20 F.4th 57
D.C. Cir.2021Background:
- United Airlines sought refunds under 49 U.S.C. § 44940(g) for security fees it remitted to TSA for January 1, 2010–February 29, 2012.
- Two categories of alleged overpayments: (1) Involuntary Transfer (IT) tickets—passengers bought tickets from other carriers then were involuntarily flown on United, and United alleges it never collected those fees; (2) Exchange-Rate-Difference (ERD) tickets—fees collected in foreign currency, converted imperfectly, producing small over- or under-remittances that United says netted to an overpayment.
- United’s consultant (Ryan) ran a programmatic review and stratified random samples to calculate a $1.54M net refund; Ryan excluded eight ranges of ticket fee amounts from the programmatic universe but did not disclose that exclusion initially.
- TSA (with CBP assistance) reviewed the submission, identified methodological and data discrepancies, and denied the refund in 2020; United petitioned for review in this Court.
- The D.C. Circuit upheld TSA’s denial as to ERD tickets (methodology and data unreliable) but vacated and remanded as to IT tickets because TSA’s denial lacked adequate, reasoned explanation and failed to resolve disputed factual practice about fee transfers.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether United is entitled to refunds for Involuntary Transfer (IT) tickets | United: statute attaches liability to the carrier that sold the ticket, so United—having not sold the ticket—had no duty to collect/remit; its remittances were therefore mistakes warranting refund. | TSA: retains discretion under §44940(g) and reasonably required United to show it truly overpaid, noting possibility that transferring carriers may have passed fees to United or failed to remit. | Court: Vacated TSA denial for IT tickets; TSA’s denial was arbitrary and capricious because it relied on unsupported hypotheticals and failed to resolve factual dispute about industry practice. Remand for further consideration. |
| Whether United proved a net overpayment for Exchange-Rate-Difference (ERD) tickets | United: Ryan’s programmatic review and samples reliably show a net overpayment; TSA’s criticisms are inadequate to reject the submission. | TSA: CBP review found excluded ticket ranges, incomplete universe, sampling flaws, accounting discrepancies, and unreconciled errors undermining reliability. | Court: Upheld TSA denial for ERD tickets as reasonable—methodology and data limitations justified denial. |
| Whether TSA was required to calculate an alternative refund (Cohan principle) | United: If TSA found flaws in United’s numbers, it should approximate a refund rather than deny entirely. | TSA: No statutory duty to approximate; denying is permissible where proffered data/methods are unreliable. | Court: Rejected mandatory Cohan-style duty here; agency reasonably declined to estimate where data/methodology lacked sufficient reliability. |
Key Cases Cited
- United Airlines, Inc. v. TSA, 859 F.3d 67 (D.C. Cir. 2017) (prior appeal and remand addressing TSA audit notice issues)
- Motor Vehicles Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary-and-capricious review standard for agency action)
- Alaska Airlines, Inc. v. TSA, 588 F.3d 1116 (D.C. Cir. 2009) (scope of judicial review of TSA informal adjudication)
- Dickson v. Secretary of Defense, 68 F.3d 1396 (D.C. Cir. 1995) (agency need not be a model of analytic precision)
- Butte County, Cal. v. Hogen, 613 F.3d 190 (D.C. Cir. 2010) (agency must provide a satisfactory explanation for denials)
- Schaffer ex rel. Schaffer v. Weast, 546 U.S. 49 (2005) (burden of proof generally lies with party seeking relief absent contrary intent)
- Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930) (tax-court approximation doctrine discussed; Court distinguishes its applicability)
- Public Citizen, Inc. v. FAA, 988 F.2d 186 (D.C. Cir. 1993) (requirement that agency adequately explain its result)