Source: http://openjurist.org/686/f2d/854/civil-aeronautics-board-v-frontier-airlines-inc
Timestamp: 2017-01-20 21:30:22
Document Index: 580046047

Matched Legal Cases: ['§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 249', '§ 20', '§ 249', '§ 20']

686 F2d 854 Civil Aeronautics Board v. Frontier Airlines Inc | OpenJurist
686 F. 2d 854 - Civil Aeronautics Board v. Frontier Airlines Inc HomeFederal Reporter, Second Series 686 F.2d.
686 F2d 854 Civil Aeronautics Board v. Frontier Airlines Inc 686 F.2d 854
CIVIL AERONAUTICS BOARD, Plaintiff-Appellant,v.FRONTIER AIRLINES, INC., Defendant-Appellee.
A panel of this court reversed the dismissal of the action by the trial court, 468 F.Supp. 443, and a rehearing en banc was granted at the request of Frontier. The judgment of the panel was vacated April 17, 1981. The case was submitted without further oral argument to the en banc panel on May 6, 1982.
An analogous problem arose under § 20(5) of the Interstate Commerce Act, as amended, 49 U.S.C. § 20(5). This section served as a model for the provisions of the Federal Aviation Act which are presently at issue. This arose in connection with the Supreme Court decision in the case of United States v. Louisville & Nashville R. R., 236 U.S. 318, 35 S.Ct. 363, 59 L.Ed. 598 (1915), in which it was held that the Interstate Commerce Commission did not have the authority to inspect the correspondence of the railroad even though it had authority to inspect accounts, records and memoranda. The reason given by the Supreme Court for this conclusion was that any such inspection would not be related to the purpose of § 20 which was to establish a "uniform system of accounting and bookkeeping and to have inspection thereof." Id. at 335, 35 S.Ct. at 369. The Court considered the purpose of § 20 and concluded that inspection of correspondence by the I. C. C. had never been intended by Congress. Congress amended § 20 in 1920, Ch. 91, 41 Stat. 456, 493, so as to include correspondence. The court however placed no restrictions on the right of the Commission to inspect all accounts, records and memoranda kept by the carrier. Since that time the courts have found that the same limitation applied by the court to correspondence, must be applied to inspection of other documents, i.e. the inspection of the documents must be related to the purpose of the statute authorizing the inspection. Burlington Northern, Inc. v. Interstate Commerce Commission, 462 F.2d 280 (D.C.Cir.), cert. denied, 409 U.S. 891, 93 S.Ct. 120, 34 L.Ed.2d 148 (1972). In Burlington the Court ruled that the I. C. C.'s authority under § 20(5) to inspect accounts, records and memoranda kept by carriers did not extend to projections or predictions of future events which had no obvious relevance to the narrow purpose of the statute, i.e. evaluation of accounting and bookkeeping records. Also in Southern Railway Co. v. Interstate Commerce Commission, 553 F.2d 1345 (D.C.Cir.1977) the I. C. C. was required to demonstrate its need for information relating to or explanatory of required bookkeeping and accounting entries before the court would require the railroad to produce the requested material for inspection.
There is other support for the rule of reason standard in analogous situations. See Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 44 S.Ct. 336, 68 L.Ed. 696 (1924); Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946), a Fair Labor Standards Act case. Here again a reasonable standard for inspection of corporate records was adopted and applied. See also United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 368, 94 L.Ed. 401 (1950); California Bankers Association v. Shultz, 416 U.S. 21, 66-67, 94 S.Ct. 1494, 1519-1520, 39 L.Ed.2d 812 (1974). In the case of Fleming v. Montgomery Ward & Co., 114 F.2d 384 (7th Cir.), cert. denied, 311 U.S. 690, 61 S.Ct. 71, 85 L.Ed. 446 (1940) the court ruled that there should be full access to the records of the company, and that the inspections of records of wages and hours under the Fair Labor Standards Acts should not be limited only to cases in which the Administrator had reasonable cause to believe that an employer was violating the Act. Also found by the Court was that an administrative agency was entitled to inspect records which it requires an agency to keep, to obtain information and for the further purpose of determining whether or not such records are being kept, and kept in such a way as to make available the specified information. This same court recognized that for a search of records to be consistent with fourth amendment principles there must be a demand made by a duly constituted authority. It also held that such demand must be expressed in lawful process, and that the lawful process must limit the demand to described documents and papers which are easily distinguished and clearly described.
Normally, when reasonable men can differ in interpreting the sweep of governmental intrusiveness, I am inclined, because of my sense of our law and tradition, to move toward an interpretation that limits rather than expands the sweep of governmental prying. As the opinions in this case illustrate, the proper interpretation of the scope of the Civil Aeronautics Board's authority to examine any and all records required to be kept by a carrier is by no means obvious. The only issues raised in this case concern the CAB's statutory and regulatory authority; no constitutional issue has been raised. What ultimately persuades me to join in Judge Logan's dissent is a reexamination of the Supreme Court's decision in Wyman v. James, 400 U.S. 309, 91 S.Ct. 381, 27 L.Ed.2d 408 (1971). In that case, the Court found no infringement of constitutional rights in an agency's requirement that a beneficiary of the Aid to Families with Dependent Children program submit to home visits by inspectors as a condition to receiving further benefits. If we authorize severe penalties against persons receiving direct welfare assistance unless they surrender important constitutional rights to accommodate the inspection desires of the administering agency, it makes no sense to restrict inspection rights of an agency in the case of corporate beneficiaries of regulatory schemes. After all, the airline carriers are in a much better position to pressure for legislative and regulatory limitations on government intrusiveness in the name of regulation than are the poor recipients of government largess.
Exercising its authority under section 407(d), the CAB has issued regulations requiring carriers to preserve permanently the minutes of meetings of directors and of the executive and other directors committees. See 14 C.F.R. § 249.13. In this respect the CAB's authority is substantially similar to that of the Interstate Commerce Commission (ICC) under 49 U.S.C. § 20(5) (repealed 1978). Reviewing that provision, the Supreme Court noted in United States v. Louisville & Nashville R. R., 236 U.S. 318, 334, 35 S.Ct. 363, 368, 59 L.Ed. 598 (1915), that "(t)he 'records' of a corporation (include) ... its charter and by-laws, the minutes of its meetings ..." (emphasis added). The CAB regulation requiring airlines to maintain and preserve corporate minutes, 14 C.F.R. § 249.13(f), is well within the scope of authority granted by section 407(d).
Congress modeled the authority granted the CAB in section 407(e) on the Interstate Commerce Act, 49 U.S.C. § 20(6) (repealed 1978), intending to provide the CAB powers over the aviation industry similar to those of the ICC over the railroads. United States v. Louisville & Nashville R. R., 236 U.S. 318, 35 S.Ct. 363, 59 L.Ed.2d 598, involved the ICC's power to inspect railroad records and correspondence. While the Court held the ICC could not examine the correspondence, the Court indicated no limitation on the ICC's power to examine records the ICC could require the railroad to maintain, including corporate minutes. The Court reviewed the legislative history of section 20(6), quoting the following segments of the Commission's report to Congress recommending passage of the act:
236 U.S. at 332, 35 S.Ct. at 367 (emphasis added). Reading section 20(6) "in the light of the purpose it was intended to subserve and the history of its origin," the Court found that "Congress has authorized the Commission to prescribe the forms of accounts, records, and memoranda, which shall include accounts, records, and memoranda of the movements of traffic, as well as the receipts and expenditures of money, to which accounts, records, and memoranda the Commission is given access at all times." Id. at 333, 35 S.Ct. at 368 (emphasis added). It held the "primary object to be accomplished was to establish a uniform system of accounting and bookkeeping, and to have an inspection thereof." Id. at 335, 35 S.Ct. at 369 (emphasis added). Subsequent amendments to section 20 did not alter its basic function and purpose as defined by the Supreme Court: "to maintain a uniform accounting system and to permit the analysis and interpretation of records which are required to be kept by carriers." Burlington Northern, Inc. v. I. C. C., 462 F.2d 280, 287 (D.C.Cir.), cert. denied, 409 U.S. 891, 93 S.Ct. 120, 34 L.Ed.2d 148 (1972).
I agree with the views stated in Fleming v. Montgomery Ward & Co., 114 F.2d 384, 391 (7th Cir.), cert. denied, 311 U.S. 690, 61 S.Ct. 71, 85 L.Ed. 446 (1940), that an administrative agency is entitled to inspect records which it reasonably requires to be kept, not only to obtain the information it needs for its regulatory function, but "for the further purpose of determining whether or not such records are being kept, and whether or not they are being kept in such a way as to make available the specified information." I have searched in vain for cases in which courts have imposed limitations on the broad authority granted the CAB and other agencies to inspect the business records they properly require to be kept. CAB v. United Airlines, Inc., 542 F.2d 394 (7th Cir. 1976), relied on by Frontier, is not such a case. There the CAB sought to inspect records it did not require air carriers to keep, and the Seventh Circuit held the CAB must first show its purpose and the relevancy of those specific materials.