DHL Corp. v. C. A. B.
| Decision Date | 19 October 1981 |
| Docket Number | Nos. 79-7416,80-7133 and 80-7200,s. 79-7416 |
| Citation | 659 F.2d 941 |
| Parties | DHL CORPORATION, Petitioner, Gelco Courier Services, Inc., Petitioner-Intervenor, v. CIVIL AERONAUTICS BOARD, Respondent, Pan American World Airways, Inc., Respondent-Intervenor. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Ralph L. Kissick, Washington, D. C., argued for Gelco Courier Services; Zuckert, Scoutt & Rosenberger, Washington, D. C., on brief.
John L. Richardson, Washington, D. C., argued for Pan American World Airways; Robert S. Venning, Heller, Ehrman, White & McAuliffe, San Francisco, Cal., Verner, Liipfert, Bernhard & McPherson, Washington, D. C., on brief.
Thomas L. Ray, Washington, D. C., argued for the CAB; Mary McInnis, Sanford M. Litvack, Asst. Atty. Gen., Washington, D. C., on brief.
On Petition for Review of Civil Aeronautics Board Orders 79-1-6, 79-6-147, 80-2-148, 80-4-54, 80-5-32.
Before POOLE and BOOCHEVER, Circuit Judges and GILLIAM, * District Judge.
After Pan American World Airways (Pan Am) and British Airways filed tariffs with the Civil Aeronautics Board (CAB) providing for a higher tariff rate for courier baggage, two courier companies (essentially freight forwarders or resellers of baggage space whose employees accompany bulk commercial documents shipped as air passenger baggage) filed complaints against
the proposed tariffs. They alleged that the tariffs were unjustly discriminatory, excessive and anti-competitive. The CAB ultimately dismissed the complaints and the rates became effective. One of the companies filed a petition for review of the CAB orders. The other company and one airline intervened. We hold that the CAB did not abuse its discretion in dismissing without an investigation the allegations in the complaints concerning unjust discrimination and anti-competitiveness. We hold, however, that the allegation that the rates were excessive should have been investigated.
On December 18, 1979, Pan Am filed proposed tariffs for domestic, overseas, and international travel which applied to courier baggage. 1 These tariffs applied the Excess Baggage Case formula 2 to an alleged typical weight of 30 kilograms per piece of courier baggage. Additionally, couriers were not granted a free baggage allowance, other than a maximum of two bags for personal use only. Other passengers are allowed to ship two bags free without regard to the ownership of the contents. DHL Corporation (DHL) and Gelco Courier Services, Inc. (Gelco), filed complaints alleging inter alia that the tariff was: (1) not susceptible to uniform enforcement because of the indefiniteness of the term "courier;" (2) not justified by the costs and unreasonable because there was no basis for either using a rate based on weight or concluding that courier bags weigh an average of 30 kilograms when in fact they usually weigh less; and (3) anti-competitive because it gave the airline's own parcel express service an unfair advantage.
In Order 80-2-148, the CAB dismissed the complaints and permitted the tariffs to become effective. The CAB rejected the complainants' arguments because: (1) although recognizing minor ambiguity in the definition of "courier," 3 DHL did not prove that it will be problematic in practice and the CAB noted that DHL tenders its baggage in colorful containers; (2) courier baggage costs more to handle than passenger baggage and the weight of the average courier bag is heavier than the average passenger bag; and (3) Pan Am was not in direct competition with the couriers. Id.
On March 4, 1980, British Airways filed a tariff to match Pan Am's courier tariff. DHL and Gelco filed complaints, but in Order No. 80-4-54 the CAB dismissed the complaints for the reasons expressed in its previous dismissal concerning Pan Am's tariff. DHL filed petitions for review of the CAB orders. 4
FAA § 404(b), 49 U.S.C. § 1374(b), 5 prohibits airlines from creating tariffs that cause unjust discrimination. FAA § 1002, 49 U.S.C. § 1482, concerns the enforcement of the various provisions of the Federal Aviation Act. Under that section, the CAB is required to investigate a complaint which provides reasonable grounds to believe that the Act has been violated. If the complaint does not state facts which warrant an investigation, the complaint may be dismissed without a hearing.
In cases of rate discrimination, the complaining party bears the burden of showing that the particular rates are discriminatory. 6 If the complainant fails to meet this burden, the CAB may properly dismiss the complaint without a hearing. 7 Even if the complainant meets this burden, the CAB may dismiss the complaint without a hearing if the CAB affirmatively shows that the tariff is justified for public policy reasons or in terms of established CAB precedent or policy and the relevant facts. 8
Because no hearing was held, the standard of review is whether the CAB abused its discretion in failing to order an investigation and dismissing the complaint without a hearing. 9
The complainants contend that the courier baggage tariff unjustly discriminates in two respects. First, they contend that the tariff violates the rule of equality because couriers are charged a higher rate for the same services rendered other passengers. Second, they argue that the tariff unjustly discriminates because it cannot be fairly administered. For the reasons discussed below, we reject each of these arguments.
FAA § 404(b), 49 U.S.C. § 1374(b), prohibiting unjust discrimination in rates, contains the rule of equality. Moss v. C.A.B., 521 F.2d 298, 310 (D.C.Cir.1975) cert. denied, 424 U.S. 966, 96 S.Ct. 1460, 47 L.Ed.2d 732 (1976). 10 The right to be treated fairly and nondiscriminatorily by a common carrier is an expression of the persuasive precept of fairness between government and governed and is derived from the common law of carriers. Trailways of New England, Inc. v. C.A.B., 412 F.2d 926, 931 (1st Cir. 1969). The rule and § 1374(b) is violated
when different fares or rates are charged for like and contemporaneous services under substantially similar circumstances and conditions.
Aloha Airlines, Inc. v. C.A.B., 598 F.2d 250, 263 (D.C.Cir.1979). A prima facie case of unjust discrimination can be established where: (1) there is a large price differential for substantially similar purposes, (2) the differential is based upon status rather than a transportation related factor, and (3) the fares cause a significant injury. Trailways, 412 F.2d at 932-33. The CAB found that a prima facie case had not been established because the services to a passenger and a courier are not substantially similar.
The complainants argue that the tariff draws a distinction based merely on status by dividing passengers into two categories: courier passengers and all others. A greater charge is levied upon courier baggage than passenger baggage. The basis for the distinction is the ownership of the items within the baggage. They argue that because the courier has the same contractual relationship with the airline as any other passenger, the charge for courier baggage should equal the charge for passenger baggage. Thus, charging couriers a higher rate for shipment of their baggage constitutes impermissible discrimination.
The CAB and Pan Am respond that typical passengers and couriers do not receive similar services. Couriers receive a unique service, freight service with handling advantages enjoyed only by passengers. Moreover, the carrier's transport of a passenger's baggage is incidental to the passenger's own transportation. By contrast, transport of courier baggage is the primary service purchased, and the courier's own carriage is secondary. Typical passengers carry their own baggage. 11 Typical couriers carry the baggage of others for a profit so that their use of the airplane is similar in that respect to cargo shippers. We believe that the CAB did not abuse its discretion in determining that couriers and passengers are not similarly situated. Moreover, although the complainants argue in their briefs that the two are similarly situated, DHL's counsel at oral argument acknowledged that it was not unreasonable for the airlines to distinguish couriers from typical passengers although couriers should be treated the same as other passengers with many bags. 12 Since we conclude that the service provided to couriers is not the same as that of ordinary passengers, we need not discuss whether the fare differential was justified on economic or public policy grounds.
DHL also contends that the courier baggage tariff is unjustly discriminatory because it cannot be fairly administered. The CAB, although recognizing some minor ambiguity in the definition of courier, rejected this argument because DHL did not demonstrate that the "definitional problems will prove problematic in practice." Order 80-2-148 at 3.
DHL's position is that the carriers will be unable to distinguish who is a courier and who is not. DHL's argument is premised upon an admission by Pan Am's counsel that it might not know who is a courier. The counsel, however, stated that typically Pan Am does know who is a courier because the courier does business on a regular basis or, if not, a courier could be easily recognized because of the tendering of a large number of distinctive bags. 13 Moreover, at oral argument DHL's counsel stated that he did not suggest that Pan Am cannot tell a DHL courier in most cases.
DHL has failed to demonstrate that identification of a courier will prove difficult in most cases. Rate distinctions have previously been approved which require the airline to identify a particular characteristic about its passenger.
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