United States: Court Refers Parts Dispute To FAA Under Primary Jurisdiction Doctrine

Marc L Antonecchia is a Partner in our New York office.

A Florida district court has taken the rare step of referring a dispute between aerospace industry competitors to the Federal Aviation Administration (FAA) under the "primary jurisdiction doctrine."1  Under this doctrine, a court may stay or dismiss an action pending resolution of a factual issue that falls within the special competence of an administrative agency. 

Plaintiff and defendants sell various fasteners installed on general aviation airframes, corporate jet aircraft, and commercial airplanes.  In order to be sold and installed, the fasteners must meet performance standards set forth in technical standard order (TSO) C-148, which is issued by the FAA.  Plaintiff alleged that defendants falsely advertised approval for certain fasteners and implemented a complex scheme using forged or fraudulent documents that purported to evidence approval.  Plaintiff sought a preliminary injunction to enjoin defendants from selling, as FAA approved, the fasteners and other products used on airplanes. 

The primary jurisdiction doctrine may justify staying or dismissing an action that raises issues of fact not within the conventional experience of judges or requires the exercise of administrative discretion.  The court noted that the two main justifications for invoking the primary jurisdiction doctrine are "the need for agency expertise and the need for uniform interpretation of a statute or regulation."

If a particular administrative agency has jurisdiction over the issue, the court considers four factors to determine whether to apply the doctrine:  (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory scheme that (4) requires expertise or uniformity in administration.

In this instance, the court determined that the factual issues were within the FAA's jurisdiction and regulatory authority, required the FAA's expertise, and necessitated regulatory uniformity.  Through Congress, the FAA has expansive authority to "promote safe flight of civil aircraft" by prescribing "minimum standards required in the interest of safety for appliances and for the design, material, construction, quality of work, and performance of aircraft." 2   Under this congressional power, the FAA has issued regulations that allow it to set minimum performance standards for specified articles used on civil aircraft.  If a specific article meets a TSO, the FAA will issue a "TSO authorization," which "is an FAA design and production approval issued to the manufacturer of an article that has been found to meet a specific TSO."3

The court elaborated on the specific process to obtain a letter of TSO design approval, which includes applying to the appropriate aircraft certification office and providing a statement of conformance and a copy of the technical data required in the applicable TSO.  After the issuance of TSO authorization, the holder of the TSO continues to undergo FAA oversight, including having to immediately notify the FAA in writing of any change that may affect the inspection, conformity or airworthiness of the article.  The applicant must allow the FAA to inspect its quality system, facilities, technical data, and any manufactured articles.  In sum, the court determined that the role of the FAA in issuing TSO authorizations involve a "myriad of factors," including analyzing the inspection and test procedures used to ensure that each article conforms to the type design as is in a condition for safe operation, i.e., the article is airworthy.

In addition to issuing approvals, the court found that the FAA has broad enforcement power, including suspending or revoking any approval based on a fraudulent, intentionally false, or misleading statement in any application or in any record or report kept, made, or used to show compliance.  The FAA may impose civil penalties, cease and desist orders, injunctions, and seek criminal fines and imprisonment.  And where, as here, a private citizen suspects violations of FAA regulations, the FAA contemplates reporting suspected unapproved parts through the FAA's Suspected Unapproved Parts Program.4  

Plaintiff asserted that the dispute should remain before the court because it encompassed nothing more than "historical fact finding" as to whether the approval existed at the time defendants advertised to the public that they had FAA approval.  Defendants contended that the issues before the court were "technical questions of whether they properly obtained the TSO-C148 approvals they say they have, and assuming they did properly obtain the approvals, when did they obtain them." 

The court determined that the issues before it were not limited to the "historical questions" of whether defendants advertised approvals that they did not receive, but included the broader questions of whether defendants forged the FAA documents, submitted those documents to the FAA, and "conned" the FAA into granted TSO-C148 approvals.  For instance, the court noted that even if it found that all of the documents alleged by plaintiff to be fraudulent actually were, it could not say whether the FAA, in its discretion, properly granted or would have granted approval.  Whether defendants should have approval "is surely a technical question for the FAA to decide in its judgment and discretion."  In referring the issue to the FAA, the court directed plaintiff to file a formal complaint with the FAA5 and ordered the delivery of relevant court filings to the FAA. 

In the aviation context, courts invoke the primary jurisdiction doctrine sparingly.  The court cited only one other instance of referring a plaintiff to seek administrative relief before the FAA.6   Other courts have declined to invoke the doctrine on the basis that the fact finder, with the aid of expert witnesses, are capable of determining defective aircraft designs.7    

Determining whether an issue is subject to "historical fact finding" by a court or "uniform regulatory enforcement" by an administrative agency is not necessarily a straightforward inquiry.  The court itself noted that the inquiry may shift during the pendency of an action:  "To be sure, the issues before the Court were – at one point in time – simply the historical questions of whether [Defendants] falsely advertised TSO-C148 approval. . . . But now, as this case has progressed, there is certainly a question here as to whether Defendants have forged purported FAA documents." 

Given that the doctrine provides for a permissive – not mandatory – remedy of referral, the result here will continue to be the exception rather than the norm.  But it does signal that, in certain instances, the combination of the FAA's approval and enforcement powers may weigh in favor of referral:  "[W]hether the FAA properly granted those TSO-C148 approvals are technical issues best left to the agency that is alleged to have been defrauded, the agency with authority to enforce its regulations and to do so uniformly." 


1 Skybolt Aeromotive Corporation v. Milspec Products, Inc., No. 5:16-cv-616, 2017 WL 2540817 (M.D. Fla. June 9, 2017)

2 49 U.S.C. § 44701(a)(1). 

3 14 C.F.R. § 21.601(b)(2).

4 FAA Order 8120.16A. 

5 14 C.F.R. § 13.5 provides:  "Any person may file a complaint with the Administrator with respect to anything done or omitted to be done by any person in contravention of any provision of any Act or of any regulation or order under it, as to matters within the jurisdiction of the Administrator." 

6 See Commander Properties Corp. v. Beech Aircraft Corp., 745 F. Supp. 650 (D. Kan. 1990) (uniformity and consistency in the aviation field would be promoted by FAA's resolution of whether wing design was defective and whether modification would correct defect and make the aircraft "airworthy").

7 See, e.g., Sunbird Air Service, Inc. v. Beech Aircraft Corp., 789 F. Supp. 360 (D. Kan. 1992) (FAA decision to certify aircraft relevant to the determination but not dispositive).

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