Kitty Hawk Air Cargo, Inc. v. Chao

Citations: 304 F. Supp. 2d 897; 9 Wage & Hour Cas.2d (BNA) 533; 2004 U.S. Dist. LEXIS 7528; 2004 WL 305603Docket: 3:01-cv-01356

Court: District Court, N.D. Texas; January 26, 2004; Federal District Court

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Kitty Hawk Air Cargo, Inc. sued Elaine L. Chao, Secretary of the U.S. Department of Labor, regarding wage determinations for airline pilots under the McNamara-O'Hara Service Contract Act (SCA). The U.S. Department of Labor's Wage and Hour Division (WHD) issued Wage Determination No. WD 95-0229, raising minimum wages for Kitty Hawk's pilots, which was challenged by the USPS and others on the basis of improper methodology and the claim that pilots are exempt from the SCA due to their professional status. The WHD reviewed the determination but did not address the exemption issue. The Administrative Review Board (ARB) subsequently remanded the matter to the WHD, which concluded that pilots do not qualify as professionals under the SCA, as they do not require a four-year college degree. This decision was appealed to the ARB, which upheld the WHD's ruling, asserting that pilots did not meet the criteria of performing work requiring advanced knowledge in a specific field. Kitty Hawk then appealed the ARB's decision to the U.S. District Court, which granted Kitty Hawk’s Motion for Summary Judgment and denied the Defendant’s Motion. Summary judgment is appropriate when no genuine issues of material fact exist, and the moving party is entitled to judgment as a matter of law.

A properly supported motion for summary judgment shifts the burden to the nonmovant, who must provide evidence demonstrating a genuine issue of material fact, rather than relying on mere allegations. All evidence must be viewed favorably toward the nonmovant. In the case of Kitty Hawk, the company claims its pilots qualify as exempt professionals under the Service Contract Act (SCA), which generally protects "service employees" and mandates minimum wage specifications for contracts involving service provision to the U.S. The SCA excludes individuals employed in bona fide executive, administrative, or professional capacities. 

To determine if an employee is a "professional," a three-prong test is applied, requiring that the employee’s primary duties involve advanced knowledge, the exercise of discretion and judgment, and compensation of at least $250 per week. Specific definitions of "professional" include "learned professionals," whose advanced knowledge must be acquired through prolonged study rather than experience and cannot be gained at the high school level. While an advanced degree serves as strong evidence of such qualifications, it is not the sole requirement.

Discretion and judgment involve evaluating different courses of action, unlike merely applying skills through prescribed procedures. The burden to prove exempt status lies with the employer, with exemptions interpreted narrowly against them. The court must review agency actions to ensure they are not arbitrary, capricious, or unlawful.

Kitty Hawk argues that its pilots meet the advanced knowledge requirement to be classified as professionals under the SCA. Citing the case Paul v. Petroleum Equipment Tools Co., the Fifth Circuit determined that a pilot with an ATP certificate and FAA licenses possesses the necessary advanced knowledge. The court emphasized that the substantial training required for a commercial license and instrument rating demonstrates a level of knowledge acquired through specialized instruction. Kitty Hawk supports its position with an affidavit from its Vice President, confirming that all pilots are FAA-trained and certified, with each captain holding the FAA's highest certification, the ATP certificate. The Department of Labor concedes that Kitty Hawk mandates ATP certification for new pilots and acknowledges that the qualifications of Kitty Hawk's pilots align with those of the pilot in Paul.

The Department of Labor contends that a college degree is necessary for professional status, except for registered nurses as explicitly noted in the regulations. However, the regulations indicate that the required knowledge cannot be obtained at a high school level, without specifying that it must come exclusively from a college education. The Fifth Circuit has ruled, as seen in Owsley, that a college degree is not a prerequisite for professional exemption. In Owsley, athletic trainers were deemed to meet the "learned prong" despite their educational background. The court upheld that extensive knowledge in relevant fields, such as aerodynamics and airplane operations, suffices for professional classification. This Court aligns with the Fifth Circuit's reasoning in Paul and rejects the Department of Labor's argument that a college degree is mandatory for professional status, deeming it too restrictive.

Kitty Hawk's pilots meet the professional exemption criteria under the Service Contract Act (SCA), satisfying the knowledge requirement. The Department of Labor's conclusion to the contrary is deemed arbitrary and unlawful. To qualify as exempt professionals, employees must also demonstrate discretion and judgment in their duties and meet a minimum salary requirement of at least $250 per week, excluding benefits. The Administrative Review Board (ARB) did not evaluate the discretion and judgment aspect because it found the pilots did not meet the knowledge requirement. However, this Court will assess whether Kitty Hawk’s pilots fulfill the discretion and judgment and salary tests. 

Evidence shows that Kitty Hawk's pilots perform at least thirty-five discretionary functions, exercising independent judgment in flight situations, which aligns with the criteria established in the Fifth Circuit’s decision in Paul. Thus, they meet the discretion and judgment test. Additionally, pilot salaries in 2002 ranged from $43,949 to $131,033, far exceeding the minimum salary requirement. Consequently, the Court concludes that Kitty Hawk's pilots satisfy both tests as a matter of law. The ARB's ruling that exempt professionals must hold a college degree is found to be arbitrary, leading to the Court's decision to set aside the ARB's actions and grant summary judgment in favor of Kitty Hawk. Plaintiffs' Motion is granted, and the Defendant's Motion is denied, with a judgment to be entered for Kitty Hawk. Counsel for Kitty Hawk is instructed to submit a proposed judgment within fifteen days.