Continental Air Lines, Inc. v. Department of Transp.

• Decision Date: 08 April 1988
• Docket Number: 86-1039 and 86-1040,Nos. 86-1026,s. 86-1026
• Citation: 843 F.2d 1444
• Parties: CONTINENTAL AIR LINES, INC., Petitioner, v. DEPARTMENT OF TRANSPORTATION, Respondent, America West Airlines, Inc., Southwest Airlines Co., City of Dallas, Texas, et al., Intervenors. CITY OF DALLAS, TEXAS, et al., Petitioners, v. DEPARTMENT OF TRANSPORTATION, Respondent, America West Airlines, Inc., Southwest Airlines Co., Continental Air Lines, Inc., Intervenors. SOUTHWEST AIRLINES CO., Petitioner, v. DEPARTMENT OF TRANSPORTATION, Respondent, America West Airlines, Inc., Continental Air Lines, Inc., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1444

843 F.2d 1444

269 U.S.App.D.C. 116

CONTINENTAL AIR LINES, INC., Petitioner, v. DEPARTMENT OF TRANSPORTATION, Respondent,

America West Airlines, Inc., Southwest Airlines Co., City of

Dallas, Texas, et al., Intervenors.

CITY OF DALLAS, TEXAS, et al., Petitioners, v. DEPARTMENT OF TRANSPORTATION, Respondent,

America West Airlines, Inc., Southwest Airlines Co.,

Continental Air Lines, Inc., Intervenors.

SOUTHWEST AIRLINES CO., Petitioner, v. DEPARTMENT OF TRANSPORTATION, Respondent, America West Airlines, Inc., Continental Air Lines, Inc., Intervenors.

Nos. 86-1026, 86-1039 and 86-1040.

United States Court of Appeals, District of Columbia Circuit.

Argued Dec. 8, 1986.

Reargued March 9, 1988.

Decided April 8, 1988.

Paul Y. Seligson, with whom Paul M. Ruden and Robert W. Kneisley, Washington, D.C., were on the brief, for Southwest Airlines Co., petitioner in No. 86-1040 and intervenor in Nos. 85-1026 and 86-1039.

Michael F. Goldman, with whom Julie A. Swanson, Washington, D.C., was on the brief, for City of Dallas, et al., petitioners in No. 86-1039 and intervenors in Nos. 86-1026.

Ronald A. Stern, Washington, D.C., for Continental Airlines, petitioner in No. 86-1026 and intervenor in Nos. 86-1039 and 86-1040. Thomas D. Goldberg, Andrew T. Karron, Washington, D.C., and Richard B. Hirst were on the brief for Continental Airlines, petitioner in No. 86-1026 and intervenor in Nos. 86-1039 and 86-1040. Calvin J. Collier, Washington, D.C., entered an appearance for Continental Airlines.

Kenneth N. Weinstein, Atty., Dept. of Transp., with whom John J. Powers, III and Andrea Limmer, Attys., Dept. of Justice, Washington, D.C., were on the brief for respondent in Nos. 86-1026, 86-1039 and 86-1040.

John E. Gillick, Washington, D.C., entered an appearance for intervenor, America West Airlines, Inc. in Nos. 86-1026, 86-1039 and 86-1040.

Before STARR, SILBERMAN and WILLIAMS, ^* Circuit Judges.

Opinion for the Court filed by Circuit Judge STARR.

STARR, Circuit Judge:

These consolidated cases raise several issues under a provision of law which has come to be known as the Love Field Amendment. Love Field is an airport situated in Dallas, Texas. Once Dallas' leading airport, Love Field has been eclipsed by the mammoth Dallas/Fort Worth International Airport ("DFW") situated conveniently between the two cities that bear its name. The questions before us are: (1) whether the Department of Transportation properly interpreted the Love Field Amendment so as to permit service at Love Field by Continental Air Lines, Inc., an "interlining" carrier (that is, one with connecting flights with other airlines); (2) whether the agency properly interpreted the commuter airline exception to the Love Field Amendment; (3) whether the agency's interpretation of the Amendment's restrictions on certain Love Field-related advertising ran afoul of First Amendment protections of commercial speech; and (4) whether Continental's failure to raise its constitutional objection in the agency proceedings precludes its maintaining that claim before us.

For the reasons that follow, we conclude that the Department's interpretation of the Love Field Amendment passes muster under the now familiar principles enunciated in Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) and its progeny. We further conclude that Continental's constitutional assault on the Department's advertising ban founders by virtue of the airline's failure to present its claim to the agency in contravention of the statutorily ordained requirement of exhaustion of administrative remedies.

I

The much heralded opening of the Texas-size airport at DFW ushered in a new era for the once busy facilities at Love Field. Now a mere shadow of its former self, Love Field lives on in rather modest circumstances. Of relevance to our case is a restriction fashioned by Congress in February 1980 as part of the International Air Transportation Competition Act of 1979 Pub.L. No. 96-192, 94 Stat. 35 (1980). In the bowels of that internationally oriented measure is a provision of a distinctly parochial, domestic nature. Section 29 was designed to except Love Field from the liberalized entry provisions of the Airline Deregulation Act of 1978, Pub.L. No. 95-504, 92 Stat. 1705 (1978), which the reader doubtless knows signaled the demise of federal economic regulation of the domestic airline industry. The reason for the exception was, of course, to protect DFW from competition at Love Field. Its purpose is well captured by the Department in its brief before us:

The Amendment was a compromise solution to a longstanding controversy involving attempts by the cities of Dallas and Fort Worth to prohibit interstate operations at Love Field and other area airports so as to ensure the viability of new Dallas/Ft. Worth Regional Airport.

DOT Brief at 6-7.

The Love Field Amendment has three subsections. Subsections (a) and (b) are set forth in the margin. ¹ It is the meaning of subsection (c) that is the principal bone of contention before us. We shall presently quote the provision in full, but to lead the reader gently into the somewhat forbidding language, we should observe in general fashion that it sets forth exceptions to an otherwise comprehensive ban on interstate operations at Love Field. The DFW parties describe this provision in the following way:

[I]t provides a limited exception to Sections 29(a) and (b), in situations where the service provided is between Love Field and one or more points in Louisiana, Arkansas, Oklahoma, New Mexico and Texas [the "Love Field Service Area"], and where two other conditions are met.

Brief of DFW Petitioners at 7.

With that brief introduction, we set forth the provision, cum its critical (to this litigation) two conditions:

(c) Subsections (a) and (b) shall not apply with respect to, and it is found consistent with the public convenience and necessity to authorize, transportation of individuals, by air, on a flight between Love Field, Texas, and one or more points within the States of Louisiana, Arkansas, Oklahoma, New Mexico, and Texas by an air carrier, if (1) such air carrier does not offer or provide any through service or ticketing with another air carrier or foreign air carrier, and (2) such air carrier does not offer for sale transportation to or from, and the flight or aircraft does not serve, any point which is outside any such State. Nothing in this subsection shall be construed to give authority not otherwise provided by law to the Secretary of Transportation, the Civil Aeronautics Board, any other officer or employee of the United States, or any other person.

Faced with this rather dreadfully framed language, DOT nonetheless ruled in the proceeding at hand that the statute, coupled with its legislative history, was crystal clear. The Department concluded that "the plain and literal meaning of subsection (c) refers to a specific 'flight,' and subclauses (1) and (2), which must logically be read together (the clauses are joined by the conjunction 'and'), describe restrictions applicable to the flight.... [T]he legislative history is not contrary to this plain reading; and this reading is not unreasonable." Joint Appendix ("J.A.") at 8-9. Unless this opening language ("on a flight") in subclause (c) was taken to apply to both subclauses (1) and (2), DOT reasoned, the provisions would necessarily exclude from Love Field an air carrier that operated interstate flights (other than in the Love Field Services Area) anywhere on its system. That result, the Department found, was foreclosed by clear legislative history to the contrary. Accordingly, the Department determined that Continental's proposed move into Love Field (to inaugurate a Dallas-Houston service) was permissible under the Love Field Amendment, notwithstanding the fact that Continental was an "interlining" carrier. As DOT summarized its view:

Congress intended to make Love Field a short-haul airport limited to turnaround intrastate and interstate service in five states. As a result, subclauses (1) and (2) are not properly read as class and operational restrictions, respectively. Rather, these subclauses simply specify interline and on-line restrictions applicable to service at Love Field.

Id. at 12. It is this interpretation which is now under challenge.

The parties have jousted skillfully (and at length) over the meaning of the key provision of the Love Field Amendment. Here, in brief, are the competing positions: Joined by Southwest Airlines, the DFW parties contend that the statute is plain and clear. In their view, section 29(c)(1) "is a class restriction; the carrier cannot be of a class which provides through service or ticketing with another air carrier." DFW Brief at 7. The second clause, in turn, is seen as an "operational restriction." Id. That is, "the air carrier cannot route its flight or sell transportation from Love Field to a point outside of the five enumerated states." Id. at 7-8.

The DFW parties buttress their position by pointing to a helpful sentence in the Conference Committee Report, ² which they candidly allow "to some extent tracks the statutory words." DFW Brief at 33. The DFW parties also emphasize the views of now-Speaker Wright, who was the animating force behind the Love Field Amendment (including views expressed long after enactment of the measure). ³

For its part, DOT, joined on this issue by Continental, continues to maintain that the statute is indeed plain and clear, but in quite the opposite way from that of the DFW parties' reading. Emphasizing both the clarity (as DOT sees it) of the statutory language and the judiciary's obligation to defer to reasonable agency interpretations, DOT stresses that Congress' employment of the phrase, "on a flight," at the beginning of subsection (c) most naturally should be taken to mean that the restrictions found in (c)(1) and (c)(2) are applicable solely...