NEWSLETTER

The Seventh Circuit has affirmed a lower court’s judgment in favor of American Airlines, finding that it did not violate the Age Discrimination in Employment Act (ADEA) when it reassigned two flight engineers (ages 70 and 75) to lower paying jobs after it phased out the flight engineer position. See Miller v. American Airlines, Inc. (May 5, 2008). In reaching this decision, the Seventh Circuit upheld that trial court’s decision that the resolution of the claim required an interpretation of the collective bargaining agreement (CBA) and was, therefore, a minor dispute under the RLA.

The plaintiffs were hired by American in the 1950’s to work as flight engineers. The airline ultimately phased out the flight engineer position, but agreed to a provision in the CBA that guaranteed surplus flight engineers a job with a fixed monthly salary based on the individual’s average earnings for the previous twelve months as a flight engineer, until the normal flight engineer retirement date. At the time the provision was implemented, the “normal flight engineer retirement date” was set by the American Airlines’ Retirement Benefit Plan as age 65.

In 2002, American grounded the last of its three-crew airplanes. At this time, American offered the plaintiffs, who were ages 70 and 75, staff assistant positions in its publications department, which paid $100,000 less than their salaries as flight engineers.

The plaintiffs filed suit in federal court, claiming American violated the ADEA when it did not offer them positions with salaries comparable to that of their flight engineer jobs. The court held that the claims involved a minor dispute over terms in a collective bargaining agreement and, therefore, were preempted by the RLA. Thus, it ordered the case stayed until the parties completed arbitration.

The arbitrator determined that American was not required to offer the plaintiffs positions at a comparable salary because the CBA provision only guaranteed flight engineer pay until normal retirement age, which the arbitrator determined was 65. The federal trial court adopted the arbitrator’s findings that the CBA did not guarantee flight engineer pay past age 65.

The Seventh Circuit upheld the lower court’s determination that the resolution of the plaintiffs’ ADEA claim was dependent upon the interpretation of the phrase “normal flight engineer retirement date” in the CBA. Thus, the claim was governed by the arbitration provisions of the RLA and the courts were bound by the arbitrator’s interpretation that the phrase does not require comparable pay past age 65. The Seventh Circuit noted that it was not suggesting that employees are always precluded from bringing an ADEA claim in federal court if the dispute involves a collective bargaining agreement, but “if the success of the claim is dependent upon an interpretation of the collective bargaining agreement's terms, the court cannot consider it.”

The Ninth Circuit has held that the National Labor Relations Board (NLRB) erred in asserting jurisdiction to determine a dispute among ALPA, DHL, and ABX Air Inc. See Air Line Pilots Association v. NLRB. The court held that this case is fundamentally a Railway Labor Act (RLA) dispute and, thus, exempt from the National Labor Relations Act (NLRA).

This case arose from the restructuring of the DHL entities and the acquisition by DHL of certain other companies. ALPA represents pilots employed by DHL Airways. At the time ALPA was certified as the pilots’ representative, DHL Airways was a wholly owned subsidiary of DHL Holdings.

In 1998 ALPA and DHL Airways entered into a collective bargaining agreement, the Scope clause of which provided, in part, that “all present and future flying performed on [DHL Airways'] behalf ... shall be performed by [DHL Airways'] pilots.” DHL Holdings subsequently agreed in a Side Letter Agreement that it and any of its successors would be bound by the Scope Clause. Subsequently, DHL Airways was sold and the new owners changed the company’s name to ASTAR Air Cargo Inc.

In March 2003, DHL Holdings’ parent company announced an agreement to merge with Airborne, Inc. Like the DHL Holdings network, Airborne was engaged in the business of time-sensitive delivery of documents, small packages, and other freight. Airborne had its own flying subsidiary, ABX. ABX pilots are represented by the Teamsters and governed by the RLA. When the merger was completed on August 15, 2003, ABX became an independent company and Airborne, consisting only of ground operations, became a wholly-owned subsidiary of DHL Holdings.

Before the DHL/Airborne merger was completed, ALPA sent DHL Holdings a letter asserting that the flying generated by the former Airborne operations would be subject to the scope provisions of the DHL Airways (now ASTAR) collective bargaining agreement. Ultimately, DHL Holdings filed an action in federal court, seeking either a declaratory judgment stating that the collective bargaining agreement did not require that ASTAR perform future flying on behalf of Airborne or, alternatively, finding that the dispute was a representation dispute within the exclusive jurisdiction of the National Mediation Board.

While this claim was pending in federal court, ABX filed a charge with the NLRB against ALPA claiming that by filing the grievance and attempting to force DHL Holdings not to do business with ABX, ALPA violated the secondary boycott prohibitions of the NLRA. The federal court action was stayed pending resolution of the NLRB charge.

The NLRB found that ALPA violated the NLRA’s secondary boycott provisions. Although the U.S. Supreme Court held in Jacksonville Terminal that the NLRB does not have jurisdiction over disputes involving organizations subject to the RLA, the Board reasoned that Jacksonville Terminal did not apply in this case. According to the Board, this is not a “pure” RLA dispute because ALPA is an NLRA labor organization (it represents employees of an NLRA employer, who are not involved in this action) and DHL Holdings is an NLRA-covered employer.

The Ninth Circuit reversed this decision, finding that the NLRB misapplied the law of Jacksonville Terminal. The Ninth Circuit held that the charge before the NLRB reflected a dispute between a traditional railway labor organization (ALPA), acting on behalf of employees subject to the RLA (ASTAR pilots), and a carrier subject to the RLA (ABX). Acknowledging that the dispute between ABX and ALPA is the primary dispute in this case, the court found the underlying dispute between ALPA and DHL Holdings – whether DHL Holdings is still bound by the collective bargaining agreement and the Side Letter Agreement – instructive in understanding the ABX/ALPA dispute.

The court held that it is less the case that ALPA (an RLA labor organization) chose to embroil DHL Holdings (a NLRA employer) in this dispute; rather, ABX interfered in an existing dispute between ALPA and DHL Holdings – which ALPA and DHL Holdings were already working to resolve pursuant to the RLA, and which involved RLA employees. “Substantively, both the dispute between DHL Holdings and ALPA, and the present dispute between ABX and ALPA in which ALPA ‘enmeshed’ DHL Holdings, are ‘pure’ Railway Labor Act disputes.”

Thus, the Ninth Circuit found that this dispute is exempt from the NLRA and set aside the NLRB’s order finding that ALPA violated the NLRA’s secondary boycott provisions.

A federal court in Texas has held that a group of corporate pilots failed to show they were subjected to age discrimination when they were forced to retire at age 60. See EEOC v. Exxon Mobil Corp. (N.D. Tex, April 28, 2008). In ruling for the employer, the court held that the employer’s policy is a bona fide occupational qualification (BFOQ) and does not violate the Age Discrimination in Employment Act (ADEA). The court also held that the employer’s reliance on the Federal Aviation Administration (FAA)’s age 60 rule is probative of a BFOQ because the work performed by the corporate pilots is congruent with the work performed by commercial pilots in all material ways.

In this case, several pilots who were required by company policy to retire when they turned 60 filed charges of discrimination with the EEOC, claiming their terminations violated the ADEA. The ADEA prohibits employers from discriminating against employees who are age 40 and older on the basis of age; however, the law permits an employer to discharge an employee on the basis of age when age is a BFOQ.

The EEOC found that the company discriminated against the pilots in violation of the ADEA and subsequently filed suit on behalf of the pilots, seeking, among other things, an order prohibiting Exxon from enforcing its mandatory retirement policy. In our September 2007 Airline Newsletter, we discussed the court’s decision denying this request.

At the time the lawsuit was filed, Exxon’s mandatory retirement policy mirrored the FAA’s rule for commercial pilots, which prohibited them from flying past age 60. Since the lawsuit was filed, Congress passed the Fair Treatment for Experienced Pilots Act (FTEPA), which raised the mandatory retirement age for commercial pilots to 65, subject to certain limitations for international flights. Exxon has since altered its retirement policy to mirror the new rule enacted by Congress.

In its recent order granting judgment in favor of Exxon, the court noted that the passage of the FTEPA does not change its analysis from the earlier order denying the preliminary injunction. In order to prevail on a BFOQ defense, an employer must show that the age limit is reasonably necessary to the essence of the business. The employer must also demonstrate that all or substantially all of the individuals excluded from the job are in fact disqualified, or that some excluded individuals possess a disqualifying trait that cannot be ascertained except by reference to age because it is impossible or highly impractical to deal with employees on an individualized basis.

Exxon argued that its reliance on the FAA’s rule prohibiting pilots from flying after they reach a certain age is probative evidence that its mandatory retirement age is a BFOQ. In addressing this issue, the court examined the congruity between the occupations at issue and the weight of the evidence supporting the FAA rule’s rationale. Here, the court focused on whether the safety concerns that motivate the FAA rule are equally applicable to Exxon and its aircraft.

The court noted that the aircraft flown by Exxon pilots, including four Bombardier Global Express jets and five Bombardier Challenger 300 jets, are similar in terms of speed and range to those flown by commercial pilots. The court also found that Exxon’s pilots are substantially similar to commercial pilots in terms of experience, qualifications and job responsibilities. Further, the court held that the fact that Exxon’s aviation department may have a different purpose than commercial airlines is not a material difference.

Accordingly, the court held that the vast majority of safety concerns that apply to commercial airline pilots apply with equal force to Exxon’s pilots. “Most fundamentally, a concern that as a pilot’s skills deteriorate with age the risk of an accident increases applies to both commercial pilots and Exxon’s pilots.”

The court concluded that the worked performed by Exxon’s pilots is congruent with the work performed by commercial airline pilots in all material ways. Consequently, the court found the FAA’s age-related rule to be highly probative of Exxon’s BFOQ defense. Thus, the court held that Exxon established its BFOQ defense and, accordingly, granted judgment in favor of the company on the pilots’ age discrimination claims.

American Airlines and the Department of Justice (DOJ) have reached an agreement to settle the DOJ’s claims that the airline violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by restricting the rights of pilots on military leave to earn vacation and sick leave benefits. See Woodall v. American Airlines, Inc. USERRA prohibits discrimination based on military service, requires employers to grant a military leaves of absence to qualifying military service members, requires reinstatement of the service members upon their completion of military service, and prohibits retaliation for taking military leave or serving in the military.

The DOJ claimed American classified pilots who were on military leave in 2001 as “absent on leave” rather than “in service,” which meant that those on military leave did not accumulate credit for sick leave or earn as much vacation time as those in service. The DOJ claimed this practice violated USERRA and filed a class action against the airline. This was the first class action filed by the DOJ under USERRA.

American has denied any violation of USERRA but has agreed to injunctive and monetary benefits to resolve the suit. Under the terms of the settlement, if approved by the court, American will pay a class of 353 pilots a total of $345,772 for the loss of vacation and sick leave benefits. Additionally, pilots in the class who are now working for American will receive specified sick leave credits and the company will modify its employment policies accordingly.

Many airlines that have imposed service fees for checking bags curbside have found themselves the target of class action lawsuits filed by skycaps under state and federal wage and hour laws. A jury recently returned a verdict against American Airlines in a lawsuit filed by skycaps at Boston’s Logan International Airport. See DiFiore v. American Airlines, Inc. In this case, the skycaps claimed the service charge violated the Massachusetts tip law and constituted tortious interference with the skycaps’ relationship with passengers. The jury returned a verdict in favor of the skycaps of over $325,000, which represented the $2 service charge on bags each skycap handled during the period in question.

American has asked the judge to reverse the jury’s verdict. In motions filed with the court, the airline argued that it complied with the Massachusetts tip law by posting signs clearly indicating that the $2 charge was not a gratuity. Thus, according to American, since the law creates a “bright line” rule that enables employers to avoid liability by providing such notification, the jury award should be reversed. Additionally, the airline argues that it is not liable under the law because eight of the ten skycaps who filed the complaint were not its employees; they were employed by a third-party contractor.

In addition to the motions filed by American, the skycaps have requested the court award them attorney fees and triple damages under a new Massachusetts law that mandates triple damages for all violations of the state’s wage and hour laws.

American has since implemented a policy prohibiting skycaps at Logan from accepting tips. Because the Massachusetts law is unique, American has not implemented a policy banning skycaps at other airports from accepting tips.

The law firm representing the skycaps in the American case also represents skycaps in similar class action lawsuits against U.S. Airways and United Airlines and has indicated it expects to file suit against Delta Airlines. In the lawsuit against U.S. Airways and a contractor, three skycaps claim the baggage service fee has drastically reduced their pay and violates the Fair Labor Standards Act. The skycaps claim the fee should have been paid to them and that the imposition of the fee caused their wages to drop below minimum wage. The suit was filed on April 11 in federal court in Massachusetts.

Whether these lawsuits will be successful remains to be seen. In denying class certification to the group of skycaps who sued American, the court noted that tipping laws vary from state to state. Additionally, many of the skycaps who filed these suits are employed by third party contractors rather than the named airlines. We will continue to keep you updated on the status of this litigation.

ALPA has sued ATA and its parent, Global Aero Logistics, in federal court, claiming ATA’s abrupt shutdown in early April violated the federal Worker Adjustment and Retraining Notification (WARN) Act. See Air Line Pilots Association International v. ATA Airlines Inc. The WARN act requires employers with 100 or more employees to provide employees with sixty days advance notice of covered plant closings or mass layoffs.

ATA filed for bankruptcy protection on April 2, citing the loss of a key contract for its military charter business. After filing for bankruptcy, the airline immediately discontinued all operations and canceled all current and future flights.

ALPA, which represents ATA pilots, sued the airline, claiming that the pilots were not given any warning of the shutdown, as required by the WARN Act. Thus, the suit claims that each of the 892 pilots whose jobs were eliminated are entitled to 60 days of back pay and benefits, with interest, in accordance with the WARN Act’s remedies provision.

ALPA has sought priority for the pilots’ WARN Act claims over the claims of unsecured creditors in the bankruptcy case. This is the second WARN Act suit filed against ATA based on its shutdown. The earlier suit was filed as a class action on behalf of all affected ATA employees.

Skybus Airlines has also been sued for WARN Act violations based on its shutdown in early April. On April 15, a group of former Skybus employees filed a class action lawsuit in federal bankruptcy court in Delaware, claiming the airline violated the WARN Act by failing to give them a sixty day notice of the proposed shutdown. According to news reports, airline officials believe the company complied with the law and have indicated that the faltering business exception applies to this situation.

The faltering business exception is one of the few exceptions to the WARN Act’s sixty day notice requirement. It applies where a business is actively seeking capital or business that, if obtained, would have enabled the employer to avoid or postpone the shutdown, and the employer reasonably and in good faith believed that giving the notice required would have precluded the employer from obtaining the needed capital or business. The Department of Labor (DOL) regulations interpreting the WARN Act state that the faltering business exception applies only to a plant closing, not a mass layoff.

Another defense that may be available to the airlines is the unforeseeable business circumstances defense. The WARN Act permits an employer to give less than sixty days’ notice when the layoffs were the result of unforeseeable business circumstances. The DOL regulations encourage a case-by-case examination of the specific facts in determining whether the unforeseeable business circumstances exception applies.

We will keep you updated on the status of this litigation.

Corporate Air
The Independent Freight Pilots Association (IFPA) lost an election to represent Pilots. Out of 65 eligible voters, there were 7 votes for IFPA, 1 vote for American Pilots Association International, and 9 votes for UTU. Dismissal May 22, 2008.

CommutAir
ALPA won an election to represent Flight Deck Crew Members. Out of 118 eligible employees, there were 106 votes for ALPA and 1 write-in vote. Certification May 21, 2008.

Empire Airlines, Inc.
The Independent Freight Pilots Association (IFPA) lost an election to represent Pilots. Out of 101 eligible employees, there were 4 votes for IFPA and 13 votes for Other. Dismissal May 13, 2008.

Amerijet International, Inc.
IBT won an election to represent the Pilots. Out of 40 eligible employees, there were 26 votes for IBT and 9 votes for APG. Certification May 1, 2008.

Skybus Airlines
IBT’s application to represent Pilots was dismissed after the carrier ceased all operations, filed for Chapter 11 bankruptcy protection and discharged all employees. Dismissal April 24, 2008.

US Airways
US Airline Pilots Association (USAPA) won an election to represent Pilots. Out of 5,238 eligible employees, there were 2,254 votes for ALPA, 2,723 votes for USAPA, and 8 votes for other. Certification April 18, 2008.

Hawaiian Airlines
Application of TWU to represent Maintenance Controllers withdrawn. Dismissal April 1, 2008.

United Airlines
IBT won an election to represent Mechanics and Related Employees. Out of 8,631 eligible employees, there were 4,113 votes for IBT, 2,631 votes for AMFA, 11 void votes, and 45 write-in votes. Certification April 1, 2008.

Comair, Inc.
Application of IAM to represent Office Clerical Employees dismissed for insufficient showing of interest. Dismissal April 1, 2008.

Piedmont Airlines
IBT won an election to represent Flight Dispatchers. Out of 12 eligible employees, there were 0 votes for IAM and 11 votes for IBT. Certification March 21, 2008.

Tradewinds Airlines, Inc.
IBT won an election to represent Flight Deck Crew Members. Out of 98 eligible employees, there were six votes for TACCA and 80 votes for IBT. Certification March 12, 2008.

Piedmont Airlines
CWA lost an election to represent Fleet and Passenger Service Employees. Out of 2,574 eligible employees, there were 1,220 votes for CWA, 8 votes for other, and 3 void votes. Dismissal February 20, 2008.

Compass Airlines
AFA lost an election to represent Flight Attendants. Out of 46 eligible employees, there were 16 votes for AFA. Dismissal January 30, 2008.

Commutair
IAM won an election to represent Flight Attendants. Out of 47 eligible employees, there were 28 votes for IAM and 2 void votes. Certification January 25, 2008.