Air Line Pilots Ass'n, Intern. v. Delta Air Lines, Inc.

• Citation: 863 F.2d 87
• Decision Date: 16 December 1988
• Docket Number: No. 88-7054,88-7054
• Parties: 130 L.R.R.M. (BNA) 2165, 274 U.S.App.D.C. 181, 110 Lab.Cas. P 10,908, 10 Employee Benefits Ca 2163 AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, et al., Appellants, v. DELTA AIR LINES, INC.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 87

863 F.2d 87

130 L.R.R.M. (BNA) 2165, 274 U.S.App.D.C. 181,

110 Lab.Cas. P 10,908,

10 Employee Benefits Ca 2163

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, et al., Appellants, v. DELTA AIR LINES, INC.

No. 88-7054.

United States Court of Appeals, District of Columbia Circuit.

Argued Nov. 1, 1988.

Decided Dec. 16, 1988.

Eugene B. Granof, with whom Gary Green, Washington, D.C., was on the brief, for appellants.

Baruch A. Fellner, with whom William J. Kilberg, Washington, D.C., was on the brief, for appellee.

Before RUTH BADER GINSBURG, SILBERMAN and D.H. GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

The Air Line Pilots Association ("ALPA") brought suit against Delta Air Lines, Inc. in the district court--pursuant to the Railway Labor Act ("RLA"), 45 U.S.C. Secs. 151-188 (1982)--seeking injunctive relief to compel arbitration before a System Board of Adjustment of disputes allegedly arising from a collective bargaining agreement between the parties. The district court held that the disputes at issue, which concerned the eligibility of two pilots for disability benefits from the Delta Pilots Disability and Survivorship Plan, were not subject to arbitration before the System Board. The court thus granted summary judgment for Delta, and ALPA appealed. We conclude that the disability benefit disputes arguably do arise under the collective bargaining agreement and are thus subject to arbitration before the System Board. Therefore, we reverse the judgment of the district court.

I.

The Railway Labor Act has governed disputes between air carriers and their employees since 1936. 45 U.S.C. Sec. 181 (1982). The RLA provides that "disputes between an employee or group of employees and a carrier or carriers by air growing out of grievances, or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions ... may be referred by petition of the parties or by either party to an appropriate adjustment board." 45 U.S.C. Sec. 184. Each carrier has a duty to establish a board of adjustment. Id. The statutory grievance procedure is "mandatory, exclusive, and comprehensive," Brotherhood of Locomotive Engineers v. Louisville & N.R.R., 373 U.S. 33, 38, 83 S.Ct. 1059, 1062, 10 L.Ed.2d 172 (1963), and judicial review of a System Board's decision is narrowly limited to three categories provided in the Act. Union Pacific R.R. v. Sheehan, 439 U.S. 89, 93, 99 S.Ct. 399, 402, 58 L.Ed.2d 354 (1978); 45 U.S.C. Sec. 153 First (p). ¹

In section 19 of their 1982 collective bargaining agreement, Delta and ALPA established a System Board of Adjustment in order to comply with the RLA. The agreement states that the Board's purpose is to "adjust[ ] and decide[ ] disputes which may arise under the terms of the Pilots' Agreement and which are properly submitted to it." Its jurisdiction includes "disputes between any pilot covered by [the] Agreement and the Company growing out of grievances or out of interpretation or application of any of the terms of [the] Agreement." The Board is composed of four members, two appointed by Delta and two appointed by ALPA. A majority vote of the Board members establishes a final and binding decision on any matter properly before it; in the case of deadlock, the agreement provides for the selection of a fifth Board member from a panel of neutrals established by the parties.

Section 26 of the contract describes retirement, disability, and survivor benefits for the pilots. Two parts of that section are directly implicated in this case. Section 26.A states that "[t]he Company shall pay the full cost of the Delta Pilots Retirement Plan and the Delta Pilots Disability and Survivorship Plan, plans regulated under the Employee Retirement Income Security Act of 1974 ("ERISA"), such plans hereby incorporated by reference into this Agreement," and section 26.C provides that "[a] pilot who becomes disabled prior to his normal retirement date shall be provided a monthly disability benefit from the Delta Pilots Disability and Survivorship Plan equal to fifty percent (50%) of his highest twelve (12) consecutive months of normal earnings during the last thirty-six (36) months of active service as defined in the Plan."

The Delta Pilots Disability and Survivorship Plan provides benefits for pilots employed by Delta. The Plan vests the exclusive power to interpret its terms and the responsibility for carrying out its provisions in an Administrative Committee of at least three members, who are appointed by the Board of Directors of Delta. Of particular relevance to this appeal, section 11.02 of the Plan states that "decisions of the Administrative Committee as to interpretation and application of the Plan shall be final."

Like virtually all employee benefit plans, the Delta Plan is regulated by ERISA, which was passed by Congress in 1974 to establish minimum standards for such plans. 29 U.S.C. Sec. 1001(a) (1982). Administrators of the Plan are designated fiduciaries, see 29 U.S.C. Sec. 1102, and ERISA imposes certain duties on them as a matter of federal law. 29 U.S.C. Secs. 1102-1113. ERISA also imposes a series of disclosure and reporting requirements to protect the interests of participants and beneficiaries. 29 U.S.C. Secs. 1021-1031. Section 502 of ERISA provides for civil enforcement of the various provisions of the Act through actions brought by participants, beneficiaries, and fiduciaries. 29 U.S.C. Sec. 1132(a)(1).

The first of two grievances underlying this dispute involves former Delta pilot Donald R. Hazeltine. Delta discharged Hazeltine on July 23, 1984, after an incident at the Houston airport on July 3, 1984, during which, according to Delta, Hazeltine "created an unnecessary scene with security checkpoint personnel at [the airport] in front of numerous passengers." This episode was the last in a series of events since 1969 which Delta believed made Hazeltine a "constant source of embarrassment to the Company." Hazeltine had been progressively disciplined through suspensions of increased durations, so Delta concluded that termination was warranted after the Houston incident.

Hazeltine appealed the termination of his employment to the System Board, claiming that he should be placed on disability and that his conduct did not justify his termination. The Board sustained Hazeltine's discharge and ruled that the "initial determination of the medical merits [of the disability claim] are properly determined by the Administrative Committee of the Delta Pilots Disability and Survivorship Plan." (emphasis added). But the Board concluded that "the grievant shall not be barred from making application for disability under the Delta Pilots Disability and Survivorship Plan; the Administrative Committee of the Plan shall not be barred from considering his application, and that the Administrative Committee shall not be bound by the grievant's current employment status in making its determination." ALPA had sought such a determination, because it feared that the Committee would deny Hazeltine's claim on the ground that he was not disabled at the time of his discharge. When terminated, Hazeltine was arguably not yet "disabled" as that term is defined by both section 26.C.4 of the agreement and section 1.08 of the Plan, because he had not "los[t] his [Federal Aviation Administration] license to fly as an airline pilot," and section 7.01 of the Plan states that "[t]here are no benefits under this Plan in the event of Termination of Continuous Employment."

Hazeltine subsequently applied for issuance of an airman medical certificate from the FAA, which the agency denied on July 18, 1985. He then sought disability benefits under the Plan in August 1985. The Plan's Administrative Committee denied his claim on April 15, 1986, stating that "at the time of the termination of [his] employment with Delta, [Hazeltine] held a first class medical certificate." The Committee reasoned that "the onset of disability must occur during employment," and "no post termination benefits are available under the Plan." Its decision made no mention of the Board's earlier seemingly inconsistent award.

The second underlying grievance was brought by former Delta pilot Earl E. "Ed" Meech. On January 24, 1985, Meech was indicted by a federal grand jury in Dallas, Texas on eleven felony charges of fraud and conspiracy. Delta thereafter suspended him without pay and benefits on February 8, pending resolution of the criminal charges. The company said that the "serious nature of the criminal charges" called into question Meech's "judgment and integrity" and that Meech's preparation of a legal defense would prevent him from giving "undivided attention to [his] duties and responsibilities as a pilot for the Company."

In March 1985, while on suspension, Meech fell from a ladder and seriously aggravated a prior back injury. On the 19th of that month Meech received a "Disability Certificate" from an FAA-certified medical examiner, attesting that Meech was physically unable to perform his job duties. This certificate, however, was not technically equivalent to the denial of an FAA license, which Delta argues is a prerequisite to disability benefits under the Plan and the agreement. In June 1985, Meech was convicted on two felony charges, and Delta converted his suspension into a termination on July 31, 1985. Sometime thereafter, Meech applied for, and was denied, an FAA license.

During his suspension, on July 10, 1985, Meech applied for long term disability benefits under the Plan. Delta denied his claim on August 16, on the ground that his alleged disability commenced after 30 days from the date he was suspended. Although section 4.02 of the Plan, which delineates the requirements for income benefits, does not explicitly include a 30 day limitation period, Delta explained that section 4.02 had been "interpreted to be consistent with the provisions...