Landy v. Federal Aviation Administration

635 F.2d 143
CourtCourt of Appeals for the Second Circuit
DecidedNovember 26, 1980
DocketNos. 702, 1113, Dockets 79-6212, 79-6220
StatusPublished
Cited by6 cases

This text of 635 F.2d 143 (Landy v. Federal Aviation Administration) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Landy v. Federal Aviation Administration, 635 F.2d 143 (2d Cir. 1980).

Opinions

VAN GRAAFEILAND, Circuit Judge:

In this action brought by the Federal Aviation Administration under sections 901 and 903 of the Federal Aviation Act, 49 U.S.C. §§ 1471, 1473, the Government alleged that M. Marshall Landy, International Aircraft Leasing, Inc. (IAL) and Air-Trans Ltd. jointly and severally operated an aircraft for compensation or hire in air commerce and that J. D. Smith Inter-Ocean, Inc. (Smith) acted as agent for IAL, knowing that the aircraft was to be operated for compensation or hire.1 The Government alleged further that these parties jointly and severally violated section 610 of the Federal Aviation Act, 49 U.S.C. § 1430, and Federal Aviation Regulation 121.3(f), 14 C.F.R. § 121.3(f).2

Section 610(a)(4), (5) provides in substance that it shall be unlawful for any person to operate as an air carrier without an air carrier operating certificate or to operate an aircraft in air commerce in violation of any FAA rule, regulation or certificate. Regulation 121.3(f) provides, with certain inapplicable exceptions, that no person may engage in the carriage of persons or property for compensation or hire in air commerce without, or in violation of, a commercial operator operating certificate and appropriate operations specifications issued pursuant to the Regulations.

Section 901(a) provides in part that any person who violates the safety requirements of the Act or any rules or regulations issued thereunder shall be subject to a civil penalty of not to exceed $1,000 for each violation and that, if any violation is^ a continuing one, each day of violation shall constitute a separate offense. Section 903(b)(1) provides that proceedings for collection of the penalties shall conform as nearly as may be to civil suits in admiralty except that, if the value in controversy exceeds $20, either party may demand trial by jury of any issue of fact. Jury trial was demanded in this case.

[145]*145Air-Trans, a Bahamian corporation, was not served with the Government’s pleadings. The case went to trial against the remaining three defendants and resulted in a jury finding that each of the defendants operated the plane for compensation or hire. Additional factual findings were made in response to special interrogatories, and the court thereafter entered judgment assessing a penalty of $430,000 jointly and severally against Landy and IAL and a penalty of $20,000 against Smith. Smith has compromised its differences with the Government, and Landy and IAL have appealed. Because of fundamental errors in the proceedings below, the judgment against Landy and IAL must be reversed and a new trial granted.

Although the facts are complicated and much in dispute, the basic issues in the case may be simply stated. In 1976, Landy purchased a Boeing 707 airplane from Lufthansa Airlines and had it converted from a passenger to a cargo plane. He then leased the plane to IAL for one year. Between May and August of 1977, IAL subleased the plane on a number of occasions, principally for the transportation of livestock belonging to the sublessees. Many of these subleases were arranged by Smith, a freight forwarding company. Apparently the crews on all of the flights were furnished by Air-Trans, whose services were usually secured through the agency of Smith.

It is the Government’s contention that the “subleases” were not in fact leases, in that IAL did not turn over possession and control of the plane to the “lessees”. Instead, the crews were furnished by Air Trans, allegedly an alter ego of Landy, and fuel and maintenance were provided .by IAL. The Government contends that, in actuality, IAL and Landy were operating or causing the plane to be operated for compensation or hire and therefore were subject to the rigorous requirements of Part 121 of the Federal Aviation Regulations, which applied to such commercial operations. See 14 C.F.R. § 121.1(a)(5).

The Government called IAL’s president as its witness to establish the alleged violation of certain Part 121 regulations. It also introduced evidence of alleged additional violations through the testimony of two government employees who inspected the plane on August 2, 1977 and August 19, 1977. Appellants contend that the Part 121 regulations are inapplicable. They assert that they were not operating the plane during the subleases and that therefore the less onerous “General Operating Rules” of Part 91 of the Federal Aviation Regulations should control, rather than the more rigorous requirements of Part 121. In brief, then, the issues at trial were whether “subleasing” of the plane was a subterfuge intended to disguise what was actually a commercial operation and, if so, who was the commercial operator during each of the flights and what Part 121 regulations did he violate.

A determination of these issues would require at the outset factual findings as to what flights were made and the circumstances surrounding each. No such findings were made. The district judge elicited factual findings by way of written interrogatories which, for convenience of reference, are set forth in full in an appendix to this opinion.3 The first three interrogatories ask simply whether the defendants operated the aircraft for compensation or hire, without any reference to the time, the place, or the flight in which the operation took place. Under the court's instructions, the jury’s affirmative answer to the first three interrogatories required it to find that, if one of the three defendants failed to meet any of the requirements made the subject of the remaining thirty-five interrogatories, the other two defendants would be guilty of the same violations. Like the first three interrogatories, the re-[146]*146maining thirty-five pinpointed neither time, place, nor flight. Moreover, the jury was not instructed to consider whether Air • Trans, the company whose employees actually flew the plane, had complied with any of the requirements in question.

To make matters worse, the questions were paraphrasings of Federal Aviation Regulations that were neither read nor explained to the jury. As a result, there was no way in which the jury could make intelligent responses. For example, Interrogatory No. 4 inquired whether any of the defendants “failed to convey operation specification information to their employees.” This was the district court’s paraphrase of 14 C.F.R. § 121.75(a), which provides that “[ejach certificate holder shall keep each of its employees informed of the provisions of its operations specifications that apply to the employee’s duties and responsibilities.” Operations specifications have to do with such things as the types of aircraft authorized for use, en route authorizations, areas of operation, inspection requirements, procedures for control of aircraft weight and balance, etc. 14 C.F.R. § 121.45(b). None of this was explained to the jury. Yet the jury was permitted to find that all three defendants violated the regulation’s requirement, including Landy who apparently had only one employee, his secretary.

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635 F.2d 143, Counsel Stack Legal Research, https://law.counselstack.com/opinion/landy-v-federal-aviation-administration-ca2-1980.