KODIAK WESTERN ALASKA v. BOB HARRIS FLY. SERV.

OPINION

CONNOR, Justice.

This appeal concerns the superior court's reversal of an Alaska Transportation Commission ruling that Harris Flying Service had violated the Air Commerce Act by charging individual passenger fares while providing regular service.

Kodiak Western Alaska Airlines, Inc. (hereinafter "Kodiak Western") complained to the Alaska Transportation Commission alleging that Bob Harris Flying Service, Inc. (hereinafter "Harris") was violating sections of the Alaska Air Commerce Act, AS 02.05. The Commission found that Harris had violated AS 02.05.050(d)(3)1 by: (1) carrying passengers on an individual fare basis between points served on a "regular" basis, specifically Dillingham and Togiak, and (2) charging individual passenger fares less than those charged by Kodiak Western, the scheduled air carrier between those points.

The Commission found the gross revenue obtained from these "illegal" operations to be approximately $25,600 realized from 128 separate days of operation and, because of the substantial and continuous nature of the violations, deemed the maximum civil penalty of $150 per day appropriate. Thereupon the Commission levied a $19,200 penalty against Harris, suspending $10,000 for one year, then to be dismissed, provided that Harris cease its violative practices and commit no further violations.

On appeal, the superior court found the evidence insufficient to support the Commission's finding that Harris had provided "regular" service. Although the court found substantial evidence to uphold the finding of a tariff violation, it concluded that the penalization was "fundamentally unfair." The case was remanded to the Commission for entry of a new order and vacation of the penalty.

Kodiak Western has appealed. As the prevailing party, Harris was awarded costs against Kodiak Western with the Commission being exempted from liability. No attorney's fees were awarded and Harris has cross-appealed on that issue.2

The Alaska Air Commerce Act permits an air taxi operator to charge individual passenger fares "on bush routes or points served by him on an irregular basis." AS 02.05.050(d)(3). The controversy in the instant case is whether the service between Dillingham and Togiak provided by Harris was "regular" or "irregular." No regulations clarifying the meaning of "irregular" in the statute have been promulgated.

Appellant Kodiak Western maintains that Harris operated a consistent pattern of frequent flights between Dillingham and Togiak which constituted "regular" service. The evidence on this matter includes a listing by date of all Harris' flights between these points for the period January 1, 1975, through July 15, 1975. The listing shows that during the six and one-half month period covered by the complaint, Harris made 483 trips between Dillingham and Togiak, operating on 128 out of the 196 days. The frequency of the flights ranged from 33 to 115 per month, with as many as eleven on one day (May 1), and periods of up to eight consecutive days with no flights (March 9-16).

At the hearing Kodiak Western's chief Dillingham pilot testified that in the course of his ordinary affairs at the Dillingham airport he noticed that Harris operated a regular daily morning flight between Dillingham and Togiak, but he did not observe a consistent afternoon flight pattern. In contradictory testimony, Harris' president denied operating a regular 9:00 a.m. flight and stated that he never leaves the ground unless there is freight to be hauled or a personal "request to either go pick up traffic or take traffic." Regarding this point Harris argues that it must go whenever there is a request because AS 02.05.150 mandates that it provide service "upon reasonable request."3

Although it is clear that Harris made numerous trips between Dillingham and Togiak, we are not convinced that any hourly, daily, or weekly pattern of "regular" service was established.

Additionally, consideration must be given to the integral and essential part that air taxi services play in rural Alaskan life. Air taxi often provide the only means of transportation between isolated communities and villages. Therefore the limitation allowing per passenger fares only on bush routes or points served irregularly4 must be read together with the mandate to provide service upon reasonable request.5 It is clear that an air taxi operating "upon reasonable request" cannot control the frequency of its flights between specific points.

The Commission determined that Harris was conducting "regular," not "casual,"6 operations between Dillingham and Togiak in violation of AS 02.05.050(d)(3). Since we find that the Commission's decision was based on evidence which shows an "irregular" pattern of "service on reasonable request," we cannot agree with its conclusion. The superior court was correct in holding that the evidence was insufficient to support the Commission's findings of fact7 and that, therefore, the Commission's legal conclusions could not be upheld.8

The second issue raised by this appeal concerns Harris' tariff violation. AS 02.05.050(d)(3) provides in part that where individual passenger fares are allowable an air taxi's rate cannot be "less than that contained in the published tariff of a scheduled carrier." It is clear from the record that Harris violated this provision. However, the question remains whether Harris should be fined for charging its filed tariff rate. Although Harris violated AS 02.05.050(d)(3) by using a fare less than Kodiak Western's, Harris' tariff had been properly filed and accepted by the Commission, and would otherwise have been the "legal" rate which Harris was then authorized to charge.

Kodiak Western contends that acceptance of a filed tariff is not the equivalent of approval and that a filed tariff is not necessarily lawful. It argues that it was Harris' duty, as an air taxi operator, to ascertain the scheduled carrier's published tariff rate and to then file a proper tariff. It also maintains that the assessment of a civil penalty against Harris is a proper, albeit indirect, exercise of the Commission's enforcement responsibility. Thus, Kodiak Western's position is that Harris violated the Act and should be penalized.

Harris argues that the Commission is in the best position to determine whether the tariffs filed are lawful, that the Air Commerce Act requires the Commission to perform this duty, and that the Commission's acquiescence exonerates the violation. Harris also insists that any relief allowed should be prospective only, and that it should not be penalized for filing and observing a tariff which contained fares less than Kodiak Western's, because no reasonable person would intentionally file a tariff whereby either compliance or non-compliance made him violate the law.

The applicable statutes do not state expressly what should happen in a situation of this kind. AS 02.05.140(c) does state:

This provision does not place upon the Commission an affirmative duty to review and disapprove tariffs which are improper. But it certainly is empowered to do so. Moreover, AS 02.05.150(c) states:

Where, as here, there is no evidence that the carrier knew that its filed and accepted tariff was unlawful, the question is whether the Commission can penalize a carrier for charges collected by it before it was notified that its tariffs were in question. We think not. The Commission can act prospectively, but we find no statutory authority for the Commission to impose a penalty as to tariffs which have been filed and accepted, and as to which the carrier has not received notice that its tariff is considered legally questionable. This assumes, of course, that there is no evidence of bad faith or intentional misconduct on the part of the carrier. We are persuaded that the superior court did not err in vacating the penalty for the tariff violation.9 Prior to the instant action Harris had no notification that the tariff was violative of the act. Nor was a "cease and desist" order issued. Under these circumstances we are convinced that the severe penalty imposed by the Commission should not be reinstated.

Harris has cross-appealed from the superior court's denial of attorney's fees. It is important to observe that this was an appeal to the superior court from the determination of an administrative agency. Thus it was brought pursuant to Appellate Rule 45, and it was not an action brought under the Civil Rules. In such an appeal we believe that Civil Rule 82, which governs attorney's fees in civil cases, has no application. The rule which, by analogy, is most nearly applicable is Appellate Rule 29(d).10 Under that rule the court has discretion to award attorney's fees or not to award them.

Our review of this case reveals that the superior court correctly employed its discretion in not awarding attorney fees to Harris. It cannot be said that any party to the appeal emerged with a clear victory, and even in such an instance there would be no need to award fees as a matter of course. It follows that the superior court did not err in refusing an award to Harris.

AFFIRMED.

BOOCHEVER, Chief Justice, concurring and partially dissenting.

While I agree with the majority's treatment of the issue of attorney's fees, I dissent from the remainder of the majority opinion. I differ with the majority's reaching the issue of whether Harris was providing "regular" service. It seems to me that in dealing with the constitutional void for vagueness challenge to the statute, the majority opinion places the cart before the horse. When a party challenges a statute as being unconstitutionally vague, it must first be examined "on its face." United States v. National Dairy Products Corp., 372 U.S. 29, 32, 83 S.Ct. 594, 597, 9 L.Ed.2d 561, 565 (1963). Although historical application of the statute may be examined in connection with the vagueness inquiry, id., a statute must first survive the facial challenge before the court proceeds to examine whether the particular conduct of the party before the court falls within or without the statute. The majority opinion reverses the order of inquiry. It first concludes that Harris' activity does not fall within the terms of the statute (i.e., that he has not provided "regular" service). In Footnote 8 (Page 1203), the majority then concludes that the vagueness issue need not be reached. This is a non-sequitur. If a statute's operative term — here, "regular" — is challenged as being vague, the term must first be defined before one can face the issue of whether or not the evidence is insufficient to bring a party's conduct within the operation of the statute.

I would not pass on the issue of whether or not Harris was providing "regular" services. Depending on the definition of "regular" and "irregular" services, a close question would be presented by the facts of this case. The Commission has failed to define the terms "regular" and "irregular" services, and, in my opinion, in the absence of such definitions more adequately informing air taxi operators and others of the requirements, the statute is void for vagueness.1

I also differ from the court's decision pertaining to the penalty for charging an unlawful tariff. It was undisputed that Harris violated AS 02.05.050(d)(3) by charging a lower fare than Kodiak Western. Under AS 02.05.231, the Commission may levy a civil penalty upon a person who violates a provision of Chapter 5.2 Normally, a mens rea is not required for the violation of a regulatory provision such as those specified in the Alaska Air Commerce Act of 1960 (Chapter 5).3 AS 02.05.230 provides that knowingly violating the Air Commerce Act is a misdemeanor. The civil penalty provision, AS 02.05.231, contains no requirement of knowledge, and proof of the violator's state of mind normally should not be necessary to impose a civil penalty.4

Where, however, a tariff has been filed with the Commission, I agree that, normally, if the carrier does not have knowledge of the facts constituting a violation of the statute, the Commission should not penalize it for charges collected before the carrier is notified that its tariff provision is invalid. I think, however, that a question of fact was presented as to whether Harris knowingly charged a lower fare than Kodiak Western in violation of AS 02.05.050(d)(3). If he knowingly violated the statute, the Commission could impose an appropriate civil penalty. I believe that a factual issue was presented under which the Commission should have ascertained whether or not there was a knowing violation of the statutory provision. No such finding was made by the Commission. In a small community such as Dillingham, there certainly would be the basis for an inference that an air taxi operator would know the tariff of his competitor. I would remand to the Commission on this issue.

I have one further comment pertaining to the majority opinion. I agree with its statement as to the importance of air taxi service in many sectors of Alaska. I think, however, that there are countervailing interests pertaining to the maintenance of certificated carriers providing regular services. These carriers are required to service their routes at specified times regardless of whether or not they have paying loads. There would be no reason for furnishing such services if scheduled carriers are subject to unlimited competition by unscheduled air taxi operators. An incentive has to be furnished for the type of service furnished by scheduled carriers.

BURKE, Justice, concurring.

Like my esteemed colleague, Justice Boochever, I think the statute is unconstitutionally vague and that it is, therefore, unnecessary for this court to pass on the issue of whether there was sufficient evidence to support the Commission's finding that Harris was providing "regular" service.

Otherwise, I concur in the majority opinion.