Thibodeaux v. Executive Jet Intern., Inc.

Decision Date16 April 2003
Docket NumberNo. 01-31227.,01-31227.
Citation328 F.3d 742
PartiesLarry J. THIBODEAUX, Jr., individually and on behalf of all those similarly situated, Plaintiff-Appellee, v. EXECUTIVE JET INTERNATIONAL, INC., Defendant-Appellant.
CourtU.S. Court of Appeals — Fifth Circuit

Charles Scott LaBarre (argued), Gauthier, Downing, LaBarre, Beiser & Dean, Kenneth L. Tolar, Metairie, LA, for Plaintiff-Appellee.

Celeste Wasielewski (argued), Piper Rudnick, Washington, DC, George Phillip Shuler, III, Julie Dautreuil Savage, Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, LA, for Defendant-Appellant.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before DAVIS, BARKSDALE and DENNIS, Circuit Judges.

PER CURIAM:

Larry Thibodeaux, a flight attendant for Executive Jet International, Inc. ("EJI"), brought this action on behalf of himself and all other similarly situated flight attendants employed by EJI, alleging that they were denied the overtime compensation required by the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-19. The district court granted summary judgment in Thibodeaux's favor on the issue of liability under the Act. EJI appeals and contends that it is not liable for overtime compensation because § 13(b)(3) of the FLSA exempts Thibodeaux and his fellow flight attendants from the Act's overtime pay requirements. We agree. Accordingly, we reverse the district court's judgment and remand this case for entry of judgment in favor of EJI.

I. BACKGROUND

EJI has employed Larry Thibodeaux as a flight attendant since August 1998. On November 1, 2000, Thibodeaux brought this action against EJI seeking to recover unpaid overtime compensation under the FLSA. In his Complaint for Class Certification and for Damages, he alleged that he and similarly situated flight attendants regularly work over forty hours per week but are not paid overtime. Section 13(b)(3) of the FLSA provides, however, that the overtime provisions of the Act do not apply to "any employee of a carrier by air subject to the provisions of title II of the Railway Labor Act [(`RLA'), 45 U.S.C. §§ 181-88]."1 Those subject to Title II of the RLA include "every common carrier by air engaged in interstate or foreign commerce."2 Thus, EJI asserted in its answer to Thibodeaux's complaint that it is a "common carrier by air" subject to Title II of the RLA and that, as a consequence, it is not liable for overtime compensation. Determining whether EJI's defense is a valid one requires an appreciation of its business, the business of its parent and affiliate corporations, and its regulatory environment.

A. Executive Jet International, Inc., and Related Entities

EJI is engaged in the business of operating, maintaining, and managing Gulfstream IV and Gulfstream V aircraft that are fractionally owned or fractionally leased by persons or entities participating in a program known as "NetJets." EJI also provides air charter services with Gulfstream aircraft. EJI is a wholly-owned subsidiary of Executive Jet, Inc. EJI, in turn, owns EJI Sales, Inc., a company that sells and leases aircraft to EJI's customers. EJI has a facility in East Granby, Connecticut, and Bluffton, South Carolina, is its principal place of business.

EJI operates flights for customers under Parts 91 and 135 of the Federal Aviation Regulations ("FAR").3 Generally speaking, FAR Part 91 applies to private or non-commercial carriage. "Common carriers," on the other hand, have traditionally been subject to the more stringent safety standards of FAR Part 135. EJI operates its NetJets flights under Part 91 and its charter flights under a Part 135 Certificate issued by the Federal Aviation Administration ("FAA").

According to EJI, the duties and responsibilities of its flight attendants do not differ significantly from those of flight attendants employed by the major commercial airlines. As of March 2001, EJI employed ninety-eight flight attendants. Of this number, eight attendants were qualified under FAA rules and regulations to work on EJI's Part 135 charter flights in the capacity of "crewmembers." The remaining flight attendants, including Thibodeaux, worked flights operated under Part 91.

Executive Jet, Inc., also owns Executive Jet Aviation, Inc. ("EJA"), whose principal place of business is Columbus, Ohio. Like its sister EJI, EJA is engaged in the business of operating, maintaining, and managing aircraft that are fractionally owned or fractionally leased by persons or entities participating in the NetJets program. The aircraft used by EJA in the NetJets program are likewise purchased by its wholly owned subsidiary, Executive Jet Sales, Inc., and then sold or leased in fractions to EJA's customers. EJA also possesses a Part 135 Certificate, which permits it to conduct charter operations. The makes and models of aircraft currently operated by EJA are: Boeing 737, Cessna Citation V Ultra, Cessna Citation Excel, Cessna Citation VII, Cessna Citation X, Raytheon Hawker 800 XP, Raytheon Hawker 1000, and Dassault Falcon 2000.

With the exception of the type of aircraft, the record reflects little difference between the air charter operations conducted by EJA and EJI under their respective Part 135 Certificates. Similarly, with the exception of the type of aircraft, there is little difference between the nature of the owner-occupied or lessee-occupied flight operations conducted by EJA and EJI in the NetJets program pursuant to Part 91. Furthermore, each company's operations in the NetJets program far exceed its air charter operations. From 1999 to 2001, EJI operated only 2% of its flights under Part 135. It operated the remaining 98% of its flights under Part 91. EJA's operations are nearly proportional to those of its sister company.4 One important distinction between EJA and EJI makes these similarities significant to this case: EJA's employees are unionized, but those of its younger sister EJI are not.5

EJA's maintenance personnel have been represented for purposes of collective bargaining by the International Brotherhood of Teamsters, Airline Division, since 1971. The Teamsters' certification was issued by the National Mediation Board ("NMB"), the federal agency responsible for administering the RLA.6 The maintenance employees' terms and conditions of employment are governed by a collective bargaining agreement negotiated pursuant to the terms of the RLA. The Teamsters also represent EJA's pilots.

EJA employs flight attendants for the Falcon and Boeing aircraft it operates. All those attendants work on flights operated under Part 91. Prior to July 12, 2001, EJA's flight attendants were not represented by a labor organization. In December 1999, the NMB conducted an election among the attendants to determine whether they wanted to be represented by the Teamsters. Because less than a majority of the eligible employees cast valid ballots in the election, the NMB found no basis for certification and dismissed the Teamsters' application. But in May 2001 the Teamsters filed an application for investigation of a representation dispute with the NMB and sought another election. The NMB again exercised jurisdiction over EJA and oversaw the election. Ballots were counted on July 11, 2001, and a majority of flight attendants voted in favor of union representation.

This brief sketch of EJA's labor relations history reveals that the NMB has ruled on several occasions — most recently in July 2001 — that EJA is covered by Title II of the RLA and therefore subject to the jurisdiction of the Board.7 EJI contends that if EJA is a "common carrier by air" subject to the RLA, then it is likewise a covered carrier because its operations are virtually identical to those of EJA. Put differently, if a labor dispute that had the potential to interrupt commerce arose at EJI, the company contends that the NMB would have jurisdiction over the dispute just as it did over the disputes at EJA.

B. The NetJets Program

The NetJets program is marketed on the internet and in publications such as The Wall Street Journal, Business Week, Business Journal, Forbes, Cigar Aficionado, Fortune, and Town and Country. Marketing is also conducted through direct mail campaigns as well as at public and quasi-public events, such as the annual convention of the National Business Aviation Association, the Berkshire Hathaway annual shareholders meeting, the Paris Air Show, and the Farnborough Air Show.

A participant in the NetJets program will enter into three contracts. A customer interested in flying on a Gulfstream aircraft will enter into a Purchase Agreement or Lease Agreement with EJI Sales. The Lease Agreement is five years in duration and the leased share of the aircraft remains titled to EJI Sales. A customer who prefers a Boeing 737, Citation, Hawker, or Falcon aircraft will enter into a Purchase Agreement or Lease Agreement with Executive Jet Sales. The EJA Lease Agreement like the EJI Lease Agreement is five years in duration; the leased share of the aircraft remains titled to Executive Jet Sales.

Next, the customer will enter into a Management Agreement with either EJI or EJA, depending on the type of aircraft. The Management Agreement covers all services related to the aircraft. Thus, EJI provides pilots and flight attendants, as well as maintenance, flight planning, and other flight-related services, to owners or lessees of the Gulfstream aircraft.

The third contract is a Master Interchange Agreement between the customer and Executive Jet Services, Inc., a sister company of EJA and EJI. The Master Interchange Agreement permits an owner or lessee to use another owner's or lessee's aircraft in the event the aircraft in which he has a share is unavailable.

This alternative method of acquiring interests in aircraft has proved quite appealing to people or businesses who want ready access to air travel but cannot justify the purchase of a whole aircraft:

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