American Airlines, Inc. Pilot Retirement Program Variable Income Plan – Over $6 Million Class Settlement


On January 17, 2014, James Michael Allman filed a class action lawsuit under the Uniformed Services Employment and Reemployment Act (“USERRA”) and the Employee Retirement Security Income Act of 1974 (“ERISA”) alleging that American Airlines and its retirement plan adopted a policy for determining and making pension contributions to pilots’ Plan accounts in a manner that did not comply with USERRA.  The lawsuit alleges that the earnings that were used under the policy to calculate employer contributions for periods of Long-Term Military Leave were based on the average earnings of three more senior pilots instead of each pilot’s own average monthly hours from the 12 months prior to military leave. The lawsuit also claims that the Plan’s fiduciaries violated ERISA by failing to make sure that the Plan received proper amounts of employer contributions and by failing to take action to collect such amounts.

On March 28, 2016, the Court certified a Class of more than 1,200 American Airlines pilots, and appointed Outten & Golden LLP as Class Counsel.

On July 21, 2016, the parties reached a Settlement Agreement, and on February 15, 2017 the District of Massachusetts granted final approval of the Settlement Agreement.  The overall Settlement is estimated to be worth more than $6 million.  The Settlement Agreement requires the Defendants to pay $500,000 in cash and approximately 137,000 shares of American Airlines Group (“AAG”) stock into the Class Settlement Fund.  Under the settlement, it is estimated that all Class Members will receive payments of 100% of the amounts of pension contributions they were allegedly denied based on the formula the Plaintiffs advocated for in the litigation, and a large portion of the Class Members will receive annual interest on the contributions they were allegedly denied.  It is likely that most of the payments will be placed in the pension accounts of the Class Members so that the pilots receive favorable tax treatment on their payments.

Contact: Michael J. Scimone at @email or call (202) 952-9482.

Michael Scimone

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