by Gregory J. Reigel – Attorney At Law
© 2015 All rights reserved.
In past articles, I have discussed FAA legal enforcement actions in which the FAA has suspended or revoked a mechanic’s certificate or the certificate of an air carrier or repair station, or has assessed a civil penalty against a certificate holder. In those situations, the FAA believed the regulatory violations committed by the certificate holders justified legal enforcement action to suspend or revoke the offending party’s certificate(s) or to assess a civil penalty, rather than simply resolving the violation through an administrative action.
Fortunately, once initiated, many legal enforcement cases settle. Some cases settle without a formal hearing before an administrative law judge and others may settle at some point during or even after the hearing. The settlement is an agreement between the FAA and the certificate holder to resolve the case on terms that both sides are willing to accept.
In the past, when an alleged violator settled with the FAA, the settlement was typically documented either by letter or e-mail in which both the FAA attorney and the alleged violator acknowledged the terms upon which the parties were agreeing. Based upon that documentation, the FAA attorney would then either issue an order incorporating those terms, or he or she would take any other agreed upon action (e.g. outright dismissal, or downgrading from legal enforcement action to administrative action).
However, the FAA recently updated its Order 3250.3B, FAA Compliance and Enforcement Program, to now require a more formal process for settling a legal enforcement case. Now such settlements, including settlements reached at or after hearing, must be documented with a written settlement agreement that is executed by the parties. The update states the settlement agreement should include, as applicable and appropriate, the following items:
1. The specific terms and conditions of the settlement, including the obligations of each party;
2. The “material terms and phrases that are used in the settlement that are not otherwise commonly understood or are not defined in FAA regulations or policies;”
3. The sanction proposed in the Notice of Proposed Certificate Action/Civil Penalty or ordered if an Order of Suspension, Revocation or Civil Penalty was actually issued and the sanction agreed to in settlement. In the case of a certificate action, the agreement should identify “the period of suspension or, in the case of a revocation, the number of months after which the person may apply for new certificate(s) and/or rating(s).” For civil penalty actions, the agreement should state “the amount of the assessed civil penalty, whether the assessed civil penalty will be paid in a lump sum or in installments, the date(s) when the payment(s) must be made, and if the penalty is to be paid in installments, a statement that the person will sign a promissory note.”
4. If applicable, a statement that the sanction is waived under the Aviation Safety Reporting Program;
5. A statement that the person or entity charged with violating the regulations is waiving the right to a hearing before an administrative law judge;
6. A statement regarding the costs to be paid by each party, whether each pays their own or some other allocation;
7. If applicable and appropriate, a statement that the person charged with violating the regulations agrees not to initiate any litigation under the Equal Access to Justice Act or any other statutory provision or rule to collect legal fees or costs;
8. If appropriate, a waiver of all potential causes of action against the FAA and its employees and agents, both past and present, in their personal or official capacity;
9. A statement that the agreement accurately reflects the terms to which the parties have agreed and that it is a binding agreement; and
10. Signatures by the FAA legal counsel and the individual person or entity charged with violating the regulations or the alleged violator’s authorized representative.
For the most part, I think this is a good update. By formalizing the settlement process, the updated policy hopefully ensures that both sides understand and agree with the terms upon which the case is being settled and minimizes the opportunity for later confusion or disagreement. However, the update does raise two concerns:
First, item eight (8) states that the settlement agreement should contain a waiver of “all potential causes of action” the alleged violator may have against the FAA or its employees. These claims could be related to the legal enforcement action (e.g. the alleged violator may believe that an aviation safety inspector acted improperly or contrary to law during the investigation upon which the legal enforcement action was based). Or the claims could arise from a situation unrelated to the legal enforcement action. In either event, if the settlement agreement includes the waiver, then the legal enforcement action will be settled and the alleged violator will lose all other claims.
Interestingly, the update indicates that this waiver language should be included “if applicable.” So, if the FAA attorney handling the legal enforcement action is aware of potential claims, then presumably this language will be included in a settlement agreement. For example, if an alleged violator tries to use the threat of other litigation as a bargaining chip in trying to resolve the legal enforcement action, it would be reasonable to expect that a settlement of the legal enforcement action would include the waiver language. Thus, although it may be tempting to use such a threat as leverage to settle the legal enforcement action, if an alleged violator wants to pursue claims against the FAA or individual FAA employees separate from the legal enforcement action, it may be best to either not disclose that fact or, alternatively, reject inclusion of the waiver language in the settlement agreement.
The second concern with the update is that it does not appear to allow for, or at least it does not address, inclusion of a statement by the alleged violator denying liability. In the past, the parties could agree to include this type of disclaimer in the final order issued by the FAA. For example, the issued order would include a statement that “this matter has been settled by mutual agreement of the parties. The certificate holder does not admit or stipulate to any of the allegations, determination, findings of fact or conclusions of law found herein.”
Since the update requires the inclusion of some fairly specific terms in the settlement agreement, presumably such a disclaimer would need to be in the agreement if it were going to also appear in the final order. Unfortunately, the update does not provide for or address the inclusion of this type of disclaimer. As a result, it is unclear whether the FAA will continue to allow this practice. However, it would certainly be reasonable to request that this language be included both in the settlement agreement as well as any final order that may be issued in the case. After all, a settlement is still a negotiated agreement between the parties and the added language doesn’t in any way limit the other terms of such an agreement.
In the end, although this update appears to formalize the settlement process, settling a legal enforcement action will still require the agreement of the parties. As such, the FAA and an alleged violator will still need to negotiate the terms of that agreement. Hopefully this more formal process won’t make it more difficult for either side to settle a legal enforcement action.
EDITOR’S NOTE: Greg Reigel is an attorney with Reigel Law Firm, Ltd., a law firm located in Hopkins, Minnesota, which represents clients in aviation and business law matters.
For assistance, call (952) 238-1060 or Twitter: @ReigelLaw (www.aerolegalservices.com).
