United States District Court, D. Maine
ORDER ON DEFENDANTS' JOINT MOTION FOR SUMMARY
TORRESEN UNITED STATES CHIEF DISTRICT JUDGE
the Court is the Defendants' joint motion for summary
judgment pursuant to Federal Rule of Civil Procedure 56 (ECF
No. 100). For the reasons stated below, the Defendants'
joint motion for summary judgment is GRANTED IN PART and
DENIED IN PART.
following facts are based on the parties' joint statement
of material facts, which contains all of the parties'
statements of facts and responses. At the summary judgment
stage, I am obligated to view the facts in the light most
favorable to the non-moving party and make all reasonable
inferences in that party's favor. Johnson v. Univ. of
P.R., 714 F.3d 48, 52 (1st Cir. 2013).
class/collective action arises out of restoration work being
performed on a Lockheed L-1649A Super Star airplane (the
“Super Star”) at the Lewiston-Auburn Municipal
Airport in Auburn, Maine. The Plaintiffs are individuals who
performed work on the Super Star project.
Lufthansa Technik North America Holding Corp.
Lufthansa Technik North America Holding Corp.
(“LTNA”) falls within the corporate structure of
Deutsche Lufthansa AG (“Lufthansa”). Lufthansa
“is a global aviation group with approximately 540
subsidiaries, which are organized into five primary business
segments: Passenger Airline Group; Logistics; Maintenance,
Repair, and Overhaul (“MRO”); Catering; and IT
Services.” Joint Statement of Material Facts and Resp.
to Req. to Strike ¶ 1 (“JSMF”) (ECF No.
121). These business segments are referred to collectively as
the “Lufthansa Group, ” and Lufthansa is the
parent company of all Lufthansa Group entities. JSMF
events leading to this litigation began in December of 2007,
when the Deutsche Lufthansa Berlin-Stiftung
(“DLBS”), which is managed and controlled by
Lufthansa, acquired three Super Star airplanes. JSMF ¶¶
37, 39. DLBS then contracted with Lufthansa Technik AG
(“LHT”) “to overhaul and restore one of the
Super Stars to an airworthy condition.” JSMF ¶ 37.
LHT is a wholly owned subsidiary of Lufthansa, which provides
MRO services for civil aircraft. JSMF ¶ 6. LHT provides
integral services to the Passenger Airline Group, which is
LHT's single largest customer. JSMF ¶¶ 9-10.
LTNA is a wholly owned and controlled subsidiary of LHT. JSMF
¶ 13. LTNA does not operate any aircraft itself. JSMF
¶ 105; Defs.' Resp. to Pls.' Statement of
Material Fact ¶ 105 (“DRPSMF”). Instead,
LTNA performs MRO work on “the aircraft and components
used by Lufthansa German Airlines, . . . airlines that are
under common control by Deutsche Lufthansa AG, and other
external airlines.” JSMF ¶ 14. MRO “are
functions traditionally performed by airline employees in the
aircraft industry.” JSMF ¶ 53. The majority of
LTNA's MRO work is performed for passenger and freight
airlines through LTNA's Federal Airline Regulation Part
145 Repair Stations, which are located in Maine, California,
Florida, Oklahoma, and Puerto Rico. JSMF ¶¶ 15-16.
Global Aircraft Services, Inc.
Global Aircraft Services, Inc.
(“GAS”) is a Texas repair
company that services, maintains, and repairs aircraft fuel
systems. JSMF ¶ 83; Ex. 6 to Loc. Rule 56(h) Stip. Rec.
¶ 2 (“Ex. 6”) (ECF No.
122-6). Like LTNA, GAS does not operate any commercial
flights. JSMF ¶ 106.
Super Star Project
September of 2009, LTNA retained GAS “to deseal, change
fasteners and dome nuts, and reseal the wings of the Super
Star.” JSMF ¶ 80; Ex. 6, ¶ 3. After GAS was
retained, however, “it became clear that the extent of
the corrosion on other portions of the aircraft required more
work than GAS was able to provide.” JSMF ¶ 81.
Accordingly, LTNA requested that GAS “identify and
supply sheet metal contractors to perform repairs outside the
fuel system.” JSMF ¶ 82. “Although GAS's
ordinary business was limited to fuel systems, it agreed to
use its own repair-station license and contacts in the
industry to refer contractors to the Super Star
project.” JSMF ¶ 83.
referred contractors all signed the same agreement with GAS
to work as independent contractors restoring the Super Star
at an hourly rate. Ex. 3 to Loc. Rule 56(h) Stip. Rec.
57:10-20; 58:6-9 (“Ex. 3”) (ECF No. 122-3).
Christopher Venegas, the named Plaintiff, began working on
the Super Star project in early 2013. Ex. 11 to Loc. Rule
56(h) Stip. Rec. ¶ 3 (“Ex. 11”) (ECF No.
project involves the restoration of the Super Star at
LTNA's Auburn, Maine Repair Station, which is located on
the grounds of the Auburn-Lewiston Airport. JSMF ¶¶
47-48. The Super Star “is being modified to meet
current FAA standards for passenger safety.” JSMF
¶ 54. Accordingly, the work “is highly regulated
by the FAA.” JSMF ¶ 85. While the work was
initially performed through GAS's FAA Repair Station
authorization, the FAA required LTNA to have its own Repair
Station Certificate in 2010. JSMF ¶ 49. As the holder of
an Air Agency Certificate, LTNA must comply with “the
requirements of the Federal Aviation Regulations relating to
the establishment of an Air Agency and Repair Station.”
JSMF ¶ 51. Thus, LTNA's Director of Maintenance for
the project “is responsible for the overall operation
of the Repair Station[, ]” including “directing,
planning, and laying out the details of inspection standards,
methods, and procedures used by the repair station in
complying with all applicable Federal Aviation
Regulations.” JSMF ¶¶ 55-56.
discovery of hidden damage on the Super Star has extended the
project five years past its anticipated end date. JSMF ¶
66. The Super Star itself has not flown in at least ten
years, and the restoration project has now been ongoing for
seven years. JSMF ¶¶ 108, 111. The Plaintiffs in
this case have worked on the Super Star project only at the
Auburn-Lewiston Airport. JSMF ¶ 109. And LTNA has not
performed any additional work at the Auburn-Lewiston Airport
beyond working on the Super Star. JSMF ¶ 110.
majority of the work on the Super Star is performed by
workers designated as independent contractors, although there
are some LTNA employees who work on the project. See
JSMF ¶ 58. For his part, Venegas “worked on
fabricating parts, constructing the frame, installing various
parts, and inspecting parts that would be installed on the
Super Star.” JSMF ¶ 65. Although the type of sheet
metal work done on the Super Star was typical of the type of
work airlines perform to maintain passenger and cargo
aircraft, the licensing requirements were
different. Workers on the Super Star project did not
need an Airframe and Power Plant license, which would be
required if the work were performed for an airline. Pls.'
Resp. to Defs.' Statement of Material Fact ¶ 63
(“PRDSMF”); Pls.' Resp. to Defs.' Reply
Statement of Material fact ¶ 116
(“PRDRSMF”). “GAS's job advertisement
for ‘Aircraft Sheet Metal Contractors' states that
an Airframe and Power Plant license is not required.”
PRDSMF ¶ 63.
Super Star's Intended Use
DLBS and LSSG “are restoring the Super Star aircraft to
meet current FAA-standards for passenger
service.” JSMF ¶ 42. “Once the full
restoration is complete, the Super Star will provide paying
passengers with a unique service of traveling on one of
Deutsche Lufthansa AG's fleet of vintage aircraft, flying
both national and international routes.” JSMF ¶
43. Flights on the Super Star will operate as airplanes did
in the 1950s-at half the speed and half the altitude of
today's commercial airliners-“providing passengers
with a unique perspective of the landscapes below.”
JSMF ¶ 44. “The Super Star will also be presented
at airshows and exhibitions.” JSMF ¶ 45. And
ticket prices for flights on the Super Star “will be
priced on the basis of a break-even policy to directly
support the maintenance of the plane.” JSMF ¶ 46.
Consequences of Reclassifying the Plaintiffs as
employees are eligible for several different programs,
benefits, and plans through its parent company LHT. JSMF
¶¶ 17, 21-31. Examples of benefits include
membership in different plans, such as medical, dental, life,
accidental death/dismemberment, disability, and flexible
spending accounts. JSMF ¶ 18. LTNA offers its employees
three choices for health insurance with resulting
contributions from LTNA/LHT, depending on the selected
coverage. JSMF ¶¶ 19-20. After three months of
employment, LTNA employees can participate in LTNA's
401(k) Plan “which provides a 2% contribution above
what the employee contributes up to 7%.” JSMF ¶
26. Employees also receive flight privileges, including
reduced-fares on “Lufthansa, Star Alliance, and ZED
Partners” flights. JSMF ¶ 32. “Immediate
family members, companions, and a limited number of friends
can accompany the LTNA employee on these trips.” JSMF
¶ 32. In all, these benefits are “estimated to
increase LTNA's costs of employment on average of 30-40%
above the employee's regular pay.” JSMF ¶ 33.
Each contractor working on the Super Star project would be
entitled to these benefits if they were classified as LTNA
employees. JSMF ¶ 69.
the higher costs LTNA spends on employees, reclassifying all
of the workers on the Super Star project would impact the
project itself and the way that LTNA conducts its business.
JSMF 68. It is anticipated that reclassification
would make it difficult to engage a sufficient number of
workers to meet the Super Star's production schedule.
JSMF ¶ 71; PRDSMF ¶ 71. And because of the
unexpected costs that have already been incurred in restoring
the Super Star, it is “foreseeable that requiring LTNA
to reclassify all workers on the project as LTNA's
employees would put the completion of the Super Star project
in jeopardy.” JSMF ¶ 74. On the other hand, if the
project is completed, ticket prices for passengers may be
adjusted due to the higher costs associated with the project
and the completed Super Star's ongoing maintenance. JSMF
¶ 75; PRDSMF ¶ 75.
“costs generated during the overhaul of the Super
Star” are invoiced to DLBS and LSSG. JSMF ¶ 76.
Because of DLBS and LSSG's relationship with Lufthansa,
increased costs from the Super Star project could potentially
be borne by all entities in the Lufthansa Group. JSMF ¶
There is also a chance that increased costs could be passed
on to external airlines served by LTNA. JSMF ¶
GAS claims it would not have sent the contractors to Maine to
work on the Super Star project if it had been required to
classify them as employees. JSMF ¶¶ 72, 102.
Plaintiffs counter that GAS had not employed any workers as
independent contractors before its contract with LTNA and
that GAS sent both employees and independent contractors to
Maine. PRDSMF ¶¶ 72, 102.
Venegas filed suit in 2014 on behalf of himself and other
workers on the Super Star project alleging violations of
federal and Maine wage and hour laws. Compl. ¶¶
62-69 (ECF No. 1). The crux of Venegas's claims is that
GAS and LTNA (collectively, the “Defendants”)
misclassified him and other workers as independent
contractors, meaning they were not paid all legally-required
wages. Compl. ¶¶ 63-64, 66-68. In early 2015, I
conditionally certified a group of metal workers on the Super
Star project as a collective action under the federal Fair
Labor Standards Act. Order on Pl.'s Mot. for Conditional
Certification 8-9 (ECF No. 56).
on February 4, 2016, I granted the Plaintiffs' motion for
class certification with respect to their state law
claims and denied the Defendants' motions for
collective action decertification with respect to the
Plaintiffs' federal claims. Order on Pls.' Mot. for
Class Certification 1 (ECF No. 126). Both of the Defendants
have filed petitions for permission to appeal this Order
pursuant to Federal Rule of Civil Procedure 23(f) with the
United States Court of Appeals for the First Circuit. The
First Circuit has not yet ruled on the
petitions. For purposes of this summary judgment
motion only, the Defendants have assumed that the Plaintiffs
are employees under both state and federal law. Joint Mot.
for Summ. J. 2 n.2.
judgment is appropriate when there is no genuine dispute of
material fact and the moving party is entitled to judgment as
a matter of law. See Fed. R. Civ. P. 56(a). “A
dispute is genuine if the evidence about the fact is such
that a reasonable jury could resolve the point in favor of
the non-moving party.” Johnson, 714 F.3d at 52
(citation and quotations omitted). “A fact is material
if it has potential to determine the outcome of the
Plaintiffs' Complaint is twofold. In Count I, the
Plaintiffs claim that the Defendants failed to pay them
proper wages under 26 M.R.S.A. §§ 663, 664, 760.
Compl. ¶¶ 62-64. The Defendants maintain that these
state law claims are preempted by the Airline Deregulation
Act (the “ADA”). 49 U.S.C. § 41713. In Count
II, the Plaintiffs claim that the Defendants violated the
Fair Labor Standards Act of 1938 (the “FLSA”) by
failing to pay them overtime wages. 29 U.S.C. § 201;
Compl. ¶¶ 65-69. The Defendants contend that they
are exempt from paying overtime wages under the FLSA because
they are subject to the Railway Labor Act (the
“RLA”). 45 U.S.C. § 151. I address whether
summary judgment is appropriate as to each claim below
beginning with Count II.
Railway Labor Act Exemption-Count II
Overview of Railway Labor Act
§ 207 of the FLSA, the general rule is that an employee
must be paid at a rate of one and one-half times the
employee's regular pay for all hours worked in excess of
40 hours in a given workweek. 29 U.S.C. § 207. There are
exceptions to the general rule, see 29 U.S.C. §
213, but “exemptions [are] ‘narrowly construed
against the employers seeking to assert them, ' ”
and the “burden is on the employer to prove an
exemption from the FLSA's requirements.” Marzuq
v. Cadete Enter., Inc., 807 F.3d 431, 438 (1st Cir.
2015) (quoting Reich v. John Alden Life Ins. Co.,
126 F.3d 1, 7 (1st Cir. 1997)).
§ 213(b)(3) of the FLSA provides an exemption for
“any employee of a carrier by air subject to the
provisions of title II of the Railway Labor Act.”
Accordingly, if the Defendants are carriers by air, and thus
subject to the RLA, the FLSA's overtime requirements do
“creates a special scheme to govern the labor relations
of railroads and airlines because of their unique role in
serving the traveling and shipping public in interstate
commerce.” Verrett v. SABRE Grp., Inc., 70
F.Supp.2d 1277, 1281 (N.D. Okla. 1999). One of the purposes
of the RLA is to provide mechanisms for the resolution of
labor disputes. 45 U.S.C. § 151a. Parties subject to the
RLA must utilize its dispute resolution processes
“before resorting to self-help.” Cunningham
v. Elec. Data Sys. Corp., No. 06-cv-3530-RJH, 2010 WL
1223084, at *3 (S.D.N.Y. Mar. 30, 2010) [hereinafter
the RLA was initially limited to railroads, it was amended in
1936 to include air carriers. The RLA applies to:
[E]very common carrier by air engaged in interstate or
foreign commerce . . . and every air pilot or other person
who performs any work as an employee or subordinate official
of such carrier or carriers, subject to its or their
continuing authority to supervise and direct the manner of
rendition of his service.
45 U.S.C. § 181. The RLA defines “carrier”
broadly to include the carrier itself “and any
company which is directly or indirectly owned or controlled
by or under common control with any carrier . . .
.” 45 U.S.C. § 151, First. (emphasis added).
Entities that do not operate aircraft, sometimes referred to
as derivative carriers or carrier affiliates, can be subject
to the RLA if they are sufficiently connected to air
carriers. “When the activities of carrier affiliates
are necessary to the operations of an air carrier, and a
labor dispute at the affiliate could cripple airline
operations, those affiliates must be subject to the RLA
because such disruption is the very type of interruption to
air commerce the RLA was designed to prevent.”
Verrett, 70 F.Supp.2d at 1281.
determine whether an employer and its employees are subject
to the RLA when the employer itself is not engaged in the
common carriage of passengers by air, the National Mediation
Board (“NMB”) applies a two-part test:
First, the NMB determines whether the nature of the work is
that traditionally performed by employees of rail or air
carriers-the function test. Second, the NMB determines
whether the employer is directly or indirectly owned or
controlled by, or under common control with, a carrier or
carriers-the control test.
In re Int'l Cargo Mktg. Consultants, 31 NMB 396,
406 (June 18, 2004). “Both prongs must be satisfied in
order for the RLA exemption to apply.” Roca v.
Alphatech Aviation Servs., Inc., 960 F.Supp.2d 1368,
1372 (S.D. Fla. 2013). Accordingly, summary judgment is
proper if the Defendants have produced enough undisputed
evidence to satisfy both prongs of this test.