In the case of Transcontinental & Western Air, Inc. v. Civil Aeronautics Board in 1948, the U.S Supreme Court ruled that the Civil Aeronautics Board (CAB) had exceeded its authority by ordering Transcontinental & Western Air to cease and desist from certain practices without first holding a hearing on whether those practices were unjust or unreasonable. The court held that under Section 411 of the Federal Aviation Act, CAB was required to hold such hearings before issuing cease-and-desist orders unless it could show cause why no hearing was necessary. In this instance, CAB failed to demonstrate any reason for not conducting a hearing prior to issuing an order against TWA's alleged discriminatory pricing strategy favoring long-haul over short-haul passengers which violated Sections 403(b) and 404(b). Therefore, the Supreme Court reversed and remanded with instructions for further proceedings consistent with their opinion.

In the dissenting opinion for Transcontinental & Western Air, Inc. v. Civil Aeronautics Board, Justice Robert H. Jackson disagreed with the majority's decision to uphold the Civil Aeronautics Board's (CAB) authority to allocate mail contracts among airlines based on public convenience and necessity rather than competitive bidding as required by Congress in 1934 legislation. He argued that this interpretation of CAB’s powers was a departure from legislative intent and gave too much discretion to an administrative agency without clear guidelines or standards, which could lead to arbitrary decisions or favoritism towards certain carriers over others. Furthermore, he contended that such broad power should not be inferred but explicitly granted by Congress itself through statutory law.