PHILADELPHIA – A class action lawsuit over a profit-sharing plan between employees and American Airlines Group is heading to the U.S. Court of Appeals for the Third Circuit, after the plaintiffs’ case was dismissed by a federal judge last month.
James B. Scanlan, a major general in the United States Air Force Reserve and a pilot for American Airlines, first filed suit against AAG and its parent company on Sept. 19, 2018 for violation of the Uniformed Services Employment and Reemployment Act and breach of contract by AAG under Texas law.
Specifically, Scanlan claimed 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, 2020, 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, 2020, 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
After a nearly year-long stay in the case was lifted in August 2021 and the finalization of the class in the case, U.S. District Court for the Eastern District of Pennsylvania Judge Harvey Bartle III found in favor of the airline on all counts, in a Nov. 2 memorandum opinion.
“A pilot’s military leave is accompanied with more than minimal government pay and sometimes a pension and generally recurs at regular intervals over a number of years while the two other types of leave consist of short-term events and are infrequent with no outside pay for bereavement leave and minimal government pay for jury duty with no pension. Moreover, military leave is significantly different in its purpose and in the degree of control which a pilot has over when to take that leave,” Bartle stated.
“AAG contends that it does not need to credit short-term military leave when calculating each pilot’s award under the plan because short-term military leave is not comparable to jury duty and bereavement leave. The comparability analysis for plaintiffs’ claim against American for pay while on military leave in count III applies equally to their claim against AAG for inclusion of imputed income while on military leave in the calculation of profit-sharing awards.”
On Dec. 1, the plaintiff filed a notice of appeal with respect to Bartle’s ruling to the Third Circuit.
“Notice is hereby given that plaintiff and the class representative, James P. Scanlan and Court-appointed class representative Carla Reiner, on behalf of themselves, the class, and the subclasses, hereby appeal to the U.S. Court of Appeals for the Third Circuit from the final judgment entered in this action on Nov. 2, 2022, and from every part thereof,” the notice stated.
“Plaintiff and the class representative notify the Clerk of Court that this appeal of the underlying judgment involves causes of actions under the Uniformed Services Employment and Reemployment Rights Act and is thus exempt from both the filing fee and the appellate docket fee.”
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