### SERVED: September30, 2013

U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

WASHINGTON, DC

) FEDERAL AVIATION ADMINISTRATION, ) ) Complainant, ) FAA DOCKET No. [TO BE ASSIGNED] ) v. ) (Civil Penalty Action) ) CORNERSTONE AVIATION, INC. ) ) Respondent. ) FDMS No. FAA-2011-1293 )

INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE RICHARD C. GOODWIN
Found: Respondent is hereby assessed a civil penalty of$2,000.


### I. Background Respondent Cornerstone Aviation, Inc. ("Respondent" or "Cornerstone") is anAir Agency certificatedto operate a Part 141 pilot school. The Complaint ofComplainantFederal Aviation Administration ("Complainant," "FAA," or "the agency") charged Cornerstone with two violations ofthe Federal Aviation Regulations ("FARs"): 1) 14 C.F

### .R §141.101(c), failure to certify a student's record upontermination ofthat student's training; and 2) 14 C.P.R. §141.95(b)(7), issuing a graduation certificate that did not contain a statement ofthe crosscountry training the student received. Following cross-motions by the parties, I found each violation. The determination ofcivil penalty remains the only issue in the case. 

### See Order Granting in Part Orderto Show Cause, Granting Complainant's Motions, and Limiting Hearing to Sanction, served January 9, 2013.
Under the provisions of49 U.S.C. §46301(a) and (d), as adjusted by 14 C.P.R. §13.305 (reflecting periodic cost-of-living adjustments), the agency's Complaint asked for a civil penalty of$5,000. 

### 182

I granted the parties' subsequent request to decide the issue onthe briefs. See Order Cancelling Hearing and Requiring Parties to File Briefs, served July 11, 2013. A schedule of briefs was created. The parties now have filed their briefs and the matter is ready for decision. 1 Because the ensuing discussion disposes ofthe penalty issue, it constitutes an Initial Decision ("I.D."). See 14 C.P.R. §13.232; Florence L. Barnhill, FAA OrderNo. 92-32 (May 9, 1992), 1992 WL 753161, pp. 3-4.


### II. Framework Complainantbears the burden ofproving that the penalty it seeks is appropriate. 14 C.P.R. §13.224(a);AmericanAirNetwork, FAA OrderNo. 2006-5 (February 10, 2006), 2006 WL 265369, p. 9 n. 19; see also Compl. Br., p. 2. Financial hardship may constitute grounds for a reduction ofan assessment which is otherwise fitting. ConquestHelicopters, FAA OrderNo. 1994-20 (June 22, 1994), p. 3. The plea ofinability to pay, however, is an affirmative defense. In an affirmative defense, Respondent assumes the burden ofproof. 14 C.P.R. §13.224(c). That is, it becomes Respondent's burden to prove mitigation ofall orpart ofan otherwise appropriate civil penalty. As the Administrator has explained, this assignment ofthe burden is "reasonable and necessary" because the Respondent has control ofits financial information. Salvatore Giuffrida, FAA OrderNo. 1992-72 (December 21, 1992), p. 2. Claims ofthis nature mustbe substantiated to be credited. See, e.g., MichaelJohn Costello, FAA OrderNo. 93-10 (March 24, 1993), 1993 WL 833110, p. 4.
In determining the appropriate civil penalty amount, the decisionmaker is obligatedto consider several factors. These include the nature, circumstances, extent, and gravity ofthe violation, and, with respect to the violator, the degree ofculpability, any history ofprior violations, the ability to pay, any effect on the ability to continue to do business, and "other matters thatjustice may require." The civil penalty also shouldprovide sufficient incentive to deter the respondent and similarly-situated entities from future violations. Overall, a proper assessment should reflect the nature ofthe respondent's conduct and thetotality ofthe circumstances. Folsom'sAirService, Inc., FAA OrderNo. 2008-11 (November 6, 2008), 2008 WL 4948488, pp. 11, 20.
The Administrator has providedpolicy guidance for agency employees to follow inthe determination ofsanction. The FAA has issued to its staffa policy statement and detailed guidelines ("the guidelines") for arriving at a fitting civil penalty amount. The guidelines assess all relevant statutory criteria. Mitigating and/or aggravating factors also are part ofthe calculus. The guidelines are designedto bestreflect the nature and circumstances ofthe violation under consideration. They also are intended to advise the public ofthe sanctionpolicy that the Administrator intends to follow through the adjudication ofindividual cases. Folsom'sAir Service, Inc., FAA Order No. 2008-11, p. 13. The guidelines are known as Order 2150.3B.
The guidelines further aid Complainant's penalty determinationthrough a Sanction Guidance Matrix ("Matrix"). The Matrix, found in Appendix B to Order 2150.3B, sets out )

.
1 Complainant, as the party with the ultimate burden ofproof, was permittedto file an opening briefand a briefin response to Respondent's answering brief. See Order ofJuly 12, 2013. Complainant filed an opening brief ("Compl. Br.") and Respondent filed an answering Brief("Resp. Br."). Complainant declined to file a further brief.3
specific penalty ranges for each ofseveral inputs, cross-referencing such factors as the respondent's size, the type ofbusiness it conducts, and the nature and extent ofthe harm the violations produced. Complainant's ultimate determination nevertheless does notmerelyreflect a fixed mathematical computation. Nor is the number ofF AR violations in itselfan important consideration. The Administratorhas cautioned that deriving an assessment simply by multiplying the number ofviolations times the penaltyrecommended per sanction couldresult in a fine disproportionately severe. Warbelow 'sAir Ventures, Inc., FAA OrderNo. 2000-3 (February 3, 2000), pp. 20-21,pet.forreconsid. den., OrderNo. 2000-14 (June 8, 2000). Rather, the Matrix is intended to indicate the Administrator's "general views" about the civil penalty ranges appropriate for different types ofviolations. Folsom'sAirService, Inc., p. 13. Each situation, being dependent on so many variables, is unique. "Evaluation ofthe case,"the FAA has emphasized, "isbased onthe totality ofthe facts and circumstances."See 72 Fed.Reg. 55853 (October 1, 2007).
An administrative lawjudge ("ALJ") is notrequired to follow the guidelines orthe Matrix., They are intended for agency personnel, and ALJs are not agency personnel. ALJs make decisions independently, and the ALJ determines (subject to agency review) whether a civil penalty is to be assessed, and ifso, in what amount. The guidelines nonetheless mustbe respected as an expression ofagency sanctionpolicy. They represent an effort to produce consistent results in similar cases. The Administratorhas asserted the powerto impose the agency's sanctionpolicy on appeal ifan ALJ assesses a civil penalty that is found to be inconsistent with the policy. Warbelow 'sAir Ventures, Inc., FAA OrderNo. 2000-3 (February 3, 2000), p. 20; NorthwestAirlines, FAA Order No. 1990-37(November7, 1990), pp. 8-10.

III. The Parties' Positions
A. Complainant
In formulating its civil penalty recommendation the agency weighed several factors. The violations, the FAA concluded, were non-operational and inadvertent. The agency also noted Respondent's attitude ofcooperation. The Matrix considers these to bemitigating factors. Respondent's level ofexperience at the time the violations occurred, a little less than eight years, was counted as an aggravating factor. The Matrix also accounts for Respondent's status as a small business. Complainant's calculus additionally reflected the "purelyrecordkeeping" nature ofthe violations; the agency never was concerned that Respondent's incorrecttraining records reflected onthe qualifications or competence ofthe pilots who lately had earned their certificates (Compl. Br., p. 2). On the otherhand, Complainant weighed the fact that these violations were not reported voluntarily, but were discovered upon inspection. Finally, while Respondent subsequently sent notices to its instructors that no graduation certificates were to be signedby anyone otherthan chiefinstructors, "that is the type ofactionthat shouldbe expected ofa flight school," the agency maintains. Itis not grounds for significant mitigation ofthe sanction. Finally, Complainant states that Respondent presented no otherevidence warranting sanction reduction (Compl. Br., p. 4).
In evaluating the factors described above Complainant determined that underthe Matrix the violations each warrant a fine inthe moderate-to-maximum range. The maximum civil4
penaltyperviolation is $11,000, so the maximum sanction would be $22,000. The moderate range for each violation is $7,700; therefore, Complainant argues, its proposed sanction of $5,000 is less than the moderate range for one violation, let alone two (Compl. Br., pp. 3-4). B. Respondent Respondent was represented by its founder, president and co-owner, Susan Horstman. Ms. Horstman is also a pilot.
Cornerstone asks that no sanction be levied. Itfollowed the regulations, it argues, butthe timeline as described therein for Part 141 operators to generate required records is imprecise and confusing. FAA inspectors have been unhelpful in clearing it up. Cornerstone also states that it has since implemented a software program ensuring that these types ofviolations couldnot recur. Respondent additionally contends that the civil penalty proposed wouldunduly penalize Cornerstone as a small business, and would fail to promote safety by diverting money needed for the business to paying the fine. Respondent also recited certain financial difficulties which, it claims, would be exacerbated bythe imposition ofa civil penalty (Resp. Br., pp. 2-4). Itprovided no documentary evidence in support, however. As such, this affirmative defense fails for lack ofproof.


### IV. Decision
I find and conclude that a total civil penalty of$2,000 is appropriate. I find that this amount fairly reflects all the facts and circumstances. It properly accounts for all mitigating and aggravating circumstances. The penalty will also, I conclude, appropriately promote compliance withthe FARs and deter Cornerstone and comparable entities from similar violations.
I do not viewthe recordkeeping violations found inthis case as particularly grave. The penalty amounts the guidelines suggest, I find, do not fairly reflect the nature ofthe transgressions. It also is a mitigating circumstance that the violations were non-operational and inadvertent. Yetthese offenses are not trifling. As the Administratorhas noted, recordkeeping is the linchpin ofthe regulatory scheme by which safety in flight is maintained. The most feasible way for the FAAto fulfill its mandate is through records inspection. Complete and accurate recordkeeping is essential to this purpose. WattsAgriculturalAviation, Inc. d/b/a GrowersAir Service, FAA OrderNo. 91-8 (April11, 1991), review den. sub. nom. Watts Agricultural Aviation v. Busey, 977 F.2d 594, 1992 U.S. App. Lexis 25020 (9 Cir. 1992). Additionally, a violation's unintentional character does not abate an otherwise reasonable sanction. Evidence that a violation was intentional would, in fact, constitute an aggravating factor and would make a higher sanction appropriate.AmericanAirNetwork, Inc., FAA Order No. 2006-5 (February 10, 2006), p. 8

..5
Respondent's reference to a new and presumably more meticulous and complete software program as a mitigating circumstance is not persuasive. These mistakes should have been detected. Nor do I credit Respondent's assertion thatthe regulations are vague orotherwise difficult to understand. The requirements are straightforward and uncomplicated, I find.
The fads underlying the chargesjustify a civil penalty greater than a token amount. Against this background, I conclude that a civil penalty of$2,000 for the two violations found is commensurate with the totality ofthe circumstances.
All arguments the parties have made which are not specifically addressed herein are rejected. I find that they do not merit.discussion.


### IV. Conclusion
In view ofthe discussion above, Respondent is hereby assessed a civil penalty of$2,000 for violations ofFederal Aviation Regulations 14 C.F.R. 

### §141.95(b)(7) and 

### §141.101(c).2

U.S. Administrative Law Judge
Attachment

- Service List

2 This decision may be appealed to the Administrator ofthe FAA. The notice ofappeal must conform to sections 13.210, 13.2ll(e) and 13.233 ofthe Rules ofPractice, which require that a notice ofappeall)be filed not laterthan 10 days (plus an additional five days ifmailed) from the service date ofthis decision, and 2) beperfected with a written brieformemorandum not later than 50 days (plus an additional five, ifmailed) from the service date ofthis decision. The notice ofappeal and briefor memorandum must eitherbe a) mailed to the Federal A\riation Administration, 800 Independence Avenue, S.W., Washington, DC 20591, Attn: Hearing Docket Clerk, AGC-430, Wilbur Wright Building-Suite 2WIOOO, orb) delivered personally or via expedited courier service to the Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur Wright Building-Suite 2W1000, Washington, D.C. 20591, Attn: Hearing Docket Clerk, AGC-430. A copy ofthe notice ofappeal and brieformemorandum also must be sent to agency counsel. Service upon the presidingjudge is optional.

### 6

SERVICE LIST
ORIGINAL & ONE COPY Federal Aviation Administration 800 Independence Avenue, S.W. Washington, DC 20591 Attention: Hearing Docket Clerk, AGC-430 Wilbur Wright Building-Suite 2W1000 1
ONE COPY Susan J. Horstman, ChiefExecutive Officer Cornerstone Aviation, Inc., Respondent 337 North 2370 West #130 Salt Lake City, UT 84116 TEL: 801-355-2244 FAX: 801-355-2754 Kyle Lomazow, Complainant's Counsel Attorney, Office ofthe Regional Counsel Northwest Mountain Region, ANM-7 Federal Aviation Administration 1601 Lind Avenue, S.W. Renton, WA 98057 TEL: 425-227-1847 FAX: 425-227-1007
The Honorable Richard C. Goodwin,

Administrative LawJudge Office ofHearings, M-20 U.S. Department ofTransportation 1200 NewJersey Avenue, S.E. (E11-310) Washington, DC 20590 TEL: 202-366-2139 Attorney-Advisor 202-366-5121 StaffAssistant FAX: 202-366-7536 FDMS No. FAA-2011-1293 (Civil Penalty Action)

1 Service was by U.S. Mail. For service in person or by expedited courier, use the following address: Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur Wright Building-Suite 2Wl000, Washington, DC 20591; Attention: Hearing Docket Clerk, AGC-430.