Lea v. Republic Airlines, Inc.

• Citation: 903 F.2d 624
• Decision Date: 03 May 1990
• Docket Number: No. 89-15088,89-15088
• Parties: 134 L.R.R.M. (BNA) 2165, 58 USLW 2708, 115 Lab.Cas. P 10,051, 12 Employee Benefits Ca 1469 William LEA, Don Trevey, Frank Veskerna, William Brown, Paul Murphy, Plaintiffs-Appellants, v. REPUBLIC AIRLINES, INC., a corporation, Northwest Airlines, Inc., a corporation, successor in interest to Republic Airlines, Inc., Air Line Pilots Association, an association, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 624

903 F.2d 624

134 L.R.R.M. (BNA) 2165, 58 USLW 2708,

115 Lab.Cas. P 10,051,

12 Employee Benefits Ca 1469

William LEA, Don Trevey, Frank Veskerna, William Brown, Paul Murphy, Plaintiffs-Appellants, v. REPUBLIC AIRLINES, INC., a corporation, Northwest Airlines Inc., a corporation, successor in interest to Republic Airlines, Inc., Air Line Pilots Association, an association Defendants-Appellees.

No. 89-15088.

United States Court of Appeals Ninth Circuit.

Argued and Submitted March 14, 1990.

Decided May 3, 1990.

Kevin C. Sewell, Douglas M. Edwards, Edwards, Kolesar & Sewell, Edward J. Hanigan, Las Vegas, Nev., for plaintiffs-appellants.

Gary Green, Eugene B. Granof, Elizabeth A. Ginsburg, Air Line Pilots Ass'n, Washington, D.C., for Air Line Pilots Ass'n.

Richard J. Omata and Gregory C. Sisk, Karr Tuttle & Campbell, Seattle, Wash., for Republic Airlines, Inc.

Appeal from the United States District Court for the District of Nevada.

Before SNEED, FARRIS and FERNANDEZ, Circuit Judges.

SNEED, Circuit Judge:

William J. Lea and four other former airline pilots ¹ appeal a summary judgment against them in their suit against Republic Airlines, Inc. (Republic) and the Air Line Pilots Association (ALPA). Appellants claim that Republic, their former employer, violated the Employee Retirement Income Security Act of 1974 (ERISA), and that ALPA, their collective bargaining representative, violated ERISA and breached its duty of fair representation implied under the Railway Labor Act (RLA). Appellants also charged appellees with negligence, breach of contract, and fraud. In addition to monetary damages, appellants seek equitable relief and attorneys' fees. We affirm.

I. FACTS AND PROCEEDINGS BELOW

In late 1983 and early 1984, Republic's financial condition deteriorated. As part of its effort to spur the airline's recovery, Republic entered into negotiations with ALPA aimed at restructuring the company's retirement plans. On March 25, 1984, Republic and ALPA executed an agreement to terminate the Pilots Retirement Income Plan (PRIP). Under the Termination Agreement, the parties would calculate the cost of purchasing annuities to fund all accrued benefits under the PRIP. Because the active pilots had conceded certain benefits during Republic's financial restructuring talks, the parties agreed to rechannel excess assets not needed for the purchase of the annuities from the PRIP back to the active pilots. Republic would then terminate the PRIP and receive a reversion of the residue of funds.

The Termination Agreement went into effect according to plan. In mid-June 1985, Republic began purchasing annuities to ensure that all disabled and retired pilots received benefits at the same rate as before the termination of the PRIP. By June 28, 1985, Republic and ALPA agreed that the PRIP adequately provided all vested and accrued benefits and that the plan could be terminated as agreed. The airline then notified the relevant government authorities and parties of its intention to terminate the plan, effective July 31, 1985. On December 31, 1985, the Pension Benefits Guaranty Corporation issued a Notice of Sufficiency permitting the termination of the PRIP and distribution of the assets.

On July 3, 1985, more than 200 retired pilots (including appellant Frank Veskerna) filed suit in the U.S. District Court in Washington against ALPA and Republic to challenge the Termination Agreement, alleging that it violated the notice and fiduciary provisions of ERISA. The court rejected these claims, holding that Republic and ALPA were not fiduciaries under ERISA and that neither party had violated that statute. See Hale v. Republic Airlines, Inc., No. C85-1261V (W.D. Wash. July 23, 1987). Appeals were filed but dismissed with prejudice by this court in 1989.

Appellants in this lawsuit are former Republic pilots who participated in the PRIP or predecessor plans and who allege they went on disability leave in 1984 and 1985. Appellants claim that the Termination Agreement improperly denied them the additional retirement benefits that it accorded to active pilots. As already indicated, they assert claims for breach of trust, breach of fiduciary duty, negligence, breach of contract, and fraud. They also seek equitable relief. A more complete statement of these claims and the rulings of the district court follows.

A. Breach of Trust Claim.

The gravamen of the pilots' breach of trust claim is that Republic, as administrator of the PRIP, violated ERISA by improperly calculating and distributing the retirement annuities. The district court held that appellants did not present any genuine issues of material fact that necessitated a trial. The court reasoned that the

                parties disagreed not over the salient facts, but rather over how these facts applied to the terms of the PRIP, the Termination Agreement, and ERISA.  The court found that "[t]here can be no dispute of the fact that Plaintiffs were on disability status no later than March 25, 1984, prior to the termination of the PRIP."    Appellants contend that this ruling was erroneous.  They submit that it is disputed whether they were on disability status "no later than March 25, 1984."    They cite affidavits that place the disability status of each appellant as occurring at a later date. 2
                

B. Breach of Fiduciary Duty and Duty of Fair Representation Claims.

The district court also rendered summary judgment for appellees on the breach of fiduciary duty claim. The court determined that whether a party is a fiduciary under ERISA is a question of law, not fact, and relied on two Seventh Circuit cases--United Indep. Flight Officers, Inc. v. United Air Lines, Inc., 756 F.2d 1262 (7th Cir.1985) (UIFO 1 ) and United Indep. Flight Officers, Inc. v. United Air Lines, Inc., 756 F.2d 1274 (7th Cir.1985) (UIFO 2 ). These cases support appellees' contention, the court said, that "the duties and responsibilities of a fiduciary under ERISA are inapplicable to unions and employers negotiating in a collective bargaining context." The court rejected appellants' arguments that (1) ALPA breached its duty of fair representation under the Railway Labor Act, thus violating the spirit of ERISA, and (2) Republic breached its fiduciary duty by implementing the Termination Agreement. See UIFO 2, 756 F.2d at 1280.

C. Contract and Tort Claims.

The district court also ruled that ERISA preempted appellants' causes of action for negligence, breach of contract, fraud, and equitable relief.

D. The "Hybrid" Claim.

Appellants' last allegation is that ALPA essentially neglected its duty to consider the effects of the Termination Agreement on the disabled pilots by agreeing that the excess assets should go to the active pilots. The district court ruled that this allegation raised a "hybrid" claim under the Railway Labor Act and ERISA, and that a six-month limitations period controlled. DelCostello v. International Bhd. of Teamsters, 462 U.S. 151, 172, 103 S.Ct. 2281, 2294, 76 L.Ed.2d 476 (1983) (holding that a six-month limitations period applies for breach of duty of fair representation claims under the National Labor Relations Act). The court rejected appellants' contention that ERISA's three-year statute of limitations applies, see 29 U.S.C. Sec. 1113(a)(2) (Supp. V 1987), and held the claim as time-barred.

E. The Veskerna Claim.

Finally, the district court ruled that res judicata barred appellant Frank Veskerna's claims. The court found that he was a plaintiff in the Washington litigation in which retired pilots challenged the Termination Agreement and he did not there dispute that his disabled status entitled him to the add-on benefits awarded to the active pilots.

Appellants challenge these rulings.

II. JURISDICTION

The district court had subject matter jurisdiction pursuant to 28 U.S.C. Sec. 1331 (1982), inasmuch as it interpreted the appellants to be alleging claims both under the ERISA statute, which confers jurisdiction independently under 29 U.S.C. Sec. 1132(e) (1982), and the Railway Labor Act, which does not independently confer jurisdiction on the federal courts. See 45 U.S.C. Secs. 151-188 (1982). This court has jurisdiction

over the appeal under 28 U.S.C. Sec. 1291 (1982).

III. STANDARD OF REVIEW

We review district court rulings on motions for summary judgment under a de novo standard. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989). We also review de novo the decisions of an employee benefit plan administrator in a civil action challenging the plan unless the plan provides otherwise. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989).

IV. DISCUSSION

A. Breach of Trust Claim.

The pilots' appeal on the breach of trust issue has two components: first, that the district court erred because the appellants became disabled after the relevant date for determining the eligibility of the added benefits; and second, that the court incorrectly concluded that "disabled" pilots should not be treated precisely as were "active" pilots. We address each claim in turn.

1. Eligibility Date for Active Pilots.

Both parties urge us to interpret a plan that they both regard as unambiguous despite the conflicting interpretations each attaches to it. The PRIP does not explicitly supply a date on which pilots were to be classified as "active," "retired," or "disabled" for purposes of distributing the excess plan assets. The omission is unfortunate because active pilots made certain financial concessions in the collective bargaining negotiations and received added benefits once the PRIP had been terminated. At issue is whether appellants were "active" at a time that would make them eligible for these added benefits.

At oral argument, counsel for appellants maintained that the cutoff date for such a classification was March 29, 1984, whereas counsel for Republic and ALPA argued that the cutoff date was June 30, 1984. We agree with Republic and...