SERVED OCTOBER 26, 2010 

U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF HEARINGS 

WASHINGTON, DC 

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FEDERAL AVIATION ADMINISTRATION, 

Complainant, 

V. 

PRECISION DISPLAYS AND TOOLS, 

Respondent. 

FAA DOCKET No. CP09AL0008 

(Civil Penalty Action) 

DMS No. FAA-2009-0733 

INITIAL DECISION 

OF ADMINISTRATIVE LAW JUDGE RICHARD C. GOODWIN 

Found: Respondent is hereby assessed a civil penalty of $20,000. 

I. Background 

This proceeding is limited to the question of penalty. I previously granted 

summary judgment to Complainant Federal Aviation Administration ("Complainant," 

"FAA," or "the agency") on the violations it alleged against Respondent Precision 

Displays and Tools ("Respondent" or "Precision"). See Order Granting Motion for 

Decision, served August 4, 2010. 

Precision, a company which builds fixtures, stores, and the like (Tr. 32-33), was 

found to have committed eighteen violations of the Hazardous Materials Regulations 

("HMRs"). On May 9, 2008, it was determined. Precision had offered for transportation 

on a passenger-carrying aircraft a shipment containing several materials classified as 

hazardous. The goods consisted of a one-quart (32 ounce) can of lacquer thinner, 

classified as a flammable liquid; a one-pint (16 ounce) can of stain, also classified as a 

flammable liquid; three 16-ounce aerosol cans of a "multipurpose adhesive," a flammable 

gas; and two 12-ounce cans of spray paint, also an aerosol which is classified as a 

flammable gas. The shipment had not been declared. As such, none of the several 

labeling, marking, and other notifications that the HMRs require for the protection of 

persons who might come in contact with such materials - typically cargo handlers, 

passengers, and crew — were present. The Respondent also was found in violation of two 

training-related HMRs. The employee who offered the materials had not received the 
training required. He was not working under the direct supervision of a properly trained 

hazmat employee. Finally, Respondent did not have a record of current training for each 

of its hazmat employees meeting HMR requirements.' 

Thus the only issue remaining is penalty. Under the provisions of 49 U.S.C. 

§5123(a)(l) and 14 C.F.R. §13.305(d), the agency asked for an assessment of $20,000. 

Respondent asserted that it was unable to pay this amoimt. It claimed additional 

mitigating circumstances. A hearing was held and testimony taken on August 17, 2010, 

in San Francisco. 

At the hearing Respondent was represented by its president and owner, Robert 

Persekian. Mr. Persekian was Precision's sole witness. He offered evidence in support 

of Respondent's position, but his presentation was incomplete.^ Subsequent to the 

hearing I issued an order permitting Respondent additional time to file information 

supporting its position (Order on Mitigation of Penalty, served August 24, 2010). The 

Order directed Respondent and Mr. Persekian to submit to Complainant, no later than 

September 3, 2010, certain specified financial information. The information sought 

included, for the time spans noted in the ordering paragraphs, tax returns, credit card 

statements, a profit and loss statement, and "[a]ny other information Respondent deems 

relevant to its prayer for mitigation." (Order on Mitigation of Penalty, Ordering ^1 .f). 

Complainant was directed to notify the Court in writing concerning Respondent's 

compliance with this order by September 10, 2010. 

Complainant duly submitted the notification. In addition, and as part of its 

submission, it filed a Motion for Decision Setting Penalty ("Motion for Decision").' The 

agency argues that Respondent's filings failed to meet its proof It seeks the civil penalty 

of $20,000 it had originally proposed." Respondent did not answer the Motion for 

Decision. 

I grant the Motion for Decision at this juncture insofar as it requests a decision on 

the penalty issue. Consideration of the merits of that motion follows below. Because the 

ensuing discussion disposes of the penalty issue following an oral evidentiary hearing, it 

constitutes an Initial Decision. See 14 C.F.R. §13.232; Florence L Barnhill, FAA Order 

No. 92-32 (May 9, 1992), 1992 WL 753161, pp. 3-4. 

' The specific HMR sections violated are set out in Ordering Paragraph #3. 

^ Precision's evidence is summarized and considered below in section nLA.2 beginning on page 5. 

' The fill! title of the notification and pleading is "FAA's Notification to Judge Re Precision Displays' 

Compliance With Order on Mitigation of Penalty, And Motion for Decision Setting Penalty." (Italics in 

Original). 

"* The arguments contained in Complainant's Motion for Decision are summarized below in section III.B., 

which begins on page 5. 
IL Framework 

Complainant bears the burden of proving that the penalty it seeks is appropriate. 

But the plea of inability to pay is an affinnative defense. That is, it is Respondent's 

burden to prove mitigation of all or part of an otherwise appropriate civil penalty. See, 

I e.g., American Air Network, FAA Order No. 2006-5 (February 10, 2006), p. 9 n. 19. As I 

|| underscored at the hearing, "it's incumbent upon [Respondent] to demonstrate to the 

|;| Court that you cannot afford to pay".. ." (Tr. 43; see also Tr. 76) (italics added). 

I\ Respondent's owner, Mr. Persekian, indicated that he understood this (Tr. 66-67). 

H 

l| In determining whether to assess a penalty, and if so, setting its amount, the 

f ] decisionmaker must consider "the nature, circumstances, extent, and gravity of the 

f J violation," and, with respect to the violator, "the degree of culpability, any history of 

; i prior violations, the ability to pay, and any effect on the ability to continue to do 

; / business," and "other matters that justice requires" (49 U.S.C. §5123(c)). In other words, 

: the totality of the circumstances involved determines the proper assessment. Stebbins 

' \ Aviation, FAA Order No. 2006-3 (February 7, 2006). 

\ The determination of an appropriate assessment also is informed by an agency 

directive. The FAA has issued to its staff detailed guidelines for arriving at a justifiable 

civil penalty amount (Order No. 2150.3B). The guidelines also are intended to advise the 

public of the sanction policy that the Administrator intends to follow through the 

adjudication of individual cases. Folsom 's Air Service, Inc., FAA Order No. 2008-11 

(November 6, 2008), p. 13. Appendix C of Order 2150.3B provides guidance on setting 

civil penalties in cases of violations of the HMRs.^ The guidelines' Sanction Guidance 

Table for hazardous-materials violations sets out penalty recommendations within three 

ranges of amounts, designated minimum, moderate, and maximum. Suggested penalty 

j amounts are quantified within various categories. The overall intent is to best reflect the 

• nature and circumstances of the violation under consideration. Mitigating and/or 

aggravating factors also are part of the calculus. 

Hazardous materials, by their very nature, are dangerous. Tendering of such 

goods to aircraft puts the safety of air transportation - the overriding goal of the 

Department — at significant risk. On account of hazmats' inherent capacity for peril, the 

HMRs effect a web of protection to minimize risk for persons who could be adversely 

affected by proximity to such materials. 

i Undeclared shipments of hazardous materials lack that protection. As hidden 

shipments, they constitute a safety threat whose magnitude is unknown. The FAA 

; considers them particularly worrisome. The Administrator has emphasized that 

undeclared shipments of hazardous materials "pose a special risk" {Envirosolve, Inc., 

FAA Order No. 2006-2 (February 7, 2006), p. 14; Interstate Chemical Company, Inc., 

FAA Order No. 2002-29 (December 6, 2002), p. 16). Judge Benkin has elaborated that 

^ See 72 Fed.Reg. 55853 (October 1, 2007); Order No. 2150.3B is found in its entirety on the internet at 

rgl.faa.gov/, then clicking "Orders/Notices" on the right side of the page. 
"[mjajor catastrophes and significant loss of life may occur because seemingly irmocuous 

household items are placed in the stream of air commerce without adequate warning to 

the carrier, its employees or emergency rescue personnel." Mole-Master Services 

Corporation, Docket No. CP08SO0012, Initial Decision served February 10, 2009 (2009 

WL 348181). 

III. The Parties' Positions 

A. At the Hearing 

1. Complainant 

The agency has classified under the guidelines the items offered by Precision, 

other than the stain, as "Category A." Category A goods, if released, carry the potential 

for a "catastrophic effect" on an aircraft's ability to continue safe flight (64 Fed.Reg. 

19443,19449 (April 12, 1999); Toyota Motor Sales, Inc., FAA Order No. 94-28 

(September 30, 1994), p. 13). Violations warrant a civil penalty in the maximum portion 

of the recommended monetary range. The stain falls into "Category B," the category 

designated as moderate risk. Unintended release of Category B items could cause injury 

or death. 

i,i 

\i 

While the quantities offered for shipment in this matter were relatively small, the 

amounts. Complainant notes, were nonetheless significant. And they could have proven 

particularly perilous. The paint products could have been ignited easily by heat, sparks, 

and flame. Aerosols are capable of exploding or rupturing fi-om heat or sudden 

teihperature change. On-board flammable substances could be transformed into powerfiil 

accelerants by fire. Released in the confines of an aircraft, these items carried the 

potential for a catastrophic effect - possible injury or death ~ on the safety of aircraft 

operations {see Tr. 12). 

The agency's penalty recommendation also considers the nature of the offending 

entity. The guidelines coimsel that the greater the degree of a respondent's involvement 

in hazardous materials, the higher the sanction amoimt should be. A business regularly 

offering or transporting hazardous materials will be subject to a greater penalty than a 

business using dangerous goods in the course of its business. And the latter type of 

business will warrant a greater penalty, all things being equal, than a mere "business 

entity" (Appendix C, p. C-12). Complainant determined that Respondent is a business 

entity (Tr. 18-19). Weighing all the factors. Complainant concluded that the violations 

belonged in the "moderate" range (Tr. 11-17). 

The number of categories of violations is the final factor in Complainant's 

determination of penalty. Five categories of violations were present. The agency took a 

figure a bit lower than the midpoint of the suggested range of fines per violation ~ $4,000 

- and concluded that an appropriate civil penality would be an assessment of $4,000 per 

violation category, or a total of $20,000 (Tr. 18-20). Complainant concluded that a civil 

penalty of $20,000 appropriately reflected the factors relevant to its judgment: the nature 
and gravity of the violations and the nature, history, and attitude of Respondent (Tr. 19-

21). 

2. Respondent 

Mr. Persekian testified in support of Precision's plea of mitigation. He stated that 

the economic downturn in 2008 and significant medical conditions experienced by both 

he and his daughter led to a situation where the company's "[ijncome . . . went down to a 

trickle" while "expenses are the same." (Tr. 31-34). The amount of work the company 

obtained in 2009, he added, "was very minimal." (Tr. 49). Additionally, he accumulated 

a "big debt burden" on account of the circumstances (Tr. 51), and testified that he had 

been paying his federal taxes in installments (Tr. 51 -52). His added that his credit is zero 

(Tr. 52). American Express in 2010 got a judgment against Mr. Persekian personally of 

neariy $54,000 (Tr. 55, 59). 

Respondent also asserted that the violations were not deliberate; in fact, the 

shipment was contrary to the company policy forbidding transportation of dangerous 

goods. Precision also pointed out that it has no prior history of violations. 

As noted, subsequent to the hearing Mr. Persekian and Precision were given an 

opportunity to supplement Respondent's presentation (Order on Mitigation of Penalty, 

August 24, 2010; see I.D., p. 2). Respondent provided several items to Complainant by 

the due date of September 3, 2010. 

B. The Motion for Decision 

Complainant's Motion for Decision states that the docimients Precision provided 

in response to my Order on Mitigation of Penalty were materially incomplete. 

Respondent, it concludes, did not comply with the Order, and failed in its proof. 

The agency set out numerous instances of required documents missing from 

Respondent's submission. The Order on Mitigation of Penalty sought annual credit card 

statements for the years 2007, 2008, and 2009 for both Precision and Mr. Persikian. 

They were not provided. Nor was a Precision profit and loss statement covering the first 

six months of calendar year 2010 submitted. Other documents had key information 

missing. Some credit card statements did not identify the debtor. Some credit cards were 

in the name of entities whose relationship to Precision or Persikian was not explained.* 

In several instances Respondent submitted only one side of credit card statement 

copies which evidently had been copied onto both sides. This did not, of course, enable 

meaningful review. In fact. Complainant states, Precision supplied only one side of 

^ Some of the financial records, including a profit and loss statement for the first six months of 2010, were 

in the name of Mayolo, Inc. Mayolo, Inc. apparently is the name of the corporation under which Precision 

operates. Tr. 36-37. But Respondent never provided any documentary evidence for that claim. Nor did it 

explain how Mayolo records affected its own financial situation, specifically its claimed inability to pay. 
nearly all apparently two-sided copies of banking and line of credit statements as well as 

credit card statements. Such a pervasive bungle suggests, it asserts, "actual contempt for 

the judge's direction." (Motion for Decision, p. 3). 

Moreover, the materials were unsorted and generally disorganized (Motion for 

Decision, p. 3). No index was provided. Finally, Precision did not explain why any of 

the materials support its claimed inability to pay (Motion for Decision, p. 11). 

The motion concludes that Respondent failed in its obligation to demonstrate an 

inability to pay the civil penalty Complainant has suggested.' It asks that Respondent be 

ordered to pay the $20,000 civil penalty it seeks, or, in the alternative, that the hearing be 

reconvened to resolve this issue (Motion for Decision, p. 12). 

IV. Decision 

I find and conclude that a civil penalty of $20,000 is warranted. 

Respondent put into the stream of commerce a shipment containing several 

hazardous materials. All except one were classified under the guidelines as Category A, 

signifying goods carrying the greatest risk of danger. The shipment, furthermore, had not 

been declared, thus affording no notice to anyone encountering the materials in the course 

of flight. Finally, the individual charged with packaging and forwarding the goods 

neither had received the requisite training nor was under the supervision of an employee 

who had. Respondent's conduct was careless and irresponsible. Most importantly, it 

carried significant, even potentially catastrophic, danger. Such circumstances warrant a 

substantial penalty. The penalty should be in an amount that would cause Precision in the 

fiature to more carefiilly consider the consequences of loosing a shipment into the stream 

of commerce. 

Respondent's pleas in mitigation fail. It did not fiimish adequate proof of its 

inability to pay the civil penalty proposed. It should be noted that Precision was given 

numerous chances to do so: in discovery, at the hearing, and pursuant to my Order on 

Mitigation of Penalty. Yet it utterly failed.' In response to the Order on Mitigation - eit 

least its third bite at the apple ~ Precision sent to the FAA a disorganized muddle of halfformed documents. The submission was nowhere near complete. Nor did Respondent 

even bother to attempt to explain why these doctiments established its claim. 

It is significant, moreover, that Respondent made no response to Complainant's 

characterization of its submission in the agency's Motion for Decision. When a party 

' Motion for Decision, p. 12. Indeed, there are some indicia that Respondent did not disclose its control or 

access to substantial amounts of cash. A checking account in Mr. Persekian's name, according to 

Complainant, has been used to wire over half a million dollars to unknown accounts since December 2008. 

Motion for Decision, pp. 11-12. 

* Under these circumstances, there is no reason to grant Complainant's request in the alternative to 

reconvene the hearing to afford Respondent yet another opportunity to give evidence on this issue. 
fails to challenge assertions under circumstances in which it would be reasonable and 

natural to do so, it may be assumed that that party acknowledges that the assertions are 

true. U.S. V. Hale, All U.S. 171 (1975). Having no reason to otherwise doubt 

Complainant's assertions, we may take the agency at its word. 

Respondent's other points in mitigation do not avail it. That the violation may 

have been unintentional does not mitigate an otherwise reasonable sanction; indeed, 

evidence that a violation was intentional would constitute an aggravating factor, making a 

higher sanction appropriate. American Air Network, Inc., FAA Order No. 2006-5 

(February 10, 2006), p. 8. Nor does a violation-free history mitigate, for such history is 

considered the norm. Toyota Motor Sales, USA, Inc., FAA Order No. 94-28 (September 

30, 1994). Finally, Precision's policy against handling hazardous materials does not 

warrant a sanction reduction. Policies not to ship may fail to be followed - as, of course, 

occurred in this case. Interstate Chemical Company, Inc., FAA Order No. 2002-29 

(December 6, 2002), p. 18. 

A balancing of all the statutory factors demonstrates that a civil penalty of 

$20,000 is appropriate. It fairly reflects all the facts and circumstances of the case: the 

nature and extent of the violations (particularly the level of hazard Respondent introduced 

into the stream of commerce) and the nature and size of Respondent's business. Another 

factor suggesting that the civil penalty amount is appropriate is the assessment's 

similarity to fines levied in roughly comparable cases. See Mole-Master Services 

Corporation, Docket No. CP08SO0012, Initial Decision of administrative law judge 

Isaac D. Benkin served February 10, 2009 (2009 WL 348181) ($25,000 fine for tendering 

a leaky, undeclared package of nine 11-ounce tubes of sealant, a hazardous material) and 

James Walsh, Docket No. CP07SO0011, Initial Decision of Judge Benkin served March 

31, 2008 (2008 WL 926620) ($20,000 fine for tendering a undeclared shipment 

containing four 16.4-ounce containers of propane fuel, one box of "strike-anywhere" 

matches, and one box of safety matches). The penalty, I also find, contains sufficient 

'bite' to deter Precision and other comparable entities from similar violations, and will 

promote compliance with the HMRs. 

For all these reasons, it is ORDERED as follows: 

1. Complainant's Motion for Decision is granted in its entirety; 

2. Respondent's plea in mitigation is denied; 

3. Respondent is hereby assessed a civil penalty of $20,000 for violations of 

the following Hazardous Materials Regulations: 49 C.F.R. §§172.200(a); 

172.201(d); 172.201(e); 172.202(a)(1); 172.202(a)(2); 172.202(a)(3); 

172.202(a)(4); 172.202(a)(5); 172.203(f); 172.204(a); 172.204(c)(2); 
172.204(c)(3); 172.300(a); 172.301(a); 172.400(a); 172.604(a); 

172.702(a); and 172.704(d).' 

Richard C. Goodwin 

U.S. Administrative Law Jud^e 

Attachment - Service List I 

This decision may be appealed to the Administrator of the FAA. The notice of appeal must conform to 

sections 13.210, 13.211(e) and 13.233 of the Rules of Practice, which require that a notice of appeal 1) be 

filed not latfer than 10 days (plus an additional five days if mailed) from the service date of this decision, 

and 2) be perfected with a written brief or memorandum not later than 50 days (plus an additional five, if 

mailed) from the service date of this decision. The notice of appeal and briefer memorandum must either 

be a) mailed to the Federal Aviation Administration, 800 Independence Avenue, S. W., Washington, DC 

20591, Attn: Hearing Docket Clerk, AGC-430, Wilbur Wright Building—Suite 2W1000, orb) delivered 

personally or via expedited courier service to the Federal Aviation Administration, 600 Independence 

Avenue, S.W., Wilbur Wright Building—Suite 2WI000, Washington, D.C. 20591, Attn: Hearing Docket 

Clerk, AGC-430. A copy of the notice of appeal and briefer memorandum also must be sent to agency 

counsel. Service upon the presiding judge is optional. 

r, -i 

ft! 
FAA Docket No. CP09AL0008 

(Civil Penalty Action) 

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' 

ONE COPY 

Robert Persekian, Owner 

Precision Displays and Tools, Respondent 

1555 Alum Rock Avenue, Suite 20 

San Jose, CA 95116 

TEL: 408-504-2515 

FAX: 408-251-7990 

Howard L. Martin, Jr., Complainant's Counsel 

Regional Counsel, Office of the Regional Counsel, AAL-7 

Alaskan Region 

Federal Aviation Administration 

222 West 7* Avenue, Box 14 

Anchorage, AK 99513-7587 

TEL: 907-271-5269 

FAX: 907-271-2800 

The Honorable Richard C. Goodwin, Administrative Law Judge 

Office of Hearings, M-20 

U.S. Department of Transportation 

1200 New Jersey Avenue, S.E. 

East Building Ground Floor, Room El2-320 

Washington, DC 20590 

TEL: Attorney-Advisor 202-366-2139 

Legal Assistant 202-366-5121 

FAX: 202-366-7536 

' Service was by U.S. Mail. For service in person or by expedited courier, use the following address: 

Hearing Docket, Federal Aviation Administration, 600 Independence Avenue, S.W., Wilbur Wright Building - Room 

2014, Washington, DC 20591, Attention: Hearing Docket Clerk, AGC-430.