American Airlines, Inc. v. North American Airlines, Inc.

PETITIONER: American Airlines, Inc.
RESPONDENT: North American Airlines, Inc.
LOCATION:

DOCKET NO.: 410
DECIDED BY: Warren Court (1955-1956)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

ARGUED: Mar 06, 1956 / Mar 07, 1956
DECIDED: Apr 23, 1956

Facts of the case

Question

Media for American Airlines, Inc. v. North American Airlines, Inc.

Audio Transcription for Oral Argument - March 06, 1956 in American Airlines, Inc. v. North American Airlines, Inc.

Audio Transcription for Oral Argument - March 07, 1956 in American Airlines, Inc. v. North American Airlines, Inc.

Earl Warren:

Number 410, American Airlines, Incorporated versus North American Airlines, Incorporated.

Mr. Westwood, you may proceed.

Howard C. Westwood:

May it please the Court.

At the Court's rising yesterday, I just referred to the one issue that remains in the case at this stage.

That is whether the findings of the Civil Aeronautics Board make out a case of violation of Section 411 of the Civil Aeronautics Act because of the respondent's use of the name North American.

The lower court held that the findings did not make out such a case.

First, the Court pointed out that there was no finding that the respondent had adopted the North American name with the intent to deceive the public or that it had palmed itself off as American Airlines.

Now, as to that, later in the Court's opinion, it relied on and indeed quoted the dictum of Mr. Justice McReynolds in the Gratz case to the effect that in order to make out a Section 5 case under the Trade Commission Act, it was necessary that there be a showing of fraud or bad faith or something of that nature.

The respondent in its brief here, unlike its argument pressed to the lower court, agrees with us that the Gratz dictum no longer represents the law.

Indeed that dictum was long since repudiated if it ever meant what had been attributed to it and a showing of fraud or something of that nature is not necessary in order to make out a Section 5 case under the Trade Commission Act and a fortiori under Section 411 of the Civil Aeronautics Act.

The next point that was emphasized by the lower court with respect to deficiency in the Court's -- in the Board's findings is that there had been no finding to the effect that American Airlines had actually lost business to North American as a result of the name similarity.

As to that, we respectfully suggest that the Court was in error, that the absence of any such finding is not a flaw.

Certainly, since the Wheeler-Lea amendment to Section 5 of the Trade Commission Act in 1938, the substance of which was incorporated in Section 411 of the Civil Aeronautics Act, a finding of injury of that nature to a competitor is not necessary to establish a case of unfair or deceptive practice or unfair method of competition.

Felix Frankfurter:

Mr. Westwood, before you sit down I take it you will deal with the question that's implied in your remark a minute ago a fortiori to the Civil Aeronautics Act implying of course that the scope and gamut of -- of outlaw -- of the criteria of outlaw activity is not identical to a difference and in favor of the Civil Aeronautics Board.

Will you deal with that (Voice Overlap) --

Howard C. Westwood:

Yes, I'll -- I'll come to that immediately.

The Civil --

Felix Frankfurter:

(Inaudible)

Howard C. Westwood:

Well, no, that -- that's all right.

I might as well talk about it now.

This Section 411, while it -- its wording is very similar in substance to the wording of Section 5 of the Trade Commission Act, does appear in a context which is quite different, we suggest, from that of Section 5 of the Trade Commission Act.

That is a particular section in a comprehensive regulatory statute addressed to a -- the problems of a particular segment of industry, that is common carriers by air, in which there is very complete and very elaborate administrative regulation of service, of routes, of rates and so forth, in which there is a special statement or declaration of policy set forth to guide the administrative agency given special responsibility for the administration of that statute.

Now, in that context, we suggest that not only is Section 411 as broad in its -- in its conferring of power on the agency as is Section 5 of the Trade Commission Act.

But by virtue of the fact that the Section is a part of a pattern giving special administrative powers to the Board, the scope of Section 411 may indeed be broader than Section 5 depending upon the expertise of the agency in working out its -- the application of the legislative standard there appearing to the particular problems of the industry.

Now, the -- the next point and this is my -- my final point that the lower court emphasized was that absent the findings of loss of business by a competitor, findings as to fraud et cetera, the Klesner case decided by this Court under the Trade Commission Act, meant that the lower court -- that the lower court was able itself to determine what is to or in the public interest.

And it arrived at the determination that the findings made by the Board, despite the fact that they had been specifically addressed to and had spelled out its conception of the public interest that those findings failed in the Court's judgment to show a case in the public interest.

Your Honors will recall that under Section 411 it is provided and again this is somewhat similar to Section 5 of the Trade Commission Act that the Board is to institute a proceeding, is to proceed when it considers such action to be in the interest of the public.

Now, the -- the flaw as we see it in the reasoning of the lower court is that it applied the Klesner case to mean that it could substitute its judgment for that of the agency as to what is in the public interest.

Now, we have discussed at some length in our briefs the Klesner case, we've debated what its present significance may be, suffice it to say here simply this that whatever the significance of the Klesner case may be today under Section 5 of the Trade Commission Act, certainly under Section 411, appearing in the context in which it appears, it would be most unwise and we suggest contrary to accepted canons of statutory construction to apply that case so as to give a Court of Appeals warrant to substitute its judgment for that of the agency, and that the public interest issue under Section 411 should be treated no differently from the public interest issue under other sections of the Civil Aeronautics Act.

And as this Court decided in the National Broadcasting case involving the Federal Communications Act, a pattern of administrative regulations somewhat similar to the Civil Aeronautics Act, the public interest issue has been delegated by the Congress to the agency and its determination and not a court's is to control.