MATSUMOTO, District Judge:
Plaintiffs, twenty-one former Delta Air Line, Inc. pilots, who were required by previous federal law to retire at age 60 during the period between September 16, 2006 and December 4, 2007, commenced this action against Delta Air Lines, Inc. ("Delta"), the Air Line Pilots Association, International ("ALPA" or "the Union"), and the president of ALPA, John Prater ("Prater"),
The following facts are taken from plaintiffs' Amended Complaint, which the court must assume to be true for the purposes of resolving Delta's and ALPA's motions to dismiss and, where indicated, the factual background is supplemented by facts and information drawn from documents external to the Amended Complaint, which plaintiffs explicitly reference, rely upon or cite to within the Amended Complaint, or are in the purview of judicial notice. These external documents have been provided to the court as attachments to the defendants' motions to dismiss.
Plaintiffs are twenty-one former Delta commercial airline pilots, hired at various dates ranging "almost exclusively between 1972 and 1991." (Am. Compl. ¶ 55.) All plaintiffs, with the exception of one,
Defendant ALPA is a labor union for airline pilots and acts as the exclusive bargaining representative of Delta's pilots, including plaintiffs, during the time of their employment with Delta. (Id. ¶¶ 60, 73.) ALPA acts through a Master Executive Council ("MEC") at each airline at which it represents pilots. (Id. ¶ 68.) The MEC at each airline, comprised of pilots from that airline carrier, serves as the coordinating council for Union membership at that airline. (Id. ¶¶ 69-70.) Defendant Prater is the President of ALPA and is sued only in his representational capacity. (Id. ¶¶ 3(c), 65, 67.) Defendant Delta, an airline carrier, employed all of the plaintiffs prior to their mandatory retirement under the Age 60 Rule. (Id. ¶¶ 55, 56, 58, 84, 87.)
In October 2004, Delta negotiated concessions from its pilots and subsequently reduced its pilots' salaries by approximately one third of their prior pay. (Id. ¶ 99.) On September 14, 2005, Delta filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Southern District of New York ("the Bankruptcy
During the Chapter 11 reorganization, ALPA and Delta entered into a Bankruptcy Restructuring Agreement, memorialized as Letter of Agreement #51 ("Letter 51"), which modified the existing 2004 Pilot Working Agreement ("PWA") between Delta and ALPA and granted further concessions to Delta.
Among the concessions contained in Letter 51 was an additional 14% decrease in the Delta pilots' hourly pay rates. (Letter 51 at 5; see also Am. Compl. ¶ 132.) In consideration for these salary reductions and other concessions, Delta gave ALPA a non-priority, unsecured $2.1 billion bankruptcy claim ("the ALPA Claim"). (Am. Compl. ¶¶ 131-32; Letter 51 at 36-37.) Letter 51 specifically provided that the ALPA Claim was given to ALPA "in respect of the concessions made by ALPA and savings to [Delta] resulting from achievement of consensual [m]odifications to the PWA." (Am. Compl. ¶ 136 (quoting Letter 51 at 36).)
Letter 51 also contained a provision that provided, in relevant part, that ALPA "would essentially support any voluntary, involuntary or distress termination of the Delta Pilots Retirement Plan and other related retirement plans." (Am. Compl. ¶ 134; Letter 51 at 37.) In exchange, Delta agreed to provide ALPA with convertible notes in the amount of $650 million (the "Notes") in the event that the Delta Pilots Retirement Plan ("DPRP") was terminated. (Am. Compl. ¶ 133; Letter 51 at 17-18, 37, 40-42.) Delta also
The Bankruptcy Court approved of Delta and ALPA entering into modifications of the collective bargaining agreement set forth in Letter 51. (See Doc. No. 43, Ex. 7, Bankruptcy Court's Approval Order ("Approval Order").) Delta later assumed Letter 51 in its Bankruptcy Restructuring Plan, which was subsequently approved and memorialized by Order of the Bankruptcy Court. (Am. Compl. ¶ 129; See Doc. No. 43, Ex. 11, Delta's Bankruptcy Reorganization Plan (the "Plan") & Doc. No. 10, Bankruptcy Court's Confirmation Order (the "Confirmation Order").)
According to the Amended Complaint, Letter 51 provided ALPA, through its MEC, "exclusive authority" to determine the manner of allocating the ALPA Claim and the Notes (jointly "the proceeds") for distribution among Delta pilots. (Am. Compl. ¶ 137; Letter 51 at 36-37, 40.) The only agreed-upon restriction contained in Letter 51 on ALPA's authority to determine the allocation method for the ALPA Claim was that the method be "reasonable and lawful."
On or about August 4, 2006, the MEC selected three pilots to serve as members of the Allocation and Distribution Committee ("ADC").
The ADC Claim Dispatch of October 9, 2006 explained that, when developing the Claim Model, the ADC focused on an allocation method that "would recognize the varying types and degrees of concessions and fairly allocate the claim to those pilots who work (or may work) under the terms of Letter 51." (Am. Compl. ¶ 143 (quoting Claim Dispatch at 1); see also Claim Dispatch at 6 ("Considerable time was spent during the development phase discussing how the allocation model should appropriately treat those who were not active pilots while ensuring that those who work during the term of Letter 51 received a fair allocation.").) The ADC Claim Dispatch indicated that the primary goal of developing the Claim Model was "to arrive at a fair allocation solution while avoiding unnecessary complexity." (Am. Compl. ¶ 146 (quoting Claim Dispatch at 2).)
According to the Amended Complaint, the Claim Model divided the face value of the ALPA Claim into four "silos" of equal proportion, each representing a quarter of the $2.1 billion ALPA Claim. (Id. ¶¶ 147, 150.) Under the Claim Model, the sum of those four silos amounted to the total claim allocation for each given pilot. (Id. ¶¶ 148, 153.) The four silos were the following: (1) per capita;
Under the Claim Model, pilots who would not work for the full 43-month term of Letter 51 (from June 1, 2006 through December 31, 2009) would have the amount of their silo allocation decreased or "forfeited," as explained below. (See Am. Compl. ¶ 156; Claim Dispatch 6-8.) Among the pilots subject to decreased allocations as a result of not working during the entire 43-month period of Letter 51 were pilots, including plaintiffs, who would be required to retire under the Age 60 Rule during the concessionary period, "special case pilots" on personal leave, furlough,
In formulating the allocation, distribution and forfeiture provisions, the Claim Model relied upon three dates: (1) the allocation date, which was estimated to occur "about November 1, 2006;" (2) the distribution date, which would be the date on which Delta exited bankruptcy;
Using these dates, the Claim Model developed different forfeiture formulas for each of these pilot sub-groups. For example, pilots who could potentially return to active status with Delta, for example, those on personal leave, furlough, bypass, and long-term disability, would not receive any allocation from the hourly rate silo for the entire 43-month period, even if they returned to active status during this time, and their overall treatment under the Claim Model depended on whether they had returned to active status before the distribution date of the ALPA Claim. (Id. at 6-8.) If these pilots failed to return to active status by the distribution date, the pilots would "forfeit" their allocations in one to three of the remaining three silos over the entire 43-month period. (Id.)
In contrast, the Claim Model provided that pilots who voluntarily ended their employment relationship with Delta, either by resignation or early retirement (i.e. not because of the mandatory Age 60 Rule) would forfeit their entire allocation, regardless of time worked during the 43-month period, provided they stopped working at any time before the distribution date.
Finally, the Claim Model provided that pilots, like plaintiffs, who would reach the mandatory retirement age "in effect on the distribution date" (which, at the time was
Notably, the Amended Complaint indicates that, despite this "forfeiture" provision provided for by the Claim Model, when Congress enacted FTEPA on December 13, 2007, increasing the mandatory retirement age for commercial airline pilots from age sixty to age sixty-five, the MEC waived application of the forfeiture provision to pilots who had not yet attained the age of 60. (See Am. Compl. ¶¶ 88, 167.) Accordingly, of the 170 Delta pilots who would turn age sixty during the concessionary period of Letter 51, the 140 active pilots who attained age sixty after FTEPA's enactment and continued to work received their full allocation. (Id. ¶ 167.) Thus, only 30 pilots who reached the age of 60 during the term of Letter 51 but before FTEPA's enactment were affected by this forfeiture provision.
In August 2007, the ADC presented the MEC with a proposed method to allocate the $650 million Notes that were provided to Delta's pilots in relation to the termination of the DPRP. (Notes Dispatch at 1.) The MEC accepted and adopted the ADC's proposed model to allocate the Notes among those pilots on the Delta pilots' System Seniority List on June 1, 2006. (Id.) After the approval of the Notes Model, ALPA informed the Delta pilots of the Notes Model by the ADC Notes Dispatch dated August 9, 2007. (See id.) According to the ADC Notes Dispatch, the Notes Model "addresses retirement-related issues and other items; it is not a mirror of or a replacement for the terminated Delta Pilots Retirement Plan (DPRP) or associated plans." (Id.) Further, the ADC Notes Dispatch clarified
The Notes Model included two alternative methods for allocation. (See Notes Dispatch at 3-4, 7.) First, the Net Lost Approximate Qualified Benefit Allocation ("Benefits Lost Allocation") addressed the losses suffered by pilots as a result of the termination of the DPRP. (Id. at 1-4, 7.) Specifically, the Benefits Lost Allocation method considered a pilot's qualified benefit component and non-qualified benefit component. (Id. at 1-7.) The qualified benefit component, modeled upon the pilot's "net loss associated with the termination of the Delta Pilots Retirement Plan," was an approximated compensation amount which took into consideration a pilot's years of service and his or her final average earnings up to the Internal Revenue Service limit of $205,000 through December 31, 2004, offset by the projected amount the pilot would receive in benefits from the PBGC
Second, the Years of Service Minimum Credit Calculation ("Minimum Credit Allocation"), based primarily on the pilot's years of service, was to be made "only after every pilot has his lost qualified benefit and lost non-qualified benefit (if any) addressed" and was designed as a "parallel allocation" to ensure a minimum allocation for all pilots. (Id. at 7-8.) Therefore, under the Notes Model, a pilot received the greater of the Minimum Credit Allocation amount or Benefits Lost Allocation amount, but not both. (Id. at 8.) Unlike the Claim Model, the Notes Model did not contain a "forfeiture" provision requiring decreased allocation because of early mandatory retirement under the Age 60 Rule. (See generally id.)
On April 25, 2007, the Bankruptcy Court issued an Order (the "Confirmation Order") confirming Delta's Joint Plan of Reorganization
(Confirmation Order ¶ 78; Plan § 13.3.) The Confirmation Order and Plan further provide for the Discharge of Delta, whereby each holder "of a Claim . . . is deemed to have forever waived, released and discharged [Delta], to the fullest extent permitted by Section 1141 of the Bankruptcy Code, of and from any and all Claims, Interests, rights and liabilities that arose prior to the Effective Date [April 30, 2007]." (Confirmation Order ¶ 79; Plan § 13.3.)
The Confirmation Order and Plan also contain an exculpation clause ("Exculpation Clause"), applicable to Delta and ALPA, which states:
(Confirmation Order ¶ 83; Plan §§ 1.1(9), 1.1(73), 13.5.)
Finally, the Confirmation Order and Plan reinforce the Discharge and Release and the Exculpation Clause with a broad injunction ("Plan Injunction") against the assertion of discharged claims against Delta (Confirmation Order ¶¶ 78-80; Plan § 13.3), permanently enjoining "all persons or entities who have held, hold, or may hold Claims or Interests," from and after the Effective Date, from, inter alia, "commencing or continuing in any manner any action or other proceeding of any kind with respect to any such Claim, against [Delta]. . . or property of [Delta]." (Confirmation Order ¶ 80; see also id. ¶ 79 (enjoining, pursuant to Section 524 of the Bankruptcy Code, all holders of claims against Delta arising prior to the Effective Date "from prosecuting or asserting any such discharged Claim against . . . [Delta]").) The Confirmation Order states:
(Confirmation Order ¶ 78; see also Plan § 13.3.)
Notably, the Exculpation Clause applies to both Delta and ALPA (see Confirmation Order ¶ 83; Plan § 13.5), whereas the Discharge & Release Clause, as well as the Plan Injunction, refer only to Delta and therefore do not cover ALPA's conduct. (See Confirmation Order ¶¶ 78-80; Plan § 13.3.)
On various dates beginning in March 2007,
Although plaintiffs filed EEOC charges regarding the Claim Model, plaintiffs admittedly did not file charges of discrimination regarding the Notes Model.
Plaintiffs allege the following two claims against ALPA: (1) age discrimination under the ADEA under a disparate treatment theory; and (2) breach of contract.
First, plaintiffs allege that ALPA violated the ADEA by developing two allocation models for the ALPA Claim and the Notes, which treated plaintiffs disparately on the basis of their age. (Am. Compl. ¶¶ 173-96.) To substantiate this claim, plaintiffs allege that they are within the protected age group as set forth in the ADEA, specifically 29 U.S.C. § 631(a),
Specifically, as to the Claim Model, plaintiffs allege that ALPA engaged in a "pattern or practice of discriminating against certain pilots who are within the protected age group," specifically those closest to the then-mandatory retirement of sixty, "under the cloak of ostensible impartiality of the four `metrics' and the forfeiture rules that were manufactured." (Id. ¶ 178.) According to plaintiffs, the oldest pilots who were required to forfeit their ALPA Claim allocation after their mandatory retirement date were the "only pilots whose ages precluded them from sharing appreciably in the distribution of the claim," and that the "forfeiture" provision applicable to them "targeted" older pilots for the benefit of younger pilots. (Id. ¶¶ 158, 180, 182.) Based on these foregoing allegations, plaintiffs allege that they have been "adversely affected" by ALPA's discriminatory allocation of the ALPA Claim. (See id. ¶ 183.)
As to the Notes Model, plaintiffs' factual allegations are sparse and difficult to comprehend. In four paragraphs in the middle of the Amended Complaint (id. ¶¶ 168-71), plaintiffs generally allege that they "reasonably understood . . . that the proceeds of the [N]otes would be distributed to those who lost monies based upon the termination of the defined benefit plan" but instead the "proceeds were paid to junior pilots who lost nothing in the termination of the defined benefit plan, inasmuch as those pilots were being made whole by the PBGC."
Second, plaintiffs allege that ALPA breached its contract with Delta to develop methodology for the distribution of the proceeds
Plaintiffs allege the following two claims against Delta: (1) age discrimination under the ADEA under a disparate treatment theory; and (2) breach of implied contract.
First, plaintiffs allege that Delta violated the ADEA by being "fully aware at each step of the way" of the allocation methods adopted by ALPA but failing to take steps to assure that ALPA treated Delta's "oldest, most experienced pilots . . . better, or even equally, monetarily than younger, far less experienced pilots . . . despite the fact that the oldest pilots would be losing far more (in actual dollars or proportionately) than any other segment of the pilot workforce." (Id. ¶¶ 251-52.) To substantiate this claim, plaintiffs allege that Delta, an "employer" within the meaning of 29 U.S.C. § 630, "simply abandoned its oldest, most valuable pilot employees to the whims of the much younger ALPA leadership and stood silently by as the [ALPA leadership] decided to, predictably, leave the former with virtually no economic protections after a lifetime of dedicated service, in favor of the younger pilots," who "would reap a windfall" from the older pilots' redistributed allocations. (Id. ¶¶ 242, 253.)
Second, plaintiffs allege that Delta breached an implied contract between Delta and its pilot employees. (Id. ¶¶ 261-65.) Specifically, plaintiffs assert that, although Delta's contract with ALPA gave ALPA "exclusive authority" to allocate and distribute the proceeds of the ALPA Claim and the Notes, Delta retained a "non-delegable duty" to assure that ALPA allocated the proceeds in a "reasonable" manner. (Id. ¶¶ 137, 262.) Plaintiffs therefore allege that Delta breached an implied contract between Delta and its pilots that "Delta would monitor the allocation of the Proceeds and assure that such allocation was accomplished in a reasonable manner, and, more to the point, in a manner that
Rule 12(b)(1) allows a district court to dismiss a case for lack of subject matter jurisdiction if the court "`lacks the statutory or constitutional power to adjudicate [the case].'" Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir.2005) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000)). Indeed, it is well-established that the plaintiff asserting subject matter jurisdiction has the burden of proving that jurisdiction exists by a preponderance of evidence when opposing a 12(b)(1) motion to dismiss. Luckett v. Bure, 290 F.3d 493, 497 (2d Cir.2002) (citing Makarova, 201 F.3d at 113). In resolving a Rule 12(b)(1) motion to dismiss, the court "must accept as true all material factual allegations in the Amended Complaint, but will not draw inferences favorable to the party asserting jurisdiction." Crayton v. Long Island R.R., No. 05-CV-1721, 2006 WL 3833114, at *3 (E.D.N.Y. Dec. 29, 2006).
Rule 12(b)(6) allows for the dismissal of a cause of action if a plaintiff's complaint fails "to state a claim upon which relief can be granted." Fed. R.Civ.P. 12(b)(6). Rule 8(a)(2) requires a pleading to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). While Rule 8 "does not require `detailed factual allegations[,]' . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Thus, factual allegations must consist of more than mere labels, legal conclusions, or a "`formulaic recitation of the elements of a cause of action.'" Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).
In order to "survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'"
The plausibility determination is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949. Plaintiff's "[f]actual allegations must be enough to raise a right to relief
The plausibility standard does not require a showing of a "probability" of misconduct, but it does demand more than a "sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S.Ct. at 1949. The plausibility standard is not met where factual allegations, taken as true, are "`merely consistent with' a defendant's liability," id. at 1949 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955), but are also "not only compatible with, but indeed. . . more likely explained by, lawful . . . behavior." Id. at 1950. Thus, where there is an "`obvious alternative explanation'" that is more likely, the plaintiff's cause of action is not plausible and must be dismissed. Id. at 1951 (quoting Twombly, 550 U.S. at 567, 127 S.Ct. 1955); see also Arar v. Ashcroft, 585 F.3d 559, 617 (2d Cir.2009) (en banc) (Allegations "become implausible when the court's commonsense credits far more likely inferences from the available fact.").
However, a well-pleaded complaint may survive a motion to dismiss even where "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 556, 127 S.Ct. 1955 (citation and internal quotation marks omitted). This is because the court's function is "not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985).
In conducting such an assessment on a Rule 12(b)(6) motion to dismiss, courts must "`accept as true all allegations in the complaint and draw all reasonable inferences in favor of the non-moving party.'" Vietnam Ass'n for Victims of Agent Orange v. Dow Chem. Co., 517 F.3d 104, 115 (2d Cir.2008) (quoting Gorman v. Consol. Edison Corp., 488 F.3d 586, 591-92 (2d Cir.2007)); see also Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir. 2010).
In deciding a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), courts may consider evidence outside of the pleadings. See Luckett, 290 F.3d at 496-97 (citing Makarova, 201 F.3d at 113); Thomas v. Metro. Corr. Ctr., No. 09-CV-1769, 2010 WL 2507041, at *1 (S.D.N.Y. June 21, 2010).
Furthermore, in resolving a Rule 12(b)(6) motion to dismiss, courts may properly consider documents that are deemed included in, incorporated in, or integral to the complaint. See Sira v. Morton, 380 F.3d 57, 67 (2d Cir.2004) (noting that a court deciding a Rule 12(b)(6) motion may consider all documents included in the complaint whether by attachment, through incorporation by reference, or because the documents are integral to the pleading). Indeed, courts may consider "the full text of documents that are quoted in the complaint or documents that the plaintiff either possessed or knew about and relied upon in bringing the suit." Carter v. Safety-Kleen Corp., No. 06-CV-12947, 2007 WL 1180581, at *3 (S.D.N.Y. Mar. 14, 2007). Courts may also "consider matters of which judicial notice may be taken under Fed.R.Evid. 201," including documents filed in other courts. See Kramer v. Time Warner Inc., 937 F.2d 767, 773-74 (2d Cir.1991) ("[C]ourts routinely take judicial notice of documents filed in other courts . . ."); see also Arista Records, Inc. v. Dalaba Color Copy Ctr., Inc., No. 05-CV-3634, 2007 WL 749737, at *4 n. 1 (E.D.N.Y. Mar. 7, 2007). "`If these
In total, ALPA
There is no heightened pleading standard for employment discrimination cases. Swierkiewicz v. Sorema, N.A., 534 U.S. 506, 512, 514-15, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (Under Rule 8 of the Federal Rules of Civil Procedure, an employment discrimination complaint "must include only a short and plain statement of the claim . . . [that] give[s] the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests."); see also Twombly, 550 U.S. at 547, 569-70, 127 S.Ct. 1955 (explicitly affirming the Swierkiewicz pleading standard for employment discrimination claims.); Iqbal, 129 S.Ct. at 1953.
Accordingly, to overcome a motion to dismiss, a complaint in an ADEA case need not allege specific facts that establish a prima facie case of discrimination. Swierkiewicz, 534 U.S. at 515, 122 S.Ct. 992. However, "the complaint must be facially plausible and must give fair notice to the defendants of the basis for the claim." Morales v. Long Island R.R. Co., No. 09-CV-8714, 2010 WL 1948606, at *3 (S.D.N.Y. May 14, 2010); see also Arista Records, LLC v. Doe 3, 604 F.3d 110, 120-21 (2d Cir.2010) (noting that, although Twombly and Iqbal did not impose a heightened pleading standard in employment discrimination cases, enough facts must still be pleaded to make plaintiff's claim plausible); Doverspike v. Int'l Ordinance Techs., No. 09-CV-00473, 2010 WL 986513, at *5 (W.D.N.Y. Mar. 17, 2010) (same).
As a threshold matter, ALPA and Delta argue that plaintiffs' claims are barred by the Bankruptcy Confirmation Order and Plan. Delta contends that plaintiffs' claims are barred under the Exculpation Clause and the Discharge and Release Clause in the Confirmation Order and Plan.
In response, plaintiffs argue that the Exculpation Clause contains an exception for "willful misconduct" and that the Amended Complaint contains allegations that both Delta and ALPA acted willfully are therefore outside of the protective scope of the Exculpation Clause. (See Doc. No. 46, Pls.' Mem. in Opp. to Delta's Mot. to Dismiss ("Pl. Opp. to Delta") at 16-18; Doc. No. 45, Pls.' Mem. in Opp. to ALPA's Mot. to Dismiss ("Pl. Opp. to ALPA") at 30-31.) Plaintiffs offer no response to Delta's argument that all of plaintiffs' claims against Delta are barred by the Discharge and Release Clause. (Pl. Opp. to Delta at 16-18.)
The Confirmation Order and Plan's Discharge & Release Clause, applicable to Delta, but not ALPA, provides that "upon the Effective Date [April 30, 2007], all existing Claims against [Delta] . . . shall be, and shall be deemed to be, discharged and terminated." (Confirmation Order ¶ 78; Plan § 13.3.) Under this discharge provision, each holder of a claim against Delta "is deemed to have forever waived, released and discharged [Delta], to the fullest extent permitted by Section 1141 of the Bankruptcy Code, of and from any and all Claims, Interests, rights and liabilities that arose prior to the Effective Date." (Confirmation Order ¶ 79; Plan § 13.3.)
Under Section 1141 of the Bankruptcy Code, a bankruptcy court's confirmation of a reorganization plan discharges the debtor from any debt that arose before the
Thus, the Discharge and Release Clause covers all debts and claims that existed before April 30, 2007, the Effective Date of the Plan. (Confirmation Order ¶ 78; Plan § 13.3.) Accordingly, the applicability of the Discharge and Release Clause to the plaintiffs' claims against Delta hinges primarily upon the court's determination of whether the plaintiffs' claims arose prior to April 30, 2007.
A claim arises, for the purposes of discharge in bankruptcy cases, at the "time of the events giving rise to the claim, not at the time the plaintiff is first able to file suit on the claim." Carter, 2007 WL 1180581, at *4-5 (internal quotation marks and citation omitted). Moreover, when determining whether a claim arises before or after the date of the Bankruptcy Plan's confirmation, courts must look to the relevant non-bankruptcy law that serves as the basis for the claim, namely, employment discrimination law, breach of contract law, and, as will be discussed, infra, law surrounding hybrid claims for breaches of collective bargaining agreements and of the duty of fair representation. See, e.g., In re Manville Forest Prods. Corp., 209 F.3d 125, 128 (2d Cir.2000).
In employment discrimination cases, a claim is deemed to arise "on the date the employee learns of the employer's discriminatory conduct." Flaherty v. Metromail Corp., 235 F.3d 133, 137 (2d Cir.2000); see also Bates v. Long Island R.R. Co., 997 F.2d 1028, 1037 (2d Cir. 1993). Further, a cause of action for breach of contract under New York law accrues when the contract is breached. Ely-Cruikshank Co., Inc. v. Bank of Montreal, 81 N.Y.2d 399, 402, 599 N.Y.S.2d 501, 502, 615 N.E.2d 985, 986 (1993). Moreover, a breach of contract claim premised on an employer's breach of the collective bargaining agreement and on a union's breach of its duty of fair representation is "apparent to the [plaintiff] at the time [plaintiff] learns of the union action or inaction about which she complains." Ghartey v. St. John's Queens Hosp., 869 F.2d 160, 165 (2d Cir.1989); see also Cohen v. Flushing Hosp. & Med. Ctr., 68 F.3d 64, 67 (2d Cir.1995) ("[I]t is well settled that [a hybrid cause of action for a breach of collective bargaining agreement against an employer and breach of duty of fair representation claim against a union] accrue[s] no later than the time when plaintiffs knew or reasonably should have known that such a breach . . . had occurred." (internal citations and quotation marks omitted)); see also Welyczko v. U.S. Air, Inc., 733 F.2d 239, 241 (2d Cir.1984), cert. denied, 469 U.S. 1036, 105 S.Ct. 512, 83 L.Ed.2d 402 (1984) (six-month federal statute of limitations applicable to hybrid actions under the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 141 et seq., is also applicable to hybrid claims under the RLA).
Here, plaintiffs' claims against Delta based upon the ALPA Claim arose after Delta filed its Chapter 11 petition and prior to the Effective Date of the Plan. The 2006 ADC Claim Dispatch, which notified plaintiffs of the details of the allegedly "unreasonable" and "unlawful" method of allocation of the ALPA Claim, was circulated
Accordingly, on April 30, 2007, all of plaintiffs' claims against Delta arising out of the establishment and implementation of the Claim Model were barred, discharged, terminated, and enjoined by the Discharge and Release Clause and Plan Injunction in the Confirmation Order and Plan and the injunction provisions set forth in sections 1141(d) and 524(a) of the Bankruptcy Code. See 11 U.S.C. §§ 524(a), 1141(d); see, e.g., Carter, 2007 WL 1180581, at *5 (finding plaintiff's discrimination claim, which the court found to arise prior to the confirmation of the debtor's plan of reorganization, to be discharged under the under the terms of the Reorganization Plan and by the Bankruptcy Code); see also Garland v. U.S. Airways Inc., 270 Fed.Appx. 99, 101-02 (3d Cir.2008) (discrimination claims against airline based on plaintiff's termination were discharged by confirmation of U.S. Airways' bankruptcy reorganization plan and by the Bankruptcy Code); Long v. Delta Air Lines, Inc., No. 5:08-CV-00210, 2009 WL 5198092, at *3-4 (W.D.Ky. Dec. 23, 2009) (finding plaintiff's discrimination claims against Delta to be discharged by the confirmation of Delta's reorganization plan, effective April 30, 2007, and that plaintiff was enjoined from bringing any action against Delta regarding any claims that arose prior to April 30, 2007).
Plaintiffs' claims against Delta arising from the Notes present a more difficult question. Although acknowledging that the plaintiffs first learned of the Notes Model in August 2007, Delta argues that the claims based upon the Notes Model "existed" prior to the Effective Date of the Plan and were similarly discharged. (Doc. No. 44, Reply Br. in Support of Def. Delta Air Lines, Inc.'s Mot. to Dismiss ("Delta Reply") at 4 ("[T]o the extent Plaintiffs' claims against Delta are based on the agreement to allow ALPA to determine the [Notes] model, they arose from Bankruptcy Letter #51, and where thus also discharged.").)
Delta's argument is without merit. In both employment discrimination cases and breach of contract cases premised on breaches of a collective bargaining agreement, a claim arises when the employee gains knowledge about the allegedly unlawful or discriminatory action or inaction. Flaherty, 235 F.3d at 137; Ghartey, 869 F.2d at 165. In state-law breach of contract cases, a claim arises when the contract is breached. Ely-Cruikshank Co., 81 N.Y.2d at 402, 599 N.Y.S.2d at 502, 615 N.E.2d at 986. ALPA informed the Delta pilots of the Notes Model through the ADC Notes Dispatch on August 9, 2007, more than three months after the April 30, 2007 discharge date. (Notes Dispatch at 1.) Moreover, Delta concedes that plaintiffs
Accordingly, plaintiffs' claims based upon the Notes Model did not arise until plaintiffs could reasonably be expected to learn about the details of the Notes allocation method: at the earliest August 9, 2007, the date of the ADC Notes Dispatch. Because the August 9, 2007 ADC Notes Dispatch post-dates the Effective Date of the Plan, the court finds that plaintiffs' age discrimination claim and breach of implied contract claim against Delta arising from the Notes are not barred by the Discharge and Release Clause.
Exculpation clauses are properly considered in a Rule 12(b)(6) motion to dismiss. In re BH S & B Holdings LLC, 420 B.R. 112, 145 (Bankr.S.D.N.Y.2009) ("The Court may take judicial notice of an exculpatory provision at the motion to dismiss stage."); see also Nisselson v. Lernout, 568 F.Supp.2d 137, 149 (D.Mass.2008) (dismissing complaint on a 12(b)(6) motion when plaintiff failed to plead claims of non-exempt conduct with sufficient particularity to permit the court to reasonably conclude the conduct falls outside the exemption to the exculpation provision).
The Exculpation Clause contained in the Confirmation Order and Plan shields both ALPA and Delta from incurring liability "to any holder of a Claim . . . for any act or omission in connection with, related to or arising out of, the Chapter 11 Cases,. . . the offer, issuance and distribution of any securities issued or to be issued pursuant to the Plan . . . or the administration of the Plan or the property to be distributed under the Plan, except for willful misconduct, ultra vires acts or gross negligence." (Confirmation Order ¶ 83; Plan § 13.5.)
Defendants contend that the Exculpation Clause is both retrospective and prospective and that, as plaintiffs' age discrimination and contract claims against them clearly fall within the purview of events covered by the Exculpation Clause, these claims are barred. (See Delta Mot. at 15-17; Delta Reply at 4-5; ALPA Mot. at 27-28.) Specifically, defendants argue that plaintiffs are holders of Claims, as defined under the Confirmation Order and Plan, and that these claims center chiefly upon the defendants' alleged actions, inactions, and duties relating to and arising directly from Letter 51, a modification of the pilots' collective bargaining agreement negotiated so that Delta could emerge from bankruptcy, which was incorporated into the Bankruptcy Court's Plan and approved by the Confirmation Order. (See Delta Mot. at 15-17; Delta Reply at 4-5; ALPA Mot. at 27-28; see also Am. Compl. ¶ 129.) The defendants therefore argue that the acts or omissions alleged by plaintiffs arise out of "the Chapter 11 Cases" under the purview of the Exculpation Clause. (See Delta Mot. at 15-17; Delta Reply at 4-5; ALPA Mot. at 27-28.) Furthermore, the defendants argue that the allocation models developed to distribute the ALPA Claim and the Notes constitute issues of administration of Letter 51, an integral part of the Bankruptcy Plan, and that the ALPA Claim and the Notes, which are either securities or stock convertible into cash, constitute securities and property to be distributed under the Plan. (Delta Mot. at 15-17; Delta Reply at 4-5; ALPA Mot. at 27-28; see also Plan §§ 1.1(7), 1.1(163), 1.1(164), 4.2(d), and 6.14.) Thus, defendants argue, and the court agrees, that plaintiffs' age discrimination and breach of contract claims fall squarely within the substantive coverage of the Exculpation Clause.
In response to defendants' arguments, plaintiffs contend that: (1) plaintiffs' claims are not barred by the Exculpation Clause because plaintiffs have properly alleged that ALPA's and Delta's conduct constitutes willful misconduct;
Defendants argue that the text of the Exculpation Clause is both prospective and retrospective in nature and therefore shields both ALPA and Delta from liability related to or arising out of the development of both the Claim Model and the Notes Model. (Delta Mot. at 16-17; ALPA Mot. at 27-28.) Plaintiffs, on the other hand, argue that the Exculpation Clause protects against retrospective actions only, and thus would not exculpate defendants from their liability related to or arising out of the development of the Notes Model.
The court declines to adopt plaintiffs' interpretation of the Exculpation Clause. First, the Exculpation Clause, which shields Delta and ALPA from "any liability" for, inter alia, "any act or omission in connection with, related to or arising out of. . . the administration of [Delta's] Plan [of Reorganization]," contains no explicit limitation regarding the temporal genesis of that alleged liability. (Confirmation Order ¶ 83; see also Plan § 13.5.) Further, the language of the clause itself is prospective in nature, as it exculpates the parties from liability arising out of "the administration of the Plan," including securities "to be issued pursuant to the Plan," and "property to be distributed under the Plan." (Confirmation Order ¶ 83; see also Plan § 13.5.) As courts in this circuit have noted, limiting the scope of the Exculpation Clause to actions occurring only prior to the Effective Date "would render the `administration of the Plan' clause meaningless, because conduct during the administration of the Plan necessarily occurs after the effective date of the Plan." In re Flushing Hosp. and Med. Center, 395 B.R. 229, 235 (Bankr.E.D.N.Y.2008) (holding
Accordingly, unless an exception to the Exculpation Clause applies, plaintiffs' claims against defendants arising from both the ALPA Claim and Notes Models are barred by the Exculpation Clause contained in the Confirmation Order and Plan.
Neither the Confirmation Order nor the Plan defines the term "willful misconduct," as used in the exception to the Exculpation Clause. Courts interpreting "willful misconduct" in exculpation clauses with similar language to the clause in this case have defined the term as "intentional" conduct. See, e.g., Sabella v. Scantek Med., Inc., No. 08-CV-453, 2009 WL 3233703, at *12 (S.D.N.Y. Sept. 25, 2009) (holding that because "there is no suggestion that the term [`willful misconduct' as used in exculpation clause] is ambiguous, `willful misconduct' will be given its ordinary meaning, which is `Misconduct committed voluntarily and intentionally.'" (citing Black's Law Dictionary (8th ed. 2004))); see also Black's Law Dictionary (8th ed. 2004) (defining "misconduct" as "[a] dereliction of duty; unlawful or improper behavior"); Mansfield v. Air Line Pilots Ass'n Int'l, Nos. 06-C-6869, 07-C-590, 2007 WL 2048664, at *3 (N.D.Ill. July 9, 2007) (on motion to dismiss, analyzing similar exculpation clause exempting "willful misconduct" from purview and concluding that "[t]he words `intentional' and `willful' are synonyms, for all practical purposes." (citing Webster's Third New Int'l Dictionary 2617 (1993))).
Relying on Supreme Court cases analyzing willful violations of the ADEA, plaintiffs argue that "willful" conduct occurs where "the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by statute." (Pl. Opp. to ALPA at 31 (citing McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988)); Pl. Opp. to Delta at 16 (same)); accord Hazen Paper Co. v. Biggins, 507 U.S. 604, 617, 113 S.Ct. 1701, 123 L.Ed.2d 338 (1993) (analyzing § 7(b) of the ADEA and concluding that a violation of the ADEA would be "willful" if "the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the [ADEA]"); Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 126, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985) (same); Benjamin v. United Merchants and Mfrs., Inc., 873 F.2d 41, 44 (2d Cir.1989) (same). Plaintiffs therefore contend that the knowing or reckless disregard standard from ADEA cases should be imported into the definition of "willful misconduct" found in the Exculpation Clause. Defendants do not dispute this argument or offer an alternate definition of "willful misconduct."
In order to withstand Delta's motion to dismiss, plaintiffs argue that the Amended Complaint contains sufficient allegations regarding Delta's willful participation in the allegedly unlawful and unreasonable allocation of the proceeds so that their claims against Delta are not barred by the Exculpation Clause.
First, assuming the truth of plaintiffs' non-conclusory allegations, the Amended Complaint fails to allege sufficient facts to establish a plausible showing of Delta's willful misconduct with regard to the Notes Model. See Twombly, 550 U.S. at 570, 127 S.Ct. 1955; Iqbal, 129 S.Ct. at 1950. There are no allegations to suggest that Delta acted with discriminatory intent, directed ALPA to allocate the Notes in an unreasonable, unlawful or discriminatory manner, played any part in developing or approving the Notes Model, or that Delta knew of or recklessly disregarded the possibility that the allocations made under ALPA's Notes Model violated the ADEA.
The thrust of plaintiffs' allegations is that ALPA, not Delta, through its MEC
As discussed, meeting the plausibility standard requires a complaint to plead facts that show "more than a sheer possibility that a defendant has acted unlawfully" and a complaint that only pleads facts that are "`merely consistent with' a defendant's liability ... `stops short of the line between possibility and plausibility of entitlement to relief.'" Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Plaintiffs' allegations that they did not receive proportionately more allocation under the Notes Model than the younger pilots (Am. Compl. ¶¶ 168-71), and that Delta did nothing to rectify this alleged inequity falls short of a plausible showing that Delta intentionally or knowingly violated the ADEA, that Delta showed reckless disregard for whether its conduct violated the ADEA, or that Delta intentionally breached an implied contract. See, e.g., Benjamin, 873 F.2d at 44 ("[T]here is no liability for [a willful violation of the ADEA] when a plaintiff proves only that the employer acted negligently, inadvertently, innocently, or even, if the employer was aware of the applicability of the ADEA, and acted reasonably and in good faith.")
Indeed, the factual allegations contained in the Amended Complaint fail to plausibly suggest that the Notes Model itself was discriminatory or unreasonable. Quite the opposite, the allegations in the Amended Complaint and the ADC Notes Dispatch make clear that the Notes Model, which determined allocations based on the greater of the amount lost from the termination of the Plan, or alternatively, on years of service, necessarily rewarded older pilots, such as plaintiffs, who had worked for Delta for longer than the younger pilots. Further, the allegations in the Amended Complaint and the ADC Notes Dispatch suggest that any disparities between the older and younger pilots' proportional recovery under the Notes Model were the result of the discrepancy between the ADC's predicted valuation and the actual valuation of the PBGC claim and, thus, contradict plaintiffs' allegations of discriminatory animus based on the older pilots' age.
Further, as plaintiffs have not supported their conclusory allegations with facts sufficient to render the allegations of Delta's willful misconduct plausible, they are not entitled to engage in discovery in order to determine whether they can allege a plausible claim.
In opposition to ALPA's motion to dismiss, plaintiffs argue that because the Amended Complaint sufficiently pleads allegations regarding ALPA's willful participation in the allegedly unlawful and unreasonable allocation of the ALPA Claim and the Notes, its claims are not barred by the Exculpation Clause. (Pl. Opp. to ALPA at 30-31.) Arguing that they have sufficiently pleaded willful misconduct against ALPA, plaintiffs direct the court's attention to their two allegations that ALPA acted "willfully," and, generally, to the allegations made in connection with ALPA's alleged age discrimination and breach of contract claims. (Id. at 31.) Finally, plaintiffs contend that the Amended Complaint contains an "array of allegations that, taken together, suggest a brazen attitude by" ALPA in its determination of the Claim and Notes Models.
Given plaintiffs' allegations that the forfeiture provision in the Claim Model was developed to account for the inability of pilots turning 60 to work for the full term of the concessionary period and that the MEC waived the forfeiture provision for 140 out of 170 pilots who had not mandatorily retired before FTEPA's enactment, the court finds that the Amended Complaint contains insufficient factual allegations to render plausible ALPA's alleged willful violation of the ADEA and breach of contract based on the Claim Model. Likewise, for the reasons noted above, plaintiffs have insufficiently pleaded a plausible claim willful misconduct in connection with the Notes Model. However, even if the court found plausible plaintiffs' allegations of ALPA's willful misconduct, plaintiffs' claims against ALPA are dismissed on other grounds.
ALPA argues that plaintiffs' ADEA claim should also be dismissed as a matter of law because plaintiffs seek monetary damages, which are unavailable in ADEA claims against a union under controlling Second Circuit precedent. (ALPA Mot. at 16-17.) In response, plaintiffs ignore controlling Second Circuit law and instead rely on cases outside the Second Circuit holding that monetary damages may be recoverable against a labor union under the ADEA, and urge the court to follow the reasoning of those courts, because, inter alia, barring money damage awards leaves discrimination victims without a remedy. (Pl. Opp. to ALPA at 13-16 (citing Tyrrell v. City of Scranton, 134 F.Supp.2d 373, 385-87 (M.D.Pa.2001)).) Alternatively, plaintiffs argue that ALPA may be viewed as an indirect or de facto employer subject to monetary damages under the ADEA and that ALPA can be liable under the ADEA via an "aiding and abetting" theory of liability. (Pl. Opp. to ALPA at 11-13; see also Pl. Supplemental Letter Br. at 3.)
The Second Circuit, interpreting the remedies available under the ADEA in Air Line Pilots Ass'n Int'l v. Trans World Airlines Inc., held that the ADEA does not permit the recovery of monetary damages against a labor organization. 713 F.2d 940, 957 (2d Cir.1983), aff'd in part, rev'd in part, 469 U.S. 111, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985). Specifically, the Second Circuit held:
Id. at 957 (internal citations omitted). The Supreme Court subsequently declined to address the issue, finding that it was "without jurisdiction to consider this question." Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 119 n. 14, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985).
Although, as plaintiffs point out, courts in other circuits have held that unions can be liable for money damages under the ADEA, courts in this circuit
Here, however, the only remedy plaintiffs seek from ALPA in Count One of the Amended Complaint is monetary damages, in addition to attorney's fees and costs for the alleged ADEA violation. (See Am. Compl. ¶ 195 (stating that, because of ALPA's violation of the ADEA, "each of the complaining plaintiffs was deprived of such sum as may be determined at trial to represent proceeds of distributions to which they were, or should have been entitled, but in no event less than One Million One Hundred Thousand ($1,100,000.00) Dollars for each plaintiff."); id. at p. 44-45 ("Wherefore ... as to the claims set forth in Count I [the ADEA claim], as against [ALPA and Prater] such sum as may be determined at trial, but in no event less than the sum of One Million One Hundred Thousand ($1,100,000.00) Dollars for each plaintiff herein, plus the costs of maintaining this claim, including reasonable attorneys' fees).) The Amended Complaint also contains a formulaic recitation for "such other and further relief as the Court may deem just and proper." (Id. at p. 48.)
Damages are an essential element of an ADEA claim, and in the absence of an available remedy, the ADEA claim must be dismissed. See, e.g., Lightfoot v. Union Carbide Corp., 110 F.3d 898, 909-10 (2d Cir.1997) (affirming the dismissal of an ADEA claim on summary judgment where district court held that damages were unavailable as a matter of law); Shaheen v. Gonzales, 05-CV-8400, 2006 WL 3164763, at *8 (S.D.N.Y. Nov. 1, 2006) (stating "[a]s in most civil actions, an inability to prove damages is grounds for dismissal" and granting summary judgment and dismissing ADEA claim where plaintiff "cannot show that he has suffered damages for which the ADEA provides a remedy"); Cipriano, 700 F.Supp. at 1213 (granting summary judgment on ADEA claim against union based on the unavailability of monetary damages). As the plaintiffs have not requested injunctive relief, there is no other remedy in connection with plaintiffs' ADEA claim against ALPA, and the claim must be dismissed.
Plaintiffs' general requests for "such other and further relief as to this Court may seem just and proper" and for attorney's fees and costs do nothing to change the foregoing analysis. The Second Circuit has held that, in an ADEA case, an employee's general prayer for relief was insufficient to defeat a motion for summary judgment where the relief the plaintiff sought was unavailable as a matter of law. Lightfoot, 110 F.3d at 910. Moreover, an award of attorney's fees is only
In an effort to salvage their ADEA claim, plaintiffs argue that ALPA may be viewed as an indirect or de facto employer and, alternatively, that ALPA can be liable under the ADEA claim by advancing a theory of "aiding and abetting" liability. (Pl. Opp. to ALPA at 11-13.) These theories fail for the reasons set forth below.
First, plaintiffs argue that, because ALPA was delegated the authority to determine the allocation methods, the court should deem the union an "employer" under the ADEA, subject to monetary damages. (Pl. Opp. to ALPA at 11-13.) Specifically, plaintiffs argue the word "employer" in Title VII
Plaintiffs' argument is unpersuasive. First, the structure of the ADEA, which specifically distinguishes between age discrimination claims brought against an "employer" and those brought against a "labor union," indicates that the ADEA holds employers and unions separately responsible for their own conduct. Compare 29 U.S.C. § 623(a) with 29 U.S.C. § 623(c). However, even if the ADEA contemplates a situation where, as here, plaintiffs seek to hold their union liable both in its capacity as plaintiffs' union and as plaintiffs' indirect or de facto employer, plaintiffs would be required, at the very least, to include sufficient factual allegations in the Amended Complaint to alert defendants to this theory of liability. See, e.g., Kern, 93 F.3d at 46 ("[W]hen a plaintiff brings a Title VII action against a union in its capacity as an employer, the plaintiff must demonstrate that the union meets the Title VII definition of "employer." On the other hand, if a plaintiff brings a Title VII action against a union in its capacity as a labor organization, the plaintiff must demonstrate that the union meets that statutory definition of a "labor organization.""); see also Herman v. United Bhd. of Carpenters & Joiners, 60 F.3d 1375, 1384-85 (9th Cir.1995) (holding that, under the ADEA, a plaintiff who sues his employer-local-union in its capacity as an employer must demonstrate that the employer-local-union meets the statutory definition of employer). Instead, the Amended Complaint explicitly seeks to hold ALPA liable under the ADEA in its capacity as a "labor organization" under 29 U.S.C. § 623(c). (Am. Compl. ¶¶ 61, 174 ("ALPA is a `labor organization' within the meaning of the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act and as defined in 29 U.S.C. sec. 630, in that it is a labor organization engaged in an industry affecting commerce ...").) Plaintiffs may not, in their Opposition papers, make arguments based on allegations which are completely absent from the Amended Complaint or assert a new cause of action in their Opposition in an effort to avoid dismissal of their ADEA claim. Accordingly, the court finds plaintiffs' indirect or de facto employer
Finally, the plaintiffs have failed to articulate a sufficient basis for their "aider and abettor" theory of liability in this context. (Id. at 12-13.) Even if such liability existed under the ADEA and had been plausibly alleged, plaintiffs have cited to no cases holding that such liability would render ALPA liable for monetary damages under the ADEA.
Accordingly, for the foregoing reasons, plaintiffs' ADEA claim against ALPA is dismissed as a matter of law. See, e.g., Cipriano, 700 F.Supp. at 1213; Shaheen; 2006 WL 3164763, at *8.
ALPA next argues that plaintiffs' state law breach of contract claim against ALPA should be dismissed because: (1) the claim is a "minor dispute" under the RLA and therefore falls within the exclusive jurisdiction of the System Board of Adjustment ("Adjustment Board"); and alternatively, (2) the claim is preempted by the federal duty of fair representation, which is time-barred, as plaintiffs conceded at the oral argument. (See ALPA Mot. at 19-23; Tr. at 33-34.) The court agrees that plaintiffs' breach of contract claim against ALPA is preempted and thus must be dismissed.
First, ALPA argues that plaintiffs' state-law breach of contract claim must be dismissed because the claim constitutes a "minor dispute" subject to the exclusive jurisdiction of the Adjustment Board. In response, the plaintiffs contend that their state law contract claim exists independently of the collective bargaining agreement, and is therefore not preempted by the RLA. (See Pl. Opp. to ALPA at 27-28.) Plaintiffs alternatively argue that the question of whether their claim constitutes a "minor dispute" as a matter of law requires further discovery. (Id. at 26.) The court finds that the mandatory arbitration provision of the RLA, which governs the parties' collective bargaining agreement,
Labor disputes in the airline industry are governed by the RLA. See 45 U.S.C. § 181; Baylis v. Marriott Corp., 843 F.2d 658, 662 (2d Cir.1988). One of the primary purposes of the RLA is to minimize interruptions in the nation's transportation services by strikes and labor disputes. Int'l Assoc. of Machinists v. Cent. Airlines, Inc., 372 U.S. 682, 687, 83 S.Ct. 956, 10 L.Ed.2d 67 (1963). To effectuate that purpose, the RLA mandates the establishment of arbitration panels called "Adjustment Boards," composed of members selected by the air carriers and by labor organizations representing the employees, Baylis, 843 F.2d at 662, and grants exclusive jurisdiction to Adjustment Boards to resolve "minor disputes," that is, disagreements over the interpretation or application of terms in existing collective bargaining agreements. See 45 U.S.C. § 184; Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 252-53, 114 S.Ct. 2239, 129 L.Ed.2d 203 (1994); Baylis, 843 F.2d at 662 (stating that jurisdiction over a dispute concerning "the interpretation of the terms of a collective bargaining contract ... lies
Unlike major disputes, which relate to "the formation of collective bargaining agreements or efforts to secure them," Hawaiian Airlines, 512 U.S. at 252, 114 S.Ct. 2239 (internal quotation marks omitted), minor disputes "contemplate[] the existence of a collective agreement already concluded or, at any rate, a situation in which no effort is made to bring about a formal change in terms or to create a new one." Consol. Rail Corp. (Conrail) v. Ry. Labor Execs. Ass'n, 491 U.S. 299, 303, 109 S.Ct. 2477, 105 L.Ed.2d 250 (1989) (internal citation omitted). Accordingly, minor disputes arise out of the duties and rights created or defined by existing collective bargaining agreements. See Hawaiian Airlines, 512 U.S. at 252-53, 114 S.Ct. 2239 ("Minor disputes involve `controversies over the meaning of an existing collective bargaining agreement in a particular fact situation.'" (quoting Trainmen v. Chicago R. & I.R. Co., 353 U.S. 30, 33, 77 S.Ct. 635, 1 L.Ed.2d 622 (1957))). Therefore, any state law claim seeking to interpret or enforce such contractual rights is preempted by the RLA. See Conrail, 491 U.S. at 303-04, 109 S.Ct. 2477; Hawaiian Airlines, 512 U.S. at 256, 114 S.Ct. 2239 ("Our case law confirms that the category of minor disputes contemplated by § 151a [of the RLA] are those that are grounded in the CBA."). On the other hand, if the claim does not require interpretation of the CBA, but rather "involves rights and obligations that exist independent of the CBA," the state law cause of action is not preempted. Hawaiian Airlines, 512 U.S. at 260, 114 S.Ct. 2239.
Here, the allegations in the Amended Complaint make clear that plaintiffs' "breach of contract claim" against ALPA is simply a claim that the terms of the collective bargaining agreement were breached, which is a "minor" dispute subject to the exclusive jurisdiction of the Adjustment Board. Specifically, plaintiffs allege that the collective bargaining agreement between Delta and ALPA, as modified through Letter 51, gave ALPA the "exclusive authority" to determine the method of allocation of the ALPA Claim and the Notes, which were given "in consideration for the reductions in pay, work rules, and benefits endured by the Delta pilots." (Am. Compl. ¶¶ 132, 137.) Plaintiffs further allege that Letter 51 created the "only restriction" on that "exclusive authority," which was "that such allocation had to be `reasonable and lawful.'" (Id. ¶¶ 137, 138 (quoting Letter 51).) Indeed, plaintiffs allege:
(Id. ¶ 203.) As determined, supra, the "reasonable and lawful" provision only applies to the distribution of the ALPA Claim, not the Notes. (Compare Letter 51 at 36 with Letter 51 at 40.)
Moreover, the Amended Complaint alleges that ALPA breached the reasonable and lawful contractual terms by allocating the proceeds in an "unreasonable" and "unlawful" way. (Am. Compl. ¶¶ 201-08 ("In light of the fact that the method of allocation was not reasonable and/or lawful, the particular methodology of allocation of the Proceeds constituted a breach of the contract between the Union and
In an attempt to circumvent the exclusive jurisdiction of the RLA, in direct contradiction of the allegations in the Amended Complaint, plaintiffs state that they are not arguing that the collective bargaining agreement has been breached. (Pl. Opp. to Delta at 15 ("[I]t is not claimed that the collective bargaining agreement has been breached. Indeed, it was the methodology of allocating and distributing the claim and notes that was at the heart of the implied contract claim, and such methodology was not set forth in the CBA.") (emphasis in original).) Although plaintiffs' argument is difficult to decipher, plaintiffs appear to be arguing that, because the actual method of allocation was set out in documents separate and apart from the CBA, their contractual rights do not emanate from the CBA and the RLA does not preempt their claim. (Tr. at 58-59.)
The court finds plaintiffs' arguments to be unpersuasive. Plaintiffs cannot, and have yet to, point to any source of their contractual rights external to the collective bargaining agreement.
Alternatively, plaintiffs, citing to Urdahl v. Eastern Airlines, No. 86-CV-1322, 1987 WL 6479, 1987 U.S. Dist. LEXIS 16825 (E.D.N.Y. Jan. 28, 1987), contend that, absent discovery, the court should not rule as a matter of law that plaintiffs' actions involve a minor dispute subject to the exclusive jurisdiction of the System Board. (Pl. Opp. to ALPA at 26.) In Urdahl, the court held that further discovery may allow the plaintiff to prove that plaintiffs' state-law libel and slander claim is "merely a peripheral concern" of federal law and that plaintiff must therefore be afforded "a reasonable opportunity to conduct discovery for the purpose of showing that jurisdiction exists." Urdahl, 1987 WL 6479, at *4, 1987 U.S. Dist. LEXIS 16825, at *12-13. However, unlike in Urdahl, where the court confronted a state-law tort claim for libel and slander where the source of the asserted rights could potentially be found outside the CBA, the court here faces a purported breach of the collective bargaining agreement itself. Furthermore, unlike in Urdahl, where the court noted that "further discovery may substantiate plaintiff's argument that plaintiff's state tort action is sufficiently independent of the wrongful discharge claim that it is `merely a peripheral concern' of federal law," id. at *4, 1987 U.S. Dist. LEXIS 16825 at *13, the court here finds it unlikely that discovery will uncover any facts that will substantiate plaintiffs' assertions, made in contradiction to the Amended Complaint, that their claim emanates from a source outside of the collective bargaining agreement. Thus, the court declines to grant plaintiffs' request for discovery and finds that plaintiffs' state law contract claim against ALPA is a minor dispute that is preempted by the RLA and therefore beyond the jurisdiction of the court. See, e.g., Carswell v. Air Line Pilots Ass'n Int'l, 540 F.Supp.2d 107, 124-25 (D.D.C. 2008) (finding plaintiff's breach of contract claim against ALPA to be a "minor" dispute subject to mandatory arbitration).
ALPA next argues that, even if plaintiffs were not required to bring their
"A union, as the exclusive bargaining representative of the employees it represents, owes the employees a duty to represent them fairly in collective bargaining with the employer and in enforcing the resulting CBA." Cooper, 349 F.Supp.2d at 507 (citing Steele v. Louisville & Nashville R.R. Co., 323 U.S. 192, 201-02, 65 S.Ct. 226, 89 L.Ed. 173 (1944); Vaca v. Sipes, 386 U.S. 171, 177, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967)). This duty requires the union "to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct." Vaca, 386 U.S. at 177, 87 S.Ct. 903. Accordingly, a plaintiff may sue the union for a breach of its duty of fair representation when a union's conduct towards its member is "arbitrary, discriminatory, or in bad faith." Id. at 190, 87 S.Ct. 903.
Because federal law defines the scope of the duty of fair representation owed by a union to its members, state law claims that are "mere refinements" of the duty of fair representation are preempted by the RLA. See Cooper, 349 F.Supp.2d at 507-08. A state law claim is a "mere refinement" of the duty of fair representation if it is based on the same conduct that would support a federal duty of fair representation claim or if it seeks to vindicate the same rights as the federal duty of fair representation. Id. at 508; Garland v. U.S. Airways, Inc., No. 05-CV-140, 2006 WL 3692591, at *7 (W.D.Pa. Dec. 12, 2006), aff'd, 270 Fed.Appx. 99 (3d Cir.2008) ("Plaintiff cannot avoid dismissal of his [duty of fair representation] claim simply by repackaging that claim under the guise of a different cause of action.").
In this case, plaintiffs' state law claim for breach of contract against ALPA is, in substance, a claim of breach of ALPA's duty of fair representation under the RLA. Although plaintiffs' claim is couched in terms of state breach of contract law, the claim is based on the same facts and theories of obligations that would support a federal duty of fair representation, namely, that ALPA's conduct in allocating and distributing bankruptcy proceeds bargained-for on behalf its members was invidious, unreasonable, and arbitrary. Indeed, the allegations in support of the breach of contract claim in the Amended Complaint allege that ALPA's conduct in the methodology of allocation and distribution of the Claims and Notes was "unlawful in that it... constitutes a violation of the Union's duty of fair representation in that it is discriminatory, arbitrary, and/or constitutes bad faith." (Am. Compl. ¶ 207.) Plaintiffs' breach of contract claim is therefore preempted by federal law. See, e.g., Cooper, 349 F.Supp.2d at 508 ("If the duty of fair representation is [unavailable], plaintiffs cannot avoid that result by simply using state common law labels for their claims. Put another way, plaintiffs cannot substitute for an inadequate duty of fair representation claim a state law claim arising out of the same facts and theories of obligation or `mere refinements' of those theories."); Garland, 2006 WL 3692591, at *5-7 (finding the proper avenue of relief for plaintiff's breach of contract claim against ALPA was a duty of fair representation
Notably, in every other case that the court has found where pilot plaintiffs alleged that ALPA failed to reasonably allocate proceeds received as a part of the pilot employer's bankruptcy pursuant to modified collective bargaining agreements, the plaintiffs appropriately sued (or attempted to sue) ALPA under the theory of breach of the duty of fair representation. See, e.g., Bondurant v. Air Line Pilots Ass'n, 718 F.Supp.2d 836, 838-39 (E.D.Mich. June 8, 2010) (alleging ALPA breached its duty of fair representation and violated the ADEA by failing to fairly administer to pilots required to retire under the Age 60 Rule a full share of their pre-petition bankruptcy claim); Gilliland v. Air Line Pilots Ass'n, Int'l, 741 F.Supp.2d 1334, 1340-41, No. 07-CV-3082, 2009 WL 6898343, at *5 (N.D.Ga. filed Oct. 15, 2009), aff'd, 396 Fed.Appx. 655, 2010 WL 3636746 (11th Cir. Sept. 21, 2010) (alleging, inter alia, that ALPA breached its duty of fair representation and violated the Americans with Disability Act of 1990, 42 U.S.C. § 12101, et seq., by developing a claim allocation model that unlawfully discriminated against plaintiff based on his disability); Mansfield, 2007 WL 2048664, at *1 (alleging ALPA breached its duty of fair representation by the manner in which it distributed the proceeds of convertible notes it received as a part of United's bankruptcy). See also Vaughn, 395 B.R. at 528, 535-540 (alleging ALPA breached its duty of fair representation and violated the ADEA in the manner in which it negotiated the termination of the pilots' defined benefit plan and the terms of the replacement pension plans).
The instant plaintiffs did not assert a breach of the duty of fair representation claim in the Amended Complaint, because, as plaintiffs conceded at oral argument, that claim is time-barred. (Tr. at 33-34); see also Eatz v. DME Unit of Local Union Number 3 of the Int'l Broth. of Elec. Workers, AFL-CIO, 794 F.2d 29, 33 (2d Cir. 1986) (A claim for breach of the duty of fair representation must be commenced within six month from when plaintiff knew or reasonably should have known a breach occurred.). Thus, plaintiffs cannot assert an expired claim for breach of the duty of fair representation. Accordingly, without a duty of fair representation claim, the court may not exercise jurisdiction over plaintiffs' preempted state law claims.
The decision of whether to allow plaintiffs leave to amend their Amended Complaint is left to the sound discretion of this court; however, there must be a good reason for denying plaintiffs the opportunity to replead. Acito v. IMCERA Group, Inc., 47 F.3d 47, 55 (2d Cir.1995). One good reason to deny plaintiffs leave to amend "is when such leave would be futile." Id. Indeed, if a plaintiff is unable to allege any fact sufficient to support its claim, a complaint should be dismissed with prejudice. See, e.g., Spain v. Ball, 928 F.2d 61, 62-63 (2d Cir.1991).
First, because the court has dismissed the ADEA and implied breach of contract claims against Delta based on the Discharge and Release Clause (for conduct relating to the Claim Model) and on the Exculpation Clause (for conduct relating to the Notes Model) contained in the Confirmation Order and Plan, the only additional facts plaintiffs could potentially plead to move the case forward against Delta relate to Delta's alleged willful misconduct with regard to the Notes. However, given the deficiencies in the Amended Complaint as well as plaintiffs' inability, at oral argument, to articulate or identify any facts giving rise to a plausible inference of willful misconduct on the part of Delta, the court determines that leave to replead would be futile. Furthermore, given the unavailability of a remedy for the ADEA claim against ALPA and the preemption of the breach of contract claim against ALPA, the court finds the plaintiffs' case against ALPA to be fatally deficient and declines to offer plaintiffs leave to amend.
Plaintiffs, who have not requested leave to amend orally or in writing, provide the court with no reason to believe that they can, if given the opportunity, replead in good faith the factual allegations necessary to move their case forward. Accordingly, because providing plaintiffs leave to amend would be futile, the court dismisses plaintiffs' Amended Complaint with prejudice. See Vaughn, 395 B.R. at 552 (denying plaintiffs' request for leave to amend their complaint because any further amendments would be futile).
For the foregoing reasons, Delta's and ALPA's motions to dismiss are granted in their entirety. Plaintiffs' Amended Complaint is dismissed with prejudice. The Clerk of Court is respectfully requested to enter judgment accordingly and to close this case.
(See EEOC Discrimination Charges.)
