Source: http://nj.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19870501_0000031.DNJ.htm/qx
Timestamp: 2017-01-20 20:20:36
Document Index: 285739065

Matched Legal Cases: ['§ 1430', '§ 1471', 'art 135', 'art 91', '§ 1430', 'art 91']

| UNITED STATES v. MIDWESTERN POUCH EXPRESS
UNITED STATES v. MIDWESTERN POUCH EXPRESS
Midwestern Pouch Express, Inc., et al., Defendants
The opinion of the court was delivered by: FISHER, U.S.D.J.; WOLFSON, MAGISTRATE
The United States has brought this action against Midwestern Pouch Express, Inc. ("Midwestern"), E.C.C. Aviation, Inc. ("E.C.C."), Edrei Communications Corporation ("Edrei Communications") and Michael Edrei for alleged violations of 49 U.S.C. § 1430(a) and Federal Aviation Regulations, in particular 14 CFR 135,
and seeks penalties pursuant to 49 U.S.C. § 1471. Defendants have moved for summary judgment, and the plaintiff has filed a cross-motion for summary judgment. Argument was held on March 2, 1987. After recounting certain of the stipulated facts, I shall address first the liability issue concerning Midwestern, the air carrier. Secondly, I shall turn to the motions regarding the other defendants: Michael Edrei, President and Chief Executive Officer of Midwestern, and of the other corporate defendants, E.C.C. and Edrei Communications; Edrei Communications, which publishes books, magazines and reference materials, with monthly magazines and periodicals constituting the bulk of its publications; and E.C.C., whose sole purpose was to "either purchase or lease vehicles for distribution of the products of Edrei's customers, to lease those airplanes or vehicles to the operational arm, which is Midwestern Pouch Express." (Edrei dep. at 6-7). Any claim against these latter defendants must first survive the essential liability dispute, which is based on the activities of Midwestern. FACTS As stipulated in the pretrial order filed December 29, 1986, Midwestern operated an air delivery service from March 18 through August 30, 1985, primarily between New Jersey and airports in Michigan and Illinois. Midwestern transported printed material, such as magazines, newspapers and other periodicals, for which it received payments of approximately $ 200,000 from 13 or more customers including: Investors Daily, Inc.; New York Post, Inc.; Air Source Express, Inc.; Fairchild Publications, Inc.; Grace Courier Services; Hassett Air Express; Viking Express, Inc.; Sky Courier Network; Creative Courier; Special Courier; Graf Air Freight, Inc.; Ad Com Express and American Check Co. The flights ran on a weeknight basis. The publications which Midwestern carried were generally either dailies or weeklies.
In early 1985 Jack Collura, a Midwestern employee, mailed solicitations to potential customers, informing them of Midwestern's rates. Early in 1985, before the period of its transport flights, Midwestern endeavored to prepare an application for and to operate with a certificate pursuant to 14 CFR 135, but such a certificate was not obtained. I. MIDWESTERN As stated above, I will address first the motion and cross-motion for summary judgment concerning defendant Midwestern, since the liability of the other named defendants, if any, would stem from whatever involvement they may have had with Midwestern's aircraft operations. The purpose of the summary judgment rule is the avoidance of the delay and expense of an unnecessary trial where the circumstances of the case, the applicable law and the facts, are ripe for such procedure. Goodman v. Mead Johnson Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977); Celotex Corp. v. Catrett, 477 U.S. 317, , 91 L. Ed. 2d 265, 276, 106 S. Ct. 2548 (1986). Fed. R. Civ. P. 56 provides for the granting of summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." As the moving party bears the burden of demonstrating that there is clearly no genuine issue of material fact, all doubts will be resolved against the moving party. Adickes v. S.H. Kress and Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970); Anderson v. Liberty Lobby, 477 U.S. 242, , 91 L. Ed. 2d 202, 216, 106 S. Ct. 2505 (1986). The crux of the government's claim against Midwestern is that the latter's aircraft operations fell within the purview of 14 CFR 135 and its requirements for obtaining a certificate demonstrating compliance therein. Midwestern asserts that its aeronautic activities fell within the safe harbor of 14 CFR 91.181, thus exempting it from the requisites of Part 135 ("135"). It is undisputed that, under the regulations, an operation governed by Part 91.181 ("91.181") is immune from the demands, expenses and enforcement of 135. It is also undisputed that Midwestern did not comply with, nor did it secure the certificate mandated by 135. Thus, if the Court finds that Midwestern's flights were appropriate under 91.181, Midwestern's motion for summary judgment must be granted. Conversely, if the undisputed facts lead to the conclusion that Midwestern's activities were governed by 135, then the government's cross-motion for summary judgment frames the proper outcome. Midwestern argues that its operations are covered by the umbrella of 91.181, in particular subsection (b)(7): The carriage of property (other than mail) on an airplane operated by a person in the furtherance of a business or employment (other than transportation by air) when the carriage is within the scope of, and incidental to, that business or employment and no charge, assessment, or fee is made for the carriage other than those specified in paragraph (d) of this section [charges for costs and fees incurred in the flight].
Midwestern urges that its air operations were in conformity with the above quoted regulation, i.e., incidental to its business (other than air transportation), rather than "for compensation or hire" in air commerce pursuant to 135 and 49 U.S.C. § 1430(a). The defendant maintains that its air operations were, in fact, incidental to the publishers' services business described in the affidavit of defendant Michael Edrei. This publishers' services business was to assist publishers in coordinating their production and distribution. Whatever services may have been contemplated in futuro, the only operation ever effectuated was the delivery of unrelated publishers' products by air transport. Midwestern was the vehicle for this transport. Even if there was a broad plan for a multitude of services to publishers, Edrei's affidavit only shows a service based on air transport. And, even if this Court were to defer a conclusion on the potential operations of Mr. Edrei's conceived publishers' services business, it cannot be said that Midwestern operated other than as an air transporter business. It is immaterial that the operations in question did not yield a profit, or that Edrei/Midwestern held a good faith belief in their compliance with the regulations. United States v. Caribbean Ventures Ltd., 387 F. Supp. 1256, 1260 (D.N.J. 1974).
In Caribbean Ventures, also involving a carrier's reliance on Part 91, Judge Lacey cited another court's finding of common carrier status and the objective criteria test: The test which the Board applies is an objective one, relying upon what the carrier actually does rather than upon the label which the carrier attached to its activity or the purpose which motivates it. . . . it is immaterial that the service offered will be attractive only to a limited group; or that it may be performed pursuant to special contract. It is also immaterial that in terms of the carrier's own bookkeeping the transportation may be furnished at cost, at a loss, or even without charge. Las Vegas Hacienda, Inc. v. C.A.B., 298 F.2d 430, 434 (9th Cir. 1962), cited in Caribbean ...