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HUGHES TOOL CO. V. TRANS WORLD AIRLINES, INC., 409 U. S. 363 (1973)

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U.S. Supreme Court

Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363 (1973)

Hughes Tool Co. v. Trans World Airlines, Inc.

No. 71-827

Argued October 10, 1972

Decided January 10, 1973*

409 U.S. 363

Syllabus

Trans World Airlines (TWA) brought this antitrust action against the Hughes Tool Co. (Toolco) and others for treble damages as a result of the manner in which Toolco had exercised its controlling interest in TWA, with particular reference to Toolco's asserted acts to control and dictate the acquisition and financing of aircraft by TWA. As an organization engaged in phases of aeronautics, Toolco could not acquire control of an air carrier such as TWA without consent of the Civil Aeronautics Board (CAB). In 1944, the CAB approved de facto control of TWA by Toolco as comporting with the provisions of § 408 of the Federal Aviation Act. That provision permits acquisitions of control that the CAB finds are not inconsistent with the public interest and that will not result in monopoly. Section 414 immunizes from antitrust liability any conduct approved by a CAB order issued under § 408. The approval narrowly limited inter-company sales transactions without specific CAB approval, and required annual reporting. A few years later, Toolco and TWA made an agreement permitting Toolco to obtain full legal control of TWA. The CAB, after full hearings into the Toolco-TWA relationship, found that Toolco's financial and other support was of great importance to TWA, and concluded that "the continued interest of Toolco in TWA appears essential to the best interests of the carrier and the public." The CAB's approval was made subject to the conditions of the 1944 order. As a result, from 1944 to 1960, every acquisition and lease of aircraft by TWA from Toolco and each financing by TWA from Toolco received CAB approval pursuant to § 408. In 1960, Toolco's stock in TWA was placed in a voting trust in connection with a program for financing TWA's acquisition of jet equipment. Shortly thereafter, TWA brought this suit. As a defense, Toolco relied on Pan American World Airways v. United States, 371 U. S. 296. The District Court entered a default judgment against chanroblesvirtualawlibrary

Page 409 U. S. 364

Toolco. The Court of Appeals affirmed, concluding that Pan American was inapplicable because, unlike the situation in that case, the conduct challenged in TWA's complaint was "unrelated to any specific function of the CAB," and not within the CAB's exclusive competence.

Held: The transactions that TWA challenged as violative of the antitrust laws were under the CAB's control and surveillance, and, by virtue of §§ 408 and 414 of the Federal Aviation Act, had immunity under the antitrust laws. The Court of Appeals, therefore, erred in holding that Pan American, supra, is not controlling on the facts involved here. Pp. 409 U. S. 366-389.

449 F.2d 51, reversed.

DOUGLAS, J., delivered the opinion of the Court, in which BRENNAN, STEWART, WHITE, POWELL, and REHNQUIST, JJ., joined. BURGER, C.J.,filed a dissenting opinion, in which BLACKMUN, J., joined, post, p. 409 U. S. 389. MARSHALL, J., took no part in the consideration or decision of the cases.





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