Flytenow, Inc. v. Federal Aviation Administration ( 2015 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 25, 2015 Decided December 18, 2015
No. 14-1168
FLYTENOW, INC.,
PETITIONER
v.
FEDERAL AVIATION ADMINISTRATION, ADMINISTRATOR,
RESPONDENT
On Petition for Review of an Order
of the Federal Aviation Administration
Jonathan Riches argued the cause for petitioner. With
him on the briefs were Gregory S. Winton, Clint Bolick, and
Aditya Dynar.
Sydney A. Foster, Attorney, U.S. Department of Justice,
argued the cause for respondent. With her on the brief were
Benjamin C. Mizer, Acting Assistant Attorney General,
Ronald C. Machen Jr., U.S. Attorney at the time the brief was
filed, and Mark R. Freeman, Attorney.
Before: PILLARD and WILKINS, Circuit Judges, and
GINSBURG, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge PILLARD.
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PILLARD, Circuit Judge: Flytenow, Inc., developed a
web-based service through which private pilots can offer their
planned itineraries to passengers willing to share the pilots’
expenses. After starting operations in early 2014, Flytenow
sought a legal interpretation from the Federal Aviation
Administration (FAA) regarding its business plan’s
compliance with the Federal Aviation Act of 1958 and the
FAA’s regulations. The FAA responded with a Letter
Interpretation, concluding that pilots offering flight-sharing
services on Flytenow’s website would be operating as
“common carriers,” which would require them to have
commercial pilot licenses. Flytenow’s members, licensed
only as private pilots, thus would violate FAA regulations if
they offered their services via Flytenow.com.
Flytenow asks us to set aside the FAA’s Interpretation as
arbitrary and capricious and inconsistent with statutory and
constitutional law. Because we conclude that the FAA’s
Interpretation is consistent with the relevant statutory and
regulatory provisions and does not violate Flytenow’s
constitutional rights, we deny Flytenow’s petition for review.
I.
Flytenow.com facilitates connections between pilots and
“general aviation enthusiasts” who pay a share of the flight’s
expenses in exchange for passage on a route predetermined by
the pilot. Enthusiasts must be members of Flytenow to search
for flights, but anyone may become a member by filling out
an online form. Pilots using Flytenow’s service “initially and
unilaterally dictate the time, date, and points of operation” of
their proposed flights. J.A. 48. After a member-enthusiast
expresses interest in being a passenger on a particular flight, a
pilot may “accept or reject an enthusiast’s request . . . for any
or no reason.” Id. If a pilot carries one or more passengers,
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Flytenow facilitates the sharing of expenses on a pro rata
basis between passengers and pilot. Id. Around the same
time that Flytenow publicly launched its flight-sharing
website and requested the FAA’s legal opinion, another firm
proposing a substantially similar service, AirPooler, Inc.,
submitted a parallel request for a legal interpretation on the
same issue.
The FAA is charged with “promot[ing] safe flight of civil
aircraft.” 49 U.S.C. § 44701. To that end, the FAA is
empowered to regulate nearly every aspect of private and
commercial flight, including licensing and regulation of pilots
and their operations. See, e.g., id. §§ 44701(a), 44703, 44705.
At issue here is whether the FAA permissibly concluded that
private pilots using Flytenow’s service to offer flights to
potential passengers hold themselves out as common carriers
transporting persons from place to place for compensation in
violation of the terms of their noncommercial licensure.
The FAA issues several categories of “airman
certificates” licensing qualified pilots to fly in various
capacities subject to specified terms. See id. §§ 44702,
44703; 14 C.F.R. §§ 61.81-95, 61.102-17, 61.121-33.
Relevant to this petition are “commercial pilot” licenses, id.
Part 61, subpart F, and “private pilot” licenses, id. subpart E.
Certified commercial pilots are qualified to transport
passengers or property for compensation. See id.
§ 61.133(a)(1). Private pilots, by contrast, are barred from
receiving compensation. See id. § 61.113(a).
Seven narrow, enumerated exceptions to the
compensation bar permit private pilots to receive
compensation in specified circumstances. Id. § 61.113(b)-(h).
Those exceptions authorize, for example, private pilots to
accept compensation for certain charity events, id.
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§ 61.113(d), search-and-location operations, id. § 61.113(e),
or airplane-sale-related flights, id. § 61.113(f). One of the
seven exceptions to the compensation bar provides that a
private pilot may share expenses with passengers, provided
that the pilot does “not pay less than the pro rata share of the
operating expenses” and that the expenses “involve only fuel,
oil, airport expenditures, or rental fees.” Id. § 61.113(c). The
pro rata sharing of expenses is further limited by the FAA’s
“common-purpose test,” which requires private pilots and
their expense-sharing passengers to share a “bona fide
common purpose” for their travel. See FAA Legal
Interpretation Letter from Rebecca B. MacPherson, Assistant
Chief Counsel for Regulations, to Mark Haberkorn (Oct. 3,
2011) (Haberkorn Interpretation), J.A. 41-44. Private pilots’
receipt of compensation outside of the seven exceptions is a
violation of section 61.113 subject to civil penalties under 49
U.S.C. § 46301.
In addition to pilot licensing, the FAA regulates the
conduct of aircraft and pilots in flight. The regulations make
an important distinction between private carriage and
common carriage, with the latter subject to more stringent
operating requirements.
Part 91 of the FAA’s regulations establishes baselines
that apply to all aircraft operating in the United States. See 14
C.F.R. § 91.101; see generally id. §§ 91.101-47. Part 91
governs, for example, the use of seat belts, id. § 91.107,
minimum safe altitudes, id. § 91.119, aircraft speed, id.
§ 91.117, and rights of way among aircraft, id. § 91.113.
Part 119 of the FAA’s regulations subjects flights
operating as air carriers to safety requirements beyond what
Part 91 requires of all flights. See 14 C.F.R. § 119.1. An “air
carrier” under the Federal Aviation Act is a person
5
undertaking to provide “air transportation,” 49 U.S.C.
§ 40102(a)(2), defined to include “foreign air transportation,
interstate air transportation, or the transportation of mail by
aircraft,” id. § 40102(a)(5). Interstate air transportation, the
category relevant to this case, “means the transportation of
passengers or property by aircraft as a common carrier for
compensation . . . .” Id. § 40102(a)(25). Anyone piloting as
an air carrier must have “an air carrier operating certificate”
and operate only in compliance with its terms. 49 U.S.C.
§ 44711(a)(4). The term “[a]ir carrier” for purposes of Part
119 of the regulations tracks the statutory definition. See 14
C.F.R. § 1.1. Thus, as relevant here, under the statutory and
regulatory definitions, an “air carrier” is a person engaged in
transportation of passengers as a “common carrier.”
The statute does not define “common carrier” or
“compensation.” See 49 U.S.C. § 40102(a). Instead, the FAA
has relied for nearly thirty years on a definition of common
carriage it announced in an advisory circular. FAA Advisory
Circular 120-12A (April 26, 1986) (FAA Advisory Circular),
J.A. 30-32. That circular noted the common-law heritage of
“common carriage” and “private carriage” and determined
that, because the Act left those terms undefined, FAA
“guidelines giving general explanations” of the terms “would
be helpful.” Id. ¶ 3, J.A. 30.
The FAA Advisory Circular distinguished “private
carriage” from “common carriage.” It explained that
“[p]rivate carriage for hire is carriage for one or several
selected customers, generally on a long-term basis.” Id.
¶ 4.d., J.A. 31. As long as she does not hold herself out to the
public generally, and any compensation she receives does not
exceed the passenger’s pro rata share of expenses, a private
pilot may offer private carriage consistently with the
regulations. See generally FAA Advisory Circular, J.A. 30-
6
31. In contrast to private carriage, the FAA’s Advisory
Circular defined “common carriage” as service meeting four
elements: “(1) a holding out of a willingness to (2) transport
persons or property (3) from place to place (4) for
compensation.” Id. ¶ 4, J.A. 30. The two “common carriage”
definitional factors at issue here are the first and fourth—
holding oneself out as willing to transport passengers, and
doing or offering to do so for compensation.
As noted above, a pilot with a commercial license is
qualified to offer carriage for compensation; a private pilot
may only receive compensation pursuant to one of the seven
exceptions in section 61.113. 14 C.F.R. § 61.113. Under the
FAA Advisory Circular, a pilot’s receipt of compensation
may be evidence that a pilot’s operations are “air
transportation,” meaning common carriage, requiring a higher
level of pilot qualification. FAA Advisory Circular, J.A. 31.
For example, notwithstanding the regulatory permission for
private pilots to carry selected customers and share flight
costs with them pursuant to the express exception set forth in
section 61.113(c), even carriers flying members of only “one
organization may be . . . common carrier[s] if membership in
the organization and participation in the flights are, in effect,
open to a significant segment of the public.” Id. ¶ 4.f., J.A.
31. The FAA also noted that a private pilot’s provision of
“free transportation” for a hotel or casino that requested
“nominal charges” for “gifts and gratuities” has been held to
be “common carriage based on the fact that the passengers
[we]re drawn from the general public and the nominal charge
constituted compensation.” Id. ¶ 4.g., J.A. 31.
The FAA Advisory Circular defined “holding out” as
making representations “to the public, or to a segment of the
public” that a carrier is “willing to furnish transportation
within the limits of its facilities to any person who wants it.”
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Id. The FAA warned that a private pilot may intend to offer
only private carriage, but the pilot’s flights could come to be
treated as common carriage: “The number of contracts must
not be too great, otherwise it implies a willingness to make a
contract with anybody.” Id. ¶ 4.d., J.A. 31. The FAA
emphasized that its definition of “holding out” as a factor in
the definition of common carriage is broad and flexible:
“‘holding out’ which makes a person a common carrier can be
done in many ways and it does not matter how it is done.” Id.
¶ 4, J.A. 30. If a carrier were to show that it did not have rate
schedules, that it offered services only pursuant to separately
negotiated contracts, or that the carrier occasionally refused
service to would-be customers, such facts would not
necessarily be “conclusive proof” that a carrier is a private—
as opposed to common—carrier. Id. ¶ 4, J.A. 30. A carrier
cannot avoid a “holding out” determination and its regulatory
implications simply by avoiding advertising on its own
behalf; “‘holding out’ may be accomplished through the
actions of agents, agencies, or salesmen who may,
themselves, procure passenger traffic from the general public
. . . .” Id. ¶ 4.b., J.A. 31.
The FAA responded to Air Pooler’s and Flytenow’s
requests for legal interpretations in separate letters on August
13 and August 14, respectively. The letter to Flytenow
incorporated by reference the letter to AirPooler. The letters
concluded that pilots offering services on Flytenow.com or
AirPooler.com would be engaged in common carriage as the
FAA defines it, which would subject them to Part 119, the
more stringent regulations governing pilots in air commerce.
First, in its letter to AirPooler, the FAA explained the
general rule that a private pilot may not act as pilot-in-
command of an aircraft carrying passengers or property for
compensation or hire. That general rule admits of a narrow
8
exception for private pilots’ “accept[ance] [of] compensation
in the form of a pro rata share of operating expenses” from
their passengers. J.A. 58. That expense-sharing provision is
cast as “an exception to the compensation or hire prohibition,”
that is, it specifies a circumstance in which compensation is
permitted. Id.
Second, the FAA explained that it treats flight-sharing
services as “common carriage.” Under the FAA’s definition
of “common carriage,” flight-sharing services meet the
compensation element of the common-carriage definition
because expense sharing is compensation. J.A. 59. The
“holding out” element is met by pilots’ use of the online
service to “post[] specific flights” to the website. J.A. 60. In
its letter to Flytenow, the FAA explained that “[h]olding out
can be accomplished by any ‘means which communicates to
the public that a transportation service is indiscriminately
available’ to the members of that segment of the public it is
designed to attract.” J.A. 62 (quoting Transocean Airlines, 11
C.A.B. 350 (1950) (enforcement proceeding)). The FAA
concluded that, “[b]ased on [Flytenow’s] description, the
website is designed to attract a broad segment of the public
interested in transportation by air.” J.A. 62. The FAA thus
concluded that a pilot holding out his services and receiving
expense-sharing compensation is engaged in “common
carriage” and requires a Part 119 certificate.
Flytenow timely filed this petition for review challenging
the FAA’s Interpretation.
II.
We have jurisdiction to review Flytenow’s petition under
section 46110 of the Federal Aviation Act, whether or not the
FAA’s interpretation is a final order. Even where no party
contests jurisdiction, “it is well established that a court of
9
appeals must first satisfy itself of its own jurisdiction, sua
sponte if necessary, before proceeding to the merits.”
Blackman v. District of Columbia, 456 F.3d 167, 174 (D.C.
Cir. 2006) (quoting Citizens for Abatement of Aircraft Noise,
Inc. v. Metro. Wash. Airports Auth., 917 F.2d 48, 53 (D.C.
Cir. 1990), aff’d, 501 U.S. 252 (1991)). Neither party has
identified any jurisdictional defect in this appeal, and we
perceive none.
The Federal Aviation Act authorizes review in this court
by any “person disclosing a substantial interest in an order
issued by” the FAA Administrator. 49 U.S.C. § 46110(a).
There would perhaps be an obstacle to our review of the
FAA’s Interpretation if the Administration’s letter were not
final action, but the FAA has not objected to our reviewing
the letter as an “order” under section 46110(a) or otherwise
contended that the Interpretation is unreviewable as non-final.
See Br. of Respondent 1. At oral argument, the FAA
disclaimed any non-finality bar to our review. We need not
address finality sua sponte because finality is not
jurisdictional under either the Administrative Procedure Act
or the Federal Aviation Act.
The APA authorizes judicial review of “final agency
action for which there is no other adequate remedy in a
court,” as well as “[a]gency action made reviewable by
statute.” 5 U.S.C. § 704. After a period of uncertainty in our
circuit, it is “now firmly established” that finality under the
APA is non-jurisdictional. Vietnam Veterans of Am. v.
Shinseki, 599 F.3d 654, 661 (D.C. Cir. 2010).
Like the APA’s section 704, section 46110 of the Federal
Aviation Act, on which Flytenow relies, authorizes judicial
review of an “order.” Unlike the APA, however, section
46110 does not impose any explicit finality requirement.
10
Rather, we have incorporated generally applicable finality
principles into the analysis of what counts as an “order” under
section 46110. See, e.g., CSI Aviation Servs., Inc. v. U.S.
Dep’t of Transp., 637 F.3d 408, 411 (D.C. Cir. 2011) (citing
Bennett v. Spear, 520 U.S. 154, 178 (1997)); Vill. of
Bensenville v. Fed. Aviation Admin., 457 F.3d 52, 68 (D.C.
Cir. 2006) (same); Puget Sound Traffic Ass’n v. Civil
Aeronautics Bd., 536 F.2d 437, 438-39 (D.C. Cir. 1976)
(noting that the Federal Aviation Act’s review provision,
“which gives this court power to review Board orders, has
been judicially restricted to review of final agency orders”).
Because the finality requirement under section 46110(a) is
judicially imported from the APA, it is no more jurisdictional
than the APA’s own finality requirement. Our precedent
confirms that finality under the Federal Aviation Act is a
matter of judicial creation, allowing us to “avoid premature
intervention in the administrative process.” CSI, 637 F.3d at
411 (citing Puget Sound, 536 F.2d at 438-39).
Because finality is non-jurisdictional, we accept the
FAA’s decision not to pursue any such defense it might have
had. This case presents no exceptional circumstances
warranting our consideration of the potential finality bar
despite its forfeiture. See District of Columbia v. Air Fla.,
Inc., 750 F.2d 1077, 1084-85 (D.C. Cir. 1984). Government
litigants may sometimes “want to waive or forfeit certain non-
jurisdictional, non-merits threshold defenses so as to permit or
obtain a ruling on the merits.” Grocery Mfrs. Ass’n v. Envtl.
Prot. Agency, 693 F.3d 169, 185-86 n.5 (D.C. Cir. 2012)
(Kavanaugh, J., dissenting). We do not second-guess the
FAA’s decision here.
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III.
Flytenow characterizes the FAA’s Interpretation as a
significant deviation from the Administration’s prior
interpretation of its own regulations and asserts that such a
shift requires notice and comment rulemaking under the
Administrative Procedure Act. That argument is foreclosed
by Perez v. Mortgage Bankers Ass’n, in which the Supreme
Court expressly abrogated the doctrine of our circuit upon
which Flytenow relies. 135 S. Ct. 1199, 1207 (2015)
(abrogating Paralyzed Veterans of Am. v. D.C. Arena L.P.,
117 F.3d 579 (D.C. Cir. 1997)). As the Supreme Court in
Perez explained, the APA’s “notice-and-comment
requirement ‘does not apply . . . to interpretative rules.’” Id.
at 1206 (quoting 5 U.S.C. § 553(b)(A)) (omission in original).
Perez tells us that its “exemption of interpretive rules from the
notice-and-comment process is categorical . . . .” Id. The
Interpretation at issue here is a quintessential interpretative
rule, as it was “issued by an agency to advise the public of the
agency’s construction of the statutes and rules it administers.”
Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 99 (1995)
(quoting Chrysler Corp. v. Brown, 441 U.S. 281, 302 n.31
(1979)). We thus reject Flytenow’s contention that the
Interpretation is invalid for want of notice and comment
rulemaking.
A.
On the merits, Flytenow objects that its pilots do not
engage in “common carriage” and so cannot be required to
comply with Part 119’s common-carrier licensure
requirements. Flytenow argues that the FAA has
misconstrued the definition of common carriage. When we
consider a challenge to the FAA’s interpretation of its own
regulations, the familiar Auer v. Robbins framework requires
12
us to treat the agency’s interpretation as controlling unless
“plainly erroneous or inconsistent with the regulation.” 519
U.S. 452, 461 (1997). Even without such deference, we have
no difficulty upholding the FAA’s interpretation of its
regulations in this case.
The FAA concluded that pilots offering their services on
Flytenow.com would be common carriers. That conclusion
rests on the FAA’s interpretations of “compensation” and
“holding out” as the FAA uses those two terms in its
regulations. Flytenow objects that: (1) the FAA
misinterpreted its regulations in finding that expense sharing
under Flytenow’s service would be “compensation” to
participating pilots; and (2) the FAA erroneously concluded
that pilots’ participation on Flytenow.com would amount to
“holding out” an offer of transportation to the public. Both of
Flytenow’s objections are unpersuasive.
1. Compensation. The FAA correctly interpreted its
regulation prohibiting private pilots from receiving
compensation. The FAA concluded that the exception from
the general ban on receipt of compensation—allowing private
pilots to engage in expense sharing in certain circumstances—
did not redefine expense sharing as something other than
compensation. That exception instead narrowly authorized
some expense sharing notwithstanding the otherwise-
applicable general ban on private pilots’ receipt of
compensation. Flytenow argues that the FAA’s reading
impermissibly treats the “exception to the definition [as] the
same as the definition”—i.e., that it “contort[s]” the exception
by treating what Flytenow says the regulation identifies as
“not compensation” as if it were still compensation. Reply
Br. 9. Flytenow misapprehends the FAA’s analysis. The
expense-sharing rule, by excepting certain expense sharing
13
from the ban on private pilots’ receipt of compensation,
creates a category of compensated flight that is permitted.
The text and structure of the regulation make clear that
allowable expense sharing is still compensation, albeit an
authorized subcategory. Under the heading “Private pilot
privileges and limitations: Pilot in command,” the rule
explains that, “except as provided in paragraphs (b) through
(h) of this section, no person who holds a private pilot
certificate may act as pilot in command of an aircraft that is
carrying passengers . . . for compensation or hire.” 14 C.F.R.
§ 61.113(a). In other words, section 61.113 defines the only
circumstances in which private pilots may receive
compensation. Those are set forth in seven categories of
compensation, including expense sharing, that are exempted
from the general bar. Id. § 61.113(b)-(h). The most natural
reading of that rule’s language and structure—and the reading
the FAA adopted—is that the exempted expense sharing is
“compensation,” but is nevertheless permitted in the identified
contexts. The exceptions in paragraphs (b) through (h)—
including the limited expense-sharing exception—set out
acceptable forms of compensation; they do not change the
underlying definition of compensation.
The FAA’s position that expense sharing can be
permitted compensation is consistent and well established.
Since at least the 1980s, the FAA has explained that “any
payment for a flight, even a partial payment, means that the
flight is for compensation or hire.” FAA Legal Interpretation
Letter from John H. Cassady, Assistant Chief Counsel,
Regulations & Enforcement Div., to Hal Klee, Executive
Director, Pilots & Passengers (undated, identified by FAA as
1985), J.A. 26-27. “This is true even if the payment is made
under the ‘expense sharing’ provisions . . . .” Id.; see also
FAA Legal Interpretation from John H. Cassady, Assistant
14
Chief Counsel, Regulations & Enforcement Div., to Thomas
Chero, Vice President – Legal, AVEMCO Ins. Co. (Dec. 26,
1985) (Chero Interpretation), J.A. 28. And as recently as
2011, the FAA explained that it “construes the term
compensation very broadly; any reimbursement of expenses,
including a pro rata share of operating expenses, constitutes
compensation.” Haberkorn Interpretation, J.A. 42 n.1. The
FAA correctly concluded here, in keeping with its prior
interpretation, that expense sharing is always compensation.
Flytenow argues that, where a pilot and her passengers
share a common purpose, as Flytenow’s service contemplates,
expense sharing cannot be compensation within the meaning
of the “common carrier” definition. Br. of Petitioner 19-21.
But that analysis confounds two issues. The FAA applies the
“common-purpose” test to identify the narrow circumstances
in which admittedly private pilots may share expenses under
section 61.113. See FAA Legal Interpretation Letter from
Kenneth E. Geier, Regional Counsel, to Paul D. Ware (Feb.
13, 1976) (Ware Interpretation), J.A. 23; Chero Interpretation;
FAA Legal Interpretation from Rebecca MacPherson,
Assistant Chief Counsel for Regulations, to Guy Mangiamele
(Mar. 4, 2009), J.A. 35-36; Haberkorn Interpretation. Here,
however, the question is whether Flytenow pilots would be
acting as private pilots, or instead as common carriers without
adequate licensure. The common-purpose test has no bearing
on whether compensation in the form of passengers’ expense
sharing, together with holding out to the general public, tends
to show that a private pilot is operating as a common carrier.
Flytenow invokes an interpretation from a local field
office that, it claims, read the regulations differently from all
of the interpretations issued by the FAA’s Office of the Chief
Counsel. See Br. of Petitioner 20 (citing Legal Interpretation
Letter from Loretta E. Alkalay, Regional Counsel, to Ron
15
Levy (Oct. 25, 2005)). To the extent that the Levy
Interpretation concluded that, so long as the passenger and
pilot share a common purpose, a private pilot may generally
hold herself out as providing flights on an expense-sharing
basis and remain in compliance with Part 119, it was
erroneous. An anomalous local field office interpretation
cannot control. Cf. Paralyzed Veterans of Am., 117 F.3d at
587 (“A speech of a mid-level official of an agency, however,
is not the sort of ‘fair and considered judgment’ that can be
thought of as an authoritative departmental position.”),
abrogated on other grounds by Perez, 135 S. Ct. 1199. In
sum, we reject Flytenow’s effort to recast the common-
purpose limitation as part of the definition of compensation
rather than as part of an exception under which the FAA
permits private pilots to receive compensation.
2. Holding Out. Flytenow’s argument regarding the
“holding out” element of common carriage is question-
begging and incorrect. Flytenow contends that the limitation
against pilots “holding out” is “codified in” section 119.5(k),
which bars advertising or offering unauthorized service. Br.
of Petitioner 24; 14 C.F.R. § 119.5(k). Section 119.5(k)
states: “No person may advertise or otherwise offer to
perform an operation subject to this part [governing air
carriers] unless that person is authorized by the [FAA] to
conduct that operation.” Flytenow reads that restriction to
mean that any pilot not subject to Part 119’s stringent rules
for air carriers may “advertise or otherwise offer” herself or
himself as willing to provide expense-sharing services,
without that conduct establishing the “holding out” element of
the “common carrier” definition. See Brief of Petitioner 24-
25.
As the FAA rightly notes, section 119.5(k) is not the
codification of the “holding out” requirement. Rather, section
16
119.5(k) is a prohibition on advertisement of unauthorized
services. The statute and regulations do not define “holding
out”; the FAA instead uses “holding out” as that concept is
defined through the common law, see CSI Aviation, 637 F.3d
at 415; FAA Advisory Circular, J.A. 30, and applies it in a
functionalist, pragmatic manner, see FAA Advisory Circular,
J.A. 30; Haberkorn Interpretation, J.A. 42-43.
Flytenow’s reliance on section 119.5(k) has the reasoning
backwards. The central question in this case is whether
Flytenow’s pilots are “subject to this part”—i.e. Part 119 on
commercial operation—and the answer depends on whether
the pilots are acting as “air carriers,” see 14 C.F.R.
§ 119.1(a)(1) (“This part applies to each person operating or
intending to operate civil aircraft . . . [a]s an air carrier . . . .”).
As noted above, an “air carrier” is a “common carrier.” See
14 C.F.R. § 1.1 (defining “air carrier”). Section 119.5(k) does
not define, but depends on, whether a pilot is operating as a
common carrier, which turns in part on whether the pilot is
“holding out.”
Under the definition of “holding out” the FAA articulated
in the 1986 circular, J.A. 30, we have no trouble finding that
Flytenow’s pilots would be doing so. Flytenow.com is a
flight-sharing website putatively limited to members, but
membership requires nothing more than signing up. Any
prospective passenger searching for flights on the Internet
could readily arrange for travel via Flytenow.com.
Flytenow’s statement to its members that its pilots may on a
case-by-case basis decide not to accept particular passengers
is not to the contrary. As the FAA noted in its circular, no
“conclusive proof” that a pilot is not a common carrier can be
gleaned from the absence of rate schedules, or pilots
occasionally refusing service or offering it only pursuant to
17
separately negotiated contracts. FAA Advisory Circular, J.A.
30.
Finding that Flytenow’s pilots are “holding out” does not
lead to the absurd consequences of which Flytenow warns.
See Br. of Petitioner 25. It is simply not accurate, as
Flytenow fears, that “any pilot communicating an expense-
sharing flight, for the sole purpose of identifying a common
purpose, will now be considered holding out to provide
common carriage.” Id. Pilots communicating to defined and
limited groups remain free to invite passengers for common-
purpose expense-sharing flights. See Br. of Respondent 30.
As the FAA notes, id., nothing in the challenged
Interpretation calls into question the FAA’s reasoning or
conclusions in its 1976 Ware Interpretation, in which the FAA
opined that posting on a bulletin board is permitted in certain
circumstances. J.A. 23. Nor does the Interpretation call into
question the continuing vitality of the expense-sharing rule.
See Br. of Petitioner 33. Private pilots continue to enjoy the
right to share expenses with their passengers, so long as they
share a common purpose and do not hold themselves out as
offering services to the public.
B.
In its reply brief, Flytenow raises a new line of attack
against the Interpretation, contending that it must be set aside
because the FAA’s definition of common carriage
contravenes the common-law definition. “Ordinarily, we will
not entertain arguments or claims raised for the first time in a
reply brief.” Forman v. Korean Air Lines Co., 84 F.3d 446,
448 (D.C. Cir. 1996). As we have explained, considering
such arguments “is not only unfair to an appellee, but also
entails the risk of an improvident or ill-advised opinion on the
legal issues tendered.” McBride v. Merrell Dow & Pharm.,
18
Inc., 800 F.2d 1208, 1211 (D.C. Cir. 1986) (internal citations
omitted).
In its opening brief to this court, Flytenow did not contest
the FAA’s definition of common carriage. To the contrary, it
invoked the FAA Advisory Circular’s articulation of the
FAA’s understanding of common carriage. See Br. of
Petitioner 6 n.6, 11, 25. Thus, in its response, the FAA did
not defend its Interpretation on the ground that its definition
of common carriage is in keeping with the common law, aside
from making passing reference to a decision in this court that
noted the common-law pedigree of “common carriage.” See
Br. of Respondent 30 (citing CSI, 637 F.3d at 415). We
therefore do not consider Flytenow’s argument that the FAA’s
decision contravenes the common law. That argument is
forfeited.
IV.
Flytenow raises several other statutory and constitutional
claims. The government argues that these claims are barred
by the Federal Aviation Act’s exhaustion requirement, 49
U.S.C. §46110(d), because Flytenow did not raise them
before the agency. The exhaustion requirement does not
apply here, however, because there was a “reasonable
ground” for Flytenow’s failure to raise its arguments before
the agency. Id. The Interpretation did not result from the
type of administrative “proceeding” in which Flytenow was
notified of an agency proposal and had a chance to raise
statutory or constitutional objections. See Elec. Privacy Info.
Ctr. v. U.S. Dep’t of Homeland Sec., 653 F.3d 1, 8 (D.C. Cir.
2011); cf. Cont’l Air Lines v. Dep’t of Trans., 843 F.2d 1444,
1455-56 (D.C. Cir. 1988). Remand to the FAA in this case
would not serve the policies that exhaustion is meant to
protect. The agency has not identified any factual disputes
19
relevant to Flytenow’s statutory or constitutional objections,
nor does it hint that it missed any opportunity to apply its
expertise or revise its rule to avoid Flytenow’s objections.
See generally McKart v. United States, 395 U.S. 185, 194
(1969). Flytenow was not required to have raised these
challenges before the FAA.
A.
Flytenow argues that the FAA has exceeded its
jurisdiction under the Federal Aviation Act by regulating
private communications on a website. That argument
misreads the statute and misapprehends the role of the FAA.
The Federal Aviation Act directs the FAA to regulate
common carriers. 49 U.S.C. § 44705. As noted above, the
“sine qua non” of a common carrier is “some type of holding
out to the public.” CSI, 637 F.3d at 415.
The FAA must consider whether air carriers hold
themselves out to the public to determine which FAA rules
apply. In considering what information pilots communicate
via Flytenow.com, and to whom, the FAA relies on the
communications as evidence of “holding out,” thereby
reaching conduct the Act indisputably authorizes it to
regulate. Flytenow’s complaint that the FAA treats “all
Internet-based communications by a pilot, concerning a
proposed expense-sharing flight” as “necessarily ‘holding
out’” is inaccurate. Br. of Petitioner 27. The FAA opined
only on the type of flight-sharing program described in
Flytenow’s and AirPooler’s requests for legal interpretation.
See J.A. 60, 61-62. Other kinds of internet-based
communications, such as e-mail among friends, for example,
seem unlikely to be deemed “holding out” under the FAA’s
Interpretation.
20
If accepted, Flytenow’s argument that the FAA lacks
statutory authority to consider the evidentiary value of
Flytenow’s speech would frustrate the FAA’s enforcement of
the Federal Aviation Act. The Act calls on the FAA to
regulate certain aspects of the commercial speech of pilots
and airlines. For example, the FAA regulates in detail airline
computerized reservation systems, requiring that they display
particular information, including schedules and fares, in
particular ways. 14 C.F.R. §§ 255.1-.8. The FAA requires
that airline websites disclose on-time performance data for
any domestic flight for which the sites provide schedule
information. Id. § 234.11(b). The FAA also requires
disclosure of code-sharing arrangements among airlines, and
bans airlines from holding out code-sharing flights for sale
without such disclosure. Id. §§ 257.4-.5. In each such case,
the FAA’s speech-related requirement is consistent with its
statutory mandate.
B.
Flytenow’s three constitutional arguments are unavailing.
1. First Amendment. Flytenow challenges the
Interpretation as a First Amendment violation on the grounds
that: (1) the Interpretation imposes an unconstitutional prior
restraint on Flytenow’s commercial speech; and (2) the
Interpretation is an impermissible content-based regulation.
Flytenow misdescribes the Interpretation as a prior
restraint. See generally Alexander v. United States, 509 U.S.
544, 549-54 (1993). The Interpretation does not bar any
speech in advance, but sets forth the FAA’s view that pilots
advertising their services on Flytenow.com risk liability if
they are not licensed for the offered services. Thus, the
Interpretation explains the possible consequences of speech,
but does not enjoin it. In any event, the advertising of illegal
21
activity has never been protected speech. See, e.g., Pittsburgh
Press Co. v. Pittsburgh Comm’n on Human Relations, 413
U.S. 376, 388-89 (1973).
The FAA’s reliance on Flytenow’s speech as evidence of
“holding out” is fully compatible with the First Amendment.
It is well settled that “the First Amendment allows ‘the
evidentiary use of speech to establish the elements of a crime
or to prove motive or intent.’” Whitaker v. Thompson, 353
F.3d 947, 953 (D.C. Cir. 2004) (quoting Wisconsin v.
Mitchell, 508 U.S. 476, 489 (1993)). In Whitaker, the court
upheld the FDA’s reliance on a drug company’s speech (via
its drug labeling) to infer that company’s intent to sell a drug
for purposes for which it was not authorized. Id. In this case,
the FAA is doing much the same thing: it is using speech
(postings on Flytenow.com) as evidence that pilots are
offering service that exceeds the limits of their certifications.
Any incidental burden the FAA’s regulations impose on
pilots’ speech does not violate the First Amendment because
the regulations further an important government interest
unrelated to the suppression of free expression. United States
v. O’Brien, 391 U.S. 367, 377 (1968). Barring pilots from
holding themselves out to the public to provide services for
which they are not licensed directly advances the
government’s interest in “promot[ing] safe flight of civil
aircraft in air commerce.” 49 U.S.C. § 44701(a). Seeking to
prevent advertising of services by or on behalf of pilots not
licensed to offer them is a constitutionally permissible way to
advance the policy that “the general public has a right to
expect that airlines which solicit their business operate under
the most searching tests of safety.” Woolsey v. Nat’l Transp.
Safety Bd., 993 F.2d 516, 522 (5th Cir. 1993).
22
2. Equal Protection. Flytenow’s Equal Protection
challenge also fails. Flytenow makes no claim that the FAA’s
classification implicates any fundamental right or categorizes
on any inherently suspect basis, but contends that the FAA’s
regulations cannot be sustained under rational basis review.
See, e.g., Fed. Commc’ns Comm’n v. Beach Commc’ns, Inc.,
508 U.S. 307, 313-15 (1993). To succeed, Flytenow would
have to negate “every conceivable basis which might support”
the challenged classification. Id. at 315 (quoting Lehnhausen
v. Lake Shore Auto Parts Co., 40 U.S. 356, 364 (1973))
(internal quotation marks omitted).
The FAA’s distinction between pilots offering expense-
sharing services on line to a wide audience and those offering
expense-sharing services to a limited group is justified:
holding out to the public creates the risk that unsuspecting
passengers, under the impression that the service and its pilots
lawfully offer common carriage, will contract with pilots who
in fact lack the experience and credentials of commercial
pilots. Regulators have good reasons to distinguish between
pilots who are licensed to offer services to the public and
those who are not, as other courts have recognized. See
Woolsey, 993 F.2d at 522.
3. Vagueness. Finally, there is no credible claim that the
Interpretation is unconstitutionally vague. The FAA
announced that pilots offering expense-sharing flights on
Flytenow.com are holding themselves out to provide common
carriage and are therefore subject to Part 119. The Agency
was clear in its application of its regulation to Flytenow:
“You suggest there is no holding out . . . . We disagree. . . .
[Flytenow.com] is designed to attract a broad segment of the
public interested in transportation by air.” J.A. 62. Flytenow
is in no position to assert a facial vagueness challenge. “[A]
plaintiff who engages in some conduct that is clearly
23
proscribed cannot complain of the vagueness of the law as
applied to the conduct of others.” Holder v. Humanitarian
Law Project, 561 U.S. 1, 18-19 (2010) (quoting Hoffman
Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495
(1982)).
***
For the foregoing reasons, Flytenow’s petition for review
is denied.
So ordered.