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

Filing 37

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that Defendant Allied Pilots Associations Motion to Dismiss 9 is DENIED without prejudice. IT IS FURTHER ORDERED that Plaintiffs oral motion for stay is DENIED. IT IS FURTHER ORDERED that Plaintiffs' request for Rule 16 conference is DENIED. IT IS FURTHER ORDERED that Defendant Allied Pilots Association's Motion for Leave to File Supplemental Memorandum in Support of Defendant American Airlines' Motion toTransfer 20 is GRANTED. IT IS FURTHER ORDERED that Defendant American Airlines, Inc.'s Motion to Transfer 13 is GRANTED. IT IS FURTHER ORDERED that the Clerk of the Court shall take all necessary administrative steps to transfer this case to the United States Bankruptcy Court for the Southern District of New York. Signed by District Judge John A. Ross on 3/4/13. (LAH)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

JOHN KRAKOWSKI,
KEVIN HORNER, and
M. ALICIA SIKES, individually, and
on behalf of those similarly situated,
Plaintiffs,
v.
AMERICAN AIRLINES, INC., and
ALLIED PILOTS ASSOCIATION,
Defendants.

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No. 4:12-CV-00954-JAR

MEMORANDUM AND ORDER
This matter is before the Court on Defendant Allied Pilots Association (“APA”)’s Motion
to Dismiss [ECF No. 9], Defendant American Airlines, Inc. (“American”)’s Motion to Transfer
this Action to the United States Bankruptcy Court for the Southern District of New York [ECF
No. 13], and Defendant APA’s Motion For Leave to File Supplemental Memorandum in Support
of Defendant American’s Motion to Transfer [ECF No. 20].1 The Court heard oral argument on

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In its Supplemental Memorandum, APA advises the Court that two groups of former
TWA pilots filed objections in the Bankruptcy Court to American’s renewed motion pursuant to
11 U.S.C. § 1113 to reject its collective bargaining agreement with APA. In addition, one of the
two groups has joined the other parties to the bankruptcy proceeding in a stipulation to
coordinate the appeals from the Bankruptcy Court’s Orders. One of the named Plaintiffs in this
action (Alicia Sikes) is a member of the group appealing in the Bankruptcy Court. (Doc. No. 21)
The Court can take judicial notice of the bankruptcy proceedings and the documents filed
therein. Quick v. Formula Telecom, Inc., 2011 WL 572513, * 1 n.4 (E.D. Mo. Feb. 15, 2011)
(citing Stutzka v. McCarville, 420 F.3d 757, 760 n. 2 (8th Cir. 2005). Thus, APA’s motion for
leave to file its supplemental memorandum will be granted.

the motions on December 11, 2012. At the hearing, Plaintiffs moved to stay this case pending
arbitration. The Court granted the parties an opportunity to submit additional briefing on
Plaintiffs’ oral motion. Plaintiffs filed their Memorandum in Support of their Motion For Stay on
December 26, 2012. (Doc. No. 31) On January 9, 2013, APA filed its Response to Plaintiffs’
Motion for Stay (Doc. No. 33) and American filed its Opposition to Plaintiffs’ Motion. (Doc.
No. 34) Plaintiffs filed a Reply on January 15, 2013. (Doc. No. 35) The motions are now fully
briefed and ready for disposition.
Background
By way of background, American acquired TWA in April 2001. Plaintiffs are former
TWA pilots who currently fly for American. In November 2001, American and APA negotiated
a modification to the APA/American collective bargaining agreement to incorporate the former
TWA pilots into American’s pre-existing pilot seniority list (Supplement CC). While this
modification did not give the majority of former TWA pilots credit for the seniority they had
accrued at TWA, provision was made for a “protective fence”, which guaranteed the pilots a
specified number of Captain positions in St. Louis as well as preferential bidding rights for
former TWA First Officers in St. Louis. The fence effectively reserved most of the flying in St.
Louis to former TWA pilots.
In November 2011, American filed for bankruptcy in the Southern District of New York.
This case is pending.2 In February 2012, as part of American’s reorganization, American and
APA negotiated a new collective bargaining agreement that included provisions regarding the
closing of the St. Louis pilot base and interest arbitration to determine the terms and conditions

2

In re AMR Corp., Case No. 11-15463 (SHL) (Bkrtcy.S.D. N.Y.)
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that will substitute for Supplement CC. It was further agreed that the arbitrators would have no
jurisdiction to modify the existing pilot seniority list.
Plaintiffs filed this Class Action Complaint for Damages and Declaratory Relief in May
2012. Count I alleges APA breached its duty of fair representation (DFR) by agreeing to an
interest arbitration that was precluded from modifying American’s pilot system seniority list.
Plaintiffs further allege in Count II that American colluded in this breach.
APA moves to dismiss Plaintiffs’s DFR claim as barred by the doctrines of res judicata,
collateral estoppel, and ripeness. Specifically, APA contends that the question of whether it
breached its duty by failing to negotiate for the return of seniority accrued at TWA has already
been litigated and lost in a previous action brought by a class of former TWA pilots in Bensel v.
Allied Pilots Assoc., 271 F.Supp.2d 616 (D.N.J. 2003), aff’d, 387 F.3d 298 (3d Cir. 2004), cert.
denied, 544 U.S. 1018 (2005). (Doc. No. 10, pp. 6-8) Alternatively, APA argues that any claims
Plaintiffs might have involving the results of interest arbitration cannot be ripe until the
arbitration is conducted and concluded. (Id., pp. 10-12) (see also Doc. No. 33, p. 2)
American moves to transfer this action to the United States Bankruptcy Court for the
Southern District of New York based on the interests of justice and convenience of the parties.
American argues this dispute is “intricately related” to American’s reorganization and the
Bankruptcy Court is already familiar with the issues raised by Plaintiffs here. (Doc. No. 14, p. 6)
Plaintiffs move the Court to stay these proceedings pending arbitration since the
arbitration could produce an outcome acceptable to Plaintiffs that would moot their case.
Plaintiffs contend that under similar circumstances, courts have entered stays pending related
arbitration proceedings. See, e.g., Fox v. Career Educ. Corp., 2012 WL 1205155 (E.D. Mo. April

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11, 2012); Barton Enterprises, Inc. v. Cardinal Health, Inc., 2010 WL 2132744 (E.D. Mo. May
27, 2010); Davis v. Sprint Nextel Corp., 2012 WL 5904327 (W.D. Mo. Nov. 26, 2012). (Doc.
No. 31, p. 4)
Discussion
APA’s Motion to Dismiss
In ruling on a motion to dismiss, the Court must view the allegations in the complaint
liberally in the light most favorable to Plaintiff. Eckert v. Titan Tire Corp., 514 F.3d 801, 806
(8th Cir.2008) (citing Luney v. SGS Auto Servs., 432 F.3d 866, 867 (8th Cir.2005)).
Additionally, the Court “must accept the allegations contained in the complaint as true and draw
all reasonable inferences in favor of the nonmoving party.” Coons v. Mineta, 410 F.3d 1036,
1039 (8th Cir.2005) (citation omitted). To survive a motion to dismiss, a complaint must contain
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007) (abrogating the “no set of facts” standard for Fed.R.Civ.P. 12(b)(6)
found in Conley v. Gibson, 355 U.S. 41, 45–46 (1957)). Thus, as a practical matter, a dismissal
under Rule 12(b)(6) should be granted “only in the unusual case in which a plaintiff includes
allegations that show, on the face of the complaint, that there is some insuperable bar to relief.”
Strand v. Diversified Collection Serv., Inc., 380 F.3d 316, 317 (8th Cir.2004). The issue on a
motion to dismiss is not whether the plaintiff will ultimately prevail, but whether the plaintiff is
entitled to present evidence in support of his or her claim. Rosenberg v. Crandell, 56 F.3d 35, 37
(8th Cir.1995).
In support of its motion, APA argues Plaintiffs are attempting to relitigate their DFR
claim, which is barred by the judgment entered in its favor in Bensel, 271 F.Supp.2d 616. (Doc.

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10, p. 9) There, a class of former TWA pilots alleged APA breached its duty of fair
representation to the class once they became subject to Supplement CC on April 3, 20023 by
failing to require American to maintain the status quo as to the working conditions of the class,
including seniority.4 The district court dismissed that claim on the following grounds:
While there are allegations that APA has breached its [duty of fair representation]
obligations since April 3, 2002, these allegations are either too general in nature
to specify any actual DFR breach, or simply state that APA “continues to this day
to fail to negotiate a fair and equitable integration of the TWA pilots.” As there
was nothing to negotiate once Supplement CC became effective, this allegation
fails to state any DFR breach.
Bensel, 271 F.Supp.2d at 625. The Third Circuit affirmed, finding the imposition of Supplement
CC on the class on April 3, 2002 did not constitute a change in the status quo. Bensel, 387 F.3d
at 316. Pursuant to the parties’ facilitation agreement, the class consented to be bound by the
terms of the American/APA collective bargaining agreement, including Supplement CC, at the
time the NMB certified APA as the bargaining representative for the entire class. Id. Thus, the
court determined that Supplement CC provided the status quo terms for the class.
Bensel is distinguishable from the instant case based on the recent negotiations between
APA and American for a new pilot collective bargaining agreement, which was approved by the
Bankruptcy Court on December 19, 2012. See In re AMR Corp., No. 11-15463 (SHL) (Bankr.
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On April 3, 2002, the National Mediation Board (NMB) certified APA as the sole
bargaining agent for all American pilots (including the former TWA pilots) and Supplement CC
became effective. Bensel, 271 F.Supp.2d at 621.
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The “status quo” provisions of the Railway Labor Act (RLA), 45 U.S.C. § 151, et seq.,
directs that while the major dispute resolution procedures are being followed, “rates of pay, rules
or working conditions shall not be altered by the carrier until the controversy has been finally
acted upon as required by [the RLA] . . .” 45 U.S.C. § 156. See also § 152, which provides that
“[n]o carrier . . . shall change the rates of pay, rules, or working conditions of its employees . . .
except in the manner prescribed in [collective bargaining] agreements or in section 156 of this
title.” Bensel, 387 F.3d at 315.
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S.D.N.Y.) (ECF No. 5800). Plaintiffs specifically allege that APA acted in bad faith, and in an
arbitrary and discriminatory manner towards the former TWA pilots in reaching its new
agreement with American. Because the instant case involves a new and different collective
bargaining agreement than the one at issue in Bensel, the Court finds the judgment entered for
APA in Bensel has no preclusive effect in this case. APA’s res judicata and collateral estoppel
arguments will, therefore, be denied.
In further support of its motion to dismiss, APA argues that its agreement that the interest
arbitrators will not have jurisdiction to modify the existing seniority list merely continues a
policy that has been in place since April 2002. Thus, Plaintiffs’ claim is barred by the six-month
statute of limitations for DFR claims. Delcostello v. Int’l Brotherhood of Teamsters, 462 U.S.
151, 170 (1983). (Doc. No. 10, p. 10)
Plaintiffs allege APA breached its duty in February 2012 when it agreed American could
close the St. Louis base, eliminate Supplement CC without restoring the former TWA pilots’
seniority, and refer the matter to an “issue arbitration” where the arbitrator will be powerless to
modify the TWA pilots’ seniority. Plaintiffs argue their claim accrued at that time, when the
seniority remedy was taken off the table, even though the agreement has not yet been
implemented and the arbitration has not taken place, and cite Propst v. Association of Flight
Attendants, 330 Fed.Appx. 304 (2d Cir. 2009). (Doc. No. 11, p. 9) In Propst, the court found the
plaintiff flight attendants “knew or reasonably should have known” about any breach in
December 2002 when their employer and union entered into an agreement amending the terms of
employment, even though the employer had not then begun operations, and dismissed their
February 2006 complaint as untimely. Id. at 305. Plaintiffs also cite Ramey v. District 141,

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Intern. Ass’n of Machinists and Aerospace Workers, 378 F.3d 269 (2d Cir. 2004), where the
court held that plaintiff airline mechanics’ cause of action against its union for breach of the duty
of fair representation accrued when the union advocated a position on the seniority issue to
employer USAir. Id. at 279-80. Because the court concluded that the union had not met its
burden to demonstrate that plaintiffs’ claim was time-barred, it did not address “the difficult and
unsettled question of how certain it must be that harm will be caused by a union's breach in order
to trigger the statute of limitations.” Id. at 280 n.5. The Ramey court instructed that “we have
held that the statute of limitations is triggered even if it is not absolutely certain that a union
member will be harmed by a breach,” id., citing Santos v. District Council of New York City and
Vicinity of United Broth. of Carpenters and Joiners of America, AFL-CIO, 619 F.2d 963 (2d Cir.
1980).
A motion to dismiss should be granted only if the complaint on its face is conclusively
time-barred and “no reasonable person could disagree on the date” on which the cause of action
accrued. Metropolitan St. Louis Equal Housing Opportunity Council v. Tillman, 2007 WL
3046585, at *1 (W.D. Mo. Oct. 16, 2007). As discussed above, whether Plaintiffs’ DFR claim
has accrued is a “difficult and unsettled question,” and the Court has acknowledged the dilemma
faced by Plaintiffs in deciding to file their action now as opposed to awaiting the outcome of the
interest arbitration. (Transcript of Motion Hearing (“Tr.”), Doc. No. 32, 26:18-24). In any event,
after liberally construing the complaint in a light most favorable to Plaintiffs, the Court cannot
conclude as a matter of law that Plaintiffs’ claim is time barred. For the foregoing reasons,
APA’s motion to dismiss will be denied.
American’s Motion to Transfer/Plaintiffs’ Motion for Stay

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“[A] district court may transfer a case or proceeding under Title 11 to a district court for
another district, in the interest of justice or for the convenience of the parties.” 28 U.S.C. § 1412.
Likewise, in considering a motion for stay, a district court should consider both the interest of
judicial economy and the potential prejudice or hardship to the parties. Toppins v. 3M Co.,, 2006
WL 12993, at *1 (E.D. Mo. Jan. 3, 2006) (citing Rivers v. Walt Disney, 980 F.Supp. 1358, 1360
(C.D. Cal. 1997)).
In support of its motion to transfer and in opposition to Plaintiffs’ motion to stay,
American states that generally, "the court where the bankruptcy case is pending is the proper
venue for all related proceedings within the court's jurisdiction, because speedy and economic
administration of cases is a paramount consideration in the bankruptcy process." In re Vital Link
Lodi Inc., 240 B.R. 15, 19 (Bankr. W.D. Mo. 1999). For this reason, there is a "strong
presumption in favor of placing venue in the district court where the bankruptcy case is pending.
Quick v. Viziqor Solutions, Inc., 2007 WL 49424, at *3 (E.D. Mo. Feb. 12, 2007) (citations
omitted). American argues this case should be transferred to the Bankruptcy Court because
Plaintiffs’ claims concerning the modification of their seniority and job bidding rights under the
collective bargaining agreement are directly related to the process initiated by American in the
Bankruptcy Court under Section 1113.5 (Doc. No. 14, pp. 6-7) In addition, American maintains
that transferring this case would promote economy and efficiency in the administration of its
pending reorganization by decreasing the amount of duplicated effort for the parties and the Court
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When American filed its motion to transfer on August 10, 2012, the Bankruptcy Court
had not yet ruled on its Section 1113 motion. In its August 15, 2012 decision denying
American’s section 1113 motion, the Bankruptcy Court deemed the former TWA pilots’ DFR
claims to be “premature.” In re AMR Corp., No. 11-15463 (SHL) (ECF No. 4044, at p. 105
n.72). On September 5, 2012, the Court granted American’s renewed Section 1113 motion,
authorizing it to reject its collective bargaining agreement with APA. Id. (ECF No. 4293).
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and avoiding potentially inconsistent rulings from the two courts. (Id., p. 8)
Finally, American notes that two groups of former TWA pilots intervened in its
bankruptcy proceedings to assert, by way of objections to American’s Section 1113 motion, the
same claims Plaintiffs are seeking to litigate here, i.e., that the interest arbitration process is “an
actionable breach of the APA’s duty of fair representation, for which American is jointly
liable….” (Id., pp. 10-12) (See also American’s Supplemental Memorandum, Doc. No. 19, and
Opposition to Plaintiffs’ Motion for Stay, Doc. No. 34, pp. 7-8) It is American’s position that the
Bankruptcy Court considered, and rejected, the pilots’ objections in ruling on its Section 1113
motion. (Doc. No. 34, p. 7)
When American then filed its motion with the Bankruptcy Court to approve the new
collective bargaining agreement with APA, former TWA pilots filed objections to that motion,
asserting the same claim Plaintiffs are pursuing in this Court, that is, that “[t]he elimination of
Supp CC, together with the proposed ‘interest arbitration,’ amounts to an actionable breach of the
APA’s duty of fair representation that American is jointly liable for by reason of its knowing
collusion in that breach….” (Id., pp. 7-8) American contends that in approving the new collective
bargaining agreement on December 19, 2012, the Bankruptcy Court clearly considered the same
DFR claims Plaintiffs are asserting in this Court. (Id., pp. 8-9) The Bankruptcy Court addressed
the legal standard for DFR claims set forth in Airline Pilots Ass’nm Intern. v. O’Neill, 499 U.S.
65, 78 (1991), and found the settlement reached by American and APA in the new collective
bargaining agreement “reflect the bargains struck between parties who are very well represented.”
(Id. at 8, citing transcript of December 19, 2012 hearing (“Bankr. Tr.”), Doc. No. 34-1, p. 74-75).
The Bankruptcy Court further found the provisions “were all heavily negotiated and represent

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appropriate compensation for . . . the pilots as well as significant concessions.” (Id., citing Bankr.
Tr., p. 75)
Moreover, the Bankruptcy Court specifically retained jurisdiction “to hear and determine
all matters arising from the interpretation and/or implementation” of its December 19 order. (Doc.
No. 34, p. 10) American argues that should the Bankruptcy Court determine that Plaintiffs’ DFR
claims are not foreclosed by its December 19 order, or the Court’s prior orders concerning
American’s section 1113 motion, then the DFR claims can be litigated in an adversary proceeding
before the Bankruptcy Court. See In re Manville Forest Products Corp., 47 B.R. 140 (Bankr.
S.D.N.Y. 1985) (resolving duty of fair representation claim in bankruptcy court). (Id.)
In opposition to American’s motion to transfer, Plaintiffs contend there is nothing pending
before the Bankruptcy Court that relates to the St. Louis base closure or their fair representation
claim, and that the Bankruptcy Court has not actually addressed the arguments Plaintiffs are
asserting here. (Doc. No. 15, pp. 4-5; Doc. No. 31, p. 6) In support of their motion to stay,
Plaintiffs argue this Court is the more convenient forum for Plaintiffs and the class of former
TWA pilots, since they all work here, many of them live here, and their chosen counsel is here.
(Doc. No. 15, p. 5-7; Doc. No. 31, p. 3) In addition, Plaintiffs argue New York has no connection
to the case because the sources of proof in this case are located in St. Louis and Fort Worth;. (Id.,
p. 7)
American replies that neither the location of the pilot base in St. Louis, nor the location of
the former TWA pilots, has any bearing on the challenged negotiations or representational issues.
(Id., pp. 7-8) Rather, all negotiations were undertaken in connection with American’s section
1113 motion in the Bankruptcy Court. (Id., p. 9) Moreover, courts have declined to consider

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similar allegations concerning the residence of putative class members, or the location of counsel,
when ruling on a motion to transfer. See, e.g., Childs v. Unified Life Insurance Co., 2010 WL
200057, at *2 (W.D. Okla. Jan. 13, 2010). (Doc. No. 17, p. 8)
On March 1, 2013, Plaintiffs requested a Rule 16 conference. (Doc. No. 36) No Rule 16
conference was scheduled in this matter because of the pending motions and because the Court
was monitoring the progress of American’s proceedings in the Bankruptcy Court. Now, after
careful consideration of the interests in this case, it is the Court’s opinion that the Bankruptcy
Court is the proper and most efficient forum for litigation of Plaintiffs’ claims. There is currently
an agreement in place setting hearing dates for the interest arbitration in April and May, and
requiring a decision no later than June 1, 2013. Moreover, a group of former TWA pilots arguably
part of Plaintiffs’ class is already before the Bankruptcy Court, having joined the other parties to
the bankruptcy proceedings to appeal the Bankruptcy Court’s orders. The record demonstrates the
Bankruptcy Court is completely familiar with the facts and evidence pertaining to the issues
raised by Plaintiffs in this case. Any issues Plaintiffs believe remain to be litigated are best
decided by the Bankruptcy Court in the context of the larger reorganization and consistent with its
own prior orders. Indeed, counsel for Plaintiffs acknowledged during oral argument that they
could assert their DFR claim in the approval process with respect to the new collective bargaining
agreement, or alternatively, in an adversary proceeding in the bankruptcy. (Tr. 17:18-25; 18:1)
As to the convenience of the parties, the Court is mindful that a plaintiff’s choice of forum
is given a great deal of deference. See Lipari v. U.S. Bancorp, 2007 WL 1063178, at * (W.D. Mo.
April 4, 2007). However, the balance of interests in this case weigh strongly in favor of transfer,
due to the pending bankruptcy action in New York. See May Dep’t Stores Co. v. Wilansky, 900

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f.Supp. 1154, 1166 (E.D. Mo. 1995) (“Litigation of related claims in the same tribunal is strongly
favored because it facilitates efficient, economical and expeditious pre-trial proceedings and
discovery and avoids duplicitous litigation and inconsistent results.”).
For the foregoing reasons, Plaintiffs’ motion to stay and request for Rule 16 conference
will be denied and American’s motion to transfer will be granted.
Accordingly,
IT IS HEREBY ORDERED that Defendant Allied Pilots Association’s Motion to
Dismiss [9] is DENIED without prejudice.
IT IS FURTHER ORDERED that Plaintiffs’ oral motion for stay is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ request for Rule 16 conference is
DENIED.
IT IS FURTHER ORDERED that Defendant Allied Pilots Association’s Motion for
Leave to File Supplemental Memorandum in Support of Defendant American Airlines’ Motion to
Transfer [20] is GRANTED.
IT IS FURTHER ORDERED that Defendant American Airlines, Inc.’s Motion to
Transfer [13] is GRANTED.
IT IS FURTHER ORDERED that the Clerk of the Court shall take all necessary
administrative steps to transfer this case to the United States Bankruptcy Court for the Southern
District of New York.

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Dated this 4th day of March, 2013.

_______________________________
JOHN A. ROSS
UNITED STATES DISTRICT JUDGE

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