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Summary

The panel affirmed the district court’s dismissal of two consolidated actions brought under the Railway Labor Act, alleging a union’s breach of 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.

The district court did not err when it dismissed Retirees’ allegations that TWU violated its duty of fair representation through conduct that was arbitrary, discriminatory, or done in bad faith.

AFFIRMED.

Full 20 page Decision Demetris V. TWUA in PDF