### SERVED: AUGUST 

### 271 

### 2012

U.S. DEPARTMENT OF TRANSPORTATION OFFICE OFHEARINGS

WASHINGTON, DC 

### ' 28 /\ 

### q: 12

•. ) FEDERAL AVIATION ADMINISTRATION, ) ) Complainant, ) FAA DOCKET Nos. [TO BE ASSIGNED] ) v. ) (Civil Penalty. Actions) ) CORNERSTONE AVIATION, INC. ) ) Respondent.- ) OMS No. FAA-2011-0481 ) OMS No. FAA-2011-0484 ) OMS No. FAA-2011-0489 

# ____________________________)

INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE RICHARD C. GOODWIN

., Found: Respondent is hereby assessed a civil penalty

# of$6,500. 

### I. Background**-t~-** '**.~,** ••,..;,:,,:: - ]. This consolidated proceeding is limited to the issue ofpenalty. I granted in each ofthe three matters summaryjudgment onthe violations to Complainant Federal Aviatioq Administration ("Complainant," "FAA:;, or ''the agency"). I left for later decision in each case the issue ofpenalty. See Orders o(October 28**an~** December 8, 2011, Granting Complainant's Motions for Limited Summary Judgment; see also·Order ConsolidatingProceeding, Qctober

# o, 2011. ' •'**.~~** ... . Respondent Cornerstone Aviation, Inc. ("Respondent" or "Cornerstone") is anAir ;: Agency certificated to operate a Part 141 pilot school. Inthe first proceeding docketed, DMS No. FAA-2011-0481 ("0481"), Complainant established that Cornerstone allowea a student to begin Instrument/Commercial groimd and flight instruction before the student had beengranted a Private Pilot certificate. A Private Pilot certificate is

# a prerequisite to undergoingthat particqlJlf instruction. The FAA additionally showed that Cornerstone's training records lacked the,date ·. that the student in question had initially enrolled inthe course. As such, I found that Respondent
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..**~·.** ,•2
violated two Federal AviationRegulations ("FARs"): 14 C.F.R. §14L83(a)(l) (failing to comply with an approved training course) and §141.101(a)(1) (failing to maintain an accuraterecord of the date a student was enrolled in an approved course). Order ofDecember 8, 2011 in -0481. Inthe second proceeding, DMS No. FAA-2011-0484 ("0484"), Complainant showed that Cornerstonehad enrolled a student in a training course for an Instrument

- Airplane rating and had graduated the student, although the student had no record ofgroundtraining. The course syllabus requires students to complete 30.0 hours ofground training before taking the course. I found the four violations alleged: §141.77(a)(1) (issuinga graduation certificate to a student who had not completed all training); §141.77(b) (graduating a student who had failed to complete all curriculum requirements); §141.83(a)(1) (failing to comply with Cornerstone's approved training course); and§141.101(a) (failing to maintain a current and accurate studentrecord). Order 0f October 28, 2011 in -0484. The third proceeding, DMS No. FAA-2011-0489 ("0489"), involved three students. The FAA demonstrated that Cornerstone had credited one student enrolled in an InstrumentAirplane/Commercial course with ground training received elsewhere, although Cornerstone did not have authorization to credit such training. This student's training records additionally had not
· been certified as correct. The training records ofa second student who had been enrolled in

Cornerstone's Private Pilot course similarly had not been certified as correct. Finally, a· graduation certificate hadbeen issued to a third student without containing that student's name.·I found that these circumstances made outthree FARviolations: section 141 ;95(b)(2) (issuing a graduation certificate to a student that failed to contain the student's name); §141.101(a) (failing to maintain a current and accurate record ofthe participation ofa student enrolled in an approved training course); and§141.101(c) (failing to certify a student's record upon termination ofthat student's training). Order ofDecember 8, 2011 in -0489. Thus, as noted, the only issue remaining for decision is penalty. Undertheprovisions of 49 U.S.C. §46301(a) and (d), as adjusted by 14 C.F.R. §13.305 (reflecting periodic cost-of-living adjustments), the agency asked for a civil penalty in -0481 of$5,000; in -0484, $5,000; and in -0489, $5,500. The total assessment soughtis $15,500. A hearing was held andtestimony taken on March 12, 2012,. in Salt Lake..,eity, UT. The parties have filed briefs and the matter now is ready for decision. 1 Because the ensuing discussion disposes ofthe penalty issue following an oral evidentiary hearing,.it

### co~titutes an Initial Decision ("I.D."). 

### See 14 C.F.R. §13.232; 

### Florenr;e L. Barnhill, FAA**Order~No.** 92-32 (May 9, 1992), 1992 WL 753161, pp. 3-4. .· 

### H. Framework**.·~** ' Complainantbears the burden

### ofpro~iag thatthe penalty it seeks is

### appropifat~. See, e.g., AmericanAirNetwork, FAA OrderNo. 2006-5 (February 10, 2006), 2006 WL 265369, p. 9 n.

1 Complainant, as the party with the ultimate burden ofproof, was permitted to file an opening-briefand·a briefin response to Respondent's answeringbrief. See Order ofMay 9, 2012. Complainant duly filed an opening brief ·· ("Compl. Br.") and a Rebuttal Brief("Compl. Rebut. Br."), the latter inresponse to Respondent's Briefin answerto Complainant's openingbrief("Resp. Br."). · ,, .,. ,;



### ·.3 

### ' 19. Financial hardship may constitute grounds for a reduction ofan assessment which is otherwise fitting.· ConquestHelicopters, FAA OrderNo. 1994-20 (June 22, 1994), p. 3. The pleaofinability to pay, however, is an affirmative defense. That is, onthat issue Respondent assumes**th~** burden ofproof. Itbecomes Respondent's burden to prove mitigation ofall orpart ofan otherwise appropriate civil penalty. As the Administrator has explained, this assignment of the burden is "reasonable and necessary" because the Respondent has control ofits financial information. Salvatore Giuffrida, FAA OrderNo. 1992-72 (December 21, 1992), p. 2. Claims of this nature must be substantiated to be credited. See, e.g., MichaelJohn Costello, FAA Order No. 93

.. 10 (March 24, 1993), 1993 WL 833110, p. 4. In determining the appropriate civil**pe~alty** amount, the decisionmaker is obligated to consider severalfactors. These include the nature, circumstances, extent, and gravity ofthe violation, and, with respect to the violator, the degree ofculpability, any history ofprior violations, the ability to pay, and any effect onthe ability to continue to do business, and "other matters thatjustice mayrequire." The civil penalty also should provide sufficient incentive to

. deter the respondent and similarly-situated entities from future violations. Overall, a proper

assessment should reflectthe nature ofthe respondent's conduct and the totality ofthe circumstances. Folsom'sAirService, Inc., FAA OrderNo. 2008-11 (November 6, 2008), 2008 WL 4948488, pp. 11, 20. The Administrator has provided policy guidance for agency employees to follow in the determination ofsanction. The FAA has issued to its staffa policy statement and detailed guidelines ("the guidelines") for arriving at a fitting civil penalty amount. The guidelines assess all relevant statutory criteria. Mitigating and/or aggravating factors also are part ofthe calculus. The.guidelines are designed to bestreflect the nature and circumstances ofthe violation under consideration. They also are intended to advise the public ofthe sanction policy that the Administrator intends to follow through the adjudication ofindividual cases. Folsom 'sAir Service, Inc., FAA Order No. 2008-11, p. 13. The guidelines are known as**Order-~150.3B,** and relevant**e~cerpts**may be found inthis case in Exhibit C-1. · The guidelines further aid Complainant's penalty determination through a Sanction Guidance Matrix ("Matrix"). The Matrix, found in Appendix B to Order 2150.3B (Exh. C-1, p. B-1 etseq.), sets out specifie penaltyranges for each ofseveral inputs, cross-refeterteing such factors as the respondent's size, the type ofbusiness it conducts, and the nature and extent ofthe harm the violations produeed. Complainant's ultimate determination nevertheless does not merely reflect a fixed mathematical computation. Nor is the number ofF ARviolations in itself an important .consideration. The Administrator has .cautioned that deriving an assessment simply by multiplying the number ofviolations times the penalty recommended per sanction eould result in a fine disproportionately severe. Warbelow 'sAir Ventures, Inc., FAA OrderNo. 2000-3 (February 3, 2000), pp. 20-21,pet.for reconsid. den., OrderNo. 2000-14 (June 8, 2000). Rather, the Matrix is-intended to indicate the Administrator's "general views" about the civil penalty ranges appropriate for different types ofviolations. Folsom'sAirService, Inc., p. 13. Each situation, being dependent on so many variables, is unique. "Evaluation ofthe case," the FAA has emphasized, "isbased onthe totality ofthe faets and circumstances." See 72 Fed.Reg. 55853 (October 1, 2007).4
An administrative lawjudge ("ALJ") is not required to follow the guidelines orthe Matrix. They are intended for agency personnel, and ALJs are not agency personnel. ALJs make decisions independently, and the ALJ determines (subjectto agency review) whether a civil penalty is to be assessed, and ifso, inwhat amount. The guidelines nonetheless must be respected as an expression ofagency sanctionpolicy. They represent an effort to produce consistent results in similar cases. The Administrator has asserted the powerto impose the agency's sanction policy onappeal ifanALJ assesses a civil penalty that is found to be inconsistent withthepolicy. Warbelow 'sAir Ventures, Inc., FAAOrderNo. 2000-3 (February 3, 2000), p. 20; NorthwestAirlines, FAA OrderNo. 1990-37 (November 7, 1990), pp. 8-10.


### III. The Parties' Positions A. Complainant The agency weighed several factors in formulating its civil penalty recommendations. The violations were non-operational andinadvertent, it concluded. Italso.noted Respondent's attitude ofcooperation. The Matrix considers these to be mitigating factors. Respondent's level ofexperience**~t** the time the violations were alleged, about eight years, was counted as an aggravating factor. The Matrix also accounts for Respondent's status as a small business. Cornerstone's students.have always performed well, the agency stated. Complainant additionally noted that the record showed Cornerstone taking "corrective action ofsome sort." Finally, Complainant's calculus reflected the "purelyrecordkeeping" nature ofthe violations; Respondent's incorrect training records, the agency determined, did not reflect onthe qualifications or competence ofthe pilots involved (Tr. 10, 17-20, 50-51, 60; Compl. Br., pp. 2, 6-8). '

. 1. Case 0481 

# .. Weighing the factors described above, the Matrix suggests thatthe violations each warrant a fine inthe moderate-to-maximum range (Compl. Br., p. 4). The maximum civil penalty per violation is $11,000. Against this bacKground, Complainantproposes for the twoviolations

# a total civil penalty of$5,000.
2. Case 0484· Complainantfolded the four violations il1to three because two ofthe'violations, §§141.77(a)(l) and 141.77(b), require proofofthe same facts. As such, they must be· considered for penalty purposes as one. 2 Each ofthe violations underthe Matrix warrants a civil penalty inthe moderate-to maximuin range (Compl. Br., pp. 4-5). "' Complainant suggested a total sanction in this proceeding of$5,000.

2 CitingBlockburger v. U.S., 284 U.S. 299, 304 (1932). As noted earlier, p. 2, section 141.77(a)(l)prohibits issuing a graduation certificate to a student who had not completed all training; section 141.77(b) is violated when a regulated entity graduates a student who had failed to complete all curriculum requirements.

. :)'5
3. Case0489 Noting that two ofthe three violations, §§141.101(a) and (c), require proofofthe same facts, the FAA considered them as one.3 The Matrix shows that each transgression calls for. a civil penalty in the moderate-to-maximum range (Compl. Br., pp. 5-6). Complainant suggested a total sanction of$5,500. B. Respondent Respondent was represented atthe hearing by its founder, president and co:.owner, Susan Horstman (see Tr. 51). Ms. Horstman, a veteran pilot, testified in support ofCornerstone'splea in mitigation (Tr. 52). She was Cornerstone's sole witness. Cornerstone asks that no sanction be levied. In.support, it argues that the situations causing the violations have been rectified. Itemphasizes·that the violations were inadvertent. Cornerstone has always cooperated with the FAA in fixes, Ms. Horstman testified. Respondent also states that the civil penalty proposed would penalize Cornerstone and its owner and would neither act as a deterrent norpromote safety. Finally, Respondent argues that a civil penalty would adversely affect its business operations. But it did not submit any evidence to support a finding ofmitigation on account offinancial hardship. 4
1. Case 0481 Cornerstone points out that it was itselfwhich notified the FAA ofits §141.83(a)(l) (failing to comply with an approved training course) violation. That circumstance properly should be considered mitigating, it asserts. Moreover, Cornerstone has repaid the student for its mistake and gave the student free flying time as well. "Thatis the proper sanction" for this violation, Respondent argues. The second violation found in this matter, that of§141.101(a)(l) (failure to record a student's enrollment date), was the responsibility ofanother entity with whom it entrusted the recordkeeping, Cornerstone**stat~s.**

· No sanction at all shouldissue in this proceeding, Cornerstone concludes. 5

3 Section 141.101(a) found Cornerstone in violation for failing to maintain a current and accurate record ofthe participation ofa student enrolled in an approved training course; §141.101(c) found a violation for failing to certify a student'srecordupon termination ofthat student'straining. See I.D., p. 2. 4 Tr. 46-50, 55; Resp. Br., p. 3; see Compl. Rebut. Bt., p. 2. Complainant filed along with its Rebuttal Briefa Motion to Strike ("Motion"). The Motion asks that Respondent's briefbe strickentothe extentthat itbrings up facts not in evidence and irrelevant facts. I deny the Motion. I note, however, that Complainant's arguments have merit. But it is impractical, and unnecessary, to excise the offending arguments from Respondent's brief. I will consider every assertion made on briefbybothparties and give each the weight it warrants. 5 Resp. Br., pp. 1, 2. Respondent also asserts that "[t]here is no violation" concerning the §141.101(a)(l) charge. Resp. Br. p. 1. This is not correct. As noted, my Order Granting Complainant's Motion for Limited Summary Judgment, servedDecember 8, 2011, found this violation. See I.D., pp. 1-2.**--------~~~----**
6

2. Case0484 Cornerstone states that it fired the flight instructor responsible for enrolling the student who lacked a record ofground training in a**cour~e** which required such training as a prerequisite (see I.D., p. 2). (The unlawful enrollment was the basis for the violations asserted and found). Termination ofthe instructor, Respondent argues, is the appropriate sanction in this case. Resp. Br., pp. 1, 2. 3. Case0489 Cornerstone asserts in its defense that it was unsure ofrecordkeeping requirements; standards changed when FAAinspectors did, it says. Cornerstone further states that it has installed a new software program; the program's installation and development "is the proper sanction" inthis case, Respondent argues (Tr. 48-49, 55-57; Resp. Br., pp. 1, 2).


### IV. Decision I find and conclude that a total civil penalty of$6,500 in the three cases isappropriate. I find that this amount fairly reflects all the facts and circumstances ofthe cases. Itproperly accounts for all mitigating and aggravating circumstances. The penalty will also, I conclude, appropriately promote compliance with the PARs and deterCornerstone and comparable entities from similar.violations. I will make one pointbefore discussing my determinations individually. Theparties agree that the violations in each casewere inadvertent. Yet, it must be stressed, a violation's unintentional character does not abate an otherwise reasonable sanction. Evidence that a violation was intentional would, in fact, constitute an aggravating factor and woulfl make a higher sanction appropriate. AmericanAirNetwork, Inc., FAA OrderNo. 2006-5 (February 10, 2006), p. 8. All arguments the parties have made which are not specifically addressed herein are rejected. I find that they do not merit discussion. A. Case0481 I will assess a civil penalty of$1,500 inthis matter. I find that Cornerstone's action inreporting the violationto the FAA, which led to the 

### §141.83(a)(l) charge, ought to be givensignificantly more mitigating weight than the Complainant has given it.6 The agency's policy ofencouraging regUlated entitiesto report apparent violations in exchange for a lesser (or.no) penalty would be undermined to a degree unmerited by the circumstances ifComplainant's proposed assessment were adopted. 7 The facts

6 Complainant concedes that Respondent's arguments for mitigation, which it asserts in each matter, are most compelling respecting this charge. Compl. Rebut. Br., p. 3. 7 Under the agency's Voluntary Disclosure Reporting Program (VDRP), regulated entities in certain circumstances mayreceive only a letter ofcorrection for a violation they voluntarily disclose to the FAA ifthey propose and7
' underlying the charges nonethelessjustify a civil penalty greater than a token amount

- an assessment which appropriately promotes the agency's policies ofcompliance and deterrence. Against this background, I conclude that a civil penalty of$1 ,500 for the two violations found is commensurate withthe totality ofthe circumstances. B. Case0484 I will assess a civil penalty of$3,000 inthis matter. Itis amitigating circumstance that the violations were non-operational. But it nonetheless is a significant matter when a student is graduated despitefailing to elll.'f?l.l in and pass a basic prerequisite. Such a transgression is more than a recordkeeping violation; it invites undue risk to the safety offlight. Itmust be adequately addressed.

-- That an instructor in Cornerstone's employwas inthe first instance responsible and was terminated as a result, as Cornerstone argues inmitigation, does not avail Respondent. That circumstance simply is not relevant to the charges, having no effect on Respondent's legal responsibility. Employers are vicariously liable for the actions oftheir employees acting within the scope oftheir employment (see, e.g., Warbelow 'sAir Ventures, Inc., FAA OrderNo. 2000-3 (February 3, 2000), p. 5, reconsid. den., FAA OrderNo. 2000-14, Junes; 2000,pet. den. 19 Fed.Appx; 606 (unpublished opn., September 20, 2001)). Respondent must answer for the conduct ofits instructor. Evaluating the situation as a whole, I conclude that a civil penalty of$3,000 accounts for the circumstances underlying the charges and appropriately promotes the agency's policies of compliance and deterrence. C. Case0489 

# .. I will assess a civil penalty of$2,000 inthis matter. I do not viewthe recordkeeping violations_found inthis case as particularly grave. The penalty amounts the guidelines suggest, I find, do not fairly reflectthe nature ofthe-

- transgressions. Yet these offenses are nottrifling. As the Administrator has**noted~** -• - recordkeeping is the linchpin ofthe regulatory scheme bywhich safety·in flight is maintained. The most feasible way forthe FAAto fulfill its mandate is through recon,ls inspection. Complete and accurate recordkeeping is essential to this purpose. WattsAgriculturalAviation, Inc., d/b/a GrowersAirService, FAA OrderNo. 91-8 (Aprilll, 1991), review den. subnom. WattsAgriculturalAviation v. Busey, 977 F.2d 594, 1992 U.S. App. Lexis 25020 (9Cir: 1992). Respondent's reference to a new andpresumablybetter softwareprogram as a mitigating circumstance is notpersuasive. The matters underreview are eJementary and shoulc;!_haye been_ .\ .. 

# ..

implement a "comprehensive fix" that satisfies the FAA's requirements. See Advisory Circular (AC) 06::58B; Tr. 36. Evidence at the hearing showed that Respondent in 2009 attempted to make a disclosure under the VDRJI', butthe agency ultimately rejected it. Tr. 33-41. 

# .,

### 8
detected. Nor do I credit Respondent's assertion that the regulations arevague or otherwise difficult to understand. The requirements are straightforward and uncomplicated, I find. In sum, I find and conclude that a civil penalty of$2,000 onthese charges is appropriate. Itfairly reflects, I think, the totality ofthe circumstances and promotes to an appropriate degree the agency's poliCies ofcompliance and deterrence. 

### IV. Conclusion For all these reasons, it is ORDERED as follows: 1. · Complainant's Motion to Strike is denied; 2. Respondent is hereby assessed a civil penalty of$1,500 in DocketNo. FAA2011-0481; $3,000 in DocketNo. FAA-2011-0484; and $2,000 in Docket No. FAA-2011-0489, for violations ofthe following Federal Aviation Regulations: 14 C.F.R. §141.83(a)(l) and §141.101(a)(l) (Docket 2011-0481); 14 C.F.R. §141.77(a)(l), §141.77(b), §141.83(a)(l), and §141.10l(a) (Docket 2011-0484); and §141.95(b)(2), §141.101(a), and §141.101(c) (Docket 2011-0489); 8 and 3. All other matters not specifically addressed herein are denied.

'o
R chard C. Goodwin U.S. Administrative LawJudge. Attachment

- Service List

8_This decision may be appealed to the Administrator ofthe FAA. The notice ofappeal must conform to sections 13.210, 13.211(e) and 13.233 ofthe Rules ofPractice, which require that a notice ofappeal1)be filed not later than 10 days (plus an additional five days ifmailed) from the service date ofthis decision, and 2) be perfected with a written brieformemorandum not later than 50 days (plus an additional five, ifmailed) from the service date ofthis decision. The notice ofappeal and brieformemorandum must eitherbe a) mailed to the Federal Aviation Administration, 800 Independence Avenue, S.W., Washington, DC 20591, Attn: Hearing Docket Clerk, AGC-430, Wilbur Wright Building-Suite 2W1000, orb) delivered personally or via expedited courier service to the Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur Wright Building-Suite 2Wl000, Washington, D.C. 20591, Attn: Hearing Docket Clerk, AGC-430. A copy ofthe notice ofappeal and brieformemorandum also must be sentto agency counsel. Service upon the presidingjudge is optional.

### SERVICE LIST ORIGINAL & ONE COPY Federal Aviation Administration 800 Independence Avenue, S.W. Washington, DC 20591 Attention: Hearing Docket Clerk, AGC-430 WilburWright Building-Suite 2W1000 1 

### ONE COPY Susan Horstman, ChiefExecutive Officer Cornerstone Aviation, Inc., 

### Respondent 337 North 2370 West #130 Salt Lake City, UT 84116 TEL: 801-355-2244 Jeffrey M. Harper, 

### Complainant's Counsel Attorney, Office ofthe Regional Counsel Northwest Mountain Region, ANM-7 Federal Aviation Administration 1601 Lind Avenue, S.W. Renton, W A 98057 TEL: 425-227-2161 FAX: 425-227-1007 The Honorable Richard C. Goodwin,



### Administrative Law Juqge Office ofHearings, M-20 U.S. Department ofTransportation 1200 New Jersey Avenue, S.E. Washington, DC 20590 TEL: 202-366-2139 Attorney-Advisor 202-366-5121 Legal Assistant FAX: 202-366-7536 FDMS Nos. FAA-2011- 0481, 0484 and 0489 (Civil Penalty Action)

.,

1 Service was by U.S. Mail. For service inperson orby expedited courier, use the following address: Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur WrightBuilding-Suite 2Wl000, Washington, DC 20591; Attention: Hearing Docket Clerk, AGC-430.