# Petition for Writ of Certiorari — Air Cargo, Inc. v. Breen Air Freight Ltd.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_0284%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1973
- **Citation:** 411 U.S. 932

## Text

INDEX

PAGE
Opinions Below ae 2
i naar sadncanindeemnantbeitohibesencann a
Questions Presented .........................- 2
Constitutional and Statutory Provisions Involved ...... 3
Statement of the Case [eee ciciodencatcnnsctuaneeteie 4
Nees cupsacstelatiniteeioe 4
SE IIS TOOT ooo... cccccececcsecccesocenesssosocnneecsocse 4
The Agreements Approved by the Civil Aero-
nautics Board Between 1947 and 1962 ................ 6
The Exemption Granted by the Civil Aeronautics
Board in 1962 8
The 1970 Ryd-Air Agreements .........2...2..2.-..--0--0-00-0 8
Reasons for Granting the Writ .........................- 9
ARGUMENT

A. The Conflict with Carnation Co. v. Pacific
Westbound Conference and Ricci v. Chicago
Merchantile Exchange .........-.-..-.-c--c-er-ec-e--cceceecenees 11

B. The Conflict with Pan American World Air-
ways, Inc. v. United States and Hughes Tool

Company v. Trans World Airlines, Ine. ............ 14
C. The Pre-emption of the Antitrust Field Under

Sections 408 and 412 of the Act .-.......00...0......... 16
D. The Denial of Due Process ............22..-..20-00-----+- 18

TE aianins 21

PAGE

Aprenpix A
Opinion of Circuit Court of Appeals for Second
Circuit la
Order Denying Petition for Rehearing .................... 14a

Order Denying Petition for Rehearing in Banc.. lia
Opinion of Irving Ben Cooper, D. J. -.........2.---20-200-+- 16a
Memorandum by Cooper, D. J. on Reargument .... 20a

Order on Reargument and Granting Certification

of an Interlocutory Appeal 22a
Appenpix B
Constitutional Provisions, Statutes and Regula-
tions Involved 24a
ApPENDIxX C
Agreement 30a
Order, Approving Agreement 34a
TaBLE oF AUTHORITIES
Cases:
Armstrong v. Manzo, 380 U.S. 545 (1965) ..................... 20
Brinkerhoff-Faris Co. v. Hill, 281 U.S. 673 (1930) ........ 20
Carnation Co. v. Pacific Westbound Conference, 383
U.S. 213 (1966) 9, 11, 12, 13
Goldberg v. Kelly, 397 U.S. 254 (1970) 20
Hughes Tool Company v. Trans World Airlines, Inc.,
41 U.S.L.W. 4131 (U.S. Jan. 10, 1973) ............ 6, 10, 13, 14,

15, 16, 17

PAGE

Laveson v. Trans World Airlines, Inc., —— F.2d ——
(3d Cir., No. 71-2156, December 26, 1972, 12 CCH Av.
ERS nse rae? 1 Panos oe Re ea 13

Morgan v. United States, 304 U.S. 1 (1938) ..00.0 20

Pan American World Airways, Inc. v. United States,
371 U.S. 296 (1963) ‘ 10, 16, 17

Ricci v. Chicago Mercantile Exchange, 41 U.S.L.W.
4097 (U.S. Jan. 9, 1973) oeeeccccooo- 10, 11, 13

Trans World Airlines, Inc. v. Hughes, 332 F.2d 602
(2d Cir. 1964), cert. dismissed,
RR ME UNIIND csinccxtihbesbinenconiasictondanunaiiarsaibesstionsl 6, 14, 15

Statutes:

Federal Aviation Act of 1958:
§408(a), 72 Stat. 767, 49 U.S.C. §13878(a) _.....000.2..... 3
§412, 72 Stat. 770, 49 U.S.C. §1382 ........ 3, 8, 9, 10, 15, 16
§414, 72 Stat. 770, 49 U.S.C. §1384 oo.

IE II Sscn2snssAncndrndscehustiansinactimlsoecinnisnonsadlbceaien
RG MEMNIN isha cst dbcrtetenssiciabsinoscnbnenainnasivsisescitinemannisapts

Regulations:

Civil Aeronautics Board:
Gomes, 26 C.F... Part SOD: ...-..-cencsc.ce.s-....--

Other Authorities:

United States Constitution:
SL ELLE TTT TOPE:

Restatement of Agency 2d 144

IN THE

Supreme Court of the United States

Octroser TERM, 1972

Arr Carco, Ino., et al.,

Petitioners,
—agaimsit—
Breen Arm Freicut, Lrp., and
Mercury Arr Freicut, Inc.,
Respondents,

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

Petitioners, Air Cargo, Inc., Ryder System, Inc., Ryd-
Air, Inc., Air Canada, Airlift International, Inc., Alle-
gheny Airlines, Inc., American Airlines, Incorporated,
British Overseas Airways Corp., Braniff Airways Incor-
porated, Delta Air Lines, Inc., Eastern Air Lines, Incor-
porated, Mohawk Airlines, Inc., National Airlines, Inc.,
Northwest Airlines, Incorporated, Northeast Airlines, In-
corporated, New York Airways, Inc., Flying Tiger Lines,
Ine., Ozark Air Lines, Inc., Pan American World Airways,
Inc., Piedmont Aviation, Inc., Southern Airways, Inc., Sea-
board World Airlines, Inc., Trans World Airlines, Inc. and
United Air Lines, Inc., pray that a writ of certiorari issue
to review the opinion and order of the United States
Court of Appeals for the Second Circuit entered on No-
vember 10, 1972, which affirmed two orders of Judge Irving

ee —

Ben Cooper of the United States District Court for the
Southern District of New York denying petitioners’ mo-
tion to stay this antitrust action on the ground that
primary jurisdiction over the subject matter resided in
the Civil Aeronautics Board.

Opinions Below

The opinion of the Court of Appeals, review of which is
sought, is not officially reported. A copy of this opinion
and of the two opinions of the District Court are set forth
in Appendix A hereto, infra, pp. 1a-23a,

Jurisdiction

The order of the Court of Appeals for the Second Cir-
cuit was entered on November 10, 1972. A timely peti-
tion for rehearing and suggestion for rehearing en banc
was filed on November 22, 1972 and denied on November
29, and December 7, 1972, respectively. The jurisdiction
of this Court is invoked under 28 U.S.C. §1254(1).

Questions Presented

1. Whether the Civil Aeronautics Board has primary
jurisdiction when an antitrust complaint challenges the con-
duct of a wholly-owned subsidiary of the airlines in enter-
ing into agreements covering the pick-up and delivery of
air freight, when such conduct is at least arguably lawful
under the Federal Aviation Act as constituting the imple-
mentation of an agreement among air carriers previously
approved by the Civil Aeronautics Board?

2. When the Civil Aeronautics Board has approved an
agreement among air carriers to employ their wholly-

owned subsidiary to act as their agent in providing “di-
rectly or by contract” the pick-up and delivery of air
freight at all points within the continental United States
served by the air carriers, is the providing of such ser-
vices “by contract” through a subsidiary of a motor car-
rier, in which subsidiary the air carriers owned a minority
interest, immunized from the operations of the antitrust
laws under Section 414 of the Federal Aviation Act?

3." Does Civil Aeronautics Board jurisdiction under Sec-
tions 408 and 412 of the Federal Aviation Act with re-
spect to the relation of common carriers to air carriers
and contracts between air carriers and other carriers, pre-
empt the antitrust field?

4. Are defendants deprived of property without due
process of law in violation of the Fifth Amendment when
a court denies an evidentiary hearing necessary to deter-
mine the subject matter jurisdiction of the Civil Aero-
nautics Board and the consequent immunization of the de-
fendants under the antitrust laws?

Constitutional and Statutory Provisions Involved

The constitutional and statutory provisions involved are
set forth in Appendix B hereto, infra, pp. 24a-29a. They
include the following:

1. United States Constitution, Amendment V.

2. United States Code, Title 49, Sections 1378(a),
1382 and 1384 (Federal Aviation Act $$ 408(a),
412, 414).

3. The Economic Regulations of the Civil Aeronautics
Board, § 289.3 (14 C.F.R., Part 289).

Layee, ‘i uN
i a ES YEE AS ROI

4

Statement of the Case

The Complaint

On February 10, 1971 the plaintiffs Breen Air Freight,
Ltd. (“Breen”) and Mercury Air Freight, Inc. (“Mer-
cury”), commenced this action against Air Cargo, Ince.
(“ACI”), Ryder System, Inc. (“Ryder”), Ryd-Air, Ine.
(“Ryd-Air”) and the defendant air carriers seeking un-
specified treble damages for alleged violation of the anti-
trust laws and claiming damages for breach of contract in
the amount of $1,000,000 plus attorney’s fees and costs.

The complaint (5a-21a)* alleges that the petitioners have
combined and conspired and have engaged in unfair busi-
ness practices designed to eliminate competition and re-
strain trade among carriers engaged in the pick-up and
delivery of domestic air freight in commerce in the Metro-
politan area of the City of New York by removing plain-
tiffs, among others, from the relevant market involved.

The Proceedings Below

On April 23, 1971 petitioners moved to stay the action
on the ground that primary jurisdiction is vested in the
Civil Aeronautics Board under the Federal Aviation Act
of 1958 (22a-23a).

In an order and opinion dated December 6, 1971 the
District Court denied petitioners’ motion for a stay,
stating:

“The activities at issue are not ‘arguably lawfv”
under the Federal Aviation Act. No party to the Ryd-
Air agreement is an ‘air carrier’ under Section 412 (a)

* References are to the Joint Appendix on appeal to the United
States Court of Appeals for the Second Circuit. Unless otherwise
indicated, emphasis is supplied.

—

5

of the Act, 49 U.S.C. §1382(a); the agreement has not
been submitted to the C.A.B.; without C.A.B. approval
actions pursuant to an agreement are not immune from
the antitrust laws.” (App. A, p. 19a).

On motion for reargument petitioners requested an evi-
dentiary hearing to demonstrate that ACI acted as agent
for the airlines in entering the agreement with Ryder Sys-
tem, Inc. of May 30, 1970 (101a-103a) so that “air car-
riers” were thus parties to such agreement, contrary to the
conclusion of the District Court. In a memorandum opinion
dated February 16, 1972 the District Court denied an evi-
dentiary hearing and adhered to its original decision,
stating :

“The record does not contain factual allegations to
support either the position that Air Cargo, Inc. acted
as agent for the airlines in the ACI-Ryder agreement
or to create the necessity of a hearing on this issue.”
(App. A, p. 20a).

Following certification of an interlocutory appeal pursu-
ant to 28 U.S.C. §1292(b), the Court of Appeals on Novem-
ber 10, 1972 affirmed the orders of the District Court deny-
ing the motion for a stay, holding:

“We rest on the ground that the [Ryd-Air] agree-
ments, viewed as interdependent parts of a single inclu-
sive plan, have not been executed by ‘air carriers’ and
that consequently the Board lacks authority to immu-
nize the contracting parties from liability for antitrust
damages.” (App. A, p. 6a).

Alternatively, the Court of Appeals held:

“Even if we were to find that the Board could im-
munize the agreements under its Section 412 authority,

- a

we would still conclude, on the basis of Carnation Co. v.
Pacific Westbound Conference, 383 U.S. 213 (1966)
and Allied Air Freight, Inc. v. Pan American World
Airways, Inc., 393 F.2d 441 (2 Cir. 1968), cert. denied,
393 U.S. 846 (1968), that the doctrine of primary juris-
diction is inapplicable.” (App. A, p. 10a).

The Court explained this conclusion saying:

“The Board’s 1947 approval of ACI merely author-
izes its establishment and approves its then-contem-
plated activities which flow therefrom. Trans World
Airlines, Inc. v. Hughes, 332 F.2d 602 (2d Cir. 1964).”
(App. A, pp. 12a-13a).

The decision upon which the Court of Appeals thus
rested, Trans World Airlines, Inc. v. Hughes, has since been
reversed by the decision of this Court in Hughes Tool Com-
pany v. Trans World Airlines, Inc., 41 U.S.L.W. 4131 (U.S.
Jan. 10, 1973).

The Agreements Approved by the Civil Aeronautics Board
Between 1947 and 1962

On December 31, 1947 the Civil Aeronautics Board
(“CAB”) approved an agreement under which the US.
scheduled airlines employed their wholly owned subsidiary,
ACI, to act as their agent in providing cartage services for
the ground transportation of air freight at each airport
served in the continental United States (43a-46a).* The
agreement contemplated that ACI would provide such ser-
vices “directly or by contract” (40a).

In 1948 the CAB reaffirmed its approval of this agree-
ment saying:

* Pertinent provisions of this agreement and of CAB Order
Serial No. E-1086 are set forth in Appendix C, infra, pp. 30a-37a.

7

“We are fully in sympathy with all efforts of air
carriers to reduce costs by consolidation of individual
duplicating ground and terminal facilities. These ef-
forts are clearly within the scope of the policy of Sec-
tion 2 of the Civil Aeronautics Act and thus in the
public interest. ... Cooperative efforts of air carriers
to accomplish these results through agreements such
as that establishing Air Cargo receive, and will con-
tinue to receive, our support and encouragement” 9
C.A.B. 468, 469 (1948).

By reason of such approval ACI and the defendant air
carriers were relieved from the operations of the antitrust
laws under Section 414 of the Civil Aeronautics Act of 1938,
52 Stat. 1004, which provided:

“Any person affected by any order made under sec-
tions 408, 409, or 412 of this Act shall be, and is hereby,
relieved from the operations of the ‘antitrust laws,’ as
designated in section 1 of the Act entitled ‘An Act to
supplement existing laws against unlawful restraints
and monopolies, and for other purposes,’ approved
October 15, 1914, and of all other restraints or prohibi-
tions made by, or imposed under, authority of law,
insofar as may be necessary to enable such person to
do anything authorized, approved, or required by such
order.” *

Under the 1947 agreement ACI could have provided such
cartage service “directly,” i.e., by employing its own drivers
and trucks. Initially, however, it was not deemed feasible
for ACI to provide such services “directly.” Instead ACI
provided the service “by contract” (27a).

: * Section 414 of the Civil Aeronautics Act of 1938 is continued
in effect under Section 414 of the Federal Aviation Act of 1958,
72 Stat. 770, 49 U.S.C. §1384.

as NIE PT LOMB TAY SILT NI LEE S

—

8

Save at a few of the larger airports, where it was neces.
sary to contract with more than one trucker, ACI con-
tracted with a single motor carrier in each area to provide
the pick-up and delivery service. The CAB in 1952 de-
scribed such carriers as “the recognized ‘airline cartage
agent’ for the area, a single trucking concern with which
Air Cargo has contracted for pickups and deliveries serving
all the certificated airlines in the area” 15 C.A.B. 850, 851
(1952).

Between 1948 and 1962 each of the contracts between
ACI and the local motor carriers was filed with and ap-
proved by the CAB pursuant to Sections 412 and 414 of
the Federal Aviation Act (49 U.S.C. §§1382 and 1384)*
(27a).

The Exemption Granted by the Civil Aeronautics Board
in 1962

Because the ACI cartage contracts were substantially
identical in form, and because the airline tariffs filed with
the CAB described the services provided and the rates
charged (28a), the CAB, effective March 8, 1962, dispensed
with the requirement that the ACI cartage agreements be
filed under Section 412 of the Act.**

The 1970 Ryd-Air Agreements

For a number of years prior to 1970 ACI had contracted
with the plaintiffs, Breen and Mercury, to provide cart-
age services for the defendant airlines in the New York
Metropolitan area (16a, 18a). By 1970 the services of

* Prior to 1958 such filing and approval was effected under Sec-
tions 412 and 414 of the Civil Aeronautics Act of 1938, 52 Stat.
1004.

** Economic Regulations, Civil Aeronautics Board §289.3 (App.
B, pp. 27a-28a).

—

9

Breen and Mercury had deteriorated to such an extent
that replacement of these carriers became necessary (33a).

The airlines requested ACI to consider providing cartage
service directly, but once again direct service was found
to be impracticable (33a).

As an alternative to direct service, ACI on May 30, 1970
contracted with the defendant Ryder. Ryder agreed to
form a subsidiary to be known as Ryd-Air, Inc. in which
ACI, as agent for the air carriers, would own a 20% minor-
ity interest (10la). The sole purpose of incorporating
Ryd-Air was to permit it to “perform air freight pick-up
and delivery service in New York City Area A” (101a).

Following the formation of Ryd-Air, ACI on June 30,
1970 entered into its standard form of pick-up and delivery
service contract with Ryd-Air under which Ryd-Air agreed
to perform cartage services for the air carriers in New
York City (149a-187a). This cartage agreement, which is
continuing in effect, is substantially identical with all other
cartage agreements between ACI and local motor carriers
throughout the United States, except that Ryd-Air is guar-
anteed its operating costs plus a 5% profit (34a; 153a).

Because of the exemption provided by Section 289.3 of
the CAB’s Economic Regulations, the 1970 Ryd-Air agree-
ments were not filed with the CAB under Section 412 of
the Act (28a).

Reasons for Granting the Writ

The decision of the Court of Appeals is in direct conflict
with the holding of this Court in Carnation Co. v. Pacific
Westbound Conference, 383 U.S. 213, 220 (1966), that courts
must refrain from imposing antitrust sanctions for activi-
ties of “debatable legality” under administrative agency

——

10

jurisdiction. Contrary to this Court’s ruling in Carnation,
the Court of Appeals here would defer to the administrative
agency only when the activities involved had been “ex-
plicitly” approved by the administrative agency.

The decision of the Court of Appeals is also in conflict
with the decision of this Court in Pan American World
Airways, Inc. v. United States, 371 U.S. 296 (1963), and the
very recent decision of this Court in Hughes Tool Company
v. Trans World Airlines, Inc., 41 U.S.L.W. 4131 (U.S. Jan.
10, 1973), decided subsequent to the decision of the Court
of Appeals, that transactions under the control and sur-
veillance of the Civil Aeronautics Board by virtue of the
Federal Aviation Act are not subject to the antitrust laws.

The decision of the Court of Appeals is likewise in con-
flict with the decision of this Court in Ricci v. Chicago
Mercantile Exchange, 41 U.S.L.W. 4097 (U.S. Jan. 9, 1973),
also decided after the decision below, that judicial pro-
ceedings should be stayed to afford opportunity for ad-
ministrative consideration “when conduct seemingly within
the reach of the antitrust laws is also at least arguably
protected or prohibited by another regulatory statute en-
acted by Congress” 41 U.S.L.W. at 4100-01.

The decision of the Court of Appeals entirely ignores the
considerations which led the CAB in 1962 to exempt the
airlines from the requirement that cartage agreements,
such as the one here challenged, be filed with the CAB under
Section 412 of the Act. As a result, the validity of over 400
such cartage agreements throughout the United States may
be subject to challenge.

The decision of the Court of Appeals that the CAB has
no jurisdiction in this case ignores a quarter of a century’s
surveillance by the CAB of the activities of ACI in provid-

_ing cartage services for its air carrier members.

a

In reaching this decision the Court of Appeals and the
District Court have denied the air carrier defendants an
evidentiary hearing which would have demonstrated con-
clusively that the CAB had and has jurisdiction in this
matter.

11

The decision thus violates due process of law, emascu-
lates an important section of the Federal Aviation Act
and invites collision between the CAB and the courts.

As in Ricci v. Chicago Mercantile Exchange, supra at
4100, the problem to which the Court of Appeals ad-
dressed itself in this case “is recurring,” and is of im-
portance in the administration of the antitrust laws and
the Federal Aviation Act.

ARGUMENT

A. The Conflict with Carnation Co. v. Pacific Westbound
Conference and Ricci vy. Chicago Mercantile Exchange.

There is a direct conflict between the holding of the Court
of Appeals in this case and the holding of this Court in
Carnation Co. v. Pacific Westbound Conference, supra. The
holding of this Court in Carnation Co. was specific:

“... courts must refrain from imposing antitrust
sanctions for activities of debatable legality under the
Shipping Act in order to avoid the possibility of con-
flict between the courts and the Commission” 383 U.S.
at 220.

Here the CAB in 1947 had approved an agreement
among the airlines to employ ACI, as their agent, to provide
cartage service for the pickup and delivery of air freight
at every airport in the United States. This agreement ex-
pressly provided that ACI was to provide such cartage
service for the airlines “directly or by contract” (40a).

Ho RAO Sie PELE NY SO Ree Oe NE EOE RE ay ah ra, EE

oe cm

12

In implementation of that agreement, ACI, as the agent
of the airlines, entered into an agreement with Ryder to
form Ryd-Air and a cartage agreement with Ryd-Air for
the pickup and delivery of air freight in the New York
area.®

How then may the airlines’ 1970 conduct be challenged
as a violation of the antitrust laws? Certainly it would ap-
pear that ACI, acting as agent for the airlines, was acting
precisely as the CAB contemplated ACI would act under
the 1947 agreement. ACI was merely providing cartage
services for the airlines in the New York area “by contract”
with Ryd-Air. At the very least, the conduct of ACI and
the defendant air carriers was thus “arguably lawful” and
the Court of Appeals should have stayed this action in the
light of this Court’s decision in Carnation Co., supra.

In order to reach its contrary decision in this case, the
Court of Appeals made a finding that the CAB in 1947
clearly intended “that the future activities of ACI were to
be limited under the Order** to those explicitly set out in
the 1947 agreement” and that these activities did not con-
template an agreement with a cartage agent in which the
airlines owned a minority interest, or the formation of such
a company (App. A, p. 12a).

The Court of Appeals would thus emasculate the holding
of this Court in Carnation Co. that the courts must not
impose antitrust sanctions for activities of “debatable
legality”. If there is “explicit approval”, legality is not
“debatable” and there is no need for the application of

*The cartage agreement with Ryd-Air recites that ACI was
“acting as agent for and on behalf of Air Carriers, who are stock-
holders or associate participants in the Company [ACI]” (149a).

** CAB Order Serial No. E-1086, December 31, 1947, App. C,
pp. 34a-37a.

13

primary jurisdiction ; such a case, in view of the provisions
of Section 414 of the Act, should be dismissed,* not merely
stayed and referred back to the Board.

Even where the administrative agency regime is not
pervasive, as here, this Court has stayed judicial proceed-
ings to provide to the antitrust court the help of a prior
determination by the regulatory agency in arriving “at
the essential accommodation between the antitrust and the
regulatory regime.” Ricci v. Chicago Mercantile Exchange,
supra, 41 U.S.L.W. at 4103. A fortiori the Court of Ap-
peals here should have stayed this action pending refer-
ence to the CAB.**

* Hughes Tool Company v. Trans World Airlines, Inc., supra,
41 U.S.L.W. 4131.

** The decision of the Court of Appeals here is also in direct
conflict with the subsequent decision of the United States Court
of Appeals for the Third Circuit in Laveson v. Trans World
Airlines, Inc., F.2d —— (No. 71-2156, December 26, 1972,
12 CCH Av. Cas. 17,684), where the Court stayed an antitrust
action charging the defendant airlines with conspiring to fix the
price for the rental of headsets used with inflight motion pictures
on the ground that the CAB had primary jurisdiction. In 1967,
12 domestic air carriers, including defendants, had filed with the
CAB for approval under Section 412 of the Act an agreement
providing for a “$2 charge for visual inflight entertainment on
domestic flights.’ The CAB subsequently deferred definitive action
on the filed agreement and stayed effectiveness of an amendment
to its Economic Regulations so as to require the carriers offering
visual inflight entertainment to provide a charge therefor in their
tariffs. Rejecting an argument that courts may not properly defer
to agency jurisdiction when the CAB has not yet expressly ap-
proved the alleged illegal agreement, and expressly following this
Court’s holding in Carnation Co., supra, the Court stated “... re-
gardless of the particular remedy sought, the subject matter of this
action falls within the regulatory jurisdiction of the CAB” 12 CCH
Av. Cas. at 17,689.

NLT REBT ALO ELD TENE NOESY I HIE IRE GRASP REO

a

14

B. The Conflict with Pan American World Airways, Inc. y,
United States and Hughes Tool Company v. Trans World
Airlines, Inc.

When the defendants in this case moved to stay the pres-
ent action and, indeed, when the Court of Appeals handed
down its decision on November 10, 1972, this Court had not
yet rendered its decision in Hughes Tool Company v. Trans
World Airlines, Inc., supra.

In the light of this Court’s holding in Hughes, the com-
plaint herein should be dismissed, not merely stayed.

In concluding that the CAB’s 1947 approval empowering
ACI to provide cartage services for the defendant airlines
“directly or by contract”, did not authorize ACI to contract
for such cartage services with Ryd-Air, the Court of Ap-
peals relied on its 1964 holding in Trans World Airlines,
Inc. v. Hughes, 332 F.2d 602, cert. dismissed, 390 U.S. 248
(1965).*

The 1964 decision of the Court of Appeals has now been
reversed by this Court in Hughes Tool Company v. Trans
World Airlines, Inc., supra,

Here, as in Hughes, the CAB had retained jurisdiction
and exercised surveillance over the activities of ACI for
over a quarter of a century. When it reaffirmed its 1947
order on September 2, 1948 the CAB stated:

“Cooperative efforts of air carriers to accomplish
these results [the consolidation of individual duplicat-
ing ground and terminal facilities] through agreements

*The Court of Appeals stated (App. A, pp. 12a-13a) :

“The Board’s 1947 approval of ACI merely authorizes its
establishment and approves its then-contemplated activities
which flow therefrom. Trans World Airlines, Inc. v. Hughes,
332 F.2d 602 (2 Cir. 1964) ; see Federal Aviation Act 414, 49

U.S.C. § 1384.”

15

such as that establishing Air Cargo receive, and will
continue to receive, our support and encouragement”
9 C.A.B. 468, 469 (1948),

In succeeding years the CAB specifically approved hun-
dreds of ACI cartage agreements filed with it pursuant to
Section 412 of the Act (27a). All of these agreements
granted the local trucker so employed the exclusive right
to serve the airlines. The CAB expressly noted this prac-
tice with approval in 1952, describing such truckers “as
the recognized ‘airline cartage agent’ for the area” 15
C.A.B. 850, 851 (1952).

As above noted,* the ACI cartage agreements were iden-
tical in form and the anticompetitive considerations the
same. Accordingly, after specifically approving hundreds
of ACI cartage agreements, the CAB in 1962 dispensed
with the requirement that such agreements be filed under
§412 of the Act. For that reason the 1970 ACI cartage
agreement with Ryd-Air was not filed with the CAB
(28a). Notwithstanding the absence of filing and specific
approval in 1970, the action of ACI in arranging to have
Ryd-Air provide cartage service for the airlines “by con-
tract” was clearly authorized by the 1947 approval of the
CAB. Thus, as in Hughes, the Court of Appeals here
erred “in construing and applying § 414, which immunizes
from antitrust liability any conduct approved, authorized
or required by any Board ordrer issued under” § 412.°°

Furthermore, the Court of Appeals misapprehended the
significance of the CAB’s surveillance over ACI. Instead,
it followed the approach taken in its 1964 decision in
Trans World Airlines, Inc. v. Hughes, supra, 332 F.2d
602, by ascribing an extremely limited area of jurisdic-

* Supra, p. 8.
** 41 U.S.L.W. at 4138,

—— MATER ESPEN WIRES TORI B CI RN 7 RID CTRL NAT BELEN YE

16

tion for the CAB. Thus, as this Court noted in 1973, the
Court of Appeals had held that “TW4A’s complaint against
Toolco was ‘unrelated to any specific function of the CAB’
and hence was not within the exclusive competence of that
body” 41 U.S.L.W. at 4137. Here the Court of Appeals
took an equally narrow view of the jurisdiction of the
CAB by declaring that “[a’s we interpret the CAB order,
it cannot possibly have comprehended the formation of
Ryd-Air or approved its creation years after the issuance
of the order.” (App. A, p. lla). It was precisely this
overly restrictive view of CAB jurisdiction that was sub-
sequently rejected by this Court in Hughes Tool Company
v. Trans World Airlines, Inc.

The complaint should be dismissed, not merely stayed.

C. The Preemption of the Antitrust Field Under Sections
408 and 412 of the Act.

In Pan American World Airways, Inc. v. United States,
371 U.S. 296 (1963), this Court held that the jurisdiction
of the CAB under §408 of the Act pre-empted the antitrust
field “even though the CAB had taken no action to investi-
gate ... the alleged misfeasance. .. .” Hughes Tool Com-
pany v. Trans World Airlines, Inc., supra at 4138. In
reaching this conclusion as to the scope of the CAB juris-
diction this Court emphasized, 371 U.S. at 305, that “the
relation of common carriers to air carriers” is “basic in
this regulatory scheme” and that “the acts charged in this
civil suit as antitrust violations are precise ingredients
of the Board’s authority . . . in allowing or disallowing
affiliations between common carriers and air carriers.”

Here, as in Pan American, there is present an affiliation
between a common carrier, Ryd-Air, and air carriers act-
ing through their agent, ACI.

Here, as in Hughes, there was CAB control and surveil-
lance over the activities of ACI for 25 years.
x
lh

17

The CAB, in its Order* approving the employment of
ACI by the air carriers to provide “directly or by contract,
pick-up and delivery services at all points within the con-
tinental United States” served by the air carriers (App. C,
p. 32a), made clear its intention to exercise control and
surveillance over the activities of ACI, stating:

“,.. the future development of Air Cargo, Inc. is un-
certain and ... its activities may require future recon-
sideration of the approval granted herein;” (App. C,
p. 36a).

Accordingly, the CAB conditioned its approval of the
employment of ACI by requiring:

“(1) That Air Cargo, Inc. and its member air car-
riers supply to the Board copies of such agreements
and documents and submit such information in rela-
tion to the activities of Air Cargo, Inc. as may be
prescribed or requested by the Economic Bureau of
the Board.” (App. C, p. 35a).

The air carriers and ACI have fully complied with all
requirements prescribed or requested by the CAB’s Eco-
nomic Bureau and the CAB has continued to exercise eon-
trol and surveillance over the activities of ACI.**

Accordingly, pursuant to the decisions of this Court in
Pan American World Airways, Inc. v. United States and
Hughes Tool Company v. Trans World Airlines, Inc., supra,
the complaint herein should be dismissed on the ground

*CAB Order Serial No. E-1086, December 31, 1947, App. C,
pp. 34a-37a.

** See, e.g., 9 C.A.B. 468 (1948) ; 15 C.A.B. 850 (1952) ; Order
No. E-14601 (1959); Order 68-7-40 (1968). Hundreds of ACI’s
cartage agreements were approved by the CAB between 1947 and
1962 when the CAB dispensed with the requirement that such
agreements be filed under Section 412 of the Act (Economic Regula-
tions §289.3, App. B, pp. 27a-28a).

18

that CAB jurisdiction under Sections 408 and 412 of the
Act pre-empts the antitrust field.

D. The Denial of Due Process.

The Court of Appeals held that ACI is not an “air car-
rier” and hence the CAB would have jurisdiction only
when ACI contracts as agent for the airlines, who would
then become parties to the contract as disclosed principals
of their agent, ACI. Restatement of Agency 2d 7144.

The Court of Appeals admits that the cartage agreement
between ACI and Ryd-Air of Jane 30, 1970 (149a-187a)
would clearly fall within the CA®’s jurisdiction, since
that agreement expressly recited that ACI was “acting as
agent for and on behalf of the Air Carriers” (149a).

That admission would seem to dispose of any contention
that the CAB does not have jurisdiction in this case. The
only important agreement here is the agreement to employ
Ryd-Air % perform cartage services for the airlines in the
New York ares, thus ousting plaintiffs from performing
such services.

Nonetheless, the Court of Appeals held that the CAB in
this case “lecks authority to immunize the contracting
parties frem iiebility for antitrust damages.” (App. A, p.
6a).

In order to reach this conclusion the Court of Appeals ig-
noved the ACI-Ryd-Air cartage agreement of June 30, 1970.
Instead it focused solely on “the first of the two agree-
ments, the one by which ACI agreed to participate in the
crea‘ion of Ryd-Air.” (App. A, p. 7a).

The Court of Appeals then found that ACI was not acting
as agent for the airlines in signing this agreement with
Ryder System, Inc. of May 30, 1970. This finding rested
on a negative inference, i.e., “there is no indication on the

B — . ‘ ee eS

—

19

face of the Ryd-Air agreement that ACI signed it as an
agent of the airlines.” (App. A, p. 8a).

Such a finding ignores the fact that ACI is a wholly
owned subsidiary of the airlines. Furthermore, it ignores
the affirmative evidence on the face of this agreement that
ACI was acting as agent for the airlines. The agreement
expressly recited that:

“... the parties have agreed that a subsidiary of Ryder
shall perform air freight pick-up and delivery service
in New York City Area A pursuant to a Pick-up and
Delivery Service contract between Air Cargo and such
subsidiary, .. .” (101a).

As the Court of Appeals stated, the two agreements
were “interdependent” and “inseparable” (App. A, pp. 6a-
7a). Both agreements were “a single inclusive plan” for
pick-up and delivery service in the New York area. Since
ACI was admittedly acting as agent of the airlines in
one of the “inseparable” agreements, it clearly was acting
as such agent in the other.

The Court of Appeals then rejected the airlines’ conten-
tion that they had ratified ACI’s actions by their subsequent
dealings with Ryd-Air under the cartage agreement of June
30, 1970. In rejecting this contention, the Court of Appeals
said ;

“Here there is no evidence in the record that the air-
lines knew the material facts involved in the formation
of Ryd-Air or that they communicated a desire to
ratify its formation.” * (App. A, p. 10a).

In the District Court the airlines had requested an evi-
dentiary hearing to demonstrate in fact that ACI was act-

* As the plaintiffs are fully aware, this finding is contrary to
fact. The April 28, 1970 minutes of the meeting of ACI’s direc-
tors, produced on discovery to plaintiffs, show that (1) vice pres-
idents of seven airlines attended this meeting as ACI directors.

— LR SS, MFR TIER SRI ee

20

ing as their agent in both Ryd-Air agreements and that
they did know “the material facts involved in the formation
of Ryd-Air.”

The District Court denied this request for an eviden-
tiary hearing, saying:

“The record does not contain factual allegations to
support either the position that Air Cargo, Inc. acted
as agent for the airlines in the ACI-Ryder agreement
or to create the necessity of a hearing on this issue.”
(App. A, p. 20a).

Solely because an evidentiary hearing was denied, the
Court of Appeals has determined—contrary to fact—that
ACI was not acting as agent for the airlines when it negoti-
ated and signed “the first of the two agreements, the one
by which ACI agreed to participate in the creation of Ryd-
Air.” (App. A, p. 7a).

Manifestly the refusal to grant a hearing on this all-im-
portant evidentiary fact denied defendants due process of
law—“using that term in its primary sense of an oppor-
tunity to be heard and to defend its substantive right.”
Brinkerhoff-Faris Co. v. Hill, 281 U.S. 673, 678 (1930).
“The right to a hearing embraces . . . the right to present
evidence,” Morgan v. United States, 304 U.S. 1, 18 (1938).
“A fundamental requirement of due process is ‘the oppor-
tunity to be heard.’ Granms v. Ordean, 234 U.S. 385, 394.”
Armstrong v. Manzo, 380 U.S. 545, 552 (1965). The de-
fendants here have been denied “an effective opportunity
to defend .. . by presenting . . . [their] own arguments
and evidence orally.” Goldberg v. Kelly, 397 U.S. 254, 268
(1970).

and (2) the meeting approved the negotiation of the two Ryd-Air
agreements following a request by ACI’s president that there be a
policy determination of this matter at the airlines’ corporate gen-
eral office level.

Re

SARDPSE GAIN RIPEN ERIE NY SER ROS Fa Speen aap yt ata YR SIO CRT

21

CONCLUSION

For the reasons stated, this writ should be granted and
the order of the Court of Appeals for the Second Circuit
reversed.

Respectfully submitted,

Haroitp L. Warner, JR.

25 Broadway

New York, New York 10004

Counsel for Petitioners other than
Ryder System, Inc. and Ryd-Air, Inc.

Of Counsel:

Cart S. Rowe

EpmMunp E. Harvey

ZacHARY SEIMER
CHADBOURNE, ParKE, WHITESIDE & WoLFF
25 Broadway
New York, New York 10004

Georce D. Reycrarr

One Wall Street

New York, New York 10005

Counsel for Petitioners
Ryder System, Inc. and Ryd-Air, Inc.

Of Counsel :

P. Jay Fuocken

CapwaLaDER, WICKERSHAM & Tart
One Wall Street
New York, New York 10005

February 22, 1973

as SRE SHEEN OTC ee RE

eel
Ba ety a)

APPENDIX A

Opinion of Circuit Court of Appeals for Second Circuit
UNITED STATES COURT OF APPEALS

For THE Seconp Circuit

No. 91—September Term, 1972.
(Argued October 19, 1972 Decided November 10, 1972.)
Docket No. 72-1500

Breen Ark Freicut, Lrp., and
Mercury Arr Freicut, Inc.,

Plaintiff s-A ppellees,
—_—V—

Arr Carco, Inc., Ryper System, Inc., Ryp-Am, Inc., Arr
Canapa, Arrtirr INTERNATIONAL, INc., ALLEGHENY AIR-
uinEs, Inc., AMERICAN AIRLINES, INCORPORATED, BRITISH
Overseas ArrwAys Corp., BranirF Arrways IncorpPo-
RATED, Detta Arr Linzs, Inc., Eastern Arr Lines, In-
CORPORATED, MoHAWK AIRLINES, Inc., NaTIONAL AIRLINES,
Inc., NortHwest AIRLINES, INcoRPORATED, NORTHEAST
Arruinss, Iycorporatep, New York Airways, Inc., Fiy-
inc TicEr Liygs, Inc., Ozark Arr Lines, Inc., Pan AMER-
can Worup Arrways, Inc., Prepmont Aviation, Inc.,
SoutHErn Arrways, Inc., Szasoarp Wortp AIRLINES,
Inc., Trans Wornp Arrives, Inc., and Unirep Arr
Lrygs, Inc.,

Defendants-A ppellants.

Before:
WaterMAN, SMITH and KaurMan,
Circuit Judges.

i RN AOE Hm RTL NE OE TAL LINES RELLY LTE II LENT Fe OLLIE PII LETS LN REY
rss : x % vs eer S

——y

2a
Appendiz A

Plaintiffs-appellees brought their action in the United
States District Court for the Southern District of New
York seeking treble damages from defendants-appellants
as violators of the antitrust laws. Defendants’ motion for
a stay on the ground that the Civil Aeronautics Board had
primary jurisdiction over the subject-matter of the com-
plaint was denied, Cooper, J., and defendants appealed.

Order affirmed.

Epwarp Bropsky, Rosert E. Srarrorp, Gold-
stein, Shames & Hyde, New York City, for
Plaintiffs-Appellees.

Harotp L. Warner, ZacHary Sumer, Chad-
bourne, Parke, Whiteside & Wolff, New
York City, for Defendants-Appellants other
than Ryder System, Inc. and Ryd-Air, Inc.

Georce D. Reycrart, P. Jay Fuiocxen, Cad-
walader, Wickersham & Taft, New York
City, for Defendants-Appellants Ryder Sys-
tem, Inc. and Ryd-Air, Inc.

Waterman, Circuit Judge:

This is an interlocutory appeal from two orders in which
Judge Irving Ben Cooper of the Southern District of New
York denied defendant-appellants’ motion to stay this anti-
trust action. Defendants claimed that the facts plaintiffs
allege show that primary jurisdiction over the subject
matter resided in the Civil Aeronautics Board (CAB).
Plaintiffs allege that defendants have committed viola-
tions of the antitrust law through their concerted refusal
to deal with plaintiffs as airfreight cartage agents in met-
tropolitan New York City. Defendants claim that plaintiffs’

—

3a

Appendix A

action should be stayed until such time as the CAB has
had an opportunity to conduct administrative proceedings
on the complaint. After the motion for a stay was denied
Judge Cooper certified an interlocutory appeal on the
ground that an important controlling question of law was
involved in the case and an immediate appeal from his
ruling might materially advance the ultimate termination
of the litigation. Appellants then moved in this court for
leave to appeal pursuant to 28 U.S.C. § 1292(b) and Rule 5
of the Fed. R. App. Pro., and we granted the motion. The
sole issue before us is whether the doctrine of primary
jurisdiction is operative under the circumstances here, so
as initially to deprive the antitrust court of jurisdiction.
For reasons which follow, we hold that the doctrine is
not applicable here and we affirm the orders below denying
the motion for a stay.

Under the Federal Aviation Act of 1958 (72 Stat. 731)
the CAB is given broad authority to regulate certain
aspects of the airline industry throughout the United
States. See Pan American World Airways, Inc. v. United
States, 371 U.S. 296 (1963). Pursuant to this authority the
CAB is empowered to approve agreements among air
carriers and air carriers and common carriers affecting
air transportation. 49 U.S.C. § 1382. All agreements af-
fecting air transportation must be filed prior to their im-
plementation by the air carriers which are party to them,
and, once approved by the CAB, these agreements are
exempt from the operation of the antitrust laws, 49 U.S.C.
§ 1384, and the Board may also enjoin anticompetitive be-
havior among air carriers, 49 U.S.C. § 1381.

Plaintiffs Breen Air Freight, Ltd. and Mercury Air
Freight, Inc. are corporations which formerly were en-
gaged under contract with defendant Air Cargo, Ine.

aa EAMONN ENS MEGA SOR AERO REP ENE

4a
Appendia A

(ACI) in the pickup and delivery of air freight in metro-
politan New York City. Breen had been so engaged since
1967 and Mercury since 1948. In 1970 ACI refused to
renew their contracts and, instead, signed a contract with
defendant Ryd-Air, Inc., whereby Ryd-Air became exclu-
sive cartage agent in New York City. Plaintiffs claim that
this decision not to renew their contracts and the correla-
tive agreement with Ryd-Air constitute a violation of the
antitrust laws, and they seek treble damages.

With the approval of the CAB defendant ACI was first
established in 1941 by seventeen certified air carriers as
a joint research corporation. By 1944 its research had
been completed and ACI became inactive. In 1947 ACI
was reactivated by an agreement among the airlines to
provide, directly or by contract, terminal and cartage
services as agent of the air carriers. This agreement was
filed with the Board and was approved by the Board by its
Memorandum Order of December 31, 1947. The Board
specified that it would require ACI to file such future
ACI contracts and documents as its Economic Bureau
should prescribe needed Board approval. Over 200 cartage
contracts, such as those under which Breen and Mercury
had been operating, were submitted and approved. As of
March 8, 1962, however, the Economic Bureau exempted
cartage contracts from the filing requirements and since
that date ACI has not been required to file and has not
filed with the Board its “pick-up and delivery contracts”
with local agents.

In 1970 ACI executed two agreements with defendants
Ryder System, Inc. and Ryd-Air. These agreements con-
stitute the basis of the antitrust complaint. The first pro-
vided for the formation of Ryd-Air; it was to be a sub-
sidiary of Ryder created for the purpose of providing

5a

Appendia A

cartage services in metropolitan New York City. ACI took
a 20% stock interest in Ryd-Air and two of five seats on
the Board of Directors. Immediately thereafter Ryd-Air
executed a second agreement, a cartage contract with ACI,
by which it became the exclusive airfreight cartage agent
in New York City. These agreements, although embodied
in separate documents, were clearly part of a single inclu-
sive plan wherein Ryd-Air would be formed, and, when
formed, would then become the exclusive cartage agent in
New York. Neither the Ryd-Air incorporation document
nor the cartage contract was filed with or explicitly ap-
proved by the Board.

In opposition to plaintiffs’ antitrust allegations defen-
dants contend that even though these agreements have
neither been filed nor approved by the CAB they have been
immunized from the operation of the antitrust laws. As to
the agreement creating Ryd-Air, they assert that this agree-
ment is nothing more than an implementation of the air
carriers agreement of 1947 which the Board had approved
by its 1947 Order. As to the cartage contract, they assert
that it was, and is, exempt from the filing requirement by
the amended regulation of March 8, 1962 issued by the
Economic Bureau. Alternatively, defendants urge that in-
asmuch as both agreements are at least “arguably lawful”
(i.e., “arguably approved”) the antitrust court must defer
to the CAB under the authority of Carnation Co. v. Pacific
Westbound Conference, 383 U.S. 213 (1966) and Allied Air
Freight, Inc. v. Pan American World Airways, Inc., 393
F.2d 441 (2 Cir. 1968), cert. denied, 393 U.S. 846 (1968).

1 Carnation was a private action for treble damages in which
Plaintiff alleged that a rate increase charged by defendant shipping
corporations was a violation of the antitrust laws. Defendant
Shipping Conference claimed they and their members were totally
immune from the antitrust laws by virtue of the Shipping Act of

: La aTE a ery Y

mage

20a
Appendia A
Memorandum by Cooper, D. J. on Reargument
UNITED STATES DISTRICT COURT

SoutrHern District or New York

[SAME TITLE]

Irvine Ben Cooper, D. J.

While the motion to re-argue is granted, upon recon-
sideration we adhere to our original decision. The motion
for certification of an interlocutory appeal is granted. 28
U.S.C. §1292(b).

No party to the ACI-Ryder agreement (not submitted
to the C.A.B.) is an “air carrier” under Section 412(a) of
the Act, 49 U.S.C. §1328(a). Accordingly, the conduct under
the ACI-Ryder agreement cannot be immunized and “argu-
ably lawful” under Section 412 itself and therefore the fact
that the agreement has not terminated does not control.
Allied Air Freight, Inc. v. Pan American World Airways,
Inc., 393 F.2d 441, 446 (2d Cir.), cert. denied, 393 U.S. 846
(1968); See Trans World Airlines v. Hughes, 332 F.2d 602
(2d Cir. 1964). The record does not contain factual allega-
tions to support either the position that Air Cargo, Inc.
acted as agent for the airlines in the ACI-Ryder agreement
or to create the necessity of a hearing on this issue. Addi-
tionally, such entry does not accord with C.A.B. order
E-1086 which states that ACI shall “not issue or sign any
shipping contract except in the name of and as agent for a
member air carrier party to the agreement” (emphasis
added).

21a
Appendix A

As this and our prior order involve a “controlling” ques-
tion of law as to which there is a substantial ground for
difference of opinion and an immediate appeal therefrom
may materially advance the ultimate termination of the
litigation, we certify an interlocutory appeal.

Settle order on notice.

New York, N.Y.
February 16, 1972

/8/ Irvine Ben Cooper
United States District Judge

22a
Appendix A

Order on Reargument and Granting Certification of an
Interlocutory Appeal

UNITED STATES DISTRICT COURT

SoutTHerN District or New York

[SAME TITLE]

This Court having considered the motion by the air car-
rier defendants and defendant Air Cargo, Inc. for reargu-
ment of their motion for a stay or, in the alternative, for an
amendment of the Court’s decision and order of December
6, 1971, by including therein a certification pursuant to 28
U.S.C. §1292(b), and the Court having granted said motion
to reargue and upon reconsideration having adhered to the
decision and order of December 6, 1971, and having granted
the motion for certification of an interlocutory appeal,

Ir Is Onverep that the motion to reargue is granted and
the Court adheres to its original decision and order of
December 6, 1971; and

Ir Is FurtHer Orperep that the motion for amendment
of said decision and order of December 6, 1971 to include
therein a certification of an interlocutory appeal pursuant
to 28 U.S.C. §1292(b) is granted and said decision and order
is hereby amended to include the following statement:

This order, and the Court’s subsequent memorandum
of law as to which there is a substantial ground for
of February 16, 1972 involve a “controlling” question
difference of opinion and an immediate appeal there-

23a
Appendix A

from may materially advance the ultimate termination
of the litigation. We therefore certify an interlocutory
appeal.

/8/ Irvine Ben Cooper
United States District Judge

Dated: New York, N.Y.
March 10, 1972

24a

APPENDIX B

Constitutional Provisions, Statutes and
Regulations Involved

United States Constitution:
Fifth Amendment:

No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment or
indictment of a Grand Jury, except in cases arising
in the land or naval forces, or in the Militia, when in
actual service in time of War or public danger; nor
shall any person be subject for the same offence to be
twice put in jeopardy of life or limb; nor shall be
compelled in any criminal case to be a witness against
himself, nor be deprived of life, liberty, or property,
without due process of law; nor shall private property
be taken for public use, without just compensation.

Federal Aviation Act of 1958:
§ 408. [72 Stat. 767, as amended by 74 Stat. 901, 83 Stat.

103, 49 U.S.C. 1378] (a) It shall be unlawful unless
approved by order of the Board as provided in this
section—

(1) For two or more air carriers, or for any air
carrier and any other common carrier or any person
engaged in any other phase of aeronautics, to con-
solidate or merge their properties, or any part thereof,
into one person for the ownership, management, or
operation of the properties theretofore in separate
ownerships;

(2) For any air carrier, any person controlling an
air carrier, any other common carrier, or any person

POL

al i a Ne td tee: Po Ey al

-_

25a
Appendix B

engaged in any other phase of aeronautics, to pur-
chase, lease, or contract to operate the properties, or
any substantial part thereof, of any air carrier;

(3) For any air carrier or person-controlling an
air carrier to purchase, lease, or contract to operate
the properties, or any substantial part thereof, of any
person engaged in any phase of aeronautics otherwise
than as an air carrier;

(4) For any foreign air carrier or person controlling
a foreign air carrier to acquire control, in any manner
whatsoever, of any citizen of the United States en-
gaged in any phase of aeronautics;

(5) For any air carrier or person controlling an air
carrier, any other common carrier, any person engaged
in any other phase of aeronautics, or any other person
to acquire control of any air carrier in any manner
whatsoever: Provided, That the Board may by order
exempt any such acquisition of a noncertificated air
carrier from this requirement to the extent and for
such periods as may be in the public interest;

(6) For any air carrier or person controlling an
air carrier to acquire control, in any manner whatso-
ever, of any person engaged in any phase of aeronautics
otherwise than as an air carrier; or

(7) For any person to continue to maintain any
relationship established in violation of any of the fore-
going subdivisions of this subsection.

§412. Pooling and other agreements; filing, approval by
Board

(a) Every air carrier shall file with the Board a
true copy, or, if oral, a true and complete memorandum,

26a
Appendiz B

of every contract or agreement (whether enforceable
by provisions for liquidated damages, penalties, bonds,
or otherwise) affecting air transportation and in force
on the effective date of this section or hereafter entered
into, or any modification or cancellation thereof, be-
tween such air carrier and any other air carrier,
foreign air carrier, or other carrier for pooling or
apportioning earnings, losses, traffic, service, or equip-
ment, or relating to the establishment of transportation
rates, fares, charges, or classifications, or for preserv-
ing and improving safety, economy, and efficiency of
operation, or for controlling, regulating, preventing,
or otherwise eliminating destructive, oppressive, or
wasteful competition, or for regulating stops, sched-
ules, and character of service, or for other cooperative
working arrangements.

(b) The Board shall by order disapprove any such
contract or agreement, whether or not previously ap-
proved by it, that it finds to be adverse to the public
interest, or in violation of this Act, and shall by order
approve any such contract or agreement, or any modifi-
cation or cancellation thereof, that it does not find to
be adverse to the public interest, or in violation of this
Act; except that the Board may not approve any con-
tract or agreement between an air carrier not directly
engaged in the operation of aircraft in air transporta-
tion and a common carrier subject to the Interstate
Commerce Act, as amended, governing the compensa-
tion to be received by such common carrier for trans-
portation services performed by it. (72 Stat. 770, 49
U.S.C. § 1382)

Ne

27a

Appendiz B

§ 414. Legal restraints

Any person affected by any order made under sec-
tions 408, 409, or 412 of this Act shall be, and is hereby,
relieved from the operations of the “antitrust laws’’,
as designated in section 1 of the Act entitled “An Act
to supplement existing laws against unlawful restraints
and monopolies, and for other purposes”, approved
October 15, 1914, and of all other restraints or prohi-
bitions made by, or imposed under, authority of law,
insofar as may be necessary to enable such person to
do anything authorized, approved, or required by such
order. (72 Stat. 770, 49 U.S.C. § 1384)

Other Statute:

28. U.S.C. § 1254. Courts of appeals; certiorari; appeal;
certified questions

Cases in the courts of appeals may be reviewed by the
Supreme Court by the following methods:

(1) By writ of certiorari granted upon the petition
of any party to any civil or criminal case, before or
after rendition of judgment or decree ;

Civil Aeronautics Board Economic Regulations:
| § 289.3. Types of agreements which need not be filed,

(a) Ground services and facilities, Agreements be-
tween certificated route air carriers, or between any
such air carrier(s) and any foreign air carrier(s), for
the furnishing of ground facilities, ground equipment,
ground service, or building or ground space: Provided,
That the fees or charges therefor are known or antici-

——

28a
Appendiz B

pated not to exceed $50,000 during any twelve-month
period: And, provided further, That in case the aggre-
gate annual charge under an agreement believed to
fall within this exemption at the time of execution
thereof exceeds the dollar limitation in any twelve-
month period, the carrier shall (1) report promptly
the total amount paid, and (2) file the agreement with
the Board under section 412(a) of the Act upon request
by the Director of the Board’s Bureau of Economic
Regulation.

(b) Free or reduced-rate transportation. Agree-
ments between certificated route air carriers, or be-
tween supplemental air carriers, or between certif-
icated route carriers and supplemental carriers, or
between any such air carriers and foreign air car-
riers for the issuance or interchange of free or re-
duced-rate transportation: Provided, That such agree-
ments do not provide for the issuance or interchange
of passes for free or reduced-rate transportation other
than as described in documents filed pursuant to
§ 223.6 of Part 223 of this supcharter.

(c) Pick-up and delivery. Agreements between cer-
tificated route air carriers or indirect air carriers on
the one hand and surface motor carriers on the other
hand for pick-up and delivery of property: Provided,
that all of the points named in the agreement and the
rates and charges to the public for such service are
set forth in tariffs filed by the air carriers with the
Board pursuant to Part 221 of this subchapter.
(27 F.R. 1067) |

—

29a
Appendiz B

§ 289.4. Effect of exemption.

The exemption granted by this part shall not be deemed
to constitute an “order made under sections 408, 409, and
412” within the meaning of section 414 of the Act. (27
F.R. 1068)

30a

APPENDIX C
AGREEMENT

Amone Certain Ark CARRIERS
Rexiatine To Ar Carco SERVICES

Wuergas, the parties are air carriers authorized by
certificates of public convenience and necessity issued pur-
suant to the Civil Aeronautics Act of 1938 as amended, to
engage directly in the transportation of property between
various points in the United States; and

Wueneas, the parties desire further to coordinate their
respective services in the continental United States with
respect to the transportation of property, both with one
another and with those rendered by other common carriers,
so as to provide a complete and integrated system for the
transportation of property by air to and from all points
in the United States; and

WHereas, in order to promote maximum efficiency and
to eliminate unnecessary duplication of expense, the par-
ties desire to employ Air Cargo, Inc. to perform, on their
behalf and in their names or as principal, certain services
and to provide certain facilities required in connection
with the handling of air cargo; and

Wueneas, the authorized shares of stock of Air Cargo,
Ine. are 1,000 shares, each of no par value, of which 544
shares are outstanding; and

Wuereas, the stockholders of Air Cargo, Inc. and the
shares of stock respectively held by them are as follows:

RG POA BRIS AY ERDAS Ata MM ASHE NNR EE MAGI MRM Pasa eT

—

3la
Appendiz C
Stockholder Shares Held
All American Aviation, Inc. 4
American Airlines, Ine. 100
Braniff Airways, Inc. 22
Chicago and Southern Air Lines, Inc. 10
Colonial Airlines, Inc. 4
Continental Air Lines, Inc. 6
Delta Air Lines, Inc. 12
Eastern Air Lines, Inc. 100

Inland Air Lines, Inc.
Mid-Continent Airlines, Inc.

National Airlines, Inc.

Northeast Airlines, Inc. 4
Northwest Airlines, Inc. 24
Pennsylvania-Central Airlines Corporation 26
Transcontinental & Western Air, Inc. 100
United Air Lines, Inc. 100
Western Air Lines, Inc. 12

Total 544

Now, Tuererorg, for and in consideration of the prem-
ises and the mutual covenants hereinafter contained, the
parties hereto agree as follows:

— ——_——— BE ESTE MAE US BIR OLS CORTE Low BE

32a
Appendia C

7. Each of the parties hereby confers upon Air Cargo,
Inc. full power and authority, on its behalf, subject only to
a limitation upon payment that may be due for services in
the several amounts set forth hereinafter in this paragraph
7, to negotiate and execute agreements or arrangements
(if and only if any such agreement or arrangement confers
the right on the parties thereto and Air Cargo, Inc. to can-
cel the agreement or arrangement on not more than sixty
days’ notice), and to renew, modify, cancel, or terminate in
accordance with the terms hereof, any existing arrange-
ment, by or between any of the parties hereto and any other
party or parties engaged in performing under contract pick-
up and delivery or other services with respect to the handl-
ing of air freight, air cargo, or air express (including with-
out limitation, the Air Express Agreement between the
respective parties and the Railway Express Agency, Inc.),
provided, however, that insofar as the foregoing delegates
authority to cancel or terminate any existing arrangements
which have heretofore been filed with and approved by the
Civil Aeronautics Board, the exercise thereof shall be sub-
ject to either (a) approval of the cancellation or termina-
tion of such an existing arrangement by the Civil Aero-
nautics Board, or (b) the approval of this agreement by
the Civil Aeronautics Board. It is agreed and understood
in this connection that it is the purpose and intent of this
agreement that Air Cargo, Inc. should have responsibility
for:

(b) Providing, directly or by contract, pick-up and
delivery services at all points within the continental
United States served by any party hereto, and tripper
services between such points and the airports through
which they are served;

TT Le NLT LENE SIL E DLN EC IER EGLO PRE NE EO INE PAE TS a

33a

Appendix C

(c) Providing, directly or by contract, terminal facil-
ities and services incidental to the proper handling of
air freight and air cargo at all such points; and

(d) Providing, directly or by contract, clerical, ac-
counting, and other services which may be desired by
the parties hereto in the interest of promoting max-
imum efficiency, eliminating unnecessary duplication
of expense, and coordination of their respective air
freight and air cargo services with one another and
with those rendered by other common carriers of prop-

erty.

oa

Appendia C

UNITED STATES OF AMERICA
CIVIL AERONAUTICS BOARD

Wasuinoton, D. C.

Adopted by the Civil Aeronautics Board
at its office in Washington, D. C.
on the 31st day of December, 1947

Agreement C.A.B. No. 1041

In the Matter of an Agreement filed pursuant to
section 412(a) of the Act between

Aut American Aviation, Inc.
and

SrxteeEN OtrHer Arr CARRIERS

relating to the establishment of Air Cargo, Inc.

Orper Approvinc AGREEMENT

There having been filed with the Board pursuant to
section 412(a) of the Act and Part 251 of the Economic
Regulations, an agreement between All American Aviation,
Ine. and sixteen other carriers, providing for the estab-
lishment of Air Cargo, Inc., evidenced by Agreement C.A.B.
No. 1041;

The Board finding that the agreement provides that
member air carriers of Air Cargo, Inc. agree to utilize that
corporation in the performance of certain ground terminal

nail
& Resear nets eae mes eee Cit 4

35a

Appendiz C

operations in connection with the transportation of air
cargo such as ground transportation incidental to airline
hauls; the facilitation of joint interline movement of air
cargo over the lines of member air carriers; the arrange-
ment for joint interline agreements and services with other
common carriers for over-the-road hauls in connection with
transportation of property by surface carriers and aircraft;
the provision of cargo terminals; and the performance of
other services and provision of other facilities incidental
to these enumerated matters; and to act as agent for the
member air carriers in certain other related matters; and

It having been represented to the Board that Air Cargo,
Ine. will not have responsibility for nor control over, the
rates, charges, rules, regulations, or practices applicable to
air transportation; that it will not issue or sign any ship-
ping contract or document except in the name of and as
agent for a member air carrier party to the agreement;
that it will not assume any responsibility to the consignor
or consignee of any property transported by air; and it
will not hold itself out to the public to perform any service
or accept any responsibility except as agent for a member
air carrier party to the agreement; and

The Board not finding that the agreement will be adverse
to the public interest or in violation of the Act if approved
upon the basis of the representations and findings set forth
above and subject to the following conditions:

(1) That Air Cargo, Inc. and its member air carriers
supply to the Board copies of such agreements and
documents and submit such information in relation to
the activities of Air Cargo, Inc as may be prescribed
or requested by the Economic Bureau of the Board.

(2) That any holder of a certificate of public con-
venience and necessity issued by the Board authorizing

a

na

36a
Appendiz C

transportation of property by aircraft be authorized to
participate in Air Cargo, Inc. as a matter of right;

The Board further finding that the future development
of Air Cargo, Inc. is uncertain and that its activities may
require future reconsideration of the approval granted
herein; and

The Board further finding that approval of the agree-
ment does not constitute a determination of the reasonable-
ness, for any purpose under the Civil Aeronautics Act, of
payments by member air carriers to or on account of Air
Cargo, Inc.; and

There having been filed with the Board a petition in this
proceeding by the Brotherhood of Railway Clerks request-
ing the Board to impose certain conditions in its order of
approval for the protection of member air carrier em-
ployees affected as a result of the operations of Air Cargo,
Ine. or in the alternative that the matter be assigned for
hearing; and

The Board further finding that the said petition does not
set forth sufficient grounds to warrant the relief requested
therein; and that approval of the agreement shall be re-
considered in the event that at any time a showing is made
that the interests of air carrier employees at a particular
airport or place have been, or are about to be, substantially
adversely affected on account of the extension to said air-
port or place of the terminal operations by Air Cargo, Inc.

IT IS ORDERED THAT:

1. Agreement C.A.B. No. 1041 be and it hereby is ap-
proved subject to the conditions set forth above.

37a

Appendix C

2. The said petition of the Brotherhood of Railway
Clerks, filed in this proceeding on August 22, 1947, be and
it hereby is denied without prejudice.

By the Civil Aeronautics Board:

/8/ M. C. Mutuican
M. C. Mulligan
Secretary

(SEAL)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_0284%3A1. Public record. Not legal advice.