Cooper v. Twa Airlines, LLC

• Decision Date: 23 November 2004
• Docket Number: No. 02-CV-3477 NGKAM.,02-CV-3477 NGKAM.
• Parties: Sherry COOPER, Cynthia Jones, Pamela Jackson, Paige Verducci, Wilson Aviles, Kristine Wolanske, Cathy Whittington, on behalf of themselves and all others similarly situated, and William O'Driscoll as representative of The International Association of Machinists and Aerospace Workers, Plaintiffs, v. TWA AIRLINES, LLC, American Airlines, Inc., and The Association of Professional Flight Attendants, John Ward as Representative, Defendants.
• Court: U.S. District Court — Eastern District of New York

349 F.Supp.2d 495

Sherry COOPER, Cynthia Jones, Pamela Jackson, Paige Verducci, Wilson Aviles, Kristine Wolanske, Cathy Whittington, on behalf of themselves and all others similarly situated, and William O'Driscoll as representative of The International Association of Machinists and Aerospace Workers, Plaintiffs, v. TWA AIRLINES, LLC, American Airlines, Inc., and The Association of Professional Flight Attendants, John Ward as Representative, Defendants.

No. 02-CV-3477 NGKAM.

United States District Court, E.D. New York.

November 23, 2004.

COPYRIGHT MATERIAL OMITTED

James P. Allen, Sr., Detroit MI, for plaintiff.

Thomas E. Remert Jr., Washington DC, Sam S. Shaulson, New York City, for American Airlines, Inc. and TWA Airlines, Inc.

Daniel Katz, Washington DC, James N. Blair, New York City, for John Ward as representative of Association of Professional Flight Attendants.

OPINION & ORDER

GERSHON, District Judge.

Plaintiffs, suing as a class, are former Trans World Airlines, Inc. ("TWA") flight attendants who joined American Airlines Inc. ("American") when American acquired TWA following TWA's bankruptcy in early 2001. Defendants are American and its wholly owned subsidiary, TWA Airlines, LLC ("TWA-LLC") (jointly "Company defendants") and the Association of Professional Flight Attendants, John Ward as representative ("APFA"). Plaintiffs originally filed this action on June 14, 2002, and on March 3, 2003, they filed an Amended Complaint. Their claims deal with the events surrounding American's acquisition of TWA in 2001 and the subsequent furlough of 1,018 TWA-LLC flight attendants in the aftermath of the September 11, 2001 terrorist attacks. On June 20, 2003, plaintiffs filed a Supplemental Complaint, dealing with events surrounding American's reorganization in 2003 and an accompanying Restructuring Agreement between American and APFA ("Supplemental Complaint").¹ Plaintiffs' motion for a preliminary injunction enjoining American from implementing the Restructuring Agreement was denied by Judge Carol Bagley Amon of this court. See Cooper v. TWA Airlines LLC, 274 F.Supp.2d 231 (E.D.N.Y.2003). The case was reassigned to me on April 21, 2004.

Count One of the Amended Complaint alleges that American violated Sections 2 and 6 of the Railway Labor Act ("RLA"), 45 U.S.C. §§ 152, 156. Counts Two through Eight allege that American and APFA violated state common law in various ways, namely, (2) breach of contract; (3) fraud; (4) negligent misrepresentation; (5) fraudulent inducement; (6) breach of the implied covenant of good faith and fair dealing; (7) promissory estoppel; and (8) unjust enrichment. All defendants move to dismiss the Amended Complaint. The Company defendants argue that plaintiffs lack standing under the RLA to bring Count One and that all of the state law claims are preempted by the RLA. APFA argues that the state law claims against it are preempted by the RLA and also fail on the merits.

The claims in the Supplemental Complaint will be the subject of additional motions not yet made.

BACKGROUND

The allegations in the Amended Complaint, described below, are taken as true for the purposes of defendants' motions to dismiss.

This case arises out of the integration of former TWA flight attendants into American Airlines' workforce as part of American's acquisition of TWA in 2001. In January 2001, TWA and American entered into an agreement whereby American agreed to purchase substantially all of TWA's valuable assets in connection with TWA's planned Chapter 11 bankruptcy (the "Purchase Agreement"). Immediately after the Purchase Agreement was executed, TWA filed for bankruptcy and sought court approval of its terms. Contemporaneously, American formed a wholly owned subsidiary, TWA-LLC, to own and operate TWA's assets. TWA-LLC was formed as a transitory entity controlled by American that would cease to exist once the two airlines were fully integrated. Thus, TWA-LLC was American's "alter ego" for purposes of merging the two airlines.

At the time the merger negotiations between American and TWA were proceeding the TWA flight attendants were represented by plaintiff International Association of Machinists and Aerospace Workers ("IAM"). Under IAM's collective bargaining agreement ("CBA") with TWA, in effect at the time bankruptcy protection was sought by TWA, the TWA flight attendants' occupational seniority rights were protected by what are known as Allegheny-Mohawk Labor Protective Provisions. Occupational seniority determines, among other things, the order of layoffs and recalls and the bidding priorities among flight attendants for selecting their monthly flying schedules. The Allegheny-Mohawk provisions in the CBA required TWA to insist that American agree to integrate the TWA flight attendant seniority lists under the standard process for fair and equitable integration established by the Civil Aeronautics Board in the Allegheny-Mohawk Merger Case, 59 CAB 19 (1972). At all relevant times during the negotiations, IAM's position was that TWA employees' occupational seniority date must be based on the date they entered the job classification at TWA for purposes of a fair and equitable integration. In other words, IAM sought to preserve the occupational seniority rights of TWA flight attendants upon their integration into American. American knew that any representations it made to IAM concerning these benefits were material to IAM in its decision-making process.

American's flight attendants were, and still are, represented by APFA. American's CBA with APFA did not contain Allegheny-Mohawk Labor Protective Provisions and did not allow American to adopt such provisions vis-à-vis other flight attendants in the event of a merger. Thus, American made waiver of the Allegheny-Mohawk provisions, among other changes to the CBA, a pre-condition to its purchase of TWA. In order to facilitate the purchase of TWA, American agreed and represented to IAM and its members that, if IAM voluntarily agreed to waive the Allegheny-Mohawk Labor Protective Provisions, TWA-LLC would adopt mirror benefits or would provide benefits no less favorable than those applicable to similarly situated American employees.

IAM was concerned about the integration of IAM-represented employees into the American/TWA-LLC workforce and repeatedly expressed this to American, stressing that seniority integration was an essential issue that needed to be resolved before the acquisition closed. IAM also filed limited objections, in the bankruptcy court, to TWA's agreement to amend the CBAs without finalizing job security and seniority integration issues with its unions.

On March 9, 2001, in response to IAM's concerns, American and TWA-LLC sent a letter to IAM which stated in relevant part:

For its part, American Airlines, Inc. ("American") agrees to use its reasonable best efforts with its labor organizations representing the mechanics and related and flight attendant crafts or classes (collectively, "mechanics and flight attendants") to secure a fair and equitable process for the integration of seniority. In that regard, American will engage a facilitator to organize meetings with the labor organizations representing the mechanics and flight attendants and American and TWA-LLC. American agrees to adopt the procedures that result from this process for seniority integration of the mechanics and flight attendants.

This letter also included a recognition provision, under which TWA-LLC agreed to recognize IAM as the bargaining representative of the same employees it represented at TWA as of the date of closing of the purchase, subject to action by the National Mediation Board under the RLA.

Relying on the commitment to engage a facilitator and on American's repeated representations that TWA-LLC flight attendants would receive benefits, including seniority status, that mirrored those provided to American flight attendants, IAM withdrew its objections to the Purchase Agreement in the bankruptcy court. The bankruptcy court approved American's purchase of TWA on March 12, 2001.

On March 15, 2001, TWA filed a Section 1113 motion in the bankruptcy court seeking permission to abrogate all of the TWA CBAs then in effect. Abrogation would have eliminated the flight attendants' existing benefits, work rules and grievance procedures as well as IAM's right to represent the TWA flight attendants, essentially turning all TWA employees into "at will" employees. American advised the TWA flight attendants, through IAM, that, for the purchase to close without abrogation of all the CBAs, the labor unions had to agree to voluntarily waive certain provisions of the CBA, including the Allegheny-Mohawk provisions. In a letter dated March 15, 2001, the president of TWA, William Compton, assured the TWA employees that waiving these provisions would not compromise their employment or reduce their benefits.

On March 21, 2001, while the Section 1113 motion was pending before the bankruptcy court, the APFA Board of Directors adopted a resolution which set forth its position on seniority integration issues. The resolution proposed that TWA flight attendants would be "fenced into" TWA's two bases, John F. Kennedy International Airport and Lambert-St. Louis International Airport, with their seniority intact.² It also provided that, for all other purposes, American flight attendants' occupational seniority lists would be preserved intact and that American flight attendants could bid against the TWA flight attendants at JFK and St. Louis, but TWA flight attendants could not bid against American flight attendants at other airports.

Following this APFA resolution, IAM increased its efforts to convince American to honor the commitment embodied in the March 9, 2001 letter to use its reasonable best efforts with APFA to secure a fair and equitable process for integration of seniority. In response, American sent a letter dated March 30, 2001 reaffirming its March 9th commitment...