UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

In the Matter of: 

EMPIRE AIRLINES, INC. 

Administrator, Federal Aviation Administration: 

APPEAL BRIEF 

FAA DOCKET CP09NM0009 

FAA Case No. 2007NM700155 

DMS No. FAA-2009-0586 

On March 28, 2011, the Administrative Law Judge served a written Initial Decision in the 

above-captioned case. On April 7, 2011, Empire Airlines, Inc. (hereinafter "Empire") filed a 

Notice of Appeal pursuant to Section 13.233(a) of the Rules of Practice in Federal Aviation 

Administration Civil Penalty Actions (14 C.F.R. § 13.233(a». Pursuant to 14 C.F.R. § 

13.233(d), Empire, by and through undersigned counsel, hereby files this Appeal Brief 

requesting reversal of the Initial Decision as it relates to violations of 49 C.F.R. §§ 175.3 and 

175.30(a). 

I. INTRODUCTION 

The Initial Decision must be partially reversed. Material findings of fact are not 

supported by substantial evidence and related conclusions of law ignore applicable law, 

precedent, and policy. 

The Administrative Law Judge failed to adequately consider the central independent 

contractor relationships between Federal Express Corporation d/b/a FedEx Express (hereinafter 

"FedEx Express") and Empire within the chain of custody. As a result, the law judge failed to 

reach the appropriate legal conclusion that Empire was not liable for failures of its independent 

contractor, FedEx Express. Moreover, the law judge did not evaluate the significant issue of 

whether Empire employed reasonable methods to ensure that the hazardous material complied 

with the requirements of § 175.30(a). One reasonable avenue is through reliance upon an initial 

carrier and independent contractor for accepting and loading hazardous materials. 

1 
The law judge failed to consider the unique circumstances of this case in relation to Part 

175 and the HMR. Past precedent and the plain language of Part 175 expressly allows for an 

independent contractor relationship for accepting hazardous material that limits the liability of 

the air operator. Here, Empire was not responsible for its independent contractor when the latter 

improperly accepted cargo under § 175.30(a). 

FedEx Express served as an independent contractor when accepting and loading the 

hazardous materials for Empire. FedEx Express had command over its employees, supplied the 

instlUmentalities and tools, and exercised dominion over the work performed. To find that 

Empire controlled or directed the detailed physical performance ofloading and accepting ignores 

substrultial evidence to the contrary. Empire was left supervising the result of FedEx Express's 

loading and acceptance process, not directing or controlling the means; this is not agency. 

Empire is further shielded from liability based on the reasonable actions it took to 

"ensure" pmsuant to § 175.30(a). One reasonable avenue for an air operator serving as a feeder 

airline to satisfy the ensming requirement of § 175.30(a) is through reasonable reliance upon 

another airline that serves as the initial carrier and independent contractor for accepting and 

loading hazardous materials. Empire's reliance on FedEx Express was reasonable because 

FedEx Express was primarily responsible as the prior offeror of hidden shipments; FedEx 

Express served as the initial air cruTier charged with the highest level of safety; and FedEx 

Express acted as an independent contractor that owed a specific duty of care when accepting and 

loading. Moreover, Empire took reasonabk steps to fulfill its "ensuring" mruldate such as 

supervising or monitoring the acceptance process consistent with the FAA-approved General 

Operations Manual (GOM), and being aware of perceptible facts under its control. 

The reasonableness of Empire's actions becomes more evident when comparing other 

instances where air carriers relied on third parties, such as Part 145 repair stations or other air 

carriers providing security functions. In contrast to those cases, FedEx Express served a primary 

role - cOl11mercially, legally, and physically - in the structure of the relationship and sequence of 

events involved here. In addition, this case involves a hidden shipment of hazardous material 

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where FedEx Express exclusively controlled the key decision-points and critical data in the chain 

of custody. In the end, Empire did not transfer its responsibility to "ensure" under § 175.30(a); 

instead, it took reasonable and allowable methods to meet this obligation. 

II. BACKGROUND 

The issues in dispute and findings subject to appeal specifically relate to the sequence of 

events and relationships ullderpitming Empire Flight 8677-22 and the transportation of celtain 

hazardous materials. 

This case arose from the FAA inspection of August 21-22, 2007 at a FedEx Express 

facility located in Medford, Oregon. (Tr. at 17-19; Tr. at 95.) During the inspection, the FAA 

agents gathered certain "down-line" infonnation on what was expected to be on flights in-bound 

from Portland, Oregon, including Flight 8677-22. (Complainant's Brief, at 3.) The FAA agents 

sought to compare the available information in order to determine the consistency between what 

was stated to be arriving at the airport and what was actually on-board the aircraft at an-ivaI. (Tr. 

at 19.) In order to answer this question, the FAA agents first tumed to FedEx Express (not 

Empire), which provided an inbound dangerous good alert, produced through its exclusive 

AutoDG system, that indicated that no hazardous material was aboard flight 8677-22. (Tr. at 41, 

16-22; Exhibit C-5; see also Tr. at 144-146.) The FAA agents also accessed FedEx Express's 

website using FedEx Express tracking numbers to detennine whether hazardous material was 

aboard Flight 8677-22. (Tr. at 45-46; Exhibit C-7.) Upon landing, the FAA also reviewed a 

FedEx Express AutoDG manifest carried by Empire for Flight 8677-22, which merely verified 

the prior FedEx Express inbound dangers good alert. (Tr. at 44-45; Exhibit C-6.) As a result, tile 

Empire crewmember could not produce any shipping papers indicating the presence of hazardous 

material on board Flight 8677-22. (Tr. at 53, Lines 12-20.) 

However, during off-loading operations conducted by FedEx Express, the FAA agents 

observed two packages marked ORM-D and this marking was located near the FedEx Express 

affixed shipping label. (Tr. at 49, lines 7-19; Tr. at 52, lines 12-17; Tr. at 95; and Exhibit C-8.) 

The ORM-D marking indicates the presence of hazardous material, but does not signify 

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authorization for transportation by air. (Tr. at 49; Tr. at 53; 49 e.F.R § 173.27.) After FedEx 

Express personnel opened the packages, an FAA agent detelmined that the packages included 

hazardous materials and, therefore, were improperly marked and lacked requisite shipping 

papers. (Exhibit e-l; Exhibit e-8; Tr. 49-54.) 

Based on these observations and [mdings, the FAA initiated civil penalty proceedings 

against Empire for violations of §§ 175.3 and 175.30(a), among others. l These regulations relate 

to acceptance of hazardous materials and specifically allow for the role of independent 

contractors for accepting and loading purposes. See 49 C.F.R. Part 175. Empire disputed these 

allegations and requested a hearing. (E.g., Answer.) On June 22, 2010, the Administrative Law 

Judge set the hearing in this matter for, and it was held on October 27-28,2010. (See generally, 

Tr. and Exhibits.) 

Dnring the administrative hearing under 14 C.F.R. Part 13, the record revealed a 

sequence of events and critical relationships within the chain of custody leading to Empire Flight 

8677-22. First, Empire served as a supplemental or feeder airline for FedEx Express. (Tr. at 46, 

lines 4-7.) FedEx Express used Empire to access rural markets, such as the Medford area, 

instead of dedicating FedEx Express's trunk aircraft. (Tr. at 133-134.) Empire's commercial 

feeder operations were completely dependent upon and exclusive to FedEx Express. (Tr. at 

168.) 

In this case, for example, l'edEx Express had already accepted, processed, and 

transported the shipments, including by air, scveral times. On August, 21, 2007, a FedEx 

Express courier acceptcd the shipments and transported them to the FedEx Express sorting 

facility near Baltimore, Maryland. F edEx Express then flew the shipments from Baltimore, 

Maryland to Memphis, Telmessee, where they were sOlied again and the FedEx Express label 

affixed to this shipment was scanned again, and thereafter placed on another l'edEx Express 

I The FAA also initiated proceedings against FedEx Express in connected to the same underlying factual 

transactions at issue here and the law judge lbund violations for 49 C.F.R. §§ 175.3 and 175.30(a). See FAA Docket 

No. CP09NMOOIO, DMS No. FAA-2009-0721, FAA Case No. 2007NM700156. FedEx Express did not appeal. 

4 
aircraft. These shipments then flew from Memphis, Tennessee to Portland, Oregon. (See 

Exhibit C-7; see also Complainant's Brief, at 2.) 

Second, Empire entered into a contractual relationship with FedEx Express, which 

included having FedEx Express provide accepting and loading services. (Tr. at 132·134.) 

Empire never physically accepted or loaded cargo under this an-angement and relied upon the 

instrumentalities, tools, facilities, and employees ofFedEx Express. (Tr. at 30,16-22; Tr. at 133-

136.) According to the FAA agent's testimony, when a FedEx Express main flight lands at the 

Portland FedEx Express station, FedEx Express employees offload the cm'go using FedEx 

Express unit load devices and bring the cargo to a FedEx Express sorting facility. (Tr. at 51.) If 

the cargo is destined for an Empire aircraft, then FedEx Express employees place the cargo in 

FedEx Express cmts that are tugged by FedEx Express employees to the Empire aircraft. (Tr. at 

51-52.) Once at the aircraft, the FedEx Express personnel load each aircraft by placing boxes 

longitudinally on rollers leading to the aircraft and providing no apparent visual cues as to 

markings on the ends of each package. (Id.; Tr. at 175-176; Tr. at 181-182.) 

Third, under Empire's FAA-approved GOM, the Empire crewmember supervises the end 

result of a FedEx Express accepting, processing, transporting, and loading process. (Exhibit C11.) Empire's GOM, Appendix G, lists the "Fed-Ex" procedures for acceptance and loading that 

require FedEx Express employees to actually separate the hazm'dous material from other freight 

"so" that the Empire crewmember "may" accomplish the pre-load inspection. (Id.; Tr. at 66; Tr. 

at 187-189; Tr. at 197 .. 198.) In executing this separation task, the FedEx Express loading 

personnel utilize information previously entered into the FedEx Express AutoDG system. (Tr. 

at 140-144.) Once the hazardous materials are separated from otller freight, FedEx Express 

employees present the Empire crewmember with an AutoDG manifest so that the pilot may 

survey the contents of the list against the separated packages. (Tr. at 173.) 

In the case of a discrepancy, only FedEx Express persolUlel that were trained in the use of 

AutoDG can access and update the system. (Tr. at 146, lines 13-22; Tl'. at 149, lines 7-17.) 

Empire has no access to AutoDG. (Tr. at 156, lines 2-4.) Empire trains mId employs its 

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crewmembers while FedEx Express trains and controls its employees, including accepting and 

loading personnel. (Tr. at 136-138; Tr. at 169-170.) 

Fourth, there was no evidence offered that Empire failed to actually supervise the 

acceptance and loading process, as prescribed under the GOM and described in testimony. 

Despite this record and regulatory context, the law judge found violations under the 

Hazardous Materials Regulations (HMR), 49 C.F.R. Parts 171-180, including §§ 175.3 and 

175.50(a). (Initial Decision, at 6-7.) The law judge reasoned that Empire could not transfer or 

delegate the responsibility to accept packages that are not in compliance with the packaging, 

marking and shipping paper requirements of the HMR. (!d.) Central to this finding was the law 

judge's conclusion that FedEx Express served as an agent for Empire because the Empire 

crewmember supervised the acceptance and loading process pursuant to the GOM. (Id at 7.) In 

addition to other deficits, the Initial Decision does not explore the precise mechanics of the GOM 

or fully analyze the legal manifestations of agency based on the evidence given. 

m. ARGUMENT 

A. The Administrative Law Judge made material findings of fact that are not 

supported by substantial evidence and conclusions of law that ignore applicable law, 

precedent, and policy. 

When reviewing an appeal, the FAA decisionmaker considers whether each finding of 

fact is supported by a preponderance ofreJiabJe, probative, and substantial evidence. 14 C.F.R. § 

13.233(b). The specific facts underlying a situation must be detelmined before the legal standard 

may be correctly applied. Blakemore v. Coleman, 701 F.2d 967 (D.C. Cir. 1983). 

The FAA decisionmaker must examine the relevant data and articulate a satisfactory 

explanation for its action including a rational connection between the facts found and the choice 

made. City of Santa Monica v. FAA, 631 F.3d 550,554 (D.C. Cir. 2011) (citing Motor Vehicle 

Mfi's. Ass'n v. State Farm Mut. AUlD. Ins. Co., 463 U.S. 29, 43 (U.S. 1983) and 49 U.S.c. § 

46110(c». FAA's factual determinations are conclusive if they are supported by substantial 

evidence. 49 U.S.C. § 46110(c); see also 5 U.S.C. § 706(2)(E) (courts must set aside agency 

actions which are "unsupported by substantial evidence"). Substantial evidence is such relevant 

6 
evidence as a reasonable mind might accept as adequate to support a conclusion taking into 

account whatever in the record fairly detracts from its weight. Ickes v. FAA, 299 F.3d 260, 264 

(3d Cir. 2002) (citations and quotation marks omitted). 

The FAA decisionmaker will also consider whether each conclusion of law is made in 

accordance with applicable law, precedent, and public policy. 14 C.F.R. § 13.233(b). More 

generally, federal agency decisions must not be arbitrary, capricious, an abuse of discretion, or 

otherwise not in accordance with law. 5 U.S.c. § 706(2)(A); see also Garvey v. NTSB, 190 FJd 

571, 577 (D.C. CiI. 1999). This threshold is met when a federal agency decision was based on a 

consideration of all relevant factors and there is no clear error of judgment. Ritter Transp., Inc. 

v, Interstate Commerce Com" 684 F.2d 86, 88 (D.c. Cir. 1982), 

However, a federal agency decision is arbitrary and capricious if the agency has relied on 

factors which Congress has not intended it to consider, entirely failed to consider an important 

aspect of the problem, offered an explanation for its decision that runs counter to the evidence 

before the agency, or is so implausible that it could not be ascribed to a difference in view or the 

product of agency expertise. Molar Vehicle Mfrs. Ass'n., 463 U.S. at 43, 

In this case, as further demonstrated below, the material findings of fact are not supported 

by substantial evidence and the conclusions oflaw ignore applicable law, precedent, and policy. 

The Administrative Law Judgc failed to adequately consider the central independent contractor 

relationships between FedEx Express and Empire within the chain of custody. As a result, the 

law judge failed to reach the appropriate legal conclusion that Empire was not liable for failures 

of its independent contractor, FedEx Express. Moreover, the law judge failed to evaluate the 

significant issue of whether Empire employed reasonable methods to ensure that the hazardous 

material complied with thc requirements of § 175.30(a), One reasonable avenue is through 

reliance upon an initial carrier in addition to contracting with an independent contractor for 

accepting and loading hazardous materials. The precedent used to support the Initial Decision 

does not speak to the applicable facts or regulatory context involved here. 

7 
B. Part 175 and the HMR specifically allow for an independent contractor relationship 

that limits the liability of the air operator. 

The law judge failed to consider the unique circumstances of this case in relation to Part 

175 and the HMR. Past HMR precedent and plain language of Part 175 specifically allow for an 

independent contractor relationship for accepting hazardous material that limits the liability of 

the air operator. 

The analysis begins with Section 175.3, which states that a hazardous material that is not 

prepared for shipment in accordance with Subchapter A may not be offered or accepted for 

transportation or transported aboard an aircraft. This regulation does not specifY which actors 

will be physically accepting and loading. Instead, this broad standard is refined by the 

application of Subchapter A, which includes § 175.30. 

Specifically, § 175.1 notes that Snbchapter A of Part 175 applies to air carriers and their 

contract personnel, including loading personnel. Thus, Part 175 acknowledges that air carriers 

do not act alone in the chain of custody of hazardous materials and may contract out accepting 

and loading services to independent contractors. 

The plain language of § 175.30(a) describes this relationship further and identifies 

different types of actors involved during the inspection process. Section 175.30(a) stipulates: 

No person may accept a hazardous material for transportation aboard an aircraft unless 

the aircrqfi operator ensures the hazardous material is ... [emphasis added.] 

In other words, some "person" perfonns the act of "accepting" while the "air operator" is 

separately charged with the act of "ensuring" compliance. During the inspecting and loading of 

cargo, a person other than the air operator may be actually accepting the hazardous material. 

This person may be an independent contractor for acceptance and loading purposes. 

An independent contractor has a duty to his employer to act with a standard of care and 

with the skill which is standaId in the locality for the kind of work which he is employed to 

pelform and, in addition, to exercise any special skill that he has. E.g., Restatement (Second) of 

Agency § 379 (1958). An independent contractor is a person who contracts with another to do 

something for him, but who is not controlled by the other or subject to the other's right to control 

with respect to his physical conduct in the perfolTnance of the undertaking. Id. at § 2(3). If a 

8 
person has the right to control only "the result of the work" by another person, and "not the 

means" by which it is accomplished, an independent contractor relationship exists. ]n the Matter 

of Aero Continente, SA. , FAA Order No. 2003-8, 2003 FAA LEXIS 432, *23 (Sept. 12,2003), 

citing In re Coupon Clearing Service, ]I1C., 113 F.3d 1091,1099 (9th Or. 1997). In contrast, an 

agency relationship exists when the principal has the authority to control the detailed physical 

performance and day-to-day operations of the entity acting on its behalf. Id. 

Employers are not responsible for their independent contractor's acts or omissions. 

Wilson v. Good Humor, 757 F.2d 1293,1301 (D.C. Cir. 1985). This specifically includes when 

an independent contractor improperly offers or accepts hazardous materials on behalf of an air 

carrier. See In the Matter of Federal Express, FAA Order No. 2002-20 (Aug. 5, 2002), 

reconsideration denied, FAA Order No. 2003-2, 2003 FAA LEXIS 194 (May 6, 2003); see also 

]n the Matter of Aero Continente, SA. , FAA Order No. 2003-8, 2003 FAA LEXIS 432, *22 

(Sept. 12,2003). Therefore, an air operator is not responsible for its independent contractor 

when the latter improperly accepts cargo under § 175.30(a). 

C. FedEx Express served as an independent contractor, not agent, for Empire when 

accepting and loading hazardous material. 

With respect to acceptance of hazardous material, the Administl'ator has specifically 

considered an independent contractor relationship between an air carrier and its contracted 

service provider. In the Matter of Federal Express, FAA Order No. 2002-20 (Aug. 5, 2002), 

reconsideration denied, FAA Order No. 2003-2, 2003 FAA LEXIS 194 (May 6, 2003). In 

Federal Express2

, the "key question" was whether the air catTier was responsible for the 

courier's improper otfer and acceptance of hazardous materials in air transportation. Id., at 5. 

Given that the courier was in fact an independent contractor, the Administrator held that liability 

could not be transfctTed to the air carrier. Id., at 9. 

2 Given the central issue in this case, it is interesting to note that the Complainant failed to cite the Federal Express 

precedent when claiming that an air carrier may nol be shielded from liability when utilizing an independent 

contractor in the acceptance of hazardous materiaL (Complainanfs Rebuttal Brief, at 3.) Complainant does cite in a 

footnote the related Administrator's decision, FAA Order No. 2002-3, denying a petition for reconsideration, but 

that decision affums the conclusions of FAA Order No. 2002-20. (Id., at 8.) 

9 
In Federal Express, the courier service failed to provide to the air carrier any information, 

including any shipping papers, that the shipment involved hazardous materials. ld at 3. The 

Administrator, thus, determined that the packages were "hidden shipments" even though there 

were inconspicuous dangerous good (DG) labels on the outside near the air carrier's affixed 

shipping labels. ld 

Moreover, the Administrator held that the courier was not an agent of the air carrier even 

though: (1) the air carrier obtained business through the courier; (2) the courier's delivery 

services were limited to the air carrier; (3) the courier adveliised itself as the air carrier, such as 

placing decals on its vehicles; and (4) the courier utilized the air carrier's air waybills and 

envelopes. ld at 3-4. 

The Administrator instead found that the courier was an independent contractor because 

the courier had command of its employees (hired and fired its own persounel), supplied its own 

instrumentalities and tools (vehicles), exercised control over the work and space (determined its 

own routes). ld The principal air calTier did not have power to control the "detailed physical 

perf01mance" and "day-to-day operations" of the courier. ld. at 7 (citing United States v. 

Orleans, 425 U.S. 807, 814 (1976) (quotation omitted»; see also Restatement (Second) of 

Agency § 220(2) (1958). 

In this case, FedEx Express failed to provide any information, including any shipping 

papers, aleliing Empire that the shipments involved hazardous materials. (Tr. at 182, lines 6-16; 

and see generally, Answer.) Like the packages in Federal Express, the packages here were 

hidden shipments even though there were inconspicuous ORM-D marks near the FedEx Express 

affixed shipping label. (Exhibit C-8; Tr. at 181; Tr. at 53.) 

Similar to the courier, FedEx Express also served as an independent contractor for 

accepting hazardous material for the air operator. This contracting arrangement was consistent 

no! only with Part 175 and the HMR, as described above, but also with the loading options under 

Empire's Operations Specifications. (Exhibit C, page 13.) Moreover, FedEx Express meets the 

test set forth in applicable precedent. 111 the Matter of Federal Express, FAA Order No. 2002-20, 

10 
3-4 (Aug. 5, 2002), reconsideration denied, FAA Order No. 2003-2, 2003 FAA LEXIS 194 

(May 6, 2003). 

First, Empire obtained regional air transport business through FedEx Express. (Tr. at 

133-134.) Second, Empire received accepting and loading service exclusively from FedEx 

Express. (Tr. at 168, lines 7-18.) Third, the aircraft operated by Empire had FedEx Express 

logos and was painted in FedEx Express colors. (Tr., at 150, line 4; Exhibit C-15.) Fourth, 

Empire utilized FedEx Express shipping labels, tracking numbers and documentation of 

AutoDG. (Tr. at 45-47; Exhibit C-7; Tr. at 130-131.) Like in Federal Express, such facts do 

not make FedEx Express an agent of Empire. 

Instead, FedEx Express served as an independent contractor of Empire for accepting and 

loading purposes. FedEx Express hired, fired and trained its own personnel (command power); 

utilized AntoDG and its own tracking number system for cargo (instrumentalities and tools); and 

determined the method for accepting, processing, and loading packages (exercised control over 

details). (Tr. at 45-47; Tr. at 51-52; Exhibit C-7; Tr. at 133-140; Tr. at 144-145; Tr. at 175-176; 

Tr. at 182, lines 6-16; and see generally, Answer.) Indeed, the sorting and acceptance process 

for feeder airlines occurred at the Portland International Air FedEx Express station utilizing 

FedEx Express sorting equipment, ULDs, carts, and rollers controlled by FedEx Express 

employees. (Tr. at 51-52; Tr. at 134-135.) There is no allegation implying or record evidencing 

that Empire, the feeder airline, oversaw the day-to-day operations of F edEx Express, the 

principal airline. 

Although Empire had the right to "supervise" the accepting and loading process, nothing 

in tlle record indicates that this right extended into directing me detailed physical perfolmance of 

FedEx Express personnel. Indeed, testimony indicates that Empire pilots "observed" or 

monitored the loading process. (Tr. at 51-52.) Empire's written procedures further reveal that 

FedEx Express personnel were in charge of the critical components of the operation. (Exhibit C11.) Empire's GOM, Appendix G, lists the "Fed-Ex" procedures for acceptance and loading as 

follows: 

11 
Loading and unloading ofDG is handled by Fed-Ex ranked personnel. During the 

loading, the DG is separated from other freight, so the crew member may accomplish 

the pre-load inspection ... A crew member must supervise the loading ofDG. 

(Exhibit C-l1, page 41; Tr. at 66; Tr. at 187-189; 1'r. at 197-198.) 

In other words, Empire's supervision, under the FAA-approved procedme, was 

contingent upon and subsequent to FedEx Express personnel actually separating the hazardous 

material from other freight. FedEx Express personnel separate the hazardous material packages 

"so" that the Empire crewmember "may" accomplish the pre-load inspection. 

Empire relied on FedEx Express to carry its duties during the sorting and loading 

process at the FedEx Express station (in addition to upholding its other obligations as a prior 

offeror and initial air carrier). (Tr. at 134-135; 1'1'. at 139-140.) In turn, the FedEx Express 

loading personnel at the FedEx Express station further relied on the accuracy of infonnation 

previously entered into the AutoDG system, which was completely controlled by FedEx ExpTess. 

(Tr. at 140-144.) In the case of a discrepancy, only FedEx ExpTess personnel that were trained 

in the use of AutoDG could access and update the system. (Tr. at 146, lines 13-22; 1'r. at 149, 

lines 7-17.) 

To find that Empire controlled or directed the detailed physical perfonnance of loading 

and accepting ignores substantial evidence to the contrary.3 Empire was left supervising the 

result of FedEx Express's loading and acceptance process, not directing or controlling the means; 

this is not agency. Since FedEx Express was an independent contractor, Empire cannot be held 

liable for its acts or omissions. See In the Matter of Federal Express, FAA Order No. 2002-20 

(Aug. 5,2002), reconsideration denied, FAA Order No. 2003-2,2003 FAA LEXIS 194 (May 6, 

2003); see also In the Matter of Aero Contil1ente, S.A., FAA Order No. 2003-8, 2003 FAA 

LEXIS 432, *22 (Sept. 12,2003). 

Even though the issue was not raised by Complainant, it should be noted that Empire 

never held out FedEx Express as its agent consistent with the theory of apparent agency. 1n the 

Matter of Federal Express, FAA Order No. 2002-20, at 8 (Aug. 5, 2002), reconsideration 

J The record also lacks any testimony from the actual Empire crewmember that "supervised" FedEx Express's 

acceptance and loading services or from the persOimeI ofthe independent contractor on site. Thus, there is no 

substantial evidence to prove that Empire's single pilot actually failed to carry his obligations under the GOM. 

12 
denied, FAA Order No. 2003-2, 2003 FAA LEXIS 194 (May 6, 2003). Courts may find an 

employer vicariously liable for the negligence of its independent contractor if the employer has 

held out the independent contractor as an agent of the employer. Wilson, 757 F.2d at 1301-1303. 

Courts generally require a showing of reasonable reliance by a third party on the business 

reputation or good name of the employer in doing business with the independent contractor. Id. 

Given that Empire's feeder commercial service is dependent upon and exclusive to FedEx 

Express; that FedEx Express provides the instrumentalities and tools (from ULDs to AutoDG); 

and that FedEx Express is a global brand for express cargo service; it is doubtful that any third 

party relies on Empire's business reputation when shipping vis-a-vis FedEx Express. Moreover, 

there is no substantial evidence in the record to support such a finding. In the broader 

commercial relationship, Empire could be considered an agent for FedEx Express. This issue 

was not explored. Of course, agents are not responsible for the acts or omissions of their known 

principals. E.g., Restatement (Second) of Agency § 328 (1958). 

D. Empire also reasonably relied upon FcdEx Express as the initial carrier and its 

independent contractor for accepting and loading hazardous materials. 

Even with the protection provided by the express language of Part 175 and past precedent 

under the HMR, Empire is further shielded from liability based on the reasonable actions it took 

to "ensure" pursuant to § 175.30(a). 

The duty of care exercised by the air operator, tile reasonableness of its effort, must be 

measured by the precise circumstances involved and within the applicable regulatory context. 

FAA v. Federal Express CO/poration, FAA Docket No. CP01NM0015, 2002 FAA LEXlS 570 

(Oct. 31, 2002), at *10 (citing Rainey v. Paquet Cruises, Inc., 709 F.2d 169 (2 Cir. 1983); 

Prosser, The Law of Torts § 34, p. 181 (4th ed. 1971»). In this case, such a conclusion can only 

be reached following a thorough factual and legal review of the relationship of the actors in tile 

chain of custody and within the precise regulatory context of the HMR and Part 175. Such an 

analysis is lacking in the Initial Decision. 

Section 171.2 notes that each offeror may rely on infonnation provided by another (prior) 

offeror. Specific to carriers, an initial carrier remains an offeror when it transfers a hazardous 

13 
material to another carrier for continued transportation in commerce and when performing a pretransportation function such as acceptance. 49 C.F.R. § 171.8 (defining "person who offers or 

offeror" in relation to carriers.) For example, a feeder airline may rely on the information 

provided by an initial air carrier if that prior air operator performs a pre-transportation function 

for the feeder airline. 

An air operator may not rely on an initial carrier if the operator knows or, a reasonable 

person, acting in the circumstances and exercising reasonable care, would have knowledge that 

the infol1uation provided by the other offeror is incorrect. 49 C.F.R. § 171.2. Additionally, for a 

violation to occur there must be substantial evidence of actual knowledge of the issue or a lack of 

reasonable care by the subsequent air carrier (constlUctive knowledge). 49 U.S.C. § 52l3(a). 

This reliance analysis must also be reviewed within the specific context of Part 175, as 

detailed previously, which allows the air operator to contract out the acceptance and loading 

function under § 175.30(a) to an independent contractor. The air operator must still enSlU"e that 

the hazardous material complies with the requirements of § 175.30(a) including proper shipping 

papers and markings. Within the reliance and relationships contemplated under the HMR and 

Part 175, the question therefore arises as to what reasonable methods an air operator may use to 

ensure that the hazardous material complies with the requirements of § l7S.30(a). 

One reasonable avenue for an air operator serving as a feeder airline to satisfy the 

ensuring requirement of § 1 75.30(a) is 111rough reasonable reliance upon another airline that 

serves as an initial carrier and independent contractor for accepting and loading hazardous 

materials. The air operator must still take reasonable steps to fulfill its "ensuring" mandate, such 

as supervising or monitoring its independent contractor consistent with an F AA-GOM, and 

remain aware of perceptible facts under its control. This was the case here. 

First, Empire was relying not just on any pl~or offeror, bnt the primary and initial air 

canier that failed to uncover a hidden shipment. Under the HMR offerors have "primary 

responsibility" for undisclosed hazardous material. 63 Fed. Reg. 30411 (Jun. 4, 1998). The 

adjective "primary" means "being Of standing first in a list, series or sequence" and "fu·st in 

14 
importance; chief; principal; main," Alaska Airlines, Inc" FAA Order 2004-8,2004 FAA LEXIS 

905, at *12 (Oct. 4,2004) (citing Webester's Dictionary), This primary responsibility is 

coupled with the requirement that air carriers must exercise the highest degree of safety. 49 

U.S,C, § 44702(b)(I)(A), Thus, when FedEx Express initially accepted, inspected, processed, 

and transported the packages at issue, performing pre-transportation functions for the benefit of a 

subsequent air carrier, it was being held to an extraordinary and unique standard of care. Empire 

could reasonably rely on the pathway tread by FedEx Express as a prior offeror and initial air 

croTler, 

Second, Empire took reasonable steps to fulfill its "ensuring" mandate by supervising or 

monitoring its independent contractor consistent with its FAA-approved GOM, The written 

procedures first call for FedEx Express persOlmel to conduct tbe actual acceptance and loading, 

which involved separating the hazardous materials from other freight. (Exhibit C-11, page 41; 

Tr. at 66; Tr. at 187-189; Tr. at 197-198.) FedExExpress-trainedloadingpersOlmelatthe 

FedEx Express station in Portland identify the hazardous material shipments based on 

information set forth in AutoDG using FedEx Express tracking numbers entered prior to the 

initial flight by FedEx Express to the feeder (mral) market. (Tr, at 130-131; Tr, at 136-138.) 

Prior to the initial flight, FedEx Express couriers or other persol1l1el, specifically trained by 

FedEx Express in hazardous material awareness, must enter accurate infonnation about the 

shipment for the shipment to be hroldled properly down-line, (Id.) If the packages are not 

declared as hazro'dous material, then the packages are processed by FedEx Express as regular 

cargo, (Tr. at 139-140.) In carrying out these steps, FedEx Express, as an independent 

contractor, had a special duty to Empire to act with the standard of care and skill expected of the 

accepting and loading persOlmel of the world's leading airline for express delivery, E.g., 

Restatement (Second) of Agency § 379 (1958), 

All the critical decision-points within the chain of custody took place prior to the Empire 

crewmember actually fulfilling his supervisory fUllction, (Tr. at 66, lines 7-20; Exhibit C-ll.) 

The record shows that FedEx Express failed to provide any shipping papers or infonnation to 

15 
Empire that hazardous materials were being accepted and loaded onto Flight 8677-22. (Exhibit 

C-5; Tr. at 182, lines 6-16; and see generally, Answer.) Since FedEx Express failed to tmcover 

the hidden shipments as the prior offeror, initial operating carrier and then loading independent 

contractor, the packages with hazardous materials were not properly separated from the other 

freight for review. (Tr. at 66, lines 7-20; Exhibit C-ll; Tr. at 130-131; Tr. at 136-137.) Once the 

dangerous good manifests produced by FedEx Express and packages segregated by FedEx 

Express were presented to Empire, the air operator was supervising a false universe of 

information. (Tr. at 173, lines 3-19.) Moreover, only trained FedEx Express personnel could 

actually fix the AutoDG data. (Tr. at 146, lines 13-22.) 

In light ofthe FAA-approved process involved, Empire took reasonable and required 

measures for "ensuring" the compliance of hazardous material being accepted and loaded. 

However, the efficacy of Empire' s supervision was contingent on FedEx Express personnel 

actually separating the hazardous material from other freight; and this step was dependent on the 

care and skill of FedEx Express personnel (from initial couriers to prior-loaders to the pilot in 

command of the initial flight); their performance was contingent upon the accuracy of AutoDG; 

and Empire had no control over this system or prior process. Notably, there is no substantial 

evidence that Empire failed to actually supervise the loading and accepting process called for 

under its FAA-approved GaM to meet the requirements of § 175.30(a). 

In smn, Empire could only monitor the given facts mlder its control during its role as 

supervisor at a particular point in the chain of custody. Complainant has not alleged that Empire 

failed to "ensure" based on these specific factual circmnstances under § 175.30(a), the law judge 

did not make such a finding, and the record does not SUppOit such a finding. There is simply no 

substantial evidence that Empire forfeited its reasonable reliance in this case. This conclusion 

becomes even clearer when comparing the particular factual relationships and the regulatory 

context of this case with past precedent involving air carrier reliance on third pmties. 

16 
E. This case is substantially different from other instances where air operators relied 

on third parties, including FAA certificate holders. 

Appellant acknowledges that an air carrier's duties, such as airworthiness, security and 

maintenance, involve an elevated standard of care. 49 U.S.c. § 44702; 49 U.S.C. § 

4470 1 (d)(1)(A). As past precedent indicates, such duties are non-transferable. See generally In 

the Matter o/US Air, Inc., FAA Order No. 92-70, 1992 FAA LEXIS 352 (Dec. 21, 1992) 

(airworthiness); In the Matter o/WestAir Commuter, FAA Order No. 96-16, 1995 FAA LEXIS 

342 (May 3,1995) (security); In the Matter o/Empire Airlines, FAA Order No. 2000-13, 2000 

FAA LEXIS 648 (June 8, 2000) (maintenance); and In the Matter 0/ Alaska Airlines, FAA 

Order 2004-8,2004 FAA LEXIS 905 (Oct. 4, 2004) (maintenance). 

However, this precedent, cited by Complainant, does not address issues of acceptance by 

independent contractors WIder the HMR or speak to the reasonable methods by which an air 

operator may "ensure" pursuant to § 175.30(a), including the particular factual circumstances of 

this case involving an initial air carrier and independent contractor. 

First, the US Air case involved an airline's improper reliance on a pushback operator's 

determination of airworthiness. In the Matter 0/ US Air, Inc., FAA Order No. 92-70, 1992 FAA 

LEXIS 352, * I (Dec. 21, 1992). The pushback operator was not an FAA-certificated expert in 

airwOlthiness, the airline trained and held the pushback operator under its immediate and day-today control (agency), the airline acknowledged responsibility for the push back operator's 

actions, and the airline was put on notice by a loud noise during operations. Id. at *2-*8. As a 

result, the Administrator confirmed violations under 14 C.F.R. § 12I.153(a)(2) (airWOlihiness) 

and 91.13 (recklessness operation). 

Second, in the WestAir case, a commuter airline relied upon an associated airline for the 

provision of certain security services. In the Matter o/WestAir Commuter, FAA Order No. 96-

16,1995 FAA LEXIS 342 (May 3,1995). The associated airline failed to even provide a ground 

security coordinator for certain t1ights ofthe commuter airline as required by the latter's FAAapproved security program and 14 C.F.R. §§ 108.5 and 108.IO(a)(I). Id. at *1. The 

17 
Administrator found that the commuter airline did not actually monitor the contracted services. 

Id.at*IO. 

Third, the Empire Airlines case involved an air carrier contracting with a Part 145 repair 

station. In the Matter of Empire Airlines, FAA Order No. 2000-13,2000 FAA LEXIS 648 (June 

8,2000). The Administrator held that the air carrier violated 14 C.F.R. §§ 43.\3(a) and 

121.379(b) when the left engine mount of the catTier's aircraft was repaired in a matmer not 

specified by either the aircraft's Structural Repair Manual (SRM) or Overhaul Manual (OM). Id. 

at *25. The Administrator reasoned that the deviant repair was described accurately in the 

maintenatlCe records and had the air catTier actually reviewed the recmd then the carrier would 

have been on notice of the violation. Id. at *23. The Administrator acknowledged that there 

may be certain circumstances in which an air carrier might not be held responsible for an 

independent contractor's failure in maintenatlCe aIld inspections. Id. at *24. However, since the 

air carrier retained primary responsibility for maintenaIlce under the express language of § 

121.379(b) and did not in fact CatTY out its supervisory function, then the air carrier could not 

reasonably rely on its independent contractor. Id. 

The case at hand involves substantially different factual circumstances and regulatory 

context. First, the role and relationship of the actors involved is materially dissimilar. In US Air, 

the air carrier relied upon a non-air carrier agent that the catTier trained and retained day-to-day 

control over. The WestAir case involved a commuter airline that relied on a piece of paper, not 

on another air catTier's prior operational actions or an actual person physically carrying out 

certain duties on site (the security coordinator never showed up). Similarly, in Empire Airlines, 

the air carrier relied on a Part 145 repair station, not all air carrier serving as all initial air catTier 

and loading contractor. These cases say nothing about the chain of custody involved in 

hazardous material transportation. 

Here, Empire reasonably and literally walked in the precise footsteps of FedEx Express 

and then reasonably relied upon the air carrier to cany out acceptance and loading functions 

under § 175.30(a). FedEx Express served as the dominant commercial entity, the lead air 

18 
operator, and an independent contractor with directly applicable FAA-certificated expertise. 

Empire was relying on FedEx Express's separate duties of care and skill as the offeror, the initial 

air carrier, and the independent contractor for accepting and loading purposes. Within the 

structure of this relationship and sequence of events, F edEx Express served a primary role -

commercially, legally, and physically. 

In addition, the facts here involve a hidden shipment of hazardous material as opposed to 

an accurate record of signals and prior process leading to discovery ofthe violation. (Tr. at 41, 

lines 16-22; Tr. at 50, lines 4-14.) In contrast to the US Air case, Empire was not actually alerted 

by a "loud noise" or engaged in communications with the independent contractor about the 

problem (like the dialogue between the pilot and the pushback operator in US Air following the 

loud noise). In WeslAir, the commuter airline actually failed to monitor its independent 

contractor and ignored over the course of several flights the glaring absence of the security 

ground coordinator. And unlike in Empire Airlines, the independent contractor did not provide 

an accurate written record (maintenance paper work and manuals) to the air carrier clearly 

identifying the violation. 

Instead, the record shows that FedEx Express failed to provide any shipping papers or 

information to Empire that hazardous materials were being accepted and loaded onto Flight 

8677-22. (Exhibit C-5; Tr. at 50, lines 4-14; Tr. at 182, lines 6-16; and see generally, Answer.) 

The record further demonstrates that the efficacy of Empire's supervision was contingent on the 

FedEx Express personnel actually separating the hazardous material from other freight and the 

accuracy of AutoDG, which it had no control over. (Tr. at 66, lines 7-20; Exhibit C-11; Tr. at 

133-140; Tr. at 146, lines 13-22; Tr. at 149, lines 11-22.) 

The packages in question had inconspicuous ORM-D markings on the outside near the 

FedEx Express shipping labels. However, this does not make it a declared shipment. See Inlhe 

Matter of Federal Express, FAA Order No. 2002-20, at 3 (Aug. 5,2002), reconsideration 

denied, FAA Order No. 2003-2, 2003 FAA LEXIS 194 (May 6, 2003). The markings 

themselves were not in plain site given the placement of the marks and naturc of the FcdEx 

19 
Express loading process. (Ir. at 181-182.) Moreover, the Empire crewmember does not 

physically accept and load the packages. (Ir. at 30, lines 16-22; Ir. at 181-182.) In accordance 

with FAA-approved procedures, he surveys the product of a prior process based on an 

information system beyond his contro\. (Exhibit C; Ir. at 100, lines 4-10; Ir. at 136-140; Ir. at 

146-147; Ir. at 173, lines 3-19.) 

Ihese facts must also be viewed within the regulatory context involved. Section 

175.30(a) does not require Empire to separately accept and load each package - in addition to the 

actions of its independent contractor. Part 175 expressly permits the contracting out of 

acceptance and loading functions by the operating air carrier. Ihe HMR pelmit reasonable 

reliance. Ihus, a feeder airline may rely upon an independent contractor for accepting and 

loading of hazardous material so long as the feeder airline undertakes reasonable measures to 

ensure compliance. Ihere is no evidence in the record, Complainant has not alleged, and the law 

judge did not find that Empire failed to actually carry out its supervising role as written in the 

GaM and envisioned by § 175.30(a). 

Indeed, the ability of an air carrier to undertalce reasonable reliance under the HMR and 

Part 175 is illuminated by the stark contrast of the specific facts and regulatory violations of the 

Alaska Airlines.4 Ihe Administrator held in Alaska Airlines that the ail' carrier was responsible 

for the maintenance deficiencies of its independent contractors because: (1) 14 C.F.R. § 121.363 

provides that carriers are "primarily responsible" for maintenance; (2) the FAA had issued 

guidance emphasizing that carriers have "unrestricted and unconditional responsibility" for their 

independent maintenance contractors; and (3) one of the air calTier's operations specifications 

required it to "ensure" that its contractors performed all substantial maintenance "without 

deviation" according to its maintenance program. Alaska Airlines, Inc., FAA Order 2004-8, 

2004 FAA LEXIS 905, *2-*3 (Oct. 4, 2004). 

In contrast with respect to hazardous materials, the HMR, including the specific 

regulations involved in this case, expressly allow for reasonable reliance on initial air c3niers 

4 It is important to note that the Alaska Airlines case is cited when evaluating the NOPIC allegation during the first 

flight not with regard to the VIolations at issue in this appeaL Initial Decis_ion, at 4. 

20 
and independent contractors in the chain of custody. Part 175 does not utilize the absolute 

latlguage and qualifiers that the Administrator found compelling when holding the ail' carrier 

responsible in Alaska Airlines. 

Consistent with this regulatory context, Empire's GaM simply acknowledges that the 

airline is "responsible" for HMR compliance, not "primarily" responsible. (Exhibjt C-ll, at 

page 11-8.) Additionally, under the HMR offerors (including initial air carriers also acting as 

offerors) have "primary responsibility" for undisclosed shipments. 63 Fed. Reg. 30411 (Jun. 4, 

1998). The adjective "primary" means "being or standing first in a list, series or sequence" and 

"first in importance; chief; principal; main." Alaska Airlines, Inc., FAA Order 2004-8, 2004 

FAA LEXIS 905, at * 12 (Oct. 4, 2004) (citing Webester's Dictionary). 

TIlere is no question that FedEx Express, as initial air carrier and prior offeror, was first 

in the sequence of accepting, loading, and transporting the hazardous material at issue and then 

served as the primary actor in accepting and loading the hazardous material. (Tr. at 133-140; Tr. 

at 175-176.) As noted in the record and explained in the prior section, FedEx Express 

exclusively controlled the key decision-points and critical data in the loading and acceptance 

process. Under the FAA-approved loading process for the feeder airline, Empire supervised the 

result of F edEx Express's prior critical ctTors and unknown mistakes. 

Finally, unlike the Alaska Airlines case, there are no express conditions or restrictions on 

how an operating catTier may reasonably ensure wIder § 175.30(a). Significantly, there is no 

listed reqnirement that an air operator must "ensure" that its independent contractor acts "without 

deviation" when loading and accepting hazardous material. Here, Empire took reasonable and 

permissible measures to ensure that the hazardous materials complied with the requirements of § 

175.30(a), including contracting out acceptance and loading functions. There is also no 

substantial evidence, finding or allegation that Empire did not actually ca1'1'y out its duty to 

supervise its independent contractor. As a result the deviations that occurred fall squarely and 

reasonably at the feet of FedEx Express. 

21 
IV. CONCLUSION 

For the reasons set forth above, Empire Airlines, Inc. respectfully requests that the FAA 

decisiorunaker partially reverse the Initial Decision such that violations of 49 C.F.R §§ 175.3 and 

175.3 O( a) are dismissed. 

Dated this 22nd day of June, 2011. 

Respectfully Submitted, 

~.Gre . Wicks 

- Roncevert D. Almond 

22 

The Wicks Group, PLLC 

1215 1 i h Street, NW 

Sumner Annex, Fourth Floor 

Washington, DC 20036 

Tel: (202) 457-7790 

Fax: (202) 457-7799 

Courtney E. Felts 

Senior Attorney - Regulatory Affairs 

Federal Express Corporation 

3620 Hacks Cross Road 

Building B, 3

rd Floor 

Memphis, TN 38125 

Tel: (901) 434-8632 

Fax: (901) 434-8283 

Counsel for Empire Airlines, Inc. 
CERTIFICATE OF SERVICE 

I hereby certify that the foregoing docrunent has been sent via facsimile and expedited 

courier service to: 

Federal Aviation Administration 

600 Independence Avenue, SW 

Wilbur Wright Building-Suite 2WI 000 

Washington, DC 20591 

Attention: Hearing Docket Clerk, AGC-430 

Fax: (202) 493-5142 

Mr. James A. Barry, Senior Attorney 

Enforcement Division, AGC-300 

Office of the Chief Counsel 

Federal Aviation Administration 

800 Independence Avenue, SW 

Washington, DC 20591 

Tel: (202) 267-8198 

Fax: (202) 267-5106 

Mr. Scott Morris, Attorney 

Federal Aviation Administration 

Office of the Regional Counsel (ANM-7) 

1601 Lind Ave., S.W. 

Renton, W A 98057 

Tel: (425) 227-1417 

Fax: (425) 227-1107 

Dated this 22nd day of June, 2011. 

23 

Two (2) copies and original 

One (I) copy 

One (1) copy 

Ao evert D. Almond 

The Wicks Group, PLLC 

1215 17th Street, NW 

Sumner Annex, Fourth Floor 

Washington, DC 20036 

Tel: (202) 457-7790 

Fax: (202) 457-7799 

Counsel for Empire Airlines, Inc.