Legislature(2005 - 2006)BUTROVICH 205
03/09/2005 08:30 AM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing – Select Committee on Legislative Ethics | |
| SB105 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | SB 105 | TELECONFERENCED | |
| *+ | SJR 10 | TELECONFERENCED | |
| + | TELECONFERENCED |
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.
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