Petition for Writ of Certiorari — National Airlines, Inc. v. Civil Aeronautics Board

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IN THE

Supreme Court of the Gnited States

OctToBER TERM, 1955

No. 561]

NATIONAL AIRLINES, INC., a Corporation,

Petitioner

CIVIL AERONAUTICS BOARD, Respondent

and

EASTERN AIR LINES, INC.

COLONIAL AIRLINES, INC.

Intervenors

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

JoHNn W. Cross

Crayton L. BurRWELL

- 920 Southern Building

Washington, D. C.

Counsel for Petitioner

Parss or Brron S. Anams, Wasutneron, D. C.

Page

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Reasons for granting the Writ ....................5- 4

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Appendix A—Statutes .............. cece eee eee eee 1

Appendix B—U. S. Constitution .................... 3

Appendix C—Per Curiam Order U. 8S. Ct. of Appeals

for the District of Columbia Circuit

Dah, WE, WI a ace ee ctceiaiin 3

Appendix D—Order of Civil Aeronautics Board ...... 4

CITATIONS

CasEs :

Chicago and Southern Airlines v. Waterman Steam-

— he ee Eerreprerrrrrit ire re 4

Colonial Airlines v. Adams et al., 87 Fed. Supp. 242;

336 UB. S48; SUB UB. O67 2. cc ncnncssaccsccss 7

United States Overseas Airlines v. Civil Aeronautics

Bes Te We ek eis ce cnwcadinicncsdavese 4

SraTuTEs:

Act June 23, 1938, C-601, 52 Stat. 977 (‘‘Civil Aero-

nauties Act’’) 49 USC 401 et seq. :

See. 408(b) (49 USC 488(b)) .............08, la

oe 8 Sg ht eee rrevaere acres la

Sec. 1006 (49 USC 646) ................08.. 2a

Aci June 11, 1946, C 324, section 2 et seq., 60 Stat.

237 (‘*Administrative Procedure Act’’), 5 USC

1001 et seq.:

See. 7(d) (5 USC 1006(d)) ................. 2a

head

IN THE

Hupreme Court of the Anited States

OcToBerR TERM, 1955

No.

NATIONAL AIRLINES, INC., a Corporation,

Petitioner

Vv.

CIVIL AERONAUTICS BOARD, Respondent

and

EASTERN AIR LINES, INC.

COLONIAL AIRLINES, INC.

Intervenors

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

To the Honorable, Chief Justice, and the Associate

Justices of the Supreme Court of the United

States.

The Petition prays that a writ of certiorari issue to

review the judgment of the United States Court of

Appeals for the District of Columbia Circuit entered

in the above cause on September 15, 1955.

OPINION BELOW

No opinion was filed by the Court.

JURISDICTION

The judgment of the United States Court of

Appeals for the District of Columbia Circuit was

dated and entered on September 15, 1955 (App. C).

The jurisdiction of this Court is invoked under Section

1254(1), 28 U.S.C.; and Section 1006(f), Civil Aero-

nauties Act of 1938, as amended.

QUESTION PRESENTED

Whether a proper construction of section 801 and

1006 of the Civil Aeronautics Act of 1938, as amended,

forbids judicial review of violations by the Civil Aero-

nautics Board of procedural requirements of the Civil

Aeronauties Act and the Administrative Procedure

Act prior to a consideration by the Board or decision

by the President of the merits; and if a proper con-

struction does forbid such judicial review whether

sections 801 and 1006 of the Civil Aeronautics Act of

1938, as amended, are unconstitutional as an undue

delegation of legislative power by Congress to the

Executive and as a denial of due process of law to this

petitioner.

STATUTES INVOLVED

The Act of June 23, 1938 C. 601, 52 Stat. 977 and the

Act of June 11, 1946 C. 324, section 2 et seq., 60 Stat.

237 are involved as well as ArT. 1, See. 8; ArT. 1, See. 1

and AMENDMENT V to the U. S. Constitution. The

pertinent statutory and constitutional provisions are

printed in Appendix, infra (App. A and B).

STATEMENT

Petitioner, National Airlines, and Intervenor, East-

ern Air Lines, are bitter rivals for the airline traffic

between the Eastern seaboard and Florida. In order

to broaden the area from which Florida traffic could

be generated and served without a change of planes,

petitioner commenced negotiations in the latter part of

1951 with Colonial Air Lines to aequire the assets of

Colonial Air Lines. Thereafter Eastern defeated a

National-Colonial integration by gaining illegal control

of Colonial.

On July 24, 1952, Eastern and Colonial filed with

the Civil Aeronautics Board as required by Sections

408 and 412 of the Civil Aeronautics Act, a joint

application for approval by the Civil Aeronautics

Board of an agreement by which Colonial’s assets

would be acquired by Eastern. Public hearings were

held in Consolidated Dockets 5569 and 5666. The

Board’s recommended decision was submitted to the

President for approval in accordance with section

801 of the Civil Aeronautics Act since the assets of

Colonial included a fore zn route from New York to

Bermuda and Montreal. The President disapproved

the agreement because of a finding of the Board and

the President that Eastern had secured unlawful con-

trol of Colonial in violation of Section 408 of the Act.

On February 26, 1954, the Board issued a decision

ordering that the joint application of Colonial and

Eastern for approval of their agreement dated July

18, 1952 ‘‘be and hereby is disapproved’’. The Presi-

dent approved this order February 27, 1954, thereby

terminating Consolidated Dockets 5569 and 5666.

Docket 6582 to ascertain whether Eastern still main-

tained illegal control of Colonial culminated in a three

Saeeeen

to two opinion of April 29, 1955 by the Board that

Eastern did not control Colonial as of December 30,

1954.

On February 3, 1955, a new joint application was

filed by Colonial and Eastern, Docket No. 6998, as re-

quired by sections 408 and 412 of the Act for approval

of another agreement dated January 28, 1955 covering

acquisition by Eastern of the assets of Colonial.

On June 28, 1955 the Board issued Order No. E-9347

in Docket No. 6998 upholding the Examiner’s ruling

which excluded the statutory issues of public interest,

violation of the Act and monopoly required by section

408 of the Act.

Petitioner filed a petition for Judicial Review of

said Order No. E-9347 with the U. 8. Court of Appeals

for the District of Columbia Circuit. The Court

ordered the dismissal of the Petition for Judicial

Review on September 15, 1955, with no opinion.

(App. C). This petition is for review of the Court’s

‘ refusal to review the Board’s order when it is given

jurisdiction by Section 1006(a) of the Civil Aero-

nauties Act of 1938, as amended (49 U.S.C. 646(a)).

REASONS FOR GRANTING THE WRIT

In the absence of an opinion by the Court of

Appeals it is presumed that it dismissed the Petition

for Judicial Review based upon the Court’s interpre-

tation of the case of Chicago and Southern Airlines

v. Waterman Steamship Co., 333 U.S. 103, as for-

bidding judicial review of any order of the Civil Aero-

nauties Board pertaining to a proceeding involving a

foreign route transfer requiring Presidential ap-

proval under Section 801 of the Civil Aeronautics Act.

In support of this presumption see United States

Overseas Airlines v. Civil Aeronautics Board, 222

F. 2nd 303.

It is also presumed that the Court sustained the con-

stitutionality of sections 801 and 1006 of the Act under

the authority of Colonial Airlines v. Adams, et al, 87

Fed. Supp. 242; 338 U.S. 942; 338 U.S. 947.

The Circuit Court’s decision is not limited to the

ratio decidendi but is based upon an extreme view of

the dicta of Mr. Justice Jackson speaking for the

majority of 5 to 4 in the Waterman Case (supra). The

Waterman decision is distinguishable from the instant

ease. See Answer of Petitioner to Respondent’s

Motion to Dismiss. The decision of the Court of

Appeals stretches the application of the Waterman

doctrine in a way that affects vitally the most im-

portant part of the U. S. aviation transportation

system. At present, Pan American, United American,

Eastern, National, Colonial, Delta-C&S, Braniff,

T.W.A., Northwest, Western, Northeast and Seaboard .

and Western Airlines, all have foreign routes. In

Alaska alone there are eleven additional airlines

in overseas transportation likewise affected by the

case. The magnitude of the portion of the indus-

try affected by the Court’s interpretation of the

Waterman decision dicta depriving it of a right to a

hearing and judicial review at any stage of a proceed-

ing may be gathered from a comparison of the net

assets invested by various groups of certificated air

carriers receiving mail pay :'

‘Quarterly Report of Air Carrier Operating Factors, June

1955, Civil Aeronautics Board, Office of Carrier Accounts and

Statistics, at pg. 21.

ee ee ee

Domestic, Foreign and Overseas

Combination Carriers $880,653,000°

Foreign or Overseas Carriers only 276,646,000

Domestic Carriers only 100,381,000

Virtually all passenger carriers except the local

feeder lines have some overseas and foreign segments

to their route systems. Any proceedings involving

routes with foreign and overseas points must be sent

to the President for approval. Most important actions

affecting carriers in some way do involve their route

systems. The decision of the Court of Appeals re-

moves any responsibility of the Board or the President

to grant the hearing required by the Civil Aeronautics

Act and the Administrative Procedure Act. If the

Board can deny a fair hearing in the instant case, dis-

regarding some statutory requirements, it can deny

a hearing altogether in the next case, disregarding all

statutory requirements. A significant part of an

essential industry has been removed from the opera-

tion of important parts of the Act and is committed

to the vagaries of politics, with no Congressional

standards enforceable against anyone by the Court of

Appeals’ interpretation of the dicta of Mr. Justice

Jackson in the Waterman Case.

The interpretation of the Waterman decision by the

Court of Appeals is inconsistent with its decision in

Colonial Airlines v. Adams, 87 Fed. Supp. 242, 338

U.S. 942, 338 U.S. 947. According to Mr. Justice

2 An allocation of investment as to domestic route operations

on the one hand and foreign and overseas on the other would

show more dollars invested in domestic routes. For the most part

the two are integrated to a degree that any action which affects

the foreign and overseas routes has serious impact upon the

domestic and vice versa.

Jackson’s dicta in the Waterman Case the Board was

a mere advisor to the President with no legal signi-

ficance attached to the method by which it formulated

its advice and the President in turn was free from

any Congressional standards. Apparently the Court

adopted this reasoning in the instant case. On the

| otherghand j olonial Airlines,v. Adams (supra)

: 0 District of Colum-

bia -Girenit, Judge Goldsborough dissenting, upheld

the constitutionality of sections 801 and 1006 of the

Civil Aeronautics Act on the ground that Congress

had put into the Act adequate standards. Unreview-

able and unenforceable standards which are inappli-

cable to the Board and the President in the Court’s

view of Mr. Justice Jackson’s dicta in the Waterman

Case and yet are adequate to support the constitu-

tionality of the Act in Colonial Airlines v. Adams

(supra) against the charge of undue delegation of the

legislative authority creates a confusing conflict on a

substantial constitutional question.

The Court’s interpretation of the Waterman deci-

sion deprives petitioner of property without due

process of law. Petitioner has spent millions of dollars

in flight and ground equipment, advertising and devel-

opmental operations in perfecting routes duly granted

it between New York and Florida with the expectation

that such routes would not be revoked in whole or in

part by any action of the Board or the President with-

out due process of law. The power of the Board to

revoke or impair the routes in the public interest with

due process is not challenged. Neither the Board nor

the President has the power to do so without due

process,

The Board’s order under review prejudges an

approval of a transfer of routes from Colonial to

Eastern in flagrant disregard of the Act. One of the

results of this, injurious to petitioner, will be the pro-

vision by Eastern of service from Ottawa, Montreal

and other points on Colonial’s routes of one plane,

through service, to all points on Eastern and peti-

tioner’s routes between New York and Florida at

which they so bitterly compete. As a practical matter

the Board’s action preempts for Eastern a_ vast

amount of traffic for which Eastern and petitioner had

competed and in so doing depreciates accordingly the

value of petitioner’s existing routes. No one could

say petitioner’s routes are worth as much after the

merger as before. Petitioner does not seek protection

from competition, nor protection from route changes

arrived at after fair hearings on the question of public

interest. It seeks protection of the millions invested

by stockholders from being impaired by allocations

and preemption by the Board of the traffic market

without a fair hearing required by the statute and

the due process clause of the Constitution.

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be granted.

Respectfully submitted,

JoHN W. Cross

Crayton L. BuRWELL

Counsel for Petitioner

Sie enone aren

Pm niente mins centage De

Vey ae Bn renee

APPENDIX A—STATUTES

Acr Jung 23, 1938 C. 601, 52 Stat. 977 (‘‘Civil Aeronautics

Act’’) 49 USC 401 et seq. Sec. 401 (49 USC 481(i))

‘*No certificate may be transferred unless such transfer

is approved by the Board as being consistent with the

public interest.”’

See. 408(b) (49 USC 488(b)) ‘‘Any person seeking

approval of a consolidation, merger, purchase, lease,

operating contract, or acquisition of control, specified in

subsection (a) of this section, shall present an application

to the Board and therewpon* the Board shall notify the

persons involved in the consolidation, merger, purchase,

lease, operating contract, or acquisition of control, and

other persons known to have a substantial interest in the

proceeding, of the time and place of a public hearing.

Unless, after such hearing, the Board finds that the con-

solidation, merger, purchase, lease, operating contract, or

acquisition of contro] will not be consistent with the public

interest or that the conditions of this section will not be

fulfilled, it shall by order, approve such consolidation,

merger, purchase, lease, operating contract, or acquisition

of control, upon such terms and conditions as it shall find

to be just and reasonable and with such modifications as

it may prescribe: Provided, That the Board shall not

approve any consolidation, merger, purchase, lease,

operating contract, or acquisition of control which would

result in creating a monopoly or monopolies and thereby

restrain competition or jeopardize another air carrier not

a party to the consolidation, merger, purchase, lease,

operating contract, or acquisition of control * * *”

(Remainder not material)

Sec. 801 (49 USC 601) ‘‘The issuance, denial, transfer,

amendment, cancelation, suspension, or revocation of, and

the terms, conditions, and limitations contained in, any

3 Ttalies supplied.

certificate authorizing an air carrier to engage in overseas

or foreign air transportation, or air transportation

between places in the same Territory or possession, or any

permit issuable to any foreign air carrier under section 482

of this title, shall be subject to the approval of the

President. Copies of all applications in respect to such

certificates and permits shall be transmitted to the

President by the Civil Aeronautics Board before hearing

thereon, and all decisions thereon by the Civil Aeronautics

Board shall be submitted to the President before publica-

tion thereof. * * *’’ (Remainder not material).

See. 1006(a) (49 USC 646(a)) ‘‘Any order, affirmative

or negative, issued by the Board under this chapter,

except any order in respect of any foreign air carrier

subject to the approval of the President as provided in

section 601 of this title, shall be subject to review by the

courts of appeals of the United States or the United States

Court of Appeals for the District of Columbia upon peti-

tion, filed within sixty days after the entry of such order,

by any person disclosing a substantial interest in such

order. After the expiration of said sixty days a petition

may be filed only by lease of court upon a showing of

reasonable grounds for failure to file the petition thereto-

fore.’’

Act June 11, 1946 C. 324, section 2 et seq. 60 Stat. 237

(‘‘Administrative Procedure Act’’) (5 USC 1001)

et seq.

See. 7(d) (5 USC 1006(d)) ‘‘The transcript of testimony

and exhibits together with all papers and requests filed

in the proceeding, shall constitute the exclusive record for

decision in accordance with section 1007 of this title and

* * *** (Remainder not material).

APPENDIX B—U. S. CONSTITUTION

Art. 1, See. 8 of the U.S. Constitution: ‘‘Congress shall

have Power * * * to regulate Commerce with foreign

Nations.”’

Art. 1, Sec. 1 of the U.S. Constitution: ‘‘All legislative

Y owers herein granted shall be vested in a Congress of the

\ nited States, which shall consist of a Senate and House

cf Representatives.”’

Amendment V to the U.S. Constitution: ‘‘No person

shall be * * * nor be deprived of life, liberty, or property,

without due process of law; * * *.”’

Filed Sept. 15, 1955

APPENDIX C

Order of United States Court of Appeals for District of

Columbia Circuit—Dated Sept. 15. 1955

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

April Term, 1955

No. 12,878

Nationa, Arrives, Inc., a corporation, Petttioner,

Crvm Arronavutics Boarp, Respondent.

Before: Edgerton, Chief Judge, Wilbur K. Miller and

Fahy, Circuit Judges, in Chambers.

ORDER

This case came on for consideration on the motions to

dismiss filed by respondent and intervenor, Colonial Air-

lines, Inc., and by

intervenor, Eastern Air

and said motions

Lines, Ine,

were argued by counsel.

APPENDIX D

Order of Civil Aeronautics Board

Appendix B Order No, E-9347

UNITED STATES OF AMERICA CIVIL AERONAUTICS BOARD ‘'

WASHINGTON, D. ©,

Adopted by the Civil]

Aeronautics Board at its Office in

Washington, D. C.,

on the 28th day of June, 1955

Docket No. 6998

In the matter of the

Eastern-Co.ontar, AcguisiTion Case

ORDER DENYING APPEAL AND GRANTING

INTERVENTION

This matter comes before the B

oard on the appeal yp*

National Airlines, Ine. (National i

), from the following

L. Wiser, at a pre

titled proceeding on

rulings made by Examiner Ralph

hearing conference in the above-en

May 18, 1955:

evidence will be heard are limited to: (1) whether the

terms of the Eastern-Colonial acquisition agreement ere.

| not consistent with the public interest; and (2) if the

- aedjuisition is to be approved, the terms and conditions, if

| any, that should be attached and the modifications, if any,

| that should be prescribed. The Examiner also ruled that,

| while evidence will not be received regarding Eastern’s

former acquisition of control of Colonial Airlines, Inc.

(Colonial), in violation of section 408 and the subsequent

termination of that control, the parties may present argu-

ments to the Examiner and the Board on a contention that

Eastern should not be authorized to acquire Colonial at

this time because of its prior violation. The ruling further

provides that in support of such arguments, the parties

may refer to the previous Board and Examiner’s findings

0. the violation and termination thereof.

The Examiner denied National’s motion for postpone-

ment of procedural dates until the Eastern-Colonial Control

Case, Docket No. 6582, is finally concluded, pointing out

that the Board can defer final action in this case, if

justified, when the matter is submitted to the Board for

decision. The Examiner also recommended denial of

National’s petition for consolidation into this proceeding:

(1) its application for extension of Route No. 31 to

Montreal and (2) the issue of integration of National and

Colonial. The Examiner stated that consolidation would

substantially expand the issues and delay the proceeding

: * that the proceedings sought to be consolidated are not

so related that their consolidation would be justified.

In its appeal, National contends that the Examiner pre-

judged Eastern’s motion to limit the issues, in that he

ruled on Eastern’s motion before National’s answer

thereto had been filed and before the time for filing the

answer had expired. National also claims that the

Examiner’s ruling on the merits of the motion was

erroneous for the following reasons: (1) The record in

the original Eastern-Colonial Acquisition Case, Docket

No. 5666 et al., is more than two years old and the economic

data in the record are even older; (2) since the old

record, Colonial’s position has improved in that: the

carrier has shown a profit for two successive years for the

first time in its corporate history, its breakeven need has

been reduced, it has received additional route authoriza-

tions, and has shown increases in revenue passengers,

traffic ton miles, fares and load factors; (3) Eastern’s

dominance has been extended by the Northwest-Eastern

interchange, giving Eastern access to Minneapolis/St. Paul

and Milwaukee, and its route has been amended to

authorize service on an alternate route from Charlotte,

N. C., to Detroit, via Columbus and Toledo; (4) Eastern’s

net worth, available seat miles and domestic load factor

have increased, and Eastern dominates the Florida-East

Coast market; and (5) the Board’s prior finding that

Eastern’s control of Colonial had been terminated is not

res judicata; the issue is whether Eastern has control now

and that question cannot be answered until all evidence

has been adduced in this case.

National also contends that the Examiner erred in deny-

ing its motion to postpone procedural dates. The carrier

contends that since it had until June 1, 1955, within which

to file a petition for reconsideration of the decision in the

Eastern-Colonial Control Case, Docket No. 6582, the

institution of the instant proceeding is premature and a

prejudgment of any petition for reconsideration. As to

denial of its petition for consolidation National argues

that consolidation of its route extension application will

provide the Board with an alternate method of providing

one-carrier service between Florida and Montreal and the

award of such a route to National may be necessary to

justify a finding that Eastern’s acquisition of Colonial

would not result in a monopoly in this market. The carrier

urges that consolidation of the issue of integration of

National and Colonial is required under the Board’s hold-

ing in the original Acquisition Case that the objectives of

the National-Colonial Integration Investigation and the

Eastern-Colonial Acquisition proceeding were mutually

exclusive.

National has requested oral argument of its appeal.

Eastern and Colonial have each filed answers to National’s

appeal. Upon consideration of National’s appeal and the

answers thereto, the Board finds it unnecessary to pass

upon the alleged prejudgment of Eastern’s motion to limit

the issues. Inasmuch as the Examiner allowed this appeal

to be taken to the Board, the Board has full opportunity

to correct any error in the Examiner’s ruling on the merits

of said motion. However, the Board has considered the

merits of the Examiner’s rulings and finds that they are

valid and proper.

We find that no useful purpose would be served by

retrial of the question whether an Eastern-Colonial in-

tegration would be consistent with the public interest,

whether it would create a monopoly and restrain competi-

tion or jeopardize another air carrier not a party to the

agreement, and whether an Eastern-Colonial integration

would result in a greater advantage to the public than

would flow from a National-Colonial combination. These

issues have been fully determined in the Eastern-Colonial

Acquisition Case, Docket No. 5666 et al., where National

participated as a party and had ample opportunity to

explore these issues. The Board also finds that there is

no sound reason to retry the issue whether Eastern has

control of Colonial at this time, in view of the recent deter-

mination of that issue in the Eastern-Colonial Control

Case, Docket No. 6582, and National’s participation in that

proceeding. The factual allegations set forth in National’s

appeal to support National’s contention that the facts have

changed since the determination of the foregoing issues

do not, if true, indicate that the circumstances have

changed to such an extent as to require the Board to retry

these issues.

With regard to National’s motion to postpone procedural

dates in the instant proceeding until after the determina-

tion of the petition for reconsideration filed by National

in the Eastern-Colonial Control Case, Docket No. 6582, that

matter is now moot, for the petition in question has been

denied by Order No. E-9308, adopted June 15, 1955.

The Board agrees with the Examiner’s recommendation

that National’s petition for consolidation should be denied.

We find that the consolidation of National’s route extension

application would unduly expand the issues and delay

the instant proceeding, and that a determination of that

application is not necessary to a decision as to whether

the acquisition agreement should be approved.

National has filed a petition for leave to intervene and

the Board finds it appropriate at this time to make its

ruling upon said petition. Upon consideration of the

petition and the answer of Eastern thereto, the Board

finds that National is a proper party in interest whose

intervention will be conducive to the ends of justice and

will not unduly impede the conduct of these proceedings.

Tuererore, Ir Is OnpERED:

1. That National’s appeal be and it is hereby denied, and

the Examiner’s rulings appealed from are hereby affirmed;

2. That National’s motion for consolidation filed May 16,

1955, be and it is hereby denied;

3. That National be and it is hereby granted leave to

intervene in this proceeding.

By the Civil Aeronautics Board:

/s/ M. C. Muuuican

M. C. Mulligan

Secretary

(Sear)

ee A ee et

RE ia Lanett Ls

INDEX

Page

ini oS COML ch vig dbase tviieweud ook 1

NA ah Gb kn ku bes okh ew avks DAkas gus bakes 1

I UN ek ban Sc n dAdo Oe KOA Reo oekacbis 2

ESS OER EIN ee AOE eT A 2

me mmtoment of the Case ....... 0.0.0... cece ccccucese. 2

3 SNE Ree Ua sv OuNibAs doin cend sb ceacactcdexce 4

4 Nationa] Has No Case on the Merits ............. 4

| National Has Shown No Right to a Review ...... 6

4 ERISA RIS SESTORLS'S cst ANG i a 7

4 TABLE OF CASES

4 Interstate Commerce Commission v. Jersey City, 322

5 ce a GOT SPOT LET EE aT 6

4 Chicago and Southern Airlines, Inc. v. Waterman

“4 Steamship Company, 333 U.S. 103 ............... 6

Seaboard and Western v. CAB, 191 F.2d 777 ........ 4

IN THE

Supreme Court of the Anited States

OcToBER TERM, 1955

No. 561

NATIONAL AIRLINES, INc., a Corporation, Petitioner,

Vv.

Civit AgRonavtTics Boarp, Eastern Arr Lines, INnc.,

COLONIAL AIRLINES, INc., Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

BRIEF FOR COLONIAL AIRLINES IN OPPOSITION

OPINIONS BELOW

The United States Court of Appeals for the Dis-

trict of Columbia Circuit did not render an opinion and

its order dismissing Petitioner’s petition for review

is not reported. The Court’s order is printed in Ap-

pendix C to the petition. The order of the Board as

to which Petitioner sought review in the court below is

printed in Appendix D to the petition.

JURISDICTION

Jurisdiction is adequately alleged in the petition.

QUESTION PRESENTED

In the view of Colonial Airlines, an intervenor

below, the sole question presented is whether an inter-

locutory order merely prescribing the procedure to be

followed in a Civil Aeronautics Board acquisition pro-

ceeding (a proceeding in which one air carrier seeks au-

thority to acquire routes and assets of another carrier

which is only completed when the President of the

United States has approved or disapproved the action

recommended by the Board) is reviewable by a Court

of Appeals.

STATUTE INVOLVED

The Statute involved is the Civil Aeronautics Act

of 1938, 52 Stat. 973 et seq., 49 U.S.C. 401 et seq., Sec-

tions 408(b), 801 and 1006(a), the relevant provisions

of which are printed in Appendix A to the petition for

certiorari.

STATEMENT OF THE CASE

Since 1951, with the approval and formal encourage-

ment of the Civil Aeronautics Board, Colonial Air-

lines has been a candidate for merger or acquisition.

The vegional, shorthaul nature of its operations have

necessitated this step; it has been supported by sub-

sidy throughout its history; its stockholders have not

received a dividend in the company’s twenty-seven year

history. The two air carriers with which Colonial

could logically be merged have always been Eastern

Air Lines and National Airlines. Toward this end a

series of negotiations have been conducted over the

years and a series of proceedings have been held before

the Board.’ National has not made a bid for Colonial’s

assets since 1952.

1 Previously, the Board had approved an Eastern-Colonial

merger. This was not approved by the President because at the

On January 28, 1955, a contract providing for the

acquisition of Colonial’s routes and assets by Eastern

was signed, the contract to terminate on its own terms

if the necessary governmental approval could not be

obtained within one year. A proceeding seeking this

approval was initiated before the Civil Aeronautics

Board on February 5, 1955. National intervened.

Because of the prior proceedings in connection with

this acquisition, the Board, on June 28, 1955, issued

an order limiting the issues in the Colonial-Eastern

Acquisition Case. In the order, over National’s ob-

jection, the Board declined to retry the issues of

whether an Eastern-Colonial consolidation would be in

the public interest and of whether Eastern controlled

Colonial. The Board also refused to consolidate Na-

tional’s application for a route to Montreal or to include

the issue of whether a National-Colonial integration

would better serve the public interest then an Eastern-

Colonial integration. On August 26, 1955, National

filed its petition for review and motion for a stay in

the United States Court of Appeals for the District

of Columbia Circuit. National now seeks to obtain a

writ of Certiorari to review the dismissal of its peti-

tion for review by the court below.

time it had been held that Eastern had acquired technical control

of Colonial without obtaining prior approval of the Civil Aero-

nautics Board. A subsequent investigation determined that East-

ern no longer held control over Colonial. The President’s disap-

proval did not affeet the finding made by the Board that an

Eastern-Colonial integration would be in the public interest. These

orders are referred to and summarized in the Brief in Opposition

filed by the Board.

ARGUMENT

Colonial Airlines takes the position that National’s

petition for Certiorari is filed for purposes of delay

in order to prevent governmental approval of Colo-

nial’s contract with Eastern by January 28, 1956, the

termination date of the contract. There is no sub-

stance to National’s claims. It was fully heard before

the Civil Aeronautics Board on all relevant subjects

and was not in any way denied due process of law.

The order which it attacks is, under a decision of this

Court, clearly a non-reviewable order. The petition

should be promptly denied.

National Has No Case on the Merits

National’s petition for Certiorari contains allega-

tions or intimations that its certificate has been re-

voked in part or that its routes have been impaired

without due process of law. No effort is made to ex-

plain to the Court the nature of its claim with respect

to denial of due process. Its petition for review below

discloses that the root of its complaint is its failure

to get one more rehearing on issues which had been

thoroughly heard in previous eases in which National

was an active and aggressive party. The order com-

plained of removed from the Colonial-Eastern Ac-

quisition Case the issues of whether an Eastern-

Colonial consolidation would be consistent with the

public interest and whether it would create a monopoly.

Yet these issues were litigated in a consolidated pro-

ceeding known as Docket No. 5666 and 5569 in which

National was an active party. National alleges that

the findings made in these Dockets were out of date at

the time of the order involved in the instant ease; but,

this contention was mz: by the Board in the order under

attack. The Board pointed out that National had made

no allegations of factual change of sufficient signifi-

cance to warrant a reexamination of the earlier deci-

sion. (Appendix D to petition.)

National next contended that the Board should have

retried the issue of whether Eastern + ontrolled

Colonial. A case in which the question of control was

the sole issue (CAB Docket No. 6582) and in which

National was an active party had been concluded less

than a month previously.

Before the Board National sought to have its own

application for a route to Montreal consolidated with

the Colonial-Eastern Acquisition Case. This broad-

ening of the issues would obviously have unduly de-

layed the acquisition case. The Board declined to ac-

cede to this request; and its action in this regard is

supported by the case of Seaboard and Western v.

CAB, 181 F. 2d 777.

Finally, National complained of the Board’s refusal

to include as an issue in the Colonial-Eastern Acquisi-

tion case the issue of whether a merger between Na-

tional and Colonial would be more in the public inter-

est. No contract of merger between National and

Colonial was before the Board and the Board had no

power to order one. In a previous proceeding, Docket

No. 5666 and 5569, the CAB bad ruled on June 17, 1954,

Order No. E-8446, that a combination of Eastern and

Colonial was preferable and that ‘‘it would cause less

revenue diversion from National than would be suf-

fered by Eastern if National and Colonial merged.”’

National’s complaint to this Court that it has been

denied due process of law is based on the above facts.

Clearly, it has had its day in court in this and related

proceedings on every issue which the Board is required

to consider in connection with the Colonial-Eastern

Acquisition. The order now sought to be reviewed

merely limited the issues (and accordingly the evi-

dence) in the present acquisition proceeding because

all the matters raised by National had already been

presented. Due process, it is submitted, could not be

served by a continued retrial of such issues. Every

controversy must end at some time. Administrative

agencies, like courts cannot, if they are to function at

all, permit the injection of old, already decided issues

into every new proceeding that is begun. If they did,

the whole administrative process could be hopelessly

frustrated by disgruntled aspirants for the authority

sought in each pending proceeding. (Cf. Interstate

Commesce Commission v. Jersey City, 332 U.S. 503

(1944) ).

National Has Shown No Right to a Review

The order which National seeks to have reviewed

was an interlocutory order; it merely determined the

subsequent procedural course in a proceeding which

has not even as yet been completed. No authority has

been cited for the proposition that an order such as

this one is reviewable in the courts. It is almost axio-

matic that interlocutory orders, particularly when re-

lating to procedure, are not.

In this particular case the proceeding will ulti-

mately involve the participation of the President of

the United States. There can be no question under ap-

plicable decisions that judicial review is not available

in a case in which the President has acted. Chicago

and Southern Airlines, Inc. v. Waterman Steamship

Company, 333 U.S. 103 (1948).

The Waterman case also held that no review may

be had of an interlocutory order issued in a proceed-

ing such as this one where the President must ulti-

mately approve the action taken by the Board. Na-

tional makes the contention that this holding is dictum.

However, Mr. Justice Jackson’s opinion considered

the reviewability of interim orders in the course of

reaching conclusions with respect to reviewability of

a final order involving presidential approval. Further-

more, and of significance here, the dissenting opinion

of Mr. Justice Douglas indicated that the whole Court

agreed that an interlocutory order cannot be reviewed

prior to the time the President has acted. Accordingly,

the authority of the entire court stands squarely behind

the proposition that National has no right to a review

of this purely procedural, interlocutory order at this

time.

National contends that if no review is available the

statute is unconstitutional. This contention is pre-

mature in this case and is a self-defeating argument

at best. National’s only right to go to the Court of

Appeals is created by the very statute which National

would now strike down on constitutional grounds.

(See. 1006(a) of the Civil Aeronautics Act, 49 USC

646(a))

National has no right to have this order reviewed.

CONCLUSION R

Colonea®

The contract between Eastern and Neatienat expires

on January 28, 1956. The parties to the contract, of

course, can extend it and may do so. The Board, how-

ever, has no power to order it extended and if

approval is not forthcoming by that date, the rights

which Colonial stockholders presently have under the

agreement are at an end. Proceedings in the acquisi-

tion case, looking toward the obtaining of the decision

by the President, may well be in abeyance pend-

ing disposition of National’s petition for a writ of

certiorari in this Court. National on December 19

specifically requested the Board in writing that this

be done.

Accordingly, Colonial respectfully requests this

Court to dispose of National’s petition at the earliest

possible time. We submit that the order of the court

below is fully supported by the decision of this Court

and that the petition for a writ of certiorari should

be denied. We request that it be denied promptly so

that Board and Presidential approval, if forthcom-

ing, will apply to a contract which is still in effect.

Respectfully submitted,

STEPHEN AILEs

1100 Shoreham Building

Washington, D. C.

Attorney for

Colonial Airlines

Of Counsel

STEPTOE & JOHNSON

1100 Shoreham Building

Washington 5, D. C.

SuLLIvAN, Donovan, HANRAHAN,

McGovern AND LANE

14 Wall Street

New York, New York

EpMonp M. HANRAHAN

14 Wall Street

New York, New York

Epwarp A. SILuiere

14 Wall Street

New York, New York

L. OrvitLE CAMERON

230 Park Avenue

New York, New York

InN THE

Supreme Court of the United States

October Term 1955

No. 561

NationaL Arruines, lxc., a Corporation,

Petitioner,

—vV.—

Crvit AERonavuTics Boarp,

Respondent,

—and—

Eastern Arr Lines, Ixc.,

CoLtoniaL Airings, INc.,

Interveners.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR EASTERN AIR LINES, INC.

IN OPPOSITION

E. SMytHe GAMBRELL

W. Gren Harian

Terry P. McKenna

825 Citizens & Southern

National Bank Building

Atlanta 3, Georgia

Counsel for Eastern Air Lines, Inc.

GamBRELL, Haran, Russett, Move & Ricwarpson

825 Citizens & Southern

National Bank Building

Atlanta 3, Georgia

Of Counsel

| a PS ST I SED

| INDEX

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Citations:

CASEs:

Chicago & Southern Airlines v. Waterman Steamship

BPs SR ls TOG NIE wince sael Clncaian site Rained 4,5,6,7,8

Colonial Airlines, Inc. v. Adams, 87 F. 242; 338 U. S.

Eisner v. Macomber, 252 U.S. 189, 205 2000000000 8

Federal Communications Commission v. Pottsville

Broadcasting Co., 309 U. S. 487 2.2... cccccccccccccctscccceceee 11

Jones v. Habersham, 107 U.S. 179 2.0... 7

National Fire Ins. Co. of Hartford v. Thompson, 281

I a ia i ka 10

Railroad Companies v. Schutte, 103 U.S. 118 2000000000...

Rochester Telephone Corp. v. United States, 307 U. S.

ERR ERNCENS ERE Ee NREL OR oe DON NA

Seaboard & Western Airlines, Inc. v. Civil Aeronautics

UR a.

Union Pacific R.R. v. Mason City and Ft. Dodge R.R.,

ARES Soe e oy tnt Od RS gee

United Air Lines, Inc. v. Civil Aeronautics Board, No.

12,043 CADC, 5 Pike & Fischer, Ad. Law (2d) 254

United States v. Curtiss-Wright Corp., 299 U. S. 304 ....

United States v. Illinois Central R. Co., 244 U. S. 82 ....

United States v. Los Angeles & Salt Lake R. Co., 273

U.S. 299 ;

United States v. Pierce Auto Freight Lines, Inc., 327

U.S. 515

STATUTES:

Act June 23, 1938, C-601, 52 Stat. 977 (“Civil Aero-

nautics Act’’) 49 USC 401 et seq.:

Sec. 401(i) (49 USC 481(i)) cecccccccccccccccccccsscecececeeeceece

Sec. 408(b) (49 USC 488(b)) ccccccccccccccccccsccccccccccccccce

ee I ae i

Sec. 1006(a) (49 USC G646(a)) ............. 2...

IN THE

Supreme Court of the United States

October Term 1955

No. 561

NationaL ArruiNes, [xc., a Corporation,

Petitioner,

—_vVvV.—

Crvit AERONAUTICS Boarp,

Respondent,

—and—

Eastern Aig Lines, INc.,

CoLtontaL Arrives, INc.,

Interveners.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR EASTERN AIR LINES, INC.

IN OPPOSITION

Opinions Below

The Court of Appeals did not render an opinion, and its

order of dismissal (Petition for Certiorari, Appendix ©)

is not reported. The opinions and orders of the Civil

Aeronautics Board are not reported but are included in

the materials certified as part of the record herein,

Jurisdiction

The basis of jurisdiction is adequately set forth in the

petition.

Questions Presented

1. Whether the Board’s interlocutory procedural order

determining the scope of the evidence and issues in the

administrative proceeding of which review was sought

below has sufficient finality to be ripe for review;

2. Whether the provisions of the Act permit review of

interlocutory procedural orders in proceedings where ulti-

mate determination must be made by the President; and

3. Whether the Board’s order for which review was

sought below deprived National of a fair hearing or any

other procedural right.

Statement

On July 24, 1952 Eastern and Colonial filed with the Civil

Aeronautics Board as required by Sections 408 and 412 of

the Civil Aeronauties Act, a joint application for approval

of an agreement under the terms of which Eastern would

acquire all of the air transportation system and other assets

of Colonial. Extensive public hearings, in which petitioner

actively participated, were held in Docket 5666, the Eastern-

Colonial Integration Agreement Case. On charges by peti-

tioner of “illegal control” of Colonial by Lastern, follow-

ing disapproval of the agreement by the President, the

* Petitioner's allegation (Pet., p. 3) that “Thereafter Eastern

defeated a National-Colonial integration by gaining illegal control

of Colonial” is wholly unfounded as the Board has determined.

As a matter of fact, in the public hearings petitioner made pre-

cisely this charge and sought to adduce evidence to that end. The

Trial Examiner found that petitioner's charges were unfounded

and petitioner took no exception to that finding although it filed

voluminous exceptions to other facts found by the Examiner.

Board instituted a proceeding known as Jn The Matter Of

The Investigation of Control of Colonial Airlines, Inc., by

Eastern Air Lines, Inc., under Docket 6582. Following ex-

tensive public hearings, this investigation was concluded

with a finding by the Board’s Counsel, the Examiner and

the Board that Eastern did not control Colonial.

On February 3, 1955, Colonial Airlines, Inc. (“Colonial”)

and Eastern Air Lines, Ine. (“Eastern”) filed with the

Civil Aeronautics Board (“the Board”) a joint application

seeking approval of an agreement dated January 28, 1955

under the terms of which Eastern would acquire all of the

air transportation system and other assets of Colonial.

Evidentiary hearings were concluded in the proceeding on

August 1, 1955, an Examiner’s recommendations were pub-

lished on October 26, 1955, exceptions and briefs in support

thereof were filed, oral argument before the Board was

held on November 28, 1955, and the case stands submitted

to ‘he Board for decision. Since the Colonial routes in-

volve foreign operations, the ultimate decision of the Presi-

dent approving or disapproving the agreement is required

pursuant to Section 801 of the Cisil Aeronautics Act (“the

Act’’). In its orders defining the procedures to be followed

in the evidentiary hearings (Pet., App. D, p. 5a), of which

orders review was sought below, the Board decided that,

since voluminous evidence on certain aspects of the agree-

ment had already been received in companion cases in

which National participated most actively, it would in the

current case not hear further evidence with respect to any

questions except (a) whether the terms of the agreement

are not consistent with the public interest, and (b) what,

if any, terms and conditions should be attached, and what

modifications, if any, should be preseribed in the event of

approval.

Statutes Involved

The statute involved is the Civil Aeronautics Act of 1938,

as amended, 52 Stat. 973, 49 U. S. C. 401 et seg., Sections

401(i), 408(b), 801 and 1006(a), the relevant provisions of

which are printed in the appendix hereto.

Argument

1. The Board’s order, for which review is sought here

and was sought below, is obviously an interlocutory pro-

cedural order for which review is not provided. This Court

in Chicago € Southern Air Lines, Inc. v. Waterman Corp.,

333 U. S. 103 (1948), stated the established rule that “ad-

ministrative orders are not reviewable unless and until they

impose an obligation, deny a right or fix some legal rela-

tionship as a consummation of the administrative process.”

United States v. Los Angeles € Salt Lake R.R., 273 U. S.

299 (1927) ; United States v. Illinois Central R.R., 244 U. 8.

82 (1917) ; Rochester Telephone Corp. v. United States, 307

U. S. 125 (1939). The order here complained of by peti-

tioner is not within any of those categories.

Petitioner apparently recognizes that preliminary inter-

locutory orders are not subject to review, but it contends

that review should be accorded this interlocutory order

because the Waterman decision held that a final order

(approved by the President) is not subject to judicial re-

view. It is difficult to understand why an interlocutory

order should be thought to be reviewable solely because it

would be unreviewable if it were final. On the contrary,

it seems clear that in the interlocutory stage the order

would be doubly unreviewable: First, because it is not final

and therefore determines no rights or obligations, and

second, because finalization by the President will add mat-

ters of executive discretion which the Court could not re-

view in any event and therefore any attempt at judicial

action would be a nullity.

Whatever argument petitioner may have as to the cor-

rectness of the Waterman decision in holding review un-

available after Presidential action, there can be no valid

argument as to the unavailability of review at this pre-

liminary stage. In the Waterman case, the Court divided

five to four on reviewability after decision by the President,

but the Court was unanimous in holding that judicial review

is not available at the interlocutory stage here involved.

The majority of this Court pointed out that an order of

the Board prior to Presidential action “can give nothing

and can take nothing away” (333 U. S. 112) and held that

until Presidential approval the order was not a final de-

termination and after Presidential approval it was unre-

viewable because the courts cannot review the exercise of

Presidential discretion.

The dissenting opinion, while dividing with the majority

upon the question of review after Presidential action, agreed

that review is unavailable before such action, stating (333

U. S. 116) that “Approval by the President under this

statutory scheme has relevance for the purposes of review

only as indicating when the action of the Board is review-

able ... When the order fixes rights, on clearance by the

President, it becomes reviewable.”

Thus the Waterman decision, contrary to petitioner’s con-

tention, is undivided on the proposition that orders of the

interlocutory nature of that now before the Court are not

susceptible of review. The present case has not yet reached

the stage of Presidential action and is therefore, pursuant

to this Court’s unanimous opinion in Waterman, not sub-

ject to review and petitioner’s request is premature.

Petitioner’s request is founded on the two assumptions

(1) that the Board will approve the agreement and (2)

that the President will approve the Board’s decision. Both

assumptions are merely “presently hypothetical results”

as to which this Court, and the parties, at this juncture,

can do no “more than speculate” (United Air Lines, Inc.

v. Civil Aeronautics Board, No. 12,043, CADC, 5 Pike &

Fischer, Ad. Law (2d) 254, 257, decided June 20, 1955).

2. Nor does petitioner’s inability to obtain review of an

interlocutory order at this time raise any question of the

constitutional validity of Section 801 of the Act as a dele-

gation of authority to the President without standards.

In the first place the question of the existence of stand-

ards is separate and distinct from the requirement of re-

view to insure the application of those standards. Petitioner

calls upon this Court to assume that the Board and the

President will not abide by the required standards. The

Court can make no such assumption, and petitioner has

not contended that the Act’s substantive standards have

been or will be ignored. It suggests merely that they might

be, and that therefore judicial review is necessary under

the Constitution. But the courts cannot act to correct

“wrongs” which have not occurred and are merely specu-

lative.

The constitutional validity of Section 801 in cases where

judicial review is not available even after final decision

was implicitly established by this Court in the Waterman

ease (333 U. S. 109). As a three-judge district court has

concluded :

“While the immediate question involved in the Water-

man case was that of the construction of the statute

as it relates to judicial review of a domestic carrier

seeking a permit to engage in foreign operation, it

seems necessarily implicit in what the Court said that

the Congress had the right to make the delegation

which it did make in this statute.” Colonial Airlines,

Inc. v. Adams, 87 F. Supp. 242, 243 (D. D. C. 1950),

appeal dismissed on motion of appellant, 338 U. S.

947 (1950).

It is difficult to believe that this Court would have held

review unavailable in the Waterman case without even

noting the constitutional difficulty—if one had been present

—created by such unavailability.

Moreover, in the Waterman decision this Court cited

United States v. Curtiss-Wright Corp., 299 U. 8. 304 (1936),

and other authorities holding that Coagressional standards

for Presidential action in the field of foreign commerce

need not be as rigid as in other fields. There can be no

doubt therefore that determination of the constitutional

validity of Section 801 was before this Court and consid-

ered by it in the Waterman case and that the Court’s

decision in that case implicitly, if not directly, confirmed

the constitutional validity of Section 801.

Nor can petitioner evade the force of the implicit con-

clusions of the Waterman decision by the simple expedient

of discarding the language of Mr. Justice Jackson as

“dicta.” It is too well established to require lengthy argu-

ment that all conclusions which are necessary to an inte-

gral parts of a judicial decision are part and parcel of

the ratio decidendi and not mere “dicta.” Railroad Com-

panies v. Schutte, 103 U. S. 118 (1881); Jones v. Haber-

sham, 107 U. S. 179 (1883); Unton Pacific R.R. v. Mason

City and Ft. Dodge R.R., 199 U. S. 160 (1905).

Petitioner regards as “dicta” (Petition, pp. 6-7) the state-

ment of the Court in the Waterman case that the Board

was “a mere advisor to the President” and that therefore

review of the Board’s actions could not be had at any time

—not even, as the Court of Appeals thought in that case

(166 F. 2d 1021), after the decision had become final upon

approval by the President. Such statements by Mr. Justice

Jackson obviously did not constitute dicta. They were the

gist of the decision. As the Court then stated (333 U. S.

113):

“The dilemma faced by those who demand judicial re-

view of the Board’s order is that, before Presidential

approval, it is not a final determination even of the

Board’s ultimate action, and after Presidential ap-

proval, the whole order, both in what is approved

without change, as well as in amendments which he

directs, derives its vitality from the exercise of un-

reviewable Presidential discretion.”

Certainly such statements are not “dicta.” As the Court

stated in Eisner v. Macomber, 252 U. S. 189, 205 (1920),

a statement “cannot be regarded as obiter dictum” where

it has “furnished the entire basis for the conclusion

reached.”

3. Petitioner has not shown, and indeed could not show,

that it has been deprived of a fair and complete hearing

before the Board or has been deprived of any procedural

right to which it is entitled either by the Constitution or

by statute.

The question of the fairness of the administrative hear-

ing afforded petitioner was extensively briefed and argued

before the court below and was, in fact, one of the grounds

upon which respondent’s motion to dismiss was based.

Petitioner’s conclusion that the Court of Appeals granted

the motion to dismiss solely on the authority of the Water-

man decision is therefore unfounded. The Court of Appeals

has had occasion in the past to hold that its jurisdiction

to review an interlocutory order can be invoked and exer-

cised only upon a showing of deprivation of right by the

order. Seaboard & Western Airlines, Inc. v. Civil Aero-

nautics Board, 86 App. D. C. 9, 181 F. 2d 777, 779 (1949).

The dismissal below could have been, and it can reasonably

be assumed was, granted on the merits and can be sus-

tained on that basis.

The Eastern-Colonial Integration Agreement Case has

been a very lengthy proceeding involving three separate

hearings. In July 1952, the first Eastern-Colonial Inte-

gration Agreement Case was presented to the Board for

hearings which were held in the Fall and Winter of 1952-

1953. On charges by petitioner of “illegal control,” a pro-

ceeding (Jn the Matter of The Investigation of Control

of Colonial Airlines, Inc. by Eastern Atr Lines, Inc.) was

instituted. Extensive public hearings were held in boti

eases. When the present Eastern-Colonial Integration

Agreement Case was set for hearing, the Board properly

decided that no necessity existed for relitigation of all the

phases of the agreemen’ upon which evidence had been

received in the previous cases in the absence of a showing

of substantially changed conditions.

In all of these proceedings petitioner was given the

opportunity over a period of many weeks of hearings,

and in numerous briefs, and other documents, and in

oral argument before the Board, and in petitions for re-

hearing and reconsideration and for reopening of the rec-

ord, to show that the integration of Mastern and Colonial

would not be consistent with the public interest.

Moreover, in the phase of the case which is now before

the Court, petitioner was afforded numerous opportunities

to file documents with the Board to present such new and

additional facts as might be available to it and might be

helpful in persuading the Board to hear further evidence

on those phases of the agreement heard in the companion

cases. Petitioner actually did file a lengthy appeal docu-

ment with the Board in which it set out numerous factors

which it claimed called for further investigation and a

different result from the prior decisions.’ Upon considera-

tion of the facts alleged by petitioner, the Board found

that the “factual allegations set forth in National’s appeal”

did not “indicate that the cireumstances have changed to

such an extent as to require the Board to retry these

issues” (Order E-9347, Petition, App. D., p. 7a).

The right of the Board to support its findings by refer-

ence to companion cases is firmly established. Crichton,

et al. v. United States, et al., 56 F. Supp. 876, 880 (S. D.

N. Y. 1944) ; National Fire Ins. Co. of Hartford v. Thomp-

son, 281 U. S. 331 (19380); United States v. Pierce Auto

Freight Lines, Inc., 327 U. S. 515 (1946). In the ease

last cited this Court said:

“In the absence of any showing of specific prejudice,

that claim comes down to the highly technical objection

that the Commission, in the final stage of forming its

judgment, could not in either case take account of

what had been done in the other, notwithstanding the

closely related character and objects of the applica-

tions and the prior proceedings. The contention in its

farthest reach amounts to a legal version of the scrip-

tural injunction against letting one’s right hand know

what one’s left hand may be doing.

“Obviously, it would be consistent with neither good

sense, nor, we think with the type of hearing assured

by the statute to force the Commission to put on such

complete blinders.”

* Petitioner alleged all of these “facts” again in the documents

it filed with the Court of Appeals and based its argument to that

Court upon the existence of those facts which, it alleged, necessi-

tated complete new hearings and relitigation of the issues tried and

heard by the Board in the companion cases.

It is believed that this Court will not be impressed by

petitioner’s contention that the Board’s limitation of is-

sues to be heard was illegal. What the Board has done is

not substantially different from what a trial court commonly

does in either (1) declining to grant rehearing in the ab-

sence of a showing of substantial new evidence, or (2)

applying the principles of res judicata or estoppel by

judgment to a party who has lost the litigation and has

either failed to appeal or has been unsuccessful on appeal.

Administrative procedure must be less restrictive than

judicial procedure. Federal Communications Commission

v. Pottsville Broadcasting Co., 309 U. S. 487 (1940).

Petitioner has had a full measure of “due process” be-

fore the Board, and the court below properly dismissed

its petition for review as wholly without merit.

CONCLUSION

The decision below is proper and correct; petitioner

has been deprived of no procedural right; and there

is no issue presented by petitioner warranting review

by this Court. The petition for a writ of certiorari

should be denied.

Respectfully submitted,

s/ E. SMytHe GAMBRELL

E. Smythe Gambrell

s/ W. Guen HarLan

W. Glen Harlan

Counsel for Eastern Air Lines, Inc.

APPENDIX—STATUTES

Act June 23, 1938, C. 601, 52 Stat. 977 (“Civil Aeronautics

Act”) 49 USC 401 et seq.

Sec. 401(i) (49 USC 481(i)) “No certificate may be trans-

ferred unless such transfer is approved by the Board as

being consistent with the public interest.”

Sec. 408(b) (49 USC 488(b)) “Any person seeking

approval of a consolidation, merger, purchase, lease, oper-

ating contract, or acquisition of control, specified in sub-

section (a) of this section, shall present an application

to the Board and thereupon the Board shall notify the

persons involved in the consolidation, merger, purchase,

lease, operating contract, or acquisition of control, and

other persons known to have a substantial interest in the

proceeding, of the time and place of a public hearing.

Unless, after such hearing, the Board finds that the con-

solidation, merger, purchase, lease, operating contract, or

acquisition of control will not be consistent with the public

interest or that the conditions of this section will not be

fulfilled, it shall by order, approve such consolidation,

merger, purchase, lease, operating contract, or acquisition

of control, upon such terms and conditions as it shall find

to be just and reasonable and with such modifications as

it may prescribe: Provided, That the Board shall not

approve any consolidation, merger, purchase, lease, oper-

ating contract, or acquisition of control which would

result in creating a monopoly or monopolies and thereby

restrain competition or jeopardize another air carrier not

a party to the consolidation, merger, purchase, lease,

operating contract, or acquisition of control * * *” (Re-

mainder not material)

Sec. 801 (49 USC 601) “The issuance, denial, transfer,

amendment, cancelation, suspension, or revocation of, and

the terms, conditions, and limitations contained in, any

certificate authorizing an air carrier to engage in overseas

or foreign air transportation, or air transportation

between places in the same Territory or possession, or any

permit issuable to any foreign air carrier under section 402

of this title, shall be subject to the approval of the

President. Copies of all applications in respect of such

certificates and permits shall be transmitted to the Presi-

dent by the Civil Aeronautics Board before hearing thereon,

and all decisions thereon by the Civil Aeronautics Board

shall be submitted to the President before publication

thereof. * * *” (Remainder not material).

Sec. 1006(a) (49 USC 646(a)) “Any order, affirmative

or negative, issued by the Board under this Act, except

any order in respect of any foreign air carrier subject to

the approval of the President as provided in section 801

of this Act, shall be subject to review by the circuit courts

of appeals of the United States or the United States Court

of Appeals for the District of Columbia upon petition,

filed within sixty days after the entry of such order, by

any person disclosing a substantial interest in-such order.

After the expiration of said sixty days a petition may be

filed only by leave of court upon a showing of reasonable

grounds for failure to file the petition theretofore.”

INDEX

age

ON...) i eet caekakont + iakamwinh tae see !

| lla ea i ORBLE SEEM ERE ke 7 ie RT A A 1

mapeestions presented . . . . ..........-..-..-.--.---- 2

S M@tatute involved. ..................-. ce ee 2

TL en a aceien nna eae 3

tet te A RED Bat Heo Ane PHA ATER 8 8

Ne ee ee el ane aabbaknes ae 13

ee ebakimaule 14

c CITATIONS

Cases:

a Chicago & Southern Airlines v. Civil Aeronautics

Board, C. A. D. C. No. 10,375, certiorari

Re a ai i alain a nmin coches ll

Chicago & Southern Airlines v. Waterman Steam-

ehip Corp., 333 U.S. 103..........--.-- 8,9, 11,12

Colenial Airlines v. Adams, 87 F. Supp. 242,

eppeal dismissed, 338 U.S. 947... ......-.-.-- li

Crichton v. United States, 56 F. Supp. 876,

SO, SE TE, Oh, Ban ae cman caccanyscen 10

Eastern Air Lines v. Civil Aeronautics Board, 178

EPEC NSE SRO ere Semen 9

Eastern-Colonial Acquisition Case, C. A. B.

Docket Nos. 5569, 5666... ..............-- 3, 6,10

Eastern-Colonial Acquisition Case, C. A. B.,

Se Cn oes ohh einéonenaceste 6

Eastern-Colonial Control Case, C. A. B. Docket

SO ao nick eleislents enn inant =n: tng pie wishion 5, 6.7, 10

Federal Communications Commission v. RCA

Communications, Inc., 346 U.S. 86_.-.----.-- ll

Georgia Comm. v. United States, 283 U.S. 765-- 10

Interstate Commerce Commission v. Jereey City,

BD CRE Scccectoncaukshemnbuededeadet 10

re)

Cases—Continued Page

Pauley v. Federal Communications Commission,

181 F. 2d 202._.....-...-.---------------- 9

Pittsburgh Glass Co. v. Board, 313 U. S. 146----- 10

Reetz v. Michigan, 188 U.S. 505- ------------- ll

Seaboard & Western Airlines v. Civil Aeronautics

Board, 181 F. 2d 777.....------------------ 8,9

Trans World Airlines v. Civil Aeronautics Board,

184 F. 2d 66, certiorari denied, sub nom.

Sparks v. Civil Aeronautics Board, 340 U. S.

A cnt ndamendetedsnscsccooeesesans 4

Western Airlines v. Civil Aeronautics Board, 184

F. 2d §45.....---------------------------° 9, 10

Statutes:

Civil Aeronautics Act of 1938, 52 Stat. 973, 49

U.S. C. 401 et seg.:.---------------------- ® 2

ee WO AS. 5 os ann cencconssense<se 4, 10, 14

“net ER tae epi yanee ner 2, 4,11, 15

Sec. 1006 (a)---------------------------- 16

Miscellaneous:

Orders of the Civil Aeronautics Board:

E-8136, Feb. 26, 1954. -..--------------- 4

E-8446, June 17, 1954. ..---------------- 5

E-9162, April 29, 1955......------------- 5

E-9347, June 28, 1955. ...-------------- 6, 7, 10

athe Supreme Gourtof the Wied Sates

OctTosEeR TERM, 1955

No. 561

NATIONAL AIRLINES, INC., PETITIONER

Crvm. AERONAUTICS BOARD, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE DISTRICT

OF COLUMBIA CIRCUIT

BRIEF FOR THE CIVIL AERONAUTICS BOARD IN

OPPOSITION

OPINIONS BELOW

The Court of Appeals did not write an opinion.

The opinions and orders of the Civil Aeronautics

Board (S. R. 80-165)* are not reported.

JURISDICTION

The judgment of the Court of Appeals was

entered on September 15, 1955 (Pet. App. 3a—4a).

The petition for a writ of certiorari was filed on

? The symbol “S. R.” refers to the Supplement to the Rec-

ord filed by respondent pursuant to Rule 26 (1) of the

Revised Rules of this Court.

(1)

December 9, 1955. The jurisdiction of this Court

rests on 28 U. S. C. 1254 (1).

The Civil Aeronautics Board has pending be-

fore it an application for approval of Eastern Air

Lines’ proposed acquisition of the routes and

properties of Colonial Airlines. Since the Colo-

nial routes involve foreign operations, ultimate

approval or disapproval of the acquisition will be

made by the President pursuant to Section 801 of

the Civil Aeronautics Act. In the course of its

proceeding, the Board has entered an order (1)

denying consolidation of petitioner’s application

for certain new routes with the Colonial-Eastern

acquisition proceeding, and (2) refusing to re-

consider, in the latter proceeding, certain issues

already decided in prior related administrative

proceedings in which petitioner has participated.

Petitioner sought judicial review of that order,

and the Board moved to dismiss on several

grounds. The court below entered a per curiam

order of dismissal which did not specify the

grounds thereof.

The question presented is whether the petition

for review of the Board’s order was properly

dismissed, either on jurisdictional grounds or as

plainly lacking in merit.

STATUTE INVOLVED

The relevant provisions of the Civil Aeronau-

ties Act of 1938, 52 Stat. 973, 49 U. S. C. 401

et seq., are set forth in the Appendix, infra,

pp. 14-16.

STATEMENT

Petitioner National Airlines (‘‘National’’) and

Eastern Air Lines (‘‘Eastern’’) conduct compet-

ing air carrier operations between Florida points

and Washington and New York. Colonial Air-

lines (‘‘Colonial’’) is a short-haul subsidized car-

rier which operates (1) between Montreal and

Ottawa on the one hand, and New York and

Washington on the other, (2) between New York

and Bermuda, and (3) between Washington and

Bermuda. Its operations hold little hope of be-

coming economically self-sufficient in the near

future.

In 1952 the Board instituted an investigation

to determine whether integration of National

and Colonial would be in the public interest.”

Shortly thereafter, however, an application was

submitted to the Board for approval of an agree-

ment for the acquisition of Colonial by Eastern,

and this application was consolidated for hearing

with the pending National-Colonial investigation.

Eastern-Colonial Acquisition Case, Docket Nos.

5666 and 5569.

2 Under the Civil Aeronautics Act, the Board has no power

to compel ccnsolidation of air carriers, but it frequentiy indi-

cates situations where it is of the view that voluntary con-

solidation would be in the public interest. Consolidation

agreements require Board approval under Section 408 of

the Act.

In the ensuing administrative proceedings,

National (which was a party) contended that

Eastern had unlawfully acquired control of

Colonial prior to the acquisition agreement, and

that the agreement was the result of this illegal

control. The Board held that Eastern had ac-

quired unlawful control, but that such control had

not influenced the execution of the acquisition

agreement. It found that the Eastern-Colonial

merger was in the public interest, and it there-

fore did not reach the question whether a

National-Colonial merger might also be in the

public interest.

Since Colonial’s certificates in part cover for-

eign air transportation, Section 801 of the Act

requires Presidential approval for their transfer

(infra, p. 15).2 The Board submitted the agree-

ment to the President for approval, but the Pres-

ident disapproved it solely ‘‘because of Eastern’s

unlawful acquisition of control of Colonial in

violation of Section 408’’ (Order E-8136, S. R.

88). In so doing, the President did not disturb

the Board’s finding that combination of the two

carriers would be in the public interest. The

Board then entered an order disapproving the

merger.

Shortly thereafter, the Board issued an opinion

in which it stated that, although it previously had

8 See T'rans- World Airlines v. Civil Aeronautics Board, 184

F. 2d 66, 71 (C. A. 2), certiorari denied sub nom. Sparks v.

Civil Aeronautics Board, 340 U. S. 941.

concluded that an Eastern-Colonial merger would

be more in the public interest than a National-

Colonial merger, it had considered the merits

of the latter in view of the President’s disap-

proval of the former. It concluded that a merger

of National and Colonial would also be in the

public interest. The Board stated that it made

this determination in order to ‘‘open the door to

negotiation’’ between the carriers, and it further

stated that if an agreement for the acquisition

of Colonial by National would be presented to it

for approval, it ‘‘would then have before it only

the problem whether the terms of the agreement

were consistent with the public interest’’ (p. 4,

Order E-8446, June 17, 1954, S. R. 94). The

Board pointed out (id., p. 5), however, that in

approving a National-Colonial merger it was not

deciding that ‘‘a future acquisition agreement

between Eastern and Colonial would necessarily

be inconsistent with the public interest if East-

ern, prior to entering into such an acquisition

agreement were shown to have clearly divested

itself of control of Colonial.”

The Board also instituted a separate proceed-

ing, in which National was a party, to compel

Eastern to divest control of Colonial. Eastern-

Colonial Control Case, Docket No. 6582. On

April 29, 1955, the Board found that Eastern no

longer exercised control over Colonial as of Au-

gust 31, 1954, and dismissed the proceedings.

Order E-9162, April 29, 1955, S. R. 161.

‘On September 24, 1954 (when Eastern no longer

eontrolled Colonial), Colonial solicited bids from

‘both Eastern and National. National did not bid,

and a new Eastern proposal to acquire Colonial

was accepted by the latter on January 28, 1955.

This proposal was presented to the Board for

approval, and National intervened in opposition.

On June 28, 1955, the Board entered the order

under review, which had the following conse-

quences :

(1) The Board limited the evidence to be

received in the proceeding to evidence relat-

ing (a) to whether the terms of the Eastern-

Colonial agreement are consistent with the

public interest, and (b) to the terms and

conditions which should be attached to the

acquisition if approved. This was rested

upon findings that no useful purpose would

be served by a retrial of the broader public

interest issues previously determined in the

earlier Eastern-Colonial Acquisition Case or

by a retrial of the issues relating to Eastern’s

control of Colonial recently determined in the

Eastern-Colonial Control Case.

(2) The Board declined to consider whether

a National-Colonial integration would be

preferable to an Eastern-Colonial merger.

This was based upon findings that this issue

had been thoroughly explored and determined

in the earlier Eastern-Colonial Acquisition

Case recently concluded by the Board.

(3) The Board denied consolidation into

the proceeding of a new route application

filed by National requesting an extension of

its routes to Montreal. It found, in this con-

nection, that consolidation would unduly ex-

pand the issues and delay the proceeding, and

that a determination of National’s application

is not necessary to decision as to whether

the Eastern-Colonial acquisition should be

approved.‘

On ‘August 26, 1955, National filed a petition to

review the above order. The Board moved to

dismiss* on three grounds: (1) That the order

related to matters committed to the determination

of the President and therefore was not reviewable ;

(2) that the order was an interlocutory proced-

ural one; and (3) that there was no showing of

error by the Board or that National had been

deprived of any rights.

On September 15, 1955, the Court of Appeals,

after argument, entered a per curiam order of dis-

missal, which does not state the grounds therefor

(Pet. App. 3a).

*In holding that Eastern’s control of Colonial had been

terwninated (supra, p. 5), the Board also found that “no

element of control” had entered into the negotiation of the

present acquisition agreement. Initial decision in Docket

No. 6582, pp. 42-45, S. R. 147-150. In its order of June 28,

1955, the Board stated that National was free to argue in the

Eastern-Colonial merger proceeding that Eastern’s prior

acquisition of control disqualified it from now acquiring

Colonial—a contention which National has made before the

Board.

* Eastern and Colonial intervened, and they also moved to

dismiss.

370789—55——_2

In the interval, the administrative hearings on

the acquisition were completed. On October 26,

1955, the examiner issued a report recommending

approval, and on November 28, 1955, the Board

heard oral argument. At the time of the filing of

this brief, the matter is still pending before the

Board and no recommendation has been sent to

the President. The acquisition agreement, unless

sooner approved or disapproved, will expire by

its terms on January 28, 1956.

ARGUMENT

Contrary to petitioner’s contention (Pet. 4,

5), it cannot be ‘‘presumed” that the court’s

order of dismissal rested on the fact that the

Board’s order related to foreign air transporta-

tion—a subject which, under Chicago and South-

ern Air Lines v. Waterman Steamship Co., 333

U. S. 103, is generally within the non-reviewable

discretion of the President. As we have noted

(supra, p. 7), the Board moved to dismiss not

only because the proceedings related to foreign

air transportation, but also because (1) the order

was interlocutory and (2) petitioner had not

shown that it was erroneous, or that it deprived

petitioner of any rights.° As we point out below,

*In determining whether an interlocutory administrative

order is reviewable, the court below has considered, on other

occasions, whether it deprives the petitioner of any rights.

Cf. Seaboard & Western Airlines v. Civil Aeronautics Board,

181 F. 2d 777, 779 (C. A. D.C.);

entirely apart from the applicability of the

Waterman decision to the ease at bar, the de-

cision of the Court of Appeals is clearly correct.

~ The Board’s order (1) denied consolidation of

petitioner’s pending new route application with

the Eastern-Colonial merger proceeding, and (2)

refused to reconsider, in the merger proceed-

ing, certain issues which had been decided in the

prior related administrative proceedings—pro-

ceedings in which petitioner had fully partici-

pated. |

In so far as the order denied consolidation,

such orders repeatedly have been held non-final

for review purposes" and, as this Court pointed

out in the Waterman case, supra, pp. 112-113,

only final Board orders are reviewable. In any

event, the Board correctly denied consolidation.

Petitioner sought consolidation on the ground

that the two applications were ‘‘mutually exclu-

sive,’ and that the Board therefore could not

grant one without a contemporaneous hearing on

both. But an application for a new route is not

mutually exclusive with an application for trans-

fer of an existing route, and consolidation of the

two was not required. Seaboard d: Western Air-

"EB. g., Eastern Air Lines v. Civil Aeronautics Board, 178

F. 2d 726, 727 (C. A. D. C.); Western Air Lines v. Civil

Aeronautics Board, 184 F. 2d 545 (C. A. 9); cf. Pauley v.

Federal Communications Commission, 181 F. 2d 292 (C. A.

D.C.).

lines v. Civil Aeronautics Board, 181 F. 2d 777,

779 (C. A. D. C.); Western Airlines v. Civil

Aeronautics Board, 184 F. 2d 545, 550 (C. A. 9).

Nor was there any merit to petitioner’s con-

tention below that the Board had erred in limit-

ing the issues in the merger proceeding. The

right of an agency to refuse to reopen matters

decided in a prior stage of the proceedings is

well settled,* and the Board did not abuse its

discretion in applying that principle to the facts

of this ease.°

In sum, the result reached in this case finds

full support in familiar and accepted principles

of administrative law. The case does not require

appraisal of the reach and applicability of the so-

8 Georgia Comm. v. United States, 283 U. S. 765; Pitts-

burgh Glass Co. v. Board, 313 U. S. 146; 7. C. C. v. Jersey

City, 322 U. S. 503, 517; Crichton v. United States, 56 F.

Supp. 876 (S. D. N. Y., 1944), affirmed per curiam, 323 U.S.

684.

®*In the earlier proceedings (the first Zastern-Colonial

Acquisition case, and the Zastern-Colonial Control case,

supra, pp. 3, 5, in both of which petitioner participated as

a party), the Board fully considered and decided against

petitioner all the issues under Section 408 which petitioner

sought to reopen in the present proceeding—whether the pro-

posed acquisition would result in creating a monopoly or

restraining competition; whether the acquisition would pro-

mote the public interest ; whether an Eastern-Colonial merger

would be preferable to a National-Colonial one; and whether

Eastern illegally controlled Colonial. As the Board found

(Order E-9347, S. R. 82), petitioner did not show any change

of circumstances sufficient to warrant reexamination of those

issues.

called Waterman doctrine. We believe, therefore,

that it is not an appropriate vehicle for consider-

ation by this Court of the statutory questions *

which might be presented if the Court of Appeals

had necessarily decided the case on the single

ground on which petitioner ‘“‘presumes” it did.”

We, of course, recognize that this Court’s de-

cision in Waterman involved an attempt to review

a substantive determinaticr made with express

approval of the President pursuant to Section

801, and that the Court has not passed upon the

applicability of the doctrine of non-review, enun-

ciated in that case, to situations involving alleged

procedural irregularity by the Board. By the

2° Contrary to petitioner's suggestion, there is no constitu-

tional right to appellate review of procedural orders of the

Board enter. d ‘in cases involving foreign air transportation.

See, e. g., Reet2 v. Michigan, 188 U. S. 505; Federal Com-

munications Commission v. RCA Radio Communications,

Inc., 346 U. S. 86, 90. The constitutionality of Section 801,

in so far as it precludes judicial review of substantive Board

orders, was implicitly sustained in the Waterman case; see,

also, Colonial Airlines, Inc. v. Adams, 87 F. Supp. 242

(D. D. C.), appeal dismissed on motion of appellant, 338

U.S. 947.

1 Petitioner did not seek clarification of the basis of the

decision below, although almost three months elapsed be-

tween entry of the judgment and filing of the petition. Cf.

Chicago & Southern Airlines v. Civil Aeronautics Board,

C. A. D. C., No. 10, 375, certiorari denied, 340 U. S. 829,

where review was sought of a Board order, issued after Presi-

dential approval, which certificated a carrier to conduct in-

ternational operations. The Board moved to dismiss on

several grounds, among them, that under Waterman its order

same token, the Court has not considered whether,

assuming that in the latter situation there may

be review at some point, such review may be

obtained at an interlocutory stage, ¢. e., before

consideration by the President and entry of a

final order. Granting that these questions are

novel and that they might, in some contexts,

assume importance, we submit that there is

neither need nor occasion to explore them in a

ease in which the underlying claim of procedural

irregularity is, itself, patently insubstantial.

was not reviewable. The Court of Appeals entered a per

curiam order of dismissal which, as in the case at bar, did

not specify the grounds for its action, The carrier moved

for reconsideration or clarification, and the court then en-

tered a clarifying order dismissing the petition for review

on the authority of the Waterman case. See Record on

Appeal, October Term, 1950, No. 235, pp. 61-63, 65-66, 71-72.

CONCLUSION

The decision below is clearly correct and there

is no conflict of decision. The petition for a writ

of certiorari should be denied.

Respectfully submitted,

Son E. SosBeELorr,

Solicitor General.

STanLeEy N. BaRNEs,

Assistant Attorney General.

DANIEL M. I’RtEDMAN,

Attorney.

FRANKLIN M. STONE,

General Counsel,

JoHN H. WANNER,

Associate General Counsel,

0. D. OzMENT,

Chief, Litigation and Research Division,

GeraLp F. Krassa,

Attorney,

Civil Aeronautics Board,

Washington 25, D. C.

JANUARY 1956.

APPENDIX

STATUTORY PROVISIONS

The relevant provisions of the Civil Aero-

nautics Act of June 23, 1938, 52 Stat. 977, as

amended by Reorganization Plans 1940, Nos.

TIT and IV, 54 Stat. 1233 and 1235, and Act of

May 24, 1949, 63 Stat. 107; 49 U. S. C. 401

et seq., are:

Sec. 408 (b), 49 U. S. C. 488 (b): Any

person seeking approval of a consolidation,

merger, purchase, lease, operating contract,

or acquisition of control, specified in sub-

section (a) of this section, shall present

an application to the Board, and thereupon

the Board shall notify the persons involved

in the consolidation, merger, purchase,

lease, operating contract, or acquisition of

control, and other persons known to have

substantial interest in the proceeding, of

the time and place of a public hearing.

Unless, after such hearing, the Board finds

that the consolidation, nerger, purchase,

lease, operating contract, or acquisition of

control will not be consistent with the pub-

lic interest or that the conditions of this

section will not be fulfilled, it shall by

order, approve such consolidation, merger,

purchase, lease, operating contract, or

aquisition of control, upon such terms and

conditions as it shall find to be just and

reasonable and with such modifications as

it may prescribe: Provided, That the Board

shall not approve any consolidation, merger,

(14)

purchase, lease, operating contract, or

acquisition of control which would result

in creating a monopoly or monopolies and

thereby restrain competition or jeopardize

another air carrier not a party to the con-

solidation, merger, purchase, lease, oper-

ating contract, or acquisition of control:

Provided further, That if the applicant is

a carrier other than an air carrier, or a

person controlled by a carrier other than

an air carrier or affiliated therewith within

the meaning of section 5 (8) of the Inter-

state Commerce Act, as amended, such ap-

plicant shall for the purposes of this see-

tion be considered an air carrier and the

Board shall not enter such an order of

approval unless it finds that the transac-

tion proposed will promote the public in-

terest by enabling such carrier other than

an air carrier to use aircraft to public

advantage in its operation and will not

restrain competition.

Sec. 801, 49 U. S. C. 601: The issuance,

denial, transfer, amendment, cancellation,

suspension, or revocation of, and the terms,

conditions, and limitations contained in,

any certificate authorizing an air carrier to

engage in overseas or foreign air transpor-

tation, or air transportation between places

in the same Territory or possession, or any

permit issuable to any foreign air carrier

under section 402, shall be subject to the

approval of the President. Copies of all

applications in respect of such certificates

and permits shall be transmitted to the

President by the Board before hearing

thereon, and all decisions thereon by the

Board shall be submitted to the President

before publication thereof. This section

shall not apply to the issuance or denial of

any certificate issuable under section 401

(e) or any permit issuable under section

402 (c) or to the original terms, conditions,

or limitations of any such certificate or

permit.

Sec. 1006 (a), 49 U. S. C. 646 (a): Any

order, affirmative or negative, issued by

the Authority under this Act, except any

order in respect of any foreign air carrier

subject to the approval of the President as

provided in section 801 of this Act, shall

be subject to review by the courts of ap-

ep of the United States or the United

tates Court of Appeals for the District

of Columbia upon petition, filed within

sixty days after the entry of such order, by

any person disclosing a substantial interest

in such order. After expiration of said

sixty days a petition may be filed only by

leave of court upon a showing of reason-

able grounds for failure to file the petition

theretofore.

U. S. GOVERNMENT PRINTING OFFICE: 1958

Jiice

- Sepreme Cea!

FiliBD

JAN 10 1956

— on eae =x , Ck

IN THE

Supreme Court of the Gnited States

October Term, 1955

No. 561

NationaL ArRuines, Inc., Petitioner,

Crvi. AzRonavtTics Boarp, Respondent,

and

Eastern Arr Lines, INc.,

CoLONTAL AIRLINES, INC.,

Intervenors.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the District of Columbia Circuit

REPLY BRIEF

JoHN W. Cross,

Crayton L. BURWELL

920 Southern Building,

Washington, D. C.

Counsel for Petitioner

ane

saatieenieneaiaiaiauaaiii

Press or Byron S. Apams, Wasntneron, D. C.

Page

Ree ere re ore oe ee er rere 2

The Question Is Important to the Industry .......... 2

The Question Is a Substantial One .................. 2

If the Order Is Not Reviewed Now It May Be Unre-

SEE 4 Ped bon cacanes cub budaes bask wes hanes 5

NS i ea nek ca cdae MEA SEA TAS ROCA CRN OL GSS 7

NE Sb Scin Adda she bend chhswks \ ced RARA Ch eS ES 8

CITATIONS

CasEs:

Chicago & Southern Airlines v. Waterman Steamship

OSS BR yore rrr rrr se 6, 7

Cobbledick v. U. S., 309 U.S. 323 ................. 6

Cohen v. Beneficial Industrial Loan Corp., 337 U.S.

DR es iar bank aS cas MRE ARERR EEN Ranke ab ab kee 6

Georgia Public Service Comm. v. U.S., 283 U.S. 765 4

I. C. C. v. Jersey City, 322 U.S. 503 .............. 4

Isbrandtsen Co. v. U. S., 211 F.2d 51, cert. denied

PC MS cuts eS gees bh AS AA SER MOARAY SO RES 6

ec Oa, Us SE Gav c cate can sense ces 7

STaTUTEs:

Civil Aeronautics Act of 1938, 52 Stat. 973, 49 U.S.C.

NG Mi as cca cdwads be owENS Obs toxnaees 2, 3, 4, 5, 7,8

OE Ore yy eer reer ee 2, 3, 4,8

in ce ch Cabenearasnbhedes kien ee , 3, 4,

i Pe Uh Gckb sc eherasatigasesepiaweedn 5,

IN THE

Supreme Court of the Anited States

October Term, 1955

No. 561

NATIONAL AIRLINES, INc., Petitioner,

Civi. AERONAUTICS Board, Respondent,

and

EAsTeRN Arr Lines, INC.,

COLONIAL AIRLINES, INC.,

Intervenors.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the District of Columbia Circuit

REPLY BRIEF

To the Honorable, Chief Justice, and the Associate

Justices of the Supreme Court of the United States:

Petitioner is filing this reply brief in answer to Re-

spondents brief received January 4th, 1956, and to the

briefs of Colonial Airlines and Eastern Air Lines, Inc.,

Intervenors.

The Question Is Novel

Respondent’s brief at page 11 states:

‘*We, of course, recognize that this Court’s de-

cision in Waterman involved an attempted to re-

view a substantive determination made with ex-

press approval of the President pursuant to Sec-

tion 801, and that the Court has not passed upon

the applicability of the doctrine of non-review,

enunciated in that case, to situations involving

alleged procedural irregularity by the Board. By

the same token the Court has not considered

whether, assuming that in the latter situation

there may be review at some point, such review

may be obtained at an interlocutory state, i.e.,

before consideration by the President and entry

of a final order. Granting that these questions are

novel and that they might in some contezts, as-

sume importance, we submit that there is neither

need nor occasion to explore them in a case in

which the underlying claim of procedural irregu-

larity is, itself, patently insubstantial’’. (Italics

supplied )

The Question Is Important to the Industry

Not only is the principal question novel but it is

one of vital importance to the greater part of the

United States aviation transportation industry. It is

significant that neither the Respondent nor the Inter-

venors challenged the statements in the Petition at

pages 5 and 6 on this point.

. The Question Is a Substantial One

After conceding the novelty of the question and fail-

ing to deny its important impact on the aviation trans-

portation system, Respondent suggests that the pro-

cedural irregularity of depriving Petitioner of a hear-

ing on the issues required by Sec. 408(b) of the Act is

insubstantial and that on this account the Court should

not grant the Petition, Res. Brief p. 12.

The Petition for Judicial Review before the Circuit

Court at page 15 alleged that Petitioner will lose con-

siderable traffic by the merger, that Petitioner has a

substantial interest in the order complained of and

at page 13 that approval of the merger would result

in the development of a monopoly by Eastern Air

Lines. Petitioner’s allegations of fact were of course

assumed to be true by the Circuit Court in granting

the motion to dismiss and consequently it would seem

dificult to support the theory that the procedural

irregularity had an insubstantial impact on the Peti-

tioner as a matter of fact, or that the Cireuit Court

considered this aspect of the matter when there was.

no Court review on the merits.

Insofar as the Respondent claims that the pro-

cedural irregularity of depriving Petitioner of a hear-

ing on the statutory issues is an insubstantial legal

error is concerned, the cases cited by Respondent are

inapplicable. Unlike the case here, none of those cases

involved the interpretation of a statute requiring a

hearing on each specific application for merger as to

certain issues. Respondent overlooks the wording of

See. 408(b) of the Act which states in part:

“Any person seeking approval of a consolidation,

merger, purchase, lease, operating contract, or acquisi-

tion of control, specified in subsection (a) of this see-

tion, shall present an application to the Board and

thereupon the Board shall . . .” give a hearing and

consider certain issues including the public interest,

monopoly, ete. (Italics supplied)

Similarly in Section 801 of the Act (Appendix) the

word ‘‘thereon’’ is used twice referring to the specific

application in question and providing a hearing on that

application exclusively. In violation of these sections

the Board has imported into the instant proceeding cer-

tain findings and rejected others made in respect to

a distinctly different agreement and application for

approval in substitution for the statutory require-

ments of a hearing on the specific agreement and

application presently under consideration.

Apart from the distinction based upon sections

408(b) and 801 of the Act, the cases cited by respond-

ent are of doubtful application. Respondent’s brief

cites them at page 10 in support of ‘‘the right of an

agency to refuse to reopen matters decided in a prior

stage of the proceedings ...’’. It would appear that in

Georgia Public Service Comm. v. U. S., 283 U. S. 765

and I. C. C. v. Jersey City, 322 U. S. 503 the agency

had re-opened the proceeding, whereas there has been

no re-opening of Docket No. 5666 from .which the

selected findings in question were imported into Docket

No, 6998. The principal question however is whether

the findings are taken from a prior stage of the same

proceeding or from a different proceeding. While the

eases cited by Respondent pertain to matters decided

in a prior stage of the proceedings. Respondent’s brief

page 9 characterizes Dockets No. 5666, and 6582, as

‘prior related administrative proceedings.”’

The President and the Board closed Docket No.

5666 by order disapproving the earlier proposal for

merger. It was not re-opened or consolidated with

Docket 6998 nor was any evidence introduced from ét

into Docket 6998 nor any evidence from it incorpo-

ratel by reference into Docket 6998. No judicial notice

was taken and res adjudicata could appply only to

bar further consideration of a merger between Eastern

and Colonial. Since the evidence on which the imported

findings are based is not present in the record in this

case and not specified it would be difficult for a Court

to review a case handled in this way for insufficiency

of evidence, for arbitrariness etc. A mere consolidation

of the records would of course not suffice as the Board

found it necessary to reject some of the findings and

evidence in Docket 5666 which did not suit its present

purpose. It is not believed that at this stage either the

litigants, the Board or the Courts could determine

what evidence if any supports the findings in the pro-

ceeding in question.

Petitioner submits that the procedural irregularity

of depriving it of a hearing on the statutory issues

has foreclosed its interests and represents a substan-

tial legal error.

If the Order Is Not Reviewed Now It May Be Unreviewable

Respondent claims the order complained of is inter-

locutory and not reviewable. Sec. 1006 of the Act

under which the petition for review was brought gives

the Court jurisdiction to review ‘‘any order’’. The

order severed from the hearing the broad statutory

issues and was final as to these. There was left an

emasculated hearing on narrow issues with a result

favorable to the Intervenors virtually a foregone con-

clusion. At page 8 of Respondent’s brief it is stated

that on October 26, 1955 the examiner issued a report

recommending approval and on November 28, 1955,

the Board heard oral argument and that no recom-

mendation has been sent to the President. It seems safe

to conclude and petitioner believes that the Board has

already decided the matter favorably to the Intervenors

and awaits only a decision on this Petition to submit its

decision to the President for approval. Unless the

—

decision 1s classified, Respondents could of course con-

firm or deny petitioner’s belief that a final adverse de-

cision has been made by the Board.

Under the ratio decidendi of the Waterman Deci-

sion there may be no judicial review after the Presi-

dent’s action since Executive political discretion is

then mixed with questions of evidence or procedure

before the Board. Chicago & Southern Airlines vy.

Waterman Steamship Corp., 333 U.S. 103. Petitioner

therefore submits that it has exhausted such admin-

istrative remedies as are open to him before the Board,

that the severing of the major issues by the order find-

ing in favor of the Intervenors was tantamount to a

final adverse decision and that in any event if Peti-

tioner does not get a review now, under the ratio

decidendi of the Waterman decision it will not get

any review. As was said in Cobbledick v. U. S., 309

U.S. 323 at page 328 analyzing the doctrine of finality

as illustrated in Perlman v. U. S., 247 U. S. 7:

“The United States claimed that the action of

the district court was ‘not final’ but merely

interlocutory and therefore not reviewable by this

court. We rejected the Government’s contention.

To have held otherwise would have rendered

Perlman powerless to avert the mischief of the

order...”

*“*... to have denied him opportunity for re-

view on the theory that the district court’s order

was interlocutory would have made the doctrine

of finality a means of denying Perlman any appel-

late review of his Constitutional claim. Due re-

gard for efficiency in litigation must not be car-

ried so far as to deny all opportunity for the ap-

1 contemplated by the statutes.”’ Cohen v.

eneficial Industrial Loan Corporation, 337 U. 8S.

541; Ishrandtsen Co. v. United States, 211 F. 2d

51. Cert. denied 347 U. S. 990.

It ig submitted therefore that the paramount ques-

tion involved is whether the Waterman doctrine

should be stretched to permit the denial of a statutory

hearing without judicial review and how such an ap-

plication of the doctrine can be reconciled with the

Constitutional prohibition against undue delegation

of legislative power by Congress, and the deprivation

of property without due process of law. Due process

includes a hearing by a tribunal clothed with power

to decide. Morgan v. U. S., 298 U. S. 468. The Act

grants no hearing before the President and according

to the dicta of Mr. Justice Jackson in the Waterman

case (supra) the Board has no power to decide.

Conclusion

Wherefore, the petition for a writ of certiorari

should be granted.

Respectfully submitted,

JOHN W. Cross,

Crayton L. BuRWELL

Counsel for Petitioner

APPENDIX

Statutory Provisions

The relevant provisions of the Civil Aeronautics Act of

June 23, 1938, 52 Stat. 977, as amended by Reorganization

Plans 1940, Nos. III and IV, 54 Stat. 1233 and 1235, and

Act of May 24, 1949, 63 Stat. 107; 49 U.S.C. 401 et seq.,

are:

Sec. 408 (b), 49 U.S.C. 488 (b): Any person seek-

ing approval of a consolidation, merger, purchase,

lease, operating contract, or acquisition of control,

specified in subsection (a) of this section, shall present

an application to the Board, and thereupon the Board

shall notify the persons involved in the consolidation,

merger, purchase, lease, operating contract, or acqui-

sition of control, and other persons known to have

substantial interest in the proceeding, of the time and

place of a public hearing. Unless, after such hearing,

the Board finds that the consolidation, merger, pur-

chase, lease, operating contract, or acquisition of con-

trol will not be consistent with the public interest or

that the conditions of this section will not be fulfilled,

it shall by order, approve such consolidation, merger,

purchase, lease, operating contract, or aquisition of

control, upon such terms and conditions as it shall find

to be just and reasonable and with such modifications

as it may prescribe: Provided, That the Board shall

not approve any consolidation, merger, purchase, lease,

operating contract, or acquisition of control which

would result in creating a monopoly or monopolies and

thereby restrain competition or jeopardize another air

carrier not a party to the consolidation, merger, pur-

chase, lease, operating contract, or acquisition of con-

trol: Brecided forther. That if the applicant is a car-

rier other than an air carrier, or a person controlled

by a carrier other than an air carrier or affiliated

therewith within the meaning of section 5 (8) of the

Interstate Commerce Act, as amended, such applicant

shall for the purposes of this section be considered an

air carrier and the Board shall not enter such an order

of approval unless it finds that the transaction pro-

posed will promote the public interest by enabling such

al = _ ww Se ae ww

carrier other than an air carrier to use aircraft to

public advantage in its.operation and will not restrain

competition. —

Sec. 801, 49 U.S. C. 601: The issuance, denial, trans-

fer, amendment, cancellation, suspension, or revoca-

tion of, and the terms, conditions, and limitations con-

tained in, any certificate authorizing an air carrier to

engage in overseas or foreign air transportation, or

air transportation between places in the same Terri-

tory or possession, or any permit issuable to any for-

eign air carrier under section 402, shall be subject to

the approval of the President. Copies of all applica-

tions in respect of such certificates and permits shall be

transmitted to the President by the Board before hear-

ing thereon, and all decisions thereon by the Board

shall be submitted to the President before publication

thereof. This section shall not apply to the issuance

or denial of any certificate issuable under section 401

(e) or any permit issuable under section 402 (c) or to

the original terms, conditions, or limitations of any

such certificate or permit.

Sec. 1006 (a), 49 U.S. C. 646 (a): Any order, affirm-

ative or negative, issued by the Authority under this

Act, except any order in respect of any foreign air

carrier subject to the approval of the President as

provided in section 801 of this Act, shall be subject to

review by the courts of appeals of the United States

or the United States Court of Appeals for the District

of Columbia upon petition, filed within sixty days after

the entry of such order, by any person disclosing a sub-

stantial interest in such order. After expiration of

said sixty days a petition may be filed fe by leave

of court upon a showing of reasonable grounds for

failure to file the petition theretofore.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.