Scanlan v. American Airlines Group, Inc.

567 F.Supp.3d 521

James P. SCANLAN on his own behalf and all others similarly situated

v.AMERICAN AIRLINES GROUP, INC., et al.

CIVIL ACTION NO. 18-4040

United States District Court, E.D. Pennsylvania.

Filed October 8, 2021

Adam Harrison Garner, The Garner Firm Ltd., Philadelphia, PA, Colin M. Downes, R. Joseph Barton, Block & Leviton LLP, Hannah Cole-Chu, Outten & Golden LLP, Peter Romer-Friedman, Gupta Wessler, Washington, DC, Matthew Z. Crotty, Crotty & Son Law Firm, PLLC, Thomas G. Jarrard, Spokane, WA, Michael J. Scimone, Outten & Golden LLP, New York, NY, for James P. Scanlan.

Anton Metlitsky, Mark W. Robertson, O'Melveny & Myers LLP, New York, NY, Kenneth A. Murphy, Faegre Drinker Biddle & Reath LLP, Philadelphia, PA, M. Tristan Morales, O'Melveny & Myers LLP, Washington, DC, for American Airlines Group, Inc., American Airlines, Inc.

MEMORANDUM

Bartle, District Judge

Plaintiff James P. Scanlan, a commercial airline pilot and a Major General in the United States Air Force Reserve, has sued defendants American Airlines Group, Inc. ("AAG") and American Airlines, Inc. ("American"), his employer and AAG's wholly owned subsidiary, in this putative class action under the Uniformed Services Employment and Reemployment Rights Act ("USERRA"), 38 U.S.C. §§ 4301 et seq., and for breach of contract. In essence, plaintiff claims that he and the classes he seeks to represent have not received the compensation or benefits due to them under the statute and by contract. Plaintiff seeks declaratory, injunctive, and monetary relief. Before the court is the plaintiff's motion for class certification pursuant to Rule 23 of the Federal Rules of Civil Procedure.

I

Plaintiff has worked as a pilot for American since 1999 and has participated in AAG's Global Profit Sharing Plan since 2016. Throughout his employment with American and while he has participated in the Plan, plaintiff has taken periods of leave to perform his military service in the reserves. For instance, plaintiff took leave for military service 128 days in 2016 and 132 days in 2017. Most of these periods of leave were for only a few days at a time although some extended up to fourteen days.

American does not pay its pilots when they take military leave no matter how long or short that leave is. Likewise, with several exceptions, it does not pay its other employees when they take such leave.¹ It does, however, pay employees who take leave for jury duty or bereavement. American employees who take leave for jury duty either receive their full regular pay or the difference between their regular compensation and their pay as jurors. The collective bargaining agreement ("CBA") between American and the Allied Pilots Association on behalf of American pilots is silent as to bereavement leave. According to defendants’ corporate representative Todd Jewett, the company policy applies when the CBA is silent. American's policy is to provide up to three days of paid bereavement leave in the event of a death of an immediate family member.

American's parent company, AAG, is also the parent company of Envoy Air, Inc., Piedmont Airlines, Inc., and PSA Airlines, Inc. AAG adopted and implemented the Profit Sharing Plan effective January 1, 2016 to share a portion of its profits with employees of American and its subsidiary airlines who are participants in the Plan. Employees who are eligible to participate in the Plan include pilots, flight attendants, mechanics, and passenger service employees as well as non-union management and non-management employees. Participants are categorized by different so-called "work groups" based on their position and union representation.

Under the Plan, AAG pays profit sharing awards each spring to the Plan participants that total five percent of AAG's pre-tax earnings from the preceding year. Participants receive their award as a lump sum cash payment and may contribute all or part of the award to their retirement plans. AAG calculates each participant's individual award by dividing the five percent of AAG's pre-tax earnings by the aggregate amount of all participants’ earnings and multiplying this resulting value by an individual participant's "eligible earnings." Eligible earnings are based on the participant's "compensation" as defined by his or her applicable 401(k) plan. Earnings from paid leave are credited to the Plan participants for purposes of this allocation.

AAG may modify or terminate the Plan at any time. Profit sharing is not guaranteed. AAG has not had profits to distribute since 2019.

AAG does not credit short-term military leave² toward a participant's eligible earnings under the Plan when employees are not paid for such leave. However, it does credit the leave and impute income under the Plan for employees when they take leave for jury duty or bereavement. As a result, plaintiff and other similarly situated employees who have taken military leave received lower profit sharing awards than they would have received if credit had been given for such leave. This situation will continue if and when profits are distributed among Plan participants in the future.

II

USERRA is one of a series of laws that Congress has enacted to protect the rights of military service members who take leaves of absence from their employers to perform military service. Crews v. City of Mt. Vernon, 567 F.3d 860, 864 (7th Cir. 2009) ; Rogers v. City of San Antonio, 392 F.3d 758, 762 (5th Cir. 2004). Congress stated in the first section of USERRA that its purposes, among others, are "to encourage noncareer service in the uniformed services by eliminating or minimizing the disadvantages of civilian careers and employment which can result from such service" and "to prohibit discrimination against persons because of their service in the uniformed services." 38 U.S.C. §§ 4301(a)(1) and (a)(3) ; see also Carroll v. Del. River Port Auth., 843 F.3d 129, 131 (3d Cir. 2016). As our Court of Appeals has explained, "we must construe USERRA's provisions liberally, in favor of the service member." Gordon v. Wawa, Inc., 388 F.3d 78, 81 (3d Cir. 2004). USERRA seeks to treat those employees in non-career military service equally with employees not engaged in military service.

Plaintiff alleges in Count I of the second amended complaint that AAG's policy of not crediting short-term military leave to participants’ eligible earnings for purposes of its Profit Sharing Plan but doing so for jury duty and bereavement leave violates USERRA, specifically § 4316(b)(1).³ Plaintiff also alleges a violation of § 4316(b)(1) in Count III based on American's failure to pay its employees for short-term military leave while paying its employees for leave taken for jury duty or bereavement. In denying defendants’ earlier motion to dismiss Counts I and III, this court explained in its June 18, 2019 Memorandum and Order that compensation for short-term military leave is a right and benefit within the meaning of this statute. See Scanlan v. Am. Airlines Grp., 384 F. Supp. 3d 520 (E.D. Pa. 2019). Our Court of Appeals has recently affirmed this holding in a similar case. See Travers v. Fed. Express Corp., 8 F. 4th 198 (3d Cir. 2021).

Plaintiff also brings a claim against AAG in Count II for breach of contract based on the language of the AAG Profit Sharing Plan. The Plan calculates the amount of each participant's profit sharing award based on that participant's eligible earnings. Eligible earnings, as noted above, are defined in the Plan as "compensation" as that term is defined in the participant's 401(k) qualified defined contribution plan. For American pilots, their 401(k) plan provides that employees will be considered compensated for qualified military service "at the same annual rate as the Eligible Employee's average rate of Compensation from the Employer during the 12 months immediately preceding the qualified military service." Plaintiff alleges that AAG is violating the terms of the Plan by not including credit or imputed income for American pilots’ short-term military service.

The class which plaintiff seeks to certify under Count I is a profit sharing class of current and former employees of American and all AAG affiliates who have participated in the Plan at some point since its inception on January 1, 2016 and who are harmed and will continue to be harmed as a result of violation of § 4316 ("Profit Sharing Class"). The proposed class

consists of participants in the Profit Sharing Plan who took short-term military leave at any AAG affiliate (including American) from the inception of the Plan 2016 to the present.⁴ Count I is brought on behalf of the Profit Sharing Class and alleges that AAG violated USERRA [§ 4316] by not crediting periods of short-term military leave under its Profit Sharing Plan.

Members of this proposed class must also have been employed in the United States while a participant in the Plan or were a citizen or national or permanent resident of the United States while employed in a foreign country and have been a participant whose profit sharing award did not include credit or imputed earnings for short-term military leave.

Plaintiff also seeks to certify a subclass of the Profit Sharing class under Count II limited to American pilots who are or were eligible to participate in the American pilots’ 401(k) plan and who have been harmed and will continue to be harmed as a result of breach of contractual provisions in the Profit Sharing Plan ("Profit Sharing Pilots Subclass"). This proposed subclass

consists of members of the Profit Sharing Class who were pilots at American Airlines. Count II of the ... Second Amended Complaint is brought on behalf of the American Pilots Profit Sharing Subclass and alleges that AAG committed breach of contract and violated the terms of the Profit Sharing Plan by not crediting periods of short-term military leave under its Profit Sharing Plan.

Finally, plaintiff moves for certification under Count III of a class of current and former American employees who...