# Petition for Writ of Certiorari — Seaboard & Western Airlines, Inc. v. Civil Aeronautics Board > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386417_0093%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1950 - **Citation:** 339 U.S. 963 ## Text MAR 25 1950 CHARLES ELMCH- SUPREME COURT OF THE UNITED TES | OCTOBER TERM, 1949 No. 702 SEABOARD & WESTERN AIRLINES, INC., site Petitioner, CIVIL AERONAUTICS BOARD, ET AL. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA AND SUPPORTING BRIEF. d Harpy K. Mactay, 917 15th Street, N. W.., Washington, D. C., Attorney for Seaboard & Western Airlines, Inc., Petitioner. Of Counsel: Lanpis, Gewrrtz & Macuay, 917 15th Street, N. W., Washington, D.C. Doveias M. AMMan, FENNELLY, LOWENSTEIN, EnGeLHarD & PITCHER, 25 Broad Street, New York 4, New York. _ Petition for Writ of Certiorari.................... Statement of the Matter Involved... ree Ne itn. Os i a a B. Mail Rate Proceedings Before Respond- EN re te ete Gr Cae og sss INDEX Jurisdictional Statement................... Sik ye | Reasons for the Allowance of Writ................ Brief in Support of Petition for Certiorari......... Opinion of the Court Below................... SS RE eo Goectiontion of Mrrere....................... The Importance of This Case................. I. Temporary Mail Rate Orders and Inter- UE NO os ks new eae en. II. The Extent of Intervention in the Per- manent Mail Rate Proceedings. ..__. GS, gels Sco de tees ns c5oe bs TABLE OF AUTHORITIES Cases: Alabama Power Co. v. Ickes, 302 U. S. 464, 58 S. | Ct. 300, 82 L. Eid. 374 (1988)................ American Airlines, Inc., Mail Rate Proceeding, | eM IE cS gel Cee eects American Airlines, Inc., Mail Rate Proceeding, Mc UIE oo 5 koko sce ana paedaes Eastern Air Lines, Inc., Mail Rate Proceeding, ye IS Bk Sy wv kek sk keen ce kaen. Essair, Inc., Temporary Mail Rate, 6 C.A.B. 687 Ce re ee ie etry 24 is eet aes Federal Communications Commission v. Sanders Bros. Radio Station, 309 U. S. 470, 60 S. Ct. 693, 84 L. Ed. 869 (1940)................... —7376 Page Pom mOoamuont es bo tpt co on ii INDEX Flymg Tiger Line, Inc. v. Atcheson, T. & S. F. Ry. Co., 75 F. Supp. 188 (S.D. Calif. 1947) .... 12 North Atlantic Route Case, 6 C.A.B. 319 (1945) . 13 Pan American Airways, Inc., et al., Latin-Ameri- can Rate Case, 3 C.A.B. 657 (1942).......... 15 Pan American-Grace Airways, Inc.—Mail Rates, Cae CS 35 aio Riv seks Cn eeavic, 15 Transcontinental & Western Air, Inc. v. Civil Aeronautics Board, 336 U. S. 601, 69 S. Ct. Pe I eae eee ate Uk cocker 11,12 Statutes: Civil Aeronautics Act of June 23, 1938, c. 601 (52 Stat. 977 ff., 49 U.S.C., See. 401-691) : Section 406 (52 Stat. 998, 49 U.S.C. 486).... 2,12 Section 1006 (52 Stat. 1024, 49 U.S.C. 646) 5, 14, 15 62 Stat. 928; 28 U.S.C. 1254 (1948).......... 5 Miscellaneous: Hearings before Committee on Interstate and Foreign Commerce on S. Res. 50, 81st Cong., Ist Sess. 126 (1949)................. .. . 11,13, 15 SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1949 No. 702 SEABOARD & WESTERN AIRLINES, INC., Petitioner vs. CIVIL AERONAUTICS BOARD, Respondent, AMERICAN OVERSEAS AIRLINES, INC., Intervenor, PAN AMERICAN AIRWAYS, INC., Intervenor PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS To the Honorable Fred M. Vinson, Chief Justice of the United States and the Associate Justices of the Supreme Court of the United States: The petitioner, Seaboard & Western Airlines, Ine., re- spectively shows to this Court: Statement of the Matter Involved A. Background Petitioner is an air carrier engaging in international air transportation of property on an irregular or non-scheduled 2 basis. It is operating under the authority of a Letter of Registration issued by respondent, Civil Aeronautics Board, pursuant to its economic regulations. There is pending before respondent a proceeding in which petitioner is ap- plicant for a certificate of public convenience and necessity authorizing it to conduct international air transportation of property without limitation of frequency or regularity. Transcontinental & Western Air, Inc., American Over. seas Airlines, Inc., and Pan American Airways, Inc. are air carriers engaging in international air transportation of persons, property and mail under certificates of public convenience and necessity. These carriers, as mail cer- tificated carriers, are entitled to and are receiving mail pay pursuant to Section 406 of the Civil Aeronautics Act of 1938, as amended (52 Stat. 998, 49 U. S. C. 486). Peti- tioner receives no mail pay or subsidy of any kind, and depends entirely upon its commercial revenues for sur- vival. Petitioner and the above named carriers transport prop- erty between points in the United States and points in Europe, and elsewhere. Petitioner transports property over many of the same routes as the above named carriers, and is, therefore, in direct competition with them. B. Mail Rate Proceedings Before Respondent Section 406 of the Civil Aeronautics Act (52 Stat. 998, 49 U.S.C. 486) empowers and directs respondent to fix and determine, after notice and hearing, the fair and reasonable rates of compensation for the transportation of mail by air carriers holding certificates authorizing them to trans- port mail. Among the elements to be considered by re- spondent in fixing a rate is the need of the air carrier for mail pay sufficient to enable it, under honest, economical, and efficient management, ‘‘to maintain and continue the , ee 3 development of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the national de- fense.”’ In 1946 respondent instituted proceedings to fix mail rates for Transcontinental & Western Air, American Overseas Airlines, and Pan American Airways. At the same time so- called ‘‘temporary’’ rates for these carriers were set, such temporary rates to be paid them pending the adoption of permanent rates. In 1947 and again in 1948 retroactive increases in these temporary rates were awarded by re- spondent. Upon the initial fixing of or subsequent increase in a temporary rate for a past period, a lump sum is immedi- ately paid to the carrier. Such payments are in fact pay- ments on account, there having been no determination of the actual amount to which the carrier will later be found entitled. The amount paid under temporary rate orders may be greater or less than the amount later authorized in a permanent rate order. On December 7, 1948, respondent on its own initiative proposed a third increase in the temporary mail rate of Transcontinental & Western Air (80). On December 10, petitioner petitioned for leave to intervene in this proceed- ing (82). The petition alleged that petitioner had a sub- stantial property and financial interest in the subject mat- ter of the proceeding, that its interest would not be ade- quately represented by existing parties, and that inter- vention would not unduly broaden or delay the proceeding. On December 16, respondent denied this petition for leave to intervene (86). On December 22 a pro forma hearing was held (89) and on the same day respondent issued an order establishing a new increased temporary mail rate for Transcontinental & Western Air (96). Petitioner in- stituted proceedings in the United States Court of Appeals + for the District of Columbia to review respondent’s order denying petitioner the right to intervene (2). Petitioner on January 6, 1949, in the case of American Overseas Airlines (124), and on Decemher 10, 1948, in the case of Pan American Airways (198), petitioned for leave to intervene in the rate proceedings of each. Each petition alleged that petitioner had a substantial interest in the subject matter of the proceeding, that its interests would not be adequately represented by existing parties, and that its intervention would not unduly broaden the issues or delay the proceedings. On April 19, 1949, respondent, on its own initiative, proposed a further increase in the rates of both these carriers for the past period January 1, 1946 to December 31, 1948, and proposed to make such increased rates the permanent rates for that period (181, 263). At the same time, respondent directed Pan American Airways and American Overseas Airlines to show cause why these proposed permanent rates should not be immediately adopted as the temporary rate for each (182, 264). Respondent, at the same time, denied petitioner’s petitions for intervention so far as each ‘‘requests inter- vention in the temporary mail rates,’’ but granted inter- vention ‘‘as a matter of discretion . . . limited to the final mail rate determination, and then only to such issues as relate to cargo operations and the extent, if any, to which such cargo operations should be underwritten with ‘need’ mail pay.’? (185, 266) On April 29, respondent issued orders fixing the proposed increased rates as the tempo- rary rates (193, 277). Petitioner instituted an action in the United States Court of Appeals for the District of Columbia to review respond- ent’s orders denying it the right to intervene in the tempo- rary rate proceedings and granting only limited interven- tion in the permanent mail rate proceedings (98). Peti- — 4) tioner subsequently amended its petition to include a review of the orders fixing temporary rates, alleging that respond- ent committed several errors in determining said rates (286). C. Action of the Court Below The petition to review the action of respondent in the Transcontinental & Western Air proceeding and the peti- tion to review the action of respondent in the American Overseas Airlines and Pan American Airways proceedings were consolidated for hearing and decision. On December 27, 1949, the United States Court of Appeals for the District of Columbia affirmed in part and dismissed in part the orders of respondent which had been challenged by petitioner (290). It was held that temporary rate orders were not reviewable because not final, that the orders deny- ing intervention in the temporary rate proceedings were not reviewable for the same reason, and that the award of only limited intervention in the final mail rate proceedings was proper (289). Jurisdictional Statement This Court has jurisdiction to review the judgment and decree of the United States Court of Appeals for the Dis- trict of Columbia by virtue of the following statutory pro- visions: 28 U.S.C. 41254 (62 Stat. 928), and § 1006 (f) of the Civil Aeronautics Act of 1938 (52 Stat. 1024; 49 U.S.C. 646). The petition is timely, the United States Court of Appeals for the District of Columbia having rendered its decision on December 27, 1949 and this petition having been filed on March 25, 1950. The Questions Presented 1. Whether orders of the Civil Aeronautics Board fixing temporary rates of compensation for an air carrier for mane URE 6 transportation of the mail pursuant to which United States funds are actually paid to that carrier are appealable? 2. Whether orders denying an air carrier the right to intervene in the temporary mail rate proceedings of a com- petitor are appealable? 3. Whether an air carrier is entitled to intervene in the temporary mail rate proceedings of a competitor? 4. Whether petitioner’s status as an air carrier of cargo is such as to entitle it to intervene in the permanent mail rate proceedings of a competitor and to raise therein any questions and present evidence upon any issue relating to the propriety or amount of mail pay to be awarded to such carrier? 3. Whether the Board imposed an undue and improper limitation upon the intervention of petitioner in the mail rate proceedings of other air carriers by limiting its par- ticipation to such issues as relate to cargo operations and the extent to which such operations should be underwritten with ‘‘need’’ mail pay? Reasons for the Allowance of the Writ 1. The United States Court of Appeals for the District of Columbia has decided questions of general importance which have not been, but should be, settled by this Court. 2. The United States Court of Appeals for the District of Columbia has decided questions of substance relating to the construction and application of a statute of the United States which has not been, but should be, settled by this Court. 3. The United States Court of Appeals for the District of Columbia has failed to give proper effect to several ap- plicable decisions of this Court. 7 These reasons are discussed in petitioner’s attached brief. Wuenrerore your petitioner prays that a writ of certiorari issue under the seal of this Court, directed to the United States Court of Appeals for the District of Columbia, com- manding said Court to certify and send to this Court a full and complete transcript of the record and of the pro- ceedings of the said Court of Appeals had in the cases numbered and entitled: Seaboard & Western Airlines, Inc., Petitioner v. Civil Aeronautics Board, Respondent, Docket No. 10086; and Seaboard & Western Airlines, Inc., Petitioner v. Civil Aeronautics Board, Respondent, Docket No. 10242, to the end that these causes may be reviewed and determined by this Court as provided for by the stat- utes of the United States; and that the orders herein of the said United States Court of Appeals for the District of Columbia be reversed by this Court and for such other, further or different relief as to this Court may seem proper. Dated, Washington, D. C., March 25, 1950. Harpy K. Mactay, Counsel for Seaboard & Western Airlines, Inc., Petitioner. Lanpis, Gewirtz & Macuay, Dove tas M. AMMAN, Frenne.ity, LOWENSTEIN, Encetuarp & PircHer, Of Counsel. SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1949 No. 702 SEABOARD & WESTERN AIRLINES, INC., Petitioner, vs. CIVIL AERONAUTICS BOARD, Respondent, AMERICAN OVERSEAS AIRLINES, INC., Intervenor, PAN AMERICAN AIRWAYS, INC., Intervenor BRIEF IN SUPPORT OF PETITION FOR CERTIORARI Opinion of the Court Below The opinion of the United States Court of Appeals for the District of Columbia appears in the certified copy of the Transcript of Record (284-289). It has not as yet been officially reported. Jurisdiction Reference is made to the jurisdictional statement in the petition (supra, p. 5). Specification of Errors 1. The Court of Appeals erred in deciding that orders establishing temporary mail rates are not appealable. 10 2. The Court of Appeals erred in deciding that orders denying intervention in temporary mail rate proceedings are not appealable despite the fact that petitioner dis- closed a ‘‘substantial interest’’ in the proceedings. 3. The Court of Appeals erred in deciding that orders denying intervention in temporary mail rate proceedings are not appealable despite the fact that the petitioner was concededly entitled to intervene in the permanent mail rate proceedings. 4. The Court of Appeals erred in deciding that peti- tioner, although he had established a ‘‘substantial interest,’’ could not participate fully in the permanent mail rate pro- ceeding and could not present evidence on all issues bearing upon the public interest but was to be limited to “such issues as relate to cargo operations and the extent, if any, to which such cargo operations should be underwritten with ‘need’ mail pay.’’ 5. The Court of Appeals erred in failing to hold that the Civil Aeronautics Board erred in denying petitioner the right to intervene in the temporary mail rate proceedings of its competitors. 6. The Court of Appeals erred in holding that since the Postmaster General is a party to mail rate proceedings, it is unnecessary and the Civil Aeronautics Act does not require that a person having a substantial interest be allowed to present evidence and argument protecting the public interest. 7. The Court of Appeals erred in affirming the orders of the Civil Aeronautics Board granting petitioner the right of culy limited intervention in the permanent mail rate pro- ceedings of Pan American Airways and American Over- seas Airlinex. ie. 11 8. The Court of Appeals erred in dismissing the appeal from the orders of the Civil Aeronautics Board fixing tem- porary rates for Pan American Airways and American Overseas Airlines. 9. The Court of Appeals erred in dismissing the appeal from the orders of the Civil Aeronautics Board denying intervention to Petitioner in the temporary mail rate pro- ceedings of Transcontinental & Western Air, American Overseas Airlines, and Pan American Airways. The Importance of This Case The resolution of the issues raised in this case is of great importance to the Civil Aeronautics Board in its adminis- tration of the Civil Aeronautics Act, to the aviation indus- try, and to the American public generally. Mail pay to certificated air carriers involves an expendi- ture by this Government of many millions of dollars each year.’ Without it, a major portion of the aviation indus- try, as it operates today, might not be able to survive. There is also inherent in mail pay support for one segment of the industry the power to destroy another large segment of the industry which receives no mail pay but nevertheless operates in direct competition with carriers which do. The importance of questions involving the extent of the power to administer mail pay has already been recognized by this Court when it granted certiorari in the case of Transcontinental & Western Air, Inc. v. Civil Aeronautics Board, 336 U. S. 601 (1949) ‘‘because of the importance 1 “Last year (1948) the air mail bill for our domestic trunk, feeder, and international carriers amounted to approximately $102,000,000. This figure is subject to upward adjustment. In the current year the bill will be higher, perhaps as high as $125,000,000.” Hearings before Committee on Interstate and Foreign Commerce on S. Res. 50, 81st Cong., Ist Sess. 126 (1949). 12 of the question to the carriers and the public alike.’’ Iq. at 603. I. Temporary Mail Rate Orders and Intervention Therein The Court of Appeals has here decided that temporary rate orders themselves and orders denying intervention therein are not reviewable. Insofar as petitioner can deter- mine, this is the first case in which an air carrier has sought judicial review of such orders of the Civil Aeronauties Board. The effect of the decision below is to confer upon the Board a degree of discretion not contemplated by the Civil Aeronautics Act, to allow the Board to authorize disburse- ment of Government funds without adherence to statutory safeguards or standards imposed by Congress, and to preclude persons having a substantial interest in the pro- ceedings from protecting themselves or raising for judicial review questions of public importance. The Civil Aeronautics Act clearly contemplates develop- ment of the aviation industry in the direction of a self-sup- porting non-subsidized air transport system. Cf. Trans- continental & Western Air, Inc. v. Civil Aeronautics Board, 336 U. S. 601, 606 (1949). It contemplates also the coexist- ence of subsidized and non-subsidized carriers. Cf. Flying Tiger Line, Inc. v. Atcheson T. & S. F. Ry. Co., 75 F. Supp. 188 (S.D. Calif. 1947). It is, of course, to the interest of the subsidized carrier to secure the maximum possible amount of mail pay. It is equally to his non-subsidized com- petitor’s interest and to the interest of the public that such mail pay shall be no more than is essential to enable the subsidized carrier properly to conduct its operations to the extent such operations are found desirable and proper by the Civil Aeronautics Board. Section 406 of the Civil Aeronautics Act (52 Stat. 998, a 13 49 U.S.C. 486) is the only provision in the Act dealing with the authority and method for fixing rates for the trans- portation of mail. It provides that the Board is to set the fair and reasonable rate of compensation only after notice and hearing. Among the factors to be considered by the Board is ‘‘the need of each such air carrier for compensa- tion for the transportation of mail sufficient to insure the performance of such service, and, together with all other revenue of the air carrier, to enable such air carrier under honest, economical, and efficient management, to maintain and continue the development of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service, and the national defense.’’ Ever since the air transportation pattern for the North Atlantic was established some four years ago (North At- lantic Route Case, 6 C.A.B. 319 (1945)) American Overseas Airlines, Pan American Airways, and Transcontinental & Western Air have been operating these routes under so-called ‘‘temporary’”’ rates. To date more than $50,000,- 000 has been paid to these three carriers pursuant to tem- porary rate orders of the Board (96, 197, 281). As yet no permanent rates for these carriers beyond 1945 have been established. Nor is the practice of using temporary rates (rates fixed pending a determination of permanent rates which are subject to retroactive adjustments) limited to the interna- tional field. Since the practice was first adopted in 1946 (Essair, Inc., Temporary Mail Rate, 6 C.A.B. 687 (1946)), it has been in general use in the entire industry. H earings before Committee on Interstate and Foreign Commerce on S. Res. 50, 81st Cong., 1st Sess., 130 (1949). The Court of Appeals, on the premise that all temporary rates are subject to retroactive adjustment when a perma- 14 nent rate is fixed (289), held that temporary rate orders and orders denying intervention therein are not final for purposes of judicial review. Such a theory fails to give proper weight to the fact that under such orders funds are in fact disbursed from the public treasury to private parties for their use and benefit. If rates in excess of those to which a carrier is entitled under Section 406 are paid to such carrier, his non-sub- sidized competitors will in all probability be placed at a competitive disadvantage. The subsidized carrier may engage in a program to eliminate his non-subsidized com- petitor and recover the costs of so doing in the form of temporary mail pay. The fact that several years later the Board, when it fixes a permanent rate, or the courts, when the permanent rate order is appealed, may decide that too much mail pay or mail pay for uneconomical or unauthorized operations was paid is of no help to the non- subsidized competitor. By that time he may have been forced out of business or been placed in such a poor com- petitive position that he cannot regain his old position. Nor is this merely damnum absque injuria as in the case of Alabama Power Co. v. Ickes, 302 U. 8. 464 (1938). Section 406 prescribes the standards under which mail rate orders shall be formulated and Section 1006 (52 Stat. 1024, 49 U. S. C. 646) confers upon any person disclosing a ‘‘sub- stantial interest’’ the right to seek judicial review from Board orders. Cf. Federal Communcations Commission v. Sanders Bros. Radio Station, 309 U. S. 470 (1940). But the permanent effects of these *‘temporary’’ rate orders are not limited to competitors. The American public may also suffer directly from them. Although it may be subsequently determined that excessive temporary mail pay has been disbursed by the Government, recovery of such excess may as a practical matter be impossible. By the time the permanent rate is fixed, the carrier may be a 15 out of business or on the verge of bankruptcy. Or perhaps the financial position and other factors concerning the car- rier will be such that to recover the excessive amounts paid in the past will so jeopardize the operations of the carrier that the Board will conclude that it is not in the public in- terest to recover these amounts.” In at least four different mail rate proceedings the Board has found that excessive amounts were paid to carriers, but, despite its ability to do so, it refused to recapture the excessive amounts paid.* Il. The Extent of Intervention in the Permanent Mail Rate Proceedings As has already been indicated, Section 1006 of the Civil 2The following remarks of Chairman O’Connell are directly here in point: “In many of the eases which are now being processed by the Board’s staff, the mail rates are being set for the past 2, 3, or even 4 years. This makes the process of effecting disallowances extremely difficult. The facts themselves surrounding the need of a carrier tend to be- come blurred with the passage of time. Furthermore, the manage- ment of a carrier is obviously in a much more favorable position to defend its past action than the staff of the Board is to attack them. “Finally, substantial disallowances from the costs which have al- ready been incurred tend to defeat the purpose of the act in that they may so weaken the carrier financially that it is no longer in a posi- tion to develop routes and services in the soundest and most expe- ditious manner.” Hearings before Committee on Interstate and For- eign Commerce on S. Res. 50, 81st Cong., Ist Sess., 136 (1949). 3 At first the Board was of the opinion that any excessive payments during the pendency of a rate proceeding should be recaptured.