Holmes v. Air Line Pilots Ass'n

• Citation: 745 F.Supp.2d 176
• Decision Date: 12 October 2010
• Docket Number: No. 08–CV–5232 (KAM) (CLP).,08–CV–5232 (KAM) (CLP).
• Parties: Judson W. HOLMES, et al., Plaintiffs,v.AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

745 F.Supp.2d 176

Judson W. HOLMES, et al., Plaintiffs,

v.AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, et al., Defendants.

No. 08–CV–5232 (KAM) (CLP).

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

Oct. 12, 2010.

Michael S. Haber, Law Office of Michael Haber, New York, NY, for Plaintiffs.David M. Semanchik, Elizabeth A. Ginsburg, Air Line Pilots Association, International, Herndon, VA, Joseph J. Vitale, Michael L. Winston, Travis M. Mastroddi, Cohen, Weiss and Simon, LLP, New York, NY, Susan W. Pangborn, William Boice, Kilpatrick Stockton, LLP, Atlanta, GA, for Defendants.

MEMORANDUM & ORDER

MATSUMOTO, District Judge:

Plaintiffs, twenty-one former Delta Air Line, Inc. pilots, who were required by previous federal law to retire at age 60 during the period between September 16, 2006 and December 4, 2007, commenced this action against Delta Air Lines, Inc. (“Delta”), the Air Line Pilots Association, International (“ALPA” or “the Union”), and the president of ALPA, John Prater (“Prater”), ¹ alleging, inter alia, (1) violations of the Age Discrimination in Employment Act (“ADEA”) and the Older Workers Benefit Protection Act (“OWBPA”), ² 29 U.S.C. §§ 621 et seq., against both defendants, (2) breach of contract against ALPA, and (3) breach of implied contract against Delta. ³ ( See generally Doc. No. 1, Compl.; Doc. No. 3, First Amended Complaint (“Am. Compl.”).) Delta and ALPA separately move to dismiss plaintiffs' claims pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), and the court held oral argument on both defendants' motions on April 21, 2010. (Doc. No. 40, ALPA's Motion to Dismiss (“ALPA Mot.”); Doc. No. 43, Delta's Motion to Dismiss (“Delta Mot.”); Tr. of 4/21/10 Oral Argument (“Tr.”).) For the reasons that follow, the motions of ALPA and Delta are both granted, and plaintiffs' claims are dismissed in their entirety.

BACKGROUND

The following facts are taken from plaintiffs' Amended Complaint, which the court must assume to be true for the purposes of resolving Delta's and ALPA's motions to dismiss and, where indicated, the factual background is supplemented by facts and information drawn from documents external to the Amended Complaint, which plaintiffs explicitly reference, rely upon or cite to within the Amended Complaint, or are in the purview of judicial notice. These external documents have been provided to the court as attachments to the defendants' motions to dismiss.

I. Parties

Plaintiffs are twenty-one former Delta commercial airline pilots, hired at various dates ranging “almost exclusively between 1972 and 1991.” (Am. Compl. ¶ 55.) All plaintiffs, with the exception of one,⁴ were born between September 16, 1946 and December 4, 1947, and turned sixty between September 16, 2006 and December 4, 2007. ( See id. ¶¶ 12–53.) Plaintiffs were required to retire on their sixtieth birthdays pursuant to the Federal Aviation Administration's (“FAA”) longstanding “Age 60 Rule.” ⁵ ( Id. ¶¶ 86–87, 96.) On December 13, 2007, President Bush signed into law the Fair Treatment of Experienced Pilots Act (“FTEPA”), 49 U.S.C. § 44729, an act permitting commercial airline pilots to continue working as such until the age of sixty-five. ( Id. ¶ 88.) However, FTEPA was not retroactive and did not allow pilots, who were under the age of sixty-five but who had already retired under the Age 60 Rule, to return to their former jobs, or to maintain their seniority and position if the pilot returned to commercial flying. ( Id. ¶ 89.) Thus, because plaintiffs, with the exception of one, turned sixty before the enactment of FTEPA on December 13, 2007, they had already retired and could not return to their former jobs, as prescribed by FTEPA.⁶ ( Id.)

Defendant ALPA is a labor union for airline pilots and acts as the exclusive bargaining representative of Delta's pilots, including plaintiffs, during the time of their employment with Delta. ( Id. ¶¶ 60, 73.) ALPA acts through a Master Executive Council (“MEC”) at each airline at which it represents pilots. ( Id. ¶ 68.) The MEC at each airline, comprised of pilots from that airline carrier, serves as the coordinating council for Union membership at that airline. ( Id. ¶¶ 69–70.) Defendant Prater is the President of ALPA and is sued only in his representational capacity. ( Id. ¶ ¶ 3(c), 65, 67.) Defendant Delta, an airline carrier, employed all of the plaintiffs prior to their mandatory retirement under the Age 60 Rule. ( Id. ¶ ¶ 55, 56, 58, 84, 87.)

II. Delta's Bankruptcy & Bankruptcy Restructuring Agreement (Letter of Agreement # 51)

In October 2004, Delta negotiated concessions from its pilots and subsequently reduced its pilots' salaries by approximately one third of their prior pay. ( Id. ¶ 99.) On September 14, 2005, Delta filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Southern District of New York (“the Bankruptcy Court”). ( Id. ¶ 102.) Notice of Delta's bankruptcy was sent to all Delta employees in a notice process that was completed on September 30, 2005. ( See Doc. No. 43, Ex. 1, Delta's Notice of Bankruptcy & Ex. 2, Aff. of Mailing.) On June 22, 2006, a second notice of bankruptcy was sent to all Delta employees, advising them about the process of filing claims against Delta and filing requests for payment from Delta. (Doc. No. 43, Ex. 3, Delta's Second Notice of Bankruptcy & Ex. 4, Aff. of Mailing.) Finally, on May 10, 2007, potential claimants, including Delta's employees, were notified of the cutoff date for asserting claims against Delta that arose after the petition date of September 14, 2005 but prior to April 30, 2007, the “Effective Date” of Delta's Bankruptcy plan. ( See Doc. No. 43, Ex. 5, Affs. of Publication.)

During the Chapter 11 reorganization, ALPA and Delta entered into a Bankruptcy Restructuring Agreement, memorialized as Letter of Agreement # 51 (“Letter 51”), which modified the existing 2004 Pilot Working Agreement (“PWA”) between Delta and ALPA and granted further concessions to Delta.⁷ (Am. Compl. ¶¶ 125, 128.) The PWA is a collective bargaining agreement (“CBA”) between Delta and ALPA which sets forth the rates of pay, rules, working conditions, and benefits fund contributions for Delta's pilots. (Am. Compl. ¶¶ 74, 125, 132; Doc. No. 43, Ex. 6, Letter of Agreement 51 (“Letter 51”) at 1.) Section 19 of the PWA provides that the Delta Pilots' System Board of Adjustment, established in compliance with Section 204, Title II of the Railway Labor Act (the “RLA”), as amended, 45 U.S.C. § 151 et. seq., “will have jurisdiction over disputes growing out of grievances or out of the interpretation or application of any of the terms of the PWA.” (Doc. No. 41, Ex. 4, Pilot Working Agreement (“PWA”) at 175.) Letter 51 provides that “[t]his BANKRUPTCY RESTRUCTURING AGREEMENT is made and entered into in accordance with the provisions of the Railway Labor Act, as amended” and it specifies amendments, additions, and deletions to the PWA section by section. (Letter 51 at 1–2.) ALPA and Delta agreed that Letter 51 would remain in effect for forty-three months, beginning on June 1, 2006 and ending on December 31, 2009 (the “concessionary period” or “term of Letter 51”). (Am. Compl. ¶ 130; Letter 51 at 2.)

Among the concessions contained in Letter 51 was an additional 14% decrease in the Delta pilots' hourly pay rates. (Letter 51 at 5; see also Am. Compl. ¶ 132.) In consideration for these salary reductions and other concessions, Delta gave ALPA a non-priority, unsecured $2.1 billion bankruptcy claim (“the ALPA Claim”). (Am. Compl. ¶¶ 131–32; Letter 51 at 36–37.) Letter 51 specifically provided that the ALPA Claim was given to ALPA “in respect of the concessions made by ALPA and savings to [Delta] resulting from achievement of consensual [m]odifications to the PWA.” (Am. Compl. ¶ 136 (quoting Letter 51 at 36).)

Letter 51 also contained a provision that provided, in relevant part, that ALPA “would essentially support any voluntary, involuntary or distress termination of the Delta Pilots Retirement Plan and other related retirement plans.” (Am. Compl. ¶ 134; Letter 51 at 37.) In exchange, Delta agreed to provide ALPA with convertible notes in the amount of $650 million (the “Notes”) in the event that the Delta Pilots Retirement Plan (“DPRP”) was terminated. (Am. Compl. ¶ 133; Letter 51 at 17–18, 37, 40–42.) Delta also sought, and received, approval of the termination of the DPRP by the Pension Benefit Guaranty Corporation (“PBGC”) ⁸ in exchange for an unsecured $2.2 billion bankruptcy claim and $225 million in cash.⁹ (Am. Compl. ¶¶ 118, 120, 121; Notes Dispatch at 6.) With permission from the Bankruptcy Court, Delta terminated the DPRP on September 2, 2006. (Am. Compl. ¶¶ 115, 118, 121.)

The Bankruptcy Court approved of Delta and ALPA entering into modifications of the collective bargaining agreement set forth in Letter 51. ( See Doc. No. 43, Ex. 7, Bankruptcy Court's Approval Order (“Approval Order”).) Delta later assumed Letter 51 in its Bankruptcy Restructuring Plan, which was subsequently approved and memorialized by Order of the Bankruptcy Court. (Am. Compl. ¶ 129; See Doc. No. 43, Ex. 11, Delta's Bankruptcy Reorganization Plan (the “Plan”) & Doc. No. 10, Bankruptcy Court's Confirmation Order (the “Confirmation Order”).)

III. Allocation Models for the ALPA Claim & Notes

According to the Amended Complaint, Letter 51 provided ALPA, through its MEC, “exclusive authority” to determine the manner of allocating the ALPA Claim and the Notes (jointly “the proceeds”) for distribution among Delta pilots. (Am. Compl. ¶ 137; Letter 51 at 36–37, 40.) The only agreed-upon restriction contained in Letter 51 on ALPA's authority to determine the allocation method for the ALPA Claim was that the method be “reasonable and lawful.” ¹⁰ (Am. Compl. ¶ 138; Letter 51 at 36.) Letter 51 further required that the distribution of the Notes “comply with law or regulation” and “be capable of being calculated and tracked by computer.” (Letter 51 at...