Shortly before his scheduled departure from Washington, D.C. to
Connecticut, where he was to fulfill speaking engagements,
petitioner, who had reserved a seat on one of respondent's Hartford
flights arrived at the check-in area, but was advised that he could
not be accommodated because all the seats were occupied. After
refusing the tender of respondent, which concededly overbooked the
flight, of denied boarding compensation, petitioner brought a
common law action against respondent based on an alleged fraudulent
misrepresentation arising from respondent's failure to apprise
petitioner of its deliberate overbooking practices, and a statutory
action under § 404(b) of the Federal Aviation Act of 1958, arising
from respondent's failure to afford petitioner the boarding
priority specified in its rules filed with the Civil Aeronautics
Board (CAB). The District Court entered judgment and awarded
compensatory and punitive damages on both claims. The Court of
Appeals remanded petitioner's statutory claim for further findings
and reversed the award of punitive damages on that claim. The
question of punitive damages for the common law claim was remanded
for further findings on respondent's good faith. None of that
court's foregoing rulings was presented in the petition for
certiorari. The court also held that the common law fraudulent
misrepresentation claim had to be remanded to the District Court,
and stayed, under the principles of primary jurisdiction, pending
referral to the CAB to determine whether the alleged failure to
disclose the practice of deliberate overbooking is a deceptive
practice under § 411 of the Act, which provides that the CAB may
investigate and determine whether any air carrier has been or is
engaged in unfair or deceptive practices, and that practices found
to violate the section shall be the subject of a cease and desist
order. The court held that a CAB determination that a practice is
not deceptive under § 411 would preclude a common law tort action
for damages for injuries caused by that practice.
Held: Petitioner's common law tort action based on
Page 426 U. S. 291
the alleged fraudulent misrepresentation by respondent air
carrier should not be stayed pending reference to the CAB for a
determination whether the practice is "deceptive" within the
meaning of § 411 of the Act. Pp.
426 U. S.
298-308.
(a) There is no irreconcilable conflict between the Act's scheme
and the common law remedy; both may coexist as contemplated by the
Act's saving clause, which provides that
"[n]othing contained in this Act shall in any way abridge or
alter the remedies now existing at common law or by statute, but
the provisions of this Act are in addition to such remedies."
§ 1106.
Texas & Pacific R. Co. v. Abilene Cotton Oil
Co., 204 U. S. 426,
distinguished. Pp.
426 U. S.
298-300.
(b) No power to immunize a carrier from common law liability can
be inferred from § 411's language; where Congress has sought to
confer such power, it has done so expressly, as in § 414 of the
Act. Section 411 is both broader and narrower than common law
remedies. A cease and desist order may issue thereunder if the CAB
concludes that a carrier is engaged in an unfair or deceptive
practice, and no findings that the practice was intentionally
deceptive or has caused injury in fact are necessary; on the other
hand, a CAB decision that such an order is inappropriate does not
manifest the CAB's approval of the practice, but may merely
represent the agency's conclusion that a more flexible approach is
necessary. Pp.
426 U. S.
300-303.
(c) The doctrine of primary jurisdiction, which has been applied
where a claim originally cognizable in the courts requires the
resolution of issues which, under a regulatory scheme, have been
placed within the special competence of an administrative agency,
is inapplicable here, where petitioner's action for respondent's
asserted failure to disclose its overbooking practices implicates
no tariff practice or similar technical question of fact uniquely
within the CAB's expertise. Pp.
426 U. S.
303-307.
167 U.S.App.D.C. 350, 512 F.2d 527, reversed and remanded.
POWELL, J., delivered the opinion for a unanimous Court. WHITE,
J., filed a concurring opinion,
post, p.
426 U. S.
308.
Page 426 U. S. 292
MR. JUSTICE POWELL delivered the opinion of the Court.
In this case, we address the question whether a common law tort
action based on alleged fraudulent misrepresentation by an air
carrier subject to regulation by the Civil Aeronautics Board
(Board) must be stayed pending reference to the Board for
determination whether the practice is "deceptive" within the
meaning of § 411 of the Federal Aviation Act of 1958, 72 Stat. 769,
49 U.S.C. § 1381. We hold that, under the circumstances of this
case, a stay pending reference is inappropriate.
I
The facts are not contested. Petitioner agreed to make several
appearances in Connecticut on April 28, 1972, in support of the
fund-raising efforts of the Connecticut Citizen Action Group
(CCAG), a nonprofit public interest organization. His two principal
appearances were to be a a noon rally in Hartford and a later
address at the Storrs campus of the University of Connecticut. On
April 25, petitioner reserved a seat on respondent's flight 864 for
April 28. The flight was scheduled to leave Washington, D.C. at
10:15 a.m. and to arrive in Hartford at 11:15 a.m. Petitioner's
ticket was purchased from a travel agency on the morning of the
flight. It indicated, by the standard "OK" notation, that the
reservation was confirmed.
Petitioner arrived at the boarding and check-in area
approximately five minutes before the scheduled departure
Page 426 U. S. 293
time. He was informed that all seats on the flight were
occupied, and that he, like several other passengers who had
arrived shortly before him, could not be accommodated. Explaining
that he had to arrive in Hartford in time for the noon rally,
petitioner asked respondent's agent to determine whether any
standby passengers had been allowed to board by mistake, or whether
anyone already on board would voluntarily give up his or her seat.
Both requests were refused. In accordance with respondent's
practice, petitioner was offered alternative transportation by air
taxi to Philadelphia, where connections could be made with an
Allegheny flight scheduled to arrive in Hartford at 12:15 p.m.
Fearing that the Philadelphia connection, which allowed only 10
minutes between planes, was too close, petitioner rejected this
offer and elected to fly to Boston, where he was met by a CCAG
staff member who drove him to Storrs.
Both parties agree that petitioner's reservation was not honored
because respondent had accepted more reservations for flight 864
than it could, in fact, accommodate. One hour prior to the flight,
107 reservations had been confirmed for the 100 seats actually
available. Such overbooking is a common industry practice, designed
to ensure that each flight leaves with as few empty seats as
possible despite the large number of "no-shows" --
reservation-holding passengers who do not appear at flight time. By
the use of statistical studies of no-show patterns on specific
flights, the airlines attempt to predict the appropriate number of
reservations necessary to fill each flight. In this way, they
attempt to ensure the most efficient use of aircraft while
preserving a flexible booking system that permits passengers to
cancel and change reservations without notice or penalty. At times,
the practice of overbooking results
Page 426 U. S. 294
in oversales, which occur when more reservation-holding
passengers than can be accommodated actually appear to board the
flight. When this occurs, some passengers must be denied boarding
("bumped"). The chance that any particular passenger will be bumped
is so negligible that few prospective passengers aware of the
possibility would give it a second thought. In April, 1972, the
month in which petitioner's reservation was dishonored, 6.7
confirmed passengers per 10,000 enplanements were denied boarding
on domestic flights. [
Footnote
1] For all domestic airlines, oversales resulted in bumping an
average of 5.4 passengers per 10,000 enplanements in 1972, and 4.6
per 10,000 enplanements in 1973. [
Footnote 2] In domestic operations, respondent oversold
6.3 seats per 10,000 enplanements in 1972 and 4.5 seats per 10,000
enplanements in 1973. [
Footnote
3] Thus, based on the 1972 experience of all domestic airlines,
there was only slightly more than one chance in 2,000 that any
particular passenger would be bumped on a given flight. [
Footnote 4] Nevertheless, the total
number of confirmed ticket holders denied seats is quite
substantial, numbering over 82,000 passengers in 1972 and about
76,000 in 1973. [
Footnote
5]
Board regulations require each airline to establish priority
rules for boarding passengers and to offer "denied boarding
compensation" to bumped passengers. These "liquidated damages" are
equal to the value of the passenger's ticket with a § 25 minimum
and a § 200 maximum. 14 CFR § 250.5 (1975). Passengers are free to
reject the compensation offered in favor of a common
Page 426 U. S. 295
law suit for damages suffered as a result of the bumping.
Petitioner refused the tender of denied boarding compensation (§
32.41 in his case) and, with CCAG, filed this suit for compensatory
and punitive damages. His suit did not seek compensation for the
bumping
per se, but asserted two other bases of liability:
a common law action based on fraudulent misrepresentation arising
from respondent's alleged failure to inform petitioner in advance
of its deliberate overbooking practices, and a statutory action
under § 404(b) of the Act, 49 U.S.C. § 1374(b), [
Footnote 6] arising from respondent's alleged
failure to afford petitioner the boarding priority specified in its
rules filed with the Board under 14 CFR § 250.3 (1975).
The District Court entered a judgment for petitioner on both
claims, awarding him a total of $10 in compensatory damages and
$25,000 in punitive damages. Judgment also was entered for CCAG on
its misrepresentation claim, with an award of $51 in compensatory
damages and $25,000 in punitive damages.
The Court of Appeals for the District of Columbia Circuit
reversed. 167 U.S.App.D.C. 350, 512 F.2d 527 (1975). A number of
its rulings were not presented to this Court in the petition for
certiorari. The award of damages to CCAG was reversed on the ground
that the organization was too "remote from the transaction" to fall
"within the class of persons who may recover."
Id. at 372,
512 F.2d at 549. The merits of petitioner's statutory claim were
remanded for further
Page 426 U. S. 296
findings. The award of punitive damages to petitioner on the
statutory claim was reversed on the ground that respondent's
conduct contained no "elements of intentional wrongdoing or
conscious disregard for" petitioner's rights.
Id. at 373,
512 F.2d at 550. The question of punitive damages for the common
law claim was remanded for further findings on respondent's good
faith. In particular, the trial court was to consider "whether
Allegheny reasonably believed that its policies were completely
lawful and in fact carried the approval of the Board."
Id.
at 374, 512 F.2d at 551. None of these rulings was presented to
this Court in the petition for certiorari.
The only issue before us concerns the Court of Appeals'
disposition on the merits of petitioner's claim of fraudulent
misrepresentation. Although the court rejected respondent's
argument that the existence of the Board's cease and desist power
under § 411 of the Act eliminates all private remedies for common
law torts arising from unfair or deceptive practices by regulated
carriers, it held that a determination by the Board that a practice
is not deceptive within the meaning of § 411 would, as a matter of
law, preclude a common law tort action seeking damages for injuries
caused by that practice. [
Footnote
7] Therefore, the court held that the Board must be
Page 426 U. S. 297
allowed to determine in the first instance whether the
challenged practice (in this case, the alleged failure to disclose
the practice of overbooking) falls within the ambit of § 411. The
court took judicial notice that a rulemaking proceeding concerning
possible changes in reservation practices in response to the
1973-1974 fuel crisis was already underway, and that a challenge to
the carriers' overbooking practices had been raised by an
intervenor in that proceeding. [
Footnote 8] The District Court was instructed to stay
further action on petitioner's misrepresentation claim pending the
outcome of the rulemaking proceeding. The Court of Appeals
characterized its holding as
"but another application of the principles of primary
jurisdiction, a doctrine whose purpose is the coordination of the
workings of agency and court."
167 U.S.App.D.C. at 367, 512 F.2d at 544.
Page 426 U. S. 298
II
The question before us, then, is whether the Board must be given
an opportunity to determine whether respondent's alleged failure to
disclose its practice of deliberate overbooking is a deceptive
practice under § 411 before petitioner's common law action is
allowed to proceed. The decision of the Court of Appeals requires
the District Court to stay the action brought by petitioner in
order to give the Board an opportunity to resolve the question. If
the Board were to find that there had been no violation of § 411,
respondent would be immunized from common law liability.
A
Section 1106 of the Act, 49 U.S.C. § 1506, provides that
"[n]othing contained in this chapter shall in any way abridge or
alter the remedies now existing at common law or by statute, but
the provisions of this chapter are in addition to such
remedies."
The Court of Appeals found that, "although the saving clause of
section 1106 purports to speak in absolute terms, it cannot be read
so literally." 167 U.S.App.D.C. at 367, 512 F.2d at 544. In
reaching this conclusion, it relied on
Texas & Pacific R.
Co. v. Abilene Cotton Oil Co., 204 U.
S. 426 (1907). In that case, the Court, despite the
existence of a saving clause virtually identical to § 1106, refused
to permit a state court common law action challenging a published
carrier rate as "unjust and unreasonable." The Court conceded that
a common law right, even absent a saving clause, is not to be
abrogated
"unless it be found that the preexisting right is so repugnant
to the statute that the survival of such right would, in effect,
deprive the subsequent statute of its efficacy; in other words,
render its provisions nugatory."
204 U.S. at
204 U. S. 437.
But the Court found that
Page 426 U. S. 299
the continuance of private damages actions attacking the
reasonableness of rates subject to the regulation of the Interstate
Commerce Commission would destroy the purpose of the Interstate
Commerce Act, which was to eliminate discrimination by requiring
uniform rates. The saving clause, the Court found,
"cannot in reason be construed as continuing in shippers a
common law right, the continued existence of which would be
absolutely inconsistent with the provisions of the act. In other
words, the act cannot be held to destroy itself."
Id. at
204 U. S. 446.
[
Footnote 9]
In this case, unlike
Abilene, we are not faced with an
irreconcilable conflict between the statutory scheme and the
persistence of common law remedies. In
Abilene, the
carrier, if subject to both agency and court sanctions, would be
put in an untenable position when the agency and a court disagreed
on the reasonableness of a rate. The carrier could not abide by the
rate filed with the Commission, as required by statute, and also
comply with a court's determination that the rate was excessive.
The conflict between the court's common law authority and the
agency's ratemaking power was direct and unambiguous. The court in
the present case, in contrast, is not called upon to substitute its
judgment for the agency's on the reasonableness of a rate -- or,
indeed, on
Page 426 U. S. 300
the reasonableness of any carrier practice. There is no Board
requirement that air carriers engage in overbooking, or that they
fail to disclose that they do so. And any impact on rates that may
result from the imposition of tort liability or from practices
adopted by a carrier to avoid such liability would be merely
incidental. Under the circumstances, the common law action and the
statute are not "absolutely inconsistent," and may coexist, as
contemplated by § 1106.
B
Section 411 of the Act allows the Board, where "it considers
that such action . . . would be in the interest of the public,"
"upon its own initiative or upon complaint by any air carrier,
foreign air carrier, or ticket agent," to "investigate and
determine whether any air carrier . . . has been or is engaged in
unfair or deceptive practices or unfair methods of competition. . .
." Practices determined to be in violation of this section "shall"
be the subject of a cease and desist order. The Court of Appeals
concluded -- and respondent does not challenge the conclusion here
-- that this section does not totally preclude petitioner's common
law tort action. But the Court of Appeals also held, relying on the
nature of the airline industry as "a regulated system of limited
competition,"
American Airlines, Inc. v. North American
Airlines, Inc., 351 U. S. 79,
351 U. S. 84
(1956), and the Board's duty to promote "adequate, economical, and
efficient service," § 102(c) of the Act, 49 U.S.C. § 1302(c), "at
the lowest cost consistent with the furnishing of such service," §
1002(e)(2) of the Act, 49 U.S.C. § 1482(e)(2), that the Board has
the power in a § 411 proceeding to approve practices that might
otherwise be considered deceptive, and thus to immunize carriers
from common law liability. 167 U.S.App.D.C. at 366, 512 F.2d at
543.
Page 426 U. S. 301
We cannot agree. No power to immunize can be derived from the
language of § 411. And where Congress has sought to confer such
power, it has done so expressly, as in § 414 of the Act, 49 U.S.C.
§ 1384, which relieves those affected by certain designated orders
(not including orders issued under § 411) "from the operations of
the
antitrust laws.'" When faced with an exemptive provision
similar to § 414 in United States Navigation Co. v. Cunard S.S.
Co., 284 U. S. 474
(1932), this Court dismissed an antitrust action because initial
consideration by the agency had not been sought. The Court pointed
out that the Act in question was "restrictive in its operation upon
some of the activities of common carriers . . . and permissive in
respect of others." Id. at 284 U. S. 485.
See also Far East Conference v. United States,
342 U. S. 570
(1952). Section 411, in contrast, is purely restrictive. It
contemplates the elimination of "unfair or deceptive practices"
that impair the public interest. Its role has been described in
American Airlines, Inc. v. North American Airlines, Inc.,
supra at 351 U. S.
85:
"'Unfair or deceptive practices or unfair methods of
competition,' as used in § 411, are broader concepts than the
common law idea of unfair competition. . . . The section is
concerned not with punishment of wrongdoing or protection of
injured competitors, but rather with protection of the public
interest."
As such, § 411 provides an injunctive remedy for vindication of
the public interest to supplement the compensatory common law
remedies for private parties preserved by § 1106. [
Footnote 10]
Page 426 U. S. 302
Thus, a violation of § 411, contrary to the Court of Appeals'
conclusion, is not coextensive with a breach of duty under the
common law. We note that the Board's jurisdiction to initiate an
investigation under § 411 is expressly premised on a finding that
the "public interest" is involved. The Board "may not employ its
powers to vindicate private rights." 351 U.S. at
351 U. S. 83.
Indeed, individual consumers are not even entitled to initiate
proceedings under § 411, a circumstance that indicates that
Congress did not intend to require private litigants to obtain a §
411 determination before they could proceed with the common law
remedies preserved by § 1106,
Cf. Rosado v. Wyman,
397 U. S. 397,
397 U. S. 406
(1970).
Section 411 is both broader and narrower than the remedies
available at common law. A cease and desist order may issue under §
411 merely on the Board's conclusion, after an investigation
determined to be in the public interest, that a carrier is engaged
in an "unfair or deceptive practice." No findings that the practice
was intentionally deceptive or fraudulent, or that it, in fact, has
caused injury to an individual, are necessary.
American
Airlines, Inc. v. North American Airlines, Inc., supra at
351 U. S. 86. On
the other hand, a Board decision that a cease and desist order is
inappropriate does not represent approval of the practice under
investigation. It may merely represent the Board's conclusion that
the serious prohibitory sanction of a cease and desist order is
inappropriate, that a more flexible approach is necessary. A wrong
may be of the sort that calls for compensation to an injured
individual without requiring the extreme remedy of a cease and
desist order. Indeed, the Board,
Page 426 U. S. 303
in dealing with the problem of overbooking by air carriers, has
declined to issue cease and desist orders despite the determination
by an examiner in one case that a § 411 violation had occurred.
[
Footnote 11] Instead, the
Board has elected to establish boarding priorities and to ensure
that passengers will be compensated for being bumped either by a
liquidated sum under Board regulations or by resort to a suit for
compensatory damages at common law. [
Footnote 12]
In sum, § 411 confers upon the Board a new and powerful weapon
against unfair and deceptive practices that injure the public. But
it does not represent the only, or best, response to all challenged
carrier actions that result in private wrongs.
C
The doctrine of primary jurisdiction
"is concerned with promoting proper relationships between the
courts and administrative agencies charged with particular
regulatory duties."
United States v. Western Pacific R. Co., 352 U. S.
59,
352 U. S. 63
(1956). Even when common law rights and remedies survive and the
agency in question lacks the power to confer immunity from common
law liability, it may be appropriate to refer specific issues to an
agency for initial determination where that procedure would secure
"[u]niformity and
Page 426 U. S. 304
consistency in the regulation of business entrusted to a
particular agency" or where
"the limited functions of review by the judiciary [would be]
more rationally exercised, by preliminary resort for ascertaining
and interpreting the circumstances underlying legal issues to
agencies that are better equipped than courts by specialization, by
insight gained through experience, and by more flexible
procedure."
Far East Conference v. United States, 342 U.S. at
342 U. S.
574-575.
See also United States v. Western Pacific
R. Co., supra at
352 U. S.
64.
The doctrine has been applied, for example, when an action
otherwise within the jurisdiction of the court raises a question of
the validity of a rate or practice included in a tariff filed with
an agency,
e.g., Danna v. Air France, 463 F.2d 407 (CA2
1972);
Southwestern Sugar & Molasses Co. v. River Terminals
Corp., 360 U. S. 411,
360 U. S.
417-418 (1959), particularly when the issue involves
technical questions of fact uniquely within the expertise and
experience of an agency -- such as matters turning on an assessment
of industry conditions,
e.g., United States v. Western Pacific
R. Co., supra, at
352 U. S. 66-67.
In this case, however, considerations of uniformity in regulation
and of technical expertise do not call for prior reference to the
Board.
Petitioner seeks damages for respondent's failure to disclose
its overbooking practices. He makes no challenge to any provision
in the tariff, and indeed there is no tariff provision or Board
regulation applicable to disclosure practices. [
Footnote 13] Petitioner also makes no
challenge,
Page 426 U. S. 305
comparable to those made in
Southwestern Sugar &
Molasses Co. v. River Terminals Corp., supra, and
Lichten
v. Eastern Airlines, Inc., 189 F.2d 939 (CA2 1951), to
limitations on common law damages imposed through exculpatory
clauses included in a tariff.
Referral of the misrepresentation issue to the Board cannot be
justified by the interest in informing the court's ultimate
decision with "the expert and specialized knowledge,"
United
States v. Western Pacific R. Co., supra, at
352 U. S. 64, of
the Board. The action brought by petitioner does not turn on a
determination of the reasonableness of a challenged practice -- a
determination that could be facilitated by an informed evaluation
of the economics or technology of the regulated industry. The
standards to be applied in an action for fraudulent
misrepresentation are within the conventional competence of the
courts, and the judgment of a technically
Page 426 U. S. 306
expert body is not likely to be helpful in the application of
these standards to the facts of this case. [
Footnote 14]
We are particularly aware that, even where the wrong sought to
be redressed is not misrepresentation, but bumping itself, which
has been the subject of Board consideration and for which
compensation is provided in carrier tariffs, the Board has
contemplated that there may be individual adjudications by courts
in common law suits brought at the option of the passenger. The
present regulations dealing with the problems of overbooking and
oversales were promulgated by the Board in 1967. They provide for
denied boarding compensation to bumped passengers, and require each
carrier to establish priority rules for seating passengers and to
file reports of passengers who could not be accommodated. [
Footnote 15] The order instituting
these regulations contemplates that the bumped passenger will have
a choice between accepting denied boarding compensation as
"liquidated damages for all damages incurred . . . as a result
of the carrier's failure to provide the passenger with confirmed
reserved space,"
or pursuing his or her common law remedies. [
Footnote 16] The Board specifically
provided
Page 426 U. S. 307
for a 30-day period before the specified compensation need be
accepted so that the passenger will not be forced to make a
decision before "the consequences of denied boarding have occurred
and are known." [
Footnote
17] After evaluating the consequences, passengers may choose as
an alternative "to pursue their remedy under the common law."
[
Footnote 18]
III
We conclude that petitioner's tort action should not be stayed
pending reference to the Board and accordingly the decision of the
Court of Appeals on this issue is reversed. The Court of Appeals
did not address the question
Page 426 U. S. 308
whether petitioner had introduced sufficient evidence to sustain
his claim. We remand the case for consideration of that question,
and for further proceedings consistent with this opinion. [
Footnote 19]
It is so ordered.
MR. JUSTICE WHITE, concurring.
I join the Court's opinion with these additional words.
It may be that, under its rulemaking authority, the Board would
have power to order airline overbooking and to preempt recoveries
under state law for undisclosed overbooking or for overselling. But
it has not done so, at least as yet. It is also unnecessary to stay
proceedings on the present state law claim pending Board action
under § 411. Neither an order denying nor one granting relief under
that section would foreclose claims based on state law; and there
is not present here the additional consideration that a § 411
proceeding would be helpful in resolving, or affecting in some
manner, the state law claim for compensatory and punitive damages.
Cf. 414 U. S. Chicago
Mercantile Exchange, 409 U. S. 289
(1973);
Chicago Mercantile Exchange
v. Deaktor,
Page 426 U. S. 309
414 U. S. 113
(1973). I seriously doubt that any pending or future § 411 case
would reveal anything relevant to this case about the Board's view
of the propriety of overbooking and of overselling that is not
already apparent from prior proceedings concerning those
subjects.
[
Footnote 1]
Brief for Civil Aeronautics Board as
Amicus Curiae
filed in Court of Appeals, App. B, p. 58.
[
Footnote 2]
Id. at 50
[
Footnote 3]
Id. at 51.
[
Footnote 4]
On any given flight, of course, the chance that a passenger will
be bumped may be higher or lower than the overall average.
[
Footnote 5]
Id. at 50.
[
Footnote 6]
Section 404(b) provides:
"No air carrier or foreign air carrier shall make, give, or
cause any undue or unreasonable preference or advantage to any
particular person, port, locality, or description of traffic in air
transportation in any respect whatsoever or subject any particular
person, port, locality, or description of traffic in air
transportation to any unjust discrimination or any undue or
unreasonable prejudice or disadvantage in any respect
whatsoever."
[
Footnote 7]
Section 411 provides in full:
"The Board may, upon its own initiative or upon complaint by any
air carrier, foreign air carrier, or ticket agent, if it considers
that such action by it would be in the interest of the public,
investigate and determine whether any air carrier, foreign air
carrier, or ticket agent has been or is engaged in unfair or
deceptive practices or unfair methods of competition in air
transportation or the sale thereof. If the Board shall find, after
notice and hearing, that such air carrier, foreign air carrier, or
ticket agent is engaged in such unfair or deceptive practices or
unfair methods of competition, it shall order such air carrier,
foreign air carrier, or ticket agent to cease and desist from such
practices or methods of competition."
[
Footnote 8]
The rulemaking proceedings were initiated in January, 1974.
Emergency Reservation Practices Investigation, 39 Fed.Reg. 823
(1974) (CAB Order 73-12-93, EDR-260). An opinion and an order were
issued on April 13, 1976. Emergency Reservation Practices
Investigation (CAB Order 76-4-55). The Board concluded that the
questions raised by the Court of Appeals in this case were "outside
the scope of [the] investigation."
Id. at 7. It
specifically noted that "the question of whether intentional
overbooking, in general, or nondisclosure of such practice, in
particular, is a deceptive trade practice" was not at issue.
Id. at 8.
In April, 1976, the Board announced a proposed rulemaking
proceeding with respect to deliberate overbooking and oversales.
Priority Rules, Denied-Boarding Compensation Tariffs and Reports of
Unaccommodated Passengers: Reexamination of the Board's Policies
Concerning Deliberate Overbooking and Oversales, 41 Fed.Reg. 16478
(1976) (CAB Order EDR-296). The Board has decided to reevaluate
existing practices in light of a recent "trend toward a higher rate
of oversales" and in light of the fact that oversales "continue to
be a significant cause of [consumer] complaints."
Ibid.
Among the options to be considered is a requirement that the
practice of deliberate overbooking, if allowed to continue, be
disclosed to customers.
Id. at 16479.
[
Footnote 9]
The Court later described the saving clause discussed in
Abilene as follows:
"That proviso was added at the end of the statute not to nullify
other parts of the Act or to defeat rights or remedies given by
preceding sections, but to preserve all existing rights which were
not inconsistent with those created by the statute. It was also
intended to preserve existing remedies, such as those by which a
shipper could, in a state court, recover for damages to property
while in the hands of the interstate carrier -- damages caused by
delay in shipment, damages caused by failure to comply with its
common law duties, and the like."
Pennsylvania R. Co. v. Puritan Coal Mining Co.,
237 U. S. 121,
237 U. S.
129-130 (1915).
[
Footnote 10]
Cf. Federal Trade Comm'n v. Klesner, 280 U. S.
19,
280 U. S. 25-26
(1929);
Holloway v. Bristol-Myers Corp., 158 U.S.App.D.C.
207, 212, 485 F.2d 986, 991 (1973) (both opinions discuss § 5 of
the Federal Trade Commission Act, 38 Stat. 717, as amended, 15
U.S.C. § 45, which this Court, in
American Airlines, Inc. v.
North American Airlines, Inc., 351 U.S. at
351 U. S. 82,
described as the model for § 411).
[
Footnote 11]
In the late 1950's, § 411 investigations were initiated against
two carriers charged with deliberate overbooking. One of these
investigations was terminated on the ground that the record showed
no deliberate overbooking by the carrier.
Eastern Air Lines
Overbooking Enforcement Proceeding, 30 C.A.B. 862 (1960). The
other was terminated, after a finding by the examiner of a § 411
violation, in favor of an industrywide investigation.
National
Airlines, Inc., Enforcement Proceeding, 31 C.A B. 390
(1960).
[
Footnote 12]
See nn.
15-18 and
accompanying text infra.
[
Footnote 13]
In 1965, the Board proposed a rule requiring carriers to notify
individual passengers of overbooked conditions 12 hours prior to
the scheduled departure time. Passenger Priorities and Overbooked
Flights: Notice of Proposed Rule Making, 30 Fed.Reg. 13236 (1965)
(CAB Order EDR-95). This proposal subsequently was abandoned after
industry opposition on the ground that it was excessively rigid and
unworkable. Priority Rules, Denied Boarding Compensation Tariffs,
And Reports of Unaccommodated Passengers: Notice of Proposed Rule
Making, 32 Fed.Reg. 459, 460-461 (1967) (CAB Order EDR-109).
The Board's abandonment of this proposal cannot be read as
blanket approval of failure to make a public disclosure of
overbooking practices. The cost of an individual notification
program in terms of expense, public relations, and passenger
confusion could be prohibitive. But alternative means of disclosure
may be significantly less disruptive. Petitioner suggests, for
example, that carrier overbooking practices be included in tariffs,
which are required to be available for public inspection. And the
Board has approved an innovative approach suggested by Eastern Air
Lines, which provides for a system of limited overbooking in which
passengers subject to possible denial of boarding are advised at
the outset of their status.
See Delta Air Lines, Inc. v.
CAB, 147 U.S.App.D.C. 272, 455 F.2d 1340 (1971)
(
aff'g CAB Order 71-6-120).
[
Footnote 14]
For example, if respondent's overbooking practices were detailed
in its tariff, and therefore available to the public, a court
presented with a claim of misrepresentation based on failure to
disclose need not make prior reference to the Board, as it should
if presented with a suit challenging the reasonableness of
practices detailed in a tariff. Rather, the court could, applying
settled principles of tort law, determine that the tariff provided
sufficient notice to the party who brought the suit -- as, indeed,
petitioner suggests it would. Reply Brief for Petitioner 3, n.
3.
[
Footnote 15]
Priority Rules, Denied Boarding Compensation Tariffs and Reports
of Unaccommodated Passengers, 32 Fed.Reg. 11939 (1967) (CAB Order
ER-503).
See 14 CFR § 250.1
et seq. (1975).
[
Footnote 16]
CAB Order ER-503,
supra, 32 Fed.Reg. 11943.
[
Footnote 17]
Id. at 11942
[
Footnote 18]
Foreign Air Carriers: Priority Rules, Denied Boarding
Compensation Tariffs and Reports of Unaccommodated Passengers, 38
Fed.Reg. 15083, 15084 (1973) (CAB Order EDR-248) (amending existing
regulations to include foreign air carriers).
See also
testimony of Jerome F. Huisentruit, assistant general counsel for
the Air Transport Association of America and respondent's witness
on Board jurisdiction, App. 72-73.
The contemplation that common law remedies will continue to
exist is in conformance with longstanding Board policy dating back
at least to the Board's approval in 1962 of an industry agreement
covering trunk carriers and calling for ticketing time limits and
reservation charges in combination with a provision for denied
boarding compensation.
See Domestic Trunklines, Tariff
Agreement, 35 C.A.B. 881 (1962) (CAB Order E-18064). The Board
specifically rejected the carriers' proposal that the denied
boarding compensation be made an exclusive remedy:
"[T]o the extent that the proposed tariff provision is designed
to restrict a passenger from seeking damages to which he would
otherwise be entitled under the common law, we find it to be
adverse to the public interest. Accordingly, we shall condition our
approval of the agreement to make clear that the prescribed penalty
is a minimum obligation of the carrier which, only if accepted by
the passenger, would terminate the carrier's obligation."
Id. at 882-883.
[
Footnote 19]
The Court of Appeals specifically remanded for reconsideration
of the award of punitive damages on petitioner's claim of
fraudulent misrepresentation. The propriety of that ruling was not
challenged in this Court.
As the issues of ultimate liability and damages are not before
us, we express no opinion as to their merits. We conclude above
that mere compliance with agency regulations is not sufficient, in
itself, under the Act to exempt a carrier from common law
liability. We make clear, however, that this conclusion is not
intended to foreclose the courts on remand from considering, in
relation to other issues in the case, evidence that the Board was
fully advised of the practice complained of, and that the carrier
had cooperated with the Board.