Reeve Aleutian Airways, Inc. v. U.S.

Decision Date21 November 1989
Docket NumberNo. 88-5411,88-5411
Citation889 F.2d 1139
Parties, 58 USLW 2376 REEVE ALEUTIAN AIRWAYS, INC., Appellant, v. UNITED STATES of America, et al.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (Civil Action No. 88-00897).

Bert W. Rein, with whom Philip J. Davis and Edwin O. Bailey, Washington, D.C., were on the brief, for appellant.

R. Craig Lawrence, Asst. U.S. Atty., with whom Jay B. Stephens, U.S. Atty., and John D. Bates, Asst. U.S. Atty., Washington, D.C., were on the brief, for appellees. Richard N. Reback, Asst. U.S. Atty., also entered an appearance for appellees.

Before WALD, Chief Judge; BUCKLEY and SENTELLE, Circuit judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

This is an appeal from an order of the United States District Court for the District of Columbia. The District Court granted summary judgment in favor of the Department of Defense ("DOD") and its Commercial Airlift Review Board ("CARB") and denied the summary judgment motion of Reeve Aleutian Airways, Inc. ("Reeve"). Reeve had requested the District Court to set aside an order of CARB prohibiting Reeve's participation in DOD's airlift transportation program and to enjoin CARB's application of the DOD regulations pursuant to which CARB had suspended Reeve. Because of CARB's failure to state with any specificity the grounds for Reeve's suspension, we vacate the District Court's order and instruct the District Court to remand the matter to CARB.

A. Statutory and Factual Background

Reeve provides scheduled passenger and cargo service along the Aleutian Islands chain in Alaska. Since 1972, Reeve has participated in DOD's military airlift transportation program and has flown DOD military and civilian personnel on its regularly scheduled flights. Reeve's participation in the program is pursuant to contract with DOD.

After the 1985 commercial air disaster in Gander, Newfoundland in which almost 250 servicemen were killed, Congress directed the Secretary of Defense to establish a Commercial Airlift Review Board with responsibility regarding the suspension and reinstatement of air carriers operating under DOD contracts. 10 U.S.C. Sec. 2640(c)-(d). Department of Defense regulations empower CARB to suspend air carriers upon the occurrence of a serious or fatal accident; a violation of FAA rules, regulations, orders or standards; deficiencies in aircraft maintenance; deficient compliance with "generally accepted standards of airmanship, training, and maintenance practices and procedures"; or "[a]ny other condition which affects the safe operation of [a] carrier's flights...." 32 C.F.R. Sec. 861.4 (1988). CARB's regulations provide for a two-step procedure consisting of "temporary nonuse" and "suspension." Temporary nonuse immediately excludes a carrier from any participation in the DOD airlift transportation program; no prior notice is required, and temporary nonuse status ends automatically if suspension proceedings are not commenced within 30 days. Id. Sec. 861.6(a). If CARB determines that suspension proceedings are in order, it must notify the carrier that such proceedings are under consideration and must state the basis for them. Id. Sec. 861.6(b)(2).

The regulations provide further that the presiding CARB member is to establish such hearing procedures "as may be appropriate which shall be as informal as practicable consistent with administrative due process." Id. Carriers may appear in person and offer written or oral evidence (or both). The Board may consider, among other things, evidence of "[c]orrective actions that may have been taken by the carrier to ... [c]orrect the specific deficiencies that have led the Board to consider suspension, and ... [p]reclude recurring similar deficiencies," and "[s]uch other matters as the Board deems relevant." Id. Sec. 861.6(b)(3)(ii)-(iv). The carrier has the burden of proof by clear and convincing evidence. Id. Sec. 861.6(b)(4). CARB is not required to put on evidence at the hearing or to offer witnesses. If a carrier fails to meet its burden, it is excluded from the DOD airlift transportation program for a CARB-fixed period of time or until the carrier establishes that remedial measures have been taken. Id. Sec. 861.6(c).

In an initially unrelated development, the Federal Aviation Administration ("FAA") conducted a National Aviation Safety Inspection Program ("NASIP") review of Reeve in September and October of 1987. DOD played no role in this review. The NASIP review raised 384 items that Reeve characterizes as "opened for discussion," Appellant's Brief at 6, and that DOD characterizes as "deficiencies in Reeve's operations," Appellees' Brief at 4. Both parties agree that 28 of the items raised potential enforcement issues. Five items required FAA action, but the FAA did not suspend Reeve.

In October of 1987, CARB received from the FAA a copy of the NASIP report. By letter dated 27 November 1987, CARB placed Reeve in immediate temporary non-use status and informed Reeve that suspension action was being considered. As the basis for its actions, CARB cited the "information provided in the FAA National Aviation Safety Inspection report" which "indicate[d] deficiencies that raise serious doubts about the training and company procedures of both the operations and maintenance departments plus the airworthiness of your company's aircraft." Joint Appendix ("J.A.") at 45-46. Reeve submitted approximately 200 pages of documents to CARB concerning the NASIP report. Prior to the suspension meeting or hearing, CARB did not provide further information; Reeve did not object to the procedures, however, nor did it claim a lack of understanding of the nature of the questions raised or charges brought by CARB.

On 14 December 1987, CARB held a meeting or hearing attended by the president of Reeve and some two dozen CARB officials. Reeve protests that "CARB gave no specification of its concerns or any allegations against Reeve, made no presentation of CARB or FAA evidence or testimony against Reeve and did not give Reeve the opportunity to confront any of the FAA NASIP team or the CARB staff that analyzed the report." Appellant's Brief at 12. Reeve also claims that it was not told that the CARB staff had prepared a report reviewing potential safety implications of the NASIP report, and that CARB offered no contradictory evidence, produced no witnesses or documents, made no transcript, and made no effort to inspect Reeve's facilities, aircraft or personnel. CARB points out that Reeve did not object to the hearing, requested no witnesses or documents, and did not claim that it was unaware of the issues upon which the proceeding was based. However, the record does reflect that at the hearing Richard Reeve requested that he be advised of "any specific NASIP items about which [CARB] were sufficiently concerned to hold [Reeve] out of service." Affidavit of Richard Reeve, J.A. at 41.

On 29 December 1987, CARB suspended Reeve indefinitely from participating in the DOD program. J.A. at 47. As a basis for suspension, the letter stated without elaboration that Reeve "still fails to comply with the applicable [FAA] regulations, rules, and standards." Id. The decision prevented DOD personnel from traveling on Reeve in their official capacity. The suspension had no official effect on private travelers or non-military federal personnel, although Reeve claims that it suffered substantial economic loss both because of the loss of military traffic and because of the unfavorable publicity surrounding the decision.

Reeve appealed on 5 February 1988, raising issues of CARB's authority and of due process. In a letter dated 22 February 1988, DOD denied the appeal. Pursuant to Reeve's request for reinstatement, a DOD inspection team examined Reeve's facilities and operations on 28 March 1988. Within two weeks of the inspection, Reeve was reinstated as a DOD carrier. Reeve filed suit for review in the District Court on 1 April 1988.

B. District Court Opinion

In an unreported Memorandum Opinion dated 30 September 1988, the District Court denied Reeve's motion for summary judgment and granted DOD's cross-motion. The District Court found that CARB had jurisdiction over Reeve; Reeve does not appeal this finding. The District Court also found that Reeve was not entitled to application of the due process standards that apply to government contractors' debarment proceedings because Reeve's suspension was not a debarment. Relying on Arrow Air, Inc. v. United States, 649 F.Supp. 993 (D.D.C.1986), for the proposition that a debarment action--which re quires prior notice and a hearing--must be based on charges of fraud, dishonesty, or lack of integrity, the District Court found that the "charges against [Reeve] did not fall into this category," Reeve Aleutian Airways, Inc. v. United States, No. 88-0897, slip op. at 7, 1988WL104936 (D.D.C. Sept. 30, 1987), and that therefore "these [DOD] procedures met, and possibly exceeded what was due to plaintiff." Id. The District Court therefore granted DOD's summary judgment motion.

A. Mootness

Although it did not so argue before the District Court, DOD now asserts that Reeve's claim is moot because the carrier has been reinstated and does not face suspension in the immediate future; therefore, this Court's opinion would be merely advisory. To establish a live controversy, DOD claims, "Reeve must show that it has sustained or is immediately threatened with sustaining some specific, direct injury as a result of the official conduct it challenges...." Appellees' Brief at 11 (citing Golden v. Zwickler, 394 U.S. 103, 109-10, 89 S.Ct. 956, 960, 22 L.Ed.2d 113 (1969), and City of Los Angeles v. Lyons, 461 U.S. 95, 102, 103 S.Ct. 1660, 1665, 75 L.Ed.2d 675 (1983)). Past exposure to illegal conduct...

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