Allied Air Freight, Inc. v. Pan American World Airways, Inc.

• Citation: 393 F.2d 441
• Decision Date: 25 April 1968
• Docket Number: No. 126,Docket 31043.,126
• Parties: ALLIED AIR FREIGHT, INC., Plaintiff, and Allied Air Freight International Corp., Plaintiff-Appellant, v. PAN AMERICAN WORLD AIRWAYS, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

393 F.2d 441 (1968)

ALLIED AIR FREIGHT, INC., Plaintiff, and Allied Air Freight International Corp., Plaintiff-Appellant, v. PAN AMERICAN WORLD AIRWAYS, INC., Defendant-Appellee.

No. 126, Docket 31043.

United States Court of Appeals Second Circuit.

Argued November 24, 1967.

Decided April 25, 1968.

Milton Horowitz, New York City, for plaintiff-appellant.

Fowler Hamilton, New York City (Cleary, Gottlieb, Steen & Hamilton, New York City and George Weisz, New York City, on the brief), for defendant-appellee.

Before LUMBARD, Chief Judge, KAUFMAN and FEINBERG, Circuit Judges.

LUMBARD, Chief Judge:

The question which appellant seeks to raise is whether or not the district court erred in applying the doctrine of primary jurisdiction to plaintiffs' civil antitrust suit and staying the action until plaintiffs exhausted available administrative remedies before the Civil Aeronautics Board. Before reaching this question, we must clear away considerable procedural underbrush, the net result being that, in the interests of efficient judicial administration, we conclude that we should review the interlocutory stay order on this appeal from a final order dismissing the action without prejudice for lack of prosecution. Since appellant only seeks damages for past actions by appellee which are not "arguably lawful" under the administrative scheme, the stay is vacated and the case is remanded for further proceedings in the district court.

Allied Air Freight, Inc. and Allied Air Freight International Corp.,¹ were engaged in the business of air freight forwarding. Defendant Pan American is an air carrier which, inter alia, operates an air freight service between New York and Puerto Rico. The complaint claims that Pan American entered into a conspiracy in restraint of trade with Add Airfreight Corp., an air freight forwarding company, for the purpose of securing for Add a monopoly in the air freight forwarding business between New York and Puerto Rico.

Allied charges that in furtherance of this conspiracy Pan American denied airplane space to shipments consolidated by plaintiffs and gave undue preference to shipments consolidated by Add. Allegedly this practice ceased only after "informal intervention" by Civil Aeronautics Board personnel in response to Allied's complaint. In addition, it was alleged that Pan American and Add solicited Allied's customers in Puerto Rico and that Pan American, in an attempt to take away Allied's business, warned shippers that freight handled by Allied "would not move," while Add shipments would move "with top priority."

The conspiracy allegedly ended when Add entered into an arrangement with one of Pan American's competitors. After that, Pan American allegedly continued to attempt to destroy Allied's business by impairing its credit.

Pan American moved to dismiss or stay the action on March 10, 1964 on the ground that primary jurisdiction of the matter was vested in the Civil Aeronautics Board under the Federal Aviation Act of 1958. On May 22, 1964, Judge Palmieri granted a stay "until the plaintiff exhausts its available remedies before the Civil Aeronautics Board."

On June 2, 1964, Allied's request for a certificate for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) was denied by Judge Palmieri. Nonetheless plaintiffs filed a notice of appeal. On June 19 Allied moved for reargument before Judge Palmieri. After reargument the court filed an opinion adhering to its decision. We dismiss plaintiffs' appeal in January 1965 for lack of jurisdiction and a petition for mandamus was denied as an inappropriate attempt to obtain review of an unappealable order. Allied Air Freight, Inc. v. Pan American World Airways, Inc., 340 F.2d 160 (2d Cir.), cert. denied, 381 U.S. 924, 85 S.Ct. 1560, 14 L.Ed.2d 683 (1965).

On June 8, 1966, the action appeared on the Review Calendar of the District Court pursuant to General Rule 23 of the Southern District. Judge McGohey issued an order from the bench providing that unless Allied filed a note of issue for trial, took other action to obtain a determination of the action or sought an extension of time within 90 days the action would be dismissed for want of prosecution. Thereafter, Judge Sugarman, sua sponte, signed an order on September 26, 1966, dismissing the action without prejudice.

Allied Air Freight, Inc. was adjudicated bankrupt in July 1964 by the United States District Court for New Jersey, and has not appealed. The bankrupt estate was closed and assets were distributed soon after issuance of the 90-day order of Judge McGohey. Pan American offered to stipulate for a vacatur of the dismissal order and restoration of the cause to the status quo ante as a pending action stayed by the order of June 1, 1964 on the condition that the appeal be withdrawn if the application for restoration were granted. Allied declined this offer, stating that it desired to obtain review of the stay order on its merits.

Pan American does not challenge the Court's jurisdiction to hear any aspect of the appeal. Indeed the parties are agreed that appellant is entitled to some relief. The points upon which they differ are the nature of the relief to be granted and the extent to which the Court should review the proceedings below at this time.

Pan American's theory is that since it was in Allied's power to avoid the final order from which this appeal was taken, and since Allied does not deny that the reason that no action was taken to avoid dismissal under the 90-day order was to obtain review of the interlocutory order granting the stay, which appellant had failed to obtain by direct appeal from the order or by mandamus, we should decline to rule on the stay order "in the interest of the orderly administration of justice." We are warned that to consider the merits of this interlocutory order in this case would encourage all would-be appellants from interlocutory orders to do nothing, procure a dismissal, which under the present practice in the Southern District is likely to be without prejudice,² which could then be appealed to this Court for review of the interlocutory order.

Even though appellant could have averted dismissal of the action by seeking an extension during the 90-day period or applying to the CAB in order to exhaust administrative remedies, the dismissal is not a voluntary dismissal from which there is no appeal. United States v. Procter & Gamble Co., 356 U.S. 677, 78 S.Ct. 983, 2 L.Ed.2d 1077 (1958); Ruff v. Gay, 67 F.2d 684 (5th Cir. 1933), aff'd 292 U.S. 25, 54 S.Ct. 608, 78 L.Ed. 1099 (1934).

Appellee seeks to distinguish these cases because the appeals were from dismissals on the merits, while this appeal is from a dismissal without prejudice. We do not believe that this distinction should control: dismissals with and without prejudice are equally appealable as final orders. United States v. Wallace & Tiernan Co., 336 U.S. 793, 794, 69 S.Ct. 824, 93 L.Ed. 1042 (1949); Noonan v. Cunard Steamship Co., 375 F.2d 69 (2d Cir. 1967). Whether or not to dismiss on the merits is within the discretion of the district court. Link v. Wabash Railroad Co., 370 U.S. 626, 633, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962). The nature of relief granted at the trial court's discretion does not determine whether or not a final order is appealable, although it may be a determining factor in the disposition of the appeal. Since all interlocutory orders and decrees are merged into the final order of the district court, see 6 Moore, Federal Practice, pars. 54.12 1, 54.09 (2d ed. 1966), they may be reviewed on the appeal. Davenport v. Procter & Gamble Mfg. Co., 241 F.2d 511, 513, 63 A.L.R.2d 1350 (2d Cir. 1957).

Pan American contends that even though the court may review the stay order as well as the dismissal order, we should merely vacate the dismissal order and restore matters to where they were before Judge McGohey issued the 90-day order. Pan American urges that Judge Sugarman, acting upon Judge McGohey's order of June 8, 1966, could not have known of the stay issued by Judge Palmieri, and that if the court below had known of the stay, the dismissal order would not have issued.

We do not find this argument convincing. The 90-day order permitted appellant to "take other action to obtain a determination of the above entitled action * * *." or apply for an extension prior to the expiration of the 90 days, supported by an affidavit showing "the reason why additional time is needed" in lieu of filing a note of issue. Because of the stay order, appellant was precluded from proceeding with the action in the district court "until plaintiffs exhaust their available remedies before the Civil Aeronautics Board." However, Allied could have complied with both the 90-day order and the stay by commencing a proceeding before the CAB and informing the court that it was proceeding to exhaust administrative remedies.

Allied contends that Judge McGohey was informed at oral argument on the calendar call that the case had been stayed pending exhaustion of administrative remedies, and Pan American does not dispute this contention. But whether or not the calendar judge knew that an order had been issued making exhaustion of administrative remedies a condition precedent to prosecution of the action in the district court, an order dismissing the action unless plaintiffs filed an affidavit showing reasons why a note of issue could not be filed within 90 days certainly is not an abuse of the district court's discretion in dealing with an action which had been dormant for over two years. If the order granting the stay was a proper order, it was equally proper to require appellant to satisfy the terms of the stay in order to proceed with the action or face dismissal for failure to prosecute, and to dismiss the action sua sponte when appellant failed to take any action.

The only possibility of error that we see in the issuance of the 90-day order and the dismissal under its terms was that requiring...