### Page 1 U.S. DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

- - - - - - X Inthe Matter of JET LOGISTICS, INC., Docket No.: FDMS-2013-0290 Respondent.



### - - - - - - - - - - - - - - - *x U.S. Department of Transportation 1200 New JerseyAvenue, S.E. Office ofHearings, M/20 (E11-310) Washington, D.C. 20591 Tuesday, September 24, 2013

LITIGATION SCHEDULING CONFERENCE (TELEPHONIC)

The above-entitledmatter came on for hearing at 1:33p.m., pursuant to notice. BEFORE: HON. J.E. SULLIVAN, U.S. Administrative Law Judge

APPEARANCES: 

# RECEIVED CCT2 82013 

## HEARINGDOCKET

### For the Respondent:

Mr. W. Ashley Smith (By telephone) Jet Logistics, Inc. 5400 Airport Drive Charlotte, North Carolina 28208

For the Agency:

Jose L. Nieves, Esq. (By telephone) Page 2

Office of the Regional Counsel, Southern Region Federal AviationAdministration 1 Aviation Plaza Jamaica, New York 11434 (718) 553-3278

### Page 3 P R 0 CE E D I N GS 1 2 JUDGE SULLIVAN: We are on the record inthematter 3 of Jet Logistics, Inc. This is DocketNumber FAA-2013-0290. 4 Today is Tuesday, September 24, 2013, and the parties have 5 appearedby telephone for a Rule 16 litigation scheduling 6 conference. 7 The FederalAviationAdministration, which I'll 8 hereinafter refer to as the FAA, is representedby its 9 attorney of record, Jose L. Nieves. The respondent, Jet 10 Logistics, Inc., is representedby its representative, W. 11 Ashley Smith, Jr. 12 Mr. Smith, before I go into any thingmore 13 substantive, can you tellme if you are a lawyer? 

### 14 15 16 company. MR. SMITH: No, ma'am. I'mthe owner of the

JUDGE SULLIVAN: Okay. Thank youverymuch. 17 Then, Mr. Smith, I'llhereby refer to you as a lay 18 representative since you're not an attorney. 

### 19 20 MR. SMITH: That's fine. JUDGE SULLIVAN: Okay. Let's just chat a little 21 bit about proceduralmatters, essentiallyon July 26, 2013, 22 this administrative court issued an order settingRule 16 23 litigation scheduling conference anddirecting the parties to 24 engage in a Rule 26(f) planning conference, and to submit a 25 jointdiscovery andproposed schedule for litigation. The 26 parties did file that on September 24, 2013. I'm sorry,

### Page 4 1 yesterday, September 23, 2013, and the parties are appearing 2 today as previouslynoted. 3 Mr. Nieves, I justwant to point out a couple 4 things to you. In the proposedRule 26(f) scheduling and 5 discoveryplan, your assistant sent it to an old address, and 6 our address changed two years ago, andwe didnot get your 7 materials until yesterday. So I'mgoing to ask you tomake 

### 8 sure to update your service list so that our correct address 9 is on it. Do youhave a copy of your proposed scheduling and 10 discoveryplan in front of you? 11 12 MR. NIEVES: Yes, Judge. JUDGE SULLIVAN: Okay. If you look at the service 13 list, the certificate of service undermy name, under the 14 streetname, which says 1200New JerseyAvenue S.E. 

### 15 16 MR. NIEVES: That's right. JUDGE SULLIVAN: It also indicates East Building, 17 Ground Floor, andthen a roomnumber. We moved fromthe East 18 Building in September 2011, and so youwant to eliminate that 19 line. And I wouldputRoomE, as inegg, 11-310, directly 20 under the words •office ofHearings, M/20." Everything else 21 may remain the same. What will happen is themailed copy of 22 yourmaterials will go to themail roominthe DOT 

### 23 headquarters, and it willbe irradiated as all federal mail 24 mustbe now. 25 MR. NIEVES: Okay. 26 JUDGE SULLIVAN: The roomnumber basically

### Page 5 1 identifies where it goes from there, andmy office is two 2 blocks away from the headquarters building, and itdoes not 

### 3 receivemail directly. 

### 4 5 MR. NIEVES: Understood. JUDGE SULLIVAN: Okay. And then in the future when 6 I give a due date to have something filed in this office, you 7 maywant to tell your assistant thatmeans it shouldbe inmy 8 hand on that day. So ifyouhave not filed it in the U.S. 

### 9 mail post office with enough time for themail service to get 10 tomy hand, then you also want to faxme a courtesy copy. 11 And that's whatmost people do, in partbecause there's no 12 certainty as to how long themail roomwill take to irradiate 13 the U.S. mail. They're usuallyprettyquick, but five days 14 to two weeks is not unusual. So I justwanted to kind of 15 clearthat up so that youhave some better understanding of 16 how to get things tome efficiently, if you can. 

### 17 18 MR. NIEVES: I appreciate that, Judge. JUDGE SULLIVAN: You're welcome. Now, let's talk a 19 little bit about the proposed scheduling and discovery plan. 20 Neither of you, I don't think, have ever appearedbeforeme 21 before, and I'mgoing to just generally tell you a littlebit 22 about how I handlemost litigation. I generallyprovide the 23 parties with a lotmore deadline and discoveryplanning than 24 what you have provided tome, and I do that inpart to allow 25 parties sufficient time to exchange discovery, file motions 26 if theyneed to, file dispositivemotions, and also appear

### Page 6 1 beforeme for argument on anyprehearingmotionbefore the 2 trial or the hearing. 3 So I thinkwhat I can do with you two today is just 4 talk a littlebit about what you anticipate the final hearing 5 will be, and then I canbacktrack and kind of give you an 6 idea of what I thinkwe can add to the proposed schedule 7 you've already offered tome. So, startingwith you, Mr. 

### 8 Nieves, canyou tellme how long you think a hearingwould 9 take in this case, ifyou assume that nomatters are resolved 10 prior to the hearing and that all issues remain on the table? 11 How long do you thinkyour clientwouldneed to trya prima 12 facie case, and about howmany people do you thinkyoumight 13 be calling? And I understand that this is speculative, since 14 discovery is not yet complete at this time? 

### 15 MR. NIEVES: Based on that understanding, judge, I 16 would approximate that the hearing would take nomore than 17 three days, probablytwo days wouldbe sufficient. In 18 addition, I believe that on the government side as far as 19 witnesses, we would call approximately five witnesses. 

### 20 JUDGE SULLIVAN: And howmany ofthose five would 21 be expert witnesses in your opinion? 

### 22 23 MR. NIEVES: One. JUDGE SULLIVAN: And when you say two to three 24 days, you're talking not only about your prima facie case, 25 but the respondent's case, orjustyourprima facie case? 

### 26 MR. NIEVES: I'mtalking about the prima facie

### Page 7 1 case, the respondent's case and possible time for decisions. 2 JUDGE SULLIVAN: Okay. Thank you. Mr. Smith, let 3 me turnto you, and I'mgoing to askyou a few questions that 4 are a little different. Can you tellme ifyou've ever 5 appearedas a layrepresentative for your company or someone 6 else in a case like this? And the reason I ask is not to 7 cause you any concern or nervousness. I justwant to get a 8 sense ofhowmuch I'mgoing to needto explain today. 9 

### 10 MR. SMITH: Urn. First of all, you couldn't addto the nervousness or concern. It's probably already at the 11 maximum level. 12 

### 13 JUDGE SULLIVAN: Okay. MR. SMITH: I have not

-- I've never been through 14 this systembefore. The few cases that I'vebeen involved in 15 as a member ofmanagement for previous air carrier operations 16 were all settledbefore it ever got to this particularpoint, 17 so I mean completelyuncharteredwaters forme. 

### 18 JUDGE SULLIVAN: Okay. Letme askyou ifyou ever 19 watch television shows involvingpretend trial. 

### 20 MR. SMITH: Not really. No. 21 JUDGE SULLIVAN: So you never -- and this may date 22 me -- excuseme. You've never seen shows like PerryMason, 23 Judge for the Defense, L.A. Law, those kinds of shows that 24 show trial work? 25 MR. SMITH: I saw "A Few Good Men," the movie. 

### 26 JUDGE SULLIVAN: Okay. Well, that is a military

### Page 8 

### 1 court andthat gives you a general sense. 2 MR. SMITH: Right. 

### 3 JUDGE SULLIVAN: In terms of yourparticular issues 4 here, ifthis case went to a hearing like the one not exactly 5 the same, but similar to a hearing you saw inthatmovie that 

### 6 youjust talked about, howmany witnesses do you thinkyou 7 would call? Do you have any idea? Have you thought about 

### 8 

### 9 that? MR. SMITH: Yes, ma'am, I have. I don't think it 10 would be anymore than five for me, either, andprobablymore 

### 11 likelythree. 

### 12 13 

### 14 JUDGE SULLIVAN: Okay. MR. SMITH: Yes, ma'am. JUDGE SULLIVAN: And would any of those peoplebe 15 experts? And when I say expert, I'mtalking about someone 16 who might have special knowledge, eitherbecause theyhave 17 experience, education, some other type of specialized 18 understanding of a topic. 

### 19 MR. SMITH: Inmy opinion, at least two wouldbe, 20 possiblythree. Yes, ma'am. 

### 21 JUDGE SULLIVAN: Okay. Would yoube the person 22 that continues to represent yourbusiness, or are you 

### 23 planning onhaving some help? 24 MR. SMITH: At this point it'sjust going tobe us, 25 and that's part of the point that the reasonwe're going 26 to the hearing. And I was unable to come to an agreement on

### Page 9 1 the amount of a fine. 2 

### 3 4 

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### 6 7 8 JUDGE SULLIVAN: Okay. MR. SMITH: Yeah. The company's just not in a positionto afford it. I can't affordan attorney either, so I'mgoing to have tojustdo the best I can. And I apologize in advance formy ignorance of what we're doing. JUDGE SULLIVAN: Thank you verymuch. Andyou are not the first personwho has chosen to represent his company 9 and you will not be the last. So you joinmany otherpeople 10 in this endeavor. 11 12 MR. SMITH: I do? JUDGE SULLIVAN: Yes. I would say to you that 13 there are people who have beenvery successful in 14 representing their companies and there are others who have 15 not been. And part of it simply is, I think, a combination 16 of good sense andperhaps persistence. And some of it is 17 also dealingwith the facts, because howeverbrilliant you 18 might be as a person, you stillhave a certaintype of fact 19 to deal with. And that can help shape the case as itwere. 20 So let's talk a littlebit about the place. 21 Startingwith you, Mr. Nieves, and I shouldpoint out to you, 22 Mr. Smith, in this type of case the litigation rules are 23 fairly traditional. So what you'll seeme do is I will 24 always turn to the prosecuting agent, first. In this case 25 it's the FAA; always ask the FAA first, and then askthe 26 respondent second.

### Page 10 1 In the hearing itself you'll see the same 2 hierarchy. The FAA has the burden of initial proof. It puts 3 on its case first, and then the respondent, your company, 4 goes second. And that's just the way it is, traditionally, 5 in virtually all litigation. So it's not in anyway a 

### 6 statement that the FAA has anyparticularpriorityover you 7 or that there's a favoritism of any kind. It simplymeans 8 that there's a prosecuting agent andthe court turns to them 9 first. 

### 10 So, Mr. Nieves, let's talk to you for a moment. 

### 11 Where do you think this case wouldbe tried if it goes to 12 

### 13 trial? MR. NIEVES: Um. The venue that the government 14 wouldprefer is Charlotte, North Carolina, where the 15 witnesses will be actually situated. 16 JUDGE SULLIVAN: And are almost all of your 17 witnesses locatedthere? Is that what you're tellingme? 

### 18 19 MR. NIEVES: Yes, judge. JUDGE SULLIVAN: Okay. And, Mr. Smith, would 20 Charlotte, North Carolina, be a preferredplace for you as 21 well to actuallyhave the hearing? 22 MR. SMITH: Yes, ma'am. For resource reasons that 23 wouldbe preferred. 

### 24 JUDGE SULLIVAN: Okay. Then I'lljustnote that 25 venue is agreedto be in Charlotte, North Carolina, at this 26 point.

### 1 Page 11 Mr. Nieves, letme ask you this. In terms of your 2 complaint and the answer that you received, are all issues in 3 your opinion still on the table, or has there been some 4 resolution by the parties regarding some of the issues at 5 this point? 

### 6 MR. NIEVES: Judge, based on the admissions, the 7 response fromMr. Smith, he admits to all the allegations as 8 far as 1 through 11. He admits to 1 through 11, which 9 includes 11 being that the operation of the flight in 10 questionwas done outside of the operation specifications 

### 11 that was approved for the company. So that wouldmean that 12 three of the six charges that are on the complaint, 13 basically, are admitted. The other three that deal with the 14 training qualifications of the pilots involved in the flight 15 is still in question. 

### 16 JUDGE SULLIVAN: And when you say three of the six 17 charges, I as unable to determine exactlyhowmany violations 18 you were alleging. It looks like there might have been six 19 or seven, and it sounds like you're saying six at this point. 20 Is that right? 21 MR. NIEVES: Correct. The charges that I'm 22 referring to that were admittedbythe respondent is the 23 charge alleging violation of Section 119.5(g), 119.5(j), and 24 119.5(1). Those are the charges that deal with the operation 25 of an aircraft outside of an air carrier or certificate 26 holders operation specification.

### Page 12 1 The charges that deal with the training of the 2 individual pilots that operatedthe specific flight in 3 question are the latter three of the charges on the 4 complaint, which is 135.95(b), 135.293(a) and 135.343. Those 

### 5 are the charges that are disputed at this point. 

### 6 JUDGE SULLIVAN: So essentiallywe've been talking 7 about the initial complaint that's dated June 18, 2013, and 

### 8 you have been referringme to page 5 andpage 6 of that 9 complaint. 

### 10 11 MR. NIEVES: Correct. JUDGE SULLIVAN: And as I understand it fromwhat 

### 12 you've been tellingus, you're asserting that on page 5 under 13 paragraph 3, sectionb as inboy, c as in cat, d as in david, 14 which outline three different violations, have been admitted 15 in your opinionbythe respondent's answer, and that sections 

### 16 e as in egg, f as in frank, and g as in george all of 17 which are contained onpage 6 of the complaint-- are still 

### 18 in dispute. Is that correct? 

### 19 20 MR. NIEVES: Correct, judge. JUDGE SULLIVAN: And then I also have onpage 5 of 

### 21 the complaint, section a as in apple, that you've identified 22 as Section 91.13 alpha. Is that simply an explanatory 23 section? 

### 24 MR. NIEVES: One second, judge. No. Actually, 25 alpha was disputed. So that's, I guess, a fourth charge. I 26 correct what I saidbefore. It's a fourth charge that is

### Page 13 1 disputedby the respondent. He disputes it. 2 JUDGE SULLIVAN: Okay. I'mgoing to stopyou. So, 

### 3 essentially, we have sevenviolations andnot six. 

### 4 5 MR. NIEVES: That's correct. JUDGE SULLIVAN: And four which remain in dispute 6 according to you? 

### 7 MR. NIEVES: Correct. 8 JUDGE SULLIVAN: Okay. Mr. Smith, I'mgoing to 

### 9 turn to you next. Were you aware when you filed your answer 10 that youmight have been admitting to some of the violations 

### 11 that were alleged in the complaint? 12 

### 13 MR. SMITH: Yes, judge, I was. I was very clear. JUDGE SULLIVAN: Okay. Wouldyou agree or disagree 14 withMr. Nieves that the violations identifiedon page 5 and 15 6 of the FAA's complaint under the paragraphs labeledbas in 16 boy, c as in cat, and d as in david, are the violations that 17 youwanted to admit towhen you filed your answer? 

### 18 19 MR. SMITH: Yes, ma'am. That is correct. JUDGE SULLIVAN: Okay. Then I will note that has 20 occurred, and as I understand it, Mr. Smith, from your 21 answer, you still challenge all of the proposed civilpenalty 22 that the FAA has suggestedin this case. 

### 23 MR. SMITH: I have rejected the proposed amount, 24 yes, ma'am. That's correct. 25 JUDGE SULLIVAN: Okay. All right. Then I'm 26 looking atmy clock and I'mrunning out of time, and I'm so

### Page 14 1 sorry. I thinkwhat I'lldo is I'llbifurcate this, because 2 we have a lot of information to go to and discuss. What I'm 3 going to do next is I'mgoing to askboth the parties to take 4 a look at your calendars. I'mgoing to calendar a secondCR 5 16 conference. I'mgoing to schedule a littlemore time, 

### 6 because I think that wouldbe helpful, and then I'mgoing to 7 talkto you a littlebit about what we're going to be 8 discussing at this next conference so that you have a better 

### 9 idea ofwhat's going to be coming down the pipe. 10 So, Mr. Nieves, let's turn to you. I thinkwe 11 shouldprobably schedule an hour and a half to finish up with 12 this, and when we do that, we'll be able to reallytie down 13 where the parties want to spend their time in terms of 14 discovery, I think, and also interms of anyprehearing 15 motion. I know that there is a pending threat of a 16 government shutdown. We all know that. So let's talk about 17 perhaps the latterpart of October, just tobe on the safe 18 side. Do youhave time, Mr. Nieves, the week of October 28, 19 2013, for a 90-minute telephone conference? 

### 20 MR. NIEVES: Yes, judge. The 28th, the 29th are 21 open as of today. 22 JUDGE SULLIVAN: Okay. And just so that I know in 23 terms of full availability, do you have time the 30th, 31st 24 through the 1st? 

### 25 MR. NIEVES: The 31st I'mnot available. The 30th 26 I am available inthemorning.

### 1 2 

### 3 

### Page 15 JUDGE SULLIVAN: Okay. And what about the first? MR. NIEVES: The 1st I am available. JUDGE SULLIVAN: Okay. Mr. Smith, turning to you, 4 looking at the same week of October 28th, do youhave any 5 black-out time during that weekwhere you could not be in a 6 90-minute telephone conference? 7 MR. SMITH: The only challenge forme, judge, would 8 be themorning of the 29th. Other than that, I'mavailable 9 the entireweek. 

### 10 JUDGE SULLIVAN: Okay. Why don't we try then for 

### 11 Wednesday, October 30, 2013? And let's plan on a 10 a.m., 12 and that wouldbe until 11:30 EasternTime. Andmy office 

### 13 againwill contactboth of you with a conference call number, 14 and I do appreciate it whenyou're on time as youwere today. 

### 15 We have so far talked about how the trialmay take 16 two to three days. Mr. Smith, I didnot askyou 17 specifically, and I should. Do you also agree that that's 18 about how much time the total trial wouldbe? Do you have a 19 sense of that, now? 

### 20 MR. SMITH: Yes, ma'am. I can't see where itwould 21 be any longer thanthat. What I need to do wouldbe quite a 22 bit less. 

### 23 JUDGE SULLIVAN: Okay. We'lljust assume for the 24 sake of discussion that itwould be a total of three days at 25 this point. There's been an agreement that itwould occur in 26 Charlotte, North Carolina. There's also been an agreement

### Page 16 1 that three of the seven charges have been admittedby the 2 respondent's answer, and that the respondent still challenges 3 four of the remaining seven charges and also challenges the 4 total penalty of $40,000 as proposedby the FAA. 5 Now, when we meet again, what we're going to be 6 talking about is a couple different things, and I'mgoing to 7 give youMr. Smith, some resource information as well. What 8 I generally do is I schedule deadlines for initial 9 disclosure, which is a very limited disclosure ofverybasic 10 information, andthen I schedule deadlines tobegingeneral 

### 11 discovery andto end general discovery. And, general 12 discovery is usually things that involve depositions, 13 requests for production and exchange ofbasicinformation 14 regarding experts, the names of your witnesses, those kinds 15 of things, serving interrogatories, that type of general 

### 16 discovery. 17 I then set a very short period of time for any 18 necessary supplemental discovery after general discovery is 19 done, and I do that, particularly in cases where depositions 20 are beingtaken during general discoverybecause as fate 21 oftenhas it, a person deposedwill often notbring 22 everything or think of something during a deposition that 23 they didn't realize they knew, and so forth. And so 24 supplemental discovery canbe helpful at thatpoint. 25 I then schedule a time to file a motion ormotions 26 to address dispositive issues with answer and reply as well1 

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as a telephone conference to address those dispositive motions. If the parties want, I'll also schedule after that

a final conference, prehearing conference, to see where you're at in terms of the litigation. Then I set a witness list, exchange of exhibits due date, and then the trial. So those are the kinds of things that we're going

to be talking about at the next conference, and I'll also talk a little bitmore about what discovery is and what it

means. Mr. Smith, just so that you're not on the edge of your seat for a whole month, discovery is actuallyjust a period of information exchange between you and the FAA and it's a formal process that has over the years acquired the

name of discovery, because you are in essence discovering new information about the dispute. So your friend across the aisle, Mr. Nieves, will be giving you information that you request from him and alternately you will be responding to requests for information fromMr. Nieves. Itmay be by this point that youboth knowpretty much what you want to know, or itmaybe that you have more questions to ask of each other; and, if so, then this 22 discoveryperiod is the time to do it. And there are 23 different rules andprocesses that apply, but we can talk 24 more about this at the next conference. We can also talk a 25 littlebitmore about the process of the hearing and answer 26 or address other questions that either partymight have about

### Page 18 this. 1 2 I typically stop discovery long before 15 days 3 before the hearing, inpartbecause I think it's very 4 important to havemost, ifnot all of your discovery 5 completedbefore you file for dispositivemotions. And 6 dispositivemotions are requests to the court, priorto the 7 hearing, or final decision on some or all ofthe dispute, a 8 very importantpart of the prehearingprocess. Sometimes 9 those requests are granted; sometimes the requests are 10 denied; and, sometimes, part of the request is granted and 

### 11 part of the request is denied. Itjust depends onwhat the 12 facts are and what the parties present during thosemotions, 13 but we'll talk a littlebitmore about that, as well. 14 And I thinkwe'll also talk a littlebitmore about 15 what the crux of this civilpenalty dispute is so that we can 16 kind of clear the air at least for what the comingmonths 17 might bring and also see ifthere's a possibilityto still 

### 18 retain some discussionprivatelybetween the parties about 19 continuing settlement. And, as I say to everyone, settlement 20 discussions remainpart of the litigationprocess for 21 everybody. It'sjustpart andparcel of litigation, because, 22 as you discoverymore about each other's positions, youmay 23 discover that you're not as far apart as you thought, and you 24 want to always keep the door open for shakinghands. 25 With that, Mr. Nieves, is there anything else we 26 can address for your clienttodaybefore we close?

### 1 2 judge. 

### 3 

### Page 19 MR. NIEVES: No, I thinkwe've done just fine,

JUDGE SULLIVAN: Thankyou. Mr. Smith, anything on 4 behalf of your clientbefore we close? Because I don't want 5 you to feel uncomfortable, nervous or anxious betweennow and 6 ournext conference on October 30, 2013. 

### 7 MR. SMITH: No, judge. I really appreciate you 8 taking it to an elementarylevel and explaining it as 9 thoroughlyas youhave. I'mmuchmore comfortablewithwhat 10 to expect going forward. So, thank you. 

### 11 JUDGE SULLIVAN: Okay. You're verywelcome. Just 12 so that youboth know, I'llbe sending out an orderthat 13 codifies inwritingwhat we'vejusttalked about, which 14 essentially is we'll be meeting again onWednesday, October 15 30, 2013, 10 a.m. to 11:30 Easterntime; and, also, that 16 there's been a stipulationofvenue as well as an admission 17 ofthree of the seven charges. 18 So, with that, I thank you all for yourpresence. 

### 19 It appears ourbusiness is complete. I look forward to 20 speaking with you inonemonth. We can go offthe record, 21 and I wish you all a goodday. 22 (Whereupon, at 2:03 p.m., the telephonic scheduling 23 conferencewas concluded.) 

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