s denial of intervention in -review of an
Sy ee —
H
17
©. Intervention 1s Controlled By Fortuity im the Ab-
sence of an Authoritative Policy. The conflict between the
oirenits— is particularly significant in that $1006 of the
Federal Aviation Act, 49 U.S.C. §1486, provides that re- |
view may be taken either to United States Court. of Ap-
peals for the District of Columbia Circuit or to the Court
of Appeals for the Circuit wherein the petitioner resides
or has his principal place of business. Thus, if ‘Northeast
had elected to seek review from the District of Columbia
Circuit (which receives the great bulk of appeals from:
the CAB), Eastern and National would have been granted
| intervention automatically. However, Northeast, by choos-°
ing the First Circuit, as it had a right to do under the
statute, was able to bar its competitors, your Petitioners,
from participating’ in the judicial review proceedings.
Ironically enough, Northeast has been allowed to intervene:
in support of CAB orders beneficial to it without question
of its right to do so in two recent appeals by your Peti-
tioners challenging those orders. National ‘Airlines, Inc.
v. CAB, 321 F.2d 380 (D.C. Cir. 1963) ; National Airlines,
Inc. v. CAB, 306 F.2d 753 (D.C. Cir. 1962). However, when »
‘astern and National received a decision beneficial to them, -
‘ the same adverse: ‘parties (Eastern and National) in the
proceedings just cited were deprived of intervention to
protect their interests when Northeast elected to seek re--
~~ view in the First Circuit. Intervention was not granted
until it was too late to affect decision.
D. An Appropriate i Issue Is Presented.
The above conflict of rules in different circuits on a matter
involving rights of substance and a requires this
Court’s review y and harmonization.
NLRB proceeding, has granted. intervention in appeals of CAB cases, as
indeed, appears to have been its former practice with regard to NLRB
. appeals.
<<
18
In enacting the statutory procedures for review: r-of CAB
~ action, Congress must have envisioned orderly continua-
tion of the Board proceedings, where all parties have full
status as litigants. Yet, if the First Circuit’s policy on
intervention is not reviewed, sheer fortuity will control
“the rights of the parties before the eas to participate _
_in court review proceedings. |
The District Courts are given statutory powers of re-
view over numerous federal agency decisions.'* Rule 24
of the Federal Rules Procedure provides for intervention
of right when a statute confers such right or when repre-
sentation by existing parties may be inadequate and: the
applicant may be bound by the judgment. It grants per-
missive intervention when the applicant’s claim or defense
has a question of law or fact in common with the pending
action. Under the standards of Rule 24 applicable to re-
‘view proceedings in the District Courts, the reasoning of
Textile Workers Union of America v. Allendale Co., 226 -
- F.2d 765 (D.C. Cir. 1955), cert. denied, sub nom. Allendale
Co. v. Mitchell, 351 U.S. 909 (1956) that intervention must.
be granted to the prevailing party before a federal agency
if the agency ruling is judicially challenged, seems un-~
exceptionable. To the same effect, see Atlantic Ref. .Co.
v. Standard Oil Co., 304 F.2d 387 (D.C. Cir. 1962). There
is no question that Eastern. and National as prevailing
parties in the proceeding before the agency would be
bound by the decision of the Court of Appeals. As pointed |
out above, they have a right under §1007 of the Federal
12 In addition to numerous specific statutes, district court jurisdiction is :
, also available under §10(b) of the Administrative Procedure Act, 5 U.S.C.
1009 '(b). See Pan American World Airways v. CAB, 207 F.Supp. 152
(D.D.C. 1962), rer’d on other grounds, sub nom. Alaska Airline¢ v. Pan
American World Airways, 321 F.2d 394 (D.C. Cir. 1963), where « *istriet
court judge enjoined the carrying out of an order of the aie Aeronautics
Board — a route case for hearing.
19
Aviation Act to obtain enforcement of the Board’s order
by Federal district courts. The Court’s order invalidating
that. decision is, however, a bar to any action by Eastern
or National predicated upon that’ statutory provision and
thus Eastern’s and National’s right of action has been
taken away. In Wolpe v. Poretsky, 144 F.2d 505 (D.C.
-Cir.), cert. denged, 323 U.S, 177 (1944), the Court of Ap-.
peals held that adjoining land owners’ were entitled to
intervene under Rule 24 (a) ina proceeding to-enjoin the
carrying into effect of & disputed zoning order, the Court
. holding at 507:
“It seems clear that a judgment which declares a zoning
order to be void would bind adjoining property owners
to the extent of taking away their statutory right to
an independent action based on the order.” ,
To the same extent, Eastern ‘and National are bound by
the judgment of the Court of Appeals taking away their —
‘statutory right to enjoin Northeast’s. operations, which
right had been granted by the Board’s decisional order.
It. is indeed anomalous that if the Board’s order had
. been sustained and EKastern or National had sought in-
junctive relief under §1007 in the District Court of Mas-
sachusetts, Northeast would very clearly have been in a
position. to defend. itself, but upon Northeast’s seeking
review of that order in-the First Circuit, Eastern and
National were denied intervention. | |
There is no difference in fact or logie between interven-
tion on the issues presented by review proceedings in the.
Court of. Appeals, and cases commenced in‘ the district
courts. ,
The prevailing party htue the Federal Communica- “ei
tions Commission, the Atomic Energy Commission, the.
Maritime Commission and the Department of Agriculture
~ 20
enjoys a statutory right of. intervention upon review of
those agencies. 5 U.S.C. 1038(a). Such is also the case
‘under the review statute applicable to the ICC, 28 U.S.C.
- 2323. Hudson Transit Lines v. United States, 82 F.Supp.
158 (S.D.N.Y. 1948), afd, 338 U.S. 802 (1949). ‘That.
statute would appear to be simply declaratory of the long-
- accepted right -of intervention in judicial ‘review proceed-
‘ings of CAB orders as it has been found by all circuits
except the First Circuit. |
It is paradoxical that the prevailing party before
the agency actually loses in the First Cireuit by virtue |
of his success below. If he had lost before the CAB, he
_ unquestionably could have aright’ of appeal under $1006
of the Federal Aviation Act. See also §10 (a) of the Ad-
ministrative Procedure Act, 5 U.S.C. 1009 (a). But having
prevailed before the CAB, under the First Circuit’s rea-’.
~ soning he may not participate as a party either in the Court
of Appeals nor before this Court nor may he seek or op-
pose this Court’s grant of review."
If the ruling and policy of the First Circuit remain
unreviewed, prevailing parties before the Civil Aero-
nautics Board (and before other agenzies) can be denied
participation in judicial review proceedings although they.
would enjoy that participation (1) if they had lost and . .
not prevailed before the agency; (2) if the review petition
had been filed instead in the District of Columbia Circuit;
(3) if the review. proceedings had arisen from agency. |
orders reviewable under 5 U:S.C. 1038 or 28 U.S.C. 2323;
or, (4) if the proceedings had been commenced in the Dis- a
trict Court and thus been subject to Rule 24.
e Unies, of course, the Court of Appeals, as a matter of grace, confers
* the status of intervenor upon him after the decision for the pape of
permitting him to seek review, as was — here.
———e
21
Such captious and arbitrary results call for « exercise
of this Court’s “general power to supervise the adminis-
tration of justice in the federal courts.” Western Pac. R.
Corp. v. Western Pac. R. Co., 344 U.S. 247, 260 (1953).
_ This Court is accordingly requested to exercise its super-
visory powers to bring the decision and policy of the
First Circuit within the standards*governing intervention
‘in judicial review - proceedings. we in the other
“8 Courts of ne.
° Il. °
The Interpretation Placed On Section 7(d) Of The
Administrative Procedure Act By The First Circuit Is
Contrary To The Terms Of That Section, Conflicts
With Decisions Of This Court And Of Other Courts —
Of Appeals, And With Long-Standing Practices Of Ad-
ministrative Agencies And Would Render Many Admin-
istrative Proceedings Impossible Of Completion.
A. ‘Section. 7(d) Was Inter preted Contrary to Law
and Governing Precedent.
It is shown below (subpart II, B) that the Court of
‘Appeals failed to. apply, or even -consider, the rule of
‘prejudicial error and that the decision would preclude
any effective reliance upon official notice as part of the
decisional process (subpart II, C).. Here we are concerned.
with the court’s interpretation of §7(d) contrary to the
_ prevailing interpretation of that ‘statute by the courts
and the agencies. -
Section 7(d) provides that wher agéncy decision rests |
_ on official notice of a ‘material fact not appearing in the
evidence of record, any party shall on timely request: be
_ afforded an opportunity. to show the contrary. -
22 } 7 {
In its decisions, thé Board looked at.certain data such
. as Northeast’s reported income statements and the reported ©
statistics of traffic moving over the route in issue.'*. Those _
_ data were derived from Northeast’s. monthly, quarterly
‘ and/or annual reports filed with the Board by that carrier
and certified by it as correct under the penalties of 18 U.S.C. _
- 1001. They were also derived from traffic statistics filed .
_. with ‘the Board by the carriers (including Northeast) and
‘compiled in official CAB surveys of airline traffic. In addi-
- ion, the Board made reference to a Trust Instrument which
had beenexecuted by Northeast, among others, and filed™
_ withthe Board. The use of those materials was perfectly
_ proper under the leading case of United States Vv. Pierce Auto
Frieght Lines, 327 U.S. 515, 529-30 (1946); Market Street
“Ry. v. Railroad Commission, 324 U:S., 548, 559-62 (1945) ;
Wisconsin v. FPC, 201 F.2d 183, 186- 87 (D.C. Cir. 1952),
cert. denied, 345 U.S. 934 (1953) ; Great Lakes -Airlines v.
CAB, 291 F.2d 354, 369 (9th Cir. 1961), and the past prac-
%< _ tice of the CAB and othe?-agencies.
Northeast sought reconsideration asserting rights under
§7(d). But at no point did it attempt, to show the contrary
of the facts to which the Board had looked. sInstead it chal-
lenged the inferences drawn by the Board and @laimed that.,
‘itshould be allowed in rebuttal and explanation to produce
me _ further, additional’ and more ‘recent facts together with
expert ‘testimony and forecasts. Many of the additional —
. facts which Northeast desired the Board to notice were set
14 Tt should be noted again, that the Board did so for two reasons:
(1) in order to verify the conclusion reached on the evidence of record,
and (2) in order to determine whether this proceeding should be reopened.
The first reason ‘is squarely in accord with Market Street Ry. v. Railroad
Commission, 324 US. 548, 559-562 (1945). And the decision not to reopen
is in aceord with United States v. Pierce Auto Freight , 327 U.S. 515,
_ 594-535 —
ie |
forth in its Petition for Reconsideration (of the ‘Board’s —
December 1, 1964 decision) as was the gist of: what its
experts night say. In its opinion on reconsideration, the’
Board not only considered Northeast’s arguments, -but it
assumed that the additional facts advanced and the testi-
mony proffered would be as Northeast claimed. .It-never- —
theless found it would reach the same ultimate conclusion.
The action of the Court gf Appeals in holding that-North-.
east must have yet a further opportunity to rebut and
explain ig not in accord with §7(d). .Northeast had its
“opportunity and it took advantage of it on reconsideration
when it presented all its arguments and additional facts
to the Board. Section 7(d) requires no more. American’ '
“Trucking Association v. Frisco Transportation Co., 398 US.
133, 144 (1958).
Nor is the action of the Court of Appeals consistent with
- the decisions of this:Court, and of other Courts of Appeals.
In ordering the Board to permit Northeast to rebut infer-
ences by. means of expert testimiony, forecasts and a gen-
eral updating of the record, the First Circuit has held
or contrary to such decisions.. Thus, the Board is not
-- bound by the testimony of an expért. of a private party
_ even if that testimony is the only expert testimony in the
' record, It may and should apply its-own expertise to the
facts of record. Market Street Ry. v. Railroad Com-—
mission, supra; Radio Officers Union v. NLRB, 347 US.
17, 48, 49 (1954); Central Illinois PSC v. FPC, 338 F.2d
> 682, 684 (7th Cir. 1964) ; Spitzer v. Commissioner, 153 F.2d
967, 972 (8th Cir. 1946). See also Chicago, South Shore &
South Bend R, v. on — 221 F. sai 106 cm D. Ind.
1963). ee
Vibes the updating of the record which the First
Cireuit required is beyond the province of a reviewing
24
Court to order. United States v. Pierce Auto Freight Lines,
supra, 327 U.S. at 534-535.
“B. The Statutory. and Decisional Rule of Prejudicial
Error Was Ignored.
In both of its Orders upon remand from the First Circuit
(E-21550 and E- 21872), the Board expressly stated that
it had reached its decision (not to renew Northeast’s au-
‘thority) on the basis of the evidentiary. record, and had
looked at official carrier reports (to the Board) of traffic
and profit and loss only to verify the correctness of its
conclusion and to determine whether events happening
after the close of the record required the exercise of the
Board’s discretion to reopen the proceeding. In its opinion,
the Court of Appeals did not conclude otherwise. It con-
cluded only that the Board “chose to look at some subse-
quent matters,” and that “having elected to look at such
‘matters it could not pick and choose, at least to the extent
of denying an objecting. party the rights guaranteed, but
by no means created, by, §7(d) ‘to rebut not only those
matters it looked to, but also the inferences which were
sought to be drawn therefrom:” (Appendix 195a).
Section 7(d) does not, by its terms, prohibit the use of
official notice. Nor, by its terms, does it require that the
use of extra-record facts be followed, in every case, by
an opportunity for a party to show the contrary. It-states
only that when agency decision rests on matters of official
notice, such an opportunity shall be afforded.
The deciSion of the Board on the major issue of the
proceeding—1.e., renewal or nonrenewal of Northeast—
did not rest on any matters other than those in the evi-
dentiary record. The Board .itself said so in both its
opinions. And the Court of Appeals did not conclude to
. the contrary. It could not have done so. For, in declining
y ‘
)
to pass “on ‘the merits” (Appendix 195a) and in basing
its decision solely on a determination that the Board: had
“opened the door to new data” and. must therefore take
a full look, it obviously could not have determined whether
the agency decision rested..on official notice of faéts ‘or
whether it rested, as the Board said it did, on the facts
of record. But before §7(d) can come into play, that ques-
tion has to be determined. The plain words of the section.
permit no other interpretation.
In failing to make the above determination—a deter-
mination which it could hardly make short of accusing
the Board of misrepresentation—the Court of Appeals
ignored not only the words of §7(d) but also the require-—
ment of §10(e) that due account be given in judicial review
proceedings to the rule of prejudicial error. For, if the
decision did not rest on matters of official notice, as the
Board said it did not, but was grounded on substantial
evidence of record, the use of officially-noticed facts did not
prejudice Northeast. |
The opinions of this Court and of lower tribunals except
the First Circuit have made it abundantly clear that the
use of official notice is not reversible error where the
matters noticed are delineated in the opinion and where .
substantial prejudice does not result from such use. United
States v. Pierce Auto Freight Lines, 327 U.S. 515, 529-530
(1946); Market Street Railway Co. v. Railroad Commis-
sign, 324 U.S. 548, 559-562 (1945) ; Opp Cotton Mills v.
Administrator, 312 U.S. 126, 154, 155 (1941). In Pierce
Auto, supra, this Court said ‘that it—
“... has not undertaken to make a fetish of sticking
squarely within the four corners of the specific record
in administrative proceedings or of pinning down.
such agencies, with reference to.fact determinations,
even more rigidly than the courts in | strictly judicial
26
proceedings. On the contrary, in the one case as in
the other, the mere fact.that the determining body
_ has looked beyond the record proper does not in-
‘- validate its action unless substantial prejudice is
shown to result.” (327 U.S. at 530).
The rule that - substantial prejudice must be ‘shown
is incorporated in §10(e) of the Administrative Pro-
~ cedure Act.® And it has been followed by other Courts of
Appeals since the passage of the Act. State of Wisconson
v. FPC, 201 F.2d 183, 186-87 (D.C. Cir. 1952), cert. denied,
345 U.S. 934 (1953); NLRB v. Johnson, 310 F.2d 550, 552
(6th Cir. 1962) ; Great Lakes Airlines v. CAB, 291 F.2d 354,
369 (9th Cir. 1961). The first circuit, however, has ignored
the rule and has held that whenever an agency uses any
- matter of official notice. it has committed legal error and
must reopen the proceeding.
_C. The Effect of the Decision Would Be to Durnge
Long-Standing Agency Procedures.
The use .of official notice is longstanding in administra-
tive practice. The Civil -Aeronautics Board constantly
refers to matters in reports filed with it by carriers to
assist in decision of cases before it, and as a check upon its
decisions. Washington-Baltimore Adequacy of Service In-
_ vestigation, 30 C.A.B.° 1255 (1960), affirmed, National’ Air
Lines v. CAB, 800 F.2d 711 (D.C. Cir. 1962); Dallas to the
West Service Case, 29 C.A.B. 23, 30 (1959), affirmed, Braniff .
Airways v. CAB, 277 F.2d 334 (D.C. Cir. 1960) ; Reopened
' Delta-C € S Mail Rate Case, 28 CAB 820 (1959) ; Southwest-
Northeast Service Case, 23 C.A.B. 42, 45 (1956); Spearfish
15 See also Attorney General’s Manual on the Administrative Procedure
Act, p. 110.. “. . . errors which have no substantial bearing on the rights
of the parties ‘will be disregarded.” Significantly, the Manual relies on
Market Street a supra.
ewe Freee ane
:
Suspension Case, 18 C.A.B. 657 (1954) ; Latin American Air |
Freight Case, 16 C.A.B. 107 (1952). en
Other agencies also rely frequently on official notice.
E.g., In re Sears Roebuck & Co., 15 P. & F. Ad. L. 2d 748
(FTC 1964) ; In re Bakers of Washington, Inc., 15 P. & F.
Ad. L. 2d 399 (FTC 1964) ; In re Cabinet, Mfg. Corp., 144
'N.L.R.B. 82, 14 P. & F.:Ad. L. 2d 391 (1963) ; El Paso Natu-
_ ral Gas Co., 23 F.P.C. 610 (1960) ; In re Plant City Welding
& Tank Co.,9 P. & F. Ad. L. 2d 264 (NLRB 1959) ; N.Y.
- Central R. Co. Abandonment, P. & F. Ad. L. 2d 1021 (ICC
_ 1960); In re Loading an 6 P. & F. Ad.
. L, 2d 81 (ICC 1956).
_ Agencies such as the Civil iovemiiiiin teork the Fed-
eral Power Commission and the Interstate Commerce
Commission, all: of which are charged with the grant or
denial of licenses, ‘have before them cases which,are com-
plex and of long duration. Inevitably there are. lengthy
periods between the close of the record at the hearing and
the date of agency decision. Although the law requires
that agency decision be based upon substantial evidence
of record, it cannot be construed to prohibit an agency
from looking to the reports filed with it by the companies
which it regulates in order to verify its conclusions in
light of recent data or to determine whether a reopened
record may. be desirable because of such data.
Yet such is the effect of the decision of the First Circuit.
For, on the one hand, that decision declares. that concen-
tration solely on the record without checking more recent |
data by ‘official notice is subject to “criticism, legal or
_ otherwise” (Appendix 195a) and, on the other, it holds
that the evidentiary record should be: reopened, explained
and updated whenever such data are noticed. The result
in lengthy licensing proceedings is obvious; the proceed-
98
ings would become interminable: The agency must use
official notice to escape criticism. But, if it does, any per-
son aggrieved will seek to reopen, explain and’ update.
Thereafter, due to the lag in the decisional process, official
_notice..must again be taken to avoid criticism. And; on.
application, another reopened, explanatory and updated ©
proceeding must be held. And so on. We do not believe
that the administrative process, already. under attack for
the length of its proceedings, can function properly under
the decision of the First Circuit. We respectfully submit
that this Court should review that decision.
CONCLUSION
The denial of intervention to petitioners herein pre- :
cludéd them from an opportunity to be heard. . That denial
is contrary to decisions of this Court, and in conflict with
decisions of the Circuits. This Court should exercise its
‘power of review and supervision to put this —
question of Federal law beyond dispute.
The First Circuit’s .interpretation of §7(d) of the Ad-
ministrative Procedure Act is contrary to decisions of
this Court and also in conflict with decisions of other
Circuits, and with the prevailing practices of the agencies.
The correct application of the law in respect to official |
notice is of widespread importance to the administrative
process. This Court is respectfully requested to review
the action of the First Circuit and thereby to settle the
law which all agencies must follow in respect to official
notice.
Petitioners suggest that this Court upon review as re-
quested herein may find it desirable to review and affirm
the decisions of the Civil Aeronautics Board and thus
. terminate a proceeding already more than four years old
*
?
sabe prt: sikh 5 ADA ABE ali PAE te Rae
a
29"
and involving almost one billion revenue dollars to date,
and Petitioners respectfully ask the Court so to do. _
Respectfully submitted,
JoHn W. Cross
E. SmytHe GaMBRELL
Attorneys for Petitioners
Of Counsel
Haroitp L. Russeun
James H. Bratton, Jk.
GamBRELL, Hartan, Russett & Move
Wiuum A. NELson |
Anprew T. A. MacDonap
Cross Murpoy & Smiru
“May 19, 1965
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.