United States v. Eastern Air Lines, Inc., 11532-M-Cr.

• Decision Date: 23 February 1961
• Docket Number: No. 11532-M-Cr.,11532-M-Cr.
• Parties: UNITED STATES OF AMERICA v. EASTERN AIR LINES, INC.
• Court: U.S. District Court — Southern District of Florida

192 F. Supp. 187

UNITED STATES OF AMERICA v. EASTERN AIR LINES, INC.

No. 11532-M-Cr.

United States District Court S. D. Florida, Miami Division.

February 23, 1961.

E. Coleman Madsen, U. S. Atty., by Robert W. Rust, Asst. U. S. Atty., Miami, Fla., for Government.

Gambrell, Harlan, Russell, Moye & Richardson, by Harold L. Russell, Atlanta, Ga., for defendant.

John B. Drury, Enforcement Atty., Civil Aeronautics Bd., Washington, D. C.

RAO, Judge (Judge of the United States Customs Court sitting by designation as United States District Judge).

Defendant is charged in an information presently comprising sixteen counts¹ of violating the provisions of an Order of the Civil Aeronautics Board (Order E-11560) adopted July 11, 1957, wherein it was directed to "cease and desist from advertising, or in any manner representing to the public, that it offers `lowest fares' between two points so long as any other air carrier offers the same or lower fares between the same points."

Such violation, if established, is declared to be a misdemeanor by the terms of § 902(a) of the Federal Aviation Act of 1958 (49 U.S.C.A. § 1472) which provides as follows:

"§ 1472. Criminal penalties — Generally

"(a) Any person who knowingly and willfully violates any provisions of this chapter (except subchapters III, V, VI, VII, and XII of this chapter), or any order, rule, or regulation issued under any such provision or any term, condition, or limitation of any certificate or permit issued under subchapter IV of this chapter, for which no penalty is otherwise herein provided, shall be deemed guilty of a misdemeanor and upon conviction thereof shall be subject for the first offense to a fine of not more than $500, and for any subsequent offense to a fine of not more than $2,000. If such violation is a continuing one, each day of such violation shall constitute a separate offense."

§ 1007(b) of the Federal Aviation Act of 1958, as amended (49 U.S.C.A. § 1487) empowers the Civil Aeronautics Board to request prosecution under said § 902(a), venue being laid by the provisions of § 903 of said act (49 U.S.C.A. §§ 1473) in the district in which such offense is committed. It is further provided in said § 903 that "whenever the offense is begun in one jurisdiction and completed in another it may be * * * tried, determined, and punished in either jurisdiction in the same manner as if the offense had been actually and wholly committed therein."

The parties have cooperated to present to the Court — trial by jury and special findings of fact having been expressly waived — the full facts and circumstances giving rise to this action. An agreed statement of facts reveals that defendant Eastern Air Lines, Inc. (hereinafter called Eastern) was party to a proceeding before the Civil Aeronautics Board instituted on September 5, 1956, by Delta Air Lines, Inc., in which it was charged that Eastern had engaged in unfair and deceptive practices and unfair methods of competition within the meaning of Section 411 of the Civil Aeronautics Act of 1938 as amended, (now Section 411 of the Federal Aviation Act of 1958, 49 U.S.C.A. § 1381), by "holding out in advertisements that its fares were the `lowest' and its scheduled flight times were the `fastest,' whereas it was alleged that in fact another air carrier offered identical fares and identical scheduled flight times for air transportation between certain points involved served by Eastern."

After conferences with the staff of the Civil Aeronautics Board, Eastern entered into a stipulation of facts and consent to issuance of an order to cease and desist, the pertinent part of which is hereinabove quoted.

On June 23, 1959, Eastern was authorized to provide a one way passenger economy daytime fare between New York, N. Y. and Miami, Florida, of $45 per person, to be effective July 23, 1959. Similar authorization was granted National Airlines, Inc. (hereinafter called National) and Northeast Airlines, Inc. (hereinafter called Northeast) effective respectively July 29, 1959 and August 1, 1959.

It appears that between July 23, 1959 and July 29, 1959, no other airline operating regularly scheduled daytime economy flights between New York and Miami offered a one way passenger rate equal to or less than $45. Accordingly, for that period, Eastern advertised in various publicity media that it offered "Lowest Daytime Fares" between New York and Miami. In anticipation, however, of an equalization of authorized rates for this run, Eastern and its Advertising Agency, Fletcher, Richards, Calkins & Holden, considered alternative promotional material to attract passengers for its airline. Directions were issued that the phrase "Lowest Daytime Fares" was to be eliminated from Eastern's advertisements as soon as any other air line was permitted to charge the $45 fare, and that thereafter there was to be substituted the phrase "lowest daytime fares in history." It was the consensus of the members of the policy meeting representing both Eastern and its advertising agency that the new language would fairly present the facts without being misleading or deceptive or violating the terms of the cease and desist order. The revised copy was thought to express a concept of rates in point of view of time rather than in relation to competition with current fares of other airlines.

Notwithstanding the explicit instructions with respect to the use of the phrase "lowest daytime fares," there appeared in the Miami Herald, a daily newspaper published in Miami, Florida, on July 29, 1959, a paid advertisement of Eastern containing the statement "Lowest Daytime Fares, New York Non-Stop Only $45."

Count One of the information embraces this incident, charging that in so advertising defendant did knowingly and willfully violate Order No. E-11560, supra, since on that date another carrier offered the same fare between the same points. Defendant admits the advertisement but asserts, inter alia, that it was unwittingly carried in the Miami Herald, and hence not a willful act in violation of the order of the Civil Aeronautics Board.

John D. Walker, the copy supervisor for Eastern's advertising agency, gave testimony tending to substantiate defendant's claim that the July 29th advertisement in the Miami Herald was inadvertent. He explained that it was "an unfortunate mistake" on the part of the agency which had a "clear mandate * * * not to run that ad," when the fares of competitors were equalized. He suggested, as possible reasons for the unauthorized action, that during the week in question the agency prepared some 200 advertisements for distribution in 120-odd cities; that the insertion order did not properly identify the advertisement by reference to its entire phraseology; or that the office identification number for "Lowest Daytime Fares" of 59-1363, was so similar to the number for "Lowest Daytime Fares in History" to wit, 59-1393, that the two might easily have been confused.

§ 902(a) supra, restricts criminal responsibility for the acts which it punishes to those which are "knowingly and willfully" performed. Innocent violations are neither embraced by its provisions nor included within its orbit. To fall within the scope of knowing and willful conduct an act must have been "conscious and intentional, deliberate and voluntary, rather than merely negligent." United States v. Joralemon Brothers, Inc., D.C., 174 F.Supp. 262, 263. See also Inland Freight Lines v. United States, 10 Cir., 191 F.2d 313; United States v. E. Brooke Matlack, Inc., D.C., 149 F.Supp. 814; Riss & Company, Inc. v. United States, 8 Cir., 262 F.2d 245; United States v. Illinois Central Railroad Co., 303 U.S. 239, 58 S.Ct. 533, 82 L.Ed. 773; United States v. Texas & P. R. Co., C.C., 185 F. 820; United States v. Wishnatzki et al., 2 Cir., 77 F.2d 357.

An exhaustive consideration of the phrase "knowingly and willfully" in statutes of similar purport undertaken by Circuit Judge Matthes in Riss & Company, Inc. v. United States of America, supra, 262 F.2d at page 248, reveals the following:

"Contentions, similar to that here advanced by defendant, have received judicial consideration in cases where the involved statute forming the basis for the prosecution or recovery of penalty used the words `knowingly and willfully.' From decisional law, the principle emerged that determination of the meaning of those words rested upon the character of the offense charged. Thus in Chicago, St. P., M. & O. R. Co. v. United States, 8 Cir., 162 F. 835, certiorari denied 212 U.S. 579, 29 S.Ct. 689, 53 L.Ed. 659, where this Court was concerned with a charge that defendant had granted rebates in violation of the statute known as the `Elkins Act,' 49 U.S.C.A. § 41 et seq. this pronouncement appears at page 842 of 162 F.: `In most cases the evil mind or bad intent accompanies the doing of a wrongful act, and no difficulty arises in the disposition of a case involving an offense malum in se.² It is only when an offense malum prohibitum³ is charged that the application of the general doctrine becomes doubtful.'

"St. Louis & S. F. R. Co. v. United States, 8 Cir., 169 F. 69, 70, concerned an action to recover a penalty for failure of defendant to comply with a statute providing for the manner of handling livestock in transit, known as the `28-hour law.' The opinion deals specifically with the meaning of the words `knowingly and willfully' as used in the statute. Speaking through Judge Van Devanter, later Mr. Justice Van Devanter, this definition was laid down, at page 71 of 169 F.: `"Knowingly" evidently means with a knowledge of the facts which taken together constitute the failure to comply with the statute, * * *. "Willfully" means something not expressed by "knowingly," else both would not be used conjunctively * * * But it does not mean with intent to injure the cattle or to inflict loss upon their owner because such intent on the part of a carrier is hardly within the pale of actual experience or

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