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Skybolt Aeromotive Corp. v. MilSpec Products, Inc.

United States District Court, M.D. Florida, Ocala Division

June 9, 2017

SKYBOLT AEROMOTIVE CORPORATION, a Florida Corporation Plaintiff,
v.
MILSPEC PRODUCTS, INC. and JEREMY SUMMERS Defendants.

          ORDER

          PHILIP R. LAMMENS United States Magistrate Judge.

         In this consent case, Plaintiff seeks a preliminary injunction to enjoin Defendants MilSpec Products, Inc. and Jeremy Summers, who is MilSpec's president, from selling, as Federal Aviation Administration approved, fasteners and other products used on airplanes. (Docs. 32, 32-1-32-15, 33, 34). Defendants, of course, oppose the motion. (Docs. 38, 39, 40, 41). Upon a review of these filings, and after a hearing on Plaintiff's motion (Docs. 35, 47), the Court asked the parties to brief the applicability of the primary jurisdiction doctrine (Doc. 49), as it appears that the Federal Aviation Administration has regulatory authority over the issues raised. They have now done so (Docs. 57, 59), and for the reasons that follow, this case is referred to the Federal Aviation Administration under the primary jurisdiction doctrine for initial consideration of the issues before the Court.

         I. Background[1]

         Plaintiff and MilSpec compete in the “aerospace fastener industry wherein both parties sell quarter turn fasteners, panel fasteners, cowling fasteners and captive fasteners which are installed on general aviation airframes, corporate jet aircraft and commercial airplanes.” (Doc. 32 at p.2). According to Plaintiff, both of the companies' fasteners “must meet certain performance standards prescribed in technical standard order (TSO) C-148 (“TSO-C148”) in order to be sold and installed on aircraft” and “in order to advertise or promote the fact that one has TSO-C148 approval, one must submit a TSO application to the F[ederal] A[viation] A[dministration] with drawings, fastener performance requirements and limitations, TSO Qualification test reports, lot numbers of qualification parts, raw material heat number or certification numbers and material composition of the qualification parts.” (Doc. 32 at p.2).

         TSO-C148 approval is, as noted above, obtained from the Federal Aviation Administration (the “FAA”). See infra section III.A. At the heart of the issues before the Court are Plaintiff's allegation that MilSpec falsely advertises TSO-C148 production approval for a significant number of the fasteners it sells.[2] (Docs. 1 at ¶32; 32 at p.11).

         Specifically, Plaintiff alleges that MilSpec has TSO-C148 approval for these (and only these) fasteners: C-SPEC 2600, 2700, and 4002 parts (granted in a FAA letter dated September 9, 2003) and C-SPEC Isolator Platemount Assembly parts (granted in a FAA letter dated April 5, 2016).[3] (Docs. 1 at ¶32; 32 at pp.11-12; 32-1; 32-5). Indeed, the parties agree that MilSpec obtained TSO-C148 approval on September 9, 2003 for its C-SPEC 2600, 2700, and 4002 parts and approval on April 5, 2016 for its C-SPEC Isolator Platemount Assembly parts as both parties are in possession of documents purportedly from the FAA that the parties (mostly) agree are authentic.[4] And thus, among other parts, Plaintiff concludes that MilSpec falsely advertises TSO-C148 approval for these fasteners: A-SPEC parts, Z-SPEC parts, and C-SPEC 2800, 2000, and 4000 parts. (Doc. 32-15 at p.4).

         Plaintiff bases these allegations, in part, on two Freedom of Information Act (“FOIA”) requests it placed with the FAA and to which the FAA has responded. (Doc. 1 at ¶¶33-34; 1-1 at p.66; 32 at ¶¶4-9; 32-5). In short, Plaintiff requested from the FAA any and all correspondences with MilSpec from September 9, 2003 to March 2, 2017. (Doc. 32 at ¶¶4-9). In response to these FOIA requests, the FAA provided Plaintiff with documents that fail to show that MilSpec has the TSO-C148 approvals it says it has (with the exception, as noted, of the C-SPEC 2600, 2700, and 4002 parts and the C-SPEC Isolator Platemount Assembly parts). (Doc. 32-5).

         As discovery has progressed, however, MilSpec and Summers have submitted here various alleged FAA documents to show the TSO-C148 approvals at issue. (See, e.g., Doc. 39). But Plaintiff challenges these documents: unlike the September 9, 2003 and April 5, 2016 FAA letters that the parties agree grant, respectively, MilSpec TSO-C148 approval of its C-SPEC 2600, 2700, and 4002 parts (with the exception of the “MS-O () S Plush Flush-Extended Depth” parts, which is in dispute) and its C-SPEC Isolator Platemount Assembly parts, Plaintiff disputes the veracity of most of these documents. Indeed, as previously noted, Plaintiff asserts that Defendants have implemented a complex fraudulent scheme using numerous forged or otherwise fraudulent documents to deceive the FAA, this Court, and Plaintiff into believing that MilSpec has TSO-C148 approvals that it does not have. (Doc. 49 at p.2). The Court will now identify these purportedly fraudulent documents, which are relevant to the primary jurisdiction doctrine.[5]

         Defendants have submitted a purported FAA document dated December 23, 2003 or 2008 (the parties disagree what year the document is dated). (Docs. 38 at ¶12; 39 at ¶¶17(a), 18-20 and at p.7). This document purports to be a “response to [Summer's] letter, dated September 10, 2003, and subsequent letter, dated November 4, 2003, for the Federal Aviation Administration to grant requested authorization to produce new items on structural panel fasteners approved under TSO-C148.” (Doc. 39 at p.7). The letter further purports to approve MilSpec's “Quality Assurance Manual, Revision ‘002, ' dated August 26, 2003” and states that “the articles are approved for production at the Sorrento, FL facility.” (Doc. 39 at. p.7). But the letter does not identify any specific parts. Plaintiff asserts that Summers created the document by cutting and pasting a document that Defendants previously produced to Plaintiff (around seven years ago) in a prior litigation. (Doc. 55 at ¶29). Summers did contend-at one point in time-that this letter was a “true and accurate correspondence from the FAA to MilSpec, which w[as] sent to MilSpec as part of the FAA TSO-C148 production approval process, confirming FAA TSO-C148 production approval.” (Doc. 39 at ¶¶17(a), 18, 19). But now he avers that he does not know “the origin” of this letter. (Doc. 62 at ¶16).

         Defendants have also submitted an alleged FAA document dated December 23, 2009.[6](Doc. 39 at pp. 8-9). This document purports to grant MilSpec TSO-C148 approval for numerous A-LOCK, Z-LOCK, and C-LOCK parts. Plaintiff has called the veracity of this document into question on (at least) six separate bases:

1) its experts' testimony that analyzes the purported signature of Eugene Evans (Evans is apparently an Associate Manager-Airframe of the Atlanta Aircraft Certification Office) and concludes that the signature was forged (Docs. 42, 42-1, 42-2);
2) the lack of technical data in the letter (this argument is based on juxtaposing this letter with other similar letters-letters which Plaintiff contends are authentic FAA letters that which refer to technical data in approving other parts under TSO-C148) (Doc. 55 at pp.14-15);
3) Summers' statement that he altered the document to reflect approval for production at his “Sorrento” location (Doc. 62 at ¶16);
4) the concept that at the time of the letter dated 2009, MilSpec did not yet use the terms “C-SPEC, A-SPEC, and Z-SPEC, ” thus the drawings lists that use those terms and that purport to support this December 23, 2009 TSO-C148 approval are suspect (Doc. 55 at ¶¶35-36);[7]
5) CAD drawings that Plaintiff alleges were created after 1999 and modified in 2017 and that MilSpec has submitted as proof of obtaining TSO-C148 approval from the FAA (Doc. 55 at p.15);[8] and
6) metadata that allegedly shows Summers created the December 23, 2009 document in a Microsoft® Word program in March of this year (Docs. 42; 42-3; 56-2 at ¶¶5-12).

(See generally Docs. 32, 33, 34, 42, 55).[9]

         Defendants have also submitted two documents that Plaintiff does not directly dispute as true FAA documents.[10] (Doc. 39 at pp.13-15, 16-18). First, Defendants have submitted an alleged FAA letter dated February 27, 2017, which is an apparent request from the FAA to Summers asking him to provide the FAA “with a copy of [Milspec's] complete TSO application and their FAA TSOAs for project number SP12050AT:”

An internal FAA audit of the FAA's Certification Project Notification database, Regulatory Guidance Library, and records archive revealed that the TSO applications and data your company submitted for the approval of the TSO-C148 fasteners (listed in Table 1, below) under FAA project number SP12050AT are missing from our records. MilSpec Products submitted those TSO applications and data in accordance with 14 CFR 21.603(a) on or about September 10, 2009, and November 4, 2009. The Atlanta Aircraft Certification Office (ACO) issued the TSO Approvals (TSOA) on or about December 3, 2009, and December 21, 2009.

(Doc. 39 at pp.13-15). The letter expounds, “To rectify this situation, we request your assistance in providing us with a copy of your complete TSO applications and their FAA TSOAs for project number SP12050AT.” (Doc. 39 at p.13). This document contains a table titled “TSO C148 fasteners authorized through FAA project number SP12050AT” and that table includes numerous C-LOCK, Z-LOCK, and A-LOCK parts that are at issue here. (Doc. 39 at pp.13-15).

         Second, Defendants have submitted an alleged FAA letter dated March 30, 2017. This letter appears to be intended to correct a “TSOA letter, dated December 23, 2009, which incorrectly referenced the production facility as Leesburg, FL, instead of Sorrento, FL.” (Doc. 39 at p.16). The letter purports to also be a “response to [Summer's] letter, dated September 10, 2009, and subsequent letter, dated November 4, 2009, for the Federal Aviation Administration to grant requested authorization to produce new items on structural panel fasteners approved under TSO-Cl48” and states that “[w]e find your statement of conformance and MilSpec, Inc. Quality Assurance Manual, Revision ‘003, ' dated March 03, 2011, acceptable and the articles below are approved for production at the Sorrento, FL facility.” (Doc. 39 at p.16). Then the letter goes on to list numerous C-LOCK, Z-LOCK, and A-LOCK parts that are at issue here. (Doc. 39 at pp.16- 18).

         Plaintiff does not directly challenge the validity of the February 27, 2017 and March 30, 2017 letters but, instead, implies that Defendants improperly obtained these letters from the FAA by their duplicity, which includes the forged December 23, 2009 letter and other malfeasance. (See Doc. 55 at p.16) (“What Defendants provided to the FAA were falsified and fabricated documents that were created and modified after 2009 in order to prove up an approval that was allegedly submitted in 2009.”); (Doc. 55 at p.18) (“Defendants fabricated the December 23, 2009 document and the December 23, 2003 document; altered the September 9, 2003 document; and modified all of its drawings and MDL's before providing them to the FAA, Plaintiff and this Court claiming that such documents were originally sent to the FAA in 2009 when in fact they were not.”). In sum, Plaintiff-at least implicitly-challenges whether the FAA properly granted MilSpec TSO-C148 approval in the alleged FAA letter dated March 30, 2017.

         II. Legal Standard

         “Under the primary jurisdiction doctrine, a court of competent jurisdiction may stay an action pending resolution of an issue that falls within the special competence of an administrative agency.” Beach TV Cable Co. v. Comcast of Florida/Georgia, LLC, 808 F.3d 1284, 1288 (11th Cir. 2015). Even when a “court is authorized to adjudicate the claim before it, the primary jurisdiction doctrine ‘comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.”' Smith v. GTE Corp., 236 F.3d 1292, 1312 n.3 (11th Cir. 2001) (quoting United States v. Western Pac. R.R. Co., 352 U.S. 59, 64 (1956)).

         “The primary jurisdiction doctrine is a flexible tool that is designed to allocate efficiently fact finding between the federal courts and administrative agencies.” Loggerhead Turtle v. Cty. Council of Volusia Cty., Fla., 148 F.3d 1231, 1259 (11th Cir. 1998) (J. Roney, dissenting). Put differently, “[t]he primary jurisdiction doctrine is thus no more than recognition of the fact that the compelling necessity for regulatory uniformity and consistency, coupled with the almost infinite variety of administrative rules and regulations which affect or may affect a particular dispute, initially require administrative rather than judicial fact-finding and rule-applying expertise.” Taylor Cty. Sand Co. v. Seaboard Coast Line R. Co., 446 F.2d 853, 854 (5th Cir. 1971).[11]

         The doctrine of primary jurisdiction may justify staying a case “which raise issues of fact not within the conventional experience of judges or which require the exercise of administrative discretion.” Sunbird Air Serv., Inc. v. Beech Aircraft Corp., 789 F.Supp. 360, 363 (D. Kan. 1992); see Far East Conference v. United States, 342 U.S. 570, 574-75 (1952). “The doctrine functions not to determine whether the court or agency will finally decide an issue; rather it serves to delay the judicial decision until the court can take advantage of the agency's expertise.” Id. The two main justifications for invoking the primary jurisdiction doctrine are the need for agency expertise and the need for uniform interpretation of a statute or regulation. Boyes v. Shell Oil Prod. Co., 199 F.3d 1260, 1265 (11th Cir. 2000).

         The doctrine is inapplicable when the Court is faced with a question of law. Georgia Power Co. v. Baker, 591 F.Supp. 1569, 1573 (M.D. Ga. 1984) (citing Great Northern Railway Co. v. Merchants Elevator Co., 259 U.S. 285, 294 (1922)). But “[t]he doctrine recognizes that if ‘the inquiry is one of fact and of discretion in technical matters, ' then resolution of the inquiry by the court ‘is tantamount to engaging in judicial guesswork.”' Gamble v. PinnOak Res., LLC, 511 F.Supp.2d 1111, 1126 (N.D. Ala. 2007) (quoting United States v. W. Pac. R.R. Co., 352 U.S. 59, 66, 68 (1956)) (citations omitted).

         “[I]n determining whether to exercise its discretion [in invoking the primary jurisdiction doctrine], the district court must first be satisfied that the particular agency has jurisdiction over the issue presented.” Id. at 1127. If it does, the court will then “consider four factors when applying the doctrine of primary jurisdiction: (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory scheme that (4) requires expertise or uniformity in administration.”[12] Herazo v. Whole Foods Mkt., Inc., No. 14-61909-CIV, 2015 WL 4514510, at *5 (S.D. Fla. July 24, 2015). Finally, where “the doctrine of primary jurisdiction applies, the court has discretion either to stay the case and retain jurisdiction or to dismiss the case without prejudice if the Parties would not be unfairly disadvantaged.” Greenfield v. Yucatan Foods, L.P., 18 F.Supp.3d 1371, 1377 (S.D. Fla. 2014).

         III. Discussion

         For the reasons that follow, this case should be referred to the FAA for consideration of the allegations contained in Plaintiff's Complaint (Doc. 1), its motions (Docs. 32, 55), and its other filings (Docs. 33, 34, 42, 56, 69). In short, the factual issues before the Court are within the FAA's jurisdiction and regulatory authority, require the FAA's expertise, and require regulatory uniformity. Further, given the numerous other claims and counter-claims at issue, this case is stayed pending the outcome of the FAA's decision.

         A. The FAA has the jurisdiction and the regulatory authority to address TSO-C148 approval

         The parties do not dispute that the FAA can properly address MilSpec's purported TSO-C148 approval or lack thereof. (Docs. 57 at pp.1-2; Doc. 59). Without a doubt, through Congress, the FAA has expansive authority to “promote safe flight of civil aircraft in air commerce by prescribing, ” among other things, “minimum standards required in the interest of safety for appliances and for the design, material, construction, quality of work, and performance of aircraft.” 49 U.S.C. § 44701(a)(1). Under this congressional power, the FAA has issued regulations that allow it to set “minimum performance standard for specified articles used on civil aircraft.” 14 C.F.R. § 21.601(b)(1); see §§ 21.601-21.621.

         1. Technical Standing Orders

         These minimum performance standards are known as Technical Standard Order or TSOs. 14 C.F.R. § 21.601(a)-(b). If a specified article meets a TSO, the FAA will issue a “TSO authorization, ” which “is an FAA design and production approval issued to the manufacturer of an article that has been found to meet a specific TSO.” 14 C.F.R. § 21.601(b)(2).[13] “A TSO authorization or letter of TSO design ...


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