Legislature(2005 - 2006)BUTROVICH 205
03/09/2005 08:30 AM JUDICIARY
Download Mp3. <- Right click and save file as
|Confirmation Hearing – Select Committee on Legislative Ethics|
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 105-OVERTIME WAGES FOR FLIGHT CREW 9:11:27 AM CHAIR SEEKINS announced his intention to skip the customary introduction of SB 105 and go straight to testimony. MR. TOM DANIEL, Partner, Perkins Coie Law Office, testified in favor of SB 105. SB 105 clarifies that overtime exemption applies to pending lawsuits. Mr. Daniel gave an in depth account of the history of pilot pay, both state and federal. 9:15:41 AM MR. DANIEL gave a history of lawsuits filed from the late 1990s to present date. He said the purpose of SB 105 is to ensure that lawsuits cease. Class action lawsuits can bankrupt small carriers, which impacts pilots, customers, and the economy of Alaska. 9:21:43 AM MR. DANIEL gave an account of the history of Mike Hageland's company, Hageland Aviation Services. 9:25:01 AM CHAIR SEEKINS asked Mr. Daniel if the pilots who are bringing lawsuits against air carriers are seeking to reap extra rewards over and above the earlier agreed upon pay, which was represented by a signed contract. MR. DANIEL answered yes. He stated it only takes one former employee to start a class action lawsuit. CHAIR SEEKINS asked if the plaintiff's attorneys are recruiting additional members into the class action. MR. DANIEL replied yes. A notice was sent out to all the present and former pilots notifying them of the case. The pilots had 60 days to affirmatively opt out and 60 of them have done so. It's hard to tell how many of the remaining pilots want to participate. If they do not respond, they are in the class. There is one pilot and a potential of 20 plus. 9:27:38 AM SENATOR HUGGINS asked Mr. Daniel if he was permitted to contact the pilots to see if they are opting out. MR. DANIEL replied no due to the ethics rules governing lawyers they are considered clients of the plaintiff's counsel. CHAIR SEEKINS asked Mr. Daniel if he has contacted the pilots who have affirmatively opted out. MR. DANIEL answered yes. SENATOR HUGGINS asked Mr. Daniel to clarify his earlier statement. MR. DANIEL said one active pilot out of approximately 60 is part of the class action lawsuit. SENATOR HUGGINS commented small commuter airlines operate on the economic edge. MR. DANIEL advised he is not sure about the financial condition of the airline companies. He said any significant unexpected cost threatens the viability of the small airlines. SENATOR HUGGINS commented the essence of the class action that Mr. Daniel is involved in potentially jeopardizes one or more airlines. MR. DANIEL agreed. The three pending lawsuits threaten the economic viability of three airline companies. 9:30:32 AM SENATOR FRENCH asked Mr. Daniel about the statute of limitations. MR. DANIEL answered it was two years. The time period covered by the lawsuit extends back to mid 2000. SENATOR FRENCH asked if the pilots were still being paid wages during that time period. MR. DANIEL answered yes; they were all paid on time. The individual who filed the lawsuit did not know he had an overtime claim. His initial reason for seeing an attorney was another issue. The attorney is the one who saw the overtime claim. SENATOR FRENCH asked Mr. Daniel to comment on the worse case scenario. MR. DANIEL explained there are currently 23 class members. The plaintiffs have told some pilots they could recover $70,000 each, which is doubled due to the liquidated damages penalty. This takes the damage into the millions and would bankrupt Hageland Aviation. 9:32:50 AM SENATOR FRENCH asked Mr. Daniel if the judge issued a written opinion on his ruling. MR. DANIEL answered yes. The case name was Harms versus Hageland. SENATOR FRENCH commented that Mr. Daniel testified it was clear the Legislature intended to apply the previous bill to pending lawsuits. He asked Mr. Daniel if he could support his statement. MR. DANIEL said he would refer to the legislative history of the lawsuit. The purpose of passing the legislation was to clear up the uncertainty of exemption to pilots. He suggested the Legislature did not expect the lawsuits to continue. 9:34:35 AM SENATOR FRENCH commented the Legislature knows how to make a law retroactive. If you look back to the law passed in 2003, the intent of the final product would be hard to find. MR. DANIEL agreed. CHAIR SEEKINS asked Senator Olson to join the committee. SENATOR FRENCH commented regarding notification of class action lawsuits and said the plaintiff's attorneys followed the law. They were required by law to send out notice to other potential claimants and the judge approved the notice they sent out. MR. DANIEL agreed. 9:36:38 AM CHAIR SEEKINS commented that one pilot who was in direct contact with the plaintiff's attorney testified in the Labor and Commerce Committee meeting. In addition to the mail-out, that indicates some conversation between the plaintiff's attorney and the class members occurred. MR. DANIEL agreed communication occurred after the mailing went out. He has no way of knowing if communication occurred before then. CHAIR SEEKINS asked Mr. Daniel if there is jeopardy for other carriers. MR. DANIEL answered yes. Two other carriers are facing lawsuits. Until July of 2005, there is potential that other carriers can be sued due to the statute of limitations. CHAIR SEEKINS commented it could be a multimillion-dollar windfall for people who otherwise had a contract that the employer lived up to. 9:38:31 AM MR. DANIEL agreed. 9:38:50 AM MR. MIKE HAGELAND, owner of Hageland Aviation Services, testified in support of SB 105. He spoke of previous practices for pilot pay. He gave an historic account of starting his own business and of paying pilots fairly. He explained the situation of the pilot who sued Hageland Aviation for overtime pay. 9:44:44 AM CHAIR SEEKINS asked Mr. Hageland if he ever had problems paying his pilots. MR. HAGELAND answered no. He said if there was a dispute, he would always find in their favor. CHAIR SEEKINS asked Mr. Hageland if his company had a history of wage and hour complaints. MR. HAGELAND answered no. 9:45:44 AM SENATOR HUGGINS asked Mr. Hageland when the lawsuit was initiated. MR. HAGELAND replied 2002. SENATOR HUGGINS asked Mr. Hageland for an estimate of how much the lawsuit has cost Hageland Aviation. MR. HAGELAND said the cost to date was approximately $450,000. SENATOR HUGGINS asked if there was any way to recoup that money. MR. HAGELAND answered no. 9:46:23 AM SENATOR DONNY OLSON asked Mr. Hageland how he balances having a pilot fly in extreme conditions and keeping him happy. MR. HAGELAND answered he pays pilots on a daily basis whether they fly or not. Pilots make the decision on the weather but they are not penalized. They are also paid if the aircraft is down for maintenance. SENATOR OLSON commented that he has had to fire unsafe pilots. MR. HAGELAND replied it was a hard call to terminate someone. One must be sure there is good reason. 9:49:00 AM CHAIR SEEKINS asked Mr. Hageland if the person who created the class action was terminated from Hageland Aviation. MR. HAGELAND replied he asked him to retire because he had been exhibiting problems. CHAIR SEEKINS asked, "Was he asked to retire for safety reasons?" MR. HAGELAND answered yes. Hageland offered to give the pilot another job within the company but he rejected the offer. CHAIR SEEKINS commented that the Human Rights Commission determined there was no violation of rights. MR. HAGELAND responded the pilot worked for Hageland one and a half years. 9:49:53 AM SENATOR FRENCH asked Mr. Hageland how realistic the threat is that the class action lawsuit would put Hageland Aviation out of business. MR. HAGELAND answered the pending lawsuit would definitely put his company out of business. The point is only the attorneys will benefit and it will negatively impact his employees and customers. 9:52:57 AM CHAIR SEEKINS interjected his opinion that the only reason the court ruled the legal and lawful claim was because the Legislature did not foresee the jeopardy of the airlines. This is a second opportunity for the Legislature to address the original intent of the previous bill. 9:54:14 AM SENATOR HUGGINS added the issue is between right and wrong, not about whether this would put an airline out of business. 9:54:58 AM MR. MIKE BERGT, general manager of Alaska Central Express (ACE), testified his company provides a critical service for the U.S. Postal Service. They employ over 70 people. A former pilot who left the company on good terms later sued ACE for overtime pay. ACE pilot pay is standard throughout the industry. He said attorneys bypass ethics to seek a windfall. The lawsuit is now in Alaska Superior Court. Attorneys are taking advantage of the window created by previous legislation. 9:59:44 AM MR. BRUCE McGLASEN, president and owner, Grant Aviation, testified in support of SB 105 and in support of Mr. Hageland who is one of his major competitors. Grant Aviation would benefit if Hageland Aviation were put out of business through the current lawsuit but it would not be fair. 10:01:26 AM CHAIR SEEKINS asked Mr. McGlasen if Grant Aviation ever had any pilots file a wage and hour dispute. MR. McGLASEN replied no but Grant Aviation is open to the same kind of lawsuit and the damages would be insurmountable. CHAIR SEEKINS asked Mr. McGlasen if he would attempt to pay his pilots any justifiable outstanding wages. MR. MCGLASEN said his pilots are paid fairly. SENATOR FRENCH clarified that Grant Aviation has not been sued to date. 10:03:26 AM SENATOR HUGGINS commented that television advertisements could entice pilots to join the class action lawsuit. MR. McGLASEN replied he has watched the Hageland case with great interest. His calculations show that Hageland Aviation would enter into bankruptcy if the pilot wins the lawsuit. 10:04:52 AM CHAIR SEEKINS commented he does not believe the legislative intent was to create a window for lawsuits. He maintained the previous Legislature did not realize there was jeopardy to the airline industry. SENATOR HUGGINS aired his impression that the pilots are not feeling mistreated, it is the attorneys who are looking for money. MR. MCGLASEN agreed. 10:06:20 AM MR. RICHARD CLARK, pilot, Hageland Aviation, testified in support of SB 105. 10:09:01 AM CHAIR SEEKINS asked Mr. Clark if he knows of any pilots who think the lawsuit is fair. MR. CLARK answered the pilots view the lawsuit as unfair. 10:09:32 AM MR. IGNATIOUS BEANS, pilot, Hageland Aviation, testified in support of SB 105. CHAIR SEEKINS asked Mr. Beans if he thought the loophole created by previous legislation was fair. MR. BEANS answered it is unfair. He does not know of any pilots who want to take advantage of the current loophole. 10:11:57 AM MR. BOB HAJDUKOVICH, Frontier Flying Service, testified in support of SB 105. 10:14:57 AM SENATOR HUGGINS asked Mr. Hajdukovich if he views the current law as a loophole. MR. HAJDUKOVICH agreed. SENATOR OLSON asked Mr. Hajdukovich how many employees and pilots he employs. MR. HAJDUKOVICH replied he has 195 employees and 45 of them are pilots. SENATOR OLSON asked if there is any indication that his pilots will be filing lawsuits. MR. HAJDUKOVICH replied no. 10:18:05 AM MR. JERRY ROCK, president, Alaska Air Carriers Association (AACA) and president of Evergreen Aviation in Alaska, testified in support of SB 105. An attorney approached Evergreen in the past 90 days with a letter stating he represented an Evergreen pilot. Evergreen advised the attorney they were protected under federal law as an interstate carrier. Overtime pay goes against safe measures as it gives pilots incentive to fly under unsafe conditions. CHAIR SEEKINS asked Mr. Rock if most carriers in Alaska carry mail. MR. ROCK replied most of them do. SENATOR OLSON asked Mr. Rock if the 121 portion of Evergreen airlines has been involved in wage and hour litigation. MR ROCK answered they had never heard anything regarding wage and hour until they were approached by the attorney 90 days ago. After advising him of their federal protection, they haven't heard from him since. 10:22:28 AM MR. TOM NICOLOS, general manager, Cape Smythe Air, testified in support of SB 105. A pilot who was discharged for an unsafe act sued Cape Smythe Air in May 2004. He then filed a lawsuit to receive overtime pay. Cape Smythe Air has spent close to $100,000 to date in defense. Pilots agree on pay before beginning employment. Cape Smythe has a history of paying pilots fairly. Current lawsuits can potentially cause bankruptcy. 10:26:05 AM MR. GRANT THOMPSON, Cape Smythe Air, testified in support of SB 105. 10:26:34 AM MS. KAREN CASANOVA, Alaska Air Carriers Association testified in support of SB 105. She stated failure to pass SB 105 would negatively affect the entire airline industry in Alaska. None of the costs are covered by insurance. Many carriers provide critical service to Alaskans. 10:28:16 AM MR. MICHAEL CHARLIE testified in support of SB 105. CHAIR SEEKINS asked Mr. Daniel if Mr. Peter Norsak provided him with his previous briefing. MR. DANIEL answered no. SENATOR FRENCH asked Mr. Daniel if he has seen any briefings from Mr. Norsak. MR. DANIEL answered no. SENATOR HUGGINS made a motion to pass CSSB 105(L&C) out of committee with attached fiscal notes. There being no objection, the motion carried.