1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 David W. Williams- SBN 141065 16372 Underhill Lane Huntington Beach, CA 92647 714-745-5610 Attorney for Respondent FROST AD ATELIER lNC. 

# RECEIVED DEC 1

## 8 2012 

## HEARING DOCKET

UNITED STATES DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS, WASHlNGTON, D.C. ) lNRE: ) CaseNo.: FAA-2011-0294 ) FROST AD ATELIER lNC. ) ) RESPONDENT'S POSTHEARINGBRIEF RESPONDENT. ) ) ) ) ) ) ) )

1 9 Respondent FROST AD ATELIER lNC. hereby submits this Post Hearing Briefin 20 defense ofthe action against it. 21 1. BURDEN OF PROOF:
22 There is no dispute that the Agency bears the Burden ofProofinthis matter. Likewise, 23 there is no dispute, that the charge filed by the Agency requires specific intent. Therefore it is 24 the burden ofthe Agency to establish, by a preponderance ofevidence, that respondent 25 knowingly attempted to transport hazardous materials as alleged inthe Complaint. There is no 26 evidence what-so-ever to establish intent. 27 (1) A person that knowingly violates this chapter or a regulation 2 8 prescribed or order issued underthis chapter is liable to the United States Government for a civil penalty ofat least $250 butnot more than $25,000 for

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## usc 5123. each violation. A person acts knowingly when- (A) the person has actual knowledge ofthe facts giving rise to the violation; or (B) a reasonable person acting inthe circumstances and exercising reasonable care would have that knowledge. (2) A separate violation occurs for each day the violation, committed by a personthat transports or causes to be transported hazardous material, continues. (b) Hearing Requirement.

- The Secretary ofTransportation may fmd that a person has violated this chapter or a regulation prescribed under this chapte only after notice and an opportunity for a hearing. There was no evidence that Respondent had any knowledge or intent to transport any prohibited items. A corporation only acts and wills by virtue ofits employees. As such, a corporation's knowledge is made up ofall ofthe knowledge acquired byits employees in the scope oftheir duties. Restatement (Third) ofAgency § 5.03 (2006); Steere TankLines, Inc. v. UnitedStates, 330 F.2d 719, 722 (5th Cir. 1963). Similarly, corporate intent depends onthe intent ofspecific employees. Saba v. Compagnie NationaleAirFrance, 78 F.3d 664, 670 (D.C. Cir. 1996); see also UnitedStates v. Philip Morris USA Inc., 566 F.3d 1095, 1118 (D.C. Cir. 2009) ("[c]orporations maybe held liable for specific intent offenses based onthe 'knowledge and intent' oftheir employees"). The only employee ofRespondent thattestified was Rhonda Frostad. Mrs. Frostad testifiedthat she had no knowledge that any prohibited items were packed or otherwise presented for transportation. Mrs. Frostad testified as to the corporation's policy ontransporting hazardous materials. In short, she testified that the corporation's policy is to NEVERtransport the items alleged to have been submitted for transportation. Withrespect to the butane, she testified that while it is used during the process in the field, it is the policy to purchase the disposable canisters at the location ofthe project and to leave the butane on site. With respect to the WD-40 alleged to have been submitted for transport, Mrs. Frostad testified that oil based products are NEVER used as part oftheprocess, and consequently never transported. Mrs. Frostad further testifed tha

-2-1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WD-40 is sometimes, although seldom, used at the main facility to lubricate one ofthe machines inthe foundry. She testified that Respondent still has the original can it obtained when the foundry opened. The government presented no evidence what-so-ever to address the critical element of Knowledge bythe Respondent. The Agency was aware ofthenames ofthose persons travelling withMrs. Frostad, and certainly couldhave called them to testi:f'y. Simplyput, the Agency failed to meet its burden ofproof. The witness presented by the Agency, Krista Hynes was a Customer Service Supervisor. Ms. Hynes was not credible in any ofher testimony. In short, she testified that she was calledby the airport TSAto identi:f'y a bag that was claimed to have been checkedby one ofthe passengers ofthe airlines she worked for. She could not describe the bag. She could not describe the contents ofthe bag. She could not describe the room in whichthe bag was located. She further testified that she paged Mrs. Frostad and was confidentthat any passenger anywhere inthe airport could have heard the announcement. However, she could not describe whattime the announcementwas made, norhowmany times shepagedMrs. Frostad. The government simply did not carry its burden ofestablishing liability. No penalty should issue. 2.PENALTY: The penalty to be assessed should consider, among other factors, the degree ofculpability and the corporation's ability to pay any penalty assessed. (c) Penalty Considerations.-In determining the amount ofa civil penalty underthis section, the Secretary shall consider- (!) the nature, circumstances, extent, and gravity ofthe violation; (2) withrespectto the violator, the degree ofculpability, anyhistory ofprior violations, the abilityto pay, and any effect onthe ability to continue to do business; and (3) other matters thatjustice requires. 49 U.S.C. 5123. The degree ofculpability has been addressed above. There should be no penalty issued. All other factors mitigate against any penalty. The evidence is uncontroverted and supported by Federal Tax Retnrns that Respondent is not in any position to pay. The corporation, since it's

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27 28 inceptionhas lost money consistently. Should penalty be imposed, Respondent simply be forced to cease doing business. Respondent has no history ofany other violations, and poses no threat to the public. CONCLUSION The Agencyhas failed to meet its burden to establish corporate liability inthis matter. This is not a strict liability offense. The mere fact that Respondent is claimed to have items in the checked baggage ofone ofits employees does not give rise to automatic penalties. The Agency has failed to establish the critical element of"knowledge." All evidence illustrates that not only did Respondent NOT know ofthe items claimedto have beenin employees' bags, but that Respondent has specific policies in place to prevent such actions. Further, Respondent has never had a profitable year. The imposition ofany penalty such as the Agency suggests will simply put it out ofbusiness. This is specifically contrary to the letter and intent ofthe Code. No penalty should issue.

Date: December 7, 2012

-4-FAA DOCKETNO. NotAssigned FDMS No. FAA-2011-0294 CERTIFICATE OF SERVICE I hereby certify that on this date I have placed in the United States mail, postage prepaid, the executed original and one copy ofthe RESPONDENT'S POST HEARING BRIEF addressed as follows:

and a true copyto:

Also by facsimile:

Also by facsimile: Hearing Docket Federal AviationAdministration Wilbur Wright Building, Suite 2Wl000 Attn: Hearing Docket Clerk, AGC-430 800 Independence Avenue, S.W. Washington, DC 20591 The Honorable Richard W. Goodwin Administrative LawJudge U.S. Department ofTransportation Office ofHearings, M-20 East Building Ground Floor Room El2-320 1200 NewJersey Avenue, S.E. Washington, D.C. 20590 (202) 366-7536 F.A.A. P.O. Box 92007 Los Angeles, CA 90009 Attn: Lisa Toscano (310) 725-6816