Nader v. Allegheny Airlines, Inc

Decision Date07 June 1976
Docket NumberNo. 75-455,75-455
Citation426 U.S. 290,48 L.Ed.2d 643,96 S.Ct. 1978
PartiesRalph NADER, Petitioner, v. ALLEGHENY AIRLINES, INC
CourtU.S. Supreme Court
Syllabus

Shortly before his scheduled departure from Washington, D. C., to Connecticut, where he was to fulfill speaking engagements, petitioner, who had reserved a seat on one of respondent's Hartford flights, arrived at the check-in area but was advised that he could not be accommodated because all the seats were occupied. After refusing the tender of respondent, which concededly overbooked the flight, of denied boarding compensation, petitioner brought a common-law action against respondent based on an alleged fraudulent misrepresentation arising from respondent's failure to apprise petitioner of its deliberate overbooking practices, and a statutory action under § 404(b) of the Federal Aviation Act of 1958, arising from respondent's failure to afford petitioner the boarding priority specified in its rules filed with the Civil Aeronautics Board (CAB). The District Court entered judgment and awarded compensatory and punitive damages on both claims. The Court of Appeals remanded petitioner's statutory claim for further findings and reversed the award of punitive damages on that claim. The question of punitive damages for the common-law claim was remanded for further findings on respondent's good faith. None of that court's foregoing rulings was presented in the petition for certiorari. The court also held that the common-law fraudulent misrepresentation claim had to be remanded to the District Court and stayed, under the principles of primary jurisdiction, pending referral to the CAB to determine whether the alleged failure to disclose the practice of deliberate overbooking is a deceptive practice under § 411 of the Act, which provides that the CAB may investigate and determine whether any air carrier has been or is engaged in unfair or deceptive practices, and that practices found to violate the section shall be the subject of a cease-and-desist order. The court held that a CAB determination that a practice is not deceptive under § 411 would preclude a common-law tort action for damages for injuries caused by that practice. Held: Petitioner's common-law tort action based on the alleged fraudulent misrepresentation by reondent air carrier should not be stayed pending reference to the CAB for a determination whether the practice is "deceptive" within the meaning of § 411 of the Act. Pp. 298-308.

(a) There is no irreconcilable conflict between the Act's scheme and the common-law remedy; both may coexist as contemplated by the Act's saving clause, which provides that "(n)othing contained in this Act shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this Act are in addition to such remedies." § 1106. Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, distinguished. Pp. 298-300.

(b) No power to immunize a carrier from common-law liability can be inferred from § 411's language; where Congress has sought to confer such power it has done so expressly, as in § 414 of the Act. Section 411 is both broader and narrower than common-law remedies. A cease-and-desist order may issue thereunder if the CAB concludes that a carrier is engaged in an unfair or deceptive practice, and no findings that the practice was intentionally deceptive or has caused injury in fact are necessary; on the other hand, a CAB decision that such an order is inappropriate does not manifest the CAB's approval of the practice but may merely represent the agency's conclusion that a more flexible approach is necessary. Pp. 300-303.

(c) The doctrine of primary jurisdiction, which has been applied where a claim originally cognizable in the courts requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative agency, is inapplicable here where petitioner's action for respondent's asserted failure to disclose its overbooking practices implicates no tariff practice or similar technical question of fact uniquely within the CAB's expertise. Pp. 303-307.

167 U.S.App.D.C. 350, 512 F.2d 527, reversed and remanded.

Reuben B. Robertson, III, Washington, D. C., for petitioner.

E. Barrett Prettyman, Jr., Washington, D. C., for re- spondent.

Mr. Justice POWELL delivered the opinion of the Court.

In this case we address the question whether a common-law tort action based on alleged fraudulent misrepresentation by an air carrier subject to regulation by the Civil Aeronautics Board (Board) must be stayed pending reference to the Board for determination whether the practice is "deceptive" within the meaning of § 411 of the Federal Aviation Act of 1958, 72 Stat. 769, 49 U.S.C. § 1381. We hold that under the circumstances of this case a stay pending reference is inappropriate.

I

The facts are not contested. Petitioner agreed to make several appearances in Connecticut on April 28, 1972, in support of the fundraising efforts of the Connecticut Citizen Action Group (CCAG), a nonprofit public interest organization. His two principal appearances were to be at a noon rally in Hartford and a later address at the Storrs campus of the University of Connecticut. On April 25, petitioner reserved a seat on respondent's flight 864 for April 28. The flight was scheduled to leave Washington, D. C., at 10:15 a. m. and to arrive in Hartford at 11:15 a. m. Petitioner's ticket was purchased from a travel agency on the morning of the flight. It indicated, by the standard "OK" notation, that the reservation was confirmed.

Petitioner arrived at the boarding and check-in area approximately five minutes before the scheduled depar- ture time. He was informed that all seats on the flight were occupied and that he, like several other passenge who had arrived shortly before him, could not be accommodated. Explaining that he had to arrive in Hartford in time for the noon rally, petitioner asked respondent's agent to determine whether any standby passengers had been allowed to board by mistake or whether anyone already on board would voluntarily give up his or her seat. Both requests were refused. In accordance with respondent's practice, petitioner was offered alternative transportation by air taxi to Philadelphia, where connections could be made with an Allegheny flight scheduled to arrive in Hartford at 12:15 p. m. Fearing that the Philadelphia connection, which allowed only 10 minutes between planes, was too close, petitioner rejected this offer and elected to fly to Boston, where he was met by a CCAG staff member who drove him to Storrs.

Both parties agree that petitioner's reservation was not honored because respondent had accepted more reservations for flight 864 than it could in fact accommodate. One hour prior to the flight, 107 reservations had been confirmed for the 100 seats actually available. Such overbooking is a common industry practice, designed to ensure that each flight leaves with as few empty seats as possible despite the large number of "no-shows" reservation-holding passengers who do not appear at flight time. By the use of statistical studies of no-show patterns on specific flights, the airlines attempt to predict the appropriate number of reservations necessary to fill each flight. In this way, they attempt to ensure the most efficient use of aircraft while preserving a flexible booking system that permits passengers to cancel and change reservations without notice or penalty. At times the practice of overbooking results in oversales, which occur when more reservation-holding passengers than can be accommodated actually appear to board the flight. When this occurs, some passengers must be denied boarding ("bumped"). The chance that any particular passenger will be bumped is so negligible that few prospective passengers aware of the possibility would give it a second thought. In April 1972, the month in which petitioner's reservation was dishonored, 6.7 confirmed passengers per 10,000 enplanements were denied boarding on domestic flights.1 For all domestic airlines, oversales resulted in bumping an average of 5.4 passengers per 10,000 enplanements in 1972, and 4.6 per 10,000 enplanements in 1973.2 In domestic operations respondent oversold 6.3 seats per 10,000 enplanements in 1972 and 4.5 seats per 10,000 enplanements in 1973.3 Thus, based on the 1972 experience of all domestic airlines, there was only slightly more than one chance in 2,000 that any particular passenger would be bumped on a given flight.4 Nevertheless, the total number of confirmed ticket holders denied seats is quite substantial, numbering over 82,000 passengers in 1972 and about 76,000 in 1973.5

Board regulations require each airline to establish priority rules for boarding passengers and to offer "denied boarding compensation" to bumped passengers. These "liquidated damages" are equal to the value of the passenger's ticket with a $25 minimum and a $200 maximum. 14 C.F.R. § 250.5 (1975). Passengers are free to reject the compensation offered in favor of a common- law suit for damages suffered as a result of the bumping. Petitioner refused the tender of denied boarding compensation ($32.41 in his case) and, with CCAG, filed this suit for compensatory and punitive damages. His suit did not seek compensation for the bumping per se but asserted two other bases of liability: a common-law action based on fraudulent misrepresentation arising from respondent's alleged failure to inform petitioner in advance of its deliberate overbooking practices, and a statutory action under § 404(b) of the Act, 49 U.S.C. § 1374(b),6 arising from respondent's alleged failure to afford petitioner the boarding priority specified in its rules filed with the Board under 14 CFR § 250.3 (1975).

The District Court entered a judgment for petitioner on both claims, awarding him a total of $10 in...

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