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Bensel v. Allied Pilots Association

December 17, 2009

LEROY "BUD" BENSEL, ET AL., PLAINTIFFS,
v.
ALLIED PILOTS ASSOCIATION ET AL., DEFENDANTS.



The opinion of the court was delivered by: Irenas, Senior District Judge

OPINION

This Second Amended Complaint arises under the provisions of the Railway Labor Act, 45 U.S.C. §§ 151--188. Plaintiffs, a class of former TWA pilots, allege the Air Line Pilots Association ("ALPA") breached its duty of fair representation owed to them during the TWA, Inc.-American Airlines assets acquisition. The gravamen of Plaintiffs' complaint is that ALPA's underlying conflict of interest in trying to merge unions with the American pilots, infected the entire process of the assets acquisition so much so that ALPA breached its duty of fair representation. Presently before the Court is Defendant's Motion for Summary Judgment. For the reasons set forth below, this Motion will be denied.*fn1

I.

A.

In early 2001, TWA, Inc. ("TWA") and American Airlines negotiated an asset purchase transaction.*fn2 TWA was in dire financial straits and American Airlines appeared to be its only and last financial hope before it succumbed to liquidation. Def. Statement of Material Facts (SMF) ¶ 14. ALPA was the certified exclusive collective bargaining agent for the Plaintiffs and all TWA pilots until April 3, 2002. About six months before TWA and American began negotiating the deal, in October, 2000, ALPA adopted a national policy to recruit independent pilot unions to come into its fold, including, but not limited to the American Airlines pilots represented by the Allied Pilots Association ("APA").*fn3 ALPA claims this organizing effort, specifically with regards to APA, was aborted in late January, 2001, because of the impending merger of TWA and American Airlines. Defendant's Motion for Summary Judgment (Def. Motion for SJ), 27.

The TWA Master Executive Council ("TWA-MEC") was the executive body of the local division of the ALPA. Second Amended Complaint ¶ 31.*fn4 For each airline at which it represents employees, ALPA sets up a MEC to serve as "the coordinating council for ALPA members at that airline." Ford v. Air Line Pilots Ass'n Intern., 268 F. Supp. 2d 271, 277 (E.D.N.Y. 2003).

Under the terms of the Asset Purchase Agreement, TWA was required to and did file for bankruptcy. SMF ¶ 8. The negotiating process of the Purchasing Agreement was therefore monitored by the Bankruptcy Court in Wilmington, Delaware, with the TWA-MEC representing the TWA pilots' interests. Second Amended Complaint ¶ 30. The TWA-MEC and ALPA both had their own independent advisors, including labor counsel, bankruptcy counsel, an investment banking firm, and an aviation consulting firm. SMF ¶ 30--31.

ALPA, the TWA pilots and TWA were all bound by a 1998 collective bargaining agreement ("CBA") which among other provisions required "the fair and equitable seniority integration of employees in the event of a merger or acquisition of TWA." Second Amended Complaint ¶ 36. This provision is known as a Labor Protective Provision ("LPP"). Part of American's offer to TWA was "the promise to hire nearly all of TWA's union-represented employees." Id. ¶ 12. But, American Airlines' offer was contingent upon the TWA-MEC waiving their LPPs contained in the 1998 CBA. American Airlines had its own binding CBA with APA, its pilots' union, which required any newly hired pilots be "stapled" to the bottom of the American pilots' seniority list. Id. ¶ 24. In other words, American Airlines seemed unwilling to break its own CBA with its pilots and would not hire the TWA pilots if they did not relinquish their seniority integration rights so as to comply with APA's stated contractual position. The APA, and its own CBA were the TWA pilots' biggest obstacle to retaining their LPPs for the future.

The TWA-MEC was willing to exchange their LPPs for another seniority integration process. However, if the LPPs were waived and no other agreement could be negotiated, then the TWA pilots' seniority would be governed by the APA-American CBA. Under this arrangement, TWA pilots with 7 or 8 years of experience might have less seniority than American pilots who had just been hired.

When, in early 2001, ALPA, with the TWA-MEC's approval, refused to agree to American Airline's request to remove the LPPs from the TWA pilots' CBA, TWA moved to reject the ALPA-TWA's CBA in its entirety under § 1113(c) of the Bankruptcy Code, 11 U.S.C. § 1113(c).*fn5 Fifteen days later, ALPA filed an objection to TWA's motion.

In spite of this objection, on April 2, 2001, the TWA-MEC (with the ALPA's approval and alleged coercion) adopted a resolution agreeing to eliminate the LPPs. As a result of this resolution, TWA withdrew its § 1113 motion, and the transaction between TWA and American Airlines closed on April 10, 2001. At this point, nearly all of the TWA pilots became employees of TWA LLC, a subsidiary entirely owned by American Airlines. American Airlines, concurrently with the TWA-MEC's agreement to waive the LPP, submitted a new CBA which was signed by TWA LLC and ALPA, representing the TWA pilots. In addition, American Airlines agreed in a letter to ALPA and the TWA-MEC that it would use its "reasonable best efforts" to come to an agreement with regard to seniority integration of the American and TWA pilots. SMF ¶ 40.

However, after months of attempting to find a middle ground in negotiations between APA and TWA-MEC, on November 8, 2001, APA and American Airlines executed an agreement ("Supplement CC") that imposed the default seniority integration formula on the TWA LLC pilots (as they were known after the purchase of TWA by American Airlines).*fn6 Second Amended Complaint ¶ 16. In essence, most of the TWA LLC pilots (with a few exceptions) were to be placed junior to the American pilots hired prior to April 10, 2001. Id.

In November, the National Mediation Board (NMB), at the behest of the APA, determined the operations of American Airlines and TWA LLC were sufficiently integrated so as to be a single employer for collective bargaining purposes.*fn7 With this determination, Supplement CC became binding upon the TWA LLC pilots. ALPA filed an opposition to the APA's petition on January 10, 2002.

The Aviation Workers' Rights Foundation, Inc. (AWRF), representing approximately 600 TWA pilots with the full support of the TWA-MEC, also filed an opposition with the NMB against APA's petition. They also submitted documents and a statement contending ALPA's conflict of interest (with regards to APA) so infected the TWA pilots' decision making process that "any seniority integration put in place by APA without agreement of the TWA pilots or neutral binding arbitration cannot be legitimate." SMF ¶ 75; Def. Att. 23, Exhibit 7, 4.*fn8 Regardless of these oppositions, the NMB determined the two companies were sufficiently integrated so as to be a single employer for collective bargaining purposes and Supplement CC became the new binding agreement for the former TWA pilots.

While this drama was unfolding, two American pilots, Mark Hunnibell and John Clark, organized a campaign to reunite APA and ALPA. They sent authorization cards to American pilots to request a vote on re-unification with ALPA in mid-May of 2001. They also were in contact with Ronald Rindfleisch, New Members Liaison for ALPA, on a regular basis throughout the winter of 2001, and well into the next year of 2002.*fn9 Ronald Rindfleisch, according at least to John Clark, was to be their "point of contact" at ALPA with regards to this campaign. Acchione Decl., Ex. 53. The correspondence between the two American pilots and those at ALPA covered a wide range of topics: the TWA-American Airlines merger, the authorization cards sent to APA members, and reimbursement for the two American pilots' costs.*fn10 However, ALPA insists it "did not bankroll, encourage or assist" the American pilots in any way. Plaintiffs, of course, disagree with this statement and allege ALPA misrepresented its position to them and misled them by concealing these relationships with APA members. Def. Motion for SJ, 3.

B.

This claim of breach of the duty of fair representation, under 45 U.S.C. §§ 151-188, is before this Court for the second time.*fn11 The first time Plaintiffs' claims were dismissed as failing for "statute of limitations reasons." Bensel v. Allied Pilots Association, 271 F. Supp. 2d 616, 624 (D.N.J. 2003) (hereinafter Bensel I). The Third Circuit reversed this decision and held that under the ray of hope doctrine, the statute of limitations did not preclude Plaintiffs' suit against ALPA:

"[A]t this stage of the proceedings Plaintiffs should be given a fuller opportunity for discovery . . . It may be that ALPA properly carried out its duty of fair representation and there was nothing ALPA could realistically accomplish under difficult circumstances. But it is too early to decide this issue at this point."

Bensel v. Allied Pilots Association, 387 F.3d 298, 312 (3d Cir. 2004)(hereinafter Bensel II).*fn12 .

Plaintiffs now allege ALPA made a number of material misrepresentations to induce the TWA-MEC to concede its LPPs and remove them from its contract. ALPA also, allegedly, did not inform the TWA-MEC of material facts including its involvement in an organizing campaign to bring American pilots into ALPA's representation. Specifically Plaintiffs allege ALPA made or permitted to be made the following false misrepresentations:

"a. that there was a 100 percent chance that TWA would win the section 1113 motion resulting in the TWA pilots losing everything including their bargaining agent, grievance procedures, and all other provisions of their CBA;

b. that if they [Plaintiffs] did not agree to concede their LPPs, American would walk from the deal and that they would again ...


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