AIR EXCURSIONS LLC v. YELLEN
1:21-cv-01769
D.D.C.Apr 12, 2022Background
- Congress disbursed payroll‑support program (PSP) funds under CARES, CAA, and ARP to air carriers; Treasury administered disbursements with broad discretion.
- Corvus Airlines applied for PSP funds, then filed Chapter 11; during the bankruptcy FLOAT Shuttle purchased many Corvus assets and the right to Corvus’s federal funds per the Asset Purchase Agreement.
- Treasury paid roughly $10–10.5M (CARES/CAA) and ~$9.8M (ARP) that ultimately benefitted FLOAT; the PSP Agreements named the signatory and its “successors, and assigns” as the Recipient and barred assignment without Treasury’s written consent.
- Air Excursions planned to enter the same Alaska routes and alleges FLOAT’s PSP‑enabled below‑market fares and refusal to sublease gates caused competitive injury and lost business opportunities.
- Air Excursions sued under the Administrative Procedure Act seeking declaratory relief and clawback of the PSP payments; Treasury moved to dismiss for lack of standing and failure to state a claim.
- The court found Air Excursions plausibly alleged competitor standing at the 12(b)(6) stage but dismissed on the merits, holding the statutes and PSP Agreements leave no judicially manageable standard and that Air Excursions misreads the bankruptcy Sale Order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (competitor standing) | Air Excursions: below‑market fares funded by PSP and refusal to sublease gates caused concrete competitive injury. | Treasury: no concrete injury; entry still imminent and gate negotiation was speculative. | Court: Plaintiff plausibly alleged injury, causation, redressability at 12(b)(6); standing survives dismissal stage. |
| Reviewability under APA (statute commits discretion) | Air Excursions: Treasury’s recipient/clawback decisions are reviewable; statute/agreements can be applied by court. | Treasury: CARES/CAA/ARP give Secretary discretion to set terms ("as the Secretary determines appropriate"); clawbacks and enforcement decisions are committed to agency discretion and unreviewable. | Court: Statutory language and enforcement nature render Treasury’s recipient/clawback decisions lacking a judicially manageable standard; claim dismissed for failure to state a claim. |
| Contract/PSP Agreements as judicial standard | Air Excursions: the PSP Agreements define "Recipient" (signatory, successors, assigns) and provide a contract standard the court can apply; bankruptcy Sale Order supports FLOAT not being a successor. | Treasury: Agreements expressly preserve Treasury guidance/waiver power; Agreements grant Treasury broad discretion (e.g., to waive terms), so contract does not supply a manageable APA standard. | Court: Contract language leaves substantial Treasury discretion and does not supply a meaningful judicial standard; reliance on the Agreement cannot salvage the APA claim. |
| Meaning of bankruptcy Sale Order (successor vs assignee) | Air Excursions: Sale Order statements that buyer "shall not be deemed a successor" mean FLOAT was not entitled to the PSP funds. | Treasury: Sale Order read with the Asset Purchase Agreement shows buyer obtained rights to PSP funds; anti‑assignment protections were for Treasury’s benefit and could be waived; Asset Purchase Agreement anticipated Treasury approval/assignment. | Court: Air Excursions misreads the Order; more reasonable inference is Treasury consent/waiver and that FLOAT was successor or assignee entitled to funds; Sale Order does not entitle plaintiff to relief. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausible on its face)
- Dep't of Commerce v. New York, 139 S. Ct. 2551 (2019) (distinguishing categorical nonreviewability and reviewability doctrines)
- Heckler v. Chaney, 470 U.S. 821 (1985) (agency refusal to enforce generally committed to agency discretion)
- Webster v. Doe, 486 U.S. 592 (1988) (statutory language that ‘‘exudes deference’’ can preclude meaningful judicial review)
- PSSI Glob. Servs., L.L.C. v. Fed. Commc'ns Comm'n, 983 F.3d 1 (D.C. Cir. 2020) (competitor‑standing economic logic)
- Mendoza v. Perez, 754 F.3d 1002 (D.C. Cir. 2014) (generous view of what constitutes participation in a market for standing)