Petition for Writ of Certiorari — Northwest Airlines, Inc. v. Alaska Airlines, Inc.

Supreme Court of the Hu DOR EARVE, CLERK

-OcrosER Term-—1965

NQ 8 3

NORTHWEST AIRLINES, INC.

Petitioner,

VS,

ALASKA AIRLINES, INC.,

Respondent.

\

\

\

SaLcaLeEaE SEDER SEnEE a inaSEEEREEeneane

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT

|

Brrnarp M. SHANLEY,

Freperick B. Lacry,

SmanLey & FisHern, =

. Counsel for Petitioner,

570 Broad Street,

: Newark, New Jersey.

Of Counsel:

R. BoocHEvEr,

FAauLKNeERr, BANFIELD, |

BoocHEVER AND Doogan,

311 North Franklin Street,

Juneau, Alaska.

Adams Press Corp., 11 Commerce Street, Newark, N. J.—Market 3-8611-12

TABLE OF CONTENTS

Ly

4

s PAGE

Opinions BELOW.............. eee aves ee oe 1

erry ere re TT eer re ee ees ads aw ae

QUESTIONS PRESENTED....... Paley batho ea ae ewan 2

CONSTITUTIONAL Provisions INVOLVED.............4-. 3

STATUTES IxvoLvED oes Lan Oe Senet hua e ae ars 3

STaTEMENT Suenaas "ee saeaer ua eee 4

REASONS FOR, GRanTING CERTIORARI...........0.--- ane

} A. The Southwestern Sugar & Molasses Case.... 11

B. FAA Regulation of Shemya Falls Within the

Scope of the Rule of Southwestern Sugar

¢& Molasses..... ar beep ee eset tesa scene 12

C. The Decision of the Court of Appeals and its __

Consequences ............-..-.:- Peeper ye 16

1. The Failure to Apply the Southwestern

oi oda ins ann d eee eee ee 16

2. The Role of State Public Policy in Agency

Determinations; Scope of Judicial Review 19

a. The Scope of Judicial Review......... 19

b. State Public Policy and Agencies not

within the Seope of Southwestern..... 21

Come bee a 2

’

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G

ii | TABLE OF CONTENTS

PAGE

APPENDIX:

* A—Opinion of the United States District Court

for the District of Alaska.................: 25°

B—Opinion of the United States Court of Ap-

peals for the Ninth Cireuit................. 38

Cases Cited

Air Transport Associates, Inc. v. United States, 221

FP Be Se CBR. Glg BO ao 6 Oe 4 oko kdaecccauecen: 22

Airline Pilot’s Ass’n v. Queseda, 276 F. 2d 992 (2d

Ci, Bh rr eA tnccbe ncn rescue eieencadeanecea 20

Allegheny Airlines v. Village of Cedarhurst, 238 F.

Be Be Ce is ME hiesa v ixccanccedcscaduneenes 21

Bisso v. Inland Waterways Corp., 349 U.S. 85 (195 5) 11

Boston & M. R.R. v. Hooker, 233 U.S. 97 (1914)...... 14

Gibbons v. Ogden, 9 Wheat. 1 (1824)........ ieee ae aS 17, 22

Gray v. Powell, 314 U.S. 402 (1941)................ 20

Griggs v. County of Allegheny, 369 U. S. 84 (1962)... 18

Jacksonville Terminal Co: v. Railway Express Agency,

Inc., 296 F. 2d 256 (Sth Cir., sities cert. denied,

369 U. a's fee hekens ke seaaseaes 17,18

Lichten v. Eastern Airlines, Inc., 189 F. 2d 939 (2d

Nee rai a tices nai dsa Kee Rok a wxkeu hee on 14

Northwest Airlines, Inc. v. Minnesota, 322 U. S. 292

ee tela ken 13

Southwestern Sugar & Molasses Co. v. River Termi-

nals Corp 360 U.S. 411 (1959)........,<00.. 6; passim .

-, United States v. Eastern Airlines, 132 F. Supp. 787

(KE. D. N. ¥, — ef AP ARE Es Deena ee PE 21, 22

TABLE OF CONTENTS iii

PAGB

Western Union Tel. Co. v. Esteve Bros., 256 U.S. 566

I ee ee, aes 14

_ United States conta :

Artizle 1, Section 8, Clause 3° 3,17, 21

mre TV, Cmte F oo. sccvcses sentence “Prevrvee o |

Statutes Cited

Administration of Washington National Airport Act

of June 29, 1940:

I oie oa sk Sue sak sn deus igeiek sok 14

Civil Aeronautics Act of 1938:

Se a eee Seb owas 13 .

Federal Airport Act

Act of May 13, 1946:

60 Stat. 170, 49 U.S.C. §1101..........-,. 0.2... 14

Federal Aviation Act of 1958: e

72 Stat. 731, 49 U.S.C. $1301 Resend i.cccarnenses 13

49 U.S.C. §§1422, 1423, 1425, 1426, 1427, 1429,

re cath cg daweceeehees > 14

International Aviation Facilities Act

‘Act of June 16, 1948:

62 Stat. 450, 49 U.S.C. $1991... 0.2.0... 20. . 2, passim

CRON oe ds ee seen ws DUsadabieaouees 7

MUR 1. 6c. ik... avaee eae 7

a Er 3, passim

4

Cc

& 6

iv TABLE OF CONTENTS

- “ PAGE

Second Washington Airport Act .

Act of September 5, 1950:

Re FR OD, 0p cher csnsesanveseretics x

WE WE, GIN isk anise cesses cnscnoces ween

OG GORE, TID on ccc cseeess OTT TTT CTT Ty Sesse

72 Stat.808 (1958) ....: Ore CET PEE Tet T Pee : f-. 9

62 Stat. 928, 28 U.S.C. §1254 (1) ............ 2

; | Other Authorities Cited _ |

FAA, First Annual Report (1959).............+... 2,14

House Report: No. 1892, 80th Cong. 2d Sess. (1948).. 7

U. S. Air Coordinating Committee, Report to the

President, in 1948 U.S. Av. R@&p. 123............

U. S. Code Cong. Service (80th Cong., 2d Sess. 1948) 7

IN THE x:

Supreme Court of the United States

-Ocroser. TERM—1963 |

>

No.

=—¢

NortHweEst Arr.iNgs, Inc.,.

; Petitsoner,

vs. =

Auaska Arrunss, Inc., ne

Respondent.

®

°

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPZALS FOR THE

NINTH CIRCUIT

. Petitioner, Northwest Airlines, Inc., prays that a Writ

of Certiorari issue to review the judgment of the United

States Court of Appeals for the Ninth Circuit entered in

the above-entitled case on September 27, 1965.

' Opinions Below

The opinion of the United States District Court for the

District of Alaska is reported at 228 F. Supp. 322 and is

printed as Appendix A herein. The opinion of the Court

of Appeals for the Ninth Circuit is reported at 351 F. 2d

253 and is printed as Appendix B herein.

>

& Jurisdiction

The judgment of the. Court of Appeals was entered on

September 27, 1965. Rehearing was denied on November 3, ©

1965. The jurisdiction of this Court is invoked under 62

Stat. 928, 28 U.S.C. §1254(1).

_

Questions Presented

The Court of Appeals for the Ninth Circuit has held

invalid, under the public policy of the State of Alaska, a

contractual provision exculpating from the consequtnces of

its own negligence the operator of an airport owned and

regulated by the Federal Aviation Agency under the In-

ternational Aviation Facilities Act, 62 Stat. 450, 49 U.S.C.

§§1151-1160. The contract in which the éxculpatory pro-

vision appeared was made pursuant to a published schedule

of charges filed with and approved by the Federal Avia-

tion Agency,’ in accordance with.the International Avia-

tion Facilities Act. The questions presented are:

- 1. Does not the Federal Aviation Agency have effective

power to authorize the exculpatory agreement in question,

notwithstanding the public policy. of the State of Alaska,

and the concomitant right to primary jurisdiction over chal-

lenges to the provision’s validity? :

1The Federal Aviation Agency was the successor to the Civil

Aeronautics Administration, and the FA. Administrator assumed

the responsibilities of the CAA Administrator with respect to Air-

ports administered under the International Aviation ‘Facilities Act

in the latter part of 1958. 72 Stat. 808 (1958); FAA, sess a

Report iii (1959).

The abbreviations “CAA” and “FAA” will be used interchang¢ -

ably herein. The abbreviation “FAA” should be read as “CAA”

when used in reference to the period prior to the change of the

Agency's designation.

i)

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2. Under the United States Constitution, Article I, Sec-

tion 8, Clause 3, the Commerce Clause, and Article VI, the

Supremacy Clause, can a court, acting solely on the basis

of state public policy, invalidate an exculpatory provision

in a Schedule of Charges approved by a federal adminis-

trative agency pursuant te a Congressional program?

Constitutional Provisions Involved

U.S. Const., Art. I, See. 8, Cl. 3:

‘The Congress shall have Power...

‘*To regulate Commerce with foreign Nations, and

among the several States, and with the Indian

Tribes ;’’

U. 8. Const., Art. VI, Ul. 2:

**This Constitution, and the Laws of the United

States which shall be made in Pursuance thereof;

and all Treaties made, or which shall be made, un-—

der the Authority of the United States, shall be’ the

supreme Law of the Land; and the Judges-in every

State shall be bound thereby, any Thing in.the Con-

stitution or Laws. of any State to the Contrary not-

withstanding.”’ v

Statutes Involved

The statutory_provision primarily involved is the Inter-

national Aviation Facilities Act, 62 Stat. 450 (1948), 49

U.S.C. 1151-1160, and particularly 49 U.S.C. §1159 (a):

“e(a) With regard to airport property and air-

way property jn territory (including Alaska) out-

side the coutinental limits of the United States which

he has acquired pursuant to this chapter or any other

&

4

provision of law, the Administrator is. empowered

and directed to do and perform by contract or other-

wise, all acts and things necessary or incident to

their consolidation, operation, protection, mainten-

ance, improvement, and administration, including

but not limited to the power (1) to adapt, from time

to time, such properties to the needs of civil aero-

nautics by construction, installation, reengineering,

relocation, or otherwise; (2) to make and amend

such reasonable rules and regulations as he may

deem necessary to the proper exercise of the powers

granted by this section; (3) to lease under such

conditions as he may deem proper and for such pe-

riods as may be desirable (not to exceed twenty

years) space or ‘property for purposes essential or

appropriate to their consolidation, operation, pro-

tection, and administration under this chapter; (4)

to contract for, or to provide directly for, the sale

of fuel, oil, equipment, food and supplies, hotel ac-

commodations, and other facilities and services nec-

essary or desirable for the operation and adminis-

tration of such properties; (5) to make just and

reasonable charges for aeronautical services (includ-

ing but not limited to landing feés and fees for the

use of communication services) ; and (6) to acquire,

by purchase or otherwise, real or personal property,

or interests therein, which he may consider neces-

sary for the purposes of this section.”’

Statement

On July 21, 1961 an Alaska Airlines’ DC-6 crashed while

attempting to land at the airport on Shemya Island in

the Pacifie Ocean. The airport was owned and adminis-

tered by the Federal Aviation Agency under the Interna-

tional Aviation Facilities Act, 62 Stat. 450, 49 U.S.C. §1151

5

et seg., and was operated by Petitioner, Northwest. Air-

lines, Inc. (Northwest) under the regulation of the FAA.

Alaska Airlines (Alaska) brought suit for the loss of the

aircraft against Northwest in the United States District

Court for the District of Alaska. For one of its defenses,

Northwest pleaded that the suit was barred by virtue of

provisions in its published ‘‘Schedule of Charges’’ (which

had been approved by the FAA) and in an agreement be-

tween the parties (pursuant to and incorporating the pub-

lished schedule) which exculpated Northwest from liabil-

ity to Alaska and all other airport users for losses arising

out of their use of the Shemya facilities.”

2 Paragraph J of the Schedule of Charges, dated May 10, 1957

and approved by the FAA on July 12, 1957, provided:

“Shemya and its facilities shall be listed in all publications

as privately operated and available to the aeronautical public

upon the terms and conditions set forth herein and at the sole

risk of the user, and the user will specifically indemnify and

hold Northwest Airlines, Inc., its employees, agents, contractors

and subcontractors, harmless against any and all claims for loss,

damage, injury or death arising out of or in any way connected

with such use of the facilities or services provided at Shemya.”

The Agreement between the parties was dated December 19, 1958

and incorporated all the provisions af the Schedule of Charges. In

addition, Paragraph 4 provided:

“Alaska agrees to hold harmless and indemnify Northwest,

its officers, agents, contractors, servants and employees from

_ all claims and liabilities for damage ‘to, loss of, or destruction

of any property of Alaska, its officers, agents, servants and

employees, and the property of any other person or persons,

and for injuries to or death to any person or persons which may

now or hereafter arise out of or be in any way connected with

the services and facilities furnished to Alaska under this Agree-

~ ment.”

6

To avoid this defense, Alaska sought a declaratory judg-

ment in the same court, basing jurisdiction on 28 U.S.C.

§1332(a) (diversity of citizenship) and 28 U.S.C. $2201

(Declaratory Judgment Act), asserting that (1) neither

the language cf the Schedule of Changes nor of the Agree-

ment was sufficiently clear to exqnerate Northwest from

responsibility for its sole negligence, and (2) should those

provisions be construed to cover Northwest’s sole negli-

gence, both are invalid and unenforceable as contrary to

the public policy of the State of Alaska. The District

Court on April 14, 1964 adopted both of Alaska’s con-

tentions. |

Northwest appealed to the Court of Ajpeals for the

Ninth Circuit on the grounds that (1) the District Court’s

construction of the provisions was erroneous, and (2) the

approval of the exculpatory provision by the FAA pur-

suant to federal statutory law foreclosed judicial consider-

ation of the validity of the schedule and Agreement un-

¢der the common law public policy of a state. Northwest

further pointed out that the Court should defer to the

FAA’s primary jurisdiction to determine the validity of

the provisions, under the doctrine of Southwestern Sugar

& Molasses, Inc. v. River Terminals Corp., 360 U. S. 411

(1959), which held that the validity of an exculpatory pro-

vision in a tariff filed by a regulated carrier with the In-

terstate Commerce Commission should be determined in

the first instance by the ICC. The Court of Appeals on

September 27, 1965 found that the exculpatory language

was ‘‘perfectly clear’’ and that the unequivocal intent of

the agreement between the parties was to protect North-

west from the consequences of its own negligence. Never-

theless, the Court of Appeals affirmed the District Cour

by holding that the FAA’s regulation of Shemya was in-

sufficient to require application of the doctrine of the

Southwestern case, and that the exculpatory provision was |

contrary to the ‘‘publie policy’’ of the State of Alaska and

hence invalid, notwithstanding FAA approval of the

Schedule of Charges. Northwest’s Petition for Rehearing

was denied on November 3, 1965.

The foregoing is the broad outline of the case. Basic to

an understanding of the federal issues, however, is a brief

exposition of the historical background.

Anticipating the increase of international air commerce

in the years following World War II, Congress in 1948

passed the International Aviation Facilities Act, 62 Stat.

450, 49 U.S.C. §1151 et seg. Its objective was to create

and develop federally-owned’ air navigation facilities in

extra-continental United States and foster the safe opera-

tion of ‘American air carriers engaged i international air

transportation.*® The Civil Aeronautics Administration was

empowered to acquire and establish airports in extra-con-

tinental United States territory, 49 U.S.C. §§1152, 1157,

and to improve, operate and administer them, 49 U.S.C.

§1159, cither itself or, if necessary or desirable, under

lease to private airport operators. 49 USC. §1159 (a)

(3). t»

During World War II, the United States Air Force had

developed an airfield and related facilities on Shemya Is-

land, a remote outpost at the far western end of the Aleu-

tian Islands [FF 5, 6]. In 1955, the Air Force withdrew

* House Report No. 1892, 80th Cong., 2d Sess. (1948). reported

in U. S. Code Cong. Service (80th Cong.. 2d Sess.) at 1803-1804.

See also U.S, .\ir Coordinating Committee, Report to the President,

reprinted in 1948 U. S. Aviation Reports 123, 128.

"EE" references are to the findings of fact of the U. S. District

Court below, as contained in the Transcript of the Record, Vol. 2.

from and closed down the Shemya installation, jurisdic-

tion of which then was transferred to the Administrator

of the Civil Aeronautics Administration pursuant to the

International Aviation Facilities Act [F¥ 7]. The CAA

chose not to operate and maintain the isolated airfield it-

self, but sought to contract out that function, as authorized

by 49 U.S.C. §1159(a) (3). On September 30, 1955, the

CAA reactivated Shemya by leasing it to Northwest, an

air carrier with a North Pacific route [FF 9]. Among

other things, the lease charged Northwest to operate as

complete an air navigation facility as practicable on a non-

discriminatory basis,° and provided for review and approv-

al by the Administrator of Civil Aeronautics of all pro-

posed charges for services, which were required to be fair

and reasonable.®

5 Paragraph 2(c) of the lease provided:

“Lessee shall maintain and operate as complete an air navi-

gation facility at Shemya as is practicable, including but not

limited to: Landing areas, communications and navigation fa-

cilities, to be available to any civil or military aircraft of the

United States or friendly foreign registry or ownership on 2

non-discriminatory basis.”

* Paragraph 2(d) of the lease provided:

“Lessee shall furnish all available services at Shémya to the

aeronautical public at fair and reasonable prices and shall, as

soon as practicable hereafter and in any event within six months

from the date hereof, furnish Lessor with a schedule of charges

to be made for such services by Lessee at Shemya, which sched-

* we of charges shall be approved by the Administrator of Civil

Aeronautics or his designee unless found by him or his designee

to be excessive, discriminatory. or unfair, in which case Lesse:

agrees to amend said schedule of charges to conform to thase

considered, in the judgment of Lessor, to be reasonable.”

9 \

After undertaking operation of Shemya, Northwest sub-

mitted a Schedule of Charges to the CAA on April 6, 1956

and a revised Schedule on May 10, 1957 when commercial]

use of Shemya increased. Although the expense of main-

taining and operating Shemya was greater, the May 10,

1957 Schedule provided for the same landing fees as the .

Anchorage and Fairbanks International Airports [FF 15,

Tr. pp. 139-140]. It also contained in Paragraph J the

aforementioned provision that the airport would be avail-

able ‘‘at the sole risk of the user.’ On July 12, 1957 the

CAA, per William B, Davis, Acting Administrator, ap-

proved all the provisions of the Schedule, including Para-

graph J [FF 13, 36]. Subsequent contracts between

Northwest and 15 other carriers authorized to use the

Shemya facilities incorporated the ‘‘sole risk’’ and indem-

nification provisions in the published Schedule of Charges

[FF 22, 25].

In late 1958, Alaska Airlines sought and obtained CAA

authorization to make use of the Shemya facilities, and on

January 5, 1958, entered into a letter agreement with

Northwest dated Decmber 19, 1958 [FF 12] which incor-

_ porated by reference the entire Schedule of Charges ap-

proved by the CAA [FF 13], and expressly provided for

exculpation and indemnification of Northwest as required

by Paragraph J of the Schedule.® No complaint was made

by Alaska to the CAA or to its successor, the FAA, with

respect to any of the various charges or the exculpatory

and indemnity provisions found in the published Schedule

‘Tr. references are to the trial transcript, Transcript of Record

Vol. 3.

* See note 2 supra.

4!

7

See Note 2 supra.

3

10

and incorporated in the Agreement; Alaska availed itself

of the Shemya facilities pursuant to the terms of the Agree-

ment and the Schedule without complaint and without in-

cident for over two and a half years, until the July 21,

1961 crash led it to challenge the validity of its Agrec-—

ment with Northwest and the Schedule of Charges.

Reasons for Granting Certiorari

Petitioner2s basic position before both the District Court

~ and the Court of Appeals was (1) that the FAA, by virtue

of its regulatory experience and legislative power, had the

requisite expertise and control over Shemya to.bring this

case within the scope of Southwestern Sugar & Molasses

Co. v. River Terminals Corp., 360 U. S. 411 (1959), and

therefore, (2) that the FAA’s approval of the exculpatory

' provision in question was within its power and foreclosed

consideration of its validity wholly on the basis of state

public policy. The crux of the decisional process below,

therefore, should have been an analysis of the FAA’s role

with respect to Shemya in light of the holding in the South-

western case. In neither opinion below, however, does the

necessary analysis appear. Both courts merely stated the

bald and inexplicable conclusion that the FAA did not have

the requisite control over Shemya to come within the scope

of Southwestern and, treating the case as an ordinary di}

versity action, held that the validity of the provision was

governed by state public policy rather than by the FAA’s

approval.

The significance of the decision below, warranting the

exereise of this Court’s certiorari jurisdiction, is that this is

not a simple diversity case but rather a case which neces -

sarily involves fundamental questions of federal jurisdic-

tion, federal agency power, and fhe relationship between

ff

s

11

courts and agencies. These issues of federal law were not

fully discussed or not reached by the Court in Southwest-

ern. Moreover, the unexplained conclusions of the Court

below conflict in principle with the rationale of Southwest-

ern and confuse the precedential effect of that case.

Necessary to a complete understanding of the issues re-

quiring consideration by the Supreme Court, but epR

from the opinions below, is an examination of the F.

functions, generally and with respect to Shemya, meas-

ured against the standards set forth in Southwestern. Pre-

liminary to its discussion of the issues, therefore, peti-

tioner will review briefly the decision in Southwestern and

then, in relation to that case, the FAA’s expertise and con-

trol over operation of the airport at Shemya.

A. The Southwestern Sugar & Molasses Case

The Southwestern decision arose from a challenge to

validity of a provision in a tariff filed by a regulated water

carrier with the Interstate Commerce Commission, but not

specifically approved by that agency; the tariff provision

exculpated the carrier fro e consequences of its own

negligence. Similar provigions in agreements between tug

and tow had been held ¢ ntrary to public policy and in-

valid under federal maritime law. See Bisso v. Inland

Waterways Corp., 349 U.S. 85 (1955). However, the Court

in Southwestern pointed out that the considerations of pub-

lie policy mentioned in Bisso to strike down exculpatory

fereeant i.c., to discourage negligence and to restrict

hose who have the power to drive hard bargains, are not

necessarily applicable where the conduct of the parties is

‘effectively controlled by a pervasive regulatory scheme,”’’

such as that administered by the IOC. 360 U. S. at 418.

The possibility that exculpatory agreements may repre-

12

sent an unfair economic overreaching by the tug owner,

the Court noted, was effectively controlled by the I

power to regulate the tugboat’s rates. Ibid. The Court

therefore held that the validity of the exculpatory provi-

sion should in the first instance be determined by the ICC,

which, with its expert knowledge of the physical operat-

ing circumstances ‘and economic conditions of the indus-

try, might find the exculpatory provision to be entirely

‘fair and reasonable under the circumstances.

The Southwestern decision, therefore, stands for the

proposition that when an agency like the ICC has (f) per-

vasive regulatory power over charges to effectively enable

it control the power to drive hard bargains and (2) the

expertise to evaluate the propriety of exculpatory tariff

provisions in light of the safety and economic factors in

the regulated industry, then it also’ has (3) the’general

power, subject to judicial review, to approve and authorize

exculpatory arrangements under proper circumstances,

- hotwithstanding contrary common law public policy.”

B. FAA Regulation of Shemya Falls Within the Scope of

the Rule of Southwestern Sugar & Molasses.

Like Southwestern, the instant case arises from a chal-

lenge to the validity of an exculpatory provision in a

tariff (Schedule of Chargés) filed with—and in this case

approved by—a federal administrative agency, the FAA.

10 This clearly was the conclusion of the majority of the Court.

who, it must be assumed, would not have referred the issue\ of valid-

- ity to the ICC if the ICC lacked the power to approve the provi-

sion. Moreover, the majority necessarily rejected the dissenting view

of the Chief Justice, Mr. Justice Black and Mr. Justice Douglas

that the ICC should not be able to override the rule of Bisso under

any circumstances. 360 U.S. at 422.

13

Like the ICC, in its regulation of water carriers, the MAA,

in its administration of airports and air navigatign facili-

ties under the International -Facilities Act, has effective

colitrol over charges and ‘‘the power to drive hard ‘bar-

gains’’ and has the expertise to evaluate the economic and

physical factors which determine the propriety of the use

of exculpatory arrangements at airports under the Inter-

national Aviation Facilities Act. Indeed, because of its

extensive operating as well as regulatory experience, it

would seem that the FAA is better equipped than the ICC

to determine the propriety of an exculpatory provision.

To illustrate briefly, the FAA from its inception has op-

erated in a field of commerce in which federal control has

been described as ‘‘intensive and exclusive’’ and in which

Congress through its agencies has asserted its pre-emi-

nence in defining a ‘‘national public policy”’ in the use and

development of the airways. From the standpoint of ex-

pertise and control of safety factors which may arise from

exculpatory agreements, the FAA examines, licenses, in-

spects and tests all technical personnel in the aviation in-

dustry (pilots, mechanics, airport control tower operators),

11 “Air as an element in which to navigate is even more inevitably

federalized by the commerce clause than is: navigable water.”

* 2 =.

“Congress has recognized the national responsibility for regulat-

ing air commerce. Federal control is extensive and exclusive.”

Northwest clirlines, Inc. v. Minnesota, 322 Us'S, 292, 303 (1944)

(Jackson, J., concurring opinion). See also Griggs v. Cty. of Alle-

gheny, 364 U. S. 84, 91-92 (1962). See particularly the Civil Aero-

‘nautics Act of 1938, 52 Stat. 977 et sea. and the Federal Aviation

Prograny 72 Stat. 731 (1958), 49 U.S.C. $§1301-1542, both of

which set forth 2 comprehensive meen PS policy with respect

te development of civil air Siena

14

~ 49 U.S.C. §§1422, 1429, 1430, and essential equipment (air-

craft, engines, propellers and air navigation equipment),

49 U.S.C. §§1423, 1425, and airports, 49 U.S.C. §§1426,

1429. Moreover, the FAA has expertise in the field of

* the economics of airport operation, for it operates and sets

the charges at Dulles International Airport, 64 Stat. 770

(1950) and Washington National Airport, 54 Stat. 686

(1940), FAA First Ann. Rep. 37 (1959). It operates in-

ternational air terminals in the Pacific at Wake Island,

Canton Island, Cold Bay in the Aleutians, and, until re-

cently, Vairbanke and Anchorage [Tr. pp. 30, 31]. The

FAA administers the Federal Airport Act, 60 Stat. 170

(1946), 49 U.S.C. §1101 et seg., under which it provides

planning and federal aid for the development of public

‘p airports.

This general expertise is combined with full regulatory

control of airports, like Shemya, administered by the FAA

under the International Aviation Facilities Act. That leg-

islation was intended to foster the development of inter-

national air commerce. It empowers the FAA to perform

‘‘All acts and things necessary or incident to . . . con-

solidation, operation, protection, maintenance, improve-

ment, and administration’” of airports acquired thereun-

der, and specifically provides that actual operating duties

may be contracted out. 49 U.S.C. $1159 (a) (3). The FAA

is specifically directed ai.d empowered to regulate the rea-

‘ sonableness of all proposed. charges at those airports, 49°

‘U.S.C: §1159(a) (5)." By its lease with Northwest, FAA re-

12 Such regulatory power over charges for services is generally

held to include the power to approve or reject provisions excludin;

or limiting liability, which are recognized as integral parts of the

charged rates. Southwestern Sugar & Molasses C o. Vv. River Ter-

minals Corp., 300 U.S. 411, 418 (1959) ; Western Union Tel. Co. v.

iisteve DBros., 256 U.S. 566, 571 (1921): Boston & M. R. R. v.

Hooker, 233 U.S. 97, 116 (1914) : Lichten v. Eastern Airlines, Inc..

189 F, 2-939 (2d Cir. 1951). .

6

15

served the power and prescribed procedures for its re-

view of the amount, fairness and reasonableness of pro-

posed charges at Shemya in accordance with its statutory

duty. See n.6 supra. And of course, all the FAA’s regu-

latory powers in the safety area are applicable to personne!

and air navigation equipment at Shemya.

Thus, to a degree even greater than the ICC in South-

western, the FAA has specific and effective control of ‘‘the

power to drive hard bargains”’ and of any possible tend-

ency toward negligent operation at Shemya, as well as the

general expertise to evaluate the propriety of an excul-

patory provision at Shemya in light of the physical and

- economic circumstances and the goals of the International

Aviation Facilities Act.* The FAA falls well within the

guidelines laid down in Southwestern and, like the ICC,

should have been held to have the general power, subject

to judicial review, to approve and authorize exculpatory

arrangements under proper circumstances, notwithstand- ©

ing contrary common law public safety.

13 The FAA had valid reason in approving the exculpatory provi-

sion to consider the Alaskan public policy inapplicable and unneces-

sary. In view of Shemya’s remote location, it may have considered

the provision a desirable inducement or an economic necessity ia

order to have Shemya operated by a private corporation. Recogniz-

‘ing that as between large corporations an exculpatory agreement

merely shifts, the cost of insurance premiums from one* party to

another. see Southzestern Sugar & Molasses Co. v. River Terminals

Corp., 360 U. S. 411, 418 (1959) the FAA may have felt the ex-

culpatory provision was the only way landing fees at Shemya could

be kept in line with charges at the more accessible Fairbanks and

Anchorage Airports. The FAA may. have felt the provision was

not conducive of negligence because of its own supervision of per-

sonnel an: facilities, because Northwest's own aircraft regularly

used the Shemya ficld, and because the very assumptions of the

“public policy” are undercut when the exculpatee is a large cor-

poration whose employees are not even aware of the existence of the

agreement.

\

ed

16

C. The Decision of the Court of Appeals and its Conse-

quences.

The Court of Appeals decided, without explanation, that

the operation of Shemya Airport was not ‘‘effectively con-

trolled by a pervasive regulatory scheme’’ so as to bring

the case within the principle of Southwestern and con-

sequently that the validity of the exculpatory provision

was exclusively governed by the public policy of the State

of Alaska. 4

Both the failure to apply Southwestern and the govern-

ing effect given the public policy of the State of Alaska in-

volve serious errors of federal law which call for review

by the Supreme Court. These two points will be discussed

in turn.

1. The Failure to Apply the Southwestern Case.

* The decision that the FAA lacked sufficient power or ex-

pertise in its regulation of Shemya to require adherence

to the doctrine of Southwestern has implications that ex-

tend far beyond the result of this case. There are two

reasons for this effect.

First, the desizion strikes directly at the power of the

FAA under the International Aviation Facilities Act.

Since it holds that the FAA does not fall within the doc-

trine of Southwestern, the FAA does not have, under the

decision below, either (1) the right to primary jurisdic-

tion over the question. of the validity of exculpatory pro-

visions (as the ICC did in Southwestern) or (2) the power

to approve a Schedule of Charges provision which con-

travenes common law ‘‘public policy’’4(as the TOC wax

held to have in Southwestern). Therefore, contrary to the

Constitutional pre-eminence over state law of federal regu-

lation of interstate and foreign commerce, U. s Cone

\

| 17

wae

Art. I, Section 8, Clause 3; Gibbons v. Ogden, 9 Wheat. 1

(1824), the FAA, in attempting to implement the Inter-

national Aviation Facilities Act, must defer to the diverg-

ent dictates of ‘‘public policy’’ of each state in which it

operates.

Secondly, because the decision conflicts so sharply with

the rationale of Southwestern, it confuses the doctrine of

that’ case and, therefore, confuses the law governing the

powers of many other agencies and their relationship with

the courts. Since the Court of Appeals offered no explana-

tion of its conclusion, and yet it is impossible to perceive

in what respect the FAA’s expertise and regulatory powers

at Shemya falls short of the ICC’s control of water car-

riers, the decision below naturally raises the question, ‘‘If

the doctrine of Southwestern does not apply in this case,

when does it apply?’’ Until the standards for determin-

ing when an agency has ‘‘effective control’’ or a ‘‘perva-

sive regulatory scheme’”’ are clarified by: this Court, the

decision below leaves the courts, the agencies and those

who deal with them in doubt as to whether an administra-

tive agency comes within the principles of Southwestern.

For example, if the FAA, in its regulation of Shemya,

does not come within the doctrine of Southwestern and con-

sequently must defer to the public policy of the several

states, the FAA in its other functions and other federal

administrative agencies are necessarily unclear as to

whether they have sufficient expertise and regulatory power

to make a determination contrary to common law public

policy. Also, under the decision below, the FAA must re-

frain from approving exculpatory provisions for airports

in Alaska, although it ‘might well be able to if the airport

were in Florida, whose public policy upholds exculpatory

oagreements between large business enterprises. Cf. Jack-

18

— sonville. Terminal Co. v. Ratlwauy Express Agency, Inc.,

296 F. 2d 256 (Sth Cir. 1962). Consequently, the deci-

sion below indicates that other agencies whose expertise

and regulatory powers do not-appear to exceed those of

the FAA must also be frustrated in their attempts to

achieve uniform national regulation of commerce in accord-

ance with their statutory purposes.

Similarly, if the FAA, which has great expertise and

special knowledge of safety, economic, and operating fac-

tors, does not have primary jurisdiction over chailenges

to the validity of an exculpatory provision operative at

Shemya, the doctrine of primary jurisdiction in generai

is restricted by the opinion below. Unless the FAA is em-

powered to determine in the first instance the propriety of

conditions of use imposed at airports under the Interna-

tional Aviation Facilities Act, no cohesive and economical-

ly realistic airport-use policy can be developed, for the

conditions of use at each airport will be subject to chal-

lenge and determination in the courts of each state. Simi-

larly, by restricting | the doctrine of primary jurisdiction,

the decision below stands as authority for the courts to

deny other federal administrative agencies the opportunity

to make initial decisions on the validity of exculpatory pro-

visions in their respective regulatory fields.

Moreover, the confusion created by the decision below

_as to the applicability of the doctrine of Southwestern af-

fects adversely those who are regulated by the FAA and

those who deal with them. If Northwest and Alaska Air-

lines can operate for two and a half years under an ex-

culpatory provision approved by the FAA, then to have

it challenged and overturned in court on the basis of state

law, no federally-regulated enterprise or those who deal

with if ean be certain that the regulations under which

they have heen operating will not be overturned by a sub-—

19

sequent court decision that the regulating agency is not

within Southwestern and that state law controls. Only

the clarification by the Supreme Court of the standards for

application of the doctrine of Southwestern can avert the

widespread uncertainty and frustration of federal regula-

tory efforts that will result’ from the decision below.

2. The Role of State Public Policy in Agency Determinations ; ;

Scope of Judicial Review.

The erroneous conclusion of the Court of Appeals that

the FAA did not effectivelyccontrol operations at Shemya

within the meaning of Southwestern, in addition to limit-

ing the power of the FAA and confusing the applicability

of Southwestern, had two further consequences requiring |

review on certiorari. First, the Court of Appeals failed

to deal with an important question of federal law not

reached by the Court in Southwestern but properly and

necessarily presented by this case, t.e., the scope of judi-

cial review of a determination by an agency having the

status and powers of the ICC (here, the FAA) that an

exculpatory provision is reasonable. Second, whether a

federal agency or department which is held not to fall

within the scope of Southwestern can properly approve

or authorize contractual provisions which contravene state

ja policy.

¢ a. THe Scorz or Jupicia, Review

In Southwestern, where the Court referred to the ICC ©

the question of validity of an exculpatory tariff provision

filed with but not approved by that agency, the Court

stated, 360 U. S. at 420:

‘‘We maycassume that the question whether a clause

of this kind offends against publie policy is one ap-

propriate ultimately for judicial rather than ad-

ministrative resolution.’’ ;

20

However, the case did not come back to the Supreme Court,

and the Court did not reach the question of the scope and

nature of judicial review following administrative: approv-

al of an exculpatory clause which is contrary to common

law public policy.

This question is squarely presented by the instant case.

Here, the exculpatory provision in question already had

been approved by the FAA, an administrative agency

whose expertise and effective regulatory control of the op-

erations at Shemya are at least the equivalent of that of

the LCC, and the FAA’s determination was made pursuant

to its administration of the International Aviation Facili-

ties Act. The question presented, therefore, is the scope

of judicial review of agency action and the weight, if any,

to be accorded the public policy of the State of Alaska in

such review,.e.g., is the agency free to make its initial de-

termination without reference to state public policy, or

should it consider that policy and to what extent?

Under familiar pyinciples of administrative law, see,

e.g., Gray v Powel i U. S. 402 (1941); Airline Pilot’s

Ass’n v.:Qu 5; 276 F. 2d 892 (2d Cir. 1960), it would

seem that judicial review of an agency approval of an ex-

culpatory provision should be limited to a determination

of whether the administrative action was within the statu-

tory powers of the administrative body and was reason-

able under the facts ard in terms of the statutory purpose.

Specific guidance from the Supreme Court, however, is

needed as to what weight should be given state public

policy by the courts in determining the ‘‘reasonableness’’

of determinations by agencies which are within the scope

of the Southwestern case and by the agencies. themselves

in making their initial determinations. :

21

b. Srare Pusiic PoLticy ANnp AGENCIES NOT WITHIN THE

Score or SOUTHWESTERN ‘

The Court of Appeals, because of its erroneous conclu-

sion that the FAA was not within Southwestern, apparent-

ly felt that on review, it need give no weight whatever to

the FAA approval of the provision, and that the ques-

' tion of validity was to be determined anew by the courts

under state public policy. In other words, the Court ap-

parently assumed that Southwestern holds that only agen-

cies which, like the ICC, have ‘‘effective control’’ through ~

a ‘‘pervasive regulatory scheme’’ have the power to ap-

prove an exculpatory provision that contravenes state pub-

lic policy, and that without the power to approve, an agen-

cy’s determination is completely irrelevant. The decision

below, therefore, stands for the preposition that, except

in those instances where Southwestern controls, a deter-

mination of a federal administrative agency, acting with-

in the scope of its Congressionally-delegated powers, may

be completely subordinated to conflicting state public pol-

icy. The implication of the decision below is that the Fed- |

eral Government, when acting through administrative agen-

cies other than the ICC and those comparable to it, must .

subordinate its programs and regulatory control to the

dictates of the public policy of each of the fifty states.

The decision below, therefore, contravenes the policy of

of the Commerce Clause, Article I, Section 8, Clause 3, and

the Supremacy Clause, Article VI, of the United States

Constitution and conflicts in principle with federal cases

which, without reference to Southwestern, have held that

particularly in the field of aviation, where federal regu-

lation is intensive and exclusive, local law cannot over-

ride the determinations of a federal regulatory agency

- which conflict with state law. See Allegheny Airlines v.

Village of Cedarhurst, 238 F. 2d 812 (2d Cir. 1956) ; United

=a,

22

eee

States v. Eastern Airlines, 132 F. Supp. 812 (E. D. N. Y,

1955) .**

Thus, the Court of Appeals’ review and de facto reversal

of the FAA’s approval of the exculpatory provision in

this case wholly on the basis of state law subordinates

to state public policy the acts of every federal administra-

tive agency not within the scope of Southwestern, frus-

‘trating the purposes of Congressional regulation and the

United States Constitution. Supreme Court review and

correction is therefore necessary to define the powers of

federal agencies not within Southwestern to authorize con-

tracts contrary to state law and to define the proper stand-

ard of court review of such agency action.

CONCLUSION

- As shown above, the Court of Appeals in this case de-

cided incorrectly important federal questions involving the —

relationship between federal and state law and between

the courts and federal administrative agencies. Its deci-

sion impedes the function of the FAA under the Interna-

tional Aviation Facilities Act and, in process, derogates

5 &

14In support of its conclusion that a federal agency not within

the scope of Southwestern lacks the power to override state public

policy, the Court of Appeals relied on its decision in Air Transpori

-Issociates v. United States, 221 F. 2d 467 (9th Cir. 1955), where

~ it had invalidated under Alaskan public policy an exculpatory agree-

landing field. However, Air Transport was decided under the Fed-

tal-Tort Claims Act, pursuant to which the Government waived

its sovereign immunity and agreed to be bound by state law, and

therefore is not authority for the proposition that the Government.

when acting pursuant to a legislative program to regulate and pro- |

‘mote commerce, is subject to state public Rey. See generally,

- Gibbons v. Ogden, 9 Wheat. 1 (1824).

hse between the Air Force and a private user of an Air Force

23

its general expertise and authority in the aviation field. In

addition, as a result of its finding that this Cdurt’s deci-

sion in the Southwestern case is inapplicable here, the .

precedential effect of Southwestern is restricted and nu-

merous federal agencies and those who deal with them are

subjected to uncertainty as to the law which govgrns their

actions. By subordinating a federal agency de

to state public policy, the decision Melos cade enes and

hinders the purposes of the Commerce Clause and Sv-

premacy Clause of the United States Constitution.

For all the foregoing reasons, this petition for a writ of

certiorari should be granted.

‘Respectfully submitted,

Bernarp M. SHantey,

Freperick B. Lacey,

- Smantey & FisHer,

Counsel for Petitioner.

Of Counsel:

R. BoocHEvER,

‘FauLkKner, BANFIELD,

BoocHever AND Doocan.

: oa

[APPENDICES FoLLow ]

APPENDIX A

2

OPINION OF THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

(April 14, 1964)

PuummeEr; District Judge.

By this action the parties seek a declaration of their

_ rights arising out of an agreement relating to the use of

_an airport and related facilities at Shemya, Alaska.

In September of 1955, the United States of America was

the owner and had jurisdiction over the Island of Shemya..

The air navigation facility located there was administered

by the Administrator of Civil Aeronautics Administration

under the provisions of the International Aviation Facjli-

ties Act (62 Stat. 450, 49 U.S.C.A. §1151 et seq., Act of

June 16, 1948, c. 473). 49 U. 8.C. A. $1159 provides, ‘in part,

as follows:

‘“(a) With siaiail to si sisal property and air-

way property in territory (including Alaska) out-

-side the continental limits of the United States which

he has acquired pursuant to this chapter or any

other pr SEVEN the Administrator is empow-

ered and directed to do and ‘perform, by contract

or otherwise, all acts and things necessary or in-

cident to their consolidation, operation, protection,

maintenanee, improvement, and administration, in-

eluding but not limited to the power * * *. (3) to

lease under such conditions as he may deem proper

and for such periods as may be desirable (not to

- exceed twenty years) space. or property for pur-

poses essential or appropriate to their consolidation,

operation, protection, and administration under this

chapter; * * *.”” |

[25]

x S

26

‘Appendia. A

“On September 30, 1955, defendant leased the Shemya air-

field from the United States of America, the United States

_ being represented by the Administrator of Civil Aeronau-

‘tics Administration. The lease contained, among others,

the following provisions:

and

‘WHeErras, it is considered to be in the public in-

terest that said air navigation facilities at Shemya

be available to the seronaakient public on a non-

discriminatory basis :’ ;

' «*(e) Lessee shall maintain and operate as com-

plete an air navigation facility at Shemya.as is prac-

ticable including, but not limited to: landing areas,

communications and navigation facilities, to be avail-

able to any civil or military aircraft of the United ,

States or friendly foreign registry or sleet tat on

a non-discriminatory basis.

‘¢(d) Lessee shall furnish all available services at

Shemya to the aeronautical public at fair and rea-

sonable prices and shall, as soon as practicable here-

after and in any event within six months from the

date hereof, furnish Lessor with a schedule of

charges to be made for such services by Lessee at

Shemya, which schedule of charges shall be approved

by the Administrator of Civil Aeronautics or his

designee unless found by him or his designee to be

excessive, discriminatory, or unfair, in which case

Lessee agrees to amend said schedule of charges to

conform to those considered, in the judgment of Les-

sor, to be reasonable.’’

0 .*

27

Appendiz A

On January 5, 1959, an agreement pertaining to Alaska’s

use of the Shemya facilities was entered into between

Northwest and Alaska. It provided, in part, as follows:

‘*4. Alaska agrees to hold harmless and indemni-

fy Northwest, its officers, agents, contractors, serv-

ants and employees from all claims and liabilities

for damage to, loss of, or destruction of any prop-

erty of Alaska, its officers, agents, servants and

employees, and the property of any other person

or persons, and for injuries to or death of any per-

son or persons which may now or hereafter arise

out of or be in any way connected with the service

and facilities furnished to Alaska under this agree-

ment.”’

By reference, a schedule of charges for Shemya airport

dated May 10, 1957, submitted to CAA by Northwest Air-

lines and approved by the Acting Administrator of the

_ CAA on July 12, 1957, was made a part of the agreement

between Northwest and Alasks. This schedule of charges

provided, in part, as follows:

‘‘J. Shemya and its facilities shall be listed in all

publications as privately operated and available to

the aeronautical public upon the terms and condi-

tions set forth herein and at the sole risk of the user,

and the user will specifically indemnify and hold

Northwest Airlines, Inc., its employees, agents, con-

tractors and, subcontractors, harmless against any

and all claims for loss, damage, injurv or death aris-

ing out of or in any way connected with such use

of the facilities or services provided at Shemya.”’

— 28

Appendiz A

On July 21, 1961, while Northwest was operating the

Shemya airfield under the terms of its lease agreement

with the United States of America, a DC6 airplane owned

by Alaska and operated by it as flight 779, crashed and

burned near the approach end of Runway 10 at Shemya.

All six crew members aboard the aircraft were killed and

the aircraft was destroyed or substantially damaged.

In a separate action pending in this court (No. J-4-63

Civil), Alaska has sued Northwest alleging that its negli-

gence was the sole and proximate cause of the accident and

seeking to recover for the loss of the aircraft and attend-

ant damages. Northwest has denied Alaska’s allegations

of negligence and has, in turn, alleged contributory negli-

gence and assumption of ‘risk on the part of Alaska. As a

further affirmative defense, Northwest claims the protec-

tion of the exculpatory provisions contained in the agree-

ment of January 5, 1959.

Six wrongful death actions have been instituted against

Northwest in other courts by personal representatives of ~

the decreased crew members. Northwest has demanded that

Alaska defend those cases, basing this claim upon the ex-

culpatory provisions of the agreement.

The combined total recovery sought by these actions

approximates $3,000,000.00. This action was brought for the

purpose of obtaining a declaration of the rights existing

between Alaska and Northwest under the exculpatory pro-

visions of the agreement of January 5, 1959.

This court has jurisdiction under 28 U.S.C.A. § 1332(a)

\and under the declaratory judgment provisions contained

’ jn 28 U.S.C.A. §§ 2201 and 2202.

29

Appendiz A

The parties are in complete agreement that the exculpa-

tory provisions contained in the agreement of January 5,

1959, are clear and unequivocal. Alaska vigorously con-

tends that the contract clearly did not provide that North-

west would be indemnified against its own negligence. De-

fendant with equal vigor’ contends just the opposite. Pro-

visions similiar to those irfvolved in the present case were

contained in agreements which Northwest had with Seandi-

navian Airlines System, Inc., and Japan Airlines Company,

and were construed by them to include damage to, loss of,

or destruction of property and injury to or death of persons

caused by the gross negligence or willful conduct of North-

west Airlines. .

In United States v.. Wallace, 18 F. 2d 20, 21 (9th Cir.

1927), the court, with reference to an indemnity provision

there being considered, stated as follows:

‘‘Read literally, the language is undoubtedly broad

enough to cover not only cases were both indemni-

tor and indemnitee are negligent, but cases where,

as here, the indemnitee alone is chargeable. But in

the light of the circumstances and of established prin-

ciples of interpretation, should it be so understood?

* & 899

In American Stevedores v. Porello, 330 U. S. 446, 67 S.

Ct. 847, 91 L. Ed. 1011 (1947), the court in holding an

indemnity provision to be ambiguous stated:

“Itmay be that parties only meant American to,

indemnify the United States should the Government.

he held liable for damages solely caused by Ameri-

can’s negligence. It may be that the intention was

that American should fully reimburse the United

>

30

Appendia A

States for all damages caused in any part by

American’s negligence. Finally, the parties may have

intended that American, in case of the joint negli-

gence of the parties, should be responsible for that

proportion of the saatieins which its fault bore to the

total fault.’’

The similarity of the provisions presently under consid-

eration with those considered in Wallace and Porello is

sufficient to raise a serious question as to whether they

can be said to be expressed i in clear and unequivocal terms.

A contract of indémnity will not be construed to indem-

nify a person against his own negligence unless such in-

tention is expressed in ‘‘clear and unequivocal terms.’’ An

examination of the reported cases readily establishes that

e words ‘‘clear and! unequivocal terms’’ can. be inter-

Fetes in more than one manner.

The letter agreement between the parties dated Decem-

ber 19, 1958, was addressed to Alaska Airlines, Inc., 435

Fourth Avenue, Anchorage, Alas, the attention of Mr.

© Kelley Weiss, Assistant. Vi resident—Operations, and

accepted by him on behalf of Alaska on January 5, 1959.

The place of contracting is the place where the last event

necessary to make the contract occurs. Consequently, the

construction and validity of-the present contract is to be

determined according to the law of Alaska. Since the letter

agreement was drafted and prepared by Northwest any

question of doubt in its interpretation should be construed

against Northwest.

The Supreme Court of Alaska has not as yet passed upon

the issues presented by this casef Under these cireum-

stances this court is required to use its best judgment in

2

31

Appendix A

predicting what the State court would hold. Tavernier v.

Weyerhaeuser Company, 309 F. 2d 87, 91 A. L. R. 2d 1268

(9th Cir. 1962).

Plaintiff suggests that the opinion of the United States

Court of Appeals for the Ninth Circuit in United States v.

Wallace, supra, should be controlling since it was deter-

minative of the law in Alaska prior to statehood and no

Alaskan court has since spoken on the subject. In Wallace

the court was required to construe an indemnifying pro-

vision which provided:

‘‘The contractor is to fully protect the ship and

owners against any and all claims for injury to work-

men engaged by him or his creator de in carry-

ing out work on the —- vi

In holding that this clause did not indemnify the owner, the

United States of America, against its own negligeiice, the

court stated, in part, as follows:

‘The established principle is thought to be that

general words alone do not necessarily import an

intent to hold an indemunitor liable to an indemnitce

for damages resulting from the sole negligence of

the latter; it is but reasonable to require that an ob-

ligation so extraordinary and harsh should be ex-

pressed in clear and unequivocal terms.”

Defendant responds to this suggestion by asserting that

although Wallace may be distinguished from the present

case purely on the language of the clause, the actual ground

of distinction is much broader, and that while Wallaeé may

have represented a view prevalent in the Ninth Cireuit 35

years ago, the case has never been cited by that court since

and its reasoning has been completely rejected.

*

ev

Appendiz A

In Southern Pac. Co. v. Layman, 173 Or. 275, 145 P. 2d

295 (1944), the Supreme Court of Oregon construed an in-

demnity provision which provided:

‘‘Licensee shall and hereby expressly agrees to in-

demnify and save harmless the Licensor and its -

lessor from and against any and all loss, damage,

injury, cost and expense of every kind and-nature,

from any cause whatsoever, resulting directly or in-

directly — = maintenance, presence or use of

said crossing.’ |

In holding that the provision did not cover losses caused

by the indemnitee’s negligence, the Supreme Court of Ore-

gon quoted excessively from Wallace and cited and relied

upon all of the cases cited by the Ninth Circuit Court of

Appeals in its opinion in Wallace.

However, defendant states that the Supreme Court of

Oregon in Southern Pacific Co. v. Morrison-Knudsen Co.,

216 Or. 398, 338 P. 2d 665 (1959), has restricted Layman

to its facts and arrived at a completely different result on

similar language.

In Boise Cascade Corp. v. Nicholson Manufacturing Co.,

221 F’. Supp. 135 (D. C. Or. 1962), the court adhered to the

rule laid down by the Supreme Court of Oregon in Layman

and clearly distinguished the holding in Morris-Knudsen.

The decision of the district court’ was affirmed in a per

curiam opinion, Boise Cascade Corp. v. Nicholson Manu-

facturing Co., 322 F. 2d 792 (9th Cir. 1963), which stay

as follows:

‘‘We refer to and adopt the opinion of the District

Court appearing at 221 F. Supp. 135 and affirm the

judgment for the reasons therein stated.’’

33

_.l[ppendix A

Layman embéeédies the rationale of Wallace. ~The ra-

tionale of Layman is clearly adopted by the United States

District Court of Oregon in Nicholson Manufacturing Co.

On appeal the United States Circuit Court of Appeals, in

the clearest of language, adopts the logic and reasoning of

Wallace and Layman.

Wallace is probably the leading case, and has been cited

with approval on numerous occasio , for the proposition

‘that to impose liability upon an indemnitor for the negli-

gence of the indemnitee, the intention of the parties must

be expressed in clear and unequivocal terms.

As previously stated, the’ Supreme Court for the State

of Alaska has not had occasion to decide the precise ques-

tion here presented. Plaintiff’s suggestion that the Ninth

Cireuit’s opinion in the Wallace case should be control-

ling on this court is entitled to serious consideration.

The act of May 17 g§904, e. 53, sec. 7, 23 Stat. 24, 25-26,

an act providing a civil government for the Territory of

Alaska, provided, in part, as follows:

‘*Sec. 7. That the general laws of the State of Ore-

gon now in force are hereby declared to be the law

in said district, so far as the.same may be applicable

and not in conflict with the provisions of this act or

the laws of the United States * * *,”’

Historically the courts of the Territory of Alaska con-

sidered the opinion of the Supreme Court of Oregon _ as

being highly persuasive. There has been no indication to

date that the Supreme Conrt of the State of Alaska will

deviate from or abandon this praetice. Under the eireun-

stances of the: present ease, this court believes that the

Supreme Court of Alaska, if faced with this question, would

° : }

34

Appendia A

quite properly follow the logic and reasoning of the deci-

sions in Wallace, Layman and Nicholson Manufacturing

Co. .

ro

The construction to be given the exculpatory provisions

under consideration in this case can best be stated by para-

phrasing the conclusion of the District Court of Oregon in

Nicholson Manufacturing Co. as follows: Whatever else

the general promise of indemnity may include, the rule in

Wallace, Layman and Nicholson Manufacturing Co. pro-

hibits this court from reading into it-an intent to indemify

for losses chused by the sole negligence of the indemnitee.

If, in this case, Northwest had wished to make Alaska an

insurer not only for losses caused by Alaska’s acts, but also

for losses caused by Northwest’s sole negligence, that in-

tention should have been expressed in clear and unequivocal

language. The language here falls short of this require-

ment. -

Alaska also contends that this case falls squarely within

the facts and logic of Air Transport Associates, Inc. v.

United States, 221 F. 2d 467 (9th Cir. 1955). Northwest,

however, states that Air Transport is not applicable since

Shemya airport was not béiig operated by it as a public

facility.

49 U.S.C.A. §1349 (sec 303 of the Civil Aeronautics Act

of 1938, 52 Stat. 973, 986) provides that there shail be no

exclusive right for the use of any landing area or air navi-

gation facility upon which federal funds have been ex-'

pended. It was stipulated by the parties that federal funds

had been expended on the airport at Shemya in the early

1950's. For this reason, no exclusive right of use in con-

nection with the facilities at Shemya could be granted to

defendant or to anyone else.

2

35

Appendix A

The lease of September 30, 1955, between the United

States of America and Northwest declares it to be in the

public interest that the facilities at Shemya be available

to the aeronautical public on a non-discriminatory basis;

required that the facilities be available to any civil or mil-

itary aireraft of the United States or friendly foreign

registry or ownership on a non-discriminatory basis; and

required that Northwest furnish all available services at

Shemya to the aeronautical public at fair and reasonable

prices to be approved by the Administrator of CAA or his

- designee.

Paragraph J of the schedule of charges submitted by

Northwest and approved by the Acting Administrator of

CAA on July 12, 1957, provided in part that Shemya and

its facilities should be listed in all publications as privately

operated and available to the aeronautical public.

‘The court finds that on July 21, 1961, the facilities at

Shemya were being operated by Northwest as a public

airport within the purview of Air Transport Associates,

Inc. v. United States, supra, and adopts as controlling the

opinion in that case.

Defendant’s efforts to distinguish this case from Air

Transport on the ground that an approved tariff provision

is involved in the present case is discussed later in this de-

cision. Suffice it to say, at this point, that it is reasonable

to conclude that the conditions of the use of Elmendorf Air

. Force Base airfield were not established unilaterally by

those using the field but that the conditions imposed upon

its use were those deemed proper by, and subject to, the

‘approval of some officer or agency of the United States

which, in reality, is all that was required in the present

case.

cctiaene

Appendia A

_ It is Northwest’s contention that regardless of the val-

idity of paragraph 4 of the agreement of January 5, 1959,

paragraph J of the schedule of charges which was ap-

proved by the Acting Administrator of the-Civil Aero-

nautics Administration on July 12, 1957, which by refer-

ence was made a part thereof, is an approved tariff provi-

. sion and is unquestionably valid and controlling in this

ease. This contention on the part of the defendant is

predicated upon Southwestern Sugar and Molasses, Co.,

Ine. v. River Terminals Corp., 360 U. S. 411, 79 S. Ct. 1210,

3 L. Ed. 2d 1334 (1959). Defendant’s reliance on South-

western Sugar presupposes that the schedule of charges

here involved is a tariff filed with and subject to the per-

vasive regulatory authority of ‘an expert administrative

body and that the situation is effectively controlled by a

pervasive regulatory scheme.

49 UJS.C.A. §1159, section 10 of the International Avia-

tion Facilities Act, supra, p. 2, under which the lease be- »

tween the United States of America and Northwest came

into existence, authorizes the Director of the Civil Aero-

nautics Administration in;connection with airport property

in territories, including.Alaska, to lease under such condi-

tions as he may deem proper space or property for pur-

poses essential or appropriate to their consolidation, op-.

eration, protection and administration and to make just

and ‘reasonable charges for aeronautical services. The

lease of September 30, 1955, between the United States of

‘America and Northwest required that Northwest, within

6 months from the date of the lease furnish the United

States with a schedule of charges, to be approved by*the

Administrator of CAA, to be made by Northwest for such

services at Shemya.

37

“Appendia A - ©

(‘ourts may take judicial notice of federal statutes and

regulations prescribing the powers, duties, authority and

jurisdiction of the Civil Aeronautics Administration and —

.of the Administrator of that agency. From a review of

the statutes and regulations on this subject in effect on

July 12, 1957, the date on which the schedule of charges

of which paragraph J forms a part, was approved by the

‘Acting Administrator of the CAA, the court finds that the

CAA and the Administrator of that agency was not on

that date an expert administrative body with pervasive

regulatory authoricy within the purview of the Supreme

Court’s decision in Southwestern Sugar Co. v. River

Terminals, supra.

The facts of the present case bring it within the rule

of Bisso v. Inland Waterways Corp., 349 U. S. 85, 7 Ss.

Ct. 629, 99 L. Ed. 911 (1955), and the companion ease of *

Boston Metals Co. v. The Winding Gulf, 349 U. S. 122, 75

S. Ct. 649, 99 L. Ed. 933 (1955), as reiterated in Dixilyn

“Drilling Corp. v. Crescent Towing & Salvage Company,

372 U. S. 697, 83 S. Ct. 967, 10 L. Ed. 2d 78 (1963). The

rationale-of these cases is that agreements of the type here

involved relieving one from the consequences of his own

negligence are unenforceable. The rule is grounded on

publie policy with the end in mind of discouraging negli-

gence by making wrongdoers pay damages, and of protect-

ing those in need of services from been overreached by oth-

ers having power to drive hard bargains. On the authority

of these eases the court finds paragraph 4+ and paragraph

J of the agreement of January 5, 1959, invalid.

Pursuant to court rule 12, counsel for Alaska is di-

rected, within fifteen (15) days from date, to prepare,

serve and submit proposed findings of fact, conclusions of

law and judgment.

ao 4

I

38

APPENDIX B

OPINION OF THE UNITED STATES COURT OF APPEALS’

FOR THE NINTH CIRCUIT

[September 27, 1965]

Appeal from the United States District Court

for the District of Alaska

/ Before: Hamun, Merriwz and Envy, Circuit Judges

Exy, ‘Circuit Judge:

Northwest Airlines, Inc., instituted a suit for declara-

tory relief against Alaska Airlines, Inc. In this opinion

the parties will be called ‘‘Northwest’’ and ‘‘Alaska’’. The

suit was brought under the authority of 28 U.S.C. $2201.

and ‘!Northwest’’ appeals from an adverse judgment.

The District Court, in its reported opinion, 228 F. Supp.

322°(D. Alaska 1964), fully recites the controlling facts,

and the elaborate recitation is quoted ® the footnote be-

low.’

1“In September of 1955 the United States of America was the

owner and had jurisdiction over the Island of Shemya. The air

navigation facility located there was administered by the Adminis-

trator of Civil \eronautics Administration under the provisions of

the ‘International Aviation Facilities Act (62 Stat. 450, 49 U.S.C.A.

$1151 et seg., Act of June 16, 1948, c. 473). 49 U.S.C.A. $1159

provides, in part, as follows ;

‘(a) With regard to airport property and airway property in

territory (including Alaska) outside the continental limits of the

United States which he has acquired pursuant to this chapter or

any other provision of law, the Administrator is empowered and

’ (Continued on following page)

39

= Appendiz B

( Continned*from preceding page)

directed to do and perform, by contract or otherwise, all acts and

things necessary or incident to their consolidation, operation,

protection, maintenance, improvement, and administration, in-

cluding but not limited to the power ** *. (3) to lease under

such conditions as he may deem proper and for such periods

as may be desirable (not to exceed twenty years) space or

property for purposes essential or appropriate to their consoli-

dation, operation, protection, and administration under this chap-

ter; * * * 9

“On September 30, 1955, defendant leased the

from the United States of America, the United States bei repre-

sented by the Administrator of Civil Aeronautics I

The lease contained, among others, the following

“WIJTEREAS, it is considered to be in the public interest that

air navigation — at Shemya be available to the

tica! public on a non-discriminatory basis :’

and

‘(c) Lessee shall maintain and operate as complete an air navi-

gation facility at Shemya as is practicable including, but not lim-

ited to: landing areas, communications and navigation facilities,

to be available to any civil or military aircraft of the United

States or friendly foreign registry or ownership on a non-dis-.

criminatory basis.

‘(d) Lessee shall furnish all available services at Shemya to the

aeronautical public at fair and reasonable prices and shall, as

— sooneas practicable hereafter and in any event within six months

from the date hereof, furnish Lessor with a schedule of charges

to he made for such services by Lessee at Shemya, which sched-

ule of charges shall be approved by the Administrator of Civil

Aeronautics or his designee unless found by him or his designee

to be excessive, discriminatory, or unfair, in which case Lessee

agrees to amend said schedule of charges to conform to those

considered, in the judgment of Lessor, to be reasonable.”

(Continued on following page)

40

- Appendix B

(Continued from preceding page)

“On January 5, 1959, an agreement pertaining to Alaska’s use of

the Shemya facilities was entered into between Northwest and Alas-

ka. It provided, in part, as follows:

‘4. Alaska agrees to hold harmless and Stemi Northwest.

its officers, agents, contractors, servants and employees from all

claims and liabilities for damage to, loss of, or destruction of

any property of Alaska, its officers, agents, servants and em-

ployees, and the property of any other person or persons, and

for injuries to or death of any person or persons which may

now or hereafter arise out of or be in any way connected with

the service and facilities furnished to Alaska under this agree-

ment.’

“By reference, a schedule of charges for Shemya airport dated

May 10, 1957; submitted to CAA by Northwest Airlines and ap-

proved by the Acting Administrator of the CAA on July 12, 1957,

was made a part of the agreement between Northwest and Alaska.

‘This schedule of charges provided, in part, as follows: :

‘J. Shemya and its facilities shall be listed in all publications as

privately operated and available to thé aeronautical public upon

the terms and conditions set forth herein and at the sole risk of

the user, and the user will specifically indemnify and hoi.

Northwest Airlines, Inc., its employees, agents, contractors and

subcontractors, harmless against any and all claims for loss.

damage; injury or death arising out of or in any way connected

with such use of the facilities or services provided at Shemya.’-

“On July 21, 1961, while Northwest was operating the Shemy:

airfield under the terms of its lease agreement with the United States

of America, a DC6 airplane owned by Alaska and operated by it

as Flight 779, crashed and burned near the approach «end of Runway

10 at Shemya. All six crew members aboard the aircraft was killed

and the aircraft was destroyed or substantially damaged.

“In a separate action pending in this court (No. J-4-63 Civil).

Alaska has sued Northwest alleging that its negligence was the sole

(C ontinued on following page )

41

u Appendix B

It appears that in 1955 the island of Shemya, now a part

of the State of Alaska, was owned by, and under the juris-

diction, of, the United States of America: On the island

there was an airfield administered by the Civil Aeronautics _

Administration. On September 30, 1955, the United States,

acting through the Administrator of the Administration,

leased the facility to ‘‘Northwest’’. The lease recited,

“*“Wirnreas, it is considered to be in the public interest that

said air navigation facilities at Shemya he available to the

aeronautical public on a nondiscriminatory basis: * * *??,

and it specifically required that ‘‘(d) Lessee shall furnish

all available services at Shemya to the aeronautical public

at fair and reasonable prices * * *’’, . .

‘On January 5, 1959, ‘Northwest’? and ‘‘Alaska’’ exe-

cuted; in-Alaska, a contract by which ‘‘Alaska’’, a eom-

mon air carrier, acquired the right to use the Shemya air-

(Continued from preceding page)

and proximate cause of the accident and seeking to recover for the

loss of the aircraft and attendant damages. Northwest has denied

Alaska’s allegations of negligence and has, in turn, alleged contribu-

tory negligence and assumption ‘of risk on the part of Alaska. As

2 further affirmative defense, Northwest claims the protection of the

exculpatory provisions contained in the agreement of January 5,

1959. 7

“Six wrongful death actions have been instituted against North-

west in other courts by personal representatives of the deceased crew

members. Northwest has demanded that Alaska defend those cases.

basing this claim upon the exculpatory provisions of the agreement.

“The combined total recovery sought by these actions approxi-

mates $3,000.009.00. This action was brought for the purpose of

obtaining a declaration of the rights existing between Alaska and

Northwest under the exculpatory provisions of- the agreement of

January 5, 1959.”

-

49

Appendix B

- port and facilities. The contract contained an indemnity

provision as follows:

‘*4. Alaska agrees to hold harmless and indemnify

Northwest, its officers, agents, contractors, servants

and employees from all claims and liabilities for

damage to, loss of, or destruction of any property of

Alaska, its officers, agents, servants and employees,

and the property of any other person or persons,

and for injuries to or death of any person or per-

sons which may now or hereafter arise out of or

be in any way connected with the service and facili-

ties furnished to Alaska under this agreement. sia

r% ‘palit of charges, submitted by ‘‘Northwest’’ o

May 10, 1957 in compliance with a requirement of the haa

agreement between the United States and ‘‘Northwest’’,

was approved by the Acting Administrator of the Civil

Aeronauties Administration on July 12, 1957 and, by ref-

erence, was iricluded as a We of the contract between

‘‘Northwest”’ and ‘‘Alaska’’. / This schedule contained the

following provision :

“sy. Shemya and its facilities shall be listed in all

publications as privately operated and available to

the aeronautical public upon the terms and condi-

tions set forth herein and at the sole risk of the user.

and the user will specifically indemnify and hold

Northw est Airlines, Inc., its employees, agents, con-

tractors and subcontractors, harmless against any

and all claims for loss, damage, injury or death aris.

ing out of or in any way connected with such use

of the facilities or services provided at Shemya.’’

43

Appendiz B

On July 21, 1961, an aircraft owned and operated by

‘‘Alaska’’ crashed and burned on the Shemya cairport.

The six members of the crew were killed. ‘‘Alaska’’, al-

leging that negligence on the part of ‘‘Northwest’’ was the ©

sole proximate cause of the disaster, sued ‘‘Northwest’’ for

the recovery of the damage to its aircraft. Six other suits,

in which damages were sought for the deaths of the crew

members, were alsg brought against ‘‘Northwest’’.

‘‘Northwest’’ then instituted its action in the court below

seeking, in effect, a judicial declaration that it was saved

from liability to ‘‘Alaska’’ by the exculpatory provision of

the contract of January 5, 1959 and that, under the in-

- demnity provision of the contract, ‘Alaska?’ was obliged

to defend the six death actions and hold .‘‘Northwest”’

harmless from loss on account thereof.

The District Court’s judgment, favoring ‘* Alaska’’, was

based on two conclusions, (1) that the terms of the exculpa-

tory or indemnity provision of the ‘‘Northwest-Alaska’’

contract were not sufficiently clear to exonerate ‘‘North-

west’’ from responsibility for its sole negligence if sole

negligence should be proved and (2) that the questioned

provision of the contract, should it be construed to be so ©

broadly protective as urged by ‘‘Northwest’’, is invalid

and unenforceable. We reject-the first conclusion of the

District Court, and we agree with the second.

Our court has said, in language which bears upon the

construction of a contractual provision for indemnity,

‘“<#® *® general words alone do not necessarily import an

‘intent to hokl an indemnitor-liable to an indemnitee for

damages resulting from the sole negligence of the latter; it

is but reasonable to require that an obligation so extra-

ordinary and harsh should be expressed in clear and. un-

(4;

4,

oe

, ad

Appendix B

i>

equivocal terms.’’ United States v. Wallace, 18 F. 2d 20

(9th Cir. 1927); see also, e.g., Annot., 175 A. L. R. 8, 30

(1948). To us the agreement in-question here seems per-

fectly clear. Repeating its unequivocal provision, ‘‘ Alaska

‘agrees to hold harmless and indemnify Northwest, * * *

from all claims and liabilities * * * which may now or here-

after arise out of or be in any way connected with the serv-

ice and facilities furnished to Alaska under this agree-

ment.’’ We see no ambiguity. The language, reasonably

construed, undertook to Save ‘‘Northwest’’ from loss even

should the loss result from the negligence of ‘‘ Northwest”’

alone. See Jackson Termmal Co. v. Ratlway Express

Agency, Inc., 296 F. 2d 256 (Sth Cir. 1961), cert. denied,

369 U. S. 860, 8 L. Ed. 2d 18, 82 Sup. Ct. 949 (1962).

It is, of course, ordinarily desirable that competent par-

ties be protected in their rights to make and enforce agree-

ments between themselves. These rights are restricted by

the transcendent rule that denies enforceability to a pri-

vate contractual provision which would require an unlaw-

ful act or which, given effect, would gravely violate para-

mount requirements of public interest. Especially sig-

nificant here is the decision of our own court in Atr Trans-

port Associates v. United States, 221 F. 2d 467 (9th Cir.

1955). There, the Government, the owner and operator

of an Alaskan airport, had granted to an air carrier the

right to employ the airport’s facilities in exchange for val-

uable consideration and the execution by the carrier of an

agreement undertaking to exculpate the Government for ©

any loss arising from the carrier’s operations. Following

a nighttime crash of one of the carrier’s planes, alleged to

- have resulted from the Government’s negligence in parking

xn ground vehicle upon an unlighted runway, the carrier

&

A,

4

45

Appendic B

sued, under the Federal Tort’\Claims Act, to recover for

the damage to its aircraft. In defense, the Government in-

voked the exculpatory provision of the contract. We re-

jected the defense, holding that under the law of both

Washington, where the contract. was executed, and Alaska,

where the contract was to be performed, the exculpatory

provision was invalid. We held that its enforcement would

be opposed to the policy interests of the general publica

That decision rests upon the controlling fact that the air-

port was a public enterprise and its operation a public

service. In looking to Washington law, we cited Griffith

v. Henry Broderick, Inc., 27 Wash. 2d 901,182 P. 2d 18, 175

A. L. R. 1 (1947), and Broderson v. Rainier Nat. Park Co.,

187 Wash. 399, 60 P. 2d 234 (1936), and we wrote, at page

472,:

9

‘*In both of those cases, while the Washington Su-

preme Court held valid exculpatory agreements,

they recognized the general law concerning this type

of agreement, and cited with approval the statement

of that law found in the American Law Institute, Re-

statement of Contracts, Volume 2, Sectign 575(1)

as follows:

ghia! | ‘bargain for exemption from liability for

the consequences of a wilful breach of duty is illegal,

and a bargain for exemption from liability for the

consequences of negligence is illegal if * * * (b) one

of the parties is charged with a duty of public serv-

ice, and the bargain relates to negligence in the per-

formance. of any part of its duty to the public for

which it hasreceived or been promised compensa-

tion.’ ”’ aie)

?

46

a Appendia B

We referred to a Washington statute, Wash. Rev. Code

tit. 14, §14.08.020, which, in effect, declared that the oper-

ation of airports is a public function exercised for public

‘purposes. We demonstrated that Alaska, then a territory,

had expressly adopted the common law, Alaska Comp.

Laws 1949, §2-1-2, and_we relied upon a congressional di-

rective to the Administrator ot the Civil Aeronautics

Board, 49 U.S.C. $1102(b) in concluding, ‘‘There can be

no doubt that under the law of Alaska the operation of

Elmendorf Field was a public enterprise.’’ In the case ‘at

bar, the contract not only was to be performed i in Alaska,

but it was also executed there; hence the question. of the

validity, vel non, of the challenged provision would-ordi--

-narily be reaolvetl by the application of Alaskan law. When

we decided Air Transport Associates, we were not directed.

to, nor could we find, any pointedly controlling Alaskan

decision. The same is true today, so that as we adhere to -

our former decision, there if no intervening Alaskan de-

termination which is opposed.

‘¢Northwest’’ vigorously contends that Air Tramsport

Associates is not dispositive, reasoning, as we understand

its argument, that here, the Administrator’s approval of

the schedule of charges and the quoted provision therein,

incorporated into the ‘‘ Northwest-Alaska”’ contract by ref-

erence, endowed the contract with a quality of government-

al approval which should require us to decide that the

-whole contract, including the provision in question, was

‘enforceable as promotive and not violative of the public’s

interest and policy. We cannot accept this argument. The.

terms of the airport’s lease to ‘‘Northwest’’ expressly de-

clare a purpose of public interest and require that ‘‘North-

¢

Riad

/

47

Appendiz B Ch °

¢

west”? offer the facilities for the use of the aeronautical

public. It would appear utterly incongruous to hold, as we

did in Air Transport Associates, that the Government

could not, by contract with a user of a government airport,

relieve itself from liability for its own negligence and then,

here, to hold that the Government may empower its lessee

to make an indemnity agreement which might tend to inflict

upon the air-traveling public the possibility of tragic con-

sequences flowing from relaxed vigilance in the manage-

ment of public airport facilities. ras

We cannot see, as urged by ‘‘Northwest’’, that the en-

tire management and operation of the Shemya airport was

so ‘‘effectively controlled by pervasive regulatory scheme’’

as to require us to apply the principle announced in South-

western Sugar & Molasses Co. v. Rwer Terminals Corp.,

360 U.S. 411, 418, 3 L. Ed 2d 1334, 79 Sup. Ct. 1210 (1959).

If we were obliged to apply federal law and not Alaskan

law, we would be strongly influenced by Supremé Court

decisions holding that waterways tugboat towers may not,

by contract, exempt themselves from all liability for their

- own negligence. E.g., see Dixilyn Drilling Corp. v. Cres-

cent Towing & Salvage Co., 372 U. S. 697, 10 L. Ed. 2d

78, 83 Sup. Ct. 967 (1963);. Bisso v. Inland Waterways

Corp., 349 U: S. 85, 99 L. Ed. 911, 75 Sup Ct. 629 (1955).

In Bisso, 349 U.S. at 91, we see the Supreme Court’s views

in the language, ‘‘The two main reasons for the creation

and application of the rule [to prevent enforcement of

release-from-negligence contracts] havé been (1) to dis- -

* courage negligence by making wrongdoers pay damages,

*** The dangers of modern machines make it all the more

oy

48

Appendiz B

necessary that negligence be discouraged. » ~6Can it

sincerely believed that the public interest is better served

the discouraging of the negligence of tugboat operators

than by the discouraging of negligence on the part of

operators of public airports? We think not.

If, in the orderly course of litigation, it is determined

that negligence, if any, on the part of ‘‘Northwest’’ was

not a proximate cause of the disaster, the indemnity pro-

vision may afford an avenue by which it may gain some

relief from ‘‘Alaska’’. And it is, of course, not to be im-

plied that ‘‘Northwest’’ is, by this opinion, deprived of

any established defenses which Alaskan law affords in ac-

tions based upon alleged negligence, nor is it divested of

rights or contribution or indemnity which it may have un-

der proper application of general law. We hold only that

the exculpatory and indemnity provision, insofar as it is

sought to be enforced to spare ‘‘Northwest’’ from liability

for its own negligence, being against public policy and in-

valid, is unenforceable.

Affirmed.

2 The second “main” reason given by the caurt in Bisso was “(2)

tc protect those in need of g or services from being overreached

xy others who have power to drive hard bargains.” The Fifth Cir-

cuit, in Jackson Terminal Co. v. Railway Express Agency, Inc., 296

F. 2d 256 (5th Cir. 1961), cert. denied, 369 U. S. 860, 8 L. Ed.

2d 18, 82 Sup. Ct. 949 (1962) emphasized, in upholding an in-

’ demnity agreement, that the contracting parties were not in an un-

equal bargaining position. If that consideration is critical, it is im-

portant to note here that “Northwest”, through its agreement with

* the Government, became a monopolist in the operation of airport

facilities on Shemya Island. Its airport was the only airport. It

lay beneath a route regularly flown by “Alaska”, and “Alaska’’ was

in need of. its use for landing and refueling its planes. “N orth-

west” was in the far’ stronger position to insist upon the inclusion

of its own terms Within its contract with “Alaska’’.

%

Offiee-Supreme Court, U.S,

: FILED :

(tithes pay f pe

= cre (free L, s. FER 23 1966

JOHN -F; DAVIS, CLERK

—

‘

IN THE

Some Court of the United States

OCTOBER TERM, 1965

No. 983

»s

ee

NoRTHWEST AIRLINES, INC.,

Petitioner,

—against—

ALASKA AIRLINES, INC.,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

\ States Court oF APPEALS FOR THE NINTH CIRCUIT

BRIEF FOR RESPONDENT IN OPPOSITION

Wiu1AM J. JUNKERMAN

Counsel for Respondent

80 Broad Street

New York, N.Y. 10004

Digby 4-6800

* DovuGLas B. BowRING

JAMES B. BRADLEY

Of Counsel

INDEX»

sh

/ PAGE

Opinions Below ...... PE eee eye iacaywens %

J urisdiction inten unt PIAS A TE Rone MT os 1

Questions Presented ...........0..ceceeceeceee “4

Constitution and Statute Involved ..... Seueees: OE

Statement MTN ag FAs e vcadlcneenes 2

Argument pace cece eet en cece etn eeeeeeeeeeees 3

Point I—This petition should be denied since it

was not timely filed ..................824.. 3

- Pont II—No conflict exists between the decision

° of the Court of Appeals and the decision of

this Court in Southwestern Sugar & Molasses

Co. v. River Terminals Corp., 360 U.S. 411.. 6

Pont I1I—Even if the rule of the Southwestern

case should be held to be applicable to the

facts of this case, the Court below was cor-

rect in holding the clause to be invalid and

SI 235: 95 50h ee 14

18

CN edie es ak Se rae eee Ae

o

ll

TABLE oF Cases CITED

PAGE

_ Bisso v. Inland Waterways Corp. (1958) 349

ee Ra pce pak Be Nee Maen 7; 15, 16

Boston Metals Co. v. The Winding Gulf, on

i os 00 a ears ood ee bees “15

Dizilyn Drilling Corp. v. Crescent Towing & Sal-

vage Co., (1963) 372 U. 8. 697 ...........5. 15

Southwestern Sugar & Molasses Co. v. River Ter-

minals Corp. Cm) 360 U.S. 411,

7 2, 6,7, 8, 9, 10, 14, 15, 16, 18

OTHER AUTHORITIES. CITED

Rea rae ee ites hot a re 9

MR BO oie iic nsdn fe cdavbawial 3

49 U.S.C.A.: : |

a Ea i aagees te mae Pome OID ey oe 9

§906 ..... eee nin APO AR Ee RPE DOP TE ie oe

§907 ...... yee OT Rr TENS I oe 9

§$§ 1151 et seq. ....... roerere Cr ere e 9

sare oki Ce rude retake 8,9

U. S. Code Congressional Service, 80th Congress,

2d Session, 1948, at page 1809 ............ .9, 10

United States Supreme Court Rules, Rule 34 ..3, 4,5

IN THE

Supreme Court of the United States

) OCTOBER 91965.

No. 983

>

NortHWEsT AIRLINES, INC.,

Petitioner,

—against—

ALASKA AIRLINES, INC.,

Respondent.

»™

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BRIEF FOR RESPONDENT IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

Opinions Below

The opinions of the courts below are set forth in the

petition at page 1.

Jurisdiction

The jurisdictional requisites are set forth in the

petition at. page 2.

\ Questions Presented

1. Should this petition be denied since it was not

timely filed ?

2

2. Whether the court below was not correct in

holding that the principle of Southwestern Sugar &

Molasses Co. v. River Terminals Corp., 360 U. S. 411,

did not apply, since the Federal Aviation Agency’s -

power to approve Northwest Airlines’ schedule of

charges did not constitute “effective control by 8

pervasive regulatory scheme.”’

3\ ven assuming that the principle of South-

western Sugar & Molasses Co. v. River Terminals

Corp., is applicable, and even assuming that the

Federal Aviation-Agency consciously ‘‘approved’’ the

exculpatory clause, would not that clause be invalid

_ as a violation of public policy? o

Constitution amd Statute Involved

Respondent contends that no constitutional provi-

sion is involved. The pertinent provision of. the

statute involved is set + in the petition at pages

3 ond 4,

Statement of Facts

The facts involved are adequately set forth in the

petition at pages 4-10.

ARGUMENT

POINT I

This petition should be denied since it was not

timely filed.

It appears from the petition (page 2) and page 65

of Volume 1 of the ‘‘Transcript of Record’’ in this

Court that the Court of Appeals for the Ninth Circuit

denied rehearing on November 3, 1965. Under Title

28, § 2101 of the United States Code and Rule 34 of

the Rules of this Court, therefore, the petition was

required -to be filed on or before February 1, 1966,

unless, prior to the expiration of that period, a Fustiee

of this Court extended the time in which to file the

petition. ,

No application for extension 6f time within which

to file the petition was made on or before February

1st. |

Petitioner did fife. an application for extension of

time dated February 3rd, ingeniously avoiding Rule

34’s prohibition of the Clerk’s receiving any such

petition after the expiration of the period by pre-

senting the application not to the Clerk, but to Mr.

Justice Brennan. Mr. Justice Brennan thereupon

signed an order extending petitioner’s time to file to

February 15th, but ‘‘* * * without prejudice to this

-Court’s consideration of whether this application was

filed in time.”’