Legislature(2005 - 2006)BUTROVICH 205

03/09/2005 08:30 AM Senate JUDICIARY

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08:36:59 AM Start
08:41:44 AM Confirmation Hearing – Select Committee on Legislative Ethics
09:11:27 AM SB105
10:29:55 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Select Committee on Legislative Ethics TELECONFERENCED
Confirmation Hearing: Marianne Stillner
Moved CSSB 105(L&C) Out of Committee
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled 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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
CHAIR SEEKINS  asked Mr.  Daniel if there  is jeopardy  for other                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
CHAIR SEEKINS  asked Mr.  Rock if most  carriers in  Alaska carry                                                               
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
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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