## SERVED: JULY 2, 2014 U.S. DEPARTMENT OFTRANSPORTATION

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In The Matter Of: BAER AIR, INC. Respondent 

### OFFICE OFHEARINGS WASHINGTON, DC**?~-~ ~** **~r ~Pi**  -':**~** "'[ 

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Docket No. FAA-2014-0112 ) ) ) ) ) Case No. 2011S0150234



### ORDERFINDING RESPONDENT FILED A TIMELY REQUEST FORHEARING AND DENYING FAA'S MOTION TO DISMISS

On May 1, 2014, the FAA filed a Motion to Dismiss for Failure to State a Claim ("Motion"). On May 21,2014, the Respondent, BaerAir, Inc. filed an Answer opposing the FAA's Motion to Dismiss ("Answer"). OnMay23,2014,the FAA filed a Reply to the Respondent's Response to the FAA's Motion to Dismiss ("Reply"). On June 17, 2014, an Order Continuing the Rule 16 Litigation Scheduling Conference was filed. I. BriefFactual Summary 

### q: 30

Itwas undisputed that on May 24,2014 and May 25,2011 the FAA conducted a safety inspection ofthe Respondent's facilities. (Complaint, 1**~** 4.) Approximately two (2) years later, on April30, 2013, the FAA served the Respondent with a Notice ofProposed Civil Penalty. Two and a half(2**~)months** later, on July 15,2013, Mr. Jeffrey L. Levy notified the FAA, via email correspondence, that he was an attorney who would be representing the Respondent inthe civil penalty action. (Response, 2**~** 3; Levy**Affidavit~** 4, 10-11; Ex. A, 3-4.) Mr. Levy then acted on behalfofthe Respondent in settlement negotiations with the FAA. (Response, 2; Levy**Affidavit~** 5-10.) During negotiations, Mr. Levy told the FAA that ifsettlement discussions failed, the Respondent wanted a formal hearing. (Levy**Affidavit~~** 7, 10.) The FAA asserts that approximately ten months later, onMarch 5, 2014, it properly served a Final Notice ofProposed Civil Penalty ("FNPCP") on Mr. William L. Baer, the president ofthe Respondent. (Motion, 1; Exs. 1 and 2.) It was undisputed that the FAA did not attempt any service ofthe FNPCP onMr. Levy, the Respondent's attorney. The FAA asserts that the FNPCP was served on Mr. Baerby certified mail, return receipt requested. (Motion, 1; Exs. 2 and 3.) Although the FAA's certificate ofservice (Motion, Ex. 1page 5) was not signed ordated, it was undisputed that a "James Toler" signed for, and received, the certified mailing on March 10,2014 (Motion, Exs. 2 and 3). The FAA first asserted that the date ofreceipt is included in counting the fifteen days (Motion, 1), but then presented a time calculation that did notinclude counting the date ofreciept 1Thus, according to the FAA, the last date for filing a timely request for hearing was March 25, 2014. (Motion, 1.) As a result, the FAA argues that the Respondent's March 26, 2014 filing was late, and that this court has nojurisdictionto even considerthe issues presented. (Motion, 1-2; Reply, 2.) The Respondent first objects that service was not effectuated onthe Respondent's designated agent, its attorney, Mr. Levy. The Respondent alternatively argues good cause; its President, Mr. Baer, was out ofthe office from March 10, 2014, through March 25, 2014, because ofhis pilot flight training in Denver, Colorado. (Response, 3**~** 11; Levy Affidavit, 2**~** 12.) On March 26, 2014, Mr. Baerreturned to the office, opened the certified mailing, and immediately contacted Mr. Levy, the Respondent's attorney. (Response, 3**~** 11; Levy Affidavit, 2**~** 13; Ex. C, 2.) That same day, Mr. Levy contacted the FAA onbehalfofthe Respondent about the FNPCP. (Response, 3**~** 14; Levy Affidavit, 3**~** 14; Ex. C, 2.) In this March 26, 2014 email contact, 

### Mr. Levy objectedto the FAA's service choice, since he was still the attorney ofrecord, and the FAAhad not served him withthe FNPCP. (Ex. C, 2.) In addition, that same day, March 26, 2014, the Respondent filed a request for hearing. (Motion, 1; Response, 4**~** 15; Levy

1Given the FAA's correct calculation oftime after the March 10,2010receipt, it appears that the FAA intended to say that the 15 day time clock began to run immediately after the date ofreceipt. (Motion, 1 ). Pursuant to 14 C.F.R. § 13.212(b), "[t]he date ofan.act, event, ordefault, after which a designated time period begins to run, is not included in a computation oftime underthis subpart." Although 14 C.F.R. § 13.16(g)(2) appears in a different subpart (i.e., subpart C), the governing subpart in this proceeding is subpart G, which lists the Rules ofPractice. Thus, the fifteen day time clock begins the day afterthe date ofreceipt. This provides the respondingparty with the full fifteen days as provided by the regulation. The FAA's actual time calculation reflects the full15 day period. Page 2 of 11Affidavit, 3**~** 15; Ex. B.) Lastly, the Respondent alternatively argues that the FAA waived the right to file its Motion upon filing the Complaint, pursuant to 14 C.F.R. 

### § 13.208(a). 

### II. Jurisdiction The FAA argued that this court lackedjurisdictionto hear the case because "the regulatory windowhad closed." (Motion, 2 and Reply, 2.) This is incorrect. The Rules of Practice contained in 14 C.F.R., part 13, subpart G, provide that when a request for hearing is filed, the court'sjurisdiction is established, and the court has fulljurisdictionto address all issues involving the case. 

### See 14 C.F.R. § 13.201(a) and 14 C.F.R. § 13.16 (i). Thus, upon motion, the court may first considerthe question whether the request for hearing was timely oruntimely filed. Ifthe request for hearing was untimely filed, then, as the FAA correctly noted (Reply, 2), the respondent has the burden to show good cause before such an untimely request is excused

### In
re Carl P. Langton, FAA OrderNo. 93-12, page 6 (Mar. 25, 1993)(Anuntimely request for hearing will be excused only upon a showing ofgood cause). 

### III. ProofofService and Receipt ofthe FNPCP Pursuant to 14 C.P.R.§ 13.16(g)(2), a respondent must, within 15 days of

### receipt ofthe FNPCP, eitherpay the proposed penalty orrequest a hearing. 

### In re CanuckIndustries, FAA2000-7726, FAA OrderNo. 2002-14, Decision and Order, 2 (May 10, 2002), 

### modifiedon other grounds, FAA OrderNo. 2002-17, Order Granting Petition to Modify (May 24, 2002). There have been multiple arguments raised bythe parties in this Motion. All arguments have been considered. However, only certain matters will be discussed herein. A. The FAA has the Burden ofProofin Establishing Proper Service Pursuant to 14 C.P.R.§ 13.224, the FAA has the burden ofproofin demonstrating proper service and receipt ofthe FNPCP. 

### See also, Steven Baicker-McKee, et.al, 

### Federal CivilRules Handbook, West Publishing (2012) (Rule 4- Burden ofProving Service ofProcess)(The burden ofproofofservice is on the party attempting service.) The FAA asserts thatthe Respondent's fifteen (15) day time clock for filing a timely request for hearing began to run immediately after March 10, 2014, the date the Respondent Page 3 of 11allegedly "received"the certified mailing ofthe FNPCP at its business address. (Motion, 1.) Thus, according to the FAA, the last day for the Respondent to file a timely request for hearing was March 25,2014. B. Who Must be Served- Designation ofRespondent Agent orRespondent Attorney To effectuate service ofa FNPCP, 14 C.F.R. 

### § 13.16 provides: Ifnot previously done in response to a notice ofproposed civil penalty, a corporation or company may designate in writing anotherperson to receive documents in that civil penalty action. 14 C.F.R. § 13.16(g)(2) also specifically requires proofofthe date ofreceipt ofthe FNPCP by eitherthe Respondent or its designated agentbefore the fifteen day time clockbegins to run. The record is silentregarding when (ifever) the Respondent itselfnotified the FAAthat it had hired Mr. Levy as counsel, and was specifically designating Mr. Levy, pursuant to 14 C.F.R. 

### § 13.16(g), to accept service onits behalf. However, even without a party's specific written designation for alternate service under 14 C.F.R. § 13.16(g), or an attorney's formal filing ofa Notice ofAppearance, the FAA Administrator has recognized that service on a respondent's attorney-who has been identified to the FAA in some fashion as acting the respondent's representative-is well-established in these proceedings. Although the regulation does anticipate that a respondent may designate in writing alternative means ofservice, nothing in this provision undermines the settled principle, routinely followed in a variety oflitigation contexts and generally required bythe rules of professional conduct, that service ona party is effectively accomplished by service on identified counsel. CanuckIndustries, at

### 4.2 The "settled principle" recognized by the FAA Administrator is the long established federal service practice codified in Fed. R. Civ. P. 5(b)(1), which requires service to be "made on the [party's] attorney, unless the court orders service onthe party." Rule 5 (b) 1; See, Steven Baicker-McKee, et.al, Federal Civil Rules Handbook, West Publishing (2012)(Rule 5- Service

2 In the year 2002, at time ofthe FAA Administrator's Decision and Order in the Canuck case, the regulation was contained in 14 C.F.R. § 13.16( e). In 2005, and again in 2006, the regulation was amended. The applicable regulatory language is now found in 14 C.F.R. § 13.16(g). Page 4 of 11on Attorney, Not Party); See also, Wright, Miller, et.al., FederalRules of CivilProcedure (Rule 5. Serving and Filing ofPleadings and Other Papers) (the requirement to serve a party's attorney should be "followed literally"); U.S. E.E.O.C., 2010 WL 5391269,2 (S.D. Tex. 2013) (ifa party is represented by an attorney, service must be made on the attorney). The FAA Administrator in CanuckIndustries also referenced "the rules ofprofessional conduct" in acknowledging that once a respondent obtains counsel, service on the respondent may be "effectively accomplished" on respondent's counsel. CanuckIndustriesat 4. Rule 4.2 ofthe Model Rules ofProfessional Conduct ("MRPC") addresses communications with a person represented by counsel. Rule 4.2 prohibits an attorney from having direct contact with a party who is represented by counsel, except in cases where the attorney has a court order granting such direct contact, orthe party's attorney has authorized such direct contact. MRPC, Rule 4.2. According to the American BarAssociation ("ABA"), Rule 4.2 is considered the "no contact" rule. ABA Annotated MRPC (7th Ed. 2011). "Ifa person is represented in a particularmatter, lawyers must go through his counsel ifthey are to communicate with him about it." ABA Annotated MRPC, Annotation (7th Ed. 2011). The purpose ofRule 4.2 is to "preserve the lawyer-client relationship." (/d.). Rule 4.2 also "contributes to the proper functioning ofthe legal system by protecting a person who has chosen to be represented by a lawyer." (ABA Annotated MRPC, Comment 1 (7th Ed. 2011). Thus, once a person or an organization is represented by an attorney, "service shall be made upon the attorney." Wright, Miller, et. al., Federal Rules of CivilProcedure (Rule 5. Serving and Filing ofPleadings and Other Papers); See also, ABA Annotated MRPC, Comment 7 (ihEd. 2011) (inthe case ofan organization, Rule 4.2 also prohibits contact with a constituent ofthe organization who "supervises, directs orregularly consults withthe organization's lawyer concerning the matter"). C. ProofofReceipt ofFNPCP by Respondent The FAA submitted proofofservice ofthe FNPCP by certified mailing to Mr. Baer, the Respondent's President, at the Respondent's business address. The FAA argues that suchproof ofservice ofthe FNPCP to the Respondent's business address by"certified mailing is proper and sufficient service. The first question in this case, however, is whether service on Mr. Baer, the Page 5 of 11president ofthe Respondent, instead ofMr. Levy, the Respondent's attorney, was proper. Ifsuch service was not proper, the second question is whetherthe submitted facts support a finding that 1) the Respondent has received sufficient notice ofa pending legal action to satisfy general service requirements, and 2) when suchnotice occurred. 

### 1. Identification of RespondentAttorney It should be noted that in FAA proceedings, the means ofidentifying an attorney representative for service pursuant to 14 C.F.R. 

### §13.16 is not limited to the formal filing ofa notice ofappearance. 

### See, e.g., CanuckIndustries at 1-2 (Attorney called the FAA, sent written notice confirming his representative status, and participated in settlement negotiations). In the case herein, it is clearthat Mr. Levy was the Respondent's attorney, and that this representative status was firmly established priorto the issuance ofthe FNPCP. The submitted materials demonstrate that approximately ten (10) months prior to the issuance ofthe FNPCP, Mr. Levy contacted the FAA in writing, identified himselfas the Respondent's representative, and then participated in settlement negotiations with the FAA onbehalfofthe Respondent. For example, onJuly 13,2013, Mr. Levy contacted the FAA by email and identified himselfas counsel onbehalfofthe Respondent. (Response, 2**~** 3; Levy Affidavit**~** 4, and 10-11; Ex. A, 3- 4.) In this same email, Mr. Levy requested participation in settlement negotiations. The FAA beganto communicate directly with Mr. Levy about the case. (Response, Ex. A.) Mr. Levy then participated in settlement negotiations with the FAA on behalfofthe Respondent. Subsequently, on March 26,2014, Mr. Levy re-contacted the FAA onbehalfofthe Respondent about the certified mailing ofthe FNPCP. The FAA then continued to communicate with Mr. Levy inhis representative capacity aboutthe FNPCP. (Response, Ex. C.) Nothing inthe record suggests that Mr. Levy'srepresentative status had been suspended orterminated betweenthe conclusion of settlement negotiations in 2013 and the mailing ofthe FNPCP in 2014. 

### 2. No Proof of Receipt byRespondent'sAttorney Atthe time ofthe alleged service ofthe FNPCP, Mr. Levy was still ofcounsel, butthe FAA chose not to serve him withthe FNPCP. The FAA also did not notify Mr. Levy that the FNPCP had been mailed to his client. (Response, Ex. A, 2.) Had the FAA done so, it is highly possible that Mr. Levy could have acted promptly to preserve his client's rights byreiterating in Page 6 of 11an email ora letterto the FAAhis client's previous oral request for a hearing (made during the 2013 settlement negotiations). In any event, the FAApresented no proofofreceipt by Mr. Levy ofthe FNPCP, because the FAA did not serve Mr. Levy, the Respondent's attorney, withthe FNPCP. 

### 3. FAA ProofofService on Respondent'sPresident-March 10, 2014 Instead, the FAApresentedproofofservice and receipt onthe Respondent's President, Mr. Baer. The evidence is clearthat on March 10, 2014 a "James Toler" acknowledged receipt of the certified mailing addressed to Mr. Baer. The Respondent does not dispute that "James Toler"
was authorized to pick up certified mailings onbehalfofthe company. The Respondent also asserts that this certified mailing was taken to Mr. Baer's office, and left unopened inMr. Baer's in-box while Mr. Baerwas out oftown attending ajob-related flight training program. The FAA argues that this proofestablishes receipt by the Respondent, and the triggering ofthe fifteen (15) day clockpursuant to 14 C.F.R. 

### §13.16. However, as discussed 

### supra, this argument is notpersuasive, because it is a settled principle that service should have been on Mr. Levy, the Respondent's designated representative. "[A]lthough it may seem counterintuitive, service upon a party represented by an attorney does not comply with the rule." 

### Wright, Miller, et. a/. supra; See In the Matter of AlpineAviation, Inc., FAA-2005-22218, Order ofChief Administrative LawJudge, 3 (Nov. 2, 2005) (Where a respondent is represented by an attorney, all communications-includingthe FNPCP-mustbe**~ent** to the attorney). 

### 4. First Constructive Notice to Respondent'sAttorneyof FNPCP -March 26, 2014 Although Mr. Levy was never served with the FNPCP, it is undisputed that hereceived constructive notice ofthe FNPCP on March 26, 2014, the date Mr. Baerreturned to his office, found the FAA's certified mail envelope, opened it, and contacted Mr. Levy about it. That same day, Mr. Levy contacted the FAA and objected to service ofthe FNPCP directly upon his client. In addition, Mr. Levy helped ensure that his client filed a request for hearing that same day. 

### 5. Date Established for Receipt of the FNPCP- March 26, 2014 Despite the lack ofservice ofthe FNPCP on Mr. Levy, a date ofservice inthis case may be determined. It should be noted that the provisions in 14 C.F.R. 

### § 13.16(g), and discussed in Page 7 of 11FAA case decisions and orders, are very similarto the provisions in Fed. R. Civ. P. 4(e) and (h).**Thes~** federal rule provisions provide guidance on the underlying purpose ofservice, and what "othermeans" ofeffective service may be considered by the court. Two ofthe many reasons supporting the "settledprinciple" ofrequiring service on an attorney representative (ratherthan directly on a party) are to ensure notice ofa lawsuit reaches a party, and to help "expeditepreparation ofthe case for prompt adjudication onthe merits." See, Wright, Miller, et.al., supra; See also,Anin v. Reno, 188 F.3d 1273, 1277 (11th Cir. 1999) (the rules favor notice to counsel rather than actual notice to the client). In addition, the overall, primary purpose ofthe service rules is to ensure thatthe responding party is timely notified that "alegal action has been filed" andto ensure that the responding party has "afair opportunity to answer the pleading and raise defenses and objections." Steven Baicker-McKee, et.al, Federal CivilRulesHandbook, West Publishing (2012) (Rule 4 -The Goal ofService). In this case, it is clearthat both Mr. Baer and Mr. Levy had actual notice ofthe FNPCP on March 26, 2014. As demonstrated by the materials submitted, the same day Mr. Levy and his client actually knew about the FNPCP, Mr. Levy was instrumental in expediting contact with the FAA about the FNPCP and ensuring that a writteri response to the FNPCP was filed. Thus, the lack ofactual service by the FAA ofthe FNPCP on Mr. Levy does not require a finding that no service was effectuated. Instead, based on all the evidence submitted inthis case, there are sufficient facts to support a finding that the date ofMarch 26, 2014-theknown date of actual receipt by Mr. Baer and constructive notice to Mr. Levy-satisfies the basic purpose of notice and process requirements. In other words, both Mr. Levy and his clientreceived notice on March 26, 2014 that the FAAhad filed "alegal action." On March 26, 2014 Mr. Levy also had sufficient notice from his client as to what that legal action entailed, so that he could help ensure that his client responded expeditiouslyto the notice. While the situation was not ideal, it does meet the minimum service requirements ofgiving**~otice** and opportunity to respond.

Page 8 of 11

### 6. March 26, 2014Request for Hearing- Timely Filed Given the fact that March 26, 2014 is deemed to be the date ofreceipt ofservice bythe Respondent ofthe FNPCP, then it follows that the Respondent's filing ofa request for hearing that same day was timely pursuantto 14 C.F.R. 

### § 13.16. Thus, the alternative issue ofwhether the Respondent established good cause for filing an untimely request for hearing is moot. 

### IV. Preclusion orWaiver As an alternative defense, the Respondent argued that the FAA's Motion was improper because the FAA had already filed a Complaint. According to the Respondent, once the FAA filed a Complaint, the FAA was precluded from filing, orwaived its opportunity to file, a motion challenging the timeliness ofthe Respondent's request for hearing. (Response, 4.) The Respondent asserted that the plain language of 14 C.F.R. § 13.208(a) supported this argument. The Respondent also cited 

### FAA 

### v. HarbonAirlines, FAA Docket No. CP96NM0250 (1996 FAA LEXIS 1534)(1996) as support. Section 13.208 provides: The agency attorney shall file the original and one copy ofthe complaint with the hearing docket clerk, 

### or may file a written motion pursuant to§ 13.218(f)(2)(i) of this subpart instead offiling a complaint, not later than 20 days after receipt by the agency attorney ofa request for hearing. 14 C.F.R. 

### § 13.208(a) 

### (emphasis added). The plain language ofsection 13.208(a) places a requirement on the FAA to file a complaint not later than 20 days after receipt by the agency attorney ofa request for hearing. As an alternative, the FAA attorney may choose to file a written motionto dismiss, as specified in 14 C.F.R § 13.218(f))(2)(i), in lieu offiling a complaint within 20 days ofreceipt ofa request for hearing, without running afoul ofthe 20-day filing deadline for a filing a complaint. In

### HarbonAirlines, the court found that the language of 14 C.F.R. 

### § 13.218(f))(2)(i) required the FAA to make a flling choice, and to choose whether to file a Complaint or a Motion to Dismiss.

Page 9 of 11Section 13.218(f))(2)(i) states that the agency may file a "motionto dismiss a request for hearing instead offiling a Complaint" (emphasis added). In this case, the FAA filed both which is improper. Once the agency filed the Complaint, it effectively waived its right to challenge the timeliness ofthe request for hearing. HarbonAirlines, at 1 (emphasis in orginal). In its Reply in this case, the FAA did not discuss theHarbonAirlines ruling, but did argue that the language of 14 C.F.R. 

### § 13.208(a) provided a permissive option which was not mandatory. (Reply, 1-2.) The FAA also argued that 14 C.F.R. 

### § 13.218(f))(2)(i) simply outlined procedural requirements infiling any motion, was not restrictive, and had simplybeen "misread" by the Respondent. (Reply, 2.) The FAA did not provide any particular authority for its position, but instead relied on a reasoned interpretation ofthe regulations. A briefreview ofthe Federal Register demonstrates no specific history ofwhat the drafters ofthe language "instead offiling a complaint" meant to convey in section 13.208(a). 53 Fed. Reg. 34646, 34650 (Sept. 7, 1988). Based on the plain language ofthe regulation, however, it is quite possible that the drafters intended the FAA to address one issue at a time. That way, a respondent has the opportunity to fully concentrate on answering either a complaint or a motion to dismiss at the start oflitigation. Pursuant to 14 C.F.R. 

### § 13.209, a respondent is required to file a detailed answer to a complaint within 30 days ofservice. Pursuantto 14 C.F.R. 

### § 13.218(d), a respondent is required to file an answerto a motion to dismiss within 10 days of service. Simultaneous or closely timed filings by the FAA ofboth a complaint and a motionto dismiss might easily lead a respondent to commit error inthe timing offiling its answers, or force the respondent to move for relieffrom strictly construed time limits, orobject to immediate requests for discovery, leading to more litigation on procedural issues. However, since this court has found herein that the Respondent filed a timely request for a hearing, this alternate defense raised by the Respondent need not be further addressed atthis time. 

### IV. Conclusion Based on the foregoing, and pursuant to 14 C.F.R. 

### §§ 13.205(a)(8), 13.218(f)(2)(i), 13.208, and afterreviewing all relevant caselaw, regulations, statutory authority, and being fully advised; Page 10 of 11

### ITIS HEREBY ORDERED: 1. Based onthe evidence submitted, the FAA has proved that the Respondent was properly served with, and received, the FAA's March 5, 2014 Final Notice ofProposed Civil Penalty onMarch 26, 2014.

2. The Respondent's March 26, 2014 Request for Hearing is accepted as timely filed.

3. The FAA's Motion to Dismiss is denied, onthe grounds that the Respondent filed a timely Request for Hearing.

4. The Rule 16 Litigation Scheduling Conference set for July 9, 2014, at 10:30 a.m. ET, is reconfirmed. The parties shall access the Conference by dialing 202-493-2343.

Attachment: Service List

Page 11 of 11 \DocketNo. FAA-2014-0112 (Civil PenaltyAction)

· SERVICE LIST- BY U.S. MAIL ORIGINAL & ONE COPY Federal Aviation Administration 800 Independence Avenue, S.W. Washington, DC 20591 Attention: Hearing Docket Clerk, AGC-430 Wilbur Wright Building-Suite2Wl0003

Mr. Vincent J. Bennett Complainant's Counsel ONE COPY

SeniorAttorney, Office ofthe Regional Counsel, ANE-7 Federal Aviation Administration 12 NewEngland Executive Park

.Burlington, MA 01803 TEL: 781-238-7044

. FAX: 781-238-7055 Mr. Gregory S. Winton Mr. Jared M. Allen Respondent's Counsel The Aviation Law Firm 1997 Annapolis Exchange Parkway Suite 300 Annapolis, MD 21401 TEL: 301-294-8550 FAX: 866-568-9886 Judge J.E. Sullivan U.S. Administrative LawJudge Office ofHearings, M-20 U.S. Department ofTransportation 1200 NewJersey Avenue, S.E. (E11-310) Washington, DC 20590 TEL: 202-366-6941 FAX: 202-366-7536 BaerAir, Inc. Respondent Mr. William L. Baer, President 150 South Apollo Boulevard Melbourne, FL 32901

3 Service was by U.S. Mail. For service in person orby expedited courier, use the following address: Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur Wright Building-Suite2Wl000, Washington, DC 20591; Attention: Hearing Docket Clerk, AGC-430.