AUSTIN - Texas has agreed not to punish a company that successfully challenged the investigative powers of the Attorney General's Office, as the State opens a probe into Boeing 737 MAX disasters.
Spirit Aerosystems was the target of a request to examine by AG Ken Paxton but went to federal court to show the state's RKE statute was unlawful. U.S. Magistrate Judge Mark Lane last year recommended Spirit be granted an injunction against Paxton's investigation, and District Judge Robert Pitman agreed.
Paxton has appealed while Spirit seeks $580,000 from the State as the prevailing party in the litigation.
Pitman, meanwhile, on Jan. 13 signed an order regarding Paxton's co-defendant, Secretary of State Jane Nelson. She and Spirit asked that the injunction be applied to her as well.
It stipulates that Nelson cannot de-register Spirit from doing business in Texas for failing to comply with Paxton's RTE.
Spirit makes fuselages for Boeing 737s and went to court after receiving an RTE from Paxton. Lane said the RTE law is unconstitutional, to which Paxton argued an injunction would "needlessly" put an end to an investigative tool on the books for more than 100 years.
"(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 pre-compliance 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..."
Spirit complained it didn't have a chance to challenge aspects of the RTE before being forced to comply with it.
"If an entity fails to immediately comply with the Attorney General's demand, the entity's managerial officials can be criminally prosecuted for a misdemeanor offense, and the Attorney General's staff can arrest those officials on the spot," attorneys for the company wrote.
"In other words, a Request to Examine recipient and its managerial officials are, at the moment of receipt, put to the choice of complying with the request or violating the statutory 'immediately permit' requirement."
And exemptions to the pre-compliance review requirement regarding closely regulated industries don't apply, Spirit says, as there is no Texas law that regulates the commercial aircraft manufacturing industry.
In 2024, 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.
Spirit argues Paxton has no jurisdiction over it. The company's headquarters are out of state and Boeing malfunctions occurred in California and overseas.
Paxton's claim that Texans are regular passengers on Boeing planes "is meritless," Spirit says.
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 pre-compliance review.
Paxton 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.