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Supreme Court of the United States ______ NO. _____ In the Supreme Court of the United States ________________ SPIRIT AIRLINES, INC.; ALLEGIANT AIR, LLC; and SOUTHWEST AIRLINES CO., Petitioners, v. UNITED STATES DEPARTMENT OF TRANSPORTATION, Respondent. ________________ On Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit ________________ PETITION FOR WRIT OF CERTIORARI ________________ PAUL D. CLEMENT JOANNE W. YOUNG Counsel of Record DAVID M. KIRSTEIN JEFFREY M. HARRIS KIRSTEIN & YOUNG, PLLC BANCROFT PLLC 1750 K Street, NW, Ste. 200 1919 M Street, NW, Ste. 470 Washington, DC 20006 Washington, DC 20036 (202) 331-3348 [email protected] (202) 234-0090 Counsel for Spirit Airlines & Allegiant Air Counsel for Petitioners M. ROY GOLDBERG ROBERT W. KNEISLEY SHEPPARD MULLIN ASSOCIATE GENERAL COUNSEL RICHARD & HAMPTON SOUTHWEST AIRLINES, CO. 1300 I Street, NW 1901 L Street, NW, Ste. 640 11th Floor East Washington, DC 20036 Washington, DC 20005 (202) 263-6284 (202) 218-0007 Counsel for Southwest Airlines QUESTIONS PRESENTED In 1978, Congress passed a major initiative to deregulate the airline industry and allow the marketplace, not regulators, to determine the fares, routes, and services offered in this critical industry. Until recently, carriers were free to advertise prices in that marketplace in the same manner as virtually every other industry—on a pre-tax basis—as long as additional taxes and fees were clearly disclosed. Petitioners were quite happy not just to disclose, but to emphasize the extent to which government fees and taxes outside their control contributed to the consumer’s final cost. They also sought to emphasize that the pre-tax fares within their control were lower than their competitors. Importantly, the total price was always calculated for and clearly displayed to the customer before purchase. The Department of Transportation (“DOT”) nonetheless concluded that truthful speech about pre-tax fares and the extent of the government’s tax burden is somehow “unfair” or “deceptive.” DOT thus mandated that airline advertisements display the total price of the ticket, inclusive of all taxes and fees, and barred airlines from “prominently” identifying government-imposed taxes and fees, dictating that any such disclosures appear in “significantly smaller type.” DOT also attempted to re-regulate the extent to which carriers can sell tickets on a non-refundable basis by mandating a 24-hour refund period on most tickets. The questions presented are: ii (1) Whether DOT violated the First Amendment by mandating “total cost” advertising and restricting airlines’ truthful speech about the large (and ever- growing) share of each ticket that consists of government taxes and fees. (2) Whether DOT exceeded its statutory mandate and acted arbitrarily and capriciously by re- regulating—down to the size of typeface and the length of mandatory refunds—an industry that Congress expressly chose to deregulate. iii LIST OF PARTIES TO THE PROCEEDINGS Petitioners Spirit Airlines, Inc., and Allegiant Air, LLC were Petitioners in the proceedings before the D.C. Circuit. Petitioner Southwest Airlines Co. intervened on behalf of Spirit and Allegiant in the D.C. Circuit. Respondent U.S. Department of Transportation was the Respondent below. The American Society of Travel Agents, Inc. intervened on behalf of Respondent. iv RULE 29.6 STATEMENT Petitioner Spirit Airlines, Inc. has no parent corporation and no publicly held company has a 10% or greater ownership interest in it. Petitioner Allegiant Air, LLC is a wholly owned subsidiary of Allegiant Travel Company. As of December 31, 2011, T. Rowe Price Associates, Inc. held beneficial ownership of 10.5% of the stock of Allegiant Travel Company. Petitioner Southwest Airlines Co. has no parent company and no publicly held company has a 10% or greater ownership interest in it. v TABLE OF CONTENTS QUESTIONS PRESENTED......................................... i LIST OF PARTIES TO THE PROCEEDINGS ........ iii RULE 29.6 STATEMENT .......................................... iv TABLE OF AUTHORITIES ...................................... vii PETITION FOR CERTIORARI .................................. 1 OPINIONS BELOW .................................................... 1 JURISDICTION .......................................................... 1 CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED .................................. 1 INTRODUCTION ........................................................ 2 STATEMENT OF THE CASE .................................... 6 A. Congress’ Deregulation of the Airline Industry ......................................................... 6 B. DOT’s Longstanding Approach to Regulation of Pricing and Advertising ......... 8 C. DOT’s Recent Efforts to Re-Regulate the Airline Industry .................................... 11 D. The D.C. Circuit’s Decision ......................... 14 REASONS FOR GRANTING THE PETITION ........ 17 I. THE COURT SHOULD GRANT CERTIORARI TO ADDRESS THE CONSTITUTIONALITY OF THE TOTAL PRICE RULE .............................................. 17 A. The Total Price Rule Restricts Airlines’ Ability to Engage in Core Political Speech Informing Customers about Tax Burdens ...................................... 17 vi B. The Total Price Rule Cannot be Upheld Even as a Valid Regulation of Commercial Speech ..................................... 23 C. The D.C. Circuit’s Holding Creates a Circuit Split and Implicates Critical Issues About the Government’s Ability to Obscure Tax Burdens and Restrict Truthful, Non-Misleading Speech .............. 29 II. THE COURT SHOULD GRANT CERTIORARI TO ADDRESS WHETHER DOT MAY, BASED ON ANECDOTAL EVIDENCE, RE-REGULATE AN INDUSTRY THAT CONGRESS HAS EXPRESSLY CHOSEN TO DEREGULATE .................................... 33 CONCLUSION .......................................................... 38 APPENDIX TABLE OF APPENDICES .................................. App-1 Appendix A Opinion of the U.S. Court of Appeals for the D.C. Circuit, No. 11-1219 (June 13, 2012) ............................................ App-1 Appendix B Relevant Excerpts of DOT Final Rules, 76 Fed. Reg. 23,110 .................................... App-36 vii TABLE OF AUTHORITIES Cases 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996) .............................................. 23 American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995) .......................................... 5, 36 BellSouth Telecomms., Inc. v. Farris, 542 F.3d 499 (6th Cir. 2008) .......................... 29, 30 Central Hudson Gas v. Pub. Serv. Comm’n of New York, 447 U.S. 557 (1980) ........................ 27 Citizens United v. FEC, 130 S. Ct. 876 (2010) ...................................... 21, 26 Edenfield v. Fane, 507 U.S. 761 (1993) .............................................. 24 FDA v. Brown & Williamson Tobacco, 529 U.S. 120 (2000) .............................................. 38 Ibanez v. Florida Dep’t of Bus. & Prof. Regulation, 512 U.S. 136 (1994) .......................... 23 In re R.M.J., 455 U.S. 191 (1982) .............................................. 24 McConnell v. FEC, 540 U.S. 93 (2003) ................................................ 21 MCI v. AT&T, 512 U.S. 218 (1994) .............................................. 38 Milavetz, Gallop & Milavetz v. United States, 130 S.Ct. 1324 (2010) ........................................... 29 Morales v. TWA, Inc., 504 U.S. 374 (1992) ................................................ 6 viii New York Times v. Sullivan, 376 U.S. 254 (1964) .............................................. 16 Nixon v. Shrink Missouri Gov’t PAC, 528 U.S. 377 (2000) .............................................. 18 Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999) .............................. 27 Rosenblatt v. Baer, 383 U.S. 75 (1966) .......................................... 17, 18 Rubin v. Coors Brewing, 514 U.S. 476 (1995) .............................................. 37 Rust v. Sullivan, 500 U.S. 173 (1991) .............................................. 37 Schneider v. New Jersey, 308 U.S. 147 (1939) .............................................. 20 Sorrell v. IMS Health, 131 S. Ct. 2653 (2011) .......................................... 22 Spence v. Washington, 418 U.S. 405 (1974) .............................................. 20 Thompson v. Western States Medical Ctr., 535 U.S. 357 (2002) .............................................. 22 United States v. Alvarez, 132 S. Ct. 2537 (2012) .......................................... 31 Virginia State Bd. Of Pharm. v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976) .............................................. 22 Whitman v. American Trucking Ass’n, 531 U.S. 457 (2001) .............................................. 38 Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) ........................................ 28, 29 ix Statutes and Regulations 21 C.F.R. § 202.1(e)(4)(i)(A) ....................................... 32 42 U.S.C. § 1396b(i)(10) ............................................. 32 42 U.S.C. § 1396r-8(k) ............................................... 32 49 U.S.C. § 399.85 ..................................................... 19 49 U.S.C. § 40101(a)(6) ................................................ 8 49 U.S.C. § 40101(a)(12)(B) ....................................... 33 49 U.S.C. § 41712(a) .......................................... 2, 8, 33 Federal Aviation Act of 1958, Pub. L. No. 85-726, §§ 403-04 .................................................... 6 Other
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