United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS April 16, 2003
For the Fifth Circuit Charles R. Fulbruge III
Clerk
No. 01-31227
LARRY J. THIBODEAUX, JR., individually and on behalf of all those
similarly situated,
Plaintiff – Appellee,
VERSUS
EXECUTIVE JET INTERNATIONAL, INC.,
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
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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,
1
29 U.S.C. § 213(b)(3).
2
45 U.S.C. § 181.
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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
3
See 14 C.F.R. §§ 91, 135.
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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
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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
4
In 1999, EJA operated approximately 3.7% of its flights under
Part 135; the remaining 96.3% of its flights were operated under
Part 91. In 2000 and 2001, approximately 3.4% of EJA’s flights
were operated under Part 135, while the remaining 96.6% of the
flights were operated under Part 91.
5
EJI was incorporated in 1995.
6
The district court correctly recognized that the NMB has
primary jurisdiction to determine the scope of the RLA.
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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
7
See, e.g., In the Matter of the Representation of Employees of
Executive Jet Aviation, Inc., 28 N.M.B. 471 (2001).
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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
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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:
By purchasing an interest in an aircraft that is part of
the [NetJets] program, an owner gains round-the-clock
access to a private jet at a fraction of the cost. In
addition to access to the aircraft in which it owns an
interest, it also has access to all other aircraft in the
program, as well as the support of a management company
that will handle all arrangements relating to
maintenance, crew hiring, and all administrative details
relating to the operation of a private aircraft.8
Under NetJets, neither EJI or EJA own the aircraft they
manage. Instead, each participant is an owner or a lessee that, in
the companies’ view, operates the aircraft for itself. EJI and EJA
simply provide the ancillary services that enable each owner to
8
Eileen M. Gleimer, When Less Can Be More: Fractional Ownership
of Aircraft—The Wings of the Future, 64 J. Air L. & Com. 979, 981
(1999).
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“operate.” The purported vesting of operational control in the
owner is critical to the operation of the NetJets aircraft under
FAR Part 91—the regulatory framework under which NetJets was
developed.9 NetJets was designed with this framework in mind
because Part 91’s operating rules are less restrictive than those
that apply to traditional commercial operators. Among other areas,
Parts 91 and 135 differ with respect to the size of airports that
can be used, criteria governing the hiring of flight crews, and
crew rest and duty requirements.10
FAR Part 91 was designed for non-commercial operations, but
NetJets does not comfortably fit within the traditional
understanding of private aviation. If EJI is deemed to be in
operational control of the aircraft it manages, then it would be
carrying passengers—namely the fractional owners and their
guests—and receiving compensation in the form of an hourly
operating cost plus the management fee it charges.11 If the FAA
adopted such a view, NetJets would be subject to the rules of Part
135, and those rules would dramatically affect its business.12
When the NetJets program began in 1986, however, FAA regional
9
See id. at 1002.
10
See id. at 1002–05.
11
See id. at 1002.
12
See id. at 1006 (“[C]ompliance with Part 135 would change the
fundamental nature of the operation of aircraft in fractional
ownership programs.”).
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officials concluded that NetJets could operate under Part 91.13 But
the rapid growth in the fractional ownership business has since
caused the FAA to rethink its position. The FAA’s study of the
issue resulted in a proposed rule that will soon govern the use of
aircraft in fractional ownership programs.14 Although this recent
development does not influence our decision, the foregoing
regulatory background is critical to understanding Thibodeaux’s
successful argument in the district court that EJI is not a common
carrier by air because it operates primarily under Part 91.
C. Proceedings in the District Court
EJI moved for summary judgment in the district court claiming
that § 13(b)(3) of the FLSA exempts it from overtime compensation
liability because it is a common carrier by air. In denying the
motion, the court first found that there were disputed issues of
material fact concerning whether EJI is a “common carrier by air”
subject to Title II of the RLA. More specifically, the court
declined to decide whether EJI is a common carrier based on an
analogy to its sister company EJA because there was no showing of
the percentages of flights that EJA operates under FAR Part 135 as
opposed to FAR Part 91. The court noted that only 2% of EJI’s
13
See id. at 1014.
14
See Regulation of Fractional Aircraft Ownership Programs and
On-Demand Operations, 66 Fed. Reg. 37,520 (July 18, 2001) (to be
codified at 14 C.F.R. pt. 91); see also Eileen M. Gleimer, The
Regulation of Fractional Ownership: Have the Wings of the Future
Been Clipped?, 67 J. Air L. & Com. 321 (2002).
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flights during the preceding three years were conducted under Part
135, while the rest were conducted under Part 91. In its view,
“EJI’s rather insubstantial charter operations under Part 135 . .
. could play a pivotal role in the ultimate determination of
whether or not EJI is a common carrier by air.” Second, the court
found that even if EJI is a common carrier by air, there was at
least a genuine issue of material fact as to whether Thibodeaux
spends more than 20% of his time each workweek performing
“nonexempt” work. In support of this finding, the court relied on
29 C.F.R. § 786.1, a regulation issued by the Department of Labor
providing that the § 13(b)(3) exemption applies even if an employee
performs some nonexempt work during the workweek so long as the
nonexempt work is not “substantial.” The regulation further
provides that nonexempt work is substantial if it occupies more
than 20% of the employee’s workweek. Suggesting that work
performed on Part 91 flights is nonexempt, the district court
concluded that the § 13(b)(3) exemption would be “defeated” if
Thibodeaux spends more than 20% of his workweek on Part 91 flights.
After the denial of its summary judgment motion, EJI moved for
reconsideration and supplied the district court with the EJA
operating percentages that it previously found missing from the
record. The court treated the motion as being filed under Rule
59(e) and refused to consider the supplemental information because
it was available to EJI when it filed its motion for summary
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judgment. But the court also stated that even if an analogy to EJA
indicates that EJI is a common carrier, “the court cannot conclude
as a matter of law that this exemption is applicable here because
there is at least a genuine issue of material fact as to whether
Plaintiff spends more than 20% of his time during the workweek
performing nonexempt work.” The court therefore denied the motion
for reconsideration.
Following the failure of its motion for reconsideration, EJI
requested a status conference with the district court. It conceded
that Thibodeaux spends 100% of his time performing work on Part 91
flights and that only questions of law remained. But Thibodeaux
had not filed a cross-motion for summary judgment, so EJI sought
the court’s guidance on how to proceed. The court held a status
conference and, on the following day, entered a Rule 54(b) judgment
in Thibodeaux’s favor on the liability portion of the case without
requiring him to file a motion for summary judgment. The court
concluded, as a matter of law, that EJI is not a “common carrier by
air” because it operates most of its flights under Part 91. The
court was “unpersuaded by EJI’s analogy to its sister company,
Executive Jet Aviation, Inc., to rule otherwise.” In addition, the
court found that even if EJI is a “common carrier by air,” thus
triggering the FLSA § 13(b)(3) exemption from overtime pay, “this
exemption is nevertheless inapplicable here because: (1)
Plaintiff’s work on Part 91 flights is ‘nonexempt’; and (2) such
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nonexempt work is ‘substantial’ because it occupies more than
twenty percent of the time worked by Plaintiff.”
EJI filed a notice of appeal from the district court’s Rule
54(b) judgment. Because the district court’s determination of
EJI’s liability under the FLSA was interlocutory in nature and not
within the scope of Rule 54(b), this court directed the parties to
brief the issue of appellate jurisdiction.15 In response, EJI filed
an unopposed motion to remand the case for certification of
judgment under 28 U.S.C. § 1292(b). This court granted the motion,
and the district court entered a § 1292(b) certification on remand.
This court then granted EJI leave to appeal from the district
court’s interlocutory order, which we now treat as a grant of
partial summary judgment limited to the issue of EJI’s liability.16
II. ANALYSIS
A. Standard of Review
This court reviews summary judgment de novo, applying the same
standards as the district court.17 Summary judgment is appropriate
when there is no genuine issue as to any material fact, and the
15
See Kaszuk v. Bakery & Confectionery Union & Indus. Int’l
Pension Fund, 791 F.2d 548, 553 (7th Cir. 1986) (“A decision that
fixes liability but not damages is not appealable, despite the
entry of an order under Rule 54(b).” (citing Liberty Mut. Ins. Co.
v. Wetzel, 424 U.S. 737 (1976))).
16
See Liberty Mut., 424 U.S. at 744.
17
Cochran v. B.J. Servs. Co. USA, 302 F.3d 499, 501 (5th Cir.
2002).
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moving party is entitled to judgment as a matter of law.18
B. Applicability of the Air Carrier Exemption to the FLSA
The FLSA generally requires employers to pay premium overtime
provisions to employees who work in excess of forty hours per
week.19 There are specific exemptions, however, to the overtime
requirements, including the exemption for “any employee of a
carrier by air subject to the provisions of title II of the Railway
Labor Act.”20 Those subject to Title II of the RLA include “every
common carrier by air engaged in interstate or foreign commerce .
. . .”21
Neither the RLA nor the FLSA defines the term “common carrier
by air.” In Woolsey v. National Transportation Safety Board, a
case involving the FAA’s revocation of a commercial pilot’s
certification, this court looked to the common law to determine
whether the pilot’s company, a small air carrier that specialized
in transporting musicians, was a “common carrier” subject to FAR
Part 135 or a private carrier subject to the less stringent
regulations of FAR Part 91.22 We found that “the crucial
determination in assessing the status of a carrier is whether the
18
Fed. R. Civ. P. 56(c).
19
See 29 U.S.C. § 207.
20
Id. § 213(b)(3).
21
45 U.S.C. § 181.
22
993 F.2d 516, 522 (5th Cir. 1993).
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carrier has held itself out to the public or to a definable segment
of the public as being willing to transport for hire,
indiscriminately.”23 And we emphasized that our test “is an
objective one, relying upon what the carrier actually does rather
than upon the label which the carrier attaches to its activity or
the purpose which motivates it.”24
The parties dispute the significance of the Woolsey case.
Thibodeaux cites as controlling our observation that “FAR Part 91
specifically excludes common carriers from its coverage, leaving
them subject to the more stringent safety standards of FAR Part
135.”25 In his view, which the district court embraced, EJI is not
a common carrier because it operates most of its flights under Part
91. But the Woolsey test for common carrier status does not refer
to the Federal Aviation Regulations. Indeed, the pilot in Woolsey
argued that his company was not a common carrier because it
designed its lease agreements with the musicians it transported
with an eye to compliance with the requirements of Part 91, but we
found that the company’s subjective intentions were not
controlling: “[W]hether or not the leases comport with the
requirements of FAR Part 91, the crucial question remains whether
[the company] acted as a common carrier with respect to the flights
23
Id. at 523.
24
Id. (internal quotation and citation omitted).
25
Id. at 521–22.
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in question.”26 Similarly, EJI’s belief that it can operate under
Part 91 would be unavailing if the FAA revoked the license of a
NetJets pilot for failure to comply with Part 135. The key inquiry
instead would be whether EJI held itself out to the public as being
willing to transport for hire.
EJI argues, on the other hand, that Woolsey is wholly
inapplicable because this case does not involve a license
revocation. It suggests that we look instead to the decisions of
the National Mediation Board for a definition of the term “common
carrier.” In the principal decision it cites, however, the NMB
recognized that the RLA does not define the phrase “common carrier
by air” and then looked to the common law for a definition, just as
this court did in Woolsey.27 Although the Board was not as concise
as this court, it identified the same factors and relied on some of
the same authorities. All in all, the Board’s definition of common
carrier does not materially differ from the test this court
established in Woolsey. Furthermore, in Valdivieso v. Atlas Air,
Inc., a case also involving the air carrier exemption to the FLSA,
the Eleventh Circuit determined the characteristics of a common
carrier by discussing Supreme Court and circuit court precedents
instead of NMB decisions.28 In fact, the Valdivieso court cited the
26
Id. at 518.
27
See In re Southern Air Transport, 8 N.M.B. 31 (1980).
28
305 F.3d 1283, 1286–87 (11th Cir. 2002).
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Woolsey decision.29 We therefore choose to apply our own test for
common carrier status to the facts of this case.
Turning, then, to the Woolsey test, Thibodeaux argues that EJI
satisfies neither its “holding out” nor its “transport for hire”
elements. He contends that there is no “holding out” because EJI
does not market the NetJets program. Instead, Executive Jet
Services, EJI’s sister company, conducts the program’s marketing
efforts. And Thibodeaux further contends that EJI does not
transport for hire because the company merely maintains and
operates aircraft for customers who own their airplanes. Thus,
Thibodeaux urges us to evaluate EJI’s operations narrowly rather
than focusing on the NetJets program as a whole.
A 1997 case from the Federal Circuit involving EJA supports
taking the broader approach. In Executive Jet Aviation, Inc. v.
United States, EJA appealed from a judgment of the Court of Federal
Claims that dismissed EJA’s action for a tax refund.30 The refund
that EJA sought represented the difference between the total air
transportation taxes that were paid pursuant to Internal Revenue
Code (“IRC”) § 4261 with respect to certain flights EJA conducted
for Texaco Air Services, a NetJets participant, and the total taxes
that would have been paid had the flights instead been subject to
29
See id.
30
125 F.3d 1463 (Fed. Cir. 1997).
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the IRC § 4041(c) fuel tax for non-commercial aviation.31 EJA
argued that it had to provide the means for conveyance in order for
Texaco Air’s flights to have been subject to the § 4261
transportation tax. In its view, which is very similar to
Thibodeaux’s, providing services that facilitate the use of an
aircraft by the person who owns it or has an independent right to
use it (i.e., Texaco Air) does not mean that the provider is in the
business of transporting persons for hire.32 Although EJA furnishes
flight-related services, NetJets participants like Texaco Air
provide the means for their own conveyance; they are in operational
control of the aircraft.
The Federal Circuit rejected the argument that Texaco Air’s
flights under the NetJets program were not subject to the
transportation tax because EJA did not own or lease the aircraft it
serviced. The court stated that “[t]he central question is whether
EJA was in the ‘business of transporting persons or property for
hire by air,’ for it is undisputed that neither Texaco nor any of
the other participants in the NetJets program were in such a
business.”33 After describing the NetJets program in some detail,
the court agreed with the Court of Federal Claims that there are
31
Id. at 1464. The transportation tax and the fuel tax for non-
commercial aviation are mutually exclusive. See id. at 1465.
32
Id. at 1467.
33
Id. at 1469 (quoting 26 U.S.C. § 4041(c)).
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“negligible differences between the NetJets aircraft interchange
program and the operation of a commercial air charter business.”34
Because the substance rather than the form of a transaction is
generally controlling for tax purposes, the court held that the
transportation tax was properly imposed:
While it is true that Texaco Air held legal title in
N111QS [(a Cessna Citation S/II jet aircraft)] to the
extent of its fifty percent ownership interest, the
agreements which framed the NetJets program placed
extensive limitations on the exercise of that interest.
At the same time, EJA coordinated all of N111QS’ flights
with the needs of the other participants in the
interchange program and reserved for itself exclusive use
of the aircraft for its charter service and for training
pilots when the aircraft was not being used by one of its
owners. Texaco Air’s highly circumscribed ownership
interest in N111QS simply was the vehicle through which
Texaco Air entered into, and was allowed to participate
in, an arrangement pursuant to which it obtained from EJA
transportation from one airport to another. We hold
that, through its NetJets program, EJA was in the
“business of transporting persons or property for hire by
air.” Accordingly, Texaco Air’s flights on N111QS and
other interchange aircraft were properly subject to the
air transportation tax of IRC § 4261.35
The text of the RLA suggests that a similar substance-over-
form analysis should apply here. In 1934, Congress amended the RLA
and expanded the definition of “carrier” to include carrier
affiliates that perform services related to transportation: “The
term ‘carrier’ includes any railroad . . . and any company which is
directly or indirectly owned or controlled by or under common
control with any carrier by railroad and which operates any
34
Id.
35
Id.
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equipment or facilities or performs any service . . . in connection
with the transportation . . . of property . . . by railroad.”36
This focus on the whole entity engaged in transportation indicates
that Congress sought “(1) to avoid the possibility that certain
employees could interrupt commerce with a strike, and (2) to
prevent a carrier covered by the RLA from evading the purposes of
the Act by spinning off components of its operation into
subsidiaries or related companies.”37 Title II of the RLA
establishes that any consequences flowing from § 151’s expansive
definition of the term “carrier” apply with equal force to common
carriers by air and their employees.38 Thus, in the air carrier
context, the affiliate prong of the § 151 definition results in RLA
coverage for carrier affiliates that do not fly aircraft for the
transportation of freight or passengers if their functions are
nevertheless related to air transportation.39 Here, EJI operates
36
45 U.S.C. § 151, First.
37
Verrett v. Sabre Group, Inc., 70 F. Supp. 2d 1277, 1281 (N.D.
Okla. 1999).
38
See 45 U.S.C. § 181 (extending the RLA to common carriers by
air); id. § 182 (“The duties, requirements, penalties, benefits,
and privileges prescribed and established by the provisions of
subchapter I of this chapter, except section 153 of this title,
shall apply to said carriers by air and their employees in the same
manner and to the same extent as though such carriers and their
employees were specifically included within the definition of
‘carrier’ and ‘employee’, respectively, in section 151 of this
title.”).
39
See, e.g., Verrett, 70 F. Supp. 2d at 1281–83 (holding that a
provider of customized management information services and computer
reservation services to affiliated and non-affiliated airlines was
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aircraft for the transportation of passengers, so the affiliate
cases are not entirely applicable.40 But because EJI, EJA, and
Executive Jet Services are each components of an air transportation
program, and the RLA has a “whole entity” focus, we will evaluate
the NetJets program to determine whether EJI is a common carrier.
The record reflects that NetJets is marketed on the internet,
through direct mail, in business and upscale publications, and at
public and quasi-public events. Despite these marketing efforts,
Thibodeaux argues that NetJets does not offer air transportation to
individuals or businesses indiscriminately and observes, in support
of this argument, that EJI has no regular schedule of flights nor
fixed fares for passengers on a per-flight basis. In Woolsey,
however, we found that uniform tariffs and regular flight schedules
are not essential characteristics of a common carrier: “While most
common carriers do utilize uniform tariffs applicable to all who
apply for service, we agree with the FAA that the absence of
tariffs or rate schedules, transportation only pursuant to
separately negotiated contracts, or occasional refusals to
a carrier subject to the RLA); District 6, Int’l Union of Indus.,
Serv., Transp. & Health Employees v. National Mediation Board, 139
F. Supp. 2d 557, 560–62 (S.D.N.Y. 2001) (holding that a catering
company under common control with an air carrier is also a carrier
subject to the RLA).
40
Nevertheless, EJI’s analogy to its sister EJA is persuasive.
Because the companies perform nearly identical operations, and the
NMB has asserted jurisdiction over EJA, if this court found that
EJI is not a common carrier then the two companies would be subject
to different labor–management regimes despite their similarities.
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transport, are not conclusive proof that the carrier is not a
common carrier.”41 “What is crucial is that the common carrier
defines itself through its own marketing efforts as being willing
to carry any member of that segment of the public which it
serves.”42 NetJets clearly satisfies this requirement. Although
its target customers represent a small segment of the general
population, the services that NetJets provides are offered
indiscriminately to any member of that segment willing to pay for
those services.43 Thus, NetJets satisfies the “holding out” prong
of the Woolsey test.
The final inquiry is whether NetJets constitutes a
transportation-for-hire business. The Federal Circuit answered yes
in its assessment of EJA’s participation in NetJets, and the
similar analysis that applies here leads us to conclude that,
through its participation in the NetJets program, EJI is in the
business of transporting persons for hire. A NetJets participant’s
“highly circumscribed” interest in the aircraft is simply the
vehicle through which he obtains transportation from EJI from one
41
Woolsey, 993 F.2d at 524 (internal quotation and citation
omitted).
42
Id.
43
See id. at 524 n.24 (“Only those carriers who affirmatively
hold themselves out to the public, either by advertising or by a
course of conduct evincing a willingness to serve members of the
general public (or a segment thereof) indiscriminately, so long as
they are willing to pay the fee of the carrier, will qualify as
common carriers.”).
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airport to another.44
In sum, because EJI “has held itself out . . . to a definable
segment of the public as being willing to transport for hire,
indiscriminately,” it qualifies as a “common carrier” and is
therefore subject to Title II of the RLA.45 And because it is
subject to the RLA, EJI’s employees are exempt from the overtime
provisions of the FLSA.46
C. The “Nonexempt Work” Enforcement Policy—29 C.F.R. § 786.1
Title 29 C.F.R. § 786.1, entitled “Enforcement policy
concerning performance of nonexempt work,” formalizes the position
of the Wage and Hour Division of the Department of Labor that the
§ 13(b)(3) exemption to the FLSA applies even if an employee
performs some “nonexempt” work during the workweek, unless the
amount of nonexempt work is “substantial”:
The Division has taken the position that the exemption
provided by section 13(b)(3) of the Fair Labor Standards
Act of 1938, as amended, will be deemed applicable even
though some nonexempt work (that is, work of a nature
other than that which characterizes the exemption) is
performed by the employee during the workweek, unless the
amount of such nonexempt work is substantial. For
enforcement purposes, the amount of nonexempt work will
be considered substantial if it occupies more than 20
percent of the time worked by the employed during the
workweek.47
44
Executive Jet Aviation, Inc., 125 F.3d at 1469.
45
Woolsey, 993 F.2d at 523.
46
See 29 U.S.C. § 213(b)(3).
47
29 C.F.R. § 786.1.
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The district court found that even if EJI is a “common carrier by
air,” the § 13(b)(3) exemption is inapplicable because Thibodeaux’s
work on Part 91 flights is nonexempt, and this nonexempt work is
substantial because it occupies 100% of his workweek. This
finding, however, is incorrect.
First, the district court erred by equating nonexempt work
with service on flights operated under Part 91. Apart from the
fact that § 786.1 does not mention the FAR, by defining “nonexempt
work” in relation to the FAA’s regulations, the district court
overlooked the Department of Labor’s definition of that term.
“Nonexempt work” is “work of a nature other than that which
characterizes the exemption.”48 Section 13(b)(3) of the FLSA
exempts employees of air carriers that are subject to the RLA. “In
adopting the Railway Labor Act, Congress endeavored to bring about
stable relationships between labor and management in this most
important national industry.”49 In other words, “[t]he purpose of
the restrictive provisions of the Railway Labor Act is to keep
transportation moving.”50 It therefore follows that an employee
whose work is not directly related to the air transportation
activities of his employer performs “work of a nature other than
48
Id.
49
Bhd. of R.R. Trainmen v. Chicago River & Ind. R.R. Co., 353
U.S. 30, 40 (1957).
50
Pan Am. World Airways, Inc. v. United Bhd. of Carpenters &
Joiners of Am., 324 F.2d 217, 220 (9th Cir. 1963).
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that which characterizes the exemption.” Conversely, an employee
whose duties are directly related to air transportation performs
work that qualifies for coverage under the RLA.51 In short, the
applicability of the § 13(b)(3) exemption depends on both the
nature of the employee’s duties and the nature of the employer’s
business—not the FAR.
Second, because the district court did not apply the proper
definition of “nonexempt work,” it never determined whether
Thibodeaux’s work is transportation related. This inquiry is an
easy one, for Thibodeaux does not argue that the particular duties
he performs are unrelated to EJI’s transportation activities.
Because a flight attendant employed by a common carrier will
generally perform work that qualifies for coverage under the RLA,
and Thibodeaux has made no showing to the contrary, § 786.1 does
not “defeat” Thibodeaux’s exemption from the overtime provisions of
the FLSA.
III. CONCLUSION
In granting summary judgment to Thibodeaux, the district court
relied too heavily on the Federal Aviation Regulations. The Fair
Labor Standards Act and the Railway Labor Act provide the
51
See, e.g., Valdivieso, 305 F.3d at 1287 (11th Cir. 2002)
(“Appellants do not dispute that their positions as loadmasters are
integral to the transportation of cargo; therefore, these positions
are included in the air carrier exemption to the FLSA.”).
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substantive law relevant to this dispute. Because EJI is a “common
carrier by air” subject to Title II of the RLA, the FLSA exempts
the company’s flight attendants from its overtime requirements. We
therefore reverse the district court’s judgment and remand this
case for the entry of judgment in favor of EJI.
REVERSED AND REMANDED WITH INSTRUCTIONS.
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