08/03/201 1 15:4 6 FA X 2024935ia 2 FA A - DM S @]001/01 0

-F'ARTMENTO F 

### •^^IM^JSPORTATION ' •:r:KFTOPFRATION S 

# '*"•" " ^'ii«-'*^^' ^

PfECElVE D 0_V_5R.NLGHTMAM . Federa l Aviatio n Administratio n 80 0 Independenc e Avenue , SW . Washington , D C 20S9 1 ^cAR/^J Q QQf^^f^ ^ Att n Hearin g Docke t

Clerk , AGC-43 0 "-^A t ? Wilbu r Wrigh i Building

- Suit e 2W100 0

ATTN : HEARIN G DOCKE T CLER K Re : I n th e Mallei ' o f

D & M Custo mInjectio n Moldin g Corporatio n FA A Cas e No . 2009-GL-70-0 3 1 4 Enclose dherei n pleas e fin dou r .respons e t o th e Federa l Aviatio n Administration' s Complain t

i n th e above-entitle dactio n fo r filing. W e concu r

wit h th e FAA' s reques t o f Jun e 24 , 201 1 tha t

th e hearin g i n thi s matte r b e hel di n th e Chicag o are a Pleas e addres s al l communication s fo r D & M Custo mInjectio n Moldin g Corporatio n t o th e attentio n o f

Mik e Teofilovich , President . D& M Custo mInjectio n Moldin g Corporation , P.O . Bo x 158 , 15 0 Frenc h Road , Burlington , 11.60109 . Sincerely , Mik e Teofilovic h Presiden t08/03/201 1 15.4 G FA X 202493514 2 FA A - OM S 0002/01 0

I n th e Matte r

o f D & M Custo mInjectio n Moldin g Corporatio n FA A Cas e N o 2009-GL~70-031 4

RESPONS E T O COMPLAIN T SERVE D JUN E 27 . 201 1 D & M Plastic s Coiporaiio n f"D&M" ) hereb y file s it Respons e t o th e Complain t o f (h e Federa l Aviatio n Administratio n TFAA") , date dJun e 27 , 201 1 an dstate s a s follows :

1 O n Jul y 1 , 2010 , D& M wa s advise dthroug h aNofic e o f Propose dCivi l Penalt y tha t th e FA A propose dt o asses s acivi l penalt y i n th e amoun t

o f $168,000 . O n Jun e 7 , 2011 , aFina l Notic e o f

propose dCivi l Penalt y i n th e amoun t o f S16 8 00 0 wa s issued ; and , o n Jun e 16 , 2011 , D& M submitte dawritte n reques t fo r ahearin g

I I

D& M doe s no t

disput e th e FAA' s accoun t o f th e circumstance s describe di n thei r complain t

o f Jun e 27 , 201 1

III . D& M doe s no t

disput e th e violation s a s outline di n th e FA A complain t

o f Jun e 27.2011 .08/03/201 1 1 5 a s FA X 2024935^ 2 FA A ' O^'I S 12003/01 0

V I 1 . D& M doe s no t

disput e th e computatio n unde r 4 9 U S C . SS512 3 o f

$168,00 0 However , D& M doc s disput e th e appropriatenes s o f th e impositio n o f

suc h apenall y give n th e followin g fi-omothe r relevan t section s o f

4 9 U S C . SS5123 ' a s i t applie s t o impositio n o f

apenally :

I'Ji c SL \rcfc/

n .\/k7/ / /f/i/yo.s e i j penal n tnulcrdii s .st^Lfif m/' \yivini : ih c /'ciwni i wiinrt i iiuik c (i f

th e itmotni f

(> f /hepc.ncrln . (c

> }\'/uifn' ' 'uu.'ihh'ri//Ji>/t.s . -[ n ik'ii.'1'nfiniii ^ ihi

^ uniunn i o f

o civil(>tHiait

v unde r (hi s stzClivn . ihi

^ Secrcnu x :,hal l Lonsidc r - (I ) th e ruiturt: . cirtnm'^Jani.cs , fXTtc/r: , and^ra \i n n f th e vhtJauon ; (j ) will ) n:.\pcc f

! o J h e vjoknoi . ih c dc-^ix't : ofcdlikilyliiv . a mhisin} \iif}}ri<> r yu'lulJt»i'< . rh c nhilin ' topLn \uiu f ini v cffj-c j n n fl w ohihrt

- /i * n^jiti^in : u ? d< ^ h)i->iii(.'ss ; Liiu

i (3 ) c/fu' r iiiaitcr s ihu i //istfc c reqtiircs .

2 l aparticular , D& M ha s pre.<;eiii«?' J informatio n an devidenc e t o niitiuat e th e Limoun ) utth o penalt y OIKI . t o date , ha s no t receive dan

y ^specifi c respons e t o th: U informatio n au devidence , retiiriii g i r o r olherv^ise . despit e it^ ' compellin g n^iiure : n . D& M WH

S no x informe da^

y t o th e presenc e ofhar.aidou s maierial. s i n th e product s i t ua s engage dl u a.ssembi e b y it s cujitomer . Ruyn n America . Inc. . ('Ruyan'" ) Minneapolis . M N h Th e n:itui e o f

th e projec t

wa s siit h ihal tli e evidenc e o t lli c presenc e o f

haziirJou s iniiteriaL' i i

n th e product s wa s no l apparen t an d\va s no t

require dl o he s o evidcn i i n orde r t o complet e th e projec t

a s directe db y Kuyan .08/03/201 1 15.4 G FA X 202483514 2 FA A - DM S [?]004/01 0

c . D& M h;i: ; n o hi.stor

y o f previou s violation s d . D& M ha s n o jirio r

hi.slor > o f dealin g wit

h ha7.ardou s material s an dheheved . i) [ th e tim e o f it s engagemen t

b y Ruva n that

i [ woul dno t

b e dealin g ha.7nrdou s niateria k n t an y rim e e Th e impo.^itio n orih c penalt y a r th e le\e l impose dwoul dpos e aseriou s ris k t u D&M' s fniaiKia l siabilit y an dir s abilit y t o contuiu e t o d o busines.* ; a s i t ha s UadiiionaJl y clon

e i n it s coinnmnity . 1 h) siippo n o f

thes e mitigatin g ciicumsranccs . D&V I provide s th e atTidavi t

o f Willia m? B;uikovvski . wh o wa s it s comac t a t Ruya n a i th e titn e o f

th e projec t :-in dthroug h th e projec t ." . I'nde r th e fact s an dcircum.^tance s o f thi s case , panicularl y give n th e mitigatin g circumstance. ^ pursu;m t

t o 4 9 I J S.C . SS 5 I2. v D& M ha s utVeredt o pay an appropiKil e civi l pen.^lt

y o f S2.^.00( J

WFTEREFORE , D& M respeatiil K request s tha t

th e Admini-Strativ e La w Judg e ente r a n orde r as.sessin g D& M acivi l penalt y o f n o mor e than S2^.000 . give n th e compellin g mitigatin g circumsiance s surroun dthi s incident . Respectfull y Submitted . Mik e Teotiknie h Prciiden r D& M Plastic sch h - DM S 0005/01 0 0e/03/20 U 15:4 6 FA X 202493514 2 FA A

Kc : I n th e Matte r

of D& M Custo mInjectio n Moldin g Corporatio n FA A Cas e No . 2<H*9-GL'7«-051 4 Affidavi t ofWinim n P . Bartkowsk i Stat e o r Minnesot a Cuuat y o f

Hennepi n BEFOR E ME , th e undersigne dNotary . Roge r Nielse n o n thi s 21 " da

y o f July , 2011 , personall y appeare d"Willia mP . Barlkowski , 59 , wh o bein g b y me first dul y swom , o n hi s oath , depose s an dsays : 1 . My nam e i s Willia mB . Bankowgld . I a m5 9 years . Currenrtv , \provid e consultin g service s fo r

avariety o f

businesses . Fro mSqjtembe r o f 200 8 throug h Augus t o f 2010 , i serve da s th e Presiden t o f Ruya n America , Inc. . Minneapolis , M N 55419 . r

resid e a t 522 3 Malib u Drive , Edina . MN 55436 . 2 . Ruyan America , Inc . ("RAF' ) wa s ajoin t ventur e 49 % owne db y Minnesot aUSA

base dChon g Corporatio n and51 % o\vne db y Chin abase dRuya n Grou p Holdings , Ltd . ("Ruyan Group") . ^ . Th e busines s o f

RA I wa s t o impor

t -wha t ai e no w calle delectroni c cigarette s an d accessorie s manufacmrc db y Ruya n Cirou p an dmarket , merchandis e an dsel l thes e prodvicl s throug h establishe ddistributio n an dletai l channel s a s smokin g alternatives . 4 . Thes e electroni c cigarette s containe dnicotine , suspende di n a n iner t carrier

propylen e glycol , whic h woul dvaporiz e int o aamokc-likc vapo r whe n ause r dre w o n on e en do f

th e device , flipping aswitch , activatin g alithiu mbattery * an d engagin g avaporizer .08/03/201 1 1 5 4B FA X 2024935U 2 FA A - DM S 0006/01 0

5 Betwee n Januar

y o f 200 8 an dMarc h o f

2009 , RA I ixxcive danumbe r o f shipment s o f

thes e product s irn mChin avi aDll k Air withou t incident . 6 . I n Marc h o f

2009 , th e U S Foo dan dDra g Administratio n ("FDA"),issue da n import ale n widi regar dt o al l electroni c cigarettes , raisinf i th e concern ±a t

thes e product s wer e unapprove ddru g delivery an ddru g products ; an dinstructin g U S Custom s an dBorde r

Security ("USCBS" ) t o detai n al l suc h produc t containin g th e activ e ingredien t

nicotine . 7 . I n May o f

2009 , RA I hadashipmen t o f approximatel y 2,00 0 unit s detaine dby USCBS . Appeal s t o th e FD A were futile . Tli e FD A claime dtha i th e presenc e o f mcotio e i n th e wnit s mad e the masmokin g cessatio n produc t and , a s such , require dthat

suc h product s require dth e submissio n o f aNe w Dru g Applicatio n t o th e FD A an dalength y an dcostl y approva l process . 8 . T n Jun e o f 2009 , RAI , consulte dwith industry experts ; and , mad e th e decisio n t o reformulat e th e product . Instea do f nicotine , RAI dctemiine dtliat a n FDA

exemp t formul acontainin g awell-establishe ddietary supplemen t Lobelia , woul d b e used . Rathe r

tha n importin g afully-assemble dandformulate dmodel , i t wa s determine dthat

ther e wer e distinc t

marketin g an dmerchandisin g advemtage s t o soui-ce andformulate Lobeli ai n th e U S andad dth e activ e ingredien t t o th e produc t i n aU S base dfacility . 9 . I n Jun e an dJul y o f

2009. 1 an dother s a

t RA I wer e referre dt o D & M Plastics , Inc . o f Burlington , I L 60018 . D& M wa s experience di n assembly , wa s certifie d i n certai n manufacturin g proces s an dwa s intereste di n doin g th e work .08/03/201 1 15-4 6 FA X 2024935U 2 FA A - DM S gjOOT/Ol O

1 0 Th e wor

k wa s describe dt o the ma s follows : Ruyan Grou p woul dshi p partiall y assemble dunit s t o D <f

e M . Additionally , the y woul dshi p othe r componcnts specifically , cartridge s an dcap s an dmaterial s for labelin g an dpackaging . D& M wa s instructe dt o fill th e cartridge s with formul aprovide db y RAI , insert th e cartridge s im o th e units , ca p th e cartridge s an dthe n individuall y labe l and packag e th e unit s for

distribution . The y agree dt o d o thi s wor k an dapurchas e orde r wa s provide dt o the mb y RAJ . At n o time , wa s ther e any discussio n o f thes e unit s containin g alithiu mbatter y and/o r flammable formul abein g apar t of th e assembl y o r

formulatin g process . Th e purcha^t c orde r di dno t contai n an y descriptio n o f

th e produc t

o r th e formul atha

t woul dhav e indicate dth e presenc e o f ahazardou s materinL I t

i s m y belief , tha t sinc e thes e wer e product s intende d for hinna n consumptio n an dpresumptivel y regulate dsimilarl y t o vitamin s and othe r dietar y supplemenis , i t

di dno t occu r t o D & M t o inquir e a s t o th e natur e o f th e component s sinc e n o activity o n thei r part require dthe mt o dissembl e th e par t o f th e uni t tha t containe dth e lithiu mio n battery , whic h woul dhav e reveale dth e presence o f

th e lithiu mio n battery . I n fact , dissemblin g th e units , whic h woul d hav e reveale dth e presenc e o f alilhiu mio n battery , woul dhav e rendere dth e unit s unfi t f'l r as.-^embl y an dunusable . 1J . Historically , RA

J ha drelie do n th e inteznatJOiia l shippin g expert s a t

Ruya n Grou p t o provid e al l o f

it s guidanc e wit

h respec t t o shippin g produc t

an dthos e shipment s appeare dt o b e properl y an dappropriatel y labeled . 12 . I n -Tul y o f 2009 , RA I place da

n orde r o f approximatel y 250 0 unit s wit h Ruya n Group , Th e unit s wer e manu^ture dan dpartiall y assemble di n China . The y08/03/201 1 15-4 G FA X 202433514 2 FA A - DM S gjOOS/Ol O

wer e shippe dfro

mChin adirectl y t o D&M . Fo r reason s no t

know n t o m e the n or a t thi s lime , th e produc t

wa s shippe di n carton s an dpackagin g tha t provide dn o informatio n a s t o what

wa s containe di n th e product . Al l relevan t custom s material s describe dth e conlenl s o f th e carton s a s "electroni c components. " And , the y wer e shippe dby Ruya n Group b y air , clearin g custom s i n Cincinnati an d the n sen t b y groun dt o D&M' s facility . 13 . D& M assemble dth e produc t and , pursuan t

t o direction s fromus , sen t th e produc t overnigh t vi aFedera

l Expics a(Fe dEx ) t o ou r Minneapoli s location . Variou s delays i n thi. s entir e process - du e t o manufacturin g an dasseoibl y delay s i n China

mad e thei r

arrival i n Miimcapoh s aparticularl y urgen t matter . 14 . So , t o detai l th e specifi c circumstance s surroundin g th e shipment , le t me reiterate : a . D& M ha dn o informatio n a t th e tim e o f

shippin g tha

t th e product s containe dhazardou s mfltcrials . b . D& M woul dhav e bee n unabl e t o discove r th e presenc e o f

hazardou s material s fromth e packagin g that wa s provide dwhe n t

t wa s sen t b y ai r vi a DH L fromChina . c D& M woul dno t

hav e bee n abl e t o discove r ih e presenc e o f

hazardou s material s Iro mour

discussion s a s t

o th e us e an dpurpos e o f

th e product

- r

o be use da s aiLFp A -exemp t dietar y supplement-typ e produc T intende dfo r human consumption . d . D& M woul dno t

hav e discovere dth e presenc e o f hazardou s material s a s a resul t o f tmdcrtaking , managin g o r completin g th e proces s o f assembl y pursuan t t o th e purchas e orde r

that the y wer e provided .08/03/201 1 15-4 7 FA X 202433514 2 FA A - OM S QOOS/OI O

e . D& M woul dhav e logicall y assume dthat th e produc t

containe dn o hazardou s material s and , a s such , wa s appropriat e for shippin g vi aai r

i n th e US , give n that

that wa s ho w th e produc t

wa s shippe dan dtransporte d t o i t fromChin ab y Ruyan Group . f A s aInsul t

o f th e forgoing , ther e wa s n o attemp t by O&M t o intentionall y mislabe l th e produc t

or mislea dth e carrie r

a s t o th e content s o f

th e product s intende dl o b e shippe dt o Minneapolis . The y complete dal l shippin g documcnlaiio n consisten t wit h th e documentatio n the y receive d fromChin aan dconsisten t wit h th e packagin g tha t

i t arrive dIn . g . B y th e sam e token , give n ho w Ruya n Grou p hadtraditionall y sen t u s th e produc t i n Miimeapolis

- w e wer e expectin g th e shipmen t t o u s fi-cv n D& M t o b e expedite dconsisten t wit h ho w i t ha dbee n shippe dintcmaiionall y fir^ mRuyan Group . I n fac t

i t wa s shippe di n that

manner . h . Th e circumstance s o f

th e shipmen t

an dth e projec t

wer e suc h tha t

D& M coul dno t hav e logicall y discovere dth e presenc e o f hazardou s material s i n th e produc t

and , thereby , shippe di t

i n accordanc e wit

h FA A regulation s an dguidelines . 15 . Addirionally , ou r

ow n investigatio n a s t o th e caus e o f th e inciden t

reveale dtha t Ruya n Group , th e manufecturer , ha dmad e a n unauthorize ddesig n chang e i n th e product . ITii s informatio n wa s provide dt o th e FA A a s apar t o f it s investigatio n i n th e Fal l o f

2009 .08/03/201 1 15:4 7 FAX 202493514 2 FA A - DM S 01010/01 0

16 . Finally , a s aresul t

o f th e incomplet e and , i n th e cas e o f Ruyan Group , inaccurat e informatio n provide dD& M by Ruya n Grou p an dRAI , I believ e tha t thei r euJpabilrt y an dthei r

propose dcivi l penalt y shoul db e significanri y mitigated . 

# ijmJ-Ls.^^. ^ Willia mP . Bartkowsk

i 522 3 Malib u Driv e Minneapolis , M N 5543 6 Subscribe dan dsworn t o befor e me , thi s 21i: t

da y o f My . 2011 . [Notar y Seal: ]

l[^^^¥wfrb f

Notary j Nielse n NOTAR Y PUBLI C ^^ 3 I , 2 0 / V M y commissio n expires : J C