Slick Airways v. American Airlines

• Decision Date: 18 August 1952
• Docket Number: No. C 317-50.,C 317-50.
• Citation: 107 F. Supp. 199
• Parties: SLICK AIRWAYS, Inc. v. AMERICAN AIRLINES, Inc. et al.
• Court: U.S. District Court — District of New Jersey

107 F. Supp. 199

SLICK AIRWAYS, Inc. v. AMERICAN AIRLINES, Inc. et al.

No. C 317-50.

United States District Court D. New Jersey.

June 7, 1951.

Rehearing Denied August 18, 1952.

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Minton, Dinsmore & Lane, Trenton, N. J. (Steptoe & Johnson, Arnold, Fortas & Porter, Washington, D. C., of counsel), for plaintiff Slick Airways, Inc.

Morrison, Lloyd & Griggs, Hackensack, N. J., (Debevoise, Plimpton & McLean, New York City, of counsel), for defendant American Airlines, Inc.

Stryker, Tams & Horner, Newark, N. J. (Mayer, Meyer, Austrian & Platt, Chicago, Ill., of counsel), for defendant United Airlines Corp.

Katzenbach, Gildea & Rudner, Trenton, N. J. (Chadbourne, Wallace, Parke & Whiteside, New York City, of counsel), for defendant Transcontinental & Western Air, Inc.

Pitney, Hardin & Ward, Newark, N. J., for defendant Air Cargo, Inc.

FORMAN, Chief Judge.

This is a suit brought under the antitrust laws of the United States and more particularly sections 1, 2 and 7 of the Sherman Act 15 U.S.C.A. §§ 1, 2 and 15 note¹ and sections 4, 12 and 16 of the Clayton Act, 15 U.S.C.A. §§ 15, 22 and 26.² Plaintiff, alleging violations of these Acts by defendants, seeks to recover triple damages in the sum of ten million dollars and to enjoin defendants from further action in violation of the anti-trust laws.

Plaintiff, a corporation, has been engaged in the business of air freight since March of 1946, the year of its organization. Since August of 1949 it has held a certificate of public convenience and necessity to act as a common carrier of freight by air issued by the Civil Aeronautics Board (hereinafter called the CAB).

Three of the defendants, American Airlines, Inc., United Airlines, Inc., and Transcontinental & Western Air, Inc., are certificated carriers of passengers, express, mail and freight by air. Defendant Air Transport Association of America³ is composed of the above defendants and other companies engaged in air transportation and the defendant Air Cargo, Inc. is a corporation whose stock is owned by defendant airlines and other companies engaged in air transportation.

The Complaint

The gravamen of the complaint is that the defendants and other airlines, since 1946, "have conspired to monopolize, monopolized and attempted to monopolize air freight transportation and have unlawfully contracted, combined, and conspired to restrain trade or commerce among the several states in air freight transportation" with the design of driving the plaintiff and other freight carriers from the business, and that the following means and methods have been utilized in pursuance thereof:

"(a) A deliberate attempt, through predatory rate policies and a process of attrition, to waste the resources of the plaintiff and other freight carriers, and to cause them to operate at a substantial loss;

"(b) The abuse of the privilege of intervention and participation in CAB proceedings controlling plaintiff's legal right and authority to engage in the air freight business;

"(c) A campaign of unfair competitive practices designed to appropriate the business;"

The defendants have moved to dismiss the complaint upon the ground that this court lacks primary jurisdiction to hear and determine the matters alleged in the complaint, that the exclusive primary jurisdiction with respect to all such matters has been vested by Congress in the CAB, and that plaintiff fails to state a claim upon which relief can be granted or an injunction issued. It is plaintiff's position principally that the matters raised in the complaint are properly cognizable by this court at this time and do not require further recourse to an administrative board for their decision, since the plaintiff has already invoked the Board's proceedings and the relief it seeks in the form of damages is beyond the authority and power of the Board to grant.

The task of determining whether a cause of action has been pleaded herein was not made easier by the unnecessary prolixity of the complaint numbering twenty-three printed pages. In screening the interminable allegations the fundamental rule that on a motion to dismiss a complaint is entitled to be given its most liberal construction was observed to the fullest extent.

Insofar as its applicability to the complaint under consideration is concerned, the doctrine of primary jurisdiction, although enunciated and developed in many cases, presents a matter of great complexity. None of them provides a ready or definitive resolution of the question involved. To a large extent the determining factor will depend upon (to use the expression of Mr. Justice Brandeis in the case of Great Northern Ry. v. Merchants' Elevator Co., 259 U.S. 285, 291, 42 S.Ct. 477, 479, 66 L.Ed. 943, "the character of the controverted question and the nature of the inquiry necessary for its solution." Among other things, it will become necessary to analyze the character of the alleged illegal concerted undertaking by defendants and the acts allegedly committed pursuant thereto and with respect to such undertaking and acts, the scope of power of the CAB, the resort, if any, made to it and the power reserved to the courts under the anti-trust laws.

The Statute

Bearing upon the complaint we note the following provisions of the Civil Aeronautics Act⁴ as relevant thereto:

A declaration of policy for the guidance of the CAB is set forth in § 402:

"In the exercise and performance of its powers and duties under this chapter, the Board shall consider the following, among other things, as being in the public interest, and in accordance with the public convenience and necessity —

"(a) The encouragement and development of an air-transportation system properly adapted to the present and future needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense;

"(b) The regulation of air transportation in such manner as to recognize and preserve the inherent advantage of, assure the highest degree of safety in, and foster sound economic conditions in, such transportation, and to improve the relations between, and coordinate transportation by, air carriers;

"(c) The promotion of adequate, economical, and efficient service by air carriers at reasonable charges, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices;

"(d) Competition to the extent necessary to assure the sound development of an air-transportation system properly adapted to the needs of the foreign and domestic commerce of the United States, of the Postal Service, and of the national defense;

"(e) The regulation of air commerce in such manner as to best promote its development and safety; and

"(f) The encouragement and development of civil aeronautics."

In the portions of the Act pertaining to economic regulations over air carriers there has been enunciated in a more specific manner types of activity, both permitted and proscribed, and the scope of the power of the CAB to deal with such activities.

Under § 488(a) consolidations, mergers and acquisitions of control in the aeronautical field are unlawful unless approved by the Board as therein provided.

Section 488(b) sets forth the manner in which any such consolidation, merger or acquisition of control shall be approved by the Board, subject to this limitation upon the power of the Board to grant its approval thereto:

"Provided, That the Board shall not approve any consolidation, merger, purchase, lease, operating contract, or acquisition of control which would result in creating a monopoly or monopolies and thereby restrain competition or jeopardize another air carrier not a party to the consolidation, merger, purchase, lease, operating contract, or acquisition of control:".

With regard to violations of § 488(a), § 488(e), provides: "The Board is empowered, upon complaint or upon its own initiative, to investigate and, after notice and hearing, to determine whether any person is violating any provision of subsection (a) of this section. If the Board finds after such hearing that such person is violating any provision of such subsection, it shall by order require such person to take such action, consistent with the provisions of this chapter, as may be necessary, in the opinion of the Board, to prevent further violation of such provision."

With regard to the Board's power over methods of competition in the aeronautical field, § 491 provides: "The Board may, upon its own initiative or upon complaint by any air carrier or foreign air carrier, if it considers that such action by it would be in the interest of the public, investigate and determine whether any air carrier or foreign air carrier has been or is engaged in unfair or deceptive practices or unfair methods of competition in air transportation. If the Board shall find, after notice and hearing, that such air carrier or foreign air carrier is engaged in such unfair or deceptive practices or unfair methods of competition, it shall order such air carrier or foreign air carrier to cease and desist from such practices or methods of competition."

The Act provides in § 492(a) for the filing with the Board of every agreement affecting air transportation and § 492(b) requires that the Board approve or disapprove such agreements:

"(a) Every air carrier shall file with the Board a true copy, or, if oral, a true and complete memorandum, of every contract or agreement (whether enforceable by provisions for liquidated damages, penalties, bonds, or otherwise) affecting air transportation and in force on the effective date of this section or hereafter entered into, or any modification or cancelation thereof, between such air carrier and any other air carrier, foreign air carrier, or other carrier for pooling or apportioning earnings, losses, traffic, service, or equipment, or relating to the establishment of transportation rates, fares, charges,...