Apsley v. The Boeing Co., Case No. 05-1368-EFM.
| Citation | 722 F.Supp.2d 1218 |
| Decision Date | 30 June 2010 |
| Docket Number | Case No. 05-1368-EFM. |
| Parties | Perry APSLEY, et al., Plaintiffs, v. The BOEING COMPANY and Spirit AeroSystems, Inc., Defendants. |
| Court | U.S. District Court — District of Kansas |
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Lawrence W. Williamson, Jr., Williamson Law Firm, LLC, Kansas City, MO, for Monique K. Centeno, Office of the Public Defender, Uzo L. Ohaebosim, Law Offices of Sean Shores, Wichita, KS, for Plaintiffs.
Carolyn L. Matthews, Charles E. Watson, II, Douglas L. Stanley, Forrest T. Rhodes, Jr., James M. Armstrong, Teresa L. Shulda, Todd N. Tedesco, Trisha A. Thelen, Foulston Siefkin LLP, Wichita, KS, for Defendants.
This case arises out of Boeing's sale of the assets of its commercial facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma (the “BCA Wichita Division”), to Spirit AeroSystems, Inc. (“Spirit”), in June 2005. Plaintiffs are former Boeing employees who were not hired by Spirit when it purchased Boeing's BCA Wichita Division assets. Plaintiffs bring this lawsuit alleging that Defendants violated the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1140; § 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185; and the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 623. On November 11, 2006, this Court conditionally certified a collective action under the ADEA. Now before the Court are the following motions: (1) Plaintiffs' motion to certify a class under the LMRA and ERISA (Doc. 287); (2) Defendants' motion for summary judgment on Plaintiffs' ERISA and LMRA claims (Doc. 298); and (3) Defendants' motion for summary judgment or, in the alternative, to decertify Plaintiffs' ADEA claims (Doc. 307). For the reasons stated below, the Court grants Defendants' motions for summary judgment. In light of this holding, Plaintiffs' motion to certify a class under the LMRA and ERISA and Defendants' motion to decertify Plaintiffs' ADEA claims are rendered moot and are therefore denied.
In hopes of remaining competitive in the aerospace industry, Boeing Commercial Airplanes (“BCA”), headquartered in Seattle, Washington, began changing its business strategy in the late 1990s. BCA decided to increasingly focus on the initial engineering and design of its aircrafts, sales and marketing to the end user, and final assembly of the finished product. This shift in focus meant moving toward purchasing more piece parts and component assemblies from non-Boeing outside suppliers.
Pursuant to this change in strategy, BCA began exploring opportunities to divest itself of several of its manufacturing operations that had been internal suppliers of piece parts and component assemblies, but were not involved in final assembly of the aircraft. When it reviewed each of its facilities, BCA compared the performance of that Boeing facility as an internal supplier against acquiring the parts and assemblies from an external supplier. The comparisons were based upon a wide variety of factors. Over a number of years, several Boeing facilities were divested.
Boeing's commercial facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma (the “BCA Wichita Division”) were a BCA supplier. In light of the fact that Boeing was increasingly outsourcing work to non-Boeing external suppliers, management at the BCA Wichita Division grew increasingly concerned that the BCA Wichita Division would win fewer contracts on new Boeing programs unless a different cost structure could be established. Due to this concern, management at the BCA Wichita Division began to analyze how they could structure the BCA Wichita Division to be more competitive with external suppliers.
In early 2002, Jeff Turner, the leader of the management team in Wichita, spoke with Jim Morris, BCA V.P., Engineering & Manufacturing in Seattle, and suggested that BCA consider bundling the facilities in Wichita, Tulsa, and McAlester and either sell the facilities, create a wholly-owned subsidiary, or spin-off the facilities. Mr. Turner learned that a team of individuals in Seattle was already evaluating whether a different structure for the BCA Wichita Division would allow BCA to purchase the assemblies manufactured at the BCA Wichita Division at a more of a market-based price. BCA management was also evaluating whether restructuring the BCA Wichita Division created less risk than purchasing the assemblies from an external supplier. At the time of these discussions, there were many other suppliers with the ability to meet Boeing's needs.
In the fall of 2003, the decision to offer the assets of the BCA Wichita Division for sale was made. At that point in time, the potential sale was referred to as “Project Lloyd.” A team of people in Seattle prepared for the potential sale, working closely with the management team for the BCA Wichita Division. Between September 2003 and March 2004, an Offering Memorandum was prepared for and given to potential buyers. This memorandum provided business, product, operational, and financial data, highlighted market outlook, presented current and projected revenue, as well as new growth opportunities, and included internally developed cost saving opportunities for the stand alone entity. One of the key assumptions was that Boeing would enter into a long-term supply agreement with the buyer.
BCA believed that the Wichita Division would be attractive due to the potential cost saving opportunities. Unlike Boeing, the purchaser of the Wichita Division would not be constrained by labor contracts that were tied to those in Seattle. These contracts had resulted in the Wichita Division paying higher wages than those in the rest of the Wichita market and had created a number of job codes that were too rigid, as they defined each employee's job responsibilities too narrowly. In addition to the savings that would occur from offering base pay and benefits that were more in-line with the local market and combining job codes, BCA believed that the purchaser could also reduce costs by reducing the number of people working at the Wichita Division. Management for the Wichita Division believed that the purchaser could still meet the Division's statement of work by hiring only 80 to 90% of the current workforce.
Onex Partners LP (“Onex”) was one the companies interested in purchasing the BCA Wichita Division. Onex believed that the opportunity to acquire the Wichita Division was attractive because: (1) the commercial aircraft market was at a low point in its production cycle; (2) the Wichita Division would be able to reduce its costs and increase its competitive position by virtue of being separated from Boeing; and (3) the distinct competencies of the Wichita Division, when combined with the long-term supply agreement to be entered into between it and Boeing, would give it a sustainable revenue outlook.
In October 2004, Boeing and Onex entered into exclusive negotiations for the divestiture of the BCA Wichita Division. Boeing agreed that Onex could have access to a select group of leaders in Wichita to allow it to evaluate the supply contracts being offered by Boeing and potential cost savings identified by the Wichita management and other consultants. 2 From the outset of negotiations, Boeing made it clear that a requirement of any sale was that Boeing's existing pension obligations would be transferred to Onex for those employees hired by them. Initially, Onex did not want to assume these obligations and preferred to pay a higher purchase price rather than assume the pension obligations. Onex's position was based on its desire to offer a defined contribution 401(k) retirement plan instead of a defined benefit pension plan. However, in the end, Onex agreed to assume Boeing's pension liabilities as of the close of the sale, so long as Boeing transferred sufficient funds for the pension obligations being transferred.
Sometime during the negotiations, Onex formed Mid-Western Aircraft Systems, Inc. (“Mid-Western”). Mid-Western served as the vehicle to purchase the assets of the BCA Wichita Division from Boeing. 3 On February 22, 2005, Boeing and Mid-Western signed the Asset Purchase Agreement. The closing of the transaction took place on June 16, 2005. At the time of the closing, Boeing terminated all employees at the BCA Wichita Division. All employees stopped accruing benefits under the Boeing pension plan on that day. 4 Spirit's Day One workforce began work on June 17, 2005.
The process used by Spirit to select its Day One workforce was developed by the BCA Wichita Division Human Resources personnel. This process involved Boeing managers evaluating employees on seven defined criteria: skills, productivity, quality, teamwork/attitude, safe work practices, lean, and corrective action. Each of the criterion included details and examples of what the criterion meant. Although managers were not told how to weigh the criteria, they were told that they were only to consider these criteria. Managers were further told that age was not to be considered. According to Defendants, these hiring criteria were designed to identify a workforce that would be flexible and possess the skills and attitude necessary to give Spirit the best chance of success.
In Wichita, the selection process was conducted by organization, with the director of each organization ultimately being responsible for signing off on the hiring recommendations. Within those director groups, the make-up of the selection meetings varied, depending on the make-up or organization of the group. For example, in large organizations, the selection groups may have been organized by second-level manager, that...
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