Soc'y of Prof'l Eng'g Emps. in Aerospace v. Boeing Co.
| Decision Date | 11 December 2012 |
| Docket Number | CIVIL ACTION No. 05-1251-MLB,CIVIL ACTION No. 07-1043-MLB |
| Parties | SOCIETY OF PROFESSIONAL ENGINEERING EMPLOYEES IN AEROSPACE, et al., Plaintiffs, v. BOEING CO., et al., Defendants. |
| Court | U.S. District Court — District of Kansas |
This case comes before the court on cross motions for summary judgment. Plaintiffs' motion is denied and Boeing's1 motion is denied in part and granted in part for the reasons stated herein.
Plaintiff Society of Professional Engineering Employees in Aerospace ("SPEEA"), plaintiff International Association of Machinists and Aerospace Workers ("IAM") and plaintiff District Lodge 70 are unincorporated labor organizations that represent employees in industries affecting commerce for purposes of collective bargaining.These unions represented a majority of the workforce at Boeing.3
In addition, several individuals are plaintiffs in this case. On July 14, 2008, this court granted certification for one class of plaintiffs, the "Harkness Class." (Doc. 118). Plaintiffs David A. Harkness, William G. Hartig, Jr., David Lewandowski, Jene Lewandowski, Ronald Owens, Richard Pullen, Tomey Shabshab, Donna Zagonel, and Michael Baker, are the named representatives for the Harkness Class. The Harkness Class is the group of plaintiffs who accepted employment with Spirit.
There are two additional groups of plaintiffs who are not certified as a class and are referred to as the "McCartney/Boone Plaintiffs." Those plaintiffs are Michael McCartney, Norris Palmer, Bradley Stevens, Margaret Wieland, James Boone, Bruce Carselowey, Marsha Gray, Darlene Kerns, Randall McFarland, Larry Moore, Russell Norman, James Queen, Timothy Sanders, Marlon Stocking, William Stoner, Lisa Wright, and Gary Leavell. The McCartney/Boone plaintiffs are those individuals who either did not accept an offer of employment with Spirit or failed to sign a consent form to be eligible for employment with Spirit.4
The individual plaintiffs began employment at various times at Boeing's Facility in Wichita ("Wichita plant") in positions that were within bargaining units represented by SPEEA, the IAM and IBEW 271. All the named individual plaintiffs had 10 or more years of service and were between 49 and 54 years of age as of June 16, 2005, and have now turned 55.5
The Boeing defendants are as follows: The Boeing Company ("Boeing") is a corporation that previously operated a commercial aircraft manufacturing company in Wichita, Kansas. Boeing currently operates other plants around the United States. The Boeing Company Employee Retirement Plan ("BCERP") is an ERISA-covered employee pension benefit plan that provides certain specified pension benefits to eligible participants in accordance with the terms and conditions of that plan. The Boeing Retiree Health and Welfare Benefit Plan ("BRHP") is an ERISA-covered employee welfare benefit plan that provides certain specified benefits to eligible participants in accordance with the terms and conditions of that plan. The Boeing Company Layoff Benefits Plan ("Boeing Layoff Benefits Plan") provides certain severance benefits for eligible Plan participants in accordance with the terms and conditions of that Plan. Boeing is the sponsor of the BCERP, the Boeing Retiree Health Plan, and the Boeing Layoff Benefits Plan.
The Boeing Employee Benefits Plans Committee ("Committee" or"EBPC") is the Plan Administrator of the BCERP, BRHP6 , and Boeing Layoff Benefits Plan. The Committee is comprised of Boeing officers and employees, appointed to the Committee by Boeing's Board of Directors.
Spirit AeroSystems Holdings, Inc. ("Spirit Holdings") is a Delaware corporation with its headquarters in Kansas. Spirit AeroSystems, Inc. ("Spirit"), is a wholly-owned subsidiary of Spirit Holdings. The Spirit AeroSystems Holdings, Inc. Pension Value Plan ("the Spirit Plan") is an employee pension benefit plan that provides certain specified benefits to eligible participants in accordance with the terms and conditions of that plan. The Spirit AeroSystems Holdings, Inc. Retirement Plan for IBEW, WEU, WTPU and IAM Employees was merged into the Spirit Plan on or about December 31, 2005. Spirit Holdings is the plan sponsor of the Spirit Plan.7
In 2003, Boeing decided to bundle its commercial aircraft assets in Wichita, Tulsa and McAlester, Oklahoma, to sell to an as then unknown company. Boeing's plan was for the new company to manufactureparts and then sell those parts to Boeing. Boeing assigned a team of personnel to work on employment issues concerning the potential sale. In 2005, Boeing sold certain assets associated with its manufacture of commercial airplanes in Wichita and Oklahoma to Onex, a private equity firm, which had created a company called Mid-Western Aircraft Systems, Inc. ("Mid-Western") to hold the purchased assets and to operate the commercial airplane business. Mid-Western was later renamed Spirit. On February 22, 2005, Boeing and Mid-Western (hereinafter "Spirit") executed an Asset Purchase Agreement (APA). The unions were not consulted by Boeing or Spirit about the terms of the APA.
In March 2005, Boeing advised the unions and employees of the Wichita plant that Worker Adjustment and Retraining Notification Act (WARN) notices8 would be issued in connection with the sale of assetsto Spirit.
Boeing entered separate talks, called "effects bargaining," with IAM, SPEEA, and IBEW 271 over the effects of the sale of the assets of the Boeing Commercial Aircraft facility in Wichita. There was no agreement, however, as to the effect of the sale with respect to the issues before the court and especially those relating to a "lay off." Boeing ultimately retained a small number of employees to continue with its military projects which were not subject to the sale. The remaining employees received WARN notices which advised them of their recall rights, as set forth in the CBAs, to certain positions that each individual was qualified for.9
Spirit announced that it planned to operate the Wichita plant to manufacture airplane parts and that it would hire most of the Boeing employees. All Boeing employees who worked at the Wichita plant were informed that they were required to sign a Consent to Release Information form as a condition to be considered for employment by Spirit. The consent form allowed Boeing to disclose the employees' employment records to Spirit.
Spirit interviewed the Boeing managers of certain employees whoapplied for work at Spirit. Spirit hired most but not all of the Boeing employees who sought employment with Spirit. The employees who applied for but did not receive a position with Spirit were eligible to go through Boeing's redeployment process and were treated as laid off employees. While Spirit was not required to hire all of Boeing's employees, the APA required Spirit to pay a higher purchase price if it hired less than 90% of Boeing's workforce.
On or about June 17, 2005, referred to as "Day One", Spirit began manufacturing airplane parts in Wichita. As of that date, approximately 85% of former Boeing employees had been hired by Spirit and started work as Spirit employees, including the members of the Harkness class.
i. New CBAs and Benefits
Spirit did not assume any of the existing collective bargaining agreements that Boeing had with the unions representing the commercial-division employees in Wichita. On Day One, Spirit did not have executed collective bargaining agreements with the IAM10 , SPEEA-WEU, or SPEEA-WPTU11 bargaining units. When the CBAs were executed, the IAM- and IBEW-represented employees agreed to a 10% pay reduction but negotiated an equity bonus, which ultimately paid out $61,44012 per employee when Spirit became a public company. The SPEEA-represented employees declined an offer for reduced pay and therefore received the same pay at Spirit but were not eligible for the bonus.
The APA between Boeing and Spirit included provisions relating to the BCERP and certain assets and liabilities. Under the terms of the APA, Spirit agreed to assume the accrued pension liabilities for its newly hired employees, i.e. the members of the Harkness Class. Spirit created "mirror pension plans13 " — the Spirit Plans — for the Harkness Class members who were not yet age 5514 , under which they will receive certain pension benefits when they terminate their employment with Spirit.15 Boeing transferred assets from the BCERP to the Spirit Plans that it determined were sufficient to fund the liabilities to the Harkness Class who would be participants in the Spirit Plans. Spirit, however, did not continue to fund these plans for its employees and the assets were in essence frozen. Spirit's defined contribution plan for its SPEEA and IBEW-represented employees included 401(k) benefits. It was not a defined benefit plan as Boeing had provided.16 Spirit also agreed to retain vacation pay, sick leave, create flexible spending accounts and provide health insurancebenefits17 for its employees and eligible retirees.18 Spirit's estimated savings in employee compensation and benefits was $100 million for the first year of operation.
Boeing treated the departing commercial division employees differently depending on the employees' circumstances. Employees who accepted positions with Spirit were considered "terminated pursuant to divestiture," which is abbreviated as "TER-DIV." Employees who applied for a position with Spirit but were not hired were considered to be "laid off" from Boeing. Finally, Boeing employees who did not apply for a position with Spirit or declined an offer of employment with Spirit were considered "resigned" from employment. The EBPC hadinformed all Boeing employees prior to the sale that employees who refused to apply for or declined a position at Spirit and those who went to work at Spirit would not be treated as "laid...
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