Krakowski v. Allied Pilots Association
Filing
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OPINION MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that Defendants Motion to Dismiss, or in the alternative, Motion for Summary Judgment, [Doc. No. 30 ], is granted. IT IS FURTHER ORDERED that Counts 3, 4, and 5 are dismissed. IT IS FURTHER ORDERED that summary judgement is granted as to 13 Counts 1 and 2. A separate judgment is entered this same date.. Signed by District Judge Henry Edward Autrey on 3/22/19. (KJS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
JOHN KARKOWSKI, individually,
and on behalf of all others similarly
situated,
Plaintiff,
v.
ALLIED PILOTS ASSOCIATION,
Defendant,
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Case No. 4:17CV1527 HEA
OPNNION, MEMORANDUM AND ORDER
This matter is before the Court on Defendant’s Motion to Dismiss, or in the
alternative, Motion for Summary Judgment, [Doc. No. 30]. Plaintiff opposes the
Motion. For the reasons set forth below, the alternative Motion for Summary
Judgment will be granted.
Background
Plaintiff has filed a Second Amended Complaint alleging a breach of the
duty of fair representation by Defendant, (Count 1); violation of the LaborManagement Reporting and Disclosure Act, (Count 2); breach of contract, (Count
3); conversion, (Count 4); and unjust enrichment, (Count 5). Plaintiff filed the
Second Amended Complaint on behalf of himself and all others similarly situated.
Plaintiff and the Class are pilots at American Airlines, Inc. (American).
Plaintiff and Class claim that APA improperly collected and retained 1% agency
fees/dues, as set out in APA’s Constitution and Bylaws (C&B), from a Global
Profit Sharing Plan (the Plan) introduced by American.
Facts and Background
Plaintiff is an airline pilot employed by American Airlines, Inc.
(“American”), and purports to represent a putative class consisting of all American
pilots. APA is a labor organization and the certified collective bargaining
representative of the American pilots.
The terms and conditions of employment for American pilots are contained
in a collective bargaining agreement between APA and American (the “CBA”).
The CBA defines itself as the body of the CBA and all supplements and letters of
agreement between the APA and the Company. The CBA provides that the
“Agreement” shall supersede and take precedence over all “Agreements”
concerning the same subjects previously executed.
Pursuant to Section 25 of the CBA, APA is authorized to receive dues from
its members and agency fees from non-member pilots in return for APA’s
collective bargaining services. The vast majority of American pilots elect to have
American withhold dues from the compensation they receive from American,
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which remits the dues directly to APA. The remaining pilots elect to receive an
invoice from APA and directly pay APA each month.
On the subject of dues, the APA’s Constitution & Bylaws (“C&B”) provides
as follows:
Members shall pay dues at the rate of one percent (1%) on current monthly
income. Dues at the rate in effect at the time any such payments
are received by the member shall be collected on all contractual
pay, including Variable Compensation, cash bonuses, and cash
profit sharing.
In 2016, American established the American Airlines Group Inc. Global
Profit Sharing Plan (the “Plan”) to provide profit sharing awards to American
employees who are “Participant[s]” in the Plan in the form of “a lump-sum cash
payment on or prior to March 15th of the immediately following Plan Year.” The
Plan expressly conditioned the issuance of payments to employees represented by a
labor union, including the APA, on the requirement that “such union has agreed to
the Employees’ participation in this Plan.”
As the Plan required, on October 20, 2016, APA entered into a letter of
agreement with American to that effect, thereby making APA-represented pilots—
including Plaintiff—eligible for cash profit sharing distributions from the Plan.
The October 2016 LOA confirmed APA’s and American’s “understanding
regarding profit sharing” and provided that it “shall remain in effect for the
duration of the Joint Collective Bargaining Agreement dated January 30, 2015.”
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On March 10, 2017, American made its first cash profit sharing distribution
pursuant to the Plan. APA received dues based on that distribution, either by
deduction from pilot compensation by American or by invoice to pilots by APA.
APA did not respond to Plaintiff’s demands for the return of the 1% dues
attributable to the distribution.
In April 2017, two members of APA’s Board of Directors (“BOD”)
introduced a resolution to refund to each pilot any and all dues/agency fees
collected on the cash profit sharing distributions. That resolution included the
following whereas clauses:
WHEREAS, the Company established a profit sharing
arrangement … for all employees and offered the Plan to
APA for consideration and acceptance; and,
WHEREAS, at the Fall 2016 Board of Directors meeting, the APA
Board moved to direct the President “…to sign the profit sharing
LOA as presented by the Negotiating Committee.”; and,
WHEREAS, dues and/or agency shop fees have been withheld
and/or billed to pilots who received compensation under the Plan;
and,
WHEREAS, the Association’s Officers and Directors desire to not
have compensation from the Plan be subject to dues and/or agency
fee …
That resolution failed.
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In March 2018, American made a second cash profit sharing distribution
pursuant to the Plan, on the basis of which APA received dues or agency in the
manner set forth above.
On January 2, 2018, American announced its intention to pay a one-time
cash bonus of $1,000 to each of its non-executive employees.
Also on January 2, 2018, in a post on the Company’s internal website,
JetNet, American answered frequently asked questions about the $1,000 cash
bonuses, including the following:
Does this payout require approval by each union?
Yes. We’re working with each union on that now and hope to reach
agreement soon.
***
When will I receive the $1,000?
… This is subject to signed Letters of Agreement with each union.
***
Will union dues be deducted from this payout?
Union dues will be deducted for mainline pilots as part of their
collective bargaining agreements.
On January 22, 2018, the APA BOD approved and APA executed a letter of
agreement with American, Letter of Agreement 18-003 (“January 2018 LOA”), in
which APA agreed to a “one-time payment to eligible pilot employees represented
by APA” of $1,000 as a “cash bonus.” American subsequently paid the cash
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bonuses in January 2018. APA again received dues or agency fees based on that
cash bonus in the manner specified above.
Legal Standards
A complaint must contain “a short and plain statement of the claim showing
that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To satisfy this
requirement, a plaintiff must plead “enough facts to state a claim to relief that is
plausible on its face.” Corrado v. Life Inv'rs Ins. Co. of Am., 804 F.3d 915, 917
(8th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A
claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Barton v. Taber, 820 F.3d 958, 964 (8th Cir. 2016) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “Threadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do not suffice.”
Zink v. Lombardi, 783 F.3d 1089, 1098 (8th Cir. 2015) (quoting Iqbal, 556 U.S. at
678), cert. denied, 135 S. Ct. 2941 (2015). The complaint’s factual allegations
must be “sufficient to ‘raise a right to relief above the speculative level.’”
McDonough v. Anoka Cty., 799 F.3d 931, 946 (8th Cir. 2015) (quoting Twombly,
550 U.S. at 555). The Court must accept factual allegations as true, but it is not
required to accept any “legal conclusion couched as a factual allegation.” Brown v.
Green Tree Servicing LLC, 820 F.3d 371, 373 (8th Cir. 2016) (quoting Iqbal, 556
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U.S. at 678). Thus, “[a] pleading that offers ‘labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action will not do.’” Ash v.
Anderson Merchandisers, LLC, 799 F.3d 957, 960 (8th Cir. 2015) (quoting Iqbal,
556 U.S. at 678), cert. denied, 136 S. Ct. 804 (2016).
On a motion to dismiss, courts must rule “on the assumption that all the
allegations in the complaint are true,” and “a well-pleaded complaint may proceed
even if it strikes a savvy judge that actual proof of those facts is improbable, and
‘that a recovery is very remote and unlikely.’” Twombly, 550 U.S. at 555, 556
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). “Determining whether a
complaint states a plausible claim for relief ... [is] a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.”
Mickelson v. Cty. of Ramsey, 823 F.3d 918, 923 (8th Cir. 2016) (alteration in
original) (quoting Iqbal, 556 U.S. at 679).
Pursuant to Federal Rule of Civil Procedure 56(a), a district court may grant
a motion for summary judgment if all of the evidence before the court
demonstrates that “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. Rule 56(a);
Celotex Corp. v. Catrett, 477 U.S. 317, 322, (1986). The burden is on the moving
party. City of Mt. Pleasant, Iowa v. Associated Elec. Co-op. Inc., 838 F.2d 268,
273 (8th Cir.1988). The movant “bears the initial responsibility of informing the
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district court of the basis for its motion” and must identify “those portions of [the
record] ... which it believes demonstrate the absence of a genuine issue of material
fact.” Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. If the movant does so, the
nonmovant must respond by submitting evidentiary materials that set out “specific
facts showing that there is a genuine issue for trial.” Id. at 324, 106 S.Ct. 2548
(quotation marks omitted). Since the parties have submitted evidence outside the
pleadings, the Court will construe the motion as one for summary judgment.
Fed.R.Civ.P. Rule 12(d) on those matters not dismissed.
Discussion
Unjust Enrichment and Breach of Contract
Plaintiff initially argued that his original Petition could be resolved without
interpreting the CBA and that the claims were simple state-law tort claims,
independent of a federal question. In its Opinion, Memorandum and Order of
April 30, 2018, the Court concluded that the Collective Bargaining Agreement
(“CBA”) between Defendant and American was inextricably intertwined with
Plaintiff’s state-law claims and that the Railway Labor Act, 45 U.S.C. § 151 et seq.
completely preempted Plaintiff’s state law claims for conversion and unjust
enrichment. Furthermore, the Court concluded that Plaintiff’s claim for breach of
contract failed to allege a breach of the CBA. Plaintiff’s Second Amended
Complaint again alleges conversion, unjust enrichment, and breach of contract.
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For the reasons set forth in the April 30, 2018 Opinion, these claims, Counts 3, 4,
and 5, are dismissed.
Duty of Fair Representation
The National Labor Relations Act imposes a duty on certified unions to
fairly represent their members during collective bargaining. See Vaca v. Sipes, 386
U.S. 171, 177-78 (1967) (interpreting sections 7 and 8 of the National Labor
Relations Act). A union breaches this duty “only when [its] conduct toward a
member of the collective bargaining unit is arbitrary, discriminatory, or in bad
faith.” Id. at 190. To state a claim for breach of the duty of fair representation, a
plaintiff must allege enough facts that, if presumed true, permit the inference that
there was both a breach and causation. See Iqbal, 556 U.S. at 678; Twombly, 550
U.S. at 555; Anderson v. United Paperworkers Int’l Union, 641 F.2d 574, 579
(1981). Plaintiff alleges Defendant breached its duty of fair representation by
acting arbitrarily and in bad faith when it collected and retained the dues from the
Profit Sharing Plan and tax relief bonuses.
A union may be deemed to have acted arbitrarily when the action is “so far
outside a wide range of reasonableness that it is wholly irrational.” Air Line Pilots
Ass’n, Int’l v. O’Neill, 499 U.S. 65, 78 (1991) (internal citation omitted) (internal
quotation marks omitted).
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Defendant’s Constitution and Bylaws provides that its members pay dues at
the rate of one percent on current monthly income on all contractual pay, including
Variable Compensation, cash bonuses and cash profit sharing. Defendant and
American entered into Letters of Agreement regarding these payments to Plaintiff
and other members. Defendant collected dues on the Global Profit Sharing Plan
and the one-time bonus, which payments were authorized through the Letters of
Agreement regarding these payments. American collected the dues in accordance
with the CBA as contractual pay. Contractual pay, according to the C&B includes
cash bonuses and cash profit sharing. Plaintiff’s interpretation that contractual pay
does not include cash bonuses and cash profit sharing would render the inclusion
of these in the C&B superfluous. As Defendant correctly argues, a
fundamental principle of contract interpretation is to interpret the contract as giving
meaning to all terms included. 11 Williston on Contracts § 32:11(4th ed.). Accord
Restatement (Second) of Contracts § 203 (1981). Indeed, the Letters of
Agreement, which are incorporated into the CBA, interpreted the payments as
contractual pay. Defendant’s actions in withholding the dues were not arbitrary.
With respect to Plaintiff’s claim that Defendant acted in bad faith, a plaintiff
must prove “fraud, deceitful action, or dishonest conduct” to establish a breach of
the duty of fair representation by a union’s bad-faith conduct. Gaston v. Teamsters
Local 600, Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am.,
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614 F.3d 774, 778 (8th Cir. 2010) (internal quotation marks omitted). Bad faith is
not “[m]ere negligence, poor judgment or ineptitude on the part of the union.”
Gaston, 614 F.3d at 778. A union acts in bad faith when, for example, it deceives
members about a known risk of job loss or change to seniority status, or it lies
about producing important documents at a hearing. See Thomas v. Bakery,
Confectionery & Tobacco Workers Union Local No. 433, 826 F.2d 755, 759-61
(8th Cir. 1987).
The undisputed facts establish that the withdrawal of the dues was not
hidden, deceitful or dishonest. It was made pursuant to the C&B as part of
contractual pay. Indeed, American advised the non-executive employees that the
cash bonuses would have the dues deducted from the payout. Plaintiff himself
acknowledges he was aware of the deduction by demanding a refund. Nothing in
the record establishes any actions by Defendant which can establish it acted in bad
faith.
Labor Management Reporting Disclosure Act
District courts have subject-matter jurisdiction over LMRDA claims when a
plaintiff’s rights, as secured by the LMRDA, have been violated. 29 U.S.C. § 412.
Plaintiff claims Defendant violated Section 411(a)(3)(A) of LMRDA. Section
411(a)(3)(A) provides, in relevant part:
[T]he rates of dues and initiation fees payable by members of any
labor organization … shall not be increased, and no general or
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special assessment shall be levied upon such members, except—
(A) in the case of a local labor organization, (i) by majority vote by
secret ballot of the members in good standing voting at a general or
special membership meeting, after reasonable notice of the
intention to vote upon such question, or (ii) by majority vote of the
members in good standing voting in a membership referendum
conducted by secret ballot …
29 U.S.C. § 411(a)(3)(A).
Defendant deducted the dues as defined by the C&B at a rate of 1%. This
amount was entirely consistent with the amount that was required to be collected.
There was no increase in the rate of dues; the dues were collected on contractual
pay as defined in the C&B. As such, there was no violation of the Act. Defendant
is entitled to judgment as a matter of law.
Conclusion
Based upon the foregoing analysis and the record before the Court,
Defendant is entitled to judgment as a matter of law on Counts 1 and 2. Counts 3,
4, and 5 will be dismissed.
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss, or in the
alternative, Motion for Summary Judgment, [Doc. No. 30], is granted.
IT IS FURTHER ORDERED that Counts 3, 4, and 5 are dismissed.
IT IS FURTHER ORDERED that summary judgement is granted as to
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Counts 1 and 2.
A separate judgment is entered this same date.
Dated this 22nd day of March, 2019.
___________________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE
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