Wednesday, July 18, 2012

Hester v. Vision Airlines (9th Cir. - July 18, 2012)

It's the summertime.  Few academic responsibilities apart from writing.  Living in San Diego, where the weather is perfect.  Staring at the wide Pacific Ocean.  Beautiful.  It's even my birthday -- and my son, Henry, turned three yesterday -- so life is wonderful.  That's my day today.

By contrast, let's see how the morning went for Vision Airlines and its Las Vegas attorney, Harold Gewerter.  Here's how the Ninth Circuit describes the case:

"Appellant Gerald Hester, a former pilot for Vision Airlines, sued Vision on behalf of a Class of other pilots and flight crew employees to recover “hazard pay,” which Hester and the Class alleged Vision had accepted on their behalf and never paid to them. After nearly two years of discovery disputes between Vision and the Class, the district court sanctioned Vision by striking its Answer, entered default judgment against Vision, and held a jury trial to determine damages.

Vision appeals, arguing (1) that the district court abused its discretion by striking Vision’s Answer, (2) that the claims in the Complaint are legally insufficient to support the default judgment, and (3) that the district court abused its discretion by certifying the Class. We reject Vision’s arguments and affirm those orders. The Class cross-appeals, arguing that the district court erred in dismissing, on the morning of trial, the Class’s claim for punitive damages. We agree and reverse the order dismissing the Class’s claim for punitive damages.

During the U.S. military occupation of Iraq and Afghanistan, the United States established an “air bridge” to deliver supplies through war zones to U.S. posts in Baghdad, Iraq, and Kabul, Afghanistan. The United States contracted with private airlines to deliver supplies to those posts, and it provided “hazard pay” for the pilots and crew members of those airlines.

In 2004, the United States contracted with Capital Aviation to provide bi-weekly flights to Baghdad and Kabul. The contract provided one set of funds for the flight services by Capital Aviation and another set of funds for the hazard pay for the pilots and crew members.

Pursuant to the contract, every pilot, first officer, and international relief officer was to receive $5000 in hazard pay per round-trip flight. Every other crew member on the flights, including attendants and mechanics, was to receive $3000 in hazard pay per round trip. The contract contained a “pass-through” provision to ensure that the hazard pay actually made it to the pilots and crew members who were risking their lives by transporting supplies through war zones. The pass-through provision required Capital Aviation to pass the hazard pay through to any subcontractors, who were also required to pass the hazard pay through to their employees without taking a cut for themselves.

Capital Aviation subcontracted with Vision Airlines to provide the flights to and from Baghdad and Kabul. For the average round-trip flight, Capital Aviation received from the United States $27,000 in hazard pay on behalf of the pilots and crew members. Capital Aviation then paid that full amount to Vision.

In the summer of 2005, at the beginning of Vision’s performance under the contract, Vision did pay some of the hazard pay to its pilots, but by August of that year, Vision stopped paying hazard pay to any of its employees, and it kept the money for its own benefit. In addition to ceasing its intermittent distribution of hazard pay, Vision also fired all pilots and crew members who knew about or had previously received hazard pay, and it replaced them with employees who were unaware that they were entitled to it."

Now, I'm no lawyer -- actually, I am -- but that seems like a darn good class action to me.  And from the way the Ninth Circuit's describing the case, I'm thinking that they may have the same reaction.  One that is not exactly in Vision's favor.  The Company seems . . . well, is "evil" too strong a word?

I need not describe the resulting years of discovery disputes in detail.  Which essentially amount to plaintiffs saying things like "Can I please have any documents that relate to hazard pay?" and defendants saying "I do not know what you're talking about."  Even though documents totally exist, the district judge starts realizing what's going on, and the result's exactly as the Ninth Circuit describes:  entry of default.  Read the opinion for more.  It's a study in how discovery should not be conducted.

Suffice it to say that the opinion holds not only the the entry of default was proper, but that the class was entitled to seek punitive damages, so it keeps its $5 million-plus judgment and gets to go after some more money in punitives on remand.

And then the Ninth Circuit ends the opinion with this paragraph:

"As a final note, based on the record before us, Harold Gewerter appears to have committed numerous ethical violations. We recommend that the district court, in the exercise of its discretion, report Mr. Gewerter to the state bar to determine whether disbarment or some other sanction is merited."

When the Ninth Circuit ends its opinion by suggesting not only sanctions, but your potential "disbarment," I think we can all agree that's not exactly a banner day.

For you, anyway.  Meanwhile, in San Diego, life is good.  Turning 46 is a lot better than watching a client get spanked for millions, face getting spanked for millions more, and contemplating being disbarred.