United States: In A Split Decision, Ninth Circuit Rejects FAA Delegation To A Helicopter Manufacturer As The Basis For Removal To Federal Court

This case involved an appeal by Airbus Helicopters, Inc. ("AHI") of a Nevada federal district court's order remanding to state court a case arising from a 2018 helicopter crash in the Grand Canyon. Plaintiff alleged that the AHI-manufactured helicopter was defectively designed because the fuel tank was not crash-resistant, and could not withstand an impact of a minimal or moderate nature without bursting into flames and engulfing the passenger compartment.

AHI removed the case to federal court, asserting 28 USC § 1442(a)(1) as the basis for removal. This statutory provision permits removal to federal court of an action against "any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or related to any act under the color of such office." AHI is an FAA-certified Organization Designation Authorization ("ODA") Holder with authority to issue Supplemental Certificates, and had exercised that authority in connection with the design and manufacture of the accident helicopter.

In a matter of apparent first impression in the Ninth Circuit, in a 2-1 decision with lengthy majority and dissenting opinions, the Ninth Circuit affirmed the District Court's decision to remand the action to state court. The Court found that AHI had inspected and certified the accident helicopter pursuant to FAA regulations and federal law, and in addition, found that AHI could not make any structural or design changes without the consent of the FAA. Citing to United States Supreme Court and Ninth Circuit decisions, the majority held that "AHI's mere compliance with federal regulations did not satisfy the "acting under" requirement" of Section 1442(a)(1).

In so holding, the Court joined the Seventh Circuit in concluding that "an aircraft manufacturer does not act under a federal officer when it exercises designated authority to certify compliance with governing federal aviation regulations." However, the Court explicitly declined to adopt a "rule-making-rule-compliance" distinction that was the basis for the Seventh Circuit decision, and which had been the rationale relied upon by the District Court in remanding the case to state court. Instead, the Ninth Circuit said it was "content to rely on the more clearly articulated common analyses...on whether the private entity is engaged in mere compliance with federal regulations." (emphasis added).

In a strongly worded and well-reasoned dissent, Senior Circuit Judge O'Scannlain found that the FAA had delegated to AHI the authority to issue certificates on behalf of the FAA—"certificates that the FAA must otherwise issue on its own before an aircraft can be lawfully flown." Among other authorities, he cited to the following provision of the Federal Aviation Act (found at 49 USC § 44702(d)(1)):

Ultimately, he argued that the majority misunderstood the FAA's regulatory scheme for aircraft certification and misapplied Supreme Court precedent addressing the "acting under" requirement, and concluded that because AHI undertakes the certification duties on the FAA's behalf, AHI was "acting under" a federal agency within the meaning of Section 1442(a)(1).

This is a significant case that practitioners should closely examine in evaluating whether to remove a state court action to federal court based on an aircraft or component manufacturer's exercise of delegated authority from the FAA. Otherwise, you may find that what you thought would be a full stop landing in federal court will become no more than a touch and go landing in federal court with a full stop landing back in state court. Riggs v Airbus Helicopters, Inc., 939 F.3d 981 (9th Cir. 2019).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.