Petition for Writ of Certiorari — Trans World Airlines, Inc. v. Delta Air Lines, Inc.

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Text

: it _ , . ' ae . ia | ce q _ Umoe Supisme Court U.S.

FILE -COrr a Fit ED.

MAR 8 1960

AAOMES R. BROWNING, Clerk

IN THE ~~

| Supreme Coutt. of the United States |

Octroper Term, 1959.

aad No. 24-4 |

3 Pe PASTE RN’ AIR LINE S, INC, .

i , “ ’ Petitioner,

a ees a

_* CIVEL AERONAUTICS BOARD,

; Re ‘sponde nt. |

- PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA GIRCUIT.

E. SmytHe GAMBRELL,

. W. GLEN HARLAN, °

) , ; Harotp L. Russe, a ae

P Attorneys for Petitioner, 3°

, "825 Citizens & Southern *

. . \ . Nationa] Bank Building,

» _ Atlanta 3, Georgia. i

James H. Bratton, JR., a

ALLISON WADE, :

, 2 Of Counsel.

Atlanta, Georgia * 4

/ March 9, 1960

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_ Orrytons BeLow ee...

- JURISDICTION ....... iniltiesapiindsl I cies Sysiheiinennahanmnsansinnnanancons

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Statutes INvo.ven ............... =a Ease al a

eewdk on :

STATEMENT OF THE CASE..+..........0000200000-+- TS SS Eisen

Reasons FoR GRANTING THE WRIT..2.........------o0-eoeecosscoeeees * 10

~ I. It is in the Public Interest for this Court to %.

Clarify the Requirements of the Standard ,

of ‘*Public Convenience and Necessity <(, Ss

Air Route Cases.............. < Ser Teena . 12. .

II. It is in the Public Interest for ‘this Court to:

Clarify its Ashbacker. runt as Applied

to Air eats Cnet... : 17

teet | ‘ Co

7m hae <A. The.Problem is Significant basso ialeena sitlebe 18

| aia B...The, Decisions Below are Confusing

¥ me and in Conflict... conn. sesenneereeereerenas 19

SE & ~ TI. It is in “the Public Interest for this Court ~

to Review the Board’s Practice of Pre-

judging Cases Through the Press Release

- Decision Procedure’... :........./ccccsscssnssssnseees . Ba

A. The Press Release Decision Procedure | ° .

Has Far+Reaching Consequetices...... 26

'B..The Press Release Decision Procedure

| ae Le ........: 8

** Appenpix A—SratuTes anp ReGuiLaTion Ixvotveb...... Al

, ‘ " Appewpix B—Opinions anv’ J UDGMENT Betow...... — Bl

‘il

;

, . TaBLe or AUTHORITIES.

mon 8 .

. Americaw Airlines, Inc. v.° Civil Aeronautics Board,

193 FF. 208.417 (D. CO. Cir. 1951 )onicscccSiccscicqpicrcteicosen .. 12315

Amerivan Airlines, Inc. v. Civil Aeronautics Board, a.

241 F. 2d 445 (D. C. Cir. 1957)............ AER tas AEE - 18

: Ashbacker Radio Corp. v. Federal cman.

“Cammission, 326 6 U. S. 327 (1945)....2, 4,7, 8, 11, 17, 18, 19,

¢ r —_ * * 22, 23 -

Cooper v. Aaron, 358 U. S. 1° (1958)... Te. Nidal cide 29 -

Delta Air Lines v. Civil Aeronautics Bgard, 228 Fr. i

24°17 (D. C. Cir. 1955)...... a ...0, 18, 19

‘Dickinson v. Petroleum Conversion Corp. % 338 U. s. +

GOT (Y9GO): -ncainsnnnn gga nnnnnennnnnsedescsneisenvecinineccnsconncesnsssoncoese a oa

Eastern Air Lines, Inc. v. Civil Aeronautics Board,

178 FP 9d 726 (D. C. Cir. 2969) nas. caedevjeareqeeseneceiqecs 18 -

Eastérn Air Lines, Inc. v. Civil Aeronautics Board,

«243 BF. 2d 607 (D. ¢. ‘Cir. 1956).. wees. 18, 23, G3

_Eastern Air Lines, Inc. v. Civil Aeronautics Board,

247 F. 2d 562 (D, C. Cir. 1957)........ ae peso ae

Eastern Air Lines, Inc. v. Civil Aeronautics Board,

271: F. 2d 752 (2d. Cir. 1959) :...2 cd seccssccceceeneeees 18, 23; 97, 30

Eastern Air Lines, Ine., St. Louis-Nashville-Muscle ae

_ Shoals Operations, I C. A. A. 792 (1940)...... jess cree

Great Lakes-Southeast Service Case, CAB Docket

- 2396 et al. CAB-Order - 13835; diss. op. (May 7,

ee) eran ene | OE TIA SS ORR! LER 26, 27, 29°

John Hancock Ins. Co:v. Bartels, 308 U.S. 180 (1939) 24

Magjio v. Zeitz, 333 U.S. 56 (1948) cee oeeeneed aun 24

Midwestern Gas Transmission v. Federal Power

Commission, 258 F. 2d 660 (D. -C. Cir. 1958)............ 18, 21

National Airlines, Inc. v. Civil Aeronautics Board,

249-F. 2d 13 (D. C. Civ. 1957)..2..:.......-::pcecccssereessesnesnse . 18.

- North American Airlines, Inc. v. Civil Aeronautics

| Board, 241 F. 2d 445 (D. C. Cir. 1957) = 18

F. 2d 339 (D. PEE. Fe isercstmgscaciinmnsvsinines PE as 5,18.

‘Pool v.C.B.&Q. R.Co., 6 Fed: 844 (D. Iowa 1888)... _ 28

. Saginaw Broadcasting Co. v. Federal Communi¢éa- 7

tions-Commission, 96 F. 24.554 (D. C. Cir. 1938)... . 25

Seaboard d:, Western Airlines, Inc.. v. Civil dero- ee oar,

* nautics Board, 181 F. 2d 777 (D. C. Cir. 1949)......... “18

iii

_ Northwest Airlines v. Civil Aeronautics Board, 194

~ South Central Area Local Service Case, C. A. B.:

_ Docket 7939 et al., C. A. B. Order F-13648 (Mar. -

SR a a (14,15

Southeast Aviation v. Civil Aeronautics Booed, No. ;

« 15566 D. C. Cir., Feb. 15, vinta dememnsatinisensaomeiijon

United Air Iines, Inc. v. Civil Aeronautics Board, —

228 F. 2d 13 (D. C. Cir. 1955)....:..... tienen rate 18

United Air “Lines, Inc. Red Blu Operations, a

C. A, AFB (1940)... one RRMA: SCRE ERD, -. i

} Western Air Lines, Inc. v. Civil Aeronautics Board, -

184 F. 2d 545 — Cir. 1950).............. ihecaahhes SAL EE » 8

Constitution. a Oe ‘

_Rifth: ‘Amendment to the Constitiation of the uniséa oe

States” Me Ssgeaasaieiarasiaks porssacts 3,5, 30

Statutes.

Administrative Procedure Act, 60 Stat, he (1946),

5 U.S. C. §§1001. “1009; (1952), ; ye '

_, Section 3(a) (60 Stat. 238, 5 UWS. C. §1002 (a)) 3, 25

. Section 8 (b), (60 Stat. 242, 5 U. S.C. $1007 {b)) 2 4

’

Section 10 (a) (60 Stat. 243, 5 U. S. C. °§1009 {a)) 3

-- Seetion'10 (e) (60 Stat. 243,,5U.S.C.§1009 (e)) 2,3

" Civil Aeronautics Act pf 1938, 52 Stat. 977,49U.S.C.

§§401-705 -(1952), ;

‘Section 2 (5 ata 980, 49 U. S.C. 402). SAE Son $3 2 ro

ey ®

° : - ° . ——-

iv. ae

Section 401 (52 Stat. 987, 49.0: KE. 6481): 2, 3,1 M12,

Section 1005 () (52 Stat. 1 1023, 49 U. 8. C. $645:

(f)), -wcsonn,

; Section 1006 (a) (52 Stat. 1024, 49 U. S. C. §646

(a)) -...

ee”

pate }\

bough

_ Section 1006 (f) (52 Stat. 1024, 49 U. S. C. 9646

(£))

a REGULATIONS. ~* *

*_ Civil “Aaconnuibis Board, Rules of Practice in Su.

nomic Proceedings Rule 36 (17 nf R. 3020, Vag 8,

1952 »

) ane

£ ~ “TREATISES. ’

| Landis, The Administrative Prov "e838 (1938)... etenaeaane es

-MIscELLANEOUS.

Civil Aeronautics Beard Annual Report for 1958......

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«2

10.

ema ~ %

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| Supreme Court of the Bnited States

~~ Octoser Term, 1°

“9

BS seerteenncisionis

: s.)

. Eastern Air Lives, Inc., | ?

ae ; Petitioner,

we, peeeogr ie. an

; Civ. AERONAUTICS Boao, See

"Respondent,

PETITION FOR A ‘WRIT OF CERTIORARI TO THE.

UNITED STATES COURT OF APPEALS FOR -.

THE DISTRICT OF COLUMBIA CIRCUIT.

Petitioner, Eastern Air Lines, Inc. (‘‘Eastern’’?) 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-entitled case on

"December 10, 1959, and amended J january 7, 1960 and sub-

sequently —

Opinions Below.”

The opinions and orders ‘of ‘the Civil Acromauties Board

(‘‘the Board’’ or ‘‘the CAB’’) are not officially reported,

but appear in the printed joint appendix used i in the Court ;

of Appeals below (479-519, 640-662). .

* 1Unless otherwise indicated, numbers i in paréatheses refer to

“Rages of the joint appendix.

”~

i eee S ae 8 he ne \

\ ' \

The opinion of the Court of. Appeals, Pwee je anne

> (D. C. Cir. 1959), 9 Ad. L. Dec.- 2d 863 (1959) 1 is a

in Appenfix B hereto,

che Jurisdiction.

The jnrisictions this court is boniotvad under 28 v: S: C. ¢

§1254(1) and 49°U. 8. ©. $646(f). |

| a

; | Questions Presented. * .

--1..May'the Civil Acronautics Board, required by stat- —

ute (Civil Aeronautics Act of 1938 §1005(f), 49 U.S. C..+

§645(f); Administrative Procedure Act 4§8(b), 10(e), 5 ~~

U: S. C. §§1007(b), 1009(e)) to anake adequate findings on

the elements-of public convenience afid necessity: before

certificating a new air.service (Civil Acronauties Act of -

1938 §§2, 401(d), 49 U.S. C. §§402, 481(d)), certificate a new

serviee ina market and lawfully refuse to make findings

‘measuring the expectal le revenues or volume of traffic °°

Z against’ expectable costs of ‘operation | and capacity in that

market?

2. Can the Boa rd i in an airline new route case commonly

knowh as an ‘‘area proceeding”’ consider the needs for ser-

vice between points inside the ‘‘area’’ and points-on a ‘little

additional segment outside the area’’ (App. B,p. 21 hereto)

‘without considering all applications for authority to pro-,

vide that service as required by the Ashbacker doctrine

" LThe Civil Aéronauties Act of 1938, 52 Stat. 977, 49 U.'S. C.

- §§401-705 was replaced in all pertinent parts without material —

change by the Federal Aviation Act of 1958, 72 Stat. 737, °

U. S. C. §§1301-1542.

‘

3 ; lls

SAshbacker Radio Corp: v. Federal Communications Com-

mission, 326 U: S. 327.(1945)) :

{ . 1" °

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* 3. Is it lawful for the Béard, in airline’ “new route’?

* proceedings, to announce. its determinations, prior. to con-

. sideration of all relevant and material portions of the-rec-

*. ord, by ** press release”, without supporting reasons or

_ consider@tion:of all pertinent and material facts? -

Statutes Involved. ah

This case ae the Fifth Amendment to the Consti-

tution of the) United States, sections 2, 401, 1005(f) and

1006(a): of the Civil Aeronautics Act pf 1938 (52 Stat. 980,

987, 988, 1028, 49 U.S. C. $§402, 481, 645(f), 646(a), and

'. sections 3(a), 8(b), 10(a), and. 10(e) of the Administrative

'.. Procedure Act (60 Stat. 237, 241, 242, 243,,5 U.-S. C.

- . §$§1002(a), 1007(a), 1009(a),' 1009(e)). ‘These sections are

: inet in Appendix A hereto. Set ha ae

Statement of the Case.

This. matter arose as a ‘‘new route”’ Ge: before |

the Board. . Dass ,

Eastern isa cordteati air carrier, authorized by the

Board to engage

(inter alia) St. Louis and Florida and between. Memphis,

Birmingham, Atlanta and Florida, both routes including

_ intermediate points, Prior to the Board’s decision in |

the proceeding before it (479-519) no other carrier Was _

certificated to serve those routes. However, that order

authorized Trans World Airlines,: Ine. (**TWA’’) to oper-

ate between St. Louis and Nashville on thé one hand and .

Atlanta and Florida on the other and Delta Air Lines, Inc.

cheduled air transportation between

‘ ; ’ ‘ :

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+ a a.

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(“Delta”): to operate between Memphis on "S one hand

‘ and Birmingham, Atlanta and Florida on the other b6th i in

Yompetition with Eastern.

Prior to the institution ‘of the proceeding before the .

' Board; Eastern had applied to the Board on two separate

occasions for a route between St. Louis, Kansas Gjty, Los-

Angeles and San Francisco where TWA operates (11, 15,

Supplemental Joint Appendix 4-5) and for a route between

Memphis and Kansas City, where Delta operates (11-15). |

“Those Eastern applications have never been sect dow?’ for

hearing. ee

On March 2, 1956,.,the Boatd eres activation of t

St. Louis-Southeast Bilsles Case (29-31) Various ca

riers (including TWA and Delta) then filed. applications’

for ‘St. Louis-Florida, authority (Delta. also applied for

Mem his-Florida authority) and requested that their appli-

cations ‘be included in the proceeding. In response to the.

Board’s order, Eastern requested consolidated hearing on

its applications, previously referred to, pursuant te which °

Eastern would be authorized to offer services identical to

* those proposed by TWA and Delta, Eastern alleged that

its applications were ‘‘mutually éxclusive’’ within the mean-

ing of the Ashbacker doctrine with the ae and TWA

applications (42-45)?

a Normally, the Board hear’ applications in order of filing and

delays jn processing gy usually result in sevéral years

- between filing and hearing. The City of St. Louis had filed an appli-

-eation with the Board February ee 7 neh 958 for an additional carrier

into the Southeast (19-22). application ‘became the lead

docket in the procgeding, although it was only three yeeks old

. when assigned for ptehearing conference. Eastern’s ap ications,

previously referred to, were then some three years old, and now, -

_ still unacted upon, are over seven years old.

*Delta’s existing Kansas City-Memphis authority, ote i

application for Memphis-Birmingham authority, combined wi

its existing Birmingham-Southeast authority, permitted Delta to

offer Kansas City- Bouthenst | service (which theretofore was wet

#) a

ie)

ae / ‘

ee Fe tema

| The Board refuséd to’ consolidate Eastern’s applica-

tions for hearing, but it did include the TWA and Delta

applications to duplicate Eastern between St. Louis and

Memphis on the one hand and Atlanta and-Florida on the

other (91-92, 149). Certain applications of Eastern for -

new service authorizations hetweth points entirely. within

the ‘‘area’’ of the case were also consolidated for hearing

and decision! (149-51). x rs

Hearing was held before an Examiner of the Board,

and Eastern and ‘other parties filed briefs with the Exam-

iner. Among other things, Eastern requested the Examiner

to make findings on the issues gf ‘‘mutual exclusivity”’

entheriaed to any carrier). Eastern sought to combine its existing

Memphis-Soytheast authority with its Memphis-Kaasas City appli-

cation to offer Kansas City-Southeast service: Similarly, TWA by

combining its existing West Coast-St. Louis authority with its St.

Louis-Southeast application’ sought to offer, West Coast-Southeast

service. Eastern desired to combine its existing St.. Louis-South-

east authority with its St. Louis-West Coast proposal to offer the

same West Coast-Southeast service offered by TWA. It should be

pointed out that Fastern sought hearings on its applications limited |

strictly to the services that were offered by TWA and Delta. Each

_ of those carriers proposed to combine existing routes with the

applied-for routes for operations between points within the so-called

“‘area’’ of the case and points outside thereof. Eastern differed

only in that Eastern’s ezisting authorizations were within the

‘‘area’’ and the applied-for authority was ‘‘outside’’ the ‘‘area’’

while TWA’s and Delta’s existing authorizations were outside the

area and their applications were for new authorizations within the

area. Eastern desired to extend west from the Soutiast, and TWA

and Delta desired to proceed eastward into the Southeast. (The

‘‘area’’ of the case was never precisely defined by the Board but it

conforged generally to an area’ ‘circumscribed, by a line drawn

between St. Louis, Memphis, Birmingham, Atlanta, Tampa, Miami,

Jacksonville, Atlanta, Nashville and St. Louis; see, ¢.g., the Exam-

iner’s description of the applications consolidatedsinto the proceed-

ing, at 297-98 of the joint appendix below.)

1 The Board has generally recognized, as have: the Courts, the

duty, under Ashbacker, to hear all conflicting applications proposing

service between points lying within an,‘‘area.”’ See, ¢,9., Northwest

Airlines v. Civil Aeronautics Board, 194 F.2d 339 (D. C. Cir. 1952) ;

tg —A Lines v. Civil Aeronautics Board, 228 F. 24.17 (D. C.

ir. . ; '

(274-75) created by the inclusion of the TWA and Delta

applications in the case and the exclusion of Eastern’s

applications. The Examiner in his Initial Decision made

-no findings upon those ‘‘mutual exclusivity”’ questions.

_ Exceptions to the Initial Decision and briefs were filed —

with the Board. Eastern asked that the Board make find-

_ ings upon ‘‘mutual exclusivity” (405).

The Board then deferred decision for simultaneous con-

sideration with the Great -Lakes-Southeast Case, CAB

Docket 2396 et al. (409-11). >: ~

On March 19, 1958, the Board commenced deliberations

in the case below, the Great Lakes case, supra, and others

deferred for simultaneous consideration. Deliberations

continued on March 25, 26 and 27, 1958 (729-43). .

On March 26 and 31, 1958, the Board announced, with-

out supporting reasons and by press release, its determina-

tions to grant TWA a route between St.-Louis, Nashville,

Atlanta, Tampa, and Miami, and Delta a route between

Memphis and.Birmingham, there joining Delta’s existing

routes to Atlanta and Florida, both routes competitive with

‘Eastern (662-63, 666).

On October 2, 1958, the Board released its formalized _

decision (479-519) giving reasons for the awards to. TWA -

‘and Delta, previously announced in its’‘‘press release’’

decisions. In general, the Board’s formal opinion adopted

the Examiner’s Initial Decisiop in ¢oncluding: that an addi-

tional.carrier between St. Louis and Florida was required |

by the public convenience and necessity (485-90, 299-312,

376-81). The conclusions rested upon general observations

to the effect that.inadequacies had been shown in Eastern’s

service, that the market hfd not developed as fast as some

other markets, that in some instances, Eastern, the incum-.

bent carrier, had offered older-equipment, and that there ;

was a public need for competition in the area.. Nowhere,

és

however, did the Board, or the Examiner, measure the

\market’s potential traffic and revenues-against the capacity

to be offered or the cost of the operation, to determine

.whether -two carriers could be economically "sustained.

After deciding that. a second St. Louis-Florida carrier

should be authorized,,TWA was chosen over the other

applicants because it could provide the greatest ‘“beyond

area’’ benefits (492-93).

Neither did the Board make any findings on the ‘‘mutual

exclusivity”? i issue raised by Eastern as between its excluded

application and the application of TWA..: ‘(As will be

pointed out below, the Court of Appeals held this failure

- of the Board to be legal error.)

In stating its conclusions as to the Delta award, -the

Board noted that sqme civic representatives had complained

- abou Eastern’ s Memphis-Birmingham services (505, 317,

319). However, the Board made no attempt to balance the

_ traffic potential or rev enues against capacity and costs of

operation. Neither did the Board make findings as to the

- mutual. exclusivity between Delta’s award and Eastern’s .

excluded :application, which, if heard and granted, would:

permit Eastern'to: prov ide the same service between Kansas

City onthe one hand and Birmingham and Atlanta on the”

other, a question timely and properly raised by Eastern.

(As will. be’ ‘pointed out below, the. Court of Appeals hed

that the Board was, entitled in this instance: to disregard

7 the Ashbacker doctrine.)

Eastern and others petitioned. the Board for recen-

sideration, Eastern pointing out (618-19) that operation by

two carriers on the St. Louis-Florida routing would be

uneconomic, that two carriers could not be economically |

certificated between the Southeast and the,West Coast via - :

St. Louis and therefore that the TWA application was

mutually exclusive’ of Eastern’s excluded appliation..

On: November 21, 1958, Eastern filed, pursuant to Sec-

~ tion 1006 of the Civil Aeronautics Act (49 U.S. C. §646),

in the Court of Appeals for the District of ‘Columbia: a

petition for review (711-43), later amended (744-7 50), and,

as weil, a petitjon for stay of the Board’s order. The stay

was subsequently denied on December 15, 1958 and the

Court of Appeals issued its decision on the review ques-

tions December 10, 1959. ;

Various other parties to the proceeding. before the

Board also sought review by’ the Court of Appeals (Delta,

705-710 ; National Air Lines, Ine: (‘*National’’), OL -758 ;

and American Airlines, Inc. (‘‘American’’), whose petition

for review was not printed in the joint appendix below).

* The Court below overturned the TWA award and held

in substance that in an ‘‘area’’ proceeding, it was unlawful

for the Board, in light of the Ashbacker~doctrine, to

award a transcontinental route without: hearing applica-

tions ‘of other carriers for .the same transcontinental

authority (App. B, pp. B3-B12, B14, B18-B20). With respect

to Eastern’s complaint that the Delta award violated the

‘Ashbacker doctfine in the same manner ‘as, the TWA. —

award, the Court stated (App. B, p. B21) that:

‘‘EKastern’s -position is, in effect, that the same

_ considerations which apply to the treatment of the

' transcontinental route problem, as it arose in the

St. Louis Case, apply likewise to the Kansag City |

service problem as it arose in that same case. We

think they do not. The expansion of an area case by

adding a little additional segment outside the aréa is

quite: a different thing from awarding a transconti-

nental certificate in a limited area case. The former

is an expansion of a limited case. The latter is a

transformation of the real nature of the proceedings.

“We are’of opinion that the Board had a discretion to

refuse to include in the St. Louis-Southeastern area

case Eastern’s application for the Memphis-Kansas .

City — sai ;

Eastern had also urged the Court helow to find that the

Delta and TWA awards were not based upon proper find-

ings of public convenience and necessity. Eastern argued

that sound Board precedent required a balancing of antici-

pated revenue (or traffic) in the markets at issue against

the total costs (or capacity) to be incurted. The Board

had mace no such findings. The Court did_not rule;except

perhaps by negative inference, upon Eastern’s contention.

Rather, the Court stated that there were Board findings that

Eastern’s service had been inadequate, had not developed

the market, that more: traffic would result from improved

service and there was a need for competition. But it is

important to point out that the Court did not hold that

those were suffigient findings to sustain the awards. Rather, °

' the Court. henna tied Edstern’s contention as to the

requirement of balancing revenues (or traffic) against

costs (or capacity) | to another point made by. Eastern—

that the Board should have reoperied the record to receive

current data on Eastern’ 8 operations and held that on the

facts the Board need not réopen the, record. (App. B, pp.

B22-B23). Eastern _did not so_limit -its—eoententions.——-~

Eastern’s contention. is that the Board, in the lawful exer-.

cise of its duty and discretion under the Act must, at.some

time, balance exnectable revenues (or traffie) against expect:

able expenses (or capacity) to determine: whether additional

‘carriers will actually serve a useful public purpose ‘respon-

sive toa public need. The Court below erroneonsly —

‘to rule upon this contention. - « :

The Court did not pass upon Eastern’s contention that

the Board unlawfully prejudged the case by announcing by

press release its determination to award the TWA and Delta

routes, that announcement appearing some six months

before the Board issued its formal opinion and order along

with supporting reasons for the awards. It was shown

in Eastern’s brief to the Court that the traffic data upon —

which the Board relied héavily in making its formalized

findings in the case were unavailable to the Board at the

time of its press release prejudgments, and therefore could

not have served as a basis for the Board’s predetermina-.

tions. The Board simply took ‘‘official notice’? of sub-

sequently revealed information to justify ex post facto its

preconceived results. The: Court below did not consider

these contentions. |

Reasons for Granting-the Writ.

“ 2 ; . ah :

Sound, orderly regulation of this Natjon’s air transport —

_ industry is eminently in the public interest, as Congress |

recognized in enacting the Civil Aeronautics Act of 1938. _

and its: successor, the Federal Aviation Act of 1958. In

1958 the air lines became the Nation’s number one inter-

city common carriers and the Board expects that an even

greater incr .

_ of new jet equipment. (Annual Report of the Civil Aero-

nautics Board for 1958, p. 2). Some 50,000,000 persons —

- flew on commercial air lines in 1958 which were then a |

$2,900,000,000 business (Ibid.).

The outcome of ‘‘new toute’ proceedings before ie ,

Board is -of grave consequence not only to the airline

parties, but also to the .public, the Post Offiee and the f

national defense.! Air route cases are processed under

sections of a law, over 20 years old, that have_never been

squarely bhetore this Court for interpretation.

A There were 849 economic applications (about all of which were

for new route authority) filed with the Board during 1958, a year

in which the Board disposed of ‘683 such applications. Annual —

Report of the Civil Aeronautics Board for 1958, 41. Asof June 30,

1958, there were 1,616 pending ——— in the: Board’s files |

(Ibid. ).

in air travel will come with the advent

> | J

aN —

w ; C& - ye

The problems created, but not-solved, in the decision

' below are typical of the problems faced with increasing

frequency, and in proceedings of. expanding complexity, by

all parties to controversies before the Board {and to some

exfent by parties to proceedings before other Federal admin-

istrative agencies). Some of the confusion is the inevitable

result of the fact that:this Court has never spoken. defini-

tively on the meaning of Section 401 of the Act,' although

air transport routes have been — under its terms

for more than 20 years.

Section 401 éstablishes the machinery by iich air routes

are granted and amended, provides for hearing and-decision on

‘on applications for new route authority, and states that-a

new route must be found required by the. public eonvenience

and necessity before it be certificated. F

‘This petition presents this Court with an opportunity

(1) to define for the lower Courts; the Board, and the parties

to proceedings before the Board what Congress meant by

the term ‘*public convenierice and necessity’’, and- what >

findings are necessary 4 sustain a conclusion that a new

' route is required by the public convenience and necessity,

(2) to clarify forall the meaning of this Court’s Ashbacker

doctrine, and (3) to set outaclearly the right of a party Cin

administrative proceedings to have his ease decided on the _~

merits after full consideration of all pertinent facts and

without prejudgment” eeites announced and ardently.

defended. _

. Each of these tatters i is teecenainatiy involved before the

Board. and the Courts of. Appeal, and with i incregsing incon-

1 The Federal. Aviation Act of 1958 made no changes in the sub-

stance of §401 of the Civil Aeronautics Act.of 1938. See p. 2 n. 1

‘above. References to ‘‘the Act’’ herein are to the 1938 Act unless |

otherwise indicated. In any event, the applicable provisions of law

are identical under both statutes. '

es | ’ | ; Gr

m a ¥ .

sistency of sreatenent. Board decisions will be increasingly

“litigated in the Courts of Appeal unless this:Court estab-

lishes essential guidelines for future conduct.

I. |

- It Is In The Public Interest For This a To

' Clarify The Requirements Of The Standard of “Public

, Convenience and Necessity” In Air Route Cases.

Section 401 of the Act states that a new airline route

‘must be required by the ‘‘public convenience and necessity”’

before it can be certificated.

‘Neither this Court nor any otlier court has determined

what ‘basic findings of public qgnvenience ‘and necessity

are essential for afwiul | disposition of an application for

_ @- new or amended certificate. to engage in scheduled air

transportation. i

Eastern squarely presented .that question to the Court

below, but Eastern’s request for a definitive explanation |

was ignored. ke om

In efforts to provide. the Board: with ‘rational factual

bases upen which to fashion the Board's permission for |

future operations,' almost every applicant in every route

proceeding spends great sums of money-and considerable

employee and consultant energy in amassing volumes of

data forecasting the ecenoniic results of its proposed opera- 7

tions. Applicants for new routes make every effort to

_ show in terms of forecast dollars and cents that their opera--

tions will be economie and eventually profitable, while.

opposing carriers exert just as much effort ‘to show that

those proposed services cannot, be operated profitably.

ree = - a,

LCompare : Aveericin Airlines v. Cinit deronautics Board, 192 4

F. 2d 417, 421 1 (D. C. Cir. 1951): infre. p. 15. mer: .

;

; a

In the case below, the Board ’s Bureau of:Air Operations

requested and the Examiner required the applicants to,

' furnish. estimated revenues and expenses (77-80, Requests

2 b,, 3, 5-11,-13). The parties supplied extensive data as |

requested. (See, e.g., those portions of TWA’s exhibits —

reproduced at 235-38 of the joint appendix below.)

Although the Examiner’ s Initial Decision referred to those |

_ estimates in his recital of the evidence (326-30, 334-39, 344-

46, 353-56), the Examiner made no findings or conclusions

onthe basis of those forecasts (376-86) except to find that

Eastern would lose $1,500,000 annually by revenue: diver-

“sion (381). The Board’s decisions made no findings or con-

clusions upon: ‘the basis of those forecasts (484-90, 504-506,

653-57) although there was appropriate request for findings

(see, ¢.g., excerpts from Eastern’s brief to the Board, 404-

405, and petition. for rehearing, 620).

Eastern maintains only that the Board should find that

there- must: be some reasonable relationship between pro-

jected revenues.(or traffic) and. projected. costs (or capacity)

before a néw route may be granted. If Eastern is wrong

and this Court will so state, parties to “new route cases

before the Board can,save hundreds of*thousands of dollars *

annually now wasted in the preparation of new route reve-

nue (traffic) and expense (capacity) forecasts. If astern

is correct in its contentions, then the awards to TWA and

; Delta should be set aside and the case remanded to the

Board for required findings. Eastern respectfully submits

that its interpretation of the Act is.reasonable and correct.

In one of the first. proceedirigs before it under its thefi-

7 : new enabling statute, the Board stated that an evaluation

of the public convenience and necessity required, sanenes

, other: ae, consideration of these questions:

~ (1) whether the new service will serve a useful

public purpose, résponsive to-a public need;

(2) whether this purpose can ae will be served:

as well by existing lines or vaarene. and

(3) whether it can be served by the applicant with”

the new service without impairing the operations of

existing carriers’ contrary to the public interest.

_. United Air Lines, Inc., Red Bluff Operations, 1 C. A. A.

: 778, 779-90 (1940).

At the other end of the ch onological scale, the Board

declared less than a year ago ina proceeding known as the —

South Central Area Local Service agane, CAB Docket 1989

- et al., that:

: , : &

‘‘in arriving at its decision on new route proposals,

the Board must evaluate all the traditional elements

of public convenience and necessity, such as public

need for the service, potential traffic, - benefits

involved, cost of ‘operation, commercial revenues,

- subsidy requirements, diversion, ete.’? (Emphasis

‘ supplied.) (Mimeographed opinion, | CAB Order

. E-13648, p. 62, Mar. 21, 1959.) :

In the twenty year interval between’ Red‘ Bluff and

South Central, the Board has generally acknowledged the -

requirements that it laid down in Red Bluff, and contem- -

poraneously decided cases. See, ¢.g., Eastern Air Lines,

St. Louis-Nashville-Muscle Shoals Operations, IC. A. A.

792, 795 (1940),

Eastern believes that the Court of Appeals for the Dis-

‘trict of Columbia ‘recognized, several years, ago, that the

Board is required to make specific findings “apon such

fundamental items as revenues measured against costs of

operations when it. said that the function of the Board

is to: ,

é ‘examine the relevant past and sig and then

to exercise a rational judgment upon the data to

eo. : 2b e

ascertain the public convenience and necessity in

the reasonably foreseeable future.’> American Air-

lines v. Civil Aeronautics Board, 192 F. 2d 417 ie

Cir. 1951). nes. ae,

- While findings as to potential revenues and potential

expenses cannot -be-made with absolute precision, the same

Court correctly, Eastern submits, declared:

‘*governmental permissions for the future cannot

be fashioned from pure fantasy, speculation devoid -

of factual. premise. Public convenience and neces-:

sity in the sense of those statutes has a hard core of

factual possibility, which can be ascertainéd and

evaluated only upon the basis of present and past

events and conditions.’’ American Airlines v. Civil

Aeronautics Board, supra, at 421."

It is, or should be,. the Board’s function to resolve con-

’ flicting claims as to the economics of.a proposed €oute. At

’ least as recently as the South Central Area cast; Supra, the

Board recognized an obligation to balance revenues against —

costs in determining public convenietice’ and necessity.

However, it did not attempt. that balancing in the case below

when it granted the TWA and Delta. routes, and the deci-

sion of the Court. of’ Appeals below would cad

absolve the Board from any such obligation.

‘Eastern presented to the’Court below the i issue; Must

te Board, in évaluating public conyenience ard necessity

s balance. capacity offered by all carriers (the new

i oli the old) and expectable expenses against the expectable

traffic and revenue om 725-26 ; the specific vate was

3 It shouid be pointed out that American did not concern itself

with a review of the standards of public convenience and ‘necessity

as that term is used in §§2 and 401 of the Act. That case involved the

issue whether the Board had power under the Act to create a special

clas of carriers limited to the transportation of freight _ |

: 16 .

pinpointed in Eastern’s briefs to the Court, being fairly

‘comprised in these cited portions of-Edstern’s petifion for

review). The Court did not pass ‘upon. the question, but

only recited that ‘the Examiner and the Board had found -

‘‘Eastern’s service in the Southeast area had been inade-

quate, that Eastérn had not developed the potential market,

that more traffic would result from improved service, and

that there was a public need for competition in-the area”’.

(App. B, p. B23). Those findings may, of course, be

relevant to the ultimate question of ‘public convenience and |

necessity, but the question is whether they obviate any need

to consider whether the proposed operations will be eco- .

nomic. The Court did not resolve the issue raised by

Eastern, namely, thatoof adequacy of. findings and of

required findings. Instead of concluding that the Board’s

findings did or did not satisfy the statutory mandate, the

Conrt concluded that the Board was justified, on the facts

of the case, in not reopening the ‘record, as réquested by

Eastern, to receive current operating data, (Ibid.)

Eastérn contends that no ‘informed: ‘judgment as to the

eerequirements of the public convenience and necessity can be

made without ‘resolving the always hotly-contested issue:

will the new operation be economically féasible? And such

a determination can be made only by some reasonable bal-

While EaStern urged bilow ‘that tthe. Board erred ia failing to

take account of more recent experienc e by Eastern over the routes

“in question, that assignment. of error was quite distinct from the

contention urged both in this Court, and in the Court below, that

- the Board did not make proper or adequate findings on the basic

elements @f public convenience and necessity. Bastern’s petition for

review, and amendment thereto, and Eastern’s briefs to the Court,

treated these issues independently ; compare 719-22, 725-26, 745-46,

* 447-48 ‘(required .findings on ‘‘publie convenience and necessity’’)

with 748-49 (more recent operating data), It is regrettable that the.

’ Court’ below confused ‘Eastern’s, contentions and avoided passing

upon the. issue of adequate findings since, to the best of Eastern’s

knowledge, no court’ has ever interpreted and explained he* term

**publie convenience and necessity ’’ as contained’in the Act.

a m

ow | | | )

| 4

-ancing of anticipated revenues against egpenses. If. this

Court should: fail to speak authoritatively on the Board’s

fact-finding and adjudicatory’ responsibilities vis- -i-vis the

‘* public nvenience and necessity,’’ the Board would have

free rein to award new routes without regard to their

economic feasibility. Applicants for new routes would not

“know the showing required to establish public convenience.

and necessity and existing carriers would be deprived of

their most effective means of protecting. their position and

of demonstrating the lack of need for a new service—a

careful presentation of hard-economic facts.

To ‘proteet litigants in, future Board proceedings, to

establish guidelines for the Board, and to chart a clear path

¢ for future interpretations of section 401, this Court should

* review the judgment below and clearly define what are

awfully required findings of ‘* public cgnvenience and

necessity’’.

4 | Its Inthe Public Interest For This Court To Clarify

Its Ashbacker Doctrine As Applied To Air Route Cases.

tame

= _

Section 40? of the Act guarantees applicants for new

route authority a right to ‘hearing. It is manifest that this

right requires a faig hearing: according to the Ashbacker

case, supra: Ashbacker arose when Fetzer was awarded a

radio frequency for which Ashbacker had also a pplied, but

_Ashbacker’s application hgd not béen heard. Yhefrequency |

could be granted only to o8e. .When the case reached this ;

Court,itwassaid: = =o yur , aul,

| “where two bona fide applications are mitenity

- exclusive the grant to one without a hearing to both

deprives the loser of the opportunity which Congress

chose to _ him.’? ¢ $26" U. S. at 333.)

hs a

A. The Problem Is Significant.

_ For over,15 years, the Ashbacker doctrine of mutual

“ exclusivity has been law, and for more than ten years, the

Board and the lower courts have been struggling with its

- application tovair route cases. No one disputes it vitality

there.’ However, much confusion has resulted in its applica-

tion in this field." In every route proceeding of any cor-

“sequence before the Board, thé problem is raised, and at

Yeast 12 times the Courts of Appeal have been asked to rule

on an Ashbacker issue.? The issue has also arisen out of

pipeline proceedings before the Federal Power Commission.

See, e.g., Midwestern Gas Transmission v. Federal Power

, Commission, 258 F. 2d 660 (D. C. Cir. 1958), vacated, 358 |

U. S. 280 (1959), and the Sahiels recurs frequently before

the Federal Communication Commission, where Ashbacker

began. |

ces

'The Court of Appeals for the District of Columbia declaring -

-Ashbagher applicable to air route cases stated that: ‘*. :. Ashhacker

" fis] a of substance and not... a mere prescription of form.’’ |

Delta Air Lines v. Civil. Aeronautics Board, 228 F. 2d 17, 21 (1955).

is ' 2 Eastern Air Lines, Inc. v. Civil Aeronautics Board, 178 F. 24

726 (D. C. Cir. 1949) ; Seaboard & Western Airlines, Inc. v. Civil

Aeronautics Board, 181 F. 2d 777 (D. C. Cir. 1949); Western Air

Lines, Inc. v. Civil Aeronautics Board,.184 F. 2d 545 (9th Cir.

1950); Northwest Airlines, Inc. v. Civil Aeronautics Board, 194 F.

24 339 (D. C. Cir. 1952); United Air Lines, Inc. v. Civil Aeronau- .

tics Board, 228 F.-2d 13 (D. C. Cir. 1955): Delta Air Lines, Inc. v.

Civil Acronautics Board, 228 F. 2d 17 (D. C. Cir. 1955); Morth

American Airlines, Inc. v. Civil Aeronautics Board, 241 F. 2d 445

(D. C. Cir. 1957) ;-Eastern Air Lines, Inc. v. Civil Aeronautics

Board, 243 F. 2d 607 (D. C. Cig. 1956); Eastern Air Lines, Inc.

v. Civil Aeronautics Board, 247 F. 2d 562 (D. C; Cir, 1957);

National Airlines, Inc. v. Civil Aeronautics Board, 249 F. 2d 13

(D. C. Cir. 1957); Eastern At* Lines, Inte. v. Civil Aeronautics

_ Board, 271 F. 2d 752 (2d Cir. 1959), and this case below. ~All of .

‘these cases ‘involved a considerations and=the Ashbacker.

case was cited in each one except the first Eastern case.

B. The Decisions Below Are Confusing and In Conflict..

Ashbacker recognizes that when two persons desire a -

license.to perform a service and the license can be granted

. to only one, the due process right to a fair hearing requires ~

that both applications be heard simultaneously. and con-

‘sidered concurrently.

* - The Court below remarked that it has seevbiae pointed

- ont ‘that the “application of the Ashbacker doctrine to

awards of airplane routes presents many difficulties not in

the radio cases”? (App. B, p. B7). Until the case below,

it was. generally believed, on the basis of. the Delta case,

supra, that Ashbacker required consolidation: ‘of all applica-

tions for new routes within the ‘“‘arda’? of ati area proceed-

ing, The Court below went on to say (App. B, p. B20 n.

24) that *“the reasoning of: that opinion [Delta] requires

‘the same kind. of hearing in a case suclr as this, where a. ,

prima facie showing’ is made of mutual exclusivity of appli-

. cations for a particular -route’”’ extending beyond the con-

‘fines of the ‘‘area.”? °

The Court below thus expanded the reasoning of Delta

to encompass those situations where. an application to join

an applied-for-new route within the ‘‘area’’ combined with

an existing route outside,the ‘‘area’’ is mutually exclusive

of an application for the entire route that is not consoli- ©

dated. Such a result is inevitable, and desirable, since

neither the Board-nor the Courts could ignoré the realities

of the situation: if a route between A, B-and C is awarded -

by adding a new segment B-C te an existing segment A-B,

it ig just as much a new. route between A and C as if a

new segment B-A were ‘added to an existing segment C-B,

or if an entirely new route A-B-C were awarded. They. are

three different ways of accomplishing the identical result,

a route between A and C via B, and Ashbacker—‘‘a rule

of substance, not .a mere prescription of | form”? (Delta,

r 4

a °

supra)—is. equally applicable to all three. Thus, the Board

could not lawfully grant TWA a new St. Louis-Southeast

Florida extension of its existing. West Coast-St. Louis

~ route, thereby. creating a transcontinental West Coast- St.

Louis-Southeast-Florida route without. giving Eastern a

hearing on its application for a new St. Louis-West Coast

extension of its existing Florida-Southeast-St. Louis route

to create a transcontinental West Coast-St. Louis-South-

east-Florida route offering: the same. services as TWA or:

without valid findings that the TWA grant would not be.

mutually exclusive of the Eastern — (App. B, pp.

B16-B20).

_ The Board had ied that the case was a limited: ‘‘area’”’

proceeding, and, in effect, that ‘Ashbacker did not apply.

Adoption of that contention would have reduced Ashbacker

te meaningless form. without substance, and tue Court

emphasized: below ‘‘that the Board cannot, either inten-

tionally or by the demonstrable ‘effect of an order, avoid

what is now known as the Ashbacker doctrine.’’ (App. B,

p. B7). . Eastern submits that the Court properly analyzed

the law in that regard, asserting the vitality of Ashbacker

and its resistance to subterfuge.

However, the Court did a complete volte face when it

considered Bustern’s contentions . respecting. the Delta

award. The Board authorized Delta to combine its existing

Kansas City-Memphis authority (outside the ‘‘area’’)

. with the authority applied for between Memphis and Bir-

mingham to provide a Kansas City-Birmingham/Atlanta

service. As pointed out above in the Statement of the Case;

Eastern was a long-standing applicant for Kansas City-

Southeast authority; but the Board refused to hear East-

ern’s application below. Surely, in the light of the Court’s

interpretafjon of Ashbacker as to the TWA-award, that was"

error. Yet the same Court in the same decision held that

~ because the Kansas City-Memphis segment was a ‘“‘little

additional segment outside the area’’ (App. B, p..B21; ef. .

’ App. B, p. B20: Kansas, City ‘“‘being well outside the area

of the case’’) Ashbacker did not apply, and the Board was

at liberty to disregard Kastern’s ‘‘mutual exclusivity”? con--

‘ tentions. Eastern is at a loss to reconcile the Court’s com- |

pletely inconsistent approach in light of its statement that -

the Board could not intentionally or otherwise avoid

“Ashbacker. Neither, can Eastern square the Court’s treat-.

ment of the Delta aw ard with its refusal in M idwestern Gas

Transmission, supra, 258 F. 2d at 667, to require | ‘« Ash-

- backer’ ’ to bow to expediency as urged by the Federal

. Power Commission. _ .

It would appear from the opinion, of the Court below

‘that, Ashbacker applies only to ‘‘area’’ cases that become,

’ willy-nilly, transcontinental cases, and that Ashbacker

would not apply when a 379-mile’segment (the nonstop‘ dis-

tance between Memphis and Kansas City)-is the extent of

the ‘‘area’s”’ wanderi ings. The Courts holding that ‘‘the

doctrine of Ashbacker also arises where a request for an

extension of an existing routing would preclude the grant :

‘of otlier pending applications for the entire route’’ { App. B,

p. B9), would be rendered meaningless by its own ruling -

on the Delta award.

‘It is respectfully submitted that the right to a fair‘hear- .

' ing is an absolute right, not dependent upon | mileages or

mileage variations, absolute or relative. It is also respect-

‘ fully submitted that there is rio substantive distinction

-between the Ashbacker considerations inherent in the TWA

award and those inherent in the Delta award. ‘The TWA

award involved a 1,073-mile proposed route between Miami

and St. Louis (nonstop) and a 1,591 mile existing route |

between St. Louis and California (nonstop St. Louis- -Los

Angeles). The Delta ‘award involved new route mileage

‘between Birmingham and Memphis, .212 miles inside the.

area, and a route of 379 miles between Memphis and Kansas .

City, outside-the area. The relationship between ‘‘inside:

the area’’ and ‘‘outside the area”’ mileage i is similar in the !

TWA award and in the Delta award. Further, it.certainlys ,

could not be said that Ashbacker protects 1,591-mile.route

proposals but not 379-mile route proposals, The latter

may be relatively more important than the former in such

vital particulars as passengers, reyenues, operational flexi-

bility, etc. and certainly the latter could be more easily

’ protecte ocedurally, by the Board. The right'to a fair

hearing must be the same for the small as for. the large;

yet the Court below would protect only the large.

The Court’s disposition of the issue raised by the Delta

award is at variance with the same Court’s (and basically rs

the same panel ’s)' decision in Eastern Air Lines v. Civil .

Aeronautics Board, 243 F. 2d 607 (D. C. Cir. 1956). In that

case, Eastern appéaled the Board’s consolidation order in

the Great. Lakes-Southeast "Service Case, supra, alleging

that the Board violated the Ashbacker doctrine by consoli-

dating, inter alia, applications of Northwest Airlines, Ine.

(“No} ‘thwest’’) for a new route between Chic ago and

F lotid a (where Eastern operated) without hearing East-

ern’s applications for new authority between Chicago and

points in sthe Pacific Northwest served- by Northwest.

Northwest’s application, if granted (and it subsequently |

_was), would have permitted transcontinental operations

between, for example, Seattle and Florida, and‘so would

Eastern’s application if it had been heard, and if it had —

been granted. The Great Lakes Case was an ‘‘area’? pro-

' 1Two of the three Judges who sat in the case below also served

in the Eastern case. The same Judge wrote both opinions.

23 |

ceeding, and’ surely if the opinion below had been extant

at that time, it would have been held controlling as being -

on all-fours, since the Board in each instance expanded an’

‘*area’’ case into a transcontinental proceeding. However,

the Court stated, in dicta,’ that application of Ashbacker n

would transform a ‘limited area case’’: into a “massive

consideration of the whole of American air transportation”

(243 F. 2d at. 609). It is impossible to reconcile the 1956 ©

Eastern case and the opinion below. |

That is not the end of the conflict in Ashbacker between

the Great Lakes Case, supra, and the St. Louis Case, as-the~ ee

proceedings were known before the Board Eastern

appealed the Great Lakes Case-to the Court of Appeals

_ for the Second Circuit (after the Board had decided it)

alleging that the grant to Northwest of the route déscribed.

above violated Ashbacker. The Second Cirenit ruled that

Eastern. had not show n mutual exclusivity and that the

Board was not ‘compelled to rule on Ashbacker. Eastern

Air Lines v. Ci€il Aeronautics Board, 271 RB. 2d 752, 757

(2d Cir. 1959): That holding conflicts with that of the

Court below that, where a prima facie Ashbacker situation ©

appears,. the Board is required to make specific findings on

the issue? (App. B, p: B14.) ;

* This Court should, in the interests of the orderly and

_uniform administration of justice, particularly in a matter ~

of such great importance as this one which affects so many

proceedings\.before administrative agencies, review the

1 The Court ruled: that the consolidation order’ was not a final

order and thus was unreviewable, and dismissed the case for want

of jurisdiction. However, it said (at length) that Ashbacker was

not applicable where a limited area case would become a transcon-

tinental ease.

2 Eastern will present to this Court on March 14,1960, a petition

for certiorari to réview the decision of the Second Circuit.

decision below and unequivocally Main the law for.the

guidance of all. ‘The decisions’ below present intercirguit,

intracireuit and intradecision coutiate.’ ~

It Is In The Public. ety Fer This Court To-

~ toe

“Review The Board’ s Practice Of Prejudging Cases.

Through The Press Release Decision Procedure..

Eastern alleged below that it was denied a fair hearing

because the Board prejudged the issues of. the proceeding

ang ‘announced awards: of valuable route authority com-

petitive with Eastern without giving supporting reasons

and without considering all the material facts. By its

. “*press release decis isions’” the Board effectively fettered its

discretion and precluded any open-minded considpration of

the facts in the preparation of its formal decision.

‘Shortly after thé Board deliberated on the case, it

announced its “tentative decision’’ to award the TWA and

. Delta routes (March 26 and 31, 1958; see Statement of Case,

supra and 660, .663, G66). Some six months later it issued

a formalized decision announcing its reasons for the awards.

~The findings of fact relied upon to sustain the awards were

based largely. on data not ‘available to the Board at the time

af its press release decisions."

- ! This Court’s Rule 19, \ (hb) indicates that certierari will be

granted to reconcile, conflicts between circuits. In such cases as

Dickinsén v. Petroleum Conversion Corp., 338 U. 8. 507 (1950),

. Madgio v. Zeitz, 333 U. S. 56 (1948) and John Hancock Ins. Co.

- v. Bartels, 308 U. S. 180 (1939) this Court has granted certiorari

to achieve intracircuit uniformity. The conflict within the District

‘

of Columbia Cireuit is of grave consequence, particularly in view |

of the fact that most appeals from orders of the Civil Aeronautics

Board are heard in that Circuit.

2 See pages 486, 493, 498, 502, 507 of. the. joint appendix where

the Board refers to ‘‘ March & September 1957 O & D Surveys’’ and

Rule 36 of the Board’s Rules of Practice! provides that

in making its decision on controv ersies before it the Board

will consider the whole: record, the Examiner’s Initial Deci-

. sion, and the exceptions to it, will resolve all questions of

fact by the greater weight of the evidence and then issue

an appropriate order. Rule 36 adheres to the judicially-:

“recognized *process-which_a commission properly follows

in reaching a decision’’, to borrow. the e words“of-the Court

in Saginaw Broadcasting Co. v. Fede ral Communications ~

_ Commission, 96 F. od 554,. 559 .(D. C. Cir. 1938) which

stated, with respect to deciding eases:

“The process necessarily inchidles at least four

parts: (1) evidekve must be taken and weighed, both

as to its accuracy and credibility ; (2) from attentive

consideration of this evidence, a determination of

facts of a basic or underlying: nature must be

reached; (3) from these basic facts. the ultimate

c . facts, usually in the language of the statute; are to

be inferred, or not, as the case may by’ ;. (4) from this

finding the decision will follow by the applieation of

— the statutory criterion.’

The Board stated that its **press release decisidne” did

not constitute the final decision (663, 668), andParcues that

they were ‘*te ntative’’ (660), subject tochanee, if necessary.

Section 8 (h) of the Aduinist rative Procedure Act pro-

vides, in part, that

—

other 1957 traffic data, as well as ‘‘Form 41 Reports’’ for 1957

(507). The“‘O & D Surveys” are ggmpilations of reported air

traffic flows by origin and destination and are the basie source mate-

rial for any analysis of aif passenger movements. ‘‘Form 41

Reports”’ are reports filed by all carriers with the Board, reporting

‘their operations in detail. Neither the September 1957 0 & D-

Surveys nor the Form 41 Reports for 1957° were available to the

Board i in March, 1958, when the “pre Ss rele ases’’ were issued.

‘' Required to be published by. $3(a) of the Administrative

Procedure Act.

» 26 -

‘* All decisions (including initial, recommended, or

_tentative decisions) shall become a part of the record

and include a‘statement of (1) findings and conclu-

sions, as well as the reasons or basis therefor, upon -

all the material issues of fact, law, or discretion pre-

sented on the record, and (2) the appropriate rule,

order, sanction, relief, or denial thereof.’’ (lmpha-

sis supplied.) a

e Eastern, conte nded, both before the Board ‘and before

the Court helow, thaf it was deprived of a fair hearing and

decision Ly the Roard's “press release * decision. practice.

The Board brushed Eastern’ s contentions “aside (660) and

the ¢ ‘ourt dynored Mastern’'s contentions.

This Court. is respectfully — to declare the

‘press release’? preeedure invalid. It is a-matter of grave |

consequence, permeating as it does the Board’s entire deci-

sional process, and has given rise to eriticism in another

Circuit, as well as within the membership of the Board itself.

A. The Press Release Decision Procedure Has Far-Reach-

ing Consequences”

In August J956, to prevent “‘leaks’’, the Board com-

menced announcements of new route Sutin’ by ‘‘press

release’* prior to the formulation and adoption of formal

opinions. ‘Since then every major CAB route ease has had

its result foretold several months in advance of the formal

order by a ‘*press release’’ decision. Betweer August 1956

and May 1959, there were 41. cases so decided. CAB

Member Hector has criticized the practice freely, pointing

out that for all practical purposes, the ‘‘press release’? is

the decision of the Board, and as such it violates the Admin-

1See Great Riabes Beuthoust Service Case, CAB Docket 9396 "

et al., CAB Order E-13835 ( May 7, 1959), mimeo., Member Hector’s

‘concurring and dissenting opinion 4.

istrative Procedure Act and the Board’s own Rules of

Practice'. He said?: i og ; |

‘To my mind this is not a mere theoretical legal issue.

When an agency announces a tentative decision in a

press release, forces are set in motion-which cannot

‘be reversed. It is unrealistic to state that the agency

. retains: full freedom of deliberation, discussion and —

‘reconsideration after a vote is made .public and.

parties begin to act in reliance thereon.”’ es 7

. . °

Member Hector also noted, that once a ‘press release’’ 1s

a announced, the pexties prepare, to implement the awards

- *tarid take other/steps involving efpenditures of a magnitude

which no responsible businéss man would undertake unless ©

he knew that a decision had in effect already been made®”’.

Member Hector’s vigorous opposition to the practice

illustrates the far-ranging nature of its consequences: all ,

major “decisions are so announced, the formal decision

invariably conforms in major particulars to the ‘‘press

release’, pa rties commence actions in reliance on the ‘‘press

releases”, and the Board loses its freedom of action to

consider the case on its merits when the actual work of

opinion writing begins.’° . > . ;

The Board itself admits that the situation is at best an

unhappy one, conceived in.necessity.*. If it is not stopped

by this Court, the Board will continue its use, and the prac:

tice may spread to all other agencies which adjudicate gon-

1Jd. at 4-5.

27d, at 5. :

37d. at 4. p

‘The Board alleges a necessity for preventing ‘‘leaks’’ of its

votes by untrustworthy persons who participate ‘in the decisional

process, attending the Board’s deliberations. Eastern Air Lines v.

Civil Aeronautics Board, 271 F. 2d 752, 757, n. 10 (2d Cir. 1959).

The very éxcuse offered should condemn. the decisions themselves

as being infected with impropriety.

troversial matters attracting wide. spread public. interest. 7

The result will be administrative adjudication by ‘press

-release’’—an’ anathema upon any concepts of due process.

B. The Press Release Decision Procedure Is Unlawful. © _

The above discussion of the consequences of the ‘‘press

release’’ decision practice has touched ‘on its illegality.

Clearly Member Hector regarded the practice as unlawful, °

and indeed it is impossible to reconcile its usage with the

requirements (of the Administrative Procedure Act and

Rule 36 of the Board’s own Rules of Practice.

- Tt should be remembered that the Board in its delibera-

: tions sitsas a fact-finding jury and it is axiomatic that jury-

- men, should not annoifnce their ‘‘tentative’’ -conclusiens

‘prior to consideration of all the evidence. It was stated

“in Pool v. C. B. € Q. R. Co,. 6 Fea. 844, 850 (D. Towa 1888)

(ordering new trial because of juror ’s misconduct) :.

* Now the human mind is constituted so that what

one himself publicly declares touching any contro- —

versy is much more potent in biasing his judgment

~ and confirming hig predilections than similar. dee-

larations which ‘he may hear uttered by other per-

sons. When most men commit themselves publicly to

any fact, theory, or judgment they are too apt to

‘stand by their own public declarations, in defiance

of evidence. This pride of opinion and of consistency

belongs to human nature. Where, therefore,.a jnror

talks outside the jury room about a case pending and

undecided before him, he gives the clearest evidence

The Federal Communications Commission adopted the ‘‘ press

release’’ procedure shortly after the Board’s first-experimentations

. with.it. See FCC Public Notice 41611, February 7, 1957, ‘FCC

To Announce Instructions In Docket Cases.’’ The broadcast indus-

try trade magazine explained that the Commission, like the Board,

had been plagued with ‘‘leaks” in important television license and

deintermixture proceedings and was adopting the Board’s practice

to combat the problem. 52 Broapceastine 65 (Feb. 11, 1957).

———

2 Peta,

that he is not an impartial and unbiased juror. The

very disoussion of any matter by a juror elsewhere

‘than in the jury room tends to the forming of false ~

impressions and prejudgments. Nor will it do fora .

moment to accept the statement of the juror that

\ 6 what he has said or heard has not affecfed or influ-

_enced his judgment.”” os ie.

This Court can take judicial notice of human nature, as -

described in the passage quoted.’ A

It has been pointed out that the provision of the Admin-

istrative Procedure Act for supporting reasons and find-

ings of fact to accompany decisions of administrative agen-«

cies is not an idle requirement: '

‘(Any judge can testify to the experience of working

on opinions that won’t write with the result that his

-eonelusions are changed because of his inability to |

state to his satjgfaction the reasons upon which they

depend.”’ Landis, The Administrative Process 106

(1938). ; :

_ Eastern raised the ‘‘press release” consideration in

a ‘the Second Circuit in the appeal of the Great Lakes-South-_

_ east Service Case, supra, and that Court expressed consid-

1it should be made clear that there is nothing but the most

jal resemblance between the ** press release’ practice and .

. the rarely-used practice of this Court, and other courts, appearing

sometimes in extraordinary cireumstances, of announcing a final .

judgment before there has been sufficient time to reduce the jifdg-

_ment to writing. For example, in the Little Rock School Case,

Cooper v. Aaron, 358 U. S: 1 (1958), this Court made it abundantly

clear that it was announcing its final judgment after.‘‘having fully

_ deliberated’’ on the issues and that the imminence of the netv school

_ year at Little Rock coupled with the physical impossibility of

_ pedueing the Court’s already carefully reasoned judgment to writ- .

ing made it ‘‘important to make prompt announcement of our

|- judgment.’’ The ‘‘press release’’ decision practice of the Board

is not even remotely comparable. This Court'did not, and it is

submitted would not, announce that it had ‘‘tentatively’’ decided to

issue its order, but that it would make up its mind definitely and

publish its opinion later after it had’ had time to look at the record

_ in the case. . . a

30° ,

erable difficulty with ‘the practiee.. Although the Court did

not find that its use.constituted reversible error, Sthe Court

- was-carefully critical: .‘‘We do not mean to express

approval of the Board’s practice of making public its ten-

tative decisions.’’ 271 F. 2d at 758.

The Court below, in this case did not: discuss the bie

of the “press release’? decision. That Court’s disregard

: for the issue, coupled with the Second Cireuit’s grave con-

cern about the practice, presents a conflict of views that

should be reconciled by this Court. Since all of the Board’s

major route awards are announced by ‘press release” -

decisions, considerable future litigation will certainly result

_ unléss, and until, this-Court rules upon the practice.’

Aside from the general public interest in the practice,

it is also a matter of acute public interest that. this Court

‘ reaffirm the right of litigants in-administrative proceedings

- to a fair determination of the issues on the record, fairly

- considered, and not consign their fates to trial by press

release. ;

‘The’ question is: May an administrative agency make

up its mind, vote, and publicly announce its determinations

‘without giving supporting reasons and without ever consid-

ering material it later finds essential to its formal opinion

and order, that is, material not even in existence at the time —_.

of the vote, decision, and announcement?

Eastern submits that the answer required by the due

process clause of the Fifth Amendment, by the statutes

governing administrative procedure, and by ‘fundamental

4 As recently as February 15, 1960, a petition for review of. an

order of the Civil Aeronautics Board was filed in‘the District of —

Columbia Circuit Court of Appeals where the petitioner alleged,

inter alia, thatthe Board’s ‘‘ press release’’ procedure had preju-

‘diced it. Southeastern Aviation, Inc. v. Civil Aeronautics Board,

No. 15566 D. C. Cir., Feb. 15, 1960, Petition for Review 6, sub-

i para. (m).

common law iaueaiie of Ange-Asherneg) eamenmies -

is an emphatic **No.””

3 Conclusion: *

For the nnigeten reasons, ‘this petition for a writ of

" certiorari should be granted. :

‘

Respectfilly submitted,

E. Suyrne GamMBReLL, 5 a

W, Guewn Harta, : gg

Harotp L. Russet, ,

ioc Attorneys for Petitioner,

825 Citizags and Southern National Bank Bldg.,

Atlanta, Georgia

James H. Bratton, Jz, a gee ~

ALLISON Wave, . . ree ee e +8

. | Of Counsel.

March 9, 1960.

_ Al.

APPENDIX A.

a, Statutes and Regulation Involved.

Fifth Amendment to Constitution of the United States:

No person shall be held to answer for a capital, or other-

wise infamous crime, unless on a presentment or indict-

ment of a Grand Jury, except in cases arising in the land

or naval forces, or in the Militia, when in actual service

in time of War or pnblic danger; nor shall any erson -

be subject for the same offense to be twice put in je ardy

of life or limb; nor shal] be compelled in any crimina. case

‘to be,a witness against imself, nor be deprived of life,

liberty or property, without due process of law; nor shall

private property be taken for public use, without just com-

pensation.

Administrative Procedure Act, 60 Stat. 237, 5 U. S. C.

§1001 |

’ Section 3(a) :

Except to the extent that there is involved (1) any

function of the United States requiring secrecy in the public

interest or (2) any matter relating solely to the internal

management of an agency— . .

(a) Ruves. —Every agency shall separately state and

currently publish in the Federal Register (1) description

of. its central and field organization including delegations

by the agency of final authority and the established places

at which, and methods whereby, the ~nblic may secure

information or make submi‘tals or sot

of the general course and method . anctions -

ie ‘ are channeled and determined, iné ature and |

requirements of all formal orinform: ., s available

as well as forms and instructions as \ +... ..vp2 and con:

tents of all papers, reports, or examinations; and (3) sub-

stantive rules adopted as authorized by law and statements

Pe of general policy or interpretations formulated and adopted

by the agency for the guidance of the public, but not rules

. s |

c . , : ? : . “

Se : i

AQ.

_ Appendix A.

addressed to and served upon named persons in accord- .

ance with law. No person shall in any manner be required

to resort to organization or procedure not so published.

(60 Stat. 238, 5 U. S. C. §1002(a))}

Section 8(b):.

_ Supmrrrats anv Decisions.—Prior to each recommended,

- initial, or tentative decision, or decision upon-agency review

of the decision of subordinate officers the parties shall be

afforded a reasonable opportunity to submit for the con-

. sideration of the officers participating in such decisions

(1) proposed findings and conclusions, or (2) exceptions

. to the decisions or recommended decisions of subordinate

. Officers or to tentative agency decisions, and (3) supporting:

reasons for such exceptions or proposed findings or con-

clusions. The record shall show the ruling upon each such .

finding, conclusion, or exception presented. All decisions

(including initial, recommended, or tentative decisions)

shall become a part of- the record and include a statement

of (1) findings and conclusions, as well as the reasons or

_basis therefor, upon all the material issues of fact, law,

or discretion presented on the record; and (2) the appro-

priate rule, order, sanction, relief, or denial thereof.

| (60 Stat. 242, 5 U. S. C. §1007(b))

Section 10(a):

Ricut or Review.—Any person suffering legal wrong

because of any agency action, or adversely affected or

aggrieved by such action within the meaning of any relevant

statute, shall be entitled to judicial review thereof.

(60 Stat. 243, 5 U.S. C. §1009(a))

Section 10(e):

Score or Review.—So far as necessary to decision and-

where presented the reviewing court shall decide all rele-

Appendix A.

. © vant questions of law, interpret constitutional and’ statu-

tory provisions, and determine the meaning or applicability

of the terms of any agency action. It shall (A) compel

agency action unlawfully withlreld or unreasonably delayed ;

and (B) hold unlawful and set aside agency action, find- :

ings, and conclusions found to be (1) arbitrary, capricious,

an abuse of. discrefion, or otherwise not in accordance

with law ; (2) contrary to constitutional right, power, privi-

lege, or immunity; (3). in excess of statutory jurisdiction,.

authority, or limitations, or short of statutory right; (4)

without observance of procedure required by law;° (5)

unsupported by substantial evidence in any case subject

to the reyuirements of sections 7 and 8 or otherwise reviewed —

on the record of an agency hearing provided. by statute;

or (6) unwarranted by the facts to the extent that the facts

‘are subject to trial de novo by the reviewing court. In°

making the foregoing determinations the court shall review

‘the whole record or such portions thereof as may be cited

by any party, and due account shall. be taken of the rule

of prejudicial error.

(60 Stat. 243, 5 U. S. G. §1009(e))

Civil Aeronautics Act of 1938, as amended, 52 Stat. 977,

49 U.S. C. §401

Section 2:

_ In the exercise and performance.of its powers and duties

under this Act, the authority shall consider the following,

among other things, as being in the public interest,‘ and

' in accordance with the public. convenience and necessity—

(a) The encouragement and development of: an air-

transportation system properly adapted to the present and

future needs of the foreign and domestic commerce of the

United States, of the Postal Service, and of the national

defense; —

. 8

Appendix A.

(b) The regulation of air transportation in such manner

as to recognize and preserve -the inherent advantages of,

assure the highest degree of safety in, and foster sound.

economic conditions in, such transportation, and to i improve

the relations between, and coordinate transportation by, air

carriers; .

( ¢) The promotion of. adequate, economical, and efficient

'.. service by air carriers at reasonable charges, without unjust

discriminations, undue preferences or advantages, or unfair

or destructive competitive practices; :

.(d) Compétition to the extent necessary to assure the

sound development of an air-transportation system prop- -

erly adapted to the needs of the foreign and domestic com- .

merce of the United States, of the Postal Service, and of

the national defense;

(e) The regulation of air commerce in such manner as

to best promote its ieee neeats and safety; and

(f) The encouragement and development of civil aero-

nautics. , . :

(52 Stat. 980, 49 U.S.C. §402)

. Section 401:

CERTIFICATE OF PusLic CONVENIENCE AND NBECESSITY

(a) No air carrier shall engage in any air transporta-

tion unless there, is in force a certificate issued by the

Board authorizing such air carrier to engage in such trans-

portation: Provided, That if an air carrier is engaged in

such transportation on June 23, 1938, such air carrier may

continue so to engage between the same terminal and inter-

- mediate points for one hundred and twenty days after said

date, and thereafter until such time as the Board shall

pass upon an application. for a certificate for such trans-

portation if within said one hundred and twenty days sueh

air carrier. files such application as provided herein. —

e 3

an | A5

Appendia A. ,

-. (b) Application for a certificate shall be made in writ-

ing to the Board and shall be so verified, shall be in such

form and contain such information, and shall be accom-

panied by such proof of service upon such interested per-

sons, as the Board shall by regulation require. .

shall give due notice fhereof to the public by posting a

‘notice of such application in the office of the secretary of

the Board and to such other persons as the.Board may by

‘regulation determine. Any interestéd person may file with

the Board a protest or memorandum of opposition to or in

. support of the issuance of a certificate. Such application

- shall be set for public hearing, and the Board shall dispose .

- of such application as speedily as possible.

(d) (1) The Board shall issue a certificate authorizing

the whole or any part of the transportation covered by the

application, if it finds that the applicant is fit, willing, and —

able to perform such transportation properly, and to con-

form to the provisions of this chapter and the rules, regu-

_ lations, and requirements of the Board hereunder, and that

such transportation is required by the public convenience

and necessity, otherwise such application shall be denied.

(2) In the case of an application for a certificate to en-

gage in temporary air transportation, the Board may issue

a certificate authorizing the whole or any part thereof for

such limited periods as may be required by the public

convenience and necessity, if it finds that the applicant is -

fit, willing, and able properly to perform such transporta-

tion and to conform to the provisions ofthis chapter and

the rules, regulations, and requirements of the Board |

hereunder.

. re Py

@ ® @ * .

P ‘

(f) Each certificate issued under this section shall

specify the terminal points and intermediate points, if any,

.* A6 7 a

ss Appendia 4.

bitween which the air carrier is authorized to engage in

air transportation and the service to be rendered; and

there shall be attached to the exercise of the privileges

‘granted by the certificate, or amendment thereto, such rea-

sonable terms, conditions, and limitations as the public

interest may. require. A certificate issued under this sec-

tion to engage in foreign air transportation shall, insofar

as the operation is to take place without the United States,

designate the terminal and intermediate points only insofar

as the Board shall deem practicable, and otherwise shall .

designate only the general route or routes to be followed.

_-Any air carrier holding a certificate for foreign air trans-

portation shall be authorized to handle and transport mail

of countries other.than the United States. No term, con-

dition, or limitation of a certificate shall restrict the right

of an air carrier to add to or change schedules, equipment,

accommodations, and facilities for performing the author-

ized transportation and service as the development of the

business and the demands of the public shall require. No -

air carrier shall be deemed to have violated any term,

condition, or limitation of its certificate by landing or tak-

ing off during an emergency at a point not named in its

certificate or by operating in an emergency, under regu-

lations which may .be prescribed by. the Board, between

terminal and intermediate points other than those specified

- in its certificate. Any air carrier may make charter trips

or perform any other special service, without regard to —

_ the points named in its certificate, under regulations pre-

scribed by the Board.

(gz) Each certificate shall be effective from the date

specified therein, and shall continue in effect until sus-

pended or revoked as hereinafter provided, or until the

Board shall certifiy that operation thereunder has ceased,

' or, if issued-for a limited period of time under subsection

(d) (2) of this section, shall continue in effect until the

expiration thereof, unless, prior to the -date of expiration,

' Appendia A.

such’ cortifiente shall be suspended or revoked as provided:

herein, or the Board shall certify that operations there-

under have ceased: Provided, That if ariy service author- |

ized by a certificate is not inaugurated within such. period,

not less than ninety days, after the date of the authoriza- —

tion as shall be fixed by the Board, or if, for a period of

ninety days or such other perigd as may be designated by

the Board, any such service is not operated, the Board

may by order, entered after notice and hearing, direct that

such certificate shall thereupon cease to be effective to the

extent of such service.

(h) The Board, upon petition or einalbilas or upon its

own initiative, after notice and hearing, may alter, amend,

modify, or suspend any such certificate, i in whole or in part, -

if the public convenience and necessity ‘so require, or. may

revoke any such certificate, in whole or in part, for inten-

tional failure to comply with any provision of this sub-

chapter or any order, rule, or regulation issued hereunder

or any term, condition, or limitation of such ceftfficate:

. Provided, That no such certificate shall be revoked unless

the holder thereof fails to’ comply, within a reasonable |

time to be fixed by the Board, with an order of the Board

commanding obedience to the provision, or to the order

(other than an order issued in accordance with this pro-

viso), rule, regulation, term, condition, or limitation found

by the Board to have been violated. Any interested person

may file with the Boa: d a protest or memorandum in sup-

port of or in- opposition to the alteration, amendment,

modification, suspension, or revocation of a certificate.

- (52 Stat. 987, 49 U. S. C. §481)

- Sectiow 1008(2):

Form and Service of Orders |

Every order of the ‘Authority [Board] shall set forth

the findings of fact upon which it is based, and shall be

A ppendix A.

served upon the parties to the proceeding and the Persons

affected by such order.

(52 Stat. 1023, 49 U.S.C. s645(f))

Section 1006(a) :

Any order, affirmative or negative, issued by the Author.

. ity 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

. Teview by the courts.of appeals of the United States or the

United States Court of Appeals for the District of Colum-

- bia 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 therete-

fore. +t

(52 Stat. 1024, 63 63 Stat, 107, 49 U.8.C.,§646(a))

_ Section 1006(f):

(f) The judgment and decree of the court dimies

modifying, or setting aside any such order of the Board

shall be subject only to'review by the Supreme Court of —

the United States upon certification or certiorari as pro- ~

vided in sections 346 and: 347 of Title 28.

(52 Stat. 1024, 49 U. S. C. 4646(f))

A9 ‘ 7

Appendiz A.

Crvm. Amines Boarp, Rues or Phacrice IN Ecoxomto :

Proceepines, Ruue 36.. :

” Section 302.36 Final decision of the Board. ‘Upon sub- .

mittal of a case to the Board for final decision on the merits

. the Board will consider the whole record, including the -

‘initial or recommended decision of the Examiner of its

tentative decision, and the exceptions thereto, will resolve

all questions of fact by what it deems to be the greater

weight of the evidence thereon, will make its decision,

stating the reasons or basis therefor, and enter an appro-

priate order. F

(17 F. R. 3020, Apr. 8, 1952)

- Bl

, | APPENDIX B

\J . > Opinioris' and Judgments Below.

UNITED STATES COURT OF APPEALS

@ : For tHe District or CoLumBia Cracurt.

aE: No. 14798

\ Detta Am Lives, INc., PETITIONER

| v.

Crvm Agronautics Boarp,* RESPONDENT

@iry or Nasuvuie and Tae Nasavitie CHAMBER. or

ComMMERCE,

Oni: or Tampa, Fioriva, and THe Gen ene

' \. CHAMBER oF Commence,

_ Orry or Kansas Cirt, Missouri,

. Crry or Sr. Louis, Missovai, and Tue CHamBer oF —

Commence or Metsopouitan St. Louis,

Trans Wortp Atruines, INc., |

Eastern Ais Lines, Inc.,

INTERVENORS

No. 14804

American Arurnes, Inc., PETITIONER

Crvm. Azronautics Boakp, RESPONDENT |

Crry or Tampa, Fronmpa, and Tue Greater Tampa

CuamBer or CoMMERCE,

Crry or Kansas City, Missovni,

Crry or Sr. Louis, Missouri, and Tue CHamser or

- Commerce or Mersopouitan Sr. Lovts,

Traxs Wortp Arutnes, Inc,

Easterns Arm Lings, Inc.,

INPERVENORS

Appendiz B

No. 14812

Eastern Arauines, INc., PETITIONER.

| v.

Civ Arronautics Boarb, RESPONDENT ‘

Crry or Tampa, Forma, and Tae Greater Pampa

CHamMBER oF ComMERCE.

+ . Crry oF Kansas Crry, MissourI,

Crry or Sr. Louis, Missovrr, and Tue CHaMBER OF

ComMERCE or Merropouitan Sr. ‘Louis,

Trans Wortp Arrives, Inc.,

Devta Arr Lives, Inc.,

INTERVENORS ‘

No. 14822

NationaL Arruines, INc., PETITIONER ©” ,

sith v.

~Crviz Azronautics Boarp, RESPONDENT

Crry or Tampa, FPioripa, and Tue Greate# Tampa

CHAMBER OF Commence,

“Crry or Kansas City, Missouri, |

_Crry or Sr: Louis, Missouri, and Tue CHAMBER OF

Commerce or Metropouitan Sr. Louis,

Trans Worvp Azaruines, Inc.,

_ INTERVENORS

On Petitions to Review Orders of the Civil

Aeronautics Board

Decided December 10, 1959

its

B3. ,

Appenita, B |

- Before Prettyman, Chief Judge, and, BazeLon . and/

Fany, Cireuit J udges.

PRETTYMAN, ‘Chief Judge: These are four petitions for

‘review of orders of the Civil Aeronautics Board made:

in its. St. Louis-Southeast Service Case. Principally: the

Board: awarded to Trans .World Airlines, Ine. (TWA)

a new route from St. Louis. to Miami and other Florida

coast points, and to Delta Air Lines, Inc’, a new Memphis:

Birmingham route.

The cases in this court fall into two main wait one

relating to each of the above-mentioned awards. The dis-

cussion, however, more aptly falls info four divisions:

(I) The mutual-exclusivity contentions advanced by Ameri-

can, Delta and National. * These carriers claim that TWA

was awarded an effective-southern transcontinental route

without consideration of economiéally mutually exclusive

applications. (II) Impact of. the award to*TWA on an.

- existing southern transcontinental interchange, arrange-

ment. (ITI) Eastern’s contentions concerning mutual

exclusivity. Eastern. claims that the Board. erroneously

made awards to TW.A and ‘Delta without comparative

consideration of its mutually exclusive applications. (IV)

‘The merits of the TWA and Delta awards, apart from.

' mutual-exclusivity arguments, and some miscellaneous con:

tentions.

* Two proceedings before the Board play parts in this

problem. One is the Sf. Louis-Southeast ‘Service ‘Case,

which was instituted to inquire into the need for service

‘‘between St. Louis on the one jharfd and Florida and

other southéastern points on the other’’. Several appli-

cations were ¢ :solidated in that case." As we have

_ noted, the ordershere under review: were entered in that —

. Pe ‘No. E-10304 (May 18, 1956) ; ones No. E-10651 (Oct.

) - , eee

Appendia. B

proceeding. The other case which plays a part in the ©

contentions made tous is known as the Southern Trans-

continental Service Case. It was a combination of sev-

eral proceedings, which ‘initially had various names. In

‘its order of consolidation in the ‘Southern Transconti-

mental Case? the Board delineated the scope of the pro-

eeeding to include (1) the need for single-carrier service

“between Houston and West Coast points, (2) the need for

‘‘single-carrier transéontinental service’? between Florida

_ points and the WestCoast, and (3) the need for single-

earrier transeontinental seryice between Atlanta-Birming-

ham and the West Coast. In that order the Board repeat-

_edly used the expression: ‘‘southern transcontinental

route’’. ~The Board explained that in prescribirg-the scope

of this hearing it intended to: consider new or ddditionah.

throngh service’in the southerr tier of states, that is, from *

Florida across the southern boundary of the country to and

““* * * it is necesgary to establish a framework i in which all

major southern franscontinental service issues as a whole

_ melding. sno The Board said in that connection:

‘ean be Uetermined for the foreseeable future.’”’ As thus

arranged, the case included a large number of applications.

In the St. Louis Case various preliminary motions were

made by different carriers, which motions fall .generally

‘into two classes; The first class was for expansion of |

the proceeding to include applications for, extensions. west-

ward. of existing routes into St, Louis from the East,

so as to’add te them routes from St. Louis to the West

Coast, and in the opposite direction for extensions. east--

ward of existing routes into St. Louis from the West, so

as to add to them routes from St. Louis to the Southeast.

These motions were denied. The other class of motions

wis to impose restrictions upon any ‘grant of a new route

from St. Louis.to Florida points, so’ as to prevent any

2 Order No. ‘E- 12861° (Aug. § , 1958). ; Order No. E-13132 (Nov.

4, 1958). ;

Appendiz B.

grant of such a route from being in effect a through

service Florida-California via St. Louis. In response to

these motions the Board arinounced as.a minimum restric- °

tion a requirement that service on any route granted

between California points and Florida points via St.

Louis must, include a stop at St. Louis. And the Board

‘further announced that the parties would not be foreclosed :

from advancing in the course of fhe hearing appropriate

evidence which might reflect a necessity for more stringent

limitations. Thus the Board limited*the hearing in the St.

Louis Case to service betiveen’St. Laws and Florida and

vther Southeast points. .

The Board awarded to TWA the route from St. Louis .

ta Florida-points*® and imposed as the, sole limitation the

previously described mandatory-stop ‘requirement at St.

Louis. TWA was alreddy certificated for through service

from St. Louis to California coast points, and the new

oe award was cast in the form of an amendment to TWA’s

existing Route 2, which was the St. Louis-West Coast

route. The effect of the order was, to authorize one-plane,

one-carrier, through service from Florida coast points to

California coast’ points via | Bt. Louis, with a mtandatory

stop at St. Louis.

The Board made elear that it pelea TWA as the

_ awardee of the new route because this ‘selection would

; provide for the first time. single-earrier, single-plane serv-

ice between the Florida coast and the California coast.

For example, the Board pointed out that TWA’s service,

‘operating nonstop from: I.os Angeles or “San Francisco

to St. Louis for éxpedited carriage to the Southeast onward

from St. Louis, will provide a usable and ,convenient

alternative service to the multiple-stop flights operated

by the National-Delta American Interchange, and bring .

important service benefits to a respectable portion of -the

———

81958). No. E-13026 (Sept. 30, 195 08) Order No. E- 13248 (Dee.

8, 1958) ip

Appendix B.

passengers moving in these markets.’’ And in its ruling

_ on & motion for reconsideration the Board said:

“‘The TWA award, of course, will permit that car-

rier to operate a usable one-stop, single- plane service

-between the West Coast and the points in the South-

east that are being added to its route. It was the

earrier’s ability to provide these ‘beyond area’ bene-

fits that was responsible for our selection of TWA

as the carrier to perform the St. Louis-Southeast

services that were found to be required by the public

convenienee and necessity.’’

The principal point made by petitioners as to this award

is that the Board could not restrict the nature and seope

of the St. Louis Case to considerations limited to St. Louis-

Florida points service, and then in that same case make

~ an award which was for all practical purposes a one-carrier,

one-plane, through transcontinental Florida to California

route, When there were pending unheard in another pro-

ceeding (the Sout ern Transcontinental Case) many appli-

cations for transcontinental serviee Florida to California.

This argument is premised upon the fact that the route

awarded TWA makes its Florida-California service very

slightly longer than would be any route which might be

awarded in the Southern ‘Trancontinental Case. This

method of reaching an award, say the petitioners, is a

direet evasion of the Ashhacker doctrine.‘

The law which was established by the Supreme Court

in the Ashhaeler ease has been sloganized, civen a name,

and is often disenssed as though it were a technicality.

The law which the Court there laid down was far from

a technicality. The statute involved (the Commnnicaticns

Act) provided in effect that applicants for licenses should

have a right te 9 hearing before their applications are

denied./ Two applications which were mutually exclusive

were pending. The Court held that the Commission could

* Ashha ker Radio Co. v¥. Federal Communications Comm’n,

326 U. S. 327 (1945). ;

Appendix B.

not grant one without a hearing. of" the other. The Court

said, inter alia:

‘tFor if the grant of one effectively precludes the

other, the statutory right to a hearing which Con-

gress has accorded applicants before a denial of their

- applications becomes an empty thing.’”

_ The ruling was a practical conclusion of sound common

sense. Tt is simply a realistic truth that, if only one of

several applications can be granted, an award to one ap-

plicant is as effective. a denial of all ‘the others as would

be a flat order of denial.

The foregoing conclusions were premised upon a phys-

ical mutual exclusivity of two licenses. It is ‘true, as the

Board argues, that the application of the Ashbacker -doc-

trine to awards of airplane routes presents many difficul-

‘ties not in the radio cases. We pointed this out'in Eastern -

Air Lines v. Civil Aeroiaulics Board.’ We now iterate

the doctrine there stated; the Board must have a.consider-

measure of discretion in limiting the areas to be con-

sidered in its air-route cases. Bit at the samé time we _

emphasize that the Board cannot, either intentionally or

by the demonstrable effect of ‘an order, avoid what is now

known as the Ashbacker doctrine.

.Another general doctrine, based upon economic -con-

siderations, is pertinent to, the present case. In many

fields, including both communications and air transporta-

tion, an operating license requires a aera 4 finding.

of publie interest, convenience and necessity.’ _ publie

5 Td. at 330.

6100 U.S. App. D. C. 184, 243 F. 20 607 (1956), cited and

quoted in Eastern Air Lines v. Civil Ae ronautics Board, 101 'U.

App. a ¢. 106, 247 F. 2d 562 (1957).

7 As to air transportation, See. 401(d) (1), Civil Aeronautics

Act, 52 Stat. 987 (1938). The Federal Aviation Act of 1958, which

supersedes the Civil Aeronautics Act, contains the same provision,

Sec. ERED & 2 Star. 754, 49 U.S. C. A. §1871/d) (1).

. B8

Appendix B.

interest requires service for the public. It therefore re-

quires that, if there be only enough business to support

operation by ore licensee, there must. be only one licensee.

This is a commonplace of public utility regulation. We

discussed the principle at length in Carroll Broadcasting

Co. v. Federal Communications Comm’n#*

The Civil Aeronautics Act® requires notice and hear-

ing on applications for certificates for new routes, and

also requires notice and hearing upon petitions for modi-

fications of existing licenses; which latter include exten-

sions of existing routes.'? Under the Act (Sections 401

(d)(1) and 401(h))" a finding of public convenience and

necessity is a requirement for either the grant of a new

certificate or the extension of an existing route. So the

principles we have been ‘discussing apply to’ air certifica-

tions.. If the grant of one of several applications for a

new route does, as a matter of economnic necessity, pre-

-cludg the grant of any other application, the doctrine of

Ashhacker clearly applies. Likewise, if the foreseeable

traffic would support two carriers and here are, -let us

*103 U.S. App. D. C. 346, 258.F, 2d 440 (1958): The principle

is also discussed at length in the dissent in RCA Communieations — -

v. Federal Communications. Comm’n, 91 .U. 8. App. D. C. 289, -

294-296, 201 F. 2d 694, 699-701 (D. C. Cir. 1952), with citations,

Court in that ease, Federal Communications Comm’n v. RCA Com-

munications, Ine., 346 U. S. 86 (1953). This was a telegraph case,

in which the competition involved was economic, not a radio case in

which the exclusivity is physical. Gerico Investment Co. v. Federal

Communications Comm'n, 103 U. S. App.’D. C. 141, 255 F. 2d .

.893 (1958), prior to Carroll, contains a clear intimation to the same

effect.

® See. 401(c), 52 Star. 987 (1938), as reenacted, 49 U.S. C. A.

§1371(¢c). -

10 See. 401(h), 52 Star. 989 (1438), as reenacted, 49 U.S.C. A.

| §1371(g). See, e.g., Eastern Air Lines, Inc., et al., Great Lakes to

Florida Service, 6 C. A. B. 429 (1945); Delta Air Corp., et al..

Service to Atlanta and Birmingham, 2 C. A. B.-447 (1941)..

i, 2

11 Supra notes 7 and 10.

Appendiz B.

say, five applicants, the grant of any one is an effective

denial of three of the remaining four applications, ,and

The Board denies the applicability of Ashbacker in this

latter situation and refers us to Pauley v. Federal Com-

munications Comm’n.? However that case involved neither

a grant nor a denial of an application and thus is not

remotely pertinent to the situation now before us.

The doctrine of Ashbacker also applies where a request

for an extension of an existing route would preclude the

erant of other pending applications for the entire route.

If one certificate for a route exists, and if the grant of a

second competitive route would as a matter of economic

fact destroy or substantially reduce the rendition of the

service required by the public interest, the public interest:

precludes the competitive grant. The Board has frequently

recognized and applied this latter rule; as a matter of fact

it almost always does so.”* |

This bring us to a consideration of the practicalities of

the situation in the case before us. The characteristics of a -

restricted-area service are entirely different from those of

a transcontinental service. This is well recognized in the

industry. We think the Board cannot “be compelled to

‘ expand an area case: but at the same time it cannot be per-

mitted to transform the nature of an area case without

applying to it the factors which govern the case as trans-

12 86 U.S: App. D. C.294, 181 F. 2d 292 (D. C. Cir. 1950).

18 See, ¢.g., Southern Transcontinental Service Case and Dallas

to the West Service Case, C. A. B. Order No. E-12861 (Aug. .5,

1958) ; Investigation ‘of. Service to Winsfon-Salem and/or Greens-

boro-High Point, C. A. B. Order No. E-12873 (Aug. 8, 1958),

“1A Av. L. Rep. par 22,192; Southern Service to the West Case,

Reopened, 18 C. A. B. 234 (1953) ; Transcontinental & Western Air,

Inc., et al., Detfoit-Memphis Service, 6 C. A. B. 117 (1944). Cf.

Seven States Area, Investigation, €. A. B. Order No. E-13254

(Dee. 8, 1958), 1A Av. L. Rep. par. 22,226, 22,226.11 (new com-

petitive service would be too costly to the Government in subsidies).

B10.

Appendix B.

formed. It cannot hear an area case and, without more.

make a transcontinental award. It cannot. thus ignore

pending applications for a transcontinental route certifi-

cate, if those applications-are mutually” exclusive with the

award being made. Petitioners, or some of them, had pend-

ing applications for through routes Florida to California.

coast.. These were consolidated in the Southern Trans-

continental Case. They endeavored, by motions in the Sf.

Louis Case to persuade the Board to do one‘of two things, -

either restrict any award in‘that case so stringently as to

preclude its being effective through southern transcontin.

ental or give comparative hearing to all pending applica’

tions for such a route. They now argue to us that the

maximum power of the Board under the statute, constrned

according to Ashbacker, was limited to these two alterna-

tives. The Board apparently agrees with the general prin-

ciples underlying these arguments; references’ to them

appear in the orders of consolidation.

So the first debated juestion in whether a primu farie

showing was made that the TWA award via St. Lotis would

create in an inadequate market an effective competitor in “

the southern transcontinental market. The problem, let us

remember, is not whether the award shonld be made but

whether these other. applicants: were entitled to a hearing

on the matter. We think we need go no further than the

Board's own findings to secure the answer.

In its initial opinion which supported the. order in the

preceeding now before us, the Board emphasized that the .

route to be awarded TWA, involving only 12 per cent cir.

cnity over a more direct routing between the Southeast and

the West Coast, ‘would provide a convenient alternative

< gervice to the existing National-Delta-American Inter-

change. It noted American’ s estimate’ that the new award

would divert about 50 per cent of the existing interchange

_traffic. }

Bll.

: ‘ rea) ;

. . Appendix B.

In prior proceedings the Board had concluded that the:

available business would not support two southern trans- _

continental interchange arrangements. In 1951, after :

comparative hearing of all then-pending applications, it

licensed a single-plane Florida to California service via”

New Orleans-Dallas by=an interchange arrangement oper-

ated by American, Delta and National." A year later the

Board, without further hearings, authorized a competitive

- interchange service."* This court issued a stay, and there-

- gpon the Board revoked the award and ordered an eviden- -

tiary hearing.* The board then found that the proposed -

new service would. be hopelessly uneconomic and lenied

the certificate.” One finding of the Board was that: —

ee interchange could not obtain for itself sufficient traf-

fic to meet the expenses of even one daily round trip

from the west coast to Miami.*””* ;

The Board later reexamined its findings, opinion and

decision and reaffirmed its conclusions."® Thus the Board

in 1954 concluded, after extensive evidentiary hearings,

that the- potential traffic between the Florida coast and

Ahe California coast was not sufficient to justify two com- :

petitive interchange services. .

All the applications consolidated in the Southern Trans-

continental Case seem to have included the possibility -of .

one or more stops. ‘Nowhere is it. made to appear that

4 Southern Service to the West Case, 12 C. A. B. 518.

15 Southern Service to the West Case, 14 C. A. B. 310 (1951) ;

Southern Service tu he West Case, 15 C. A. B. 94 (1952). .

16 Sonthern Service to the West Case, 15 C. A. B. 124.

17 Southern Service to the West Case, Reopened, 18 C. A. B. 234 ,

(1953). , eae =

"87d. at 236.

49 Sor-thern Service to the West Case, Reopened, 18 C. A. B. 790

(1954). a |

‘ Bi2

Appendix B. .

any such applicant sought only a nonstop certificate, to,

which service the TWA one-stop service might not be”

potentially competitive. The comparative circuity of the

St. Louis route over the proposed through routes would

-.appear to be no greater than over the existing inter-

ehange. If the TWA one-stop service is an effective com-

petitor to the ‘existing interchange to the extent of a

50 per cent diversion of the latter’s business (assumed

by the Board arguendo), it seems to us the TWA service

must, prima facie, be viewed as a potential competitor to

some similar extent of any awardee of a transcontinenial

route Florida coast to California coast involving one or

more: stops. And, if the Florida-California business ‘via

interchange is enough to support: service on only one

route, tie same business available via one carrier, but

‘ with a stop, would appear prima facie to be not too much

greater. If these things -be so, an -analfsis and evalua-

tion of the available business is necessary, if ‘demanded.

To state the matter in other-terms, if mutual ecouomic

} ‘exclusivity is claimed and the claim has a reasonable

prima facie basis, hearing on the question is required.

The Board submits several answers to the foregoing.

In the first place the Board says that the motions for

consolidation in the’ St. Louis Case filed by kpme of the

applicants for single-plane, ‘single-carrier service from

Florida .to California were filed too late. Rule 12(b) of

_ the Board’s Rules” requires that motions-to consolidate

must be filed not later than the prehearing conference

in the proceeding with: which .consolidation or. contem-

* poraneous consideration is requested. In the cireum- °

stances of the present case this is an unrealistic sugges-

tion. Some of these applicants made efforts to have the

Board expand the St. Lov is Case so as to include trans-

continental consideratiog, This the Board refused to do:

The Board strictly lim.ed that case to issues relating

to St. Louis-Southeastern points service. With the issues

214 CFR 302.12(b).

| 7 « Biz.

A eel B.

thus restricted, counsel for these applicants properly re-

_ stricted their participation to the presentation of evidence

which was relevant to those isstvs. As a matter of fact

the Administrative Ptocedure Act*®! requires the exclu-’

sion of irrelevant evidence. Indeed, as the Board seems

to recognizein a footnote (5) to its opinion on recon-.

sideration, the posing of the issue as to restrictions was

‘an indication that the Board would prevent any award

in the ease from being a transcontinental route—quite the

contrary to any indication that transcontinental | service

was to be the subject of the hearing.

In the second place the Board says that all of these

applicants were in.fact participants in the St. Louis Case

and, as such, had an opportunity to present whatey

evidence they desired to present. ‘But this Suggestion 1s

» ° also unrealistic under the view which we have described

as applicable to the timeliness point. The Board says

that these applicants were well aware of the implications

of the TWA application. They obviously were initially

so aware, as is evidenced by their various motions and

informal requests at the beginning of the case; but, as

we have pointed out, the Board ‘severly restricted the

issues to be adjudicated and as to which these parties

(as applicants or as intervenors) were permitted to par-

ticipate.

In the third place the Board savs.it made findings to -

the effect that there is no mutual exclusivity between the

TWA award “and the possible crant or grants of the ap-

_plications now consolidated in the Southern Transcontt-

nental Case. The Board points to certain passages in its —

two opinions as being findings that there was no mntual

exclusivity. It cites to us such passages as that. the TWA

‘route ‘‘would not in any real sense preclude a finding of

public need for a more direct routing,”’ and that - the

1 See. 7(e): 60 Srar. 241 (1946), 5 U.S.C. A. §1006(e).

B14

' Appendia B.

award would not ‘‘warrant the assumption that TWA will

thereby obtain preferential status in deciding the issues

in that case.’’ The Board recited that there is no mutual .

exclusivity, but the quotations hardly qualify/as~find-

ings’’. They are not based on evidence, and they are not

consequent to a hearing on the issue of exclusivity.

The question presently before us is not whether~the

‘Board might on some evidence’ before it conclude that..-

there was no mutual exclusivity; the question is whether

the applicants are entitled to a hearing on the issue.

Their statutory right is to ‘a hearing befote denial of:

their applications ; provided, of course, that the allega-

tions, of fact are sufficient to raise a debatable question.

The right to a hearing’ is the sole question before us,

.On this part-of the case we hold: (1) The Board had

ample authority ‘to limit the St.-Louis-Southeast Case to

considerations pertaining to that aréa. (2) After the Board

had’ restricted the case to area considerations and had

-. proceeded to the end on that basis, it could not, in that

same case, make a transcontinental award. (3) A prima

“facie indication. of economic mutual exclusivity’ between

the applications consolidated in the Southern Transcon-

tinental Case and the route awarded in the St. Louis Case

to TWA appears in this record. The case must therefore

be remanded. - dows

‘We do not intimate to the Board what steps it should

take upon this remand. Our holding does not necessitate

a full evidentiary comparative hearing on all applications

fora southern. transcontinental route. The Board might,

among a number of alternative courses, (1) hold. a hear-’

ing.upon the exclusivity question alone or (2) impose

such a restriction upon the route award to#T™WA via

St. Louis as to. insure that it would not be an effective

_ competitor with any single-plane, single-carrier transcon-

tinental route which inight result from the Southern Trans-

continental Case. —

_ ‘able diversion. of traffic from the interchange partners is -

Blo |

Appendiz B.

Il \

As ‘we have indicated, a three-carrier interchange

authorizing Florida-California service via New Orleans and .

Dallas had been licensed in 1951. American argues that

the award of a competitive transcontinental service Florida

to the West Coast would be a modification of the existing

interchange license to Which it is a party.’ We held ‘to the

contrary in the Gerico case,* there concluding that eco-

nomic damage to an existing licensee is: not-a modification -

of the existing license, absent agency rules guaranteeing

protection from economic injury.

Petitioners American and Delta also argue that the

| “Toreseeable impact of a possible award in the St. Louis

Casé-was clearly such as to raise an issue of the public

interest in a duplication of services. We have said enough

under I, supra, to show we agree with that argument. ‘The. ’

question required solution by evidence and findings, if a»

_. transcontinental award was to be made.

The Board recited its conclusion that the award to

'. TWA was required by the public’interest and necessity.

But that conclusion was related to a St. Louis-South-

eastern-points ‘route. It is entirely true that in making

such a finding in a limited-area case the facts of the air .

- transportation system compel consideration of out-of-area

factors. We pointed this out in Frontier Airlines, Inc. v.

Civil. Aeronautics Board2* But that is not our present

problem. The problem is the public interest in’ a compet-

ing southern transcontinental service.

The Board makes much of the point that the foresee-

not material to them in the light of their overall resources.

The point is immaterial on the question: whether these

carriers are entitled to a hearing on the possible existence

of mutual exclusivity. |

‘ 22 Gerico tnvetnent Co. v. Federal Communications Cosina*s n,

103 U. S. App. D. C. 141, 255 F. 2d 893 (1958).

23 104 U. S. App. D. C. 78, 259 F. 2d 808 (1958).

eye Fe A bpendin B.

el eas :

Cee ee is TIT

_ We come’ now to Eastern’ s contentions respecting it

_applitation | for an extension of its Route 10 westwar

from St. Louis to the West Coast and its application fe

Nines ag ‘an extension from Memphis. to Kansas City. The forme

“controversy * concerns the award to TWA and the latte

the award to Delta. .

Fastern’s motion in the St. Louis Case for cdanitha

tion of its pending application for a westward extensiq

of. Ronte 10 was -denied. ‘Eastern contends that wit]

_out compatative consideration of its (Fastern’s) apnlic:

tion the. award to TWA of a transcontinental servic

virtnally identical: “to that pronosed bv Eastern violate

the latter’s ‘rights under Ashbacker.

Fastern’s application for a westward extension | (

Route 10 must be. considered from two: points of vier

It’ must. he considered from the point of view of «th

-gease as a St. Louis-Southeastern- area case, which ‘is whi

the Board declared it to be. Then it*mnst be considere

from the point af view of a through southern transcont

: nental rovte, which is what ‘our petitioners say ‘the Roar

Se fact. , :

Fastern has a network: of+ certificated ‘iene sprea

over the eastern shalf of the country, with westernmo:

termini at Chicagoe Sp Lonis, Memphis and San Antoni

An extension from éuis to the West Coast wonl

. in actual practical fact ereate for Fastern a Boston-Ne

- York-West (oast route via St: Lonis, #& well as

_Flerida-West Coast route. The traffic accumulated by tl

Boston,St. Louis network is part of the ‘‘back-up traffic

_ which the Board says would be fed by Eastern into i

-. new- segment St: Louis-West Coast. That the traffic thi

picked up in the Northeast would be greater than thi

“originating in the Southeast seems obvious.

Quite’ clearly the route sought by Eastern. trom ¢

Louis westward was ‘not within the area. of the ease. Al:

‘ wl i

”

1g its

tward

m for

ormer

latter

olida-

nsiqn

with-

nlica-

rvice

lated

n of

view.

f «the

what

lered

-onti-

foard ©

read

most

onio.

vould

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AS a

v the °

iffic’’

0 its

thus

that

» St.

Also

~_nental route.

| Appendix Bo

via St. Louis would not have been a southern transconti-

So, if that’ were all thaf‘is involved, no

problem would be presented. But, as we ‘have noted,

Kastern’s requested externSion would also connect at St.

Louis with its existing St. Louis-Florida-coast route.

We first consider Eastern’s application as a part of the

. St. Loifis Case as a true area case, Fastern’s extension

_ west and TWA’s extension east presented different -prob-

» lems in respect to ‘traffic and the area. TWA’s extension

‘ was physically within the area, and the ‘out-of-area traffic

which was involved would flow*from existing routes into

and ‘through the area oyer the new segment: This traffic”

is certainly pertinent to the selection of a, carrier to per-

form intrg-area services found necessary because of serv-

ice deficiencies within the area; such traffic may well, as

_the ‘Board found, be used to provide the base for proper

age

traffic development within the area.

:The basic consideration in an area case is, of course,

the public interest in, and necessity for service in t

area. It seems to us that the need of the area for Service |

to traffic coming in from the outsidévand also the need of

the. area for servicé from-inside ‘tke area to the outside. -

are both proper considerations in an area case. And. so

_. the Board can properly take such neéds into consideration.

” But we think the needs. of* outside traffic, considered as

sth, are not necessarily pertinent to an area case. Thus,

to. illustrate, if traffic originating in Seattle wanted very

badly to go to Miami, such need, if ‘ot linked with some

_ need inside the southeast area, would not be relevant to

“preouitheast area case. The Board could-restrict the. area |

_ ease by excluding such wholly outside data. os

‘Eastern’s new. segment ‘would have been outsfile the

‘area, and the traffic picked up by it would have been newly -

picked up for trapsportation into tHe area over an existing

service in the area. In other words, this application posed .

‘the problem of creating in an area service case 7 route *.

-? rh

quite ‘élearly its route Boston-New York-West Coast”, ,

;

era

B18

a ro ¥ ; .

| Magee es a ca

Apbendiz Be

3 (

Ta ee ontside the area for the purpose, or with ‘the effect, ¢

bringing traffic into the area under consideration. W

* think the Board cannot be compelled to expand an area cas

. in that way. We think this situation falls within the powe

of judgment vested in the Board to limit these area case

We find no error-which would require or justify. our inte:

ference i in the Board’s decision as a limitation upon a trv

area case:

We now look at this application of Eastern as part ¢

a southern transcontinental consideration, which, -as_¥

have pointed out, is-what the Board appears to have unde

taken and decided in part in this proceeding. Eastern

‘existing certificate for Route 10 apparently authorize

through service St. Louis-Florida coast points. ‘ The recor

- shows, as the Board recifes in its Order. No. E-13026, the

- Eastern actually began the operation of such a’ throug

_ service St. Louis-Miami nonstop. So Eastern’s applicatio

.for an extension westward from St. Louis would have give

it a Florida-West Coast route with one stop at St. Loui

The eastward eXtension awarded: TWA was St. Loui

Miami via intermediate points Nashville, Atlanta, Tamp

_and St. Petersburg. So TWA under the award could dupl

cate Eastern’s existing St. Louis-Florida service, eithe

‘with the stoyis indicated. or nonstop, and the transcont

nental route created for TWA by the award is a duplicat

- of the -transcontinental route which would have bee

created for Eastern by a grant of its application.

Therefore, looking at the matter’from the standpoit

‘of a transcontinental service, Eastern occupies substa

tially the same position occupied by the other applican'

for transcontinental certificates, discussed by us in I, supn

The one factor possibly differentiating Eastern’s tran:

continental application from those of the other applicant

in this case is Eastern’s proposed St. Lonis-West Coa:

_ Toute would not be merely a southern transcontinental rout

but would connect to the West Coast all of Eastern’s ne

work of routes in the East. It was on this basis, and on

~ bs . re)

. . e °

, ‘ ° .

et, of

a Case

20wer

cases.

inter-

l true

irt of

iS we.

nder-—

ern’s ,

rized . .

ecord ~

, that .

‘ough

ation

given “

ouis. ~

Ouis-

ampa

lupli-

ither

onti-

icate

been

ee ¢

B19

t : 2

Appendix. B.

consideration of the potential traffic between St. Louis and

points west thereof named in the application, that the Board -

reached its conclusion of no mutual exclusivity. The direct

question as to exclusivity is whether TWA’s St.;Louis- —

Florida segment will prevent a grant of: Eastern’s St.-

Louis-West-Coast segment. «Phese are not two segments.

aver the same rout# but come into competition one with the

other when they are linked up with the respe€tive existing

“networks. Thus the whole of both carriers’ systems seem

to be involved. ‘The Board mentioned as a decisive factor .

the whole of Eastern’s* potential traffic, given the new

award. It did not mention the comparative whole of TWA’s

. potential traffic, given the new award. The Board’s reason-

ing and the bases for its conclusion on this point are by no ‘

means clear. It refers to the substantial ‘‘back-up”’ traffic

available to Eastern from its entire eastern network and to

_‘. “these varied. traffic sources’, This could mean (1) that

the Board did-consider the whole of the traffic potentialities -

of both carriers, or (2) that the Board deemed the traffic

potential of the single St. Louis-Southeast route awarded ‘

TWA as de minimis in comparison with the whole of the

‘traffic potentially available to. Eastern from the entire.

. southeastern area and the Northeast, or (3) some other

meaning not readily discernible. . So we are -unable to —

determine whether the Board’s action’ was.or was not valid.

Upon the remand the Board will make a clearer definition |

of its’conclusion upon this point apd the reasons therefor.

The Board’ contends that East#rn did not avail itself

‘ofthe opportunity presented to it to offer evidence .in

support of its claim of exclusivity. The record shows,

however, that Eastern, in its petition for reconsideration

of the Board Order No. E-13026, did refer to some facts

on which it relied to show mutual exclusivity. The Board’s

reply, with its reference only to traffic available to Eastern,

was inadequate. Therefore, despite Eastern’s awareness

that the issue of mutual exclusivity was open to it during

- all stages of the hearing, the Board’s failure to make the |

B20

A ppeng ix iB,

necessary specific findings deprived Eastern of. the f

_ hearing required by Delta Air Lines vy. Civil Aeronaut

Board.*

In sym, as to Eastern and TWA: If the Board Pp

ceeds with the St. Louis Case. so restricted ‘as to con:

tute it a true St. Louis-Southeastern points area case.

need not consolidate Eastern’s applicatiori for the we

ward extension. But, if it proceeds with the. case as

practical effeet a transcontinental route case, it must me

_ adequate findings upgn the problem of exclusivity, a

may or may not involve a further hearing.

The situation of Eastern vis-a-vis Delta is that De

applied for and was awarded a new segment Memph

Birmingham, which was within the St. Louis-Southeaste

“area and constituted a link in a St. Ldhis-Florida co:

service, wher@as Eastern‘applied for and was denied

“new segment Memphis-Kansas City, the latter point bei

well outside the area of the case and this segment bei

» no part of a St. Louis-Southeastern service. The questi

; is whether Eastern’s Memphis-Kansag City application v

required to be consolidated for comparative hearing w

- Delta’s Memphis- Birmingham application. — :

Delta already has certificated routes in the St. Lou

~ Southeastern area. These include routes from St. Lo

to Memphis and from Memphis roundabout to Jacks

- Meridian-Birmingham-Atlanta and thence to Miami.

also has oute Kansas City-Memphis. . Eastern, ds

have ‘noted, already has certificated routes in the |

Louis-Southeastern area, among them one Mempl

Birmingham-Atlanta and thence to Miami. Eastern ur;

that the.grant to Delta of the Memphis-Birmingham 8

ment creates for Delta a through service = Ci

2497 U.S. App. D. C. 46, 228 F. 2d 17 (1955): Iti is » true tl

_ unlike the instant case, the Delta case did not involve an applicat

_ for a new route serment outside the limited area under conside

‘ tion. However,.the reasoning of that opinion requires the same k

of hearing in a case such as this, where a prima facie showin;

made of mutual exclusivity of app!ications for a particular ro!

B21

3 ee Appendix B. ey:

e full Florida pon ae that its (Kastern’s) sppiiestion for a

autics segment Kansas City-Memphis would have created for it,

inter ala, precisely the same through service Kansas

1 pro-' a City-Florida points. The Board says (1) that considera-—

onsti- - tion of this Kastern application would be an unwarranted.

ase, it — expansion of the area case, and further (2) that the:

west- 20 datory stops: reyuired by it to be made by: Delta on

as in a any single-plane flights Kansas City-Florida points are

which — _ which would in any ‘degree preclude an eventual grant

| to Eastern of the Kansas City-Memphis — with

Delta - . authority to overtly Memphis. sid —

nphis- . ae Kastern’ S$ position is, in effect, that the same considera-

astern tions which apply to the treatment of the transcontinen-

coast _, tal route problem, as it arose in the St: Louis Case, apply

ried a | \ likewise to the Kansas City service problem as it arose

being — : in that same case. We think they do not. The expan-

being sion of an area case by adding a little additional segment. —

estion , | outside the area is quite a different thing from awarding

mn was : a transcontinental certificate-in a limited area case._The

z with ’ * former ‘is an expansion of a limited case. The latter is a

transformation of the real nature of the proceedings. We

Louis-- ~ re of opinion that the Board had a discretion to refuse to . °

Louis nclude in’ the St. Louis-Southeastern area case Eastern’s

ckson-- * application for the Memphis-Kansas City segment. ; .

ui. It - . Kastern complaing that, although the Delta award would

as we . not be mutually exclusive with one part of its application,

ne St. | it would preclude the award to Eastern of another part of

mphis- | its application, namely, the identical route, with the same

urges mandatory Btops, as that obtained by Delta. Eastern com-

n seg- ' - plains that the Board made no finding on this point. a \

City- Kansas City-Memphis-Birmingham-Atlanta-Florida’ route

ie _ would be one of many combinations of routes available to

theme a ‘ Eastern from Kansas City to Southeast points. But to

1sidera- consider. this one route separately would be to require the -

ne kind dissection of qn area case into a number of competing seg-

wg Fi : ments and to require comparative. consideration of each

B2- #3

Appendix B.

pair of parts of applications. We think there is no su

requirement. Moreover in this contention. Eastern spli

its unrestricted application into small sections’and urg

that the several sections must be compared ‘with similar

segregated sections of other applications.. We think t

Board is not required to’ do this. Were the law otherwis

the Board would be burdened with a flood of applicatio:

- and motions, with consequent hearings thereon, filed |

airlines whenever a new route was proposed which serv:

any point already served by the protesting line. Such

tangle would prevent the Board from. performing its stat

tory duty of upholding the public interest by fostering

sound air transportation system.

| Eastern contends that the TWA and Delta euteie we

“+ not made upon p proper findings of public eonvenience ai

3 necessity based on substantial evidence; that the rego

requires a finding that Eastern could and woul

all service needs in the St. Louis-Southeast

the Board failed to make sufficient findings on

lative diversion of revenue from Eastern because

awards made in this and other cases; that the Boa

failed to make adequate findings of the market potentig

and that TWA was awarded an Atlanta-Florida servi

without any finding of need for such service. We ha

examined the record and find these. contentions to

without merit. While it is true that there is some er

dence to support Eastern’s position on ,ertain of the

issues, there is substantial evidence to uphold the chi

lenged findings of the Board.. Eastern’s basic ,Argumen

concerning the lack of need for the creation of new servi

_ competitive to Eastern in the St. Louis-Southeast mark

‘are intimately tied to its contention that the Board ert

neously failed to reopen the rc ord to receive new eviden

of Eastern’s operations after the commencement of t

’

| .* &?

Appendix B. ae ; a‘

> such hearings. These several. contentions of Eastern must be

splits -viewed against the background of findings by the examiner

ilarly service in the Southeast area had n inadequate, that

ik the ' Eastern had not developed the potential market, that more

rwise, traffic would result from improved service, and that there

ations *was'a public need for competition in the area. Upon the 7

ed by facts of this case, we think the Board did not abuse its

erved discretion in declining to reopen the record.

uch a It is true that the Board did not findpany sie for the -

statu- Atlanta-Florida service award to TWA, considered as

‘ing a local service. But it specifically found a need for trunk-

, line service from St. Louis-Nashville to’both Atlanta and

Florida. We find no error in the Board’s award-of the

‘route without an absolute restriction against local service

between Atlanta. and Florida.” The Board did place a

were long-haul restriction. on the Atlanta-Florida_ gn

e-and—____}—___awara-to- FWA

Delta, while agreeing with the eel ’s findings on the’

need for a new competitive St. Lonis-Southeast route,

contends that the Board erred in -that it awarded the new

route to TWA on the basis of a ‘‘need”’ not in issue and

sumu-

se of failed to make certain comparative findings as to Delta’s

3oard and -TWA’s qualifications for the route. Delta attempts

ntial; ‘to demonstrate that the. Board, without so saying, actu- —

alien ally picked TWA “as _the-awardee upon a-consideration

have of needs of out-of-area traffic. It savs the Board specifi-

to be . eally exeluded from the issues in the case the service

» evi- needs of out-of-aréa traffic, i.e.. the needs of cities west

these and north of St. Louis for service into the ‘Southeast

chal-’ area, Nevertheless, says Delta, the Board based the award

nents to TW A upon stich needs. But it clearly appears that the

rvice only use the Board made of out- of-area traffic data was as

arket oné of the factors in selecting the carrier best able to: meet

erro- the needs of the area. The Board said:

—. 23 It should he aed that Eastern made no request for any such

restriction.

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.