# Appendix — United Air Lines, Inc. v. Public Utilities Commission

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1952
- **Citation:** 342 U.S. 908

## Text

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APPENDIX A.

Petition for Writ of Review Denied in re S. F. No.
18426, United Air Lines, Inc., petitioner, y, Public Utili-

ties Commission of the State of California, respondent.
August 2, 1951.

CALIFORNIA SUPREME Court

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APPENDIX B.
Decision No. 45624.

Before the Public Utilities Commission of the State
of California.

Investigation into the fares, rules, regulations, charges,
services, operations and practices of Arrow Airways,
Inc.: California Central Airlines; Kenneth G. Fried-
kin, doing business as Pacific Southwest Airlines;
Robin Airways, Inc.; Southwest Airways Company;
Transcontinental & Western Air, Inc.; United Air
Lines, Inc.; and Western Air Lines, Inc. Case No.
5271.

APPEARANCES

Ray E. Costello, for Southwest Airways Company,
respondent,

Donald Keith Hall and D. P. Renda, for Western Air
Lines, Inc., respondent,

Kenneth G. Friedkin, for Pacific Southwest Airlines,
respondent,

John W. Preston, Jr., for California Central Airlines,
respondent,

Charles Stearns, for United Air Lines, Inc., respon-
dent.

David G. Shearer, for Trans World Airlines, Inc.,
respondent,

Norman D. Kessler, for Robin Airways, Inc., respon-
dent,

Wilson E. Cline, C. H. Jacobsen and Thomas A. Hop-
kins, for the staff of the Public Utilities Commission of
the State of California.

niin
OPINION

This proceeding is an investigation upon the Commis-
sion’s own motion into the reasonableness,
and propriety of the fares. rules,

services, operations and practices of
for the transport

lawfulness
regulations, charges,
"respondent air lines
ation of passengers between the San
Francisco Bay area and the Los Angeles area.

Public hearings were held before Commissioner Crae-
mer and Examiner Bryant at Los Angeles on March 14

and 27, 1951. Briefs have been filed. The matter is
ready for decision.

This investigation was instituted by the Commission
upon receipt of information that fares were being assessed
for so-called “coach” transportation in excess of those
named for such service in the tariffs on file with the Com-

mission. The eight air carriers maintaining published
fares between the San Francisco and L

os Angeles areas
were made respondents,

Factual evidence was offered by representatives of
various of the carriers and by members of the Commis-
sion’s staff. The record shows that certain of the re-
spondents are not offering the coach services with which
this investigation is primarily concerned. Arrow Air-
ways, Inc., is no longer operating common carrier ser-
vice of any nature, and has requested that the tariff
which it heretofore filed for California operations be can-
celled." Similarly, a member of the Commission’s staff
testified that the operations of Robin Airways have been
suspended or discontinued. Southwest Airways Com-
pany and Trans World Airlines, Inc., ( formerly Trans-

‘Exhibit No. 6.

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continental & Western Air, Inc.) have no coach opera-
tions between California points, and there is no evidence
in this proceeding that either of these companies has made
any unauthorized increase in fares or otherwise operated
unlawfully or improperly. Kenneth G. Friedkin, doing
business as Pacific Southwest Airlines, operates a coach
service between the San Francisco and Los Angeles areas.
The record shows that his fare for this service was main-
tained at $9.95 until March 28, 1951, on which date he
increased it to $11.70, under authorization from this
Commission.2. The evidence is clear that Friedkin prop-
erly continued to assess and collect the lower fare until
his tariff was lawfully amended. As to these three car-
riers the investigation may be discontinued upon cancella-
tion of the inoperative tariffs.

The remaining respondents are California Central Air-
lines, United Air Lines, Inc. and Western Air Lines, Inc.
As to these three carriers the essential facts are similar
and undisputed. Each of them operates coach flights be-
tween the San Francisco and Los Angeles areas. For
some time prior to March 1, 1951, California Central
Airlines maintained for this service a one-way fare of
$9.99 and the other two companies maintained a fare of
$9.95. Effective with that date each of the companies
started to collect and thereafter continued to collect a
fare of $11.70. Each of the companies had filed with the
Commission, prior to March 1, an application seeking
authority to make the fare increase. None of the applica-
tions had been granted prior to March 1, nor have they
yet been granted.®

2Authority No. 20-12-121 of March 20, 1951.

8It was these circumstances which impelled the institution of
this proceeding.

At the conclusion of the taking of evidence the Com-
mission’s staff moved that the Commission promptly
issue a preliminary order requiring the three respondents
(1) to cease and desist charging passenger fares for air
line coach travel in excess of the authorized fares set
forth in their tariffs on file with the Commission, (2) to
Prepare and maintain a record of the names and addresses
of all persons from whom more than the authorized fares
have been or may be collected subsequent to F
1951, and (3) to make reparation of the exces

authorized fares over the authorized fares to
gers whose n

tainable.

ebruary 28,
s of the un-

all passen-
ames and addresses are reasonably ascer-

Replies to the motion were, by agreement,
corporated in the briefs filed by the three respondents.

At the hearing and in their briefs the three carriers
urged various extenuating circumstances.
challenged the Commission’s power to regulate in any re-
spect the activities and business of air transportation com-
panies. They contended, and offered evidence to establish,
that the fare increase was made in response to a request
by the chairman of the Civil Aeronautics Board, which
request the companies construed to be tantamount to a
demand. They asserted that in any event the $11.70 fare
is fully justified, and, without waiving their objection
that the Commission lacks jurisdiction, introduced fin-

ancial and other evidence designed to support the asser-
tion.

in-

Primarily they

The jurisdictional question may be considered first.
The respondents argue on various grounds that the pro-
visions of Article XII of the California Constitution are
not applicable to air carriers, that the constitutional sec-
tions are not self-executing, and that the California legis-

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lature has not made a specific grant of power to the Com-
mission to regulate air carriers. United Air Lines, Inc.,
and Western Air Lines, Inc., assert further that the regu-
lation of air commerce is a field which has been completely
occupied by the Federal government under the Civil Aero-
nautics Act of 1938. United Air Lines, Inc., advance the
additional argument that its operations in question are
interstate in nature.

Article XII of the California Constitution contains
many provisions which are pertinent to the jurisdictional
question. Section 17 of said Article provides that, “All
railroad, canal, and other transportation companies are

declared to be common carriers, . . .” Section 23 of said
Article, in part, states “every common carrier, is hereby
declared to be a public utility . . .”

The staff on cross-examination of witnesses for the
airlines developed the fact and we now find that the three
air carriers, California Central Airlines, United Air
Lines, Inc., and Western Air Lines, Inc., which have in-
creased their coach fares without Commission authoriza-
tion offer their services to the public in general. Counsel
for United Air Lines, Inc., in their brief admit that
United is a common carrier.

In the recent case of State ex rel. State Railway Com-
mission v. Ramsey (1949), 151 Nebr. 333, 27 N. W. (2d)
502, the Supreme Court of Nebraska in considering
whether air carriers are common carriers as that term is
used in the Nebraska Constitution laid down the follow-
ing principles:

; A Constitution is intended to meet and be
applied to any conditions and circumstances as they

arise in the course of the progress of the community.

wales

The terms and provisions of constitutions are con-
stantly expanded and enlarged by construction to
meet the advancing affairs of men. While the powers
granted thereby do not change, they do apply to all
things to which they are in their nature applicable
. . . These principles have been held to be applicable
to transportation by air. Common carriers
by air are indistinguishable from other common car-
riers with respect to the policy of the law, Any per-
son or organization engaged in transportation by

air for hire is a common carrier.” (p. 338 Nebr.
Reports )

The California Supreme Court had under consideration
in Western Association of Short Line Railroads v. Rail-
road Commission (1916), 173 Cal. 802, 162 Pac. 391,
the question whether companies engaged in the
businesses of transporting freight in raotor trucks and
Passengers in automobile stages were “other transporta-
tion companies” referred to in Article XII of the Cali-
fornia Constitution. The Court unequivocally held that

they were public transportation companies, common car-
riers, and public utilities.

then new

In light of the foregoing cited constitutional provisions
and judicial decisions, we find and hold that the herein
air carriers operating under coach fares between the Los
Angeles area and the San Francisco Bay area are trans-
portation companies, common carriers and public utilities.

We now turn to the question whether the Public Util-
ities Commission has jurisdiction over the air carriers
with respect to increases in fares charged for transporta-
tion between points within the State of California.

FMEA)

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CEM ALGAE OLED BOD IDIE TRG OLE TEEN

delle

Section 20 of Article XII of the California Constitu-
tion, in part, provides:

“No railroad or other transportation company shall
raise any rate of charge for the transportation of
freight or passengers or any charge connected there-
with or incidental thereto, under any circumstances
whatsoever, except upon a showing before the rail-
road commission provided for in this Constitution,
that such increase is justified. “

Section 22 of Article XII of the California Constitu-
tion, in part, provides:

“Said Commission shall have the power to estab-
lish rates of charges for the transportation of passen-
gers and freight by railroads and other transpor-
tation companies, and no railroad or other transpor-
tation company shall charge or demand or collect or
receive a greater or less or different compensation
for such transportation of passengers or freight, or
for any service in connection therewith, between the
points named in any tariff of rates, established by
said Commission than the rates, fares and charges
which are specified in such tariff. . . .”

In the Short Line Railroads case, supra, the Supreme
Court ordered that a peremptory writ of mandate issue
requiring the Commission to assume the jurisdiction con-
ferred by the above-quoted portion of Section 22. With
reference to the absence of enabling legislation, the Court
stated at page 804:

“Tt is not and will not be questioned but that if
the constitution has vested such power, it is not
within the legislative power, either by its silence or

by direct enactment, to modify, curtail, or abridge
this constitutional grant.”

That decision is a clear statement that the provisions of
said Section 22 of the constitution are self-executing, and
that the Commission must exercise the authority therein
conferred regardless of any absence of legislative enact-
ments. While the Court did not refer to Section 20, there
is no reason why the same construction would not be
given that section,

Various of the respondents have referred to In re .
Martinez (1943), 22 Cal. (2d) 259, 138 P. (24) 10, as |
being contrary to the Principles above set forth. It is
true that the Martinez case contains dictum to the effect
that the Commission May exercise jurisdiction only where —
such jurisdiction is given by the legislature. However. in
the Martinez case the Court had under consideration Sec-
tion 23 of Article XII which reads, in part, as follows:

ug The Railroad Commission shall have and
exercise such power and jurisdiction to supervise and ’
regulate public utilities, in the State of California,
and to fix the rates to be charged for commodities
furnished, or services rendered by public utilities as
shall be conferred upon it by the Legislature, and
the right of the Legislature to confer powers upon
the Railroad Commission respecting public utilities
is hereby declared to be plenary and to be unlimited
by any provision of this Constitution. . . .” :

—-

The grant of jurisdiction to the Commission over intra-
state rates of air carriers is found in Sections 20 and 22
of Article XIT of the constitution. The provision quoted
from Section 23 of said Article can claim no priority over

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Sections 20 and 22 of said Article unless the former pro-
vision is more specific than the latter. As a matter of
fact the latter are more specific than the tormer with re-
spect to the regulation of rates of “other transportation
companies.” Should there be any possible ground for
doubt on this point the provisions of Section 23 are con-
clusive against the contentions of respondents. Said Sec-
tion 23 further provides, in part, as follows:

a Nothing in this section (Section 23 of
Article XII) shall be construed as a limitation upon
any power conferred upon the Railroad Commission
by any provision of this Constitution now existing
or adopted concurrently herewith.”

In the face of these plain and unambiguous provisions
of the constitution and in view of the holding in the Short
Line Railroads case, supra, the dictum in the Martinez
case cannot be considered as establishing a rule of law con-
trary thereto.

The Civil Aeronautics Act does not purport to extend
economic regulation to intrastate transportation of per-
sons or property other than mail. The states are there-
fore free to regulate intrastate rates and fares of air car-
riers to the same extent as they regulate intrastate rates
and fares of railroads, trucking and bus companies, and
telephone and telegraph utilities. (Cooley v. Board of
Port Wardens (1851), 12 How. (U. S.) 299, 13 L. Ed.
996; Minnesota Rates Cases (1913), 230 U. S. 352, 57
L. Ed. 1511; Eicholz v. Public Service Commission
(1939), 306 U. S. 268, 83 L. Ed. 641; Smith v. Illinois
Bell Telephone Co. (1930), 282 U. S. 133, 75 L. Ed. 255;
Lindheimer v. Illinois Bell Telephone Co. (1934), 292
U. S. 150, 78 L. Ed. 1182.)

oat ee

Based upon the law and the facts we hold that the jur-
isdiction of the Commission in the premises is clear and
that such jurisdiction should be exercised. The conten-
tion of respondents to the contrary we hold to be without
merit.

A number of exhibits were submitted in justification of
the reasonableness of the $11.70 fare. Among these was
a 17-page inter-departmental memorandum of the Civil
Aeronautics Board consisting essentially of estimates of
revenues generated and expenses incurred by United Air
Lines, Inc., and Western Air Lines, Ine., for air coach
operations on the Pacific Coast. According to this memo- ~
randum, United incurred a loss of $73,461 in the San
Francisco-Los Angeles operations for the period May
through August, 1950, and Western similarly incurred —
a loss of $27,478 for the period June through August,
1950.‘ It was pointed out that the fare of $11.70 rep-
resents an increase of approximately one-half cent per &
passenger mile over the $9.95 fare, and that it results in
a per-mile fare of about 3% cents, According to the ~
Civil Aeronautics Board, this contrasts with recently in-
creased fares of 4% cents per passenger mile now gen-
erally prevailing throughout the rest of the country for
air coach services. The record in this proceeding is clear
that the $11.70 fare was developed, recommended, and
in fact urged upon the carriers, by that Board.

United Air Lines, Inc., through its traffic manager, in-
troduced additional evidence concerning the operation of
its coach flights between the San Francisco and Los An-
geles areas. For its revenue and expense allocations, how-
ever, this company offered only the aforesaid analysis

‘The estimated losses are on the basis of fully allocated costs.

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made by the staff of the Civil Aeronautics Board. United
did not submit comparable estimated results for the fu-
ture. The following table shows actual operating ex-
perience at the $9.95 fare as developed by the Board's
staff and submitted by the company. A second column
shows, for comparative purposes, the results which would
have obtained for the same period if the higher tare had
applied and all other conditions were unchange.!

UNITED AIR LINES, INC.
(Four Months Ending with August, 1950)

Actual Adjusted
ees Fe e Experience
at $9.95 Fare at $11.70 Fare

Revenues $549,629 $549,629

Additional Revenue from

REE SII” dcccnseedicnajsseticaieeniotinn) = 96,735"

Total Operating Revenues ‘ $549,629 $646,364
Operating Expenses:

Flying Operations $121,884

Direct Maintenance Flight Eqpt. 36,549

Depreciation—Flight Egqpt. 63,378

Ground & Direct Maintenance 38,160

Ground Operations 90,083

Stewardesses’ Salaries & Expense 8,054

Passenger Insurance & Supplies 9,847

Traffic and Sales 90,529

Advertising and Publicity 11,703

General and Administrative 47 881

Depreciation—Ground Eqpt. 16,925

General Headquarters Expense 88,097
Total Operating Expense $623,090 $623,090"
Net Operating Profit® $(_ 73,461) 23,274
Operating Ratio*® 113.4% 96.4%

(~___) Denotes Loss

1Revenue resulting from a 17.6 per cent increase in fares.
*Carrier did not submit 1951 estimated expenses.

5Before federal income taxes.

aati Be

The director of budgetary controls of Western Air
Lines, Inc., introduced and explained an exhibit showing
month-by-month results of coach operations between the
San Francisco and Los Angeles areas for the nine months
from June, 1950, through February, 1951. The increase
in passenger revenues, assuming a fare of $11.70 instead
of $9.95, was included, but this company, like United, did
not submit estimated revenues or expenses for the future.
The actual and adjusted figures for Western Air Lines,
Inc., are shown in the table which follows:

WESTERN AIR LINES, INC.
(Nine Months Ending With February, 1951)

Actual? Adjusted
Experience Experience
at $9.95 Fare at $11.70 Fare

Revenues $1,063,527 $1,063,527

Additional revenue from

Ree Ge: 184,7932

Total Operating Revenue $1,063,527 $1,248,320
Operating Expenses :

Flight Operations $ 263,881

Direct Maintenance 94,114

Depreciation of Flight Eqpt. 126,000

Indirect & Ground Expense 683,770
Total Operating Expenses $1,167,765 — $1,167,7658
Net Operating Profit* (104238) $ 80,555
Operating Ratio* 109.8% 93.6%

( ) Denotes Loss
'February costs based on January experience prorated for 28 days.

?Additional revenue resulting from the increased fare as estimated
by the witness.

°Carrier did not submit 1951 estimated expenses.
“Before federal income tax.

California Central Airlines, which operates wholly
within the State of California, derives approximately 90

oe

per cent of its revenue from coach flights between the San
Francisco and Los Angeles areas. The operations of this
company were not included in the staff report —* *‘1e Civil
Aeronautics Board. Exhibits submitted by the company
show revenues, expenses, and estimated costs, as well as
various plane-mile and passenger-mile data. According
to the evidence, the company earned in the year 1950 a
net profit of $1,512; and, if the higher fare and certain
increased expenses had been in effect during the year,
would have received an estimated net profit of $20,104.
The operating ratios would be 99.8 per cent and 98.0 per
cent, respectively. The figures as submitted by this com-
pany are summarized in the following table:

CALIFORNIA CENTRAL AIRLINES
(Twelve-Month Period)

Year 1950 Year 1951
Actual Estimated
Experience Experience
at $9.99 Fare at $11.70 Fare

Operating Revenues $855,145 $981,371!
Operating Expenses:

Flying Operations $605,290

Ground Operations 31,508

Ground & Indirect Maintenance 8,995

Passenger Service 15,600

Traffic and Sales 114,806

Advertising & Publicity 31,537

General & Administrative 44,564

Depreciation—-Ground Property 1,333
Total Operating Expenses $853,633 $961 267?
Net Operating Revenues? $ 1,512 $ 20,104
Operating Ratio 99.8% 98.0%

1Revenue resulting from the 17.1 per cent increase in fares and
an estimated diminution of five per cent in the number of
passengers carried.

“The estimated expenses for 1951 were not segregated by accounts.
5Before federal income tax.

ae ee

None of the companies supplied all of the supporting
or underlying data which would be desirable, Neverthe-
less, considering all of the circumstances of record, the
evidence is convincing, and we find as a fact, that the
higher fare is justified. Publication. filing and mainten-
ance of the fare will be authorized.

It is entirely clear, however, and indeed it is not dis-
puted, that California Central Airlines, United Air Lines,
Inc., and Western Air Lines, Inc., increased their fares
without first receiving authorization from this Commis-
sion. Timely requests for authority to make the increase
were filed, but the showings required by the state con-
stitution were made belatedly, and were incomplete at the
time the instant investigatory proceeding was instituted
and notice thereof served upon the respondents. The
order which follows will authorize publication and main-
tenance of the $11.70 fare for the future. These com-
panies are hereby placed on notice that they are and will
hereafter be deemed to be “transportation companies”
within the meaning of the Constitution of the State of
California, and that they are subject to the prohibitions
and requirements of said constitution. We also call the
attention of these companies to Section 76(a) of the
Public Utilities Act, which provides:

“Any public utility which violates or fails to com-
ply with any provision of the constitution of this
state or of this act, or which fails, omits or neglects
to obey, observe or comply with any order, decision,
decree, rule, direction, demand or requirement or any
part or provision thereof, of the commission, in a
case in which a penalty has not hereinbefore been
provided for such public utility, is subject to a penalty

pee ee

of not less than five hundred dollars nor more than
two thousand dollars for each and every offense.”

In view of the fact that these air carriers since March
1, 1951, have been charging fares in excess of the fares
reflected by their tariffs on file with this Commission as
applied to coach operations between the San Francisco
Bay area airports and the Los Angeles area airports, we
are of the opinion that amounts collected in excess of such
tariff fares should be refunded, wherever possible, to
passengers who have paid the same and such direction will
be incorporated in the order following this opinion. Sec-
tions 20, 21 and 22 of Article XII of the State Consti-
tution require that such reparation be made.

There is some evidence, not hereinbefore discussed,
relative to possible failure of some of the respondents to
comply strictly with their filed tariff rules governing re-
funds or exchanges of unused tickets. This subject was
subordinate to the basic issues in this proceeding, and the
evidence thereon was in any event inconclusive. On this
subject we make no finding of fact.

ORDER

Public hearings having been had in the above-entitled
proceeding, evidence having been received and duly con-
sidered, the Commission now being advised and basing its
order upon the findings and conclusions set forth in the
preceding opinion,

It Is Hereby Ordered:

1. That California Central Airlines, United Air Lines,
Inc., and Western Air Lines, Inc., be and they are hereby

authorized to publish, file and maintain a one-way adult
coach fare of $11.70 for transportation of passengers be-

_ sen geseon stents eves Prat: te aeees rie
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tween San Francisco Bay area airports on the one hand
and Los Angeles area airports on the other hand.

2. That California Central Air Lines, United Air
Lines, Inc., and Western Air Lines, Inc., be and they are
hereby ordered to make reparation, wherever possible,
to passengers paying coach fares for transportation be-
tween the San Francisco Bay area airports on the one
hand the the Los Angeles area airports on the other hand,
in excess of the fares as reflected by the tariffs of these
air carriers on file with this Commission.

3. That California Central Airlines, United Air Lines,
Inc., and Western Air Lines, Inc., and all other of the re-
spondents operating as common carriers, be and they are
hereby adjured and admonished that they may not, for
the transportation of passengers and property in intra-
state commerce between points within the State of Cali-
fornia, raise any rate of charge under any circumstances
whatsoever except upon a showing before the Commission
that such increase is justified, make unreasonable charges,
discriminate in charges or facilities, nor in any other
manner violate any of the provisions of Article XII of
the Constitution of the State of California applicable to
transportation companies.

4. That tariffs heretofore filed with this Commission
by Arrow Airways, Inc., and Robin Airways, Inc.,
naming fares, rules and regulations governing transpor-
tation of passengers between points in this state, be and
they are hereby canceled,

5. That the several pending motions for dismissal of
the proceeding as to particular respondents, and the pend-
ing motion for issuance of a “preliminary order,” be and
they are hereby denied.

6. That, upon the effective date of this order, this
investigation be and it is hereby discontinued.

The Secretary is hereby directed to cause a certified
copy of this decision forthwith to be served personally
on Arrow Airways, Inc., California Central Airlines,
Kenneth G. Friedkin, doing business as Pacific Southwest
Airlines, Robin Airways, Inc., Southwest Airways Com-
pany, Transworld Airlines, United Air Lines, Inc., and
Western Air Lines, Inc.

The effective date of this decision shall be fifteen (15)
days after the date hereof.

Dated at San Francisco, California, this 24th day of
April, 1951.
R. E. MItTTELSTAEDT,
Justus F, CraAEMER,
Haro.tp P. Huts,
KENNETH POTTER,
Peter E. MITCHELL,

Commissioners.

ememmmne = meas soreness ee eae

DEC § 195
SUPREME COURT OF THE UNITED STATES

OCTOBER TERM 1951

No. 464

UNITED AIR LINES, ING,

Appellant,
vs.

PUBLIC UTILITIES COMMISSION OF THE STATE ©
OF CALIFORNIA d

APPEAL FROM THE SUPREME COURT OF THY STATE OF CALIFORNIA ‘

STATEMENT IN OPPOSITION TO APPELLANT'S ;
STATEMENT OF JURISDICTION AND MOTION TO
DISMISS OR AFFIRM

Kverert C. McKeaee,
Chief Counsel,
Wusow E. Cuiiye,
Associate Counsel,
Counsel for Public Utilities Commission of

the State of California.

OEY Sor os Saw

INDEX

Suspsect Ixpex

I. Statement of the facts
II. Statement of the issues on appeal
III. No substantial Federal question is aman by
the attempted appeal

A. Preliminary statement

B. The order of the Commission regulating
the intrastate fares charged intrastate
passengers by air carriers engaged
both in intrastate and interstate com-
merce for transportation between
points in California does not place
such a burden on interstate commerce
as to constitute a violation of the Inter-
state Commerce Clause of the Con-
stitution of the United States (Sub-
section 3 of Section 8, Article I).

C. The Congress through the Civil Aero-
nauties Act of 1938, as Amended (52
Stats. 977, 49 U. S. Code 401 et seq.)
has not pre-empted the field of eco-
nomic regulation of air carriers en-
gaged in interstate commerce, or in the
transportation of U. S. mail, or both,
so as to preclude the Commission from
regulating the intrastate fares charged
intrastate passengers by such carriers
for transportation between points in
GCE os sche re ena coees the

D. United can comply with the Reparation
Order of the Commission without
violating the provisions of Section
403(b) of the Civil Aeronautics Act
(49 U.S. Code 483(b)) .

—8759

il INDEX

KE. The Commission’s order requiring air
carriers engaged both in intrastate
and interstate commerce to make
reparation to passengers paying intra-
state fares for transportation between
points in California in excess of the
intrastate fares included in their au-
thorized tariffs on file with the Com-
mission does not deprive such carrier
of property without due process of
law

IV. Conclusion and motion to dismiss or affirm

Taste or Cases Crrep

Alabama Public Service Commission v. Southern
Railway Company (1951), 341 U.S. (Preliminary
Print) 341, 95 L. ed. Adv. Ops. 708

Arkansas Railroad Commission vy. Chicago R.1. & P.
Co. (1927), 274 U. 8. 597, 71 L. ed, 1224

California Central Airlines, et al. (Decision No.
43932, 1950), 49 Cal. P.U.C. 494

California Central Airlines, et al. (Decision No.
45624, 1951), 50 Cal. P.U.C. 563

Cooley v. Board of Port Wardens (1851), 12 How.
(U. 8.) 299, 13 L. ed. 996

Davies Warehouse Co. v. Bowles (1944), 321 U.S.
144, 88 L. ed. 635

Eicholz v. Public Service Commission (1939), 306
U. S. 268, 83 L. ed. 641

Kelly v. Washington (1937), 302 U.S. 1, 82 L. ed. 3

Lindheimer v. Illinois Bell Telephone Co, (1934), 292
U.S. 151, 78 L. ed. 1182

Minnesota Rate Cases (1913), 230 U.S. 352, 57 L. ed.
ii ..

North Carolina v. United States (1945), 325 U.S. 507,
89 L. ed. 1760 .

Palmer v. Massachusetts (1939), 308 U. S. 79, 84
L. ed. 93

Page

17
18

INDEX

Panhandle Eastern Pipe Line Co. v. Michigan Public
Service Commission (1951), 341 U.S. (Preliminary
Print) 329, 95 L. ed. Adv. Ops. 673

Rosenhan v. United States (1942), 131 F. (2d) 932,
cert. den., 318 U.S. 790, 87 L. ed. 1156

Smith v. Illinois Bell Telephone Co. (1930), 282 U.S.
133, 75 L. ed, 255

STATUTES

California Constitution :
Article XII

Civil Aeronautics Act (52 Stat. 977, 49 U. S. Code
401, et seq.)

Section 1(2), 49 U.S. Code 401 (2)
Section 1(3), 49 U. S. Code 401 (3)
Section 1(10), 49 U.S. Code 401 (10)
Section 401, 49 U. S. Code 481
Section 403, 49 U.S. Code 483.
Section 403(b), 49 U.S. Code 483(b)
Section 404, 49 U. S. Code 484
Section 406(b), 49 U. S. Code 486(b)
Section 601, 49 U. S. Code 551

Constitution of the United States:
Article I, Section 8, Subsection 3
14th Amendment, Section 1
Interstate Commerce Act:
49 U.S. Code 1, et seq.
Rules on Appeal for the Supreme Court (1951), 6
Cal. (2d) 1:

Rule 27
Rule 53

WOT epee

iii
Page

11

13

10

:
4
;
|
|
i
;
¥
4
4

iv INDEX

Brits, Proceepines anp Law Review Articie

Aviation Bills, 78th Congress: Page
Lea Bill, H.R. 1012 14
Revised Lea Bill, H.R. 3420 14
H.R. Report No. 784 on H.R. 3420, H.R. Com-

mittee on Interstate and Foreign Commerce 15
Boren Bill, H.R. 4845 . re; 14
Reece Bill, H.R. 4848 14
Bailey Bill, 8. 246 14

79th Congress:
Lea Bill, H.R. 674 14
Lea Bill, H.R. 3383 La Kap 14
Johnson Bill, 8. 541 ahh 14
80th Congress:
Wolverton Bill, H.R. 2337 |. SE cepts 14
8lst Congress:
Brewster Bill, S. 423 foes 14
ee ts OE bs os coh c dances aves 14
Johnson Bill, 8. 2485... EE ag ES, fs 14

National Association of Railroad and Utilities Com-
missioners Proceedings:

1944 N.A.R.U.C. Proceedings 221....—s........ 14
1945 N.A.R.U.C. Proceedings 299... .......... 14
1946 N.A.R.U.C. Proceedings 210 ......... 14
1947 N.A.R.U.C. Proceedings 128 <tp.3 14
1948 N.A.R.U.C. Proceedings 69... 14
1949 N.A.R.U.C. Proceedings 166 14
1950 N.A.R.U.C. Proceedings 106 ae a: 14

Hamley, Appropriate Areas of State Economic
Regulation (1946), 11 Law and ee
Problems, 488 Lape 15

——

SUPREME COURT OF THE STATE OF CALIFORNIA

UNITED AIR LINES, INC,

Petitioner-Appellant,
vs.

PUBLIC UTILITIES COMMISSION OF THE STATE
OF CALIFORNIA,
Respondent-A ppellee

STATEMENT IN OPPOSITION TO APPELLANT'S
STATEMENT OF JURISDICTION AND MOTION TO
DISMISS OR AFFIRM

The Public Utilities Commission of the State of Califor-
nia, respondent and appellee (hereinafter referred to as
Commission), for its statement in opposition to stater ent
as to jurisdiction herein of United Air Lines, Inc., petitioner
and appellant (hereinafter referred to as United), and in
support of said Commission’s motion to dismiss or affirm,
respectfully shows the following:

I. Statement of the Facts

United is regularly engaged as a common carrier in the
business of carrying passengers by air. Among others its
operations include both standard and coach-class flights be-
tween the Los Angeles area airports and the San Francisco
Bay area airports and vice versa. On its coach-class flights
between these airports United carries passengers whose
journeys are wholly within the State of California and pas-

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sengers whose flights are only segments of interstate jour-
neys. On these air coach flights United carries U. S. mail.

United has had tariffs covering its intrastate operations
continuously on file with the Commission since November
28, 1931. The fares under consideration in this appeal are
the one-way adult fares for coach-class passenger air service
between Los Angeles area airports and the San Franciéco
Bay area airports.

These same fares were the subject of investigatory pro-
ceedings instituted on the Commission’s own motion
against various air carriers in 1949. In Decision No. 43932
(March 14, 1950), 49 Cal. P.U.C. 494, issuing out of this
proceeding, the Commission found that it had authority to
institute such proceedings under Article XII of the Cali-
fornia Constitution and pursuant to such authority the
Commission found that the one-way fares of $9.95 and
$9.99 then being charged had been shown to be reasonable.
As United at that time was not engaged in air coach opera-
tions between the Los Angeles area airports and the San
Francisco Bay area airports it was not made a party to this
proceeding.

United later became engaged in air coach operations be-
tween these airports and filed an intrastate adult one-way
tariff of $9.95 with the Commission. Subsequently United
made application to the Commission, by letter dated Feb-
ruary 9, 1951, to increase its intrastate one-way adult coach
fares between Los Angeles and Oakland/San Francisco
from $9.95 to $11.70 to be effective March 1, 1951.

Previously, on February 7, 1951, Western Air Lines, Ine.,
(hereinafter referred to as Western), had made a similar
application with the Commission, and shortly thereafter
but before March 1, 1951, Pacific Southwest Airlines and
California Central Airlines, the only other air carriers oper-
ating under coach-class fares between the Los Angeles
area and the San Francisco Bay area, mailed applications

3
to the Commission requesting authority to increase their
intrastate one-way adult coach-class fares to $11.70 on
Mareh 1, 1951.

The evidence subsequently introduced at the Commission
hearings showed that all these applications for fare in-
creases had been filed pursuant to request by the Civil
Aeronautics Board that these air carriers increase their
coach-class fares between the Los Angeles area and the San
Francisco Bay area to $11.70 effective March 1, 1951. That
the Civil Aeronautics Board intended these requests to
apply to intrastate fares is made clear by the fact that they
were directed to Pacific Southwest Airlines and California
Central Airlines, both of which are non-certificated air car-
riers engaged solely in intrastate operations wholly within
the State of California, as well as to Western and United.

As the information submitted in support of the various
applications filed with the Commission was not sufficient to
warrant the ex parte authorization of the requested in-
creases, the tendered tariff pages were rejected. Never-
theless, on March 1, 1951, California Central Airlines, West-
ern and United proceeded to increase their fares to $11.70
without Commission authorization. As a result on March 6,
1951, the Commission issued its order of investigation.

Hearings were held in Los Angeles on March 10 and
March 27, 1951. At the outset and throughout the course
of the hearings, California Central Airlines, Western
and United made clear their contention that the Com-
mission had no jurisdiction over their fares, Western and
United both claiming lack of jurisdiction by reason of the
Federal Constitution as well as the California Constitution,
However, at the March 27, 1951 hearing all three did submit
evidence in justification of the intrastate coach-class fare
increases and sought Commission approval of the applica-
tions which previously had been filed.

a! PES nL

ih alti

+

On March 19, 1951, Pacific Southwest Airlines refiled its
application, this time with sufficient supporting data to en-
able the Commission to act favorably thereon. On March 20,
1951, the Commission ex parte authorized Pacific Southwest
Airlines to increase its coach fares, and pursuant to such
authorization its coach-class fares for the first time were
increased to $11.70 effective March 28, 1951.

The Commission issued its Decision No. 45624, 50 Cal.
P.U.C. 563, April 24, 1951, a copy of which decision appears
as Appendix B attached to United’s Jurisdictional State-
ment. The order therein authorized California Central Air-
lines, Western and United to increase their intrastate one-
way adult coach-class fares for transportation of passengers
between the San Francisco Bay area airports and the Los
Angeles area airports to $11.70 and directed these three
carriers to make reparation, wherever possible, to pas-
sengers paying coach fares between said airports in excess
of the authorized fares. The effective date of the order was
May 9, 1951. Central California Airlines, Western and
United filed timely petitions for rehearing with the Com-
mission, all of which petitions were denied by the Commis-
sion by decisions dated May 15, 1951.

In the meantime, on May 4, 1951, United, pursuant to
Commission Decision No. 45624, supra, filed its revised
tariff covering intrastate air coach-class fares between the
Los Angeles area airports and the San Francisco Bay area
airports, effective May 10, 1951. Likewise Western and
California Central Airlines filed revised tariffs covering
such fares.

California Central Airlines upon denial of its petition
for rehearing acquiesced in the order of the Commission
and indicated it would proceed with reparation wherever
possible.

June 14, 1951, Western and United filed petitions for
writs of review of the Commission Decision No. 45624,

— na
as ean DIRS ONES BN eee A

Cnt Se ee

supra, with the California Supreme Court, S.F. No. 18427
and S.F. No. 18426, respectively. Both petitions were de-
nied by the California Supreme Court by orders issued
without opinion, filed August 2, 1951. On August 16, 1951,
Western filed with the California Supreme Court a petition
for rehearing of the order denying the writ of review, and
on August 30, 1951, the California Supreme Court denied
this petition for rehearing by order again without opinion.

United has stated on page 6 of its Jurisdictional State-
ment that it filed no petition for rehearing because no pro-
cedure is provided under the laws of the State of Califor-
nia for filing a petition for rehearing of an order of the
California Supreme Court denying a petition for writ to
review a Commission order. However, Rules 27 and 53 of
Rules on Appeal for the Supreme Court (California),
adopted by the Judicial Courcil, as amended to January 1,
1951, 36 Cal. (2d) 1, do provide for the filing of a petition
for rehearing of such a “alifornia Supreme Court decision.

On October 26, 1951, both Western and United filed ap-
peals from the orders of the California Supreme Court with
the United State. Supreme Court. If hearings be granted
on these appeals this Commission will in due time move
that the United States Supreme Court consolidate these
appeals for hearing.

II. Statement of the Issues on Appeal

The basic issues raised by United on its appeal to the
United States Supreme Court appear in italies on pages 17
and 18 of its Jurisdictional Statement as follows:

(1) ‘*The United States Has Assumed Exclusive
Control of the Rates of Air Carriers.”’

(2) ‘*Respondent’s Order Unlawfully Interferes
With Interstate Commerce.”’

(3) ‘‘Respondent Seeks to Deprive Petitioner of
Property Without Due Process.”

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|
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6

Issue (1) above is too broad in its scope. In considering
the issue as stated by United, the Court would have to
determine whether the Civil Aeronautics Act precludes the
Commission from regulating the intrastate fares charged
intrastate passengers by a non-certificated carrier engaged
in commercial air transportation wholly within the State
of California and carrying only intrastate passengers.
Admittedly, United is not such an air carrier, and, as pre-
viously stated, California Central Airlines, the only such
air carrier whose fares are regulated by the Commission
order here under consideration, has acquiesced in its
validity.

The Commission wishes the Court clearly to understand
that the Commission does not seek to exercise any jurisdic-
tion over interstate fares. The specific fare under consider-
ation is an intrastate fare inasmuch as the $11.70 is for
travel between airports within the State of California.
However, this intrastate fare may be charged an interstate
passenger (i.c., one whose travel between the Los Angeles
area airports and the San Francisco Bay area airports is
only a segment of an interstate journey), as an integral
part of an interstate fare, or it may be charged an intra-
state passenger (i.e., one whose entire journey is within the
State of California). The Commission takes the position
that its order, as set forth in Decision No. 45624, supra,
pertains only and could pertain only to fares which are
being charged to those passengers whose journeys between
the Los Angeles area airports and the San Francisco Bay
area airports are intrastate journeys and not integral parts
of interstate journeys. Such fares are hereinafter referred
to as intrastate fares.

We believe the following questions to be more definitive
of the issues before the Court in this appeal:

(1) Has the Congress, through the Civil Aeronauties Act
of 1938, as amended (52 Stats. 977, 49 U.S. Code 401, et

ame ~ nt sot wee

PO A RR RS

7

seq.), pre-empted the field of economic regulation of air
carriers engaged in interstate commerce, or in the trans-
portation of U.S. mail, or both, so as to preclude the Com-
mission from regulating the intrastate fares charged intra-
state passengers by such carriers for transportation be-
tween points in California? Z

(2) Does the order of the Commission regulating the
intrastate fares charged intrastate passengers by air car-
riers engaged both in intrastate and interstate commerce
for transportation between points in California place such
a burden on interstate commerce as to constitute a violation
of the Interstate Commerce Clause of the Constitution of
the United States (Subsection 3 of Section 8, Article I).

(3) Does the Commission’s order requiring air carriers
engaged both in intrastate and interstate commerce to make
reparation to passengers paying intrastate fares for trans-
portation between points in California in excess of the
intrastate fares ineluded in their authorized tariffs on file
with the Commission deprive such carriers of property
without due process of law?

III. No Substantial Federal Question Is Presented by the
Attempted Appeal

Although the United States Supreme Court has not issued
a decision specifically answering the above stated questions
with respect to air carriers, this Court has considered sub-
stantially the same questions in cases involving other types
of carriers and utilities and has clearly determined such is-
sues in favor of the validity of the Commission’s order,
We propose to demonstrate that United has raised no sub-
stantial Federal question by its attempted appeal.

A. Preliminary Statement

With respect to the general question of Commission
jurisdiction over rates of air carriers, it is interesting to

cus Bape none

8

note that United has, since November 28, 1931, submitted
to this jurisdiction by having on file with the Commission,
either in its.own name or that of a subsidiary or affiliate,
tariffs of its intrastate fares. Western has had tariffs of
its intrastate fares on file with the Commission since June
21, 1945. Both Western and its subsidiary, Western Air
Lines of California, Inc., acquiesced in Commission Decision
No. 43932, 49 Cal. P.U.C. 494, which found that the Commis-
sion had authority under Article XII of the California
Constitution to institute proceedings to determine the rea-
sonableness of intrastate fares of air carriers and, pursuant
to such authority, found that the one-way fares of $9.95
and $9.99 being assessed for airline coach-class service be-
tween Los Angeles and San Francisco had been shown to
be reasonable.

The inconsistent positions taken by the petitioners are
further clearly demonstrated by the fact that both Western
and United filed applications with the Commission seeking
approval of the $11.70 fare as an intrastate fare, and both
petitioners, pursuant to Commission Decision No, 45624,
which is here under attack, have filed tariffs with the Com-
mission setting forth the $11.70 one-way adult fare for air-
coach service between the Los Angeles area airports and
the San Francisco Bay area airports.

Western and United are willing to take the benefit of Com-
mission authorization of the increased fares but deny that
the Commission has jurisdiction to exercise such authority.
It is a rule of law that one may not approbate and reprobate
at the same time, particularly where he accepts the benefit
of the approbation. The actions of United and Western
prove a clear recognition on their part (although they seek
to deny it) of the lawful authority of the Commission to
regulate their intrastate fares.

The Interstate Commerce Clause of the Constitution of
the United States became effective in 1789, the Civil Aero-

4 +a canta

9

nauties Act in 1938, For logical as well as historical reasons
we prefer to discuss the issues outlined above in different
order.

B. The Order of the Commission Regulating the Intrastate
Fares Charged Intrastate Passengers by Air Carriers
Engaged Both in Intrastate and Interstate Commerce
for Transportation Between Points in California
Does Not Place Such a Burden on Interstate Com-
merce as to Constitute a violation of the Interstate
Commerce Clause of the Constitution of the United
States (Subsection 3 of Section 8, Article 1).

The fact that United is engaged in interstate as well as
intrastate commerce has no significance so far as the valid-
ity of the order of the Commission is concerned. The regu-
lation of fares charged by air carriers requirés no more uni-
formity than does the regulation of fares and rates of rail-
roads, bus lines, truck lines, and telephone and telegraph
utilities.

The speed of an airplane loses its significance when com-
pared to the speed of transmittal of a telephone or tele-
graph message. It is a matter of common knowledge that
the separation of interstate and intrastate operations of
telephone and telegraph utilities is much more difficult than
the separation of the interstate and intrastate operations
of passenger and freight carriers, including air carriers.
However, such facts have not resulted in exclusion of state
regulation of charges for intrastate telephone and telegraph
messages.

It has long been held by the United States Supreme Court
that until such time as the Congress pre-empts the entire
field of regulation, both interstate and intrastate, common
carriers and utilities are subject to state regulation in so
far as intrastate operations are concerned, even though

A PTE AIO LER OR IY TILE, Ap 0 Reem Vi MES TaN Seer tee

eT ee rene. noe) ee See ee)

10

their interstate operations are regulated by Federal author-
ity.
r Cooley v. Board of Port Wardens (1851), 12 How.
(U. S.) 299, 13 L. ed. 996.
Minnesota Rate Cases (1913), 280 U. 8. 352, 57 L. ed.
1511.
Eicholz v. Public Service Commission (1939), 306 U.S.
268, 83 L. ed. 641.
Smith vy. Illinois Bell Telephone Co. (1930), 282 U.S.
133, 75 L. ed. 255.
Lindheimer v. Minois Bell Telephone Co, (1934), 292
U. S. 151, 78 L. ed. 1182.

In the recent case of Alabama Public Service Commis-
sion v. Southern Railway Company (1951), 341 UL 5. (Pre-
liminary Print) 341, 349, 95 L. ed. Adv. Ops. 708, 711, the
United States Supreme Court, speaking through Mr. Chief
Justice Vinson, made the following statement regarding
state regulation of intrastate transportation :

‘* Appellee conducts an interstate business over the
same tracks and by means of the same trains involved
in this case, and such interstate activities are regulated
by the Federal Interstate Commerce Commission, 49
U.S. C. $41, et seq. But, it has long been held that
this interblending of the interstate and intrastate oper-
ations does not deprive the states of their primary
authority over intrastate transportation in the absence
of congressional action supplementing that authority.

* * * And Congress has since provided :

«That nothing in [the Interstate Commerce Act]
shall impair or affect the right of a State, in the exer-
cise of its police power, to require just and reasonable
freight and passenger service for intrastate business,
except insofar as such requirement is inconsistent with
any lawful order of the [Interstate Commerce Com-
mission].’ 49 U. S. C. §1 (17(a)).

li

‘*This Court has held that regulation of intrastate
railroad service is ‘primarily the concern of the state.’
North Carolina v. United States, 325 U.S. 507, 511, 89
L. ed. 1760, 1765, 65 S. Ct. 1260 (1945) (rates); Palmer
v. Massachusetts, 308 U. S. 79, 84 L. ed. 93, 60 S. Ct.
34 (1939) (discontinuance of local service).’’

The United States Supreme Court has held that the states
may even regulate interstate commerce of a local nature
until such time as the Congress has pre-empted the entire
field of interstate commerce.

Kelly v. Washington (1937), 302 U.S. 1, 9-15, 82 L. ed.
3, 10-13.

Panhandle Eastern Pipe Line Co. v. Michigan Public
Service Commission (1951), 341 U. S. (Preliminary
Print) 329, 333, 95 L. ed. Adv. Ops. 673, 676.

The United States Supreme Court, in upholding state
regulation of direct sales of gas for consumptive use by a
natural gas company which was engaged in interstate com-
merce, through the majority opinion delivered by Mr. Jus-
tice Minton, in the ease of Panhandle Eastern Pipeline Co.
v. Michigan Public Service Commission (1951), 341 U. S.
(Preliminary Print), 329, 333, 95 L. ed. Adv. Ops. 673, 676,
went even further to state:

*s * * * In the absence of federal regulation, state
regulation is required in the public interest. * * *’’

20 a oer esate etry

ee ae ee

)

12

(. The Congress Through the Civil Aeronautics Act, as
Amended (52 Stats. 977, 49 U. S. Code 401 et seq.)
Has Not Pre-cmpted the Field of Economic Reqgula-
tion of Air Carriers Engaged in Inlerstate Commerce,
or in the Transportation of U.S. Mail, or Both, so as
to Preclude the Commission from Regulating the
Intrastate Fares Charged Intrastate Passengers by
Such Carriers for Transportation Between Points in
California,

Section 1(2) of the Civil Aeronautics Act (49 U.S. Code
401(2)) defines ‘‘air carrier’’ as one engaged in ‘‘air trans-
portation,’’ and ‘‘air transportation’’ is defined in Section
1(10) (49 U. S. Code 401(10)) to mean ‘‘interstate, over-
seas, or foreign air transportation or the transportation
of mail by aireraft.”’

Air carrier economic regulation under Sections 401,
403, and 404 of the Civil Aeronauties Act (49 U. S. Code
481, 483, and 484) is limited to the regulation of ‘‘air trans-
portation.”’ The rates, fares, and charges regulated by the
Civil Aeronautics Board under these sections are ‘‘rates,
fares, and charges for air transportation.”

There is nothing in the Civil Aeronauties Act which gives
the Cis’! Aeronautics Board jurisdiction over intrastate
fares charged intrastate passengers by ‘‘air earriers’’,
nor is there anything in the Act which prevents the states
from exercising jurisdiction over such fares.

Even though the provisions of the Civil Aeronautics Act
were not clear in this regard, the United States Supreme
Court has held that any doubt should be resolved in favor of
state power. We quote from the majority opinion of Mr.
Justice Brandeis in Arkansas Railroad Commission v. Chi-
cago, R. 1. & P. Co. (1927), 274 U. S. 597, 603, 71 L. Ed.
1224, 1228:

‘The intention to interfere with the state function
of regulating intrastate rates is not to be presumed.

13

Where there is a serious doubt whether an order of the
Interstate Commerce Commission extends to intra-
state rates, the doubt should be resolved in favor of the
state power. * * *”’

Although Section 406(b) of the Civil Aeronautics Act
(49 U.S. Code 486) permits the Civil Aeronautics Board in
fixing reasonable rates for the transportation of mail by
air to consider the need of the air carrier and its revenue
from other sources, such section does not preclude state
regulation of intrastate passenger fares. The California
Publie Utilities Commission is as duty bound to fix just
and reasonable intrastate fares as is the Civil Aeronautics
Board duty bound to fix just and reasonable interstate
fares. There are adequate administrative and judicial
remedies should either governmental regulatory agency
become remiss in its duty.

Rosenhan vy. United States (1942), 131 F. (2d) 932, cert.
den. 318 U. S. 790, 87 L. Ed. 1156, is sometimes cited as
case authority to show that the Federal government has
pre-empted the entire field of air carrier regulation. The
case relates only to the safety regulatory provisions of the
Civil Aeronautics Act, however.

Federal regulation of the safety phase of the operations
of air carriers is pursuant to Section 601 of the Civil Aero-
nauties Act (49 U. S. Code 551) which grants the Civil
Aeronauties Board authority over ‘‘air commerce.’’ See-
tion 1(3) of the Act (49 U. S. Code 401(3)) defines ‘‘com-
merce’’ to mean ‘‘interstate, overseas, or foreign air com-
merce or transportation of mail by aircraft or any opera-
tion or navigation of aircraft within the limits of any civil
airway or any operation or navigation of aircraft which
directly affects, or which may endanger safety in, interstate,
overseas, or foreign commerce."’

A review of the definition of ‘‘air commerce’’ and the
safety provisions of the Civil Aeronauties Act clearly

14

demonstrates that the Congress knows how to use language
to extend Federal regulation to intrastate activities when
it desires to do so.

The Congress has consistently refused to occupy the
entire field of regulation of air carriers, although the Civil
Aeronautics Board and the interstate air carriers on numer-
ous occasions have strenuously attempted to destroy state
regulation of air carriers by prevailing upon the Congress
to supersede state authority.

In this connection we refer this Court to the legislative
history of the following bills, none of which has been en-
acted:

78th Congress: Lea-Bailey Aviation Bill introduced as
H. R. 1012 and §. 246; revised form of Lea-Bailey
Aviation Bill, H. R. 3420; Boren Bill, H. R. 4845;
Reece Bill, H. R. 4848.

79th Congress: Lea Bill, H. R. 674; Johnson Bil! S. 541;
Lea Bill, H. R. 3383.

80th Congress: Wolverton Bill, H. R. 2337.

81st Congress: Brewster Bill, 8. 423; Johnson Bill, S. 445;
Johnson Bill, S. 2435.

A concise discussion of these bills and the opposition they
met in the Congressional Committees will be found in the
following reports of the proceedings of the National
Association of Railroad and Utilities Commissioners ;

1944 N. A. R.U. C. Proceedings 221

1945 “ “999
1946 “ es 210
1947 “ oe 128
1948 ‘sé “eé 69
1949 “ “ 166

1950 ” m 106

15

For a strong statement in support of the desirability of
exclusive Federal regulation of all air navigation and air
commerce we refer United to the paragraphs appearing
under the heading ‘‘Federal Jurisdiction’ commencing on
page 8 of H. R. Report No. 784, on the Civil Aviation Bill,
78th Congress—H. R. 3420, submitted by Mr. Bulwinkle,
from the House of Representatives Committee on Inter-
state and Foreign Commerce. This statement commences
and reads in part as follows:

‘‘The inherent nature of aviation requires Federal
regulation of all air navigation and air commerce,
Such regulation is provided for in the bill.’

We also quote from the Minority Views of same report
at page 41:

“The signers of these minority views do not agree
with H. R. 3420, as reported by the committee, because
(1) it destroys States’ rights, * * *

‘“*(b) The committee bill (by specific provisions
hereinafter set forth) takes away [emphasis added]
all rights of the States:

‘*(1) To regulate intrastate commerce by air, in-
cluding certificates, permits, rates, and all other mat-
ters normally subject to the State regulation of intra-
state operations of public utilities.’’

As previously stated the minority views prevailed and
the Congress did not take away the rights of the States.
H. R. 3420 was never enacted into law.

‘“‘Appropriate Areas of State Economie Regulation”’ by
Frederick G. Hamley (1946), 11 Law and Contemporary
Problems 488, is an excellent article setting forth views
in support of the continuance of state regulation of air
carriers.

By seeking to have the United States Supreme Court,
by judicial decision, preclude the states from regulating

16

the intrastate fares of air carriers United presents a bold
attack upon our Federal form of government. This Court,
however, has consistently held that it will not construe an
act of the Congress as superseding State authority and
jurisdiction unless the statute be clear and unequivocal on
the point. Mr. Justice Jackson, speaking for the Supreme
Court of the United States, clearly reiterated these prin-
ciples in the case of Davies Warehouse Co. v. Bowles (1944),
321 U.S. 144, 153-155, 88 L. Ed. 635, 642-643 :

‘Simplicity of administration is a merit that does
not inhere in a federal system of government, as it is
claimed to do in a unitary one. A federal system makes
a merit, instead, of the very local autonomy in which
complexities are inherent.

‘*At a time when great measures of concentration of
direction are concededly necessary, it may be thought
more farsighted to avoid paralyzing or extinguishing
local institutions which do not seriously conflict with
the central government’s place. Congress has given
no indication that it would draw all such state authority
into the vortex of the war power. Nor should we
rush the trend to centralization where Congress has
wee

‘“*At least in the absence of congressional mandate

to that effect, we cannot adopt a rule of construction,
otherwise unjustified, to relieve federal administrators
of what we may well believe is a substantial burden but
one implied by the terms of the legislation when viewed
against the background of our form of government.’’

17

D. United Can Comply With the Reparation Order of the
Commission Without Violating the Provisions of
Section 403(b) of the Civil Aeronautics Act (49 U. S.
Code 483(b)).

Section 403(b) of the Civil Aeronautics Act (49 U. S.
Code 483(b)) in part provides:

‘*(b) No air carrier or foreign air carrier shall
charge or demand or collect or receive a greater or less
or different compensation for air transportation, or
for any service in connection therewith, than the rates,

fares, and charges specified in its currently effective
tariffs; °* *° °»%

This Court will note that the terms used therein are ‘‘air
carrier’? and ‘‘air transportation’’ as defined in the Act
and not ‘air commerce.’’ Hence the section applies to
interstate and not to intrastate fares, Concededly the
order of the Commission applies only to intrastate fares.

Even though United does find itself in a dilemma, it has
no right to complain, as its own voluntary actions have
created the situation. Air carriers, like other common
carriers, advisedly should obtain all the necessary author-
izations from the proper regulatory bodies, both State and
Federal, before placing into effect an increase in fares,

KE. The Commission’s Order Requiring Air Carriers En-
gaged Both in Intrastate and Interstate Commerce to
Make Reparation to Passengers Paying Intrastate
Fares for Transportation Between Points im Cali-
fornia in Excess of the Intrastate Fares Included in
Their Authorized Tariffs on File with the Commission
Does Not Deprive Such Carrier of Property Without
Due Process of Law.

As the preceding sections of this Statement in Opposition
to Appellant’s Statement of Jurisdiction clearly demon-

18

strate that the Commission does have jurisdiction over the
intrastate fares charged by air carriers for transportation
between points in California, the Commission’s order
herein under attack, requiring United to make reparation,
does not unconstitutionally deprive United of its property
without due process of law, in violation of the 14th Amend-
ment, Section 1, of the Constitution of the United States

of America.

IV. Conclusion and Motion to Dismiss or Affirm

We respectfully submit that the questions presented in
this appeal have long ago been so definitely determined that
no substantial questions are presented by this appeal en-
titling United to invoke the jurisdiction of the Supreme
Court of the United States.

Wuererore appellee and respondent respectfully moves
that the within appeal be dismissed or that the orders of
the Supreme Court of the State of California and the deci-
sion and order of the Commission be affirmed.

Dated: San Francisco, California, November 9, 1951.

Respectfully submitted,

Everett C. McKeace,
Chief Counsel,
Witsown FE. Cire,
Associate Counsel,
Attorneys for Appellee and Respondent
Public Utilities Commission
of the State of California.

(8759)

IN THE

Supreme Court of the United States

Ocroser Term, 1951.

No. 464

UNITED AIR LINES, INC,,

Appellant,
vs.

PUBLIC UTILITIES COMMISSION OF THE
STATE OF CALIFORNIA,
Appellee.

APPEAL FROM THE SUPREME COURT OF THE STATE OF CALIFORNIA.

BRIEF OF APPELLANT IN OPPOSITION TO MOTION
TO DISMISS OR AFFIRM.

Oscar A. Tripper,
458 South Spring Street,
Los Angeles 13, California,
Attorney for Appellant,
Pau M. Govesy,
Joun T. Lorcn,
Epmunp A, Srepnay,
Of Counsel.

THE GUNTHORP. WARREN PRINT NG COMPANY, 210 WEST JACKSON, CHICAGO

II,

IIT.

IV.

SUBJECT INDEX.

This Appeal Presents Several Substantial Fed-
WORE TID cnc oS vaveus o04ia sdasdeeeesccs

A.

C,

The Order of the Commission, Which Reg-
ulates Fares Charged Both Interstate aad
Intrastate Passengers by United, Is Beyond
the Commission’s Jurisdiction and Is in Di-
rect Conflict With Federal Legislation. .....
The Order of the Commission, as Applied
to United, Places Such a Direct Burden on
Interstate Commerce as to Constitute a Viol-
lation of the Interstate Commerce Clause
of the Constitution of the United States...
The Commission’s Order Assumes Jurisdic-
tion Over a Field of Economic Regulation of
Air Carriers Engaged in Both Interstate
and Intrastate Commerce Which Has Been
Pre-empted by Congress Through the Civil
Aeronautics Act of 1988.............0005.

Compliance by United With the Reparation Or-
der of the Commission Wouid Violate the Pro-
visions of Section 403(b) of the Civil Aeronautics
Act of 1938 (49 U.S. C. 483(b)) and Would De-
prive United of Property Without Due Process
EE cident vob ved walt eh Gewese ORS Sa havin ox

The Availability of a Petition for Rehearing of
the California Supreme Court’s Order Below

Does Not Affect That Order’s Finality

“eee eee

EE y's 40.0 6WE6US bo abs Bed rwaoadiunces cu

PAGE

12

ii

Taste or AuTHoritTies CITED.

Cases.

American Airlines, Inc., et a! v. Civil Aeronautics

Board, .......... F. 2d ......, 3 Avi. 17,702 (C. A. D. C.,
TOGA) oc cccccccccccccccsccccccsesccvsceceusesess 13

B. & O.S. W. R. R. Co. v. Settle, 260 U. S. 166 (1922) 7, 16
Boston and M. R. R. v. Cate, 254 Mass. 248, 150 N. E.

210 (1926)... ccc cecccccceccreceeceveccesveseeers s
Bush v. Bremner, 36 F. 2d 189 (C. C. A. 8, 1929)....... s
Chicago & Southern Air Lines v. Waterman 8. 8S. Cor-

poration, 333 U. S. 103 (1948)... 0.6... eee cree eens 9,12
Civil Aeronautics Board v. Canadian Colonial Airways,

41 F. Supp. 1006 (S. D. N. Y., 1940)... 0.6.66 ee eee 8

East Ohio Gas Co. v. Federal Power Commission, 173
F. 24 429 (C. A. D. C., 1948), reversed on other

grounds, 338 U. S. 464 (1950)... 6... eee e cece 4
Illinois Cent. R. Co. v. Holman, 106 Miss. 449, 64 So. 7

(IDEA) oc cccccccrecsctscnesgevcessoessevedseceers .
Market St. Ry. Co. v. Railroad Commission, 324 U. 8.

GOD (IDE) vc cccnvicecvccccsceccrscesvsesseccoess 17
Minnesota Rate Cases, 230 U.S. 352 (1915).......... 5, 10
Missouri, K. & T. Ry. Co. v. Ashinger, 63 Okla. 120,

SOD Pines GAG CIBEE). 0 iic cd vec cce sets cedvcccscesees 8

Missouri-Kansas-Texas R. Co. v. Northern Oklahoma
Rys., 25 F. 2d 689 (C. C. A. 8, 1928), cert. den. 278

_ U.S. 610 (1928). 0... cece eer eect e eee eens 1€
Nast v. San Antonio, U. & G. Ry. Co., 261 5. W. 1011
(Tex. Com. App. 1924)... 2.0.66. 6 cece cence ee eeees §

Northwest Airlines v. Minnesota, 322 U. 8S. 292 (1944) 1
Sprout v. City of South Bend, 277 U.S. 163 (1928)....

eee

The Daniel Ball, 10 Wall. (77 U. S.) 557 (1870).......
United States v. Yellow Cab Co., 332 U. 8. 218 ( 1947)...
Wabash, ete., Railway Co. vy. Illinois, 118 U. 8. 557

INN Oi tdnvdpeas sxdansuspenceteeeeodearciuc)

Western Oil Refining Co. v. Lipscomb, 244 U. S. 346
GONPE: Vedwn vabues cgyecanncibanctecicte aie

Statutes.
California Constitution:
Article XII, Sections 20 and 22..................

Civil Aeronauties Act (52 Stat. 977, 49 U. S. Code 401,
TID 6 s eeandurnexandsesinsi<sedscdecwel

Constitution of the United States:
PM A IE rela Sats ebook peececa

Other Authorities.

1941 Annual Report, Civil Aeronauties Board, pp. 35-
OP toivevse danaudbunthactyckidsamt i.

73 Corpus Juris Secundum, Public Administrative
Bodies and hig | iM PEG

State Regulation of Economie Phases of Air Transpor-
tation—Views of the C. A. B. 14 Journal of Air Law
and Commerce 356 (1947)

titi ht heehee tthe kaha PT

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0509%3A2. Public record. Not legal advice.
