Century Air Freight, Inc. v. American Airlines, 77 Civ. 2195-CLB.

• Decision Date: 05 January 1984
• Docket Number: No. 77 Civ. 2195-CLB.,77 Civ. 2195-CLB.
• Citation: 597 F. Supp. 564
• Parties: CENTURY AIR FREIGHT, INC., Plaintiff, v. AMERICAN AIRLINES, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

597 F. Supp. 564

CENTURY AIR FREIGHT, INC., Plaintiff, v. AMERICAN AIRLINES, INC., Defendant.

No. 77 Civ. 2195-CLB.

United States District Court, S.D. New York.

January 5, 1984.

MEMORANDUM AND ORDER

BRIEANT, District Judge.

By motions argued on September 9, 1983 and fully submitted on September 23, 1983, plaintiff seeks partial summary judgment, while defendant seeks an order dismissing certain claims pleaded, and granting summary judgment in its favor with respect to others.

This action was stayed for a time pending application by plaintiff to the Civil Aeronautics Board ("CAB") for administrative relief upon some but not all of the claims. These administrative proceedings have been concluded.¹ There remains for adjudication here Federal Aviation Act claims and antitrust claims pleaded, which were not resolved by the administrative proceedings and subsequent appellate review thereof.

Except where noted, the facts stated below are not controverted, or may be regarded as conceded solely for purposes of the motions. Defendant American Airlines, Inc. ("American") is a direct air carrier of freight and passengers. Plaintiff Century Air Freight, Inc. ("Century") is a licensed air freight forwarder, authorized to engage in that activity by the CAB, as are many others.

In January 1970, American acquired Trans-Caribbean Airways, and as part of that acquisition assumed its carriage of air freight between New York City and San Juan, Puerto Rico. On March 1, 1971, subsequent to that acquisition, American initiated Flight 841, a weekday all-cargo flight from New York City to San Juan. The dispute herein arises out of the subsequent allocation by American of main deck container positions on that flight.

Affiliated interests of the plaintiff apparently had prior commercial disputes, litigation and arbitration with American totally unrelated to this action or the dispute set forth below. Plaintiff suggests, and we infer, that these disputes left a residue of ill will. In addition, in February 1970, while Century's application for a license from the CAB was pending, the president of a competing licensed air freight forwarder, Profit-By-Air, Inc. ("PBA"), wrote a derogatory letter to the CAB concerning plaintiff, referred to as a "devastatingly effective poison pen job on Century Air Freight." Plaintiff's Memorandum at 1. There is no showing that this letter reached American, or that American shares any responsibility for it. Nevertheless, in June 1971 Century's freight forwarding license was granted by the CAB.

American Flight No. 841, during the period of its existence, from March 1, 1971 to August 31, 1981, had a scheduled departure from New York which varied between 11:00 P.M. and Midnight, with the return flight from San Juan, American Flight No. 840, scheduled for departure in the early morning immediately following discharge of cargo and reloading. The capacity of the Boeing 707 aircraft operated by American on these flights was as follows: (1) eleven, unbroken standard "A" type freight containers on the main deck of the aircraft; (2) the cubic equivalent in breakbulk form, of one additional "A" type container on the main deck; (3) two specially contoured containers each with the cubic capacity of an "A" type container in the tail section; (4) the cubic equivalent of three "A" type containers of breakbulk cargo in the cargo bay compartments of the aircraft. An "A" type container has a capacity of approximately 5,500 lbs., and contains 440 cubic feet.

American allocated the space for the twelve main deck container positions by a "Confirmed Air Freight" method, whereby there was an understanding between American and various shippers and/or forwarders, to the effect that specific numbers of container positions regularly would be available and be used by them on Flight 841. Recurring daily reservations were offered and maintained, conditional upon continuous use of the amount of space reserved by the shipper. Initially, American made offers in part on the basis of the shipper's demand for container space on the return flight, Flight 840, which was less lucrative because less air cargo moves in that direction.

According to American, the recurring daily reservations were granted initially in March 1971 on a first-come-first-served basis, and such reserved space did not become fully committed until the end of 1971. By that time, American had allocated eight main deck container positions to PBA, three to Shulman Air Freight, Inc. ("Shulman") and one to Emery Air Freight, Inc. ("Emery"). These allocations were in effect until 1978.

American asserts that on several occasions during 1971, before the main deck container positions were fully reserved, it offered Century confirmed air space on Flight 841, but that Century declined the offers, "apparently because Century believed it had preferable space from other carriers." (Affidavit of George A. Shipman, sworn to August 10, 1983, ¶ 11 "Shipman Affidavit"). Specifically, it is contended that Century contemporaneously held confirmed air freight space for six to eight "LD-3" type container positions on a late night Eastern Airlines combination passenger/freight flight from New York to San Juan. (Shipman Affidavit, ¶ 13).

American asserts further that Century's requests for specific space on particular dates on Flight 841 were granted or denied solely on the basis of the availability of space on the particular dates requested. It also contends that in January 1973 Century was given a reserved space for one hundred pounds of cargo, and that in September 1977, after the commencement of this action, American accorded Century a recurring reservation for a weight volume allocation on Flight 841 equivalent to one "A" type container. American did not confirm, however, that the Century freight would move in a container rather than as breakbulk cargo. Finally, American asserts that in 1978 when Shulman abandoned its three reserved container positions, these were filled based upon the requests of at least seven shippers, and that the three shippers granted the space had previously been without any reserved space on Flight 841.

Century contests the foregoing interpretation of events, and asserts that from the time it was first licensed as an air freight forwarder in June 1971, American never offered it any main deck container positions on Flight 841, and that in fact Century's repeated requests for reserved space were denied consistently. (Affidavit of Salvatore Cirami, sworn to July 2, 1983, ¶ 14 "Cirami Affidavit"). It asserts further that its constant requests for confirmed space in main deck container positions were prompted by necessity, because Flight 841 was the only daily all cargo flight between New York and San Juan during the relevant time period with reliable next day delivery service. (Id. at ¶ 15).

While Century does not contest directly that it had confirmed space on an Eastern Airlines combination passenger/freight flight, it does contend that the space on alternatives to Flight 841 was commercially unacceptable because the "LD-3" type containers on such combination flights had only one-third the capacity of the "A" type containers used on the American flight, and because the departure times of the alternative flights were "inconvenient" for loading in New York and ultimate delivery in Puerto Rico. (Reply Affidavit of Salvatore Cirami, sworn to August 24, 1983, ¶ 21). Century also contends that the offer of 100 pounds reserved space, made by American in April 1973 was commercially insignificant, and that the instant litigation was the sole reason for American's September 1977 offer of the equivalent of one "A" type container space.

On the basis of the foregoing facts, Century alleges that American, in conspiracy with PBA, refused, wrongfully, to deal with it with respect to reserved air freight space on Flight 841 in violation of § 404 of the Federal Aviation Act, 49 U.S.C. § 1374, and sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. American responds, as it did in the substantial correspondence between the parties (see Plaintiff's Exhibit 9), that it did not exclude Century from Flight 841 wrongfully, but rather that its reserved space allocation method or system was commercially necessary to assure the continued existence of the flight, and that, therefore, American could not reasonably cancel the existing continuous reservations of PBA, Shulman and Emery solely for the benefit of the plaintiff.

Federal Aviation Act Claim

Century alleges that American's refusal to accord it reserved main deck container positions on Flight 841 violates § 404 of the Federal Aviation Act, entitling it to damages on its motion for summary judgment. American, in its motion, seeks to dismiss under Rule 12(b)(6), F.R.Civ.P. so much of the complaint, filed May 5, 1977, as is based on the § 404 claim, on the grounds that Century has no implied private right of action for damages under that statute. In addition, in opposing Century's motion for summary judgment, American argues that even if there is an implied right of action under § 404, the plaintiff's motion should not be granted because questions of fact remain as to whether (1) American discriminated against Century in assigning reserved space; (2) Century requested reserved air freight under similar circumstances as those who were granted main deck container positions; (3) the allocation system resulted in any injury to competition in the relevant market; (4) the challenged allocation method was commercially reasonable because necessary to sustain Flight 841; (5) the challenged practice was necessary to meet competition from other direct carriers of air freight between New York and San Juan.

It is unnecessary to consider whether the aforementioned issues of fact are material and genuinely in dispute, because this Court agrees with defendant that an air freight forwarder has no implied private right of action for...