[00:00:01] Speaker 03: Case number 14-1168, FlightNow Inc. [00:00:04] Speaker 03: Petitioner versus Federal Aviation Administration Administrator. [00:00:08] Speaker 03: Mr. Riches for the petitioner, Ms. [00:00:10] Speaker 03: Foster for the respondent. [00:00:58] Speaker 05: Mr. Riches. [00:01:02] Speaker 00: Good morning, and may it please the court, I am Jonathan Riches on behalf of FlightNow Inc. [00:01:07] Speaker 00: Petitioners, I'd like to reserve about three minutes for rebuttal. [00:01:11] Speaker 00: In the order under review, the FAA has stopped pilots from doing what they have been doing since the beginning of general aviation, and that is sharing expenses with their passengers simply because those pilots use the internet to communicate. [00:01:27] Speaker 03: That's not correct. [00:01:29] Speaker 03: It's because they communicate, not because they use the internet. [00:01:33] Speaker 00: Your Honor, what – that is correct, Your Honor. [00:01:35] Speaker 00: It is because they communicate. [00:01:37] Speaker 03: It's because the means of communication that they selected in this – It wouldn't make any difference as far as the FAA's argument is concerned or their analysis, whether the pilots put up signs at the airport or use the Internet or just spread the word. [00:01:54] Speaker 00: We think that would, and in fact, historically, the where interpretation, the FAA has told us that bulletin boards are perfectly permissible. [00:02:02] Speaker 03: The bulletin board of the college, that's the case you're talking about? [00:02:09] Speaker 03: Yes, your honor. [00:02:10] Speaker 03: holding out to a very limited audience of peers. [00:02:15] Speaker 03: But in any event, that was a, I believe that was a regional office interpretation, am I right? [00:02:22] Speaker 00: No, Your Honor, that was the Levy. [00:02:24] Speaker 00: In the Levy interpretation, they said that the internet communications were perfectly permissible. [00:02:29] Speaker 03: The Levy one? [00:02:30] Speaker 03: Levy, yes, Your Honor. [00:02:31] Speaker 03: Which was the Maryland office or something? [00:02:33] Speaker 04: That's correct. [00:02:35] Speaker 04: Can I just ask a question about really the first thing that came out of your mouth, which is that this is an order, but we're not really reviewing an order, right? [00:02:47] Speaker 00: We're reviewing what is a final agency action under the jurisdiction of 49 USC 46110. [00:02:56] Speaker 04: Well, the statute says an order, right? [00:03:01] Speaker 04: You're saying an order or final agency action. [00:03:08] Speaker 04: But how do we know that FlightNow couldn't seek further reconsideration or further a hearing or fact finding, et cetera? [00:03:23] Speaker 04: I mean, I guess the problem that I have with this case, to be very candid, is that there's a lot of facts that we don't know. [00:03:31] Speaker 04: And all of these decisions seem to be very fact bound. [00:03:36] Speaker 00: What we do know, Your Honor, is that the FAA has settled on a firm legal position for which there are legal consequences, namely the cessation of operations for our client. [00:03:47] Speaker 03: Was there no procedure within the FAA by which you could appeal, as it were, the letter ruling? [00:03:55] Speaker 00: No, Your Honor, and the reason that's the case is because enforcement action had not yet been taken against individual clients, although it was threatened. [00:04:04] Speaker 00: And that put our client flight down the position of seeking pre-enforcement review from the FAA. [00:04:10] Speaker 00: And then 49 USC 46110 grants this court jurisdiction to review that final agency order. [00:04:16] Speaker 05: So there's not a way to get further review within the agency. [00:04:19] Speaker 05: You're saying short of enforcement, short of an enforcement action? [00:04:23] Speaker 00: That's correct, Your Honor. [00:04:24] Speaker 00: So the only way that that would happen is, and we now know what the agency's stated position is. [00:04:28] Speaker 00: So that would require somebody willing to run afoul of agency regulations. [00:04:33] Speaker 00: So there's literally no way to seek relief apart from this court's jurisdiction under the relevant federal statute. [00:04:41] Speaker 04: But I guess, [00:04:46] Speaker 04: We don't know, I mean, there have been lots of different factual scenarios that have been presented to the FAA. [00:04:56] Speaker 04: And some of them, like the College Bulletin Board, and then there was the one back in 2005. [00:05:03] Speaker 04: Well, I guess that was the Levy letter was in 2005. [00:05:10] Speaker 04: But I guess what I'm having trouble figuring out is [00:05:16] Speaker 04: is what facts were important to the FAA in this instance in determining that that flight now was holding out. [00:05:30] Speaker 00: Frankly, Your Honor, we're having trouble figuring out the same thing because the FAA hasn't said and won't say. [00:05:36] Speaker 00: What they have said is that FlightNow's operations, and we know all the relevant facts there, are impermissible. [00:05:43] Speaker 00: And what we do know is that that determined all rights and obligations with respect to FlightNow and its member pilots. [00:05:50] Speaker 04: Well, how can we review an order or a final agency action when we don't really understand the basis for the action? [00:06:00] Speaker 00: Well, we think that we do with respect to these particular petitioners. [00:06:06] Speaker 00: When FlightNow petitioned the FAA, they laid out all the relevant facts in terms of how their operations work. [00:06:13] Speaker 00: They laid out all relevant information in terms of the FAA certified pilots that participate on the website. [00:06:20] Speaker 05: And it would be helpful, these are facts that are, and you are Bailey Wick, to point us to facts that [00:06:27] Speaker 05: that FlightNow is not holding out to the general public. [00:06:31] Speaker 05: Because I think that's where, I think the internet is, it's less about communication and more about the ability of any potential passenger to, any potential passenger to find the service. [00:06:44] Speaker 05: And that, you know, that does go a long way toward raising a concern about holding out. [00:06:50] Speaker 05: And you have some facts about how that's not, it's not completely open to anyone. [00:06:54] Speaker 00: Yes, Your Honor, and in fact, I think the important point is we shouldn't even get to holding out. [00:07:01] Speaker 00: Holding out applies to Part 119 operations, which are commercial in nature, necessarily. [00:07:08] Speaker 00: Those are business operations. [00:07:09] Speaker 05: But they're trying to determine whether this is a commercial operation, and one way they do that is they look at the character of it and they say, well, gee, it looks like, you know, in their position, I know you differ, but their position is, [00:07:19] Speaker 05: that there's compensation here. [00:07:22] Speaker 05: And because it's in this different context, it's not subject to the exception for cost sharing by private pilots. [00:07:28] Speaker 05: And so there is some pressure on holding out. [00:07:30] Speaker 05: So what's your best facts and circumstances on why flight now is not holding out generally? [00:07:39] Speaker 00: I'd like to address that, Your Honor, but we only get to holding out if it's... Let's address that and then we can go around to the other argument. [00:07:48] Speaker 00: Yes, Your Honor. [00:07:49] Speaker 00: For several reasons. [00:07:49] Speaker 00: FlightNow is an exclusive website, so it's not open to everybody. [00:07:55] Speaker 00: The FlightNow... How long is it not open? [00:07:58] Speaker 02: I'm sorry, your honor. [00:07:59] Speaker 02: To whom is it not open? [00:08:01] Speaker 00: It's only open to pilots who are certified and fully trained and licensed by the FAA. [00:08:06] Speaker 03: I thought you meant on the passenger side. [00:08:09] Speaker 00: Any person can apply to become a flight enthusiast on flight now. [00:08:13] Speaker 00: That doesn't necessarily mean that they will remain on the website. [00:08:16] Speaker 00: If, for instance, there's evidence that they were a disruptive passenger or something like that. [00:08:20] Speaker 05: Well, that's like, I can apply for Uber and I get the app. [00:08:23] Speaker 05: I mean, I have to take a step, but I guess presumably they could bar me if I'm, you know, abuse their drivers. [00:08:30] Speaker 05: But that's not much of a screen. [00:08:32] Speaker 00: Well, Your Honor, if you look at what the FAA has permitted, namely bulletin boards, neither is that. [00:08:38] Speaker 05: I'm more interested in your pointing me to where in the record you show any meaningful restrictions. [00:08:44] Speaker 05: So you have to join. [00:08:48] Speaker 05: What else? [00:08:49] Speaker 05: Anything else? [00:08:50] Speaker 00: Yes, sir. [00:08:51] Speaker 00: And importantly, for those who join, they don't have any discretion in terms of unlike Uber. [00:08:59] Speaker 00: They don't have any or unlike a charter service. [00:09:01] Speaker 00: Those individuals don't have any discretion in terms of I'd like to go from point A to point B. All of that information is determined by the FAA certified pilot members. [00:09:12] Speaker 00: That's a pretty crucial distinction, particularly when we're talking about common carriers, which [00:09:17] Speaker 00: They very clearly are not, under the definition of this court. [00:09:21] Speaker 04: But the Haber-Korn interpretation from, I think it's 2011, right? [00:09:30] Speaker 04: That's the person who said, well, what if I just want to post on Facebook that I'm making a flight from A to B, and I want to see if any of my Facebook friends will want to tag along and share expenses. [00:09:49] Speaker 04: The FAA said that that may be holding out, right? [00:09:53] Speaker 04: Even though that's, you know, their Facebook friends presumably aren't the general public, right? [00:09:59] Speaker 00: The FAA said may. [00:10:00] Speaker 00: They didn't say that it was. [00:10:03] Speaker 00: And we think the reason you never need to get to holding out, under the definition of this court, in fact, under the FAA's own regulations, is there has to be a commercial enterprise [00:10:13] Speaker 00: In this place, in this circumstance, there is no commercial enterprise. [00:10:17] Speaker 00: These are pilots sharing expenses with their passengers. [00:10:21] Speaker 00: If this was a commercial enterprise, Your Honor, it would be the only commercial enterprise in the history of the world for which pursuing a profit was not possible, because pilots are sharing expenses. [00:10:31] Speaker 00: They are not pursuing any kind of profit. [00:10:34] Speaker 03: Well, but the agency's position is that they are compensated. [00:10:39] Speaker 00: And we think the agency is incorrect there. [00:10:42] Speaker 03: I understand that, but that's the argument you're attacking is one that is a corollary of their premise that there's compensation involved there. [00:10:54] Speaker 00: Although, Your Honor, that argument that in order to even get to compensation, that presupposes that there's a commercial operation. [00:11:00] Speaker 00: That presupposes that Part 119 applies. [00:11:04] Speaker 05: But is Flight Now not a commercial entity? [00:11:08] Speaker 00: FlightNow Inc. [00:11:09] Speaker 00: is, Your Honor. [00:11:10] Speaker 05: And the pilots have to pay to be among the pilots that are able to list on FlightNow? [00:11:16] Speaker 00: The flight enthusiasts, Your Honor. [00:11:17] Speaker 00: Not the pilots themselves, no. [00:11:19] Speaker 00: So the passengers. [00:11:21] Speaker 00: All FlightNow does, and it's an important point, is connect pilots willing to share expenses or interested in sharing expenses with passengers who are interested in joining in on that flight adventure. [00:11:34] Speaker 00: And the passengers pay [00:11:36] Speaker 00: would pay flight now a fee for connecting the pilots and the passengers. [00:11:40] Speaker 04: So they don't pay passengers or potential passengers don't pay a membership fee like you know X dollars a month or X dollars a year to join. [00:11:49] Speaker 04: No, Your Honor. [00:11:50] Speaker 04: Flight now only gets paid a commission once they are joined with a pilot and the flight takes place. [00:11:58] Speaker 04: That's correct, Your Honor. [00:12:00] Speaker 03: I think I heard you suggest that it was important to note that it was the pilots who determined the points A and B, not the passenger. [00:12:12] Speaker 03: Is that any different from a railroad? [00:12:15] Speaker 03: A railroad can go only from A to B, only where its tracks are. [00:12:18] Speaker 00: Well, I guess what's different in the railroad context is that they're clearly a common carrier. [00:12:26] Speaker 00: They can't refuse passengers indiscriminately. [00:12:30] Speaker 00: Why it's important in this context? [00:12:33] Speaker 00: is because the FAA has set out what's called the common purpose test for years, since the beginning of general aviation. [00:12:40] Speaker 00: And what that says is that if the pilot is determining the route, and both pilot and passenger have an independent reason for traveling there, then there is no compensation. [00:12:49] Speaker 00: And that's exactly what's happening here. [00:12:53] Speaker 04: And they say it's no compensation, or they just say that it's an exception. [00:13:01] Speaker 04: It's not that we are defining this to not be compensation, it's that it's an exception to the rule that prohibits compensation. [00:13:11] Speaker 00: We think they've actually said both. [00:13:16] Speaker 00: We know, and this is at Petitioners Addendum 2, [00:13:19] Speaker 00: that at least since 1964, and the FAA has reiterated this time and again, the FAA said, one or more passengers contributing to the actual operating expenses of a flight is not considered the carriage of persons for compensation or hire. [00:13:33] Speaker 00: The FAA reiterated that in 1997. [00:13:35] Speaker 00: That's it. [00:13:35] Speaker 03: That's because they had previously set out the compensation is any receipt of consideration and then said, but we're going to make an exception. [00:13:45] Speaker 03: We're going to allow it. [00:13:46] Speaker 03: It's compensation, but we're going to allow it. [00:13:48] Speaker 00: Your honor, I think they were much clearer than that. [00:13:52] Speaker 00: That might have been the FAA's position in 1963 in the proposed notice of rulemaking. [00:13:58] Speaker 00: But in the final rule, the FAA clearly said this wasn't compensation and reiterated that time and again. [00:14:04] Speaker 00: And then throughout the years, the FAA set out the common purpose test to determine whether, in fact, something is or is not compensation. [00:14:12] Speaker 00: And if there's a common purpose, it clearly isn't. [00:14:14] Speaker 03: I just don't see how you think we can avoid dealing with holding out. [00:14:22] Speaker 03: What's the sequence here? [00:14:23] Speaker 00: Thank you, Your Honor. [00:14:25] Speaker 00: I think we never, this Court never needs to reach holding out. [00:14:29] Speaker 00: Holding out only applies to Part 119, commercial operations. [00:14:36] Speaker 03: And the agency has said you're engaged in [00:14:40] Speaker 03: We're proposing Part 119 operations and by reason of your holding out. [00:14:46] Speaker 00: Your Honor, this is the first time the agency has ever said that expense sharing under Part 91, not under Part 119, is actually compensation. [00:14:55] Speaker 00: In 60 years, this is the first time that the agency has ever deemed expense sharing a commercial operation. [00:15:01] Speaker 00: This is a radical departure. [00:15:03] Speaker 05: I mean it's not quite fair because there's technology now available to match people by the internet and so it's no surprise that there are opportunities for holding out that didn't previously exist and the agency is trying to figure out how to respond to those. [00:15:19] Speaker 00: agree entirely, Your Honor, with respect to commercial for-profit business operations that are properly licensed under 119. [00:15:27] Speaker 00: This is not a business. [00:15:28] Speaker 05: But that's the question. [00:15:29] Speaker 05: You're assuming the answer to the question that we have to answer, which is, are you a commercial enterprise? [00:15:34] Speaker 00: In fact, Your Honor, I think the FAA is assuming that answer. [00:15:38] Speaker 00: Here's where we know it. [00:15:39] Speaker 00: The FAA tells us expressly in the FARs, and this is at 14 CFR 1.1, [00:15:47] Speaker 00: So these pilots, according to the FAA, can be one of two commercial operators. [00:15:51] Speaker 00: They can be something like a charter operation or something like an air carrier, so Delta. [00:15:56] Speaker 00: We know because these are four and six passenger planes, we're not dealing with Delta and air carriers. [00:16:01] Speaker 00: So the most closely analogous operation that these could be are charter operations. [00:16:07] Speaker 00: But the FAA tells us in their regulations, how do we determine compensation for charter operations? [00:16:13] Speaker 00: And what it says is this. [00:16:14] Speaker 00: 14 CFR 1.1. [00:16:17] Speaker 00: Where it is doubtful that an operation is for compensation or higher, the test applied is whether the carriage by air is merely incidental to the person's other business or is in itself a major enterprise for profit. [00:16:30] Speaker 05: But that's a separate question. [00:16:32] Speaker 05: I mean, there we're assuming that the pilots that are flying those [00:16:37] Speaker 05: flights are commercially licensed pilots. [00:16:40] Speaker 05: And here the question is, you know, it's the Airbnb question. [00:16:43] Speaker 05: It's like, are you operating a hotel or are you entertaining guests? [00:16:49] Speaker 05: And so what they say about charter seems to me a little orthogonal to the question that is before us. [00:16:56] Speaker 00: We believe it's a fundamental threshold question. [00:16:59] Speaker 00: Unlike Airbnb, these pilots can't pursue a profit. [00:17:04] Speaker 00: They're just sharing expenses, which has been permitted since the beginning of flight. [00:17:09] Speaker 05: Given the size of most people's mortgage, they're probably also not making a profit. [00:17:13] Speaker 05: They're getting some amount of cost sharing for the cost that they're paying for their property. [00:17:20] Speaker 05: Maybe. [00:17:20] Speaker 05: I mean, so it's still attractive. [00:17:23] Speaker 05: It's still money. [00:17:23] Speaker 05: It still might be seen as, I mean, obviously, the concern that they have is you're allowing the consuming public to think that because this is all packaged and open to strangers, that somebody else is making the determination about whether they trust these pilots. [00:17:42] Speaker 05: Whereas if you go to the billboard and somebody says, hey, I'm a sophomore in such and such a dorm and I'm flying out to Minneapolis this weekend, does anybody want to come? [00:17:52] Speaker 05: The person accepting that offer is really evident to her that she's got to be doing the due diligence. [00:17:59] Speaker 05: So there's some rationality behind that, and they're trying to understand whether [00:18:04] Speaker 05: You're making a loophole out of the private pilot system. [00:18:09] Speaker 00: I'm glad you brought that up. [00:18:11] Speaker 00: So the FAA has tried to fashion this new rule, which is the first time the FAA has ever fashioned this rule, which says that if you're friends with the pilot, sure, you can share expenses, regardless of if there's compensation or holding out or anything else. [00:18:26] Speaker 00: If you're strangers, then you can't. [00:18:29] Speaker 00: First of all, there is nothing in the governing regulation 61.113C that makes any friend stranger's distinction. [00:18:38] Speaker 00: The FAA, in pursuing this affinity requirement, directly undermines itself in its where interpretation, where they said that the bulletin boards are fine, because they are the friend stranger's distinction makes no sense. [00:18:50] Speaker 00: Any stranger can walk by. [00:18:52] Speaker 05: They're trying to give some meaning to holding out. [00:18:57] Speaker 00: Here's the point, I think, Your Honor, what the FAA is trying to do and what they ought to do is ensure airline safety. [00:19:03] Speaker 00: The means that they've chosen, this friend-strangers distinction, is completely irrational to that end. [00:19:11] Speaker 00: because a Part 119 certificate does nothing to ensure airline safety in terms of pilot qualifications. [00:19:19] Speaker 00: And I'll give you an example. [00:19:20] Speaker 00: A private pilot, a charter pilot, an airline pilot, Captain Sully, Neil Armstrong, could not share expenses on flight now, regardless of their extensive pilot training, because they're not a commercial operation, and they're not operating under commercial rules. [00:19:35] Speaker 00: They're expense sharing under Part 91. [00:19:37] Speaker 00: And that's why the means chosen by the FAA simply is irrational to the ends of airline safety. [00:19:44] Speaker 05: Can you just give us your view on the extent to which [00:19:49] Speaker 05: we need to define common carrier consistent with a common law or whether that is a term that the agency has taken as a term of art for purposes of its governing scheme? [00:20:05] Speaker 00: Yes, Your Honor. [00:20:06] Speaker 00: I think that the Court should maintain the definition of common carrier as clearly set out [00:20:10] Speaker 00: In the common law and by this court namely that there has to be a commercial operation for which there clearly is not because there is no possibility for profit and second that there must be a willingness to take all comers without refusal a fundamental distinction of common carriers in this case both pilots and passengers Can accept flights for any reason or no reason at all? [00:20:33] Speaker 00: Which clearly does not make them common carriers? [00:20:36] Speaker 05: Thank you Sydney [00:20:40] Speaker 05: I'm sorry, Ms. [00:20:40] Speaker 05: Foster. [00:20:50] Speaker 01: May it please the court, Sydney Foster for the government. [00:20:53] Speaker 01: Your Honor, the FAA reasonably concluded here that the FlightNow pilots who post flights on the FlightNow website are common carriers and thus require part 119 certificates in order to conduct their operations. [00:21:08] Speaker 01: The common carrier analysis, I think there's no dispute about the central elements of that analysis, [00:21:16] Speaker 01: an individual needs to be holding out to the public or a segment of a public a willingness to transport persons or property Can I ask an antecedent question, which is how do we know that this is final agency action? [00:21:31] Speaker 04: Do you agree that this is final agency action? [00:21:33] Speaker 01: Your Honor, we haven't made a final agency action argument in this case. [00:21:37] Speaker 01: We considered that and we do think it's a very close question. [00:21:41] Speaker 01: That's not something that we have argued in this case because we do think that the views that were offered in this order do represent the definitive agency views, but we do think that that is a close question. [00:21:55] Speaker 04: I mean, is there any procedure whereby FlightNow could say we want to present further facts to the agency about what we do and why we're not holding out or why we're not a common carrier? [00:22:08] Speaker 01: There's no procedure for seeking, say, reconsideration of this. [00:22:11] Speaker 01: This is kind of the end of the line for the procedure for seeking kind of a legal interpretation. [00:22:18] Speaker 01: That said, there's nothing stopping flight now from actually seeking another legal interpretation if they wanted to submit, for example, more facts to the agency or change kind of the facts that were submitted to the agency in this request for an interpretation. [00:22:34] Speaker 01: I could certainly do that and the agency would issue a new legal interpretation based on that new request. [00:22:41] Speaker 04: In the letter that's at issue, I don't really see that the agency grappled with holding out aspect with respect to these facts. [00:22:53] Speaker 04: How can I review this when I don't really see that the agency [00:22:57] Speaker 04: explained itself as to why there was a holding out here or why there'd be a holding out under these facts. [00:23:04] Speaker 01: I think I would respectfully disagree that the agency didn't grapple with the holding out. [00:23:08] Speaker 01: I think if you look at JA 62, there is a paragraph addressing holding out where the agency responded to the very limited arguments that the petitioner had made in the request for legal interpretation. [00:23:21] Speaker 01: and explained that it did think that there was holding out here because holding out can be accomplished by any means which communicates to the public that a transportation service is indiscriminately available. [00:23:33] Speaker 01: And then the agency goes on and says, based on your description, the website is designed to attract a broad segment of the public interested in transportation by air. [00:23:44] Speaker 01: So the agency was looking at the facts that were presented to it, which were somewhat limited in nature to be sure, but the facts presented to it were that any member of the public can apply to become a member of the FlightNow website and then access the postings by FlightNow pilots, and therefore those postings by the FlightNow pilots are essentially [00:24:06] Speaker 01: accessible to any member of the public, and simply all they have to do is to apply for membership. [00:24:12] Speaker 01: That seems to be a fairly straightforward case of holding out. [00:24:16] Speaker 04: And the letter doesn't, I guess, explicitly, well, reference the Havercorn letter, but presumably the agency kind of looks at these things as precedent and tries to be consistent. [00:24:35] Speaker 01: That's correct. [00:24:35] Speaker 01: And I think so. [00:24:36] Speaker 04: So, you know, sending a message to your Facebook friends is is basically inviting the public to share a ride. [00:24:48] Speaker 01: Um, two things. [00:24:49] Speaker 01: One is is just I do think that the interpretation here relied heavily on the McPherson interpretation and essentially incorporated by reference. [00:24:56] Speaker 01: And I know that that interpretation does refers to behavior for interpretation. [00:25:00] Speaker 01: But with respect to the Facebook audience question, I think in the Habercorn interpretation, what the agency concluded was that the holding out question with respect to a Facebook posting would depend on the circumstances presented. [00:25:14] Speaker 01: Obviously, people use Facebook in lots of different ways. [00:25:16] Speaker 01: Some people only have a very limited number of friends. [00:25:19] Speaker 01: in those circumstances, there would be no holding out. [00:25:22] Speaker 01: Some people have a lot of Facebook friends, and then those, you know, might have... And, indeed, businesses have Facebook pages. [00:25:29] Speaker 01: Exactly. [00:25:31] Speaker 01: So, that was the point of the Haber-Korn interpretation. [00:25:34] Speaker 01: That interpretation, the request for the interpretation there, [00:25:37] Speaker 01: didn't offer any details as to kind of the nature of the Facebook postings that issue there so that the agency wasn't able to make a determination based on the fact that represented and just noted that it would depend on, you know, various factors. [00:25:49] Speaker 04: So how does the agency define public? [00:25:57] Speaker 04: Because FlightNow says that, well, the only people who will see this are the people who are, who join the site and become members. [00:26:08] Speaker 04: And so in that sense, not just that everyone Googling can see this information, it's only people who join the site. [00:26:18] Speaker 04: So how is that opening itself up to the public? [00:26:22] Speaker 01: Well, Your Honor, any member of the public at large can easily join the FlightNow website. [00:26:28] Speaker 01: I think we've heard that there's no barrier other than simply applying for membership. [00:26:32] Speaker 01: A person from the public at large can do a Google search for, you know, what flight services are available to me. [00:26:38] Speaker 01: They might find the FlightNow website and then they can apply for membership and have access to all of those flights. [00:26:43] Speaker 01: That's very different from all the circumstances in which the agency has [00:26:46] Speaker 01: concluded that there is no holding out. [00:26:49] Speaker 04: So if somebody has Facebook and anybody who sends them a friend request, they say, yes, you can be my Facebook friend. [00:27:00] Speaker 04: That would be impermissible. [00:27:02] Speaker 04: But if they limited themselves to only 10 friends at a time or 50 friends at a time, then they wouldn't be holding out to the public. [00:27:12] Speaker 04: I'm trying to understand what the rationale is here. [00:27:16] Speaker 01: Yeah, and let me answer the question, but I'd also like to know that I don't think that this is an argument that the petitioners have made. [00:27:23] Speaker 01: I don't think they made it in the proceedings before the agency, and so I think this line of argument is barred, this court is barred from considering it under 49 UOC 4611 OD, and I also think that it's not something that they're pressing before this court. [00:27:38] Speaker 01: But to answer your question, I think the agency's position is that it is a context-specific kind of analysis [00:27:45] Speaker 01: There may be some cases where it's a close call, whether something is public or not. [00:27:49] Speaker 01: And the Facebook example is one where there are definitely going to be easy cases, like where someone has only 10 friends. [00:27:56] Speaker 01: There are going to be easy cases at the other end of the spectrum where a person has tens of thousands of friends and is basically [00:28:07] Speaker 01: effectively a public website that folks can come to. [00:28:10] Speaker 01: There are going to be harder cases in the middle of this case though it doesn't present kind of any of those harder questions because what we have here is a website that any member of the public can have access to. [00:28:20] Speaker 01: It's designed to hook members of the public at large up with pilots who want to share expenses. [00:28:28] Speaker 01: That's the very purpose of the website. [00:28:30] Speaker 01: If this is not holding out to the public it is [00:28:33] Speaker 01: It's kind of hard to imagine what's not. [00:28:35] Speaker 01: Ms. [00:28:35] Speaker 05: Foster, can we back up and just identify for me what you think is the statutory authority for this interpretation and the regulatory basis for the holding out requirement. [00:28:48] Speaker 01: So the statutory authority for the decision that was the legal interpretation? [00:28:54] Speaker 05: The statutory authority for the limitation that you're placing on the plate now. [00:28:58] Speaker 01: The holding out limitation. [00:29:00] Speaker 01: Sure. [00:29:00] Speaker 01: So the statute defines air carrier [00:29:05] Speaker 01: to mean essentially someone who's engaged in common carriage in the interstate, foreign, and so forth context. [00:29:12] Speaker 01: And we have that in the definitional provision 49 USC 40102A is where we get the common carriage requirement. [00:29:21] Speaker 05: And what's the best evidence that for your position that common carrier is not meant to reflect the common law definition? [00:29:29] Speaker 01: I don't think we're actually saying it's not meant to reflect the common law definition. [00:29:33] Speaker 01: I think actually the Fifth Circuit held in Woolsey that the agency's definition of common carriage is actually the same as the common law definition, and I don't think there is actually any distinction. [00:29:44] Speaker 01: But the elements that the agency relies upon in the advisory circular holding out that there's compensation [00:29:51] Speaker 01: and that there's, you know, carriage of persons from place to place. [00:29:55] Speaker 01: Those are the elements, I think, that are also reflected in common law. [00:29:58] Speaker 01: So I don't think we have actually a case where there's some discrepancy between the two and that we need to choose between the two. [00:30:11] Speaker 03: whether an unquestioned common carrier violated its obligations to carry non-discriminatory and so on. [00:30:25] Speaker 03: This is a very peculiar variation on that where the question is whether it's a common carrier based on whether it's holding out. [00:30:35] Speaker 03: Are there any cases like that at common law? [00:30:38] Speaker 01: I don't know about common law cases, Your Honor. [00:30:41] Speaker 01: There's certainly cases that courts have addressed kind of in the aviation context, which is what we have presented here. [00:30:48] Speaker 01: The Woolsey case in the Fifth Circuit is a good example where the court was presented with a question of whether or not the petitioner in that case was holding out or whether instead that person was engaged in private carriage. [00:30:59] Speaker 01: So there are examples of this, and certainly these cases come up all the time in these requests for legal interpretations that the FAA considers, and time after time the agency is considering whether or not the holding out requirement has been satisfied. [00:31:15] Speaker 01: I'd like to just respond to… Can I ask a question related to that? [00:31:21] Speaker 04: If common carrier is a term that's defined by the common law, [00:31:29] Speaker 04: then why are you entitled to any deference at all in how to interpret that term since the agency didn't come up with the definition? [00:31:42] Speaker 01: So I think we're not claiming that we are entitled to Chevron deference, and we actually don't think Chevron deference principles are at issue here. [00:31:50] Speaker 01: The arguments that the petitioner made in their opening brief were arguments premised on errors that the petitioner said the agency made with respect to interpretations of its own regulations. [00:32:01] Speaker 01: And so for those interpretations, we think our deference is applicable. [00:32:05] Speaker 01: The petitioner before the agency and also in the opening brief didn't seem to be making any arguments attacking the agency's interpretation of the statute, of the term common carriage, kind of as that term is found in the statute. [00:32:18] Speaker 01: And so we just don't think that questions of Chevron deference are even at issue in this case. [00:32:22] Speaker 04: Well, let's suppose we think that the case turns on whether your interpretation of common carrier is correct. [00:32:31] Speaker 04: So do you agree then that there's no deference owed to the agency with respect to that question? [00:32:38] Speaker 01: In this particular case, we're not asking for separate deference with respect to kind of the interpretation of the term common carriage in the statute. [00:32:45] Speaker 01: That is correct. [00:32:46] Speaker 05: Or the way you understand holding out? [00:32:49] Speaker 01: The way we understand holding out, again, I think we have to look at sort of how the petitioners frame their arguments. [00:32:55] Speaker 01: The attacks that the petitioner has made on their argument with respect to the agency's decisions are really attacks based on kind of the agency's understanding of its own regulations. [00:33:06] Speaker 01: In the opening brief, the only attack that the petitioner made with respect to the holding out conclusion that the agency reached here [00:33:13] Speaker 01: was that it said, oh, holding out isn't even applicable here, repeating that argument that we heard again this morning, that we don't even get to the holding out inquiry because 119.1 says that part 119 only applies to those who are subject to it, and then I think petitioner's theory is that [00:33:35] Speaker 01: Section 119.5K somehow represents the codification of the holding out inquiry, which I think as we explained in our brief, that's not correct. [00:33:44] Speaker 01: The only argument that the petitioner made in the opening brief was that we misinterpreted the part 119 regulations to conclude that holding, and that under those regulations, there is no need to engage in a holding out inquiry. [00:33:59] Speaker 01: But I think as your honors pointed out, there is a need to do that inquiry, [00:34:04] Speaker 01: when we're trying to figure out whether or not part 119 applies, part 119 has been, we have to look to see whether or not someone is a common carrier and that requires an analysis of whether that person is holding out. [00:34:15] Speaker 05: And wouldn't it matter under common law not just what the [00:34:22] Speaker 05: companies says they're doing and pilots say they're doing but what they actually do and this gets back to judge wilkins question about it's very difficult for us to look at this kind of issue with so little factual context [00:34:37] Speaker 01: That's right, and I think, I do think that when courts are evaluating the holding out inquiry, looking at whether someone is opening up their services to the public indiscriminately, there is an inquiry into kind of how things work on the ground, and the Fifth Circuit explained that in the Woolsey decision. [00:34:56] Speaker 01: This court explained a similar principle in the [00:34:58] Speaker 01: National Association of Regulatory Commissioners decision, which is in the FCC context, but basically pointed out that what really matters is how things work on the ground. [00:35:08] Speaker 01: Here, based on the submission that the agency received from FlightNow, the agency reasonably concluded that there was holding out to the public because these flights are posted on the website that are accessible to any member of the public who simply applies for membership. [00:35:24] Speaker 01: We have no reason to think that pilots who post their flights on this website are going to routinely reject these requests. [00:35:33] Speaker 01: The entire point of their posting on this website is to obtain passengers from the public at large for their flights. [00:35:40] Speaker 05: And they're not operating now as far as we know? [00:35:42] Speaker 01: I don't know exactly, I mean, certainly not in the record. [00:35:46] Speaker 01: I think they do have a website, you know, this is obviously out of the record, but they do have a website that's still up. [00:35:51] Speaker 01: I don't know if the operations are continuing or not. [00:35:53] Speaker 04: Well, if the website, the way that it works is that any member of the public can join, but they can't just kind of go surfing to see who's flying where. [00:36:05] Speaker 04: They have to put in, okay, I want to go to Boston on November the 1st. [00:36:14] Speaker 04: Are there any pilots going to Boston on November the 1st? [00:36:18] Speaker 04: And it comes back and says, yeah, there's one. [00:36:22] Speaker 04: And then they inquire whether they can join that pilot on the trip. [00:36:31] Speaker 04: In that sense, you would say that that's still holding out because it was indiscriminate as far as this person being able to join the site. [00:36:45] Speaker 01: We would say it's holding out because that flight was made available to the public at large through this website. [00:36:52] Speaker 01: In some ways, what you're describing isn't that much different from the process that I would go through if I wanted to reserve a seat on United Airlines to go on a flight to Boston. [00:37:01] Speaker 01: I would simply go to their website. [00:37:02] Speaker 01: I would say I want to leave on November 1st. [00:37:05] Speaker 01: I would see what's available, and then I would submit my request. [00:37:08] Speaker 01: to fly on the plane, I would get a ticket. [00:37:12] Speaker 01: Here, it's all the same until that very last step, whereas for me, I buy my ticket. [00:37:18] Speaker 01: The FlightNow passenger, drawn from the public at large, submits a request to the FlightNow pilot. [00:37:24] Speaker 01: We have no reason to think that FlightNow pilots are going to be routinely rejecting these requests. [00:37:28] Speaker 01: The entire point of the FlightNow website is so that [00:37:32] Speaker 01: pilots can draw passengers from the public at large to fill seats on their planes, thereby defraying some of their costs and promoting their economic interests and so forth. [00:37:44] Speaker 05: In addition... If we were to vacate and remand, you would have to wait for an actual enforcement action to develop a record? [00:37:51] Speaker 05: Is that your position? [00:37:52] Speaker 05: Is there any process by which the record could be further developed in this pre-enforcement context? [00:37:58] Speaker 01: If you were to vacate and remand, certainly the agency would be willing to accept new submissions from the petitioner if they want to provide more facts. [00:38:09] Speaker 02: That would be true even if we didn't. [00:38:11] Speaker 01: I'm sorry, what's that? [00:38:12] Speaker 02: I thought you said earlier that would be true even if we didn't remand. [00:38:16] Speaker 01: That's exactly right. [00:38:16] Speaker 01: They could do that right now. [00:38:19] Speaker 01: That's exactly right. [00:38:21] Speaker 01: At bottom, the agency receives these requests for interpretations on a regular basis. [00:38:26] Speaker 01: It responds based on the facts that are presented to it. [00:38:29] Speaker 01: Sometimes those facts aren't very well developed here. [00:38:31] Speaker 01: Perhaps they could have been developed better. [00:38:33] Speaker 01: But the agency took the facts that were presented to them, answered the question based on those facts, and we submit that the answer the agency gave was reasonable. [00:38:41] Speaker 01: And I'd like to note that the agency's answer [00:38:43] Speaker 01: is fully consistent with its prior decisions of its Office of Chief Counsel, which have, contrary to the submissions by the Petitioners' Council, addressed similar nationwide initiatives like this, not on the internet, but through kind of more traditional means of communication, and have held that those nationwide initiatives [00:39:03] Speaker 01: are not permitted and constitute common carriage. [00:39:07] Speaker 01: And I'm talking about the brown, the clay, and the tiro interpretation. [00:39:10] Speaker 01: So this is entirely consistent with those prior decisions. [00:39:14] Speaker 01: Thank you. [00:39:16] Speaker 05: So Mr. Riches, your time has expired, but we'll give you a couple of minutes. [00:39:24] Speaker 00: Judge Wilkins and Judge Ginsburg, you both asked about whether there was enough relevant facts to reach the dispositive issues here. [00:39:35] Speaker 00: We certainly think that there were. [00:39:37] Speaker 00: There were two separate letters, including one by a former FAA administrator, submitted to the FAA that laid out all of the relevant facts that the Court needs to know about how FlightNow operates. [00:39:49] Speaker 02: Who's the former administrator? [00:39:50] Speaker 00: McPherson, that would be the Rebecca McPherson request and the McPherson interpretation. [00:39:56] Speaker 03: She was representing Air Pooler? [00:39:57] Speaker 00: That's correct, Your Honor. [00:39:59] Speaker 00: So a new interpretation, you know, even if FlightNow could go back and ask for a new interpretation, Your Honor, that would get us nowhere because the facts, the relevant facts, aren't changing. [00:40:08] Speaker 05: Do we know where Air Pooler isn't in this case with you? [00:40:12] Speaker 05: They're in a very parallel position. [00:40:14] Speaker 00: Yes, Your Honor. [00:40:15] Speaker 00: It's a very similar business plan. [00:40:18] Speaker 05: But they're not coming to us with this issue. [00:40:22] Speaker 05: Do we know if they're taking a different route to try to pursue their business plan? [00:40:25] Speaker 00: I don't know if they're pursuing legislative remedies or not. [00:40:29] Speaker 00: What I do know, of course, is that right now it's chosen to challenge the agency action as they have a right to do. [00:40:35] Speaker 00: So we think that it would be unreasonable to demand a flight now that they go back to the agency to present facts that they very clearly presented in a very detailed letter, and I would direct the court to review all the facts. [00:40:51] Speaker 03: Well, in your submission to the agency and here, you say, well, the pilots have the ability to decline to take any particular pass. [00:41:05] Speaker 03: If you were in a position to just have a track record and say, well, here's what's happening. [00:41:11] Speaker 03: They have declined some passengers. [00:41:15] Speaker 03: That may be impossible because you may have been stopped from operating too early for that. [00:41:20] Speaker 03: But that is exactly how the Wolsey case was determined, right? [00:41:24] Speaker 03: The carrier, or the alleged common carrier, [00:41:30] Speaker 03: claimed that it was not holding itself out to the public and that it retained its discretion. [00:41:36] Speaker 03: The record of its conduct showed that it had never turned anyone down, and that was influential in the Fifth Circuit. [00:41:43] Speaker 00: Sure, Your Honor, but that would require an enforcement action against the pilot, and I think to this point... No, not necessarily. [00:41:51] Speaker 03: If you had a track record in which you could substantiate that pilots actually do turn people down, you'd be on a different footing. [00:41:59] Speaker 00: What we do have, Your Honor, is the terms of service from FlightNow, which is included in the record, and those very, very clearly lay out for both pilots and passengers that flights can be refused for any reason or no reason at all. [00:42:09] Speaker 00: And that's the operative question, one of the operative questions under the common law. [00:42:13] Speaker 00: That's the operative question, in fact, under the FAA's own definition of holding out, which we don't think that we need to reach. [00:42:18] Speaker 00: The FAA requires that it be indiscriminate to be holding out, but this quite clearly is discriminant. [00:42:25] Speaker 00: Thank you. [00:42:28] Speaker 05: Just a few seconds, we're really over time. [00:42:30] Speaker 00: Very briefly, Your Honor. [00:42:32] Speaker 00: The court, I think, and you asked it, Judge Pillard, where is the statutory justification for the FAA to take this action? [00:42:38] Speaker 00: The statutory justification is in airline safety, and what they have done here does not advance airline safety. [00:42:44] Speaker 00: All of these pilots are certified, and the means that they've chosen this 119 requirement has nothing to do with safety. [00:42:51] Speaker 00: It has to do with a commercial enterprise. [00:42:53] Speaker 05: Thank you, Mr. Rich. [00:42:53] Speaker 00: Thank you. [00:42:56] Speaker 05: Before the next case, we're gonna take just a short break of five minutes.