Scroggins v. Air Cargo, Inc.
| Decision Date | 08 July 1976 |
| Docket Number | No. 75-1307,75-1307 |
| Citation | 534 F.2d 1124 |
| Parties | 1976-1 Trade Cases 60,957 Frank W. SCROGGINS, Trustee in Bankruptcy for Air Transfer, Inc., Plaintiff-Appellant, v. AIR CARGO, INC., et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Candler Crim, Jr., Atlanta, Ga., for plaintiff-appellant.
Harold L. Russell, Thomas W. Rhodes, Atlanta, Ga., Russell S. Bernhard, Washington, D. C., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Georgia.
Before COLEMAN, CLARK and TJOFLAT, Circuit Judges.
The three counts of the complaint in this case alleged respectively (1) a conspiracy in restraint of trade, in violation of Title 15, United States Code, Section 1, (2) monopolization and attempt to monopolize, in violation of Title 15, United States Code, Section 2, and (3) tortious interference with a contract under Georgia law. Jurisdiction over the two antitrust counts was based upon Title 15, United States Code, Section 15, and Title 28, United States Code, Section 1337. The district court took cognizance of the state law claim because of pendent jurisdiction and also because of complete diversity of citizenship. After considering the facts in the record, most of which were stipulated, the court granted summary judgment for defendants. In the court's view, the alleged conduct was immunized from antitrust liability because it fell within an area which the Civil Aeronautics Board (CAB) was regulating pursuant to the Federal Aviation Act (FAA), Title 49, United States Code, Section 1301 et seq. As to the state law claim, the trial court felt that the parties' contract had explicitly authorized the actions complained of. Final judgment was entered in favor of defendants on December 31, 1974, and plaintiff appealed both this disposition of the lawsuit and an earlier order limiting discovery. On February 12, 1975, the court overruled plaintiff's objections to the bill of costs; and, thereafter, plaintiff amended his Notice of Appeal to include that ruling as a third basis for appeal. We affirm in all respects.
The Parties. Plaintiff is the trustee in bankruptcy for Air Transfer, Inc. (ATI), a trucking company which from 1947 until its bankruptcy in 1972 picked up and delivered air cargo at Hartsfield International Airport in Atlanta, Georgia. The chief defendant, Air Cargo, Inc. (ACI), is a wholly-owned subsidiary of all CAB-certified airlines and was formed in 1947 to serve as the airlines' agent in the handling of air cargo. The ten certified airlines which carry air cargo to or from the Atlanta airport are also defendants in this case. The other defendant is Carolina Cartage, Inc. (Carolina Cartage), which is currently the only trucker providing air cargo pick-up and delivery service at the airport.
History of ACI. Faced with the rapid development of the air cargo business after World War II, the various CAB-certified airlines decided to coordinate the movement of such cargo on the ground. In 1947, by a written agreement, they created ACI as a joint agent of all the airlines, with the responsibility of securing the necessary cargo-handling services. Among its duties was that of "(p)roviding, directly or by contract, pick-up and delivery services at all points within the continental United States served by any party (to the agreement) . . .". 1 Other provisions of the agreement conferred upon ACI the power to negotiate contracts with third parties for the pick-up and delivery of air cargo. 2 Under the Civil Aeronautics Act of 1938, 3 the airlines were required to submit this agreement for CAB approval. The agreement was duly filed on April 14, 1947, and approved by the CAB in an order dated December 31, 1947. 4 The Board expressly found that the agreement was not contrary to the public interest. However, the order also announces the Board's intention to re-examine the ACI arrangement if future circumstances should so require:
The Board further find(s) that the future development of Air Cargo, Inc. is uncertain and that its activities may require future reconsideration of the approval granted herein.
In the public interest, the Board made its approval contingent upon several conditions. One of these was a requirement that ACI and the member airlines supply the Board with whatever documents and information concerning ACI the Board's Economic Bureau might request. Another condition was that any CAB-certified airline should be allowed to participate in ACI as a matter of right. A controversy over this latter condition led the Board to clarify its conception of the public interest. After two of the member airlines petitioned the CAB to reconsider this condition, a more comprehensive order and opinion issued on September 2, 1948. 5 Therein, the Board pointed out its statutory duty to scrutinize proposed agreements in order to ascertain whether the public interest was adequately protected. 6 Concerns about possible future anticompetitive developments loomed large in the Board's opinion. Particular emphasis was placed upon the "sound public policy" represented by the federal antitrust laws, as interpreted in decisions of the United States Supreme Court. Relying upon cases such as Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945), the Board demonstrated its sensitivity to the anticompetitive dangers posed by the type of concerted action which the ACI agreement represented. In the Board's view, the public interest required "the fullest future air carrier admission and participation (in ACI) upon an equitable basis." However, the Board noted that it would consider future airlines' applications for ACI admission individually, in light of the then existing circumstances.
After the 1947 agreement became effective, ACI acted swiftly to carry out its duties. It chose to enter into contracts with local trucking companies near each airport rather than to provide pick-up and delivery services itself. All CAB-certified airlines today are participating in ACI, and ACI operates at every airport where these airlines deliver or receive air cargo. Generally, the practice of ACI has been to deal with only one trucker at each airport. However, the standard contracts between ACI and local trucking companies have never contained an exclusive dealing provision, and occasionally ACI has taken advantage of this fact by contracting with more than one trucker at a particular airport. Before 1962, ACI was required to file with the CAB copies of each contract between it and local truckers. In that year, this requirement was terminated, although the CAB still must approve every amendment to the 1947 agreement between ACI and the airlines. Also, ACI must still file with the CAB a schedule of the rates for the truckers' pick-up and delivery services. Subsequent to 1962, a number of the contracts between ACI and local trucking companies have been amended to make explicit what was implicit in earlier agreements, i. e., that ACI had the right to deal with more than one trucking company, and apportion its business among them as it saw fit. 7
Relationship between ACI and ATI. With this general background in mind, the relationships among these parties becomes clear. In 1947, ATI and ACI executed the standard contract for pick-up and delivery services in Atlanta. This specific agreement was approved by the CAB on April 20, 1949, with an express finding that the agreement was not adverse to the public interest. 8 Further amendments to the ACI-ATI contract approved at various times prior to the termination of the filing requirement in 1962. 9 Thereafter, the parties' contracts were renewed and (at times) amended without specific CAB approval. In accordance with ACI's nationwide practice, none of these contracts has contained an exclusive dealing provision. Furthermore, all of these contracts have been terminable by either party upon notice. 10 The contractual tie between ACI and ATI lasted until May 1, 1972. For almost this entire period, until December 5, 1971, ATI was the sole contracting trucker at the Atlanta airport.
At least so far as the record reflects, the parties' relationship was good until 1971. On January 11 of that year, ATI asked ACI for an increase in the rates under the current annual contract, which had become effective only two months earlier and was not due for renewal until November 1, 1971. Discussions then ensued between ACI and the participating airlines. The airlines informed ACI that they were dissatisfied with ATI's services and that they would not approve the rate increase unless improvements were forthcoming. Thereupon, a team of ACI experts investigated the Atlanta operation and presented a list of changes which were necessary to bring ATI's services into accordance with the terms of the parties' contract. Under ACI's supervision, most of the specified improvements were made, and an amended contract reflecting a rate increase became effective September 1, 1971. The September 1, 1971 contract also added a provision expressly giving ACI the right to deal with other truckers and to divide its business among the contracting truckers as it saw fit. As has been mentioned supra, ACI had introduced this provision into a number of other contracts by this time, although this was its first appearance in an ACI-ATI agreement. Soon thereafter, at the airlines' request, ACI entered into an additional contract with another trucker, Carolina Cartage, Inc. This contract became effective December 5, 1971. Carolina Cartage quickly received most of the airlines' cargo business, and the volume of cargo handled by ATI showed a corresponding decline. ATI's financial situation grew steadily worse until it filed a bankruptcy petition on April 21, 1972. When ACI received a copy of this petition on May 1, 1972, it terminated its...
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