901 F.2d 404 (5th Cir. 1990), 88-3363, Landry v. Air Line Pilots Ass'n Intern., AFL-CIO

Docket Nº:88-3363.
Citation:901 F.2d 404
Party Name:RICO Bus.Disp.Guide 7490 Frank LANDRY, et al., Plaintiffs-Appellants, v. AIR LINE PILOTS ASSOCIATION INTERNATIONAL AFL-CIO, Taca Airlines, S.A. and Charles J. Huttinger, Defendants-Appellees.
Case Date:January 31, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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901 F.2d 404 (5th Cir. 1990)

RICO Bus.Disp.Guide 7490

Frank LANDRY, et al., Plaintiffs-Appellants,



Airlines, S.A. and Charles J. Huttinger,


No. 88-3363.

United States Court of Appeals, Fifth Circuit

January 31, 1990

Opinion Modified, Rehearing Denied April 27, 1990.

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Tom W. Thornhill, Slidell, La., R. Neal Wilkinson, Baton Rouge, La., Richard A. Machen, Slidell, La., for plaintiffs-appellants.

Stephen B. Moldof, Cohen, Weiss & Simon, Michael L. Winston, New York City, Robert H. Urann, Metairie, La., for Airline & Hutt.

Jerry J. Blouin, New Orleans, La., for Fringe.

Joseph Z. Fleming, John B. Waldrip, New Orleans, La., for TACA.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before BROWN, JOHNSON and DAVIS, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

Several airline pilots brought this action against their former employer, union, union representative, and the administrator of their pension plan. The pilots alleged violations of labor law, ERISA, and RICO. Granting motions for summary judgment, the Court held: (i) the statute of limitations barred the labor law claims; (ii) ERISA imposed no fiduciary duties on the defendants; and (iii) the pilots failed to meet the necessary elements of a RICO claim. The Court also granted a protective order preventing further discovery of the defendants. On appeal, we affirm the lower court's holding with respect to the statute of limitations and the protective order. However, we find that summary judgment was improper on the ERISA and RICO claims. Accordingly, we reverse and remand to the trial court the ERISA and RICO claims.

I. The Facts

  1. History of Relations between TACA and ALPA

    1. If at first you don't succeed ...

      TACA International Airlines, S.A. (TACA), incorporated under the laws of El Salvador, operates in Central America and the United States. From 1949 until 1985, all TACA pilots were based in New Orleans, Louisiana. In 1968, the Airline Pilots Association, International, AFL-CIO (ALPA), was certified as the collective bargaining representative for all pilots employed by TACA, and thereafter negotiated numerous collective bargaining agreements with TACA.

      The relevant history of this case begins over two decades ago. In 1969, shortly after TACA entered into its first agreement with ALPA, the Republic of El Salvador requested that TACA relocate its pilot base from New Orleans to El Salvador. When TACA attempted to comply with the request of the Salvadoran government, ALPA sought and obtained an injunction, maintaining that if the relocation occurred, ALPA could no longer, under Salvadoran law, represent the pilots. A bar of representation would have abrogated the recently-entered collective bargaining agreement between ALPA and TACA. This Court affirmed the district court injunction. Ruby v. TACA International Airlines, S.A., 439 F.2d 1359 (5th Cir.1971).

    2. ... try, try, again ...

      In October of 1979, TACA and ALPA entered into a collective bargaining agreement, effective January 1, 1980 and amendable on December 31, 1983 (the 1980 collective bargaining agreement). In October, 1983, ALPA and TACA commenced negotiations to amend and continue the 1980 collective bargaining agreement.

      However, on December 20, 1983, the Republic of El Salvador adopted a new Constitution; Article 110, Sec. 4 of that constitution provided that Salvadoran public service

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      companies must have their work center and base of operations in El Salvador. Airline Pilots Ass'n, Int'l v. TACA, Int'l Airlines, S.A., 748 F.2d 965, 968 (5th Cir.1984), cert. denied, 471 U.S. 1100, 105 S.Ct. 2324, 85 L.Ed.2d 842 (1985). As a result, while in the midst of negotiations, TACA announced its intention to immediately relocate its pilot base from New Orleans to El Salvador, to unilaterally terminate the existing agreement and impose new terms and conditions of employment on its pilot employees, and to withdraw its recognition of ALPA. R. 503. Pilots were given until December 31, 1983 to accept the new terms or lose their employment with TACA. Meanwhile, because of the potential that the pilots would not move, TACA began advertising for new pilots.

      ALPA filed a lawsuit in the United States District Court for the Eastern District of Louisiana, seeking injunctive relief against TACA. Judge Feldman issued a permanent injunction prohibiting TACA from relocating the pilot base, unilaterally changing the terms of employment, recruiting replacement pilots, and interfering with the pilots' choice of ALPA as their bargaining agent.

      This court affirmed the injunction, but stated

      we neither hold nor suggest that TACA may not relocate its pilot base. We hold only that TACA must relocate its pilot base and effect the other intended steps in accordance with the substantive laws and procedures set forth in the Railway Labor Act and other relevant domestic laws.

      Id., at 972.

    3. ... until you do

      Between 1984 and 1985, TACA and ALPA continued negotiations under the auspices of the National Mediation Board (NMB). On July 24, 1985, TACA and ALPA reached an agreement entitled "Pilots' Agreement," which superseded the 1980 collective bargaining agreement under which the parties had been operating. The "Pilots' Agreement" provided that ALPA would not oppose TACA's relocation of its pilot base to El Salvador after August 31, 1985. All pilots on the seniority list as of June 30, 1985 could elect either: (i) to receive severance pay ($1,200.00 to each pilot for each full year of service and pro rata amounts for partial years, with length of service calculated through August 31, 1985), and other benefits (passes and insurance), or (ii) to continue their employment as TACA pilots, based in El Salvador. R. 504.

      On July 24, 1985, Mr. Charles J. Huttinger, a TACA pilot who represented ALPA in the negotiations with TACA, sent a letter to all TACA pilots stating that "The Association has reached a tentative agreement (subject to ratification) with TACA.... The Company has agreed to a total package which we believe justifies your support."

      Some of the pilots allegedly understood the July 24, 1985 letter to mean that the agreement would not be final until it was ratified by the individual pilots. However, on August 3, 1985, a representative of TACA sent a memorandum to all TACA pilots, informing them that "an agreement [has been] reached by which TACA will move its pilots base to El Salvador effective September 1, 1985." The memorandum further stated that "the decision to continue working for the company or retire must be made by August 15, 1985, at the latest." Each of the named plaintifs, except Gary Zyriek, elected to take severance pay. Mr. Zyriek had changed jobs and was flying for United Airlines by June 30, 1985, the date of eligibility for severance payments.

      The July 24, 1985 "Pilots' Agreement" further provided that TACA's obligation to contribute to the pilots' retirement fund would cease as of August 31, 1985. Although the parties dispute the effective date of the retirement plan (see infra ), it was formally implemented on April 18, 1985. Fringe Benefit Administrators (FBA) was named as the plan administrator and the First National Bank of Covington was the plan trustee.

      On December 17, 1985, TACA and ALPA entered into a final "settlement agreement"

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      which resolved all claims arising out of the July 24, 1985, "Pilots' Agreement." Among other things, the agreement provided that "ALPA agrees and acknowledges that TACA has no further obligations to the individuals who selected the severance option under the 'Pilots' Agreement'.... concerning insurance coverage or benefits of any kind, or premium payments of any kind."

  2. Procedural History

    In the original Complaint, the pilots 1 asserted that the July 24, 1985 "Pilots' Agreement" was negotiated and executed in breach of ALPA's duty of fair representation (DFR) to the TACA pilots and TACA's prior collective bargaining agreement with ALPA, in violation of the Railway Labor Act (RLA), 45 U.S.C. Secs. 151-88, and the National Labor Relations Act (NRLA), 29 U.S.C. Secs. 141-87. Pilots sought approximately $30 million in damages. R. 1-18. Pilots did not file their Complaint until July 23, 1986. R. 1.

    Pilots alleged that ALPA agreed to enter into the July 24, 1985 agreement as a result of TACA's threat to sue ALPA because some of the pilots purportedly sabotaged TACA property at ALPA's direction. The pilots characterized this conduct as a breach of the duty of fair representation by ALPA. In addition, the pilots have asserted that Mr. Huttinger was unqualified to represent ALPA in the negotiation of the "Pilots' Agreement." Huttinger had been placed on "sick" status by TACA, and according to the pilots, under the Constitution and By-Laws of ALPA, a pilot classified as "sick" was not permitted to hold an office within the union.

    Moreover, the pilots have filed the affadavit of Emile Cerisier, one of the plaintiffs. Mr. Cerisier states that Mr. G.M. Padgett was a TACA pilot who was a member of the ALPA negotiation team that arranged the relocation of the pilot base to El Salvador. The pilots claim that Mr. Padgett should not have been allowed on the team because he had been suspended by TACA for sabotaging TACA equipment.

    The Original Complaint also alleged that ALPA, TACA, and FBA violated the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001-1461. The pilots claim that ALPA, TACA, and FBA breached fiduciary duties imposed by ERISA in the administration and implementation of...

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