Weidberg v. American Airlines, Inc.

• Citation: 336 F. Supp. 407
• Decision Date: 12 January 1972
• Docket Number: No. 70 C 1879 and related cases.,70 C 1879 and related cases.
• Parties: Alan WEIDBERG et al., Plaintiffs, v. AMERICAN AIRLINES, INC., et al., Defendants.
• Court: United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)

336 F. Supp. 407

Alan WEIDBERG et al., Plaintiffs, v. AMERICAN AIRLINES, INC., et al., Defendants.

No. 70 C 1879 and related cases.

United States District Court, N. D. Illinois, E. D.

January 12, 1972.

Edward A. Berman, Schlifkin & Berman, Chicago, Ill., for plaintiffs.

H. Templeton Brown, Bryson P. Burnham and Lee N. Abrams, Mayer, Brown & Platt, Chicago, Ill., for defendants.

Multidistrict Litigation, Docket No. 58.

MEMORANDUM OPINION AND ORDER

NAPOLI, District Judge.

This Multidistrict Litigation was transferred to this court for consolidated pretrial proceedings by the Judicial Panel on Multidistrict Litigation pursuant to 28 U.S.C. § 1407(a), In re Air Fare Litigation, 322 F.Supp. 1013 (1971). The Panel realized that the seven actions which were filed in the wake of the decision of the Court of Appeals for the District of Columbia in Moss v. Civil Aeronautics Board, 139 U. S.App.D.C. 150, 430 F.2d 891 (1970) presented our federal judiciary with the problem of conflicting and overlapping class actions. Under these circumstances the Panel held that common questions of fact existed justifying a transfer under § 1407 in regard to the problem of the makeup, potential overlapping and damages to the purported classes. Therefore, five actions pending in districts other than the Northern District of Illinois were transferred to this district, considered by the Panel to be the most convenient for all concerned, and have been consolidated with the two actions currently pending before this court.

The factual situation involved in this litigation is most thoroughly recited in the Moss opinion at 430 F.2d 891. Hence this court will only summarize those facts which are necessary for an understanding of the issues currently before the court. Under the Federal Aviation Act of 1958, 49 U.S.C. § 1301 et seq. (1970), the air carriers must file with the Civil Aeronautics Board (hereinafter C.A.B. or Board) and keep open to public inspection tariffs showing their fares for air transportation; § 1373(a). The carriers are prohibited from charging or collecting any compensation which varies from the tariffs on file or from granting rebates or refunds therefrom, with certain exceptions not applicable here; § 1373(b). The carriers may change the tariffs by filing with the Board and posting amended tariffs thirty days before their effective date; § 1373(c). However, the C.A.B. itself is authorized to prescribe a lawful rate to be charged when it is of the opinion that the present rate is unjust or unreasonable, or unjustly discriminatory, preferential, or prejudicial; § 1482(d). It must, however, give notice and conduct a hearing before exercising this power. Subsection (e) of § 1482 enumerates the substantive standards the Board is directed to consider in determining rates and subsection (g) empowers it to suspend any newly filed tariff, pending a hearing regarding the tariff's lawfulness, if it provides the affected carrier with a statement of reasons therefor.

Petitioners in Moss, some 32 Congressmen, had complained to the C.A.B. concerning its practice of holding ex parte meetings with representatives of the carriers. Despite these complaints, the meetings ripened into new tariffs increasing passenger fares which were filed by 20 of the main domestic air carriers in August of 1969.

On September 12, 1969, the Board issued Order 69-9-68, docket 21322 which suspended the carriers' tariffs under § 1482(g) on the grounds that said tariffs "may be unjust or unreasonable." The Order further found that the carriers were in need of additional revenue due to increased expenses and proposed its own fare formula, which would in effect grant a revenue increase of 6.35%, and announced that such tariffs would be acceptable without suspension. Predictably, the carriers withdrew their suspended tariffs and filed new tariffs in accordance with the C.A.B.'s formula all of which became effective on or by October 15, 1969.

A petition for review of the C.A.B.'s order was filed in the Court of Appeals for the District of Columbia by the Moss petitioners which resulted in that court holding that the October 1969 tariffs filed by the carriers actually constituted rate making by the Board under § 1482(d) and that as such the C.A.B.'s order and rates were invalid and unlawful for failure to comply with that section's notice and hearing provisions. The court remanded the case to the C. A.B. for further proceedings. Also, the Moss petitioners filed a supplemental complaint with the Board asking that it conduct a proceeding to determine the appropriate relief for the carriers' customers who paid the now unlawful fares. An investigation entitled "Reasonableness of Passenger Fares charged by Domestic Trunkline and Local Service Carriers from October 1, 1969, through October 14, 1970", was initiated by the Board's Order 71-2-109, docket 23140 in response to these events.

Following the Moss decision, these seven lawsuits were filed, as hereinbefore mentioned, each claiming to represent the class, or a part thereof, of the public who paid the alleged overcharges as a result of the unlawful fares. Following their transfer to this court, the air carrier defendants have moved to stay the proceedings herein, pending completion of the C.A.B. investigation. In support of this motion, defendants assert that the only possible claim for relief of plaintiffs, if any, is upon the theory of unjust enrichment which depends upon the reasonableness vel non of the unlawful fares. They also assert that the issue of reasonableness is the central facet of this case because the Federal Aviation Act (hereinafter "Act") makes the implied standards for fares or rates that of justness and reasonableness, as well as the fact that the carriers are undoubtedly entitled to a reasonable rate of return for their services. Further, they claim that the question of the reasonableness of the fares is a matter within the primary jurisdiction of the C.A.B., hence these proceedings should be stayed. Plaintiffs in opposition state that their theory of recovery is not necessarily unjust enrichment, making the question of reasonableness immaterial and their claim for relief is independent of the Act. They also assert that the C.A.B. has no jurisdiction, primary or otherwise, over this cause as the issues are questions of law, not fact; that the C.A.B. has no power to conduct investigations or determine retroactively, reasonableness of fares; and that it has no power to award reparations. Finally, plaintiffs charge that the only currently effective tariffs the carriers could charge under § 1373(b) were the original tariffs on file before the carriers filed their new tariffs in August 1969. Consequently, plaintiffs believe themselves to be entitled to recover without consideration of the reasonableness of the unlawful fares.

The decisions in the field of administrative law overwhelmingly support the proposition that if the issue in controversy involves the reasonableness of fares, then that question falls within the primary jurisdiction of the appropriate administrative agency and this court should defer to such agency for the initial determination. See, e. g., Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 2d 553 (1907); Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U.S. 246, 71 S.Ct. 692, 95 L.Ed. 912 (1951); Civil Aeronautics Board v. Modern Air Transport, 179 F.2d 622 (2nd Cir. 1950); Lichten v. Eastern Airlines, 189 F.2d 939 (2nd Cir. 1951); and Tishman & Lipp, Inc. v. Delta Airlines, 275 F.Supp. 471 (S.D.N.Y.1967), affirmed 413 F.2d 1401 (2nd Cir. 1969). The doctrine of primary jurisdiction serves as a flexible guide for the courts in determining whether it will be more efficacious for the judiciary or an administrative body to make the initial determination of the question in issue. Therefore it is not technically a question of "jurisdiction" but rather a matter of judicial self restraint in conformance with comity and a healthy respect for the statutory authority of the administrative agency. The rationale of the doctrine is a recognition of the need for an orderly co-ordination of work between the judiciary and administrative bodies for the reason that those bodies can apply their knowledge or expertise to the question and thereby aid the court by laying a foundation for a more intelligent disposition of the question as well as insuring uniformity of result. See, Davis, Administrative Law Treatise (West Publishing Co. 1958) § 19.01 et seq. As such, this court believes that a stay in proceedings while this cause is referred to the C.A.B. would be a matter within its sound discretion. Ratner v. Chemical Bank New York Trust Co., 309 F.Supp. 983 (S.D.N.Y.1970).

Since the question of the reasonableness vel non of the fares falls within the primary jurisdiction of the C.A.B., the plaintiffs in order to avoid a stay must proceed on the theory either that they have a claim for relief independent of unjust enrichment, which would rest upon common-law or statutory construction, or that they are absolutely entitled to recover due to the declaration of unlawfulness by the Moss court. At the expense of lengthening this opinion the court will turn to and examine the pertinent authorities and arguments of the respective parties on these issues.

The case which presents the most factual similarity to this litigation is Atlantic Coast Line R.R. Co. v. Florida, 295 U.S. 301, 55 S.Ct. 713, 79 L.Ed. 1451 (1935) and is cited by defendants for the proposition that the only theory of recovery is unjust enrichment. In Atlantic Coast the carrier collected a higher set of rates which had been prescribed by order of the Interstate Commerce Commission upon its finding that the original rates were unjustly discriminatory. Previously the Supreme Court held that the ICC's order was unlawful for want of complete and adequate findings of fact....