Sabre, Inc. v. Department of Transp.

• Decision Date: 22 November 2005
• Docket Number: No. 04-1073.,04-1073.
• Citation: 429 F.3d 1113
• Parties: SABRE, INC., Petitioner v. DEPARTMENT OF TRANSPORTATION and Norman Y. Mineta, Secretary of Transportation, Respondents Amadeus Global Travel Distribution, S.A., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

429 F.3d 1113

SABRE, INC., Petitioner v. DEPARTMENT OF TRANSPORTATION and Norman Y. Mineta, Secretary of Transportation, Respondents

Amadeus Global Travel Distribution, S.A., Intervenor.

No. 04-1073.

United States Court of Appeals, District of Columbia Circuit.

Argued October 7, 2005.

Decided November 22, 2005.

On Petition for Review of an Order of the United States Department of Transportation.

David C. Frederick argued the cause for petitioner. On the briefs were Kenneth P. Quinn, Richard Liebeskind, Barry H. Gottfried, Jennifer Trock, and David A. Schwarte.

Sam Kazman and Randolph J. May were on the brief for amici curiae The Progress & Freedom Foundation, et al.

Paul M. Ruden was on the brief for amicus curiae American Society of Travel Agents.

Thomas L. Ray, Senior Trial Attorney, U.S. Department of Transportation, argued the cause for respondents. With him on the brief were Robert H. Pate, Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson and Steven J. Mintz, Attorneys, Jeffrey A. Rosen, General Counsel, U.S. Department of Transportation, Paul M. Geier, Assistant General Counsel, and Dale C. Andrews, Deputy Assistant General Counsel.

David H. Coburn argued the cause for intervenor Amadeus Global Travel Distribution, S.A. in support of respondents.

Before: ROGERS and BROWN, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge.

Sabre, Inc. petitions for review of a final rule promulgated by the Department of Transportation that, as relevant, states that an independent computer reservation system ("CRS") not owned by an air carrier or foreign air carrier is a "ticket agent" as defined within the Federal Aviation Act ("FAA"), 49 U.S.C. § 40102(a)(45) (2000 and West Supp.2005), and therefore subject to the regulatory authority of the Department under FAA section 411, 49 U.S.C. § 41712(a). See Computer Reservations System Regulations, 69 Fed.Reg. 976, 995-98 (January 7, 2004) ("Final Rule"). Sabre, an independent CRS unconnected to an airline, contends that it is not a statutory "ticket agent" and asks that those portions of the Final Rule in which the Department asserts the authority to regulate independent CRSs under section 411 be set aside. The Department responds that the petition should be dismissed because Sabre has suffered no injury in fact and therefore lacks standing, and its pre-enforcement challenge to the Department's interpretation of its authority is not ripe. Alternatively, the Department maintains that its interpretation of the statutory definition, and hence of its authority under section 411, is consistent with the plain language of the definition or, in any event, is reasonable.

Although no regulations promulgated by the Department currently constrain Sabre's business activity and no relevant enforcement actions are pending against any independent CRS, we hold that Sabre has standing in view of the combination of three circumstances. In the Final Rule, the Department claims that it has jurisdiction over independent CRSs under section 411; its statements indicate a very high probability that it will act against a practice that Sabre would otherwise find financially attractive; and it has statutory authority to impose daily civil penalties on Sabre for violation of section 411, which the Department plausibly asserts it may enforce without prior warning by rulemaking or cease-and-desist order. We also hold that Sabre's challenge to the Department's interpretation of its authority under section 411 is fit for review based on undisputed facts, including the risk of incurring civil penalties should Sabre proceed to implement certain marketing plans. We conclude, however, that Sabre's challenge to the Department's interpretation of its authority under section 411 lacks merit. Accordingly, we deny the petition.

I.

Section 411 of the FAA provides:

On the initiative of the Secretary of Transportation or the complaint of an air carrier, foreign air carrier, or ticket agent, and if the Secretary considers it is in the public interest, the Secretary may investigate and decide whether an air carrier, foreign air carrier, or ticket agent has been or is engaged in an unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation. If the Secretary, after notice and an opportunity for a hearing, finds that an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice or unfair method of competition, the Secretary shall order the air carrier, foreign air carrier, or ticket agent to stop the practice or method.

49 U.S.C. § 41712(a) (emphases added). The term "ticket agent" is defined as

a person (except an air carrier, a foreign air carrier, or an employee of an air carrier or foreign air carrier) that as a principal or agent sells, offers for sale, negotiates for, or holds itself out as selling, providing, or arranging for, air transportation.

Id. § 40102(a)(45). Upon finding a violation of section 411, the Department may impose civil penalties. Id. § 46301(a)(1)(A), (a)(2), (a)(5)(D), & (c).

In 2004, in the Final Rule, the Department removed the rules that had long governed the CRS industry. Concluding that "market forces are beginning to discipline the [CRS]s' prices and terms for airline participation" and that "the [CRS]s' competition for subscribers is in large part eliminating contract provisions that substantially restrict travel agents from using alternative electronic sources of airline information and booking capabilities," Final Rule, 69 Fed.Reg. at 985, the Department allowed the sunset on January 31, 2004 of its CRS regulations. Id. at 976. Two of its rules — prohibiting "display bias"¹ and certain contractual arrangements — were extended for a six-month transition period beyond the sunset date, until July 31, 2004. Id. (codified at 14 C.F.R. § 255.8 (2005)). In promulgating the Final Rule, the Department stated that all CRSs remain subject to Department authority under section 411. Id. Specifically, even those CRSs that are not owned by statutory "air carriers" (i.e., "independent CRSs") are deemed statutory "ticket agent[s]," and thus remain the subject of possible Department enforcement actions under section 411. Id. at 995-998.

II.

Sabre petitions for review of the Department's jurisdictional claim in the Final Rule and vacation of that part of the rule. Sabre contends that the Department's "novel interpretation" that independent CRSs are "ticket agents" ignores both the plain meaning of the statutory definition of "ticket agent" and its own prior interpretation of that term and rewrites Congress's purpose in 1952 when it included "ticket agent[s]" in the scope of section 411. Before reaching Sabre's challenge to the Department's interpretation of its authority under section 411, we must first address the Department's contentions that Sabre lacks standing and that its challenge is not ripe. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). The Department contends that Sabre lacks standing because Sabre cannot show that the Department's conclusion that independent CRSs are "ticket agent[s]" for purposes of section 411 will cause Sabre actual or imminent injury, and further that the validity of the Department's statutory interpretation is not ripe for review because no Department rule now restricts Sabre's business operations.

A.

Article III of the Constitution limits the role of the federal courts to decide "cases" and "controversies." U.S. Const. art. III, § 2. To ensure there is a justiciable dispute, Sabre must demonstrate standing, by showing that (1) it has suffered an "injury in fact," that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the Department; and (3) a favorable decision on the judicial relief requested is likely to redress the injury. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). Only injury in fact is in dispute.

The Department takes the position that Sabre offers only speculation as to whether and how the Department might in the future regulate independent CRSs under section 411, which the Department contends is "completely unknown and cannot constitute a present injury for standing purposes." Br. of Respondent at 21-22. The Department maintains that no relevant legal obligations continue to bind Sabre because it is unreasonable to assume that the Department would seek to enforce regulations, such as the prohibition on display bias, that the Department has specifically allowed to sunset. If the Department considered such practices to violate section 411 in all instances, the Department maintains that it would have preserved or modified these prohibitions. Id. at 22-23. Sabre is thus, according to the Department, "free to operate its business as it wishes." Id. at 26.

We conclude that Sabre has demonstrated a sufficiently concrete and particularized injury in fact due to the Final Rule's immediate impact on Sabre's ability to make business decisions about the products it will offer in the market. This comes about as the result of a combination of three circumstances:

First, in the Final Rule, the Department unambiguously claims jurisdiction over independent CRSs. It stated that it will continue to take "appropriate action[s]" under section 411 against deceptive trade practices and unfair methods of competition by CRSs, irrespective of whether the CRS is connected through ownership with an air carrier. Final Rule, 69 Fed.Reg. at 991, 998. At oral argument, the Department acknowledged that its claim of jurisdiction in...