Petition for Writ of Certiorari — American Airlines, Inc. v. North American Airlines, Inc.

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PETITIO wt €OR WRIT OF CERTIORARI TO THE

“UNITED STATES COURT OF APPEALS FOR THE

‘PISTRICT OF COL UMBIA CIRCUIT

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“Supisdichion ©... 2.05... ee ies rr epteeeees ror aS

Questions Presented ..... SiS SERS SAS RW AN Saw See Oley Tere 2

Statute Involved. Ghee sesenenenet ‘eukaea ans Sree ye ger 33

Statement = ...... Ee ge eoree eer ees VAR ee Raewses ® 5

Reasons. for Granting the W it eke Poeeee wa sevecsaese ee ‘1s

SEO a eres ye a eee ee Cai cae Ca ee ae

Appendix | —— and Judgment Below) Cer ay rere bs i

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: € ITATIONS -

Cases:

Aetna Gestalt & Sure ty Co..¥. Aetna Auto Finance, lzo —

i rs rc ae te a rn eae 16

INDEX

Charles of the Ritz v. Federal Trade "Commission, 143 F. e

ee eh es ah eo Sea chao

DDD Corp. v. Fede sa Trade.Commission, 125 F. 2d 6 >, 662...

Eugene Dicetzgen Co. ve heated Trade C ommisston, 142

ge AR: UCASE Seated ry Sa ee ere eae 2}

‘Federal Trade Commission V. ee P.W. Paper Co., 328 U.S. 193° A

Federal. Trade Commission v. Algoma Co., 291 U.S. 67, 81. ..20, "25

“Federal Trade Contmission v. Gratz, 253 U S. 421, 427-428.

. he 16, 20, 23

Federal Trade Commission V. Ki: ppel do Bro., 29) U.S. 304,

BU See ak Pe ei ae he cee es Vaan SP Te Prt 20, 28

Federal Trade ‘Commission’ V. Klesner, 280 U.S. 19..%.. “3, 15, 23

Federal ‘Trade fmmission -v. Milling Co., 238° us . ZF,

217-218 cence eee eater tected eee ee ee teen ee ee eee dd, 25

Federal Trade Commission v. Morton Salt € 'o., 334 U.S. 39°” 17

Federal Trade Commission v. Motion Picture Aw. : Co... 344

Se SS a Lele oe eek Aca Ra Oe CK La cries 26

23 Pedsrel Trade Commission v. Raladam Co., 283 U. 643. 648

-¥ ""T6. 18, 21, 23

Federal Tr ade Coiniibaaen v. Real Products Corp., 90 F.2d 617 24

Federal Trade Com%nission v. Ruberoid Co,, 3483 U.S. 470... -17

Calter v. Federal Trade Commission, 186 ee OO aca eens 24

Gimbel Bros. v. Federal Trade Commission, 116 F.2d "578, 579 -19

Greyhound Corp. v. Goberna, 128 F.2d 806, 807-808......... 17

Fillman Periodicals v. Federal Trade Commission, 174 F.2d

° 122

Heuschold Finance Corp. V.. ‘General Finance Credit Corp.,

49 F, Supp. 541, 542 ............. Darts eevase ciate vee 19

= a Index Continued

Page

Jacob Siegel Co v. Fede ral Trade Commission, $27 U.S. a ,

eh, WUE oo xs y ee eka wah ce tee Ru beeeeen uve uae pt

Koch v. Federal —— Peasnsloaisil 266 F: 2d 319319 .:.... 20

Moretrench: Corp,.v. Federal Trade Commissioi, 127 F.2d 2

792 4a 795 D as K6 Mee Ce CES oe Beh EES OO Bee SO a Oe cee Fae 25

ony Club vy. All Nevy Club, 85 F. Supp. 679, 682... +... 9

New American Library vy. Federal Trade Commission, 2138

EE Eee PEE Ce eee LEN PVT ee 21

Ohio Leather Co. v. Fede ral Trade Coumineion, 45 F.2d 39, 41h 21 °-

Pep. Boys—Manny, . Moe and Jack vy. Federal. Trade Com- —

monmnem, TES: FOR 206, BOE <. 5 oan 5 $5 Nes wages «ss er 6 ae

* Radia Officers v. Labor Board, 347 US. 13, pee ae 27

S.C. Johnson it Son x, Johnson, 175 F.2d 176, 178 2.0.2... 24

- Schechter Corp. v. United States, 295 U.S. 495, 5886.5... 16

Standard Oil Co. of Maine v. Standard Oil Co: of New York,

ee es | Es rr a rer Pi ona Py |

Standard Oil Co. of New Mexico v. Stawlard Oil Co. of Calif.,

tee fo BP ART tae ane whe ahre et roy V7

_* Stork Restaurant v. Sahati, 166 F.2d 348, 359 ....0......... 19

Universal Camera Corp. v. Labor Bd., 340 U.S. 474, 488°. "26

Statutes: . 5

Civil Aeronauties ron $411, 49 U.S.C. § 491 ake te alah ot < ee

Federal ‘Trade Commission Act, § 5, 15-US-€: $45... 2,4

Lanham Trade-mark Act, 15 U.S.C. § 1045’... 3 akan ee kees 24

Packers rage Stockyards Act, § 202, 7 U.S.C.A.’ § 192(a) peckta: GS

Tariff Act, § 337, wig S.CLA. $1337 PPCM TES SG OMRON SoG Oee 30

Webb Export amt. 4 CS PBCA 1 co.

sisal: die «

Beer, Federal Trade Law and Practice (1942)............... 22

’ Blaisdell, The Federal Trade Commission (1922) ....¢...... 23

Handler, Unfair Competition and the Federal Trade Commis- |

sion, 8 Geo. Wash. L. Rev. 399, 404 ...0.............. 20, 25, 28

Watkins, Appraisal of the Work of the Federal Trade Com-

mission, 32 Col. L: Rep + Be | Rene Ree eres 2%

S. Rep. No. 221, 75th Cong. Ist Sess. (19395, ee Ne rare a 22

eee er

Supreme Court of the Mnited States.

| --* OCTOBER TERM, 1955 : grins

fos

No.

: . ; : Q ‘

v x * . . .

AMERICAN AIRLINES, INc., Petitioner, - .

; : ‘ +) -

eR eee eae ¥.

NortH AMERICAN AikLINES, INc., Respondent. —

__. PETITION FOR WRIT: OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

@

‘Petitioner prays-that a writ of certiorarf issue to

review the judgment herein of the United States Court .

‘of Appeals for the District of Columbia Circuit which

reversed an order entered by tlie Civil Aerofiautics |

Board. .-, | or at - 8

* OPINIONS BELOW

The opinion of the Court of Appeais (it. 411-435) is

printed in the Appendix hereto. It(is not yet reported.

The opinton of the Civil Aeronautkes Board, together

with those findings of its Examiner as were specifically

adopted by the Board, appears at pages 199-229 of the

Record herein. The full Initial Decision of the Exam-.

iner is reported at pages 183-199 of the Record.” . |

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| 2 _ JURISDICTION

The judgment ofgthe Court of Appeals was entered

on June 23, 1955 (R-411). No petition for rehearing

was filed. The jurisdiction of this Court is invoked -

under 28: U.S.C. 9 I: ma P.

QUESTIONS PRESENTED

Section 411 of the C ivil Aeronautic ‘S Act (49 ULS.C.

-.§ 491) as adapted from Section 5 of the Federal. Trade

- Commission Act (15.U.S8.C. § 45) and is designed to:

prevent ‘unfair or deceptive practices or unfair meth-

ods—of competition iy alr transportation. The Act

empowers the’ Civil Aeronautics Board, either on com-

plaint of an air carrier or on its own initiative, to:

institute a proceeding. ‘‘if it considers that such ae-

tion by it would be in the interest of the public’? and,

after notice and hearing, to order an air carrier to

cease and desist from continuing any violation found

by the Board. = : |

f From 1920 .to 5 1930 Section. 9) of the Trade Commis-

sion Act was seriously crippled by rulings and dicta.”

effect: that antair ~-

in opinions of this Court to tl

methods of competition require a

deception of consumers by palming 0

a competitor. Such views, however, were subsequently

repudiated, by Congress and this ( ‘ourt.

showing of fraud,

In a Section.411 proceeding before the Civil Aero-

nauties Board where the air carrier requests an order

to preyent a competitor from continurng to advertise

and use a recently adopted same confusingly: similar

to the name of the complainant carrier previously long

established and extensively advertised, and where-a.

cease aml desist is entered on-the-basis of. the findings

of fact revealing that the similarity of: names causes”

~

and injury to:

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. . . ™~

i s

the public widespread and serious confusion and in-

_ convenience thyough checking in with the wroug car-.

Tier, attempting to purchase trausportation fron: the

Wrong | eartier, secking baggage from the wrong car-—

rier, meeting fights oF the Wrong carrier, and other-

Wise : é y : i

‘Is Section 411 to be seriously exippled by a judi-

cial gloss—ideutical with the early but now re-

pudiated views of Section 5 of the Trade Com-

mission. Act--holding thatthe cease and desist

order eliminating: the public confusion. must be- ~~

reversed on the ground that there can. be no un-

fair or deceptive practice and no unfair method -

of competition unless there is a showing of fraud-

- ulent intent to deceive, ‘‘yalming off’? by decep-

tion, and injury ‘to a competitor?

2° Ddes any vitality remain in the rule announced

in Federal Trade Commission. v. Klesner, 280

: : - US. 19 (192 9), to the-effect that public infer-

Section 5:of the Federal Trade Commission Act,

au if so, to what. extent, if any, does the Kles-.

ver rule have application in a Section’ 411 pro-

ceeding-heforé the Civil Aeronautics Board whose

jurisdic tion, unlike the Federal Trade Commis-

sion’s extends over -a specific segment of the

national economy in which the Board is. truly

a specialist in determifiing the public interest ?

STATUTE INVOLVED ? \

e Riadicn 411 of the Civil Aeronauties Act, \2 Stat.

1038 (1928), as amended 66 Stat. H28 €1952), JIS.

» 491, reads as follows: | : ;

The re ivil Acronautics]~Board may, upon its

own initiative or upon complaint by any air ear-

rier, Boreign air carrier, or tieket® agent, if if con-

siders that such action by it would be in “the inter-

est of the public, investigate and determine

est”? is an issue subject to judicial review under —

whether any air. carrier, ‘foreign air. carrier, or

“y

é

4

tie ‘ket agent fine been or is engaged in unfair or

deceptive practices or wnfalr methods of conzpeti-.

“tidn in air transportation or the sale théreo{. If

the Board shall find, after notice and hearings Mhat

such air carrier, foreigt@#tir carrier, or ticket agent, ‘

_is engaged in such unfair or deceptive practices vr

unfair methods of, competition, it shall order such

air carrier, foreign air carrier, omticket agent to.

cease and desist from such practices or, anethods of

competition.” : : —s : .

?

While there are consider able differences in. form, it

will be noted that there is a close substantive similarity

between the foregoing section and Sect mn 5 of the

Federal Trade Commission Act, pertinent excerpts

al

j~4

from which are poe & in the margin." A’ eaienpets

*“Sec. 5. (a). U ifair niethods of competition. in commerce; and

unfair or deceptive acts or prectiogs in commerce, are declared un-

lawful . ao

* * *

“The, Commission is empowered and. directed to prevent per- |

sons, partnerships, or ccrporations, except banks, common’ car-

riefs subject to the Acts to regulate commerce, air carriers and

foreign air carriers ... from using unfair methods of competition

in commerce. and ree or. deceptive acts or practices in com-

merce :

. any such person, partnership, or corporation es been or is using

any unfair method of competition or uyfair or deceptive act or

“(b): Ww henev er the ¢ ‘ommission shall have reason to believe that .

practice in commerce, and-if it’ shall appear to the: Commission -

‘that a proceeding by it in-respect thereof would be to the interest

of-the public, it.shall issue ... a complaint stating its charges . .....

If upon suelr hearing the Commission shall be of the gpinion that

the method of competition or the act or practice in question is

‘prohibited by this Act, it shall make a report in writing ... and

shall issue’... an order requiring such person, partnership, or cor-

poration to cease and desist from using uch method of competition

or such act or-practice."" 3s Stat. 719 (1914), as amended, 52 Stat.

TIT: (1938), 52 Stat. 1028 (1938), 64 Stat. 21 (1950), 66 Stat.

632-(1952); 15-U.S.C. §.45. . | ee ee ee »

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difference between the two is that the-¢ ivil Aeronautiés: ’-

Act, unlike the Trade Commission Aet, empowers the

Civil Aeronautics Board to proceed upon a complaint -

by an air carrier as well as upon its: 6wn- initiative.

po ee es

This is the first case in-court involving the interpre-

tation and application of Sectioil 411 of the (Civil -

Aeronautics: Act. Rese ae

The petitioner, Amerigain Airlines, Ine., is 5; aoe

in air. transportation pursuant to certificates of public

convenience and necessity under the Civil Aeronautics

Act (R.°220).* In 1934 it-was incorporated under its

present name and ever’ since has engaged in. extensive

air carrier service, s checuiled and otherwise, under

the name ef Aiteridies Airlines; | its predece ssor* had

also operated extensively as an air carrier undér the

name ‘American Airways’’ -for four years prior to

the inéorporation of the petitioner ((R. 220). ‘In-the

words *6f the respondent’s counsel, petitioner is con-

sider ‘d‘‘by a great part of the trav eling publie prob-.

‘ably the top airline, the best known airline, in’ the

United States” (R. ee os bs ;

= he 1 resppndent t& a North Carolina corporation, but

“its principal office is in California (R. 1). It engages —

in air tr ansportation as a large irregular carrier under

the ‘authority of a Letter of Registration issued to it

v'the Civil Aerorfiuties Board pursuant’ te Section

416 of that Act (R. 3-4): At the time of the issuance

of the Letter of Registration, *respondent’s corporate

name was ‘Twentieth Century Airlines, Inc. and the

“Pages 1 through 317 of the Record consist of the Joint Ap-

pendix below which had the same pagination,

tt ee re

é : : :

a “so -4

“ ‘ : bs re; a 5 -*

: é

—~

.

. Lette ry ot. Registration was, ixsuied, to mon: that. Hale

RE 5-4). Without making any effort to change its

registered name and without nétifving the Board in

-any manner, the respendent ow April 21, 1951 -began

offering air ‘{ransiortation services to the public under. *

the fictitious name of North: American, Airlines (Ro

S20, 309). Ther ‘eafter, of: May 21, 1951 the respondent

filed in the office of the County ‘Clefis of the Cotnty of.

* Los Angeles, California, a certificate of condue ‘ting

‘business under the fictitioys name of North American

Airlines, and on Mareli 3,,1952 it amended its articles

-§f incorporation so as to change’ its | Binge name

from Twentieth Century’ Airlines, Inc.° to - North

American Airlines, dne. (R. 1). ¢

The petitioner and the Sos sadn directly compete

on one of the most he: ivily travelled air routes inthe

country—Los Angeles-C hie; ago-New York (R. 220).

On’ August 19, 1952 the Civil Aeronautics. Board

adopted its Business: Name Regulation, and the section |

-here involved appéars\as Part 291.28 of the Board’s

Economic, Regulations (R. 295-298 ; 14 C.F.R. 291 20)e

~The validity of this Regulation has not been aia.

lenged. In substance, the Regulation provides that:

an air carrier, in dealing with the public and in per-

forming air transportation services, must secure per-

mission of the Board to use any name different from

the name in its operating autherity. In the preamble

-of the Regulation, however, the Board announeed that,

where a different name has already been used by a

carrier, to. build up. goodwill, such nime will be barred

only if its use is found after notice and hearing to

contravene Section 411 of fhe Civil Aeronautics Act.*

' ™The full te xtof the re -vulation and the prefatory statement is

printed at pp. 995-2 208 of the Record. This regulation’ appears in

> e .

4 eels on

i .

» @

Pursuant to this Re ul ition, the responde nt'applied to °

the Civil Aeronautics Board on, Oc tober 6, 1952 for

permission toruse the name North. AY mericapy Ais lines,

Ine. Ri 1) and the proceeding on'tlie appHeation was

assigned Docket No. ore CR. 5).

The petitioner thereupon objected to the grant of

the application in Docket No. 5774, and complained

that the use and adv ertising of the wame North Amerj-

‘an Airlines caus ~ pubHe to confuse the identity

of he respondent with@hat of the petitioner and con-

stitdted an unfair or “dec ‘eptite: practice -or unfair

method 6f competition in violation of Section 411 of

the Civil Aeronautics Act (Ht. 5).

The Civil. Aeronautics - Board. ina single oNler set.

for heari ing before an Ex: uniner. respondent’s applica-

:tion to change its’ registered name, Docket No.. 5774;

assigned Docket No. 5928 to a proceeding under See-

tion 411 of the Act in response to the, petitioner’s ob-

Jeétion and complaint. that use of the name North

American Airlines was in violation of that section;

and consolidated the proceeding in Docket No. 5774

With the preceeding-in Docket No, 5928 for hearing

hefore the same Examiner (R. 3-5).. In another order

‘the petitioner, as the complainant, was permitted to

intervene and become a party to support’ the allega-

tions in its complaint to the Board CR. 7).

4 ( P he. $291 DR, but there the pref fatory statement hae honk

omitted. It shonld alse be noted that several regulafions—substan-

tively. identical_—were adopted _ simultaneously, each regulation

being applicable to a different type of carrier in’ ace ‘ordanee -w ith ©

their different types of ope rating guthority. -Thus, one regulation

was applicable to carriers holding certificates of convenience and +

necessity (14 C.FLR.§ 202.8), w hereds another regulation Was ap--

licable to the large irregular chrriers: holding letters of registra-

tion (14. CER § 291.28), °°

"md.

ro)

8 :

f ° 3

Oo

. The only issue in this consolidated proceeding was

» Whether the respondent's use of and advertising itself

-under the name North Aineric ‘aay Airlines, Ine., Cor

“North American’?) was an unfair or dec ‘eptive: prac.

tice or an unfair method of competition gexeenl the

purview of Section 411 (R:210, n. 10).

At the: hearing. before a Civil Aeronautics Board

Examiner in the consolidated proceeding, both the peti-

tioner (R. 221) and the resp: mdent (R. 223) introduced.

evidence. Sixteen witnesses testified and numerous,

- exhibits were received in evidence. . In due course the

Examiner issuéd an|exhaustive Initial Decision finding

. that the. respondent's. use of the North American name

violated Seetion ‘411 (RR. 184-199).- The réspondent

filed élaborate exe eptions with the Civil Aeronautics

Board; and after the’ normal procedure of briefing and

oral argument (R. 200) the Board issued, its decision

-ateompanied by an. opinion (R, 199-229) in whieh it.

specifically adopted numerous of ;the findings made

' bythe Examiner and entered additional findings and

conclusions of itXewn, on the hasis of which it entered

a cease and desist order agaist the respondent under

‘Section 411 ay 229-230).

FINDINGS AND? DECISION’ OF THE IVIL Aeon AU ries Bo ARD , -

On the evid@ee the Board found that .the publie

confused the: respordent with thé petitioner because

ofthe respondent’s usd of the names North American

and North American Airlines: and their similarity to

the names-e ‘ommonly- understood te-refer to the peti-

tioner, i.e., American and American Airlines (R. 201). °

* Both be fore the Board and before the lower court the respond. 7

‘ent argued that the words ‘Amery an’’ and ** ‘Ameritan. Airlines’?

have ‘not acquired a secondaf® ineahing signifying the petitioner.”

; * * > e 5 < ~ < 2

.

‘ ,

- : - i 9

This confusion existed not only among passe ngers and,

persons | inquiring for Hight information, bat even

among merc ‘hants and. creditors? (R. 201-202 )——thongh

Fi he pulk of the ¢onfusion shown in ‘the record wase

on the part of persons reasonably identified as pros-.

pective ‘or actual purchasers of air transportation’

(R. 202). ; ‘8 — rae ee eee

Litowine. the Board: iniaely 3 rejected the respond:

ent’s eontention that the confusion was not ‘‘substan-

tial or wi idespread”” (R. 204-205).° While the Board ©

found it unnecessary to endorse the Examiner’s: numer-

“ical estimate that the instances of confusion in the.

Los@ingeles area alone amounted to some 20@a-week,

‘its amalysis of the evidence showed that the confusion.

was, indeed,’ substantial in amount and was’ not de

minimis as the,respondent had contended (R. 205-206).

The nature-of this widespre ad confusion was found

by the Examiner, In findings adopted bythe ‘Board,

as follows:

—**'The above evidenee generally i Inv olvea numer-

ous inquiries on the part of the public made to

American ‘employees concerning service, rates,

routes, and schedules of North “Americ: an under

the mistaken impression that North American and

American were one and the same airline.

“An: officer of Alnerican testified that he had

received .from employees under, his supervision

numerous ——— indicating confusion between

The sie vourt’S opinion does not adopt the riaipondent’ Ss view,

and the Board’ s findings of fact are quite conclusive ;

‘There is no doubt that the word American, used in connettion

‘With domestic air transportation, is widely known as meaning the

‘| petitioner] .. and that the phrase American Airlines is also un-

- defstood to refer to [petitioner] a and not to denote the airlines

in |

of this nati¢n or continent generally.’ (R. 907) .

Ae de Se 7 ae 10

American Airlines and North American Airlines, |

and that * * * his office hdd receiyed a tele phone

eall from a representative of a trade unien, ¢am-

plaining that-an Américan sign was being painted

by non-ynion painters, and upon investigation it

Was found that the sign was that-.of North Ameri-

ean, “There were ifistances of airspassengers hold- .

ing North American tickets attemptlnug to check

ju for North American flights at American ticket

counters—im fact, at the Burbank. offiee this was

.a daily eccurrenice—and. many of the passengers

“were still confused after an explanation had been

made that American and North Anierican were two

different airlines. There were jnstances where

North’ American passengers attempted to claim

their. baggage at the Aamerican connter p also other

instances. where prospective. passengers. insisted

they were entitled to a discount for se sr

on American becanse they held a ‘Buyers League

Strip Hook " Uporyan investigation by the pas-

sengers making the.inquiries, it was learned that

it was North American instead of American which

offered a discount, .

‘*There were other ang es of: pers ms meeting.

_ineoniing North American passengers who. made

inquiries at the American ticket counter at Bur-

bank to determine time of arrival. , Other inquiries

were made of American agents at Los Angeles con-

cerning an $80 fare from Los Angeles to New York,

which the persons had heard advertised on tele-

Vision, and upen investigation it was found that

it was North American thev were referring to and

not American. One witness testified that she had

heafd people state that they were under the im-

_ pression that North American and American were

the same or affiliated companies. Another witness:

for American testified that one person insisted that

American flew from New York to Miami because

‘she had heard a radie& program to that effect,

whereas the program in question Was that of North

Amevican: There were instances where mail ad-

dressedeto North American was delivered to

American Airlines’ office. Tradesmefi have dunned

American for bills Gwed by North American and

hotels have tequested Amrerican’s advice as to

billing for hotel charges 1 imeurred by North Ameri-

* ean crews. A witness for American stated that

~ at its Burbank office the president of North. Amer-

ican, who is on duty at the Nerth American ticket

counter at Lockheed air temainal, informed her

that many persons: would stop.at his couriter and

request tickets to Dallas, Oklahoma City, or Tulsa,

points which North American did not serve, and

he would realize thaethe passengers. were —

and that they were under the impression it wa

American's ticket counter. The president further

stated to the witness that if the passengers were

destined to New York or Chicago he would do.

ever ything he could to gteal: them.

“There were: many other instances similar. to

those referred to above that need not be repeated

here. In general, they indicate that certa@H+ con-

fusion exists on ee part of the public in distin-

guishing the. servires®of the two airlines in ques-

tion.’ (R. 221 1-223) (Emphasis. added) .

The respondetit had also argued to the B oard that

there was no showing-ef actual fraudulent intent in

the adoption of the North American name. The Boafd —

made no: specific finding that there was such intent,

but did find that the name was adopted when ‘‘Ameri-- —

can Airlines was universally known in .air transporta-.

tion’’, and that the use 9f a similar name was ‘‘not -

accidental. or inadvertent, but-rather was knowing.”

(R. 207). It was also found that the. renpondent s own

evidence showed that it advertised itself as ‘tone of

the nation’s four gréat airlines’? which was not “even

close to being true of respondent”, wheftas Americ: in

.

\

)

eae

‘is in fact one ef the four largest domestic air carriers,

a group. commonly referred to: as the ‘Big Four.’ ”’

(R. 207, 208 n. 8.) |

F aed the Board found:

... the recor dis convincing that the publie inter-

est requires this-action in order to prevent further

‘public corffusion between ¥espondent and* inter-

~ Yenor due to similarity of names. The maintenance

of high standards in dealing with the- public is

expected of common carriers, and the public has a __

right to be free of the inconveniences whieti flow.

from ‘confusion. between carriers engaging in the:

- ‘:transportation of persons by air. The speed cof

dir travel may well be diminished when passengers - |

check in for flights with the wrong carrier, or at-

tempt to retrieve baggage. from the wrong carrier,

or attempt to purchase. transportation from the

wrong carrier, or direct their inguiries to the wrong

carrier. Friends, relatives or business associates

planning to meet passengers or seeking informa-

tion on delayed arrivals aresubject to annoyance

_or worse when confused as to the carrier inivolved,

The proper handling of complaints from members

of the public is impeded by confusion as to the

carrier to whom the ¢ oniplaint should be presented.

The transportation itself may differ'from what the

confused purchaser had anticipated (e.g., in terms |

of equipment ),-even though the time sak place of

~ arrival may be about the satne. It is obvious that

public conftision between’ air carriers operating.

between the same cities‘is adverse te the pubhe

‘juterest, and we have determined that the public

should be protected from the effects of the confu-

sion shown on the record: by eliminating what we —

tind to be the cause of such confusion.” -(R.

208-209) :

~The Board concluded, as had its Examiner, that the

= 7 . .

respondent’s use of the name ‘‘North American Air-

©

lines’’, “North American’’ or any combinatian of the.

word *American’’.constitutes an unfair’ or deceptive

practice and an unfair method of competition (R. 210-

211). Accordingly, it determined that the respondent

and its agents should be ordered to cease and desist

from engaging in air.transportation under such names

(R, 210-211), arid “an apereprs ite order was entered

(R. 229-230). 7 . eam eg ;

One of the five Board members dissented, with a dis-

senting opinion (R. 211- 718). ie | |

_ The Opinion AND DEcISION OF THE ‘LOWER CouRT

~The respondent duly petitioned ‘the lower court -to

review the Board’s or der. The petitioner intervened |

(R. 311).

The issues on the appeal were precisely detined by

prehearing stipulation‘appreyed by the court (R. 306-

311), Those ‘issues, it was agreed, were limited to

the following: ©

a

1. Did any combination of thes Board’s findings —

“establish a -violation of Section 411, beeause of .

the use by the [respondent] of the name North

American Airlines, Ine., North Americ an Airlines

or North American’’? fans. |

. Nid the Board's findings ‘establish a secondary

meaning ¢ onnoting American Airlines, Tne., in the

words ‘American’ and ‘American Airlines’ a

Did the Board find that the respondent’s use

.of the North American name was fraudulent ?

‘The only other issues set forth in the agreed statement

related to questions as to whether various of the find-

3°

an

ings as to the existence of confusion, ‘its probability,

ete, were supported by substantial evidence.*

The lower’ ecourt’s opinion Giarot overturn the

Board’s findings-of fact. On the contrary, it quoted

some of the findings and paraphrased others, and

referred in summary form to.a part of the evidence.

~The defect it found in the Board’s decision was, as.

‘respondent had contended, that fifidings essential to.

_a Section 431 case had not been, made.

The opinion below ‘consists. of five. separately: num |

bered sections. In Section l—which coricludes that

the ‘terror of the Board stems” from the failure to |

make “findings demanded by the law’’ (R. 418; infra

p. vii)-—there is set forth the nature of the missing

findings which the court reg rarded as essential. The

discussion «begins | with’ a “quotation of ‘a statement

‘made by the Examiner in his Initial Decision:.’

-**There is no evidence of record that North Amer-

ican adopted its name with intent to deceive. the

public or trade upon the good-will and business

reputation of American, or that Aderican has

been injured by such operation . ..’? » (Emphasis

added ) (R. 417; infra; p. vi)

The aiurt’s opinion then says that its examination of

the evidence shows that the Examiner’s s negative find-"

o

-* Ite will be observed thay on the appeal no issue was tendered

bearing on the scope of. the Board’s order or its appropriateness as

a — for re amedying the Section 411 wiolation if such a violation

e properly found to exist. ence the: problem fae with in|

Jacob Siegel Co. v. Federal Trade Commission, 327 U-S, 608, 612-

613 (1946), as to whether some alternative fortis of cae should

have been entered, is not involved in this case. See also, F ‘ederal -

Trade Commission v. Milling Co., 288 U.S. 212, 217-218 (1933).

4

15

ing was correct. It also says that there was no evi-_

dence that the respondent had ‘nalmed itself off""; or

that the respondent. had derived: advantage from the

. confusion of passengers ; or that, by its advertising, re--

spondent had *tenticed’? American’s passengers .t@&-fly,

North American; or that respondent had flown a single

passenger who thought that he~ had contraeted for

something other than respondent’s transportation CR.

417-418; infu, p. vi). Accordingly, “*there is no dem-

onstration that North American affirmatively acted

in violation of a statute,within the jurisdiction of the

Board’’ (R. 418; infra, p. vil).

Subsequent sections of the opinion leave it unclear.

_whether findings of deliberate intent. to deceive -and

of injury to a competitor are regarded as essential

under the “public interest’? language of Section’ 411

-or are required as part of the substantive offense of

“unfair or Gecepuye pr actices or unfair methods of -

re ‘ompetition.””

Section I] of. the opinion notes that the legislative

history of the Act shows that the public interest was to

he the guiding consideration and that Section 411 was

adapted from Section 5 of the Federal’ Trade Com-

mission Act (R. 4419- 4292: infra pp. vii-x). And in the

first paragraph of Section I1I,the opinion proceeds on

the public =e theme by quoting Federal Trade

Conimission _ Klesner, 980) U.S... 19 (1929). -to the

effect that aout 1 on the part of purchasers is not

enough to establish a Seetion 5 case but that the pur-

pose of such a proceeding ‘‘must be protection -of the—

public.”? (R. 423; infra p. _

* The Board dia not imebade this negative finding among those

adopted by it. ;

¢

ze ee

The remainder of Section III, however, appears to

_ be cone eriied primarily with-the substantive content

of. “tunfair methods of competition”. It quotes the .

dictum from Federal Trade Commission Vv. Gratz, 253 |

U.S. 421, 427-428 (1920), that the statutory ‘words

‘unfair methods of competition’... are clearly inap-

‘plicable to praetices never heretofore regarded 06s

deception, bad faith, fraud or oppression... .’”. (R:

423; infra p. xi)- But thereafter Section II] ‘of the

opinion seems to telescope into a single concept the

separate statutory points on ‘‘yublie interest’? and

“unfair or deceptive practices or unfair. angthods of

competition’, rélying on Schechter Corp. v. United

States, 295 U.S. 495, 533 Serre and Federal Trade

“Commission vy. Raladam Co., 283 U.S. 648, 648 (1931)

(R. 423-424 ; infra pp. xi- oie

Section IV of the opinion sets forth at considérable

length wliat it says is a ‘collateral. discussion”’ (R.

428; infra p.-«xvy of numerous eases dealing with the

private law of trade name infringement (R. 424-430;

infra pp. xii-xvi) ‘and asserts that the Board was not

constituted to adjudicate such ‘complicated. issues”’

(R. 429; infragp. xvi). Significantly the opinion adds

stances can name appropriation 1D simulation of or

in general resemblance to the name of ‘another airline

result in an unfair trade practice or an unfair methed

of competition, quite the contrary’? CR. 429: in fre p..

xvi). To this statement there is appended # footnote

citing four private name infringement’ cases, each of

which involved frandulent intent on ‘the -part of the

defendant.* The eonclusion in Section TV of the opin-

—- ~ . . . r } a

“* The cases cited abe: Aetna Casualty & Surety Co. v. Aetna

Auto Finance, 123 P2d 582, 584 (th Cir. 1941) (there it plainly,

| - that the court would *‘not say that under no cireum- -

Q

a: \

] \

ion is that the me ‘re combination of thie words “North”? | oo

and **American”’ is not a case within the Board’ s Sjur-

‘isdic tion’? CR, 429- 430; infra p. XVr).

Finally the opinion asserts in Section V. the-rule

that protection of a name, is beyond the scope of th®.—

_~ Board’s powers (R. 432; infra p.xviii). The opinion

’ states that it is “reinforeed”’ in this conclusion by a

9

review of the “leading cases’? of this Court dealing

with. Section 5 of the Federal Trade Commission Act,

which it summarizes in an Appendix to the opinion. ———-

Manv of these cases have-ne-rentote hearing on the

instant case.* However, very significantly the Ales-

e,

-ner ease is summarized as follows: * eobie

‘refused enforcement where’ niere, confusion

aU competing business names failed to establish

‘specifie and stibstantial’ public interest.’ a 433

infra p. Xix) (émphasis added )

‘Also meaningful is the sinmary of Federal Trade

Commission Vv. A. P.W. PaperCo. ,228US S. 193. (1946),

. in these terms:

appears that [the name is}... fraudulent and will be enjoined”’)

Greyhound Corp. v. Guberun: 128 F.2d 806, 807-808 (5th Cir.

a i gee

1942). Choice of the name ‘Greyhound’ .. .:was . . . fraud-' ‘

ulent’*); Standard Oil Co. of Maine v. Standard Oil Co. of New -

York, 45 F.2d 309, 312 (ist Cir. 1930) (' {The fame] shows a

premeditated plan ... with but an obvious and sinister purpose in

view’), Standard Oi Co, of New Mexico, v. Standard Oil Co. of

Calif. 56 Fd 91, 980 Cloth Cir, 1932) Chit eoyld have had but

cone object, namely, to improperly obtain... the name “Standard

Oi and to take and commervially: use as its. own a commercial

asset that belongs to another”

* E.a.. Federal Trade Commission v. Morton Salt Co.. 334 U.S.

39 (1948): Federal Trade. Commission W Ruberoid ‘Co., 343° U.S. -

70 (1952), and-other cases under the Robinson-Patman Act in--

volving’ issues Wholly Yinrelated to the case at bar.

18

oo. refused enforgement of aC ommission order

forbidding the use of ‘Red Cross’ in advertising

where there was no fraud but where some. of the’

public thought that goods were made in accordance

with standards of, or by virtue of some,cornection

‘with, the American Red Cross.”’ (R. 484-435;

infra Pp. xxi) (Emphasis added) _ | .

And Federal Trade ( Commission -v. Raladam. Co. 283 Fe

U.S. 643 (1931), is summarized as follows:

pape te tO on

‘+. . denied enforcement of an order against a

dangerously misleading obesity *cure” where there

was .a failure of demonstration that advertising

‘substantially injured or tended. thus to injure .

the business of any competitor or of competitors

generally .... 7’ (R. 433; infra p.. XIX }

In sufn, then, the lower court held that, in a name

‘confusion case, there is no unfair practice. or unfair

method of competition ‘‘over which the Board, in the —

publie interest, has jurisdiction”’ (R. 430, infra Pp. Xvi)

unless there is Shown (a) deliberate intent to deceive |

amounting to. fraud and success in ‘‘palming’ off”

by deception, and (b) actual. injury to a ‘competitor

in the form of loss of patronage resulfing from ‘‘en-

ticement”’ of ¢ onfused customers. Absent these factors,

the court’s ruling is that confusion .of thé publie by

name similarity is a matter only of private concern

quite bevond the power. ef the Civil Ae ‘ronautics Board

to remedy. hye | | , -

REASONS FOR GRANTING THE WRIT

1. The court below, in hoiding that a ‘case of. statue.

tory unfair practice and untair method of competition

requires a showing’. of deliberate intent te deceive

which is carried out’ through *palming off by de

ception, is in’ conflict with decisions” of Courts of

19

_ Appeals for the Third, Seventh and Second: Circuits

under Section 5 of the Federal Trade € ‘ommission Act,

the substance of which is the same as: that of Section

411 of the Civil, Aeronauties Act: The lower court

‘specifically ruled that it was applying its view of

Section 5 of the Trade Commissjon Act (R. 432; infra”

p. xViibk).. tie is

The Court of Appeals for the Third Cireuit in the

leading case of trade-name confusion under Sec tion 5

of the Trade Commission, Act, his squarely held. that

a “deliberate effort te deceive is not necessary, nor

must the Commission find actwal deception. .. °’? Pep

Boys— Manny, Moe and Jack v. Federal Trade Com-

mission, 122 F. 2d 158, 161 (3d Cir. 1941). ‘S: milarly,

the ‘Seventh ‘Circuit has held ‘that the false, unfair

or dechptive acts defined in the Federal Trade Com-

mission Act need not be such as would. constitute. fraud, ;

as that term is trdinarily understood in law.”? DDD

Corp. v. Federal Trade Commission, 125 F.2d 679, 682

(7th Cir. 1942). And in the Second Circuit, the failure |

of the Commission to.‘‘produce consumers to testify.

to their deception does not make the order improper,

gre e actual deception of the publi¢ need not be shown

.. 2?) Charies of the Ritz v. Federal Trade Commis-

sion, 143 F. 2d 676, 680 (2d Cir, 1944). See also, Grim-

bel Bros. v. Federal Trade Commission, 116 F.2d 578.

V79 (2d Cir, 1941) (ra delibe rate effort to deceive is —

. hot necessarv’™)* -

¢ Several other courts have applied the same ‘rule in common

law cases of wetair competition, especially where only ec wogee

vlief in the future is redjuested. Navy. Club. v AW Navy Club,

F. Supp. 67% 682. CD RL 1949) ; . Hotne hold) Finanee a Vv:

Generad Finance Credit Corp., 49 BF. Supp. 541, 542 (DIN:T. 1943) ;

ef Stork Restaurant v Sahay, b66° F 2d B48, 359 (9th Cir, 1948). -

ey

7

j

20 .

In short, in+tése three circuits the controlling con-

_—atdtration is the probability that the publie may be:

misled, not a showing of delibe ‘rate intent to deceive

amounting .to fraid—and not a showing of palming

off by deception in the conventional sense of common

<

law unfair competition: : ,

‘Theylower court’ establishes contrary doetrine’ for

the District of Columbia Circuit by a revival of ah old

dictum in Federal’ ‘Trade Commission Vv. Gratz, 253

U.S. 421, 427-428 (1920), to the effect that the statu-

toryounfair method of competition is limited to cases

of fraud, deception, and bad faith in, busit@ss ethics

as understood prior to 1914 (R. 423 ; infra p. xi). It

has beer thought. by sonie stident?, Handler, Un- — -

fair Competition andthe Federal Trade Commissionz—

8 Geo. Wash. L. Rev. 399, 404 (1940),*and by some

judges, see Koch v. Federal Trade Commission,

206 F. 2d 311, 319 (6th Cir. .1953); ef. Charles

of ‘the Ritz vy. Federal ‘Trade SOUSA 143 F. 2d

676, G80 (2d Cir. 1944), that this dictum had been

interred -by this Court through Mr. Justice Cardozo

in Federal Trade Commission v. Alyoma Co., 291 U.S.

67, 81 (1934), w here. it was said that competition may

fall within the statutory ‘ban though it ‘‘does not

amount to frand as understood in courts of law’, and-

theough Mr. Justice Stone in Federal Trade Commis-_

SIOW NN, Keppel d Bro. 291 US. 304, 309 (1934). where

‘the Court expressly rejected the argument that a ~-

showing of fraud or accomplished deception istapre-

- reqiisite toa finding af an unfair method of com-.

petition. , |

However, never expressly overruled, the Gratz’

‘dictum lives again in the District of. Columbia and

seriously confuses the law.” Review by: this Court is

clearly indicated,

The lower cougt has introduced another anachro-

nistic fe into the law of statutory anfair practices

-and unfair methods of competition. It held that a.

showing of injury te a conipetitor is required to estab-

lish a violation ‘of the statute. ; :

Other circuits have taken a contrary position and

conflict exists. Faced with the argument “that the

order should be set aside hecause Lo: competitor. was

hurt by the practices’’, the Seventh Circuit rejected.

the contention as ‘hardly worthy of serious or extended

consider: ition”? Kugene Dietzgen Co. v. Federal Trade.

Commission, 142 F.2d 321, 327 (7th Cir. 19444. The

rule in the Third Circuit is the same. . Pep Boys—

Manny, Moe and Jack vy. Federal Tradé Comission,

~ 122 F.2d 158, 161 (3d Cir, 1941). Pe

7 The lower court has reintroduced the rationale of

Federal Trade Commission v. Raladam: Co., 283 US.

643 (1931), which first established the tile that com-

petitive injury was essential under Section 5 of. the

‘Federal Trade Commission Act as that Act was worded,

prior to 1938.. But Congress supposedly legislated that

decision out of the law by the Wheeler-Lea Amend-

For sivns.of ¢ onfusion Gaowliere. seg New American Library v.

} ‘odleral Tirade {* OTIMISSION, zie Y 2d 12 (2d (ir. 1954), where

one. judge would have reversed the Commission’s order. on the

vround that no violation of the statute is shown unless there is evi-

dence of actual. deception of eustomers (213-F.2d at 145, n..2).

Tits authority was Ohio Leather Co. v. Federal Trade (¢ Commission,

1 Bod 39.41 66th Cir, 1930), a case decided on the atithority of

the ffrat: opinion. Compare Hillman Periodicals v; Fede ral Trade

Cowmmissta ted F 2d 122 (2d Cir. 1949), , |

Sf LER Wem dena ne

ment to the Frade Commission* Act. in’ 1938.* The

W heeler- Lea Amendment, and the- Civil: Aeronautics

Act were enacted almost simultaneously, and the sub--

stance of the former was included in the language of

Section 414 of the latter. oP . 7

But ‘in the present case the lower court, riot only

cites and relies on the Raladam case, and Summarizes

it in the appendix to the opinion as though it remained

in full! force (see the court’s summary quoted supra

pp. 17-18), but makes a point of emphasizing,. as

grounds for its decision, the absence of a.showing: of

-Injury to the competitor, the petitioner here (R. 418;

@

A

see discussion supra p. 14). This notable resurree=

tion of the Raladam case is accomplished by reasoning

that an order to cease and desist under Section’ 411

.of the Civil Aeronautics Act must be in the public

interest, and conciuding that if,thie respondent had not

succeeded in taking business from its competitor the

_publie had not been harmed—ignoring the fact that,

the public was put to expense, annoyance, and delay °

by going to the wrong ticket counter, wlephoning the

wrong carrier, “meeting the wrong flights, and suffer-

ing the many other confusing impositions Spec cifically

disclosed by the Board's findings.

This requirement of a specific ‘showing that compe-

titive injury has been accomplished, in order to -dem-

9

* Sce Beer, Federal Trade Law and Practice-79 (1942). The

legiskitive history singled out the Raladam ruling and explicitly in-.

di@ated that it was being overturned, S. Rep. No, 22, 75th Cong. °

}st Sess. p. 2 (1937). ws

<i terer ner mnmwee

** The prohibition in Section 411 of * ‘unfair or deceptive prac-

-tices’’ follows the same. pattern as the new lang we added to Sec

tion 5 of the Trade € ommission, Act in 1938 whie h outlawed ‘‘un-

fair or deceptive acts or practices. ’

a]

ve @

2 33 - ts

on? é

siete that there %is a ‘public inter rest”? in the pro-

ceeding, defeats the plain purpose of the Wheevler-Lea

Amendment, incorporated in Section 411 of the Civil °

‘Aeronautics Act. Review by this Court is called for.

3. Having revived the Gratz dictum and the Raladam

ruling, the court below proceeds to-apply .the third

n

landmark ‘opinion that was issued during a period in

which, according to many eritics,* ' this Court was ex-

cessively severe in overturning ‘Trade Commission -

orders. This third opinion. is Federal ‘Trade Com-

mission K lesner, 280 U.S. 19 (1929).

In the Klesner case the facts disclased that in 1915

the. respondent, as a, matter of spite, opened\a small

store in W ashington, PD. (., and used the name em-

ployed by his former lessée who there: after hecame his

- any public confision that might have initially existed.

- competitor, with whom he had a wide range of disputes.

Be the time the Commi ission entered its order some

seven ‘vears later in'1922; a private suit by the com- -

- -plaining party, requesting an injuneqon against the

former lessor’s use of his. trade name, had previously

been dismissed in 1920, and this. Court emphasized

that: the notoriety of the petty and spiteful dispute

extending over a period of several years had dispelled

in the small area where the two stores operated, 280

U.S. at 29. Thus the matter. had heeome a triviality,

and the Commission’s otder. would settle only a ven-

detta in which io publie interest remained. Tn this

setting, the Supreme Court réversed the Commission’s .

order, ‘not. on the merits, but. upon the ground that >

? Blaisdell. The Fede ral Tradz ERT RC 74 (1932) : ‘Ww ihe

Apyiratsal of the Work of: the, Federal Trade Commission, 32°Col.

L. Revi 272 (1932). sei

7

a

os ae

Of

the filing of the complaint before the Commission was

not in the public interest.”* 280.U.S 3S. at 24.

Nonetheless there are some passages in the Klesner

- opinion which, taken .out of context, might suggest

that. thys ,! Court meant that customer confusion in

name similarity cases, however Widespreac ad, could not

he a basis for Commission ‘action urder Section 5 jot

‘the Trade Commission Act. And it was exactly this

interpretation which the lower court gave to the case.

The opinion below quotes from the gase (R. 422-423, in-

fra pp. x-xi) and summarizes it as one which ‘‘refused

enforcement where mere ¢onfusion in competing busi-

ness names failed to establish ‘specific and substantial’

publie interest”? (R. 433; infra -p. xix; see discussion

‘supra p. 15). After the lower court had noted .that-

the instant case likewise involves only public confusion

resulting from competing business names, it held that -

—absent fraudulent ‘intent to deceive and palming off

by deception—thie Board has no ‘jurisdic tion” of such

a case (R. 430 ; infra p. xvi).

This ruling. that the panna has no “ jurisdiction’ ‘

over name gonfusion cases conflicts with am po lg

under the Trade Commission Act.* ? 7

é

.

wnt ene 1 °

. e | ae A

* Cf. Galter v. Federal Trade Commission,. 186 F.2d 810 (7th

Cir, 1951), certs de nied 342, US; 818 (1951), Pep Boys—Manny: -

1941); Federal Trade Commission v. Real Products Corp., 90 I 2d

617 (2d Cir. 1937). Moreover, the suggestion in the opinion “below

(R. 429,, infra p. xvid that Congress has no oT, power in

this area of trade-namie Coufusion is erronecus, see S. Johnson

& Son v, Johnson, 175 F.2d 176, 178 (2d Cir, 1949), and clearly

confiiets with, and therefore casts doubt on, the invontestability

‘dlause in Section 15 of the Lanham Trade-mark Act, 60 Stat, 433

(1946), 15 U.S.C. § 1065.

| a’

a

,

A

Moe and Jack v. Federal Trade Commission, 122 F.2d 158 (3d Cir. |

on °

‘td

‘The lower court, in applying the A/esner decision

to deny Board pencgenegin hot only ignores the facts

in the Klesner case, as’ well as the most slgnifieant

passages inf this Court's opinion, but also conflicts

sharply with the interpretation of the same case he Id

by Judge Learned’ Hand: ees ty

“Keser: ... did inde ed decide that the public

interest in the Controversy-was a justiciable issue

.... The dispute concerned the use ofa trade-

mark which the respondent Klesner had adopted.

out of spite against its owner, Sammons; and th

discussion left it.‘1ot altogether clear why the

public had no interest in its settlement. One might.

perhaps infer that if the only interést at stake is’

thaf customers shall get goods from the seller of

whom they supposed. they are buving, it 4s not

enough ... but it seems clear. from what the eourt

has said later that this is not so [citing the Royal

Milling and the Alyonen eases] . Tt weld

seem, therefore, that Federal Trade Commission

\ - Klesner.. . . is to be put down as dee ‘iding tha

the. court may consider whether the controversy

isnot in general too trivial to ‘justify the attention

of the.Commission: If so, jt is doubtful whether

today the s ce answer would be given:** More-

trench Corp, V. Federal. Trade Commission, 427

F.2 dd: 792, 795 (1942), | oF

Judge Hand's view ‘of what: tlie Klesner ease held

is that generdllv entertained. Tfandler, Uufair Com-

pelition and the Federal Trade Commission, B Cien,

Wash. L. Rev. 399, 404 (1940)... That view would not

outlaw, as not in the public interest, an order to cease

and desist froni a practice affecting the public exten-

sively in its air travel between Los Angeles and | Ne Ww

ms ork.

Fe - . 3 ¥ 7 .

This Court alone can dispel’ the confusion as to the. -

meaning of the Alesner case and its present vitality:

-

ifany. As Judge Hand says, it may well be that the.

public interest issue would: not now be regarded as

+ justiciable, or‘at least ffot to the extent which this

Court apparently determined-in 1929. And even if the

case. remains vital for pur "poses of Section 5 of the’

"Frade Commission Act, there is a serious question

whether. it should be applied at all—-or if go, how far—

in judicial review of administrative action in the con-

text of a special regulatory stattite sueh as the Civil

‘Aeronauties Act, where the agency is charged with’

a peculiar responsibility. and expertise with respect to

the p ‘actices of a particular industry.

- Mr. Justice Frankfurter has recently aioted* that

the signfficance of judicial review of Section 5 Trade

-Commission orders is highlighted ‘*by- the’ dissimilar

treatment of comparable standards-entrusted té- the

enforcement of the Interstate Commerce Commis-

sion”? Although the oytet limits ‘of ‘“‘uitfir or

deceptive practices or unfair methods of, compéti-

tion’? may be determined by the courts, the findings

of the Civil Aeronautics Board in, a statuterv unfair

practice ‘ease in the highly specialized field -of air

‘transportation : are entitled to-considerably more weight _

than -sfinilar findings in an ordinary Tt ag Commis-

sion case. See Universal Camera Corp, y. Labor Bad.,

340 US. 474, 488 (1951). And the i of judicial,

review of the Board’s determination to institute a

Section 411 proceeding in the ‘‘publie interest’ should

~he even. more: limited: Compare this Ceurt’s recent

observation that judicial review of the decision of the

General Counsel to institute,an “unfair labor prae-

a * : .

tice’ " proceéding before the National Labor Relations

° Fede ral Trade Commission v. Ygtion Pic tuire i Co.. 844 U 8.

“R92: 404 61958) (dissenting opinion).

or

-?

Board -is: limited ‘to, determine whether there was

“abuse.of diseretion.”’ Radio Officers v. Labor Board,

347- US. 17,098. (1944).

Clarification by ‘this Court of the present applic ation

of the Klesner case is urgently needed.

4, he paramount importance of the questions pre-

. sented cau hardly be denied, This is the first case ever

to reach the courts involving Section 411 of. the Civil

Aeronautics Act. That section can be of great impor-

tance in the regulation of. the practices of a large,

rapidly expanding, and highly competitive industry.

“In 1938, when the Act was passed, air transportation

was conducted enly by some sixteen trunk lines, many

of them very small, and swith direct competition on bat

a handful of segments. Since the war, however, the

doniestic trunklir es have grown to ereat size, dir ectly

competing throughout the nation—with as many as

five trunk carriers competing betaveen the s same pairs

of points. In addition there are some thirteen local

service lines, many of. which are larger than sgme of

the trunk ‘arriers ‘21938. Further there co over

fifty large irregular or non- -scheduled © arriers, three

all-cargo éarriers, several helicopter lines, and literally

innumerable small non-sc sheduled linestand air ‘*taxi”’

operators. Furthermore numerous new air carrier op-

erations have appeared in the Territories. _Anid inter-

nationally there has been similar expansion, with the

carriers of nearly every important nation outside the —

iron curtain operating to-these shores, whereas before

the war there-were only two or three, and with our own

international services having multiplied from prac-

tically only one to many. To all of these services,

with their keen and -vigorous competition. and to the

vast ‘public they are serving, Section 41 I will be of

. the greatest. signifieanc e unless it is emase ‘ulated. |

“o

Je

‘lt is now recorded history that the Trade Commis-

sion, for more than-a decade, was nearly stopped in

iis tracks in attempting to enforce Seetion » pt its

basie Act outlawing unfair methods of competition.

This was‘ accomplished principally by three opinions

of this Court, in the Gratz, Raladam and Alesner

cases, the very. opinions taken as gospel by the lower

eourt. As outlined by Professor Handler:

“The story ofthe judicial frustration of the Com-

mission’s efforts to set a.plane of. competition at

a decent level has been... frequently told.... In f

the famous Gratz case... the Court in its oft- .

quoted dictum limited the authority ‘of the Com-

mission to (a) restraints of trade, (b) monopoly,

and (¢) practices which prior to 1914 had been re-

varded as dec ‘eptives -fraudulent or oppressive .

“The (iratz case was not the only blow... . . In

. Klesner the Supreme Court arrogated to ‘itself

the determination of whether proceedings by the

Commission were in the public interest, and in

doing so, gave jurisdictional effect to directional

language of the statute.- In... Raladam ... the

power of the Commissiow . ... was limited to the —

eases where Siete is sustained by an honest com,

petitor. .

“Récent ¥ vears have witnessed a ‘marke d improve-

ment... and much of the mischief wrought by

~ the earlier unsympathetic and: hostile rulings has

heen and is being undone... . :

“There -have been significant iti inal changes.

The ratio decidendt of the Gratz ease has in effect.

been overruled by Fedéral Trade Commission V.

Keppel: The Raladam case was -overturned by.

the Wheeler-Lea Ametidments. ~The Alesner case

still retains its vitality, but ‘its principal effect has

heen to exclude from the Commission’s jivisdiction.

minor peceadillos.”” -Unfatr Competition and the

Federal Trade Commission, 8 Geo. Wash. L. Rev:

399, 400-402, 404 (1940).

29

Moa . . a

It is nost disturbing that, in the first judicial inter-

retation of Section 411 of the Civil Aeronautics Act,

t should receive the same frosty. reception and rigid

onstruction Which for years stymied enforcement of

he companion. statutory provision in’ Section 5 of

the Trade Commission Act. This comment seems par-

Heularly apt in the instant case where—unlike the.

early Trade Commission cases—the Board and the

Examiner both wrote ilmminating opinions and made _

elaborate findings @s. to the diffieulties and impositions.

caused the public by the name confusion in question.

The opinion helow could well side-track Section 411

of. the Civil Aeronauties Act much more effectively

than Gratz, Raladan and Klesner impeded Section 5

of the Trade Conamission Act. Section 411 of the Civil

Aeronautics Act is of rekatively less, concern: to ‘the

Civil Acronautics Roard, with its many, other regula-

tory duties, than is Section > to-thesTrade Commission, |

It does not have the same inceutive, as had the Trade

‘Commission during its long, phil struggle, to resist

such undue judfeial restriction. .

The effect of the decision below, moreover, extends

"peyond the air transportation industry. As we .have

seen, the court below specifically held that, in constru-.

ing: Section 411 of the Civil Aeronauties Act, it was

-applying its views of Section 5.of the Trade Commis-

<ion Act, thus reaffirming in the District of Cohunbia

Cirenit a set of rules which one would have thought

completely discredited if not forgotten.

‘The decision will likewise be an important prece-

dent in dealing with other statutory provisions pro-

hibiting ‘‘unfair’’ practices in specialized fields, For

example, an almost identical twin of Section 411 of

the Civil Aeronautics Act may be found in. Séction

.

‘deceptive practice or device in commerce.

“\: nates 30

337 of the Tariff Act.* It is designed to prevent ‘‘un-.

fair methods of competition and..unfair acts in the

importation of articles into thé. United. States’’, and

authorizes the Tariff Commission to institute a proceed-

ing ‘on eunplaint under cath ar’ upon its own

initiative,’

Other statutory: provisions in this area inelide Sec-

tion: 202 of the Pac ker&§ ‘and Stockyards. Act. which

makes it “unlawful for any, packer... to (a) engage

in or use any unfair, unjustly diserin mynators? or

Finally,

the Trade Commission “has jurisdiction under Section -

14 of the Webb Export Act to prohibit ‘‘unfair methods

of competition used in export trade, nig

It is vitally important that the District of Columbia

Circuit, having special responsibilities in the field. of

administrative law, should, be brought into harmony:

_with other Cirenits and have the guidance of this Court

on the present application of some of its old and rather .

musty precedents. _ ae

- a . CONCLUSION .

For the. foregoing reasons, this petition for certio-__

‘ari should & granted. ,

Respec ‘tfullv submitted,

Howarp C. WEstwoop,

-T. RaANpouPH WItsoNn,

.7¢ >” Attorneys for Petitioner.

Covincton & BuRLING |= <> |

| Of Counsel. ae a ee

* 46 Stat. 703 (1930), 19 U.S.CLA. § 1387.7

** 42°Stat.-161 (1921), ‘as amended, 49 Stat. 649 (1935), 7 U.S.

C.A! § 192(a), ‘

899 40 Stat. 507 (1918), IS U.S.C.A. § 64.