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• IN THE MATTER OF: COVERMARK USA +"1 )' 1/, Docket No. FAA-2011-0488

Conference Room 

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Heritage Reporting Corporation 1220 L Street, N.W., Suite 600 Washington, D.C. 20005-4018 Thursday, May 31, 2012 The parties met, pursuant to notice of the Agency,

at 1:33 p.m. BEFORE: HONORABLE J.E. SULLIVAN Administrative Law Judge

APPEARANCES: (Via Telephone) For the Petitioner: GERALD ELLIS, Esquire Federal AviationAdministration Office of the Regional Counsel SouthernRegion P.O. Box 20636 Atlanta, Georgia 30320 (404) 305-5200 For the Respondent: KEITH ROBERTS, Esquire Roberts Proprietaries, Inc. 180 West 80th Street New York, New York 10024 (917) 441-8642 

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## 2012 

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# • (1:33 p.m.) JUDGE SULLIVAN: We're on the record in the matter of Covermark USA. This is docket number FAA2011-0488. Today is Thursday, May 31, 2012, and the parties have convened for a litigation scheduling conference. The Federal AviationAdministrationwhich I'll hereinafter refer to as the FAA is representedby its attorney, GeraldA. Ellis. Covermark USA is representedby its president, Keith Roberts, who also is an attorney. Also present with the Court at the office of hearings are two law student interns, MelissaNgo and also Mark Soto. They are appearing as observers only. Good afternoon, counsel. MR. ELLIS: Good afternoon. MR. ROBERTS: Good afternoon. JUDGE SULLIVAN: I'll simply note that we have a littlebit of history for the record already. In essence, there was the April 2, 2012 order deeming allegations of safetyviolation admitted and granting/denying other relief. And as the file record notes in this particularorder, the FAA's motion to deem allegations admittedwas granted. Respondent's motion for a Heritage Reporting Corporation (202) 628-4888 2

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### decisionwaiving the civilpenaltyof $10,000 was 2 denied. And the matterremains set for hearing on the 3 issue of the civilpenaltywhichhas beenrecommended 4 by the FAA tobe $10,000. 5 In addition, onApril 3, 2012, there was an 6 order settingRule 16 litigation scheduling conference 7 anddirecting Rule 26(f) planning and submission. As 8 part of that particularorder, theparties were 9 directedto contact eachother andprivatelyconduct a 10 Rule 26(f) planningmeetingand then submit a joint 11 proposeddiscoveryplanonorbefore Thursday, May 12 26th, 2012

. 13 I'll note that onMay 30, 2012 the Court 14 receivedthe FAA'sproposedprocedural schedule in 15 which it statedthat ithada copyof that schedule to 16 the Respondent andhadreceivedno response. So let's 17 chat a littlebit about that. Have the two of youhad 18 the chance tomeetprivatelypursuant to the Court's 19 order anddiscuss this case? And I'll start withyou, 20 Mr. Ellis. 21 MR. ELLIS: Yes, as is the usual inthese 22 cases, the Respondent hadanopportunity to request 23 anddidhave an informal conference inthe case. 24 25 JUDGE SULLIVAN: Well, I'mtalking about MR. ELLIS: And we have had

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### JUDGE SULLIVAN:

-- I'mtalking

-- 2 

### MR. ELLIS:

-- sorry. 3 

### JUDGE SULLIVAN: since the Court issued 4 itsApril 3, 2012 order, have you conferredwithMr. 5 Roberts privately for a Rule 26(f) conference? I'm 6 not talking about what's happened in thepastprior to 7 the office of hearing being involved. I'mtalking 8 about what has happened since I issued the order 9 directingyou to conferwith eachother. 10 MR. ELLIS: We discussed settlingthe case. 11 

### JUDGE SULLIVAN: Okay. Andwhen didyou 12 have that discussion, sir? 13 MR. ROBERTS: Thismorning. 14 MR. ELLIS: We hadone thismorning, andwe 15 hadoneprior to that onApril 12th. 16 JUDGE SULLIVAN: Okay. April 12th

-- okay. 17 Letme askyou this then

-- well, letme go toyou, 18 Mr. Roberts. Was there anyparticularreason that you 19 didnot conferwithMr. Ellis tohave a joint 20 discoveryplanproposed? 21 MR. ROBERTS: Yes. I don't think there is 22 anything tobe discovered, to tellyou the truth. 23 There are no facts indisputehere. The whole dispute 24 revolves aroundwhether theproposedpenaltyof 25 $10,000 makes any sense inthis kindof a case. We Heritage Reporting Corporation (202) 628-4888 4

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# • have no disagreement as to the facts. JUDGE SULLIVAN: Well, you wouldn't because I have already admitted the facts. MR. ROBERTS: Exactly.

(Laughter.) JUDGE SULLIVAN: Now. MR. ROBERTS: So discovery JUDGE SULLIVAN: Well, in the future

-- MR. ROBERTS: doesn't seem tobe part of theprocess. JUDGE SULLIVAN: well, in the future, when the Court directs you to confer with opposing counsel or the opposing representative, you shouldbe doing that and, as counsel, you shouldknow that. And then if there are no discovery issues thatyou think

are of merit, you shouldbe reporting that jointlyto the MR. ROBERTS: I'm sorry. I omitted that. I apologize.JUDGE SULLIVAN: Okay. Thankyou. Itmay be that you know something that I don't andyou want to keepme apprised as opposed to simply ignoring the Court's directive. That's never a promising start. MR. ROBERTS: Okay. JUDGE SULLIVAN: Okay. Let's talk, then, Heritage Reporting Corporation (202) 628-4888 5

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### about the schedule that's beenproposedby the FAA. 2 There's beena very abbreviateddiscovery schedule as 3 filedby the Complainant's proposedprocedural 4 schedule. Mr. Ellis, you didn't indicate inhere any 5 particularmotion, or dispositive motion, or any 6 particular time for trial. Have you andMr. Roberts 7 discussed that? 8 

### MR. ELLIS: No. 9 

### JUDGE SULLIVAN: Okay. Is there any 10 particularreasonwhyyouhave not discussed it? 11 

### MR. ELLIS: I'dhave to sayno other than 12 the fact that I do echo what Mr. Roberts has said. We 13 

### have beendiscussing settlement of the case, and 14 there's notmuch to discuss in terms of discovery. 15 But any date that for whicha hearing is set is 16 something I don't think itwouldbe any trouble to 17 figure out. 18 

### MR. ROBERTS: YourHonor, I'm always happy 19 to talk, but I think I'mjust as happy to submit our 20 case ina brief. 21 JUDGE SULLIVAN: Okay. 22 MR. ROBERTS: Andwithout having submitted 23 everybody to a hearing. 24 25 

### well. MR. ELLIS: That's fine with the agency as

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### JUDGE SULLIVAN: And that's something that 2 the two of you should discuss privately as part of 3 your C.R. 26(f) planningmeeting. This maybe new to 4 the bothof you, but essentially, whenyou look at 5 

### C.R. 26(f)

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### MR. ELLIS: When you say C.R. 26(f), do you 7 mean the Federal Rules of Civil Procedure? 8 

### JUDGE SULLIVAN: I do. I do. And do you 9 bothhave that out in front of you? 10 MR. ELLIS: No, YourHonor. 11 

### MR. ROBERTS: No. 12 MR. ELLIS: You're the onlyJudge who's ever 13 

### cited that tome. 14 JUDGE SULLIVAN: Really? 15 

### MR. ELLIS: Yes. 16 JUDGE SULLIVAN: Thenwelcome tomy world of 17 litigation. I generallyutilize the Civil Rules very, 18 very frequently ona dailybasis. And I think that 19 they are a natural supplement to the C.F.R.s that 20 basicallygive rawguidance to the parties about how 21 to navigate through the shoals of rockywaters in 22 litigation. But they alsoprovide a great deal of 23 

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### helpful and comfortingguidance to us all which is why I citedthem liberally in the order that youboth receivedregarding the C.R. 16 conference whichwe're Heritage Reporting Corporation (202) 628-4888 7

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# • having today and the C.R. 26(F) conference which I had hoped that you would have no later than last week. MR. ELLIS: I see. JUDGE SULLIVAN: You'll also see, counsel, my citing various Civil Rules in the future, so if you don't have a rulebook, I wouldhighly recommend that you get one. MR. ELLIS: Very good. The last one I had

was a long time ago. Here we are. JUDGE SULLIVAN: Well, if you look at C.R. 26

-- MR. ELLIS: Yes. I have it in front of me. JUDGE SULLIVAN: it talks about all the different things that you'dbe discussing with opposing counsel or opposing representatives

-- regarding the management andprocessing of the case. That could include, although it is not limited to, trying a case on the record. And I'mperfectlyhappy to adopt that type of request if bothparties had talked about it and feel comfortable with it. I'm less likely to do it if one party is uncomfortable. Obviously, this is a little different than, say, making a motion for summaryjudgment where the presumption goes to the nonmoving party. MR. ELLIS: Right. Heritage Reporting Corporation (202) 628-4888 8

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# • JUDGE SULLIVAN: Althoughyou could certainlymake motions for summaryjudgment as well. It just depends onyour comfort level, and of course the time you have to take on this particular case. That leads me back to you, Mr. Roberts. I know that you don't practice law as a general basis because you're running a company. What's your comfort level in terms of utilizing written documents instead of having a live hearing? MR. ROBERTS: I'mperfectly comfortable at doing that. I'm a writer. I've publishedbooks, and I feel capable of sayingwhat I want to say inwriting better than

-- more than I am in doing so orally. So that's perfectly acceptable to me. I also think it would save everybody time and trouble. And really, given the nature of this

case inwhich the onlymatterbeing contested is essentially a legal issue, I think it's appropriate. JUDGE SULLIVAN: Well, whenyou sayyou think it's a legal issue, what are you talking about because we're really talking about a combination of fact and law inmy opinion. MR. ROBERTS: Well, it's true. We are. But when I say it's a legal issue, I'm saying that the question that I am raising is the suitabilityof the Heritage Reporting Corporation (202) 628-4888 9

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# • 10 $10,000 penalty and the lack of any -- it's essentially, I'm essentially claiming it's arbitrary, number one. Number two, I'm saying that the amount is based on a procedure that was used as kind of accumulative charges all about the same action, like in a Plaintiff's brief in a contract or a tort case where you come at the same set of facts from 10 different legal theories except in a contractor tort

case of course the award is just an awardbasedon one amount. You don't cumulate that same amount for the

seven different theories that you imaginedup to put in the brief and come up with seven times the amount asked which is reallywhat's happening here, and that's what I'm contesting. In addition to that of

course I'm going to argue and here the facts do enter inbut I don't think there's a dispute betweenus. I'll tell youwhat the company's sales are, its size, its profitability, and so on. I think I've already submitted information about that, and I'mnot going to go beyond that. JUDGE SULLIVAN: According to the notice of complaint that I have before me that Mr. Ellis signed

on June 3, 2011, it asserts inparagraph 19 which is Heritage Reporting Corporation (202) 628-4888

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• 11 1 essentiallyonpage 6 of the notice of complaint, 2 which is the lastpage of the notice of complaint, 3 that the Respondent is subject to a civilpenaltynot 4 lower than $250 nor greater than $50,000. Assuming 5 that's true for the sake of this discussion, itmeans 6 that we're looking at a penalty scope that couldbe 7 below 10,000 or it couldbe above orhigher than 8 $10,000 depending onwhat the facts are. 9 

### MR. ROBERTS: Yes. 10 JUDGE SULLIVAN: Okay. So there's also the 11 burdenof proof which is the civilburdenof bya 12 preponderance. So essentiallythe FAA wouldhave to 13 

### make a prima facie showingbya preponderance of the 14 evidence that $10,000 as theyrequested is an 15 appropriate amount. And thenyou inresponse to that 16 prima facie case, assuming that it'smade, wouldneed 17 to showdifferently. I don't know what all the things 18 have went onwithinthe administrative process. 19 All I know is what I have here at the Office 20 of Hearings, which is the notice of complaint, the 21 Respondent's request for hearing, and then the 22 Complainant'smotion to deem allegations admitted, as 23 well as some of the otherdocuments that were filed 24 subsequent to that. As a result, whateveryouhave 25 filed during the administrativeprocess wouldhave to Heritage Reporting Corporation (202) 628-4888

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# • 12 be refiled and reargued withme, and I want to make

sure that you understand that. MR. ROBERTS: Yes, I do. JUDGE SULLIVAN: Okay. In addition, I'm required, unless the parties stipulate otherwise, to holdyou to an evidentiary admissibility standard. So that if you have material that you want to present, it must meet the minimum requirements of admissible evidence. Unless, as I mentionedbefore, the parties agree that such evidence can come in as competent and / reliable without, you know, an affidavit, a declaration, without showing the other things that you might need to show. So do you also understand that? MR. ROBERTS: No, actually I did not realize that the whole factual side of the case had to be resubmitted to you as you're describing it, and

-- JUDGE SULLIVAN: Well, the facts themselves have been admitted in terms of

-- MR. ROBERTS: No, well, in terms of the evidence I wish to present about the size of the company and stuff like that. JUDGE SULLIVAN: Yes. MR. ROBERTS: So I see that that could have been discussedbetweenus before we had this discussionhere pursuant to your order. I did not Heritage Reporting Corporation (202) 628-4888

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# • 13 realize that. JUDGE SULLIVAN: That particular type of information remains discussable at a later date ideallyunder a C.R. 26(f) conference. The two of you

are talking about the range and scope of the case that wouldbe before me, which is essentially a trial on the penalty. And talking about howmuch time it would take, who your witnesses might be, what kind of documentationyou'dwant to exchange, whether or not you're going to be filing a request for admission or filing a request to answer interrogatories, whether or not you're going to depose anyone. Those kinds of things wouldbe part of that C.R. 26(f) discussion in addition to talking about the range of time you would need to take to do those kinds of things. Whether or not there's going to be dispositive motions that might be filed down the road, andwhether or not you're going to need one day, two days, five days, et cetera for an actual trial if you get there. So you really don't need to get into too many of the evidentiary specifics during a 26(F) conference. You're doingjustmore of anumbrella look at the case itself. MR. ROBERTS: Right. Okay. Well. JUDGE SULLIVAN: Let's talk about this in Heritage Reporting Corporation (202) 628-4888

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### terms of the civilpenalty. It'smy understanding, 2 and I may be incorrect about this, that the two of you 3 have exchanged all the information that youwant to 4 know about eachother's cases already in terms of the 5 money issue. Mr. Ellis, I'll start withyou first. 6 You have everything thatyouwant? 7 

### MR. ELLIS: No, Your Honor. 8 

### JUDGE SULLIVAN: Okay. Mr. Roberts, how 9 about you? Are youhappy and feel youhave everything 10 you absolutelyneed tohave fromMr. Ellis regarding 11 themoney issue? 12 MR. ROBERTS: Well, letme put it to you 13 

### this way, everything that I shouldhave is on the 14 public record. I'mhaving some trouble finding it on 15 thepublic record. And itwouldbe veryuseful ifMr. 16 Ellis couldgiveme what he reliedon, but it is on 17 thepublic recordand I shouldbe able to find it for 18 myself. 19 

### JUDGE SULLIVAN: When you say onthepublic 20 record, to what areyou referring? 21 MR. ROBERTS: I'mreferring to a table ora 22 chart thatMr. Ellis toldme about --he'sbeenvery 23 kind about that

-- which apparentlygave him some 24 guidance whenhe reachedhis proposedpenaltyof 25 $10,000. And I have spent the morning looking for Heritage Reporting Corporation (202) 628-4888

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# • 15 that without any success which is more of a tribute to my ignorance than anything else I suspect. JUDGE SULLIVAN: Okay, well, that wouldbe something that wouldbe discoverable. MR. ROBERTS: Yeah, okay. We'll talk about that in discovery. JUDGE SULLIVAN: Yes. It looks tome like the two of you need to have some discovery at least on the issue of the civil penalties. We have only a proposal byMr. Ellis or a discovery schedule asking that any and all exchange of discovery requests be done by June 6thwhichwouldmake that next Wednesday. But I'mnot sure that that's enough time at this point. MR. ROBERTS: It is for me. I don't have a problemwith it. JUDGE SULLIVAN: Okay. MR. ROBERTS: Even in light of our discussionhere. JUDGE SULLIVAN: Yes. I appreciate that vote of confidence from you, Mr. Roberts. But my experience is that once people start exchanging discovery requests, they find out that they have something that they forgot or that they'd like to have that theyhadn't thought about before. So I think I Heritage Reporting Corporation (202) 628-4888

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### maymove that just a littlebit to give the parties a 2 bit of breathing roombecause at this point June 6th 3 is less than a week away. 4 

### MR. ROBERTS: Right. 5 

### JUDGE SULLIVAN: Whichwouldn't give you 6 even enough time to get the order that I'mgoing to 7 issue today givingyou the deadline. 8 

### MR. ROBERTS: All right. Let me just 9 mention that the week of June 11th, I am onjuryduty 10 in the EasternDistrict Court, so I will not be able 11 to do anywork that week. 12 JUDGE SULLIVAN: Okay, andwhenyou say the 13 

### week of June 11, 2012, are you talking about the dates 14 of June 11, 2012 throughJune 15, 2012? 15 MR. ROBERTS: Yes, I am. 16 JUDGE SULLIVAN: Okay. Is this your first 17 time onjuryduty, sir? 18 MR. ROBERTS: On the federal level it is, 19 yes. 20 JUDGE SULLIVAN: Oh, well, we'll look 21 forward toyour wonderful participation. 22 23 

### 24 25 MR. ROBERTS: I'mhoping they'll choose me. JUDGE SULLIVAN: Is there a likelihood that youmight have extendedjury service, for example, if you're calledto sit on a grandjury? Heritage Reporting Corporation (202) 628-4888

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# • 17 MR. ROBERTS: The notice did not mention that it was a grandjury. I don't know if that's customaryor not. JUDGE SULLIVAN: Okay. I don't know what the federal district court does inyourparticular area, so I would not be able to speculate about that. MR. ROBERTS: Okay. JUDGE SULLIVAN: We'll justplan onyou being absent from June 11, 2012, throughJune 15, 2012. Sir, do youhave any otherblackout dates within the next two months that you want to apprise me of? MR. ROBERTS: Not until August. I disappear in the month of August. JUDGE SULLIVAN: Forhow long inthe month of August?MR. ROBERTS: Until September the 1st. I first go to anAmericanBarAssociationmeeting in Chicago and then for a vacationwithmy wife to San Francisco.JUDGE SULLIVAN: So you're sayingyou are not available during the entire month of August? MR. ROBERTS: Basically that's right. I mean, I could do things by email, but otherwise I'm not available. Heritage Reporting Corporation (202) 628-4888

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# • 18 JUDGE SULLIVAN: Mr. Ellis, let me turn to you. Do you have any types of blackout dates within the next three months that you want us to be aware of? MR. ELLIS: Nothing that would interfere with discovery. JUDGE SULLIVAN: Okay. Well, typically I do the following: I do an order that talks about initial discovery exchange, general discovery exchange, supplemental discovery exchange. I usually set up deadlines for dispositive motions with an oral argument and then a witness exchange list. It sounds to me like there's alreadybeen initial discovery exchanged to the point where the parties, in essence, agree to have the violation itself admitted as unopposed which is what happened earlier this year. So we're talkingmore about a general discovery exchange and that essentiallywouldbe, you know, the two of you requesting from each other any and all other documentation that you wouldneed. It would also include noting people up for deposition if you want to depose someone, propounding interrogatories, requesting the disclosure of experts for potential testimony either inwriting or in person, those kinds of things. So if we have Mr. Roberts gone from June 11 Heritage Reporting Corporation (202) 628-4888

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# • 19 through June 15, it sounds like the two of you are pretty comfortable with the fact that you don't have a lot of discovery requests out there. Let's take a look at our latterJune 2012. If I ·ask you to exchange all of your general discovery requests by June 22nd, 2012, would that be okay withyou, Mr. Ellis? MR. ELLIS: Yes, Your Honor. JUDGE SULLIVAN: And Mr. Roberts, would that give you enough time givenyourjury service? MR. ROBERTS: Yes, I do think so. JUDGE SULLIVAN: Okay. Then in terms of the responses to the general discovery, typicallyunder both the civil rules and the federal regulation, there's a default of 30 days for the response to any and all general discovery requests. Would that be acceptable toyou, Mr. Ellis? MR. ELLIS: Yes, Your Honor. JUDGE SULLIVAN: Okay, and how about you, Mr. Roberts? MR. ROBERTS: Yes. JUDGE SULLIVAN: Okay. Mr. Roberts, you're looking at a very short period of time because of your August vacation, so when you sayyou're available by email, does that mean that you're also available to Heritage Reporting Corporation (202) 628-4888

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# • 20 hunt down records? Do you have people assisting you whenyou're out of town or away from the office? MR. ROBERTS: Yes, I do. JUDGE SULLIVAN: If you needme to, I can always extend this to the first week of September if you think that wouldbe helpful. If you think it's not necessary, I won't. MR. ROBERTS: That kind of depends onwhat Mr. Ellis and I work out that's acceptable because I don't think I'm going to want topresent to you any information that is different that material that I've already submitted to him. So if he's comfortable with the authenticity of that material and the way that I

can authenticate it fairly easily, there's not going to be anyproblem at all. JUDGE SULLIVAN: Okay. Why don't I do this: I'mgoing to err on the side of caution and I'lljust put September 7thas the deadline for responses to general discovery requests. And what that means is that that gives the two of you essentially about five and-a-half to sixweeks to be talking back and forth and exchanging any and all other discovery. MR. ROBERTS: All right. JUDGE SULLIVAN: It doesn't sound tome like either of you have any intention at this point to note Heritage Reporting Corporation (202) 628-4888

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# • 21 depositions orpropound interrogatories. MR. ELLIS: Interrogatories perhaps. JUDGE SULLIVAN: Perhaps, okay. MR. ELLIS: Request for admission, perhaps. JUDGE SULLIVAN: Okay. Would that five-week period of time, Mr. Ellis, be sufficient for you to do that? MR. ELLIS: Yes. JUDGE SULLIVAN: AndMr. Roberts, would that five-week periodbe sufficient for you to answer and/or topropoundyour own requests? MR. ROBERTS: I should think so, yes. JUDGE SULLIVAN: If you needmore time, then now's the time to say that because before we close today, I'm going to be setting dates, including trial dates. MR. ROBERTS: I just don't anticipate needing more time. JUDGE SULLIVAN: Okay. That's fine. I generally also setup a deadline for supplemental discovery in the event that something comes up during this five-week time that necessitates some additional discussion. Mr. Ellis, wouldyou like to have that option? MR. ELLIS: What would the optionbe, after Heritage Reporting Corporation (202) 628-4888

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# • 22 September 7th, a date for a supplementary discovery deadline, is that what you're asking? JUDGE SULLIVAN: Right. What I usually do is I set up a date for supplemental discovery requests and then a date for finishing any and all exchange of supplemental discovery. So for example, and I'mjust going to throw this out, 14 days after September 7th wouldbe approximately September 21, and that wouldbe

a due date for exchanging all further supplemental discovery requests. And then two weeks after that, that wouldbe the deadline for responding to such supplemental discovery. MR. ELLIS: The 21st of September? JUDGE SULLIVAN: I'mjust throwing that out

as a possibility, so does that sound reasonable to you? MR. ELLIS: Yes. JUDGE SULLIVAN: Okay. MR. ELLIS: Sounds good to me. JUDGE SULLIVAN: AndMr. Roberts, that's okay for you too? MR. ROBERTS: Yes, it is. JUDGE SULLIVAN: Okay, so September 21, 2012 will be the due date or the last day for bothparties to complete the exchange of your requests for Heritage Reporting Corporation (202) 628-4888

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# • 23 supplemental discovery. And then two weeks after that is October 5, and that will be the deadline for serving and responding to all supplemental discovery requests. Andjust so that you know, I'll be sending out an order with all these deadlines by tomorrow at the very latest so that you also have them inwriting. At that point, then the case wouldbe ready for any kind of dispositive motion, and we could utilize the dispositive motion calendar also for a request to have the trial on the record, and the two of you shouldbe talking about that privately. MR. ROBERTS: Okay. JUDGE SULLIVAN: It maybe that you might want to move for summaryjudgment or itmaybe that you simplymove to have a trial on the record only, but I don't want to limit the two of you to that today because you have some time to talk about itprivately before you decide. What I can do is I can set up the dates now so that whatever you decide you have a deadline for it. Okay. So October 5, 2012 is the deadline for the exchange of all responses to supplemental discovery requests. How about if we set October 26, 2012 as the deadline for dispositive motion filing. In essence, that wouldmean that on orbefore October 26, 2012, Heritage Reporting Corporation (202) 628-4888

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# • 24 anyone that is a party to this litigationmay file a motion for dispositive relief. That couldbe a motion for default judgment. It couldbe a motion for summaryjudgment. It couldbe a motion for a ruling

on the pleadings alone, just as an example. So that wouldbe for the motion, andboth of you couldbe filing those kinds of motions. It's helpful if you talk to each other first so that if one really feels strongly about it and the other doesn't, the one who feels strongly canbe the pleader in that type of motion as opposed to both of you filing crossmotions. But it's up to the two of you. Then I'd look at an answer date and a reply date, so let me take a look at my calendar. That puts

us close to Thanksgiving. Why don't we have the

answer due date as November 9th, 2012, and thenhow about

-- we could either have the reply done seven days later, 10 days laterdepending onhowyou folks like to take your Thanksgiving holiday. Mr. Ellis, do you usually take the week before Thanksgiving, the week after, or nothing at all during Thanksgiving? MR. ELLIS: The week of, usually. JUDGE SULLIVAN: Okay. And Mr. Roberts, how about you? What's your MR. ROBERTS: You know, that wouldbe about Heritage Reporting Corporation (202) 628-4888

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### the same for me. 2 

### JUDGE SULLIVAN: Okay. Well, how about if 3 we have

-- I can either set the replydate for 4 November 30thorDecember 4th. Does anybodyhave a 5 preference, startingwithyou, Mr. Ellis? 6 

### MR. ELLIS: This is the reply to the 7 

### dispositive motion? 8 

### JUDGE SULLIVAN: This is the reply to the 9 answer to the dispositive motion. 10 MR. ELLIS: Yes. 11 

### JUDGE SULLIVAN: You have the motion, the 12 answer, and then the reply, if any. 13 MR. ELLIS: Whatever date you choose is 14 fine, Your Honor. 15 

### JUDGE SULLIVAN: Okay. And Mr. Roberts, how 16 about you? 17 

### MR. ROBERTS: Yes, I agree. 18 JUDGE SULLIVAN: Okay. Well, why don't we 19 just sayNovember 30, 2012, then, for the reply if 20 any. Then let's talk about a telephone conference set 21 22 

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### up for the motion. If for some reasonneitherof you file any motion at all, you talked to eachotherprivately, you decided that you don't want to try the case on the record, for example, the telephone conference that I'm Heritage Reporting Corporation (202) 628-4888 25

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# • going to set up will be automatically converted to a pretrial status conference. Right now we're going to set it up as a motion conference by telephone. MR. ROBERTS: Okay. JUDGE SULLIVAN: But if for any reasonno motions are filed and no motions land onmy desk, I'm setting it up so that I can automatically convert it to a pretrial status conference. And I've found that to be veryhelpful particularlywhenparties continue their settlement discussion, and then endup telling

me that there's $200 difference and they're still working on it, you know, that kind of thing. MR. ELLIS: Yeah. JUDGE SULLIVAN: So looking at yourDecember calendars, wouldyou like to try

-- that's the week of December 10, 2012. MR. ELLIS: As early inDecember as possible for me. JUDGE SULLIVAN: Okay, and who just said that? MR. ELLIS: That was Mr. Ellis. JUDGE SULLIVAN: Mr. Ellis. Mr. Roberts, how about you? MR. ROBERTS: I agree. JUDGE SULLIVAN: Well, if it's acceptable to Heritage Reporting Corporation (202) 628-4888 26

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### 1 all of you, let's set this for December 11, 2012, and 2 

### Mr. Ellis, do youprefer the morning or the afternoon? 3 

### MR. ELLIS: Where is the hearing going to 4 be? 5 

### JUDGE SULLIVAN: Well, this is a telephone 6 conference. 7 

### MR. ELLIS: Oh, I thought you saidthis is 8 for the trial. I'm sorry. 9 

### JUDGE SULLIVAN: No. We're still talking 10 about settingup a telephone conference for oral 11 argument on the dispositive motions. 12 MR. ELLIS: Mornings wouldbe better. 13 JUDGE SULLIVAN: Okay, andMr. Roberts, how 14 about you? 15 

### MR. ROBERTS: I have a conference call set 16 up for noon on that day, so I coulddo it in the 17 afternoon or in the morning. 18 MR. ELLIS: Oh, actually, December 11 is a 19 Tuesday, correct? 20 JUDGE SULLIVAN: Yes. 21 MR. ROBERTS: Yes. 22 

### MR. ELLIS: I have a regularmorning on 23 Tuesdays, so afternoons wouldbe better. 24 25 

### Mr. Ellis?JUDGE SULLIVAN: Okay. Would 1:30 be okay,

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# • 28 MR. ELLIS: 1:39 is fine. JUDGE SULLIVAN: AndMr. Roberts? MR. ROBERTS: Yes. That seems good. JUDGE SULLIVAN: Okay. Let's try it at 1:30, andplease plan for a one-hour conference. We may not need to take that time, but if we have it, thenwe have it to use. So afterDecember 11, 2012, let's talk about the exchange of witnesses, names of witnesses and exhibits if, in fact, you decide not to hear this on the record, have it heard on the record. Do you want me to set the exchange date for shortly thereafter, ordo you want to wait until after the Christmas/Hanukkahholiday, Mr. Ellis? MR. ELLIS: Before the holiday. JUDGE SULLIVAN: Mr. Roberts, how about you? MR. ROBERTS: That's fine withme. Before is better, yes. JUDGE SULLIVAN: Okay. Then let's set the list of witness exchange for December 31, 2012. And let me ask the two of you this. Assuming that we actuallyhold an in-person trial, have you talked about the venue, where we wouldbe? Mr. Ellis? MR. ELLIS: I believe we made that request when we filed the complaint. Let me take a look at the complaint and see if we did. Heritage Reporting Corporation (202) 628-4888

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# • 29 MR. ROBERTS: I think you wanted it in Washington, D.C. MR. ELLIS: Let me take a look. We asked for Louisville, Kentucky. JUDGE SULLIVAN: Okay. AndMr. Ellis, why wouldyou want Louisville, Kentucky, just so that I know? MR. ELLIS: That was where our witness is,

our inspectorwho collected the evidence in the case. JUDGE SULLIVAN: Okay. MR. ELLIS: And also UPS where the incident happened. JUDGE SULLIVAN: Okay. AndMr. Roberts, is that a preferred location for you as well? MR. ROBERTS: No. It's a terrible location. It's verydifficult to get to. That inspector and the UPS, that's all been

-- that is not going tobepart of the information in this case, I shouldn't think, since you've already, you know, that's alreadybeen admitted and accepted as such. JUDGE SULLIVAN: Okay. MR. ROBERTS: I wouldprefer the New York

area since that's where I'm located. JUDGE SULLIVAN: Okay. MR. ROBERTS: Or someplace easilyreached Heritage Reporting Corporation (202) 628-4888

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### 1 from New York. 2 JUDGE SULLIVAN: What I 1

### mgoing to do then 3 is I 1

### mgoing to set October 26 1 

### 2012 as the deadline 4 for the parties 5 (Electronic interference.) 6 

### MR. ELLIS: You cut out onme. 7 

### JUDGE SULLIVAN: I 1

### m

### sorry1 

### what? 8 

### MR. ELLIS: You cut out onme for a minute. 9 I couldn1

### t hearwhat youwere saying. 10 JUDGE SULLIVAN: October 26, 2012 is the 11 deadline for the parties to either submit a joint 12 agreement regarding thevenue for a potential trial or 13 

### to add that to yourmotions for dispositive relief. 14 MR. ELLIS: Okay. Is this going tobe in 15 your order/ Judge? 16 JUDGE SULLIVAN: Yes, it will. 17 

### MR. ELLIS: Thankyou. 18 JUDGE SULLIVAN: Okay. And then let's talk 19 about the actual hearing. Let's assume just for the 20 sake of argument that we are going to have a trial in 21 personon the issue of a civilpenalty. Mr. Ellis, if 22 that occurs, howmuch time do you thinkWe 1

### d need and 23 howmanywitnesses do you thinkyouwouldneed to 24 call? 25 

### MR. ELLIS: Well 1 

### I'vehad this kind of Heritage Reporting Corporation (202) 628-4888

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### hearingmany, many times over the last 15 years, and 2 

### it's never takenmore thanhalf a day. 3 

### JUDGE SULLIVAN: Well, youmust bejust 4 marvelous at your examination, and I'm sopleased to 5 hear that. How manypeople do you think that you 6 wouldbe calling? 7 

### MR. ELLIS: One at the most. Two if there 8 are issues involving the penaltythat need tobe 9 examineda littlebitmore. 10 

### JUDGE SULLIVAN: Okay, well, right now the 11 only issue is the penalty, so whenyou saya half-day, 12 is that the time it takes for you toput onyourprima 13 facie case or the time that you've experienced the 14 whole trial takes? 15 MR. ELLIS: With sanctiononlyhearings, the 16 whole hearing. 17 

### JUDGE SULLIVAN: Okay. Thankyou. Mr. 18 Roberts, I know that your experience in this area is 19 limited, but howmuch time do you think itwould take 20 for you to eitherrespond to the prima facie case 21 and/or for the whole trial to take place? 22 

### MR. ROBERTS: I cannot imagine my response 23 takingmore than anhour and-a-half under any 24 circumstance. 25 

### JUDGE SULLIVAN: Okay. Sowhat I'll do is Heritage Reporting Corporation (202) 628-4888

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### I'llplan for a one-day-only trial, and since we have 2 

### a December 21 list of witnesses and exhibits being 3 

### exchanged, let's take a look real brieflyat our 4 January 2013 calendar. Mr. Ellis, doyou have any 5 preference during the monthof January 2013 for a one6 dayhearing at a place yet tobe determined? 7 

### MR. ELLIS: I do not evenhave a January 8 2013 calendaryet, YourHonor, but ingeneral I would 9 saymid-Januarywouldbe better than earlyJanuary. 10 JUDGE SULLIVAN: Okay, andwhenyou saymid11 January, are you talking about before the Martin 12 Luther King holiday or after? 13 MR. ELLIS: What day is that holiday? 14 That's

-- 15 JUDGE SULLIVAN: Usually it's

-- 16 MR. ELLIS:

-- the 16th, 15th? 17 

### JUDGE. SULLIVAN:

-- the 21st. 18 MR. ELLIS: Last year it was the 16th. 19 JUDGE SULLIVAN: Okay. 20 MR. ELLIS: Usually, around that time when I 21 was referring tomid-January, I was referringusually 22 to that week, week of the 15th. 23 24 25 JUDGE SULLIVAN: Okay. Mr. Roberts, what about the week of January 13 through the 19th, 2013, anyblackout dates during that time? Heritage Reporting Corporation (202) 628-4888

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# • MR. ROBERTS: No, I don't have anyblackout dates. JUDGE SULLIVAN: Okay. Same withyou, Mr. Roberts. Do you like having a trial onTuesday, Wednesday, orThursday. Anypreference? MR. ROBERTS: I think Thursday. JUDGE SULLIVAN: AndMr. Ellis? 33

MR. ELLIS: Not onMondays. Not on Fridays. JUDGE SULLIVAN: So Thursdaywouldbe okay? MR. ELLIS: It would. JUDGE SULLIVAN: Okay. Let's plan ona oneday trial onJanuary 17, 2013 at a place tobe determined. As a result, for anyone who needs to travel and since none of us at this time knowwhere the trial will be, I'm going to assume that's all of us, you'll have a travel day for January 16, 2013. MR. ELLIS: Your Honor, may I ask a question, please? JUDGE SULLIVAN: Certainly. MR. ELLIS: If next year's

-- I don't know if anybodyhas a January 2013 calendar, but

-- JUDGE SULLIVAN: I do. MR. ROBERTS: I do too. MR. ELLIS: Can somebody check to see when that holiday is because I'drather not have to travel Heritage Reporting Corporation (202) 628-4888

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### on a federal holiday. 2 

### JUDGE SULLIVAN: Canyou check that right 3 now withyour computer? 4 

### MR. ELLIS: Hold on. 5 

### MR. ROBERTS: I'mjust going to look for it 6 right now. 7 

### MR. ELLIS: Whoever finds it first, please 8 chime in. 9 

### JUDGE SULLIVAN: Well, I'm countingupon 10 you, counsel, to do that. 11 MR. ELLIS: I'm looking right now. 12 JUDGE SULLIVAN: Okay. 13 MR. ROBERTS: Monday, January 21st. 14 JUDGE SULLIVAN: Mr. Roberts, you see that 15 onwhat calendar? 16 MR. ROBERTS: Google actually. 17 

### JUDGE SULLIVAN: Okay. Mr. Ellis, is that 18 satisfactory? 19 

### MR. ELLIS: That that's the holiday? 20 JUDGE SULLIVAN: Yes. 21 MR. ELLIS: Yes. 22 

### JUDGE SULLIVAN: This is bumping into the 23 weekend. 24 MR. ELLIS: That's Monday, January 21st. 25 Okay. All right, so that wouldkeep us out of that Heritage Reporting Corporation (202) 628-4888 34

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### 1 situation. 2 JUDGE SULLIVAN: Okay. So we'll planon 3 January 16, 2013 as a travel day as well as January 4 18, 2013 as the return travel day in the event that 5 the case actuallygoes to an in-personhearing. Now, 6 just so that you folks know, youdo not need to submit 7 any discovery tome. That's simply an exchange 8 betweenyourself, unless there is a problem. If 9 there's a problem, thenmotions for discovery should 10 be filed within 10 calendardays after service of a 11 deficit response or a problematic request. 12 I'mgoing toput this in the order too

. 13 That will keepyouontrack, hopefully, if there are 14 anykinds of problems. I don't anticipate that there 15 wouldbe, but one neverknows. Inaddition, before 16 youeven file the motion, you shouldbe conducting a 17 C.R. 37 conference. Thatbasically is callingeach 18 otherup saying something like, hey, Mr. Ellis. Hey, 19 Mr. Roberts. I got this document and I have a problem 20 with it. Canwe resolve it informally. If you can't 21 resolve it informally, thenyounote that conference 22 inthe motion for relief thatyou file withme. 23 Inaddition, you shouldbe contactingmy 24 legal secretary, DianeMayes, and tellingher thatyou 25 have contacted the other side. Youhaven't beenable Heritage Reporting Corporation (202) 628-4888

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to reach resolution of a discoveryproblem, and here

are three dates that the two of you have talked about and agree are available for a motion conference. I will set that up onmy calendar faster thanJack Robinson, and get you before me so that I

can address that motion and its answer as fast as possible, so that I keep you on this schedule andyou don't suffer a lot of delays. That information will also be in the litigationorder. Lastly, the litigation order

-- I'll note how to set up documents, exhibits, andyou shouldbe planning onusing that system for a trial on written documents as well. It's the same process where youmark your exhibits C-1, C-2, C-3 if you're the FAA Complainant. If you're Mr. Roberts, the Respondent, youmark it as R-1, R-2, R-3, and so forth. I do have a final question for you, and I'll address this withMr. Roberts first. The original notice of complaint identifies the Respondent solely as Covermark U.S.A. I have gotten the Complainant's proposed procedural schedule, however, that identifies the Respondent now as Nuvell Laboratories, LLC doing business as CovermarkU.S.A. I have no agreement from the parties that the caption for the Respondent should have been changed, and I have no motion from the FAA Heritage Reporting Corporation (202) 628-4888

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# • 37 say1ng that there needs to be a change of the title of the Respondent. So itmaybe something that the two of you might want to address. Until I get either an agreement or a motion, I'mbound to utilize the Respondent's name that's in the notice of complaint. Mr. Ellis, starting withyou, based on all of the litigationdates, andprocedures, and discussions we have had so far, is there anythingyou would like to add or ask questions about? MR. ELLIS: No, Your Honor. JUDGE SULLIVAN: Okay. Anything else that the Court cando for you andyour client today? MR. ELLIS: No, Your Honor. JUDGE SULLIVAN: Mr. Roberts, turning next to you, any questions, comments, concerns, or request

onbehalf of your client? MR. ROBERTS: No. I will get together with Mr. Ellis. We will have that C.R. 26 conference, and

we will waive the change in captionproblem. Actually, CovermarkU.S.A. isjust a doing-business-as

name for Nuvell Laboratories. JUDGE SULLIVAN: Okay. I'dbe happy to accept that waiver today if that's what you want to do. Heritage Reporting Corporation (202) 628-4888

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### 1 MR. ROBERTS: Oh, yeah. Yeah. I don't want 2 to create a sillyhassle that canbe resolvedwith a 3 lot of nuisance. 4 

### JUDGE SULLIVAN: Okay. Mr. Ellis, is that 5 acceptable toyou? 6 

### MR. ELLIS: Yes. 7 

### JUDGE SULLIVAN: Okay. I'll also include 8 that in the order that I issue that will be sent out 9 no laterthan tomorrow. 10 

### MR. ROBERTS: Okay. 11 JUDGE SULLIVAN: Thenwith that, it appears 12 ourbusiness is complete. I'm going to thankyouboth 13 

### verymuch foryourpresencehere today. Good luck in 14 yourprivate negotiation. With that, we cango off 15 the record, and I wishyou all a goodday. 16 

### MR. ELLIS: Thankyou, Judge. Nice talking 17 toyou for the first time. 18 

### JUDGE SULLIVAN: Yes. Thankyou. Bye-bye. 19 

### MR. ROBERTS: Where are you located, Judge, 20 inWashington? 21 JUDGE SULLIVAN: Washington, D.C. 22 MR. ROBERTS: Okay. Well, itwas good 23 talking toyou. 24 25 

### II JUDGE SULLIVAN: Yes, thankyou. Bye-bye.

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••

• REPORTER'S CERTIFICATE

DOCKETNO.: r

### AA**~**2..<!:::>\\**~<::> 4~~**  

### CASE TITLE:**CctJ~~A-~**K, 0<sA 

### HEARINGDATE: 1:'\\o...-o "?:,\,2-o**~;<..,)**



### I herebycertifythat theproceedings and evidenceare containedfullyandaccuratelyonthe tapes andnotes reportedbyme at thehearinginthe

OfficialReporter HeritageReportingCorporation Suite 600 1220

### LStreet, N.W. Washington, D.C. 20005-4018



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