Powers v. Pinnacle Airlines, Inc., 2003-AIR-12 (ALJ Mar. 5, 2003)

May 9, 2009

DOL Home > OALJ Home > USDOL/OALJ Reporter

USDOL/OALJ Reporter

Powers v. Pinnacle Airlines, Inc., 2003-AIR-12 (ALJ Mar. 5, 2003)

U.S. Department of Labor Office of Administrative Law Judges
800 K Street, NW, Suite 400-N
Washington, DC 20001-8002 DOL Seal

Issue Date: 05 March 2003

Case No.: 2003-AIR-12

In the Matter of

Coleen L. Powers,
Complainant

Pinnacle Airlines, Inc.,
Respondent

ORDER GRANTING RESPONDENT'S REQUEST FOR PARTIAL DISMISSAL
AND DENYING COMPLAINANT'S REQUEST FOR DEFAULT JUDGMENT

Background and Procedural History

This proceeding began when the Complainant, Coleen L. Powers, filed a complaint against the Respondent, Pinnacle Airlines, Inc., (Pinnacle), under the employee protection provisions of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21), 42 U.S.C. Section 42121. The Complainant alleged that she was harassed and intimidated by the Respondent in retaliation for voicing concerns about flight and duty time under Federal Aviation Regulations (FAR). On December 9, 2002, the Occupational Health and Safety Administration (OSHA) issued its findings after an investigation of the Complainant's allegations. OSHA concluded that the Respondent's actions did not rise to the level of harassment or intimidation, and that there was clear and convincing evidence that whatever actions the Respondent took were for legitimate non-discriminatory reasons. OSHA dismissed the complaint.

[Page 2]

The Complainant also alleged that the Respondent violated Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002 ("Sarbanes-Oxley"), 18 U.S.C. Section 1514A, because she raised concerns about the accuracy of the Respondent's on-time flight records and the fraudulent impact they had on stockholders. OSHA noted that the Respondent was not a publicly traded company, and that its impact on Northwest Airlines, a parent company, was questionable at best. OSHA further noted that there was no evidence of a material impact on stock worth or an adverse action. OSHA also dismissed this complaint.

On January 7, 2003, the Complainant requested a formal hearing before an Administrative Law Judge. The Complainant indicated that she was seeking relief under AIR 21 and Sarbanes-Oxley, as well as "the environmental whistleblower laws." The Complainant also styled the caption of her claim as "Ms. Coleen L. Powers v. Northwest Airlines & Pinnacle Airlines, Inc. d/b/a Northwest Airlink."

On January 31, 2003, counsel for the Respondent filed a response to my January 15, 2003 Preliminary Order, indicating, inter alia, that Pinnacle was the only respondent at the administrative level, and that counsel did not represent Northwest Airlines, Inc. in this matter. Counsel noted that the Complainant had no employment relationship with Northwest Airlines, Inc., a sister company of Pinnacle, nor did the Complainant assert that Northwest Airlines, Inc. or any of its employees took any action against her.

On February 7, 2003, the Respondent filed a Motion for Partial Dismissal and To Strike Punitive Damages Demand. The Complainant filed a response in opposition on February 7, 2003. On February 14, 2003, the Respondent filed a request for leave to file a reply.

On February 19, 2003, the Complainant filed her "Notice of Filing in Support of Complainant's February 7, 2003 Sworn Opposition to Respondents' February 7, 2003 Motions for Partial Dismissal and to Strike Punitive Damages."

On February 24, 2003, the Complainant filed an "Objection to Respondents' February 14, 2003 Letter-Motion Seeking Last Word on its own Motions, Motion to Require More Expeditious Service on Both Complainant and her Counsel and Complainant's Motion for Default Judgment Against Respondents Northwest Airlines, Inc., NWA, Inc. and Northwest Airlines Corp," and "Notice of Filing of Her Exhibit CX-2 )Respondents' Ex Parte September 26, 2002 OSHA Filing) and CX-3 (February 10, 2003 Northwest Airlink Memo on Two Management Resignations), and her Sworn Motions to Order Respondents to Adopt or Recant Respondents' "Declarations" in CX-2, Remand for Further OSHA Investigation Instanter, and/or Draw Adverse Inferences Against Respondents."

On February 27, 2003, the Complainant filed her Notice of Filing of Complainant's Exhibits CX-4, 5, 6, 7A-D, 8, 9.

After receiving leave of Court to file a reply, on February 28, 2003, the Respondent filed its Reply Brief in Support of its Motion for Partial Dismissal and to Strike Punitive Damages Demand, as well as its Motion to Strike Complainant's Surrebuttal Brief.

On March 3, 2003, the Respondent filed an Answer to Complainant's Motions Filed on February 18, 2003, and Submission Regarding Notice of Hearing and Pre-Hearing Order.

On March 4, 2003, the Complainant filed a "Response to Court's Order."

[Page 3]

DISCUSSION

Applicable Standard for Summary Judgment

The Rules of Practice and Procedure for administrative hearings before the Office of Administrative Law Judges, found at Title 29 C.F.R. Part 18, provide that an administrative law judge may enter summary judgment for either party if the pleadings, affidavits, material obtained by discovery, or other materials show that there is no genuine issue of material fact. Title 29 C.F.R. Section 18.40; Federal Rule of Civil Procedure 56(c).¹ Summary judgment is appropriate when the record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). No genuine issue of material fact exists when the "record taken nas a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The party moving for summary judgment has the burden of establishing the "absence of evidence to support the nonmoving party's case." Celotex Corp. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In reviewing a request for summary judgment, I must view all of the evidence in the light most favorable to the nonmoving party. Darrah v. City of Oak Park, 255 F.3d 301, 305 (6th Cir. 2001).

The Respondent is not a Publicly Traded Company, as Required by the Sarbanes-Oxley Act

The Sarbanes-Oxley Act provides:

No company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781), or that his required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 780(d), or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders . . . .

18 U.S.C. Section 1514A(a)(1).

The Respondent argues that the Complainant does not meet the criteria for protection under the Sarbanes-Oxley whistleblower provisions. First and foremost, the Respondent notes that it is not, and never has been, a publicly traded company. Respondent provided the sworn affidavit of Curtis E. Sawyer, the Chief Financial Officer for Pinnacle, in which Mr. Sawyer stated:

Pinnacle is not a publicly-traded company, nor is it even a direct subsidiary of a publicly-traded company. At the time the events in this matter occurred, Pinnacle was a wholly-owned subsidiary of NWA, Inc., a wholly-owned subsidiary of Northwest Airlines Holdings Corporation, which in turn is a wholly-owned subsidiary of Northwest Airlines Corporation.

Mr. Sawyer stated that, although Pinnacle considered going public through an Initial Public Offering in 2002, and filed pre-registration documents with the Securities and Exchange Commission, it subsequently decided not to pursue the IPO.

[Page 4]

The Complainant does not contest the fact that Pinnacle is not a publicly traded company. Rather, the Complainant has attempted to cure this deficiency by unilaterally adding Northwest Airlines, Inc. to the caption of the case. However, Northwest Airlines, Inc. is not a party to this case. The Complainant filed her complaint at the OSHA level against Pinnacle, not Northwest Airlines, Inc. The Complainant cannot get around the fact that her Employer, Pinnacle, is not a publicly traded company by unilaterally adding another corporate entity that is publicly traded, i.e., Northwest Airlines, Inc. as a respondent, after the investigation and determination by OSHA.

It appears that the Complainant, without leave of Court, has added Northwest Airlines, Inc., as a respondent in the hope that it can be found liable for the actions of its indirect subsidiary, Pinnacle. However, this ignores the general principle of corporate law that a parent corporation is not liable for the acts of its subsidiaries. In other words, the mere fact of a parent-subsidiary relationship between two corporations does not make one company liable for the torts of its affiliate. United States v. Bestfoods, et al., 524 U.S. 51, 61 (1998). Nor has the Complainant even alleged any facts that would justify piercing the corporate veil and ignoring the separate corporate entities.

Finally, any complaint against Northwest Airlines, Inc., is not only not properly before me, as it was not investigated and considered by OSHA, it is untimely, as it was made more than ninety days after the date of the alleged violation. Nor was the Complainant an employee of Northwest Airlines, Inc., as required by the Sarbanes-Oxley Act.²

Thus, while Northwest Airlines, Inc., as a publicly traded company, may be subject to actions under the Sarbanes-Oxley Act, it is not a respondent in this claim. As the Respondent, Pinnacle, is not a publicly traded company, it does not fall under the proscriptions of the Sarbanes-Oxley Act, and the Complainant cannot maintain an action under that statute.

Pinnacle, Inc. is the only Respondent in the Complainant's AIR 21 Claim

Again, the Complainant's attempt to include Northwest Airlines, Inc., or any company other than Pinnacle, as a respondent in this matter is improper. The only matter properly before me is the Complainant's complaint against Pinnacle, which was filed with and investigated by OSHA.

There is no Environmental Whistleblower Claim at Issue

This matter, as filed and investigated by OSHA, included a complaint against Pinnacle by the Complainant under AIR 21 and the whistleblower provisions of the Sarbanes-Oxley Act. No claim was filed by the Complainant under the federal environmental whistleblower laws, and no such claim is before me. Thus, the Complainant will not be entitled to any remedies under any of the environmental whistleblower laws, including punitive damages.

[Page 5]

CONCLUSION

Based on the above, I find that, as the undisputed facts show that the Respondent is not a publicly traded company, no action may be brought against it under the Sarbanes-Oxley Act. Thus, the Respondent's Motion for Partial Dismissal is GRANTED, and the Complainant's complaint under that statute is dismissed.

The Complainant's Motion for Default Judgment against Northwest Airlines, Inc., NWA, Inc., and Northwest Airlines Corp., none of which is a party in this matter, is DENIED.

With respect to the Claimant's claim under the provisions of AIR 21, the Complainant is instructed to list only Pinnacle as the Respondent in any future pleadings; the Court will not accept any future filings that list any other parties as a respondent.

SO ORDERED.

LINDA S. CHAPMAN
Administrative Law Judge

[ENDNOTES]

¹ Title 29 C.F.R. Part 18 provides that the Federal Rules of Civil Procedure apply to situations not controlled by Part 18 or rules of special application, and that an administrative law judge may take any appropriate action authorized by the Rules of Civil Procedure for the District Courts.

² [Editor's note: Footnote 2 is empty in the slip opinion].