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Civil Aeronautics Board v. Aeromatic Travel Corp.

decided: December 12, 1973.

CIVIL AERONAUTICS BOARD, PLAINTIFF-APPELLANT,
v.
AEROMATIC TRAVEL CORP., ET AL., DEFENDANTS-APPELLEES



Appeal from an order entered in the Eastern District, Anthony J. Travia, J., staying a suit by the Civil Aeronautics Board until the Board determines whether defendants are indirect air carriers as defined by the Federal Aviation Act of 1958. 349 F. Supp. 1151 (E.D.N.Y. 1972). Reversed and remanded.

Lumbard, Mansfield and Mulligan, Circuit Judges. Mulligan, Circuit Judge (dissenting).

Author: Lumbard

LUMBARD, Circuit Judge:

Seeking to prevent appellees from participating in what it considers to be a "vast black market in air transportation," the Civil Aeronautics Board in September 1971 brought this action in the Eastern District of New York to enjoin violations of the Federal Aviation Act of 1958, 49 U.S.C. §§ 1301-1542, and the regulations thereunder. By an order dated November 15, 1972, Judge Travia, invoking the doctrine of primary jurisdiction, stayed the proceedings in order that the CAB could initially determine whether the activities of appellees violated the Act. 349 F. Supp. 1151 (E.D.N.Y. 1972). We reverse the district court's order and remand for further proceedings before a different district judge.

I.

The CAB's complaint alleged that appellees, five travel agencies and their officers or employees, arranged "charter" flights between the United States and Europe and sold tickets on these flights to members of the general public. The prices for these tickets were alleged to be fixed by appellees and not by the actual air carriers. Together with the tickets for the flights, purchasers were also given false membership documents in the organization chartering the flights. The Board claims that these activities make appellees indirect air carriers*fn1 operating without certificates of public convenience and necessity in violation of 49 U.S.C. § 1371(a) or indirect foreign air carriers*fn2 operating without permits issued by the Board in violation of 49 U.S.C. § 1372(a). It also claims that appellees' operations violate the applicable CAB charter flight regulations, which, among other things, require that there be no solicitation of the general public and that charter flights be limited to bona fide members of the chartering organization or their immediate families. See 14 C.F.R. Parts 207, 208, 212, 214.

The appellees moved to dismiss or stay the district court proceedings on the ground that the doctrine of primary jurisdiction required that the CAB initially determine whether appellees were indirect air carriers or, as appellees claimed, ticket agents,*fn3 which are not subject to the same degree of Board regulation.*fn4 They pointed out that the Board in similar cases was proceeding by investigations and hearings before the Board itself.*fn5 Judge Travia denied this motion but gave appellees leave to renew it at an appropriate time during the evidentiary hearing. 341 F. Supp. 1271, 1282 (E.D.N.Y. 1971).

At the same time, appellees moved that the airlines that actually provided the air transportation be joined as parties under Rule 19, F.R. Civ. P. Judge Travia granted this motion. 341 F. Supp. at 1276. The CAB subsequently amended its complaint to include the direct air carriers as defendants, but did not allege that they had committed any wrongs. At this point, Judge Travia changed his mind; he dismissed the airlines as defendants and granted the stay originally sought by appellees, without hearing any evidence, 349 F. Supp. at 1154-57, and, so far as we can see, without any good reason.

II.

We must decide whether we have jurisdiction to hear this appeal. Under the teaching of Cohen v. Beneficial Loan Corp., 337 U.S. 541, 545-47, 93 L. Ed. 1528, 69 S. Ct. 1221 (1949), we believe that we have jurisdiction. The issue of whether the doctrine of primary jurisdiction should be invoked is collateral to the ultimate issues of this case, the issue is vital to CAB efforts to secure speedy enforcement of the Federal Aviation Act and the Board's regulations, and the issue is too important to be deferred until the entire case is decided.

III.

Moving to the merits, we think it was error for the district court to apply the doctrine of primary jurisdiction.*fn6 The Board is given the power to enforce the Act and its regulations by either of two means. It can institute a suit in the district courts for enforcement purposes, as was done here, 49 U.S.C. § 1487(a), or it can institute its own investigations of possible violations and then issue appropriate orders to compel compliance, 49 U.S.C. §§ 1482(b)-(c). These orders can then be enforced in the district courts by suits brought under § 1487(a).*fn7

In CAB v. Modern Air Transport, Inc., 179 F.2d 622 (2d Cir. 1950), we held that the Board could sue to enjoin an air carrier from engaging in air transportation without proper authorization from the Board, even though the Board had not issued a cease and desist order in the case. We said that the doctrine of primary jurisdiction was not applicable "where the issue, regardless of its complexity, is not the reasonableness of the rate or rule, but a violation of such rate or rule." 179 F.2d at 624. Subsequent cases may have slightly relaxed this distinction, see, e.g., United States v. Western Pacific R.R., 352 U.S. 59, 77 S. Ct. 161, 1 L. Ed. 2d 126 (1956), but we believe that the distinction still holds in the circumstances of this case.

First, a reading of the Act indicates that Congress intended that the CAB be able to enforce the Act and regulations without an initial determination by the Board that they had been violated. See generally L. Jaffe, Judicial Control of Administrative Action 124-25 (1965). Congress provided in 49 U.S.C. § 1487(a) for the enforcement of the Act, and of any Board rule, regulation, or order, by the Board's suing in district court. Appellees' arguments would in effect amend this section to provide that only the Board's orders can be enforced in district court.*fn8 The fact that the Board has decided in allegedly similar cases first to seek cease and desist orders after hearings before the Board need not concern us; the CAB, in its discretion, may choose whatever enforcement procedure it believes appropriate. One of the obvious ...


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