# Petition for Writ of Certiorari — Railway Express Agency, Inc. v. Civil Aeronautics Board > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0822%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1965 - **Citation:** 382 U.S. 879 ## Text —esiok: ARY. > eae } ie me aI PRE ee CG QuURT, ue ‘S ce ,v aa JOHN F. DAVIS, cuERK 7 In Tue * bupeeate Court of the ited States : _ Ocrosse Tena, 1964. RAILWAY ; EXPRESS AGENCY; INC, EN AERC ie Petitioner, v. | cin AERONAUTICS BOARD, AIR FREIGHT FOR- - WARDERS ASSOCIATION, AMERICAN AIRLINES,’ INC, UNITED AIRLINES, INC, TRANSWORLD AIR. _ LINES, IN a a ee a Respondents. : | PETITION FOR A WRIT OF CERTIORARI TO THE ; _ UNITED STATES COURT OF ‘APP FOR - '. THE DISTRICT OF COLUMBIA CIRCUIT. __ WILLiaM Q. KEENAN, | _ New York, N. Y. 10017 - Joan E. PowEL, ' Brawner Building, Washington, D. C. 20006 Counsel for Petitioner. ’ Droury,. ‘Lynam & PowsL, . Brawner Building, | ees: Weskingten, I D. C. 20006 Wuuiuam J. Tayior, — 219 East 42nd Street, New York, N. Y. 10017 Of Counsel. Pandick Press, Inc., 22 Thames St., New York, N. Y. 10006, U. S. A. 219 East 42nd Street, Ce a AiRaaipap eI Bh iain A wind tinal - INDEX. Crration To Oprstons BeLow vets : Y...--- JURISDICTION ae . . ‘QuEsTIONS PRESENTED Statutes Invowven | STATEMENT REASONS FOR tineiinss THE Wuir a 1. The decision forecloses effective. collabora- = tion in the service of the public between the air and surface transportation industries...... 2. The decisién forecloses joint agency regula- , tion of through service Faas by air and surface carriers —— through service has been achieved. at the expense” of due — ConcLusion Appanpix A: Statatory F Provisions Cited and Quoted... wo Aprenpix B: — ; , Copy of tle Opinion Below..... *. -8--The ©. A. B. rg feskelosiars of air-surface 14, 17 VS Eisler v, Clark, 77 EF. Supp. 610 (D: ©., 1948)... 18 : National Air Freight Forwarding Corporation v. | ‘Civil Aeronautics Board, 197 F. 2d 384 (D. Cc. Cir., 1952) - on aa : Railway, Express, Airfreight Forwarder Appli- cation, 27 C. A. B. 500 (1958)__...... —-~8,11 Riss ¢ Co. v. United States, 341 U.S. 907 (1951). 18 ' Substituted Service—Piggyback, 322 L 0. C. 301 | _. (1964) - : 17 . Wong Yang Sung v. MeGrath, 339 U. 8. suena 18 _ Srarorgs: | 3 ; 7 nea re Hepburn Act of 1906, | c. 3591, 34 Stat. 584 Sec. 1 "(49 U.-S.*€. See. 1(3)(a)) | _-— _ Act of June 25, 1948, c. 646,.62 Stat. 928 (28 | U. S. C. Sec. 1254) ane ee, a Federal Aviation Act of 1958, 72. Stat, a ae ' Sec. 1°(49 U.S. C. Sec. 1301)..... Ls 2. SC Sec. 401 (49 U. 8. 0. See | Coe 7, 14,20 Crrations. | CasEs: is Tae : * PAGE Air Freight: Forwarder Case ae) lier Oc ANB. 182 (1949).......:......, 8 Airfretght Forwarder Investigation, 23°C. A ‘B. 376 (1956) -: : ee Pe Airfreight Forwarder Investigation, 24 «, rv B. , Mees atl 755 (1957)... Se Geet te American “President Lines, Ltd., et al., Petition he i +o A. B. 799 (1947)..: a? Ff a Continental Southern Links v. . Civil Aaicsianitios : ' Ba., 197 F. 24. 897 (D.C. €ir., 1952) 7 Cis « Se FL SPP Rae SORT RO A A hat : . ’ ‘ - ‘ — : pare j : - PAGE ¢ Sec. 408 (49 U.. S. O. 1378)... | in: oe Sec. 412 (49 U. S. C.,Sec. 1582). eesewneenee 2y 8, 4422 ’ See, 1002 (49:U.'S. C. See. |" | ns o | a éc.1003 (49 U. 8. C. See. 1483)... 2, 3,10, 12, gt | "16,19, 95 be) "00,1006 (49 U. 8. C. $00, 1486) nanan 9 MiscentaNgous:. A . “An Efficient Transportation System”, 108 Cong. | Record 5509,. House Doe. No. 384........ oa 3 2 ¢ ‘ . é ° ° é r . . > . a 4 4 : : . . . ow | ‘IN THE - _Bupryne Court ofthe Huited Sits Ocrozss vias 1964, * . BOOS Nictictssiinaes qeceee : ees Exess Acency, Inc. ° Sos Petitioner,, ae | }* cabin ‘aebiainaael Boaro, Amr — ‘Forwanpers Asso- | _ ciation, AMERIcaN ArRLinEs, INc., ‘Us > Arana, Inc., _ / : - ‘TRANSWORLD Aanuixzs, _ 7 - | 3 . Respondents. ' - PETITION F OR A WRIT OF CERTIORARI TO THE ~ ¢ _-- UNITED STATES COURT OF APPEALS FOR | _ THE DISTRICT OF COLUMBIA CIRCUIT. Salles Express Agency, Inc. Petitioner, prays thata "A writ. of certiorari issue to. review the judgment of the ‘ te : United States Court of Appeals for the District of Colum- . bia in the above-entitled case'‘on March 18, 1965, reconsid- 6 eration of which v was denied by order dated April 26, 1965. ~ Citation to Opinions Below. iS foe i &* | The Orders of the Civil Aesunialinn Board No. BE-20332 ' and No. E-21188 are unreported and are. printed in the _ Joint Appendix, pp. 174 and 247, nine copies of which have "Ser c7 %, ae) « 2 ~~ y . ‘ . . x i os been filed with this petition. The opinion of the Circuit — Court of Appeals, infra, p. 27, is saiuhambe in 345 F. 2d at page 445. . e , Jurisdiction. \ - The jadermet of the Circuit Court of ‘Appeals was entered on March 18, 1965. Rehearing was .denied on April 26, 1965. The jurisdiction of this Court is invoked "under 49 U. S. C. 1486(f) and 28'U.,8. C. 1254(1). Questions “Presented. ~ 1. Does the-law forbid a surface-carrier unlicensed by. _ the Civil Aeronautics Board and an air carrier to issue a — joint bill of lading, to provide a through transportation service, and to : assess charges: for it according to”a single factor rate per - hundred pounds published in a joint tariff ” filed with the C. A. B. and the Interstate Commerce Com- > ‘mission? | 2. If a 0. A. B. license ‘is required, how can a surface carrier ever enter into joint rates and through service with an air c&rrier, in the light of the Board’s reluctance to. aa issue air carriage licenses to gurface carriers? 8 3. Caii C. A: B. licensing of a surface.carrier’s engage- . ment in such a joint enterprise with an air carrier be recon- - ciled with the Congressional mandate'in section 1003 of the Federal Aviation Act of 1958, 49 U. S. C. 1483, that ai | - surface joint rates and through service be regulated ge a. joint I. C. C.-C. A. B. Board! ; 4. Whena disputed i issue of fact i arises in the course of . | “review. by the Civil Aeronautics Board of intercarrier _ contracts ‘under section 412 of the Federal Aviation Act of de ie are Se S ace : 2 ah Ses ; ae 3 3 1958, 49 U.S. C. 1382, does due process entitle the respond- | _ ent carriers toa hearing -before an order issues Cegeree- 7 ing their contracts? - Statutes Involved. | ‘The statutory provisions involved are sections 412, 1003, 101(3), 401(a), and 1002(g), (h), and (i) of the. . ' Federal: Aviation Act of 1958, 49 U. S. C. 1382, 1483, 1301(3), 1371(a), and 1482(g), (hb), and (i). They. are printed in Appendix A, infra, pp. 20-26. Statement. Petitioner (hereinafter sometimes called: REA) is a ‘common carrier of property: ‘by express in interstate com- merce under section 1(3)(a) of the Interstate Commerce Act, 49 U. 8. C. -1(3)(a). Between 1960 and 1963 REA entered into contracts with several airlines who engage in the common carriage of property by air under section 401(a) of the Federal Aviation Aet of 1958 (hereinafter sometimes called the Aviation Act), 49 Uy S. C. 1371(a). These contracts provided for the. establishment of a - through, air-surface cargo transportation service via REA from the shipper’ s dock to the; point of air-surface inter- change, via airline to the terminal point of air-surface inter- change, and via REA from ‘said second interchange point - to the receiver’s dock. (JA 106). The contract of carriage (bill of lading) was to be a document rendering REA and the air ‘carriers jointly liable for performance al the. . promises contained: in ‘it, viz.: ‘*1. The provisions of this saaiiad shall i inure to the benefit of and be binding upon the consignor, the consignee and all carriers — this — tat an oe Seg nlite ao Ten Oe ANS we OE under investigation included the following elements: . 4 and shall apply to any récosxignment or return ‘thereof’? (JA. 75). : -The rate to be charged per hundred’ pounds was to be a | ‘ single-factor rate. This rate was to be set out in a tariff jointly subscribed by REA and the airlines, and filed both with the C. A. B. and the Interstate Commerce Commission. (JA 106). ; REA and the airlines filed copies of these sensei * with the C. A. B. in accordance with the requirements of section 412 of the Aviation Act, 49 U. S. C. 1382 for dis- closure of intercarrier agreements affecting air transpor- tation and on April 15, 1963 the Board by Order E-19497 (JA 171) opened an investigation to determine whether these agreements should be disapproved on the ground that — ‘they were “‘in violation of’’ the Aviation Act. At the.Board’s invitation REA filed written, ‘unverified representations supporting the legality of the agreements and certain air carriers* filed similar statements opposing . their legality. On January 2, 1964 the Board entered. : Order. E-20332 (JA 174) finding the agreements illegal _. and disapproving them. The transportation activities called for by the contracts . (a) REA and the airlines were to provide a ‘through transportation service by ‘surface and air via _: specific points of interchange named i in the. tariff’ 1The Air Freight Forwarders Association, American Airlines, Ine., United Airlines, Inc. and Transworld Airlines; Inc. Obvi- ovrly, none of these airlines and no members of the Air Freight — ers Association were parties to the agreements in question. The seven airline contracting parties are listed at JA 190. 1«6@ © © (T)he service that is actually offered to the shipper is a complete transportation service.’’ “(C..A. B. in Order — E-20332, JA 182). An example of an REA-airline through ser- ‘vice joint tariff naming — routes and points of interchange is.supplied at JA 106. "gee aes (b) Issuance of a pill of lading making REA and | all other carriers of the shipment responsible for the : transportation movement.” (c) Assessment of transportation charges accord- | ing to a single-factor rate covering the entire trans- portation movement.’ | _ (d), Publication of the applicable single-factor rates | - in a tariff jointly subscribed by REA and the air car- riers, the tariff to be filed both with theI. C. C. and the C. A. Bt bike halen (e) Division of the through service charges col- lected among the carriers, participating’ in the haul according to a formula set. out in the contracts.® 2 The first_ paragraph of the uniform express receipt issued to the shipper as a bill’ of lading states, ‘‘The provisions of this receipt shail inure to’ the benefit of and be binding upon ® ® ® all. earriers handling this shipment * * *.’’ (JA 76). : 8 The contracts provided that ‘‘the parties shall cause to be filed * * * tariffs containing reasonable joint rates * * * covering the through service provided herein.* * *.’’ (e.g. JA 34-35). & typical tariff which the ‘parties sought to file under.one of the agreements set out, for example, a single rate of 71¢ per cwt. for - the through movement from Allendale, N. J. to Alderpoint, Cali- _ fornia via route ‘‘B’’ (JA 95), indicating air-surface interchanges at New York and San Francisco (JA 106). | 3 3 _*A typical contract says, ‘‘The parties shall cause to be filed -with-the-Civit Aeronautics Board and the Interstate Commerce Commission a tariff or tariffs containing reasonable joint rates - * *#»? (JA 34). The Board.found the agreements to ‘‘provide- fér the filing with the Board® and with the Interstate Commerce Commission, at the cost of REA, of appropriate tariffs covering the through services.’” (JA 108, Order E-19497, instituting the investigation). A typical ‘such tariff recites that it is ‘‘published and:-filed by L. R. Burke, Agent, for and on behalf of the following participating air and surface carriers, under the authority of Powers of Attorney filed with the Civil Aeronautics Board and .. the Interstate Commerce Commission: * ® * Eastern Airlines, Inc., | Railway Express Agency, Incorporated, The Flying Tiger Line, Inc., The Slick Corporation * * *.’’ (JA 69). : 5'The Board’s finding was, ‘‘As compensation for providing the air transportation, the direct air carriers are to receive specified divisions of the joint‘rates in the form of a rate per 100 pounds 6 The Board had several reasons for disapproving these . REA-airline transportation activities. The. Court of. Appeals below, however, found one to be determinative and the merits of this certiorari petition must stem from this issue. The Board found these facts to show REA as ' engaged in indirect air transportation such as is described in section 101(3) of the Aviation Act, 49 U. S. C, 1301(3) and prohibited in section 401(a), 49 U. S. C. 1871(a), unless licensed. REA lacked:.the Tequisite license. The Court - of Appeals, agreed, saying: .'Tn this case the Board found, upon substantial evidence, most of which was submitted by REA at the Board’s invitation, that REA’s operations under ‘the proposed agreements would constitute indirect air carriage. Since REA is not authorized to carry on such operations, approval of the agreements was properly withheld.’ (Appendix B, imfra, p. 32; 345 F. 2d at. 448-449). ; To explain the resulting dilemma for REA and many . other surface carriers it ‘is necessary only to recite the ~ history of REA’s application to the-Board for a license as indirect air carrier. pate with the direct air sabres @ a senthiy or other agreed basis.’’-(JA 108, Order E-19497, footnote omitted). 6 “In Order E-19497 the Board indicated its concern as to whether REA’s operations under the agreements ‘involve the per- “formance of indirect: air transportation in. addition to surface _ express transportation. If,in fact the agreements contemplate . the performance of indirect air transportation by REA, then. the agreements would be in violation of the Act because REA’ $ present authority to engage in air transportation would not. extend to the operations embraced by these agreements.’’ (JA 178). ‘‘ Accord- ingly, on the basis of the facts before us, we conclude that the agreements eontemplate the holding out by REA of air transporta- tion services which that carrier is not —— to perform.’’ A 186, footnote omitted ). 7 | \gption 408 of the Aviation Act, 49 U..S. C. 1378, pro- hibits any common carrier from purchasing the ‘properties of any air carrier without Board approval, and whenever the vendee is a surface carfier ‘‘the Board shall not, enter such an order of approval unless it finds that the trans- — , action proposed will promote the public interest by ena- bling such carrier other than an air carrier to use aircraft to public:advantage in its operation. and will not restrain competition.”? (Sec. 408(b), 49 U. S.-C. 1378(b), second proviso).. In American President Limes, Ltd., et al., Peti- tion 7 C. A. B. 799: (1947) the Board acknowledged that . its licensing powers under section 401 of the Aviation Act were not similarly limited; nonetheless the Board deter- mined as a matter of solten that a license. to engage in air carriage should: not issue to a. surface carrier who failed to satisfy the section 408 criterion because otherwise engagement in air carriage by a surface carrier would not ‘meet the ‘‘public convenience ‘and necessity’’ criterion of ' _ section 401. ‘This C, A. B.-policy was approved in Conti- nental Southern Lines v. Civil Aeronautics Bd., 197 F. 2d 397 (D. C. Cir., 1952). : True, the Board has ruled that the second proviso of — section 408 applies to engagement in air carriage by indirect ‘air carriers neither in terms of law nor of policy, saying: ‘‘The simple fact is that the second proviso of section 408(b) does not reflect a policy against the entry of indirect air carriers controlled by surface earriers.’’ Airfreight oe Investigation 23 ‘ -C. A. B. 376, 378 (1956). L 4 However, two years later, in. 1958, the C, A * aes this ruling, saying,. ‘“We conclude that REA’s whic to enter air _ transportation as an international airfreight for- — if not otherwise denied wes the Act, should 7 — “8 ‘be denied under section 408.’’ Rathway Express, a Airfreight Forwarder Application, 27 C. A. B. 500, 502 (1958). This occurred ‘aie: after it had been pending for many « years’ the C. A. B. decided REA’s application for an air freight forwarder license in Railway Express, Airfreight Forwarder Application, 27 C. A. B. 500 (1958). It found REA’s ““gurface affiliations’’ of ‘‘central importance”’ and because of them denied the application, saying, ° “Section 408 reflects the established general pol- *- icy that our air transportation system slfall he free ~~ of control. by surface | carriers,”? “nS C. A:\B: at; " 508.) xe | a Thus it Slices apparent that, aie in extraordinary “ ‘situations or in situations so lacking in economic signifi- cance as never to com¢ before the Board in an adversary regulatory proceeding, a surface carrier cannot engage in joint rates and through service with an air carrier because - the only two avenues of qualification. have been closed—the. - possibility of. obtaining an air carrier license by Ratlway Express, Airfreight Forwarder Application, 27 C. A. B. 500, supra, and the use of joint rates and through service by Board order E-20332 herein- under review.° ‘ TSee the discussions. in Air Freight Forwarder Case (Inter- _ .- national) 11 C: A. B. 182, 183-185 (1949), and National Air Freight Forwarding Corporation v. Civil Aeronautics Board, 197 F. 2d 384, 388-389 (D. C. Cir., 1952). . ‘. $It is true that the Board at one time licensed REA as an indirect air express carrier. However, this was done only because REA’s ‘‘history.’’ of engagement in the air express business ante- dated the Civil Aeronautics Act of 1938 and hence was an enter- prise which ‘‘ Congress was deemed not to have intended to disturb.’’ Railway Express, Airfreight Forwarder Application 27 C. A. B. 500, 503, supra; National Airfreight Forwarding Corporation v. Civil. Aeronautics Board 197 F. 2d 384, 388-389 (D. C. Cir., 1952), supra. Concededly this air express license does not. permit the type , of transportation. activity herein under review (JA 178). “4 A ae] ees ee eee : In reaching its decision. below that the REA-airline _ joint rate agreements were unlawful the Board relied. on _ a number of factual aspects of the transportation operation | _ other than those listed above. For example, it criticized REA’s method of soliciting business, indicated a desire ‘that REA’s shipment documentation be altered, and dis- approved the measure of revenue allocation which: REA and the airlines were using to divide the proceeds of their joint rates... _REA filed a’ reconsideration petition with eo __the Board responsive to these. In part REA took issue _ with the Board’s factual premises and in part. offered to . comply: with any regulations the Board might issue which i could guide REA as to the Board’s specific desires con- cerning the conduct of through, air-surface service. To settle the disputed factual issues REA requested a hearing (J A 194-216). The Board in a final order (No. E-21188) rejected REA’s arguments on ‘two grounds: (1) No mod} fication of* the agreements . could alter REA’s Status (in the Board’s view) as an indirect air carrier (JA 252) and © ' (2) ‘*The essential facts are undisput > (JA 253). On August 25, 1964 REA petitioned review of C. A. B. Orders E-20332. and H-21188 in the Court of Appeals for the District of Columbia. .The Court of Appeals affirmed the Board March 18, 1965 and denied reconsideration April 26,. 1965. - Reasons for Granting the pi 1. The decision forecloses effective collaboration in the service of the public between the air and surface transpor- tation industries. In 1938 Congress ordered the Interstate Commerce ie Cémmission, and the Civil Aeronautics Board to combine their memberships in a i sear — for the purpose of og c . 10 | regulating through service and joint rates of surface and air carriers. In the more than quarter century since sec- tion 1003 of the Aviation Act, 49 U. 8. ‘C. 1483, first set forth this expression of Congressional ’ purpose, a joint, I. C. C.-C. A. B. board has never ‘eonvened. On April 5, - 1962 President Kennedy’s Message to the 87th Congress concerning ‘‘An ‘Efficient. Transportation System’’’ (108 ~Congressional Record 5509, H. Document No. 384), took | note of this state of affairs:. a “Through routes and joint rates: For many | years some-regulatory agencies have been authorized to appoint joint boards to act ‘on proposals for ' intercarrier services; but they have taken virtually no initiative to foster these arrangements which could greatly increase service and convenience to the general public and open up new opportunities for _all carriers. I recommend, therefore, that Congress declare as a maiter of public policy that through routes and joint rates should be vigorously encour- aged and authorize all transportation agencies to participate in joint boards.” U.S. Code Congres- - . sional and AeA EATS News, 87th’ Cong. +» p. 4154. - : Lnplicit § in this state of affairs { is the truth that no joint, _ air-surface rate and no. through, air-surface service has: “ heretofore achieved the minimum level of economic signi- ficance necessary to merit regulatory attention. The case at bar ‘represents the first attempt since the enactment of ' the Civil Aeronautics Act to make such rates and service _ _an importantly realistic and practical means of transporta- __ tion for the shipping public. Unless reversed, the Judgment S below will mark the last such attempt so long as herrea statutory law remains me eae -Why? ee ll There are only two ways a surface carrier ‘such as REA’ and an ‘airline can make arrangements for through routes and joint rates. The first requires the C. A. B. to license the surface carrier as an air freight forwarder. Although -° the Board said in 1956 that it has no ‘‘policy against the entry’ of indirect air carriers’ controlled bygurface car- riers,’’ (Airfreight Forwarder Investigation 23 C. A, B: 376, 378), two years later it withheld an indirect aigs carrier license from REA relying specifically on the: ground thet REA is owned by railroads: “We conclude that REA’s sri 3 ‘ ten air transportation as an international airfreight for- warder, if not otherwise denied under the Act, should be denied under section 408.’ Railway Express, Airfreight Forwarder Application 27 C. A. B..500, 502 (1958). te | The Board in its brief below to the, Court of deppenle acknowledged that it has ‘‘consistently refused to permit REA to engage in any * * * air transportation services”’ | _ other than air express. (Board Brief, p. 4). As noted above, REA’s existing air express license concededly fails to cover the: transportation | operation herein under review. - That the C. A. B. has set its face against. the licensing of surface carriers to join air carriers in threugh service is . . apparent from the Board’s sapment below that, if REA were to prevail, $¢(T)t would mean that every other. cuctnes car- - Ny rier operating within the large metropolitan areas — \\ could do the same thing: Thus, REA is contending “for a construction of Section 1003 which is com- pletely inconsistent with the Congressional plan of air transportation system regulated with a view to the maintenance of sound economic conditions.’’ ( Board brief below, p. = | ee eee - — tn atiort, the first path seine joint rates and through service for REA and the airlines has been blocked by the . Board belief that the li to that end of REA or any _ other surface carrier “operating within the large metro- politan areas’? would conflict with ‘‘the maintenance of - sound. economic copditions.’* eck ” The’ second and only -remaining path for REA ‘ the goal of joint, air-strface rates and routes isto contract for them with an airline, file joint tariffs with the I. C. ©. ‘and C. A. B., and initiate the service subject to such regu- . lation as a joint board may prescribe. The enabling statutory language, enacted in 1938, is: | See. 1003 (72.Stat. 791, 49 U. S. C. 1483): eo: . ae « ae ns ae (b) Air carriers may establish reasonable through service and joint rates, fares, and charges with other common carriers; * * * Any air carrier, and any common carrier subject to. the Interstate Commerce Act, which is participating ‘in such . ‘ through service and joint rates, fares, or charges, ‘shall include in its tariffs, filed with the Civil Aero- nautics Board or the Interstate Commerce Commis- sion, as the case may be, a statement showing such ' through service and joint rates, fares, or charges. (c) Matters relating to such through service and - joint rates, fares; or ‘charges may be referred by : the Board or the Interstate Commerce Cominission, \ om ‘Katwaily, the Board has prohibited airfreight hereetdets and airlines from contracting for joint rates. and through service.. Airfreight Forwarder. Investigation, 24 C. A. B. 755, "758 (1957). :‘Even were the Board to issue REA-a license as an airfreight forwarder, this second policy would have to change before the ~~ Tieense could serve the purpose contemplated by Congress in ' - enacting section 1003 of me Aviation Act the purposes of this section be considered an air carrier and the Board shall not enter such an order of approval unless it finds that the transaction proposed will promote the public interest by enabling such carrier other #han an air carrier to use aircraft to public advantage in its operation and will not restrain competition: Provided further, That, in any case in which the Board determines that the trans- ‘action which is the subject of the application does not affect the control of an air carrier directly engaged in the operation of aircraft in air transportation, does not result in creating a monopoly, and. does not tend to restrain com- petition, and determines that -no person disclosing a sub-: stantial interest then currently is requesting a hearing, tlie Board, after publication in the. Federal Register of notice — of the Board’s intention -to dispose of such application without a hearing (a copy of which notice shall be furnished by the Board to the. Attorney General not later than the day following the date of such publication), may determine that the public interest does not require'a hearing and by. order approve or disapprove. such transaction. Sec. 412. [72 Stat. 770, 49 U. 8. C. 1382] (a) — air carrier shall file with the Board a true copy, or, if oral, a true and complete memorandum, of every contract or agree- ment (whether enforceable by provisions for liquidated oo am Re SR EN a 23 ‘damages, penalties, bonds, or otherwise) affecting air _ transportation and in force on the effective date of this sec- _ tion or hereafter entered into, or any modification or can- cellation thereof, between such air carrier and any other air carrier, foreign air carrier, or other carrier for ‘pooling or apportioning earnings, losses, traffic, service, or equipment, or relating to the establishment of transportation rates, fares, charges, or classifications, or for preserving and improving safety, economy, and efficiency of operation, or for controlling, regulating, preventing, or otherwise elim- ‘inating destructive, oppressive, or wasteful competition; or for regulating stops, schedules, and character of service, or for other cooperative working arrangements. — 7 (b) The Board shall by order disapprove any ‘incl con- tract or agreement, whether or not previously approved by it, that it finds to be adverse to the public interest, or in violation of this Act, and shall by order approve any such contract or agreement, or any modification or cancellation thereof, that it-does not find'to be adverse to the public ‘interest, or in violation of this Act; except that the Board : - May not approve any contract or agreement betweerian air carrier not directly engaged in the operation of aircraft in air transportation and a common carrier subject to the Interstate Commerce Act, as amended, governing the corn- pensation to be received by such common carrier. for trans- portation services performed by it. Src. 1002. [72 Stat. 788, 49 U. S. C. 1482] (z) Whenever any air carrier shall file with the Board a tariff stating a new individual or joint (between air car- _riérs) rate, fare, or charge for interstate or overseas air ‘transportation or any classification, rule, regulation, or practice affecting such rate, fare, or charge, or the value of the service thereunder, the Board is’ empowered, upon — complaint or ‘upon its own initiative, at ‘once, and, if it: SO orders, without answer or other formal pleading by the air carrier, but upon reasonable notice, to enter upon a hearing concerning a lawfulness of such rate, fare, or . O | charge, or such classification, rule, regulation; or practice; ‘ and pending such hearing and the decision thereon, the Board, by filing with such tariff, and delivering to the air — carrier affected thereby, a statement in writing of its rea- sons for such suspension, may suspend the operation of . such tariff and defer the use of such rate, fare, or charge, or such classification, rule, regulation, or practice, for a - . period of ninety days, and, if the proceeding has not been . concluded and a final order.made within such period, the ‘Board may, from time to time; extend the period of suspen- / sion, but not for a longer period in the aggregate than one hundred and eighty days beyond the time when such tariff | would otherwise gu into effect; and, after hearing, whether completed before or after the rate, fare, charge, classifi-- cation, rule, regulation, or practice goes into: effect, the Board may make such order with reference thereto as would be: proper in a proceeding instituted after such rate; fare, charge, classification, rule, regulation, or practice had become effective. If the proceeding has not been concluded and an order made within the period of suspension, the _ proposed rate, fare, charge, classification, rule, regulation, _ or practice shall go into effect at the end of such period: Provided, That this subsection shall not apply to any unital tariff filed by any air carrier. (h). Whenever, after notice and hearing, upon complaint : or upon its own initiative, the Board is.of the opinion that the divisions of joint rates, fares, or charges for air trans- portation are or will be unjust, unreasonable, inequitable, or undniy preferential or prejudicial as between the air. carriers or foreign air carriers parties thereto, the Board | shall prescribe the just, reasonable, and equitable divisions thereof to be received by the several air carriers. The Board may require the adjustment of divisions between such air carriers from the date of filing the complaint or. entry of order of investigation, or such other date subse- ~ quent thereto as the Board finds to be just, reasonable, and equitable: Sian CN (i) The Board shall, whenever required by the public convenience and necessity, after notice and hearing, upon | complaint or upon its own initiative, establish through — service and joint rates, fares, or charges (or the niaxima’ or minima, or the maxima and minima thereof) for inter- ~ _ state or overseas air transportation, or the classifications, rules, regulations, or practices affecting such rates, fares, . or charges, or the value of the service thereunder, and the terms and conditions under which such through service shall be operated: Provided, That as to joint rates, fares, _ and charges for overseas air transportation the Board shall -determiine and prescribe only just and reasonable maximum ‘ or minimum or maximum and minimum joint rates, fares, or charges. Szo. 1003. [72 Stat. 791, 49 U. S. C. 1483] (a). The ; . Board and the Interstate Commerce Commission shall direct their respective chairmen to designate, from time to time, a like number of members of each to act as a joint board to consider and pass upon matters referred to such board as. provided in subseetion (¢) of this section. (b) Air carriers may establish reagonable through | ' service and joint rates, fares, and charges with other common carriers; except that with respect to transporta- tion of property, air carriers not directly engaged in the operation of aircraft in air transportation (other than com- panies engaged in the air express business) may not establish joint rates or charges, under the provisions of this subsection, with common carriers subject to the Inter- . : state Commerce Act. In case of through service by .air carriers and common carriers subject to the Interstate | Commerce Act, it shall be the duty of the carriers parties thereté to establish just and reasonable: rates, fares, or charges and just and reasonable classifications, rules, regu- lations, and practices affecting such rates, fares, or charges, or the value of the service thereunder, and if joint rates, fares, or charges shall have been established with respect to such through service, just, reasonable, and equitable divi- — je eed Bey * ; $6. sions of such joint sated, eve or charges as between the carriers participating therein. Any air carrier, and any - common carrier subject to the Interstate Commerce Act, which is participating in such through: service and joint rates, fares, or charges, shall include in its tariffs, filed - with the Civil Aeronautics Board or the Interstate Com- merce Commission, as the case may be, a statement showing such. through service and joint rates, fares, or charges. : ’ (ec) Matters relating to such through service and joint rates, fares, or charges may be -referred by the Board or the Interstate Commerce Commission, upon complaint or “upon its own initiative, to a joint board created as provided in subsection (a). Complaints may be made to the Inter- - state, Commerce Commission or the Bodrd with respect to any*matter which may be referred to a joint board. under ‘this subsection. ’ (d) With respect to matters referred to any ¥ Joint board as provided in subsection ’ (c), if such board finds, after | notice and hearing, that any such joint rate, fare, or charge, or classification, Tule, regulation,’ or practice, affecting such ‘ joint rate, fare, or charge or the value of the service there- “\. under is or will be unjust, unreasonable, unjustly discrimi- “natory, or unduly preferential or prejudicial, or that any division of any such joint rate, fare; or charge, is or will be unjust,,.unreasonable, inequitable, or unduly preferential «sa ‘prejudicial as between the’carriers parties thereto, it is ; authorized and directed to take the same action with respect thereto as ‘ the; Board is empowered to take with’ respect to any joint rate, fare, or charge, between air carriers, or any divisions thereof, or any classification, rule, regulation, or practice affecting such joint rate, fare, of charge or the _ value of the service thereunder. (e) Orders of the joint boards shall be enforceable and ‘reviewable as provided in this Act with, respect to orders of - Board. .- : / 27 - | APPENDIX B. — Copy of the Opinion Below.’ UNITED STATES COURT OF APPEALS, For tHe District or Cotumsia Circuit. No. -18,868 v . Rartway Express Acency, Inc.,’ eg ' Petitioner, W,. Civ Arronavtics: Boar, Respondent. — Am Freicut ForwArpers: Assoctation, AMERICAN ArRLrnEs, Inc., Unitep Arr Lines, Inc. anp Trans Wortp AIRLINES, a ino. be Intervenors. Petition for Review of an Order — of the Civil Aeronautics Board “Decided March 18, 1965. Mr. William Q. Keenan, of the bar of the Court of Appeals of New York, pro hac vice, by special leave of court, with whom Mr. J ohn E. Powell was on the brief, for petitioner. _ Mr. 0. D. Oameii, Associate - General Counsel, Litiga- tion and Legislation, Civil Aefonautics Board, with whom 1C. A. B. Orders E-20332 and E-21188 herein under review are set forth at pp. 174 to 247 of the Joint Appendix filed with ts petition. : 28 Assistant “Attorney General William H. Orrick, Jr. and Messrs. John H. Wammer, General Counsel, Joseph B. Goldman, Deputy General Counsel, and Robert L. Toomey, Attorney, Civil Aeronautics Board, and Ltonel Kesten-. baum, Attorney, Department of Justice, were on the omer, for respondent. Mr. Louis P. ‘Haffer for intervenor Air Freight For- warders Association. Mr. Gordon W. Bickert, of the bar of the Court of: Appeals of New York, pro hac vice, by special leave of court, with whom Messrs. Warren E. Baker and Joseph F. Healy, Jr. were on the brief for intervenor Trans World Airlines, Inc., argued: for intervenors Trans World Air- lines, Inc., American Airlines, Ine. and United Air Lines, Ine. Messrs. Robert L. Stern and James Francis Reilly were on the brief for intervenor United Air Lines, Inc. Mr. Alfred V. J. Prather was on the brief for inter- venor American Airlines, Ine. Before Bazeton, Chief Judge, and Fany ond Wricnt, Circuit Judges. = Wricut, Circuit Judge: By its Order No. E-20332, the Civil Aeronautics Board disapprovid certain agreements entered into between the Railway Express Agency, Inc. (REA) and various airlines. * Under each agreement the © 1 The shlinen involved were Alaska Airlines, Inc., Eastern Airlines, Inc., The Flying Tiger Line Inc., Pan American World Airways, Inc., Riddle Airlines, Inc., Slick Corporation, and, Trans- portation Corporation of America. The agreements had been sub- mitted by the airlines for approval under §412 of the Federal Aviation Act of 1958, 72 Star. 770,49 U.S. C. §1382, which provides. in pertinent part: “*(a) Every air carrier shall ‘file with the Board a true copy * * * of every contract or agreement * * ® affecting © air. transportation * * * between such air carrier and any other air carrier, foreign air carrier or other carrier for pooling or apportioning earnings, losses, traffic, service, or equipment, or relating to the establishment of transporta- 29 : pee SJ airline promised to carry, ‘hens specified points, cargo ‘presently moving in the services of [REA]’’ to the extent the airline determined it had space available. The parties agreed that the airline should receive a fixed amount for each 100 pounds of cargo carried? and that REA would receive ‘‘the balance of the charges collected from the pub- lic.’? REA was to issue to the shipper its Uniform Express Receipt, on which it assumed responsibility to.the shipper for the entire transportation, but the agreement provided that, as between themselves, each party would bear liability ’ for damages occurring during its carriage of the shipment. REA contended before the Board that the agreements were simply contracts between itself (a surface carrier ‘subject to regulation by the Interstate Commerce Commis- sion) and a specific air carrier for through service and joint rates, and that such contracts were clearly authorized under Section 1003 of the Federal Aviation Act.? The tion rates, fares, charges, or classifications, or for preserving and improving safety, economy, ahd efficiency of operation, or for controlling, regulating, preventing, or otherwise el‘ininating destructive, oppressive, or wasteful competition, er for regulating stops, schedules, and character of rn or for other cooperative working arrangements. ‘*(b) The Board-shall by order disapprove any such contract or agreement, whether: or not previously. approved by it, that it finds to be adverse to the public interest, or in violation of this chapter * * *.’? 2 The Board found that in the Alaska Airlines and the Flying ‘Tiger Line agreements the rate charged: by the airline was equal. . to or less than the local deferred freight rate regularly charged by the airline. 8Section 1003, 72 Star. 791, 49 U. S. C. §1483, provides: - _ **(a) The Board and the Interstate Commerce Com- mission shall direct their respective chairmen to designate, from time to time, a like number of members of each to act as a joint board to consider and pass upon matters referred to such board as provided in subsection (c) of this section. ‘‘(b) Air carriers may establish reasonable through © ‘service and joint rates, fares, and charges with other common carriers ; except that with respect to transportation of property, air carriers not directly engaged in the operation ’. of aircraft in, air transportation (other than a ¢o™ . e . eae . J 30 © Board concluded, however, that the operations of REA under the proposed agreements would not be those of a engaged in the air express business) may not establish joint rates or charges, under the provisions ‘of this subsection, with common carriers subject to the Interstate Commerce Act. In case of through service by air carriers and common carriers subject to the Interstate Commerce Act, it shall be the duty of the carriers parties thereto to establish just and reasonable rates, fares, or charges and just and reasonable classifications, rules; regulations, and practices affecting such rates, fares, or charges, or the value of the service thereunder, and if joint rates, fares, or charges shall have been established with respect to such through service, just, reasonable, and _ equitable divisions of such joint rates, fares, or charges as between the carriers participating therein. Any air carrier, and any common carrier subject to the Interstate Commerce Act, which is participating in such through service and joint rates, fares, or charges, shall include in its tariffs, filed with the Civil Aeronautics Board or the Interstate Commerce Commission, as the case may be, a. statement showing such through service and joint rates, ‘fares, or charges. ‘‘(¢) Matters relating to such through séfvice and joint rates, fares, or charges may be referred by the Board or the Interstate Commerce Commission, upon complaint or upon its own initiative, to a joint board created as provided in subsection (a) of this sectio.. Complaints may be made to ‘ the. Interstate Commerce ‘ommission or the Board with respect to any matter which may be referred to a joint board under this subsection. **(d) With respect to matters referred to any joint board. as provided in subsection (c) of this section, if such board finds, after-notice and hearing, that any such joint rate, fare, or charge, or classification, rule, regulation, or practice, affecting such joint rate, fare, or charge or the value of the service thereunder is or will be unjust, unrea- sonable, unjustly discriminatory, .or unduly preferential or prejudicial, or that any division of any such joint rate, fare, or charge, is or will be unjust, unreasonable, inequitable, or unduly preferential or prejudicial as between the carriers parties thereto, it is authorized and directed to take the same ~ - action with respect thereto as the Board is empowered to take with respect to any joint rate, fare, or charge, between air carriers, or any divisions thereof, or any classification, rule, regulation, or practice affecting such joint rate, fare, - or charge or the value of the service thereunder. ’ *“(e) Orders of the joint boards shall be enforceable and reviewable as provided in this chapter with respect to orders — of the Board.’’ ' 31 joint carrier of through traffic, but rather that the agree- ments called for REA to undertake indirectly to engage in . air transportation—an undertaking which requires Board authorization not presently held by REA.* The Board’s’. conclusion was based on its finding that, as contemplated by ~ the parties to each agreement, REA would be responsible to. the shipper for the entire transportation and could charge the shipper a rate having no relation to the rate pay- able to the airline. The Board found, moreover, that REA — would determine whether or not to ship any particular ship- ment by’air and, if so and a choice of airline existed, REA _ could determine which airline to use. In short, the Board found that REA would be engaged in selling air transporta- tion to the public. Since REA has no authority so to do, the agreements were held to violate the Federal Aviation Act and, hence, under Section 412, were not + entitled to Board - approval. REA petitioned the Board for reconsideration and, in ‘addition, requested that the Board refer the case to a joint _ board appointed under Section 1003 or, in the alternative, _ that the Board grant REA a hearing. The Board denied . these requests and refused to reconsider its order. REA now petitions for review of the actions of the Board.’ _ The Federal Aviation Act permits engagement in air transportation, whether direct or indirect, only by persons who hold a certificate of public convenience and necessity 4 Section 401(a), 72 Stat. 754, 49 U. S. C. §1371(a), provides: ‘‘No air carrier shall engage in any air transportation unless there is in force a certificate issued by the Board authorizing such air carrier to engage in such transporta- tion.’’ The term ‘‘air carrier’’ is defined in §101(3),.72 Star. 737, 49 U. S. C. §1301(3), as follows: ‘¢ * Air carrier’ means any citizen of the United States who undertakes, whether directly or indirectly or by a lease. or any other arrangement, to engage in air transporta- tion eo,” . 5 Jurisdiction in this court is based on Section 1006 of the Federal. Aviation Act, 72 Stat. 795, 49 U. S: C. §1486. 32 f - issued by the Civil Aeronautics Board,* or who have been exempted from the provisions of the Act.’ The Board has defined an ‘‘indirect air carrier’’ as one who ‘‘holds out to the ‘public that it will undertake to transport property — by air, and enters into contracts with “shippers wherein . it binds itself to discharge such an undertaking with respect to particular shipments.’ In this case the Board found, upon substantial evidence, most of which was submitted by REA at the Board’s invitation, that REA’s operations | under the proposed agreements would constitute indirect air catriage.® Since REA is not authorized to carry on such operations, ore of the agreements was "properly withheld, — The case would end here were it not for REA’s con- tention that in the situation presented here Section 1003 © of the Federal Aviation Act overrides the requirement that indirect carriers be either certificated under Section 401 or exempted under Section 101(3). In essence, REA contends that when a surface carrier contracts with a direct * See Note 4, supra. 7 Under Section 101(3) of the Federal ‘Aviation Act, 49 U.S. C. §1301(3), the Board may grant an indirect air carrier an exemption ‘from the provisions of this chapter to the extent and for such periods as may be in the public interest.’’ See American Airlines v. Civil Aeronautics Board, 7 Cir., 178 F. 2d 908 (1949). 8 Railway Express Agency, Grandfather Certificate, 2 C. A. B. 531, 536 (1941). See also Consolidated Flower Shipments v. Civil Aeronautics Bd., 9 Cir., 213 F. 2d 814 (1954) ; National Air Freight Forward. Corp. v. Civil Aero. Bd., 90 U. S. App: D. C. 330, 331-332, 197 F. 2d 384, 385-386 (1952) ; ; American Airlines v. Civil Aeronautics Board, supra, Note 7; Intra-Mar Shipping, Enforcement Proceeding, 27 C. A. B. 568 (1958). The Board’s definition of this statutory term is entitled to the deference usually accorded to statutory interpretations given by _ the agency charged with the administration of the statute. Udall . v. Tallman, ....:....... _ See (No. 34, Oct. Term, 1964, decided March 1, 1965), slip opinion p. 14; Unemployment Comm’n v. Aragon, 329 U.S. 143, 153 (1946). * Under well settled principles of. judicial review of administra- . tive action, Board findings supported by the record are conclusive. . 49 U.S.C. §1486(e); N.L.R.B. v. Hearst Publications, Inc., 322 U. 8. 111 (¢ 1944.) \ bn. Oy 33 air carrier and the contract calls for the surface carrier to operate as an indirect air carrier, the requirement for Board authorization differs from what it would be if no surface carrier were involved. This difference arises, according to.REA, because of the provisions in Section 1003 which authorize air carriers to ‘establish reasonable through service and joint rates, fares, and charges with other common carriers’’ and which provide procedures for regulation of the rates, charges, and practices of carriers - operating under through service..arrangements. Under REA’s theory, all transportation in which the cargo is carried part way by surface carrier and part way by air must be regulated by a joint board convened according ~ to Section 1003(a). Such a‘construction, however, is not consistent with the regulatory system ordained by Congress. Under the Fed- eral Aviation Act, the Board is given exclusive authority - and responsibility for the economic regulation of the ‘air transportation industry, as therein défined. No one is permitted to engage in air transportation, either directly or indirectly, without Board -authorization, either in the form of a certificate or, in the case of indirect carriers, possibly by exemption. Section 1003 is not designed to create an exception to the Board’s responsibility in those cases where a surface carrier engages in operations which: the Act includes in its definition of “air transportation.”’ That section merely provides a procedure for regulation of rates and practices in cases where an air . Carrier arranges with a surface carrier for through transportation service. When such an arrangement is made, and each participating carrier is operating within the proper scope of its authority, Section 1003 provides a method which may be invoked by either the Board or the Interstate: Commerce Commission for regujating the participating _ carriers. But when, as in this case, an arrangement for through service calls for the surface carrier to perform operations which require permission from the Board, the _ surface carrier is not relieved of the necessity of obtain- ing such permission. . | © 34 Adoption of the statutory construction urged by REA would give’ Section 1003 an effect which could hardly * have been intended by Congress. At present, the opera- tion of assembling packages for air shipment is per- formed largely ‘by concerns known as air ffeight forward- ers..° These concerns are extensively regulated by the Board." In the past REA has sought authority from the Board to operate as an air freight forwarder. The Board has refused such authority because it felt that the - impact of REA’s entry into the industry would have effects ‘harmful to the public.®. However, it is now argued that Section 1003 permits REA ta engage in operations which the Board has held to be not in the public. interest. We | cannot agree that Section 1003 has the effect of allowing. REA/’s. entry, without Board approval, into an industry expressly committed by Congress to the exclusive regula- tory power of the Board.* 10 An ‘‘air freight forwarder’’ is defined as one who ‘‘in the ordinary and usual course of its undertaking, assembles and con- solidates or provides for assembling and consolidating of property or performs or provides for the performance of break-bulk and distributing operations with respect to consolidated shipments, or both, is responsible for the transportation of such property from the point of receipt to point of destination, and utilizes for the. whole or any part of such transportation the services of a direct air carrier.”’ 14 C. F. R. §297.2 (1964). 11 The Board’ $ regulations concerning. air freight forwarders appear at 14 C. F. R. Parts 296 and 297: (1964). 12 See Railway Express, Airfreight Forwarder Application, 27 - C. A. B. 500 (1958) ; and cf. Railway Express Agency, Inc.,.and . Northwest Airlines, Enc., Agreement, 9 C. A. B. 905 (1948). 13 Railway Express, Airfreight Forwarder Application, supra Note 12 at 537-538. Another reason for the Board’s refusal is the fact that REA is.controlled by railroads. See Section 408 of the Federal Aviation Act, 72 Strat. 767, 49 U. S. C. §1378; Railway. Express, Airfreight Forwarder Application, supra Note 12 at 502-504. Cf. ‘National Air Freight Forward. Corp. v.:Civil Aero. Bd., supra Note 8. 14 We find nothing i in the legislative init of Section 1003 to warrant the conclusion that the section was intended to provide any exceptions to the broad provision in Section 401. See H. R. Rep. No. 2254, 75th Cong., 3d Sess., p. 8 (1938). 35 REA also contends that the Board cond in denying its request for a hearing. This request was made at the same time REA petitioned for reconsideration of the . Board’s order disapproving the agreements. The Board had previously invited REA to submit any relevant infor- mation. .REA has done this, and it was on this informa- tion that the Board based its order. Section 412 contains no requirement for a hearing in contract approval proceedings. Nevertheless, REA con- tends that it is entitled to a hearing as a matter of due process.* But due process does not require that every administrative action be preceded by a ‘hearing. The under-. lying facts of REA’s operations under the ‘proposed agree- ments were not disputed. The Board accepted as true the information submitted by REA. The only issues before the Board involved the legal consequences of those facts. Under . such eircumstances, a hearing i is not required.” Affirmed. 15 Cf. Wong Yang Sung v. _ McGrath, 339 U. S. 33. (1950) ; The Japanese Immigrant Case, 189 U. 8S. 86. (1903). 16 Mississippi River Fuel Corp. v. Federal Power Com’ m, 108 U.S. App. D. C. 284, 292, 281 F. 2d 919, 927 oo cert. denied, 365 U. 8. 827 (1961). - --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0822%3A1. Public record. Not legal advice.