In re Northwest Airlines Corporation, Case No. 05-17930 (ALG) (Bankr. S.D.N.Y. 8/25/2008)
| Decision Date | 25 August 2008 |
| Docket Number | Case No. 05-17930 (ALG) |
| Parties | In re: NORTHWEST AIRLINES CORPORATION, et al., Chapter 11, Reorganized Debtors. |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York |
Bruce R. Zirinsky, Esq., Gregory M. Petrick, Esq., Nathan A. Haynes, Esq. New York, New York, CADWALADER, WICKERSHAM & TAFT, LLP Counsel for the Reorganized Debtors.
Mark C. Ellenberg, Esq., Washington, D.C., James A. Gauthier, Esq., Kent, Washington, GAUTHIER LAW OFFICES, P.S. Counsel for Craig S. Friday
Before the Court is the objection of the above-captioned reorganized debtors (collectively, the "Debtors") to claim 6335 (the "Claim"), filed by Craig S. Friday ("Claimant"), a former pilot for Northwest Airlines, Inc. ("Northwest"), one of the Debtors. Claimant alleges an unsecured priority claim in the amount of $1,110,256, with three components: 1) $855,788 for wages due from 1999 to the date of the Claim, less disability payments received; 2) $5,000 as compensation for the revocation of travel pass benefits; and 3) $249,468 for sick leave pay and vacation pay for time used while Claimant was removed from active flight status pending a fitness-for-duty exam.
The Debtors assert that the Claim should be disallowed and expunged in its entirety because it is barred by prior adjudication and because Claimant has no extant grievance timely-filed under the 1998-2002 Pilots Agreement (the "Pilots Agreement") between Northwest and the Air Line Pilots Association, International ("ALPA"), the union to which Claimant belonged. Claimant contends in response that Northwest has not complied with the Pilots Agreement, and he requests that the Court (i) require the Debtors to arbitrate his grievances, as allegedly required by the Railway Labor Act (45 U.S.C. § 151 et seq.) (the "RLA"), and (ii) that it rule on the Claim only if Northwest is found liable and monetary damages are assessed by the arbitration panel.
For the reasons set forth below, the Debtors' objection is sustained and the Claim is disallowed.
The facts on which the Claim is based date back to October 8, 1998, when Northwest informed Claimant that he was being removed from service, pending the outcome of a medical examination, referred to as a "Fitness for Duty Exam," pursuant to the Pilots Agreement. Claimant underwent the examination on October 23, 1998, the results of which were received by Northwest in December 1998, at which time Claimant was placed on sick leave. There followed a vast amount of litigation, including the following:
The District Court Case
On May 25, 1999, Claimant and his wife filed a complaint against Northwest in the United States District Court for the Western District of Washington (the "District Court"), captioned Friday et al., v. Northwest Airlines, Inc., Case No. CV-99-00836-JCC. The District Court action asserted claims of wrongful discharge, disability discrimination, age discrimination, retaliation, intentional and negligent infliction of emotional distress on behalf of Claimant's wife, and defamation. The suit was stayed while the parties pursued arbitration, after which by order dated November 2, 2000 (the "District Court Decision"), the District Court granted Northwest summary judgment.1 With respect to the allegation of wrongful discharge, the District Court found that "[d]uring the proceedings before the arbitrator on December 17, 1999, Friday declared, under oath, his intention to voluntarily terminate his employment due to his disability on December 17, 1999." (District Court Decision, p. 2-3.) The District Court found that at the arbitration proceeding Claimant "also agreed to `dismiss all grievances associated with [him] that are pending against the company, except for the grievance related to harassment which will be heard either in January or February.'" Id.2 The District Court found that "the date of Friday's termination of employment with Northwest Airlines was December 17, 1999." Id.
Claimant appealed the District Court Decision, and on February 20, 2002, the United States Court of Appeals for the Ninth Circuit, reviewing de novo, affirmed the District Court. See Friday v. Northwest Airlines, Inc., 31 Fed. Appx. 391 (9th Cir. 2002). The Ninth Circuit held, in part, that Claimant had failed to raise a genuine issue of material fact on his wrongful discharge and federal and state disability discrimination claims because of the prior settlement agreement wherein Claimant "voluntarily terminated his employment as a pilot at Northwest Airlines after stipulating that he was unfit to fly an airplane." Id. at 392.
Subsequent to the Federal litigation described above, Claimant began filing a series of over twenty claims with the Occupational Safety and Health Administration ("OSHA") for whistleblower protection under § 519 of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century ("AIR 21"), 49 U.S.C. § 42121. AIR 21 provides that an air carrier cannot "discharge an employee or otherwise discriminate against an employee with respect to compensation, terms, conditions, or privileges of employment," if the employee discloses to "the employer or Federal Government information relating to any violation or alleged violation of any order, regulation, or standard of the Federal Aviation Administration or any other provision of Federal law relating to air carrier safety . . . ." 49 U.S.C. § 42121(a).
Claimant filed his first complaint with OSHA on April 30, 2002, with a second following on November 18, 2002. Claimant alleged two retaliation claims: (1) Northwest had rescinded Claimant's free travel pass benefits in retaliation for his directing complaints regarding Northwest's safety problems to various government personnel and his allegedly imminent Congressional testimony on the same issue; (2) Northwest had banned Claimant from its property and threatened him with arrest for unlicensed practice of law in retaliation for his serving as a witness in the arbitration case of another Northwest pilot. OSHA dismissed both complaints. Claimant requested de novo review before the Office of Administrative Law Judges ("OALJ"). In an order, dated June 27, 2003, Northwest was granted summary judgment on each claim. See Friday v. Northwest Airlines, Inc., Case Nos. 2003-AIR-00019/00020 (Dep't of Labor June 27, 2003) (the "2003 OALJ Decision").3 The OALJ held that the travel pass claim was time-barred by AIR 21, because 42 U.S.C. § 42121(b)(1) requires that complaints be filed within 90 days after the date on which the alleged violation occurs. (2003 OALJ Decision at 5.)4 With respect to the second claim, the OALJ found that Claimant was an employee for purposes of AIR 21.5 Id. at 8. It nevertheless concluded that Claimant could not sustain a whistleblower claim under the circumstances, stating:
Northwest owes certain duties to Friday as a former employee on disability retirement, primarily paying his pension or other retirement benefits secured by ALPA's Collective Bargaining Agreement . . . As a disabled retiree, Friday continues to accrue seniority and may return to work if his medical disability abates within seven years of his retirement . . . An alteration of these obligations in retaliation for Friday's protected safety activities by Northwest would constitute a retaliatory act related to the employment relationship. Which is to say, Friday must establish that Northwest's actions were in some way related to the `compensation, terms, conditions, or privileges' which arise from Friday's relationship with Northwest as a medically retired former employee.6
Id. at 9. The OALJ ruled that Claimant had failed to establish this predicate and had not shown that an adverse personnel action took place. Id. at 10-11.
The 2003 OALJ Decision, which decided Claimant's first and second complaint, was appealed and reviewed de novo by the Department of Labor Administrative Review Board ("ARB"). The ARB, in an order dated July 29, 2005, adopted the OALJ's opinion and dismissed the complaints. Friday v. Northwest Airlines, Inc., ARB No. 03-132, 1, 3 (July 29, 2005).7 In its decision, the ARB noted that "[o]n December 17, 1999, Friday agreed to voluntarily terminate his employment with Northwest in exchange for Northwest's offer of disability retirement." Id. at 2.
There followed twenty filings by Claimant with OSHA between May 22, 2003 and February 29, 2004. Eighteen were initially dismissed by an OSHA Regional Administrator. Claimant requested a review, and Northwest moved for summary judgment before the OALJ, which dealt with all the allegations in one proceeding. The OALJ discussed each allegation in turn, and granted Northwest summary judgment on all allegations. See Friday v. Northwest Airlines, Inc., Case No. 2004-AIR-00016/00017, at 8-16 (Dep't of Labor June 16, 2004) (the "2004 OALJ Decision).8 After summarizing Claimant's employment and litigation history, the ALJ found that "the Complainant terminated his employment relationship with the Respondent on December 17, 1999, and ceased to be an employee after that date." Id. at 7. Noting Claimant's prior litigation, the ALJ held that the "Complainant is bound by the earlier determinations, and even if he were not, there is no basis for disturbing the earlier findings." Id.9 The ALJ found Claimant to be an "employee" for the purposes of AIR 21, but that "the evidence does not support the Complainant's claim that he retains a current employment status with the Respondent or that he was an employee at the time of the various alleged retaliatory actions." Id.10 The ALJ also held that the travel pass allegations were untimely, as had been decided in the prior OALJ proceeding. Id. at 12.
On August 4, 2006, Claimant filed the Claim. Soon thereafter Claimant moved for an order from this Court compelling the Debtors to arbitrate his purported grievances. The...
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