Federal Aviation Administration v. Landy, 77 Civ. 4292 (RLC).

• Decision Date: 09 February 1982
• Docket Number: No. 77 Civ. 4292 (RLC).,77 Civ. 4292 (RLC).
• Citation: 566 F. Supp. 921
• Parties: FEDERAL AVIATION ADMINISTRATION and United States of America, Plaintiffs, v. M. Marshall LANDY and International Aircraft Leasing, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

566 F. Supp. 921

FEDERAL AVIATION ADMINISTRATION and United States of America, Plaintiffs, v. M. Marshall LANDY and International Aircraft Leasing, Inc., Defendants.

No. 77 Civ. 4292 (RLC).

United States District Court, S.D. New York.

February 9, 1982.

John S. Martin, Jr., U.S. Atty., S.D.N.Y., New York City, for plaintiffs; Michael H. Dolinger, Steven E. Obus, Asst. U.S. Attys., New York City, of counsel.

Speiser & Krause, P.C., New York City, for defendant Landy; Frank H. Granito, Jr., New York City, of counsel.

Howard F. Cerny, New York City, for defendant Intern. Aircraft Leasing, Inc.

OPINION

ROBERT L. CARTER, District Judge.

On retrial on October 5, 1981, after seven days of hearings, the jury returned a special verdict by responding to numerous interrogatories posed by the court. In substance they found that between May 2, 1977, and August 2, 1977, defendants Marshall Landy and International Aircraft Leasing, Inc. ("IAL") had operated a Boeing 707, N 9985F for hire on 43 separate flights in violation of 27 Federal Aviation Administration ("FAA") regulations on each of these flights and on one flight had, in addition, failed to have life vests on the aircraft over water in violation of a 28th FAA regulation.

Pursuant to agreement of the parties, the question of penalties is presented to the court for determination without a further evidentiary hearing. This does not imply, as defendant Landy points out, that the parties waived their right to present proof and argument on this issue, but rather that they opted to submit such material to the court on papers for its consideration. The court studied and considered all the documents — the affidavits, briefs and letters — submitted by counsel in reaching its conclusions on whether and what penalties should be imposed against defendants.

The FAA regulations are designed to insure safety in air space, 49 U.S.C. § 1421(a), and are clearly in the public interest. See, e.g., Doe v. CAB, 356 F.2d 699, 701 (10th Cir.1966). It is established on this record beyond question that defendants chose to ignore the FAA's regulatory scheme on the theory that theirs was not a Part 121 operation for hire but was a private operation as defined by Part 91. Defendants, however, neither sought to bring their operational activities to the attention of FAA authorities for a determination as to whether Part 121 or Part 91 controlled their functions, nor did they apply for an FAA commercial operator's operating certificate. Under the circumstances, defendants operated at the risk that the violations attributed to them would be found. The commercialization of defendants' activities, their extensive aviation experience, their necessary familiarization with FAA regulations and the fact that the operations involved fall squarely within Part 121 make it impossible for the court to conclude other than that the violations were both deliberate and willful and in contemptuous disregard of the FAA and its regulations.

The United States' airways are crowded. Failure to comply with regulations relating to training of personnel, equipment, facilities and operational procedures poses a serious public hazard. The FAA has limited resources and cannot oversee all the aircraft using the nation's airways to determine whether all are in compliance with FAA procedures. It must depend largely on voluntary adherence to the rules it promulgates. The system has undoubtedly worked well because the safety of all those operating in or using the airways is at stake. While there is no evidence of an actual danger to public safety on any flight in which defendant bypassed the FAA regulations, that fortunate happenstance is totally irrelevant. The violations trenched broadly on all the substantive requirements for commercial operations designed to insure public safety and were in cavalier contempt for the regulatory system itself. Since there can be no issue here of mistake or inadvertence, at the very least, these violations require sanctions as a guard against similar violations by others in the future.

Landy's involvement is clear. Henry Wharton and the latter's Air Transport Company were Landy's agents and supplied the air crews for all the flights involved in this litigation. Wharton found the 707 for Landy and accompanied Landy to Germany to purchase the aircraft and returned with Landy when the aircraft was brought from Germany to Miami. He supervised the refitting of the 707 for the carriage of cargo, oversaw its maintenance, and was responsible for the preparation of the inspection program for the aircraft. He acted for Landy in seeking out business for the plane; he found and negotiated with IAL for lease of the aircraft and delivered the plane to IAL in New York. While the plane was on lease to IAL, Wharton supplied the crew, was in contact with crews either from Miami or New York and assured availability of maintenance facilities in Europe. When Landy terminated the IAL lease, Wharton was sent to New York to notify IAL, and when Landy sought to repossess the plane, Wharton was delegated to do that. Wharton ran the aircraft operation under Landy's instructions and was to receive a share of any profits Landy made in the enterprise.

Moreover, Air Transport was listed as the buyer of the aircraft from Lufthansa, although Landy supplied the money for the plane. Wharton used Landy's office to transmit Air Transport business which included contacting crews, all of which were supplied through Air Transport. The crews were paid in checks signed by Landy's secretary and when the plane was leased to Nicaragua National Airlines, Wharton supplied the crews.

Landy has been in the aircraft leasing business for some 25 years. He bought the aircraft for a business venture and all the facts pointed to a partnership or close business relationship between him and Wharton in this regard. Yet, throughout this proceeding Landy has sought to blur his...