## u.s. DEPARTMENT OF TRANSPORTATION

# R E

# cEI 

# vED FEDERALAVIATIONADMINISTRATION OFFICE OF HEARINGS WASHINGTON, DC 

## AUG-62014 

## HEARINGDOCKET

In theMatterof: FAADOCKET No. FAA-2013-0040 MartinaireAviation, LLC Respondent

THE HONORABLE RICHARD C. GOODWIN ADMINISTRATIVE LAW JUDGE FAA CaseNo.2011SW700189 (Civil PenaltyAction) FDMS No. FAA-2013-0040



### COMPLAINANT'S POST HEARING BRIEF COMES NOW the FederalAviationAdministration ("FAA"), by andthrough its attorney, and files itspost hearing brief. This brief seeks a civilpenalty againstMartinaireAviation LLC of $206,550.00. I. STATEMENT OF THE CASE On January 15, 2013, the FAA filed a Complaint against MartinaireAviation, LLC ("Martinaire") seeking a civilpenalty of $206,550.00 for violation of the Federal hazardous material transportation Law andhazardous material regulations. The violations arose from a comprehensive hazardous materials inspection conductedby FAA SpecialAgents on July 8, 2011. The inspections revealednumerous violations that involved Martinaire's failure to provide notice to the pilot-in-command regarding 17 shipments containing hazardous materials.**<~1_-J** On June 17, 2013, the FAA filed Complainant'sMotiott'ifor ·,**'~** .,, Decision. Martinaire's Answer to the Complaint admittedeach of the facts underlying the allegations of the Complaint. On July 8, 2013, Judge Goodwin found and concluded that Respondent Martinaire violated 49 C.F.R. §§ 175.33(a)(1), 175.33(a)(1)(i), and 175.33(a)(7) of the hazardous material regulations. On Complainant's Motion for Decision, Judge Goodwin granted Complainant's Motion for Decision as to the allegations inthe Complaint and denied Complainant's argument for the proposed civil penalty.II. Issue The sole issue before this Court is whether a civilpenalty of $206,550.00 is appropriate for the facts and circumstances of this case. The FAA contends that based on the totality of circumstances in this case a civil penalty of $206,550.00 is warranted andreasonable. III. Legal Standard To determine an appropriate civilpenalty to be assessed under 49 U.S.C.A. § 5123(c) Penaltyconsiderations, nine factors must be taken into consideration. These factors are (1) nature, (2) circumstance, (3) extent, and (4) gravity of the violation; (5) the degree of culpability of the violator; (6) anyhistory of past violations; the violator's (7) abilityto pay, and (8) ability to continue to dobusiness; and (9) other matters as justicemay require. "The FAA has the burden ofproving the first five factors. The FAA has establishedpolicy guidance for determining these five factors and assigningthemweight. 64 Fed. Reg. 19443 (Apr.21, 1999); FAA Order 2150 38, Appendix C, FAA Sanction Guidance, Hazardous Materials Enforcement (October 1, 2007). A penalty calculatedin accordance with the FAA's policyguidance should stand, absent a showing of the Respondent's inabilityto pay, inabilityto continue to do business, or some othermatter requiredbyjustice. See In re Villamos Tabula, FAA OrderNo. 2010-6 (June 15, 2010); In reRushmore Helicopters, Inc., FAA Order No. 2012-8 (Oct. 11, 2012). Financial hardship is an affirmative defense that the respondent bears the burden of proving. In re TWA, FAA Order No. 1999-120; In reDominion Concepts, Inc., FAA Order No. 2005-4, 10, n.l6 (Mar. 10, 2005)."1 The FAA is entitledto substantial deference in establishing an appropriate civilpenalty. The United States Court of Appeals for the District of Columbia Circuit inNL Industries, Inc. v. Department ofTransportation, Federal AviationAdministration, 901 F.2d 141 (1990), enunciated the standardbywhich to evaluate the reasonableness of a civil penalty assessedunder the Federal hazardous material statute. The court heldthat the agency's "choice of a sanction is not to be overturnedunless 'it is unwarranted in law' or 'without justificationin fact.'" NL Industries at p.144 (quoting

1 In theMatter ofNouveau Laboratories, LLCd/b/a Covermark USA, Docket No. FAA-2011-0488 at p. 3. 2Panhandle CooperativeAss'n v. EPA, 771 F.2d 1149, 1152 (8th Cir. 1985) (quotingButz v. GloverLivestock Comm'n Co., 411 U.S. 182, 185-186, 93 S.Ct. 1455, 1457-58, 36 L.Ed. 2d 142 (1973)). Thus, the amount of civil penalty assessed in a particular case is a matter of administrative discretion. See, Beall Construction Co. v. Occupational Safety &Health Review Commission, 507 F.2d 1041, 1046 (8th Cir.l974); Tempo Trucking & Transfer Corp. v. Dickenson, 405 F. Supp. 506, 514 (E.D.N.Y. 1975)

. IV. Respondent's Affirmative DefenseArguments Martinaire has (7) seven affirmative defenses. These affirmative defenses are statedin detail inRespondent's answer to the FAA's complaint. First, Martinaire claims the sanction the FAA seeks "farexceeds policy, precedent and Complainant's own Sanction Guidance Table." Secondly, it claims the FAA's case is without "basis orjurisdiction in law or fact." In its third affirmative defense, Martinaire argues that "audits have shownthat compliance has been achieved." In its fourth affirmative defense the Respondent outlines its corrective action. Its fifth affirmative defense claims that Respondent "has taken all necessary corrective action to avoid repeated mishaps

...." The sixth affirmative defense claims that the civil penalty in this case is inconsistent with the 2150.3B Order. Respondent's seventh affirmative defense claims that "as a small companythat operates only small aircraft with less than 100 employees, the burden onMartinaire causedby a $206,550.00 penalty wouldbe unsurmoutable." The arguments set forth below demonstrate that these affirmative defenses have no merit. V. Nature and Circumstances of the Violation The comprehensive hazardous material inspection on July 8, 2011 by the FAA Special Agents revealednumerous violations that involvedMartinaire's failure to provide notice to the pilot-incommand regarding 17 shipments containing hazardous materials. Martinaire failed to include the correctproper shippingname, the proper shipping name, the complete proper shipping name, the correct basichazardous material description, hazard class, packing group, identificationnumber and correct identification number onNotices to the Pilot-in-Command ("NOPICs")

. Four of the (17) seventeen shipments that containeda risk Category "A" hazardous material were incorrectly listed on the NOPICs. Arisk category "A" hazardous material poses a catastrophic riskto the safe flight of an aircraft when 

### 3released on an aircraft. 2 Four of the shipments that contained a risk category "B" hazardous material were incorrectly listed on the NOPICs. Arisk category "B" hazardous material does not pose an immediate riskto the flight of an aircraft, but it can cause death or injury if released in the confines of an aircraft. 3 Four of the shipments that contained a risk category "C" were incorrectly listed on the NOPICs. Arisk category "C" are hazardous materials that present the least amount of risk to the transportation system.4 Five of the shipments contained risk category "A", "B", or "C" hazardous materials andwere incorrectly listedon the NOPICs.5 VI. Extent and Gravity Improperly completedNOPICs pose a serious threat to the health and safety of the pilot who flies the aircraft and the first responders who have to react to a crash or a fire aboard the aircraft. In the event of an emergency, a Martinaire pilot would not be able to inform its dispatch facility, an air traffic tower or emergency response team of the kind of hazardous material aboard the plane. In addition, the dispatch office for Martinaire receives copies of the NOPICs which the pilot-in-command completes. In the event of an emergencythe dispatch office would not be able to inform first responders of the nature of the**hazardo~s** material aboard a Martinaire aircraft. Without knowledge of the specificproperties of a hazardous material, first responders wouldbe incapable of responding to an emergency in a safemanner. On direct examination, SpecialAgent Paul Klimas described the conditions of the NOPICs as "horrible".6 The NOPICs Special Agent Paul Klimas reviewedwere only a sampling of the violations he observed.7

2 See Order 2150.3B, Appendix C. Sanction Guidance Hazardous Materials Enforcement, RISK CATEGORIES, (Figure C-2) at p. C-17. 3 Id. at C-17. 4 Id. at C-17. 5 Martinaire did not retain copies of the shipping papers concerning these five shipments. As a result the FAA does not know the packing group of two hazardous material shipments at issue. In each instance, the risk category is dependent on the packing group. For example, packing group I would result in a risk category "A" material, packing group II would result in a risk category "B" material; andpacking group III would result in a risk category "C"material. 6 Transcript ofMartinaire hearing on June 18, 2014 at p. 83. 7 Id. atp. 90. 

### 4VII. The Degree of Respondent's Culpability Martinaire holds anAir Carrier Certificate issuedunder part 119 of the FederalAviation Regulations ("FAR") and operations specifications issued underpart 135 of the FAR. Martinaire operates (34) thirty four airplanes. It owns twenty one of the aircraft and leases the remainder. Martinaire is anAmerican cargo airline that operates feeder flights for overnight package delivery services for UPS and DHL. Martinaire regularly accepts and transports hazardous materials. Because it is a 135 cargo carrier, it is heldto the highest standard of care. It owes a higher duty of care to its pilots, first responders andthepublic at large. Moreover, Alan Rusinowitz, an executive vice president and chief operating officer for Martinaire, is a licensed airline transport pilot. 8 Therefore, Martinaire's personnel knew or shouldhave known the specific information that shouldbe provided to pilots-incommand, via a NOPIC, prior to the departure of each flight. Consequently, the degree of culpability for Martinaire is extremelyhigh. VIII. The Respondent's PriorViolations In June 2009, Martinaire was assessed a civilpenalty of $20,000.00 for failing to properly complete NOPICs.9 On May 18, 2012, the FAA assessed a $15,000.00 civil penaltyagainst Martinaire for the illegal shipment of hazardous material. 10 As recently as December 2013, a FAA SpecialAgent conductedan inspection at the Martinaire facility. 11 This inspection revealedthat any previous corrective action byMartinaire had not solvedthe improper completion of NOPICs. Clearly Martinaire's continuedviolation history and its lack of effective corrective action demonstrates its conduct of violating the hazardous material regulations is systemic. This systemic conduct poses a serious threat to the health and safety of Martinaire's pilots, first responders and the public at large.

8 Id. atp.l20. 9 See FAA Case No. 2009NM700058, attached to Complainant's Motion for Judicial Notice, dated June 2, 2014. 10 See FAA Case No. 2011-GL-70-0205, attachedto Complainant's Motion for Judicial Notice, dated June 2, 2014. 11Transcript ofMartinaire hearing on June 18, 2014 at p. 61. 

### 5IX. Respondent's Abilityto Pay InMartinaire's seventh affirmative defense, it claims that "as a small company that operates only small aircraft with less than 100 employees, the burden onMartinaire causedbya $206,550.00 penaltywouldbe insurmountable." Respondent bears the burden ofproving its inabilityto pay and an inabilityto continue inbusiness. See Giuffrida, FAA Order No. 1992-72 (December 21, 1992). During the hearingMr. Rusinowitz testified that for the year 2011 the companyearned approximately $197,169.00.12 Mr. Rusinowitz testified that for 2012 and 2013 the company didnot earn a profit. 13 Inhis testimony before theAdministrative Law Judge, Mr. Rusinowitz attributedMartinaire's earnings in the most recent years to a sluggish economy.14 AlthoughMartinaire's earnings in the last 2 years have been flat, these earnings are not indicative of its abilityto pay a civil penalty of $206,550.00. Respondent failed to submit into evidence any financial statements or tax returns to support its assertions that a civilpenalty of $206,550.00 wouldbe insurmountable to the company. Consequently, Respondent has failed to show a nexus between the proposed civil penalty and a negative effect on the company. X. EffectAbility to Continue in Business Another factor under 49 U.S.C.A. § 5123(c) which the FAA considers in assessing a civilpenalty is "respondent's ability to continue inbusiness." Respondent didnot put any evidence on during the hearing to showthat a civil penalty of $226,550.00 wouldput Martinaire out ofbusiness. DuringMr. Rusinowitz's deposition onMay 16, 2013, counsel for the FAA askedMr. Rusinwitz, the following question: FAA Counsel: "Will a $206,550.00 civil penaltyput Martinaire Aviation, LLC out ofbusiness?" Mr. Dworkin: "Objection. Speculative" Mr. Rusinowitz: Well, we lostmoney in 2012. I believe we provided a partial year at the time of submittal, the end result was a bigger loss. We have lost money in the first quarter of 2013. So anynot-in-the-ordinary-course-of-business payments that Martinairehas to do, including attorney's fees for this matter, and anypossible civil penalty, whatever the amount,

12 Transcript ofMartinaire hearing on June 18, 2014 at p. 122. 13 Transcript ofMartinaire hearing on June 18, 2014 at p. 123-124. 14 Id. at p. 124. 6couldbe extremelyharmful and ofMartinaireAviation, LLC."15 didnot show a nexus between a detrimental to the survivability During the hearingRespondent civilpenalty of $226,550.00 and Martinaire's abilityto remain inbusiness. No financial statements were offered into evidence andno tax returns were providedby the respondent. Such OtherMatters as Justice May Require The final factor which the FAA must consider in assessing a civil penalty is "such othermatters as justicemay require." The FAA requests that the Court give deference to the FAA's Order 2150.3B, Appendix C, Sanction Guidance Hazardous Materials Enforcement ("Order 2150.3B.") The civil penalty of $206,550.00 is reasonable based on the totality of circumstances inthis case. Under the agency sanction guidance, the failure to provide the pilot-in-commandwith an accurate and complete NOPIC warrants a civilpenalty for each individual shipment between $5000.00 and $16,000.00. 16 Themidpoint of the range is $10,600.00. A civilpenalty of $206,550.00 based on the totality of circumstances inthis case does not exceedthe civilpenalty sanction guidelines set forth in the 2150.3B Order. The Respondent claims in its affirmative defenses that it has done specific corrective action. Unfortunately, as the FAA witnesses, Paul Klimas and Bryan Buchanan testified, any corrective actionhas not eliminatedthe systemicproblem. Secondly, Respondent has not performed any corrective action that exceeds the legal minimum requirement which wouldjustifya reduction in civilpenalty.CONCLUSION In short, Martinaire is an American cargo airline that operates feeder flights for overnight package delivery services for UPS and DHL. Under the Order 2150.3B, Martinaire is classified as a Group II Air Carrierbecause it has an annual operating revenue of less than $100,000,000, has 50 ormore pilots, and operates 25 ormore aircraft. Martinaire regularly accepts and transports hazardous materials. Martinaire has a history of non-compliance and its conduct is systemic. Because it is an airline, it is heldto a higher standardof safety.

15Acopy of the deposition excerpt is attached as exhibit A. 16 See Order 2150.3B, Appendix C. Sanction Guidance Hazardous Materials Enforcement, AIRCARRIERAND OTHERAIRCRAFT OPERATORVIOLATIONS, E.Group I & IIAirCarriersandOtherAircraftOperators, Failure to provide notice to thepilot-in-command, at p. C-13. 

### 7Martinaire's personnel knew or should have known the specific information that shouldbe providedto pilots-in-command, via a NOPIC, priorto the departure of each flight. Based on the totality of circumstances, the FAA requests a civil penalty of $206,550.00 be rendered against Martinaire.

Respectfully submittedthis**5~** day ofAugust 2014.

ERIC E. ANDERSON Regional Counsel Southwest Region

# ~~~~~wca"'~Lc_j Archier, AgencyAttorney (817) 222-5074

8

## ) 1 2 3 4 5 6 7 8 9 

### 10 11 12

'' ) 13 

### 14 15 16 17 18 19 20 21 22 23 24 25 FEDERALAVIATIONADMINISTRATION v. MARTINAIRE Depositionof: ALAN RUSINOWITZ 5/16/2013 44

is we have to consider the ability of the respondent to pay a civil penalty. And the other is the effect on the respondent's ability to continue in business. Will a $206,000

-- $206,550 civil penalty put Martinaire out of business? MR. DWORKIN: Objection. There are other factors, which include compliance disposition, corrective action, and MR. ARCHIER: I'll read all of them if you want me to. I'll go through all of them. I just mentioned three, but there are other factors. MR. DWORKIN: There are a whole bunch of other factors. Q. (BY MR. ARCHIER) Yeah. Let me mention the other factors. I don't want to seem like I'm-- but the first factor is the nature and circumstances of the violation. The other is the extent and gravity of the violation. The degree of respondent's culpability, the respondent's prior violations, the respondent's ability to pay, the effect on respondent's ability to continue in business and such other matters as justice may require. That's all of them. But I'm asking you with regard to F, the effect

on respondent's ability to continue in business. Will a $206,550 civil penalty put Martinaire Aviation, LLC, out



### U.S. LEGAL SUPPORT

- DALLAS, TEXAS 214-741-6001**~** 

### GOVERNMENT**~** 

### EXHIBIT 

# I A

### 1 2 3 4 5 6 7 8 9 10 11 

### 12 

## ) 13 

### 14 15 16 17 18 19 20 21 22 23 24 25 FEDERAL AVIATIONADMINISTRATION v. MARTINAIRE Depositionof: ALAN RUSINOWITZ 5/16/2013

of business?

MR. DWORKIN: Objection. Speculative. Q. (BY MR. ARCHIER) You may answer. A. Well, we lost money in 2012. I believe we provided a partial year at the time of submittal, the end result was a bigger loss. We have lost money in the first quarter of 2013. So any not-in-the-ordinary-course-of-business payments that Martinaire has to do, including attorney's fees for this matter, and any possible civil penalty, whatever the amount, could be extremely harmful and detrimental
to the survivability of Martinaire Aviation, LLC. Q. And I believe based on the documentation that you showed me for the first quarter of, I believe, 2013, I think you said you had a loss, right?
A. Yes. Q. Okay. And I want to make sure I have this loss number right, but was.that loss in the neighborhood of 300,000? A. I don't believe we provided any financial data for calendar year 2013. Q. Okay. So that would have been

-- the loss would have been for up -- at the time, that would have been for 2012? A. I'd have to review the documents

--



### U.S. LEGAL SUPPORT

- DALLAS, TEXAS 214-741-6001 45

### CERTIFICATEOF SERVICE Re: Martinaire Aviation, LLC, FAA Case No. 2011SW700189 I hereby certifythat on this date, I have sent via Federal Express an executed original and one copy of the COMPLAINANT'S POST HEARINGBRIEF addressed as follows: FederalAviationAdministration Attention: Hearing Docket Clerk, AGC 430 600 IndependenceAvenue, SW Washington DC 20591 Wilbur Wright Building-Suite 2W1000 Washington, DC 20591 (original plus one copy) (Federal Express) I further certifythat on this date, I have sent via Federal Express a true copy of the COMPLAINANT'S POST HEARING BRIEF addressed as follows: The Honorable Richard C. Goodwin Administrative Law Judge Office of Hearings, M-20 Department of Transportation 1200 New JerseyAvenue, S.E. (Ell-310) Washington, DC 20590 TEL: (202) 366-5121 StaffAssistant FAX: (202) 366-7536 (Federal Express)

9I further certifythat on this date, I have sent via Federal Express a true copy of the COMPLAINANT'S POST HEARING BRIEF addressed as follows: Mr. Michael L. Dworkin andAssociates Law Offices 465 California Street, Suite 210 San Francisco, California 94104-1808 (Federal Express) Telephone: (415) 421-2500 Facsimile: (415) 421-2560

August 5, 2014

10