Flytenow, Inc. v. Federal Aviation Administration
420 U.S. App. D.C. 343
| D.C. Cir. | 2015Background
- Flytenow operated a website matching private pilots with members willing to share pro rata operating expenses for flights; anyone can sign up as a member.
- Flytenow requested an FAA legal interpretation whether its model complied with the Federal Aviation Act and FAA regulations governing private vs. commercial (common carrier) operations.
- FAA issued letters concluding that pilots who post flights on Flytenow and accept expense-sharing passengers both "hold out" to a broad segment of the public and receive "compensation," so they would be common carriers requiring Part 119 certification and commercial pilot credentials.
- FAA treats any reimbursement (including pro rata expense sharing) as compensation, and treats public postings to attract passengers as evidence of "holding out."
- Flytenow petitioned for review in the D.C. Circuit challenging the FAA’s interpretation as arbitrary, procedurally invalid, and unconstitutional. The court denied the petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of FAA interpretive letter (notice-and-comment) | Flytenow: FAA changed prior position; interpretive guidance that alters rights requires notice-and-comment rulemaking | FAA: Interpretation is an interpretive rule exempt from notice-and-comment under 5 U.S.C. §553(b) per Perez | Held: Perez controls; interpretive letter need not undergo notice-and-comment and is permissible |
| Whether expense-sharing is "compensation" for common-carriage analysis | Flytenow: Shared expenses in common-purpose trips are not "compensation" that triggers common-carrier status | FAA: Expense reimbursements (including pro rata shares) are compensation; §61.113 lists narrow exceptions permitting some expense-sharing despite being compensation | Held: FAA’s reading is reasonable; expense-sharing is compensation though some expense-sharing is permitted by specific regulatory exceptions |
| Whether Flytenow postings constitute "holding out" (common carriage element) | Flytenow: §119.5(k) shows advertising/offer prohibitions don’t equate to "holding out"; pilots can solicit limited/common-purpose passengers without being common carriers | FAA: "Holding out" is a common-law, fact-specific concept; public web postings designed to attract a broad segment of the public show holding out | Held: FAA reasonably concluded Flytenow’s website constitutes holding out to a broad public; pilots using it risk operating as common carriers |
| Statutory and constitutional challenges (jurisdiction, First Amendment, equal protection, vagueness) | Flytenow: FAA exceeded statutory authority; prior restraint/content-based speech restriction; equal protection and vagueness violations | FAA: Interpretation is within FAA’s mandate to regulate carriers; speech used evidentially; regulation furthers safety; classification rationally related to safety; guidance is sufficiently clear as-applied | Held: Claims fail — FAA acted within statutory authority; no unconstitutional prior restraint or improper content-based restriction; rational basis satisfies equal protection; no viable vagueness claim |
Key Cases Cited
- Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199 (2015) (agency interpretive rules are exempt from APA notice-and-comment requirement)
- Auer v. Robbins, 519 U.S. 452 (1997) (deference to an agency’s interpretation of its own regulation unless plainly erroneous or inconsistent)
- Bennett v. Spear, 520 U.S. 154 (1997) (final agency action principles applicable to judicial review)
- CSI Aviation Servs., Inc. v. U.S. Dep’t of Transp., 637 F.3d 408 (D.C. Cir. 2011) (discussing "holding out" and scope of FAA review under §46110)
- Whitaker v. Thompson, 353 F.3d 947 (D.C. Cir. 2004) (permissibility of using speech as evidentiary proof of intent)
- Holder v. Humanitarian Law Project, 561 U.S. 1 (2010) (limitation on facial vagueness challenges where plaintiff’s conduct is clearly proscribed)
- Woolsey v. Nat’l Transp. Safety Bd., 993 F.2d 516 (5th Cir. 1993) (public’s expectation of safety justifies regulatory distinctions between carriers)