American Airlines v. North American Airlines (351 U.S. 79)/Opinion of the Court

by Sherman Minton

United States Supreme Court

351 U.S. 79

American Airlines  v.  North American Airlines

 Argued: March 6 and 7, 1956. --- Decided: April 23, 1956

Twentieth Century Airlines, Inc., was issued a letter of registration as a large irregular air carrier by the Civil Aeronautics Board in 1947. For some reason, beginning in 1951 it conducted its business under the name of North American Airlines. On March 3, 1952, it amended its articles of incorporation so as legally to change its name to North American Airlines, Inc. By letter dated March 11, 1952, it requested the C.A.B. to reissue its letter of registration in the new corporate name. The Board took no action on that request, but rather, in August 1952, adopted an Economic Regulation requiring every irregular carrier after November 15, 1952, to do business in the name in which its letter of registration was issued. 14 CFR § 291.28. The Board explained that under the Regulation it would allow continued use of a different name to which good will had become attached, except where use of such name constitutes a violation of § 411 of the Civil Aeronautics Act, 52 Stat. 1003, as amended, 66 Stat. 628, 49 U.S.C. § 491, 49 U.S.C.A. § 491, which prohibits unfair or deceptive commercial practices and unfair methods of competition. 17 Fed.Reg. 7809.

On October 6, 1952, respondent applied for permission to continue use of its name, 'North American Airlines.' Petitioner, American Airlines, on October 17, 1952, filed a memorandum with the Board requesting denial of North American's application for the reasons, among others, that use of the name 'North American' infringed upon its long-established trade name, 'American,' and constituted an unfair method of competition in violation of § 411 of the Act. The Board, as authorized by § 411, on its own motion instituted an investigation and hearing into whether there was a violation of § 411 by North American. It consolidated with that proceeding an investigation and hearing into the matter of North American's application for change of name in its letter of registration. American was granted leave to intervene in the consolidated proceeding.

After extensive hearings, the Board found that respondent's use of the name 'North American' in the air transportation industry, in which it competed with American, had caused 'substantial public confusion,' which was 'likely to continue' and which constituted 'an unfair or deceptive practice and an unfair method of competition within the meaning of Section 411.' Docket Nos. 5774 and 5928 (Nov. 4, 1953), 14-15 mimeo). It found that the public interest required elimination of the use of the name, and accordingly it denied the application of North American and ordered it to 'cease and desist from engaging in air transportation under the name 'North American Airlines, Inc.,' 'North American Airlines,' 'North American,' or any combination of the word 'American." Id., at 15-16. On petition for review by North American, the Court of Appeals for the District of Columbia set aside the Board's order. 97 U.S.App.D.C. 85, 228 F.2d 432. American, having been admitted as a party below by intervention, sought, and we granted, certiorari. 350 U.S. 894, 76 S.Ct. 154.

As we understand its opinion, the Court of Appeals set aside the order because the public interest in this proceeding was inadequate to justify exercise of the Board's jurisdiction under § 411. Although the court was critical of the finding of 'substantial public confusion,' it did not, on its disposition of the case, expressly disturb that or any other of the Board's findings. For the purposes of review here, we will accept the findings, and there is no cause for this Court to review the evidence. Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456, has no application in the present posture of the case before us. The questions then presented are whether confusion between the parties' trade names justified a proceeding by the Board to protect the public and whether the kind of confusion found by the Board could support a conclusion of a violation of the statute by respondent.

This is a case of first impression under § 411. That section provides that

'The Board may, upon its own initiative or upon complaint * * * if it considers that such action by it would be in the interest of the public, investigate and determine whether any air carrier * * * has been or is engaged in unfair or deceptive practices or unfair methods of competition in air transportation or the sale thereof.'

If the Board finds that the carrier is so engaged, 'it shall order such air carrier * * * to cease and desist from such practices or methods of competition.' Section 411 was modeled closely after § 5 of the Federal Trade Commission Act, ^[1] which similarly prohibits 'unfair methods of competition in commerce, and unfair or deceptive acts or practices' and provides for issuance of a complaint 'if it shall appear to the Commission that a proceeding by it * * * would be to the interest of the public.' 38 Stat. 719, as amended, 15 U.S.C. § 45, 15 U.S.C.A. § 45. We may profitably look to judicial interpretation of § 5 as an aid in the resolution of the questions raised here under § 411.

It should be noted at the outset that a finding as to the 'interest of the public' under both § 411 and § 5 is not a prerequisite to the issuance of a cease and desist order as such. Rather, consideration of the public interest is made a condition upon the assumption of jurisdiction by the agency to investigate trade practices and methods of competition and determine whether or not they are unfair. Thus, this Court has held that, under § 5, the Federal Trade Commission may not employ its powers to vindicate private rights and that whether or not the facts, on complaint or as developed, show the public interest to be sufficiently 'specific and substantial' to authorize a proceeding by the Commission is a question subject to judicial review. Federal Trade Commission v. Klesner, 280 U.S. 19, 50 S.Ct. 1, 74 L.Ed. 138. See also Federal Trade Commission v. R. F. Keppel & Bro., Inc., 291 U.S. 304, 54 S.Ct. 423, 78 L.Ed. 814; Federal Trade Commission v. Royal Milling Co., 288 U.S. 212, 53 S.Ct. 335, 77 L.Ed. 706.

In the Klesner case, two District of Columbia retailers, with a long history of acrimonious personal and business relations, were both operating stores called the 'Shade Shop.' This Court held that the public interest merely in resolving their private unfair competition dispute would not justify the Commission in issuing a complaint. The courts of law are open to competitors for the settlement of their private legal rights, one against the other. The Board, under a mandate from Congress, is charged with the protection of the public interest as affected by practices of carriers in the field of air transportation. In exercising our function of review of the Board's jurisdiction to protect the public interest by a proceeding which may be generated from facts also giving rise to a private dispute, we must take account of the significant differences between § 5 and § 411. Section 5 is concerned with purely private business enterprises which cover the full spectrum of economic activity. On the other hand, the air carriers here conduct their business under a regulated system of limited competition. The business so conducted is of especial and essential concern to the public, as is true of all common carriers and public utilities. Finally, Congress has committed the regulation of this industry to an administrative agency of special competence that deals only with the problems of the industry.

The practices of the competitors here clashed in a field where Congress was specifically concerned to protect the public interest. Demonstrated confusion of the public as to the origin of major air transportation services may be of obvious national public concern. The criteria which the Board employed to determine whether the confusion here created a problem of concern to the public are contained in the following quotation from its report:

'* * * the record is convincing that the public interest requires this action in order to prevent further public confusion between respondent and intervenor due to similarity of names. The maintenance of high standards in dealing with the public is expected of common carriers, and the public has a right to be free of the inconveniences which flow from confusion between carriers engaging in the transportation of persons by air. The speed of air travel may well be diminished when passengers check in for flights with the wrong carrier, or attempt to retrieve baggage from the wrong carrier, or attempt to purchase transportation from the wrong carrier, or direct their inquiries to the wrong carrier. Friends, relatives or business associates planning to meet passengers or seeking information on delayed arrivals are subject to annoyance or worse when confused as to the carrier involved. The proper handling of complaints from members of the public is impeded by confusion as to the carrier to whom the complaint should be presented. The transportation itself may differ from what the confused purchaser had anticipated (e.g., in terms of equipment), even though the time and place of arrival may be about the same. It is obvious that public confusion between air carriers operating between the same cities is adverse to the public interest * * *.' Docket Nos. 5774 and 5928 (Nov. 4, 1953), 12-13 (mimeo).

Under § 411 it is the Board that speaks in the public interest. We do not sit to determine independently what is the public interest in matters of this kind, committed as they are to the judgment of the Board. We decide only whether, in determining what is the public interest, the Board has stayed within its jurisdiction and applied criteria appropriate to that determination. The Board has done that in the instant case. Considerations of the high standards required of common carriers in dealing with the public, convenience of the traveling public, speed and efficiency in air transport, and protection of reliance on a carrier's equipment are all criteria which the Board in its judgment may properly employ to determine whether the public interest justifies use of its powers under § 411.

It is argued that respondent's use of the name 'North American' cannot amount to an unfair or deceptive practice or an unfair method of competition authorizing the Board's order within § 411. 'Unfair or deceptive practices or unfair methods of competition,' as used in § 411, are broader concepts than the common-law idea of unfair competition. See Federal Trade Commission v. R. F. Keppel & Bro., Inc., supra; Federal Trade Commission v. Raladam Co., 283 U.S. 643, 648, 51 S.Ct. 587, 590, 75 L.Ed. 1324. The section is concerned not with punishment of wrongdoing or protection of injured competitors, but rather with protection of the public interest. See Federal Trade Commission v. Klesner, supra, 280 U.S. at pages 27-28, 50 S.Ct. at pages 3-4. The courts have held, in construing § 5 of the Trade Commission Act, that the use of a trade name that is similar to that of a competitor, which has the capacity to confuse, or deceive the public, may be prohibited by the Commission. Federal Trade Commission v. Algoma Lumber Co., 291 U.S. 67, 54 S.Ct. 315, 78 L.Ed. 655; Juvenile Shoe Co. v. Federal Trade Commission, 9 Cir., 289 F. 57. And see Pep Boys-Manny, Moe & Jack, Inc., v. Federal Trade Commission, 3 Cir., 122 F.2d 158, where the confusing name was not that of any competitor. The Board found that respondent knowingly adopted a trade name that might well cause confusion. But it made no findings that the use of the name was intentionally deceptive or fraudulent or that the competitor, American Airlines, was injured thereby. Such findings are not required of the Trade Commission under § 5, and there is no reason to require them of the Civil Aeronautics Board under § 411. Federal Trade Commission v. Algoma Lumber Co., supra, 291 U.S. at page 81, 54 S.Ct. at page 321; Eugene Dietzgen Co. v. Federal Trade Commission, 7 Cir., 142 F.2d 321, 327; D.D.D. Corp. v. Federal Trade Commission, 7 Cir., 125 F.2d 679, 682; Gimbel Bros., Inc., v. Federal Trade Commission, 2 Cir., 116 F.2d 578, 579; Federal Trade Commission v. Balme, 2 Cir., 23 F.2d 615, 621. See also S.Rep. No. 221, 75th Cong., 1st Sess. 2.

The Board had jurisdiction to inquire into the methods of competition presented here, and its evidentiary findings concerned confusion of the type which can support a finding of violation of § 411. The judgment of the Court of Appeals must therefore be reversed. However, since we do not understand the court to have decided whether the Board's findings were supported by substantial evidence on the record as a whole, the case is remanded to the Court of Appeals for further proceedings in the light of this opinion.

Reversed and remanded.

Mr. Justice DOUGLAS, with whom Mr. Justice REED concurs, dissenting.

Notes

1. See Hearings before a Subcommittee of the Senate Committee on Interstate Commerce on S. 3659, 75th Cong., 3d Sess. 5; 83 Cong.Rec. 6726; Hearings before a Subcommittee of the Senate Committee on Interstate Commerce on S. 2 and S. 1760, 75th Cong., 1st Sess., Pt. 1, 74.