Krakowski v. Am. Airlines, Inc. (In re AMR Corp.)

• Decision Date: 22 September 2015
• Docket Number: Adv. No. 14–01920 SHL,Case No. 11–15463 SHL Confirmed
• Citation: 538 B.R. 213
• Parties: In re: AMR Corporation, et al., Reorganized Debtors. John Krakowski, et al., Plaintiffs, v. American Airlines, Inc., et al., Defendants.
• Court: U.S. Bankruptcy Court — Southern District of New York

538 B.R. 213

In re: AMR Corporation, et al., Reorganized Debtors.John Krakowski, et al., Plaintiffs

v.American Airlines, Inc., et al., Defendants.

Case No. 11–15463 SHL Confirmed

Adv. No. 14–01920 SHL

United States Bankruptcy Court, S.D. New York.

Signed September 22, 2015

JACOBSON PRESS & FIELDS P.C., Counsel for Plaintiffs, 168 North Meramec Avenue, Suite 150, Clayton, Missouri 63105, By: Allen P. Press, Esq.

WEIL, GOTHSHAL & MANGES, Counsel for American Airlines, Inc., 767

Fifth Avenue, New York, New York 10153, By: Stephen Karotkin, Esq., Alfredo R. Perez, Esq., Stephen A. Youngman, Esq.

MORGAN LEWIS & BOCKIUS LLP, Counsel for American Airlines, Inc., 1111 Pennsylvania Avenue, N.W., Washington D.C. 20004, By: Jonathan C. Fritts, Esq.

JAMES & HOFFMAN, P.C., Counsel for the Allied Pilots Association, 1130 Connecticut Avenue, NW, Suite 950, Washington, DC 20036, By: Edgar N. James, Esq., Steven K. Hoffman, Esq., Darin M. Dalmat, Esq.

STEPTOE & JOHNSON LLP, Counsel for the Allied Pilots Association, 1330 Connecticut Avenue, NW, Washington, DC 20036, By: Filiberto Agusti, Esq., Joshua R. Taylor, Esq.

MEMORANDUM OF DECISION

SEAN H. LANE, UNITED STATES BANKRUPTCY JUDGE

Before the Court are the Defendants' motions to dismiss the amended complaint (the “Complaint”) (ECF No. 1–9),¹ filed by Plaintiffs John Krakowski, Kevin Horner, and M. Alicia Sikes on behalf of themselves and all persons similarly situated against Defendants American Airlines, Inc. (“American”) and the Allied Pilots Association (the “APA”), which is the pilots' union at American. The Plaintiffs are former Trans World Airlines (“TWA”) pilots now employed by American.²

As part of American's bankruptcy restructuring, it sought and received authority to reject its then-existing collective bargaining agreement with the APA (the “Old CBA”). American subsequently negotiated a new collective bargaining agreement for its pilots (the “New CBA”). At the same time, American and the APA entered into a letter agreement to continue using the same pilot seniority list that had been utilized under the Old CBA. In the three counts of their Complaint, the Plaintiffs allege that through the continued use of this seniority list: (1) American breached the terms of the New CBA, (2) the APA breached its duty of fair representation, and (3) American colluded in the APA's breach of that duty.

For the reasons set forth below, the Court agrees with the Defendants that the Plaintiffs have failed to state a claim for breach of the New CBA. The Court therefore grants the Defendants' motions to dismiss Count I of the Complaint, as well as the claims within Counts II and III that depend upon the breach of contract claim. The Court, however, denies the motions with respect to the remaining claims in Count II and III, finding that they sufficiently state a claim for a breach of the duty of fair representation and do not rely upon the breach of contract claim. As to the final collusion claim, the Court finds that the Plaintiffs have failed to set forth facts sufficient to allege a plausible claim of collusion.

BACKGROUND

As is the case with any motion to dismiss, the Court accepts the allegations of the Complaint as true. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In April 2001, American acquired the assets of TWA. Compl. ¶ 8. Shortly thereafter, American and the APA executed Supplement CC, which modified American's pilot seniority list to include the former TWA pilots, but stripped them of much of their seniority. Id. ¶ 10. Under Supplement CC, roughly half of the TWA pilots were moved to the bottom of the seniority list, while others were integrated into the list but retained a fraction of the seniority that they held at TWA. Id. ¶¶ 11–12.

In November 2011, American filed for Chapter 11 protection. Id. ¶ 14. American subsequently obtained the Court's permission to abrogate the Old CBA under Section 1113 of the Bankruptcy Code. Id. ¶ 15; see also In re AMR Corp., 477 B.R. 384, 401 (Bankr.S.D.N.Y.2012) ; In re AMR Corp., 478 B.R. 599 (Bankr.S.D.N.Y.2012). The Old CBA was void as of September 5, 2012. Compl. ¶ 16. As of September 5, 2012, all American pilots were technically at-will employees not subject to a valid collective bargaining agreement. Id. ¶ 17. American and the APA subsequently negotiated the New CBA, which became effective on January 1, 2013. Id. ¶ 18.³

The New CBA outlined how pilot seniority would be determined. Id. ¶¶ 21–24. It also expressly provided “that certain other rules in this Agreement stipulating specific methods and procedures of applying system seniority shall govern such application of system seniority only to the extent of the specific provisions of such rules.” See New CBA Section 13(D). The New CBA included a letter of agreement numbered 12–05 (“LOA 12–05”) that was entered into between American and the APA on January 1, 2013.See New CBA at LOA 12–05–1.⁴ LOA 12–05 provided that “[American] and [the] APA agree that the TWA pilots' existing seniority placements on the Pilots' System Seniority List are final and shall continue pursuant to Section 13 of the CBA notwithstanding the termination of Supplement CC and any preferential flying rights associated with those seniority placements.” Id. While the phrase “preferential flying rights” in Supplement CC is not relevant to the pending motions, these rights were described in a prior decision in a related case between these parties in this Court:

“To compensate for ... loss of seniority, Supplement CC created a ‘protective fence’ in St. Louis, creating minimum Captain and First Officer positions in St. Louis and granting the legacy TWA pilots preferential bidding for these positions. Thus, while reducing the seniority of legacy TWA pilots put them at a relative disadvantage for purposes of bidding against a much larger number of American pilots for positions on other routes, the protective fence guaranteed a certain number of desired positions on routes from St. Louis with bidding advantages for legacy TWA pilots.”

Krakowski v. American Airlines, Inc. (In re AMR Corp.), 2015 WL 2414750, at *1, 2015 Bankr.LEXIS 1721, at *3–4 (Bankr.S.D.N.Y. May 19, 2015). In effect, American and the APA agreed to use the same seniority list that was utilized under the Old CBA and Supplement CC, which meant that the Plaintiffs and other former TWA pilots remained at a lower seniority level than their actual years of service. Compl. ¶ 28.

DISCUSSION

Federal Rule of Civil Procedure 12(b)(6), made applicable by Bankruptcy Rule 7012, provides that a complaint must be dismissed if it fails to state a claim upon which relief can be granted. In analyzing a motion to dismiss under Rule 12(b)(6), a court looks to whether a plaintiff has pleaded “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A court must proceed “on the assumption that all the allegations in the complaint are true.” Id. at 555, 127 S.Ct. 1955. Taken as true, these facts must establish “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 677, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). “However, this does not mean that a claim must contain ‘detailed factual allegations' to survive a Rule 12(b)(6) motion to dismiss.” Eastman Chem. Co. v. Nestle Waters Mgmt. & Tech., No. 11–2589, 2012 WL 4474587, at *4 (S.D.N.Y. Sept. 28, 2012) (citing Talley v. Brentwood Union Free Sch. Dist., 08 Civ. 790, 2009 WL 1797627, at *4 (E.D.N.Y. June 24, 2009) ). Rather, the court must determine “whether the well-pleaded factual allegations, assumed to be true, plausibly give rise to an entitlement to relief.” Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir.2010) (citing Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 ). The court must also draw all reasonable inferences in favor of the non-moving party. Ganino v. Citizens Utils. Co., 228 F.3d 154, 161 (2d Cir.2000).

A Rule 12(b)(6) motion is addressed to the face of the pleading. Goldman v. Belden, 754 F.2d 1059, 1065–66 (2d Cir.1985). But the parties in this case have asked this Court to consider events and documents that go beyond the pleadings, including the New CBA. As the New CBA is both cited in and attached to the Complaint as an exhibit, it can be considered. See Cortec Indus. Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir.1991) (“[T]he complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference.”); Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”).

The Defendants seek to rely upon a second document, which is an arbitration decision issued on March 12, 2014 by Richard I. Bloch, Esq. (the “Bloch Decision”). This arbitration decision addressed pilot grievances on the very same issues raised in the Complaint. The Plaintiffs acknowledge the arbitration took place and address the merits of it in their opposition. But while the Plaintiffs do not object to the Court taking judicial notice of the decision, the decision is not attached to or mentioned in the Complaint. As such, the Court takes judicial notice only of the existence of the decision, but not of the truth of the facts contained within it. See Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 157 (2d Cir.2006) (“A court may take judicial notice of a document filed in another court not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.... Hence, although the final determination ... may be public records of which a court may take judicial notice, it may do so on a motion to dismiss only to establish the existence of the opinion, not for the truth of the facts asserted in the opinion.”).⁵

A. Plaintiffs Fail to State a Claim that American Breached the New CBA

In Count One of the...