AUSTIN - Texas Attorney General Ken Paxton is defending what he says is his right to examine the books of a company that makes parts for Boeing, as he faces a possible ruling saying otherwise.
U.S. Magistrate Judge Mark Lane recently issued his report and recommendations on the dispute between Paxton and Spirit Aerosystems, which makes fuselages for Boeing 737s. Paxton says the state's right-to-examine law grants him the power to check out the records of Spirit, which filed a motion in federal court to prevent it.
Spirit AeroSystems alleges that this statute violates its Fourth and Fourteenth amendment rights to be free from unreasonable searches and seizures. It says the RTE law provides no mechanism for presenting objections to a neutral decisionmaker in a precompliance review.
Lane agreed and filed his R&R on Nov. 1.
"(I)t is clear that the RTE Statute contains a constitutional defect in its plain language," Lane wrote.
"The RTE Statute provides no opportunity to seek precompliance review on the reasonableness of a particular request, and it explicitly prevents such opportunity through its temporal requirements and grant of unlimited power to the Attorney General..."
And exemptions to the precompliance review requirement regarding closely regulated industries don't apply, Spirit says, as there is no Texas law that regulates the commercial aircraft manufacturing industry.
Earlier this year, Paxton opened his investigation of Spirit following disasters with Boeing's 737 MAX planes. Two crashes in 2018 and 2019 killed 346 people, then in January of this year the door blew out of one that led the Federal Aviation Administration to ground all MAX planes with similar configurations.
Paxton must now convince District Judge Andrew Austin not to adopt Lane's findings. He filed his objections to them on Nov. 4.
Paxton says Lane's R&R would "needlessly" put an end to the AG's power to demand corporate records under the RTE law, which has been on the books for more than 100 years.
Key to the case is the application of a 2015 U.S. Supreme Court opinion, Los Angeles v. Patel. That case concerned Los Angeles' requirement for hotel operators to record and keep information about their guests for a 90-day period.
Those records were to be made available to police for inspection. SCOTUS and the Ninth Circuit found those inspections are Fourth Amendment searches and were unreasonable because hotels could be punished for failing to turn records over without an opportunity for precompliance review.
"Unlike in Patel, an RTE subpoena recipient can always seek a protective order under the Texas Rules of Civil Procedure," Paxton's office wrote.
"Moreover, unlike in Patel, Texas courts entertain equitable claims for an injunction in this setting. The RTE statute does not itself explicitly spell out these options, but that does not mean precompliance review is unavailable and it does not make the statute facially unconstitutional."
He issued his RTE to Spirit on March 28, telling Spirit, its board and its officers it "has a continuing duty" to provide records while he investigates.
The RTE mentions a shareholder class action lawsuit against Spirit in New York federal court that followed a drop in the company's value once Boeing announced it would halt deliveries of 737 MAX planes because of a supplier quality problem linked to Spirit.
The company's value fell nearly 21% to $28.2 per share on April 14. The presiding judge is weighing Spirit's motion to dismiss that case.
"The potential risks associated with certain airplane models are deeply concerning and potentially life-threatening to Texans," Paxton said. "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."