Locair, Inc., and

BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF HEARINGS

WASHINGTON, D. C.

-:':?,;RiMi:NT OF

" ',~A:<SPORTATiON

-:'Y/EI OPERATIONS

15~)"'J6 2 I P 12: 53

Brian L, Hall, Rory C. Crews, and Pedro E. Baez,

Individually,

Violations of 49 U.S.c. ~ 41712 and 14 CFR Part 374

En forcementP roceed ing

Served August 21, 2013

Docket OST 2013-0065

JOINT MOTION FOR APPROVAL OF PROPOSED

SETTLEM.ENT AGREEMENT

Pursuant to 14 CFR 302.417(a), the Office of Aviation Enforcement and Proceedings

(Enforcement Office), and Respondents Locair, Inc., Brian L. Hall, Rory C. Crews, and Pedro E.

Baez hereby submit for approval by Your Honor the attached proposed consent order negotiated in

settlement of this proceeding. The Enforcement Office confirms that it has received documents

and declarations from Respondents, signed under penalty of perjury, stating that Respondents have

refunded all monies owed to all consumers, known to Respondents as of August 15,2013, who

purchased tickets with credit cards or cash, whose flights were not operated, and who have filed

properly documented refund requests on or before August 15, 2013, with Locair, Inc. The

proposed consent order and' settlement requires Respondent Locair, Inc., to cease and desist from

further violations of 14 CFR Part 374 and 49 U.S.C. 941712. Approval of this agreement will

conclude the Enforcement Office's investigation into Respondents' compliance with the abovecaptioned provisions and settles all matters at issue.in the pending litigation.
2

Without admitting or denying the alkgcd violations, Respondents Locaif. Inc.. Brian L.

Hall, Rory C. Crews, and Pedro E. Baez, agree ro the term" of the proposed order. The Assistant

General Counsel for Aviation Enforcement and Proceedings agrees to the tenus and conditions

stipulated in the consent order and recommends that the settlement be approved in the public

interest. Both parties jointly move that the settlement embodied in the attached proposed order be

approved under 14 CFR 302.417( c).

Respectfully submitted,

-=:::;:'::Z='-::':::::;;;;:

_.-...... Samuej"P01lb1)T'""icy~:>

Asslsr.anc General CmIDscl

Aviation Enforcement and Proceedings

Brian L. HaU

1740 Hudson Bridge Road. Suite 10 12

Stockbridge, GA 30281

FOR LOCAffi, TNC.,

Brian L. Hal!

1740 Hudson Bridge Road, Suile 1012

Stockbridge, G/, 30281

/S -b/ '.L------..

~@(.crews

ROrYcrews l@gmai1:com

Pedro E. Bacz

27700 SW ]64 Ave.,

Homestead, fL 33031
Order 2013-X-XX

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the XX day of XX, 2013

.'

Locair, Inc.,

Docket OST 2013-0004

Violations of 49 V.S.c. S 41712 and 14 CFR

Part 374

CONSENT ORDER

Served XXXX, 2013

This order constitutes a settlement of the above-captioned matter between the Office of

Aviation Enforcement and Proceedings (Enforcement Office) and Respondents Locair, Inc.,

(Locair). This order directs Locair to cease and desist from future violations of 49 U.S.C.

941712 and 14 CFR Part 374.

Applicable Law

Locair is subject to the credit card refund requirements of Regulation Z and 14 CFR Part 374,

which implements Regulation Z. Part 374 establishes that, with respect to refund requests

involving airline tickets purchased with a credit card, a creditor-here Locair-must transmit

a credit statement for a passenger refund to the credit card issuer within seven business days

of receipt of full documentation for the refund requested. A failure to comply with the rule

and provide such refunds within the stipulated time periods is considered to be an unfair and

deceptive practice in violation of 49 U.S.c. 941712.1

Facts and Conclusion

During the time period relevant to this order, Locair was an air taxi operator registered with

the Department under 14 CFR Part 298 and held an air carrier certificate issued by the Federal

1 See, e.g., Eastern Airlines, Inc., Violations qlConsumer Protection Regulations. Order 89-8-50 (August 31,

1989); 8oston-Maine Ainvays CO/p., Violations of ~9 usc ;'41712 and 14 CFR Part 374. Order 2006-7-7

(July 7, 2006); Paragon Air, Inc.. Violations qf49 USC !i 41712 and 14 CFR Part 374. Order 2009-7-17 (July

17,2009).
2

Aviation Administration (FAA) pursuant to 14 CFR Part 135.2 Locair provided air

transportation between points in Florida and the Bahamas. In January 20 II, Locair's sole

operating aircraft experienced severe mechanical problems, which forced the carrier to cancel

all future flights. On March 15,201 I, Locair was sold by Mr. Michael H. Lochmueller to Mr.

Brian L. Hall and Mr. Rory C. Crews.

As a result of consumer complaints tiled with the Department's Aviation Consumer

Protection Division, the Office of Aviation Enforcement and Proceedings (Enforcement

Office) conducted an investigation into whether Locair was failing to provide prompt refunds,

as required by Regulation Z and Part 374, to all consumers who purchased air transportation

on the cancelled flights. That investigation confirmed that the caJTier failed to process

numerous credit card refunds within seven business days of the receipt of appropriate

documentation for the requested refunds. Locair represented to the Enforcement Office that it

had contacted the consumers known to be entitled to a refund and promised to issue refunds.

However, Locair failed to issue the refunds as promised.

Procedural Posture

On April 3, 2013, the Enforcement Office served a formal complaint and notice of

enforcement proceeding on Locair and its officers (Respondents). The complaint alleged that

Respondents failed in at least ten instances to process refund requests from consumers who

purchased air transportation but did not receive the service paid for due to Locair's unilateral

cancellation of its operations. These failures violate Regulation Z and 14 CFR Part 374 and

constitute unfair and deceptive practices and unfair methods of competition in violation of 49

U.S.c. S 41712.

Following the Enforcement Office's filing of the formal complaint, Locair submitted

documentary evidence along with declarations from its officers signed under penalty of

perjury, confirming that Respondents have refunded all monies owed to all consumers known

to Locair and its officers, who purchased tickets with credit cards or cash, who did not receive

the service paid for because the flights were not operated, and who have filed properly

documented refund requests on or before August 15, 20 I 3, with Locair.

Mitigation

In mitigation, Locair states that all of the tickets subject to refunds were sold to passengers

while Locairwas under the direction and control of its previous owner, Michael Lochmueller,

and that the sales occurred at least six months prior to the new owners, Brian L. Hall, Rory C.

Crews, and Pedro E Baez, taking ownership of the company. Locair further states that for six

months prior to the ownership change, Locair had no operable aircraft capable of passenger

service. Locair states that following the purchase of Locair, Brian L. Hall, Rory C. Crews,

and Pedro E. Baez paid $20,702.77 in passenger refunds and arranged for other flights for

some passengers before exhausting all of their available resources. Locair asserts that the

previous owner left Locair heavily in debt and unable to operate flights to and from the

2 Locair is no longer operating and has surrendered its air carrier certificate to the FAA.
3

previous owner left Locair heavily in debt and unable to operate flights to and from the

Bahamas on Locair aircraft. Messrs. Hall, Crews, and Baez state that while they made efforts

to refund passengers, the previous owner made no such attempt and solely benefited from the

sale of the tickets.

Decision

Locair's failure to process credit card refund requests within the period required by

Regulation Z has harmed consumers and constitutes a violation of 14 CFR Part 374 and an

unfair and deceptive practice in violation of 49 U.S.C. 9 41712 that subjects Locair to

enforcement action by the Department. In this connection and in order to avoid further

litigation, the Enforcement Office and Locair have reached a settlement of this matter.

Without admitting or "denying the violations described above, Locair and the Enforcement

Office agree to the issuance of this order to cease and desist from future violations of 49

U.S.c. 941712 and 14 CFR Part 374. This settlement is appropriate in view of the nature

and extent of the violations in question, serves the public interest, and establishes a deterrent

to future similarunlawful practices by Locair and other carriers.

This order is issued under the authority contained in 49 CFR Part I and 14 CFR 385.11 (d).

ACCORDINGLY,

I. Based on the above discussion, we approve this settlement and the provisions of this order

as being in the public interest.

2. We find that Locair, Inc., violated 14 CFR Part 374 by failing to process in a timely

manner refunds for air transportation purchased by credit card on cancelled flights, as

required by the Consumer Credit Protection Act and Regulation Z of the Board of Governors

" of the Federal Reserve System, 15 U.S.C. 99 1601-1693r and 12 CFR Part 226;

3. We find that, by engaging in the conduct and violations described in paragraph 2, above,

Locair, Inc., also engaged in an unfair and deceptive practice in violation of 49 U.S.C.

941712; and

4. We order Locair, Inc., and all other entities owned and controlled by, or under common

ownership and control with Locair, Inc., and their successors and assignees, to cease and

desist from future violations of Regulation Z, 14 CFR Part 374, and 49 U.S.c. 9 41712.

This order will become a final order of the Department thirty days after its service unless a

timely petition for review is filed or the Department takes review on its own initiative.

BY:

J.E. Sullivan

Administrative Law Judge

An electronic version of this document is available at

www.regulations.gov
SERVICE LIST

ORIGINAL & ONE COPY

U.S. Department of Transportation

Dockets Operations, M-30

West Building, Ground Floor

Room W12-10

1200 New Jersey Avenue, S.E.

Washinf,,>ton,DC 20590

ONE COPY

Judge J. E. Sullivan

U.S. Administrative Law Judge

U.S. Department of Transportation

Office of Hearings, M-20

1200 New Jersey Ave., S.E. (E 11-310)

Washington, DC 20590

Loeair, [ne., Respondent

1100 Lee Wagner Blvd., Suite 307

Fort Lauderdale, FL 33315

Brian L. Hall, Respondent

brian@bulldogmarine.biz

Rory C. Crew, Respondent

roryerews 1@gmaiJ.eom

Pedro E. Baez, Responden!

pedro@bulldogmarine.biz

Clereeee Kroha, Esq. Complainant's Counsel

Office of Aviation Enforcement and Proceedings, C-70

U.S. Department of Transportation

1200 New Jersey Avenue, S.E.

Washington, DC 20590

TEL: 202-366-9041

Samuel Podberesky, Esq., Complainant's Counsel

Assistan! General Counsel

for Aviation and Enforcement Proceedings

U.S. Department of Transportation

1200 New Jersey Avenue, S.E.

Washington, DC 20590

Docket No. OST-20 13-0065