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• U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS IN THE MATTER OF: BRENDAN AIRWAYS, LLC No.: FAA-2012-0020 Suite 600 1

Heritage Reporting Corporation 1220 L Street, N.W. Washington, D.C. Wednesday, June 27, 2012

.**l"·~**..,, The parties met, pursuant to the notice, 

### a 10:57 a.m. BEFORE: HONORABLE J.F. SULLIVAN Administrative Law Judge APPEARANCES: (Via Telephone) For the Complainant: ZACHARY M. BERMAN, Esquire Federal AviationAdministration Office of the Regional Counsel, AS0-7 1 Aviation Plaza Jamaica, New York 11434 (718) 553-3285 For the Respondent: ,,.,._,.,

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JASON DICKSTEIN, Esquire WashingtonAviation Group 2233 WisconsinAvenue, N.W., Washington, D.C. 20007 (202) 628-6776 Suite 503 

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# • --..._ 1 2 (10:57 a.m.) 3 JUDGE SULLIVAN: We're on the record in the 4 matter of BrendanAirways, LLC. This is Docket No. 5 FAA-2012-0020. Today is Wednesday, June 27, 2012, and 6 the parties have convened for a litigation scheduling 7 conference. 8 The Federal AviationAdministration, which 9 I'llhereinafter abbreviate as FAA, is representedby 10 its attorney, ZacharyM. Berman. BrendanAirways, LLC 11 is representedby its attorney of record, Jason 12 Dickstein. Good morning andwelcome toboth of you. 13 MR. DICKSTEIN: Goodmorning. 14 MR. BERMAN: Good morning. 15 JUDGE SULLIVAN: Folks, just so that our 16 record is clear, I'11 simplynote that onApril 23, 17 2012, I fi'led an order settinga Rule 16 litigation 18 scheduling conference and directingRule 26(f) 19 planning and submission. I'll note that I received 20 21 22 23 24 25 theparties' jointlyproposed scheduling/discovery plan as of this morning, June 27, 2012, and I've reviewed it. I also got a phone call message from my staff indicating that Mr. Dicksteinmay have some additional matters that he wants to add to this Heritage Reporting Corporation (202) 628-4888 2

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• 1 morning's agenda, so why don't I turn to you first, 2 Mr. Dickstein. Is there anythingyou would like to 3 add to the conference agenda? 4 

### MR. DICKSTEIN: It is less a matterof 5 adding to the conference agenda andmore a matter of 6 simplymaking sure that the Court is aware of some 7 matters that I'vemade Mr. Bermanaware of. 8 The air carrierhad announced last year that 9 theywouldbe discontinuing operations. They 10 discontinued operations inJanuary. They're inthe 11 process of surrenderingthe certificate and closingup 12 operations, and their intent is to actuallyhave no 13 staff and no further corporate actions of anykind a.s 14 of June 30, sobasically Fridayof this week, and I 15 wanted tomake sure that the Court was aware of that 16 as well as Mr. Berman. 17 

### JUDGE SULLIVAN: Okay. Andjust to clarify, 18 youbasically stated that your client discontinued 19 operations inJanuary 2012? 20 MR. DICKSTEIN: Correct. 21 JUDGE SULLIVAN: Okay. And then as of 22 June 30, 2012, this Saturday, theairline intends to 23 have no staff, nobusiness dealings byJune 30, 2012? 24 25 

### MR. DICKSTEIN: That is correct, Your Honor. JUDGE SULLIVAN: Okay. Where does that Heritage Reporting Corporation (202) 628-4888 3

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• 1 leave you andyour client in terms of litigating this 2 particular action? 3 MR. DICKSTEIN: To be honest, Your Honor, I 4 am unsure. I have researched the issue, andmy 5 reading of existing caselaw is that the courts have 6 actuallyrefusedmotions to declare actions in this 7 sort of a situation tobe moot on the grounds that the 8 action, the underlying action tookplace before the 9 discontinuation of operations, and courts have 10 suggested that forpolicyreasons they don't want the 11 regulatedpublic tobelieve that they canviolate 12 regulations and simplygo out of business. 13 So I understand that we may not be able to 14 successfully file a motion to seek for dismissal on 15 the ground of mootness, but I do have a client that is 16 on the throes of no longer existing and I wanted to 17 make sure that the Court was aware of that, and it is 18 certainlypossible that at a point down the road I may 19 ask the Court to withdrawon the grounds that I have 20 no more client. 21 JUDGE SULLIVAN: Well, let me askyou this, 22 andwe can talk about the potential**mo~ion** for 23 withdrawal process as well, but before we get there, 24 is your client ina position to utilize your services 25 to respond to motions at this point? Because ifyou Heritage Reporting Corporation (202) 628·A888 4

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• 1 have a client who is unable to pay for the cost of 2 litigation, one of the things that we shouldbe 3 talking about in terms of scheduling is a dispositive 4 motion. There couldbe anynumber of dispositive 5 motions, and I think it depends, quite frankly, on 6 where the FAA wants to spend its time. 7 So, for example, there couldbe a motionby 8 the Respondent to withdraw its pleadings, at which 9 point there's not much to litigate. There couldbe a 10 motionby the FAA for a decisionon summaryjudgment. 11 There couldbe a potential motion for default if the 12 Respondent basically states we are not in a position 13 to respond any further to any further litigation 14 requests, which is essentiallyan abandonment of the 15 defense, short of moving to withdraw the request for 16 hearing and the answer. There couldbe motions to 17 essentiallyadmit the violation. There appeared tobe 18 19 20 21 22 23 24 25 some answers in the Respondent's answer where some things were admitted, some things were denied. There canbe any number of things short of going to trial in I think it was Philadelphia, Pennsylvania, that couldpotentiallyresolve this, and that wouldbe independent of anykind of settlement the parties might reach duringprivate discussions regarding this matter. Heritage Reporting Corporation (202) 628-4888 5

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• 1 And I'm going to turn toMr. Bermannext. I 2 thinkhemay have some experience with cases in 3 litigationwhere the respondent has gone out of 4 business, and theremay be some preferredways that 5 his agency likes to deal with that, or there may be 6 anynumber of choices available to him that we have 7 yet to learnabout. 8 Mr. Berman, what's your general process when 9 you have a client, or not a client, excuseme, when 10 youhave an opposing litigant like BrendanAirways 11 who's intheprocess of going out of business? How do 12 you like to handle these things? 13 

### MR. BERMAN: Well, as Mr. Dickstein 14 

### referencedabout the caselaw that it's againstpublic 15 policyjust to withdraw actions simplybecause the 16 Respondent is going out of business. In this 17 particularcase, I 

### don't know the exact details 18 about

-- I am aware that BrendanAirways is in some 19 kind of process of discontinuing operations. I'mnot 20 sure of the exact details, but ourpositionat this 21 time is we'll go forward, but it could change 22 depending onthe circumstances. 23 If theydon't exist inany shape, form or 24 manner, then itwouldbe difficult for us toproceed 25 

### to collect a civilpenalty, although at a minimum, Heritage Reporting Corporation (202) 628-4888 6

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• 1 evenunder the circumstances where we decide we don't 2 want to press to collect a civil penalty, we would at 3 least want a finding of a violation. 4 JUDGE SULLIVAN: Okay. Well, that's why I'm 5 talking to you both today. I wasn't suggesting that 6 the FAA withdraw the violation. I was speaking to the 7 Respondent about the possibilityof withdrawing its 8 request for a hearing and withdrawing its pleadings, 9 which is allowedby regulation. That's one option for 10 the parties to discuss and consider. 11 Another option is for the FAA tomake 12 various motions short of going to trial that would 13 14 15 16 17 18 19 20 21 22 23 24 25 resolve this matter, get a viOlation, have potentially

a civil penaltyon the books without costingBrendan Airways thousands of dollars in attorney time and without costing the FAA thousands of dollars of attorney time. Somy question to you, Mr. Berman, is are there documents orpieces of information that wouldbe helpful toyou to get from the Respondent to see if there are ways to address this informallyor evenby stipulated agreement short of going to trial? Sometimes people just need to file certain certificates or documentation showing they've gone completely out of business for the FAA to feel HeritageReporting COrporation (202) 628-4888 7

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• 1 comfortable enough to say, okay, this is what we,re 2 going to do, this is how we,d like to do it, wouldyou 3 be willing to agree at this point andgo forward. 4 So are there documents inyour opinion, Mr. 5 Berman, that youwouldneed to.have that you don,t 6 have now that.would allow and facilitate more 7 discussion for resolving this matter without going to 8 trial? 9 MR. BERMAN: In terms of BrendanAirways 10 going out of business? 11 JUDGE SULLIVAN: Correct. 12 MR. BERMAN: Well, if they,re dissolving as 13 a corporation, I would like to see a record, an 14 official corporate record of that. 15 JUDGE SULLIVAN: And if you received that, 16 what would that leadyou to do, if anything? 17 MR. BERMAN: Well, if everything indicates 18 that theyno longer exist, that theydon,t have a 19 certificate, I don,t want to commit myself to saying 20 what we would

-- you know, but that would definitely 21 be a factor, and if we were to receive information 22 that the corporationdissolves, then thatmight lead 23 us to conclude that we shouldnot proceed, shouldnot, 24 youknow, have a civilpenalty. 25 JUDGE SULLIVAN: Okay. I 1mnot trying to Heritage Reporting Corporation (202) 628-4888 8

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• 1 pinyou to the wall. I'm trying to ask you for 2 options that you couldpotentially look at givenyour 3 expertise as an FAA litigator. So, for example, I 4 could easily set up a litigation schedule that pushes 5 this case out for trialuntil next year. That's 6 certainlyone optionbefore us this morning. I could 7 also push the litigation scheduling conference out a 8 month to give the parties some private time to talk to 9 each other about fast, cheap and effective ways to 10 resolve this so that the FAA gets what it apparently 11 would like, which is a violationon the books, and get 12 BrendanAir what it would ideally like, which is out 13 14 15 16 17 18 19 20 21 22 23 24 25 of the shadow of a litigationwhich would cost thousands of dollars to respond to and out of the shadow of a potential fine that itmight have to discharge inbankruptcy, for example. Somy question is really focused on how can I help you parties get to a point where you can tell

me more definitivelywhat wouldbe a fast, cheap, easy solutionto try and resolve this matter'short of extending it out into next year for a trial, which it appears BrendanAirways will not have the capacity or money to defend, and I'mmakingan assumption about that, but I'llmake itbecause it seems to be reasonable for today's discussion. Heritage Reporting Corporation (202) 628-4888 9

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### Let me turn to you, Mr.

-- is itDickstein 2 orDickstein? 3 

### MR. DICKSTEIN: Dickstein, Your Honor. 4 

### JUDGE SULLIVAN: Thankyou. Mr. Dickstein, 5 youknowyour clientbetter than anybody else that's 6 on the phone today. Do youhave some suggestions 7 about what wouldwork for your client short of 8 scheduling this for a trial inMarch orApril of 2013? 9 Are there some short-term solutions that you andyour 10 clienthave discussed that you'd like to suggest 11 hypotheticallytoday, orwouldyou feel more 12 comfortable doing thatprivatelywithMr. Berman 

# • 13 outside the presence of the Court? How canwe utilize 14 this time today to assist your client to a resolution 15 that wouldbe palatable? 16 MR. DICKSTEIN: Well, I understand that the 17 government's interests andpastpolicy suggests that 18 the government wants to drive to a finding of 19 violation, not justbecause it affects BrendanAirways 20 but alsobecause theywant to establisha record to 21 demonstrate to other similarly situated air carriers 22 that this sort of conduct or the conduct that they 23 alleged is unacceptable. 24 BrendanAirways has taken the positionthat 25 they didnotin fact infringe a regulation. However, 

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• 11 1 in light of the air carrier's position, having 2 discontinued operations and with no intention to 3 resume operations at this stage, I wouldbe very 4 comfortable takingback to my client a proposal of 5 withdrawing ourpleadings or taking any other similar 6 step if the FAA were interested, for example, in 7 making a finding, but eitherwaiving or suspending any 8 penalties in light of BrendanAirways' inability to 9 pay, which obviously is one of the regulatorybases 10 for modifying a penalty. 11 I cannot 100 percent guarantee that they 12 would accept that, but (a) I would feel very 13 comfortable taking itback to them, and (b) I don't 14 see that there's any reason for themnot to accept it. 15 JUDGE SULLIVAN: Okay. Let's talk about 16 that. We're going to talk a littlebit about some 17 other things too I think. There are lots of different 18 19 20 21 22 23 24 25 ways to resolve disputes, andwhen I look at the Code of Federal Regulations, I look at it in conjunction with the Civil Rules of Procedure, the Federal Civil Rules of Procedure, and the world is our oyster in terms of crafting and creating resolutions up to and that include trial. So, for example, one possible option is to withdraw a pleading, withdraw a request for hearing. Heritage Reporting Corporation (202) 628-4888

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• 12 1 One option is to talk about stipulating to certain 2 facts and then having the rest of the facts resolved 3 by a decision on the written record, for example. 4 Another possibility is looking at the whole case and 5 moving for partial summaryjudgment or for full 6 summaryjudgment. Anotherway to deal with it is of 7 course to exchange more discovery between the parties, 8 for example, BrendanAirways givingmore written 9 confirmation of the corporate status of dissolving and 10 then coming to a private agreement about the amount of 11 fine andhow the fine will or will not be actually 12 assessed against the dissolving corporation. 13 14 15 16 17 18 19 20 21 22 23 24 25 I mean, all of those have great merit and

are only examples of the different kinds of things the parties cancraft whenyou have a respondent litigant like BrendanAirways who is in the process of dissolving the corporation, going out of business and most likely is thinking about the costs that it.can and cannot pay or will orwill not pay depending on its status. I think what might work best for both parties is if I postpone this particular litigation conference for about a monthunless you tell me differently andwithin that monthperiod of time give you an opportunity to talkprivatelywith each other Heritage Reporting Corporation (202) 628-4888

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• 13 1 about an alternate resolution short of going to trial. 2 If you cannot reach any other type of resolution, when 3 we come back for the second conference, then I would 4 be happy to set up a litigation schedule that tracks 5 pretty closelywhat you've givenme inyourjointly 6 proposed discoveryplan, and thenyou cango from 7 there andwe would still have options available to us 8 for both informal settlement and for more formal 9 resolution short of going to trial, that being, you 10 know, doing summaryjudgment arguments, makingmotions 11 for default, makingmotions for a partial decision, 12 submitting the whole record on a written recordbasis 13 for decision, those kinds of things. 14 In addition, Mr. Dickstein, youhad talked a 15 little bit about potentiallymoving to withdraw. In 16 17 18 19 20 21 22 23 24 25 essence, I think a motion to withdraw shouldbe done with care and thoroughness, and I generallyutilize Rule 1.16 of the ABA Code of Professional Conduct as a guideline, and typically once a case gets to me, if an attorneywants tomove to withdraw, I prefer that you make a motion on the record, that that motion is served on all parties, includingyour own client, and that we set the matterup for a telephone conference withyour clientpresent so that I can take any and all objections from the client if there are Heritage Reporting Corporation (202) 628-4.888

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• 14 1 objections, any and all objections from the opposing 2 side if there are objections, and if under the ideal 3 circumstance I grant your withdrawal, you wouldbe 4 allowed to leave before the conference ends, and then 5 I wouldbe dealing withyour client oryour client's 6 newrepresentative, whoever that might be, to take 7 care of whatevermatters need to be addressed once you 8 go. 9 When you do it that way, you've covered all 10 your bases in terms of notice, contact, addressing 11 objections andbeing given a very clear directive from 12 the Court about whetheryou cango orwhether you 13 still need to stay for some particular reason. Does 14 that make sense to you? Does that help? 15 MR. DICKSTEIN: I think that sounds like a 16 very effective way to approach it. The one issue I 17 wouldhave is my thoughts about withdrawal are, and 18 actually I've used the analogy of musical chairs, when 19 I'm the lastperson circling the chairs and no one 20 else is in the game, it doesn't seem tomake sense for 21 me to stay in the game. So, at the point in time when 22 I wouldbe seeking to withdraw, there in fact may no 23 longerbe a client representative. 24 25 JUDGE SULLIVAN: Okay. Well, you want to think about that because I'mnot sure that as counsel Heritage Reporting Corporation (202) 628-4888

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• 15 1 youhave the ability to go forward representing 2 someone who has not authorizedyou to continue to 3 represent them. I mean, that's an interesting 4 conundrum. I mean, you always have to have a client 5 who directs you in some way, shape or form. You're an 6 agent. 7 MR. DICKSTEIN: And iri light of the fact 8 that the last day of employment for the employees and 9 representatives is this Friday, that's sort of forming 10 the basis for my thought that I may ethicallyneed to 11 withdraw if the clientno longer exists. 12 JUDGE SULLIVAN: Well, and there's always an 13 agent representative for the corporation, whoever that 14 might be. So the fact that the corporation itself 15 goes out of business I don't think necessarily 16 terminates your relationship with the agent of the 17 corporation, but that's a matter for you to address 18 withyour client because there are many different 19 activities that the corporate entityhas to take care 20 of even if it's no longer engaged in the active 21 practice of its business. So whoever itwas -- 22 MR. DICKSTEIN: The client has beenwrapping 23 things up since theirJanuary cessation of business. 24 25 JUDGE SULLIVAN: Yes, no doubt about that. I'mjust saying that I think that there has tobe some Heritage Reporting Corporation (202) 628-4888

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• 16 1 accountability for your client in terms of how he or 2 she wants you toproceed, how he or she is going to 3 direct you andhow she orhe is finishing up the ends 4 of the business. If they don't want you as the agent 5 for any lingeringproblems that the business has to 6 deal with, such as this litigation, thenhe or she has 7 to be identifiedandhas to step intoyour shoes in 8 some way, shape or form. 9 This againwould avoid the problem that you 10 raisedyourself earlier in these proceedings about 11 having a business basicallydisappear and thenno 12 longerbe held to accounting for things that occurred 13 while the business was inplace. 14 So, in terms of allowingpeople to withdraw, 15 I have a very liberal policy about that because I 16 think attorneys have a right to be paid for their 17 work, and it is preferable always to have attorneys 18 feel that they canmove out of an agency 19 representationwhen their client no longer is able or 20 willing topay them. There are some rare exceptions 21 22 23 24 25 to that, particularlywhenyou're on the eve of trial, but for the most part, if counsel can show that it's time to leave and there's a person to step into counsel's shoes, I find usually there's a goodreason to let counsel go. Not always, but often. Heritage Reporting Corporation (202) 628-4888

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• 17 1 So let me suggest this to the both of you. 2 Do you think it wouldbe helpful topostpone this 3 conference for about a month, or do you think you 4 would rather lock into some litigation dates now? And 5 I will start withyou, Mr. Berman. 6 MR. BERMAN: Yes, I think that wouldbe a 7 good idea to put this off one month. 8 JUDGE SULLIVAN: Okay. Mr. Dickstein, what 9 about you? 10 MR. DICKSTEIN: I agree withMr. Berman. 11 I've actuallybeen in contact withMr. Berman andMr. 12 Cohen about settlement discussions, and I feel like we 13 have beenmoving in a positive direction, so having 14 some additional time may be beneficial. 15 JUDGE SULLIVAN: Okay. Why don't we look at 16 our calendars then. Today is June 27, 2012. 17 Approximately one month from now wouldbe the week of 18 July 23, 2012. Mr. Berman, startingwithyou, do you 19 have anyopentimes during that week, ormaybe I 20 should say anyblackout times wouldprobablybe 21 easier? 22 MR. BERMAN: Let me just**-~** I justhave to 23 click on each date on the computer. Hold on. I'm 24 open. My schedule is open from the 23rd of July 25 through the 26th. Heritage Reporting Corporation (202) 628-4888

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• 1 JUDGE SULLIVAN: Okay. Mr. Dickstein, what 2 about you looking at that week? 3 MR. DICKSTEIN: The Court's indulgence for 4 one moment. 5 JUDGE SULLIVAN: Okay. 6 MR. DICKSTEIN: I'm actually sitting ina 7 hotel room in Seattle and logging intomy office 8 calendar. 9 JUDGE SULLIVAN: Oh, I lived in Seattle for 10 manyyears. What hotel are you in? 11 MR. DICKSTEIN: I'm at the GrandHyatt. 12 JUDGE SULLIVAN: I'mnot sure where that is. 13 Is that indowntown Seattle? 14 MR. DICKSTEIN: It's right in the middle of 15 downtown. It's actually a beautiful location. I wish 16 I couldhave spentmore time walking around the city. 17 And if I am not mistaken, the week of the 18 23rd, I believe that I don't have anything that can't 19 be moved, so I believe I am free at the Court's 20 discretion. 21 JUDGE SULLIVAN: Okay. And is there any 22 preferreddate or time that wouldbe helpful toyou so 23 that you don't have tojuggle different appointments 24 ormove them around? 25 MR. DICKSTEIN: You can't see me, Your Heritage Reporting Corporation (202) 628-4888 18

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19 1 Honor, but I am smiling here because I'm actually 2 looking at the 23rd, which is my anniversary and 3 thinking that there wouldbe some amusement factor in 4 scheduling it for the 23rd. When my wife and I 5 originallymarriedwe never took a honeymoonbecause I 6 had a trial immediately**aft~r** ourwedding. 7 JUDGE SULLIVAN:**W~ll,** I want you to think 8 carefullyabout that, Mr. Dickstein. Do you really 9 want to set something onyour wedding anniversary 10 date? 11 MR. DICKSTEIN: She does have a tremendous 12 sense of humor, which is why I marriedher. 13 JUDGE SULLIVAN: Okay. We cando that if 14 you like. Do youhave a preferred time? Do youwant 15 to have a time that coincides withyour original trial 16 date? 17 MR. DICKSTEIN: Actually this time seems to 18 workverywell as long as it wouldwork okay for Mr. 19 Berman. 20 JUDGE SULLIVAN: Mr. Berman, would 11:00 21 Eastern StandardTime onMonday, July 23, 2012, work 22 for you? 23 MR. BERMAN: That wouldbe fine. 24 JUDGE SULLIVAN: Okay. So noted. We'll set 25 this for that date and time, and thenwhat I will do Heritage Reporting Corporation (202) 628-4888

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• 1 is I will plan on chatting withyou bothone month 2 from now onJuly 23, 2012 at 11 a.m. Eastern Standard 3 Time. If you settle the case or if you need the 4 Court's assistance prior to July 23, 2012, please let 5 me know, and I will keep yourproposed scheduling/ 6 discoveryplan and I will use it inpreparing 7 potential suggestions to you for next time if in fact 8 youboth appear andneed tohave a trial set. 9 So, with that, onbehalf of the FAA, Mr. 10 Berman, is there anything else that we need to address 11 for you today? 12 MR. BERMAN: No, Judge. 13 JUDGE SULLIVAN: And, Mr. Dickstein, on 14 behalf of your client, anything else we need to 15 address? 16 MR. DICKSTEIN: No. Thank you, Your Honor. 17 JUDGE SULLIVAN: Okay. Thankyou bothvery 18 much. It appears ourbusiness is complete. With 19 that, we can go off the record, and I wishyou all a 20 good day. 21 22 23 24 25 MR. BERMAN: Thank you. JUDGE SULLIVAN: Thankyou. Bye-bye. MR. DICKSTEIN: Bye. (Whereupon, at 11:27 a.m., the hearing in the above-entitledmatterwas concluded.) Heritage Reporting Corporation (202) 628-4888 20

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• REPORTER'S CERTIFICATE

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