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Civil Aeronautics Board v. Carefree Travel Inc.

decided: March 7, 1975.


Appeal from an order of the United States District Court for the Eastern District of New York, Orrin G. Judd, Judge, granting preliminary injunction enjoining appellants from advertising and providing charter flight transportation in violation of CAB regulations. Held, reference to master, selection of judge and joinder of parties were appropriate; CAB regulations are valid and applicable to appellants; and the preliminary injunction is not overbroad. Judgment affirmed.

Smith, Oakes and Timbers, Circuit Judges.

Author: Oakes

OAKES, Circuit Judge:

This appeal is by four corporations and five individuals from a preliminary injunction issued in an action by the Civil Aeronautics Board (CAB) to prevent violations of the Federal Aviation Act of 1958 (the Act), 49 U.S.C. §§ 1301-1542, and CAB regulations thereunder, relating to so-called "affinity charters." The appeal involves an important question relating to the jurisdiction of the district court to refer the preliminary injunction question to a magistrate, as well as assorted procedural questions and the usual preliminary injunction questions concerning probability of success on the merits, the public interest, and irreparability of harm. In connection with the probability of success issue appellants urge, inter alia, unconstitutionality of the Act and regulations as applied to them. For reasons that will appear we hold that it was within the power of the district court under the circumstances of this case to refer the case to the magistrate as a special master and we hold that the preliminary injunction was properly issued. We accordingly affirm the judgment below of the United States District Court for the Eastern District of New York, Orrin G. Judd, Judge.


This action was originally brought by the CAB against 14 corporate defendants and 19 individual principals of the corporate defendants for injunctive relief to prevent their selling airplane passage on charter flights allegedly in violation of CAB regulations. Consent injunctions were granted against six corporate defendants and eight individuals. Only four of the remaining eight corporations and five of the remaining eleven individuals have appealed from the grant of the preliminary injunction below. The application for a preliminary injunction was filed on June 19, 1974, by order to show cause supported by a number of affidavits and exhibits and assigned to Judge Judd. On July 5, 1974, after assorted motions on the part of both the CAB and the defendants, Judge Judd proceeded to hear the direct testimony of the first CAB witness, George S. Minichiello, a special agent in the Bureau of Enforcement, and the start of his cross-examination. At the close of the hearing on that day, at the defendants' request, the case was adjourned until July 19, 1974, and the defendants were directed to submit affidavits by July 16. On July 11, 1974, the court granted the CAB's request to take depositions and extended the defendants' time to file affidavits until July 19. On July 18 immunity was granted to two witnesses who were being deposed by the CAB. On July 19 consent orders against certain defendants were submitted and signed, motions of remaining defendants for partial summary judgment on Count Two of the complaint were argued and denied, and further cross-examination of Minichiello was had.

At the conclusion of the hearing on July 19, the issues were referred by Judge Judd to United States Magistrate Vincent A. Catoggio (who had been present during the hearing to obtain "background" on the case) to hear and report. The order of reference was signed on July 22, 1974, and a report was requested by July 29, with the hearing on its confirmation set for July 30. The order of reference specified as grounds the need for taking considerable testimony and the imminency of criminal trials of persons in custody.*fn1 In the subsequent order granting the injunction the court elaborated that the reason for the reference had been that the judge would "be engaged in a criminal jury trial the following week."

The date on which the magistrate's report was requested was fixed to permit decision before departure of the court on vacation. During the week of July 22, further hearings were held by the magistrate. At the request of the defendants and over the objection of the CAB the times fixed in the order of reference were extended so as to give the magistrate further opportunity to study the cases. His report was ultimately filed on August 27, 1974. None of the defendants appealing here objected to the reference to the master at any time, although apparently some non-appealing codefendants did object. The CAB as a matter of Department of Justice policy also objected to the reference.

Reference here was made in accordance with the provisions of Fed. R. Civ. P. 53.*fn2

Since service as a special master is one of the duties specifically authorized for United States magistrates under 28 U.S.C. § 636(b)(1),*fn3 it is necessary to consider both Fed. R. Civ. P. 53 and the Federal Magistrates Act of 1968, 28 U.S.C. § 631 et seq., and their history to determine whether the reference here was proper. See Comment, An Adjudicative Role for Federal Magistrates in Civil Cases, 40 U. Chi. L. Rev. 584 (1973).

The matter of reference to special masters while grounded in and taken over from English chancery practice has had a long and sometimes stormy history in the United States. The practice is an ancient one the history of which has been better related elsewhere. See, e.g., Eastern Bridge & Structural Co. v. Worcester Auditorium Co., 216 Mass. 426, 103 N.E. 913, 915 (1914). The practice of reference to a master was long recognized in the federal courts. See Kimberly v. Arms, 129 U.S. 512, 32 L. Ed. 764, 9 S. Ct. 355 (1889).*fn4 The power was said to be "inherent" within the courts "to provide themselves with appropriate instruments required for the performance of their duties" and was said to have been exercised "from the commencement of our Government . . . when sitting in equity" and to include the power "to take and report testimony . . .." Ex parte Peterson, 253 U.S. 300, 312-13, 64 L. Ed. 919, 40 S. Ct. 543 (1920).

The exercise of the power of reference, at least in the days before full-time paid federal magistrates, resulted in a number of difficulties. Foremost, perhaps, was expense, stemming from the fact that generally the masters charged fees and were in effect paid by the piece. See Chief Judge Kaufman's Masters in the Federal Courts: Rule 53, 58 Colum. L. Rev. 452 n.4 (1958). References, moreover, often entailed considerable delay since many of the special masters were attorneys who gave their private practice precedence. See A. Vanderbilt, Cases and Other Materials on Modern Procedure and Judicial Administration, 1240-41 (1952). Beyond this, the appointment of masters who were practicing members of the bar raised serious problems of conflict of interest. Cf. United States v. O'Connor, 291 F.2d 520, 526 (2d Cir. 1961). In any event, for these reasons and perhaps others that were not particularly articulated, Rule 59 of the Equity Rules of 1912, 226 U.S. 666, for the first time used the language "save in matters of account, a reference to a master shall be the exception, not the rule, and shall be made only upon a showing that some exceptional condition requires it." That sentence, which in substance was carried over to present Fed. R. Civ. P. 53, was entirely new in the 1912 Equity Rules. See J. Hopkins, New Federal Equity Rules Annotated (6th ed. 1929), at 272-73. The 1912 rules were construed not to work any change in the powers of the court except to depart from the old method of referring all cases; reference was still considered "left to the discretionary power of the court to say what character of case shall be deemed exceptional . . .." Holt Manufacturing Co. v. C. L. Best Gas Traction Co., 245 F. 354, 357 (N.D. Cal. 1917). Equity Rule 68,*fn5 226 U.S. 669 (1912), did not change the substance of the rule, and it was held in Ex parte Peterson, supra, that the Seventh Amendment did not prevent the appointment of an auditor and the conduct of a preliminary hearing intended to define and simplify the issues or affect the master's power "to make tentative findings." 253 U.S. at 310, 314.

Nevertheless, the Supreme Court quite readily construed the "exception, not the rule" language of the Equity Rules as forbidding blanket referrals of, e.g., all patent cases, Los Angeles Brush Manufacturing Corp. v. James, 272 U.S. 701, 71 L. Ed. 481, 47 S. Ct. 286 (1927), even while the particular reference in that case was held not to be an abuse of the district court's discretion because calendar congestion and the priority given to criminal cases were preventing consideration of other civil cases by the trial courts.*fn6

But for reasons stated, reference to masters has not always had either clear or happy sailing in the courts. See Kaufman, supra. Adventures in Good Eating, Inc. v. Best Places to Eat, Inc., 131 F.2d 809, 815 (7th Cir. 1942), sets forth the reasons of delay, expense, entitlement to the decision of a judge and confidence in the outcome of the contest as going against the use of masters "save where exceptional circumstances are shown." Finding reference improper in that case, the court ordered its costs assessed to the plaintiff who had requested the reference. The court did not remand for a trial, however.

Adventures in Good Eating, along with a few other cases from the Seventh Circuit, was particularly relied upon by the Supreme Court in LaBuy v. Howes Leather Co., 352 U.S. 249, 1 L. Ed. 2d 290, 77 S. Ct. 309 (1957), where the Court dealt the practice of reference to special masters a substantial, if not a fatal blow. There the Court held in an antitrust case that the presence of unusually complex issues of fact and law is not justification for reference to a master but rather an impelling reason for trial before a regular, experienced judge who was familiar with that case already involving numerous pretrial findings and orders. 352 U.S. at 255-56, 259. The Court, moreover, to a considerable extent backtracked on its specific holding in the Los Angeles Brush case (without citing it in this connection, we may say) when it said that: "But, be that as it may, congestion in itself is not such an exceptional circumstance as to warrant a reference to a master. If such were the test, present congestion would make references the rule rather than the exception." 352 U.S. at 259.*fn7 Were we to read LaBuy's broad language literally and without reference to the prior history briefly alluded to above, we would be required to rule that the reference had been improper.*fn8 But Rule 53 does not mandate no reference in any situation whatsoever. A degree of discretion is exercisable under it and whether or not there was a proper exercise in this case is dependent not only on the facts but also on the change of circumstances that has been wrought by the passage of the 1968 Federal Magistrates Act, 28 U.S.C. §§ 631-39.

In the 1968 Act, Congress gave magistrates jurisdiction over certain petty criminal offenses, 28 U.S.C. § 636(a). This was the most controversial grant of power. The Act also had the purpose of enabling magistrates to relieve district courts of some part of their civil workload. 28 U.S.C. § 636(b). See Hearings on S. 3475 Before the Subcommittee on Improvements in Judicial Machinery of the Senate Committee on the Judiciary, 89th Cong., 2d Sess., at 11 n. 3 (1967). Even prior to the Act control of discovery and conduct of pretrial hearings were functions which it was considered the use of the federal magistrate in civil hearings could promote. See Kaufman, supra at 463.

Questions have been raised, to be sure, about the use of magistrates in ultimate decision making such as ruling on a motion to dismiss or a motion for summary judgment. The Seventh Circuit, for example, has held that district courts have no power to delegate such duties to magistrates. TPO, Inc. v. McMillen, 460 F.2d 348 (1972).*fn9 In addition, with specific reference to the provision of § 636(b) permitting a magistrate to be assigned to serve as a special master in an appropriate civil action under the Federal Rules of Civil Procedure, the Report of the Senate Committee on the Judiciary on S. 945, S. Rep. No. 371, 25-27 (June 28, 1967), points out that the "exception and not the rule" and the "exceptional circumstances" language of Rule 53(b) was very carefully incorporated by reference into the Federal Magistrates Act. The Senate Committee said that "These conditions which in essence reflect the rule laid down by the Supreme Court in LaBuy v. Howes Leather Company . . . protect against any abdication of the decisionmaking responsibility that is properly that of the district courts." Finally, we recently have had the guidance of Wingo v. Wedding, 418 U.S. 461, 94 S. Ct. 2842, 41 L. Ed. 2d 879, 42 U.S.L.W. 5167 (1974), where the Court, incorporating the holding in Holiday v. Johnston, 313 U.S. 342, 352-54, 85 L. Ed. 1392, 61 S. Ct. 1015 (1941),*fn10 held that the Act did not change the requirements of 28 U.S.C. § 2243 that federal judges personally conduct habeas corpus evidentiary hearings. The Court there once again emphasized that in the Federal Magistrates Act "Congress carefully circumscribed the permissible scope of assignment to only 'such additional duties as are not inconsistent with the Constitution and laws of the United States.' 28 U.S.C. § 636(b) (emphasis added)." 42 U.S.L.W. at 5170.

We are left, then, with the question whether the circumstances here were sufficient to justify Judge Judd's exercise of discretion. In this connection it must be remembered that he was not delegating the judicial decision making function as to the entire case, but only was delegating the power to make initial findings in connection with the preliminary injunction. Thus the broad language of LaBuy, supra, and the contradictory language relative to congestion of Los Angeles Brush, supra, are not wholly applicable to the case at hand.*fn11 So, too, the summary decision in McCullough v. Cosgrave, 309 U.S. 634, 84 L. Ed. 992, 60 S. Ct. 703 (1940), the background circumstances of which are set forth in 5A J. Moore, Federal Practice § 53.05[1] at 2942, is not controlling, since it involved reference to a master for trial.

Here the use of a master was "to aid [the] judge in the performance of specific judicial duties, as they may arise in the progress of a cause." Ex parte Peterson, 253 U.S. at 312. See LaBuy v. Howes Leather Co., 352 U.S. at 256. Here the court not only did not refer the entire case to the magistrate, it took evidence from the parties itself on the motion for a preliminary injunction; the principal CAB witness was heard on two different days both on direct and cross-examination. The order of reference came only after proceedings had become sufficiently complicated*fn12 with a sufficient number of parties and different motions that it appeared as though it might have to be postponed so as not to interfere with the trial of a criminal matter where the defendant was in custody. Speedy disposition of criminal cases has greatly concerned our Judicial Council, see Second Circuit Rules Regarding Prompt Disposition of Criminal Cases promulgated January 5, 1971, ...

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