Thompson et al v. American Airlines Group
Filing
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MEMORANDUM Opinion and Order: For the reasons stated herein, the Court grants American Airlines motion to dismiss 21 . Civil case terminated. Signed by the Honorable Sharon Johnson Coleman on 9/2/2015. Mailed notice(air, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHER THOMPSON, et al., individually and on
behalf of all others similarly situated,
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Plaintiffs,
v.
AMERICAN AIRLINES GROUP, INC., a
Delaware Corporation, f/k/a AMR Corporation,
and AMERICAN AIRLINES, INC., a Delaware
Corporation,
Defendants.
Case No. 14 cv 7980
Judge Sharon Johnson Coleman
MEMORANDUM OPINION AND ORDER
Plaintiffs are twenty-six retired flight attendants who filed a five-count Amended Complaint,
alleging breach of contract, promissory estoppel, negligent misrepresentation, fraudulent
misrepresentation, and tortious interference with contract against defendants American Airlines
Group, Inc., and American Airlines, Inc., (collectively “American Airlines”) for altering plaintiffs’
boarding priority status for travel benefits. 1 American Airlines moves to dismiss [21] the Amended
Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(1) and for failure to state a claim under Rule 12(b)(6). For the reasons stated herein, the Court
grants the motion.
Background
Plaintiffs and class members are those individuals who have retired or have otherwise
separated from American Airlines prior to January 2, 2014, who were granted the boarding priority
designation “D2” at the time of their separation from American Airlines. The proposed class
The named plaintiffs are purporting to represent a nationwide class of plaintiffs pursuant to Federal Rule of Civil
Procedure 23.
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includes: individuals who retired at the age of 55 years or older and had 10 or more years of
company seniority; individuals who severed employment with a minimum of five years of
occupational seniority whose age plus years of occupational seniority equals forty; individuals who
accepted travel separation packages for unlimited D2 travel for a certain block of time; individuals
who left employment under the Special Voluntary Early Out Retirement Packages from 1994-1995;
and other retired and/or separated employees who were given, in accord with American Airlines’
corporate policy, the same travel classification that they had immediately prior to leaving their
positions.
Plaintiffs assert that American Airlines diminished their travel benefits beginning September
10, 2014, by creating the new travel priority designation “D2R” indicating the plaintiffs’ status as a
retired former employee, related to a retiree, or otherwise associated with a retiree for purposes of
travel priority. The creation of the new category of D2R was negotiated as part of the 2013 merger
of American Airlines and US Airways. Plaintiffs allege that the new category of travel priority is a
demotion and violates corporate policy, manuals, early retirement agreements and travel separation
agreements. Defendants assert that the Collective Bargaining Agreement (“CBA”) entered by the
Flight Attendants Union gives American Airlines the authority to amend corporate policy and travel
benefits.
Legal Standard
A court must dismiss any action which lacks subject matter jurisdiction. The party asserting
jurisdiction has the burden of establishing it under Rule 12(b)(1). Apex Digital, Inc. v. Sears, Roebuck &
Co., 572 F.3d 440, 443-44 (7th Cir. 2009). “On a motion to dismiss for lack of subject matter
jurisdiction, the court is not bound to accept the truth of the allegations in the complaint, but may
look beyond the complaint and the pleadings to evidence that calls the court’s jurisdiction into
doubt.” Bastien v. AT & T Wireless Servs., Inc., 205 F.3d 983, 990 (7th Cir. 2000); Hay v. Ind. State Bd. of
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Tax Comm'Rs, 312 F.3d 876, 879 (7th Cir. 2002). However, when reviewing a defendants Rule
12(b)(6) motion to dismiss, the Court accepts all well-pleaded factual allegations in the complaint as
true and draws all reasonable inferences in the non-movant’s favor. Erickson v. Pardus, 551 U.S. 89,
94, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007). Detailed factual allegations are not required, but the
plaintiff must allege facts that when “accepted as true ... state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).
Discussion
American Airlines moves to dismiss the Amended Complaint in its entirety pursuant to Rule
12(b)(1), arguing that this Court lacks subject matter jurisdiction because the claims are “minor
disputes” that require interpretation of an airline collective bargaining agreement and therefore the
Railway Labor Act (“RLA”), 45 U.S.C. §§ 151 et seq. vests exclusive jurisdiction in the board of
adjustments. See Bhd. of Locomotive Eng’rs v. Louisville & Nashville R.R., 373 U.S. 33, 36-38 (1963).
The RLA provides a comprehensive framework for resolving labor disputes in the railroad
and airline industries. Brown v. Illinois Central Railroad Co., 254 F.3d 654, 658 (7th Cir. 2001) (citing
Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 252, 129 L. Ed. 2d 203, 114 S. Ct. 2239 (1994)). The
RLA differentiates between major disputes, i.e. disputes involving the formation or effort to secure a
collective bargaining agreement, and minor disputes, that “grow out of grievances or out of the
interpretation or application of agreements covering rates of pay, rule, or working conditions[,]” 45
U.S.C. § 151a, and “involve controversies over the meaning of an existing collective bargaining
agreement in a particular fact situation.” Hawaiian Airlines, 512 U.S. at 252, 253. Minor disputes must
be adjudicated through the employer’s internal procedures or by the union’s adjustment board. 45
U.S.C. § 184; Brown, 254 F.3d at 658 (quoting Monroe v. Missouri Pacific R.R. Co., 115 F3d 514, 516
(7th Cir. 1997). When the resolution of the plaintiff’s claim requires interpretation of the CBA it is
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properly characterized as a minor dispute and therefore subject to mandatory and exclusive
arbitration under the RLA. Brown, 254 F.3d at 658. Claims will be preempted if they cannot be
adjudicated without interpreting the CBA, or if they can be “conclusively resolved” by interpreting
the CBA. Id. (citing Hawaiian Airlines, 512 U.S. at 261-62, and Consolidated Rail Corp. v. Ry. Labor
Executives’ Ass’n, 491 U.S. 299, 305, 105 L. Ed. 2d 250, 109 S. Ct. 2477 (1989)).
Plaintiffs assert that the RLA does not preempt their state law claims because their claims do
not require interpretation of the CBA. Count I alleges that American Airlines breached its manuals,
trip book, corporate policy, early retirement agreements, and travel separation agreements by altering
plaintiffs’ travel priority status. To state a claim for breach of contract under Illinois, plaintiffs must
allege four elements: “(1) the existence of a valid and enforceable contract; (2) substantial
performance by the plaintiff; (3) a breach by the defendant; and (4) resultant damages.” Reger Dev.,
LLC v. Nat'l City Bank, 592 F.3d 759, 764 (7th Cir. 2010) (quoting W.W. Vincent & Co. v. First Colony
Life Ins. Co., 351 Ill. App. 3d 752, 814 N.E.2d 960, 967, 286 Ill. Dec. 734 (1st Dist. 2004)).
Count II alleges that American Airlines represented that employees would receive certain
travel benefits and maintain their designated boarding priority classification. “To establish a claim
[for promissory estoppel], the plaintiff must prove that (1) defendant made an unambiguous promise
to plaintiff, (2) plaintiff relied on such promise, (3) plaintiff’s reliance was expected and foreseeable
by defendants, and (4) plaintiff relied on the promise to its detriment.” Newton Tractor Sales, Inc. v.
Kubota Tractor Corp., 233 Ill. 2d 46, 906 N.E.2d 520, 523-24, 329 Ill. Dec. 322 (2009).
In Counts III and IV, plaintiffs allege negligent misrepresentation and fraudulent
misrepresentation, respectively. In order for plaintiffs to prevail on a claim of fraudulent
misrepresentation, they must establish “(1) a false statement of material fact; (2) known or believed
to be false by the person making it; (3) an intent to induce the plaintiff to act; (4) action by the
plaintiff in justifiable reliance on the truth of the statement; and (5) damage to the plaintiff resulting
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from such reliance.” Doe v. Dilling, 228 Ill. 2d 324, 342-343 (2008). Negligent misrepresentation has
the same elements as fraudulent misrepresentation except that the defendant need not know that the
statement is false if he carelessly or negligently fails to ascertain its falsity. Id. at 360. “For negligent
misrepresentation, a plaintiff must also allege that the defendant owes a duty to the plaintiff to
communicate accurate information.” Id. (quoting Board of Education of City of Chicago v. A, C & S, Inc.,
131 Ill. 2d 428, 452, 546 N.E.2d 580, 137 Ill. Dec. 635 (1989)).
Count V asserts that American Airlines Group induced American Airlines to unjustifiably
alter the travel benefits of retired employees. To prevail on their claim in Count V, plaintiffs must
plead and prove intentional interference with contractual rights by showing: (1) the existence of a
valid and enforceable contract between the plaintiff and another; (2) the defendant’s awareness of
this contractual relation; (3) the defendant’s intentional and unjustified inducement of a breach of
the contract which causes a subsequent breach by the other; and (4) damages. Mannion v. Stallings &
Co., 204 Ill. App. 3d 179, 188, 561 N.E. 2d 1134 (1st Dist. 1990).
The RLA preempts all of plaintiffs’ claims. The U.S. Supreme Court, in Hawaiian Airlines,
observed that a state-law claim is preempted by the RLA only when the state claim “involve[s] duties
and rights created or defined by [a] CBA” and is therefore “dependent on the interpretation of a
CBA.” 512 U.S. at 258, 262; Wolfe v. BNSF Ry. Co., 749 F.3d 859, 863-864 (9th Cir. 2014). In
contrast, “a state-law cause of action is not pre-empted by the RLA if it involves rights and
obligations that exist independent of the CBA.” Id. at 260. Here, each of plaintiffs’ claims arguably
involves rights created by the CBA. American Airlines asserts, and this Court agrees, that Article
27.D governing “pass benefits” creates the right to travel pass benefits. American Airlines argues
that Article 27.D should be interpreted as permitting American Airlines to change the travel pass
benefits because that section stipulates that such benefits are provided “in accordance with
American Airlines Regulations.” Despite plaintiffs’ argument that their claims do not require
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interpretation of any portion of the CBA, they urge the Court to interpret the language in Article
30.A.3, that travel benefits are “in lieu of any pass benefits the Flight Attendant may have been
entitled to under existing Company policy…,” to mean that American Airlines opted to exclude
from the APFA/American CBA the issue of travel benefits for its flight attendants. A plain reading
of that provision as well as the two other provisions of the CBA that address travel pass benefits
indicates that American Airlines did not exclude the issue of travel benefits from the CBA.
The Court also notes that plaintiffs’ original complaint contained the same factual basis: that
defendants unjustifiably diminished plaintiffs’ travel benefits by creating a new priority category,
while it also alleged that defendants were violating the CBA. Recent case law considering whether
the RLA preempts claims related to travel pass benefits for airline employees further illustrates that
plaintiffs’ efforts here to plead around RLA preemption are futile. In Santiago v. United Airlines Inc.,
the plaintiff, a retired flight attendant with United Airlines sued the airline after a merger with
Continental Airlines resulted in a change in boarding priority for retired employees. Santiago v. United
Airlines, Inc., No. 11 C 9109, 2014 WL 7403283, *1 (N.D. Ill. Dec. 29, 2014) (Feinerman, J.). After
finding that the district court lacked jurisdiction to adjudicate the merits of Santiago’s claims because
they were “minor disputes” under the RLA, the district court refused to order arbitration because
Santiago had not exhausted her remedies under the collective bargaining agreement. Id. at *6. While
Santiago brought her claims as a violation of the collective bargaining agreement and the case is
distinguishable for that reason, the similarity of the factual scenario and the court’s finding that a
change in boarding priority constituted a minor dispute under the RLA illustrate that the plaintiffs’
here are attempting to avoid the jurisdictional component of the RLA.
In an even more closely analogous case, Wyatt v. United Airlines, Inc., the plaintiff asserted that
United Airlines breach the collective bargaining agreement by altering her boarding priority for
travel benefits during her retirement and fraudulently represented that they would not modify travel
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pass benefits during her retirement. Wyatt v. United Airlines, Inc., No. 13 C 282, 2014 WL 3955078, *1
(E.D. N.C. Aug. 13, 2014). Wyatt also sought a declaratory judgment regarding whether United
Airlines could unilaterally change promised retiree travel benefits. Id. The court found that the
plaintiff’s state law claims for breach of contract, fraud, and declaratory judgment were preempted
by the RLA. Id. at *3. The court determined that her breach of contract claim expressly required
interpretation of the collective bargaining agreement. Id. The court further found that Wyatt’s fraud
claim also required interpretation of the CBA. Wyatt’s fraud claim closely mirrors the plaintiffs’
claims here in that she asserted that United falsely promised her the she could retire with full pass
travel benefits and those benefits would not be modified during her retirement. Id. United argued, as
American Airlines does here, that the CBA permitted the airline to modify the pass travel program
and thus its employees were on notice that the program was subject to change. Id. The court found
that this claim required interpretation of the CBA, specifically whether it permitted United to change
the pass travel program and whether it sufficiently provided notice to retirees that their benefits
were subject to change. Id. Lastly, the court found that it did not have jurisdiction over the
declaratory judgment claim for the same reason, that resolution of the issue was dependent on
interpreting the CBA. Id. at *4. The court also rejected Wyatt’s argument that her claims did not
require interpretation of the collective bargaining agreement because she was induced to retire by
promises contained in letters from United executive Glenn Tilton. Id. at *5.
In De Vera v. United Airlines, Inc., the court similarly concluded that the plaintiff’s breach of
contract claim was preempted by the RLA. De Vera v. United Airlines, Inc., No. 12 C 5644, 2014 WL
1266273, *10 (N.D. Cal. Mar. 24, 2014). De Vera asserted that the contract at issue was the airline’s
early out agreement and that the flight benefits were contained in that agreement which was not part
of the collective bargaining agreement. Id. at *9. The court concluded that resolution of whether
United could modify travel benefits for retirees would require interpretation of the travel pass
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benefits provisions of the CBA to determine if it permitted the changes for retirees. Id. A similar
conclusion was reached by the Tenth Circuit Court of Appeals in Ertle v. Continental Airlines, Inc., 136
F.3d 690, 694 (10th Cir. 1998).
Conclusion
Based on the foregoing, this Court finds that resolution of plaintiffs’ claims turns on whether
the CBA allowed American Airlines to modify the travel pass benefits. Therefore, the RLA preempts
plaintiffs’ claims, which must be submitted through the framework provided by the RLA and
submitted to the adjustment board. American Airlines’ motion to dismiss [21] is granted because this
Court lacks subject matter jurisdiction. Plaintiffs’ Amended Complaint is dismissed without
prejudice to allow plaintiffs’ to pursue their claims with the adjustment board.
IT IS SO ORDERED.
Date: 9/2/2015
Entered: _____________________________
SHARON JOHNSON COLEMAN
United States District Judge
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