Trailways of New England, Inc. v. CAB

• Decision Date: 13 June 1969
• Docket Number: No. 7112,7162.,7112
• Citation: 412 F.2d 926
• Parties: TRAILWAYS OF NEW ENGLAND, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent. TRANSCONTINENTAL BUS SYSTEM, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.
• Court: U.S. Court of Appeals — First Circuit

412 F.2d 926 (1969)

TRAILWAYS OF NEW ENGLAND, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.

TRANSCONTINENTAL BUS SYSTEM, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.

Nos. 7112, 7162.

United States Court of Appeals First Circuit.

June 13, 1969.

COPYRIGHT MATERIAL OMITTED

Howard S. Boros, Washington, D. C., with whom D. Paul Stafford, Dallas, Tex., and Boros & Lester, Washington, D. C., were on brief, for petitioners.

Warren L. Sharfman, Associate General Counsel, Litigation and Research, with whom Edward M. Zimmerman, Asst. Atty. Gen., Howard E. Shapiro, Attorney, Department of Justice, Joseph B. Goldman, General Counsel, Civil Aeronautics Board, O. D. Ozment, Deputy General Counsel, and J. Michael Roach and Donald Avery, Attorneys, Civil Aeronautics Board, were on brief, for respondent.

Before ALDRICH, Chief Judge, STALEY,^* and McENTEE, Circuit Judges.

ALDRICH, Chief Judge.

Petitioners, Transcontinental Bus System, Inc., and Trailways of New England, Inc.,¹ seek review of Order E-26431 of the Civil Aeronautics Board (hereinafter "Board") which dismissed without a hearing Transcontinental's request that the Board suspend and investigate family fare tariffs filed by 29 air carriers.² The request was made in a complaint filed with the Board in September of 1967 alleging that such an investigation would reveal that the family fare tariffs are unjust, unreasonable, unduly preferential and prejudicial, unjustly discriminatory and otherwise unlawful within the meaning of Sections 404 and 1002 of the Federal Aviation Act of 1958, as amended. 49 U.S.C. §§ 1374 and 1482. The Board by a 3 to 2 decision dismissed the complaint pursuant to its power under section 1002(a) of the Act,³ concluding that the assailed tariffs did not appear to be unjustly discriminatory or unjust and unreasonable, and that the complaint did not state facts which warranted an investigation.⁴

The prototype of the family fare now under attack was filed in 1948 by Capital Airlines and was applicable only three days a week and only on first class service. The other carriers followed with similar plans and from time to time extensions were made to six days a week and to coach service. By 1964 the family fare tariffs had evolved substantially into what they are today. In general, they provide that an adult passenger paying full fare may bring along members of his immediate family (his spouse and children under 22) at a reduction from the regular fares.⁵ They also establish restrictions on the time and manner of use of the discounted fares.⁶

Section 404 of the Act sets forth the requirements of lawfulness for a tariff: subsection (a) thereof requires that services be adequate and that rates be "just and reasonable"; subsection (b), which is the principal provision involved here, prohibits any "unjust discrimination" or "undue or unreasonable" preference or prejudice. This prohibition applies to rates for persons, ports, localities or descriptions of traffic in air transportation.⁷

Section 1002 deals with the enforcement of the Act's provisions.⁸ Under this section, the Board is empowered either upon the filing of a complaint or on its own motion to suspend and investigate tariffs when there is a reasonable ground to believe that a violation of the Act has been established.

To begin at the beginning, it is necessary to define the issue. According to Board counsel, "The narrow question before this court is whether the Board abused its discretion in declining to institute on investigation into the lawfulness of the challenged fares," the answer being that such discretion was justifiably exercised because of the "remote relationship of the complainant to the issue," the "lack of proof of alleged injury" to anyone but an intermodal competitor, the absence of "public outcry," and because the Board correctly concluded that the fares involved appeared to be just and reasonable. In further amplification the brief cites Flying Tiger Line, Inc. v. CAB, 1965, 121 U.S.App. D.C. 332, 350 F.2d 462, 465, cert. denied 385 U.S. 945, 87 S.Ct. 316, 17 L.Ed.2d 224, and points out that the Board may, in its discretion, dismiss "even a legally sufficient complaint" if it finds it in the public interest to do so.

There are, however, two flaws in counsel's position. First, little of it stems from the Board's detailed order. No reliance is placed by the Board upon any lack of standing of the petitioners; no suggestion that family fare rates are unimportant, insignificant in effect, or uniformly popular⁹ and no finding that although the complaint may be meritorious the Board has exercised a discretion to determine that it would not be in the public interest to investigate at this time.¹⁰ Rather, in the introductory summation to its order the Board described its decision as follows:

"Upon consideration of all matters of record, the Board has concluded that the assailed family fare tariffs do not appear to be unjustly discriminatory or unjust and unreasonable, and that the Trailways complaint does not state facts which warrant an investigation."

The entirety of the order is devoted to finding the tariff to be neither unjustly discriminatory nor economically unsound, basing such conclusions upon an extended legal analysis of family fares and a report of their history, effect, and economics in the airline, railway, and bus industries.

Under 5 U.S.C. § 555(e) the Board is obliged to give the grounds for its dismissal. On review nothing is clearer than the principle that we examine the Board's reasons and not the subsequent rationalizations of its counsel. Burlington Truck Lines, Inc. v. United States, 1962, 371 U.S. 156, 168-169, 83 S.Ct. 239, 9 L.Ed.2d 207. The agency cannot be affirmed by supplying reasons and facts that it had neither found nor considered to be relevant. We take the case on the Board's own statement.

The second flaw, which is perhaps chargeable to the Board rather than to counsel, is a seeming exaggeration of the discretion vested in the Board to dismiss a complaint charging discrimination without a hearing. Unlike the prosecutorial discretion of NLRB General Counsel, see United Elec. Contractors Ass'n v. Ordman, S.D.N.Y., 1965, 258 F.Supp. 758, aff'd, 2 Cir., 366 F.2d 776, cert. denied 385 U.S. 1026, 87 S.Ct. 753, 17 L.Ed.2d 674, the Board's dismissal is clearly a reviewable final order under 49 U.S.C. § 1486. If the reviewing court is to be more than a rubber stamp, standards for the Board's exercise of discretion must exist. We must also have in mind the fact that not only is the right to be treated fairly and nondiscriminatorily by a common carrier an expression of the pervasive precept of fairness between government and governed that runs through American jurisprudence, it is one derived from the common law of common carriers.¹¹ In addition, we note the strong wording of section 1002(a), 49 U.S.C. § 1482(a), as to the right of "anyone" to file a complaint, the tentative obligation of the person complained against to satisfy the complaint, and the "duty" of the Board to investigate when the complaint is not satisfied. While that section also allows for dismissal without hearing when the Board "is of the opinion that any complaint does not state facts which warrant an investigation," we do not believe, at least as to claims of discrimination and preference, but not necessarily as to other kinds of complaints, see, e. g., Flight Engineers' Int'l Ass'n EAL Chapter, AFL-CIO v. CAB, 1964, 118 U.S.App.D.C. 112, 332 F.2d 312, that the dismissal provision vests anything near absolute discretion in the Board.¹²

Undoubtedly the Board has a broad discretion in setting up the proper factors for judging the validity of rate discriminations, as well as broad discretion in determining when and what cases to investigate, given its limited resources and time. However, at some point such a discretion must be limited. In cases of rate discrimination the complaining party should have the burden of showing that particular rates are prima facie discriminatory, but once this is done the Board should have the affirmative burden of showing either that the tariffs ought not to be investigated for public policy reasons, or that the discrimination is justified in terms of established Board precedent or policy and the relevant facts.¹³ This is so with regard to cases of rate discrimination, because as the Board has stated numerous times, "Discriminatory fares can be approved only when an extraordinarily important and serious business interest of the carrier is involved. * * The business interest must be more than `ordinary'. * * *" Frontier Teachers Tariff, 1964, 39 C.A.B. 615, 619. Particularly should there be a showing when the Board chooses to dismiss a complaint for lack of substantive merit. Otherwise the Board could create precedent by fiat and avoid judicial review of the substantiality of the supporting evidence. See Miller v. United States, 9 Cir., 1967, 388 F.2d 973.¹⁴

We conclude that the petitioners here amply stated a prima facie case of rate discrimination, just as did the petitioner with respect to military and youth fares in Transcontinental Bus System, Inc. v. CAB, 5 Cir., 1967, 383 F.2d 466, cert. denied 390 U.S. 920, 88 S.Ct. 850, 19 L.Ed.2d 979, the case on which petitioners principally rely. Given the clarity of the content and effect of family fares in practice, the complaining parties' burden was satisfied by describing their general terms and characteristics. First, petitioners established an exceptionally large discount in tariff for a service very similar to normal service. Second, on its face the tariff was restricted to a class of travelers based on social factors such as age and status, not transportation-related factors, such as cost-savings. See Capital Group Student Fares, 1957, 25 C.A.B. 280, 285-286; Frontier Teachers Tariff, supra; Transcontinental Bus System, Inc. v. CAB, supra at 489. Finally, as to...