Dickson v. Phillips, SE-30224

• Decision Date: 14 July 2020
• Docket Number: NTSB Order EA-5877,SE-30224
• Parties: STEPHEN M. DICKSON, Administrator, Federal Aviation Administration, Complainant, v. REID A. PHILLIPS, Respondent.
• Court: Court of National Transportation Safety Board

STEPHEN M. DICKSON, Administrator, Federal Aviation Administration, Complainant,
v.
REID A. PHILLIPS, Respondent.

No. SE-30224

NTSB Order No. EA-5877

United States Court of National Transportation Safety Board

July 14, 2020

Adopted by the NATIONAL TRANSPORTATION SAFETY BOARD at its office in Washington, D.C. on the 13 day of July, 2020

OPINION AND ORDER^[1]

1. Background

Respondent and the Administrator cross-appeal the oral initial decision of Administrative Law Judge William R. Mullins, issued March 2, 2017.^[2] By that decision, the law judge determined the Administrator proved respondent failed to pass or complete the written or oral test required by 14 C.F.R. § 135.293(a), the competency check required by § 135.293(b), the instrument proficiency check required by § 135.297(a), the flight check required by § 135.299(a), and the initial or recurrent training required by § 135.343 for two flights on July 15 and August 10, 2015.^[3] The law judge also found a residual violation of 14 C.F.R. § 91.13(a) for those two flights.^[4] However, the law judge found the Administrator failed to meet his burden of proof on the alleged violation of 14 C.F.R. § 91.706(a)(2) regarding a flight on July 15, 2015, and the alleged violations of 14 C.F.R. §§ 135.293(a), 135.293(b), 135.297(a), 135.299(a), 135.343 and 91.13(a) regarding two flights on June 2 and 3, 2015.^[5] Accordingly, the law judge reduced the sanction from a 360-day suspension to a 120-day suspension. The Administrator and respondent timely cross appealed. For the reasons set forth below, we deny respondent's appeal and grant the Administrator's appeal in part.

A. Facts

Respondent holds an airline transport pilot ("ATP") certificate and was employed as a contract pilot by Aircraft Charter Management Services, LLC ("ACMS") and CSG Aviation ("CSG").^[6] ACMS was not authorized by the FAA to conduct operations under 14 C.F.R. Part 135 ("Part 135"), ^[7] nor was respondent authorized by the FAA to conduct operations under Part 135 on behalf of ACMS.^[8] He received training pursuant to Part 135 from CSG.^[9]

During a ramp inspection on May 21, 2015, FAA Aviation Safety Inspector Paul D'Allura provided respondent a copy of an Emergency Cease and Desist Order issued by the FAA to ACMS, ASI Aviation, LLC ("ASI") and its president, Justin Smith.^[10] The Emergency Cease and Desist Order was immediately effective, and alleged ACMS, ASI and Justin Smith violated a number of Federal Aviation Regulations by operating flights as an air carrier without proper authorization from the FAA under 14 C.F.R. Parts 119 and 135. Consequently, "Justin Smith, ASI, ACMS and/or any other associated individuals or entities" were ordered to immediately cease and desist from operating as an air carrier under Part 135.^[11] The order listed a number of aircraft alleged to have been used in violation of regulations, including a Pilatus PC12/45, U.S. Registration Number N458DL ("Pilatus") and a Cessna CE-650, U.S. Registration Number N650KK ("Cessna") - the two aircraft respondent operated on the flights at issue here.^[12]

On June 2, 2015, respondent operated the Pilatus, as pilot in command, from San Angelo, Texas, to Santa Fe, New Mexico.^[13] A passenger on the flight was Earl R. Bruno, Jr., who arranged the flight.^[14] Prior to departure of this flight, FAA Inspector Larry Lupton provided respondent with a copy of the Emergency Cease and Desist Order.^[15]

On June 3, 2015, respondent again operated the Pilatus as pilot in command on a flight from Midland, Texas, to Addison, Texas.^[16] A passenger on the flight was Wendell Iverson, Jr., who arranged the flight.^[17] After the flight landed at Addison Airport, FAA Inspector Paul Freeman and FAA Inspector Chris Wright conducted a ramp inspection of the aircraft, and Inspector Freeman informed respondent about the Emergency Cease and Desist Order.^[18]

On July 15, 2015, respondent operated the Cessna, as pilot in command, from Providenciales International Airport, Turks and Caicos, to Houston, Texas. Passengers on that flight were Michael Wortley, along with his wife and two children.^[19] On this flight, respondent operated the Cessna for a period of time at an altitude of 40, 000, which was airspace designated as Reduced Vertical Separation Minimums (RVSM) and required specific authorization from air traffic control ("ATC").^[20] He eventually climbed to 43, 000 feet, which is not subject to RVSM restrictions.^[21]

On August 10, 2015, respondent again operated the Cessna, as pilot in command, on a flight from Charleston, West Virginia, to Houston, Texas. Tara Arnold, an attorney with the law firm Arnold & Itkin, negotiated the agreement for flights with ASI on behalf of the law firm. Passengers on the flight included Arnold & Itkin employees Caj Boatright and Santana McMurrey.

B. Procedural Background

On April 13, 2016, the Administrator issued an Order of Suspension, which became the complaint in this case, of respondent's ATP certificate for 360 days. The Administrator alleged respondent violated 14 C.F.R. §§ 135.293(a), 135.293(b), 135.297(a), 135.299(a), and 135.343 on four flights on June 2, June 3, July 15 and August 10, 2015, along with a residual violation of 14 C.F.R. § 91.13(a) for all four flights. Further, the Administrator alleged respondent violated 14 C.F.R. § 91.706(a)(2) during the flight on July 15, 2015.^[22]

Respondent timely appealed the order on April 29, 2016, and timely filed an answer with affirmative defenses to the complaint on May 24, 2016. The law judge conducted a hearing from February 28 through March 2, 2017, and issued an oral initial decision on March 2, 2017. Respondent and the Administrator timely cross-appealed the law judge's oral initial decision on April 21, 2017. The Administrator filed a reply brief on May 22, 2017.

At the hearing on respondent's appeal before the law judge, the Administrator called several witnesses who contracted for the various flights operated by respondent that are the subjects of this action, namely: Tara Arnold, Michael Wortley, Earl R. Bruno, Jr., and Wendell W. Iverson, Jr. In addition, Santana McMurrey testified about her experience as a passenger on the August 10, 2015, flight from Charleston, West Virginia, to Houston, Texas.

The Administrator also called FAA Inspectors Larry Lupton, Paul Freeman, Bruce E. Schemmel, and Brian E. Givens, as well as James Bassett, an inspector with the Turks and Caicos Islands Civil Aviation Authority. Each of these inspectors testified to their respective interactions with respondent immediately before or immediately after one of the four flights at issue here.

FAA Inspector Paul D'Allura testified on behalf of the Administrator as a fact witness and an expert in aviation operations.^[23] He testified to the general requirements to become an operator under Part 135, as well as the training and experience requirements for a pilot to be qualified to fly under Part 135, including the extent to which training while employed with one Part 135 operator may satisfy training requirements when employed by another Part 135 operator.^[24] He discussed the concept of operational control as it relates to dry leases (in which the owner provides the aircraft and the lessee supplies his own flight crew and retains operational control of the flight) and wet leases (in which the owner provides both the aircraft and the crew and retains operational control of the flight).^[25] He testified that a dry lease is sometimes improperly used as a "mask" for an air carrier operation which would normally be conducted under Part 135. He stated that in those instances, the wording of the dry lease looks like "an operation that is being conducted by…the lessee, but in reality, the lessor has control of the operation in its entirety."^[26]

Respondent testified on his own behalf. After giving a brief background of his aviation experience, he testified that he was employed as a contract pilot for ACMS and CSG.^[27] For ACMS, he was "contracted out" to operate Part 91 flights in a Pilatus.^[28] His employment contract with ACMS specified the flights would be operated under Part 91, and that the owners would have operational control.^[29] He testified he was never a pilot for ASI.^[30] Likewise, respondent admitted that he was not authorized by the FAA to conduct operations under Part 135 on behalf of ASI.^[31] He described the service provided by ASI to its customers as "manag[ing] aircraft and provid[ing] a service for customers to get from point A to point B."^[32]

Respondent described a group within ASI called "Flight Ops Control" that "kept track of everything" for ACMS pilots and the customers trying to schedule flights, and was the pilots' main point of contact.^[33] Regarding CSG, respondent testified he was a contract pilot for CSG and received Part 135 training from CSG.^[34] He described CSG as a charter operator that operated flights for ASI under Part 135.^[35]

a. The Emergency Cease and Desist Order and Respondent's Notice Thereof

FAA Inspector Paul D'Allura testified generally about the investigation which led up to the Emergency Cease and Desist Order, namely documents and interviews with customers of ASI, many of whom also testified at the hearing. He stated that information provided by those interviews was generally the same as the testimony given by witnesses at the hearing.^[36] He testified that the Pilatus and Cessna used on the flights in question here were not listed on any air carrier certificate, nor did ASI, ACMS, or Justin Smith hold an air carrier certificate.^[37]

Inspector D'Allura testified that on May 21, 2015, during a ramp inspection, he spoke with respondent and another pilot about to depart with respondent and provided them with a copy of the Emergency Cease and Desist Order.^[38] He said that after the discussion, respondent and the other pilot elected to fly the aircraft back to its base without...