AUSTIN – A Kansas-based airplane parts manufacturer and the Texas Attorney General’s Office have filed cross motions for summary judgment, within an investigation being conducted by the Office into Spirit AeroSystems, Inc., after recurring issues with certain airplane parts provided by the company to Boeing.
Spirit AeroSystems, Inc. of Wichita, Kansas, first filed suit in the U.S. District Court for the Western District of Texas on May 1 against Texas Attorney General Ken Paxton and Texas Secretary of State Jane Nelson.
Spirit AeroSystems, “one of the world’s largest manufacturers of aerostructures for commercial airplanes,” according to the company, produces the fuselages for Boeing’s 737 jets. On certain models of the 737, apparent manufacturing defects have led to numerous concerning or dangerous incidents, some of which occurred in-air.
The Texas Business Organizations Code authorizes the Office of the Attorney General to investigate the company’s organization, conduct and management through a Request to Examine pertinent documents. Spirit AeroSystems is being instructed to produce a variety of documents relevant to manufacturing defects in their products.
Spirit AeroSystems is both a manufacturer of aircraft parts and a main supplier to Boeing. The Attorney General’s Office argued that in recent years, multiple Boeing planes have either lost parts mid-flight or crashed entirely, resulting in the deaths of hundreds.
A recent lawsuit revealed that several whistleblowers have accused Spirit of ignoring persistent manufacturing defects in the parts it delivers to Boeing, and as a result, the Texas Attorney General’s Office is investigating Spirit, a Texas-registered company, for potentially deceptive trade practices related to these whistleblower allegations, in violation of Texas law.
Additionally, the company must release documents related to its diversity, equity, and inclusion commitments, and whether those commitments are unlawful or are compromising the company’s manufacturing processes.
“The potential risks associated with certain airplane models are deeply concerning and potentially life-threatening to Texans. I will hold any company responsible if they fail to maintain the standards required by the law and will do everything in my power to ensure manufacturers take passenger safety seriously,” Paxton said.
UPDATE
Both sides filed cross motions for summary judgment June 6, with the plaintiff arguing that Paxton’s request is too expansive and the defendants countering that the request is both constitutional on its face and fully supported.
“Spirit has significant objections to the reasonableness of the Attorney General’s overbroad and burdensome Request to Examine. The Supreme Court has made clear that ‘in order for an administrative search to be constitutional, the subject of the search must be afforded an opportunity to obtain pre-compliance review before a neutral decision-maker.’ But the RTE Statute provides no mechanism for presenting those objections to a neutral decision-maker in a pre-compliance review. That alone renders the statute facially unconstitutional under the Fourth Amendment,” according to the plaintiff’s summary judgment motion.
“As there is no Texas law regulating the commercial aircraft manufacturing industry, it is not a ‘closely regulated industry’ exempted from the Fourth Amendment’s pre-compliance review requirement. And even if it were such an industry, the RTE Statute would nonetheless violate the Fourth Amendment because it fails to provide ‘certainty and regularity’ in its application by ‘limiting the discretion of the inspecting officers.’ Far from limiting the Attorney General’s discretion, the RTE Statute affords the Attorney General ‘the full and unlimited and unrestricted right to examination of the corporation’s books and records at any time and as often as he may deem necessary.’ Conferring on a state official such sweeping (and unreviewable) discretion to invade Spirit’s privacy interests is constitutionally intolerable under the Fourth Amendment.”
Conversely, the Texas administrative defendants argue that their inquiry is both lawful and not overbroad or burdensome.
“Rather than face up to an investigation, Spirit chose to file this facial challenge to the 100 plus years old RTE statute, claiming it facially violates the Fourth Amendment and is unconstitutional in every application. Spirit claims that the RTE statute provides no opportunity for pre-compliance review – despite the OAG affording Spirit over a month to seek pre-compliance review in this court – and risks criminal penalties for non-compliance. But Texas’s Request to Examine statute is constitutional, in every application. It authorizes the Office of the Attorney General to issue administrative subpoenas pursuant to the State’s visitorial powers, which have been recognized as valid by the Supreme Court for over a century. The RTE statute provides several different avenues for pre-compliance review within a reasonable time frame. Penalties for failure to comply with an RTE cannot be imposed until and unless the Attorney General commences a quo warranto suit in court, with all the procedural protections that a lawsuit provides. And there is no risk of a criminal penalty for failure to respond to an RTE. Though the RTE statute does technically contain a misdemeanor provision, it is unenforceable by the Attorney General, and the Attorney General’s office has no record of it having ever been enforced by any district attorney in Texas. Even if criminal prosecution were possible, the misdemeanor provision of the RTE statute is severable,” the defendants’ summary judgment motion stated.
“In other words, the RTE statute raises no Fourth Amendment problems and shares virtually nothing in common with the ordinance at issue in City of Los Angeles v. Patel, upon which Spirit’s contemporaneously filed summary judgment motion presumably relies. In truth, this facial challenge is Spirit’s attempt at distraction – distraction from allegations that Spirit’s misleading statements and deceptive trade practices contributed to planes and plane parts falling out of the sky. This Court should grant summary judgment to defendants on all counts and dismiss this case to allow the State’s investigation to proceed.”
The plaintiff is represented by Gerald A. Salvatore, Jaclyn N. Moyer and Matthew T. Martens of Wilmer Cutler Pickering Hale and Dorr in Washington, D.C., plus Darren L. McCarty of McCarty Law, in Austin.
The defendants are represented Jason C. McKenney of the Texas Attorney General’s Office, in Dallas.
U.S. District Court for the Western District of Texas case 1:24-cv-00472
From the Southeast Texas Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com