McCoy et al v. North Slope Borough

Filing 215

ORDER: re Cross-Motions for Summary Judgment 69 and 82 . Signed by Judge Sharon L. Gleason on 08/26/2013. (AEM, CHAMBERS STAFF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA

LAWRENCE McCOY, TODD
McDONALD, DONALD MEANY,
ROBERT MERCIER, RICHARD,
PATTERSON, GARY QUARLES,
LAWRENCE SHUE, RICK TIDWELL,
and STEVE WILLIAMSON,
Plaintiffs,
v.

Case No. 3:13-cv-00064-SLG

NORTH SLOPE BOROUGH,
Defendant.
ORDER RE CROSS-MOTIONS FOR SUMMARY JUDGMENT
Plaintiffs move for partial summary judgment. 1

This motion is opposed and

Defendant cross-moves for summary judgment. 2 Oral argument on the motions was
heard on July 25, 2013.
FACTS
Plaintiffs Lawrence McCoy, Todd McDonald, Donald Meany, Robert Mercier,
Richard Patterson, Gary Quarles, Lawrence Shue, Rick Tidwell, and Steve Williamson
are former and current employees of Defendant, the North Slope Borough (NSB).
Plaintiffs have all been employed as pilots, lead pilots, or as a coordinator in
Defendant=s Department of Search and Rescue (SAR). In addition to these positions,
SAR is staffed by a Director and Deputy Chief, a Chief Pilot, and three support
employees.
1

Docket No. 69.

2

Docket No. 82.

During the time period relevant to this litigation, which is April 29, 2008 until the
present, McCoy was employed as the SAR coordinator, a SAR pilot, and a lead pilot. 3
McDonald, Meany, Quarles, Shue, and Tidwell were employed as SAR pilots. 4 Mercier
and Williamson were employed as SAR pilots and lead pilots. 5 Patterson has been
employed as the SAR coordinator, a SAR pilot, and the Chief Pilot. 6 Certain Plaintiffs
are no longer employed in these positions by NSB.

Plaintiffs all seek overtime

compensation for the entire relevant time period to the extent they were then employed
by NSB except Patterson is not seeking overtime compensation for the period after he
became the Chief Pilot. 7
SAR pilots are required to have a high school education or the equivalent, an
FAA

Airline

Transport

Pilot

(ATP)

License

with

multi-engine

airplane

or

rotorcraft/helicopter rating, an FAA First Class Medical Certificate, an FCC Radio
3

From the Court=s review of the record, it appears that McCoy was the SAR coordinator from
April 29, 2008 to June 18, 2010; a SAR pilot from June 19, 2010 to October 7, 2010; and a lead
pilot from October 7, 2010 through at least the end of 2012.
4

From the Court=s review of the record, it appears that McDonald was a SAR pilot from May 17,
2010 to August 9, 2012; Meany was a SAR pilot from April 29, 2008 through at least the end of
2012; Quarles was a SAR pilot from April 29, 2008 through sometime in 2010; Shue was a SAR
pilot from April 29, 2008 through June 27, 2012; and Tidwell was a SAR pilot from November
24, 2010 through approximately May 12, 2012.
5

From the Court=s review of the record, it appears that Mercier was a SAR pilot from April 29,
2008 to March 21, 2010 and a lead pilot from March 22, 2010 through at least the end of 2010;
and Williamson was a SAR pilot from April 28, 2008 to January 14, 2009 and a lead pilot from
January 15, 2009 until September 1, 2010, when he again became a SAR pilot.
6

From the Court’s review of the record, it appears that Patterson was the SAR coordinator from
November 14, 2005 to March 3, 2009; a SAR pilot from March 4, 2009 to September 1, 2010;
and the Chief Pilot beginning on September 2, 2010.
7

See Ford Spreadsheet, Exhibit AL at 36, Notice of Filing of Exhibits, Docket No. 122.

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Permit, 3,000 hours of total flight time, and 500 hours of Arctic or remote area flying
experience. 8 SAR pilots must also be able to obtain an Alaska driver=s license within six
months of hire. 9 A SAR pilot=s primary purpose is to Aserve[] as Pilot-in-Command or
Second-in-command in Borough aircraft [and] safely pilot[] assigned aircraft to and from
destinations, and for search, rescue and medevac situations.@ 10 A SAR pilot who is not
a lead pilot is called a line pilot.
Lead pilots are required to have the same education, experience, and certificates
as SAR pilots, except they must have 4,000 hours of total flying experience and one
year of management and supervisory experience. 11 According to their job description, a
lead pilot=s primary purposes are: 1) to A[a]ssist in the management and monitoring of
operations and safety of NSB Search and Rescue flight crew as Pilot in Command of
Borough operated aircraft;@ 2) to Aassist[] in development and implementation of flight
crew training programs of NSB Search and Rescue (SAR) personnel;@ and 3) to Aassist[]
in ensuring compliance with Federal Aviation Administration (FAA) and Borough
regulations and policies.@ 12

8

North Slope Borough Job Description (Pilot) at 1-2, Exhibit 2, Plaintiffs= Motion for Partial
Summary Judgment, Docket No. 69.
9

Id. at 2.

10

Id. at 1.

11

North Slope Borough Job Description (Lead Pilot), Exhibit 20 at 4, Plaintiffs= Motion for Partial
Summary Judgment, Docket No. 69.
12

Id. at 3.

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The SAR coordinator is required to have the same education, experience, and
certificates as a SAR pilot. 13

The SAR coordinator=s primary purposes are to

A[c]oordinate[] search and rescue efforts between the NSB Search and Rescue (SAR)
Department and village, state and Federal search and rescue organizations; [and]
serve[] as Pilot in Command in Borough aircraft.@ 14
Defendant has treated SAR pilots, lead pilots, and the SAR coordinator as
exempt employees for purposes of overtime wages. In 1997, three of the SAR pilots
questioned whether they were properly classified as exempt employees. Although the
Wage and Hour Division of the Department of Labor (DOL) conducted an investigation
and did not agree with Defendant=s position that its pilots were exempt, 15 nothing came
of the investigation.
In 2004, the pilots and lead pilots approached Defendant about instituting a
rotational schedule. Defendant=s Department of Law concluded that the SAR pilots
were exempt employees and thus could work a rotational schedule. 16 The rotational
schedule required the SAR pilots and lead pilots to work a two weeks on/two weeks off

13

North Slope Borough Job Description (Search & Rescue Coordinator/Pilot), Exhibit 24 at 2,
Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.
14

Id.

15

See Exhibit 14 at 1, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

16

Exhibit 16, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

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schedule. 17 During their two weeks off, the pilots could be called back to work. During
their two weeks on, the pilots were originally required to be available for a flight at all
times, but in January 2012, the schedule was changed to monitoring the radio and
being on call for 12-hour shifts. 18
During their two weeks on, the pilots were not required to be at the SAR facility at
all times but were required to be able to respond to a tone-out within 30 minutes. A
tone-out is the tone transmitted on the SAR radio frequency to notify a pilot of a mission.
The pilots could engage in other activities while waiting for a tone-out, except they could
not, per federal regulation, drink alcohol within twelve hours of a flight. The pilots were
also required to be aware of weather conditions while waiting for a mission. Plaintiffs
checked the weather anywhere from every 30 minutes to every three to four hours.
There is evidence in the record that A[t]he number of dispatch calls per day for each
Plaintiff average[d] less than one call per day.@ 19
The proposal for the rotational schedule stated that the salary would be based on
75 hours every two-week pay period, but that the SAR pilots would be working 168

17

The SAR coordinator is a non-rotational position. The SAR coordinator works 9 a.m. to 5
p.m. Monday through Friday and is on call at other times. McCoy Deposition at 179, ln. 9 -180,
ln. 7; 181, lns. 19-23, Exhibit E, Notice of Filing of Exhibits, Docket No. 96.

18

Later in 2012, the rotational schedule was discontinued and a four days on/three days off
schedule with 12-hour shifts was implemented.
19

Exhibit R at 10, Notice of Filing of Exhibits, Docket No. 114; Affidavit of Robert Butcher and
attached reports, Docket No. 198.
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hours in each two-week pay period. 20 In answer to an interrogatory, Defendant stated
that A[p]ilots were paid for 52 weeks per year but were on duty only 75 hours per pay
period, but generally worked only two weeks on, followed by two weeks off.@ 21 Plaintiffs=
payroll records indicate that they were paid based on working 75 hours per two-week
pay period. 22
While on the rotational schedule, the pilots accrued leave according to
Defendant=s personnel policies. 23 However, it is undisputed that while on the rotational
schedule, the pilots were not permitted to take leave. Instead, the pilots were able to
periodically cash out their leave so long as they maintained a specified minimum
balance. 24
Plaintiffs contend that they have been improperly classified as exempt
employees and that pursuant to the Fair Labor Standards Act (FLSA) they should have
been paid overtime for any hours more than 40 that they worked in a week. They assert

20

Exhibit 35 at 1, Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion,
Docket No. 168.
21

Exhibit 32 at 3, Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion,
Docket No. 168.
22

Exhibit 51, Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion, Docket
No. 168.
23

Although the record does not indicate exactly how much annual leave each Plaintiff accrued,
employee welcome letters from 2009 and 2010 state that A[a]nnual leave, for all Rotational
Employees, is accrued at .1154 hours per qualifying hours worked, up to a maximum of 75
hours per pay period.@ Exhibit AF at 9, 31, Notice of Filing of Exhibits, Docket No. 122.
24

See, e.g., McCoy Deposition at 65, line 17-18; Exhibit E, Notice of Filing of Exhibits, Docket
No. 96.

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they worked 168 hours a week during their rotation.

Plaintiffs’ Second Amended

Complaint also asserts a breach of contract claim under state law based on Defendant=s
alleged failure to pay Plaintiffs overtime and holiday pay, and a claim that Defendant
failed to timely pay certain Plaintiffs the compensation they were due upon termination
as required by AS 23.05.140.
In its Answer, Defendant asserts that Plaintiffs were exempt employees under
the FLSA. Defendant also asserts, as affirmative defenses, that Plaintiffs= damages are
barred by the doctrine of unclean hands, that Plaintiffs have failed to mitigate their
damages, that there were legitimate business reasons for all actions taken regarding
Plaintiffs, and that Plaintiffs are barred from recovering any damages because they
breached their duty of loyalty to their employer. 25
Plaintiffs now move for summary judgment on their FLSA overtime claim, their
breach of contract claim, and several of Defendant=s affirmative defenses. Defendant
cross-moves for summary judgment on all of Plaintiffs= claims. In the alternative, should
the Court find that some or all of Plaintiffs were misclassified as exempt, Defendant
moves for summary judgment that its conduct was not willful, that it did not act in bad
faith, that Plaintiffs= overtime compensation should be calculated at a 50% premium,
and that it is entitled to offset any overtime that may be owed to Plaintiffs by all its
payments of compensation.

25

Answer to Plaintiffs= Second Amended Complaint at 4-5, Docket No. 39.

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DISCUSSION
Summary judgment is appropriate when there are no genuine issues of material
fact and the moving party is entitled to judgment as a matter of law. 26 The initial burden
is on the moving party to show that there is an absence of genuine issues of material
fact. 27 If the moving party meets its initial burden, then the non-moving party must set
forth specific facts showing that there is a genuine issue for trial. 28 In deciding a motion
for summary judgment, the court views the evidence of the non-movant in the light most
favorable to that party, and all justifiable inferences are also to be drawn in its favor. 29
AWhere the parties file cross-motions for summary judgment, the court must consider
each party=s evidence, regardless under which motion the evidence is offered.@ 30
I.

FLSA Overtime Claim
The FLSA requires employers to pay employees one-and-a-half times the

employee=s regular rate of pay for hours worked above forty hours in a workweek,
unless the employee is exempt. 31 A>FLSA exemptions are to be narrowly construed
against . . .

employers and are to be withheld except as to persons >plainly and

26

Fed. R. Civ. P. 56(c).

27

Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).

28

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

29

Id. at 255.

30

Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir. 2011).

31

29 U.S.C. ' 207(a) (1).

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unmistakably within their terms and spirit.=@ 32 A>An employer who claims an exemption
from the FLSA bears the burden of demonstrating that such an exemption applies.=@ 33
A>The criteria provided by regulations are absolute and the employer must prove that
any particular employee meets every requirement before the employee will be deprived
of the protection of the Act.=@ 34 AThe FLSA includes an exemption from the overtime
requirement for >any employee employed in a bona fide executive, administrative, or
professional capacity[.]” 35 Whether an employee is exempt is a question of law. 36 But
how an employee spent his working time is a question of fact. 37
Defendant has raised three specific exemptions—the learned professional
exemption, the highly compensated employee exemption, and the administrative
exemption—which the Court addresses in turn below.
A. Exemptions
1. The learned professional exemption
Defendant contends that the SAR pilots are exempt because they are “learned
professionals” under the FLSA. The applicable regulation provides as follows:
32

Solis v. Washington, 656 F.3d 1079, 1083 (9th Cir. 2011) (quoting Auer v. Robbins, 519 U.S.
452, 462 (1997)).

33

Id. (quoting Klem v. County of Santa Clara, Calif., 208 F.3d 1085, 1089 (9th Cir. 2000)).

34

Id. (quoting Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1125 (9th Cir. 2002)).

35

Id. (quoting 29 U.S.C.§ 213 (a)(1)).

36

Bothell, 299 F.3d at 1124.

37

Id. (quoting Webster v. Public Sch. Employees of Wash., Inc., 247 F.3d 910, 913 (9th Cir.
2001).
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To qualify for the learned professional exemption, an
employee=s primary duty must be the performance of work
requiring advanced knowledge in a field of science or
learning customarily acquired by a prolonged course of
specialized intellectual instruction. This primary duty test
includes three elements:
(1) The employee must perform work requiring advanced
knowledge;
(2) The advanced knowledge must be in a field of science or
learning; and
(3) The advanced knowledge must be customarily acquired
by a prolonged course of specialized intellectual
instruction. 38
There is no dispute that the SAR pilots= primary duty is to fly Defendant=s aircraft.
The dispute here focuses on whether the SAR pilots meet the third element of the
Aprimary duty@ test, to which the Court will next turn.
A SAR pilot is required to have an ATP certificate or license.

Defendant

contends that an ATP certificate is customarily acquired by a prolonged course of
specialized intellectual instruction.
The applicable regulation includes the following detail regarding this third
element of the exemption:
The phrase Acustomarily acquired by a prolonged course of
specialized intellectual instruction@ restricts the exemption to
professions where specialized academic training is a
standard prerequisite for entrance into the profession. The
best prima facie evidence that an employee meets this
38

29 C.F.R. ' 541.301(a); Solis, 656 F.3d at 1083-84. A professional employee must also be
A[c]ompensated on a salary or fee basis at a rate of not less than $455 per week. . . .@ 29 C.F.R.
' 541.300(a)(1). There is no dispute that Plaintiffs meet the salary test.
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requirement is possession of the appropriate academic
degree . . . [T]he learned professional exemption is not
available for occupations that customarily may be performed
with only the general knowledge acquired by an academic
degree in any field, with knowledge acquired through an
apprenticeship, or with training in the performance of routine
mental, manual, mechanical or physical processes. The
learned professional exemption also does not apply to
occupations in which most employees have acquired their
skill by experience rather than by advanced specialized
intellectual instruction. 39
The parties do not dispute the general route that a person takes to acquire an
ATP certificate. The first certification level for pilots is the private pilot certificate. To be
eligible for a private pilot certificate a person must be at least 17 years of age; be able to
read, speak, and write English; receive a logbook endorsement from a certified
instructor who either instructed the student or reviewed the student=s home study; obtain
a passing score on a multi-choice knowledge test covering areas such as weather,
federal regulations, aircraft operating systems, flight maneuvers, emergencies,
communications, flight planning, chart reading, navigation, and aerodynamics; receive
flight training from an instructor; and pass a practical test with a flight instructor. 40
After receiving a private pilot certificate, a person may then obtain an instrument
rating, which allows a pilot to fly under Instrument Flight Rules. To obtain an instrument
rating, a person must obtain a passing score on a multiple-choice test and receive a

39

29 C.F.R. ' 541.301(d) (emphasis added).

40

14 C.F.R. ' 61.103.

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logbook endorsement from a certified instructor. 41

Earning an instrument rating

generally requires between 50 and 70 additional hours of in-flight instruction. 42
After receiving an instrument rating, many pilots obtain a commercial certificate,
which allows a pilot to receive compensation for flying.

To obtain a commercial

certificate, a person must obtain a passing score on a multiple-choice test and receive a
logbook endorsement from a certified instructor. 43
A pilot may then obtain an ATP certificate. To obtain an ATP certificate, a person
must obtain a passing score on a multiple-choice test but is not required to receive an
endorsement from a certified instructor. 44

Michael Buckland, Defendant=s aviation

expert, testified that a person obtaining an ATP certificate is not required to do any
classroom training, but may do as much as 170 hours of classroom training. 45 Buckland
stated that doing no classroom training was Awildly unrealistic@ but that the regulations

41

14 C.F.R. ' 61.65.

42

Buckland Report at 6, Exhibit 5, Plaintiffs= Motion for Partial Summary Judgment, Docket No.
69.
43

14 C.F.R. ' 61.123.

44

14 C.F.R. ' 61.153.

45

Buckland Deposition at 66, lns. 10-20, Exhibit 19, Plaintiffs= Motion for Partial Summary
Judgment, Docket No. 69. Although Plaintiffs cite to Buckland=s report and deposition
testimony, they also argue that his testimony as to whether SAR pilots are exempt should be
excluded because it is a legal conclusion, not a factual conclusion. See Cowan v. Treetop Entr.,
Inc., 120 F. Supp. 2d 672, 684 (M.D. Tenn. 1999) (excluding expert=s opinion as to employee=s
Aprimary responsibility@ because that term has specific legal meaning under the FLSA
regulations). For purposes of the instant summary judgment motions, the Court will consider
Buckland=s opinions as they relate to factual matters, as such opinions are admissible under
Rule 702, Federal Rules of Evidence.
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did not expressly require any classroom training. 46

But in order to obtain an ATP

certificate, a pilot must have extensive flying experience, including 1,500 total flying
hours, 500 cross-country flying hours, 100 night-flying hours, and 75 hours of instrument
flight time. Plaintiff Patterson once stated that
[w]hen compared to other qualifications, this rating is akin to
a doctorate or other extended college degree . . . . This
certificate requires extensive aeronautical experience,
knowledge and flight proficiency to attain. On average it
takes at least 5 years to attain at an average cost of
$50,000. 47
Buckland’s report estimated that a pilot who met the qualifications required for a SAR
pilot would have approximately 1,062 hours of training time, which in his opinion, was
the functional equivalent of two-thirds of a bachelor of science degree. 48
Defendant argues that there can be no dispute that the foregoing constitutes a
prolonged course of specialized study because Plaintiffs could not safely fly aircraft had
they not had this specialized instruction, which they obtained in ground schools, through
self-study, or in the military.

Defendant argues that this specialized instruction is

46

Buckland Deposition at 66, lns. 13-20, Exhibit 13, Plaintiffs= Motion for Partial Summary
Judgment, Docket No. 69.
47

Exhibit H at 2, Notice of Filing of Exhibits, Docket No. 101. Patterson has testified that when
he referred to an ATP certificate being comparable to a doctorate, he meant Ait compared to B it
was the top rating compared to a commercial or private@ rating and that he was not comparing
the ATP certificate to an extended college degree. Patterson Deposition at 169, ln. 2 - 171, ln.
13, Exhibit 31, Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion, Docket
No. 168.
48

Buckland Report at 3-4, Exhibit 5, Plaintiffs= Motion for Partial Summary Judgment, Docket No.
69. At his deposition, Buckland calculated the number of training hours, including classroom
and flight training, to be significantly less than 1,062. Exhibit 29, Plaintiffs= Reply re Summary
Judgment and Opposition to Cross-Motion, Docket No. 168.

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prolonged, given that a pilot has approximately 1,500 hours of classroom and dual
instruction by the time he acquires an ATP certificate. Defendant argues that the fact
that pilots do not have academic degrees does not mean that they do not meet the third
requirement of the Aprimary duty@ test because the learned professional exemption
applies to nurses and accountants who do not have a special advanced academic
degree 49 and the same should be true for pilots.
Defendant has, however, misread the regulation pertaining to nurses, which
provides:
Registered nurses who are registered by the appropriate
State examining board generally meet the duties
requirements for the learned professional exemption.
Licensed practical nurses and other similar health care
employees, however, generally do not qualify as exempt
learned professionals because possession of a specialized
advanced academic degree is not a standard prerequisite for
entry into such occupations. 50
The regulation does not provide that all nurses are exempt, including those that do not
have advanced academic degrees. Rather, it provides that those categories of nurses
who have specialized training, such as a licensed practical nurse, are not exempt
because they do not have the requisite Aspecialized advanced academic degree[.]@ 51
The same is true of the SAR pilots; they have specialized training, but they do not have
advanced academic degrees.
49

29 C.F.R. ' 541.301(e)(2),(5).

50

29 C.F.R. ' 541.301(e)(2).

51

Id.

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Defendant has also misread the regulation pertaining to accountants, which
provides:
Certified public accountants generally meet the duties
requirements for the learned professional exemption. In
addition, many other accountants who are not certified public
accountants but perform similar job duties may qualify as
exempt learned professionals. However, accounting clerks,
bookkeepers and other employees who normally perform a
great deal of routine work generally will not qualify as
exempt professionals. 52
Again, the regulation does not state that all accountants who do not have academic
degrees are learned professionals. Rather, it states that uncertified accountants who
perform duties similar to those of a CPA may be learned professionals.

Such

individuals more than likely have had a prolonged course of specialized intellectual
instruction, even though they are not licensed as CPAs.
Defendant relies on Paul v. Petroleum Equipment Tools Co. 53 in support of its
argument that the lack of academic degree does not mean that a SAR pilot is not a
learned professional. There, the Fifth Circuit concluded that a pilot, who held an ATP
certificate, was Aengaged in a >learned profession= and thus was employed in a
professional capacity,@ even though the pilot did not have an advanced academic
degree. 54 The court rejected the pilot=s argument that Aflying is only a mechanical art or
skill@, finding instead that Aa pilot must acquire extensive knowledge of aerodynamics,
52

29 C.F.R. ' 541.301(e)(5).

53

708 F.2d 168 (5th Cir. 1983).

54

Id. at 171.

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airplane regulations, airplane operations, instrument procedures, aeronautical charts,
and weather forecasting.@ 55

The court concluded that A[t]he foundation of a pilot=s

experience is indisputably extensive, formal, and specialized training.@ 56
In Kitty Hawk Air Cargo, Inc. v. Chao, a Texas district court applied the reasoning
of its circuit court and held that cargo pilots had acquired their knowledge through a
prolonged course of specialized intellectual instruction, despite their lack of a college
degree. 57

But other courts have criticized the Paul decision.

In Howard v. Port

Authority of New York and New Jersey, a New York district court stated that the Paul
decision was Alogically flawed@ because Aits conclusion about the >customarily acquired=
prong appears to rest solely on the inference that the knowledge required by the FAA
certification, because of its advanced and technical character, necessarily must be
attained by a prolonged course of specialized instruction and study.@ 58 The Howard
court explained that Aif this prong of the learned professional exception could always be
satisfied by showing that the required knowledge is sufficiently complex or specialized in
substance, then this requirement, which pertains to the means by which such
knowledge is attained, would lose all independent force.@ 59

55

Id. at 172.

56

Id. at 173.

57

304 F. Supp. 2d 897, 900-01 (N.D. Tex. 2004)

58

684 F. Supp. 2d 409, 415 (S.D.N.Y. 2010).

59

Id. (emphasis in original).

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In Pignataro v. Port Authority of New York and New Jersey, the Third Circuit
Adeclin[ed] to follow the reasoning of the Paul Court,@ in part because it was contrary to
a decision by the DOL Review Board and Athe Wage and Hour=s Division=s
interpretation” of the learned professional exemption. 60 The question in Pignataro was
whether the defendant=s helicopter pilots had been properly classified as exempt
professional employees. 61 The helicopter pilots were required to have 2,000 hours of
flying time, a commercial helicopter pilot certificate with a helicopter instrument rating,
an FAA second class medical certificate, knowledge of FAA rules and regulations
governing helicopter flights, and a high school diploma or GED. 62 The court concluded
that the helicopter pilots had been improperly classified as exempt “learned
professional” employees because A[n]one of the certificates that helicopter pilots are
required to have are academic degrees@ and because pilots were not required to spend
a significant amount of time in the classroom. 63 The court also relied on the fact that the
Department of Labor has taken the position that pilots are not exempt professionals as
well as the fact that the Department of Labor Review Board had determined in 2000 that

60

593 F.3d 267, 271-73 (3rd Cir. 2010).

61

Id. at 267.

62

Id. at 269.

63

Id. at 270; see also Howard, 684 F. Supp. 2d at 415 (holding that Port Authority had not
established professional exemption for helicopter pilot because APort Authority helicopter pilots
obtain the required advanced knowledge through experience rather than academic study@). The
Pignataro court also cited to the following dictionary definition of the term “academic”: “relating
to, or characteristic of a school or pertaining to liberal or classical rather than technical or
vocational education.” Pignataro, 593 F.3d at 270 n.5.
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airline pilots are not learned professionals. 64 AThe Board found that almost all of the
professions delineated in the C.F.R. as >professional= require college or graduate-level
study (one exception being certain nursing degrees that require completing a
college-like academic program).@ 65 In contrast,
the training of airline pilots in this country typically does not
revolve
around
specialized
college-type
academic
instruction, but more-closely resembles the classic
apprenticeship model–a >structured, systematic program of
on-the-job supervised training;= coupled with a program of
related instruction. 66
In 2009, the DOL reiterated its Aposition that pilots are not exempt as learned
professionals@ because Aaviation is not >a field of science or learning= and . . . the
knowledge required to be a pilot is not >customarily acquired by a prolonged course of
specialized intellectual instruction. . . .=@ 67 But the DOL also reiterated that it Atakes a
position of non-enforcement with regard to pilots and copilots of airplanes and rotorcraft
who hold [a] FAA Airline Transport Certificate or Commercial Certificate and who

64

Id. at 270-71.

65

Id.

66

Id. (quoting In re U.S. Postal Serv. ANET & WNET Contracts Regarding Review &
Reconsideration of Wage Rates for Airline Captains and First Officers, ARB Case No. 98-131,
2000 WL 1251361, at *16 (Dep=t of Labor Admin. Rev. Bd. Aug. 4, 2000)).
67

January 14, 2009 Wage and Hour Opinion Letter at 4, Exhibit 4, Plaintiffs= Motion for Partial
Summary Judgment, Docket No. 69. Defendant=s contention that this opinion letter only dealt
with helicopter pilots is incorrect. The employer=s pilots flew two jet aircraft and one helicopter
and the Chief Pilot and the captains held AFAA Airline Transport Pilot Certification[s].@ Id. at 1.
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receive compensation on a salary or fee basis at a rate of $455 per week, and who are
engaged in . . . [f]lying . . . aircraft as business or company pilots.@ 68
Although neither Pignataro nor Howard involved pilots who had ATP certificates,
but rather helicopter pilots who held commercial helicopter certificates with instrument
ratings, this Court finds that to be a distinction without a difference. Buckland testified
that at most an ATP pilot would attend 20 additional classroom hours in order to obtain
an ATP certificate, but that attending ground school for an ATP certificate is not
typical. 69 Thus, a pilot who obtains an ATP certificate has not had significantly more
classroom time than a pilot who only holds a commercial license.
The Court is persuaded by the reasoning of Pignataro and the DOL Review
Board and concludes that obtaining an ATP certificate or license does not require a
prolonged course of “specialized intellectual instruction.” The SAR pilots have received
specialized training. And that training may have been quite prolonged. 70 But the SAR
pilots= training was not a course of specialized intellectual instruction akin to an
academic degree. Likewise, the training of the lead pilots and the coordinator was
substantially the same as that of the SAR pilots. Thus, the SAR pilots, lead pilots, and
coordinator do not meet the third requirement of the Aprimary duty@ test.
68

Id. at 3.

69

Buckland Deposition at 60, ln. 12 - 61, ln. 7, Exhibit 19, Plaintiffs= Motion for Partial Summary
Judgment, Docket No. 69.
70

There may be some dispute as to the number of training hours required to obtain an ATP
certificate, but this is not a material factual dispute because even if the training is prolonged, the
SAR pilots do not meet the third prong of the Aprimary duty@ test of the learned professional
exemption.
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The Aprimary duty@ test requires that all three elements be met. Because the
Court finds that the knowledge of the SAR pilots is not “customarily acquired by a
prolonged course of specialized intellectual instruction,” it is not necessary to consider
whether their knowledge is sufficiently “of an advanced type in a field of science or
learning” for purposes of this exemption. 71 Defendant’s SAR pilots, lead pilots, and
coordinator do not satisfy the “learned professional” exemption.
2. Highly compensated employee exemption
Defendant contends that some of the Plaintiffs are exempt at least some of the
time because they were highly compensated employees.

AAn employee with total

annual compensation of at least $100,000 is deemed exempt under section 13(a)(1) of
the [FLSA] if the employee customarily and regularly performs any one or more of the
exempt duties or responsibilities of an executive, administrative or professional
employee. . . .@ 72 AThis section applies only to employees whose primary duty includes
performing office or non-manual work.@ 73

A[T]o qualify as exempt as a highly

compensated employee, [an employee] must satisfy both a salary and a duties test.@ 74
71

29 C.F.R. § 541.301(a). However, it bears noting that the DOL has determined that “aviation
is not a field of science or learning.” Pignataro 593 F.3d at 270 (quoting Defining and Delimiting
the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer
Employees, 69 Fed. Reg. 22122, 22156 (Apr. 23, 2004) (citation omitted)). Further, “the
Secretary of Labor’s interpretation of his own regulation is controlling unless plainly erroneous
or inconsistent with the regulation.” Id. at 270 n.10 (quoting Auer, 519 US at 461).
72

29 C.F.R. ' 541.601(a).

73

29 C.F.R. ' 541.601(d).

74

Zubair v. EnTech Engineering P.C., 808 F. Supp. 2d 592, 599 (S.D.N.Y. 2011) (emphasis in
original).
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But, A[a] high level of compensation is a strong indicator of an employee=s exempt
status, thus eliminating the need for a detailed analysis of the employee=s job duties.@ 75
a. Salary test
The regulation requires that a highly compensated employee's total annual
compensation be at least $100,000.

ATotal annual compensation may . . . include

commissions, nondiscretionary bonuses and other nondiscretionary compensation
earned during a 52Bweek period@ but it Adoes not include payments for medical
insurance, payments for life insurance, contributions to retirement plans and the cost of
other fringe benefits.@ 76
The parties dispute whether Plaintiffs’ cashed-out leave should be included as
compensation. The annual compensation of several of the pilots exceeds $100,000
only if the cashed-out leave is included.

As noted above, while on the rotational

schedule, Plaintiffs worked 26 weeks per year and were not allowed to take leave
during the other 26 weeks. But they nonetheless accrued leave that they were allowed
to, and did in fact, cash out at regular intervals.
Plaintiffs argue that their cashed-out leave is a Afringe benefit@ that should not be
included in their total annual compensation. A fringe benefit has been defined as A[a]

75

29 C.F.R. ' 541.601(c).

76

29 C.F.R. ' 541.601(b).

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benefit (other than direct salary or compensation) received by an employee from an
employer, such as insurance, a company car, or a tuition allowance.@ 77
This Court finds that the cashed-out leave is not a fringe benefit, but rather is
nondiscretionary direct compensation. It is nondiscretionary because Plaintiffs were not
allowed to take leave while on the rotational schedule, and Defendant had to pay
Plaintiffs for their accrued leave when they requested a cash-out, so long as the
minimum required balance was maintained.

And it constituted income that was

reported as taxable wages on line 5 of the employees= W-2 forms. Further, it was paid
directly to Plaintiffs, not to a third-party, such as an insurance company. The fact that
the cashed-out leave is not included as “compensation” for purposes of PERS, the State
of Alaska’s Public Employees’ Retirement Program in which Defendant’s employees
have participated, does not change this analysis. For unlike the FLSA regulation which
includes “other nondiscretionary compensation” within total annual compensation, the
PERS definition of “compensation” expressly excludes “payments for leave not used by
the employee whether those leave payments are scheduled payments, lump-sum
payments,

donations,

or

cash-ins[.]”78

Because

the

cashed-out

leave

is

77

Black=s Law Dictionary 167 (8th ed. 2004).

78

Affidavit of Perla Halog at 3, ¶ 7, Exhibit U, Notice of Filing of Exhibits, Docket No. 115.
(quoting Alaska Department of Administration, Division of Retirement and Benefits, Glossary of
Terms and Acronyms, at http://doa.alaska.gov/drb/help/glossary.html).
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nondiscretionary direct compensation, it should be included in Plaintiffs= wages in
applying the salary test for higher compensated employees. 79
b. Duties test
In order to meet the highly compensated employee duties test, an employee’s
primary duty must be “performing office or non-manual work.” 80

In addition, the

employee must Acustomarily and regularly perform[] any one or more of the exempt
duties or responsibilities of an executive, administrative or professional employee[.]@81
The regulations define the phrase Acustomarily and regularly@ to mean Aa frequency that
must be greater than occasional but which, of course, may be less than constant.
Tasks or work performed >customarily and regularly= includes work normally and
recurrently performed every workweek; it does not include isolated or one-time tasks.@ 82
Here, the parties have focused on the duties of an administrative employee.
Under the regulations, there are two components to the duties of an exempt
administrative employee: “performance of office or non-manual work directly related to
the management or general business operations of the employer or the employer’s
79

This Court rejects Defendant=s argument that all of Plaintiffs= salaries should be pro-rated
because they only worked 26 weeks per year. The pro-rata regulation only applies if Athe
employee is newly hired after the beginning of the year or ends the employment before the end
of the year[.]@ 29 C.F.R. ' 541.601(b)(3). The pro-rata regulation does, however, apply to
Tidwell, McDonald, and Shue because they actually worked partial years. And it would apply to
employees that worked in an exempt position part of the year, and in a non-exempt position
other portions of the year, such as Patterson in 2010.
80

29 C.F.R. § 541.601(d).

81

29 C.F.R. ' 541.601(a).

82

29 C.F.R. ' 541.701.

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customers;” and “the exercise of discretion and independent judgment with respect to
matters of significance.” 83 For highly compensated employees, it is sufficient if one of
these components is demonstrated. 84
i.

SAR pilots

The parties agree that the SAR pilots’ primary duty is to fly planes. But they
disagree on whether that duty is non-manual work.

Plaintiffs contend that flying

Defendant=s aircraft is manual work; Defendant contends that it is non-manual work.
The applicable regulation lists “non-management production line workers and nonmanagement employees in maintenance, construction and similar occupations” as
examples of manual workers. 85 The regulation then lists several examples of manual
workers:

“carpenters, electricians, mechanics, plumbers, iron workers, craftsmen,

operating engineers, longshoremen, construction workers, laborers and other
employees who perform work involving repetitive operations with their hands, physical
skill and energy.” 86
The materials submitted by Defendant with these motions make clear that flying
an airplane is not manual labor. 87 While the use of one’s hands is required, it is the

83

29 C.F.R. § 541.200(a)(2)-(3).

84

29 C.F.R.§ 541.601(a).

85

29 C.F.R. § 541.601(d).

86

29 C.F.R. § 541.601(d).

87

See, e.g. Exhibit I-16 at 5-50 to 5-61, “Making Decisions;” Exhibit I-17 at 1-30, (“flying
requires a continuous series of decisions” . . . with instrument flying “[y]ou are stepping up to a
new level of flying, one when you must frequently make more complex decisions and utilize
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non-manual decision-making that is the key to the successful operation of an airplane.
This Court concludes that an ATP-licensed pilot flying an airplane is not performing
work similar to the “blue-collar” occupations identified as manual work in the regulation,
but rather is performing non-manual work of a highly technical nature that requires
extensive and specialized training. 88
For those SAR pilots whose income exceeded the requisite $100,000 per year,
Defendant also needs to establish that those pilots were regularly and customarily
performing at least one of the duties and responsibilities of an administrative employee.
An exempt administrative employee is an employee
(2) Whose primary duty is the performance of office or
non-manual work directly related to the management or
general business operations of the employer or the
employer=s customers; and
(3) Whose primary duty includes the exercise of discretion
and independent judgment with respect to matters of significance. 89
The first primary duty, A>directly related to the management or general business
operations= refers to the type of work performed by the employee.

To meet this

additional resources through application of human factors principles.”); Ex. I-35 (“flying involves
decisions that are far more involved than most daily concerns. Since instrument and
commercial flight demand complex decision making, your motivation and attitude as you make
decisions are critical.”)
88

See also 29 C.F.R. § 541.3(a) and (b). There, the regulations distinguish between manual
laborers and other “blue collar” workers and workers with occupations more similar to Plaintiffs’
work, such as police officers, emergency medical technicians, fire fighters, state troopers,
rescue workers, etc.
89

29 C.F.R. ' 541.200(a)(2)-(3).

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requirement, an employee must perform work directly related to assisting with the
running or servicing of the business[.]@ 90 In other words, A[t]his requirement is met if the
employee engages in >running the business itself or determining its overall course or
policies,= not just in the day-to-day carrying out of the business' affairs.@ 91 Based on the
record before this Court, the SAR pilots were not engaged in running the SAR itself or
determining its overall course or policies. 92
The second primary duty would exempt a highly compensated employee who
“customarily and regularly performs” duties that involve Athe exercise of discretion and
independent judgment with respect to matters of significance.@ 93 The regulation adds,
“[t]he exercise of discretion and independent judgment implies that the employee has
the authority to make an independent choice, free from immediate direction or
supervision.” The work involves “the comparison and the evaluation of possible courses
of conduct, and acting or making a decision after the various possibilities have been
considered.” 94

And “employees can exercise discretion and independent judgment

90

29 C.F.R. ' 541.201(a).

91

Bothell, 299 F.3d at 1125 (quoting Bratt v. County of Los Angeles, 912 F.2d 1066, 1070 (9th
Cir. 1990)).
92

See also 29 C.F.R. § 541.3(b)(1) and (3)(first responders such as rescue workers are not
exempt administrative employees “because their primary duty is not the performance of work
directly related to the management or general business operations of the employer or the
employer’s customers as required under § 541.200.”).

93

29 C.F.R. ' 541.202(a).

94

29 C.F.R. § 541.202(a).

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even if their decisions or recommendations are reviewed at a higher level.” 95 However,
the regulation also states that “[t]he exercise of discretion and independent judgment
must be more than the use of skill in applying well-established techniques, procedures
or specific standards described in manuals or other sources.” 96

The regulation

regarding manuals explains that
[t]he use of manuals, guidelines, or other established procedures
containing or relating to highly technical, scientific, legal, financial,
or other similarly complex matters that can be understood or
interpreted only by those with advanced or specialized knowledge
or skills does not preclude exemption . . . [but the] exemptions are
not available, however, for employees who simply apply wellestablished techniques or procedures described in manuals or
other sources within closely prescribed limits to determine the
correct response to an inquiry or set of circumstances. 97
The term “matters of significance” refers to the level of importance or consequence of
the work performed. 98
Defendant argues persuasively that the SAR pilots exercise discretion and
independent judgment while piloting Defendant=s aircraft and in flying missions.
Plaintiffs point to the pilots’ reliance on manuals, and assert that they demonstrate that
they were not exercising discretion and independent judgment. But in an emergency
situation, a pilot would not consult a manual and simply apply “closely prescribed limits”
and “well-established techniques” to determine the correct response.
95

29 C.F.R. § 541.202(c).

96

29 C.F.R. § 541.202(e).

97

29 C.F.R. § 541.704.

98

29 C.F.R. § 541.202(a).

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Instead, the

manuals included in the record demonstrate just the opposite type of problem-solving
approach—one that involves the pilot’s careful exercise of independent judgment. 99
The case Plaintiffs cite, Foster v. Nationwide Mut. Ins. Co., is inapposite. 100 There, the
district court denied summary judgment to both parties with respect to the classification
of special investigators for an insurance company.

Plaintiffs had presented evidence

that portrayed the investigators “as mere fact-gatherers who perform their investigative
tasks in a highly routinized fashion, under the exacting supervision and the rigid
constraints imposed by the [employer’s] auditing system.” 101 But this is not the case
here for the SAR pilots, who must constantly exercise their discretion and independent
judgment without direct supervision when they are flying aircraft. Further, flying an
airplane to rescue or search for individuals is clearly a “matter of significance.”
Defendant has demonstrated that the SAR pilots who earned in excess of
$100,000 in a calendar year are exempt as highly compensated employees. Defendant
is entitled to summary judgment with respect to those SAR pilots.

99

See Exhibit I-17 at 1-31 (“Aeronautical decision making … is a systematic approach to the
mental process used by aircraft pilots to consistently determine the best course of action in
response to a given set of circumstances.”); Ex. I-17 at 1-35 (“The decision-making process
normally involves several steps in which you make choices based on a variety of factors, some
beyond your control. By recognizing the elements you can control, you will improve your ability
to make wise and effective decisions.”).
100

695 F. Supp. 2d 748, 759 (S.D. Ohio 2010).

101

695 F. Supp. 2d at 759.

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ii.

Lead pilots

For the same reasons that this Court found the highly compensated SAR pilots to
be exempt, the lead pilots who earned in excess of $100,000 per year are also exempt,
as Plaintiffs have maintained that the primary responsibility of these pilots was Athe safe
operation of SAR aircraft@, which Ais precisely the same as [the] primary duty [of] a line
pilot.@ 102 Likewise, Defendant’s expert Buckland opined that the lead pilots= primary
duty was not Aclerical or administrative in nature@ but rather was Ato serve as a qualified
professional pilot.@ 103 Defendant is entitled to summary judgment that the SAR lead
pilots who earned over $100,000 per calendar year are exempt as highly compensated
employees.
iii.

SAR coordinator

The SAR coordinator position was a desk job, with a 9 a.m. to 5 p.m. Monday
through Friday schedule. 104 The SAR coordinator=s job description provides that his
essential duties include the following: 1) A[c]oordinates search and rescue operations
as required@; 2) A[a]ssists with the maintenance and operation of NSB village volunteer
search and rescue equipment@; 3) A[c]oordinates the training activities for Search and
Rescue volunteers@; 4) [m]aintains and prepares search and rescue reports and logs@;
5) A[a]ssists volunteer organizations in processing documentation to proper authorities@;
102

Affidavit of Robert Mercier at 1-2, & 2, Docket No. 70.

103

Buckland Report at 11, Exhibit 5, Plaintiffs= Motion for Partial Summary Judgment, Docket No.
69.

104

McCoy Deposition at 179, ln. 9 -180, ln. 7; 181 lns. 19-23, Exhibit E, Notice of Filing of
Exhibits, Docket No. 96. The SAR coordinator was on call the rest of the time.

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6) A[m]anages the Personal Locator Beacon (PLB) program and database@; 7)
A[r]epresents the Borough in meetings. . .@; and 8) A[a]ssist[s] the Grants Division in
application and administration of grant funding for NSB Search and Rescue and
volunteers.@ 105 On their face, these appear to be tasks that could fall within one or both
of the primary duties for the administrative exemption. But, as mentioned above, the
Court must also consider how the SAR coordinator was actually performing his job.
McCoy testified that when the coordinator is made aware of a search, he
contacts the local village search and rescue group to see if they are able to mount a
search. 106 If they are not, then SAR mounts a search. 107 Williamson testified that the
coordinator has the Ainitial obligation to identify essential pieces of information@ for a
search and rescue mission. 108 The coordinator also monitors the progress of the search
and provides support if requested. 109 Williamson testified that the SAR coordinator has
to have good judgment because A[o]n a critical mission, . . . lack of a detail maybe could
change the outlook and the result.@ 110 McCoy also testified that as a coordinator he was
105

Exhibit 24 at 1, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

106

McCoy Deposition at 186, lns. 5-22, Exhibit 22, Plaintiffs= Motion for Partial Summary
Judgment, Docket No. 69.

107

Id. at 189, lns. 1-6.

108

Williamson Deposition at 64, ln. 15 - 65, ln. 25, Exhibit C, Notice of Filing of Exhibits, Docket
No. 91.

109

McCoy Deposition at 188, lns. 7-14, Exhibit 22, Plaintiffs= Motion for Partial Summary
Judgment, Docket No. 69.

110

Williamson Deposition at 66, ln. 25 - 67, ln. 5, Exhibit C, Notice of Filing of Exhibits, Docket
No. 91.

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responsible for administering an NPRA grant, which involved getting a Awish list@ from
the village volunteer groups as to what equipment they wanted, and then, after receiving
the budget from the division manager, if there were sufficient funds, purchasing and
distributing the equipment to the village groups. 111

He testified that he received

information regarding expenditures from the village search groups after a search had
been conducted, put this information on a form, and then submitted the form to the
Alaska State Troopers. 112 McCoy also testified that he was responsible for registering
the personal locator beacons (PLBs) every two years, for maintaining a record of where
the PLBs were at any given time, and for sending the PLBs in for repairs. 113 And
McCoy testified that he took part in Ameet and greet@ meetings in the villages when he
first became the SAR coordinator to explain how the new PLBs worked and that he
attended a couple of assembly meetings with the SAR director. 114 These are all office
or non-manual tasks that are directly related to the management or general business
operations of SAR. Further, McCoy testified that as the SAR coordinator he spent
about 80 percent of his time on these tasks and only about 20 percent of his time
flying. 115

111

McCoy Deposition at 225, lns. 2-8, Exhibit 22, Plaintiffs= Motion for Partial Summary
Judgment, Docket No. 69.
112

Id. at 225, ln. 20 - 233, ln. 13.

113

Id. at 236, ln. 21 - 242, ln. 18.

114

Id. at 244, ln. 6 - 248, ln. 12; 250, lns. 5-25.

115

Id. at 183, lns. 1-5.

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The SAR coordinator performed non-manual work and meets the duties test for
the highly compensated employee exemption. And the evidence shows that during the
years that Patterson and McCoy were employed as the SAR coordinator, they each
earned at least $100,000 per year. 116

Defendant is therefore entitled to summary

judgment that Patterson and McCoy, while employed as the SAR coordinator, were
properly classified as exempt given their duties and high compensation.
3. The administrative exemption
Although the parties have each briefed the potential applicability of this
exemption for the lead pilots and SAR coordinators, Defendant has not asserted that it
would apply to the line pilots. 117 Nor would such a position be consistent with the
regulations, and particularly 29 C.F.R. § 541.3(b)(1) and (3). In light of this Court’s
ruling on the applicability of the highly compensated exemption to the lead pilots and
SAR coordinator, resolution of the applicability of this exemption to those employees is
unnecessary.

Based on the foregoing, Plaintiff is entitled to summary judgment with respect to
the classification of the line pilots who earned less than $100,000 in a calendar year,
including cashed-out leave (or pro-rated earnings based on period of employment.)118
116

Halog Affidavit at 2, ¶¶ 5-6 and Attachment A thereto at 2-3, Exhibit U, Notice of Filing of
Exhibits, Docket No. 115.

117

See NSB’s Opposition at 38-42 (Docket 83).

118

But, as explained above, this Court rejects NSB’s assertion that the proration should apply
due to the 26-week work schedule.

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These individuals are not exempt from overtime during those calendar years of
earnings.

Defendant is entitled to summary judgment with respect to the exempt

classification of all Plaintiffs during any year in which that Plaintiff earned over
$100,000.

B. Liquidated damages
The FLSA provides that A[a]ny employer who violates the provisions of section
206 or section 207 of this title shall be liable to the employee or employees affected in
the amount of their unpaid minimum wages, or their unpaid overtime compensation, as
the case may be, and in an additional equal amount as liquidated damages.@ 119 The
Ninth Circuit has held that A[t]hese liquidated damages represent compensation, and not
a penalty. Double damages are the norm, single damages the exception.@ 120

ACourts

have the discretion to deny an award of liquidated damages if the employer shows that
it acted in subjective >good faith= and had objectively >reasonable grounds= for believing
that its conduct did not violate the FLSA.@ 121

The issues of good faith and

reasonableness are mixed questions of law and fact. 122

119

29 U.S.C. ' 216(b).

120

Chao v. A-One Medical Srvcs., Inc., 346 F.3d 908, 920 (9th Cir. 2003) (quoting Local 246 Util.
Workers Union v. S. Cal. Edison Co., 83 F.3d 292, 297 (9th Cir. 1996)).

121

Id. (quoting 29 U.S.C. ' 260).

122

Chao v. Hotel Oasis, Inc., 493 F.3d 26, 35 (1st Cir. 2007).

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In the fall of 1997, Defendant was asked to respond to a DOL inquiry regarding
the overtime status of its pilots. In October of that year, Joel Rothberg, an assistant
NSB attorney, stated that A[t]he opinion of the law department is that Search & Rescue
pilots do not have exempt status under the FLSA.@ 123 Rothberg considered whether
pilots would meet the Aprofessional@ exemption but determined that pilot training does
not qualify Aas advanced learning acquired by a prolonged course of specialized
intellectual instruction.@ 124 Rothberg also noted that A[t]he FLSA requires that the work
product of the exempt professional be predominantly intellectual and varied in character
and be work which cannot be standardized in relation to a given period of time. Piloting
an airplane does not satisfy this requirement.@ 125
Soon after, Defendant obtained an opinion letter from independent counsel who
opined that A[a]lthough there is a split of authority on the issue, we believe that it is
defensible to take the position that the Borough=s pilots are exempt as professionals.@ 126
This opinion was based primarily on the Paul case. On November 26, 1997, Defendant
informed the DOL that it Abelieves that its pilot positions are exempt from the FLSA
overtime requirements under the professional exemption@ because ABorough pilots
perform work which requires knowledge of an advanced type in a field of science@ and
because Athe pilots routinely exercise independent discretion and judgment in the
123

Exhibit 1 at 1, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

124

Id.

125

Id. at 2.

126

Exhibit 10 at 2, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

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exercise of their primary duties.@ 127 The DOL disagreed with Defendant=s assertion that
its pilots were exempt. In April 1998, Defendant estimated that its liability for overtime
for the past two years for its pilots was $324,000 and informed the DOL that it Awas
sticking to its position that the pilots are exempt employees.@ 128 Although Defendant
anticipated that either the employees or the DOL would file a lawsuit Aseeking back
overtime wages@, 129 no such suit was filed at that time.
In 2004, the SAR pilots approached Defendant about instituting a rotational
schedule. Defendant=s Personnel Department asked Defendant=s Law Department to
review the issue of whether the pilots were exempt because Defendant had an
ordinance that required any rotational position be exempt from the FLSA=s overtime
provisions. In a January 31, 2005 opinion letter, the Law Department concluded Athat
Borough pilots can work a rotational schedule because they are exempt professionals
under ' 213 of@ the FLSA. 130

This conclusion was based primarily on Paul, although

Roxanne Rohweder, the assistant NSB attorney who drafted the opinion letter,
acknowledged that there was Asome risk in relying solely on@ the Paul case, given that
other courts and the DOL had taken a contrary position. 131

127

Exhibit 11 at 1-3, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

128

Exhibit 15 at 1, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

129

Exhibit 14, at 3, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

130

Exhibit 16 at 1, Plaintiffs’ Motion for Partial Summary Judgment, Docket No. 69.

131

Id. at 3.

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Based on the foregoing, Plaintiffs argue that there can be no dispute that
Defendant did not act in good faith and did not have reasonable grounds for believing
that its conduct as to the SAR pilots did not violate the FLSA. But here, the Court has
granted summary judgment to the Defendant with respect to many of Plaintiffs’ claims –
albeit on a basis other than that on which the Defendant had primarily relied. And with
respect to the line pilots, the Court is not convinced that there are no disputed facts as
to this issue. For example, while a defendant=s reliance on counsel can be evidence of
good faith, 132 here Defendant did not share Rothberg=s internal memo with its outside
counsel. 133 And yet, the fact that Defendant did not share Rothberg=s memo with its
outside counsel could be viewed as a reasonable step to take if Defendant wanted a
truly independent opinion from its outside counsel. There also may be, as Plaintiffs
contend, some question as to whether Defendant only attempted to ascertain the law
after the DOL had initiated its investigation in 1997. 134 In short, neither Plaintiffs nor
Defendant is entitled to summary judgment on the issue of liquidated damages as to the

132

See Rudy v. City of Lowell, 777 F. Supp. 2d 255, 262 (D. Mass. 2011) (ACase law suggests
that liquidated damages are to be awarded unless the employer shows that it relied on the
advice of informed counsel or an opinion it solicited from the Department of Labor.@).

133

See Koellhoffer v. Plotke-Giordani, 858 F. Supp. 2d 1181, 1193 (D. Colo. 2012) (quoting
Mumby v. Pure Energy Serv. (USA), Inc., 636 F.3d 1266, 1270 (10th Cir. 2011) (Ato rely on
advice of counsel to demonstrate good faith in [a] FLSA action, the employer must show >full
disclosure of the relevant facts to counsel=@).

134

See Reich v. Southern New England Telecommunications Corp., 121 F.3d 58, 71 (2nd Cir.
1997) (good faith Arequires that an employer first take active steps to ascertain the dictates of
the FLSA and then move to comply with them@).
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SAR line pilots because there are disputed issues of material fact as to Defendant=s
good faith defense.
C. Willfulness
AThe statute of limitations for a claim seeking unpaid overtime wages under the
FLSA is generally two years.@ 135 ABut if the claim is one >arising out of a willful violation,=
the statute of limitations is extended to three years.@ 136 To establish that an employer=s
violation of the FLSA was willful, an employee must prove that the employer Aknew it
was violating the FLSA or acted in reckless disregard of whether it was violating the
FLSA.@ 137 AWhether a violation of the FLSA is willful is a question of fact[.]@ 138
Defendant moves for summary judgment on the issue of willfulness, urging the
court to follow Pignataro on this issue.

There, the trial court=s summary judgment

finding that the employer had not acted willfully was affirmed on appeal, in part because
the employer had relied on its legal counsel=s conclusion that the helicopter pilots were
exempt, a conclusion which was supported by legal authority, namely the Paul case. 139
Similarly here, Defendant argues that it relied on the opinion of its legal counsel that the
SAR pilots were exempt, an opinion that was based on the Paul case.
135

Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1280 (11th Cir. 2008) (citing 29 U.S.C. '
255(a)).

136

Id. (quoting 29 U.S.C. ' 255(a)).

137

Pignataro, 593 F.3d at 273.

138

Id.

139

Id.

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A[A]n employer has not willfully violated the FLSA if it acts reasonably in
determining its legal obligation.@ 140 As discussed above in the section on liquidated
damages, there are facts in dispute as to whether Defendant acted reasonably in
determining that its employees were exempt. The fact that Defendant consulted Awith
an attorney may help prove that [it] lacked willfulness@ but Asuch a consultation is, by
itself, insufficient to require a finding in favor of [Defendant]. The Court's operative
inquiry focuses on the employer's diligence in the face of a statutory obligation, not on
the employer's mere knowledge of relevant law.@ 141

Defendant is not entitled to

summary judgment on the issue of willfulness.
D. Engaged to Wait or Waiting to be Engaged
Defendant argues that even if certain Plaintiffs were improperly classified as
exempt employees, they did not work 24 hours per day during their two weeks on.
29 C.F.R. § 778.223(a) provides that “an employee must be compensated for all

hours worked” and defines “hours worked” as “[a]ll time during which an employee is
required to be on duty or to be on the employer's premises or at a prescribed
workplace[.]” 142 29 C.F.R. § 785.15, which defines “on duty,” clarifies that an employee
is considered to be on duty and entitled to compensation while waiting for work if he is

140

Id.

141

Mumby, 636 F.3d at 1270.

142

29 C.F.R. § 778.223(a).

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“unable to use [the waiting] time effectively for his own purposes[.]” 143 That regulation
adds that the “on duty” waiting time is typically “unpredictable,” “usually of short
duration” and “belongs to and is controlled by the employer.” 144
Under 29 C.F.R. § 785.14, “waiting time” may also be compensable.

That

regulation provides that determining the compensability of waiting time involves an
inquiry into whether “the employee was engaged to wait or . . . waited to be
engaged.” 145

29 C.F.R. § 785.17 provides that an employee is considered to be

working while “on call” if he is “required to remain on call on the employer's premises or
so close thereto that he cannot use the time effectively for his own purposes[.]” 146 It
also explains that “[a]n employee who is not required to remain on the employer’s
premises but is merely required to leave word at his home or with company officials
where he may be reached is not working while on call.” 147
Plaintiffs contend that they were required to be Aon duty@ during their entire two
weeks on. In support of this contention, Plaintiffs cite to their own testimony that they
understood that they were Aon duty@ while on rotation 148 and to their personnel forms

143

29 C.F.R. § 785.15.

144

29 C.F.R. § 785.15.

145

29 C.F.R. § 785.15 (quoting Skidmore v. Swift, 323 U.S. 134 (1944)).

146

29 C.F.R. § 785.17.

147

29 C.F.R. § 785.17. See also 29 C.F.R. § 785.22 (Duty of 24 hours or more).

148

Meany Deposition at 29, lns. 14-20, Exhibit 34; Quarles deposition at 65, ln. 25 - 66, ln. 16,
Exhibit 41; Williamson Deposition at 42, ln. 23 - 43, ln. 10, Exhibit 42; Shue Deposition at 41,
lns. 6-16, Exhibit 43; McDonald Deposition at 83, lns. 2-15, Exhibit 44; Tidwell Deposition at 11,

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which indicate that they were Aon duty@ for 24 hours per day. 149 Plaintiffs also cite to a
November 6, 2011 safety audit of the SAR department which noted:
Fatigue Risk Management System (FRMS) elements were
not observed to be in place within SAR resulting in
scheduling of pilots to be continuously Aon-duty@ without
being released from their Ainstant contact@ responsibility for
periods of time up to and including fourteen (14) consecutive
days. 150
The audit further noted that SAR pilots A[w]hile rostered for the on-duty block of time . . .
are expected to remain in continuous radio contact with NSBSAR headquarters on a
twenty-four hour a day, seven day a week basis to the extent of having to sleep with
their VHF radio on and available for emergency communications.@ 151 Plaintiffs assert
that this evidence shows that they were Aon duty@ for the entire two week rotation.
Plaintiffs acknowledge that the 2004 job description for a SAR pilot stated that the pilot
was Aon an on-call status@ instead of Aon duty”, 152 but Plaintiffs point out that in 2004,
the rotational schedule had not yet been adopted and that job descriptions after 2004 do
not contain this statement. 153 Plaintiffs also argue that Defendant=s suggestion that the
lns. 2-10, Exhibit 45; Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion,
Docket No. 168.
149

Exhibits 38-40, Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion,
Docket No. 168.
150

Exhibit 46 at 3, Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion,
Docket No. 168.
151

Id. at 7.

152

Exhibit G at 16, Notice of Re-filing of Exhibits, Docket No. 122.

153

Id. at 28.

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terms Aon duty@ and Aon call@ are interchangeable is meritless because both terms are
expressly defined in the FLSA regulations. 154 While Plaintiffs concede that some of
them may have testified that these terms were used interchangeably, they argue that
does not change the fact that Defendant repeatedly referred to its pilots as being Aon
duty.@
While the paperwork to which Plaintiffs cite does state that they were “on duty”
during their two weeks on, there can be no dispute that Plaintiffs were not actively
“working” most or all of twenty-four hours per day during the entire two weeks of each
rotation. As such, Plaintiffs were not “on duty” as per 29 C.F.R. § 785.15. 155 Rather,
Plaintiffs were “on call” under 29 C.F.R. § 785.17 during each two-week rotation; thus,
their waiting time may be compensable under the FLSA if they were engaged to wait,
rather than waiting to be engaged during their weeks on rotation.
The Ninth Circuit has held that time spent waiting for work is “compensable if the
waiting time is spent >primarily for the benefit of the employer and his business.=@ 156
A>[T]he two predominant factors in determining whether an employee=s on-call waiting
time is compensable overtime are (1) the degree to which the employee is free to
engage in personal activities; and (2) the agreements between the parties.=@ 157
154

29 C.F.R. '' 785.15 (defining Aon duty@); 785.17 (defining Aon call@).

155

See 29 C.F.R. ' 785.15.

156

Owens v. Local No. 169, Ass=n of Western Pulp and Paper Workers, 971 F.2d 347, 350 (9th
Cir. 1992) (quoting Armour & Co. v. Wantock, 323 U.S. 126, 132 (1944)).
157

Brigham v. Eugene Water & Elec. Bd., 357 F.3d 931, 935 (9th Cir. 2004) (quoting Berry v.
County of Sonoma, 30 F.3d 1174, 1180 (9th Cir. 1994)).
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1. Personal activities
Courts have considered a number of factors in determining
whether an employee Plaintiff had use of on-call time for
personal purposes: (1) whether there was an on-premises
living requirement; (2) whether there were excessive
geographical restrictions on employee=s movements; (3)
whether the frequency of calls was unduly restrictive; (4)
whether a fixed time limit for response was unduly restrictive;
(5) whether the on-call employee could easily trade on-call
responsibilities[;] (6) whether use of a pager could ease
restrictions; and (7) whether the employee had actually
engaged in personal activities during call-in time. Such a list
is illustrative, not exhaustive. No one factor is dispositive. 158
AWhether and to what extent employees are able to use on-call time for personal
activities is a question of fact.@ 159 AHowever, whether the limitations on the employees'
personal activities while on-call are such that on-call waiting time would be considered
compensable overtime under the FLSA is a question of law[.]@ 160
It is undisputed that Plaintiffs did not have to live on Defendant=s premises. And
yet they were required to remain in Barrow during their two-week rotations. It is also
undisputed that the 30-minute response time allowed Plaintiffs to go almost anywhere in
Barrow while on call. However, the rest of the Owens factors are in dispute. As for the
frequency of calls, Plaintiffs testified that they were frequently awakened by the radio
and thus unable to get a full night=s sleep, which is contrary to Defendant=s

158

Owens, 971 F.2d at 351.

159

Berry, 30 F.3d at 1180.

160

Id.

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Ainvestigative@ report. 161 Further, the number of call-outs Plaintiffs received may be less
significant given that they had to be prepared to respond at all times, because their job
involved the safe piloting of Defendant=s aircraft, often in a harsh environment and at
times in life-and-death situations. 162 The 30-minute response time could be considered
somewhat restrictive as there is evidence that the SAR pilots did not have to simply be
at the SAR facility within 30 minutes of a tone-out, but that they had to be Aon station,
with a complete weather briefing and flight plan filed@ within 30 minutes. 163 As for shift
trades, there is evidence that SAR pilots could trade shifts, but it is not clear whether
this could be done easily or not. Although Plaintiffs did not carry pagers, they were
required to carry two cell phones and a radio, which could be viewed as making their
on-call status less restrictive as they could leave the SAR facility while waiting for a
mission; or it could be viewed as being highly restrictive because Plaintiffs were
required to be in Ainstant contact@ 164 at all times. There is evidence that shows that
Plaintiffs could engage in personal activities such as reading and watching television but
that they could not go hunting, fishing, hiking, or swimming. Yet there is also evidence

161

Exhibits A and B, Butcher Affidavit, Docket No. 198.

162

See Brigham, 357 F.3d at 938 (low number of call-outs had Alesser significance@ because the
Aparticular employees were responsible for the safety of thousands of people and, accordingly,
had to be absolutely prepared to respond at all times (i.e., rested, sober, clothed, and otherwise
able to race immediately to the trouble source if needed), without regard to how often they were
actually called out@).
163

Exhibit 46 at 5, Plaintiffs= Reply re Summary Judgment and Opposition to Cross Motion,
Docket No. 168.
164

Id. at 3.

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that some Plaintiffs were able to pursue their own personal business ventures or work at
other jobs while on rotation, although how much time they really devoted to their own
personal business is in dispute. Quarles avers that he did occasionally fly flights for his
company while on rotation but that he did so with Athe explicit approval of either the
chief pilot or the director of SAR,@ 165 a contention Defendant disputes. Tidwell testified
that he occasionally made a phone call or sent a text or email pertaining to his own
business while on rotation. 166 And there is evidence that Patterson worked for another
company on days when he was on rotation, 167 a contention that Plaintiffs dispute.
2. Agreement between the parties
The Court=s Aanalysis of the [on call] issue . . . does not end@ with consideration
of A[t]he degree to which the employees were free to engage in personal activities[.]@168
The Court must also consider Athe parties= agreement and its significance.@ 169 Case law
in the Ninth Circuit Arecognizes that an agreement cognizable for purposes of the FLSA
overtime inquiry may arise by conduct. In Owens, for instance, [the court] explained
that >the Plaintiff mechanics in the present case may not have liked the company=s
formal call-in system, but by continuing to work, they constructively accepted the new

165

Affidavit of Gary Quarles at 1, && 1-2, Docket No. 170.

166

Tidwell Deposition at 53, lns. 8-14, Exhibit D, Notice of Filing of Exhibits, Docket No. 94.

167

Exhibit attached to Affidavit of Paula A. Zawodny, Docket No. 196.

168

Brigham, 357 F.3d at 938.

169

Id.

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terms.=@ 170 AAnd in Berry, [the court] reiterated that a >constructive agreement may arise
if employees have been informed of the overtime compensation policy and continue to
work under the disclosed terms of the policy.=@ 171 AWhether there was an agreement
between the employer and the employees that employees would receive compensation
only for actual work conducted while on-call is . . . a question of fact . . . .@ 172
When Plaintiffs went on the rotational schedule in 2005, they understood that
they would be “on duty” or available for missions up to 24 hours per day during their two
weeks on. 173 In other words, Plaintiffs understood that they would be available to work
for up to 168 hours every two weeks, although the evidence also indicates that the
parties anticipated the actual amount of time worked would be far less. By continuing to
work after implementation of the rotational schedule, Plaintiffs agreed that their biweekly paycheck was their compensation for the two weeks on.
If the parties had a constructive agreement, that
assists the trier of fact in determining whether the parties
characterized the time spent waiting on-call as actual work.
An agreement between the parties which provides at least
some type of compensation for on-call waiting time may
suggest the parties characterize waiting time as work.
Conversely, an agreement pursuant to which the employees
are to be paid only for time spent actually working, and not

170

Id. (quoting Owens, 971 F.2d at 355).

171

Id. (quoting Berry, 30 F.3d at 1180).

172

Berry, 30 F.3d at 1180.

173

Exhibit 35 at 1, Plaintiffs= Reply re Summary Judgment and Opposition to Cross-Motion,
Docket No. 168.

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merely waiting to work, may suggest the parties do not
characterize waiting time as work. 174
Here, what is not clear is whether the agreed-upon amount of compensation was
intended to compensate Plaintiffs for being engaged to wait for the full 168 hours each
week, or whether it was only intended to compensate them for the hours they were
actually engaged to work during that week.
Further, as discussed above, many of the Owens factors are in dispute. Thus,
the Court concludes that neither the remaining Plaintiffs nor Defendant is entitled to
summary judgment on the issue of whether and to what extent those Plaintiffs= waiting
time was compensable work time.
E. The Fluctuating Work Week
Defendant contends that any retroactive overtime to which Plaintiffs may be
entitled should be calculated using the fluctuating work week (FWW) methodology. The
concept, if not the name, of the FWW methodology originated in Overnight Motor
Transportation Company v. Missel. 175 There, A[t]he Court held that when calculating the
>regular rate= of pay for an employee who agreed to receive a fixed weekly salary as
payment for all hours worked, a court should divide the employees’ fixed weekly salary
by the total hours worked in the particular workweek.@ 176 AOvernight Motor stated that
an employer and employee could legally agree, in certain circumstances, to a
174

Brigham, 357 F.3d at 939 (quoting Berry, 30 F.3d at 1180-81).

175

316 U.S. 572 (1942).

176

Desmond v. PNGI Charles Town Gaming, L.L.C., 630 F.3d 351, 354 (4th Cir. 2011).

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compensation arrangement where the employee would be paid a flat weekly rate for
fluctuating hours.” 177 AIn 1968, the Department of Labor (DOL) promulgated 29 C.F.R. '
778.114, an interpretive rule intended to codify the Supreme Court=s decision in
Overnight Motor.@ 178 AThe rule states that overtime hours under the method may be
compensated at a premium of one-half the employee=s >regular= rate, which in turn may
fluctuate on a weekly basis.@ 179

Under the FWW methodology, the employee is

presumed to have already been paid at the regular rate for each hour that he worked,
including each hour over forty. He is thus only entitled to be paid an additional 50%
premium for any hours worked over forty, as opposed to being paid a 150% premium for
any hours worked over forty. The Fourth, AFirst, Fifth, Seventh, and Tenth Circuits all
have determined that a 50% overtime premium [is] appropriate in calculating unpaid
overtime compensation under 29 U.S.C. ' 216(b) in mistaken exemption classification
cases, so long as the employer and employee had a mutual understanding that the
fixed weekly salary was compensation for all hours worked each workweek and the
salary provided compensation at a rate not less than the minimum wage for every hour
worked.@ 180

177

Russell v. Wells Fargo and Co., 672 F. Supp. 2d 1008, 1011 (N.D. Cal. 2009).

178

Id.

179

Id. at 1012.

180

Desmond, 630 F.3d at 354, 357.

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Plaintiffs, however, urge the Court to follow the holding in Russell v. Wells Fargo
and Company, 181 a Northern District of California case. One of the issues in that case
was “[w]hether the concurrent payment of overtime pay is a required element to
compute unpaid overtime by the FWW method, such that the FWW method of overtime
calculation cannot be used in an exempt/non-exempt misclassification case.”182 The
defendants argued “that the FWW method is available when the employer and
employee have a clear mutual understanding that a fixed salary will compensate the
employee for all hours worked in a week, including those in excess of the FLSA's fortyhour maximum, even if the ‘understanding’ is based on the employer's erroneous
premise that the employee is exempt and thus not entitled to overtime pay.” 183 The
court rejected the defendants’ argument. The court explained that the FWW regulation
“contains legal prerequisites, which employers must first satisfy to use the discounted
overtime rate available through the FWW method. These prerequisites include (1) a
clear mutual understanding that a fixed salary will be paid for fluctuating hours, apart
from overtime premiums; and (2) the contemporaneous payment of overtime
premiums.”184 The court concluded that neither of these prerequisites can be met in a
misclassification case because an “effective clear mutual understanding is absent” and

181

672 F. Supp. 2d 1008.

182

Id. at 1009.

183

Id. at 1013.

184

Id. (emphasis in the original).

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“overtime compensation was not provided contemporaneously.” 185 Other district courts
have reached the same conclusion as the Russell court, although the Ninth Circuit has
not directly addressed the issue. 186
This Court is persuaded by the reasoning of those district courts that have
concluded that the FWW method should not be applied in a misclassification case,
particularly in light of the FLSA’s remedial purpose. Here, the evidence demonstrates a
mutual understanding that Plaintiffs= fixed bi-weekly salary would serve as
compensation for Plaintiffs’ employment with Defendant. But there was no clear mutual
understanding that the fixed salary was intended as compensation, apart from overtime
premiums for the hours worked each workweek—rather, it was intended as full
compensation for the work week. And there was no contemporaneous provision for
overtime pay. Of course, if the trier of fact determines that the remaining Plaintiffs were
waiting to be engaged and worked less than 40 hours per week, then no overtime
compensation is due. But if it is determined that the remaining Plaintiffs were waiting to
be engaged during the entire two-week rotation, then the remaining Plaintiffs are due
compensation at the rate of time and one-half for overtime up to 168 hours per week,
185

Id. at 1014.

186

Zulewski v. Hershey Co., Case No. CV 11B05117BKAW, 2013 WL 633402, at *6 (N.D. Cal.
Feb. 20, 2013) (Athe retroactive application of the FWW method in the misclassification context
does not square with [Overnight Motor], because [Overnight Motor] requires an agreement
between the parties that the fixed weekly salary was compensation for all straight time [and]
such an agreement is not present in misclassification cases@); Blotzer v. L-3 Communications
Corp., Case No. CVB11B274BTUCBJGZ, 2012 WL 6086931, at *11 (D. Ariz. Dec. 6, 2012)
(citation omitted) (Aattempting to retroactively apply the FWW method to a miscalculation case is
akin to the old square peg in a round hole problem [because it requires] apply[ing] ' 778.114 to
a situation it was not intended to address@).
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less any appropriate offsets. 187 Accordingly, Defendant’s motion for summary judgment
on the fluctuating workweek is denied.
F. Offset
Defendant argues that if the Court determines that Plaintiffs are entitled to
overtime compensation, an offset of damages would be appropriate.

Specifically,

Defendant seeks to apply all of the compensation that was paid to Plaintiffs to any
overtime owed. Plaintiffs generally worked only two out of every four weeks throughout
the year, but were paid for 75 hours every two weeks, or 37.5 hours every week. In
their damages calculations, Plaintiffs do not appear to have credited the compensation
they received for 37.5 hours of work for each of the 26 weeks per year when Plaintiffs
were not on rotation. Defendants argue this compensation should be credited in any
overtime calculation.
“Pursuant to the FLSA, an employer may credit some payments it has already
made to employees against the overtime it owes them." 188 “Specifically, there are three
categories of payments which may be credited against overtime compensation
mandated by the FLSA.” 189 Employers may “receive credit for ‘extra compensation
provided by a premium rate’ for hours worked ‘in excess’ of an employee's regular

187

Indeed, it is difficult to characterize Plaintiffs’ work schedules as “fluctuating” if they are found
to have been engaged to wait the full 168 hours each and every week that they were on
rotation.

188

Conzo v. City of New York, 667 F. Supp. 2d 279, 289 (S.D.N.Y. 2009).

189

Id. (citing 29 U.S.C. § 207(h)(2)).

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working hours.” 190 “Second, employers receive credit for ‘extra compensation provided
by a premium rate’ of one and one-half times the regular rate paid for non-overtime
work performed on weekends, holidays, and other days of rest.”191 “Third, employers
receive credit for ‘extra compensation provided by a premium rate’ of one and one-half
times the rate paid for non-overtime work performed outside the regular workday or
workweek.” 192 The offset that Defendant seeks here does not appear to fall within any
of these categories.
Here, Plaintiffs received compensation for 75 hours straight time every two
weeks. While Defendant may not be entitled to an “offset” as that term is defined in the
FLSA, in calculating any overtime due, Defendant will be given credit for 75 hours of
straight time during each week that the SAR pilot was on duty, rather than the 40 hours
that Plaintiffs have used to calculate the overtime they claim they are due. 193
II.

Breach of Contract Claim
Plaintiffs= breach of contract claim is based on two regulations in Defendant=s

Personnel Rules and Regulations. The first regulation provides:
An employee who is eligible for overtime compensation
within the Fair Labor Standards Act and who is required to
work in excess of 40 hours is compensated for hours worked
190

Id. (quoting 29 U.S.C. § 207(e)(5)).

191

Id. (quoting 29 U.S.C. § 207(e)(6)).

192

Id. (quoting 29 U.S.C. § 207(e)(7)).

193

There may also be a need to adjust for time spent on the job during the two weeks off when
a pilot was called back to work. See, e.g., Docket 168-7 at 2 (schedule proposal) (“All simulator
training must be planned during off duty times.”).
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in excess of 40 hours at one and one-half times the
employee=s normal hourly rate of pay. 194
The second regulation provides that Ahourly employees, except nonpermanent
employees, who are required to work on a Borough holiday are entitled to receive
holiday pay in addition to their regular pay for hours worked.@ 195 In Alaska, Aemployee
policy manuals may modify at-will employment agreements, and . . . whether a given
manual has modified an at-will employment agreement must be determined on the
particular facts of each case.@ 196 Plaintiffs contend, and Defendant does not dispute,
that because they were required to sign a document indicating that they had been
advised of their responsibility to read Defendant=s Personnel Rules and Regulations,
that the Rules and Regulations constitute a separate promise to pay overtime and
holiday pay. Plaintiffs have acknowledged that the success of their breach of contract
claim as to unpaid overtime depends on the success of their FLSA claims. 197
Defendant argues that Plaintiffs= breach of contract claim as it pertains to
overtime is preempted by the FLSA.

AThere are three >categories= of preemption:

194

Exhibit 26 at 9, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

195

Id. at 8.

196

Jones v. Central Peninsula General Hosp., 779 P.2d 783, 787 (Alaska 1989).

197

See, e.g., Exhibit AK at 2, Notice of Filing of Exhibits, Docket No. 119. Although this
admission makes no distinction between overtime and holiday pay, Plaintiffs= admission can
only apply to their breach of contract claim as it pertains to overtime as the FLSA does not apply
to holiday pay.
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express, field, and conflict.@ 198 Only conflict preemption is at issue in this case. AThere
are two types of conflict preemption: (1) >where it is impossible to comply with both state
and federal requirements=; and (2) >where state law stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress.=@ 199
In Anderson v. Sara Lee Corporation, the Fourth Circuit held Athat Congress
prescribed exclusive remedies in the FLSA for violations of its mandates@ and thus
AFLSA-based contract, negligence, and fraud claims are precluded under a theory of
obstacle preemption.@ 200 The court observed that its Aconclusion is consistent with the
rulings of several district courts deeming state claims to be preempted by the FLSA
where those claims have merely duplicated FLSA claims.@ 201 The court also focused on
the differences in the statute of limitations between FLSA claims and state law
claims. 202
Similarly, here Defendant argues that Plaintiffs= breach of contract claim should
be preempted because it is duplicative of their FLSA claim and because different
statutes of limitations apply to the two claims. The FLSA provides for a two-year statute
of limitations unless there is a finding of willfulness, in which case a three-year statute of
198

Wang v. Chinese Daily News, Inc., 623 F.3d 743, 760 (9th Cir. 2010), judgment vacated on
other grounds, 132 S. Ct. 74 (2011).

199

Williamson v. General Dynamics Corp., 208 F.3d 1144, 1152 (9th Cir. 2000) (quoting
Industrial Truck Ass=n, Inc. v. Henry, 125 F.3d 1305, 1309 (9th Cir. 1997)).
200

508 F.3d 181, 194 (4th Cir. 2007).

201

Id. (collecting cases).

202

Id. at 192-93.

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limitations applies.

This Atwo-tiered statute of limitations[] makes it obvious that

Congress intended to draw a significant distinction between ordinary violations and
willful violations.@ 203 Because an Alaska breach of contract claim is subject to a threeyear statute of limitations, Defendant argues that Plaintiffs= breach of contract claim
would frustrate Congress= intent to make a distinction between willful and nonwillful
violations of the FLSA.
Plaintiffs argue that Defendant=s reliance on Anderson is misplaced because the
Ninth Circuit rejected Anderson in Wang v. Chinese Daily News, Inc.

There, the

plaintiffs alleged, among other things, that they had been Amade to work in excess of
eight hours per day and forty hours per week.@ 204 In addition to asserting a FLSA claim,
the plaintiffs also asserted a claim based on ACalifornia=s Unfair Competition Law, Cal.
Bus. & Prof. Code ' 17200.@ 205 A ' 17200 claim A>borrows= violations of other laws and
treats these violations, when committed pursuant to business activity, as unlawful
practices independently actionable under section 17200.@ 206

The Wang A[p]laintiffs=

' 17200 claim >borrowed= FLSA as the substantive violation.@ 207 The Ninth Circuit held
that the plaintiffs= ' 17200 claim was not preempted because compliance with both the
FLSA and the state law was possible as Athe state and federal requirements are the
203

McLaughlin v. Richland Shoe Co., 486 U.S. 128, 132 (1988).

204

Wang, 623 F.3d at 749.

205

Id.

206

Id. at 758-59 (citation omitted).

207

Id. at 759.

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same@ and allowing the ' 17200 claim to go forward would further FLSA=s purpose of
protecting employees. 208 The Court declined to follow Anderson because it relied on an
earlier Fourth Circuit case that did not concern federal preemption of a state law claim
but rather was A>about whether another federal statute (Section 1983) can support a
claim that clearly falls under the FLSA.=@ 209
Although the judgment in Wang has been vacated 210 and thus Wang Ahas no
precedential effect,@ it still has informational and persuasive value. 211 Wang stands for
the proposition that a state law claim is not preempted by the FLSA as long as that
claim furthers the FLSA=s purpose of protecting employees. The Wang court explained
that in the past, the Ninth Circuit had “relied on the principle that FLSA sets a floor
rather than a ceiling on protective legislation[.]”212 The Court finds the reasoning of
Wang persuasive and concludes that Plaintiffs= breach of contract claim as to the
overtime issue is not preempted by the FLSA.
In light of the foregoing, Defendant is entitled to summary judgment on Plaintiffs=
unpaid overtime breach of contract claims as to those pilots that this Court has found to

208

Id. at 760.

209

Id. (quoting Williamson, 208 F.3d at 1153).

210

The judgment in Wang was vacated on other grounds; it was not vacated because of the
Ninth Circuit=s analysis of the preemption issue.

211

United States. v. Joelson, 7 F.3d 174, 178 n.1 (9th Cir. 1993). The Ninth Circuit continues to
cite to Wang. See Busk v. Integrity Staffing Solutions, Inc., 713 F.3d 525, 529 n.3 (9th Cir.
2013).
212

Id. at 759 (citing Pacific Merchant Ship. Ass'n v. Aubry, 918 F.2d 1409, 1425 (9th Cir. 1990)).

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be exempt under the highly compensated regulations, as discussed above. Defendant
is not entitled to summary judgment on the exempt employees’ holiday pay breach of
contract claim.
Plaintiffs are not entitled to summary judgment on their breach of contract claim
as to those pilots that were improperly classified as exempt employees as there are
material facts in dispute as discussed herein. As for the holiday pay issue, Plaintiffs
have failed to meet their burden of showing that there are no facts in dispute as they
have made an inadequate factual presentation on this portion of their breach of contract
claim.
III.

AS 23.05.140 Claim
Defendant argues that it is entitled to summary judgment on the AS 23.05.140

claim brought by Quarles, Tidwell, and McDonald. In Hallam v. Holland America Line,
Inc., the Alaska Supreme Court interpreted AS 23.05.140 and explained that it
Amandates that where an employer terminates a worker, >regardless of the cause for the
termination, payment is due within three working days after the termination.=@ 213 AThe
statute proceeds to define the penalty for an employer >failing to pay within the time
required= as >the amount of the employee=s regular wage, salary, or other compensation
from the time of demand to the time of payment, or for 90 working days, whichever is
the lesser amount.=@ 214 Quarles, Tidwell, and McDonald seek 90 days of Apenalty pay@
213

Hallam v. Holland America Line, Inc., 180 P.3d 955, 960 (Alaska 2008) (quoting AS
23.05.140).
214

Id. (quoting AS 23.05.140(d)).

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on the grounds that Defendant failed to pay them the overtime they maintain that they
were due within three days of the termination of their employment.
In Hallam, the Court explained that AS 23.05.140 requires a demand for
payment. 215 It held that Athe trial court did not err in its determination that Hallam and
the class members were required at the least to make a demand for@ timely payment of
their seasonal bonus. 216 Plaintiffs assert that they have made a demand for payment
because A[a] lawsuit is a demand in its sharpest form[.]@ 217 However, in Hallam, the
plaintiff had filed a pro se complaint alleging a claim under AS 23.05.140, which the
Court did not count as the requisite “demand” under the meaning of the statute. 218
Plaintiffs here have not provided evidence of any other demand for payment to
Defendant that could meet the requirements of AS 23.05.140. Accordingly, the Court
finds that there is no genuine issue of fact as to this claim and that summary judgment
should be granted to Defendant on this claim.
IV.

Other Affirmative Defenses
Plaintiffs argue that they are entitled to summary judgment on the following three

affirmative defenses because Defendant has failed to state the basis for these

215

Hallam involved an allegedly untimely payment of a seasonal bonus, not overtime wages, but
AS 23.05.140 makes no distinction between different types of compensation owed. See AS
23.05.140 (“all wages, salaries, or other compensation for labor or services become due
immediately”) (emphasis added).

216

Id. at 960-61.

217

OfficeMax Inc. v. Sousa, 773 F. Supp. 2d 190, 232 (D. Me. 2011).

218

Hallam, 180 P.3d at 957.

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defenses:

1) Plaintiffs= damages are barred by the doctrine of unclean hands, 2)

Plaintiffs have failed to mitigate their damages, and 3) there were legitimate business
reasons for all actions taken regarding Plaintiffs. The Court cannot conclude based on
Plaintiffs= cursory arguments that they are entitled to summary judgment on any of these
defenses. Plaintiffs also argue that Defendant=s affirmative defense that Plaintiffs are
barred from recovering any damages because they breached their duty of loyalty to
their employer is frivolous and should be dismissed. In answer to an interrogatory,
Defendant stated that it was a breach of Plaintiffs= fiduciary duties to request damages
for time that they did not work or for wages that they are not owed. 219 Plaintiffs argue
that this defense is tantamount to retaliation as Defendant is arguing that they breached
their duty of loyalty by pursuing their FLSA claim, but raising a defense during litigation
is not retaliation. 220 Plaintiffs are not entitled to summary judgment on this defense.
CONCLUSION
Plaintiffs’ motion for partial summary judgment is GRANTED in part and DENIED
in part as follows:
1.

Plaintiffs are granted summary judgment that those pilots who were

compensated less than $100,000 per calendar year were improperly classified as
exempt employees under the FLSA.

219

Exhibit 28 at 4, Plaintiffs= Motion for Partial Summary Judgment, Docket No. 69.

220

See Harmar v. United Airlines, Inc., Case No. 95 C 7665, , 1996 WL 199734 at *2 (N.D. Ill.
April 23, 1996) (APresenting an affirmative defense, even a frivolous one, will not support a
retaliation claim.@).
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2.

Plaintiffs’ motion for partial summary judgment is otherwise denied.

Defendant=s motion for summary judgment is GRANTED in part and DENIED in
part as follows:
1.

Defendant is granted summary judgment that any Plaintiff that earned

$100,000 during a calendar year or more is a highly compensated exempt employee
during that year.
2.

Defendant is granted summary judgment dismissing Plaintiffs’ breach of

contract claim as to unpaid overtime as it pertains to the highly compensated exempt
employees.
3.

Defendant is granted summary judgment that in calculating any offset, it

will be given credit for 75 hours of straight time during each week that the SAR pilot was
on duty.
4.

Defendant is granted summary judgment as to the AS 23.05.140 claim

brought by Quarles, Tidwell, and McDonald.
5.

Defendant=s motion for summary judgment is otherwise denied.

It is further ordered that within 7 days of the date of this ruling, Defendant shall
identify each Plaintiff and time period during which it asserts the highly compensated
employee exemption is applicable.

Plaintiffs shall file a response within 7 days

thereafter.
DATED at Anchorage, Alaska, this 26th day of August, 2013.
/s/ Sharon L. Gleason
UNITED STATES DISTRICT JUDGE
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