Opinion ID: 294004
Heading Depth: 1
Heading Rank: 4

Heading: the need for a hearing

Text: 25 Petitioners also contend that the Board erred in basing its April 30 order upon pleadings, documents, and oral argument rather than a full evidentiary hearing. This assertion is made in spite of the absence of any hearing requirement in section 412, and in spite of the fact that several judicial decisions have explicitly noted this omission. See Fugazy Travel Bureau, Inc. v. CAB, 121 U.S.App.D.C. 355, 350 F.2d 733 (1965); Railway Express Agency, Inc. v. CAB, 120 U.S.App.D.C. 228, 345 F.2d 445, cert. denied, 382 U.S. 879, 86 S.Ct. 162, 15 L.Ed.2d 120 (1965); McManus v. CAB, 310 F.2d 762 (2d Cir. 1962). However, none of these cases can be considered dispositive of the issue presently before us; and petitioners urge that in the circumstances of this case, the Board was required to hold an evidentiary hearing. 26 Petitioners' argument for a hearing is based upon principles gleaned from a number of recent administrative law decisions, principles which can be summarized in the statement that the need for an evidentiary hearing is particularly acute when the issue presented is one which possesses great substantive importance, or one which is unusually complex or difficult to resolve on the basis of pleadings and argument. See generally Marine Space Enclosures, Inc. v. FMC, 137 U.S.App.D.C. 9, 17-18, 420 F. 2d 577, 585-586, n. 22, 589 n. 36 (1969); Citizens for Allegan County, Inc. v. FPC, 134 U.S.App.D.C. 229, 232-233, 414 F.2d 1125, 1128-1129 (1969); Trailways of New England, Inc. v. CAB, 412 F.2d 926 (1st Cir. 1969). 27 The petitioners assert that their antitrust allegations satisfied both of the above criteria. With respect to the substantive importance of their antitrust claim, they rely heavily on the Trailways of New England case. There the First Circuit reversed the Board's decision to dismiss without investigation a complaint which charged that certain tariffs were unduly discriminatory, stating: While [49 U.S.C. § 1482(a)]    allows for dismissal without hearing when the Board is of the opinion that any complaint does not state facts which warrant an investigation, we do not believe, at least as to claims of discrimination and preference, but not necessarily as to other kinds of complaints,    that the dismissal provision vests anything near absolute discretion in the Board. 28 412 F.2d at 931-932. The Board's own prior decisions also support the assertion that colorable antitrust claims should be considered substantively important. In IATA Credit Agreements, 30 C.A.B. 1553, 1554-1555 (1960), the Board ruled that when IATA resolutions appear on their face to be repugnant to antitrust principles, they cannot be approved under section 412 unless their proponents have made a clear showing of the need for approval to fill [a] serious transportation need or secure important public benefits. This principle has been an established aspect of the Board's regulatory policy since the Local Cartage Agreement Case, 15 C.A.B. 850, 853 (1952). Moreover, in Volumair Agreement, 30 C.A.B. 1007, 1008 (1960), the Board specifically noted the relationship between the need for a hearing under section 412 and the likelihood that the agreement in question would alter the competitive roles of the scheduled and supplemental carriers. Finally, with respect to the complexity of the issues raised, we have recently noted that summary procedures are held to have only limited scope in antitrust litigation, particularly when there is a question of predatory intent as in the present case. Citizens for Allegan County, Inc. v. FPC, supra, 134 U.S. App.D.C. at 232-233, 414 F.2d at 1128-1129. 29 To avoid the full impact of these authorities, the Board advances three primary arguments: the need to act expeditiously because of the threat of an open rate situation; the similarity of some of the fares contained in the agreement to fares which the Board had previously considered; and the fact that the public would generally benefit from lower prices under the new fares. Each of these contentions has some merit, but each also has some difficulties. The fact that the existing fare agreement was about to expire when the Board was considering whether to schedule an evidentiary hearing on the new resolution obviously had some impact on its choice of procedures, 8 and certainly the maintenance of amicable international relations concerning air transportation is consistent with the Board's regulatory objectives. However, the Board is still required to make an informed assessment of the public interest under section 412, and the specter of an open rate situation does not absolve the Board of its responsibility to employ procedures which will allow it to discharge the task adequately. This duty was admitted by the Board in IATA Agreements re Passenger Fares, 38 C.A.B. 1062, 1063 (1963): 30 The Board is concerned with the apparent view that this government is acting unilaterally to achieve its objectives; that, since IATA agreements represent a compromise of many rating philosophies and interests of different carriers and their governments, no one government can expect to achieve its total objectives and therefore should seldom take any action which would be disruptive of IATA agreed fares. To abrograte the right to disapprove an IATA agreement on the basis of its disruptive effects would reduce government review to a perfunctory exercise negating any need for review. The Board has no recourse but to disapprove agreements it considers to be inconsistent with the public interest not only from the standpoint of policy, but [also] in the discharge of its statutory obligations.    9 31 Thus, while the Board is free to ascribe some weight to the international overtones of an agreement, it obviously cannot allow these considerations to become determinative. 32 The Board's prior experience with similar group fares is also less than completely reassuring. In IATA Agreements re Passenger Fares, 38 C.A.B. 1062, 1073-1074 (1963), the Board expressed serious concern about the discriminatory aspects of affinity group fares: 33 The affinity restriction itself represents a very substantial restriction [on the availability] of these fares to the general public.    [W]e will not be prepared to approve such restrictions indefinitely. Stated differently, we believe the public interest requires that these fares eventually be made available to all groups whether or not the members have some affinity with one another. 34 More recently, in dealing with domestic GIT fares, the Board stated its conclusion that proposed round-trip inclusive tour basing fares applicable to groups of 40 or more passengers may be unjust or unreasonable, unjustly discriminatory, or unduly preferential, or otherwise unlawful, and should be investigated. Because of the possibility that these GIT fares would adversely affect competing carriers, the Board suspended their effectiveness pending investigation. Group Inclusive Tour Basing Fares to Hawaii, Order No. 68-12-144 (Dec. 20, 1968) (slip op. at 3). 35 However, these isolated excerpts from prior Board decisions demonstrate little more than the fact that group fares have some discriminatory and anticompetitive aspects, and that the Board knew of these tendencies. They do not bear upon what would seem to be a more pertinent inquiry in the present case: that is, the effect that approval of these fares would have in the currently prevailing market situation. The record on appeal contains some indications that economic conditions in the industry could change radically with the introduction of the huge Boeing 747 jet aircraft. This new airplane, which was scheduled to go into service during the term of the agreement here in issue, has a vastly greater seating capacity than its predecessors, and thus it should markedly intensify the competition between the supplementals and the scheduled carriers for passengers; at the same time, the substantial initial costs incurred by carriers purchasing these aircraft may well increase the possibility that a slight worsening of one or more carriers' competitive positions would have a far-reaching impact on the structure of the industry. In a parallel situation, where new group fares were introduced at a time when large-capacity jet aircraft were first being brought into service, the Board undertook a careful economic analysis of the competitive impact of the new fares, and set forth detailed findings in support of its approval. IATA Group Fares Agreement, 36 C.A.B. 33 (1962). 36 In short, the essential question, from an antitrust standpoint, is whether the existence of a market structure conducive to maximum feasible competition will be imperiled by approval of the agreement. Furtherance of the economic or policy implications of the agency's particular statutory charter may indeed compel overriding of antitrust principles, 10 but first the proper antitrust questions must be asked and answered. Thus it is not really responsive to an antitrust claim, except perhaps as a counterbalance to the projected anti-competitive effects, to say that an agreement will provide the public with lower fares, if there is a risk that these lower fares are merely a step toward an ultimate increase in concentration. Price cutting, after all, is a time-honored tool of the aspiring monopolist. 37 The fact that these questions are difficult and important, however, does not mean that an evidentiary hearing is an essential prerequisite to their satisfactory resolution. Much, if not most, of the needed information obviously could have been submitted in documentary form, with briefs and oral argument addressed to the inferences to be drawn from the raw data. The questions of predatory intent, which in general are particularly suited to exploration in a trial-type hearing, quite possibly could have been resolved on the basis of subpoenaed documents and the minutes of the relevant IATA conferences. We have noted above that section 412 of the Aviation Act does not contain a hearing requirement; yet, in construing similar statutes containing hearing requirements, we have attempted to avoid imposing rigid limitations that would narrow the agency's latitude in choosing which procedures are best suited for resolving a given issue in the context of a particular case. See Marine Space Enclosures, Inc. v. FMC, supra, 137 U.S. App.D.C. at 21-22, 420 F.2d at 589-590. Therefore, we hold that the Board did not commit reversible error by refusing to schedule an evidentiary hearing on the petitioners' antitrust allegations.