Civil Aeronautics Board v. Delta Air Lines, Inc./Dissent Whittaker

Mr. Justice WHITTAKER, with whom Mr. Justice FRANKFURTER and Mr. Justice HARLAN join, dissenting.

This is an airline route proceeding brought before the Civil Aeronautics Board. The case involves the effect upon the proceeding, and hence upon a certificate of convenience and necessity ordered to be issued therein, of a timely motion for reconsideration.

Specifically, the question presented is whether, in the light of the provisions of § 401(f) and 401(g) of the Federal Aviation Act, the Board, by allowing its certificate to become 'effective,' notwithstanding a timely filed and unruled motion for reconsideration, lost all power to grant the motion and accordingly to modify its order and the resulting certificate.

This case is but a facet of a multiparty, highly complex and protracted route proceeding, known as the 'Great Lakes-Southeast Service Case,' commenced before the Civil Aeronautics Board in May 1955. It involved, 'predominantly,' the 'long-haul' service needs of an area extending roughly between the Great Lakes and Florida. Numerous trunkline carriers sought new or additional operating rights in that area. The Board was also confronted with a number of petitions by local carriers for authority to provide new or improved short-haul service between certain intermediate cities in that area. In an effort to keep the proceeding within manageable bounds, the Board declined to consolidate those short-haul petitions with this case, and, instead, directed the institution of a separate proceeding (Great Lakes Local Service Investigation) for their resolution, but it did announce that, to make sure that this separation would not deprive them of an opportunity to be heard in protection of their rights, the local service carriers would be permitted to intervene in this case.

As one of the many contending trunkline carriers, respondent, Delta Air Lines, Inc., petitioned for authority (1) to extend an existing route northwesterly to provide service from Miami to Detroit, and (2) to add Indianapolis and Louisville as intermediate points on its existing Chicago-to-Miami route. Petitioner, Lake Central Airlines, Inc., a local or short-haul carrier operating a line between Chicago and Indianapolis, and also serving Louisville, intervened to object to the Delta petition unless its proposed new service to Indianapolis and Louisville be restricted to northbound flights originating, and to southbound flights terminating, at or south of Atlantia. Upon this issue, Lake Central offered evidence that it would suffer injury and damage, through diversion of its local traffic, by the proposed new Delta service unless it be so restricted.

On September 30, 1958, the Board filed its opinion and order in which, among other things, it authorized Delta to add Indianapolis and Louisville as intermediate points on its Chicago-to-Miami route, without imposing the restrictions that Lake Central had asked. Consistently with its custom, the Board stated in its order that the certificate thereby authorized to Delta would become effective on the 60th day after entry of the order (November 29).

Within the 30 days allowed by the Board's rule for the filing of a motion for reconsideration, Lake Central filed with the Board on October 31, 1958, its motion for reconsideration, elaborating the grounds it had asserted and supported with evidence, in opposition to Delta's petition. It also asked in that motion that the effective date of the Delta certificate be stayed pending decision by the Board of the motion for reconsideration.

On November 28, 1958, one day prior to the date upon which, as stated in the Board's order of September 30, the Delta certificate would become effective, the Board filed a lengthy memorandum and order in which it denied Lake Central's request (and also-with one exception not material here-the similar requests of others) for a stay of the effective date of the Delta certificate until after the Board had decided Lake Central's motion for reconsideration. In that order, the Board expressed its view that 'the parties (had) not made a sufficient showing of probable legal error or abuse of discretion' to warrant the issuance of a stay, and that, in view of the approaching peak winter season, the 'new services to Florida (were) immediately required.'

Then, turning to the motions for reconsideration, the Board said in that order that, 'because of the detailed matters raised in the petitions for reconsideration, it (would) not be possible to finally dispose of them until after November 29,' but the Board promptly would 'address itself to the merits of the petitions for reconsideragion, and (its) order dealing with (those) matters (would) issue at a later date.' It thus and otherwise made clear that its denial of the stays was not intended to be '(in any) way prejudicial to the legal rights of those parties seeking reconsideration.' It concluded: 'Nothing in the present order forecloses the Board from full and complete consideration of the pending petitions for reconsideration on their merits.'

Thereafter, on May 7, 1959, the Board granted Lake Central's petition for reconsideration and accordingly entered its final order restricting Delta's service of Indianapolis and Louisville to northbound flights originating, and to southbound flights terminating, at or south of Atlanta; but the Board did say in that order that 'If, after deciding the issues presented in the Great Lakes Local Service case, we conclude that the longhaul restrictions are not required, we will have full freedom to remove them at that time.' It is this order that gives rise to the present controversy.

On Delta's appeal from that order, the United States Court of Appeals for the Second Circuit reversed. 280 F.2d 43, 48. It held that, notwithstanding the timely filed and unruled motion for reconsideration, 'once (the Board allowed the) certificate (to) become effective,' it lost all power thereafter to grant the motion and accordingly to modify its order and the resulting certificate, and that 'it is only in a (separate and plenary) proceeding satisfying the requirements of Section 401(g) that an effective certificate authorizing unrestricted service may be modified by subsequently imposed restrictions.' 280 F.2d at page 48. Because of the importance of the question involved to the proper administration of the Act, we brought the case here. 364 U.S. 917, 918, 81 S.Ct. 283, 5 L.Ed.2d 258.

The Court now affirms that judgment. It does so upon grounds which, I am bound to say, with all respect, seem to me to be spurious and legally indefensible, as I shall endeavor to show.

Although the Federal Aviation Act does not expressly provide for motions for reconsideration by the Board of its orders, it is clear, and indeed it is agreed by the parties, that the Board has power to provide for, and to entertain, such motions, for '(t)he power to reconsider is inherent in the power to decide.' Albertson v. Federal Communications Comm., 87 U.S.App.D.C. 39, 41, 182 F.2d 397, 399. See also Braniff Airways v. Civil Aeronautics Board, 79 U.S.App.D.C. 341, 147 F.2d 152.

Pursuant to that power, the Board adopted its Rule of Practice prescribing, in pertinent part, that 'a petition for reconsideration, rehearing or reargument may be filed b any party to a proceeding within thirty (30) days after the date of service of a final order by the Board in such proceeding *  *  * .' It is admitted that Lake Central filed its motion for reconsideration within the 30 days allowed by that rule.

Under every relevant reported decision, save one to be later noted, a timely motion for reconsideration, being an authorized and appropriate step in the proceeding, 'operate(s) to retain the Board's authority over the (original) order,' Waterman S.S.C.orp. v. Civil Aeronautics Board, 5 Cir., 159 F.2d 828, 829, 'reopen(s) the case,' Black River Valley Broadcasts v. McNinch, 69 App.D.C. 311, 316, 101 F.2d 235, 240, and prevents the 'proposed decision'-which, at that stage, is all it is (Waterman case, supra, 159 F.2d at page 828)-from becoming 'final.' Outland v. Civil Aeronautics Board, 109 U.S.App.D.C. 90, 284 F.2d 224, 227. The proceeding being thus held open by the motion, and the Board having both the power and the duty to decide it, it would seem to be fundamental that the Board has power to decide it either way including, of course, the 'power to grant (it),' Enterprise Co. v. Federal Communications Comm., 97 U.S.App.D.C. 374, 378, 231 F.2d 708, 712, as it did here.

It seems necessarily true, and is well settled by the cases, that 'Where a motion for rehearing is in fact filed there is no final action until the rehearing is denied * *  * (for) there is always a possibility that the order complained of will be modified in a way which renders judicial review unnecessary,' Outland v. Civil Aeronautics Board, 109 U.S.App.D.C. at page 93, 284 F.2d at page 227, and 'although the (motion) did not *  *  * supersede or suspend the order, (it did operate) to retain the Board's authority over the order, so that the order overruling the motion should be taken as the final (order) intended by the statute to start the running of the sixty-day period for judicial review.' Waterman S.S.C.orp. v. Civil Aeronautics Board, supra, 159 F.2d at page 829. It necessarily follows that, if a timely motion for reconsideration is pending before the Board, its 'proposed decision' (id., at page 828) has 'not become final in the sense that it (is) no longer subject to change upon reconsideration,' Enterprise Co. v. Federal Communications Comm., 97 U.S.App.D.C. at page 378, 231 F.2d at page 712, and 'jurisdiction over (that) order remains with the (Board) until the time for appeal has expired, and that time is tolled by an application for rehearing.' (Ibid.) Hence, 'no (final) rights accrued to (Delta) as a result of the order originally granting (its) permit,' Black River Valley Broadcasts v. McNinch, 69 App.D.C. at page 316, 101 F.2d at page 240. See also, e.g., Braniff Airways v. Civil Aeronautics Board, supra; Albertson v. Federal Communications Comm., supra; Western Air Lines v. Civil Aeronautics Board, 9 Cir., 194 F.2d 211; and Butterfield Theatres v. Federal Communications Comm., 99 U.S.App.D.C. 71, 237 F.2d 552.

'There is no doubt under the decisions and practice in this court that where a motion for a new trial in a court of law, or a petition for a rehearing in a court of equity, is duly and seasonably filed, it suspends the running of the time for taking * *  * an appeal, and that the time within which (a) proceeding to review must be initiated begins from the date of the denial of *  *  * the motion *  *  * ,' Morse v. United States, 270 U.S. 151, 153 154, 46 S.Ct. 241, 242, 70 L.Ed. 518, and '(t)his is also true in administrative proceedings,' Black River Valley Broadcasts v. McNinch, 69 App.D.C. at page 316, 101 F.2d at page 240.

The only reported decision to the contrary is Consolidated Flowers Shipments, Inc., Bay Area v. Civil Aeronautics Board, 9 Cir., 205 F.2d 449, 451. It was there held that the time within which a petition for review must be filed runs from the date of the Board's decision, not from the date on which it overruled a timely motion for reconsideration; and, inasmuch as the petition for review had not been filed within the former period, the court dismissed the petition as untimely. Recognizing that this result was contrary to its prior decisions, the Court thought it was required to so hold because of the last sentence of § 10(c) of the Administrative Procedure Act, 5 U.S.C. § 1009(c), 5 U.S.C.A. § 1009(c), saying that, for the purposes of appeal, 'agency action otherwise final shall be final for the purposes of this subsection whether or not there has been presented or determined any application, * *  * for any form of reconsideration, *  *  * .' (Emphasis added.) The fallacy of that reasoning was completely exposed and soundly rejected in Outland v. Civil Aeronautics Board, supra. And on May 1, 1961, the ninth circuit itself specifically overruled that case. Samuel B. Franklin & Co. v. Securities Exchange Comm., 290 F.2d 719.

There is only one reported decision, involving procedures before the Civil Aeronautics Board, that has presented the precise question we have here. It is Frontier Airlines, Inc., v. Civil Aeronautics Board, 104 U.S.App.D.C. 78, 259 F.2d 808. There, just as here, after a Board certificate had been permitted to become 'effective,' the Board granted an earlier and timely filed motion for reconsideration and revised the certificate accordingly. It was contended that the revision of the order and, e nce, also of the certificate, so made, was 'a nullity because it was rendered * *  * after the certificate *  *  * had become effective.' Id., 104 U.S.App.D.C. at page 80, 259 F.2d at page 810. That contention was there soundly rejected.

It therefore seems quite clear to me that, under historic legal procedures and all, save one, of the numerous relevant decisions, the timely filing of the motion for reconsideration being a legally authorized step in the proceeding-kept the proceeding open and continuing; that having the power, as well as the duty, to decide that motion, the Board had power to grant it, as it did, and thus, necessarily, accordingly to revise its earlier decision-which, until then, was only 'a proposed decision' (Waterman case, supra, 159 F.2d at page 828)-and that, inasmuch as the Board sustained that motion, the earlier 'proposed decision' never did become the final decision in the proceeding.

Inasmuch as all of the reported cases, save the discredited and now overruled Consolidated Flowers case, supra, are against it, Delta is compelled to rely almost entirely on its claim that the 'plain language' of § 401(f) deprives the Board of power, once it has allowed a certificate to become 'effective,' to revise its initial decision and the resulting certificate in pursuance of an earlier and timely filed motion for reconsideration; and that, once it has been so permitted to become 'effective,' the certificate may be modified or altered only by a separate and independent plenary proceeding under § 401(g).

The obvious defects in that argument are that (1) under § 401(f), the 'proposed decision' (Waterman case, supra, 159 F.2d at page 228) remained subject to revision by the Board in response to the timely filed motion for reconsideration, and (2) the argument ignores the fact that § 401(g) applies only to proceedings to alter, amend, suspend or revoke a certificate in existence after the authorization proceeding has been fully concluded and finally ended-i.e., after all timely filed motions for reconsideration have been denied, and the time for appeal has expired without an appeal being taken or, if an appeal was taken, the Board's decision has been finally affirmed.

Surely it cannot be doubted that, if the Board, instead of granting it, had denied the motion for reconsideration, the Court of Appeals, on judicial review, or this Court on certiorari, could reverse the Board's decision and remand the case to the Board with directions to grant the motion for reconsideration. It is certain that such a judgment would operate not only on the Board's decision but, as well, on its 'effective' certificate. If the Board has power, when thus directed by the judgment of a reviewing court, to revise, modify or vacate its erroneous decision and its resulting certificate, even though 'effective,' why should the result be different if the Board, without such judicial direction, notes its error, grants the timely filed and pending motion for reconsideration, and accordingly revises its decision and the resulting certificate?

Apart from the discredited and now overruled Ninth Circuit case of Consolidated Flowers Shipments, Inc., Bay Area v. Civil Aeronautics Board, supra, Delta cites no case that involves the effect upon a Board decision of a timely filed motion for reconsideration, or of a Board-revised order made in pursuance of such a motion, or that in any way supports it. Its claim of support by United States v. Seatrain Lines, 329 U.S. 424, 67 S.Ct. 435, 91 L.Ed. 396; Watson Bros. Transportation Co. v. United States, D.C., 132 F.Supp. 905; and Smith Bros. Revocation of Certificate, 33 M.C.C. 465, is wholly unfounded. None of those cases involved or dealt with the question we have here. None of them involved or dealt with any question respecting the effect of a timely filed motion for reconsideration upon an administrative order. To the contrary, in each of them the administrative proceeding had long since finally ended-i.e., all timely fild motions for reconsideration had been denied, the time for judicial review had expired, and the proceeding was in all respects closed.

The only relevant statement in the Seatrain case, supra, is squarely opposed to Delta's position, namely, 'The certificate, when finally granted and the time fixed for rehearing it has passed, is not subject to revocation in whole or in part except as specifically authorized by Congress (i.e., in an independent plenary proceeding).' 329 U.S. at pages 432, 433, 67 S.Ct. at pages 439. (Emphasis added.) Here, 'the time fixed for rehearing (had not) passed,' but, instead, an appropriate motion for reconsideration had been timely filed and was pending. Surely, the Board not only had power, but also a duty, to rule on that motion and, if it found it meritorious, to sustain it, and accordingly to revise its decision and resulting certificate.

The Watson case, supra, has no relevance whatever to this one. In the Smith case, supra, the Commission was careful to point out that ' * *  * the certificate marks the end of the proceedings, just as the entry of a final judgment or decree marks the end of a court proceeding. * *  * ' 33 M.C.C., at 472. (Emphasis added.) It is certain that 'a proposed decision' (Waterman case, supra, 159 F.2d at page 228) of a court does not, while a timely filed motion for new trial, rehearing or reconsideration is pending, end the proceeding, but it is the denial of the motion, and expiration of the time to appeal, that 'marks the end of a court proceeding'; and '(t)his is also true in administrative proceedings.' Black River Valley Broadcasts v. McNinch, 69 App.D.C. at page 316, 101 F.2d at page 240.

Section 401(f) contemplates that the Board may issue a certificate of convenience and necessity 'for a limited period of time under subsection (d)(2) of (that) section.' Althaough the Board did not expressly say, in its order of September 30, 1958, that the certificate thereby authorized to Delta would continue only 'for a limited period of time,' it did expressly point out in its order of November 28, 1958, denying Lake Central's motion for a stay and permitting the Delta certificate to become effective, that Lake Central's motion for reconsideration was still pending undetermined, and that it promptly would 'address itself to the merits of (that) petition forreconsideration, and (that its) order dealing with (that) matter (would) issue at a later date.' Hence, the Delta certificate, though thus allowed to become 'effective,' was, in the law's regard, as surely 'issued for (the) limited period of time' expiring with the date of the possible grant of Lake Central's motion for reconsideration, as if that limitation had been expressed in the Board's authorizing order and certificate.

Here, as in Western Air Lines v. Civil Aeronautics Board, 9 Cir., 194 F.2d 211, 214, Delta 'acted with its eyes open and at its own risk. It was aware that the proceedings before the Board had not become final, and would not until the expiration of the period of 30 days within which petitions for reconsideration might be filed.'

Surely Lake Central's timely filed motion for reconsideration kept the whole proceeding open, including the Board's order and resulting certificate, until that motion was denied. It was not denied. Instead, it was granted, as surely the Board had power to do. Therefore, the Board's originally 'proposed decision' never did become the final decision in the proceeding. And when that 'proposed decision' thus fell, the certificate which it authorized, and which had been permitted to become temporarily 'effective,' necessarily fell with it, as it was always subject to the results of that motion.

It is not to be gainsaid that the practice, sometimes, as here, followed by the Board, of permitting route certificates to become 'effective' while nonfrivolous motions for rehearing or reconsideration are pending undetermined, is perilous business and only rarely, if ever, is justified. But it does not follow that, once having permitted a route certificate to become 'effective,' the Board has lost all power to decide a pending motion for reconsideration, and, if found meritorious, to grant it, and thus itself to rectify the errors in its 'proposed decision' and in the route certificate that was thereby erroneously authorized.

For these reasons, I think the Court has fallen into clear error in affirming the judgment of the court below, which, in my view, is contrary to the settled law and should be reversed.