Hello, PKing admin here.
You were PKed for dying whilst under FearRP, not failmug (apologies for incorrectly stating the reason as failmug in the sit).
The TM saw you unarmed right as you were exiting the LAV apartments. He pulled out his weapon and put you under FearRP, clearly stating that you were being mugged by saying "Hands up", "Come over here", and "Come back". You proceeded to run towards the docks whilst still under FearRP and, as a result, you were killed. If you had fought back, pulled out your weapon, and killed the TM during this entire encounter, even when you went into the bushes to hide, he would've been PKed.
The only second thought I had was regarding witnesses. If there were more than 3 at any given time, but when re-watching the clip it can be seen that the pink car drives off before 2 members of another faction come to observe the situation, making it no more than 2 witnesses at a time. The fact that he killed you in front of an NPC also does not change anything, as the mugging was initiated at LAV. If this were considered a failmug, people could easily run to the PD or in front of an ATM whilst fleeing from an active FearRP scenario.
I've listed a section from the rules that is relevant to this exact situation:
While under FearRP, it's recommended you oblige by the commands of your captor. If you attempt to escape or pull out a weapon to fight back but are killed, that would display a disregard for your own safety, a calculated risk you took which failed, resulting in your PK. This means it is NOT a rule violation to break FearRP, but if you are killed while breaking it, there is a possible IC consequence of being PKed.
Best of luck with your appeal.