PHILADELPHIA – A class action lawsuit over a profit-sharing plan between employees and American Airlines Group has been stayed by a federal judge, pending a decision in a separate, but related action.
James B. Scanlan, a major general in the United States Air Force Reserve and a pilot for American Airlines, filed suit against AAG and its parent company for violation of the Uniformed Services Employment and Reemployment Act and breach of contract by AAG under Texas law.
Specifically, Scanlan claims that AAG established a profit-sharing plan in which plaintiff and other AA pilots participate, but under which they are not receiving what is due under the plan, because AAG excludes from eligible earnings the income to which the pilots are entitled while they are on short-term military leave.
As written, the profit-sharing plan established by AAG sets aside 5% of its pre-tax earnings each year for pro rata distribution to qualifying employees of AA and other affiliated airlines based on each participant’s “individual eligible earnings” for that year.
It was further made clear that the plan was not negotiated by the union representing pilots like Scanlan, nor was it incorporated into any collective bargaining agreement. But the pilots and the airline dispute the interpretation of what is considered eligible earnings under the plan.
On Feb. 27, the plaintiff filed a motion to certify the suit as a class action.
Counsel for Scanlan argued three counts of the litigation, brought under the Uniformed Services Employment and Reemployment Rights Act (USERRA), were eligible for class action status and satisfied Federal Rule of Civil Procedure 23 for the following reasons:
• Members of each of the classes and the sub-class are each sufficiently numerous such that joinder is impracticable;
• All or nearly all of the issues of law and fact with respect to each claim are common to the class or sub-class bringing that claim and will result in common answers;
• Plaintiff [Scanlan’s] claims are typical of the members of the classes and the sub-class;
• Plaintiff James P. Scanlan will fairly and adequately represent the classes and the sub-class;
• Plaintiffs have retained counsel experienced and competent in handling class action employment litigation and USERRA matters.
“The requirements of Federal Rule of Civil Procedure Rule 23(b)(2) are met in this action because defendants engaged in violations of USERRA by which they acted toward the classes and the sub-class as a whole through their uniform decision not to pay short term military leave or credit it under the profit sharing plan,” the certification motion stated.
On June 4, counsel for American Airlines filed a response to the class certification motion, arguing it should be denied because of perceived conflicts between the classes – and because of the plaintiffs failing to satisfy class requirements of adequacy, typicality, commonality and pre-dominance.
“These conflicts stem from the fact that the profit pool is a fixed amount – the total available for profit sharing is fixed pursuant to a formula and will remain fixed regardless of whether plaintiff prevails on his claims. What will change, however, is each employee’s ‘Eligible Earnings,’ which determines an employee’s distribution,” according to American Airlines.
“If one employee has greater Eligible Earnings, she will receive a greater share of the profit pool. But because the total pool is fixed, an increased share for one employee necessarily means a decreased share for others.”
The airline added that differences in work-group policies for different types of leave also precluded commonality between the members of the classes.
“Plaintiff’s motion is based on a fundamentally flawed premise – there is no company-wide policy that determines whether employees receive paid jury duty leave, paid bereavement leave, or paid military leave. Instead, each of those leaves is collectively bargained for with each union-represented work group such that different groups treat different leaves differently,” per counsel for the airline.
“Only for the non-represented employees in these overwhelmingly union-represented workforces – for example, administrative assistants – are those leave policies set by company policy. And the differences in work-group specific policies – especially between pilots and non-pilots – preclude certification of the paid leave and profit sharing classes.”
In a June 25 response to American Airlines’ own response filing, counsel for the plaintiff replied:
“Despite observing that leaves were subject to different policies, defendants do not contest that across all of the workgroups in the classes, military leave was unpaid, but jury duty and bereavement leave were paid. Nor do defendants do not dispute that the terms of profit sharing plan are the same for all employees who participate in the plan,” counsel for Scanlan replied.
“Defendants’ own case confirms that the evidence to determine whether these leaves are comparable for both the profit sharing class and the paid leave class will be determined by the factors in the Department of Labor Regulations – the duration, purpose, and voluntariness of the different forms of leave.”
UPDATE
American Airlines filed a motion for certificate of appealability on Aug. 10, tying in issues from the instant case to those of Travers v. FedEx Corp.
“On July 20, 2020, Judge Kearney considered the same question presented in American’s motion to dismiss Count III and dismissed a materially identical suit brought by the same attorneys representing plaintiff here (Travers v. FedEx Corp.). Thus, there is now an intra-district conflict over the central question in this case,” counsel for American Airlines stated.
“And that conflict eliminates plaintiff’s principal argument against interlocutory review when the issue was last before this Court – namely, that there was no substantial grounds for disagreement because there were no ‘conflicting cases within the Third Circuit.’ Not only are there conflicting cases within the Third Circuit, there are conflicting cases within this district.”
Scanlan and his own counsel filed an opposing brief to the motion on Aug. 31.
“Defendants cannot show that interlocutory appeal – which would not be heard immediately after the Court’s order – would materially advance the termination of this litigation,” counsel for Scanlan said.
“Indeed, the progress of the case since defendants’ first request for certification – including substantial discovery, the addition of a new breach of contract claim and significant motion briefing – undercut the argument that interlocutory review at this stage would be more efficient than proceeding to appeal after trial.”
However, U.S. District Court for the Eastern District of Pennsylvania Judge Harvey Bartle III not only denied the defendants’ motion, but stayed the case entirely.
“It is hereby ordered that: (1) The renewed motion of defendants for immediate appeal under 28 U.S.C. Section 1292(b) is denied; and (2) This action is stayed and placed on this court’s Civil Suspense Docket pending a decision by the United States Court of Appeals for the Third Circuit in Travers v. Federal Express Corporation,” Bartle said.
U.S. District Court for the Eastern District of Pennsylvania case 2:18-cv-04040
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com