Krakowski v. Am. Airlines, Inc.

610 B.R. 714

John KRAKOWSKI, Kevin Horner, and M. Alicia Sikes, Plaintiffs-Appellants,

v.AMERICAN AIRLINES, INC. and Allied Pilots Association, Defendants-Appellees.

17-CV-03237 (KMW)

United States District Court, S.D. New York.

Signed December 17, 2019

Allen Press, Green Jacobson, P.C., Clayton, MO, for Plaintiffs-Appellants.

Daniel M. Rosenthal, Pro Hac Vice, James & Hoffman, P.C., Washington, DC, Darin Matthew Dalmat, Pro Hac Vice, Steven K. Hoffman, Pro Hac Vice, James & Hoffman, P.C., Seattle, WA, Mark Wayne Robertson, Sloane Ackerman, O'Melveny & Myers LLP, New York, NY, Robert A. Siegel, Pro Hac Vice, O'Melveny & Myers, LLP, Los Angeles, CA, for Defendants-Appellees.

OPINION & ORDER

KIMBA M. WOOD, United States District Judge

John Krakowski, Kevin Homer, and M. Alicia Sikes (together, the "Appellants") are pilots, currently employed by American Airlines, Inc. ("American") and represented by the Allied Pilots Association ("APA"). They were employed by Trans World America ("TWA") until it merged with American. In the adversary bankruptcy proceeding below, they bring several claims arising from American's and APA's treatment of former TWA pilots during and after the American-TWA merger.

In a pair of decisions, the Bankruptcy Court, Hon. Sean H. Lane, dismissed all of Appellants' claims, as follows: (1) a breach of contract claim against American, for failure to state a claim; (2) a breach of duty of fair representation claim against APA, as procedurally barred, under the law of the case doctrine, by the Bankruptcy Court's prior dismissal of an identical claim in a separate adversary proceeding between the same parties; and (3) a claim that American colluded in APA's breach of the duty of fair representation, because plaintiffs did not have a viable duty of fair representation claim, and, in any event, failed to adequately allege collusion.

Appellants now appeal from the Bankruptcy Court's orders dismissing their claims. For the following reasons, the decisions of the Bankruptcy Court are AFFIRMED.

BACKGROUND

I. Relevant Facts

Appellants are former TWA pilots who currently fly for American. (Second Amended Complaint ("SAC") ¶ 8.) In April 2001, American acquired TWA's assets. (Id. ¶ 16.) In November 2001, American and APA executed a document called "Supplement CC", which merged the former TWA pilots into American's pilot seniority list. (Id. ¶ 17.) Under Supplement CC, former TWA pilots were integrated into American's seniority list with none or a fraction of the seniority they had earned at TWA. (Id. ¶¶ 18–19.) To compensate the former TWA pilots for their loss of seniority, Supplement CC established what the parties call a "protective fence" in TWA's former hub of St. Louis, Missouri. The "fence" guaranteed a certain number of captain and first officer positions for St. Louis-based former TWA pilots, and thus permitted former TWA pilots to fly St. Louis-based routes that would otherwise be unavailable due to their reduced seniority. (Id. ¶¶ 19–20.)

Supplement CC was a supplement to American's then-existing collective bargaining agreement with APA (the "Old CBA"). When American and APA agreed to Supplement CC, the former TWA pilots were not represented by APA. They were represented by a different union. (Id. ¶ 27.) After the acquisition, however, the former TWA pilots became part of the bargaining unit of American pilots represented by APA. (Id. ¶ 29.)

Roughly a decade later, in November 2011, American filed for bankruptcy. (Id. ¶ 34.) As part of the bankruptcy proceedings, the Bankruptcy Court granted American's request to abrogate the Old CBA. (Id. ¶ 36.) The Old CBA and its supplements, including Supplement CC, became null and void as of September 5, 2012. (Id. ¶ 37.)

In the course of negotiating a replacement collective bargaining agreement, American and APA signed a letter of agreement called "LOA 12-05".¹ It had two main provisions. First, the seniority list established by Supplement CC would remain in place, notwithstanding the termination of Supplement CC. (LOA 12-05 at 1, Appendix to Appellants' Opening Brief ("App'x") at 134). Second, the protective "fence," which gave preferential flying rights to former TWA pilots on St. Louis-based routes, would not remain in place. (SAC ¶ 39.) APA and American agreed to appoint an arbitrator to decide how to compensate the former TWA pilots for the loss of the "fence." The parties agreed that the arbitrator would not be permitted to revise the seniority list established by Supplement CC but could award other types of compensation. (LOA 12-05 at 1.)

II. Procedural History

Appellants have brought many cases against American and APA, several of which are now adversary proceedings in American's bankruptcy case. The parties refer to these adversary proceedings, chronologically by date of filing, as Krakowski I and Krakowski II. The earlier case is Krakowski I . See Krakowski v. Am. Airlines, Inc. (In re AMR Corp.) , Case No. 11-15463, Adv. Proc. No. 13-01238 (Bankr. S.D.N.Y.) [hereinafter Krakowski I ]. The instant matter is known as Krakowski II . See Krakowski v. Am. Airlines, Inc. (In re AMR Corp.) , Case No. 11-15463, Adv. Proc. No. 14-01920 (Bankr. S.D.N.Y.) [hereinafter Krakowski II ].² A brief description of the proceedings in Krakowski I and Krakowski II follows.³

a. Proceedings in Krakowski I

Krakowski I was initially filed in the Eastern District of Missouri in 2012. See Krakowski I , 927 F. Supp. 2d 769, 771 (E.D. Mo. 2013). It was transferred to the Bankruptcy Court for the Southern District of New York on March 4, 2013. Id. at 776.

In Krakowski I , Appellants claimed APA breached its duty of fair representation to former TWA pilots by agreeing, in the New CBA, to compensate former TWA pilots for the loss of the protective "fence" via an arbitration procedure that could not modify the unfair seniority list established by Supplement CC. Appellants also claimed American colluded in this breach. See Krakowski I , 199 L.R.R.M. (BNA) 3584, 2014 WL 2508729, at *4–6 (Bankr. S.D.N.Y. June 3, 2014).

On June 3, 2014, the Bankruptcy Court dismissed the complaint for failure to state a claim, reasoning that APA's agreement not to modify the seniority list when negotiating the New CBA did not breach APA's duty of fair representation. See id. On October 2, 2019, the District Court, Hon. Lewis Kaplan, affirmed the Bankruptcy Court's dismissal of the complaint.⁴ See Krakowski I , 2019 WL 4857640, at *7 (S.D.N.Y. Oct. 2, 2019) (Kaplan, J.).

b. Proceedings in Krakowski II

The instant case, Krakowski II , was initially filed in the Eastern District of Missouri on May 1, 2013. (App'x at 9–19). Appellants filed their First Amended Complaint six days later, on May 7, 2013. (First Amended Complaint ("FAC"), App'x at 20–31.). Thereafter, the case was transferred to the Southern District of New York on motion of the defendants, where it was referred to the Bankruptcy Court. (App'x at 8.)

The First Amended Complaint in Krakowski II made three claims. In Count One, Appellants alleged that American breached the New CBA by placing former TWA pilots on American's seniority list according to Supplement CC, rather than crediting them for seniority they earned at TWA. (FAC ¶¶ 36–45.) In Count Two, Appellants alleged that APA breached its duty of fair representation by agreeing to continue to use the seniority list established by Supplement CC, which violated the New CBA; was unfair to former TWA pilots; and treated former TWA pilots worse than the pilots of other airlines acquired by American. (Id. ¶¶ 43–50.) In Count Three, Appellants alleged that American colluded with APA in APA's breach of the duty of fair representation. (FAC ¶ 52–54.)

On September 22, 2015, the Bankruptcy Court partially granted Appellees' motions to dismiss the First Amended Complaint. Krakowski II , 538 B.R. 213, 215 (Bankr. S.D.N.Y. 2015). The Bankruptcy Court dismissed Count One, the breach of contract claim against American, for failure to state a claim, reasoning that Appellants' argument was incompatible with the plain language of the New CBA. Id. at 218–22. The Bankruptcy Court permitted Appellants to proceed with Count Two, the duty of fair representation claim against APA, but only to the extent the claim was based on the alleged unfairness of the seniority list established by Supplement CC, and only as it pertained to the narrow time period after the Old CBA was abrogated but before the New CBA was executed.⁵ Id. at 223–24. The Bankruptcy Court warned Appellants that they would be duplicating their claims in Krakowski I if they argued that APA breached its duty of fair representation by agreeing to continue Supplement CC's allegedly unfair seniority list in the New CBA. Id. The Bankruptcy Court granted plaintiffs leave to amend Count Two, the duty of fair representation claim, and Count Three, the accompanying claim that American colluded in APA's breach of its duty of fair representation. Id. at 223–24.

On October 22, 2015, Appellants filed their Second Amended Complaint. (App'x at 219–28). The Bankruptcy Court dismissed the Second Amended Complaint on April 14, 2017. See Krakowski II , 567 B.R. 247, 250 (Bankr. S.D.N.Y. 2017). The Bankruptcy Court found that Appellants' amended duty of fair representation clam pertained only to APA's agreement to the New CBA, rather than to the narrow time period between the Old CBA and the New CBA. Id. at 254–58. The claim, as pled, was essentially identical to the parallel claim in Krakowski I , which the Bankruptcy Court had already dismissed. Appellants' duty of fair representation claim in Krakowski II was accordingly dismissed under the law of the case doctrine. Id. at 258. Appellants' accompanying claim that American colluded in APA's breach of its duty of fair representation was also dismissed. Id. The court also noted that Appellants failed to allege any acts by American that would be legally sufficient to prove that it colluded with APA in a breach of the duty of...