Civil Aeronautics Board v. British Airways Board
| Decision Date | 10 June 1977 |
| Docket Number | No. 77 Civ. 1456-CSH.,77 Civ. 1456-CSH. |
| Parties | CIVIL AERONAUTICS BOARD, Plaintiff, v. BRITISH AIRWAYS BOARD d/b/a British Airways, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Robert B. Fiske, Jr., U. S. Atty. for the Southern District of New York, New York City, for plaintiff; Carl T. Solberg, Asst. U. S. Atty., of counsel.
William C. Clarke, New York City, for British Airways Bd.
Cahill, Gordon & Reindel, New York City, for Seaboard World Airlines, Inc., amicus curiae; Irwin Schneiderman, Henry G. Bisgaier, Joel C. Balsam, John A. Shutkin, New York City, Fisher & Gelband, Washington, D. C., of counsel.
In a case demonstrating that Lord Palmerston's mid-nineteenth century, simplex munditiis view of national self-interest1 has continuing vitality in the jet age, plaintiff Civil Aeronautics Board ("C.A.B." or the "Board") sues to enjoin defendant British Airways Board, doing business as British Airways, from violating the Federal Aviation Act of 1958, as amended, 49 U.S.C. §§ 1301 et seq. ("the Act"). The alleged violation lies in British Airways' charging certain rates for the carriage by air of particular commodities from the United Kingdom to the United States, such rates not being included in tariffs on file with the C.A.B. British Airways contends that the Act does not extend to the activities complained of; or, if it purports to do so, principles of international law require denial of an injunction. A preliminary injunction was denied, so that further briefs and the views of the United States Department of State could be received and considered. Both parties now move for summary judgment. Seaboard World Airlines, Inc. ("Seaboard"), amicus curiae, has filed a brief supporting the C.A.B. For the reasons stated, summary judgment is granted to the C.A.B., the motion of British Airways is denied, and the injunction will issue.
The C.A.B. is a regulatory agency, created by the Act, 49 U.S.C. § 1321, and "vested with statutory authority to determine the overall transportation policy which best serves the interest of the public." Foreign Study League v. Civil Aeronautics Board, 475 F.2d 865, 870 (10th Cir. 1973). The statutory aims which the C.A.B. is mandated to pursue are broadly stated, 49 U.S.C. § 1302;2 its regulatory powers are equally broad, 49 U.S.C. § 1324(a).3
In essence, the C.A.B. regulates air transportation. "Air transportation" includes "foreign air transportation", 49 U.S.C. § 1301(10), which is in turn defined as the carriage by aircraft of persons or property for compensation between "a place in the United States and any place outside thereof." 49 U.S.C. § 1301(21)(c). "Foreign air carriers" are subject to regulation under the Act; they are defined as non-United States citizens who engage in foreign air transportation. 49 U.S.C. § 1301(19). The C.A.B. issues certificates of public convenience and necessity to domestic air carriers, without which they cannot engage in air transportation. 49 U.S.C. § 1371. The C.A.B. also issues permits to foreign air carriers, without which they cannot engage in foreign air transportation involving the United States. 49 U.S.C. § 1372.4 Unlike the certificates issued to domestic air carriers, the C.A.B.'s actions in respect of permits issued to foreign air carriers are subject to the approval of the President of the United States. 49 U.S.C. § 1461.5
British Airways is currently operating to and from the United States pursuant to a permit issued under § 1372. The permit recites, inter alia:
"BRITISH AIRWAYS BOARD is hereby authorized, subject to . . . the provisions of the Federal Aviation Act of 1958, and the orders, rules and regulations issued thereunder, to engage in foreign air transportation . . . The exercise of the privileges granted hereby shall be subject to such reasonable terms, conditions and limitations required by the public interest as may from time to time be prescribed by the Board."
The C.A.B. has concerned itself with rates charged by air carriers, domestic and foreign, because of its mandate to prevent "unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices", 49 U.S.C. § 1302, quoted at n. 2 supra.
Thus the Act requires foreign air carriers such as British Airways to file with the C.A.B. tariffs showing all rates for air transportation between the points served, and to charge, demand, collect or receive only those rates specified in its currently effective tariffs. 49 U.S.C. § 1373(a) and (b).6 Comparable requirements appear in the regulations. 14 C.F.R. Part 221.
In 1972 Congress amended the Act so as to strengthen the C.A.B.'s ability to regulate international rates. The amendments were prompted by a prior international incident the details of which are not necessary to rehearse; it is sufficient to state for our present purposes that the amendments contained provisions which were frankly recognized as conferring "retaliatory power" upon the C.A.B., in order:
". . . to set the stage properly for consultations and negotiations between the United States and other governments concerned and to protect the position of the U.S. carriers."7
The principal 1972 amendments relating to foreign air transportation appear in 49 U.S.C. § 1482(j). New tariffs filed by domestic or foreign air carriers are subject to hearings by the Board, as a result of a complaint or on its own initiative, to determine the "lawfulness" of the rates, and pending the hearing and decision the Board may suspend the operation of the new tariff. § 1482(j)(1). Similar powers of inquiry and suspension in respect of existing tariffs are conferred by § 1482(j)(2). The "retaliatory power" of which Senator Cannon spoke appears in § 1482(j)(3); if the Board finds that a foreign government or its authorities have refused to permit the charging of Board-approved rates "for foreign air transportation to such foreign country", the Board may, without hearing, "suspend the operation of any existing tariff of any foreign air carrier providing services between the United States and such foreign country . . ."8 § 1482(j)(4) provides explicitly that certificates held by domestic air carriers, and permits held by foreign air carriers, are conditioned upon "the provisions of this subsection and compliance with any order of the Board issued pursuant thereto . . ."9 Finally, § 1482(j)(5) specifies certain factors the Board is to consider in wielding its expanded powers, including economic factors.10
The present action for injunctive relief is brought by the C.A.B. against British Airways pursuant to the jurisdictional grant to this Court contained in 49 U.S.C. § 1487.11
In the case at bar, the C.A.B. alleges, and British Airways does not deny, that the latter is charging and collecting rates which do not appear in any tariff on file with the Board. The manner in which this state of affairs arose may be briefly stated.
Between 1974 and 1976, westbound air cargo shipments from the United Kingdom to the United States fell off substantially, causing concern to the British government.12 The consequent loss of revenue was presumably felt by British Airways, the only British carrier engaging in scheduled air cargo service between Britain and the U.S., and the four competing U.S. — flag carriers: Pan American World Airways, Trans World Airways, National Airlines and Seaboard.
British Airways responded to this situation by attempting to file a tariff with the C.A.B., establishing lower, discount rates in certain circumstances. Specifically, on August 13, 1976, British Airways filed a tariff with the C.A.B., designated as International Cargo Contract Rates Tariff No. 1, C.A.B. No. 23, which sought to establish new contract cargo rates for shippers of large annual volumes of cargo from three major cities in Great Britain to various cities in the United States.13 Contract cargo rates are bulk tender discount rates available for large tenders by shippers and cargo consolidators, which result in a saving to the shipper concomitant with a reduction in administrative and handling costs incurred by the airline.14
By Order dated September 3, 1976, the C.A.B. rejected the August 13, 1976 filing citing administrative irregularities and violation of the C.A.B.'s "seven cities" order. The "seven cities" order reflects the position of the C.A.B. that a system of add-on charges to New York rates is an improper mode of arriving at rates for shipments destined for other United States cities.15 Instead, the Board preferred a system of mileage related charges, which presumably would have the effect of avoiding discrimination against certain cities vis-a-vis a shipper's desire to choose a city of destination most economical from the point of view of overall transportation costs.
As a result of the September 3, 1976 rejection, British Airways filed another Cargo Contract Rates Tariff (designated as No. 2, C.A.B. No. 24), similar in terms to its August 13, 1976 filing and covering the same points of departure and destination. Again, on the basis of technical infirmities and violation of the seven cities" order, the C.A.B. rejected the filing.
Diplomatic negotiations between the British government and the United States followed from the C.A.B.'s rejection of the proposed tariffs. Notwithstanding such endeavors, British Airways adjusted its contract rates to conform to the "seven cities" order, and proffered still another tariff to the C.A.B. on December 3, 1976.
Although not rejected on technical grounds, the C.A.B. suspended enforcement of this tariff for up to one year pending investigation, which action was submitted to President of the United States for his review pursuant to 49 U.S.C. § 1461. This suspension became effective on December 31, 1976.
The C.A.B.'s suspension order stated:
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