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American Airlines Can't Dodge Military Benefits Claim

Law360—Adam Lidgett

A Pennsylvania federal judge is refusing to pare down a proposed class action accusing American Airlines of giving military reserve pilots the short shrift on benefits, finding the dispute at issue was not outside the court's bounds.   

U.S. District Judge Harvey Bartle III on Tuesday denied the airline's bid to dismiss a breach of contract claim from American Airlines pilot James Scanlan's lawsuit claiming the company didn't properly contribute to a 401(k) profit-sharing plan while pilots were on short-term military leave.

Judge Bartle said that under the Railway Labor Act, so-called minor disputes — which are issues concerning how to interpret a collective bargaining agreement — have to be resolved by a board that handles the union contract. However, the judge said the breach claim was not a minor issue, finding American Airlines Group hasn't shown that its unit American Airlines Inc. bargained with a union over the pilots' participation in the plan.

"AAG simply allowed the pilots' participation in the plan it unilaterally established and can unilaterally terminate," the judge wrote. "AAG did so as a matter of grace and not of right but only after the union gave its approval for AA pilots to take part."

Scanlan — who has worked as a pilot for American Airlines for years and serves as a major general in the U.S. Air Force Reserve — filed his proposed class action in September, alleging that the company violated the Uniformed Services Employment and Reemployment Rights Act, or USERRA, by implementing a policy that fails to credit employees' short-term military leave toward a profit-sharing program.

Earlier this year, Scanlan asked to certify a class of more than 500 participants in a company profit-sharing plan who took short-term military leave and who weren't credited with earnings for the purpose of calculating their benefits under that plan, even though workers who took other types of leave — such as for jury duty — were credited. Scanlan also asked to certify a class of more than 950 American Airlines workers who allegedly weren't paid while they were out on short-term military leave, even though workers on other types of comparable leave got paid.

American Airlines moved to toss the breach of contract claim in March, arguing that the pilots' collective bargaining agreement from 2015 states that grievances related to the interpretation of that agreement must follow specific procedures that don't involve the court system. American Airlines said that it is up to the union board to resolve how the term "compensation" can be interpreted in the 401(k) plan.

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Leo Synoracki, an Alaska Airlines pilot who served as a U.S. Air Force reservist, urged a Washington federal judge last month to let him move forward with a class action claiming hundreds of pilots were unlawfully denied accrued vacation or sick time while out on military assignments.

Southwest Airlines, however, was able to cut a $19 million settlement to end allegations that it stiffed reservists out of retirement benefits and sick leave.

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Scanlan is represented by R. Joseph Barton and Colin M. Downes of Block & Leviton LLP; Peter Romer-Friedman of Gupta Wessler PLLC; Michael J. Scimone and Hannah Cole-Chu of Outten & Golden LLP; Matthew Z. Crotty of Crotty & Son Law Firm PLLC; Thomas G. Jarrard of the Law Office of Thomas G. Jarrard LLC; and Adam Garner of The Garner Firm Ltd.

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The case is Scanlan v. American Airlines Group Inc., case number 2:18-cv-04040, in the U.S. District Court for the District of Pennsylvania.