DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

DOC KET NO. FAA-2013-0288 **IN THE MATTER OF: AVIONICS MASTERS, INC.** 

_____________________________________________________

HEARING BEFORE THE HONORABLE J.E. SULLIVAN

FR IDAY, MAY 9, 2014

9:31 A.M. HI STORIC JORDAN SPRINGS 116 0 JORDAN SPRINGS ROAD S TEPHENSON, VIRGINIA 22656FAA vs Avioni cs Masters Hearing May 9, 2014 VR # 1061-1 Page 2

1 APPE ARAN CES 2 ON BEHALF OF THE COMPLAINANT, 3 FEDERAL AVIATION ADMINISTRATION: 4 CHRISTOPHER R. STEVENSON, ESQUIRE (via telephone)

8 TEL EPHO NE: 404 .305.5200 9 FAC SIMI LE: 404 .305.5223 10 11 12 13 14 15 16 17 TEL EPHO NE: 954 .527.0002 18 FAC SIMI LE: 888 .769.0745 19 20 21 22 23 24 25 5 **FEDERAL AVIATION ADMINISTRATION** 6 **OFFICE OF THE REGIONAL COUNSEL, AS0-7 SOUTHERN REGION** 7 1701 COLUMBIA AVENUE 8 COLLEGE PARK, GEORGIA 30320

ON BEHALF OF THE RESPONDENT, AVIONICS MASTERS, INC.: MOHAMMAD AHMED FARUQUI, ESQUIRE (via telephone) AEROLAW OFFICES PLLC 633 SOUTHEAST 3RD AVENUE, SUITE 4R FORT LAUDERDALE, FLORIDA 33301

Also present: Cody SmithFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 3

1 HEAR ING 2 FR IDAY, MAY 9, 2014 3 9: 31 A.M. 4 THE COURT: Good morning. This is 5 Jud ge Sullivan. Is Mr. Stevenson for the FAA on the 6 lin e? 7 MR. STEVENSON: Yes, Your Honor. 8 THE COURT: And Mr. Faruqui for the 9 res pondent? 10 MR. FARUQUI: Yes, Your Honor. Good 11 mor ning. 12 THE COURT: Good morning. And I should 13 hav e a Lee Dean for County Court Reporters. 14 THE REPORTER: Yes, ma'am. 15 THE COURT: Okay. And I also have in 16 the office Mr. Cody Smith, who's sitting as an 17 obs erver only, and he has advised me that the court 18 rep orter already has everybody's spellings. 19 So, Mr. Court Reporter, are you ready? 20 THE REPORTER: Yes, ma'am. 21 THE COURT: Okay. We're on the record 22 in the matter of Avionics Masters, Inc. This is 23 Doc ket Number FAA-2013-0288. Today is Friday, May 9, 24 201 4, and the parties have convened for a second 25 mot ion conference on the FAA's motion for summaryFAA vs Avioni cs Masters Hearing May 9, 2014 VR # 1061-1 Page 4

1 jud gmen t. 2 The FAA is represented by its attorney 3 of reco rd, Mr. Christopher R. Stevenson. The 4 res pond ent, Avionics Masters, Inc., is represented by 5 its att orney of record, Mr. Mohammad Ahmed Faruqui. 6 Als o pr esent at the Office of Hearings sitting in as 7 an obse rver only is Mr. Cody L. Smith, an attorney 8 adv isor with this office. 9 Good morning, everybody. As you may 10 rec all, we, we last met on April 15, 2014, for our 11 fir st o ral argument on the FAA's motion for summary 12 jud gmen t. At the conclusion of oral argument, both 13 par ties were given deadlines to file supplemental 14 mat eria ls. The FAA was also given a deadline to file 15 an amen ded complaint. 16 The next day, on April 16, 2014, a 17 written order codified the oral. Oral relief was 18 filed. On May 5, 2014, the FAA filed the following 19 two documents, number one, supplement on motion for 20 summary judgment; and number two, an amended 21 complaint. 22 Ye ster day on May 8, 2014, the respondent filed 23 the two documents: one, an affidavit of Charles Hunt 24 reg ardi ng the, in compliance with the April 16, 2014, 25 ord er; and two, a pilot's guide.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 5

1 So let's start with the new filings. Mr. 2 Ste venson, as I understand it, you have identified the 3 sup plemental declaration that you filed as Exhibit L; 4 is that correct? 5 MR. STEVENSON: I believe so. Let me 6 ver ify that. Yes, Your Honor. 7 THE COURT: Okay. 8 And Mr. Faruqui, there were no 9 par ticular exhibit identifications for the materials 10 tha t you filed, but if we pursue the chronological 11 mar kers you previously submitted, I would presume you 12 wan t Mr. Hunt's affidavit identified as respondent's 13 Exh ibit 3 and the pilot's guide identified as 14 res pondent's Exhibit 4. Would that be accurate or 15 ina ccurate for your client? 16 MR. FARUQUI: Yes. I would like to 17 hav e them numbered as exhibits. I apologize for not 18 hav ing identified them. I was in and out of town over 19 the last few weeks because of the death of my father20 in- law. And then when I came back I, you know, had 21 oth er issues. 22 There were two affidavits that were 23 sub mitted by Mr. Hunt. One was submitted on time on 24 Tue sday. It was with respect to, I believe, paragraph 25 4 o f your order. And then the affidavit was submittedFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 6

1 yes terday with respect to the other paragraph with 2 res pect to the amount of penalty, and then the pilot's 3 gui de. So I think it's 3, 4 and 5. 4 THE COURT: Okay. Just so you know, I 5 onl y have one affidavit of Charles Hunt filed this 6 wee k, and that is entitled Affidavit of Charles Hunt 7 for Court Order Served April 16, 2014, Regarding 8 Amo unt of Penalty. And that was filed with this 9 off ice on May 8, 2014. 10 MR. FARUQUI: All right. 11 THE COURT: There is no other ... 12 MR. FARUQUI: I apologize for any 13 tec hnical issues I've had on my end. Even the 14 doc ument that you received required me to make four 15 att empts at sending faxes over a couple of days, and I 16 don 't know why the first affidavit that was sent on 17 Tue sday did not reach you. 18 THE COURT: I don't know why either. 19 Do you have it with you now? Is there some way you 20 can send it to us by fax this morning? 21 MR. FARUQUI: Yes. I can certainly 22 sen d you another copy by fax. I'm going to re-verify 23 wit h you your fax number, in case there were some 24 iss ues with that. 25 THE COURT: Well, I can assure you ourFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 7

1 fax machine has been working, so I'm sorry to hear 2 tha t you had some trouble. But I can tell you again 3 wha t our fax number is. It's the second number that 4 you have handwritten on page one of the affidavit of 5 Cha rles Hunt for a court order served April 16, 2014. 6 It is as follows: 202.366.7536. 7 MR. FARUQUI: Okay. 8 THE COURT: So do you need a minute to 9 fax the material, or do you have a staff person who 10 can assist you while we proceed? 11 MR. FARUQUI: I'll have a staff person 12 ass ist me. 13 THE COURT: Okay. 14 MR. FARUQUI: Let me write this fax 15 num ber down on a sticky note for her. This will be 16 fiv e pages. 17 THE COURT: Okay. And once you fax the 18 mat erial, if you could let me know, and then I'll ask 19 Mr. Smith, who is currently in the hearing room, to go 20 and get it. 21 MR. FARUQUI: Okay. Thank you. 22 THE COURT: Okay. All right. So, Mr. 23 Far uqui, once you give that note to your staff person, 24 let me know when you're ready to proceed. 25 MR. FARUQUI: Okay. She has gone toFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 8

1 tak e care of that. 2 THE COURT: Okay. Good. Can you tell 3 me if you have any objection to the admissibility of 4 FAAExhibit L? 5 MR. FARUQUI: No. 6 THE COURT: Okay. 7 Mr. Stevenson, turning to you, did you 8 by any chance get both of the affidavits of Mr. Hunt 9 thi s week that Mr. Faruqui has discussed with me just 10 now ? 11 MR. STEVENSON: Yes. I did, Your 12 Hon or. I received the, the affidavit of Charles Hunt 13 for a court order that was served on May 5th, which I 14 bel ieve is the one you did not have, and I received 15 the second one which, the second affidavit with an 16 att achment of a pilot's guide for the KFC 200 flight 17 con trol system. 18 THE COURT: Okay. What we're going to 19 do is basically number the May 5th, 2014, affidavit of 20 Mr. Hunt as respondent's Exhibit 3; the May 8th, 2014, 21 aff idavit of Mr. Hunt as respondent's Exhibit 4; and 22 the May 8th, 2014, pilot's guide exhibit as 23 res pondent's Exhibit 5. 24 Starting with Exhibit 3, Mr. Stevenson, 25 do you have any objection to the admissibility of thatFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 9

1 exhibit? 2 MR. STEVENSON: No. 3 THE COURT: How about Exhibit 4? 4 MR. STEVENSON: No, Your Honor. 5 THE COURT: And Exhibit 5? 6 MR. STEVENSON: Not for, no objection 7 for purposes of summary judgment, Your Honor. 8 THE COURT: Okay. Thank you. Then 9 let's, let's start with general oral argument, and 10 then once I get the May 5, 2014, copy of Mr. Hunt's 11 affidavit, we can talk a little bit more specifically 12 about these exhibits. But, Mr. Stevenson, why don't 13 we do this? And I want to give you about five, ten 14 minutes to just talk on behalf of your client about 15 the highlights of what you think the court should know 16 in terms of both your prima facie case and then any 17 responsive materials that you've received that you 18 think might be helpful to address. 19 I will then turn to Mr. Faruqui, and I 20 will ask him to do the same thing on behalf of 21 Avionics Masters, Inc. And then hopefully by that 22 time, I will have received respondent's Exhibit 3, and 23 I will then probably ask both of you some questions 24 about materials, if you had not already addressed them 25 in your argument.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 10

1 So, Mr. Stevenson, would you like to 2 take a few minutes now to simply highlight why you 3 believe that your client should be granted dispositive 4 relief? 5 MR. STEVENSON: Thank you, Your Honor. 6 Well, the first thing, initially, as to the FAA's 7 prima facie case is that in multiple places and 8 multiple documents the respondent itself certified 9 that it had performed a repair on this component. 10 I don't think that there is any dispute 11 at this point that the respondent was not authorized 12 to perform a repair on this component under its 13 capabilities list or that it was authorized to do 14 anything at all with this component, the directional 15 gyro, except in that because it was authorized to work 16 on an autopilot system, and so it could install the 17 directional gyro as part of that system, remove the 18 directional gyro as part of that system, or perform a 19 basic functional test on that gyro when it was 20 installed with the system. 21 So as a prima facie matter, they, it's 22 undisputed that they are not allowed to do a repair, 23 and they repeatedly stated that they had done a repair 24 on their own official document approving this 25 component for return to service.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 11

1 Now, the respondent has, has since 2 ass erted that contrary to the representations on the 3 for ms, that they really didn't do a repair, and which 4 is, which led to the, the FAA's alternative pleading. 5 But sticking to the primary pleading for now, the 6 res pondent's assertions even on summary judgment are 7 not sufficient to, to preclude that. While 8 cre dibility determinations are generally made in favor 9 of the nonmoving party, the finder of fact is not 10 req uired to simply accept every assertion no matter 11 how contradictory it may be to the prior party's 12 sta tements or how unbelievable it may be. 13 When the FAA first sent a letter to the 14 res pondent, the first letter of investigation, which 15 is included as Exhibit F to the, to the respondent, 16 the ir response, which was Exhibit G, said we reviewed 17 our capabilities list and discovered that you're 18 rig ht, that this gyro is not on our list. They do not 19 app ear to have even been aware that they were not 20 all owed to independently work on the gyro. 21 The respondent has asserted that they, 22 hav e subsequently asserted that, well, they worked on 23 the gyro, but only as a part of the overall autopilot 24 sys tem, but there are no records that reflect that. 25 The re is no approval for return to service of theFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 12

1 autopilot system. There is only an approval for 2 return to service for this individual component. 3 I mean, and in 145.201, it explicitly 4 says that you can only approve things for return to 5 service. They are on your, they're on your 6 capabilities list where, well, for this case a 7 capabilities list. There are other sorts of 8 authorizations for repair stages that are broader and 9 are not a, if it wasn't a limited rating. But in this 10 case it is a limited rating, so the capabilities list 11 is what controls. 12 They never asserted that this was 13 merely a typographical error, but it is unclear how 14 this possibly could have been a typographical error. 15 They typed it on their work order that it was a bench 16 check and repair of this specific component with no 17 reference to the overall autopilot system. They said 18 on the 8130 that it was a repair in two different 19 places on the form. And that was on there before it 20 was signed by the respondent. 21 I am not sure how you could possibly 22 have a typographical error that would produce the word 23 "repair" in all of those different places on this 24 component. And I, and I think that that's essentially 25 ...FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 13

1 I'm sorry. The one other thing I would 2 note is that the respondent keeps asserting in these 3 affidavits and in earlier [XX 00:15:15], talking about 4 how this would not have caused the problem, it 5 couldn't have caused the problem. They couldn't 6 detect it, that they corrected the form, and because 7 they later corrected the form, that eliminated the 8 problem. 9 I would again note that the documentary 10 evidence shows that the correction, the quote-unquote 11 correction to the 8130, did not occur until the month 12 after the FAA had informed the respondent that this 13 was discovered by the FAA performing an inspection at 14 the respondent's facilities, that there is no 15 indication that had the, had the FAA not arrived at 16 the facility, that this problem would ever have been 17 detected or corrected. 18 And so the documentary evidence 19 demonstrates that a repair did occur, and the 20 respondent's explanation for how it could have not 21 been a repair is contradictory to their own 22 documentation, not just the literal word "repair", but 23 the overall flavor, and it is contradictory to their 24 own letters of response to the FAA, and it frankly 25 defies belief. It's just not possible for things toFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 14

1 have occurred how they said and for this documentation 2 to have resulted. 3 THE COURT: Thank you. 4 Mr. Faruqui, let me ask you if you've 5 gotten a confirmation of a fax going through yet. 6 MR. FARUQUI: Yes. 7 THE COURT: Okay. Then I'll say that 8 Mr. Smith is leaving the hearing room at this time to 9 pick that up. And why don't you, Mr. Faruqui, begin 10 your primary summary judgment argument in response to 11 Mr. Stevenson while Mr. Smith goes and gets that 12 material? 13 MR. FARUQUI: Okay. Some of the 14 arguments that Mr. Stevenson has made today read to me 15 in my mind for the first time the source of some of 16 the problems that the FAA is struggling with on this 17 case. 18 Before I get to those, I would just, I 19 just want to just briefly say that these Bendix/King 20 KFC-200 autopilot systems are not a self-contained 21 unit in a box, like some autopilots might be. This is 22 basically a system that exists only by virtue of 23 several other subsystems and independent components 24 that talk to each other, and by virtue of their 25 cooperation with each other, you have an autopilot.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 15

1 Now ... 2 THE COURT: And, Mr. Faruqui, I'm going 3 to stop you. I'll just note that Mr. Smith has 4 returned to the hearing room and has provided me a 5 copy with the May 5, 2014, affidavit of Charles Hunt. 6 Thank you. Go ahead. 7 MR. FARUQUI: Thank you. Some of the 8 objections that the FAA raises to the respondent's 9 statements, some of the statements being made pro se, 10 some being made after finding representation, with the 11 respondents not knowing how to address their 12 explanations to the FAA attorney and also not knowing 13 ... 14 And I struggled many times to truly 15 understand what it is that the FAA was being confused 16 about. And with each attempt I feel like I have a 17 clearer understanding as to why it is that the FAA 18 does not truly understand our argument and why they 19 continue to argue that, you know, the previous 20 documents speak for themselves and that there is no 21 other record suggesting that there was a total 22 autopilot work done. 23 The bottom line is that when you take 24 out one component of this autopilot system, that 25 doesn't mean that after it's been sent to a repairFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 16

1 station that's qualified to repair that component, 2 that this component when it comes back, it's going to 3 be reinstalled into the same autopilot in the same 4 aircraft. 5 The FAA has not alleged that this 6 directional gyro had to be a part of the same 7 autopilot and therefore there had to be a total amount 8 of paperwork or that the paperwork with this 9 directional gyro had to be a part of lots of other 10 paperwork that it is all pertaining to the same 11 autopilot or the same aircraft. 12 So because of that, I fail to see why, 13 you know, the FAA needs to see a total package that 14 has to do with one autopilot. The fact is that you 15 cannot, the repair stations cannot install the 16 autopilot as one self-contained unit. They can only 17 take them out one component at a time, because that's 18 the way this autopilot is built. 19 Now, if an autopilot, hypothetically 20 speaking, is not functioning properly, and it takes a 21 replacement and then installation of one component to 22 get it to work properly, obviously, there is no need 23 to replace the rest of the component. So there's just 24 a hypothetical, you know, situation. 25 The FAA has admitted that this is aFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 17

1 autopilot that consists of several components and 2 subcomponents and subsystems that have to cooperate 3 with each other in order for them to, you know, you 4 know, consist of a, of an autopilot. The directional 5 gyro was never installed in an aircraft. Even after 6 it was tagged as returned to service and mistakenly 7 labeled as repaired, it was stored. 8 And the, the new affidavits that you 9 will see that were Exhibits 3 and 4, they state that 10 this repair station is in the habit of re-inspecting 11 anything that they place in inventory before 12 installing it in anything, especially if they're going 13 to store something for long term. This item was 14 stored for five months. 15 The fact of the matter is that the, the 16 FAA is hanging its entire argument on the fact that 17 just because FAA inspectors came in and saw the 18 documentation and this error before the respondent 19 ever had a chance to correct its own mistake is 20 disturbing, because then that means that, that the FAA 21 is asking the judge to not count at all the fact that 22 they have a habit of rejecting everything that they 23 place in inventory before, you know, you know, sending 24 them further downstream into aviation commerce. 25 You will see from the affidavits, fromFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 18

1 both of the affidavits, that this autopilot is a 2 component oriented autopilot, it's not a self3 contained unit, and that the air agency certificate 4 states that the, that the respondent is authorized to 5 do a Level 1 line and/or bench test and installation 6 of the autopilot. And of course, the only way to 7 install or remove the autopilot is to take out parts. 8 When they take out the directional 9 gyro, they hook it up to a harness and some indicators 10 so that they can turn the power on and see if it's 11 functioning properly. That's all part of Level 1 12 inspection. 13 So that's the general argument. You 14 know, when you get into specifics, I'll be able to go 15 into page by page on the pilot's guide to the 16 autopilot. I picked the pilot's guide as a supplement 17 to Mr. Hunt's affidavit because for me it was a much 18 easier way to explain piece by piece how these 19 components are set up. 20 As an attorney who is also a pilot, I 21 sometimes have to use autopilots, and pilots have to 22 see a manual that tells them in pilot's language how 23 these things work. And that makes it easier for me to 24 explain it rather than showing a mechanic's guide on, 25 you know, how these things are set up, which would beFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 19

1 muc h more detailed and would then have required an 2 exp ert witness testimony which, you know, would be too 3 cum bersome in a summary judgment hearing over the 4 pho ne. And we will only have to go through four or 5 fiv e specific pages of this 44-page autopilot guide, 6 if necessary. 7 With respect to the letter that the, 8 tha t the respondent sent to the FAA in response to the 9 let ter of investigation, the only thing that they 10 mis takenly, you know, thought that they had sent this 11 for an installation, they've only admitted that the, 12 tha t the KG 102A was inadvertently tagged as part of a 13 lis t of equipment being installed in an aircraft. 14 However, even though it was tagged as 15 bei ng part of equipment that was being listed in an 16 air craft, it never got installed in an aircraft. It 17 sat in inventory for five months. So I don't see how 18 the FAA can continue to rely on this letter, on top of 19 the fact that they are relying on it in the wrong 20 man ner, because their reading of the letter is only 21 con forming to what the FAA believes happened or wants 22 the court to believe happened. But the FAA is not 23 cor rectly reading the contents of this letter. 24 Your Honor? 25 THE COURT: Thank you, Mr. Faruqui.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 20

1 Why don't we do this? Because we have 2 lim ited time, and I want to make sure we get to the 3 pro posed civil penalty page, or part, before I go back 4 and ask certain questions to each of you, Mr. 5 Ste venson, let's talk first about the FAA's proposed 6 fin e on the primary charge in your amended complaint, 7 whi ch is the 7100 and some-odd dollar proposed fine. 8 MR. STEVENSON: Yes, Your Honor. 9 THE COURT: And I would like to limit 10 the rest of the discussion this morning to the primary 11 pro posed allegations and proposed fine. So you have 12 pre sented in your supplemental materials by 13 dec laration of David Dunn under FAA Exhibit L some 14 add itional material about the proposed fine of $7,150 15 if the court makes a finding that your primary 16 all egations have been correctly charged and proven. 17 Can you answer some of the material 18 tha t was raised by Mr. Hunt in the respondent's 19 sup plemental materials regarding that proposed fine? 20 MR. STEVENSON: Well, the, the first 21 thi ng I would note is that in the, I believe we're 22 ref erring to what we, the affidavit we've marked as, 23 as R-4. And Mr. Hunt talks about risk analysis, and 24 he cites to F-6. The F-6, there was no attachment to 25 tha t, but I am assuming he is referring to page F-6 ofFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 21

1 App endix, which is part of Appendix F of the 2150.3B. 2 Appendix F has no applicability here. 3 App endix F and the matters that it discusses, that the 4 res pondent talks about, are part of what we call an 5 enf orcement decision in process. And that is a 6 pro cess that our inspectors and that the people who 7 are reviewing their materials go through to help 8 det ermine how we will exercise prosecutorial 9 dis cretion to try to ensure uniformity as much as we 10 can between different inspectors, different offices, 11 dif ferent regions. 12 And so the final step of that process, 13 if it gets that far, is a risk analysis where there's 14 a m atrix that the inspector tries to figure out what's 15 the worst possible thing that could happen as a result 16 of whatever the violation is and how likely is that 17 thi ng to actually happen. And then the matrix will 18 sug gest to them whether or not it should be a legal 19 act ion or just an administrative action, so that in 20 gen eral I would note that it, it does not have any 21 app licability here. 22 I would also note that there are a 23 num ber of categories of cases that are categorically 24 exc luded from being anything other than legal action. 25 And one of those categories is, is doing somethingFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 22

1 you're not authorized to do, essentially, so somebody 2 who's flying that doesn't have a pilot certificate, 3 somebody who's flying RBSM but doesn't have RBSM 4 authorization. 5 And it includes the allegation here, 6 which is, which would be a repair station operating 7 beyond its rating. So an inspector, I would 8 anticipate, performing the enforcement decision 9 process in a case like would never even get to that 10 risk analysis, because it, because they would first 11 hit this, this category where it's categorically 12 excluded from, from consideration for, for non-legal 13 action. 14 And so I, I would just go back to the 15 materials that are already covered in the motion for 16 summary judgment and the supplement, which is that for 17 a repair station operating beyond its rating, the 18 guidance provided is, is maximum, a maximum range 19 penalty as, as discussed in Appendix B of the 2150.3B. 20 For a small business air agency such as a repair 21 station, that maximum range is about $7,000 to 22 $11,000. The default is that we go with the midpoint 23 of that range. 24 In this particular case, we're actually 25 at the, the bottom of the range, that we areFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 23

1 literally, the penalty that we proposed is the lowest 2 possible penalty that would be consistent with the, 3 with the administrator's published sanction guidance, 4 and there is ... 5 If we are in the realm of assuming that 6 the FAA has proved the violation as alleged, there's 7 nothing in this case that would be the sort of 8 extraordinary circumstance that would let us deviate 9 below that sanction guidance. 10 THE COURT: Let me ask you a question 11 or two about the respondent's Exhibit 4, which is the 12 affidavit of Charles Hunt regarding the amount of 13 penalty. And I'm going to turn to page 3 of that 14 seven-page affidavit, and I'm also going to ask you to 15 take a look as well at Exhibit J, which is the 16 declaration of Inspector McGlynn submitted by the FAA. 17 First, in its own Exhibit 4 on page 3, 18 paragraph 7, there is an assertion of mitigating 19 circumstances, first being that bench testing 20 components of the autopilot were necessary and 21 presumptively allowed, part of its Level 1 test of the 22 autopilot. 23 This seems to be contradicted by the 24 declaration of Inspector McGlynn. And if I am 25 misreading the FAA's proof, I want you to tell me. SoFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 24

1 as I read the FAA's prima facie proof, Inspector 2 McGlynn is stating in his two-page declaration that 3 the Level 1 inspection authority granted to Avionics 4 Masters under its certification did not allow it to 5 bench test the gyro, even prior to installation. 6 Inspector McGlynn states that on page 2 7 of his two-page affidavit, paragraphs 7 through 11, 8 that essentially the respondent was limited under its 9 certification, even with a Level 1 inspection 10 authority, to only take that gyro, as one of the 11 autopilot components, out of its package and either 12 install it and test it as part of the whole autopilot 13 package or remove it. 14 According to Inspector McGlynn, as I 15 read his declaration, the respondent did not have the 16 authority and did not have certification under its 17 capabilities list to even do anything beyond a visual 18 inspection, so that a bench test of the gyro component 19 as part of the autopilot system was beyond its 20 maintenance capability. 21 I'm hearing from the respondent, 22 however, obviously from Mr. Hunt and this affidavit 23 and elsewhere in the respondent's proof, that it does 24 have the right to hook up each component to test 25 harnesses and to test them for functionality. And inFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 25

1 fac t, the respondent is asserting that it's a 2 mit igating factor and that not to be able to bench 3 tes t the functionality of the gyro would make its 4 Lev el 1 inspection authorization absurd. 5 So am I misreading Inspector McGlynn's statement 6 ide ntified as FAA Exhibit J, or am I reading things 7 int o it that are not actually there? 8 MR. STEVENSON: No. I think you are 9 rea ding it correctly, Your Honor. The respondent is 10 all owed to perform functional tests on the autopilot 11 sys tem. It can do that. It can test this gyro only 12 in, only to the extent that it is testing the entire 13 sys tem. 14 I know that in paragraph 7 of Exhibit 15 4, the respondent asserts that bench testing a 16 com ponent is a necessary part of a Level 1 test, but 17 tha t is contradicted by paragraph 4 of Exhibit, of 18 Exh ibit 3, Mr. Hunt's other affidavit, where he said 19 the definition of a functional check is powering up 20 the complete system and observing the manufacturer's 21 sta ted operational characteristics. 22 It is possible, and what they're 23 aut horized to do is test the system, test the 24 ind ividual, or to test the overall autopilot system. 25 If there is something that they need, if there'sFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 26

1 something that needs to be done further with the gyro 2 specifically, they need to give that to another repair 3 station that's authorized to do that or 4 hypothetically, you know, to go to the FAA and say we 5 have the capability to do this sort of work on the 6 gyro independently. Let's, let's amend our capability 7 list. 8 Obviously, that, you know, that 9 hypothetical is not something that happened here, but 10 that is, going forward, if they wanted to be able to 11 do independent work like that on the gyro, that is 12 what they would need to do. 13 THE COURT: And essentially, as I 14 understand it, from just a pure maintenance efficiency 15 standpoint, it probably would be less time consuming 16 for a repair station to individually test components 17 before they are installed as a complete system into an 18 airplane versus installing all the components, running 19 a system check, and then finding something's wrong and 20 having to remove them again. 21 MR. STEVENSON: I would, I would 22 imagine that is the case, Your Honor. I would not, I 23 could not personally, definitively speak to that, and 24 I also, frankly, could not speak to whether or not it 25 is possible to have a bench check performed that is aFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 27

1 bench check of the entire system. 2 I don't, I mean, I don't know, I do not 3 know what the details of their setup are. And I do 4 not know what the details of what setups are available 5 to repair stations to have at their facility. So all 6 I, I cannot really do anything other than speculate as 7 to what physically they could do to do things 8 efficiently. 9 THE COURT: Okay. Thank you. 10 MR. FARUQUI: Judge ... 11 THE COURT: Mr. Faruqui, I'll give you 12 a chance to respond. 13 MR. FARUQUI: All right. 14 THE COURT: I have another question for 15 Mr. Stevenson. 16 Mr. Stevenson, I'm going to go, ask you 17 to go to page 5 of respondent's Exhibit 4, which is 18 the affidavit of Mr. Hunt regarding the amount of 19 penalty. I believe this is, this is somewhat of a 20 mixed discussion of both the primary penalty requested 21 and the alternate penalty, given the materials. So 22 I'm going to err on the side of caution and ask you to 23 answer these questions assuming that it's, it's both. 24 So on page 5 of this declaration under 25 paragraph 16, there are, there's a discussion aboutFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 28

1 how in the middle of that paragraph it states, 2 "Respondent obtained an overhaul of the directional 3 gyro from an appropriate agency, the alleged violation 4 - if any - was inadvertent, a substantial disregard 5 for safety or security was not involved, the 6 circumstances of the alleged violation were not 7 aggravated, a trend of noncompliance is not indicated, 8 and the respondent has a constructive attitude toward 9 compliance." 10 Are these the kinds of extraordinary 11 circumstances or mitigating circumstances that you 12 have seen or that the FAA has utilized in other cases 13 that would take the proposed penalty of $7,100 and 14 some-odd cents below the range that you have provided 15 in your prima facie case? 16 MR. STEVENSON: No, your honor. What 17 I, although there is no citation based on the list 18 here, what I believe the respondent is doing is 19 looking at, again, Appendix F, FAA Order 2150.3B. And 20 I indicated, right, as I indicated, that is the way 21 for, to help the inspectors try to figure out whether 22 or not this is something they should refer for a legal 23 action or process administratively, such as with a 24 warning letter or a letter of correction. 25 And the first thing they do is look toFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 29

1 see if there was something categorically included, or 2 sorry, the violation is categorically excluded from 3 being something other than legal. And then the second 4 thing that they do is go through a list of eight 5 criteria for whether or not something is eligible to 6 be an administrative action. And if, if all of those 7 criteria are met, they go on to their risk analysis. 8 If they are not met, then there'd have to be a legal 9 action, and so they, they would stop the process 10 there. 11 The means are among the factors that 12 are listed for the FAA's initial examination of 13 whether or not administrative action might be 14 appropriate. If so, I mean, for example, it says the 15 violation was inadvertent. Well, if a violation is 16 deliberate, there can't be administrative action. If 17 there, if there is a substantial disregard for safety 18 or security, then it can't be administrative action 19 and, and so on and so forth. 20 So I, I would think that the inspector 21 would not even have reached these factors, because it 22 would have been categorically excluded. And even if 23 he reached these factors, that would have only gone, 24 as such would have only gone to the FAA's exercise of 25 prosecutorial discretion.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 30

1 But with that said, I mean, if you look 2 through Chapter 7 of FAA Order 2150.3B, which talks 3 about what we would consider to be aggravating or 4 mitigating circumstances, those are, that there are 5 things that are on this list that relate to things 6 that are there. You know, the, the particular nature 7 of the, the violation can, obviously can affect what 8 the penalty is. 9 A simplistic example would be if you 10 had a low flight case and you weren't allowed to 11 operate the aircraft below 1,000 feet in a congested 12 area, right, if you're operating the plane at 100 feet 13 versus operating the plane at 900 feet, you know, 14 that, you know, is going to be something that is taken 15 into account whether or not that's aggravative or not. 16 But the most notable thing I would have 17 here is that they do say it's inadvertent and they say 18 there isn't a trend of noncompliance. The inadvertent 19 is the default that's referenced in, I believe, in the 20 regional specialist's affidavit. I know it's 21 referenced in the motion for summary judgment and in 22 Chapter 7 of the 2150.3B. 23 An inadvertent first-time offense is 24 the presumption. It matters that the offense was 25 inadvertent, because it's an aggravating factor if itFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 31

1 was n't. But it is not a mitigating factor for an 2 off ense to be inadvertent. I, I don't, I mean, the 3 oth er things here don't necessarily have a lot of 4 app licability. They don't say, the respondent doesn't 5 say why these things are applicable. 6 I don't see anything here that would 7 lea d us to not, not just mitigate down below the 8 mid point, but actually go beyond the range whatsoever. 9 And , and many of these things that they are asserting 10 in this paragraph are things that are just not 11 rel evant, that they, or that are just incorrect. 12 You know, they said there was only one 13 typ ographical error. If we're talking about whether 14 or not 7,000 is the appropriate penalty, then we've 15 con cluded that it was not just a, a typographical 16 err or, and I'm not sure how it could have been. They 17 tal k about how it was corrected. I don't think that's 18 rel evant at all, because it was only corrected after 19 the FAA sent them a letter of investigation. And, and 20 tho se documents, you can see the date of those 21 doc uments that are attached to the, the motion, the 22 two motions, sorry, to the motion for summary judgment 23 and to the response to the motion for, for summary 24 jud gment. 25 And so I, and then, and then theyFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 32

1 later, as they referenced here, they later sent it out 2 to another repair station that could do gyros that 3 inspected it, found all sorts of things wrong with the 4 gyro and then did an overhaul of it. Again, it's not 5 a mitigating factor at all, much less an extreme 6 mitigating factor that would warrant going below the 7 bottom of the range for them to fix the problem after 8 we sent them a letter of investigation. 9 Essentially, it would be an aggravating 10 factor and another violation had they, for example, 11 gone and installed it on the plane anyway after we had 12 found the error. But it, but, you know, that's not 13 something you get credit. You don't get credit for 14 not doing that. 15 THE COURT: Okay. Is there anything 16 else that you would like to add before I turn to Mr. 17 Faruqui? 18 MR. STEVENSON: Not on the subject of 19 the penalty amount. 20 THE COURT: Anything else you'd like to 21 add in general? 22 MR. STEVENSON: The one observation 23 that I, I had wanted to make after Mr. Faruqui had 24 made his statement was he talks about the letter that 25 they sent. And he talked about a part of the letterFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 33

1 tha t, that I hadn't, but I think that this highlights 2 som e of the inconsistency in the respondent's 3 dif fering versions of, of what happened in their 4 let ter of ... 5 THE COURT: And when you say "the 6 let ter", which exhibit are you referring to? Is it 7 Exh ibit G, as in George? 8 MR. STEVENSON: Yes, Your Honor. 9 Exh ibit G. And, and, and opposing counsel, as you 10 men tioned, they say in this letter that the 11 dir ectional gyro was inadvertently tagged as part of a 12 lis t of equipment being installed on an aircraft. And 13 so that's the original thing that they said, and I, 14 and I know that they are now, in their very initial 15 res ponse they're just talking about the gyro being 16 tag ged as an individual component. 17 But I would then want to turn to the 18 aff idavit of Charles Hunt that was attached to the 19 res pondent's original response to our motion for 20 sum mary judgment. I think that's Exhibit 1. The copy 21 tha t I have does not actually have a number on it. 22 But in paragraph two of that, they say 23 in this case we were requested to form a Level 1 24 ins pection of a Bendix/King autopilot. And I think 25 tha t's noteworthy, because it's, it's contradictory toFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 34

1 som e of the other things, we'll say. I think it's 2 con tradictory to the letter. I think it's 3 con tradictory to the new affidavit, which I'll, I'll 4 get to in a second. 5 But I think it also addresses, opposing 6 cou nsel is saying that he doesn't understand why the 7 FAAwould think that there would be documentation on 8 the system as a whole. Well, I mean, Mr. Hunt says in 9 his own affidavit that somebody asked them to perform 10 a L evel 1 inspection of the system. So if you are 11 say ing that what you are doing is an inspection of a 12 sys tem for a customer or something like that, I would, 13 I w ould in fact expect there to be documentation about 14 the , the system as a whole. 15 But, and then I think when you look at 16 par agraph 6 of Exhibit 3, you know, they talk about 17 aft er the functionality was confirmed, it was assigned 18 its own FAA order and then went into stock. Well, I'm 19 sor ry, it was assigned its own FAA Form 8130, and then 20 it was entered into stock. It undoubtedly was 21 app roved for return to service under its own FAA Form 22 813 0 and, and then was kept at their facility. But 23 tha t is contradictory to what Mr. Hunt is saying in 24 thi s affidavit. 25 If this, if they were given an, I'mFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 35

1 sor ry, in his original affidavit, if they were given 2 an autopilot to perform a Level 1 inspection of, it 3 doe s not make any sense that they would then turn 4 aro und and break up the individual components and then 5 put them in their stock, especially if they had, 6 acc ording to the past, according to them passed 7 wha tever the, the inspection was that they conducted 8 on them. 9 And so I, in between Exhibit G and Mr. 10 Hun t's first affidavit and Mr. Hunt second affidavit, 11 you have all of these different versions for how it is 12 tha t this directional gyro came to be approved for 13 ret urn to service as an individual component. And I, 14 so I don't think that, contrary to opposing counsel's 15 rep resentation, I don't think we're confused, except 16 to the extent that anyone would be confused trying to 17 fig ure out all of the differing versions of events 18 tha t, that Mr. Hunt has presented here. 19 And that, that was the, the one thing 20 I, observation I wanted to make. 21 THE COURT: Okay. Thank you very much. 22 Mr. Faruqui, let me ask you a couple of 23 que stions now, if I may. And I'm going to start again 24 in the same way with you that I started with Mr. 25 Ste venson. I'd like you to take a look at Exhibit JFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 36

1 and in conjunction with respondent's Exhibit 4, which 2 is the affidavit of Charles Hunt about the amount of 3 penalty. 4 And Mr. Hunt's affidavit on page 3, 5 paragraph 7, states that he believes the mitigating 6 circumstance was the bench testing of the autopilot 7 component. And as you have so clearly articulated 8 earlier today in argument, the gyro was considered to 9 be one of several components that were part of this 10 autopilot system. 11 And then in looking at the declaration 12 of Inspector McGlynn, he states with quite, quite 13 specificity that under no circumstances did Avionics 14 Masters' Level 1 inspection and capability list 15 include any type of inspection or testing of the gyro. 16 And so can you reconcile for me these 17 two different pieces of proof on behalf of your 18 client? 19 MR. FARUQUI: Yes. Roger McGlynn has, 20 before this enforcement action, I don't see any record 21 provided by the FAA or by Roger McGlynn in which Mr. 22 McGlynn articulates to the respondent before any 23 violation ever occurred in which Mr. McGlynn provided 24 a written clarification about what Level 1 inspection 25 means on the air agency certificate.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 37

1 If you look at the air agency 2 certificate on the third page, who's by ... 3 THE COURT: And, and tell me what 4 exhibit number you're referring to, please. 5 MR. FARUQUI: The air agency 6 certificate. And I don't know whether either side has 7 ... 8 THE COURT: Well, the FAA has filed 9 Exhibits A, B and C ... 10 MR. FARUQUI: Yes. 11 THE COURT: ... A being the air agency 12 certificate, which is one page; B being class ratings 13 and limited ratings for your client, which are split 14 to two pages; and C being the capability list for your 15 client's repair station. So which particular exhibit 16 do you think would be most helpful in this discussion? 17 MR. FARUQUI: Exhibit B. 18 THE COURT: Okay. Thank you. Go 19 ahead. 20 MR. FARUQUI: Second page of Exhibit B 21 is a digital signature by Roger McGlynn himself. 22 THE COURT: Well, I'm, I'm looking at 23 Exhibit B as in "boy", and the second page has the 24 signature of a Vincent, it looks like Sartiv, Ortiz, 25 excuse me.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 38

1 MR. FARUQUI: Yes. Vincent is, is the 2 ... 3 THE COURT: Excuse me, sir. I'm, I'm 4 still talking. 5 MR. FARUQUI: Sorry. 6 THE COURT: Are you looking at some 7 other exhibit? Because this is not signed by 8 Inspector McGlynn. 9 MR. FARUQUI: On the same page, Your 10 Honor, if you look a few inches up, on there there is 11 a digital signature. 12 THE COURT: There is, oh, I see. Thank 13 you. Next to the FAA symbol, there's a digital 14 signature by Inspector McGlynn. 15 MR. FARUQUI: Right. 16 THE COURT: What is this, and in your 17 opinion how does this support your argument that your 18 client had the ability to bench test the gyro? 19 MR. FARUQUI: The simple fact is that 20 we are getting into a very complex fact question about 21 what is or is not specifically authorized, which, you 22 know, parties can testify to. And there is no, no 23 prior written record where Mr. McGlynn or anybody else 24 from the FAA clarified to the respondent a narrower 25 interpretation of what's on the air agencyFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 39

1 cer tificate. 2 THE COURT: Well, let's look at page 1 3 of the two-page Exhibit B. On page 1, it talks about 4 ref erring your client to the capability list. And 5 tha t's been submitted by the FAA as Exhibit C as in 6 "ca t". And if we go to page 15 of Exhibit C, it shows 7 KFC -200 autopilot Bendix/KingLevel 1 inspection fine 8 and /or bench test and installation. 9 MR. FARUQUI: Correct. And the only 10 way bench test is possible is to take a component out 11 of the aircraft and take it to the test harness. 12 THE COURT: Okay. Well, then, let's 13 tal k then next about Exhibit G, where your client 14 pre viously indicated that he knew that the remote gyro 15 was not part of his capability list. 16 MR. FARUQUI: As far as repairs are 17 con cerned. 18 THE COURT: Okay. Anything else you 19 wou ld like to say about this particular piece of 20 inf ormation? 21 MR. FARUQUI: Other than the fact that, 22 you know,the respondent is fighting off a $7,000 fine 23 ove r a paperwork error, which is every clear here. 24 The respondent did not do any repairs. That's all 25 the re is to say about that. You know, they're doingFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 40

1 their bench test the way they're supposed to. 2 And, and if, if it's so obvious in 3 this, in this enforcement action that there is 4 confusion between the parties or dispute between the 5 parties about what the air agency certificate says, 6 then in order for the FAA to rely on Mr. McGlynn's 7 affidavit, there should have been some prior record by 8 Mr. McGlynn saying, oh, by the way, what the air 9 agency certificate says, well, this is, here is the 10 clarification. It really should be interpreted this 11 narrowly. You cannot, you know, do XY and Z. 12 First, the FAA accused the respondent 13 of performing repairs when the respondent stated that 14 they did not perform repairs, did not open the, the, 15 did not tear down the directional gyro. Now the FAA 16 wants to counter argue by saying, well, you can't do 17 anything with the directional gyro, not even a Level 1 18 inspection, not even a bench test, you know. 19 And then to, now for the first time 20 today, the FAA went so far as to say that the, they 21 cannot do inspections of just one component. You 22 would have to hook up all of the components in order 23 to do a Level 1 inspection of the entire autopilot, 24 and then try to support this argument by stating or 25 fishing for contradictions between previous affidavitsFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 41

1 when in fact they are not contradictions. It's 2 everything that's being stated is consistent. 3 And then finally when, Your Honor 4 questioned the FAA, the FAA said, well, they're not 5 entirely sure how the inspections are supposed to be 6 done, what the setup is, and the FAA conceded that it 7 would be more efficient to do a inspection of one 8 component and not, not necessarily all of the 9 components and, you know, take them out, reinstall 10 them. 11 And then basically, the FAA admitted to 12 not doing enough homework in order to determine 13 whether this warrants such a huge enforcement action. 14 So, you know, that ... 15 THE COURT: Let me ask you. Yeah, 16 thank you. Let me ask you if you would respond 17 briefly to Mr. Stevenson's discussion of the proposed 18 penalty for the primary charge. 19 MR. FARUQUI: Sure. The discussion on 20 the primary charge, they were, Mr. Stevenson said that 21 Appendix F does not apply. Well, there's two parts to 22 my argument about that. 23 Even if Appendix F does not apply 24 because this is an action about doing things they're 25 not capable of, Appendix F still gives significant,FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 42

1 tremendous guidance about the common sense factors 2 that everyone in the FAA has thought about over the 3 years, common sense that apply in any of the 4 situations anyway, including in this case. 5 So for, for the FAA to say that the 6 order, Appendix F of the order does not apply in this 7 case, that still doesn't, you know, strip us of the 8 power to use common sense to determine how much of a 9 fine should be applied. 10 The second part of my argument is that 11 the FAA has made alternate pleadings with respect to 12 the paperwork error. The alternate pleadings with 13 respect to the paperwork error are not about doing 14 acts that the repair station is not capable of. And 15 in that case, if you're looking at the alternate 16 pleadings, perhaps Appendix F applies toward the 17 alternate pleadings. 18 But when the FAA is insisting that the 19 Appendix F does not apply and continues to insist on 20 the $7,000 fine, they're, they're not mentioning and 21 don't want to talk about the alternate pleadings that 22 they have made, which on Chapter 7 showed that you can 23 go to the minimum or moderate range. And for that we 24 are asking for the minimum range. 25 THE COURT: Okay. I have a question,FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 43

1 and I want to ask this to you, Mr. Faruqui, before I 2 tur n to the FAA for final reply. You have in your 3 arg ument made some comments about how Inspector 4 McG lynn should have notified your client more 5 spe cifically about either the capabilities list or the 6 lim itations of the Level 1 inspection that they were 7 all owed to do. 8 And I'm, I need to follow up on that a 9 lit tle bit, because according to the federal aviation 10 reg ulation, there are very specific statements and 11 lis ts identified within the regulation for what the 12 ins trument ratings be for someone conducting a class 13 one repair. And I'm going to refer you specifically 14 to 14 CFR Section 145.59, Subsection 3E. 15 And that particular area talks about 16 dif ferent mechanical ratings and different things that 17 you would be looking at for inspection or repair under 18 a m aintenance standard. And then underneath that, or 19 as part of that, there's a Class 3 gyroscopic rating 20 tha t specifically defines the gyros and what 21 enc ompasses a gyro for someone who has a Class 3 22 rat ing. 23 As I understand your client's rating, 24 it didn't even have a Class 1 inspection rating, but 25 it did have a limited rating, which means that it wasFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 44

1 very narrowly defined by the certification it received 2 and the capabilities list that it, it had. 3 And wouldn't it be in your client's 4 best interest or your client's default status, 5 position, say to itself if it's not on my capabilities 6 list, I don't, I have notice right then and there that 7 it's not something I should be doing, because I have 8 these public rules to use as a guidance tool, 9 regardless of whether someone from the FAA makes a 10 personal visit to me to explain things to me? 11 MR. FARUQUI: Okay. 145.59.3 ... 12 THE COURT: There's also a E3, talks 13 about Class 3 gyroscopic ratings. So there are 14 instrument ratings for a Class 1 certification. There 15 are Class 3 gyroscopic descriptions for someone who 16 has a Class 3 rating. I'm just concerned that I'm 17 hearing from you an argument from your client that 18 unless someone comes to their business and explains 19 things to them, they can simply carry on based on 20 assumptions versus checking the law and making sure 21 they're fully informed. And maybe I misheard your 22 argument. 23 MR. FARUQUI: I'm looking at this, and 24 I'm still struggling with the numbers listed here. 25 Class 3, when you're looking at 149.59.3 ...FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 45

1 THE COURT: No, wait. I'm sorry. You 2 have the incorrect citation. So 14 CFR 145.59. 3 MR. FARUQUI: Let me pull it up again, 4 then. All right. I'm looking at 145.59, and the 5 first subsection 3 I see has to do with turbine 6 engines. The next subsection 3 I see radio, okay, 7 Class 2 radio ratings, Class 3 radar equipment, 3E 8 instrument ratings, Class 1 mechanical and diaphragm, 9 bourdon 2. That's what I'm looking ... 10 THE COURT: You don't need that. You 11 don't need to read it out loud. But it looks like you 12 found the section that I'm looking at. 13 MR. FARUQUI: But I'm looking at the 14 class ratings. Certificate holder is authorized the 15 following ratings and/or limitations: Radio Class 1 16 communications equipment, radio Class 2 navigation 17 equipment, radio Class 3 radar equipment. That's 18 from, let me see if it's shown on Exhibit B. 19 THE COURT: Yes. And then if, if you 20 look at 14 CFR Section 145.61, it talks about limited 21 ratings that are even more narrowly defined for repair 22 stations. And that talks about how the repair station 23 can only perform specialized maintenance and that 24 those limited ratings are for instruments of a 25 particular make and model.FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 46

1 MR. FARUQUI: Right. 2 THE COURT: And then under 14 CFR 3 Sec tion 145.215, it talks about the capability list 4 and how it must identify each article by make and 5 mod el or other nomenclature and be available in a 6 for mat acceptable to the FAA. 7 In addition, this same section, which 8 is, I'm sorry, same regulation, 14 CFR Section 9 145 .215, Subsection 3C and D, talk about how that 10 art icle can only be listed if the, it's within the 11 sco pe of the ratings of the repair station 12 cer tificate. 13 And then it goes on to talk about that 14 the repair station has to show that it has all the 15 hou sing facilities, equipment, material, technical 16 dat a, processes, et cetera, to work on the article. 17 And then it must provide, you know, its certificate 18 hol ding district copies with a revised list if it 19 cho oses to update, upgrade, and so forth. 20 So my concern in part with this 21 par ticular case is that nowhere has the respondent 22 ind icated that it has approval to do any testing on a 23 spe cific gyro component. And the concern I have in 24 par t is because gyroscopic material is very definitely 25 lis ted under the regulations as having a need forFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 47

1 spe cialized ratings, obviously has a need for 2 spe cialized equipment. 3 And at least in some of this material, 4 the FAA has been able to make a fairly strong argument 5 tha t your client at some point agreed with the fact 6 tha t his business did not have the ability or the 7 cer tification to work in any kind, any way, shape or 8 for m on a gyro. 9 And yet I'm hearing from you in 10 arg ument that, in fact, that's not the case, that the 11 rep air stations that are like your clients' can assume 12 tha t they have a broader ability unless somebody from 13 the FAA makes an in-person visit to them and tells 14 the m otherwise. Have I misunderstood your argument? 15 MR. FARUQUI: Your Honor, what I'm 16 get ting at is that they, the respondent was within its 17 lim its when it was performing the Level 1 inspection. 18 The re just is no way to do what the air agency 19 cer tificate says he can do without installing or, or 20 uni nstalling the components and taking them to the 21 ben ch and testing them at the bench. 22 Why write the bench test as one of the 23 app roved capabilities, if you cannot take these 24 com ponents to the bench? That's, that's confusing. 25 And , and to, to a layman who is only a mechanic andFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 48

1 doe s not, you know, you know, have so much ability to 2 int erpret regulations as a, as the FAA does, what else 3 can he rely on? 4 He's got an air agency certificate that 5 he' s relying on, and Roger McGlynn is raising for the 6 fir st time in an enforcement action that, that even a 7 Lev el 1 inspection is not permissible. 8 THE COURT: Okay. 9 MR. FARUQUI: And it, and it, it goes 10 aga inst the grain of what he signed off on on the air 11 age ncy certificate. 12 THE COURT: Okay. Thank you. 13 MR. FARUQUI: And that's very, it's 14 ver y confusing for everybody here. 15 THE COURT: I understand. Thank you. 16 MR. FARUQUI: Yeah. 17 THE COURT: Is there anything else that 18 you would like to add on behalf of your client before 19 I t urn to the FAA for final reply? 20 MR. FARUQUI: Again, the, the party, 21 the respondent made its corrections on the paperwork, 22 whi ch it probably would have anyway, irrespective of 23 whe ther there were investigators coming to their 24 off ice or not. They are in the habit of rechecking 25 any thing that was in storage, and when things fail,FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 49

1 the y go ahead and send them to whoever is allowed to 2 per form a repair. 3 THE COURT: Thank you very much, Mr. 4 Far uqui. 5 Mr. Stevenson, do you have any final 6 mat ters you'd like to make before we close today? 7 MR. STEVENSON: I think Your Honor 8 cov ered most of what I would have said with regard to 9 145 .59, and we already discussed the Royal Avionic 10 cas e in the summary judgment motion. As to the, the 11 poi nt that opposing counsel just made, I would again 12 not e that in Mr. Hunt's own affidavit, he says that 13 the definition of a functional check is powering up 14 the , the complete system and that that is something 15 tha t can be done on a complete system basis. 16 They are authorized to do work on the 17 ove rall system. I think that they did understand, 18 bas ed on Mr. Hunt's letter, that they could not do the 19 sam e sort of work on the individual component. But 20 eve n if they didn't understand that for some reason, 21 tha t doesn't mean that they didn't commit the 22 vio lation. Again, maybe the violation is inadvertent 23 rat her than deliberate, but we're not applying any 24 agg ravating factors for it being, for being 25 del iberate. I mean, there's no, we're not applyingFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 50

1 any aggravation at all here. 2 And I would note opposing counsel says 3 the FAA does not want to talk about the alternative 4 ple ading or the sanction for that. I can, if Your 5 Hon or would want. My impression was that Your Honor 6 wan ted us to focus on the primary pleading, but if for 7 som e reason I misunderstood that and there was any 8 nee d to address the alternative pleading or the 9 san ction for that, I can do that. 10 THE COURT: No. The court specifically 11 ask ed the parties to limit their discussion today to 12 the primary allegation. I did receive and review all 13 of the materials regarding the alternate violation, 14 but I wanted to preserve the time today for the 15 pri mary allegation. But thank you for offering. 16 MR. STEVENSON: And that's all I have, 17 You r Honor. 18 THE COURT: Okay. Then I'm going to 19 tha nk both counsel very much for your presentation 20 tod ay, for the filing of the supplemental materials, 21 and for your patience in answering all the court's 22 que stions. I want to thank you both very much for the 23 wor k you've done on this case. 24 I will be issuing a written decision 25 nex t week, and I know that you have a due date nextFAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 51

1 wee k of May 16, 2014, for the list of witnesses and 2 exc hange of exhibits. And what I'm going to do is I'm 3 goi ng to extend that to May 22, 2014, by court motion 4 jus t so that whatever decision I reach can be issued 5 and read by the parties without having to have done 6 add itional work that may or may not need to have been 7 don e. So instead of May 16, 2014, I am extending your 8 due date for filing exhibits and witness lists to May 9 22, 2014. And then that means I'll be able to issue 10 the decision on this case, hopefully, by next 11 Wed nesday, May 14, 2014. 12 With that, Mr. Stevenson, on behalf of 13 you r client, anything else that we need to address 14 tod ay before we close? 15 MR. STEVENSON: No, Your Honor. 16 THE COURT: And Mr. Faruqui, on behalf 17 of your client? Same question. 18 MR. FARUQUI: No, Your Honor. 19 THE COURT: Okay. Thank you both very 20 muc h again. I hope you have a good weekend. With 21 tha t, we can go off the record. And I wish you all a 22 goo d day. Thank you. 23 MR. FARUQUI: Thank you. 24 MR. STEVENSON: Thank you. 25 (WHE REUPON, the hearing was concluded at 10:53.)FAA vs Avionics Masters Hearing May 9, 2014 VR # 1061-1 Page 52

1 STI PULATION 2 3 The foregoing matter was taken on the date, and 4 at the time and place set out on the title page 5 her eof. 6 7 It was requested that the matter be taken by the 8 rep orter and that the same be reduced to typewritten 9 for m. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 251 2 3 4

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25 24 23 22 **CERTIFICATE OF REPORTER AND SECURE ENCRYPTED**

I, **Ernest L. Dean, Jr.** , Notary Public, do hereby certify that the foregoing matter was reported by stenographic and/or mechanical means, that same was reduced to written form, that the transcript prepared by me or under my direction, is a true and accurate

This transcript and certificate have been digitally or otherwise interest in the action filed or its outcome. record of same to the best of my knowledge and ability;

or counsel employed by the parties hereto, nor financial that there is no relation nor employment by any attorney

Court Reporter / Notary **SIGNATURE AND DELIVERY OF CERTIFIED TRANSCRIPT**

signed and securely delivered through our encryption

server. IN WITNESS HEREOF, I have here unto set my hand this day of , .

Notary Registration Number: 7528819 My Commission Expires: **Ernest L. Dean, Jr.** 14th

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