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Demetris v. Transport Workers Union of America

United States Court of Appeals, Ninth Circuit

May 22, 2017

DANIEL DEMETRIS; WILLIAM BURKE; DANIEL BURSTEIN; PATRICK COLLINS; RICHARD GORGAS; PAUL HERFEL; ROBERT MARINI; ABDUL MORANI; PAUL MORRONE; ROBERT PALACEK, individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
TRANSPORT WORKERS UNION OF AMERICA, AFL-CIO, Defendant-Appellee. MARK LETBETTER; MIKE MCDONALD; RICK ARNEGARD; WILLIAM BELL; WILLIAM BLACK; LONNIE BRADBURY; JOHN BREEDEN; ROGER BROWN; SCOTT BROWN; JOHN BYNUM; MIKE CODY; JOHN CRAWFORD; BILLIE CUMMINS; GEORGE DANKER; DON DRAPER; MICHAEL ELMORE; WADE FAUST; JERRY FRAZIER; KEVIN GORREMANS; MARY GORREMANS; JAMES HAYDEN; BRENDA HIGLEY; RANDY HOLLAND; JIM BOB JACKSON; ALAN KEITH; EARL KUPPINGER; SOREN LOHMAR; DEBORAH MCDANIEL; JOHNNY MCDANIEL; MIKE MCNAMARA; STEVE NUNN; MIKE REYES; GEORGE RODRIGUEZ; MIKE SHARP; JERRY SHUPE; CURTIS SIMER; ROBERT SOMMERS; RONALD SWAN; TERRANCE THOMAS; BILL THORSON; JIM TROSKEY; JAMES WALL; LARRY WEBER; CHOKUSHIN URASAKI; STEVE ABSHIER; RALPH BACON; RONNIE BERTRANG; TRAICE BRYANT; DAN BURKE; KEVIN CALMAN; DONALD CAUDLE; JERRY COLLARD; DOUG CREEKMORE; HUGH COOPER; BARBARA DEJEAR; BRYAN DESHAZO; LIDIO A. DOBRICH; DAVID ELDER; JOHN ELLER; MIKE ELLER; NED ELZO; RON ENGLES; DONALD FARRIS; ROBERT FLYNN; RANDY FORRESTER; JESSE FOSTER; STEVE FREGARA; PAUL GOULET; MARION GREENWALT; PHIL HALLMAN; MCKAYLA HARPER; SCOTT HERMANSON; LARRY HOLMES; ROGER KEMP; DANIEL KITCHENS; LARRY LAWSON; JACK LOFGREN; PATRICE MANNS; EDWARD W. MARRACCINI; FARREN MAYFIELD; GAIL MAYFIELD; GREG MCBRIDE; FRANK MEFFORD; KEN MILLER; DANNY MOORE; GERALD MURRAY; JAMES POTTEBAUM; JOHN REED; ABRAHAM REICHMAN; SHARON RITTER; BEN ROUNDTREE; GARY RUNYON; MARY RUNYON; ROGER SCHULTZ; TIM SISNEY; JOSEPH W. SMITH; RONALD SMITH; STEVE ULLRICH; SUSAN VIRDELL; MITCH WALLACE; TERRY WALLS; KENNETH WARREN; ERIC WHALEY; RAY WHITE; GLENDA WILKERSON; MIKE WILLIAMS; DON WOODRICH; JOHNNY YEARY; SAM YORK; STEVEN JONES, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, ROY HAILE, Petitioner-Appellant,
v.
LOCAL 514, TRANSPORT WORKERS UNION OF AMERICA; TRANSPORT WORKERS UNION OF AMERICA, Defendants-Appellees.

          Argued and Submitted December 13, 2016 San Francisco, California

          Amended July 5, 2017

         Appeal from the United States District Court for the Northern District of California D.C. Nos. 3:13-cv-05566-VC, 3:14-cv-04075-VC Vince G. Chhabria, District Judge, Presiding

          Michael A. Caddell (argued), Cynthia B. Chapman, and Amy E. Tabor, Caddell & Chapman, Houston, Texas, for Plaintiffs-Appellants.

          Connie K. Chan (argued) and Stephen P. Berzon, Altshuler Berzon LLP, San Francisco, California; Richard Edelman, Mooney Green Saindon Murphy and Welch PC, Washington, D.C.; for Defendant-Appellee Transport Workers Union of America, AFL-CIO.

          Teague P. Patterson, Beeson Tayer & Bodine APC, Oakland, California; Caroline B. Lapish, Norman Wohlgemuth Chandler Jeter Barnett & Ray, Tulsa, Oklahoma; for Defendant-Appellee Local 514, Transport Workers Union of America.

          Before: Diarmuid F. O'Scannlain, Ronald M. Gould, and Milan D. Smith, Jr., Circuit Judges.

         AMENDED OPINION

         SUMMARY[*]

         Labor Law

         The panel filed an amended opinion affirming the district court's dismissal of two consolidated actions brought under the Railway Labor Act, in which union members alleged that a union breached the duty of fair representation in the decision to distribute the proceeds of a bankruptcy settlement to all of its members unevenly.

         American Airlines, Inc. and American Eagle Airlines, Inc. filed for Chapter 11 bankruptcy and negotiated new collective bargaining agreements with Transport Workers Union of America, AFL-CIO, which represented mechanics, fleet service workers, and other laborers. The new agreements cut pension and medical benefits for union members and granted the union a stake in the equity that would be granted to unsecured creditors in the bankruptcy. The union and American also negotiated an early separation program whereby more senior union members could choose voluntarily to leave American in exchange for lump-sum cash payments.

         Union members who took advantage of the early separation program alleged that the union breached its duty of fair representation by excluding them from the bulk of the equity distribution. The panel held that there was no breach of duty because the union's conduct was not arbitrary, discriminatory, or in bad faith.

          OPINION

          O'SCANNLAIN, Circuit Judge:

         We must decide whether a labor union's decision to distribute the proceeds of a bankruptcy settlement to all of its members unevenly violates its duty of fair representation.

         I

         A

         American Airlines, Inc., and American Eagle Airlines, Inc. (collectively "American") filed for Chapter 11 bankruptcy in November of 2011. As part of its reorganization process, American sought to reject and to renegotiate its collective bargaining agreements. The Transport Workers Union of America, AFL-CIO ("TWU") represented mechanics, fleet service workers, and other laborers at American. American presented TWU with a new, proposed labor agreement on February 1, 2012.

         1

         After a series of negotiations, TWU agreed to new collective bargaining agreements that drastically cut pension and medical benefits for its members. Specifically, TWU: (1) made scope-of-the-work concessions to American regarding outsourcing and work-rules; (2) gave up non-accrued pension benefits; (3) gave up certain life insurance benefits and access to jointly-funded medical trust accounts; (4) agreed to release various pre-petition claims and grievances against American in exchange for a 3.1% stake in the equity that eventually would be granted to unsecured creditors as part of American's bankruptcy (such equity would also represent compensation for the scope and pension concessions won by American); and (5) agreed to release two grievances-referred to by the parties as the 29(d) grievances-as part ...


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