Following the court’s ruling in the American Airlines equity case, TWU has received several questions regarding the equity distribution process. Below, we are reprinting the text of a Q&A that was sent to all AA Local Presidents on November 2, 2017.
Question: Why has so much time passed since the initial distribution of equity in American Airlines until now without all of the equity being distributed to TWU-represented AA employees in accordance with the TWU Equity Distribution Plan?
Answer: Distribution of the equity—or the proceeds from sale of the originally distributed stock in AA—was delayed by four years due to the filing of a class action lawsuit against TWU on behalf of individual TWU-represented employees who were ineligible under the TWU Plan for a distribution, mainly because they were not employees on the dates required by the Plan (most of the plaintiffs had retired by July 26, 2013). In order to deal with the possibility that the plaintiffs’ lawsuit would succeed, TWU held in reserve investments deemed sufficient to pay any possible judgment in favor
of the plaintiffs, plus the cost of litigating the case and administering the reserve. It was necessary to hold this amount in reserve until the conclusion of the case.
Question: Is the case now over?
Answer: Yes. Plaintiffs had until October 4, 2017 to petition the United States Supreme Court to review the decision of the Court of Appeals for the Ninth Circuit upholding the grant, by the U.S. District Court, of TWU’s motion to dismiss the case. No such petition was filed; therefore, the decision of the Ninth Circuit Court has become final.
Question: What now needs to be done before we can each receive the sums due to us under the TWU Equity Distribution Plan?
Answer: TWU must complete a practical plan for the distribution. We believe the simplest way for the distribution to be done would be for TWU to transmit the TWU Reserve Fund, all in cash, to American Airlines, which could then distribute the entire sum, by one of the several methods available to them, in accord with TWU instructions, to the same employees who received equity through earlier distributions. The amount received by each distributee will be calculated based on the same percentage of the entire sum being distributed as was used in calculating the equity he/she received in prior distributions.
Question: Why can’t this distribution by AA be done immediately?
Answer: In order for this plan to be implemented, TWU must secure AA’s agreement to it. It is not certain that AA will agree; it is possible that their agreement will depend on mutually agreeable resolution of a number of legal questions, including tax questions. TWU will not sacrifice the member rights that are determined by these questions merely in order to gain the administrative simplicity and speed that distribution by AA will entail.
Question: If it is unable to get AA to agree to make the distribution sought, how will TWU handle the problem?
Answer: Should AA not agree to be involved in the distribution, TWU will arrange on its own for the distribution from the reserve fund. This will most likely involve getting all of the payroll information necessary to make the distribution; securing a payroll company to do the actual cutting of checks in amounts determined by TWU; and have that company mail of the checks.
Question: Will the process of calculating how much each covered employee is entitled to delay the distribution significantly?
Answer: No. The calculations of what percentage of the whole each TWU distribute was entitled to were made years ago, and were found to be accurate as a result of the actual distributions made based on them. These same percentage calculations are still available, to be applied mechanically to the sum deemed available for distribution.
Question: What deductions will be made from the sum available for distribution prior to its being divided up among those receiving it?
Answer: As in past distributions, it is our current belief that applicable taxes will have to be withheld prior to the distributions being made. This includes income tax; regarding FICA and other possible tax liability, significant legal questions remain to be definitively resolved. To the extent that we are unable to determine with certainty what
a given tax liability is, it is our intention not to delay the general distribution for final resolution of the legal question, but instead to make the distribution and to hold the amount in question in reserve, to be distributed when the issue is finally determined.
Question: How will TWU deal with the possibility that the calculation of some individuals’ distribution may either be in error, or the distribute may believe that it was in error?
Answer: In the prior distributions, there was an appeals process for precisely this kind of error. The process was meant to give fair and final determinations to complaints regarding such errors. We are putting together the nuts and bolts of such a procedure right now, so that it can be applied to the distribution.
The above Q&A comes from the TWU EXPRESS WINTER 2017 issue, Page 21.