Canfield Aviation, Inc. v. National Transp. Safety Bd.

• Decision Date: 13 September 1988
• Docket Number: No. 88-4096,88-4096
• Parties: CANFIELD AVIATION, INC., Petitioner, v. NATIONAL TRANSPORTATION SAFETY BOARD and T. Allan McArtor, Administrator, Federal Aviation Administration, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 745

854 F.2d 745

CANFIELD AVIATION, INC., Petitioner, v. NATIONAL TRANSPORTATION SAFETY BOARD and T. Allan McArtor, Administrator, Federal Aviation Administration, Respondents.

No. 88-4096.

United States Court of Appeals, Fifth Circuit.

Sept. 13, 1988.

Lawrence B. Smith, Tucson, Ariz., for petitioner.

Karen R. Bury, Peter J. Lynch, FAA, Donald D. Engen, Admin., FAA, Washington, D.C., for FAA and Nat. Transp. Safety Bd.

Petition for Review of an Order of the National Transportation Safety Board.

Before KING, JOHNSON and JOLLY, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

In this case, Canfield Aviation, Inc. makes several constitutional challenges to the revocation of its operating certificate by the National Transportation Safety Board ("NTSB"). Specifically Canfield alleges that the statutes and administrative regulations used against it violated the corporation's due process rights and operated as a bill of attainder against one employee, Reynald Crete, who was denied permission to serve as Canfield's director of operations and chief pilot because of his prior involvement with an air-taxi company whose license had been revoked. Because we find that Canfield lacks standing to assert Crete's constitutional rights, we decline to address this issue. With respect to Canfield's own claims, we find that the administrative proceedings met all necessary due process requirements, especially when considered in the light of the obvious public safety concerns involved in air traffic regulations. Accordingly, we affirm the order of the NTSB.

I

Canfield Aviation, Inc., is an air-taxi company ("ATCO") which operates in Houston, Texas, under a Federal Aviation Regulation ("FAR") Sec. 135 air-taxi certificate. In August 1987, the company was sold to Reynald Crete (former director of Cash Air, Inc.), Edward Desmet and Sandra Fournier. ¹

Later that month, Canfield began to use one airplane to make nightly runs carrying newspapers from Chicago to various points in the midwest. This route was the subject of an investigation by Otis Key, an FAA operations inspector. Key discovered through his investigation that the pilot on that flight, Steven Rochna, was not properly qualified and that by using him, Canfield had violated several FAA regulations. Key also learned of Crete's involvement in Canfield and that Crete's former business, Cash Air, Inc., had closed because its operating certificate had been revoked on an emergency basis.

Meanwhile, pursuant to the new ownership of Canfield Air, the corporation applied to amend its section 135 operating certificate by making Crete the new director of operations and chief pilot. Key determined that Crete had "materially contributed" to the reasons for the revocation of Cash Air's operating certificate and advised his superior to deny Canfield's application for that reason, pursuant to FAR 135.13(b). ² Because Crete did not meet the eligibility requirements of FAR Section 135.13(b) and was the only owner of the corporation who was a pilot, the FAA determined that Canfield did not currently have a qualified director of operations or chief pilot. For that reason, Canfield, Inc., did not meet the eligibility requirements of FAR Section 135.37, ³ and on November 2, 1987, the FAA issued an emergency order revoking Canfield's operating certificate. Canfield appealed to the NTSB and the revocation order was filed as a complaint in this proceeding. The FAA filed a motion for partial summary judgment because it claimed Mr. Crete had materially contributed to the reasons for the revocation of Cash Air's operating certificate. Cash Air had initially appealed that emergency order of revocation but withdrew its appeal on December 7, 1987. The Cash Air emergency order was attached to the FAA's motion for partial summary judgment in the proceedings against Canfield Aviation. The ALJ denied the FAA's motion for partial summary judgment.

A three-day administrative hearing was held before the NTSB administrative law judge ("ALJ"). At the hearing, Canfield presented only one witness, pilot Steven Rochna. On cross-examination the government asked Rochna not only about his work at Canfield, but also about the operations of Cash Air, where he had previously been employed. In its case-in-chief the government presented its own evidence through the testimony of another Cash Air pilot to show that Cash Air's operation was dangerous and that Crete had materially contributed to the hazardous operation of that company. The government also presented documents and witness testimony from two FAA agents regarding alleged safety violations by Canfield.

After the evidence was presented the ALJ affirmed the FAA's emergency order of revocation. In that decision he referred specifically to the charges made against Pilot Rochna and noted that there was an obvious similarity and connection between the Cash Air violations and the operation of Canfield Aviation. He found that for all practical purposes, Mr. Crete was the sole operator and motivating force in both companies and continued to show poor judgment in his management of Canfield Air. Canfield then appealed the ALJ's decision to the full NTSB. The NTSB upheld the judge's decision and affirmed the order of revocation.

II

This appeal is a review of the order by the NTSB pursuant to section 1006(a) of the Federal Aviation Act. Canfield raises several issues on appeal. First, Canfield claims that the FAA's application of FAR Sec. 135.13 operates as a bill of attainder against Mr. Crete since it effectively denies him the right to own or operate an aircraft corporation because of his previous involvement with Cash Air, without first affording him notice or opportunity to challenge the FAA's decision that Cash Air was improperly run or that he was materially responsible for its operation.

Canfield further challenges the application of section 135.13 in this revocation proceeding, arguing that by its own terms section 135.13 relates only to applications for, not revocation of, operating certificates. Finally, Canfield claims that its due process right to adequate notice was violated when the government presented evidence at the hearing concerning the charges that led to the revocation of Cash Air's certificate--charges against which, Canfield claims, it could not prepare to defend itself.

III

Canfield's first argument is that the FAA's Rule 14 C.F.R. Sec. 135.13 has been applied as a bill of attainder against Crete. The FAA's emergency revocation of Canfield's operating license was based in part upon the NTSB's ruling that Crete, who was not a named party to the revocation proceeding, had materially contributed to the reasons that Cash Air's certificate had been revoked, and that he was consequently unqualified to serve Canfield in a similarly responsible position. Canfield argues that the application here of this provision in section 135.13 effectively "blacklists" Crete by permanently preventing him from holding a managerial position in any air taxi operation, without providing him an opportunity for a hearing on the underlying alleged misconduct for which he is blamed. This regulation, according to Canfield, therefore operates as a bill of attainder against Crete, violating Article I of the Constitution. ⁴

Regardless of the possible merits of this argument, however, it is inarguable that the constitutional rights being asserted here belong to Crete as an individual, not to Canfield, the corporation. We lack jurisdiction to address the issue unless Canfield has proper standing to assert Crete's rights. We hold that it does not.

In order to maintain standing to raise a claim in federal court, (1) the plaintiff must allege an injury in fact, that creates a sufficiently concrete interest in the outcome of the suit to make it a case or controversy and (2) the plaintiff must be the proper proponent of the particular legal rights upon which the suit is based. Singleton v. Wulff, 428 U.S. 106, 112, 96 S.Ct. 2868, 2873, 49 L.Ed.2d 826 (1976). When examining standing issues in cases such as the one here, courts must be sure (1) that the litigant and the person whose rights he asserts have interests which are aligned; (2) that the litigant is as effective a proponent of that right as the third party; and (3) that the third party lacks the ability to assert his own right. Singleton, 428 U.S. at 114-15, 96 S.Ct. at 2874-75.

Canfield claims that it has suffered an injury in fact because denying Crete the ability to serve as chief operating director has affected its own property rights to own and operate a business and its property interest in its operations license. Any economic injury to Canfield in this case, however, could be resovled by simply appointing a new director or chief operating pilot. Furthermore, we find absolutely no evidence to indicate that Crete lacks the ability to assert his own rights. Crete, as the primary force behind both Cash Air and Canfield, certainly had notice of the events that caused the ALJ to rule that he could not serve on Canfield's board. Crete also had an opportunity to assert his own rights, first when Cash Air's license was revoked and then at this revocation hearing, because the NTSB's regulations specifically provide for intervenors. ⁵ Furthermore, as a practical matter, we do not ignore the fact that Crete, as essentially an alter ego to Cash Air and a major force behind Canfield, had an opportunity to determine the scope of the evidence and defenses presented in the proceeding, regardless of intervention rules. Crete was present at the entire hearing before the ALJ in this case, yet Canfield made absolutely no attempt to call him as a witness to defend his conduct at Cash Air, nor did Crete personally make any effort to defend himself against the charges he was hearing from the witness stand, which he knew beforehand would be a subject of the hearing. In short, Crete did not lack the opportunity or ability to assert...