Locair, Inc., and UNITED STATES OFAMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.



### Issuedbythe DepartmentofTransportation

onthe 3rd day ofApril, 2013

Brian L. Hall, Rory C. Crews, and Pedro E. Baez, individually, Served April3,2013

Violations of14 CFRPart374 and 49 U.S.C. § 41712 DOT-OST-2013-0065

EnforcementProceeding

NOTICE OF ENFORCEMENTPROCEEDING AND PROPOSED ASSESSMENT OF CIVILPENALTIES

The attached complaint of the Office of Aviation Enforcement and Proceedings (Enforcement Office) alleges that Locair, Inc., (Locair) and Brian L. Hall, ChiefExecutive Officer ofLocair, Rory C. Crew, President ofLocair, and Pedro E. Baez, Vice President of Locair, violated 14 CFR Part 374 and 49 U.S.C. § 41712, which prohibits unfair and deceptive trade practices and unfair methods of competition, by failing to process credit cardrefunds for purchased airtransportationwithinthe requiredperiod oftime. ·
Locair, at the time of the violations at issue, was subject to the credit card refund requirements ofRegulationZ ofthe Board ofGovernors ofthe Federal Reserve System, 15 U.S.C. §§ 1601-1693r. 12 CFR Part 226 and 14 CFR Part 374, which implement Regulation Z, establish that, with respect to refund requests involving airline tickets purchased with a credit card, a creditor-here Locair-musttransmit a refund to the credit card issuer within sevenbusiness days ofreceipt ofthe refundrequest. A failure to provide such refunds within the stipulated time reriod also constitutes an unfair and deceptive practice in violation of49 U.S.C. §41712.

See e.g., ParagonAir, Inc., Violations of 49 US.C.§41712 and 14 CFR Part 374, Order 2009-7- 17 (July 17, 2009).

### -2-

As an air taxi operator registered withthe Department under 14 CFR Part 298, Locair held

an air carrier certificate (YLXA892U) issued by the Federal Aviation Administration (FAA) directing the carrier to follow the operating rules of 14 CFR Part 135. On November 10, 2011, the Department's U.S. Air Carrier Licensing Division cancelled Locair's air taxi registration pursuant to 14 CFR 298.24(a) on the basis that it had ceased operations and its insurance coverage had lapsed. According to FAA records, Locair surrendered its air carrier certificate and operations specifications on December 9, 2011. On December 19,2011, FAA issued an orderrevoking Locair's air carrier certificate onthe grounds that it had ceased operations since June 7, 2011, it lacked required equipment for the operations, and it no longerhad the required economic authority from the Department.

As a result ofnumerous consumer complaints filed with the Department while Locair held authority and was operating, in March 2011, the Enforcement Office conducted an investigation into whether Locair was providing prompt refunds, as required by Regulation Z and the Department's enforcement case precedent, or providing refunds at all. The investigation revealed that, in January 2011, Locair unilaterally cancelled all upcoming flights due to mechanical issues with its aircraft. In March 2011 and while its aircraft remained inoperable, Locair was soldby Michael H. Lockmueller to Brian L. Hall, Rory C. Crews, and Pedro E. Baez, who became the company's operating officers and directors. Although Locair had re-accommodated some affected passengers on other air carriers' flights and issued refunds to others, the Enforcement Office confirmed that in at least ten instances, the carrier failed entirely to process credit card refunds. In response to the Enforcement Office's inquiry, Locair and its officers, Brian L. Hall, Rory C. Crews, and Pedro E. Baez, contacted the affected consumers in the ten instances and promised that Locair would issue refunds. However, Locair failed to fulfill its promises and in April 2012 the carrier ceasedresponding to the Enforcement Office's inquiries.

Based on the informal investigation undertaken by the Enforcement Office, there are reasonable grounds to believe that Locair, under the direction and control ofBrian L. Hall, Rory C. Crews and Pedro Beaz, has violated 14 CFR Pmi 374 and 49 U.S.C. § 41712 and that an investigation of the alleged violations is in the public interest. Accordingly, pursuantto Rule 407 ofthe Department's Rules ofPractice, 14 CFR 302.407, we institute a formal enforcement proceeding to investigate the allegations set forth in the attached complaint.

Upon information and belief, Locair is a "small business concern" as defined in section 3 ofthe Small Business Act, 15 U.S.C. § 632. As such, under 49 U.S.C. § 46301, Locair and Brian L. Hall, Rory C. Crews, and Pedro E. Baez, individually, may be assessed civil penalties ofup to $2,500 for each violation of49 U.S.C. § 41712 or ofconsumer protection regulations adopted by the Department, including 14 CFR Part 374. Under section 46301, each day that a violation continues is considered a separate offense subject to a civil penalty ofup to $2,500 per day.

The Assistant General Counsel for Aviation Enforcement and Proceedings seeks an assessment ofcivil penalties inthe enforcementproceeding institutedby this notice. Under Rule 407(d) ofthe Department's Rules ofPractice, 14 CFR 302.407(d), Locair and Brian

### - 3-

L. 

### HalL Rory C. Crews and Pedro E. Beaz, individually, are notified that they may be liable for civil penalties of $100,000, reflecting violations of 14 CFR Part 374 and 49 U.S.C. §41712.

This notice and the attached complaint will be served on Locair, Brian L. 

### Hall, Rory C. Crews and Pedro E. Beaz. Under Rule 408 ofthe Depatiment's Rules ofPractice, 14 CFR 302.408, Locair and Brian L. 

### Hall, Rory C. Crews and Pedro E. Beaz are required to file, within 15 days, an answer to the complaint admitting or denying specifically and in detail each allegation of the complaint, and a response to the proposed assessment of civil penalties, specifically presenting any matters the respondent intends to rely on in opposition to or in mitigation ofsuch civil penalties.

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# ~l Podberesky Assistant General Counsel for

Aviation Enforcement and Proceedings.. ' 

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CERTIFICATEOF SERVICE



### I certify that on April 3, 2013, I served the foregoing Notice of Enforcement Proceeding and Proposed Assessment of Civil Penalties and the related Complaint on the Respondent by first class mail addressed to Locair's address: 382 N.E. 191 Street, Suite 87123, Miami, Florida 33179, to Brian L. 

### Hall's address: 1740 Hudson Bridge Road, Suite 1012, Stockbridge, GA 30281, and by electronic mail to Brian L. 

### Hall's address: brian@bulldogmarine.biz, Rory C. Crew's address: rorycrews1@gmail.com, and Pedro E. Baez's address: pedro@bulldogmarine.biz.

Samuel Podberesky AssistantGeneral Counselfor

AviationEnforcement and Proceedings

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# Clere~e**~~** . 

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SeniorTrial Attorney Office of AviationEnforcement and Proceedings (202) 366-9041

### BEFORETHE DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

WASHINGTON, D. C.

Locair, Inc., and

Brian

### L. Hall, Rory C. 

### Crews, andPedro E. Baez, Individually,

Violations of 14 CFRPart374 and 49 U.S.C. 

### § 41712

Enforcement Proceeding

ENFORCEMENT COMPLAINT 

### Served April 3, 2013

DOT-OST-2013-0065

1. 

### During all timesrelevant to this Complaint, Locair, Inc., (Locair) was registered withthe Department ofTransportation's (Depm1ment) as an air taxi operatorpursuantto 14 CFR Pm1298, with its principal place ofbusiness at 382 N.E. 191 Street, Suite 87123, Mimni, Florida 33179. In addition, Locairheld an FAA-issued air carrier cet1ificate and 14 CFR Part 135 operations specifications.

2. On March 8, 2011, Locair was sold byMichael H. 

### Lockmueller, its previous owner and ChiefExecutive Officer, to several new owners, including Brian L. 

### Hall, Rory C. Crews, and Pedro E. Baez. Beginning on that date, Locair operated under the direction and control ofBrian L. 

### Hall, ChiefExecutive Officer, Rory C. Crews, President, and Pedro E. Baez, Vice President.

3. OnNovember 10, 2011, the Department's U.S. Air Carrier Licensing Division canceled Locair's airtaxi registration because informationreceived from the Federal Aviation Administration (FAA) indicatedthat Locair had ceased operations since June 7, 2011, and its aircraft liability insurance policyhad expired on May 29, 2011, and was not renewed.

4. According to FAA records, Locair surrendered its FAA-issued air cmTier certificate and operations specifications on December 9, 2011. OnDecember 19, 2011, the FAA issued

an orderrevoking Locair's air carrier certificate pursuant to 49 U.S.C. 44709, based on the grounds that Locair ceased its operations since June 7, 2011, it was notproperly and adequately equipped for the certificated operations since June 7, 2011, m1d it no longer held the required economic authority from the Department.2

5. As an air carrier, Locair was subject to the credit refund requirements ofRegulation Z of the Board ofGovernors oftheFederal Reserve System, 15 U.S.C. §§ 1601-1693r.

6. 12 CFR Pmi 226 and 14 CFRPart 374, which implement Regulation Z, establishthat, with respect to refund requests involving airline tickets purchased with a credit card, a creditor-here Locair-musttransmit a credit statement for a passengerrefundto the credit card issuerwithin seven business days ofreceipt offull documentation for the refund requested.

7. 49 U.S.C. § 41712 authorizes the Department to prohibit unfair and deceptive trade practices and unfair methods ofcompetition.

8. In January 2011, Locairunilaterally cm1celled all upcoming flights due to mechanical issues withits aircraft. Subsequently, Locair failed in at least ten instances to process credit refundrequests despite receiving full documentation for the refund requested. To date, Locair has not made these refunds which were requested months ago.

9. Locair's failure to process creditrefunds entirely orin a timely manner as requiredby Regulation Z constitutes a violations of 14 CFRPart 374 and an unfair and deceptive practice in violation of49 U.S.C. §41712.

10. Uponinformation andbelief, Locair is a "small business concern" as defined in section 3 ofthe Small Business Act, 15 U.S.C. § 632. As such, under 49 U.S.C. §46301, the Department may assess Locair and its principals civil penalties ofup to $2,500 for each violation ofthe Department'sregulations orTitle 49, including 14 CFRPart 374 and 49 U.S.C. § 41712. Each day each such violation continues is a separate violation.

11. Under 49 U.S.C. § 41712, the Depmimentmay, uponfinding that an air carrier is engaged in m1 unfair or deceptive trade practice orunfair method ofcompetition, issue an order directing the air carrierto cease and desist from such conduct.

12. Under49 U.S.C. § 46101(a)(4), the Depmiment may issue an order compelling compliance withprovisions ofPart A, Subtitle VII ofTitle 49 U.S.C. and requirements prescribedunderthat Part, including 14 CFR Pmi 374 and 49 U.S.C. §41712.

WHEREFORE, the Office ofAviation Enforcement and Proceedings requests the Department of Transportationto:

A. Findthat Locair, a former air carrier, and Brian L. Hall, Rory C. Crews, and Pedro E. Baez, individually, have violated 14 CFR Pmi 374 by failing to process creditrefund requests withinthe periodrequired by Regulation Z ofthe Board ofGovernors ofthe Federal Reserve System, 15 U.S.C. §§ 1601-1693r and 12 CFRPart 226;

B. Findthat Locair and Brian L. Hall, Rory C. Crews, and Pedro E. Baez, by engaging inthe conduct described in paragraph A, above, have engaged inunfair and deceptive trade practices and unfair methods ofcompetition thereby violating 49 U.S.C. §41712;3

C. Assess civil penalties against Locair and Brian L. Hall, Rory C. Crews, and Pedro E. Baez,jointly and severally, of$100,000 for the violations described inparagraphs A and B, above, and $2,500 for each similar violation revealed inthe course ofthis investigationpursuant to 49 U.S.C. §46301; and

D. Grant such otherreliefas maybe appropriate.

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### '""··creTeece Kro · SeniorTrial Attorney Office ofAviation Enforcement and Proceedings (202) 366-9041