Marcoux v. American Airlines, Inc.
| Decision Date | 22 July 2008 |
| Docket Number | No. 04 CV 1376 (NG)(KAM).,No. 04 CV 634 (NG)(KAM).,No. 03 CV 4987 (NG)(KAM).,04 CV 1376 (NG)(KAM).,03 CV 4987 (NG)(KAM).,04 CV 634 (NG)(KAM). |
| Citation | 645 F.Supp.2d 68 |
| Parties | Anne M. MARCOUX, Jill Lindsay, Kirsten Evans, Constance LaMattina, Elizabeth Lee Price, Judith Alexander, Deborah Dean, Christina Ford, Patti Gentry, LaTonya K. Gillmore, Janet Gold, Dale Hagar, Julie Horan, Louis Horter, Carol Johnson, Molly Kaiman, Beverley Kalkhof, Nancyanne Kello, Patricia Kennedy, Janet Kirby, John Kline, Dottie Long, Karen Rivoira, Laurence E. Salomon III, Daniel Santiago, Rebecca Smith, and Deborah Whittington on Behalf of themselves and all others similarly situated (i.e., the "Class"); Constance LaMattina also on behalf of Subclass I, Kirsten Evans, Jill Lindsay and Elizabeth Lee Price also on Behalf of Subclass II; Deborah Whittington also on Behalf of Subclass III, and Janet Kirby also on Behalf of Subclass IV, Plaintiffs, v. AMERICAN AIRLINES, INC., A.M.R. Corporation, Association of Professional Flight Attendants, and John Ward, as President of Association of Professional Flight Attendants, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Emily Maruja Bass, Law Offices of Emily Bass, Brooklyn, NY, Martin Garbus, Mark J. Rachman, Davis & Gilbert, LLP, Michael S. Haber, Law Office of Michael Haber, Steven Mark Nachman, Law Offices of Steven M. Nachman, New York, NY, David Nathan Lake, Jeffrey G. Huron, Jennifer Raphael Komsky, Huron Maki & Johnson, Los Angeles, CA, for Plaintiffs.
Jonathan C. Fritts, Christine Bannon Cox, Thomas E. Reinert, Jr., Morgan, Lewis & Bockius LLP, Washington, DC, Melissa C. Rodriguez, Sam Scott Shaulson, Thomas Edward. Reinert, Jr., Sam Scott Shaulson, Morgan Lewis & Bockius, LLP, Michael L. Winston, Stephen B. Moldof, Travis M. Mastroddi, Cohen, Weiss And Simon, LLP, Michael S. Haber, Law Office of Michael Haber, New York, NY, Glenn Rothner, Rothner Segall & Greenstone, Pasadena, CA, Michael L. Winston, Stephen B. Moldof, Cohen, Weiss and Simon, LLP, New York, NY, Chris A. Hollinger, Jeffrey Edward Raskin, Robert A. Siegel, O'Melveny & Myers, Los Angeles, CA, for Defendants.
Plaintiffs bring this action against Defendants American Airlines, Inc. ("American," or the "Company"), A.M.R. Corporation ("AMR" or, together with American, the "Company Defendants"), the Association of Professional Flight Attendants ("APFA" or the "Union"), and John Ward, in his capacity as President of APFA ("Ward," also included in "APFA" or the "Union"). In light of this court's previous Order, see Marcoux v. Am. Airlines, Inc., 2006 WL 842888, 2006 U.S. Dist. LEXIS 14130 (E.D.N.Y. March 28, 2006), remaining against Company Defendants are hybrid claims for breach of the duty of fair representation ("DFR") and violations of the Railway Labor Act ("RLA"), 45 U.S.C. §§ 151 et seq.; remaining against APFA are claims for breach of the DFR and breach of the APFA constitution.
All defendants move for summary judgment dismissing the remaining claims. Plaintiffs move for class certification and for summary judgment on all claims except the claim against APFA for breach of the APFA constitution. For the reasons set forth below, the motions for summary judgment filed by Company Defendants and APFA are granted in their entirety plaintiffs' motion for summary judgment is denied, and their motion for class certification is denied as moot.
Unless otherwise indicated, the facts set forth below are undisputed.
American is a "carrier by air" within the meaning of the RLA, 45 U.S.C. § 181. AMR is the publicly-traded parent company of American. At all pertinent times, APFA was the certified and exclusive representative of the class of flight attendants employed by American and is a "labor organization" within the meaning of the RLA. Ward served as President of APFA from April 2000 through August 2004. At all pertinent times, plaintiffs were members of APFA.
Between 1998 and 2001, APFA and American engaged in Section 6 negotiations under RLA, 45 U.S.C. § 156.1 In June 2001, on the last day of the "cooling-off" period, APFA and American reached a tentative agreement on the terms of a new Collective Bargaining Agreement (the "2001 CBA"2). The tentative agreement provided "industry-leading wages" and working conditions and was ratified by a 96% affirmative vote of the APFA membership, tabulated on September 12, 2001. The CBA was to continue until becoming "amendable" on November 30, 2004.3 Early in 2001, as part of what would come to be known as the "turnaround plan," American responded to financial difficulties by altering its business plan to remain competitive with low-cost carriers.
As a result of the terrorist attacks of September 11, 2001, the major airlines suffered billions of dollars of losses. American's net loss in 2002 was $3.5 billion and it projected an additional loss of $1 billion in the first quarter of 2003.
Thus, in 2002, after comparing its labor costs to those of its competitors, American developed a cost-cutting strategy relating to its pilots, mechanics, flight attendants, and other non-labor sources. American decided it needed to cut labor costs associated with the flight attendant group by $340 million annually to remain competitive. It also identified $2 billion in annual cost reductions that could be obtained through sources other than labor. Notwithstanding these cost-cutting plans, American, during this period, funded a retirement plan providing bankruptcy-protected pension benefits to senior officers. See below Facts § IV.
By letter dated December 6, 2002 from American's then-CEO, Don Carty ("Carty"), and its then-President, Gerard Arpey ("Arpey"), American requested that APFA, as well as the Allied Pilots Association ("APA"), and the Transport Workers Union ("TWU"), the bargaining representative for the Company's mechanics and other ground employees, agree to forgo two upcoming compensation increases provided under the 2001 CBA, namely, a 3% pay increase scheduled to take effect January 1, 2003, and a further increase scheduled to take effect in July 2003. American recognized at the time that, even if APFA agreed to the requested concessions, American's economic turnaround would not be complete. American stated that the concessions were non-negotiable.
In response to American's December 2002 request to forgo pay increases, APFA informed the Company that it would conduct a detailed review of the Company's finances to determine if there was a legitimate need for the relief American sought. APFA retained Mark King as a financial advisor to assist with its review of American's finances. King had assisted the APFA Negotiating Committee in the negotiations that led to the 2001 CBA. By January 1, 2003, however, APFA's financial review had not yet concluded, and the Company implemented the 3% pay increase as required under the 2001 CBA.
The Company's financial condition declined in the first quarter of 2003 to a greater extent than previously projected. American was losing cash from operations at the rate of approximately $5 million per day—nearly $7.5 million per day if capital expenditures and debt service were included, and between $14 and $21 million per day if pension contributions were included.
In early February 2003, the Company made additional demands for cost-saving contractual concessions from each of its unions, including APFA. Specifically, it demanded $1.6 billion in annual "permanent" labor cost reductions, i.e., cost savings of $1.6 billion per year on an ongoing basis, from APFA, the APA, and TWU. Of this amount, the Company indicated that $340 million annually would be required from the flight attendant workforce.
Soon after APFA received American's February 2003 demand for concessions, Ward convened a meeting of the APFA Board of Directors ("BOD") on February 11-12, 2003.4 The BOD "received a thorough briefing and analysis from [its] advisors and a presentation from the APFA Negotiating Committee." Ward Dep. 257-58. On February 12, 2003, the BOD adopted a resolution stating that
APFA is committed to the survival of the Company and recognizes the importance to the membership of taking appropriate steps to ensure that the Company is a viable and successful entity which, at the same time, respects the needs and legitimate rights and expectations of its employees and specifically of the American . . . flight attendants.
It further provided for "a comprehensive, multi-faceted plan of action" designed to continue APFA's financial analysis of the Company and prepare for concessionary negotiations that might ensue. The BOD directed "the Negotiating Committee, under the direction of the APFA President, . . . to take all necessary action . . . to be able to expeditiously address varying contingencies." Id. The BOD's "overriding obligation was to . . . best protect the interests of the Flight Attendants." President's Report, Ward Ex. 10.
In late February or early March 2003, American CEO Carty informed APFA, at a special APFA BOD meeting, that American would file for bankruptcy protection unless it obtained an agreement from APFA by March 31, 2003 that provided the $340 million in annual cost reductions that American was demanding. American set the same deadline for APA and TWU to reach agreements, in the absence of which the Company would file for bankruptcy.
The APFA BOD met again in the second week of March 2003. At that meeting, it adopted a Resolution dated March 10, 2003 stating, "the best interests of the membership will be served by taking all appropriate action to expeditiously address the Company's financial situation,"...
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