Beckett v. Air Line Pilots Ass'n

• Decision Date: 23 July 1993
• Docket Number: No. 92-7029,92-7029
• Parties: 143 L.R.R.M. (BNA) 2569, 301 U.S.App.D.C. 380, 61 USLW 2791, 125 Lab.Cas. P 10,734, 25 Fed.R.Serv.3d 1297, 17 Employee Benefits Cas. 1354, Pens. Plan Guide P 23879R Captain Stewart W. BECKETT, et al., Appellants, v. AIR LINE PILOTS ASSOCIATION, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 280

995 F.2d 280

143 L.R.R.M. (BNA) 2569, 301 U.S.App.D.C.

380, 61 USLW 2791,

125 Lab.Cas. P 10,734, 25 Fed.R.Serv.3d 1297, 17 Employee Benefits Cas. 1354, Pens. Plan Guide P 23879R Captain Stewart W. BECKETT, et al., Appellants, v. AIR LINE PILOTS ASSOCIATION, Appellee.

No. 92-7029.

United States Court of Appeals District of Columbia Circuit.

Argued April 20, 1993.

Decided June 15, 1993.

Order Denying Rehearing and Remanding

Case July 23, 1993.

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

Robert F. Gore, argued the cause for appellants.

Jerry D. Anker argued the cause for appellee. With him on the brief were Gary Green, Clay Warner and Michael E. Abram.

Before: EDWARDS, RUTH BADER GINSBURG and SILBERMAN, Circuit Judges.

Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.

HARRY T. EDWARDS, Circuit Judge:

Early in 1990, the Air Line Pilots Association ("ALPA") received a large payment of funds from Pan American Airways, Inc. ("Pan Am"), pursuant to a 1985 grievance settlement. Under the settlement, Pan Am agreed to make Savings Annuitization Payouts ("SAP"), in lieu of disputed pension contributions, on behalf of eligible Pan Am pilots. ALPA was to receive the SAP funds and then distribute the monies to eligible pilots. A dispute arose over the payments, however, and a lawsuit, Fagerland v. Air Line Pilots Ass'n, Int'l, Civ. Action No. 86-3410, was filed in District Court against ALPA by a group of former Pan Am pilots challenging the method used by ALPA to determine each pilot's share of the payout. In December 1989, the parties in Fagerland entered into a settlement agreement, under which the SAP funds were to be transferred to a trust account established and administered by ALPA, as trustee and agent, for distribution of the funds to the eligible pilot beneficiaries. The settlement agreement was approved by the District Court in a Consent Decree, 1989 WL 298428.

The present dispute involves a claim by 49 former pilots of Pan Am who are beneficiaries under the Fagerland Consent Decree. These pilots, appellants in this action, contend that, in administering the trust established for the distribution of the SAP funds, ALPA violated the Fagerland settlement agreement and Consent Decree. In particular, appellants assert that ALPA improperly withheld monies they were required to distribute to the appellants on the ground that, while serving as Pan Am pilots, the appellants had failed to pay certain agency shop fees to ALPA to support, inter alia, a sympathy strike by pilots at Eastern Air Lines, Inc. ("Eastern"). ALPA retained the appellants' SAP funds as a setoff against the delinquent agency shop fees allegedly due to ALPA. Appellants now seek to secure their shares of the SAP monies, alleging breach of the settlement agreement and Consent Decree, and violations of trust law, the Employee Retirement and Income Security Act ("ERISA") and the Railway Labor Act ("RLA").

The District Court granted summary judgment against appellants on all claims. We reverse. First, we hold that appellants' claim constitutes an action to enforce a consent decree, properly brought by intended beneficiaries of that decree; therefore, the District Court had jurisdiction over appellants' trust claim pursuant to the well-established principle that a trial court retains jurisdiction to enforce its consent decrees. Second, we hold that, as trustee and agent under the Fagerland Consent Decree, ALPA had no right to divert for its own use monies required to be transferred to beneficiaries under the settlement trust.

I. BACKGROUND

A. Assessments for the Eastern Sympathy Strike

At all times relevant to this appeal, ALPA, a labor organization within the meaning of the RLA, 45 U.S.C. § 151, Sixth (1988), represented airline pilots employed by the now-bankrupt Pan Am. ALPA's collective bargaining agreement with Pan Am contained an agency shop agreement, which, as a condition of employment, required pilots who chose not to join the union to pay a "service charge" to ALPA equivalent to its regular monthly dues, initiation fee and periodic assessments. See Agency Shop Agreement at 1, reprinted in Appendix ("A.") 71. Under the agency shop agreement, if a pilot became delinquent in his payments, ALPA's Treasurer was required to notify the pilot of his delinquency and advise him that he was "subject to discharge." Id. If the pilot did not make the necessary payments, the agency shop agreement required the Treasurer to "certify" the delinquency to the pilot's employer, who was then obligated to discharge the pilot. Id. A pilot whose discharge had been requested was permitted to file a protest if he believed that the agency shop agreement had "not been properly interpreted or applied." Id. at 2. Protests were ultimately subject to binding arbitration.

In March 1989, the International Association of Machinists and Aerospace Workers Union ("IAM"), the bargaining agent for the mechanics at Eastern, began a lawful strike against that airline. In support of the IAM, the ALPA pilots at Eastern also went on strike. ALPA's Executive Board subsequently authorized $2,400 per month in strike benefits for the Eastern pilots, to be funded by monthly assessments charged to ALPA members. A majority of ALPA's membership approved the assessments by secret vote, and voted again in September and December 1989 to continue the assessments. The assessments were discontinued at the end of February 1990.

From May 1989 to March 1990, ALPA levied eleven strike assessments to fund the benefits for the striking Eastern pilots. A number of the non-union Pan Am pilots refused to pay the assessments. By March 1990, at least 328 Pan Am pilots, including 46 of the 49 appellants, were delinquent in the payment of their assessments. (In addition, 24 of the appellants were delinquent in the payment of agency fees other than the Eastern strike assessments.) ALPA sent delinquency letters to five of the 46 appellants whose assessment payments were overdue; no other efforts were made by ALPA to pursue claims under the agency shop agreement.

B. The Fagerland Settlement Monies

The long series of events leading to this action began in early 1990, when ALPA received a large payment from Pan Am under the terms of a 1985 grievance settlement. The settlement resolved a grievance dispute arising out of Pan Am's decision in 1984 to cease contributions to the "A Plan," a pension plan it had established for its pilots. Under the settlement, reached in February 1985, Pan Am agreed to make a SAP of $35.125 million to Pan Am pilots who had participated in the A Plan prior to January 1, 1984 ("eligible pilots"). The SAP was to be paid in equal, yearly installments of $7.025 million from 1986 to 1990. The settlement required Pan Am to pay the SAP to ALPA which was then to distribute the funds to the eligible Pan Am pilots. See Pan Am-ALPA Settlement at 3, reprinted in A. 47.

Before ALPA began distributing the settlement, a group of former Pan Am pilots who had been members of the "A Plan" filed suit against ALPA in the United States District Court for the District of Columbia, challenging the method ALPA used to determine each pilot's share of the payout. As a result of the suit, Fagerland v. Air Line Pilots Ass'n, Int'l, Civ.Action No. 86-3410, the SAP fund was placed in escrow and no distributions were made. In December 1989, the parties in Fagerland entered into a settlement agreement, which the District Court approved in a Consent Decree. See Settlement Agreement and Consent Decree, reprinted in A. 55 ("Fagerland Consent Decree" or "Consent Decree").

Under the Consent Decree, the funds held in escrow were to be transferred "to a trust account to be established by defendant ALPA, which will act as trustee and agent for distribution of this fund to the beneficiaries." Id. at 7. The Consent Decree provided that ALPA, "as trustee and agent," was first to distribute a specified portion of the funds to the Fagerland plaintiffs, and was then to distribute the remaining funds "to eligible [Pan Am] pilots who are not plaintiff class members pursuant to the instructions of the Pan Am [Master Executive Council]." ¹ Id. at 8-11. The "eligible pilots" included appellants. The distribution plan set out in the Consent Decree applied to the four annual $7.025 million payments that Pan Am had already made (which were at the time held in escrow), and to the final payment Pan Am was scheduled to make in 1990.

In February 1990, after receiving the SAP funds from the first four annual payments, the Pan Am MEC adopted a resolution stating that:

all [Pan Am] pilots who are delinquent in dues, service charge or assessment payments to ALPA ... as of February 20, 1990 ... shall receive their full [SAP] payment minus all the money owed to ALPA in the form of back dues, service charges and/or assessments.

Plaintiffs' Statement of Material Facts to Which There is No Genuine Issue at 7, reprinted in A. 35. In March 1990, after the Fagerland plaintiffs had received their share of the SAP fund, ALPA distributed the remaining funds to eligible Pan Am pilots. In accordance with the MEC resolution, ALPA mailed SAP distribution checks to the pilots that included their share of the distribution from the first four Pan Am payments, less any alleged delinquency to ALPA as of February 20, 1990. ALPA withheld a total of $562,927.61 from the SAP distribution to satisfy the debts of delinquent Pan Am pilots, including $139,306.95 from appellants' share of the distribution ($100,160.47 of which constituted strike assessments, the remainder constituting other overdue fees). In December 1990, after Pan Am paid ALPA the last $7.025 million installment under the 1985 settlement agreement, ALPA made the final distribution of SAP funds to Pan Am pilots, and withheld an additional $22,340.31 from 13 of the appellants, as a further setoff for delinquency. In sum, ALPA withheld...