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U.S. DEPARTMENT OF TRANSPORTATION 

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OFFICE OF HEARINGS RECEIVE 

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MOTION CONFERENCE 

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FEB -1 2013 

HEARING DOCK T 

IN THE MATTER OF: 

FEDERAL AVIATION 

ADMINISTRATION FAA No. 

TBD 

COMPLAINANT, 

v. FDMS NO . 

FAA-2011-0488 

COVERMARK USA, 

RESPONDENT. 

Thursday, January 17, 2013 

Via Teleconference 

The above-entitled matter came on 

. for hearing, pursuant to notice, at 1:30 p.m. 

BEFORE: 

(202) 234-4433 

THE HONORABLE J.E. SULLIVAN, 

U.S. ADMINISTRATIVE LAW JUDGE 

NEAL R. GROSS 

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APPEARANCES: 

On Behalf of the Complainant: 

GERALD A. ELLIS, ESQ. 

of: Office of the Regional Counsel, 

AS0-7 

Southern Region 

Federal Aviation Administration 

P.O. Box 20636 

Atlanta, Georgia 30320 

(404) 305-5200 

On Behalf of the Respondent: 

of: 

KEITH ROBERTS, ESQ. 

Roberts Proprietaries, Inc. 

180 West 80th Street 

New York, New York 10024 

(917) 441-8642 

ALSO PRESENT: 

CODY L. SMITH 

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1 P-R-0-C-E-E-D-I-N-G-S 

2 1:31 p.m. 

3 ADMIN. JUDGE SULLIVAN: Okay. 

4 We're on the record in the matter of Covermark 

5 USA. This is Docket Number FAA-2011-0488. 

6 Today is Thursday, January 17, 2013. 

7 And the parties have appeared for 

8 final oral arguments on this matter. 

9 The record reflects that the 

10 parties previously appeared on December 11, 

11 2012 for oral argument by telephone on the 

12 FAA's motion for summary judgment. An order 

13 denying summary judgment was issued on 

14 December 13, 2012, which also granted the 

15 parties' joint motion for a decision on the 

16 written record and set this particular 

17 conference time up. 

18 The FAA is represented by its 

19 attorney of record, Gerald A. Ellis, who's 

20 present by telephone. The Respondent is 

21 represented by Mr. Keith Roberts, the attorney 

22 of record in this matter. And also present at 

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1 the Office of Hearings, sitting in as an 

2 observer only is Cody L. Smith, attorney 

3 advisor with this office. 

4 Good afternoon, Counsel. 

5 MR. ROBERTS: Good afternoon. 

6 MR. ELLIS: Good afternoon. 

7 ADMIN. JUDGE SULLIVAN: Let' s talk 

8 about some preliminary matters before we jump 

9 into anything substantive. As I understand it 

10 -- and I'm going to address this first to Mr. 

11 Ellis and then to Mr. Roberts -- essentially 

12 the parties agreed on December 11, 2012 that 

13 all of the exhibits that had been originally 

14 submitted with the FAA's motion for summary 

15 judgment, those being Exhibits 1 through 3, 

16 and more specifically identified by this Court 

17 in the December 13, 2012 order denying summary 

18 judgment, would be resubmitted by the parties 

19 for a decision on the written record. 

20 And is that your understanding, 

21 Mr. Ellis? 

22 MR. ELLIS: Yes. That there's no 

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1 further documentation to be submitted. 

2 ADMIN. JUDGE SULLIVAN: Okay. Mr. 

3 Roberts, is that also your understanding? 

4 MR. ROBERTS: Yes, it is. 

5 ADMIN. JUDGE SULLIVAN: Okay. Let 

6 me just talk a little bit about something that 

7 I think might need to be added. And, in the 

8 parties' argument at the December 11, 2012 

9 motion for summary judgment there was a 

10 tremendous amount of argument regarding how 

11 the FAA had originally assessed the penalty of 

12 $63,000 and then reduced it to $10,000. 

13 And I looked through the entire 

14 file. And I actually don't have the actual 

15 penalty determination that the FAA submitted 

16 to the Respondent and upon which all of these 

17 arguments are based. And I'm wondering if 

18 that was simply an oversight. I want to make 

19 sure that I have all of the information that 

20 I need in order to make a final decision. 

21 Mr. Ellis, I presume this was 

22 something that you provided to the Respondent. 

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1 MR. ELLIS: Are you asking for a 

2 document, Your Honor? 

3 ADMIN. JUDGE SULLIVAN: Yes, I'm 

4 asking --

5 MR. ELLIS: Or are you asking for 

6 an explanation of how the penalty was derived? 

7 ADMIN. JUDGE SULLIVAN: No, I'm 

8 asking if you actually submitted the penalty 

9 determination upon which you're basing all of 

10 the arguments to Mr. Roberts, and whether or 

11 not you're planning, or had intended to have 

12 submitted it to this decision-maker. 

13 MR. ELLIS: I'm not quite sure I 

14 know what you're talking about, Your Honor. 

15 ADMIN. JUDGE SULLIVAN: Really? 

16 Well, let me try and ask it a different way. 

17 Let's look at the Claimant's motion for a 

18 decision, which was filed with this office on 

19 October 31, 2012. And upon which the FAA 

20 basically relied upon to argue in the motion 

21 before the Court on December 11th. 

22 You talked a great deal about 

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1 this. And I'm going to go to page 3 of the 

2 motion. How you were seeking a $10,000 

3 penalty, that the amount was decreased from 

4 the original amount of 63,000 to give 

5 consideration to various Respondent factors. 

6 And then you went into the statutory factors 

7 present in the federal Hazardous Materials 

8 Transportation Statute. You did some 

9 discussion in Subsection A through D, as in 

10 David, about the way that the FAA uses the 

11 policies and the matrix, essentially, to 

12 consider various culpability, the degree of 

13 culpability, the weight of culpability, and so 

14 forth. And then you talked about the matrix, 

15 the penalty matrix, which the FAA typically 

16 uses in reaching a civil penalty. So that's 

17 what I'm talking about. 

18 I'm wondering if that material was 

19 actually exchanged and if there's an omission 

20 by not presenting it to me? 

21 MR. ELLIS: The FAA civil penalty 

22 -- I'm sorry, that part of the appendix which 

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1 is from FAA Order 2150. 3B Appendix C was 

2 exchanged between the parties, Your Honor. 

3 ADMIN. JUDGE SULLIVAN: Okay. It 

4 never reached my file. 

5 MR. ELLIS: It was exchanged 

6 between the parties. It wasn't given to you. 

7 ADMIN. JUDGE SULLIVAN: Okay. 

8 MR. ELLIS: You can take judicial 

9 notice of it, however, since it is an FAA 

10 order. 

11 ADMIN. JUDGE SULLIVAN: Well, it's 

12 hard for me to take a judicial notice of an 

13 order I've never seen if you've inputted data 

14 into it. 

15 MR. ELLIS: If I've inputted data 

16 into it? I wouldn't have inputted any data 

17 into it, Your Honor. 

18 ADMIN. JUDGE SULLIVAN: Okay. 

19 MR. ELLIS: The order simply shows 

20 how the FAA calculates civil penalties. In 

21 each --

22 ADMIN. JUDGE SULLIVAN: Okay. 

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1 MR. ELLIS: -- particular case you 

2 would have to demonstrate how you followed 

3 that order, which is what I did in the 

4 Complainant's motion for a decision. 

5 ADMIN. JUDGE SULLIVAN: Okay. And 

6 that's an argument. 

7 MR. ELLIS: Yes, it is. 

8 ADMIN. JUDGE SULLIVAN: Okay. And 

9 in order for me to make a finding that you've 

10 made a prima facie case on the civil penalty 

11 I have to have supportive facts . 

12 So I can certainly take your 

13 argument so long as I have the facts to 

14 support it. 

15 So it appeared to me that it may 

16 have been simply an omission of the factual 

17 evidence. And I'm just trying to make sure 

18 that the record is 

19 MR. ELLIS: Well, the facts that 

20 drive the penalty, Your Honor, would be in the 

21 complaint. 

22 ADMIN. JUDGE SULLIVAN: But the 

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1 complaint isn't evidence. It's an allegation. 

2 MR. ELLIS: Are you saying the complaint 

3 is not in evidence and the facts have not been 

4 admitted into evidence? 

5 ADMIN. JUDGE SULLIVAN: I'm saying 

6 that I need some factual evidence as opposed 

7 to an accusation. And I looked at this file, 

8 and I looked through the entire file that I 

9 have, and I thought, perhaps, that this was 

10 simply an omission. 

11 MR. ELLIS: It's not an omission, 

12 Your Honor. I 

13 ADMIN. JUDGE SULLIVAN: Not an 

14 omission. 

15 MR. ROBERTS: Your Honor --

16 MR. ELLIS: I've been doing this 

17 for 15 years and I've done it the same way all 

18 of those years. 

19 ADMIN. JUDGE SULLIVAN: And so 

20 have --

21 MR. ROBERTS: Your Honor, may I 

22 say something? It's Keith Roberts. 

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1 This may be against my client's 

2 interest but the reality is that when the 

3 complaint was filed we actually admitted the 

4 allegations in the complaint, the factual 

5 allegations in the complaint. 

6 ADMIN. JUDGE SULLIVAN: I know 

7 that. That's why I entered the motion or the 

8 order making a finding that the violations --

9 MR. ROBERTS: Okay. 

10 ADMIN. JUDGE SULLIVAN: -- were 

11 not contested . 

12 We're talking simply about the 

13 civil penalty process. And what I'm hearing 

14 from Mr. Ellis is that he has not neglected to 

15 file factual evidence, he simply isn't used to 

16 being asked for it. 

17 So the question I have and I'm 

18 going to direct this then to you, Mr. Roberts 

19 is, are you willing to stipulate that you have 

20 received enough information from the FAA so 

21 that the Court can find that there was a 

22 penalty determination made, that the original 

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1 penalty was $63,000, that it was then reduced 

2 to $10,000, and that you are not objecting or 

3 arguing as to any and all of the factors 

4 utilized by the FAA from, in its penalty 

5 determination calculation? That essentially, 

6 the issue is solely limited to how to go about 

7 looking at the Respondent's evidence regarding 

8 ability to pay 

9 MR. ROBERTS: How to evaluate 

10 that, yes 

11 ADMIN. JUDGE SULLIVAN: 

12 continue in business and whether or not 

13 remedial actions were properly taken into 

14 account? 

15 MR. ROBERTS: I think we are 

16 willing to admit that, yes. 

17 ADMIN. JUDGE SULLIVAN: Okay. Mr. 

18 Ellis, do you have any objection to the 

19 proposed stipulation proffered by the 

20 Respondent? 

21 MR. ELLIS: No, Your Honor. 

22 ADMIN. JUDGE SULLIVAN: Okay. 

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1 Would you agree to that stipulation? 

2 MR. ELLIS: That he has no 

3 objection to the arguments presented in the 

4 motion? 

5 ADMIN. JUDGE SULLIVAN: No, what 

6 I'm trying to make sure that I have is either 

7 factual evidence or a stipulation by the 

8 parties that the FAA has submitted factual 

9 evidence to support a prima facie case in the 

10 civil penalty proceeding. 

11 We have, essentially, a whole 

12 bunch of arguments by both parties in terms of 

13 motion and by oral argument about the penalty. 

14 But what's missing from the file is the 

15 factual evidence about what the penalty is, 

16 originally, and about what the penalty was, 

17 ultimately, that puts the decision at my door 

18 regarding the $10,000 

19 MR. ELLIS: Oh, you're talking 

20 about the $63,000 original amount versus the 

21 $10,000 amount proposed in the complaint? 

22 ADMIN. JUDGE SULLIVAN: I'm 

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1 talking about factual evidence that basically 

2 gives me the groundwork to say that, "This is 

3 the fact. Here are factual pieces of material 

4 that are testimonial or documentary in nature 

5 that build the case for the FAA's prima facie 

6 evidence. " 

7 Right now, I have an absence of 

8 actual testimonial or documentary evidence in 

9 the file that supports the prima facie case. 

10 And I think it's because everybody basically 

11 agreed that the FAA had engaged in a series of 

12 steps that they normally engage in that were 

13 not arbitrary to reach, first, a penalty 

14 assessment of $63,000 and then reduced that 

15 penalty down to a $10,000 amount. 

16 Typically and I know, Mr. 

17 Ellis, that you've done this for a very long 

18 time and that you are surprised to hear this 

19 Court talk about this -- but typically, in my 

2 0 years of experience, parties provide some 

21 testimonial or documentary evidence to support 

22 the prima facie case. 

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1 And when I looked through this 

2 file I thought, oh my goodness, it's something 

3 that I need to clarify with the parties and 

4 take care of so that the appellate record is 

5 correct. 

6 MR. ELLIS: And what is your 

7 question, Your Honor? 

8 ADMIN. JUDGE SULLIVAN: My 

9 question is, is the FAA willing to stipulate 

10 with the Respondent that the FAA engaged in a 

11 formula penalty determination which originally 

12 assessed or found that $63,000 potentially be 

13 owing by the Respondent for the 19 violations 

14 that it accused the Respondent of in its 

15 notice of complaint, that that penalty 

16 determination utilized the sanction guidance 

17 matrix that is published and available for 

18 parties to take a look at, that in looking at 

19 the penalties and the'factors that are talked 

20 about in the sanction guidance matrix, the FAA 

21 then reduced the overall penalty from 63,000 

22 to $10,000 after considering various 

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1 factor·s? And that the parties are 

2 here today simply to talk about three matters 

3 in dispute. 

4 Number one, whether the Respondent 

5 has submitted sufficient evidence regarding 

6 its ability to pay and/or to continue in 

7 business that is sufficient to rebut the 

8 $10,000 amount, and whether the Respondent's 

9 remedial action, as alleged by the Respondent, 

10 should be further taken into consideration for 

11 potentially reducing the $10,000 amount? 

12 MR. ELLIS: Well, we certainly 

13 agree to the stipulation regarding how the 

14 penalty was calculated. 

15 You said there were three matters 

16 that we're going to discuss today. I heard 

17 the first one, which was the evidence, that is 

18 Respondent's evidence, regarding its ability 

19 to pay argument, and the remedial action 

20 issue. What was the third issue? 

21 ADMIN. JUDGE SULLIVAN: It's the 

22 same as what we talked about in the summary 

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1 judgment motion on December 11, 2012. There 

2 was a dispute between the parties regarding 

3 whether or not the Respondent had the ability 

4 to pay and/or to continue in business if a 

5 $10,000 penalty was assessed. And whether or 

6 not the Respondent's remedial actions should 

7 be further taken into account for potentially 

8 reducing the $10,000 penalty. 

9 MR. ELLIS: Okay. I hear two 

10 issues, not three. 

11 ADMIN. JUDGE SULLIVAN: Well, let 

12 me ask you what it is that you've heard and 

13 can you tell me what you think the issues are? 

14 MR. ELLIS: Yes. I believe the 

15 dispute is in regard to Respondent's 

16 affirmative defense. That is, its ability to 

17 pay, whether the evidence that he, that the 

18 Respondent has presented supports his ability 

19 to pay argument. 

20 And the second issue was regarding 

21 the remedial action that the Respondent did in 

22 response to the hazardous materials 

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1 allegation. 

2 ADMIN. JUDGE SULLIVAN: In terms 

3 of the first issue that you've identified, 

4 would you agree or not agree that the 

5 Respondent has, in his oral argument of 

6 December 11, 2012 and in his materials 

7 preceding that oral argument on December 11, 

8 2012, he talked about his ability to pay 

9 and/or his ability to continue in business as 

10 he was talking about the quick ratio versus 

11 the current ratio, and so forth . 

12 It seemed to me that those were 

13 both addressed by both the Respondent and the 

14 FAA. 

15 MR. ELLIS: Correct, Your Honor. 

16 ADMIN. JUDGE SULLIVAN: I'm sorry? 

17 MR. ELLIS: I said, that's 

18 correct, Your Honor. 

19 ADMIN. JUDGE SULLIVAN: Okay. And 

20 essentially, from what you're saying to me, 

21 you look at that as one issue as opposed to 

22 two . 

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1 MR. ELLIS: Yes. 

2 ADMIN. JUDGE SULLIVAN: Okay. Mr. 

3 Roberts, would you agree that those issues, as 

4 identified by the Court and Mr. Ellis, are the 

5 issues before the Court today? 

6 MR. ROBERTS: Yes. 

7 ADMIN. JUDGE SULLIVAN: Okay. 

8 And, Mr. Ellis, as I understand it, it looks 

9 like we have an agreement regarding the 

10 stipulation regarding the FAA's prima facie 

11 case in terms of factual stipulation? 

12 MR. ELLIS: I have to say, yes. 

13 ADMIN. JUDGE SULLIVAN: Okay. And 

14 then we also have an agreement, at least, or 

15 a statement from both parties that the FAA's 

16 Exhibits 1 through 3, as utilized and 

17 proffered by the parties for the December 11, 

18 2012 argument, are re-proffered by the parties 

19 by stipulation as evidenced today in this 

20 proceeding. 

21 Let's talk about the arguments 

22 that were submitted in writing and that were 

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1 discussed orally on December 11, 2012. There 

2 is a transcript that was filed from that 

3 December 11, 2012 argument. And of course, 

4 the parties exchanged the motions and the 

5 answers to the motion for summary judgment. 

6 Does Counsel, in this proceeding today, want 

7 to adopt those same arguments for today' s 

8 proceeding and then just supplement them? Or 

9 do you want to start afresh? 

10 Starting first with you, Mr. 

11 Ellis . 

12 MR. ELLIS: I have no problem 

13 adopting the transcript, Your Honor. 

14 ADMIN. JUDGE SULLIVAN: Okay. 

15 Well, I'm not talking about just the 

16 transcript. I'm talking about all of the 

17 written material that was submitted by the FAA 

18 and submitted by the Respondent in support and 

19 in response to the FAA's motion for summary 

2 0 judgment. So that you take the whole body of 

21 material that each party submitted and then 

22 argued about, and basically agree to have it 

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1 re-utilized, essentially, for today's 

2 proceeding, which is essentially a hearing on 

3 the written record and with supplemental oral 

4 argument presented by the parties today. 

5 MR. ELLIS: The Complainant has no 

6 objection to using all the previously 

7 introduced evidence that you just described. 

8 ADMIN. JUDGE SULLIVAN: Okay. And 

9 just so you know, the evidence is different 

10 from the motions that were made in writing and 

11 the oral argument. So the evidence is the 

12 stipulation by the parties that just was 

13 entered into a little earlier this afternoon, 

14 and the Exhibits 1 through 3. 

15 What I'm saying is that instead of 

16 going through and making all the same 

17 arguments orally to the Court today, I'm 

18 asking if you feel comfortable with all of the 

19 written arguments that you filed in writing, 

2 0 prior to the telephone conference on December 

21 11, 2012, and with the arguments that you made 

22 on December 11, 2012, and to have those 

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1 resubmitted to the Court for purposes of the 

2 actual hearing, which we're convening today. 

3 And then I would be asking the parties to 

4 supplement that material. It basically would 

5 allow you to stand on the written material and 

6 oral arguments you've already made and then 

7 supplement or clarify those written and oral 

8 materials. Would you like to do that? 

9 MR. ELLIS: Yes, Your Honor. 

10 ADMIN. JUDGE SULLIVAN: Okay. Mr. 

11 Roberts, how about you? Would that be 

12 acceptable for you? 

13 MR. ROBERTS: Yes. 

14 ADMIN. JUDGE SULLIVAN: Okay. 

15 Then let's go to you. 

16 I'll so note that. And I' 11 

17 accept all of that material that was made in 

18 oral argument and in written argument for the 

19 motion for summary judgment and the response 

2 0 to it as resubmit ted today for the actual 

21 hearing. 

22 And then, Mr. Ellis, why don't I 

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1 turn to you then and ask you if there's 

2 anything else that you would like to add to 

3 those arguments about why the $10,000 proposed 

4 fine should be adopted by this Court? 

5 MR. ELLIS: Only what I had 

6 planned to argue about today. 

7 ADMIN. JUDGE SULLIVAN: Okay. And 

8 what would that be? 

9 MR. ELLIS: Well, let me make sure 

10 I understand what's going to happen here 

11 today. I thought there were going to be some 

12 additional arguments but not any additional 

13 evidence presented on the issues. And 

14 assuming, and because it's Respondent's 

15 burden, I was presuming that he was going to 

16 go first and we would respond to that. 

17 ADMIN. JUDGE SULLIVAN: Well, this 

18 is 

19 MR. ELLIS: Am I correct about the 

20 procedure? 

21 ADMIN. JUDGE SULLIVAN: No. This 

22 is a hearing. Essentially, you and the 

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1 Respondent agreed to submit everything to me 

2 on the written record, and then appear today 

3 for a continued argument, or for argument on 

4 the Cqse for purposes of me issuing a 

5 decision. So if you recall, I denied the 

6 FAA's motion for summary judgment, which means 

7 that I'm re-looking at all of the evidence 

8 anew. 

9 I'm happy to hear the parties add 

10 to whatever arguments they've already made 

11 since the parties have agreed that I may 

12 consider all of those arguments as part of the 

13 hearing process here today. That means I have 

14 to look at everything fresh, I have to make a 

15 finding that the FAA has made a prima facie 

16 case in support of the civil penalty it's 

17 proposing, which at this point is $10,000. 

18 The FAA still is the moving party before me, 

19 first and foremost. 

20 And then I turn to the Respondent 

21 and I say to the Respondent, "Okay, let's 

22 assume that the FAA has made a prima facie 

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1 case and you are now asserting affirmative 

2 defenses such as you did on the summary 

3 judgment motion. And what do you have before 

4 me that you think is persuasive?" 

5 So because the summary judgment 

6 motion on the civil penalty was denied, I have 

7 to again take a look at the case and say, "Did 

8 the FAA make a prima facie case on the civil 

9 penalty of $10, 000?" And then turn to the 

10 Respondent and say, "Have you successfully 

11 rebutted the prima facie case with your 

12 affirmative defenses?" 

13 So, Mr. Ellis, turning back to 

14 you, based on the stipulations one might say 

15 that you've made a prima facie case on the 

16 $10,000 proposed civil penalty, but you're 

17 still the moving party, to begin with. So I 

18 go to you first. Do you think that you've 

19 made the prima facie case based on the 

20 stipulations the parties just entered into? 

21 MR. ELLIS: I'm very confused now, 

22 Your Honor. Because 

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1 ADMIN. JUDGE SULLIVAN: And --

2 MR. ELLIS: -- yes, the last pre3 hearing that we had, I thought disposed of our 

4 motion. 

5 And I thought that this proceeding 

6 was going to use that information and any 

7 further argument the Respondent had to prove 

8 its ability to pay argument, and that we would 

9 rebut that. 

10 ADMIN. JUDGE SULLIVAN: Well, 

11 let's go to -- do you have the order denying 

12 summary judgment in front of you, Mr. Ellis? 

13 MR. ELLIS: I have it. 

14 ADMIN. JUDGE SULLIVAN: Okay. 

15 Let's take a look at page 7 of the order 

16 denying summary judgment, and that would be 

17 the last page because there's only seven 

18 pages. 

19 The order specifically says on 

20 page 7, paragraph 1, "The FAA's October 26, 

21 2012 motion for a decision is denied. There 

22 remain genuine issues of material facts 

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1 regarding the proposed civil penalty including 

2 Respondent's ability to pay and its ability to 

3 continue in business." 

4 Paragraph 2 of the order, on page 

5 7 says that, "The parties agree that the three 

6 FAA exhibits attached, the FAA's October 26, 

7 2012 motion for a decision should be admitted 

8 as the evidentiary record for a decision 1n 

9 this matter." And that's confirmed. 

10 Paragraph 3 says, "The parties 

11 agreement that the disputed issue of the 

12 proposed civil penalty calculation may be 

13 decided on the admitted evidentiary record 

14 without further testimonial evidence or in15 person hearing is confirmed and adopted. 11 

16 And then paragraph 4 talks about 

17 striking the live hearing. 

18 Paragraph 5 sets up today's date 

19 and time for oral argument on the admitted 

20 evidence and the disputed issue. 

21 Essentially and one of the 

22 things that we talked about on December 11, 

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1 2012 was that when I looked at summary 

2 judgment motions I had to look at them in a 

3 light most favorable to the non-moving party, 

4 which in this case was the Respondent. 

5 I didn't make a finding either in 

6 the oral arguments on December 11, 2012 or in 

7 the order that was issued, before the, to the 

8 parties on December 13, 2012 that there was an 

9 established prima facie case that I'm adopting 

10 and the matter was solely for the purpose of 

11 defense . 

12 That's why I started out this 

13 afternoon with asking the parties if there was 

14 a stipulation about the prima facie case so 

15 that we could potentially jump in to the 

16 defense. 

17 MR. ELLIS: And my understanding, 

18 and in every other motion, in every other case 

19 where it's a sanction-only hearing, then the 

20 only issue is ability to pay, with the facts 

21 that are being stipulated as they are the only 

22 live issue remaining is ability to pay. 

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1 ADMIN. JUDGE SULLIVAN: Okay. But 

2 let's look at the exhibits. And that's why I 

3 was saying, I thought it was an omission. 

4 None of the exhibits, none of them, unless you 

5 can show me otherwise, none of the exhibits 

6 stipulate that there was a prima facie .case or 

7 that there were facts sufficient to support a 

8 prima facie case. 

9 And it sounded -- and what we were 

10 doing it a little earlier today was trying to 

11 clean up that record . 

12 MR. ELLIS: Yes, when you say 

13 prima facie case, the distinction I'm making, 

14 Your Honor, is when the facts in a case had 

15 been admitted-- let's stick to the facts in 

16 this case 

17 ADMIN. JUDGE SULLIVAN: Okay. 

18 MR. ELLIS: those facts are 

19 deemed to be true, and therefore, support a 

20 penalty. 

21 Now, when you get to what the 

22 penalty should be, I agree, that is argument, 

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1 but that's not fact. I don't see any other, 

2 you know, any facts that need to be presented. 

3 It's just a matter of --

4 ADMIN. JUDGE SULLIVAN: Okay. 

5 MR. ELLIS: arguing what 

6 penalty --

7 ADMIN. JUDGE SULLIVAN: Well then, 

8 why don't you educate me? I think that would 

9 probably be best. 

10 Look at the Exhibits 1, 2 and 3, 

11 if you would be so kind, and tell me where 

12 those exhibits support the fact of the 63,000 

13 penalty, the considerations 

14 MR. ELLIS: They don't. 

15 ADMIN. JUDGE SULLIVAN: They 

16 don't? 

17 MR. ELLIS: The complaint does 

18 that, Your Honor. 

19 ADMIN. JUDGE SULLIVAN: But the 

20 complaint is an accusation. It is not fact. 

21 And it hasn't been admitted as fact in this 

22 proceeding. 

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1 MR. ELLIS: The facts of the 

2 complaint have been admitted. Have been found 

3 to be, have been found, Your Honor. 

4 ADMIN. JUDGE SULLIVAN: When? 

5 MR. ELLIS: I filed a motion to 

6 deem the facts admitted. The facts had been 

7 admitted. That motion was granted, Your 

8 Honor. 

9 ADMIN. JUDGE SULLIVAN: Right. 

10 The motion was granted in terms of the 

11 violation. It was not granted in terms of the 

12 penalty. 

13 MR. ELLIS: Yes, but the facts, 

14 what I'm saying, Your Honor, is the facts are 

15 admitted as evidence. And it's those facts 

16 which determine what the penalty will be. 

17 ADMIN. JUDGE SULLIVAN: Okay. 

18 Well, help me out again. 

19 I'm looking at the complaint. On 

20 page 6 of your complaint, paragraph 20, you 

21 say, under the facts and circumstances of this 

22 case, the civil penalty of $10,000 is 

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1 appropriate. Would.you agree with that? 

2 MR. ELLIS: That's correct. 

3 ADMIN. JUDGE SULLIVAN: Okay. And 

4 then there is a motion, actually cross-motions 

5 by the parties regarding a decision on the 

6 merits. 

7 MR. ELLIS: And before you go 

8 further, Your Honor, it also talks about 

9 consideration of Respondent's corrective 

10 action and other matters that justice 

11 requires . 

12 ADMIN. JUDGE SULLIVAN: In the 

13 complaint, you're talking about? Are you 

14 talking about the complaint, sir? Mr. Ellis? 

15 MR. ELLIS: Yes, Your Honor. I'm 

16 sorry you can't hear me. 

17 ADMIN. JUDGE .. SULLIVAN: Okay. 

18 Yes, on page 6 of the complaint there is a 

19 request by the Agency for the Court to enter 

20 an order assessing the Respondent a civil 

21 penalty in the amount of $10, 000. And an 

22 assertion by the FAA that it believes that the 

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1 $10,000 amount includes consideration of 

2 Respondent's corrective action, and other 

3 matters that justice require. I'm reading 

4 from the complaint, page 6. 

5 MR. ELLIS: Yes. I just didn't 

6 want you to overlook that. 

7 ADMIN. JUDGE SULLIVAN: Yes, I 

8 haven't overlooked it. And it simply is a 

9 request. It's not evidentiary evidence unless 

10 the parties stipulate to it. 

11 MR. ELLIS: I'm not saying it is, 

12 Your Honor. I'm just 

13 ADMIN. JUDGE SULLIVAN: But what 

14 I'm saying, Mr. Ellis, is that when we started 

15 this conference this afternoon, one of the 

16 things I was doing was trying to make sure 

17 that I had a factual basis to support finding 

18 that the FAA has made a prima facie case for 

19 today, that it had done what it needed to do, 

20 essentially, to ask the Court to issue an 

21 order assessing the Respondent $10,000 in a 

22 civil penalty. 

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1 Once I make a finding that a prima 

2 facie case has been made, then and only then, 

3 can I go to the Respondent and say, okay 

4 Respondent, what, if anything, can you say in 

5 response to this request. 

6 And I think the FAA and I are on 

7 the same page, we just are coming at the 

8 matter in a little different way. 

9 If you had appeared before me in 

10 an in-person trial, I would have expected you, 

11 absent a stipulation by the parties, show me 

12 some proof or some evidentiary information, 

13 either by testimony or documentary evidence, 

14 that you had a reasonable ground that was not 

15 arbitrary to support your request for a 

16 $10,000 penalty. And I think you would expect 

17 yourself to do that, too. 

18 We didn't have an in-person 

19 hearing in part because it appeared that the 

20 parties didn't really have a problem with 

21 this, and that they did want to basically jump 

22 into the Respondent's defense of case. 

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1 As I looked through my material I 

2 realized that I didn't actually have any 

3 testimonial or documentary evidence that 

4 supported this request for a finding of a 

5 prima facie case, which was my 

6 MR. ELLIS: I guess that's where 

7 we're differing a little, Your Honor --

8 ADMIN. JUDGE SULLIVAN: Yes. 

9 MR. ELLIS: because we think 

10 that when the facts in a complaint are 

11 admitted and the statutory violations are 

12 admitted, and considering the fact that the 

13 statute allows for a penalty of up to the 

14 statute I'm talking, not the sanctions in the 

15 regulations -- but since the statute itself 

16 provides a sanction of up to $25, 000 for each 

17 one of those regulations, those facts combined 

18 with the law alone support the amount of 

19 penalty that's supported by those facts. 

20 So when you're getting down to 

21 what's actually proposed, you're talking about 

22 a different thing than a prima facie case. 

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1 The amount of the penalty is already proven by 

2 the number of allegations and the number of 

3 violations of the Hazardous Materials 

4 Regulation that was violated. 

5 ADMIN. JUDGE SULLIVAN: And how do 

6 you reach that? 

7 MR. ELLIS: How we reached it was 

8 explained in the motion. 

9 But to say that there are no facts 

10 that support a sanction is what we're having 

11 trouble with . 

12 ADMIN. JUDGE SULLIVAN: Okay. You 

13 have 19 violations. Would you agree or 

14 disagree with that? 

15 MR. ELLIS: That's correct. 

16 ADMIN. JUDGE SULLIVAN: Okay. And 

17 this Court, on April 2nd, 2012 issued an order 

18 deeming allegations of safety violations 

19 admitted and granting/denying other relief. 

20 Would you agree with that? 

21 MR. ELLIS: Correct. 

22 ADMIN. JUDGE SULLIVAN: On page 2, 

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1 of the April 2nd, 2012 order deeming 

2 allegations of safety violations admitted and 

3 granting/denying other relief, there are four 

4 separate, specific and distinct orders. 

5 And it says in paragraph 2 of page 

6 2, essentially that, the Respondent has 

7 admitted to the safety violations in its 

8 motion for decision/Respondent's answer. And 

9 there is no genuine issue of material fact 

10 regarding the alleged safety violations. And 

11 as a result, a motion, judgment is granted as 

12 a matter of law on the safety violations. 

13 MR. ELLIS: Right. 

14 ADMIN. JUDGE SULLIVAN: Paragraph 

15 3 of that same order states that the 

16 Respondent's motion for a decision waiving the 

17 civil penalty of $10,000 is denied. And the 

18 FAA's motion to deem allegations admitted in 

19 motion for hearing on sanction only is 

20 granted. And that there are genuine issues of 

21 material fact regarding the FAA's proposed 

22 civil penalty. Do you see that? 

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1 MR. ELLIS: Yes. 

2 ADMIN. JUDGE SULLIVAN: Okay. So 

3 what I'm hearing from the parties, because I 

4 didn't see it in Exhibits 1 through 3, is a 

5 stipulation that the FAA utilized the 

6 published let me make sure that I say this 

7 correctly the published sanction guidance 

8 matrix. 

9 MR. ELLIS: It's not just a 

10 matrix, Your Honor. 

11 ADMIN. JUDGE SULLIVAN: I'm sorry? 

12 MR. ELLIS: It's not just a 

13 matrix. 

14 ADMIN. JUDGE SULLIVAN: Okay. 

15 MR. ELLIS: It's guidelines 

16 including a matrix. 

17 ADMIN. JUDGE SULLIVAN: Okay. But 

18 essentially --

19 MR. ELLIS: Actually it's an 

20 order, not a guideline. 

21 ADMIN. JUDGE SULLIVAN: Thank you. 

22 Essentially that the FAA did, in fact, utilize 

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1 the penalty matrix in considering a variety of 

2 different factors, as it's been tasked to do, 

3 in looking at the nature of the violation, the 

4 gravity of the violation, the circumstances 

5 surrounding the violation, and so forth, to go 

6 from an original $63,000 penalty to the 

7 proposed $10,000 penalty before this Court. 

8 That's my understanding of what the parties 

9 actually want this Court to find as a fact. 

10 MR. ELLIS: I believe that's 

11 correct, Your Honor . 

12 ADMIN. JUDGE SULLIVAN: Okay. And 

13 I'm saying to you, Mr. Ellis, that that's my 

14 understanding but I didn't see it as a 

15 submitted fact in Exhibits 1 through 3. It's 

16 not something that is admitted as a fact 

17 simply because you put it in your accusation. 

18 And so I was trying to make sure that the 

19 record is perfected so that I can go forward 

20 today and help the parties resolve this 

21 dispute and nip in the bud any problems with 

22 omissions if the case ever went up on 

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1 appeal. So I'm asking you if you 

2 can tell me, absent of stipulation, if there's 

3 anything in Exhibits 1 through 3 that show on 

4 a factual basis that you've done the, that you 

5 have not engaged in --

6 MR. ELLIS: Sorry. You cut out on 

7 me, Your Honor. I couldn't hear you. 

8 ADMIN. JUDGE SULLIVAN: I'm sorry. 

9 We have these phones and they have problems~ 

10 essentially, all I want to do is make sure 

11 that I have a stipulation from the parties 

12 regarding the $10,000 proposed civil penalty 

13 so that I can move into the Respondent's 

14 defense. 

15 MR. ELLIS: We can certainly 

16 stipulate to that, Your Honor. 

17 ADMIN. JUDGE SULLIVAN: Wonderful. 

18 Thank you so much. 

19 Mr. Roberts, I believe I heard 

20 from you before but I just want to make sure 

21 that I hear from you again. Is it also your 

22 understanding that you're willing to stipulate 

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1 that the FAA utilized the penalty matrix and 

2 considered the various factors as recommended 

3 by the matrix in reaching, first, the original 

4 $63,000 penalty and then reducing it down to 

5 $101 000? 

6 MR. ROBERTS: Yes. 

7 ADMIN. JUDGE SULLIVAN: Okay. 

8 Thank you so much. 

9 Mr. Ellis, turning to you, is 

10 there anything else that you would like to add 

11 to your arguments that the Court is adopting 

12 from the motion for summary judgment and 

13 utilizing for today' s proceeding before I turn 

14 to the Respondent? 

15 MR. ELLIS: Well, I do have some 

16 argument prepared. 

17 But I suppose, procedurally, I 

18 would want to know whether I am responding to 

19 Respondent's ability to pay argument or 

20 whether I'm asking, whether you're asking me 

21 for more arguments for what we already 

22 stipulated to. 

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1 ADMIN. JUDGE SULLIVAN: If you 

2 like, I'm happy to reserve the totality of 

3 your argument for reply. 

4 MR. ELLIS: I would like to do 

5 that then. 

6 ADMIN. JUDGE SULLIVAN: So noted. 

7 Mr. Roberts, let's turn to you. 

8 Let's talk about your arguments regarding the 

9 Respondent's ability to pay and/or to continue 

10 in business. Is there anything else you would 

11 like to add to the arguments and the materials 

12 that you've already presented to this Court? 

13 Any other argument or comment, suggestion and 

14 so forth? 

15 MR. ROBERTS : Your Honor, there 

16 really isn't. I think I've said, as best I 

17 can, what I could say. 

18 I could tell you what the results 

19 were for this year but I don't think it's 

20 actually germane. Although, between you and 

21 me, and it's not part of the record, 

22 obviously, the results were yet worse. But 

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1 that's not the point here. 

2 So I don' t really think there' s 

3 anything for me to submit. I feel I've 

4 submitted our case. 

5 ADMIN. JUDGE SULLIVAN: Okay. In 

6 terms of your argument that you made on 

7 December 11, 2012 orally, and then prior to 

8 that, in writing, do you have anything else 

9 that you would like to add regarding the 

10 remedial actions that you had asserted were 

11 not fully taken into account by the FAA in 

12 reaching the $10,000 proposed civil penalty? 

13 MR. ROBERTS: I fear that 

14 everything I would say now would simply be a 

15 repetition of what I already said. 

16 I think the point I was trying to 

17 make, but goes directly to the bottom line of 

18 it, is that as soon as the company learned 

19 that taking the course Mr. Ellis suggested 

20 would be the appropriate remedial action even 

21 though the company had previously discontinued 

22 selling the one product in its inventory that 

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1 might conceivably violate FAA regulations, the 

2 only product that has alcohol in it or any 

3 other flammable substance, we immediately did 

4 it. And to claim that we should have taken 

5 that remedial action the minute it was brought 

6 to our attention that there had possibly been 

7 a violation, when we were still trying to 

8 figure out how it could be a violation, 

9 doesn't make sense to me. 

10 But that's the only thing I would 

11 say . 

12 ADMIN. JUDGE SULLIVAN: Well, let 

13 me ask you about that, because according to 

14 the documentation that I received, you met 

15 with Mr. Ellis on February 11, 2011 to discuss 

16 this case. It was at that date that Mr. Ellis 

17 recommended that Ms. Rego, the executive of 

18 the company, take a hazmat course. 

19 MR. ROBERTS: Yes. 

20 ADMIN. JUDGE SULLIVAN: And that 

21 he wanted to have the results of that hazmat 

22 course filed with his office no later than 

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1 February 25, 2011, which was essentially two 

2 weeks later. 

3 MR. ROBERTS: Well --

4 ADMIN. JUDGE SULLIVAN: According 

5 to the -- I'm sorry, sir? 

6 MR. ROBERTS : I'm sorry. Go 

7 ahead. 

8 ADMIN. JUDGE SULLIVAN: According 

9 to the certificate that your client filed, the 

10 course was completed on April 5, 2011, which 

11 is significantly longer than the two weeks 

12 originally recommended. Why is it, in your 

13 opinion, that that would have been timely and 

14 should be taken into account as remedial? 

15 MR. ROBERTS: When I don't 

16 remember the two weeks that Mr. Ellis 

17 mentioned, but assuming that he did say that 

18 and that I knew it at the time, the only thing 

19 that we could really do was find a course and 

2 0 have her take the course as quickly as it 

21 could be taken. 

22 And in fact, I spoke to her the 

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1 day I returned from Atlanta and to my office, 

2 and she, on that same day, found and signed up 

3 for a course. And then the course took its 

4 course, if you will. And she immediately took 

5 it, passed it and got the certificate back. So 

6 there was no delay in our action. I just 

7 think that was the time that was involved. 

8 ADMIN. JUDGE SULLIVAN: Okay. And 

9 according to the FAA, it took into account 

10 some remedial actions by your client. In your 

11 opinion, how much should this Court take into 

12 account that the FAA did not? 

13 MR. ROBERTS: Well, I didn't see 

14 what the -- you know, one of the difficulties 

15 I had had and the reason, one of the reasons 

16 I actually brought the case originally, 

17 appealed it I mean, is that I never could 

18 figure out what was the thinking. How, in 

19 using that matrix, how the facts of this case 

20 were actually, how the matrix was actually 

21 applied to the facts of this case. 

22 And if you remember in my original 

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1 complaint I said, this was arbitrary, because 

2 I didn't even know about the matrix at that 

3 point. But in any event, I just think that 

4 given the nature of the company, given the 

5 one-time nature of this situation, because the 

6 company isn't doing this anymore, and knows 

7 the hazardous material information now 

8 perfectly well, that the immediate response 

9 that we made -- and we made every effort that 

10 we were capable of making to comply with the 

11 suggestions. We recognize the great 

12 seriousness of shipping a hazardous, a 

13 flammable material, however small it is. 

14 That's a terrible thing and we were appalled, 

15 frankly. 

16 And so we immediately did 

17 everything that we could. We ceased selling 

18 the product, we immediately took the course, 

19 and the company -- the only thing that can 

20 happen here is if the company -- you know, a 

21 $10,000 fine is one that imperils this 

22 business. I had recommended a $2000 fine 

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1 because that, frankly, is not an amount that 

2 would imperil the business. It wouldn't be a 

3 significant factor whether the business 

4 survives or not. 

5 But $10,000, it gets significant 

6 for this tiny company. And I don't know what 

7 consequence could follow upon having the fine 

8 assessed other than imperiling the jobs of the 

9 half dozen people that are working there full10 time. 

11 So that's all I can say about it.I 

12 mean, how you evaluate these things, there's 

13 no, there are no set criteria. It's, I think 

14 it's just a value -- just taking into account, 

15 as the legislation says, the situation of the 

16 company and the impact of the penalty on the 

17 company's situation. 

18 And I'm just suggesting that, 

19 unfortunately for the company -- I wish it 

20 were different $10, 000 is more than is 

21 really, what the company can really sustain. 

22 That's my argument. 

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1 ADMIN. JUDGE SULLIVAN: Thank you 

2 very much. 

3 Mr. Ellis, would you like to 

4 reply? 

5 MR. ELLIS: Sort of briefly and 

6 generally. I believe the question you asked 

7 him was about the corrective action and he did 

8 go over a little bit into the ability to pay 

9 argument again. So I'll visit both of those 

10 topics briefly. 

11 But I don't have a whole lot 

12 that's significantly different from what we 

13 said before. We cited the administrator's 

14 previous cases in the motion for decision. 

15 And I think there were one or two in the reply 

16 to Respondent's answer for the motion. The 

17 TCI Corporation case and the Phillips Building 

18 Supply case. 

19 First of all, the most pertinent 

20 one is that no credit at all really should be 

21 given for training that is legally required. 

22 And for a hazmat manufacturer and a hazmat 

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1 offeror to have no training, that was the 

2 situation we were dealing with. So any 

3 training that they got was required training. 

4 So the law doesn't provide any reduction for 

5 that. We offered it just as a matter of good 

6 faith. And we want to be clear about that. 

7 In regard to the argument 

8 regarding ability to pay, I think the most 

9 comprehensive thing I can say is that that 

10 burden is the Respondent's burden to prove. 

11 And with the evidence that he's shown us, and 

12 in particular, in regard to the ratios that we 

13 discussed before, doesn't, neither ratio shows 

14 that they can't pay a penalty. 

15 (Phone interruption.) 

16 MR. ELLIS: So therefore, we don't 

17 think --

18 (Phone interruption.) 

19 ADMIN. JUDGE SULLIVAN: I'm sorry. 

20 I'm getting a conference --

21 (Phone interruption.) 

22 ADMIN. JUDGE SULLIVAN: I'm so 

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1 sorry. 

2 Mr. Ellis, let me just interrupt. 

3 We just got a conference operator interruption 

4 saying the conference would end in ten 

5 minutes. 

6 So Mr. Smith has just left the 

7 hearing room and is going to go and extend the 

8 conference time so that everybody has a chance 

9 to say what they need to say. 

10 Mr. Ellis, please continue. 

11 MR. ELLIS: Yes . And I'm just 

12 trying to be as brief as I can. 

13 You know, our focus was on 

14 responding to the Respondent's affirmative 

15 defense here. And looking at the evidence 

16 that the Respondent presented. And 1.n 

17 essence, the evidence really just isn't 

18 comprehensive enough to show that it doesn't 

19 have the ability to pay. It's really only a 

20 two-year period, 2009 and 2010. And you know, 

21 neither ratio would carry it over the 

22 threshold, in terms of evidence, that it would 

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1 need to show the preponderance of evidence to 

2 show that it doesn't have the ability to 

3 pay. Let me just 

4 ADMIN. JUDGE SULLIVAN: Okay. Let 

5 me ask you a question or two. 

6 One of the things that the matrix 

7 talks about is whether or not a remedial 

8 action includes making a systemic change that 

9 is intended to prevent future violations. And 

10 one could make the argument that when you stop 

11 shipping hazardous material altogether, that 

12 that's a systemic change. 

13 MR. ELLIS: Where are you reading 

14 that from, Your Honor? 

15 ADMIN. JUDGE SULLIVAN: Excuse me? 

16 MR. ELLIS: Where did you see that 

17 language about systemic changes? 

18 ADMIN. JUDGE SULLIVAN: I saw it 

19 in Appendix C, Sanction Guidance Hazardous 

20 Materials 

21 MR. ELLIS: Okay. 

22 ADMIN. JUDGE SULLIVAN: So I'm 

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1 asking you if you have anything to say about 

2 that or about that particular factor that --

3 MR. ELLIS: The two primary 

4 factors that the administrator has found to be 

5 mitigating in these cases are whether the 

6 corrective action is swift and whether it's 

7 comprehensive. Obviously, when a company does 

8 comprehensive corrective action, it's better 

9 than action that's not comprehensive. And 

10 it's better to be systemic than not systemic. 

11 ADMIN. JUDGE SULLIVAN: Would you 

12 agree or disagree that completely stopping 

13 shipping of hazardous material is, in fact, a 

14 systemic change? 

15 MR. ELLIS: No, we wouldn't agree 

16 to that. 

17 ADMIN. JUDGE SULLIVAN: What would 

18 be a systemic change, in your opinion'M R 

19 ELLIS: Training every hazmat employee that is 

2 0 a hazmat employee, having some kind of a 

21 notification to the employees who come into 

22 contact with hazmat about what it is. There 

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1 are several levels of training that are 

2 required depending on what a person's hazmat 

3 functions are. 

4 So certainly comprehensive 

5 training for everybody who comes into contact 

6 with hazmat would be the starting point. The 

7 follow-up would be what you would look for 

8 after that. Some kind of plan put in place 

9 for new employees that come into the company 

10 and the executives that follow. 

11 ADMIN. JUDGE SULLIVAN: So a 

12 company that chooses to stop any and all 

13 hazmat shipping does not stand in as good of 

14 shoes for a remedial action under the systemic 

15 change as a company that continues to ship 

16 hazmat but trains everyone? 

17 MR. ELLIS: Yes. Stopping 

18 shipping hazmat is not mitigating at all. 

19 Any reasonable person who's found 

20 to have been shipping illegal hazardous 

21 materials, you know, we expect them to stop 

22 shipping. We don't consider that a mitigating 

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1 factor. 

2 ADMIN. JUDGE SULLIVAN: Okay. 

3 I'll note folks that Mr. Smith has come back 

4 to the hearing room and has indicated by a 

5 gesture that the conference has been extended 

6 for the time that we need. 

7 Let me ask you another question, 

8 Mr. Ellis. You had indicated on December 11, 

9 2012 -- and I'm going to go over that part of 

10 the transcript. This would be page 22 of the 

11 December 11, 2012 transcript . 

12 That, the Respondent could borrow 

13 money in order to pay for the fine. Is there 

14 anything in Appendix C of the sanction 

15 guidance material that I have before me or any 

16 of the case law that you have already cited 

17 that supports that particular theory, that I 

18 should simply accept that the Respondent has 

19 an obligation to borrow money if the financial 

20 figures potentially show that the Respondent 

21 can't pay right away the full amount of the 

22 civil penalty? 

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1 MR. ELLIS: The case law that I 

2 would support you wouldn't be an 

3 administrator's decision. There have been 

4 some, one or two ALJ decisions, which I could 

5 tell you about but they wouldn't be considered 

6 precedent. 

7 ADMIN. JUDGE SULLIVAN: I would be 

8 happy to -- yes, if you have something that 

9 you know about right now I would be more than 

10 appreciative of those citations. 

11 MR. ELLIS: Okay. The oldest and 

12 probably best case that deals with this 

13 particular issue is a case called Powertronic. 

14 I can get the cite for you in a second if you 

15 have a second. 

16 ADMIN. JUDGE SULLIVAN: Okay. 

17 MR. ELLIS: Okay. This is way 

18 back in '87. The case is called Powertronic 

19 Incorporated. And it's Case Number 85 G.L. 

20 730003. 

21 ADMIN. JUDGE SULLIVAN: I'll 

22 repeat that. Powertronic Inc., 85 G.L. 

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1 730003. 

2 MR. ELLIS: Right. 

3 ADMIN. JUDGE SULLIVAN: Okay. 

4 MR. ELLIS: That would be the only 

5 ALJ decision that I can think of at the moment 

6 that dealt with this particular issue. In 

7 that case, there were three years of analysis 

8 to look at instead of two. 

9 ADMIN. JUDGE SULLIVAN: And in 

10 that case, the decision-maker said that 

11 borrowing money is an acceptable process for 

12 the Respondent in meeting the civil penalty? 

13 MR. ELLIS: No, I'm not saying 

14 that, Your Honor. I'm just saying that it 

15 looked at similar issues to what we're looking 

16 at today. And that's the only case that I've 

17 seen that deals with the issue at all. 

18 ADMIN. JUDGE SULLIVAN: Okay. 

19 MR. ELLIS: With the issue of the 

20 ability to pay at all in any in-depth manner. 

21 ADMIN. JUDGE SULLIVAN: Okay. 

22 Thank you very much for that citation. I'll 

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1 make sure that I look at it. 

2 Anything else that you would like 

3 to add to your argument at this time? 

4 MR. ELLIS: I think I've covered 

5 it, Your Honor. 

6 ADMIN. JUDGE SULLIVAN: All right. 

7 Thank you very much, Mr. Ellis and Mr. 

8 Roberts, for your presence today and for your 

9 continued arguments on this matter. I 

10 appreciate all the information that you've 

11 provided . 

12 It appears our business is 

13 complete. 

14 I will be issuing a final decision 

15 in this matter, hopefully, in short orderWth 

16 that, it appears that the evidentiary record 

17 is closed. And the matter is ready for 

18 decision. 

19 On behalf of the FAA, Mr. Ellis, 

20 is there anything you would like to add or 

21 correct or note for the record before we 

22 close? 

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1 MR. ELLIS: No, Your Honor. 

2 ADMIN. JUDGE SULLIVAN: Mr. 

3 Roberts, on behalf of your client, anything 

4 you would like to add, or correct, or note for 

5 the record before we close? 

6 MR. ROBERTS: I appreciate your 

7 very careful and thorough review of all of 

8 this. 

9 I am -- you've actually unearthed 

10 an argument or two that I had overlooked, and 

11 I am grateful for that . 

12 And I feel that I'm assured that 

13 whatever you decide will be a fair judgment. 

14 So I'm happy with the whole thing. 

15 ADMIN. JUDGE SULLIVAN: Thank you 

16 very much. 

17 It appears our business is 

18 complete. We can go off the record. 

19 And I wish you all a good day. 

20 Thank you. 

21 (Whereupon, the above-entitled 

22 matter went off the record at 2:32p.m.) 

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• Neal R. Gross & Co., Inc. 202-234-4433 
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2031:20 ~-~-~~----

2009 51:20 9 

2010 51:20 9172:17 

201144:15 45:1,10 

2012 3:11,14 4:12 

4:17 5:8 6:19 

17:118:6,8 19:18 

20:1,3 21:21,22 

26:21 27:7 28:1,6 

28:8 36:17 37:1 

43:7 55:9,11 

2013 1:17 3:6 

206362:6 

2150.3B 8:1 

22 55:10 

25 45:1 

26 26:20 27:6 

----~ 

3 

34:15 7:119:16 

21:14 27:10 30:10 

37:15 38:4 39:15 

40:3 

303202:7 

305-5200 2:8 

316:19 

4 

427:16 

404 2:8 

441-8642 2:17 

5 

5 27:18 45:10 

6 

6 31:20 32:18 33:4 

63,000 7:4 15:21 

30:12 

------~7 ----------

726:15,20 27:5 

730003 56:20 57:1 

8 

80th 2:15 

85 56:19,22 

Neal R. Gross & Co., Inc. 

202-234-4433 

Page 67 
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• 

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68 

C E R T I F I C A T E 

This is to certify that the foregoing transcript 

In the matter of: FAA v. Covermark, USA 

Before: DOT/FAA 

Date: 01-17-13 

Place: teleconference 

was duly recorded and accurately transcribed under 

my direction; further, that said transcript is a 

true and accurate record of the proceedings. 

(202) 234-4433 

Court Reporter 

NEAL R. GROSS 

COURT REPORTERS AND TRANSCRIBERS 

1323 RHODE ISLAND AVE., N.W. 

WASHINGTON, D.C. 20005-3701 www.nealrgross.com