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Laveson v. Trans World Airlines

December 26, 1972

JACK LAVESON AND DR. KARL SILVER, ON THEIR OWN BEHALF AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, APPELLANTS,
v.
TRANS WORLD AIRLINES, AMERICAN AIRLINES, INC. AND UAL, INC



Kalodner, Van Dusen and Adams, Circuit Judges.

Author: Adams

Opinion of the Court

ADAMS, Circuit Judge.

The doctrine of primary jurisdiction was formulated in the last several decades as a judicial response to the creation of wide-ranging federal administrative agencies. It may be viewed as an effort to resolve procedural and substantive conflicts inevitably created when there is hewed out for an agency an area of original jurisdiction impinging on the jurisdiction of the courts.

It is in this regard that our judgment is sought here to determine the applicability of the primary jurisdiction doctrine to an antitrust action charging defendant airlines with conspiring to fix the price to coach passengers for the rental of headsets used with inflight motion pictures.

The plaintiffs, claiming to have flown as coach passengers on defendants' flights, have sued on their own behalf and as class representatives of all coach passengers who have rented headsets. They alleged that commencing in 1967 defendants conspired, in violation of the Sherman Act, to establish a $2.00 rental fee for coach passengers while providing headsets free of charge to first-class passengers.

Although originally seeking both damages and injunctive relief, plaintiffs, in response to defendants' motion to dismiss or stay the action, filed an amended complaint demanding only damages. Granting defendants' motion to dismiss directed to the amended complaint, the district court held that the action was subject to the primary jurisdiction of the Civil Aeronautics Board because it "raises various questions of fact and law which ultimately can be determined in a more informed and orderly manner if initially presented to and considered by said Board. . . ."

In their brief and at oral argument, plaintiffs have essentially asserted that the district court erred in applying the primary jurisdiction doctrine to this case and that, even if the CAB has primary jurisdiction, dismissal of the complaint, as opposed to a stay, was improper. We hold that the district court did not err in finding CAB primary jurisdiction but that the district court should have stayed the action rather than dismissing it.

I.

Before entering the legal thicket surrounding this suit, it is appropriate to examine the regulatory setting implicated here and the CAB's past involvement in the subject matter of this case.

The air transportation industry has been placed by Congress under the detailed and continuous regulation of an administrative agency -- the CAB.*fn1 Included within the CAB's jurisdiction are many matters that may also fall within the scope of the anti-trust laws. Under the Federal Aviation Act,*fn2 the Board has jurisdiction over every "contract or agreement" between air carriers relating to, among other things, the establishment of transportation rates and the regulation of "destructive, oppressive, or wasteful competition. . . ."*fn3 Airlines are directed by the Act to file such agreements with the Board for approval.*fn4 Approval by the Board relieves the parties "from the operations of the 'antitrust laws,' . . . insofar as may be necessary to enable such person to do anything authorized, approved, or required by such order."*fn5

Since 1966, the CAB has been engaged in regulating agreements among carriers relating to charges for inflight entertainment.*fn6 In 1967, twelve domestic air carriers, including the defendants, filed for Board approval an agreement providing for a $2.00 charge for visual inflight entertainment on domestic flights.*fn7 In an opinion and order dated March 9, 1967,*fn8 the Board deferred definitive action on the filed agreement but stated: "We would consider that a charge of less than $2 for a full length motion picture would not be reasonable."*fn9 Explaining its decision to defer action, the Board asserted: "However, we have also tentatively concluded that, under the circumstances here present, the implementation of such a charge . . . would more appropriately be accomplished by exercise of our rate and rule making powers under the Act."*fn10

Simultaneously with its March 9, 1967 opinion and order, the Board issued a notice of proposed amendments to its Economic Regulations that would require carriers offering visual inflight entertainment to provide therefor in their tariffs.*fn11

"In addition, the proposed amendments would state the policy of the Board that carriers establish charges to passengers utilizing such services appropriate to the cost and value of the service provided, and that, in the absence of a contrary showing, a tariff providing for a charge of less than $2 for visual entertainment . . . ...


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