Petition for Writ of Certiorari — Associated Cultural Clubs, Inc. v. Monarch Travel Services, Inc.

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TOPICAL INDEX

Page

OE TO . o

aN cree neat aackokmaineien. A

Constitutional Provisions, Statutes and Regulations

Involved . 3

The Facts . 4

The Facts Confirmed 0... 5

Preiminary injunction

Defendants Rendered Below and Certified That

Plaintiffs Have No Standing to Sue 20 o........ 19

Contrary Decision by the District Court in the

A NE

Gucsteas Preeeeted

Reasons For Granting The Writ 00000... 27

Plaintiffs Do Not Have Standing to Sue 0... 32

The Complaint, and the Alleged Evidence in Sup-

port of It, Fails to Allege Facts From Which

Irreparable Injury is Shown or That If It is

Shown That Money Damages Which Are Fixed

Would Be Inadequate and Would Not Compen-

ef

The Pleadings and the Documents in Support of the

Motion For An Injunction Were Inadaquate..... 35

eS Ra

rer |

| oe sre

foe uytiea cd

ll Index

Page

Defendants Are Not ** Indirect Air Carriers’? With-

in the Meaning of the Federal Aviation Act of

1958, 72 Stats. 731 49 USC Sees. 1301-1542... 37

It Was Error For The Trial Court to Enjoin the

Use of Money Deposited by the Defendants in

Bank Accounts Except to Reimburse Purchas-

cutie Mi,

TABLE OF CASES “AND AUTHORITIES CITED

Cases

Automated Marketing Systems, Inc. v. Martin, 467

F. 2d 1181 . ene . 39

Connally v. General Craaiinnelians Co 0., |, 296 U. s. 385,

~~ hs oe ae... 3... aS

Dandridge v. Williams, 397 US 471, 25 L. Ed. 2d

491. 505 . we ean,

Dayton v. Hedin 357 U. s. 144. act . 28

Detroit & M. R. Co. v. Boyne City, G. & a R. Co.

Fee Se a 34

Edwards v. California, 314 U.S. 160. aoe . 28

Edwards v. So. Carolina, 372 U.S. 299, 9 9 1. “Ea. od

697 . PRAISE ME ETNA Rees ee ENS ER IT MTR 38

Geihand +. US. fo. 11- 110. pin 2

Giardano v. Radio Corp. of ein, 183 F od

558 wn OF

Gulf, Celewnde & Ranta Fo R. om v. Ellis. 165 US

150, 155, 11 LL. Ed. 2d 666, 668 Sea “99

Index iil

Page

Healy v. James, 33 L. Ed. (2) 266, 267 _......W............38, 28

la ve Gat, 2 US. 2 OEE... OB

In re Johnston, 220 F. 2d 218 oo eceececttesteeeeeeeee BO

Kent v. Dulles, 357 U.S. 116 .. SPOR AOE RT

K-2 Ski Co. v. Head Ski Co., 467 F. 2d 1087 ............ 39

L. Singer & Sons v. Union Pacific Railroad Co.,

a1 US. MSL Ee. we... 20

Massachusetts v. Mellon, 262 U.S. 447, 488, 67 L.

Ed. 10783 .............. aie ae .20, 32

Morey v. Doud, 354 U.S. 4 7, 465, LL. Ea, 2a 1485,

1491 . cae Bittle om 7

Mullana v. -( ne Sicha Ty, a, 339 tv. S. 306.

National Prison Reform Association vy. Leva

ao: fF. on: 1... SS SETS

Palm Springs Alpine Estates, Inc. v. Superior

Court for Los Angeles County, 255 Cal. App. 2d

883, 63 Cal. Rptr. 618 oo... nn

Shapiro v. Thompson, 394 U.S 618, 6 58, 663, 22

L. Ed. 2d 600 ........ FEN Sa RR Te 20, 22

Singer & Sons v. Union Pacific, 311 U. S. “9295. 85

L. Ed. 198 . Ate un, Oe

Trans-Pacific Airlines, Ltd. ¥. Bren Telend Steam

Navigation Co., 75 F. Supp. 690, 692-4 .... 12, 20. 32

U.S. v. Guest, 383 U.S. 745, 766-767 Renee

Washington v. U.S. (CA 9) 87 F 2d 421 2. 39

Western Pacific California R. Co. v. Southern Pa-

cifie Co. (1931) 284 U.S. 47, 51-52, 52 S. Ct. 56,

57, 76 L. Ed. 160 Sa St CE

Winters v. New York, 333 U.S. 507, 92 L. Ed. 840.. 38

Yick Wo v. Hopkins, 118 U.S. 356, 30 L. Ed. 220. 20, 22

IN THE

Supreme Court of the Anited States

October Term, 1972

ASSOCIATED CULTURAL CLUBS, INC., a

California corporation, also known as A.C.C.L.,

UNIVERSAL STUDENT ORGANIZATION, a

corporation, MARIA RITA BOPP, J. W. REID,

THOMAS D. MERCOLA, and PAULA BLYTHE,

Petitioners, '

vs.

MONARCH TRAVEL SERVICES, INC., a Cali-

fornia corporation, BEVERLY HILLS TRAVEL

BUREAU, INC., a California corporation, and

ECKDAHL-SUNDIN TRAVEL BUREAU, a

California corporation,

Respondents.

PETITION FOR WRIT OF CERTIORARI DIRECTED

TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT OF THE UNITED STATES.

en

To the Honorable Chief Justice Warren Burger and

to the Honorable Associate Justices of the Supreme

Court of the United States:

Your petitioners, the defendants in the above en-

titled case, respectfully petition this Honorable Court

for a writ of certiorari directed to the United States

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Court of Appeals for the Ninth Circuit to review and

reverse an order granting a preliminary injunction

to the respondents, holding that a cultural and social

club which has arranged charter flights for a portion

of its members (many of them college students and

professors) from Los Angeles, California, U.S.A. to

London, England, on a British airplane, wholly owned

by a British company, (The Donaldson Airline) is an

**indirect air carrier’’ within the meaning of 49 U.S.C.

See. 1301(3), and thus acted in violation of 49 U.S.C.

Sec. 1571(a), and also holding that charter plane flight

restrictions by the C.A.B. for economical prices are

constitutional within the American privileges and

immunities of the right of Americans to travel freely,

and as first class citizens. (U.S. v. Guest 383 U.S. 745,

766-767) 16 L. Ed. (2) 239.

Opinions of the District Court of the Eastern Dis-

trict of New York, (Second Circuit) Judge Anthony

Travia, presiding on October 25, 1972, refused an in-

junction and refused to hold charter flights were *‘in-

direct air carriers,’’ contrary to the holding of the

United States District Court, Central District of Cal-

ifornia, (Ninth Circuit) thus requiring this Court to

grant a hearing to resolve the conflict and determine

which is correct. (Gelbard v. U.S. No. 71-110; 33 L.

Ed. (2) 179, See Appendixes B and (, Oct. Term 1972.)

_

JURISDICTION

Jurisdiction is conferred by Title 28, Section 1254,

U.S. Codes.

The decision of the Court of Appeals (No. 71-2053,

9th Circuit) was rendered September 15, 1972. Rehear-

ing was denied October 16, 1972.

This petition is filed within 90 days of the denial

of the petition for rehearing.

OPINION BELOW

The opinion below is reported at 466 F. 2d 552. A

copy thereof is attached hereto as Appendix ‘‘A’’ and

made a part here. The opinions of Judge Anthony

Travia, Eastern District of New York are attached

hereto and made a part hereof, Exhibits B and C, Ap-

pendix.

CONSTITUTIONAL PROVISIONS, STATUTES

AND REGULATIONS INVOLVED

United States Constitution, Privileges and immun-

ities of American citizens. (U.S. v. Guest, 383 U.S. 745,

766-7) 16 L. Ed.(2) 239, 254, 255

First Amendment Right of Association (Healy

v. James 33 L. Ed. (2) 266, 267)

Fifth Amendment, United States Constitution (due

process of law) The right to travel freely. Kent v.

Dulles 357 U.S. 116; 2 L.Ed.(2) 1206, 1210 et seq.;

Becwr~ aimee

_

Edwards v. California 314 U.S. 160; Dayton v. Dulles

357 U.S. 144

Federal Aviation Act of 1958, Sections 101, et seq.,

401(a) and 1007(a) [49 U.S.C. Section 1301, et seq.,

1371(a), and 1487(a) }

14 Code of Federal Regulations 207.40(b)(2) and

208(6) (b)

THE FACTS

Petitioners are California corporations and indi-

vidual officers. The corporations are known as As-

sociated Cultural Clubs, Inc., also A.C.C.1., and Uni-

versal Student Organization, U.S.0. They had a mem-

bership of about 11,000 students, professors, and others

interested in culture and arranged cultural meetings

for their members as part of their cultural program ar-

ranged for charter flights from Los Angeles to Lon-

don and return at a price ranging between $275 to $325

for round trip per flight as against Ist class charges of

$1100 and economy flights at $550. They were unable

to get an American air line to handle their members

who wished to travel to London and back but were

able to enter into a contract with Donaldson Air Lines,

a British company, for their members to travel to Lon-

don and hack economically, #225 to $325 a round trip,

and at a rate not then available on any other air line

of the United States. Since plaintiffs obtained their

preliminary injunction Economical flights have opened

to everyone on regular American and foreign lines.

_ =

THE FACTS CONFIRMED

On May 14, 1971 respondents, three small travel

agencies named as plaintiffs) doing business as cor-

porations organized and existing under the laws of the

State of California, brought an action in the United

States District Court, Central District of California,

on their own behalf and on behalf of the class consis-

ting of all travel agents in Southern California, to

enjoin the petitioners from arranging charter flights

to London at economical rates. They were apparently

hacked by the large air lines, or some of them, who

posted a bond of $100,000 to cover damages to peti-

tioners and others. The cross claim asserted damages

of $10,000,000.

Respondents, the three travel agents, sought the

injunction on the basis that the charter flights and

the lower fares than the regular price were damaging

their business. They claimed standing as parties in

interest to bring the suit under Section 1007(a) of

Title 49, U.S.C., and Section 1487(a) of Title 49, and

under Title 28, Sections 1331(a) and 1337, U.S. Codes.

Petitioners contested this standing, and denied that

the charter flights interfered with travel agencies serv-

ing regular flights.

The plaintiffs made no complaint to the C.A.B.

nor did they ask for a hearing from the C.A.B. which

the aviation statute permits but plunged into the

United States District Court at Los Angeles on an

original proceeding for a preliminary injunction be-

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fore a U.S. District Judge, alleging that defendants

were “indirect air carriers.”

The business of the respondents ax travel agencies

was shown to have been based upon a high class lux-

ury trip and a fixed commission of 7 per cent of the

high cost of the flights which they arranged, either

as first class or economy class. If they were damaged

this could have been calculated.

Respondents engaged detectives who were not gen-

uine passengers nor actually intended to be passengers,

although they fraudulently represented themselves as

prospective passengers, fraudulently seeking member-

ship in the defendant club. These private detectives

tried to discover alleged violations by the petitioners

of the rules and regulations of the ivi) Aeronautics

Board regarding charter flight requirements for mem-

bership and to put the petitioner-corporations out of

business as cultural clubs, and as clubs that were able

to arrange charter flights and tours for their mem-

bers at an economical price.

Only one of the defendants claimed to have switched

from a regular flight to a charter flight.

Associated Cultural Clubs was operated by Maria

Rita Bopp, president, who has been the highly success-

ful operator of the Cultural Club for more than two

years past and was on the third year arranging char-

ter flights for bonafide members of her club commenc-

ing May 18, 1971 at a 30 day flight for $255 a round

trip, or one-way $150 to London. A series of flight

~~ =

dates were set up for further flights running through

October 12, 1971.

The Court permitted the flights to operate until

July 13, 1971 and then enjoined all other flights from

taking part subsequent to that date. The flights were

all charter flights on the Donaldson Air Lines, a Brit-

ish air line, and arranged flights to be returned on the

same air line but were enjoined. Donaldson was not

named as an indispensable party.

Several members and students were stranded in

London because they were unable to use their return

flight or to get a flight return on the economical price

which Mrs. Bopp had arranged for them on her tours.

The plaintiffs’ complaint alleged that they, the

plaintiffs were selling tours and air transportation

to the public, using legal tariffs and that the defen-

dauts were engaged in selling tours and air transpor-

tation to the public on their “fictitious” charters.

Plaintiffs alleged further the defendants are there-

fore competing with the plaintiffs for the trade of

those members of the public who want tours requir-

ing air transportation. Also they alleged that defen-

dants are engaged in unfair competition in that by

pretending that their clientele have chartered airplanes

the defendants are enabled to offer air transportation

at prices substantially below legal tariffs. They alleged

plaintiffs cannot fairly compete with this tactic with-

out violating the law the same as defendants.

The complaint further charged that defendants’

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use of *‘sham charters”’ is in violation of the Federal

Aviation Act and Civil Aeronautics Board charter

regulations 14 C.F.R. Part. 208. The plaintiffs alleged

that they lost customers through the program of the

defendants and that they would continue to lose cus-

tomers, to their ‘‘irreparable damage.** There was no

proof of this.

No affidavit supported these allegations nor was

there any specific showing of irreparable damage.

Plaintiffs presented state forms of ‘‘declaration”’ of

detectives to further their unverified complaint.

The plaintiffs alleged that the defendants were

‘‘indirect air carriers,’ as follows: ‘‘In selling air

transportation to members of the public under the

guise of a charter, the defendants are acting as ‘in-

direct air carriers’ under the Act and (.A.B. inter-

pretation. Defendants have neither a certificate un-

der Section 401(a) nor exemption under Section 1013.

Consequently, defendants’ charter acti. ities are in vi-

olation of Section 401(a) of the Act, ud a crime un-

der Section 902(a) of the Act.’’

The complaint was not verified as required by Rule

65, Federal Rules of Civil Procedure, nor were the

so-called ‘‘affidavits’’ in support of the complaint

‘‘affidavits,’’ but were declarations used under Cal-

ifornia State law in state, but not federal proceedings.

In the response to the plaintiffs’ complaint, the

defendants moved to dismiss the complaint under Rule

12(b), Federal Rules of Civil Procedure on the grounds

— =

of lack of jurisdiction over the subject matter, lack of

jurisdiction over the person, failure to state a claim

upon which relief can be granted, failure to join an

indispensable party, to-wit, the Civil Aeronauties

Board, charged with the duty of supervising all civil

aeronautics matters and enforcing all regulations, if

violated, and Donaldson Air Lines.

In the preliminary statement, the defendan set

forth that the defendant Club is licensed to do bus-

iness in California in accordance with its objects and

sells its memberships for an annual fee of $15. It is

not an air line but does organize charter flights of

part of its 11,000 members throughout the world (but

only about 4% of its members take such flights). As

part of its cultural activity it caters particularly to

teachers and students in an organization allied with it,

known as A.C.C.I., Universal Student Organization.

Generally this organization arranged charter flights

for college students and even high school students

during the vacation months as a continuing education

and culture of these students. Such groups and such

flights are encouraged by the Civil Aeronautics Board

and the government.

Because of their mass operation and limited ser-

vices and facilities they are able to arrange for a lower

cost of the flights than those sold by the travel agencies

on regular flights with unlimited services and facilities.

Approximately several hundred students had already

bought charter flights from the defendants to be taken

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during the months of June and July. Most of the stu-

dents have saved their money for the summer cultural

flights arranged by Associated Cultural Clubs, Ine.

and have already paid and made arrangements for the

summer flights. The response alleged these attempts

to enjoin these flights would interfere with and break

the contracts made for these flights.

Defendants alleged that no action was first filed

by the plaintiffs or any of them, or any complaint of

.any sort, with the administrative agency, the Civil

Aeronauties Board, or the Administrator of the Board,

pursuant to the provisions of Title 49, Section 1482,

which provides for a hearing upon any complaint in

writing, made upon notice, and an opportunity to be

heard. (Due process guaranteed by the 5th and 14th

Amendments U.S. Constitution) Footnote 53 In re

Gault, 387 U.S. 33 Mallana rv. Central Harbour Tr.

Co. 339 U.S. 306.

The New York Court, Eastern District Judge An-

thony Travia rejected the application for an injune-

tion for the reason that application was not first pre-

sented to the C.A.B. and there heard and acted on.

See Eastern Court Opinions Appendix B and C.

Defendants alleged that by reason of the foregoing.

the California Court lacks jurisdiction over the sub-

ject matter and lacks jurisdiction over the person.

Before jurisdiction may be acquired over the subject

matter, defendants alleged that plaintiffs were re-

quired to comply with Section 1482 of Title 49 and

= =

exhaust their administrative remedies. The California

District Court did not require them to do so, but the

New York Court did.

Furthermore, defendants asserted that the com-

plaint charges defendants with a crime or plotting

to commit acts which would be criminal, and an in-

junction does not lie to restrain a crime.

Defendants asserted that the three plaintiffs and

the class they allege to represent are not interested

parties or *‘any party in interest,’’ as those words have

been expressed in the statute. They are merely com-

mercial competitors in the business of selling travel

space, as best they are able. If defendants through

more, better and cheaper service 6f a cultural nature

can serve the public or its members, that does not give

plaintiffs any right or standing to sue.

The motion to dismiss also set forth the right to

travel in search of culture is a right guaranteed by

the Fifth and Fourteenth Amendments to the Con-

stitution of the United States. Defendants asserted *‘it

is an attribute of a personal liberty guaranteed by the

Fourteenth Amendment. It is an incident of national

citizenship protected by the privileges and immunities

clause of the Fourteenth Amendment.”

The supplemental motion to dismiss under Rule

12b set forth that the plaintiffs have failed to file a

verified complaint as required by Rule 65 Rules of

Procedure. The plaintiffs’ complaint was not verified.

Further, the so-called *affidavits"’ were unsupported

=

hearsay and were not ‘‘affidavits’’ as required by the

rules of the federal Court. Further, it alleged that the

plaintiffs are not parties in interest within the mean-

ing of Title 49, Section 647 and 1007, U.S. Codes. (See

Trans-Pacific Airlines, Ltd. v. Inter-Island Steam

Navigation Co., 75 F. Supp. 690, 692-4; Singer d& Sons

v. Union Pacific, 311 U.S. 295, 85 L. Ed. 198) Also,

that the complaint fails to set forth facts showing

irreparable damage.

The Court denied the defendants’ motion and is-

sued a temporary injunction, a copy of which follows:

IRSFELD, IRSFELD & YOUNGER

Attorneys at Law

6381 Hollywood Boulevard

Hollywood, California 90028

Telephone No. (213) 466-4161

Attorneys for Plaintiffs

—

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

MONARCH TRAVEL SERVICES,

)

INC., a California corporation, BEVER- )

LY HILLS TRAVEL BUREAU, INC., )

a California corporation, and ECK- )

DAHL-SUNDIN TRAVEL BUREAT, )

a California corporation, ) CIVIL

Plaintiffs, ) ACTION

Vs. ») NO.

ASSOCIATED CULTURAL CLUBS, ) 71-1176-

INC., a California corporation, also ) WP@

known as A.C.C.I., UNIVERSAL STU- )

DENTS ORGANIZATION, a corpora- )

tion, MARTA RITA BOPP, J. W. REID, )

THOMAS D. MERCOLA and PAULA )

BLYTHE, )

Defendants. )

PRELIMINARY INJUNCTION

The Motion of Plaintiffs herein for a Preliminary

Injunction having come on for hearing on June 1, 1971,

and June 4, 1971 at 10:00 A.M. before the Honorable

William P. Gray, Judge Presiding in Room 6 of the

United States Court House and Plaintiffs appearing

through their attorneys, IRSFELD. IRSFELD &

YOUNGER and CHARLES HOBBS. ESQ.. and AS-

SOCIATED CULTURAL CLUBS. INC., a Califor-

nia corporation, also known as A.C.C.T.. UNTVER-

SAL STUDENTS ORGANIZATION, MARTA

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—14—

RITA BOPP, THOMAS D. MERCOLA and PAULA

BLYTHE, Defendants, appearing through attorneys

MORRIS LAVINE, and the matter having been ar-

gued and evidence oral and documentary having been

introduced by both parties and it appearing to the

Court that Defendants and each of them have been

and now are engaging as indirect air carriers in vio-

lation of the Federal Aviation Act of 1958, Section

401(a); that said Defendants, and each of them, are

presently engaged in booking passengers for a num-

ber of proposed charter flights scheduled to depart

June 15, 1971, and after, in violation of the Federal

Aviation Act of 1958, and that said Defendants, and

each of them, will continue to book passengers on il-

legal charter flights if they are not restrained by this

Court, thus causing continued losses to Plaintiffs’ ir-

reparable damage,

IT IS HEREBY ORDERED that Defendants,

ASSOCIATED CULTURAL CLUBS, INC., a Cal-

ifornia corporation, also known as A.C.C.I., UNI-

VERSAL STUDENTS ORGANIZATION, MARIA

RITA BOPP, J. W. REID, THOMAS D. MERCOLA

and PAULA BLYTHE and their officers, agents, ser-

vants, employees, and attorneys are enjoined from en-

gaging in business as indirect air carriers in viola-

tion of Section 40l1(a) of the Federal Aviation Act

of 1958, from soliciting or offering their services as

indirect air carriers, from holding themselves, or any

of them, out to the public as being authorized to en-

gage in indirect air transportation, and from violating

=

the provisions of Section 40la() of the Federal Avia-

tion Act of 1958 and the provisions of all pertinent

reculations issued thereunder:

IT IS HEREBY FURTHER ORDERED that

said Defendants, and each of them, are enjoined from

doing the following:

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Mailing to names on commercial mailing lists

solicitations advertising their charter flights.

Soliciting or accepting the business of persons

who are not members of any bona fide club or

other organization, for charter flights.

Signing up any person for a charter flight who

has not in fact been a member of a bona fide

organization for at least six months.

Signing up any relative of a bona fide member

for a charter flight who is not a spouse, de-

pendent, child or parent of said member and

living in the member's household.

Soliciting or selling one-way tickets to any

person in connection with a charter program

involving more than three flights.

Advertising a fixed single-seat price for any

charter flight.

. Filing untruthful certificates with the carrier

in violation of C.A.B. Regulations, e.g. 14

C.F.R. Section 214.35(d).

IT IS HEREBY FURTHER ORDERED that

said Defendants, and each of them, until further order

of this court, are enjoined from arranging or partici-

pating in the handling of any purported charter flights

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departing July 13, 1971, or after, where passengers on

such flights are purported members of the Associated

Cultural Clubs, Ine. or the Universal Students Or-

ganization, and said Defendants, and each of them,

shall cancel forthwith all such purported charter

flights giving notice of such cancellation to passengers

already books on such flights, and Defendants, and each

of them, shall have nothing further to do with such

persons travelling by charter; nor shall Defendants

make any other arrangements for charter trips through

the Associated Cultural Clubs, Inc., the Universal Stu-

dents Organization, or any other organization involv-

ing any air carrier, supplemental air carrier or foreign

air carrier; and Defendants are further enjoined from

assisting such passengers in transferring to any other

charter flight or flights whatsoever.

Each defendant is further enjoined from making

any expenditures from funds received on account of

payment for passage on any of the prohibited flights,

except as part of pro-rata reimbursement to the people

from whom such payments were received.

IT IS HEREBY FURTHER ORDERED that

said Defendants, and each of them, are enjoined as set

forth above until entry of a final judgment herein.

IT IS HEREBY FURTHER ORDERED that as

a condition precedent to the issuance and maintenance

of the Preliminary Injunction Plaintiff's shall forth-

With give security of $100,000 conditioned on the pay-

ment of such costs and damages as may ke incurred or

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suffered by any defendant who may be found to have

heen wrongfully enjoined or restrained.

DATED: June 4, 1971.

WILLIAM P. GRAY (Judge)

The last order enjoining expenditures was not asked

for by the plaintiffs but was done by the Court on its

own motion.

An appeal was duly taken to the Court of Appeals

for the Ninth Circuit. Although respondents asked that

Court to decide the case quickly in order to prevent

further charter flights during the summer of 1972,

that Court did not render its decision until September

1d, 1972 and considered a rehearing which it denied

October 16, 1972, affirming the District Court's judg-

ment. That Court ignored all the questions raised by

the defendants on motion to dismiss, namely, that the

Court below had proceeded on an unverified complaint,

required by Rule 65, Federal Rules of Civil Procedure.

and ignored the fact that all of the documents filed

by the plaintiffs were mere declarations and not affi-

davits and that it failed to set forth irreparable dam-

age. The Court, after rendering its decision to enjoin

defendants took an oath from the people who had filed

the declarations but these were not evidentiary as the

Court below had passed on the matter.

The Court of Appeals presented three contentions

raised by the appellants which they said required dis-

cussion as follows.

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“1. Is Monarch ‘any party in interest’ within

the meaning of 49 U.S.C. See. 1487(a) and thus

endowed with standing to maintain the suit ¢

“2. Is A.C.C.1. operating as an ‘indirect air

carrier’ within the meaning of 49 U.S.C. 1301(3)

and thus acting in violation of 49 U.S.C. See.

137la?

“3. Are Section 1301(3) and 1371(a) and the

pertinent C.A.B. regulations defining ‘charter’ un-

constitutional restrictions on the right to travel ?”’

The Court of Appeals rendered its decision hold-

ing that the plaintiffs had standing to bring suit in the

District Court prior to applying for a hearing before

the Civil Aeronautics Board and prior to receiving any

complaint before that Board and that they were a

party im interest although none of the declarations

(not affidavits except one) specified any genuine in-

tention to take a charter flight through the defendant

company. All the rest were **declarations’’ of mem-

bers of the Burns Detective Agency, who pretended

an interest and were inquiring about alleged violations

of regulations to be charter members of the organiza-

tion for six months prior to the flight. a regulation we

challenge as unweonstitutional.

Furthermore, there was no proof presented by any

affidavits, and not even by declarations of a showing

of irreparable injury or that the plaintiffs would ulti-

mately succeed in the lawsuit.

The principal request made by the plaintiffs to the

Court of Appeals was te find that the defendants were

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“an indirect air carrier’ within the meaning of 49

U.S.C, See. 1301(3) and thus acting in violation of

49 U.S.C. See. 1371(a).

The Court of Appeals for the Ninth Circuit found

that the defendants were such *‘an indirect carrier”

although they own no airplane or have any interest in

one and none of the members become passengers un-

til they are duly accepted by the air line as a passenger

under standard law regarding carriers which we will

set forth more fully hereafter.

Appellants responded in a petition for rehearing

that A.C.C.1. has a total members of 11,000. Of this

number, Mrs. Bopp swore that she arranged for about

40 seats per flight. On the basis of 12 round trip flights

per year of 40 passengers each, she swore that this

would involve only 480 members, just slightly over 4

per cent of the total membership of 11,000 members.

With 11,000 elub members, about 10,500 of whom do

not fly but who ean take part in other cultural ac-

tivities of this duly incorporated cultural club. she

answered that it cannot by any stretch of the imagi-

nation be said that A.C.C.1. is an “indirect air ear-

rier.’ Tts travel arrangements are merely part of its

over-all cultural offering as a club. She pointed out

that there are more charter flights arranged by bar

associations, such as the Universty of California. the

University of Southern California. the Lawyers Club,

the Los Angeles County Bar Association. the Elks

Club, Masonic organizations and other bodies than are

arranged by this defendant.

—30—

The defendant pointed out that she is a woman who

has successfully operated this club and the only one

that has been attacked to knock out the charter flights

and that her treatment, being singled out for invidious

treatment in violation of the equal protection of the

laws guaranteed by due process of law and the Fifth

: and Fourteenth Amendments is discriminatory and in-

: vidious. (Vick Wo v. Hopkins, 118 U.S. 356, 30 L. Ed.

220; Dandridge v. Williams, 397 U.S. 471, 25 L. Ed.

2d 491, 505; Shapiro v. Thompson, 394 U.S. 618, 658,

663, 22 L. Ed. 2d 600) The courts below ignored this

contention.

| ~~

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DEFENDANTS RESPONDED BELOW AND CERTIFIED

THAT PLAINTIFFS HAVE NO STANDING TO SUE.

They assert that the plaintiffs have no private

claim so special as to give them the power to litigate

a public controversy. Their remedy, they assert under

the Federal Aviation Act is to petition the C.A.B.

Board to act in the public interest to enforce the Act's

provision. (Trans Pacific Air Lines v. Inter-Island

Steam Nav. Co., T F. Supp. 690 (holding with ap-

proval Massachusetts v. Mellon, 262 U.S. 447, 488, 67

L.Ed. 10783) see F. Supp. at 694: also see L. Singer

d& Sons v. Union Pacifie Railroad Co., 311 U.S. 294,

85 L. Ed. 198) This was the holding of the New York

Court Eastern District.

Petitioners assert that plaintiffs’ claims were not

so special as-te give it power to litigate a public con-

troversy. (See 75 F. Supp. 694)

— ‘ihe RD ad 0 gh, 6PM Al TN A ks 80k a ta

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Plaintiffs witnesses were not passengers nor was

there any economic loss actually shown by any evi-

dence. Private detectives falsely represented them-

selves that they were going to be club members and

later to be passengers but never were.

The following in the opinion are misstatements of

fact in the Cireuit Courts opinion:

“It hires planes from direct aircraft carriers.”

Associated Cultural Clubs does not hire and did

not hire any planes. It only contracted with a carrier

to agree to accept its membership for a flight if quali-

fied and acceptable to be passengers at the time that

they were to board the airplane. The airplane accepts

or rejects them at the time of flight. Defendants have

no ownership or proprietary interest in the plane.

The court of appeals statement that defendant

** Solicits members of the general public to purchase

tickets on the flight it arranges” is not supported by

the evidence or the facts as A.C.C.1. solicited its own

11,000 membership consisting of a large number of

students and teachers and other persons interested in

culture to take such cultural trips as it was able to

arrange. This is perfectly legal activity.

The Court erroneously stated as follows:

“ACC 1. was in the transportation business thinly

disguised as a club.”’

In Mrs. Bopp’s affidavit attached to the motion to

_— tye

+e Ribicn uhetitd baa

~~

dismiss the complaint for injunction, uncontradicted

anywhere, she states as follows:

“We, the Cultural Clubs, have not taken aw ay

plaintiffs’ business. We have our own members—

about 11,000 of them—who were and are free to

join any club or travel group they wish. We have

not gone out of our way to take clients away from

anyone, as we do not need to do so. We have ar-

ranged 12 round trip flights for this year.”’

We could give the Court many circulars advertis-

ing charter flights which we are receiving almost daily.

These emphasize the point that A.C.C.I. was singled

out for invidious treatment in violation of the equal

protection of the laws guaranteed by the due process

clause of the Fifth Amendment and the Fourteenth

Amendment.

The District Court has, through this lawsuit, sin-

gled out the defendants for discriminatory and invi-

dious treatment. (Yick Wo vr. Hoplhins, 118 U.S. 356.

30 L. Ed. 220; Dandridge v. Williams, 397 U.S. 471,

25 L. Ed. 2d 491, 505; Shapiro v. Thompson, 394 U.S.

618, 658, 663, 22 L. Ed. 2d 600; Morey v. Doud, 354

U.S. 457 465, 1 L. Ed. 2d 1485, 1491: see Gulf, Colo-

rado & Santa Fe R. Co. v. Ellis, 165 U.S. 150, 155,

11 L. Ed. 2d 666, 668)

The Court states in its footnote 2 that authorized

charters are defined by C.F.R. See. 208(6)(b) as ‘* Air

transportation . . . where the entire capacity of one

or more aircraft has been engaged for the movement

PARTS as ate BT AERA RT OR HE Sot OF

~—

,

:

—233—

of persons and/or properrty .. .’’ A.C.C.I. never en-

gaged the entire capacity of an aircraft and hence

were not charterers within the definition but were

merely like the plaintiff Monarch, an agent in book-

ing passage for its members and in arranging tours

for its members. Their different mode of business did

not make them either indirect carriers or authorized

charterers. They were in no different position than

Monarch, whatever its label, except that Monarch was

booking the public at large and were therefore more

in the class referred to by the Court than Associated

Cultural Clubs, which was booking its members. The

purported regulation limiting and requiring persons

to ke members for six months prior to the flight was

and is an unconstitutional restriction on the right to

travel which we have discussed in our opening brief.

A.C.C.I. was in the transportation field for its mem-

bers and was not in any disguise.

The Court has not passed upon the points raised

in our opening brief as to the requirement of Rule 65,

Rules of Civil Procedure, requiring that a complaint

for injunction be verified under oath.

It also failed to pass upon the objections to the

declarations as affidavits or that the declarations were

of private detectives and not bonafide passengers or

persons who had any interest.

Furthermore, there is no allegation of proof of ir-

reparable injury nor that the damages, if any, could

not be factually caleulated by the 7 per cent commis-

— :

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Brite mcimne KPA AR Gre Ws

—24—

sion which is what travel agencies collect from the

travel companies.

The Court also failed to pass upon the failure to

join Donaldson International Airways and the Civil

Aeronautics Board as indispensable parties.

We reiterate that this cultural club has heen singled

out for invidious treatment, it being run by a woman,

and is the only one that appears to have been attacked

by the plaintiffs.

CONTRARY DECISION BY THE DISTRICT COURT

IN THE SECOND CIRCUIT

We are informed through a magazine article that

a similar application was made before the Honorable

Anthony Travia, United States District Judge, East-

ern District of New York (2d Cir.) for a preliminary

injunction based upon the decision of the Court of

Appeals for the Ninth Cireuit and against various

charter flight agencies in New York including the

Donaldson Air Lines, which was the main air line

used by the appellants in California from California

to London and rejected by Judge Travia.

New York Judge Travia denied the injunction and

disagreed with the holding of the California District

Court and Cowrt of Appeals that such a club is ‘‘an

indirect air carrier™’ and refused an injunction and

held the matter should go administratively through the

C.A.B.

i:

ees

—25—

The result of the preliminary injunction in Los

Angeles was to cause the stranding of several hundred

students and teachers in London, who could not ob-

tain the flights back which they would normally have

been entitled to receive. Nor was there any evidence

presented to the District Court or the Court of Ap-

peals that the plaintiffs in this action could have been

successful or that they would be irreparably damaged.

Only one affidavit supported the story that the party

would have changed flights and have obtained a reg-

war flight.

The Ninth Circuit declines to stay the mandate for

a preliminary injuncton to the court below.

QUESTIONS PRESENTED

1. Whether plaintiffs have standing to have

brought this action in the U.S. District Court without

first having exhausted the administrative remedies

of the C.A.B. and to have first lodged their complaint

and had a hearing on notice and an opportunity to be

heard, required by due process of law guaranteed by

the Fifth Amendment U.S. Constitution whether pri-

mary jurisdiction is in C.A.B.

2. Whether the defendants are “indirect air car-

riers” within the meaning of the Federal Aviation Act

of 1958, 72 Stats. 731, 49 USC Sec. 1301(3)-1542

and are thus acting in violation of 49 U.S.C. Sec. 1371a.

3. Whether the unverified complaint and the deela-

rations (not affidavits) of fictitious Claims or asser-

YS Pees

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tions by detective agencies or persons who were not in-

tended flyers, failed to allege facts which would rise to

any claim including irreparable damage and the prob-

ability of ultimate success against defendants.

4. Whether the unverified complaint and the doc-

uments (not affidavits) in support of it are hearsay

and establish that here would be irreparable injury to

the plaintiffs.

5. Whether it was shown by any competent evi-

dence that money damages would be inadequate to com-

pensate the plaintiffs if they succeeded and were en-

titled to any.

6. Whether the C.A.B. was an indispensible party.

7. Whether the unverified pleadings and the doc-

uments called declarations in support of the motion

for an injunction were inadequate under Civil Rule 65

Rules of Procedure for the U.S. District Court.

8. Whether it was prejudicial error for the trial

Court to enjoin the defendants and to also enjoin the

use of money deposited by defendants in hank accounts

except to reimburse purchasers of travel.

9. Whether there was any jurisdiction on the part

of the U.S. District Court in view of the insufficiency

of a verified complaint and insufficiency of the affi-

davits.

10. Whether the Donaldson International Airways

Was an indispensable party.

[Se

a

11. Whether the right to travel economically and

freely without restriction as to time or membership is

a right guaranteed by the privileges and immunities

section of the Constitution of the United States, which

neither Congress nor any agency of the government may

interfere with or restrict with clean hands.

12. Whether the plaintiffs acted in bad faith and

with unclean hands in trying to destroy the member-

ship and organization and operation of Associated Cul-

tural Clubs, and the right of its members to travel

freely and economically.

13. Whether the plaintiffs were guilty of laches in

waiting until vacation time to bring their suit and to

prevent the flights which resulted in breaches of con-

tract with the defendants.

14. Whether 1301(3) and 1371(a) and the perti-

nent C.A.B. regulations defining charter and requir-

ing a membership of sir months in a club or organiza-

tion are an unconstitutional restriction on the right

to travel freely and economically in violation of the

privileges and immunities of the citizens of the United

States and in violation of the Fifth and Fourteenth

Amendments to he Constitution of the United States.

15. Whether the restriction on membership to a

elub or organization and requiring membership of six

months to organize and permit a charter flight to

travel economically is an unconstitutional restriction

on the right to travel and a classification of people

who only have funds in that class to be placed in a

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different classification than those who don’t have

funds.

REASONS FOR GRANTING THE WRIT

The conflict of decision in the Ninth Circuit and

the Second Circuit entitle appellants to the granting

of a writ and the determination of the law and pro-

cedure in this matter—important in flights of students

and professors and members of clubs who form cul-

ture charter flights.

We contend that none of the charter clubs should

require six months membership. Since the time of this

case, the regular air lines and other clubs have widely

advertised that there is no time limit on which a per-

son needs to be a member of any organization to take

an economical flight at a price below the former or

present regular fare flights.

The right to associate together for culture or for

charter flights is a right guaranteed by the First

Amendment to the Constitution of the United States.

(Healy v. James, 33 L. Ed. 2d 266; U.S. v. Guest, 383

U.S. 745, 766, 767, 16 L. Ed. 2d 239, 254, 255)

The right to travel freely is also guaranteed by the

due process of the clause of the Fifth Amendment.

(Kent v. Dulles, 357 U.S. 116, 2 L. Ed. 1206, 1210, et

seq.; Edwards v. California, 314 U.S. 160; Dayton v.

Dulles, 357 U.S. 144)

The Court of Appeals erred in its facts and law,

-_

—29—

Petitioners are not “air carriers’’ or ‘indirect air

carriers.’ They are not ‘*group tour operators,’* they

have no interest in the airplane. Their obligation ceases

when the member arrives at the airport to become a

passenger only if accepted by the air line (Donaldson

International Airways), when they would take over

and be responsible for the flight. None of the deelarants

of plaintiff had even gone to the airport. Most of them

were Burns International Detectives trying to deter-

mine if they could create a membership in less than

six months and to find any other possible violations

of C.A.B. regulations. Not a sinele declarant became

an actual passenger for the flights or were accepted

by the airline.

To engage in air transportation, one must have

the means of transportation, to-wit, an aircraft. Peti-

tioners had none. To be ‘‘engaged"’ in air transporta-

tion, one must have passengers as that word is defined

in cases of law. It is a well established law of carriers

generally that one is not a passenger of an aireraft un-

til one presents himself or herself at the airport at

the time and place of the flight and is accepted by the

aircraft carrier for the flight. Unless these conditions

concur and unite, one is not engaged in aircraft trans-

portation, directly or indirectly. None of this oceurred

with any of the declarants of plaintiff. Neither the

C.A.B. nor the courts can make the defendants “in-

direct air carriers."’ It is legislation which Congress

has not enacted. Respondents admit that the Civil

Aeronautics Act of 1938 is silent on the definition

PU Aa

FREESE ARS

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—3Q—

of ‘indirect air carrier."’ The silence of Congress on

the subject is significantly contrary to respondent's

contention and lower court holdings.

Does the selling of space by a club or association

of seats make the sellers an “indirect air carrier?"

Every ticket agency and travel agency besides the

charter flight people would be indirect air carriers,

Congress and the Courts have ruled to the contrary.

Petitioners do not and did not hold themselves

out to act for the publie generally but only for their

members, and only about 4 per cent of its membershi}

take flights and could take the flights. It does not

lease the space on the air line for the passengers, but

only reserves space, similar to what anyone does when

they call an air line or travel agency or a theater or

sports arena to be sure that here is space for the per-

son calling. Once a member of the organization of de-

fendants, the prospective passenger has to be at the

airport at the time and place designated for the flight

and has to be accepted by the air line as a Passenger.

Then the duties of the petitioners cease. From then on

the air line takes over and provides food, a place to

sit and the designated location.

The operations of the petitioners is quite differ-

ent than the regular air lines. The people who take

these flights have to go on the plane at a specifie time

and have to return on a specific plane ata specifie time

and on a specifie flight. They are not free, like those

who take regular flights, to go to any hotel but are

eer

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taken to a hostel, which generally is some big house

that has been set up for taking care of guests for the

night. The food is economically arranged and the par-

ticipants are limited to the scope of the particular

price they have paid.

Only when these members are accepted by the air

line do they become passengers. If they are rejected,

then they do not become passengers and are entitled

toa refund of their reservation. According to the affi-

davit of Miss Bopp, the president of the defendant

Club, the function of the club was to buy a reservation

on the Donaldson air line for the trip leaving at a

certain time and returning at a certain time and date.

This is no different from any New York manufact-

urers buying tickets to the theaters in New York for

buyers who come to their city. It would be as much to

say that Miss Bopp is a principal and entrepreneur

because she buys space for her club membership to ake

a trip on the Donaldson air line as it would be to say

that the New York manufacturers of clothes are thea-

ter owners or directors or actors because they buy a

block of tickets to give to merchants for theaters in

New York or that persons who buy tickets to a foot-

hall game for their college group are indirect football

players. To require the appellants to have a certificate

of publie convenience and necessity would be bevond

the scope of the Congressional Act and would be to

limit memberships and charters to invoke federal jur-

isdiction. We respectfully contend that this was not the

intent of Congress nor the law,

a i ee

al

Ape e ve Fb. eas tere Th ade 8 a

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—32—

This case raises important questions of constitu.

tional and statutory law in addition to the conflict of

views between the circuits and should be decided ty

' this Honorable Court.

To prevail on motion for a temporary restraining

order, plaintiffs must have shown, which they did not

do, that there is immediate and irreparable injury.

that success on the merits is probable and that harm

to movement outweighs harm to the opposing party and

to the public. (National Prisoner Reform Associa-

tion vr. Sharkey, 347 F. Supp. 1234)

Deprivation of First Amendment rights of mem-

bers of petitioners cultural club of an organization

was in and of itself irreparable injury, of petitioners

rather than plaintiffs. We were interfered with and

wrecked rather than interfering with plaintiff travel

agency.

PLAINTIFFS DO NOT HAVE STANDING TO SUE

The plaintiffs have not set forth a private claim so

special as to give it the power to litigate a public con-

troversy. Its remedy was and is to petition the C_A.B.

to act in the public interest to enforce the Act's pro-

visions if they apply.

In Trans-Pacific Airlines v. Iuter-Island Steam

Nar. Co., 7 Fed. Supp. 690, the Court quoted with

approval Massachusetts rv. Mellon, 262 US. 447, 488.

67 1. Ed. 1078, to the effect that to be a “party in

lt ele i ho a oe °c Pare eer err

_

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—33—

interest’ a complainant must have more than a com-

mon concern for obedience to law in order to in-

voke the Court's jurisdiction. The Court said:

“Giving the phrase ‘party in interest’ the same

scope given it by the courts under the Transpor-

tation Act, the complaint here niust be measured

to determine whether or not (1) ‘some definite

lezal right possessed by complainant is seriously

threatened’ or (2) ‘the unauthorized and therefore

unlawful action of the defendant carrier may di-

rectly and adversely affect the complainant's wel-

fare by bringing about some material change in

the transportation situation.” Western Pacific

California R. Co. v. Southern Pacific Co., 1931,

284 U.S. 47, 51-52, 52 S. Ct. 56, 57, 76 L. Ed. 160,

and Singer & Sons vr. Union Pac. Co. supra.” (75

Fed. Supp. at 694)

The Court further said:

“The plaintiff has not described ‘a private

claim * * * so special,’ in my opinion, as to give

it the ‘power to litigate a public controversy.” It<

remedy is to petition the Board to act in the pub-

lie interest to enforce the Act's provisions.”” (75

Fed. Supp. at 695)

In L. Singer & Sons v. Union Pacific Railroad Co.,

311 U.S. 294, 85 L. Ed. 198, the Supreme Court held

that:

“The interest which a commission merchant

doing business on or near a city market has in

preventing the establishment of a competing mar-

ket in an adjoining city is insufficient to make

—

_ /

Sate ae

him a ‘party in interest’ entitled under See. 1(2)

of the Transportation heh @ mahi a ath

enjoin a railroad from constructing or operating,

to the competing market, an extension not autho-

rized by the Interstate Commerce Commission.”

The Court also said:

“The Trausportation Act, 1920, was designed

to protect the public against action which might

endanger its interest. In order to aid that general

purpose, Par. 20, Sec. 402, provides that suit for

an injunction may be instituted by the United

States, the Commission (1.C.C.), any Commission

or Regulative Body of the state or states affected,

or any ‘party in interest.” Such a suit cannot he

instituted by an individual unless he ‘possesses

something more than a coumon concern for obedi-

ence to law.’ The general or common interest find«

protection in the permission to sue granted to

publie authorities. An individual may have some

special and peculiar interest which may be directly

and materially affected by alleced unlawful action.

See Detroit & M. R. Co. v. Boyne City, G. & A.

R. Co. (DC) 286 F. 540. If such circumstances are

shown he may sue; he is then ‘party in interest’

within the meaning of the statute. In the absence

circumstances he is not such a party.”

=

~~ =

THE COMPLAINT, AND THE ALLEGED EVIDENCE IN

SUPPORT OF IT, FAILS TO ALLEGE FACTS FROM

WHICH IRREPARABLE INJURY IS SHOWN OR

THAT If IT IS SHOWN THAT MONEY DAMAGES

WHICH ARE FIXED WOULD BE INADEQUATE

AND WOULD NOT COMPENSATE THE PLAIN.

TIFFS.

The complaint fails to allege an amount of irrepar-

able damage claimed by the plaintiffs which must be

a basis for a preliminary injunction. Actually, the

damage has all been to the defendants and their man-

agement, which have been put out of business by being

unable to use the funds to pay for flights or to pay for

office rent, telephones, attorneys or anything else ex-

cept possible refunds.

Nothing in the pleadings for an injunction «ave

the Court the right to enjoin petitioner's funds on its

own motion, what was not asked or prayed for.

THE PLEADINGS AND THE DOCUMENTS IN SUP.

PORT OF THE MOTION FOR AN INJUNCTION

WERE INADEQUATE.

Rule 65(b), Federal Rules of Civil Procedure, pro-

vides as follows:

“A temporary restraining order may be

cranted without written or oral notice to the ad-

verse party or his attorney only if (1) it clearly

appears from specific facts shown by affidavit

: or by the rerified complaint that immediate and

. Rt ee te ee naw Lams wee

a

—36—

irreparable injury, loss, or damage will result to

the applicant before the adverse party or his at-

torney can be heard in opposition, and (2) the

applicant’s attorney certifies to the court in writ-

ing the efforts, if any, which have been made to

give the notice and the reasons —— his

claim that notice should not be required. .

(Emphasis added)

The complaint was unverified. The documents

called affidavits were not affidavits. Therefore, juris-

diction was lacking to issue the temporary restrainin:

order.

The documents in this case were not affidavits and

the mere swearing of them after the Court had al-

ready reached its conclusion did not support the issu-

ance of the temporary injunction. The Court held that

the mere fact that the persons who submitted the doe-

uments under penalty of perjury could be prosecuted

in a state court is just a technical error. (R.T. 59) We

submit it is violative of Rule 65(b) of the Federal

Rules of Civil Procedure and that the judgment and

order of the District Court is therefore a nullity.

An affidavit is a **written declaration under oath”

and in order that an affidavit he valid for any pur-

pose, it must be sworn to. (Jn re Johnston, 220 F. 2d

218)

A purported affidavit which contained acknowled-

ment reciting only that alleged affiant had appeared

before a notary public and acknowledged that she had

——

—3T7—

executed the document was not a sufficient affidavit

to form basis for contempt proceeding in that it was

not a written declaration under oath or an unsworn

statement of alleged facts certified or declared to be

true under penalty of perjury so that contempt pro-

ceeding was void ab initio. (Palm Springs Alpine Es-

tates, Inc. v. Superior Court for Los Angeles County,

255 Cal. App. 2d 883, 63 Cal. Rptr. 618)

It is stated in 3 Am. Jur. 2d, Affidavits, See. 3:

“The primary qualification of an affiant is

that he have knowledge of the facts, the truth of

which he affirms, except that in certain instances

it is permissible for one to make allegations on

information and belief, and in the absence of stat-

utory regulation, it may be said, generally, that

anyone who has knowledge of the facts and is com-

petent to testify may make an affidavit.”’

DEFENDANTS ARE NOT “INDIRECT AIR CARRIERS”

WITHIN THE MEANING OF THE FEDERAL AVIA-

TION ACT OF 1958, 72 STATS. 731, 49 USC SECS.

1301-1542.

There is a little quotation which fits the efforts of

the plaintiffs to stretch the law beyond congressional

expression, to-wit, **.\ little dab of paint makes a lady

look like what she aint.”’

The plaintiffs have attempted to use a paint brush

with far broader sweeps.than anything Congress ex-

pressed. An air carrier is defined in the Act, See.

RRB fetta Ce Beate. At 1G Dts PD seh RT NS ly Nl BEE Peer ee SE ee em

—_—e ee Be we ee s

—38—

101(3) as: *‘ ‘Air carrier’ means citizen of the United

States who undertakes, whether directly or indirectly

or by a lease or any other arrangement, to engage in

air transportation provided, that the Board may by

order relieve air carriers who are not directly engaged

in the operation of aireraft in air transportation from

the provisions of this chapter to the extent and for such

periods as may be in the public interest.’’

Congress has not defined “‘indirect air carrier,”

although Congress has never lacked ability to define

words and statutes without which the statutes become

vague and uncertain and, if they provide for criminal

sanctions, become unconstitutional. (Connally v. Gen-

eral Construction Co., 296 U.S. 385, 70 L. Ed. 322:

Winters v. New York, 333 U.S. 507, 92 L. Ed. ‘840;

Edwards v. So. Carolina, 372 U.S. 229, 9 L. Ed. 2d

697)

Surely a club which organizes charter flights or

arranges charter flights for its members or group is

not an indirect air carrier and cannot be made such

unless Congress directly so classifies it.

IT WAS ERROR FOR THE TRIAL COURT TO ENJOIN

THE USE OF MONEY DEPOSITED BY THE DE-

FENDANTS IN BANK ACCOUNTS EXCEPT TO RE-

IMBURSE PURCHASERS OF TRAVEL.

There was no pleading or prayer by the plaintiffs

seeking to enjoin the bank account or funds collected

by the defendant Associated Cultural Clubs, Inc. The

Pet. EE Fee PEED SOO ee a Oa

on

=

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Court was without jurisdiction to re-write or add tu

the petition by the three private travel agenciés' An

order of the Court directing that property be trans-

ferred to a person not a party to the action and over

whom the Court has no jurisdiction is improper.

(Washington v. U.S., (CA 9) 87 F. 2d 421 Giardano

v. Radio Corp of America, 183 F. 2d 558)

We respectfully submit that the plaintiffs in this

action are not such a party.

There was no showing that the plaintiffs would ul-

timately succeed on the merits and the burden of proof

was on him to show such possibility of such irreparable

injury. (K-2 Skt Co. v. Head Ski Co., 467 F.2d 1087;

Automated Marketing Systems, Inc. v. Martin, 467

F. 2d 1181)

We pray for a writ of certiorari and for reversal

of the order granting the preliminary injunction be-

low and for an order dismissing plaintiffs complaint.

Respectfully submitted,

MORRIS LAVINE, Esq.

Attorney for Petitioners

215 West Seventh St., Suite 620

Los Angeles, Calif. 90014

Tel. (213) MAdison 7-3241

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EXHIBIT A

OPINION OF COURT OF APPEAL

MONARCH TRAVEL SERVICES, INC.,

et al., Plaintiffs-Appellees,

v.

ASSOCIATED CULTURAL CLUBS, INC.,

et al., Defendants-Appellants.

No. 71-2053.

United States Court of Appeals,

Ninth Circuit.

Sept. 15, 1972.

Rehearing Denied Oct. 16, 1972

Suit brought by travel agents to enjoin “social

elub*’ whose real business was selling tours and air

transportation on chartered flights, from arranging

flights in claimed violation of the Federal Aviation

Act. The United States District Court for the Central

District of California, William P. Gray, J., granted

a preliminary injunction, and an appeal was taken.

The Court of Appeals, Hufstedler, Circuit Judge, held,

inter alia, that the *‘social club’’ was an “indirect air

carrier’’ within meaning of the Federal Aviation Act.

Affirmed.

1. Aviation Key 82

Within meaning of Federal Aviation Act section

authorizing ‘‘any party in interest’’ to bring suit

Pint Aes

jai tad Ree

Palen

- a

against a person who violates Act provision requiring

air carriers engaging in air transportation to have in

force a certificate issued by the C.A.B., travel agents

who suffered economic loss from the acts of ‘‘social

elub,’’ whose real business was selling tours and air

transportation on chartered aireraft but which had

no certificate of public convenience and necessity from

the Board, had standing to bring suit for violation of

the Act. Federal Aviation Act of 1958, §§401(a),

1007(a), 49 U.S.C.A. §§ 1371(a), 1487(a).

2. Aviation Key 72

When an organization arranging charter flights

operates very much like a carrier, it should be treated

as a carrier, regardless of the labels it applies to its

business or the existence of incidental features of its

program not shared by ordinary carriers. Federal Avi-

ation Act of 1958, § 101 et seq., 49 U.S.C.A. § 1301

et seq.

3. Aviation Key 72

**Social eclub’’ whose real business was selling tours

and air transportation on chartered aircraft, was an

‘indirect air carrier’’ within meaning of the Federal

Aviation Act, and thus was required to have in force

a certificate issued by the C.A.B. Federal Aviation

Act of 1958, § 101(3), 49 U.S.C.A. § 1301(3).

eae 1 cs Words and Phrases for other judicial constructions and

See publication Words and Phrases for other judicial constructions and

definitions.

= PR SAT ET RP TIS

ee —— CEP CRIN NER RIA OR hs

PE aT PO EL ae Way eo VERBS -

=

4. Aviation Key 73

Constitutional Law Key 83 (1)

Statutes and regulations, which required ‘‘social

club,’”’ whose real business was selling tours and air

transportation on chartered flights and the cost of

whose tickets was less than the legal tariff for non-

chartered flights, to have in force a certificate issued

by the Civil Aeronautics Board authorizing the ‘‘elub”’

to engage in air transportation, did not unconstitu-

tionally restrict the right to travel on theory that not

everyone can afford to pay the higher fares on regular

flights. Federal Aviation Act of 1958, §§ 101 et seq.,

401(a), 49 U.S. C.A. §§ 1301 et seq., 1371(a).

Morris Lavine (argued), Los Angeles, Cal., for de-

fendants-appellants.

Charles A. Hobbs (argued, of Wilkinson, Cragun

& Barker, Washington, D.C., Irsfeld, Irsfeld & Young-

er, Hollywood, Cal., for plaintiffs-appellees.

William D. Keller, U.S. Atty., Frederick M. Brosio,

Jr., Eugene Kramer, Assist. U.S. Attys, Los Angeles,

Cal, Peter E. Edison, Stephen A. Alterman, Attys.,

C.A.B., Washington, D.C., amicus curiae.

Before BARNES, MERRILL and HUFSTED-

LER, Circuit Judges.

HUFSTEDLER, Circuit Judge:

Three travel agents sued on behalf of themselves

and other Southern California travel agents to enjoin

nr.

Pe RM LEO I OAM GE RA Pee

Pawan.

i

appellants from arranging charter flights in claimed

violation of the Federal Aviation Act. (49 U.S.C. §

1301 et seq.) The district court granted a preliminary

injunction, and this appeal followed."

The corporate and individual appellants are closely

associated with one another in the conduct of their bus-

iness; we will refer to them collectively as **ACCI.”

The appellees will be called ** Monarch.”

Although ACCI is nominally a social club, its real

business is selling to the general public tours and air

transportation between Southern California and Eu-

rope, on aircraft it charters.’ It hires planes from

direct air carriers, solicits members of the general

public to purchase tickets on the flights it arranges,

and consolidates groups of passengers to fill the space

it purchases. ACCI does not strictly enforce the rule

that passengers on its flights be members of ACCI

for six months prior the flight." ACCI makes a sub-

stantial profit derived from the excess of the price

of the tickets it sells over its cost in hiring the aircraft.

The price of the tickets on ACCT flights is less than

the legal tariff for nonchartered flights. ACCI is not

feb fd Ef £ dS

support of the district

s holding that are indirect air carriers under 49 USC. §

1301(3) and that violated 49 USC. § 1371(a) by operating as in-

Board authorization.

direct air carriers t Civil Aeronautics

2Authorized charters are defined by 14 CFR. § 208(6)(b) as follows:

“Air transportation . . . where the entire capacity of one or more aircraft

has been engaged for the movement of persons and/or property (2)B

By a (no part of whose business is the formation of groups or

dae ‘solicieation er cnle ef teansportation curvices) for che tanspertation of

a group of persons .. . as agent or representative of such group

314 CFR. 207.40(b) (2) requires that passengers on a club charter

be members of the club “for a minimum of six months prior to the starting

flight date.”

ELIOT OLA OR LEE TY MPEGS CLL GOOS

enlies

an agent for airlines nor for its customers; it is an

entrepreneur. It has no certificate of public conven-

ience and necessity from the Civil Aeronautics Board

or any exemption from the provisions of the Federal

Aviation Act authorizing it to engage in air transpor-

tation.

Monarch acts as an agent, not a principal, in book-

ing passage on air carriers and in arranging tours

for its clients. Monarch’s money is earned from com-

missions. Monarch lost commissions from clients whose

custom was diverted by ACCI's competition.

Three contentions on appeal require discussion:

(1) Is Monarach *‘any party in interest" within the

meaning of 49 U.S.C. § 1487(a) and thus endowed

with standing to maintain the suit. (2) Is ACCI oper-

ating as an “indirect air carrier’ within the meaning

of 49 U.S.C. § 1301(3) and thus acting in violation of

49 U.S.C. § 1371(a) ? (3) Are §§1301(3) and 1371(a)

and the pertinent C.A.B. regulations defining **char-

ter”’ unconstitutional restrictions on the right to tra-

vel?

[1] Section 1487(a)* authorizes the Civil Aero-

one mee 2 ws "20 2 eer) oe ree

» _e

Pt see a

ain

nautics Board (**(C.A.B.""), the Administrator of the

Federal Aviation Agency, their agents, or ‘any party

in interest” to bring suit against a person who violates

section 1371(a) of the Act. The district court found

that Monarch had suffered economic loss from ACCT’s

acts in violation of section 1371(a) because some clients

who otherwise would have patronized Monarch were

diverted to ACCI. The finding is not clearly erroneous.

Is one who suffers such loss a “party in interest’’?

We answer affirmatively. (Northeast Airlines, Inc. v.

Nationwide Charters and Conventions, Inc. (Ist Cir.

1969) 413 F. 2d 335; ef Sierra Club v. Morton (1972)

405 U.S. 727, 92 S. Ct. 1361, 31 L. Ed. 2d 636; Arnold

Tours, Inc. v. Camp (1970) 400 U.S. 45, 46, 91 S. Ct.

158, 27 L. Ed. 2d 179; Association of Data Processing

Service Organizations, Inc. v. Camp (1970) 397 U.S.

150, 152, 90 S. Ct. 827, 25 L. Ed. 2d 184.) Accordingly,

Monarch has standing to bring the suit.

ACCI did not have a C.A.B. certificate to engage

in air transportation or an exemption. It acted in vio-

lation of section 1371(a)* if it is an indirect air car-

rier. Section 1301(a) defines “‘air carrier’ as used

in § 1371(a) as “any citizen of the United States who

undertakes, whether directly or indirectly or by a lease

or any other arrangement. to engage in air transpor-

representauves. from further vielation of such provimon of this

or of such rule. requlation, requirement, order. term, condition, or

tation, and requiring their obedience thereto ~

~~ =

tation: Provided, That the Board may by order re-

lieve air carriers who are not directly engaged in the

operation of aircraft in air transportation from the

provisions of this chapter to the extent and for such

periods as may be in the public interest.”

[2] When an organization arranging eharter

flichts operates very much like a carrier, it should

he treated as a carrier, regardless of the labels it ap-

plies to its business or the existence of incidental fea-

tures of its program not shared by ordinary carriers.

(Educational Student Exchange Program, Ine. (1971)

—C.A.B. — (Order 71-5-39) ; United European Amer-

iean Club (1971) — C.A.B. — (Order 71-2-33); ef.

Las Vegas Hacienda, Ine. v. C.A.B. (9th Cir. 1962)

298 F. 2d 430; American Airlines v. (.A.B. (7th Cir.

1949) 178 F. 2d 903; Hacienda Hotels-U.S. Aireoach,

Enforcement Proceeding (1958) 26 C.A.B. 372.)

[3] ACCT was in the transportation business thin-

ly disguished as a club. The district court correctly de-

cided that it was an indirect carrier.

[4] ACCI argues that the statutes and regulations

it violated are unconstitutional restrictions on the right

to travel because not everyone can afford to pay the

higher fares on regular flights to Europe. No uneon-

stitutional restraints on anyone's right to travel is im-

posed by the challenged statutes and reculations. The

persons regulated are carriers. Of course, higher air

tariffs will limit travel of those who cannot pay the

price. A rich man can choose to drive a limousine: a

— w er

inaiieess

poor man may have to walk. The poor man’s lack of

choice in his mode of travel may be unforunate, but

it is not unconstitutional.

ACCI's remaining contentions do not have suffi-

cient merit to warrant discussion.

Affirmed.

SORE Ee SEF OY REN AT POPE ee

APPENDIX B

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

Docket No. 71-C-1232

CIVIL. AERONAUTICS BOARD,

Plaintiff,

— against —

AEROMATIC TRAVEL CORP.

TOUR EUROPE TRAVEL AGENCY,

INC., also d/b/a TOUR EUROPE

TRAVEL SERVICES, INC., TOUR )

EUROPE TRAVEL CONSULTANTS, )

WORLDWIDE AIRLINES SERVICE )

and CALEDONIAN FRIENDSHIP )

SOCIETY,

CHRISTIAN DUBREUIL, Individually

and as Officer, Agent, Servant or Em-

ployee of, and d/b/a AEROMATIC

TRAVEL CORP.. TOUR EUROPE

TRAVEL AGENCY, INC., TOUR EUR-

OPE TRAVEL SERVICES, INC.,

TOUR EUROPE TRAVEL CONSULT-

ANTS, WORLDWIDE AIRLINES

SERVICE and CALEDONIAN

FRIENDSHIP SOCIETY,

FINBAR SULLIVAN, a‘k/a FINBAR

O’SULLIVAN, Individually and as Of-

ficer, Agent, Servant or Emplovee of, and

d/b/a AEROMATIC TRAVEL CORP..

Ne ae ae ee ee Se

ee ue a ee ee ee ee a

- oe

PHILLIP NEWMORE, Individually )

and as Officer, Agent, Servant or Em- )

ployee of, and d/b/a TOUR EUROPE )

TRAVEL AGENCY, INC., TOUR EUR- )

OPE TRAVEL SERVICES, INC., )

TOUR EUROPE TRAVEL CONSULT- )

ANTS, WORLDWIDE AIRLINES )

SERVICE and CALEDONIAN )

FRIENDSHIP SOCIETY,

)

RORY ALKIN, Individually and as

Officer, Agent, Servant or Employee of, )

and d/b/a TOUR EUROPE TRAVEL )

AGENCY, INC. TOUR EUROPE )

TRAVEL SERVICES, INC. TOUR )

EUROPE TRAVEL CONSULTANTS, )

WORLDWIDE AIRLINES SERVICE )

and CALEDONIAN FRIENDSHIP )

SOCIETY,

JOHN S. BOYLAN, a/k/a JOHN

STANLEY, Individually and as Officer,

Agent, Servant or Employee of, and d/b/a

TOUR EUROPE TRAVEL AGENCY,

INC., TOUR EUROPE TRAVEL SER.

VICES, INC., TOUR EUROPE TRAV-

EL CONSULTANTS, WORLDWIDE )

AIRLINES SERVICE and CALEDON. )

IAN FRIENDSHIP SOCIETY. )

)

(. K. FROEHLICH TRAVEL SER- )

VICE, INC., also d/*/a INTERNA- )

TIONAL UNIVERSITIES ASSOCTA- )

)

)

)

)

Pe ae

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Lea? i doled ta Peet bee, Jigtipdah

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Pe ak

TION, and INTERNATIONAL UNIT-

VERSITIES ASSOCIATES,

JOSEPH WILLIAM O’MELIA, Indi-

vidually and as Officer, Agent, Servant )

or Employee of, and d/b/a C. K. FROEH- )

Aik Aiea pe A INES

ONES ASO OSG FI ERE TREY FO

~ =

LICH TRAVEL SERVICE, INC. and )

INTERNATIONAL UNIVERSITIES

ASSOCIATION, and INTERNATION-

AL UNIVERSITIES ASSOCIATES,

)

)

ALBERT A. GLEN, JR., Individually )

and as Officer, Agent, Servant or Em- )

ployee of, and d/b/a C. K. FROEHLICH )

TRAVEL SERVICE INC., INTERNA- )

TIONAL UNIVERSITIES ASSOCIA- )

TION and INTERNATIONAL UNI- )

VERSITIES ASSOCIATES, )

)

)

)

JOHN BRADFORD, Individually and as

Officer, Agent, Servant or Employee of,

and d/b/a C. K. FROEHLICH TRAVEL )

SERVICE, INC., INTERNATIONAL )

UNIVERSITIES ASSOCIATION, and )

INTERNATIONAL UNIVERSITIES )

ASSOCIATES, )

)

)

LUAN STASSI, Individually and as Of-

ficer, Agent, Servant or Employee of, and _)

d/b/a C. K. FROEHLICH TRAVEL )

SERVICE, INC., INTERNATIONAL )

UNIVERSITIES ASSOCTATTION, and )

INTERNATIONAL UNIVERSITIES )

ASSOCIATES,

CONSOLIDATED AIR BROKERS

INC.,

CHARTER AND GROUP TRAVET,

SPECTALISTS,

9

FRED MEYROW, Individually and as

Officer, Agent, Servant or Employee of,

and d/b/a CONSOLIDATED ATR

BROKERS, INC.,

ue ue a ee ae a

— ws

LILLIAN MEYROW, Individually and )

as Officer, Agent, Servant or Employee )

of, and d/b/a CONSOLIDATED AIR )

BROKERS, INC. and CHARTER AND )

GROUP TRAVEL SPECIALISTS, )

)

JOHN BLAKELY, Individually and as )

Officer, Agent, Servant or Employee of )

and d/b/a CHARTER AND GROUP )

TRAVEL SPECIALISTS, )

)

IRA KARP, Individually and as Officer, )

Agent, Servant or Employee of, and d/b/a )

CHARTER AND GROUP TRAVEL

SPECIALISTS,

DAN AIR SERVICES LIMITED.

DONALDSON INTERNATIONAL

AIRWAYS,

) LAKER AIRWAYS,

PAN AMERICAN WORLD AIR-

WAYS,

TRANS INTERNATIONAL AIR

LINES,

UNIVERSAL AIRLINES, INC.,

BRITISH MIDLAND AIRWAYS,

BRITISH OVERSEAS AIRWAYS

~ CORPORATION,

AIR - INDIA,

Toe. es r?

ae TA ee eo ee

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Defendants.

PEC NEA P I OR TE NE IEE LEEPER GLE Le OL NAIR NEENR BB SIZ 8 ED

~~

DECISION AND ORDER

October 25, 1972

APPEARANCES:

ROBERT A. MORSE, ESQ.

United States Attorney

Eastern District of New York

Attorney for Plaintiff

225 Cadman Plaza East

Brooklyn, New York 11201

CARL I. STEWART, ESQ.

Assistant United States Attorney

Of Counsel

BERNARD KENNY, ESQ.

Attorney for Defendants

22 East 40th Street

New York, New York 10016

VINCENT M. MeCONNELL, ESQ.

Of Counsel

BOROS & LESTER, ESQS.

Attorneys for Defendants

1120 Connecticut Avenue, N.W.

Washington, D. C.

HOWARD S. BOROS, ESQ.

Of Counsel

HOFHEIMER, GARTLIR, GOTTLIEB &

tROSS, ESQS.

Attorneys for Defendants*

61 Broadway

New York, New York 10006

“Originally. the defendants, Consolidated Air Brokers. Inc., Fred Meyrow

and Lillian Meyrow, were represented by Mr. Boros. However, he was later

substituted by the firm of Hofheimer, Gartlir. Gottlieb & Gross, Esqs.

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TRAVIA, D. J.

The plaintiff, CIVIL AERONAUTICS BOARD

[hereinafter CAB], instituted this action to enjoin

and restrain the defendants, certain travel agencies

and certain named individuals associated therewith,

from engaging in specific activities as ‘‘indirect air

carriers and indirect foreign air carriers.’’ See Title

49 U.S.C. § 1301(3), (19).' In addition, the CAB re-

quested the enforcement of a cease and desist order,

issued by the CAB on June 23, 1971. That order, docket

numbers 22307 and 22311, was issued against Charter

Consultants, Inc., and Fred Meyrow, individually, and

directed that they refrain from engaging in air trans-

portation as indirect air carriers.’

The CAB alleges that the defendants, while acting

as indirect air carriers, are violating certain rules and

regulations of the CAB, made pursuant to the Federal

Aviation Act and, more particularly, that the defen-

dants’ activities are in violation of Title 49 U.S.C. §§

1371(a) and 1372(a). These sections provide that all

air carriers, direct or indirect, domestic (1371) or for-

eign (1372), must secure a certificate or permit of

1Section 1301(3) defines an air carrier as follows:

“ ‘Air carrier’ means any citizen of the United States who under-

takes, whether directly or indirectly or by lease or any other arrange-

ment, to engage in air transportation .. .”

Section 1301(19) defines foreign air carrier as follows:

“ ‘Foreign air carrier’ means any person, not a citizen of the United

States, who undertakes, whether directly or indirectly or by any other

arrangement, to engage in foreign air transportation.” (Emphasis added. )

2A copy of the cease and desist order is attached to the civil complaint

filed in this action by the CAB.

=

authorization from the CAB to engage in such activ-

ities.*

The defendants do not contest the validity of sec-

tions 1371 or 1372, nor do they allege that they have

complied with the statutory mandates by securing a

certificate or permit. They contend that the statutory

mandates are not applicable to them because they are

not acting as direct or indirect air carriers but merely

as ticket agents as defined in Section 1301(35) of Title

49 U.S.C.* The defendants also contend that the CAB

has not, as to each of them, ruled that their activities

would make them indirect air carriers as defined in

Sections 1301(3) and 1301(19). They, therefore, re-

quest that the court, at this time, exercise its discre-

tion under the doctrine of primary jurisdiction and

refer the question of their status within the industry

to the CAB for an administrative determination. The

defendants urge the necessity of an administrative

ruling in the first instance because the ageney is bet-

ter equipped to evaluate the defendants’ status within

the aviation industry. To fortify their argument on

3Section 1371(a) provides:

“No air carrier shall engage in any air transportation unless there

is in force a certificate issued by the Board authorizing such air carrier

to engage in such transportation.”

Section 1372(a) provides:

“No foreign air carrier shall engage in foreign air transportation

unless here is in force a permit issued by the Board authorizing such

carrier so to engage.” (Emphasis added.)

4Section 1301(35) defines ticket agent as follows:

“ ‘Ticket agent’ means any person, not an air carrier or a foreign

air carrier and not a bona fide employee of an air carrier or

foreign air carrier, who, as principal or agent, sells or offers for sale

any air transportaton, or negotiates for, or holds himself out by so-

licitation, advertisement, or otherwise as one who sells, provides, fur-

nishes, contracts or arranges for such transportation.”’ (.Emphasis added. }

Te

6 Sigh aR Renkin ‘titre pat eae

SiR NE ERE SRA 12

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ayes

9,

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primary jurisdiction, the defendants point out that

other members of the industry are presently awaiting

the CAB’s ruling on the exact question of status pre-

sented in this case, and that the CAB has made rul-

ings which affect this proceeding.’

A determination of the defendants’ status within

the aviation industry is the basic question in this pro-

ceeding. Clearly, such an issue presents a question of

fact. The defendant can only be held liable for the

violations alleged if they are in fact found to be oper-

ating as indirect air carriers, as defined in Section

1301 (3) of Title 49, U.S.C. The court will, therefore,

for the purpose of the defendants’ renewed motion

to dismiss, only consider the question of whether this

court should apply the doctrine of primary jurisdic-

tion, and thereby refer the issue of the defendants’

status to the CAB for their administrative ruling.

Before discussing the concept of primary juris-

diction, the court will give a brief chronological sum-

mary of the case at bar so as to ‘‘set the stage’’ and,

thus, enable the reader to better understand the posi-

tion now to be taken by this court on the motion he-

fore it.

The original complaint was filed on September

17, 1971. On October 6, 1971 an order to show cause

was signed, at the plaintiff’s request, which order

5See CAB Order 72-8-89, Docket No. 24687 (August 21, 1972): 41

U.S.L.W. at 2172 (October 3, 1972). In addition, the defendant, Aeromatic

Travel Corporation, has included in its memorandum in support of their

original motion to dismiss a complete list of the similar cases now pending

before the CAB. See defendants’ memorandum, at 14.

a

sought the issuance of a temporary injunction directed

against the defendants named. On October 29, 1971,

the plaintiff moved for an order to add additional de-

fendants, which was granted. Thereafter, the defen-

dants moved to dismiss the complaint on various

grounds, including the theory of primary jurisdiction.

Decision was reserved after oral argument on Novem-

ber 5, 1971.

On November 24, 1971 this court issued its decision

concerning the several motions made by the defendants.

In that decision the defendants’ motions were ‘‘ denied

with leave to renew at an appropriate time .. ."’ Fur-

ther, the court stated:

‘“[T]hat during the evidentiary hearing to be

held on the plaintiff’s motion for a temporary

injunction other facts and circumstances will come

to light that may make this Court's determination

on the issue of primary jurisdiction easier."* De-

cision of November 24, 1971, at 29.

Thereafter, several defendants to the action moved

to add party defendants, alleged to be indispensable.

Those motions were granted and an order was made

directing the plaintiff to amend the complaint and

add nine defendants, alleged to be indispensable part-

ies. The plaintiff followed the order of the court as it

decided to interpret the said order. It merely amended

the caption of the case by adding the additional de-

fendants and then, as if to scorn the real meaning of

the order, in allegation after allegation excluded the

aed

additional defendants from any blame or wrong-doing

As a result, the court was compelled to grant the mo

tions of the additional defendant< to dismis« the

amended complaint ax against them. The court, on th:

argument of said motions, directed the original de

fendants to renew their motions on the issue of pri

mary jumadiction, considering thix to be an appre

priate time.

As a result of the aforementioned dilatory maneu

ering, this case ix now at the stave that existed in No

vember 1971. This court will new reeonsider the re

newed motions of the original defendants to disxmi<-

this complaint on the theory that the court <honkd

apply the doctrine of primary jurisdiction and refer

the matter to the CAB for its administrative derixion

PRIMARY JURISDICTION

The doctrine of primary jurisdiction is concerned

with promoting proper relationships bet ween the

courts and administrative agencies. The doctrine ha-<

heen invoked to forestall the Federal courts from trv-

ing a case whieh involves issues placed within the

special competence of an administrative body. Thi-

deetrine is net te be confused with the dectrine of ex

haustion of administrative remedies: beth are sep-

arate and distinet principals of law."

“See ( msted State: Western Pacttu Rativoad Co. mtra. at 165

Sct at 161 1956 ce atvo © KR Daves Adverts Law Treartw

‘el at 2 1058

The rationale behind the doctrine of primary jur-

diction is set forth with partieular clarity in United

States v. Western Pacific Railroad Co! ‘That case ine

volved an action for money damages allegedly due from

the United States to the Railroad for the shipping of

aerial bomb cases filled with napalm wel. The issne

presented was whether the Government should have

paid higher first-class rates or the lower fifth-clas«

rate. The United States defended by arguing that such

a question should be considered and determined by the

administrative ageney commissioned to regulate that

particular industry. Mr. Justice Harlan, in his ma-

jority epimon holding that the question should be de-

termined by the LCLC. stated in part:

“No fixed formula exists for applying the doe-

trine of primary jurisdiction. In every case the

question is whether the reasons for the existence

of the doctrine are present and whether the pur-

poses it serves will be aided by its application in

the particular litigation . . . More reeently the

expert and specialized knowledge of the agencie~<

invelved has been particularly stressed.”

Uwited States vr. Western Pacific Railroad Co, 252

US. 59, at 4, 77 S.Ct. V1, at 165 (1956): «er aleo

Far East Counfercner v. United States, 942 US. 570,

72 S.Ct. 492 (1952). In effect. the doctrine of primary

jurisdiction will detennine whether the court or the

administrative body should make the initial determi-

nation. The doctrine does net necessarily allocate power

3952 US. 59. 77 SCe 161 1956

eek ote

Pe eee ee em ee .

afi

between the courts and various azencies. for it only

determines who shall first consider the issue, and not

who shall finally consider such issue." Therefore, a

determination by a court that an ageney has primary

jurisdiction over a particular question does not neces-

sarily mean that the court will refrain from deciding

the case before it: it may mean that the court has, in

its discretion, chosen to postpone its decision until af.

ter the administrative hody has ruled on the certified

issue.”

DEFENDANTS’ MOTION TO DISMISS

On July 20, 1972. following oral argument held on

June 30, 1972. several of the defendants. at the court

suggestion, renewed their motion< to dismiss thix ense

claiming that the court should apply the doctrine of

primary jurisdiction. Likewise, the plaintiff renewed

its position in opposition to such a dismissal.

The arguments set forth by the defendants in their

renewed motion are, in essence, identical to those as-

serted in their original motion. The hackbone of their

argument ix that the defendants" liability in this case

will only exist if it is found that their activities are

those of an indirect air carrier. In short, a determina-

tion of the defendants" statux within the aviation in-

dustry will establish or nezate their liability. Thus, the

defendants argue. *‘ where industry practice ix a sig-

"3 K. Davis, Administrative Law Treatioe, § 19.01. at 3 (1958)

*3 K. Davis, Adminiotratice Law Treetice. tupre

CR gw we ee ¥ 2 er

—l13—

nificant consideration in pigeonholing the type of ae-

tivity under consideration, the administrative tribunal

should, in the first instance, make findings of fact on

that practice."

Tae plaintiff begins its second memorandum in oy

pexition to thix motion by alleging that the court may

net now grant this renewed motion to dianiss hecanse

the prior motion was denied pending an evidentiary

hearine. whieh hearing hax not yet been held.” Thix

contention. designed to limit the court's diseretionary

power, is net supported in law or reason. | court ’<

power to defer an issue or case under the primary

jurisdiction doctrine ix purely discretionary and can

he invoked at any stage.” There is no hard and fast

rule which must he satisfied before the doctrine ean

he employed. The very nature of the doctrine lends it-

self to a situation whereby the courts may. at any time.

with or without an evidentiary hearing, consider the

appropriateness of its application.” Although the prior

motion was denied. the court specifically stated that

it would consider a renewal of that motion at an ap-

Memorandum in of the defendans” moten te dismiss (for

defendant, Ira Karp. filed Joly 20. 1972)

“Plaintiff's memorandum. at 2 (filed Aucust 11. 1972)

"United States « Western Pacific Railroad Co. 42 US 58. 77 Sa

161 (1956).

"See United State: ; Westers Pacific Railroad Co WG2US o 64

77 S.Ct at 165 (1956). Fer Ean Conference + Uaited States M2US Ste

72 S.Ct. 492 (1952)

é ‘ wyvediiet= +

ve tw WG Bt aie Ad eign ot ae

Seay Cyd’ Aare

| nein ski MES dart

;

=

propriate time in the future.“ This opportunity to

renew was not contingent entirely on the findings of

an evidentiary hearing. To now require this court to

conduct such a hearing before it can exercise its dis-

cretion and apply the doctrine of primary jurisdiction

would alone seriously limit the powers of the court.

Further, such a requirement would necessarily delay

a final determination of the case and thereby burden

all of the parties needlessly."

Following their initial argument the plaintiff.

CAB, then asserts the proposition that this court should

not grant the defendants renewed motion to dismiss be-

cause there is no question in this case involving the

special expertise of an administrative hody and the

request for an application of the doctrine of primary

jurisdiction is unfounded. In support of this latter.

more substantial claim, the plaintiff relies on the hold-

ing in CAB rv. Modern Air Transport, Inc., 179 F.2d

622 (2d Cir. 1950). In that case the United States

Court of Appeals, Second Circuit, affirmed the dis-

trict court's decision and refused to apply the doctrine

of primary jurisdiction where the issue was concern.

“The opportunity to renew the motion was granted by the court be-

cause, at that time, the court was not completely convinced by the ments

mace, Se De. Go come eam: —

Coa B_Rot completely convinced by the reasoning of

the defendants. This Court is the opinion that the Pan American

Worid » Case, supra can be distinguished from the case

as bar as can the cases cited by the plaintiff.” Court's Decision of

November 24, 1971, at

8

onfifien

ing the violation of a rule rather than the reasonable-

ness of the rule. Judge Clark, in his opinion, stated:

[T)his doctrine [primary jurisdiction] is not

applicable where the issue, regardless of its com-

plexity, is not the reasonableness of the rate or

rule, but rather a violation of such rule or rate

%°

CAB v. Modern Air Transport, Inc., id. at 624.

This court does not take issue with the rule of law

so clearly presented in Modern Air. It does, however,

feel that the circumstances and issues of the pending

case are quite different from the circumstances that

existed in Modern Air. In Modern Air there was no

question as to the defendant's status within the in-

dustry. In fact, the defendant there admitted to being

an air carrier engaged in air transportation on an ir-

regular basis.” It was, therefore, clear that the de-

fendant was subject to certain rules and regulations

pertaining to air carriers. In the instant case, the de-

fendants do not admit to being a particular type of

air carrier engaged in air transportation, rather, they

allege only to sell such transportation as mere ticket

agents.

The real question in Modern Air was whether the

defendant, an admitted air carrier, was operating on

a regular basis.” The court found that the CAB had

already set forth clearly and precisely the standards

16CAB +. Modern Air Transport, Inc. id. at 624.

13CAB v. Modern Air Transport, Inc., id. at 624.

| ee Soares”

afin

necessary to determine such an issue of frequency.”

In short, the court in Modern Air (supra), needed

only to apply the specifie rules and regulations to a

known and admitted violator of such rules and recula-

tions. In contrast, this court does not enjoy the bene-

fit of such certainty as to whether the defendants are

indeed indirect air carriers, nor is this court blessed

with the advantage of having clear standards and

eriteria by which it could be guided in determining

such a question as to the defendants’ status.

Although there are several other cases on the sub-

ject of air carriers, those cases do not offer sufficient

assistance. In all of the cases considered, the facts and

relationships of the parties do not sufficiently com-

plement or parallel the factual situation at bar.” The

court, at this stage in the case at bar. is now of the

opinion that any substantial reliance on those cases to

determine the issue presented here would he misplaced

and misleading.

In addition to the lack of clear statutory language

or case law defining the term “indirect air carrier.” the

question presented in this motion is further compli-

in this case have pointed out to the court that while

"Id. at 625.

"Pan American World Airways ©. United States. 371 US. 296 (1963).

Pan American World Airways, Inc. +. CAB. 392 F. 2d 483 (D.C. Cir. 1968) .

World Airways, Inc. ». Northeast Airlines, Inc. 349 F.2d 1007 (1st Cir

1965); Monarch Travel Services, Inc. +. Associated Cultural Clubs. Civil

Action No. 71-1176-WPG (June 4. 1971) (CD. Cal).

= =

ation industry are awaiting an administrative decision

on the very question of status raised by this motion.”

The existence of such a situation, in the court’s opin-

ion, seems to give greater weight to the defendants’ ar-

gument that the doctrine of primary jurisdiction should

be applied. Clearly, its application would prevent the

possibility of conflicting decisions.

As a result of the foregoing, the court is now of the

opinion that any ruling as to the differences between

an indirect air carrier and a ticket agent can best be

made, in the first instance, by the administrative body

charged with regulating the industry. There is no doubt

that the Civil Aeronautics Board would be better

equipped to characterize and define the subtle differ-

ences between the two roles.

Accordingly, the court exercises its discretion to ap-

ply the doctrine of primary jurisdiction, and hereby

refers the issue of the defendants’ status to the CAB.

In doing so, howver. the court does not relinquish its

jurisdiction over this case and stays the final determin-

ation until after the agency’s decision.

Submit an order with notice of settlement in accord-

ance with this decision.

ANTHONY TRAVIA

USD...

2°In addition to the fact that several similar cases are pending before

the Board certain other deve! nts, initiated by the Board, may bear on

the issues at bar On August 21. 1972 the CAB issued an order instituting

an investigation of the paweneer fare discounting practices in the North

Atlantic market. Further. the October 3, 1972 issue of The lU'nited States

Law Week, at 1272 refers to a “new regulation” affecting the operation

and practices of the charter tour business.

NREL TSI ITE PEIN POLIS EAM IS ade ae Si

APPENDIX C

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

71-C-1232

November 24, 1971

CIVIL AERONAUTICS BOARD,

Plaintiff,

— against —

AEROMATIC TRAVEL CORP.,

TOUR EUROPE TRAVEL AGENCY,

INC. also d/b/a TOUR EUROPE

TRAVEL SERVICES, INC., TOUR

FUROPE TRAVEL CONSULTANTS,

WORLDWIDE AIRLINES SERVICE

and CALEDONIAN FRIENDSHIP

SOCIETY,

CHRISTIAN DUBREUIL, Individually

and as Officer, Agent, Servant or Em-

plovee of, and d/b/a AEROMATIC

TRAVEL CORP., TOUR EUROPE

TRAVEL AGENCY, INC., TOUR EUR-

OPE TRAVEL SERVICES, INC..

TOUR EUROPE TRAVEL CONSULT-

ANTS, WORLDWIDE AIRLINES

SERVICE and CALEDONIAN

FRIENDSHIP SOCIETY,

FINBAR SULLIVAN, a/k/a FINBAR

O’SULLIVAN, Individually and as Of-

ficer, Agent, Servant or Emplovee of, and)

d/b/a AEROMATIC TRAVEL CORP., )

=

ie te ee ee ee a

fu awa. Wa gaa ent _— F

ae » ‘, » 5 Pare a PN Ne ok oN

Piitearcswier ——

~

PHILLIP NEWMORE, Individually )

and as Officer, Agent, Servant or Em- )

ployee of, and d/b/a TOUR EUROPE )

TRAVEL AGENCY, INC., TOUR EUR- )

OPE TRAVEL SERVICES, INC., )

TOUR EUROPE TRAVEL CONSULT. )

ANTS, WORLDWIDE AIRLINES )

SERVICE and CALEDONIAN )

FRIENDSHIP SOCIETY,

)

)

)

)

)

)

RORY ALKIN, Individually and as

Officer, Agent, Servant or Employee of,

and d/b/a TOUR EUROPE TRAVEL

AGENCY, INC., TOUR EUROPE

TRAVEL SERVIC ES, INC., TOUR

EUROPE TRAVEL CONSUL TANTS,

WORLDWIDE AIRLINES SERVICE )

and CALEDONIAN FRIENDSHIP )

SOCIETY,

JOHN S. BOYLAN, ak/a JOHN

STANLEY, Indiv idually and as Officer,

Agent, Serv ant or Employee of, and d/b/a

TOUR EUROPE TRAVEL AGENCY,

INC., TOUR EUROPE TRAVEL SER-

VICES, INC., TOUR EUROPE TRAY-

EL CONSULTANTS, WORLDWIDE

AIRLINES SERVICE and CALEDON-

IAN FRIENDSHIP SOCIETY,

C. K. FROEMILICH TRAVEL SER-

VICE, INC., also d/b/a INTERNA-

TIONAL UNIVERSITIES ASSOCTA-

TION,

ee ee a ee a a ee ea a ee eee a

=

JOSEPH WILLIAM O°MELIA, Indi- )

vidually and as Officer, Agent, Servant )

or Employee of, and d/b/a C. K. FROEH- )

LICH TRAVEL SERVICE, INC. and )

INTERNATIONAL UNIVERSITIES )

ASSOCIATION,

JOHN BRADFORD, Individually and as

Officer, Agent, Servant or Employee of,

and d/b/a C. K. FROEHLICH TRAV-

EL SERVICE, INC. and INTERNA-

TIONAL UNIVERSITIES ASSOCTA-

TION,

LUAN STASSIT, Individually and as Of-

ficer, Agent, Servant or Employee of, and

d/b/a C. K. FROEHLICH TRAVEL

SERVICE, INC. and INTERNATION-

AL UNIVERSITIES ASSOCTATION,

CONSOLIDATED ATR BROKERS,

INC.,

CHARTER AND GROUP TRAVEL

SPECIALISTS,

FRED MEYROW, Individually and as

Officer, Agent. Servant or Employee of,

and d/a CONSOLIDATED ATR

BROKERS, INC.,

LILLIAN MEYROW, Individually and

as Officer, Agent, Servant or Emplovee

of, and d/a CONSOLIDATED AIR

BROKERS, INC. and CHARTER AND

GROUP TRAVEL SPECIALISTS,

ll ed i he ee a a a ee ee a a ae aaa

A PALA ER POI, ——

a an

JOHN BLAKELY, Individually and as )

Officer, Agent, Servant or Employee of, )

and d/b/a CHARTER AND GROUP )

TRAVEL SPECIALISTS,

)

Defendants. )

DECISION

APPEARANCES:

ROBERT A. MORSE, ESQ.

United States Attorney, E.D.N.Y.

Attorney for Plaintiff

CARL I. STEWART, ESQ.

Assistant United States Attorney

Of Counsel

BERNARD KENNY, ESQ.

Attorney for Defendants

VINCENT M. MeCONNELL, ESQ.

Of Counsel

BOROS & LESTER, ESQS.

Attorneys for Defendants

HOWARD S. BOROS. ESQ.

Of Counsel

TRAVIA, D. J.

The plaintiff, Civil Aeronautics Board ("CAB"),

is seeking injunctive relief restraining the defendants.

certain travel agencies and certain named individuals

associated therewith, from engaging in certain busi-

hess practices alleged to be violative of the Federal

Aviation Program. The defendants move for various

types of relief. including dismissal of. the complaint,

é

The complaint alleges that jurisdiction is founded

on 28 U.S.C. § 1345 and 49 U.S.C. § 1487. (To he dis-

cussed infra on the question of venue).

The defendants are alleged to be acting in viola-

tion of three aspects of the Federal Aviation Program:

all of the defendants are alleged to be violating cer-

tain statutory provisions; all of the defendants are al-

leged to be violating certain regulations promulgated

by the CAB; certain of the defendants are alleged to

be violating a CAB cease and desist order.

With regard to the alleged statutory violations, it

is claimed that the defendants, by virtue of their bus-

ness practices, are indirect air carriers within the pur-

view of 49 U.S.C. § 1301(3). (20), and (21) or indirect

foreign air carriers within the purview of 49 U.S.C.

§ 1301(19) and (21);' and that they have acted and

continue to act as such without the required certifica-

tion by the plaintiff under 49 U.S.C. § 1371(a)? or the

permit authorizing such acts under 49 U.S.C. § 1372

(a).

149 U.S.C. § 1301 reads in part:

“(3) ‘air carrier’ means any citizen of the United States who un-

dertakes, whether directly or indirectly or by lease or any other ar-

rangement, to engage in air transportation PS

* *

“(19) ‘Foreign air carrier’ means any person. not a citizen of the

United States, who undertakes, whether directly or indirectly or by

lease or any other arrangement. to engage in foreign air transportation,”

*49 U.S.C. § 1371(a) reads:

“No air carrier shall engage in any air transportation unless there

is in force a certificate issued by the Board authorizing such air car-

rier to engage in such transportation.”

349 U.S.C. § 1372(a) reads:

“No foreign air carrier shall engage in foreign air transportation

unless there is in force a permit issued by the Board authorizing such

carrier so to engage.”

undies

As to the regulatory violations, it is alleged that

the defendants offer to sell and sell “charter” air

transportation between the United States and Europe

to the general public contrary to those CAB regula-

tions governing charter air transportation, which are

prohibited under 14 C.F.R. Parts 207.11(b)(2) et seq.

Finally, it claimed that certain of the defendants.

Fred Meyrow and Lillian Meyrow, are acting in vio-

lation of CAB Order 71-6-117, which became effective

on June 23, 1971. The Order directs a New York cor-

poration, Charter Consultants, Inc.. and Fred Meyrow.

its president, to cease and desist from engaging in cer-

tain practices similar to those complained of herein.

For relief, plaintiff seeks a judgment permanently

enjoining and restraining the defendants from Violat-

ing the statutes, regulations, and order specified in

the complaint. It also seeks judgment enjoining the

defendants from failing to refund promptly te each

purchaser of charter air transportation, whose con-

tract may not be performed due to the alleged viola-

tions, the full consideration paid for such transpor-

tation. The plaintiff also seeks a preliminary injune-

tion restraining the defendants from engaging in those

practices alleged in the complaint. An evidentiary hear-

ing on the application for a preliminary injunction has

been adjourned without date pending a determination

of motions made by the defendants directed to the

complaint and the Jurisdiction of this Court.

- s=

The defendants move to dismiss the complaint on

several grounds. They maintain (1) that the case is

not ripe for the exercise of this Court's jurisdiction

since primary jurisdiction lies with the CAB; (2) that

the complaint fails to state a cause of action: (3) that

the filing of the complaint was not properly authorized

by the CAB; (4) that the plaintiff has failed to jom

indispensable parties: and (5) that venue is not proper

in the Eastern District of New York.

The question of primary jurisdiction will be dis-

cussed last since it is the most perplexing problem to

he discussed.

I. MOTION TO DISMISS FOR FAILURE TO STATE A

CLAIM.

Defendants argue that the regulations. in the light

of specific allegations in the complaint, cannot apply

to the defendants. They argue, essentially, that the de-

fendants referred to in the particular paragraphs of

the complaint are not ‘‘indirect air carriers” as de-

fined in the statutes (49 U.S.C. §§ 1301(3), 1301(19))

and, therefore, they cannot be guilty of violations of

49 U.S.C. §$§ 1331(a), 1372(a). They argue that the

term “air carrier” is not defined in the Act nor by the

CAB regulations. Several of defendants additionally

argue that the defendants are ticket agents within the

meaning of §1301(35), and ticket agents are not hound

hy the sections of the Federal Aviation Act (** Act*’)

or the regulations specified in the complaint.

:

~ omy

callies

Since all of the defendants in this case are alleged

to be engaged in unlawful foreign charter service, the

only relevant distinction between “air carriers” and

“foreign air carriers” is that of the nationality of the

defendant.

The definition of the term “‘air carrier” is a broad

one including not only those persons who engage di-

rectly in air transportation but also those who so en-

gage “‘by lease or any other arrangement,”’ that is “‘in-

direct air carriers."” The CAB maintains that the de-

fendants operating in the manner alleged are indirect

air carriers and therefore subject to the requirements

of § 1371(a) and § 1372(a).

They state that pursuant to the bread definition

of *‘air carrier” in § 1301(3), the CAB has long reg-

ulated as indirect air carriers persons who do not them-

selves physically operate aircraft, but who as princi-

pals or on their own behalf hold out and sell air trans-

portation services. It was stated in Hacienda Hotels-

Motels, Rooms and Flight Reservations, Inc. and U.S.

Aircoach Enforcement Proceeding, 26 CAB 372. 385

(1958), that:

“Tt is the view of the Board that in general. a

person not directly engaged in the operation of

aircraft is an indirect carrier if such person sells

transportation by aircraft to the general public

other than an as authorized agent of a direct ear-

rier in the consummation of transportation ar-

rangements bet the operator of the aircraft

and the passengers.’

" ee ee

2 - ‘ate sss onda ytiinsitts nena edged pee, iene ete bie E RN OO eee an Mattern. . Seat & wee ——

atin

It is also argued that in the case of Pan American

World Airways, Inc. v. CAB, 392 F.2d 483 (D.C. Cir.

1968), it was held that certain tour operators were

foreign air carriers. As basis for its ruling, the court

noted that the tour operators arranged, operated, and

conducted the tours; they determined how much each

tour purchaser would pay for air transportation and

connecting ground services; and aircraft and crews

would be charted by the tour operators. It should be

pointed out that the court affirmed the Board decision

not to exercise jurisdiction over the foreign tour oper-

ators involved, even though such jurisdiction was with-

in the Board, on the grounds of impracticality.

CAB also cites a recent case, Mowarch Travel Ser-

rices vr. Associated Cultural Clubs, Inc., 71-1176-W PG,

entered June 4, 1971 (C.D. Cal.), wherein the court

entered an order for a preliminary injunction against

illegal passenger consolidators who had been operat-

ing as a “‘elub”’ in California. The CAB maintains that

the lecal hasis for that order was identical to that in

the instant case: defendants were found to be operat-

ing as indirect air carriers in violation of 49 U.S.C.

§ 1371.

The CAB also alleges that it hax regulated as air

carriers certain businesses which would be considered

air earriers only through a broad construction of §

1301. Certain courts have concurred in such regulation.

These businesses include air freight forwarders, tour

operators who handle exclusive tour charters, unanu-

BRAD ten Sach dita nitride ts oes |

DY ee aes

EW SA SIO 2 ene a aS

Dig Tohaves «te 6

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PRT Ce er en en ee

- =

thorized cooperative shippers of consolidated cargo,

and travel agents and ‘“‘clubs”’ offering air transpor-

tation as principals.

Therefore, the CAB argues that the defendants are

“indirect air carriers’’ and “‘indirect foreign air ear-

riers’’ and as such are required by § 1371(a) and §

1372(a) to have certificates or permits issued by the

CAB authorizing them to engage in air transporta-

tion. It is alleged that the certificates (or permits)

have not been issued; that the defendants are not ex-

empted from the requirements by statute: nor have

they been exempted by CAB order.

The plaintiff alleges facts, which if proven, would

constitute “‘engaging in air transportation.’ It is also

alleged that in doing the acts complained of defen-

dants are acting as indirect air carriers without a cer-

tificate of public convenience and necessity in viola-

tion of 49 U.S.C. § 1371(a). The question of whether

defendants are indirect air carriers is the basie ques-

tion in this case.

This Court feels that it must sustain the arguments

of the plaintiff that the complaint sets forth allega-

tions sufficient to state a cause of action although such

allegations are questions of fact to he proven. There-

fore, the motion of the defendants to dismiss on this

ground is denied.

*

PEI RIEL EMT St IIS PEE a NIE ES LED ERR ANY CD

-

|

Il. THAT THE FILING OF THE COMPLAINT WAS

NOT AUTHORIZED BY CAB.

The defendants rely on the case of Morgan v. United

States, 298 U.S. 468 (1936). The Morgan case was fol-

lowed by a series of three more ‘‘ Morgan” cases all of

which watered down the first holding and in fact, in

the last of the series, the Supreme Court virtually

overruled its initial ruling. The defendants’ reliance

thereon is misplaced. The case now before the Court

is distinguishable from the Morgan cases in many re-

spects and in addition, in this case, the (AB has filed

a copy of the Board authorization, dated September

15, 1971, by which this action was authorized.

Therefore, the motion of the defendants on this

ground is denied.

Ill. THAT THE CAB HAS FAILED TO JOIN INDIS.

PENSABLE PARTIES.

The defendants claim that it is not alleged that de-

fendants held themselves out as providing air trans-

portation or did so engage themselves; the defendants

rather, it is alleged, sold tickets of other air carriers

who are not before this Court. Those air carriers, iden-

tified in the affidavits and exhibits in support of the

CAB motion, include Dan Air Services Ltd., Donald-

son Airways, Laker Airways, Pan American World

Airways, Trans International Air Lines, and Univer-

sal Air Lines, Inc., and it is argued, should be joined

since they are indispensable ti under Rule 19,

Fed. R. Civ. P.

|

+ AD tbe entde Nee nbdiess’ —!

=— =

It is argued that the CAB in commencing this ac-

tion against the defendants because of the ‘‘vast black

market in air transportation”’ has ignored the air car-

riers who have in fact provided the transportation ser-

vice involved. The defendants submit that these air

carriers are indispensable parties in that a decree can-

not be rendered by the Court which will not affect

their interest and because their absence leaves the con-

treversy in such a condition that its final determina-

tion would be wholly inconsistent with equity and good

conscience.

It is also contended that these carriers are the real

parties in interest subject to regulation of Part 212

of C.F.R. cited as one of the parts violated by the de-

fendants. They argue that they are mere ticket agents

for the air carriers and if violation of the regulations

occurred, it was the air carriers who violated the ree-

ulations and not the defendants.

The argument of the defendants in this regard must

be sustained.

~The Court directs the plaintiff to bring in as part-

ies defendants the following:

Dan Air Services Limited

Donaldson International Airways

Laker Airways

Pan American World Airways

Trans International Air Lines

Universal Airlines, lne.

yh oe ac

ESE RRSP RRL EES TOTES SERGE PLP I

| <— -

=~

The Court further directs the plaintiff to speedily

conduct whatever pretrial discovery proceeding that

may be necessary so that there shall be no delay in

bringing on the hearing on the application for pre-

liminary injunction.

IV. VENUE

Title 28 U.S.C. § 1345 and 49 U.S.C. § 1487 provide

generally that civil actions commenced by federal

agencies are to be brought in federal district courts and

in particular that where the provisions of the Federal

Aviation Act are being violated, the federal district

courts are the proper places in which the violations are

to he enjoined. Before an action brought by the CAB

under § 1487 can proceed, however, there must be

proper venue. Section 1487 provides that in the event

of a violation, the CAB may seek proper remedies

against the violators in ‘‘the district court of the

United States, for any district wherein such person

carries on this business or wherein the violation oc-

curred ...’° The complaint alleges that the **‘Defen-

dants carry on business within the Eastern District

of New York and certain of the defendants’ violations

complained of herein, take place within the Eastern

District of New York,” (par. 3, Plaintiff’s complaint).

Not all the defendants contest the venue of this

action.

‘The defendants who press this issue state:

| ‘

“No a a been presented that Defendant

a thn apes q

a,

a

carries on business within the geographical juris-

diction of the United States District Court for the

Eastern District of New York, nor that any of

the alleged violations took place therein. Hence.

venue does not lie here. (49 U.S.C. § 1487).*" (De-

fendants’ motion to dismiss, par. 2).

They claim that departures from John F. plovds In

ternational Airport (‘‘JFK’’) are not violations of the

Act; that the violations occurred, if indeed they did

occur at all, with the “holding out for sale’’ and sale of

transportation; that these activities did not occur in

the Eastern District of New York (‘*E.D.N.Y.’’) : and

that the JFK departures cannot be said to amount to

the defendants’ carrying on business in E.D.N.Y. The

case cited by the defendants is United States v. Na-

tional City Lines, 337 U.S. 78 (1949), for the propo-

sition that the CAB has failed to establish venue in

E.D.N.Y. National City involved the applicability of

the doctrine of forum non conveniens to antitrust suits

and it appears that the defendants cannot place re-

liance on it.

A good amount of advertising is done in this Dis-

trict; the whole transaction is foreused on JFK with

the passengers, having purchased their tickets in the

Southern District of New York, being obliged to check

in at JFK and depart therefrom.

Moreover, any contention that the Southern Dis-

trict af New York would be a more convenient forwn

. os . wor P ‘ :

is frivolous. There is a mere difference in two express

eee

;

5

= =

stops on the Lexington Avenue IRT Subway Line and

if any inconvenience would be brought about, it would

be done by a change of venue.

This motion is obviously without merit and is de-

nied.

V. PRIMARY JURISDICTION

Defendants argue that the case should be dismissed

heeause it is not ripe for the exercise of this Court's

jurisdiction and primary jurisdiction over the subject

lies in the CAB, itself.

It is argued that under §\ 1471 and 1472 the CAB

has ample power to enforce civil and criminal penalties

against those violating the Act and rules, regulations,

and orders promulgated pursuant thereto; that under

$1482, the CAB has power to institute investigations,

to make findings after notice of hearing that any per-

son has failed to comply with the provisions of the

Act, to make other findings relating to reasonableness

of rates, to issue orders compelling compliance with

the Act, to prescribe rates, and to make orders regu-

lating air carriers and foreign air carriers; that the

§ 1487 authorization to the CAB to apply to federal

courts for injunctive relief against violators of the

Act and CAB rules, regulations and orders must be

read in harmony with the other delegations of power

to the CAB under the Act or the intent of Congress in

enacting the Act will be frustrated. It is contended

that if the Courts determined questions within the

1 |

ae

a

at ota eR ot Sete _

jurisdiction of an administrative tribunal prior to the

decision of the tribunal, at least in cases where the

question demands the exercise of administrative dis-

cretion requiring the special knowledge and experi-

ence of the administrative tribunal, the intent of Con-

gress would be frustrated.

It is also claimed the essential issue in the case is

whether the defendants are indirect air carriers and

that the issue is an esoteric one especially in the light

of the dearth of judicial precedent in the area. Under

the circumstances, this proceeding, especially in the

: light of the ‘‘indirect air carrier’’ issue, is one pecu-

; liarly suited to resolution by the CAB with its ex-

pertise and familiarity with the business practices

which might be relevant to a determination of the issue.

The doctrine of primary jurisdiction determines

whether the court or the agency should make the initial

decision; it applies where a claim is originally cog-

nizable in the courts and comes into play whenever

enforcement of the claim requires the resolution of is-

sues which, under a_ regulatory scheme, have been

placed within the special competence of an administra-

tive body. In such a case, the judicial process is sus-

| pended pending referral of such issues to the admin-

: istrative agency for its views. United States v. West-

ern Pacifie R. Co., 352 U.S. 61, 64 (1956).*

poe se

Maen +

*“Exhaustion of administrative remedies applies where: a claim is cogni-

zable in the first instance by an administrative agency alone; judicial inter-

ference is withheld until the administrative process has run its course.” (352

U.S. at 63). (Emphasis added). The two terms, however, are often confused

and used interchangeably; such is error. See 3 ‘Davis. Administrative Law

Treatise § wa at /2, n.7.

‘

Pails. ene salsa

ODN waa ed

a

Professor Davis has written extensively in his

treatise concerning primary jurisdiction, 3 Davis, Ad-

ministrative Law Treatise \{ 19.01 - 19.09, at 1-55. He

states in part:

**Possibly the best judicial statement of the

doctrine is that of the Supreme Court in Far East

conference v. United States:’ ‘The Court thus ap-

plied a principle, now firmly established, that in

cases raising issues of fact not within the conven-

tional experience of judges or cases requiring the

exercise of administrative discretion, agencies cre-

ated by Congress for regulating the subject mat-

ter should not be passed over.’ The Court does not

say that the power is withdrawn from the Court,

but only that the agency should not be passed over.

The Court makes this doubly clear in its next sen-

tence: ‘This is so even though the facts after they

have been appraised by specialized competence

serve as a premise for legal consequences to be

judicially defined.” The final power may thus still

he in the Court.®

* * *

The principal reason behind the doctrine of

primary jurisdiction is not and never has been

the idea that ‘administrative expertise’ requires

a transfer of power from courts to agencies, al-

though the idea of administrative expertise does

to some extent gontribute to the doctrine. The

principal reason behind the doctrine is recognition

5342 U.S. 570, 574 (1952).

_ SDavis notes that the original proceeding before the court may be con-

tinued after the agency has acted, or the agency's action may be reviewed

in a direct review proceeding. At 3. n.8. |

| ‘

|

=

of the need for orderly and sensible coordination

of the work of agencies and of courts. Whether

the agency happens to be expert or not, a court

should not act upon subject matter that is peculi-

arly within the agency's specialized field without

taking into account what the agency has to offer,

for otherwise parties who are subject to the agen-

cy’s continuous regulation may become the victims

of uncoordinated and conflicting requirements.

* m *

The Court in Far East Conference v. United

States, 342 U.S. 570, 575, 72 S.Ct. 492, 495, 96

L.Ed. 576 (1952) applied the doctrine of primary

jurisdiction and said that it was ‘merely applying

the philosophy which was put in memorable words

by Mr. Justice (as he then was) Stone: ‘‘. .. court

and agency are not to be regarded as wholly in-

i, dependent and unrelated instrumentalities of jus-

; tice each acting in the performance of its prescribed

4 statutory duty without regard to the appropriate

: function of the other in securing the plainly indi-

2 cated objects of the statute. Court and ageney are

? the means adopted to attain the prescribed end,

and so far as their duties are defined by the words

of the statute, those words should be construed so

as to attain that end through coordinated action.

Neither body should repeat in this day the mis-

take made by the courts of law when equity was

struggling for recognition as an ameliorating svs-

tem of justice: neither can rightly be regarded by

the other as an alien intruder, to be tolerated if

must be, but never to be encouraged or aided by

the other in the attainment of the common aim,"

4

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enforcement of the CAB claim, although ale

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United States v. Morgan, 307 U.S. 183, 191, 59

S.Ct. 795, 799, 83 L.Ed. 1211.’

* * *

What has been emphasized above in this sec-

tion — that the question of primary jurisdiction

is whether agency or court should act first and

not whether the court will refuse to act at all —

is now fully confirmed by a 1958 decision of the

Supreme Court that a holding that an agency had

primary jurisdiction to determine the legality of

practices did not imply that the ageney could prop-

erly approve the practices. Instead, said the Court:

‘The holding that the Board had primary juris-

diction, in short, was a device to prepare the way,

if the litigation should take its ultimate course,

for a more informed and precise determination by

the Court of the seope and meaning of the statute

as applied to those particular circumstances.’ ”’

(Federal Maritime Bd. v. Isbrandtsen Co., 356

U.S. 481, 498, 499 (1958).

The Supreme Court has stressed two reasons for

the invocation of the doctrine of primary jurisdiction:

chiefly, the necessity of a desirable uniformity which

would obtain if initially a specialized agency passed on

certain types of administrative questions and the most

desirable result which would more likely be rendered

hy the agency possessed of expertise and specialized

powers. See Western Pacific, supra at 64.

Therefore, the issue with regard to primary juris-

diction and its relevance in this case is whether the

|

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Bwivenaive ‘a

= =

cognizable in this Court under § 1487, requires the

resolution of issues which under the regulatory CAB

scheme have been placed within the special competence

of the CAB; in other words, does this case raise issues

of fact® the resolution of which are not within the con-

ventional experience of judges but which would be

more properly resolved by the CAB in the exercise of

its administrative function.

One case is of essential importance herein: CAB r.

Modern Air Transport, 179 F.2d 622 (2d Cir. 1950).

It is discussed by all parties to this proceeding and

also dealt with by Professor Davis in his treatise. In

that case, the CAB had sought and obtained a prelim-

inary injunction restraining the defendant from oper-

ating flights in excess of the frequency and regularity

permitted by the terms of an economic regulation ex-

emptinge that class of air carrier from certification.

The action was commenced under the Civil Aeronau-

ties Act of 1938 but the language contained in the

relevant parts therein is identical to the statutory lan-

guage involved herein. On appeal, the defendants ar-

eued that the district court should have declined juris-

diction on the basis of **primary jurisdiction.”* In af-

firming the distriet court, the Court of Appeals, See-

ond Cireuit stated :

It should be noted that primary jurisdiction is involved with questions

of fact; questions designated as “law” by the Courts may be appropriately

determined in the first instance by courts because uniformity may be secured

review to the single Supreme Court. The Supreme Court could not

perform its unifying function as to matters of fact because it cannot involve

— by = See Great Northern R. Co. «. Merchants El. Co.. 259 US

285. 1 (1 .

“It [defendant] earnestly contends that so long

as its letter of registration as an Irregular Air

Carrier has not heen suspended, its exemption from

section 401(a) [49 U.S.C. §1371(a)] is absolute

and complete, and that the Court has no juris-

diction to enjoin its unauthorized reeular service

until the Board has first proceeded to take action

to suspend or revoke the letter of registration .. .

* * =

Under [the doctrine of primary jurisdiction] the

courts will not determine a question within the

jurisdiction of an administrative tribunal prior to

the decision of the tribunal where the question

demands the exercise of administrative discretion

requiring the special knowledge and experience of

the administrative tribunal. 42 Am. Jur. 698-702.

This self-denying doctrine has been used by the

courts as a ground for refusing to decide the dif-

ficult issues of reasonableness of a rate of fairness

of a regulation which fall within the area of spec-

ial competence of the particular administrative

agency and for which the agency is said to have

primary jurisdiction. 51 Harv. L. Rev. 1251. But

this doctrine is not applicable where the issue, re-

gardless of its complexity. is not the reasonable-

ness of the rate or rule, but a violation of such

rate or rule...

. oa =

Our present case is one involving the violation of

a lawful regulation of the Board, rather than one

requiring expert appraisal of the reasonableness

of a company action. The Board, within the au-

thority given it by the Act, has granted an exemp-

tion for noncertifieated carriers and has set out

= =

the standards with which the carrier must comply

in order to enjoy the exemption [Part 292 of the

Keonomie Regulations }."

The Court went on to review the pertinent regula-

tory provisions, finding that the defendant's activities

had not conformed to those provisions, and that there-

fore they were operating in violation of Title 49 U.S.C.

1371 (a) and that the district court had jurisdiction

to issue the preliminary injunction:

“It is of course true that the distinction set by

the Supreme Court may afford difficulties in a

borderline case. It is also true that even the ques-

tion of violation of a regulation may be difficult.

though we do not understand that there is any-

thing in the doctrine which excuses a court from

deciding a question of violation because it may be

difficult. But the value of the distinction as es-

tablished is shown in a case such as this where

there can be no doubt of the violation and a_re-

reference to the Board to decide whether it: was

correct In seeking an injunction under the statute

‘an be only a delaying formalism peculiarly un-

desirable in the application of the vital controls

needed for aircraft.**

The court expressly reserving the question whether

the court might have jurisdiction to issue such an in-

Junction at the suit of a private party, concluded that:

... Where, as here, the Board is the petitioner

8179 F.2d 622, 624, 625: See also generally Lous |. Jaffee. Priman

Jurisdiction 77 Harv. L. Rev. 1037 (1964) -

9179 F. 2d 622, 625.

= =

seeking restraint of a violation of law, we find no

judicial barrier to granting the swift remedy ac-

corded it by Congrses.“*™

In his discussion of the case Professor Davis re-

marks that where the ageney (CAB) is the plaintiff

who brings the action in enforcement pursuant to the

statute, the reasons behind the doctrine of primary

jurisdiction are met. 3 Davis § 19.02. When the agency

is the plaintiff, the court has the advantage of know-

ing its position and in such circumstances that is the

principal function of the doctrine of primary juris-

diction ( 3 Davis, § 19.02, n. 41). Therefore, it would

seem that (1) there would be no chance of confusing

holdings between the Board and the courts because

the courts are put on notice of the Board's attitude

toward an issue, and (2) the reasons favoring an ageney

determination based on agency expertise are mitigated

where the ageney by commencing the action is vir-

tually admitting that the court's expertise in resolv-

ing the question is equal to if not greater than its own.

The cases relied on by the plaintiff are also cited

by the defendants in favor of their position. It is

claimed that the Modern Air Transport case, supra,

involved undisputed facts; the court was presented

with a clear and admitted violation of a CAB statute.

and the defendant raised only jurisdictional argu-

ments. There was no necessity for the resolution of

179 F.2d 622, 626

we

peti

D4

complex issues by a specialized ageney. The Court

stated:

“there can be no doubt of the violation and

a re-reference to the Board to decide whether it

was correct in seeking an injunetion under the

statute can be only a delaying formalism peeuliar

ly undesirable in the application of the vital con-

trols needed for aircraft.” (179 F. 2d at 625-626).

It is alleged that the cease of World Arrivays, Tne.

rv. Northeast Airlines, Tne. SAG F.2d LOOT Cist Cir.

1965), is also distinguishable. In deciding that the

issues before it were of a legal nature and that referral

of the case to the CAB would not be proper, the court

stated:

**The issue is whether the contract between World

and Nationwide violates the certificate of author:

itv issued to World. The language of the certift

cate is clear... The answer depends on whether

the contract violates this exclusion and requires

an analysis of the contract. The analysis, inter pre-

tution, construction, and appheation of coutracts

are within judicial competence and, at least in the

ease before us, require no administrative caper

tise for solution, (349 F.2d at loll). ¢ Emphasis

added ).

Moreover, it is argued that the Davis analysis is

net valid in this case. It is Professor Davis’ position

that where the agency itself is plaimtitf there need be

no prior resort to the agency for its determination

because the court is placed on notice of the agency's

95

~*

position. Such is not the case herein. Although the

CAB brings this action, if cannot be said that the

joard’s authorization to the Director of the CAB

Bureau of Enforcement te commence this action is

indietative of the Board's position on the difficult

issues presented. The defendants state that the Board

has presently pending before it a great many eases

presenting issues virtually identical to those herein

and they have been before the Board for well over

a vear Without decision: furthermore, over the course

of the last eight and one-half vears, the CAB has been

conducting its ‘Tnvestigation of the Tariff and Fare

Activities and Practices on North Atlantie Routes."

that masses of material have been gathered by the

Board in the course of its investigation.

The defendants lav great stress on the case of Pan

American World Atrways v. United States, 371 U.S.

296 (1963). That ease involved a civil antitrust suit

brought by the Attorney General against Pan Ameri-

can and W. R. Grace & Co. charging violations hy

air earriers of Seetions 1.2 and 3 of the Shennan

Act, 16 USC. 88 1.2.3. The Supreme Court. de-

termined that the suit imtiated in a federal district

court had to be disinissed since the issues involved in

the case had been entrusted to the CAB. The Court

held that it was peeuliarly a question for the Board

to determine whether the transactions in question met

the standards of competition and monopoly provided

in the Civil Aeronautics Act. It was stated that See-

tion 411 of the Act leaves with the CAB

Sake BES

4 LORS

Pictiensiees nrc:

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=

**... all questions of injunctive relief against the

division of territories, or the allocation of routes,

or against combinations between common carriers

and air carriers .. ."* (371 U.S. at 310).

Although not formally designated as plaintiff in

the case, the CAB’s position was absolutely clear; in

fact it was the CAB which specifically requested the

Attorney General to commence the action.

Therefore, the defendants allege that the conten-

tion of the CAB that it had made clear its position

on the relevant factual issues by commencing this ac-

tion, and that referral of those issues to the CAB would

be useles and that this Court is bound to make all fact-

ual and legal determinations also must fail.

With regard to the statutory violations, it is al-

leged:

**. .. defendants are indirect ‘air carriers’ within

the purview of 49 U.S.C. § 1301 (3) (20) and (21),

or indirect ‘foreign air carriers’ within the pur-

view of 49 U.S.C. § 1301 (19) and (21)... ."

It is further alleged that, as ‘indirect air carriers”

or ‘indirect foreign air carriers,’* the defendants are

acting in violation of 49 U.S.C. § 1371(a) in that they

have not obtained the required certification by the

CAB or are in violation of 49 U.S.C. § 1372(a) in that

they have not obtained the requisite permit from the

CAB. The issue of whether the necessary certifica-

tions or permits were obtained by the defendants pre-

=

sents no problem for this Court ; the remaining issue of

whether the activities engaged in by the defendants

as alleged in the complaint constitute them as ‘‘indi-

rect air carriers’’ while a more delicate one does not

require particular expertise solely within the compe-

tence of the CA. Certainly the Court does not en-

vision any problem on this point in the ease. An evi-

dentiary hearing on the plaintiff's application for a

temporary injunction may prove otherwise.

The CAB notes that it has issued a number of

cease and desist orders against parties alleged to be

carrying on operations similar to those of the defen-

dants herein. It is argued that these orders provide

the Court with an adequate basis for ascertaining the

CAB’s position with regard to the activities herein

and that this Court should apply that construction of

‘indirect air carrier” to the defendants.

The CAB also relies on the recently decided case of

Monarch Travel Services, Inc., v. Associated Cultural

Clubs, Civil Action No. 71-1176 - WPG, entered June

4, 1971 (C.D.Cal.). It is contended that the case is of

important precedential value because it involved activ-

ities identical to those herein. The order of the court

in that case, issued without written opinion. granted

preliminary injunctive relief.

This Court is not completely convinced by the rea-

soning of the defendants. This Court is of the opinion

that the Pan American World Airways, Inc., case. supra,

ean be distinguished from the case at bar as can the

~e—

cases cited by the plaintiff. The Court feels that during

the evidentiary hearing to be held on the plaintiff’s mo-

tion for a temporary injunction other facts and cir-

cumstances will come to light that may make this Court’s

determination on the issue of primary jurisdiction

easier.

Therefore, the motion of the defendants in this re-

gard is denied with leave to renew at an appropriate

time during the said hearing.

Other applications were made by the defendants

as a part of their motions. These applications, if pur-

sued, can be disposed of at the evidentiary hearing.

Submit orders in accordance with this decision with

notice of settlement to be served on the opponents.

ANTHONY TRAVIA

US.D.J.

Service of the within and receipt of a copy the

AD, 1973. |