International Travel Arrangers, Inc. v. Western Airlines, Inc.

• Decision Date: 10 June 1980
• Docket Number: No. 79-1221,79-1221
• Citation: 623 F.2d 1255
• Parties: 1980-2 Trade Cases 63,387 INTERNATIONAL TRAVEL ARRANGERS, INC., Appellee, v. WESTERN AIRLINES, INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1255

623 F.2d 1255

1980-2 Trade Cases 63,387

INTERNATIONAL TRAVEL ARRANGERS, INC., Appellee, v. WESTERN AIRLINES, INC., Appellant.

No. 79-1221.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 15, 1980.

Decided June 10, 1980.

Clay R. Moore, Mackall, Crounse & Moore, Minneapolis, Minn., for appellant.

Harold J. Tomin, Los Angeles, Cal., argued, Boyd H. Ratchye and Stephen I. Halper, Doherty, Rumble & Butler, St. Paul, Minn., on brief, for appellee.

Before STEPHENSON and McMILLIAN, Circuit Judges, and THOMAS, ^* District Judge.

STEPHENSON, Circuit Judge.

Plaintiff-appellee, International Travel Arrangers, Inc. (ITA), a Minnesota corporation, organizes and arranges travel charter flights. Defendant- appellant, Western Airlines, Inc., is a regularly-scheduled aircraft carrier with routes including Minneapolis-St. Paul/other mainland cities to Hawaii; Minneapolis-St. Paul to Las Vegas; and various western states' cities to Mexico.

The district court, ^** adopting the conclusions and recommendations of the United States magistrate acting as a Special Master, ¹ found that Western violated sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and entered judgment of trebled damages of $361,596.00 ($120,537.00 X 3) against Western and attorneys' fees and costs, of $213,390.87 and $10,771.40, respectively, to ITA.

Western, on appeal, challenges as clearly erroneous the findings of the Sherman Act violations, and challenges as excessive the amount of attorneys' fees. We affirm the district court's findings of Sherman Act violations and the damages resulting therefrom; we reduce the amount of attorneys' fees to $161,003.75.

Generally, ITA alleged at trial that Western, through a combination with its advertising agency, Batten, Barton, Durstine and Western challenges as clearly erroneous the Special Master's findings with respect to most of these factual allegations, and further specifically argues that the finding of a causal relationship between such alleged activities and ITA's alleged damages was clearly erroneous.

Osborn, ² (BBD&O) conducted a campaign aimed at preventing ITA's development of travel group charters (TGCs) from becoming a competitive threat to Western; that Western, by use of its monopoly power, further attempted to prevent ITA's program of TGCs from becoming a competitive threat; and that Western succeeded in its activities, thereby causing damage to ITA.

We shall review most of these claims in conjunction with a thorough review of the facts of this case. As a preliminary matter, however, we shall address Western's claim that the dispute between Western and ITA should initially have been referred to the Civil Aeronautics Board (CAB) under the doctrine of primary jurisdiction.

I. Primary Jurisdiction

The CAB has both exclusive jurisdiction and primary jurisdiction over a variety of disputes within the air transportation system. The district court ³ addressed the issue of jurisdiction with respect to the instant case, International Travel Arrangers v. Western Air Lines, Inc., 408 F.Supp. 431 (D.Minn.1975), and found that the federal district court had jurisdiction of the dispute and denied Western's motions to dismiss or to refer the matter to the CAB.

On appeal, Western argues that the CAB had primary jurisdiction over the case under (1) 49 U.S.C. §§ 1302, 1381 (§ 1302 amended 1978) and 14 C.F.R. § 399.80; (2) 49 U.S.C. § 1482 (amended 1977 and 1978) and 14 C.F.R. § 302, inasmuch as the dispute concerned allegedly unfair competitive practices.

49 U.S.C. § 1302 (amended 1978) defines the matters of public interest which the CAB must consider in performance of its powers and duties. 49 U.S.C. § 1302(c) (amended 1978) specifically mentions that one of these considerations shall be:

(t)he 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(.)

Id. (emphasis added).

49 U.S.C. § 1381 states that the CAB "may, upon its own initiative or upon complaint by any air carrier * * * or ticket agent" investigate and make determinations in regard to any alleged "unfair or deceptive practices or unfair methods of competition." This same section gives the CAB authority to issue cease and desist orders in connection with such practices or methods of competition. 49 U.S.C. § 1482 (amended 1977 and 1978) and 14 C.F.R. § 302 ⁴ are the statutory provisions and regulatory rules for the relevant administrative proceedings.

14 C.F.R. § 399.80 enumerates those practices which the CAB regards as unfair or deceptive or as an unfair method of competition. For example, 14 C.F.R. § 399.80(n) designates as one of these practices: "(m)isrepresentation as to the requirements that must be met by persons or organizations in order to qualify for charter or group fare flights." It is one of ITA's arguments that through false and deceptive advertising, Western misrepresented ITA's TGC requirements and operations.

49 U.S.C. § 1384 (amended 1978) is a specific immunity clause of the federal aviation Ricci v. Chicago Mercantile Exchange, 409 U.S. 289, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973) provides us with the primary considerations relevant to the doctrine of primary jurisdiction. The regulatory agency involved in Ricci was the Commodity Exchange Commission. The plaintiff alleged that he was excluded from trading on the Chicago Mercantile Exchange pursuant to an unlawful conspiracy in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. While acknowledging that the Commission could not immunize conduct from the antitrust laws, the Supreme Court determined that the Commission had primary jurisdiction because (1) a factual determination of whether or not the action taken by the Commission was pursuant to a valid rule would clarify what question was necessary for the Court to decide i. e., (a) if the action was pursuant to a valid rule, the question would be whether the rule is insulated from the antitrust laws, see Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683 (1918) (reasonable restraint of trade); (b) if the action in question was contrary to the rules, the antitrust action would presumably "take its normal course," Ricci v. Chicago Mercantile Exchange, supra, 409 U.S. at 304, 93 S.Ct. at 581; (2) that there was statutory authority for the Commission to settle the dispute; and (3) the adjudication of the dispute by the Commission would materially aid the Court "in arriving at the essential accommodation between the antitrust and the regulatory regimes." Id. at 307, 93 S.Ct. at 583.

program, which provides in regard to the antitrust laws, that "(a)ny person affected by any order made under (49 U.S.C.) sections 1378, 1379, or 1382 * * * shall be, and is hereby, relieved from the operations of the 'antitrust laws.' " As is apparent by the description of the statutory and regulatory authority upon which Western relies, Western does not allege that this immunity grant covers the instant case. Thus our discussion need not deal with exclusive jurisdiction with the CAB, but rather only that of primary jurisdiction.

The purpose of these considerations is to provide focus upon the controlling principle involved in the conflict of regulatory and judicial activity, which is that the courts "must refrain from imposing antitrust sanctions for activities of debatable legality * * * in order to avoid the possibility of conflict between the courts and (agencies)." Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 220, 86 S.Ct. 781, 786, 15 L.Ed. 709 (1966).

While the CAB has statutory and regulatory authority to determine unfair competition (the second consideration listed), it is difficult to see how a determination by the CAB, as to whether Western's activities constituted, e. g., unfair competition, would clarify any questions presented to this court the question would still be whether those activities constituted an antitrust violation. For as we have pointed out, there is no basis for antitrust immunity under action taken pursuant to 49 U.S.C. §§ 1302, 1381 or 1482.

This differs from the factual situation in Ricci v. Chicago Mercantile Exchange, supra, inasmuch as in Ricci, as is apparent by the Court's observation, the Commodity Exchange Act "contemplates that the Exchange and its members will 'engage in restraints of trade which might well be unreasonable absent sanction ' by the Act." Id., 409 U.S. at 304, 93 S.Ct. at 581, quoting Silver v. New York Exchange, 373 U.S. 341, 360, 83 S.Ct. 1246, 1258, 10 L.Ed.2d 389 (1963) (emphasis added). If the action in Ricci was determined by the Commission to be within the Exchange rules, there would be an affirmative sanction by the Exchange of the activities in question. In the instant case, even if the CAB would determine that there was no violation by Western of the CAB prohibitions against unfair competition, this would not be an affirmative sanction of the activities by the CAB. Thus a finding of an antitrust violation by this court would not create a substantial conflict. Carnation Co. v. Pacific Westbound Conference, supra.

A determination by the CAB, as to whether or not the activities constituted We hold that this court properly has jurisdiction of this case.

unfair competition, would not necessarily aid the court in arriving at an accommodation between the CAB regulations and the antitrust laws, for there would not necessarily exist a conflict even if the CAB decides one way and this court holds the opposite.

II. Factual Findings by the District Court

A. General Overview

As defined by the Special Master in his findings of fact, a travel group charter

is a form of charter air travel in which the individual traveler is a party to the charter contract incurring liability for the prorata share of the charter cost and running the risk that his cost...