Sky-Med, Inc. v. Federal Aviation Administration, No. 18-70306 (9th Cir. 2020)
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The FAA filed an enforcement action against Pacific before an ALJ, which was then appealed to the Administrator. The ALJ and Administrator held that they had the power to adjudicate the action because the FAA initially sent Pacific two separate notices alleging that Pacific was liable for civil penalties for different violations, with each notice seeking less than $50,000.
Because the FAA ultimately pursued those penalties through a single complaint seeking more than $50,000, the Ninth Circuit held that the only tribunal with jurisdiction to adjudicate the complaint was a federal district court under 49 U.S.C. 46301(d)(4). The panel explained that its conclusion is not altered by the fact that the ALJ and Administrator ultimately imposed a total penalty of less than $50,000, because a higher amount was in controversy even though not ultimately awarded. Accordingly, the court vacated the Administrator's decision and remanded with instructions to dismiss.
Court Description: Federal Aviation Administration The panel vacated a decision of the Administrator of the Federal Aviation Administration (“FAA”), and remanded with instructions to dismiss the case for lack of jurisdiction, in a proceeding wherein the FAA sought to impose $55,000 in civil penalties on Sky-Med, Inc. dba Pacific International Skydiving Center (“Pacific”) for allegedly conducting unsafe parachute operations on several occasions. Congress created two tracks for civil penalty proceedings initiated by the FAA for violations of air travel laws and regulations. If the amount of the penalty sought is relatively low, an administrative law judge (“ALJ”) in the Department of Transportation can render a decision that is appealed to the FAA Administrator, whose decision is then subject to review by a federal court of appeals. If the amount in controversy exceeds $50,000 for enforcement against small businesses like Pacific, the penalty must be sought in a case filed by the Government in federal district court. 49 U.S.C. § 46301(d)(4). The FAA brought this enforcement action against Pacific before an ALJ, and it was then appealed to the Administrator. The ALJ and Administrator held that they had the power to adjudicate the action because the FAA initially sent Pacific two separate notices alleging that SKY-MED V. FAA 3 Pacific was liable for civil penalties for different violations, with each notice seeking less than $50,000. The panel held that because the FAA ultimately pursued penalties through a single Complaint seeking more than $50,000, the only tribunal with jurisdiction to adjudicate the Complaint was a federal district court. Specifically, the panel held that the statute unambiguously establishes that federal district courts have exclusive subject matter jurisdiction over cases like this one. The panel further held that the history of 49 U.S.C. § 46301(d)(4) cuts against the FAA’s interpretation. In addition, the panel held that the purpose of the exclusive district court jurisdiction provision would be undermined if the FAA could guarantee an agency adjudicator by simply starting out with a notice of a penalty amount that comports with its preferred forum. The panel concluded that the ALJ and FAA Administrator did not have jurisdiction to resolve the merits of the FAA’s allegations.
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