InThe Matter Of: 

## SERVED: SEPTEMBER 18, 2015
U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS WASHINGTON, DC

DocketNo. FAA-2014-0807 PAZ AVIATION, INC. ) ) ) ) ) Case No. 2011S0190272 Respondent


### ORDERDENYING THERESPONDENT'S MOTIONSTODISMISS On May 15, 2015, the Respondent, Paz Aviation, Inc., filed its Amended Motionto Dismiss and Memorandum ofLaw ("Amended Motion"). OnJune 5, 2015, the FAA filed a single document, containing two filings: 1) the FAA's Notice ofAmended Complaint ("Amended Complaint") and; 2) the FAA's Response to Respondent's Amended Motionto Dismiss and Memorandum ofLaw ("Response"). 

### On June 19,2015, the Respondent filed a single document, containingtwo filings: 1) a Motionto Dismiss Amended Complaint ("Motion") and; 2) a Reply Memorandum Concerning Respondent's Motionto Dismiss ("Reply"). OnJuly 1, 2015, the parties convened by telephone for a second Motion Conference, and presented additional oral argument onthe Respondent's Amended Motion. On September 8, 2015, an Order Acknowledging the FAA's Amended Complaint, Deeming part ofthe Respondent's Amended MotionMoot, and Reserving OtherRequested Reliefwas filed. 

### A. INTRODUCTION The Respondent is seeking dismissal based on three arguments: 1) The FAA's prosecution ofeighteen (18) ofthe forty-eight ( 48) acts ofimproper maintenance allegedto have occurredbefore May 24, 2010 is untimely under 14 C.F.R. § 13.208(d), because the FAA failed to issue its Notice ofProposed Civil Penalty ("NPCP") within two years ofthe 18 allegedviolations; 2) The FAA's civil penalty action is untimely under 49 U.S.C. 

### §4630l(d)(7)(C), because the FAA failed to file its October 7, 2014 Complaint withintwo years ofthe alleged violations; and 3) The Respondent should be granted dismissal under the affirmative defense of laches. In response, the FAA primarily argues that: 1) The first issue is moot, because the FAA's June 5, 2015 Amended Complaint did not include the eighteen (18) acts ofimproper maintenance alleged to have occurred before May 24, 2010; 2) The FAA'sprosecution ofthe remaining thirty (30) acts ofalleged improper maintenance charged inthe Amended Complaint
was timely initiated under 49 U.S.C. § 46301(d)(7)(C), because the NPCP was issued within two years ofthe remaining thirty (30) alleged acts; and 3) The Respondent has failed to showthat the FAA inexcusably delayed in bringing the action, or that as a result ofthe delay, the respondent is prejudiced in its defense ofthe action. B. 

### DISCUSSION Because ofthe volume ofmaterials, this discussion only highlights certain matters. However, all motions, responses, memoranda oflaw, exhibits, supplemental briefs, and all relevant regulations, statutes, caselaw, and arguments have been considered. The Respondent's arguments are each identified and separately addressed. 1. The FAA'sprosecution ofeighteen (18) ofthe forty-eight (48) acts ofimproper maintenance alleged to have occurred before May 24, 2010 is untimely under 14 C.F.R. § 13.208(d), because the FAA failed to issue its Notice ofProposed Civil Penalty ("NPCP") within two years ofthe 18 allege,d_violation. 

### Issue Moot.

.'· 'l )**~** . t ··'

. Itwas undisputed that on or about May 24,2012, the FAA issued a NPCP, in which it alleged that the Respondent committed forty-eight ( 48) acts ofimproper maintenance, dating from July 29, 2009 through April27, 2011, in violation offive Federal Aviation Regulations. 1 (Compl. 1-3**~II,** 2; Am. Mot. 1.) As the full record ofthis case indicates, the Respondent and the FAA filed initial materials on the Respondent's Motion to Dismiss between January 23,2015, and March 12,

1 Specifically, 14 C.F.R. §§ 43.29a)(2), 43.13(a), 145.20l(b), 145.207(a), and 145.2Il(b). Page 2 of 132015,2 based onthe original allegations in the October 7, 2014 Complaint. Duringthe April22, 2015 Motion Conference, the parties agreed to file supplemental materials,3 which were filed betweenMay 15, 2015, and June 19, 2015 (as noted supra). As part ofthese supplemental materials, the FAA filed a June 5, 2015 Amended Complaint, in whichit struck eighteen (18) of the forty-eight (48) allegations

## contain~d in lts

## origi~al October 7, 2014 Complaint, because these 18 acts were alleged to have occurredbefore May 24, 2009-adate thatwas more thantwo years before the issuance ofthe FAA'sNPCP. (Am. Compl. 4**~II).** The FAA also reducedthe proposed civil penalty from $44,880 to $28,050. (Id at 6.) The Respondent is correct. 14 C.F.R. 

### § 13.208(d) requires the FAA to initiate a civil penalty action by issuing a NPCP no later than two years after a violation has occurred, unless the FAA can show good cause for any delay beyond two years. See also, 55 Fed. Reg. 27548, 27553 (Jul. 3, 1990) (Discussion ofFinal Rule). The FAA'sinitial prosecution ofeighteen (18) ofthe forty-eight (48) maintenance violations, alleged to have occurred before May 24, 2009, was untimely under 14 C.F.R. 

### § 13.208(d), because the FAA had failed to issue its NPCP withintwo years ofthose 18 alleged violations. The FAA did not allege good cause for .the·delay. Instead, itremovedthose 18 alleged '

. violations when it filed its June 5, 2015::AmendedtComplaint. It also acknowledged in its June 5, 2015 Response that 14 C.F.R. § 13.208(d) required filing a NPCP "withintwo years ofthe date ofviolation." (Resp. 7.) Because the FAA has filed an Amended Complaint and removedthe eighteen (18) maintenance violations that ithad alleged had occurred before May 24, 2009, the Respondent's Motion to Dismiss onthis issue is moot.

2 See March 6, 2015 Order Accepting Withdrawal ofRespondent's Motion to Dismiss [FAA's Responsive Brief], Reconfirming OtherDeadlines, and Providing**?irec,ti~fl:~o**

## {!le.tarties.
3 See April23, 2015 Order Setting Motion Conference and Deadlines for Supplemental Filings. Page 3 of132. The FAA's civil penalty action is untimely under 49 U.S.C. 

### §46301(d)(7)(C), because the FAA failed to file its October 7, 2014 Complaint withintwo years ofthe alleged violations as required by the statute. 

### Not Proven. As noted above, the parties agreed that 14 C.F.R. 

### § 13.208(d) required thatthe FAA file a NPCP withintwo years ofthe date ofviolation. However, given the arguments ofthe parties on this second issue, a briefdiscussion about the history ofthe FAA's adoption ofthetwo year limitation period may be helpful.4 

### a) BriefHistory ofthe

### FAA'~··Tw~r"Y.ealStatute ofLimitations Whenthe FAA promulgated the Rules ofPractice in 1990, the only statute oflimitations applicable to FAA civil penalty proceedings was found at 28 U.S.C. 

### § 2462, whichprovided for
a five (5) year limitations period: Except as otherwise provided by Act ofCongress, an action, suit or proceeding for the enforcement ofany civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless 

### commencedwithin five years from the date when the claim first accrued if, within the same period, the offender orthe property is found within the United States in order that proper service may be made thereon. 28 U.S.C. 

### § 2462 (1990) (emphasis added). In 1990, the FAA examinedthis five-year statute oflimitations when·it discussed the adoption ofits Rules ofPractice. After consideration ofpublic comments, the FAA optedto utilize a shortertime than five

### years,~~**ad~P{~~{,;~~o** (2) year limitations period. 55 Fed. Reg. 27548, 27553 (July 3, 1990) (Discussion ofFinal Rule) (codified at 14 C.F.R. § 13.208(d)). In adopting this self-imposed two (2) year limitations period, the FAA made clearthat ''the critical event" to commence an action "whichmustbetakenby the agency" was to issue "anotice of proposed civil penalty withintwo years from the date ofthe alleged violations." /d. Two years later, in 1992, Congress incorporated the FAA's self-imposedtwo (2) year limitations period into the organic statute by amending section 901(a)(3) ofthe Federal Aviation Act of 1958 (49 U.S.C. 

### § 1471(a)(3)) to provide in part: "Except for good cause, a civil penalty

4

.A more detailed discussion ofthe FAA'stwo-year limitation period can also be found in In theMatter of MississippiAirExpress, LLC, FAA-2014-0866, Order Granting the Respondent's Motion to Dismiss Action (July 22, 2015). Page 4of13action shall not be initiated

... after 2 years from the date the violation occurred." FAA Civil PenaltyAdministrativeAssessmentActof 1992, Pub. L. 102-345, 

### § 2(a) (Aug. 26, 1992) (codified at 49 U.S.C. § 1471(a)(3)(E)(iii)) (efupl}aiis added). Two years later, in 1994, Congress revised and recodified this statute as 49 U.S.C. 

### §46301(d)(7)(C). (Revision ofTitle 49, United States CodeAnnotated, "Transportation, " Pub. L. 103-272, § 1 (Jul. 5, 1994) Thus, in 1990, the FAA self-adopted a shorter two year limitations period in 14 C.F.R. 

### § 13.208(d), prior to the enactment ofthe enabling statute. Two years later, in 1992, Congress enacted a two-year statute oflimitations applicable to FAA civil proceedings. 49 U.S.C. § 46301(d)(7)(C) (formerly 49 U.S.C. § 1471(a)(3)(E)(iii)). As noted above, the parties agreedthat 14 C.P.R. § 13.208(d), which implements 49 U.S.C. § 46301(d)(7)(C), required that the FAA file
a NPCP within two years ofthe date ofviolation. b) 

### 49 U.S.C. 

### § 4630l(d)(7)(C) is Applicable to Enforcement Cases In support ofits argument for dismissal, the Respondent primarily relied onthree cases decided and dismissed as untimely, in 2005 and 2006, by U.S. Administrative LawJudge Isaac !"

. _,,,(, L

...**1'\l~,q.:''·:** Benkin. In bothAerocomp, Docket No.· F**AA~2005-21**064 (Sept. 29, 2005), andAviation Brake Service, Inc., DocketNo. FAA-2005-22213 (Mar. 9, 2006), Judge Benkin found that the five (5) year statute oflimitations in 28 U.S.C. § 2462 applied to civil penalty actions. He also found that 28 U.S.C. 

### § 2462 required dismissal ofan FAA complaint filed more than five years afterthe alleged charges, regardless ofwhen the FAA had previously issued its NPCP. Aerocomp, DocketNo. FAA-2205-21064 at 5-6; Aviation Brake, Docket No. FAA-2005-22213 at 8-12. In In the Matter of Joseph Karl, DocketNo. FAA-2005-22889 (Sept. 19, 2006), Judge Benkin explained that there were two distinct time limitations applicable to FAA civil penalty proceedings, specifically: 1) pursuant 14 C.P.R.§ 13.208(d), the FAAwas required by its own regulation to file a complaint in a civil penalty action within two (2) years ofissuing a NPCP; and 2) 49 U.S.C. § 2462 was applicable, and statutorily required that the FAA's complaintbe filed no later than five (5) years after the violation occurred. 

### !d. at 2. The parties did notpursue appeal in any ofthese three cases. The Respondent's reliance on these three case decisions is understandable, but erroneous. For example, as part ofhis rationale for dismissal, Judge Benkin mistakenly applied the five year Page 5 of 13limitationperiod of28 U.S.C. §2462 to these administrative civil penalty proceedings, without recognizing that a more specific statute, 49 U.S.C. 

### §46301(d)(7)(C), whichrequired a two-year time limitation, had been adopted and should be applied. As explained earlier herein, in 1992, Congress incorporated the FAA'stwo (2) year limitations period into its statute by amending section 901(a)(3) ofthe Federal Aviation Act of 1958 (49 U.S.C. § 1471(a)(3)). FAA Civil PenaltyAdministrativeAssessmentAct of 1992, Pub. 

### L. 102-345, 

### § 2(a) (Aug. 26, 1992) (codified at49 U.S.C. § 1471(a)(3)(E)(iii)). In 1994, this statute wasrevised (NB: revisions not material to the issue herein) and recodified as 49 U.S.C. §46301(d)(7)(C). Revision ofTitle 49, UnitedStates CodeAnnotated, "Transportatiorz, ·:Pub. 

### L. 103-272, § 1 (Jul. 5, 1994). ' , .... , Thus, the two-year statute oflimitations provided by 49 U.S.C. §46301(d)(7)(C) specifically applies to the administrative enforcement proceedings, and the five yearlimitations period under 28 U.S.C. § 2462 does not apply. 5 

### c) A 

### Civil Penalty Case is "Initiated"with the Filing ofa NPCP While the Respondent acknowledged that 49 U.S.C. 

### §46301(d)(7)(C) wasthe applicable statute oflimitations in these administrative proceedings, it still urged this Courtto adopt Judge Benkin's holding and rationale in theAerocomp,AviationBrake, and Karl cases, and find that "the two-year time limit set forth in 49 USCA § 46301(d)(7)(C) also requires the [FAA's] Complaintto be filed within two years ofthe alleged incidents giving rise to the alleged violations." (Am. Mot. 3.)
In pursuing its request for dismissal,**t4,~ Ret~pondent**  essentially argued that the language ofthe FAA's implementingregulation (14 C.F.R. 

### ·§ 13.208(d)) was not a reasonable interpretation ofCongress's enabling statute (49 U.S.C. § 46301(d)(7)(C)). In other words, the language of 14 C.F.R. § 13.208(d), which states that an alleged violation may notbe charged "morethan 2 years" before an agency attorney issues a "notice ofproposed civil penalty," does not reasonably interpret the language of49 U.S.C. 

### §46301(d)(7)(C}, which states that a case

5 It should be noted, however, that the five year limitations period in 28 U.S.C. § 2462 still applies to FAA civil penalty actions for which the U.S. district courts have exclusivejurisdiction under 49 U.S.C. § 46301(d)(4) and 14 C.F.R. § 13.16(a). See 49 U.S.C. § 4630l(d)(7)(C) (making two-year limitations period applicable only to actions "involving a penalty under this paragraph[.]"
Page 6 of 13**if,~},<\~.<.** ' -tfpt •,'"may not be initiated later than 2 years after**~he viq1~tion**  occurs." Accordingto the Respondent, '. : ·:·"-· i..!-,d'' the initiation ofa case required the issuance ofa complaint, not a NPCP. While the Respondent's argument, which followed the rationale provided by Judge Benkin in theAerocomp,Aviation Brake, and Karl cases, was understandable, it was mistaken. For example, when the Rules ofPractice were adopted in 1990, the Administrator explained that the "initiation" ofthe civil enforcement action was triggered bythe issuance ofa NPCP. See 55 Fed. Reg. 27548,27556 (Jul. 3, 1990) (Discussion ofFinal Rule) (''the FAAhas always considered legal enforcement actionto be initiated with the issuance ofa notice of proposed civil penalty.") After the enactment ofthe enabling statute in 1992, the FAA Administrator has consistently interpreted the word "initiated" in 49 U.S.C. § 46301(d)(7)(C) to mean the issuance ofa NPCP, not the issuance ofa complaint. See Everson, FAA OrderNo. 2004-5 at 2 (Sept. 22, 2004); RoyalAvionics Systems, Inc., FAA OrderNo. 2002-6 at 7-8 (Apr. 16, 2002); High Exposure, Inc., FAA Order No. 2003-7 at 8 (Sept. 12, 2003). Thus, the NPCP has long been established'as'the "initiating" document in FAA civil enforcement proceedings, in part because under the FAA Rules ofPractice, the complaint is filed
as a responsive document, wholly dependent on a respondent requesting a hearing. 

### See 14 C.F.R. § 13.16(i) ("Ifthe person charged with a violation requests a hearing

... the original complaint shall be filed with the hearing docket clerk and a copy shall be sentto the person requesting the hearing."); 14 C.F.R. 

### § 13.208(a) ("The agency attorney shall file

... the complaint withthe hearing docket clerk

... not later than 20 days after receipt by the agency attorney ofa request for hearing.") It should be noted that in the Aerocomp,Aviation Brake, and Karl cases, Judge Benkin warned that failing to "initiate" a case by filing a complaint created the risk ofdelayed adjudication. This concern is certainly legitimate in other civil cases, which may only be "initiated" by the filing ofa complaint. However,**i~itiating** a civH penalty action with a NPCP, instead ofa complaint, does not create the delayed

## ~~sk envisioned by Judge Benkin. As noted above, after the issuance ofthe NPCP in a civil penaltyaction, the "legal spur" that triggers the FAA's filing ofa complaint is the respondent's request for hearing. Therefore, the respondent has control over part ofthe pace ofthe litigation. The respondent may file this Page 7 of 13request for hearing at various stages ofthe civil penalty action: e.g., immediately following the issuance ofa NPCP, 14 C.P.R.§ 13.16(±)(3); or following an informal conference to discuss the allegations contained in the NPCP and the issuance ofa final notice ofproposed civil penalty, 14 C.F.R. 

### § 13.16(g)(ii); or at some othertime as long as the right to a hearing is properlypreserved through compliance with 14 C.P.R. § 13.16, see Woolpert LLC, DocketNo. FAA-2015-0211- 0006, Order Denying the FAA's Motionto Dismiss (June 3, 2015). Thus, while the FAA controls the initiation ofthe civil penalty actionthrough issuance of the NPCP (which has a two-year**limita~ions p~riod)'** **,the** respondent's right to receipt ofa ' ',i ,..,. :,_.,:.ll ·'· .' 1 complaint and an opportunity for a hearing is contro'lled and protc;:cted through the respondent's
own actions. 6 As a result, the issuance ofthe NPCP, which is entirely underthe control ofthe FAA, is the triggering factor for the FAA's compliance withthe two year limitations period. The two (2) year statute oflimitations runs from the date ofthe alleged violationto the date ofthe NPCP. 14 C.P.R.§ 13.16(±). Thus, 14 C.P.R.§ 13.208(d) reasonably interprets the language of 49 U.S.C. § 46301(d)(7)(C) by requiring the FAA "to initiate" a civil penalty actionby issuing a NPCP, not a complaint, no later than two years after the violation occurred, unless the FAA can show good cause for any delay beyond two years. 

### d) 49 U.S.C. 

### § 4630l(d)(7)(C) Does notRequire theFAA to Issue a Complaint WithinTwo Years ofthe Alleged Violation The Respondent's positionthat 49 U.S.C. § 46301(d)(7)(C) and 14 C.P.R.§ 13.208(d) place different requirements onthe FAA is rejected))(Am. Mot. 2, 6; Mot. & Reply 2.) Section 't

. " '. j

. I 13.208(d) and 49 U.S.C. § 46301(d)(7)(C)

### ~epres~nt'the rare situationwhere a regulation precedes the statute and Congress later incorporates the agency practice into the statute. As discussed supra, Congress incorporated the FAA's earlier adopted two (2) year limitations period into its organic statute in 1992 by amending section 901(a)(3) oftheFederal Aviation Act of 1958 (49 U.S.C. 

### § 1471(a)(3)). FAA Civil PenaltyAdministrativeAssessmentActof 1992,

6 If, as the Respondent argues, a civil penalty action is initiated only when the FAA files a complaint, then multiple situations under the current regulations will arise where a respondent is liable for a civil penalty when the FAA has not "initiated" a civil penalty action by filing a complaint. For example, pursuantto 14 C.P.R. § 13.16(d), an order assessing civil penalty may be issued ifa charged respondent does not request a hearing within 15 days afterreceipt ofa final notice ofproposed civil penalty. Because the charged respondent does not request a hearing, the FAA would not file a complaint, butthe respondent would nonetheless be liable for the civil penalty charged in the NPCP and FNPCP. Page 8 of13

· .. •iPub. 

### L. 102-345, 

### §2(a) (Aug. 26, 1992) (codified,&t49 U.S.C. § 1471(a)(3)(E)(iii)). Two years later, in 1994, the organic statue was revised and recodified as 49 U.S.C. § 46301(d)(7)(C). Revision ofTitle 49, UnitedStates Code Annotated, "Transportation," Pub. L. 103-272, § 1 (Jul. 5, 1994). Agency regulations implement statutes. 14 C.F.R. § 13.208(d) implements 49 U.S.C. § 46301(d)(7)(C). In promulgating implementing regulations, an agency's interpretation ofthe organic statute is entitled to deference. Prior to the 1992 statutory enactment ofthe two year limitations period, the Administrator interpreted the term "commenced" contained in 28 U.S.C. § 2462 to mean the issuance ofa NPCP by an agency attorney. See 55 Fed. Reg. 27548, 27552 (Discussion ofFinal Rule). When Congress chose to codify the FAA's two (2) year limitations period in 1992, it did so without referring to, or changing, the FAA's interpretation of "commenced" in the statute. Since 1992, as noted supra, the FAA has consistently interpreted the word "initiated" in 49 U.S.C. § 46301(d)(7)(C).to mean the commencement ofthe action by ) .,..Ht.

.. d,**<~·i- ·.~.**  issuance ofa NPCP, not the issuance ofa complaint. Therefore, the FAA meets the requirements ofboth49 U.S.C. §46301(d)(7)(C) and 14 C.F.R. § 13.208(d) when it issues aNPCp no later than two years after the alleged violations occurred. See Werle, FAA OrderNo. 97-20, at 7-8 (May 23, 1997); Van Guard, DocketNo. CP01S00029, 2002 WL 34359278, at *4 (May 7, 2002). Thus, contrary to the Respondent's arguments, the FAA's implementing regulation (14 C.F.R. 

### § 13.208(d)), appears to be a reasonable interpretation ofCongress's enabling statute (49 U.S.C. § 4630l(d)(7)(C)), and does not require the FAA to issue both aNPCP and a complaint within two years ofthe alleged violation(s). 3. The Respondent shouldbe granted dismissal, under the affirmative defense oflaches, because ofthe prejudice to its case because ofthe passage oftime. Not Proven

.

. •. ,h. a) Overview ofthe Defense of**La~hes** lniCivii'Penalty Cases The defense oflaches is an equitable defense.7Laches is not generally available as a defense against the United States when it is acting in its sovereign capacity to enforce a public

7 A similar overview on the FAA's defense oflaches may also be found in MississippiAirExpress, LLC, FAA2014-0866, Order Granting the Respondent's Motion to Dismiss Action (July 22, 2015). Page 9 of 13right or protect the public interest. 8See, e.g., St. John's General Hospital, 875 F.2d at 1071; Popovich, 820 F.2d at 136 (5th Cir.1987), cert. denied, 484 U.S. 976 (1987). Nevertheless, when the FAA adopted the Rules ofPractice in 1990, the FAA decided that a limited laches defense in civil penalty proceedings should be allowed: While not unmindful ofthis [laches] case law, considerations ofdue process, and a fair construction ofsection 555 ofthe Administrative Procedure Act, lead the agency to allow for a showing ofactual prejudice in an appropriate case.

1,t
..**'f~:** '· t.,.,.,.'\.:·:/•t \ 55 Fed. Reg. 27548,27556 (Jul. 3, 1990) (Discussion ofFinal Rule). The FAA's willingness to allow alaches defense appeared to be a response to concerns raised by many public commentators, who urged expediency in FAA actions, and recommended that the FAA utilize a much shorter, six-month time period to initiate safety enforcement actions ·withthe filing ofa complaint. 55 Fed. Reg. 27548, 27555 (Jul. 3, 1990) (Discussion ofFinal Rule). The FAA declined to adopt a six-month time limit for initiating an action, and also declined to utilize the two year limitations period as a deadline for filing a complaint. 9 However, the FAA acknowledged that in "rare" cases, agency delay in prosecuting an action couldresult in "actual prejudice" to a respondent's case. 

### !d. Therefore, in such cases, dismissal ofthe action, or a portion ofthe action, could be requested: [I]t is possible that a respondent would be unable adequately to defend a civil penalty action because documents or.witne§ses become unavailable due solely to the agency's unreasonable or excessivk''dMCJ.y\in initiating a case. In such a case, it is possible that a respondent could make such a showing ofactual prejudice and petition

...to dismiss

...on the basis ofsuch prejudice. 

### !d. at 27556 (emphasis added).

8 The Federal circuits are split as to whether laches is applicable to any suits at law that are authorized under a legislative statute oflimitations. Compare Lyons Partnership, L.P v. Morris Costumes, Inc., 243 F.3d 789,797 (4th Cir. 2001) (in federal copyright suit laches is not a defense to actions at law), and Ivani Contracting Corp. v. City of New York, 103 F.3d 257,260 (2d Cir. 1997) ("when a plaintiffbrings a federal statutory claim seeking legal relief, laches cannot barthat claim, at least where the statute contains an express limitation period within which the action is timely"), with Chirco v. Crosswinds Communities, Inc., 474 F.3d 227,234 (6th Cir. 2007) (laches can apply equally to claims at Jaw and equity in federal copyright suit).

9 In adopting the Rules ofPractice, the FAA explained that requiring the complaint to be filed within the two-year period would eliminate the FAA's ability to engage in flexible negotiations and communications afterthe case was initiated. (/d.) Itwould also be detrimental to the Respondent, ifthe agency "issue[d) a complaint first and ask[ed] questions later." 55 Fed. Reg. 27548,27556 (July 3, 1990) (Discussion ofFinal Rule).**:~:i.l·)** ·. b'\· t
.. ·.:) Page 10of 13**~~** .ls In its 1990 discussion ofwhen the

## def~n·s{~rlaches could be raised, the FAAdid not distinguish between actions brought by the FAA within the two-year limitations period versus outside the two-year limitations period. Id at 27553-56, Thus, the

### lach~s defense mayberaised by a respondent in civil penalty cases where the FAA has initiated the action within the two year limitations period, or in those rare cases where the FAA initiates the action outside the two year limitations period and has proved good cause for its delay in initiating the case outside the limitations period. 

### b) Laches: Burden ofProofand Elements A party that raises the affirmative defense oflaches in a civil penalty proceeding bears the burden ofproof. 14 C.P.R. § 13.225(c). Laches requires the respondent to make a showing of "actual prejudice" to the defense ofits case. 55 Fed. Reg. 27548, 27553-56 (July 3, 1990) (Discussion ofFinal Rule). The respondent's**proo~pfprejudice** must showthat itis "unableto adequately defend a civil penalty actiortL" (SS.Fed;.Reg. 27556, (Jul. 3, 1990) (Discussion of Final Rule). See also, Carroll, FAA Order 90-21 (Aug. 16, 1990) at 3 (the respondent must show "undue prejudice") (citingArmco, Inc. v. Armco BurglarAlarm Co., Inc., 693 F.2d 1155, 1161 (5th Cir. 1982) and GullAirborne Instruments, Inc. v. Weinberger, 694 F.2d 838, 843 (D.C. Cir. 1982). There are two primary elements in a laches defense: 1) "inexcusable delay" bythe FAA in bringing the claim; and 2) "undue prejudice to the otherparty resulting from that delay." Carroll, FAA Order No. 90-21, at 3; See National R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 121-22 (2002) ("a laches defense,[] bars a plaintifffrom maintaining a suit ifhe unreasonably delays in filing a suit andas a resultharms the defendant). 

### c) RespondentDid NotMeetIts Burden ofProofUnderLaches The Respondent's arguments that the FAA engaged in inexcusable delay in initiating the civil penalty action, and that this delay was the**sol~,reason** for the Respondent's loss ofevidence,
was unpersuasive. First, as discussed above, the Respondent is mistaken thatthe FAA "failedto bringthis action within the requirements of49 USCA §46301([d])(7)(C)" and that the FAA "delay[ed] [] over four years in bringing this matter to prosecution." (Am. Mot. 6.) In fact, the instant civil penalty action was initiated by the FAA's issuance ofthe NPCP on May 24, 2012-withintwo Page 11 of13(2) years ofthe thirty (30) acts ofimproper maintenance alleged in the FAA'sJune 5, 2015 Amended Complaint. The FAA'sprosecution ofthe thirty (30) acts within the regulatory and statutory limitations period, without any proofofdilatory or unreasonable conduct, does not demonstrate the "inexcusable delay" element in a laches defense. Second, the Respondent failed to prove the element of"undueprejudice." Although Mr. Allentestified that two primary witnesses have been "lost" (Am. Mot., Exh. A, 2), this testimony is not sufficient to establish prejudice under

## alaches'defense. A "lost" witness might be found, with reasonable diligence. A respondent asserting a laches defense in a FAA civil enforcement action must first demonstrate that it acted promptly to gather and preserve evidence after notice ofthe action, and that such evidence is no longer available solely because oftheFAA's delay. This concept was briefly discussed by the FAA Administrator during the adoption ofthe Rules ofPractice. As part ofthis discussion, the Administratorpointed outthat anFAALetter of Investigation ("LOI") typically preceded the NPCP and served to notify the respondentthat evidence should be collected and preserved. 55 Fed. Reg. 27548, 27556 (July 3, 1990) (Discussion ofFinal Rule). While the Administrator recognized that an LOI didnot replace the FAA's obligation to timely initiate the action by filing a NPCP, receipt ofthe LOI did "reduce

... the chance" that a respondent would be "prejudicedby delay, especially where legal enforcement action is initiated within two years." 

### !d

.. In the instant case, the

## Respond~nt did

## no~'ptovide any information about what efforts it has made (ifany) to obtain and preserve evidence between June 23,2011, the date thatthe FAA issued its LOI (Am. Mot. 1; Resp. 2)- and May 24, 2012, the date thatthe civil penalty action
was initiated with a NPCP. Given the lack ofinformation onthis issue, andbecause the Respondent has failed to satisfy the first element oflaches, further discussion regarding its assertion ofundue prejudice under the second element oflaches is unnecessary atthis time.


### C. CONCLUSION Based onthe foregoing and after having reviewed the case file, all pleadings and motions, all relevant caselaw, statutes, regulations, rules, and authority, and being fully advised;

.:r.r Page 12of13IT IS HEREBY ORDERED: 1. The Respondent's May 15,2015 Amended Motion to Dismiss is denied. 2. The Respondent's June 19,2015 Motion to Dismiss Amended Complaint is denied. 3. A separate order will issue shortly, setting a date for the parties to convene bytelephone for a Litigation Scheduling Conference.

Attachment: Service List

Page 13 of 13

### SERVICE LIST- BY U.S. MAIL ORIGINAL & 

### ONE COPY Federal Aviation Administration 800 Independence Avenue, S.W. Washington, DC 20591 Attention: Hearing Docket Clerk, AGC-430 Wilbur Wright Building-Suite 2Wl00010



### Mr. William Vines Complainant's Counsel 

### Federal Aviation Administration Office ofthe Regional Counsel, AS0-7 Southern Region 1701 Columbia Avenue College Park, GA 30337 TEL: 404-305-5200 FAJ(: 404-305-5223 

### ONE COPY DocketNo. FAA-2014-0807 (Civil PenaltyAction)

Mr. David M. McDonald Respondent's Counsel 

### McDonald & 

### McDonald Attorneys at Law Paz Aviation Inc., Respondent 

### c/o Jay Allen, President
P.O. Box 669122 Miami, FL 33166-9428 TEL: 305-643-5313 FAJ(: 305-643-4990 Judge J.E. Sullivan U.S. Administrative LawJudge 

### Office ofHearings, M-20 U.S. Department ofTransportation 1200 NewJersey Avenue, S.E. (Ell-310) Washington, DC 20590 TEL: 202-366-6941 FAJ(: 202-366-7536 7455 W 2nd Court Hialeah, FL 33014-4301

10 Service was by U.S. Mail. For service in person orby expedited courier, use the following address: Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur Wright Building-Suite2Wl000, Washington, DC 20591; Attention: Hearing Docket Clerk, AGC-430.