Day et al v. Air Methods Corporation et al

Filing 11

MEMORANDUM OPINION & ORDER: It is hereby ORDERED as follows: 1. Defendant Air Methods Corporation's 4 MOTION to Dismiss for failure to state a claim IS GRANTED in part and DENIED in part; 2. The Claims asserted by Plaintiffs Stephanie G. Logs don, Leslie H. Fryman, and Sean H. Davenport are DISMISSED with prejudice; 3. Insofar as Count I and II are predicated on hours worked prior to March 22, 2012, those claims are DISMISSED, with prejudice. All other allegations of the remaining plaintiffs encompassed by Count I, Count II, and Count III remain pending. Signed by Judge Danny C. Reeves on 10/23/2017.(KM)cc: COR

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
(at Lexington)
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LETCH G. DAY, et al.,
Plaintiffs,
V.
AIR METHODS CORP., et al.,
Defendants.
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Civil Action No. 5: 17-183-DCR

MEMORANDUM OPINION
AND ORDER

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This matter is pending for consideration of the defendants’ motion to dismiss the
plaintiffs’ Complaint pursuant to Rules 12(b)(2), and (6) of the Federal Rules of Civil
Procedure. [Record No. 4] For the reasons that follow, the Court will grant, in part, and deny,
in part, defendants’ motion to dismiss.
I.

Plaintiffs Letch G. Day, Stephanie E. Fields, Steven D. Frasure, Stephanie G. Logsdon,
Sonya A. Burkhart, Leslie H. Fryman, Sean H. Davenport, and Edwin Bentley are former
employees of Defendant Air Method Corporation. The plaintiffs purportedly filed this lawsuit
on behalf of themselves and other similarly-situated employees who are or were employed by
AMC. They allege violations of the Kentucky Wage and Hour Act (“KWHA”), KRS 337.010,
et seq., and various other state wage and hour laws. Additionally, the plaintiffs assert claims
of unjust enrichment and retaliation. [Record No. 1-1, p. 4] This action was removed to this
Court pursuant to 28 U.S.C §§ 1441, 1453, 1466 and the Class Action Fairness Act (“CAFA”).
[Record No. 1]
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The plaintiffs assert that AMC failed to pay its employees overtime for all hours worked
over forty hours in a week in violation of KRS § 377.285(1). [Record No. 1-1, ¶ 35] They
also allege on behalf of similarly-situated current and former employees that AMC failed to
pay overtime in violation of various state wage and hour laws. [Id. at ¶¶ 41-42] The plaintiffs
contend that the failure to pay them required compensation unjustly enriched AMC. Finally,
the plaintiffs’ assert that AMC retaliated against them by terminating their employment after
they made various complaints regarding wage issues in violation of KRS § 377.990(9). [Id. at
¶¶ 48-79]
II.

The plaintiffs have the burden of establishing personal jurisdiction. Conn v. Zakharov,
667 F.3d 705, 711 (6th Cir. 2012). The plaintiffs must make a two-part prima facie showing
to survive a motion to dismiss under Rule 12(b)(2) of the Federal Rules of Civil Procedure.
First, they must demonstrate that “jurisdiction is proper under a long-arm statute or other
jurisdictional rule of . . . the forum state”. Second, they must show that “the Due Process
Clause also allows for jurisdiction under the facts of the case.” Id. If either part of the test is
not met, the analysis ends. See id. at 711-12 (“[I]f jurisdiction is not proper under the Due
Process Clause[,] it is unnecessary to analyze jurisdiction under the state long-arm statute, and
vice-versa.”). However, the prima facie burden is “‘relatively slight.’” Air Prods. & Controls,
Inc. v. Safetech Int’l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) (quoting Am. Greetings Corp. v.
Cohn, 839 F.2d 1164, 1169 (6th Cir. 1989)). In determining whether a plaintiff has made this
necessary showing, the Court views the parties’ submissions “in a light most favorable to the

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plaintiff,” disregarding any contrary assertions by the defendant. Id. (citing Theunissen
v.Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)).
Next, in considering a motion under Federal Rule of Civil Procedure 12(b)(6), the Court
must determine whether the complaint states a claim for which relief is available. It “must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). The factual allegations must be sufficient to raise a right to relief
above the speculative level, Twombly, 550 U.S. at 555, and permit the Court to “draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678. While a complaint need not contain detailed factual allegations, it must contain more
than an “unadorned, the defendant-unlawfully-harmed-me accusation.” Id. “A pleading that
offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements of a cause of action’”
is insufficient. Id. (quoting Twombly, 550 U.S. at 555).
III.
A.

Personal Jurisdiction

Specific jurisdiction “depends on an ‘affiliation[n] between the forum and the
underlying controversy,’ principally, activity or an occurrence that takes place in the forum
State and is therefore subject to the State’s regulation.” Goodyear Dunlop tires Operations,
S.A. v. Brown, 564 U.S. 915, 919 (2011) (quoting von Mehren & Trautman, Jurisdiction to
Adjudicate: A Suggested Analysis, 79 HARV. L. REV. 1121, 1136 (1966). AMC contends that
this Court does not have personal jurisdiction over it regarding all claims brought in a
representative capacity of similarly-situated employees employed by the defendant outside of
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Kentucky. This argument is misplaced because the inquiry for personal jurisdiction lies with
the named parties of the suit asserting their various claims against the defendant, not the
unnamed proposed class members.1 AMC fails to cite any authority that would support the
assertion that its contacts with the named plaintiff and this forum are insufficient to for this
Court to exercise specific personal jurisdiction over them. Instead, this court may exercise
personal jurisdiction over AMC if such jurisdiction is authorized by Kentucky law and
otherwise consistent with the Due Process Clause of the Fourteenth Amendment.

See

AlixPartners LLP v. Brewington, 836 F.3d 543, 549 (6th Cir. 2016). AMC does not contend
that personal jurisdiction would be improper over the claims brought by the named plaintiffs
in this case. As a result, the Court will deny AMC’s motion to dismiss for lack of personal
jurisdiction.
B.

The KWHA and Class Actions

AMC contends that KRS § 337.385(2) does not authorize class actions for Kentucky
wage and hour violations. In support, it relies on a 2015 Kentucky Court of Appeals decision
which was recently reversed by the Supreme Court of Kentucky. McCann v. Sullivan
University Systems, Inc., No. 2014-CA-392, 2015 WL 832280 (Ky. Ct. App. Feb. 27, 2015),

1

Cf. Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco, 137 S.Ct. 1773,
1789 n.4 (Sotomayor, J., dissenting) (Justice Sonia Sotomayor recognizing that the majority
did not address whether the opinion “would also apply to a class action in which a plaintiff
injured in the forum State seeks to represent a nationwide class of plaintiffs, not all of whom
were injured there.”); Devlin v. Scardelletti, 536 U.S. 1, 9-10 (2002) (Nonnamed class
members … may be parties for some purposes and not for others. The label ‘party’ does not
indicate an absolute characteristic, but rather a conclusion about the applicability of various
procedural rules that may differ based on context.”); see Fitzhenry-Russell v. Dr. Pepper
Snapple Group, Inc., No. 17-cv-564, 2017 WL 4224723, at *5 (N.D. Cal. September 22, 2017);
see also Wood, Adjudicatory Jurisdiction and Class Actions 62 IND. L. J. 597, 616-617 (1987).
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rev’d, --- S.W.3d ----, 2017 WL 3631704 (Ky. Aug. 24, 2017). The supreme court found that
“[t[he General Assembly did not create a special statutory proceeding brought under KRS
337.385. Therefore, we hold, as a matter of law, that CR 23 remains an available procedural
mechanism to McCann’s cause of action brought under KRS 337.385.” McCann, 2017 WL
3631704, at *4. Because Kentucky’s highest has held that KRS §337.385 authorizes class
actions, AMC’s motion to dismiss on this ground will be denied.
C.

Airline Deregulation Act Preemption

Congress passed the Airline Deregulation Act (“ADA”) in 1978 “to encourage,
develop, and attain an air transportation system which relies on competitive market forces to
determine the quality, variety, and price of air services.” Pub. L. No. 95-504, 92 Stat. 1705
(1978). “To ensure that the States would not undue federal deregulation with regulation of
their own,” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378 (1992), the ADA contains
an express preemption clause which provides:
[A] State, political subdivision of a State, or political authority of at least 2 States
may not enact or enforce a law, regulation, or other provision having the force
and effect related to a price, route, or service of an air carrier that may provide
air transportation under this subpart.
49 U.S.C. § 41713(b)(1) (emphasis added). This clause applies not only to state statutes but
also to state common-law claims. Nw., Inc. v. Ginsberg, 134 S.Ct. 1422, 1430 (2014).
“The words ‘related to,’ as used in this context, ‘express a broad pre-emptive purpose.’”
Wellons v, Nw. Airlines, Inc., 165 F.3d 493, 495 (6th Cir. 1999) (quoting Morales, 504 U.S. at
388). A claim relates to rates, routes, or services if it has “a connection with, or reference to
airline ‘rates, routes, or services.’” Morales, 504 U.S. at 384. However, “‘[s]ome state actions
may affect [airline fares, routes, or services] in to tenuous, remote, or peripheral a manner’ to
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have pre-emptive effect.” Id. at 390 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100
n. 21, (1983)) (alteration in original). Under this framework, “the state laws whose ‘effect’ is
‘forbidden’ under federal law are those with a ‘significant impact’ on carrier rates, routes, or
services.” Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364, 375 (2008) (quoting Morales,
504 U.S. at 388, 390).
AMC argues that the plaintiffs’ claims for violations of various state wage and hour
laws, unjust enrichment and retaliation are all “related to” the company’s rates, routes, or
services. It contends that the cost of labor clearly impacts how many employees AMC is able
to employ, and thus, the services it is able to provide, which in turn would also affect the rates
it must charge to air medical services. Additionally, AMC attempts to limit the analysis of
preemption to the time the employees sleep when on shift. However, the plaintiffs’ contend
that as employees they are often assigned by AMC to teach courses to healthcare providers in
their service area, attend training, work public relation events and other activities not related
to air operations. This results in an employee working more than the normally assigned fortyeight hours per week.
AMC relies heavily on Northwest, Inc. v. Ginsberg, 134 S.Ct. 1422 (2014), in support
of its argument. In Ginsberg, the Court considered whether a claim seeking reinstatement of
the plaintiff in an airline frequent flyer program related to rates, routes, or services. It found
there was clearly a connection with airline rates because the program confers benefits on the
user which eliminates or reduces the rate that a customer pays. Id. at 1431. Ginsberg is easily
distinguishable. Here, the plaintiff’s claims concern the payment of overtime wages under
state wage and hour laws. Comparing a breach of implied covenant claim seeking to restore
membership perks, (which would result in reduced or eliminated prices) to employee overtime
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payments highlights that even though wage laws in some way affect rates, routes, or services,
that connection is too tenuous, remote, and peripheral to be preemptive. See DiFiore v.
American Airlines, Inc., 646 F.3d 81, 87-88 (1st Cir. 2011) (holding that a tip law does more
than regulate an employment relationship because as applied the law “directly regulates how
an airline service is performed and how its price is displayed to customers—not merely how
the airline behaves as an employer…”); see also Californians for Safe & Competitive Dump
Truck Transp. v. Mendonca, 152 F.3d 1184, 1189 (9th Cir. 1998) (California wage law is not
preempted by the Federal Aviation Administration Authorization Act because, while the law
“in a certain sense is ‘related to’ … prices, routes and services, … effect is no more than
indirect, remote, and tenuous.”).
While some state actions are contrary to the preemptive purpose of the ADA, Congress
did not intend for the ADA to completely preempt all state actions in this area. The Court
concludes that this action is not preempted simply because the claims are asserted against an
air carrier. The state wage and hour laws regulate the employment relationship between AMC
and the plaintiffs. They do not have a sufficient connection with the rates, routes or services
of AMC to be preempted. Additionally, for the same reasons the wage and hour laws are not
“related to” rates, routes or services and are not preempted, the unjust enrichment claim and
retaliation claims are not preempted.
D.

Statute of Limitations

KRS § 413.120(2) provides a five-year statute of limitations for “[a]n action upon a
liability created by statute, when no other time is fixed by the statute creating the liability.”
Because the KWHA does not specify a statute of limitations for wage and hour claims, they

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are subject to a five-year statute of limitations. See Ivey v. McCreary Cnty. Fiscal Court, 939
F. Supp. 2d 762, 769 (E.D. K.y. 2013) (applying five- year statute of limitations from KRS §
413.120(2) to KWHA claim because “KRS Chapter 337 does not specify a separate statute of
limitations for such a claim.”) (quoting Metro Louisville/Jefferson Cnty. Govn’t v. Abma, 326
S.W.3d 1, 6 (Ky. Ct. App. 2009). In addition to the KWHA claims, the five year statute of
limitations also applies to plaintiffs’ unjust enrichment claims. See, e.g., Ellis v. Arrowood
Indemnity Co., No. 12-140-ART 2014 WL 2818458, at *7 (E.D. Ky. June 23, 2014) (citing
multiple decisions identifying KRS § 413.120 “as the appropriate statute of limitations for
unjust enrichment claims.”).
As with FLSA claims, the statute of limitations applicable to KWHS claims “effectively
cuts off claims for overtime pay which are more than five years removed from the filing date
of the plaintiffs' wage and hour claims.” Com. v. Hasken, 265 S.W.3d 215, 226
(Ky.Ct.App.2007), superseded, in part, by statute, Ky.Rev.Stat. § 95A.250 (2009), as
recognized in Madison Cnty. Fiscal Court v. Ky. Labor Cabinet, 352 S.W.3d 572, 577
(Ky.2011) (recognizing that 2009 amendment of KY. REV. STAT. § 95A.250 restored the
pre-Hasken method of calculating firefighters' overtime pay). However, Kentucky equitably
tolls its statute of limitations whenever the defendant’s wrongful conduct prevents a plaintiff
from discovery his or her claims. See Osborn v. Griffin, 865 F.3d 417, 437 (6th Cir. 2017)
(citing KSR 413.190(2)). The Kentucky Supreme Court has held that “the statute’s reference
to ‘other indirect means’ of obstruction of an action still requires an act or conduct that remains
‘affirmatively fraudulently.’” Emberton v. GMRI, Inc., 299 S.W.3d 565, 573 (Ky. 2009)
(citing Adams v. Ison, 249 S.W.2d 791, 792 (Ky. 1952). The defendant’s action must consists

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of some action or conduct which misleads or deceives the plaintiff and obstructs or prevents
him or her from bringing the suit before the statute of limitations runs. See id.
The plaintiffs argue that, due to alleged fraudulent representations by AMC, they were
unaware that they should be receiving overtime pay. As a result, they contend that the statute
of limitations should be tolled. They specifically assert that AMC misrepresented that it was
not required to pay overtime due to the National Railway Act. The plaintiffs rely on AMC’s
Employee Handbook in support of their argument that AMC fraudulently misrepresented it
was not obligated to pay overtime pay. The relevant portion states:
Under the Fair Labor Standards Act (FLSA), employees classified as nonexempt are eligible for overtime pay. However, Air Methods as an employer is
governed by the Railroad Labor Act (RLA). Under this Act, employees are
exempt from overtime pay.
[Record No. 5-2, p. 10; see id. at p. 9 (Railway Labor Act/Fair Labor Standard Act)]
The plaintiffs rely on Payne v. Tri-State Careflight, LLC, No. CIV 14-1044, 2016 WL
6396214 (D.N.M. Oct. 25, 2016), in support of this argument. However, in addition to its nonbinding nature, the plaintiffs have misstated the import of Payne as well as the language in the
employee handbook. The issue in Payne was whether the RLA demonstrated congressional
intent for field preemption of state wage and hour laws, not whether the employees were
exempt from overtime pay under federal wage law, which is what the AMC employee
handbook represents by directing the reader to the interplay between the FLSA and RLA.2 The

2

Section 213(b)(3) if the FLSA exempts from its overtime pay requirements “any employee
of a carrier by air subject to the provisions of Title II of the RLA.” 29 U.S.C. § 213(b)(3).
Title II of the RLA applies “to every common carrier by air engaged in interstate or foreign
commerce . . . .” 45 U.S.C. § 181. AMC is an air ambulance service operating pursuant to an
FAA Air Carrier Certificate authorizing it to operate as an air carrier and conduct common
carriage operations. Therefore, AMC is carrier by air subject to Title II of the RLA. See
Record No 5-2, p. 9.
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plaintiffs cannot rely on statements contained in the employee handbook regarding FLSA
overtime pay exemption to claim that they were unaware of state statutory rights to overtime
pay.
The plaintiffs conclude by suggesting that the issue of when they first learned of their
cause of action is a disputed material fact, which cannot be adjudicated at this time. They cite
Hasken v. City of Louisville, 173 F. Supp.2d 654 (W.D. Ky. 2001), to suggest that the when
they first learned of the cause of action is disputed. While Hasken dealt with employees
working the same type of 24 hour shifts as the current plaintiffs, little else is similar. There,
the court was faced with whether the FLSA claims were equitably tolled due to alleged errors
in the calculation of overtime pay, not failure to pay overtime pay all together. Hasken, 173
F. Supp.2d at 661-62. The issue here concerns AMC’s failure to pay overtime pay, not the
calculation method. The plaintiffs would have been aware of this failure at the end of each
pay period when they received their pay checks, lacking any overtime pay. See Cook v. United
States, 855 F.2d 848, 851 (Fed. Cir. 1988) (stating “a claim for unpaid overtime under the
FLSA accrues at the end of each pay period when it is not paid.”).
Applying the five-year statute of limitations, Davenport’s, Fryman’s, and Logsdon’s
claims must be dismissed, as they were not employed by AMC at any time after 2008, 2009,
and 2010 respectively. The claims of all other plaintiffs will be restricted to overtime hours
worked after March 22, 2012, or five years from the date the Complaint was filed.
E.

Unjust Enrichment Preemption

AMC next argues that the plaintiffs’ unjust enrichment claims are preempted by their
KWHA claims. “As a federal court applying state law, the court ‘anticipate[s] how the relevant

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state’s highest court would rule in this case and [is] bound by controlling decision of that
court.’” In re Amason.com, Inc., Fulfillment Ctr. Fair Labor Standards Act (FLSA) & Wage
& Hour Litig., 852 F.3d 601, 610 (6th Cir. 2017) (quoting In re Dow Corning Corp., 419 F.3d
543, 549 (6th Cir. 2005)). No Kentucky court has addressed this issue. As a result, this Court
is tasked to predict how the Supreme Court of Kentucky would rule if it were deciding this
question of state law. National Sur. Corp. v. Hartford Cas. Ins., Co., 493 F.3d 752, 755 (6th
Cir. 2007) (internal citation and quotation omitted).
A Kentucky statute may preempt the common law through field preemption. Grzyb v.
Evans, 700 S.W.2d 399, 401 (Ky.1985). Field preemption occurs “[w]here the statute both
declares the unlawful act and specifies the civil remedy available to the aggrieved party....”
Id.; see also, Hill v. Kentucky Lottery Corp., 327 S.W.3d 412, 421 (Ky.2010). There is no
field preemption, however, where “the elements of the common law cause [ ] of action bear no
resemblance to those intended to be embraced by the [statute].” McDonald's Corp. v. Osborn,
309 S.W.3d 274, 285–86 (Ky.App.2009). In Kentucky, field preemption turns largely on
whether a common law claim and a statutory claim are “substantially similar.” Id.; see also,
State Farm Mut. Auto. Ins. Co. v. Newburg Chiropractic, P.S.C., 683 F.Supp.2d 502, 508
(W.D.Ky.2010) (holding that preemption does not apply “where two statutes or causes of
action address different kinds of culpable behavior.”). Here, AMC argues that the KWHA
preempts plaintiffs’ unjust enrichment claim because both claims are based on the same alleged
conduct and the Act provides plaintiffs a civil remedy.
AMC fails to cite any case holding that the KWHA preempts any common law cause
of action. In response, the plaintiffs’ cite to another court in this district, Russell v. Citi, No.
12-16-DLB, 2012 WL 5947450 (E.D. Ky. Nov. 28, 2012), in support of their argument that
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their unjust enrichment claim is not preempted by the KWHA. In Russell, the court found that
only one Kentucky court has analyzed whether the KWHA preempts a common law claim. Id.
at *4 (citing Dodd v. Dyke Industries, Inc., No. 3:04-CV-226-H, 2008 WL 1884081 (W.D. Ky.
Apr. 28, 2008)). AMC does not cite Russell or Dodd, nor do they make any attempt to
distinguish them from the case at bar.
AMC cites Gryzby and Ogborn which dealt with the Kentucky Civil Rights Act and
preemption of claims “substantially similar.” However, this Court can find no Kentucky cases
extending those holdings and reasoning to the KWHA and common law claims. Lacking any
clear indication of how the Kentucky Supreme Court would decide this issue, this Court is
unwilling to predict that that KWHA preempts common law unjust enrichment claims.
Further, as the court held in Russell, assuming arguendo that the KWHA can preempt unjust
enrichment claims for overtime pay, it would be premature at this stage of the litigation to find
as such, because if the plaintiffs cannot establish that they are entitled to relief under the
KWHA, preemption of the unjust enrichment claims would not apply. See Russell, 2012 WL
5947450, at *5.
IV.

Based on the foregoing analysis, it is hereby
ORDERED as follows:
1.

Defendant Air Methods Corporation’s Motion to Dismiss [Record No. 4] is

GRANTED, in part, and DENIED, in part.
2.

The claims asserted by Plaintiffs Stephanie Logsdon, Leslie Fryman, and Sean

Davenport are DISMISSED, with prejudice.
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3.

Insofar as Count I and II are predicated on hours worked prior to March 22,

2012, those claims are DISMISSED, with prejudice. All other allegations of the remaining
plaintiffs encompassed by Count I, Count II, and Count III remain pending.
This 23rd day of October, 2017.

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