Fugazy Travel Bureau, Inc. v. CAB

• Decision Date: 18 June 1965
• Docket Number: No. 18946.,18946.
• Citation: 121 US App. DC 355,350 F.2d 733
• Parties: FUGAZY TRAVEL BUREAU, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

121 US App. DC 355, 350 F.2d 733 (1965)

FUGAZY TRAVEL BUREAU, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.

No. 18946.

United States Court of Appeals District of Columbia Circuit.

Argued April 30, 1965.

Decided June 18, 1965.

Petition for Rehearing Denied October 5, 1965.

Mr. Paul Reiber, Washington, D. C., for petitioner.

Mr. Frederic D. Houghteling, Atty., Civil Aeronautics Board, with whom Asst. Atty. Gen. William H. Orrick, Jr., Messrs. John H. Wanner, Gen. Counsel, Civil Aeronautics Board, Joseph B. Goldman, Deputy Gen. Counsel, O. D. Ozment, Associate Gen. Counsel, Litigation and Legislation, Civil Aeronautics Board, and Lionel Kestenbaum, Atty., Dept. of Justice, were on the brief for respondent.

Before WASHINGTON, Circuit Judge, BASTIAN, Senior Circuit Judge, and TAMM, Circuit Judge.

Petition for Rehearing En Banc Denied October 5, 1965.

TAMM, Circuit Judge.

Petitioner seeks review of two orders of the Civil Aeronautics Board. The first of these (Order No. E-20741, dated April 24, 1964) held a certain agreement among the scheduled airlines of the United States, known as the "Standard Agent's Ticket and Area Settlement Plan," to be not adverse to the public interest and, accordingly approved said agreement under section 412 of the Federal Aviation Act.¹

The second order (Order No. E-21180, dated August 12, 1964) denied reconsideration of the first order.

Petitioner is a travel agent engaged in the sale, for a commission, of travel facilities. It now operates 23 offices in 21 locations. A travel agent, as the name implies, is an individual businessman who represents airlines, other common carriers, hotels, etc. in the sale of travel facilities and accommodations, and who is compensated by agreed commissions on the tickets and accommodations which the travel agent sells.

The several airlines, through their trade organization, which is known as the Air Traffic Conference of America (ATC), adopted and filed with the Civil Aeronautics Board in 1940 their first "ATC Agency Resolution;" in 1945, they adopted a new resolution and agreement, which was approved by the Civil Aeronautics Board and which has remained — with amendments — in force to the present time. The 1945 Agency Resolution provided for a minimum of four remittances a month by all ticket and travel agencies, a frequency of remittances which for most agents was decreased to two per month in 1948 and has remained at that figure since that time. In May, 1946, however, the Air Traffic Conference filed an amendment to the 1945 resolution which, when approved by the Civil Aeronautics Board, permitted individual airlines to contract with those travel agencies which they had appointed to represent them at ten or more approved locations for less frequent remittances. Still later amendments to the Agency Resolution placed a once-a-month minimum on the remittance frequency of large chain agencies, i. e., those having ten or more approved locations. These amendments also permitted airlines to allow these so-called large chain agencies an alternative of submitting remittances three times a month but under a program incorporating substantially longer grace periods in the remittance statements in order to accommodate the large agencies' centralized auditing and reporting systems. Petitioner's tenth approved location was placed on the Air Traffic Conference Agency List in August 1959, thereby making it eligible for the once-a-month remittance privilege. In May, 1962, the domestic trunklines had all agreed, with the petitioner, for remittances on a monthly basis.

In 1962, the airlines proposed a program or "Plan" (as it is referred to in the record before us) which became the subject of the two Civil Aeronautics Board orders now under challenge in this proceeding. The Plan proposed to abolish the prior special treatment of large chain agencies and to require all agents to remit the proceeds of airline ticket sales on the same three-times-a-month basis. While the petitioner attacks fundamentally that portion of the Plan which abolishes its practice of remitting the proceeds of airline ticket sales once a month and requiring remittance three times a month, other aspects of the Plan require brief enumeration in order to present a full picture of the petitioner's status.

As presented by the airlines, the principal purposes of the Plan were (1) to allow travel agents to stock a single standard ticket for all domestic and some international air travel, instead of having to stock separate tickets for each appointing airline, as had been done theretofore; and (2) to provide for a single consolidated periodic report of and remittance for air ticket sales to a designated regional bank, instead of requiring separate reports and remittances to each appointing airline. The Plan, as presented by the airlines, was represented to the respondent as relieving travel agents from the necessity of maintaining separate ticket sequences, eliminating the use of auditors' coupons by the airlines at the end of the reporting period, and of computing the net amount to each airline. As a consequence of these provisions, the Plan required a central clearing house to check the travel agents' consolidated reports, to sort and distribute the auditors' coupons and to compute and credit the amount due each airline. The Plan proposed that these latter functions would be performed by a series of designated area banks which would perform the several accounting functions for a small service fee. In order to avoid undertaking the added expense of the service fee, which the airlines contended was being incurred primarily for the travel agents' benefit, the airlines proposed to recoup the bank service charges by shortening the time interval between the agents' sales of airline tickets and the time when they remitted the proceeds of those sales to the airlines. This was to be accomplished specifically by abolishing the special monthly remittance frequencies previously allowed the large travel agents and by requiring all travel agents to remit the proceeds of ticket sales to the airlines three times a month. The Plan also shortened the so-called grace period allowed the large agents for preparation and delivery of the reports following the end of each reporting period.

With some minor changes, the Plan, as outlined here above, was approved in the challenged orders by the Civil Aeronautics Board. It is to be observed at this point that the increased frequency of remittances by travel agents was, for practical purposes, a by-product of the over-all Plan.

After the Plan had been submitted to the Civil Aeronautics Board for approval, the American Society of Travel Agents (a trade organization representing primarily the smaller agents) filed adverse comments upon the Plan, as did a number of individual agents, including the petitioner. Generally, the comments consisted of criticism of the increased reporting and remittance frequencies, which were claimed to be burdensome and unnecessary. Petitioner specifically protested that the Plan took no account of its special problems centered around its centralized accounting procedures. The petitioner asserted, and here asserts, that due process and the Standard Airlines case² "required a formal hearing before the Board could approve the Plan."

The Air Traffic Conference filed rebuttal comments with the respondent attempting to support and justify the Plan and attacking the travel agents' adverse comments. At no time did the Civil Aeronautics Board hold a formal hearing, although members of the Board's staff met with representatives of the Air Traffic Conference on at least one occasion in what is described as an attempt on the part of the Board's staff members "to satisfy their doubts about the Plan." (Tr. 98). The Board reviewed all of the adverse and favorable comments and ultimately requested further comments from both the airlines and the travel agents; and such comments were filed by the Air Traffic Conference, by the petitioner, and by other travel agencies, both large and small. Petitioner continued to reiterate its contention that the Plan would drive it out of business and that it was entitled to an evidentiary hearing. After considering all comments, the Civil Aeronautics Board approved the Plan, with some modifications. The Board specifically found that the Plan was in the public interest (Tr. 247) and that it would be of significant practical benefit to both the airlines and the agents (Tr. 259-260). The Board also reviewed the petitioner's contention that it was entitled as a matter of law to an evidentiary hearing (Tr. 251-252), and the Board held that a hearing would serve no useful purpose, since the Board found there were no significant factual disputes requiring resolution. The Board specifically, in approving the Plan, approved the change requiring all travel agencies to remit the proceeds of airline ticket sales three times a month, and also it did lengthen the grace period by one working day. The Board also required that in order to meet the central accounting problems of large chain travel agencies those agencies should be allowed to remit on an estimated basis.

After approval of the Plan as amended, the petitioner sought reconsideration, and the Board's second order, heretofore described, denied that reconsideration — again reiterating its finding that the Plan was in the public interest and again rejecting the petitioner's contention that due process required affording to petitioner an evidentiary hearing.

Against this background, the petitioner challenges the Civil Aeronautics Board proceedings, contending first that since the petitioner is adversely affected by the described orders of the Board the petitioner was entitled to an adjudicatory hearing before the approval of the Plan by the Board. The petitioner also questioned the legality of the Board's approval of the Plan without the making of specific...