Court Opinion

ID: 9469627
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:45:22.85059+00
Date Added: 2024-06-11T17:41:28.992175
License: Public Domain

LOGAN, Circuit Judge, with whom McWILLIAMS and McKAY, Circuit Judges,
join, dissenting in part:
While I agree that this case should be remanded to the district court for further proceedings, I do not agree that the CAB must show specific relevance to an investigatory purpose within its jurisdiction before being allowed to inspect all minutes of Frontier Airlines’ directors meetings.
As a regulated air carrier, Frontier is subject to CAB control over fares charged and accounting standards ' relating to government subsidies it receives. Section 407(d) of the Federal Aviation Act of 1958, 49 U.S.C. § 1377(d), empowers the CAB to “prescribe the forms of any and all accounts, records, and memoranda to be kept by air carriers ... and the length of time such accounts, records, and memoranda shall be preserved....” Section 407(e), 49 U.S.C. § 1377(e), provides that the CAB “shall at all times have access ... to all accounts, records, and memorandums ... required to be kept by air carriers . . . and it may employ special agents or auditors, who shall have authority ... to inspect and examine any and all such . . . accounts, records, and memorandums.”
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CAB’s authority is substantially similar to that of the Interstate Commerce Commission (ICC) under 49 U.S.C. § 20(5) (repealed 1978).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).
I do not believe that under section 407(d) the CAB can require air carriers under its jurisdiction to maintain any type records it desires, to which the CAB could then obtain unlimited access by virtue of section 407(e). Surely the general intent behind those sections is to permit the CAB only to require the maintenance of records that are reasonably likely to produce material relevant to its regulatory and investigative authority. No one can deny, however, that minutes of a corporation’s directors meetings and executive committee meetings would contain material relevant to the CAB’s regulatory obligations. The CAB is responsible for determining the rates the airline can charge for its air passenger services, and for supervising the payment of government subsidies during the periods covered by the minutes. Along with the charter and bylaws, directors minutes are the most basic corporate records, and all major actions taken by the board would be recorded there. The parties have stipulated that Frontier’s directors minutes contain relevant material the CAB is authorized to examine.
The key question here is whether there is an implicit limitation upon the CAB’s power to examine minutes it may require a carrier to maintain and preserve. Certainly section 407(e) contains no express limitation.
*862Congress 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:
“An efficient means of discovering illegal practices would be found, as we believe, in authority to prescribe a form in which books of account shall be kept by railways, with the right on the part of the Commission to examine such books at any and all times through expert accountants. . . . Probably no one thing would go further than this toward the detection and punishment of rebates and kindred wrongdoing.”
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.
The majority’s order of remand for an in camera inspection illustrates precisely why we should permit the routine inspection of the corporate minutes. Unless it is willing to rely upon the regulated corporation’s assurances that all relevant materials have been produced, the CAB will have to seek and obtain a judge’s in camera inspection in every case. This places upon the courts a tremendous and unnecessary burden, since the CAB has properly exercised its authority to require the minutes to be kept and the minutes will always contain information relevant to the Board’s proper regulatory and investigative authority.
I would reverse and remand with instructions that the district court permit the CAB auditors to inspect all of the corporate minutes.