Retirees Lose in Airline Union Asset Distribution

Union airline retirees lost a federal appeals challenge to union distribution of bankruptcy proceeds to American Airlines mechanics, fleet service workers and other laborers but not to share it with retirees.

The 9th U.S. Circuit Court of Appeals Monday upheld dismissal of two appeals that challenged the Transport Workers Union decision to share an equity stake in the American Airlines bankruptcy settlement unequally, cutting out retirees.

The panel found no breach of the union duty of fair representation, discrimination or bad faith.

In 2012, the TWU agreed to drastically cut pension and medical benefits for members, allow out-sourcing of jobs and made concessions on work rules as well as giving up unaccrued pension benefits.

In exchange the union received a 4.8 percent equity share in American, which later merged with American Eagle Airlines as part of the bankruptcy deal.

The union also negotiation early retirement lump-sum cash payments for those who voluntarily left the company.  Those leaving were given $5,000 to $22,500 in addition to regular severance pay, unused vacation pay and another two weeks pay.

In 2013, the union proposed a plan of distribution of the equity shares to members and it went to those employed at American between 2011 and 2013, but it excluded those who had taken the early buy-outs.

Retiree Daniel Demetris and other sued in class actions.

“A union’s decision to discriminate against its members on an impermissible basis will violate the duty of fair representation only where the aggrieved members set forth ‘substantial evidence of discrimination that is intentional, severe, and unrelated to legitimate union objectives,’” wrote Judge Diarmuid O’Scannlain for the panel.

He found the retirees lacked facts that could plausibly infer the TWU discriminated against them or acted in bad faith.  O’Scannlain pointed to two votes on the distribution plan.

Demetris v. Transport Workers Union, No. 15-15229


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