Viking Travel, Inc. v. Air France

• Decision Date: 02 June 1978
• Docket Number: No. 76 C 2195.,76 C 2195.
• Citation: 462 F. Supp. 28
• Parties: VIKING TRAVEL, INC., on behalf of itself and all others similarly situated, Plaintiffs, v. AIR FRANCE (Compagnie Nationale Air France) et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

462 F. Supp. 28

VIKING TRAVEL, INC., on behalf of itself and all others similarly situated, Plaintiffs, v. AIR FRANCE (Compagnie Nationale Air France) et al., Defendants.

No. 76 C 2195.

United States District Court, D. New York.

June 2, 1978.

Kohn, Savett, Marion & Graf, P. C., Philadelphia, Pa., Adler, Barish, Levin & Creskoff, Philadelphia, Pa., Stephen Hochberg, New York City, Fred W. Phelps, Topeka, Kan., for plaintiffs; Harold E. Kohn, Stuart H. Savett, Donald L. Weinberg, Carole A. Broderick, Arnold Levin, Josephine Stamm, Philadelphia, Pa., of counsel.

Chadbourne, Parke, Whiteside & Wolff, New York City, for Trans World Airlines, Inc. Simpson, Thacher & Bartlett, New York City, for Pan American World Airways, Inc.

Debevoise, Plimpton, Lyons & Gates, New York City, for all Foreign Air Carriers.

MEMORANDUM AND ORDER

BRAMWELL, District Judge.

The decisions reached herein are in answer to the defendants' motion to dismiss the complaint. The underlying action was commenced by Viking Travel, Inc. on behalf of itself and other similarly situated travel agents against two domestic and seventeen foreign airlines engaged in transatlantic air service. The complaint sets forth two causes of action. The first alleges that the defendants have violated section 403(b) of the Federal Aviation Act,¹ 49 U.S.C. § 1373(b). For its second cause of action, plaintiff claims that defendants have violated sections 1² and 2³ of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2.⁴ Both causes of action are premised upon the existence of an allegedly "discriminatory and unlawful rebate system utilized by defendants and certain favored travel agents to suppress competition in the sale for ... foreign air travel."⁵ Relying on Rule 12(b) of the Federal Rules of Civil Procedure, the defendants moved to dismiss the complaint on the grounds that it fails to state a claim upon which relief can be granted, that the plaintiff lacks standing to sue, and, that notwithstanding these deficiencies, the United States Civil Aeronautics Board (hereinafter "C.A.B.") has primary jurisdiction over the subject matter of the instant litigation.

FACTS ALLEGED IN THE COMPLAINT

Each of the defendants are members of the International Air Transport Association (hereinafter "IATA") who are permitted to operate in the United States pursuant to authorizations issued by the C.A.B. See 49 U.S.C. §§ 1371, 1372. Pursuant to section 403(a) of the Federal Aviation Act, 49 U.S.C. § 1373(a),⁶ each defendant air carrier is required to file with and have approved by the C.A.B. a tariff setting forth the rates, fares and charges to be received for foreign air transportation.⁷ Viking, a Kansas corporation, alleges that at all relevant times it was an IATA approved travel agent which was authorized to sell international air transportation and receive commissions for such sales from IATA member air carriers.⁸

As previously noted, the first cause of action charges a violation of section 403(b) of the Federal Aviation Act. Specifically, the complaint alleges two distinct violations of that section. First, it is claimed that the defendants did knowingly charge, collect or receive a lesser or different compensation for transatlantic service than the rates, fares and charges specified in a carrier's applicable tariff. Secondly, it is alleged that the defendants did knowingly discount, refund or remit portions of the rates, fares or charges specified in the applicable tariffs to co-conspirator travel agents⁹ or to the purchasers of transatlantic air transportation.¹⁰ The complaint further alleges that the devices used to accomplish the above 403(b) violations included the selling of tickets at special fares to persons ineligible for such special fares, transporting charter passengers on scheduled flights at charter rates and making commission payments to travel agents under circumstances where the airline making the payment intended, knew or had reason to know that the travel agent would use such commission in connection with the aforementioned 403(b) violation.

In support of their motion to dismiss the cause of action, defendants contend that no private right of action exists in favor of travel agents against air carriers for alleged violations of section 403(b) of the Federal Aviation Act. Alternatively, defendants argue that Viking has failed to show any actual injury caused by the alleged illegal activity and hence, has failed to state a claim upon which relief can be granted.

Plaintiff's second cause of action is also predicated on the claimed illegal rebate system which provides the cornerstone for the first cause of action. Plaintiff charges that prior to December 2, 1972 and continuing through the present, the defendants and their co-conspirators¹¹ have conspired to unlawfully restrain or monopolize interstate or foreign commerce in the sale of transatlantic foreign air transportation and package tours in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Plaintiff contends that the purpose of this conspiracy was to foreclose Viking and the class of similarly situated travel agents from competing with those favored travel agents who are or were receiving or benefiting from the aforesaid rebate system. As a result of this combination or conspiracy, plaintiff contends that sales and profits have been diverted from plaintiff and other members of the class to these favored co-conspirator travel agents.¹²

In urging the dismissal of the second cause of action, defendants argue that the complaint in actuality charges nineteen separate conspiracies between a named defendant and one or more unnamed co-conspirator travel agents. Since these co-conspirators are unidentified, defendants argue that no conspiracy in violation of the Sherman Act has been set forth as a matter of law. Defendants also claim that plaintiff lacks standing to bring a lawsuit under the Sherman Act since plaintiff is not within the "target area" of the allegedly illegal antitrust conspiracy and has not been directly injured by that activity. See Long Island Lighting Co. v. Standard Oil Co. of California, 521 F.2d 1269, 1273-74 (2d Cir. 1975), cert. denied, 423 U.S. 1073, 96 S.Ct. 855, 47 L.Ed.2d 83 (1976). Finally, defendants claim that since the complaint did not set forth any compensable injury with the required specificity, plaintiff has failed to state a claim upon which relief can be granted.¹³

THE SECTION 403(b) CLAIM

The first issue to be resolved is whether a private right of action exists under section 403(b) of the Federal Aviation Act in favor of Viking and the class of similarly situated travel agents which it seeks to represent. Should this question be answered in the negative, the remaining contention of the defendants as to the first cause of action need not be addressed.

In urging this Court to imply a private remedy under section 403(b), plaintiff relies on a series of cases in which private rights of action were implied under sections 403(b) and 404(b) of the Federal Aviation Act.¹⁴ However, of all these cases only United States v. Associated Air Transport, Inc., 275 F.2d 827 (5th Cir. 1960), involved a suit which raised section 403(b) issues. Moreover, the only decision brought to the Court's attention which implied a private right of action in favor of a travel agent is William Becker Travel Bureau v. Sabena Belgian World Airways, Inc., 13 Avi. 17,770 (S.D.N.Y.1975). This case, however, involved a suit under section 404(b) rather than section 403(b). See also Mason v. Belieu, 177 U.S.App.D.C. 68, 72, 543 F.2d 215, 219 (dicta), cert. denied, 429 U.S. 852, 97 S.Ct. 144, 50 L.Ed.2d 127 (1976). Most significantly, each of the decisions cited by plaintiff was rendered prior to the recent Supreme Court decision in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), which sets forth four factors to be considered in determining whether a private right of action is implicit in a statute which does not specifically create one:

First, is the plaintiff "one of the class for whose especial benefit the statute was enacted" . . .—that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law.

Id. at 78, 95 S.Ct. at 2088 (citations omitted).

In urging that no private right of action exists under section 403(b), defendants rely on the decisions of Rauch v. United Instruments, Inc., 548 F.2d 452 (3d Cir. 1976); Wolf v. Trans World Airlines, Inc., 544 F.2d 134 (3d Cir. 1976), cert. denied, 430 U.S. 915, 97 S.Ct. 1327, 51 L.Ed.2d 593 (1977); Mason v. Belieu, 177 U.S.App.D.C. 68, 543 F.2d 215, cert. denied, 429 U.S. 852, 97 S.Ct. 144, 50 L.Ed.2d 127 (1976); Polansky v. Trans World Airlines, Inc., 523 F.2d 332 (3d Cir. 1975), all of which were decided after Cort. After applying the analytical approach suggested in Cort, the courts in each case held that no implied right of action exists under various sections of the Federal Aviation Act.¹⁵

As to the threshold issue for determination here, however, none of the decisions cited by either the plaintiff or the defendants disposes of this case since none mandate either the implication or denial of a private remedy to the plaintiff. In ruling on this issue, the decisions cited by plaintiff must be re-examined in light of the principles enunciated in Cort. See Theobarous v. Bache & Co., Inc., CCH Fed.Sec.L.Rept. ¶ 96,281 (D.Conn.1977); Schy v. Federal Deposit Insurance Corp., CCH Fed.Sec.L.Rept. ¶ 96,242 (E.D.N.Y.1977).¹⁶ In employing the Cort...