SERVED: AUGUST 271 2012 

U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS 

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 of penalty. I granted in each of the 

three matters summary judgment on the violations to Complainant Federal Aviatioq 

Administration ("Complainant," "FAA:;, or ''the agency"). I left for later decision in each case 

the issue of penalty. See Orders o(October 28 an~ December 8, 2011, Granting Complainant's 

Motions for Limited Summary Judgment; see also· Order Consolidating Proceeding, Qctober o, 

2011. ' •' .~~ ... . 

Respondent Cornerstone Aviation, Inc. ("Respondent" or "Cornerstone") is an Air ;: 

Agency certificated to operate a Part 141 pilot school. In the 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 been granted a 

Private Pilot certificate. A Private Pilot certificate is a prerequisite to undergoing that particqlJlf 

instruction. The FAA additionally showed that Cornerstone's training records lacked the,date ·. 

that the student in question had initially enrolled in the course. As such, I found that Respondent 

··. . -,. ,.. . . 

,; 

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violated two Federal Aviation Regulations ("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 of December 8, 2011 in -0481. 

In the second proceeding, DMS No. FAA-2011-0484 ("0484"), Complainant showed that 

Cornerstone had enrolled a student in a training course for an Instrument - Airplane rating and 

had graduated the student, although the student had no record of ground training. The course 

syllabus requires students to complete 30.0 hours of ground training before taking the course. I 

found the four violations alleged: §141.77(a)(1) (issuing a 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 student record). Order 0f 

October 28, 2011 in -0484. 

The third proceeding, DMS No. F AA-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 of a second student who had been enrolled in 

Cornerstone's Private Pilot course similarly had not been certified as correct. Finally, a· 

graduation certificate had been issued to a third student without containing that student's name.· I 

found that these circumstances made out three FAR violations: 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 of the participation of a student enrolled in an approved 

training course); and§ 141.101(c) (failing to certify a student's record upon termination of that 

student's training). Order of December 8, 2011 in -0489. 

Thus, as noted, the only issue remaining for decision is penalty. Under the provisions 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 sought is $15,500. 

A hearing was held and testimony 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 of the 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 

.·~ ' 

Complainant bears the burden ofpro~iag that the penalty it seeks is appropifat~. See, e.g., 

American Air Network, FAA Order No. 2006-5 (February 10, 2006), 2006 WL 265369, p. 9 n. 

1 Complainant, as the party with the ultimate burden of proof, was permitted to file an opening- brief and ·a brief in 

response to Respondent's answering brief. See Order of May 9, 2012. Complainant duly filed an opening brief ·· 

("Compl. Br.") and a Rebuttal Brief ("Compl. Rebut. Br."), the latter in response to Respondent's Brief in answer to 

Complainant's opening brief("Resp. Br."). · ,, .,. ,; 

·. 
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' 19. Financial hardship may constitute grounds for a reduction of an assessment which is 

otherwise fitting.· Conquest Helicopters, FAA Order No. 1994-20 (June 22, 1994), p. 3. The 

plea of inability to pay, however, is an affirmative defense. That is, on that issue Respondent 

assumes th~ burden of proof. It becomes Respondent's burden to prove mitigation of all or part 

of an otherwise appropriate civil penalty. As the Administrator has explained, this assignment of 

the burden is "reasonable and necessary" because the Respondent has control of its financial 

information. Salvatore Giuffrida, FAA Order No. 1992-72 (December 21, 1992), p. 2. Claims of 

this nature must be substantiated to be credited. See, e.g., Michael John 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 several factors. These include the nature, circumstances, extent, and gravity of the 

violation, and, with respect to the violator, the degree of culpability, any history of prior 

violations, the ability to pay, and any effect on the ability to continue to do business, and "other 

matters that justice may require." The civil penalty also should provide sufficient incentive to 

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

assessment should reflect the nature of the respondent's conduct and the totality of the 

circumstances. Folsom's Air Service, Inc., FAA Order No. 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 of sanction. The FAA has issued to its staff a 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 of the calculus. 

The.guidelines are designed to best reflect the nature and circumstances ofthe violation under 

consideration. They also are intended to advise the public of the sanction policy that the 

Administrator intends to follow through the adjudication of individual cases. Folsom 's Air 

Service, Inc., FAA Order No. 2008-11, p. 13. The guidelines are known as Order-~150.3B, and 

relevant e~cerpts may be found in this 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 et seq.), sets out specifie penalty ranges for each of several inputs, cross-refeterteing such 

factors as the respondent's size, the type ofbusiness it conducts, and the nature and extent of the 

harm the violations produeed. Complainant's ultimate determination nevertheless does not 

merely reflect a fixed mathematical computation. Nor is the number ofF AR violations in itself 

an important .consideration. The Administrator has .cautioned that deriving an assessment simply 

by multiplying the number of violations times the penalty recommended per sanction eould 

result in a fine disproportionately severe. Warbelow 's Air Ventures, Inc., FAA Order No. 2000-3 

(February 3, 2000), pp. 20-21,pet.for reconsid. den., Order No. 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 of violations. Folsom's Air Service, Inc., p. 13. Each 

situation, being dependent on so many variables, is unique. "Evaluation ofthe case," the FAA 

has emphasized, "is based on the totality of the faets and circumstances." See 72 Fed.Reg. 55853 

(October 1, 2007). 
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An administrative law judge ("ALJ") is not required to follow the guidelines or the 

Matrix. They are intended for agency personnel, and ALJs are not agency personnel. ALJs 

make decisions independently, and the ALJ determines (subject to agency review) whether a 

civil penalty is to be assessed, and if so, in what amount. The guidelines nonetheless must be 

respected as an expression of agency sanction policy. They represent an effort to produce 

consistent results in similar cases. The Administrator has asserted the power to impose the 

agency's sanction policy on appeal if an ALJ assesses a civil penalty that is found to be 

inconsistent with the policy. Warbelow 's Air Ventures, Inc., FAA Order No. 2000-3 (February 3, 

2000), p. 20; Northwest Airlines, FAA Order No. 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 and inadvertent, it concluded. It also.noted Respondent's 

attitude of cooperation. The Matrix considers these to be mitigating factors. Respondent's level 

of experience ~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 of some sort." 

Finally, Complainant's calculus reflected the "purely recordkeeping" nature of the violations; 

Respondent's incorrect training records, the agency determined, did not reflect on the 

qualifications or competence of the 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 that the violations each 

warrant a fine in the moderate-to-maximum range (Compl. Br., p. 4). The maximum civil 

penalty per violation is $11,000. 

Against this bacKground, Complainant proposes for the two violations a total civil 

penalty of$5,000. 

2. Case 0484 · 

Complainant folded the four violations il1to three because two of the 'violations, 

§§141.77(a)(l) and 141.77(b), require proof of the same facts. As such, they must be· 

considered for penalty purposes as one.2 Each of the violations under the Matrix warrants a civil 

penalty in the moderate-to maximuin range (Compl. Br., pp. 4-5). "' 

Complainant suggested a total sanction in this proceeding of $5,000. 

2 Citing Blockburger 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. . 

:)' 
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3. Case0489 

Noting that two of the three violations, §§141.101(a) and (c), require proof of the 

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 at the hearing by its founder, president and co:.owner, Susan 

Horstman (see Tr. 51). Ms. Horstman, a veteran pilot, testified in support of Cornerstone's plea 

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. It emphasizes· 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 nor promote 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 of mitigation on account of financial hardship.4 

1. Case 0481 

Cornerstone points out that it was itself which notified the FAA of its 

§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. "That is 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 of another entity with whom it entrusted the 

recordkeeping, Cornerstone stat~s. 

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

3 Section 141.101(a) found Cornerstone in violation for failing to maintain a current and accurate record of the 

participation of a student enrolled in an approved training course; § 141.101 (c) found a violation for failing to certify 

a student's record upon termination of that student's training. 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 Brief a 

Motion to Strike ("Motion"). The Motion asks that Respondent's briefbe stricken to the extent that it brings 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 brief by both parties 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, served December 8, 2011, found this violation. See I.D., pp. 1-2. 
--------~~~----

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2. Case0484 

Cornerstone states that it fired the flight instructor responsible for enrolling the 

student who lacked a record of ground 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 of the 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 of recordkeeping 

requirements; standards changed when FAA inspectors did, it says. Cornerstone further states 

that it has installed a new software program; the program's installation and development "is the 

proper sanction" in this 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 is appropriate. I 

find that this amount fairly reflects all the facts and circumstances of the cases. It properly 

accounts for all mitigating and aggravating circumstances. The penalty will also, I conclude, 

appropriately promote compliance with the PARs and deter Cornerstone and comparable entities 

from similar.violations. 

I will make one point before discussing my determinations individually. The parties 

agree that the violations in each case were 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. American Air Network, Inc., FAA Order No. 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 in this matter. 

I find that Cornerstone's action in reporting the violation to the FAA, which led to the 

§ 141.83(a)(l) charge, ought to be given significantly more mitigating weight than the 

Complainant has given it. 6 The agency's policy of encouraging regUlated entities to report 

apparent violations in exchange for a lesser (or.no) penalty would be undermined to a degree 

unmerited by the circumstances if Complainant'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 

may receive only a letter of correction for a violation they voluntarily disclose to the FAA if they propose and 
7 

' underlying the charges nonetheless justify a civil penalty greater than a token amount - an 

assessment which appropriately promotes the agency's policies of compliance and deterrence. 

Against this background, I conclude that a civil penalty of $1 ,500 for the two violations found is 

commensurate with the totality of the circumstances. 

B. Case0484 

I will assess a civil penalty of $3,000 in this matter. 

It is amitigating circumstance that the violations were non-operational. But it 

nonetheless is a significant matter when a student is graduated despite failing 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 of flight. It must be adequately addressed. 

--

That an instructor in Cornerstone's employ was in the first instance responsible and was 

terminated as a result, as Cornerstone argues in mitigation, 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 of their employees acting within 

the scope of their employment (see, e.g., Warbelow 's Air Ventures, Inc., FAA Order No. 2000-3 

(February 3, 2000), p. 5, reconsid. den., FAA Order No. 2000-14, Junes; 2000,pet. den. 19 

Fed.Appx; 606 (unpublished opn., September 20, 2001)). Respondent must answer for the 

conduct of its 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 in this matter. 

I do not view the recordkeeping violations_ found in this case as particularly grave. The 

penalty amounts the guidelines suggest, I find, do not fairly reflect the nature ofthe- -

transgressions. Yet these offenses are not trifling. As the Administrator has noted~ -• -

recordkeeping is the linchpin of the regulatory scheme by which safety· in flight is maintained. 

The most feasible way for the FAA to fulfill its mandate is through recon,ls inspection. 

Complete and accurate recordkeeping is essential to this purpose. Watts Agricultural Aviation, 

Inc., d/b/a Growers Air Service, FAA Order No. 91-8 (Aprilll, 1991), review den. subnom. 

Watts Agricultural Aviation v. Busey, 977 F.2d 594, 1992 U.S. App. Lexis 25020 (9Cir: 1992). 

Respondent's reference to a new and presumably better software program as a mitigating 

circumstance is not persuasive. The matters under review 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', but the 

agency ultimately rejected it. Tr. 33-41. 

., 
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detected. Nor do I credit Respondent's assertion that the regulations are vague 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 on these charges is appropriate. 

It fairly reflects, I think, the totality ofthe circumstances and promotes to an appropriate degree 

the agency's poliCies of compliance 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 Docket No. FAA2011-0481; $3,000 in Docket No. FAA-2011-0484; and $2,000 in Docket No. 

FAA-2011-0489, for violations of the 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 Law Judge. 

Attachment - Service List 

8

_This decision may be appealed to the Administrator ofthe FAA. The notice of appeal must conform to sections 

13.210, 13.211(e) and 13.233 of the Rules of Practice, which require that a notice ofappeal1) be filed not later than 

10 days (plus an additional five days if mailed) from the service date of this decision, and 2) be perfected with a 

written brief or memorandum not later than 50 days (plus an additional five, if mailed) from the service date of this 

decision. The notice of appeal and brief or memorandum must either be 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, or b) 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 of the notice of appeal and brief or memorandum also 

must be sent to agency counsel. Service upon the presiding judge is optional. 
SERVICE LIST 

ORIGINAL & ONE COPY 

Federal Aviation Administration 

800 Independence Avenue, S.W. 

Washington, DC 20591 

Attention: Hearing Docket Clerk, AGC-430 

Wilbur Wright Building-Suite 2W1 0001 

ONE COPY 

Susan Horstman, Chief Executive 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 of the 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 of Transportation 

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 in person or by expedited courier, use the following address: 

Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur Wright Building-Suite 

2Wl000, Washington, DC 20591; Attention: Hearing Docket Clerk, AGC-430.