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June 25, 1971


The opinion of the court was delivered by: JUDD


This motion for a preliminary injunction against Alitalia-Linee Aeree Italiane, S.p.A. selling round-trip tickets to Rome at reduced youth rates, before filed tariffs have become effective, presents three basic question: (1) Does the direction of the Italian Ministry of Transportation and Civil Aviation immunize alitalia, a foreign air carrier, from following the requirements of federal statutes? 49 U.S.C. § 1373. (2) Can the Civil Aeronautics Board consider the effect of a tariff on competition as a basis for denying earlier effectiveness than under the normal thirty-day notice requirement? (3) If an injunction is granted against alitalia, should ticketholders be prevented from using their tickets?

The motion was submitted for decision on the filed papers and oral argument.


 Alitalia asked the C.A.B. on June 10, 1971 for permission to file a new tariff effective on short notice, covering round-trip transportation for youths between United States east coast ports and Rome or Milan for $ 199.00 at any time of year. The permission was denied, and Alitalia followed by filing a formal youth fare tariff of $ 199.00 on June 14, 1971 under the thirty-day notice provision of 49 U.S.C. § 1373(c). it next applied for reconsideration of the denial of its short notice filing; the Board denied this application by order dated June 22, 1971. One of the reasons given by the Board for refusing to advance the effective date was that the $ 199.00 tariff would undercut the existing rates of other carriers, which had fares of $ 200.00 to $ 228.00, depending on season and distance, to London, Paris, Amsterdam, Munich, and Zurich. There usually is a distance differential between west coast European cities and Rome, and there were informal statements by C.A.B. representatives that a $ 215.00 and $ 235.00 tariff might be accepted on short notice.

 In spite of the fact that the new tariff is not effective, Alitalia has continued to advertise and sell tickets at the $ 199.00 round-trip fare.

 Alitalia relies on an order from the Ministry of Transportation and Civil Aviation of Italy, dated June 9th, stating 'This Ministry instructs your Company to apply with immediate effect on your own services over the North Atlantic sector between Italy and United States of America/Canada the tariff as per above subject.' The attachment to the order set forth the $ 199.00 youth fare between U.S. east coast ports and Rome and Milan.

 No appearance has been entered for the Italian Government, which owns 80% Of the stock of Alitalia.

 The persons who have purchased tickets from Alitalia have not been made parties to the proceeding, although the plaintiff seeks to enjoin Alitalia from furnishing them the transportation which their tickets specify. About 3,500 tickets may be involved.

 An Air Transport Agreement between the United States and Italy dated June 22, 1970 provides in Article 10 that rates charged by each airline shall be subject to the approval of the aeronautical authorities of the contracting parties. The Civil Aeronautics Board is designated as the aeronautical authority of the United States. Article 10B states that any proposed rate

 shall, if so required, be filed by said airline with the aeronautical authorities of the other Contracting Party at least thirty (30) days before the proposed date of introduction unless he Contracting Party with whom the filing is to be made permits filing on shorter notice.

 Discussion of Law

 1. Dealing first with the alleged compulsion from Italian authorities to put the rates into effect, it is not clear that the Transportation Ministry's order calls for putting the rates into effect without C.A.B. approval. In the light of the Air Transport Agreement, the instruction to apply the new schedules 'with immediate effect' would seem to call only for an immediate application to the aeronautical authorities of the United States.

 Even if the intention were that the rates apply immediately, no case has been cited which permits a foreign government to direct its nationals in the United States to defy American law. American Banana Co. v. United Fruit Co., 213 U.S. 347, 29 S. Ct. 511, 53 L. Ed. 826 (1909), cited by defendant, related to activities in Costa Rica and refused to apply the Sherman Act there. It is quite another thing to claim exemption from American law in New York. Steele v. Bulova Watch Co., 344 U.S. 280, 73 S. Ct. 252, 97 L. Ed. 252 (1952) related to use of a ...

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