Stephens v. Retirement Income Plan for Pilots

464 F.3d 606

James C. STEPHENS, Floyd G. Stephens, Richard Mahoney, Donald V. Nippert, Plaintiffs-Appellants, v. RETIREMENT INCOME PLAN FOR PILOTS OF U.S. AIR, INC., Defendant-Appellee.

No. 01-3913.

United States Court of Appeals, Sixth Circuit.

Argued: July 19, 2006.

Decided and Filed: September 13, 2006.

ARGUED:

J. Bruce Bennett, Cardwell, Hart & Bennett, Austin, Texas, for Appellants. Jean Marie Breen, Office of the Chief Counsel, Pension Benefit Guaranty Corporation, Washington, D.C., for Appellee.

ON BRIEF:

J. Bruce Bennett, Cardwell, Hart & Bennett, Austin, Texas, for Appellants. Jean Marie Breen, Office of the Chief Counsel, Pension Benefit Guaranty Corporation, Washington, D.C., Karen M. Wahle, Tom A. Jerman, O'Melveny & Myers, Washington, D.C., for Appellee.

Before: MARTIN, and RYAN, Circuit Judges; MARBLEY, District Judge.^*

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

Former pilots of U.S. Airways, represented in this class action by James Stephens and three other former pilots, brought a suit in district court against both their former employer, U.S. Airways, and their pension plan, the U.S. Airways Retirement Plan for Pilots. The pilots alleged six different causes of actions against the airline and the retirement plan under provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1169. The district court dismissed all causes of action for lack of subject matter jurisdiction based on arguments stemming from the Railway Labor Act, 45 U.S.C. § 151 et seq. The pilots now appeal that dismissal.¹ Based on the following discussion, we affirm in part and reverse in part the district court's decision.

I.

US Airways is a large commercial airline. The pilots are all former employees of U.S. Airways and are participants in the Retirement Plan. The Retirement Plan is part of a broader collective bargaining agreement between U.S. Airways and the Pilots' representative labor group, the Air Line Pilots Association. Section 10.5 of the Retirement Plan entitled the Pilots to receive a lump sum distribution of their pension benefit. This lump sum was an alternative to the normal method of payment of retirement benefits, a joint and survivor annuity. The Plan states that it will pay a participant's "normal retirement amount commencing on the first day of the month coinciding with or next following his Normal Retirement Date." The Plan defines the normal form of payment as the annuity option. The Normal Retirement Date is the date on which the participant turns sixty years old.

Around 1994, U.S. Airways and the Air Line Pilots Association orally agreed that U.S. Airways could withhold payment of the lump sum benefit for up to forty-five days after the retiring pilot's normal benefit commencement date without paying the retiree the interest accrued during that time. US Airways claims it needs the forty-five days in order to calculate the exact amount owed to the retiree.²

In October 1996, Jim Stephens notified U.S. Airways that he would turn sixty on November 25, 1996, that he wished to retire effective December 1, 1996, and that he was electing to receive his pension benefit in a lump sum amount. The amount of his benefit was $488,477.22 as of December 1, 1996. US Airways paid Jim Stephens that amount on January 14, 1997. According to Stephens, he would have accrued $14,740 in interest over the period of delay. Stephens requested payment of the amount of lost interest. That request was denied by U.S. Airways. Stephens appealed this decision to the Retirement Board.

Pursuant to Section 184 of the Railway Labor Act, 45 U.S.C. § 184, and Section 14.3 of the Retirement Plan, U.S. Airways and the Pilots Association created the Retirement Board. The Retirement Board has the power to "hear and determine all disputes which may properly arise out of the application and interpretation of the [Retirement Plan]." It is comprised of four members, two U.S. Airways representatives and two Pilots Association representatives. If the four members are deadlocked on an issue, an "Impartial Referee" is brought in to break the tie.

The four member Retirement Board was deadlocked on Stephens's appeal. The Impartial Referee voted to deny Stephens's claim. The Board held that U.S. Airways and the Pilots Association came to an oral agreement in 1994 answering the question of whether interest would be paid on the forty-five day delay of payment in the negative. The Board's opinion, written by the impartial arbitrator, relies heavily on this oral agreement along with strong historical evidence in favor of U.S. Airways in that around 780 lump sum payments have been made to pilots since 1989 without interest paid to the recipients.

II.

The pilots, through Stephens and three other representatives filed this class action lawsuit on January 18, 2000. The pilots asserted six claims for relief under ERISA: (1) a claim for benefits under 29 U.S.C. § 1132(a)(1)(B); (2) a claim for equitable relief under 29 U.S.C. § 1132(a)(3)(B); (3) a claim for equitable relief for alleged violations of 29 U.S.C. §§ 1054(c)(3) and 1055; (4) a claim against U.S. Airways for breach of fiduciary duty pursuant to 29 U.S.C. §§ 1104(a)(1)(A) and (B); (5) a claim against U.S. Airways for breach of fiduciary duty for alleged violations of 29 U.S.C. § 1022; and (6) a claim against U.S. Airways for breach of fiduciary duty for alleged violations of 29 U.S.C. §§ 1104(a)(1)(A) and (B). Specifically, the pilots asserted that the oral agreement in question was void under ERISA and that the Retirement Plan, as interpreted by the Retirement Board, violated ERISA. These violations led to the breach of fiduciary duty and equitable relief pled in the above claims.

The district court dismissed the suit for lack of subject matter jurisdiction. The district court held that each claim required an interpretation of the Retirement Plan, which was a matter of exclusive jurisdiction for the Retirement Board under the Railway Labor Act. The pilots now appeal that decision before this Court.

The pilots characterize their appeal as two separate issues: first, whether dismissal for lack of subject matter jurisdiction was appropriate; and second, whether the Retirement Board has exclusive jurisdiction over the claims. Because the district court held that it was because of the exclusive jurisdiction of the Retirement Board that the district court itself did not have proper subject matter jurisdiction, these arguments are part and parcel of the same broader issue: did the district court lack subject matter jurisdiction in this matter.

III.

A. Standard of Review

This Court reviews a district court's dismissal for lack of subject matter jurisdiction de novo. Janis v. Ashcroft, 348 F.3d 491, 492 (6th Cir.2003).

B. Railway Labor Act

Enacted in 1926, the Railway Labor Act ("RLA") was designed to "avoid any interruption to commerce or to the operation of any [railroad] engaged therein" caused by labor-management disputes. 45 U.S.C. § 151a(1); see also H.R.Rep. No. 328, at 1 (1926) (noting that the Act would ensure "continuity and efficiency of interstate transportation service, and [ ] protect the public from the injuries and losses consequent upon any impairment or interruption of interstate commerce through failures of managers and employees to settle peaceably their controversies"). In 1936, Congress extended the Act to "every common carrier by air engaged in interstate or foreign commerce." 45 U.S.C. § 181.

In an attempt to prevent labor disputes from crippling freight and passenger delivery in the railway and airline industries, the Railway Labor Act divides labor disputes into four categories: (1) representation disputes, (2) major disputes, (3) minor disputes and (4) collateral disputes governed by independent state or federal laws. Int'l Bhd. of Teamsters, AFL-CIO v. United Parcel Serv. Co., 447 F.3d 491, 495 (6th Cir.2006). The district court, in this case, characterized the disputes brought by the pilots as minor disputes.

C. Minor Disputes

A minor dispute "contemplates the existence of a collective agreement ... The dispute relates either to the meaning or proper application of a particular provision with reference to a specific situation or to an omitted case [from that agreement]." Elgin, Joliet & E. Ry. Co. v. Burley, 325 U.S. 711, 723, 65 S.Ct. 1282, 89 L.Ed. 1886 (1945); see also Hawaiian Airlines v. Norris, 512 U.S. 246, 252-54, 114 S.Ct. 2239, 129 L.Ed.2d 203 (1994) ("[M]inor disputes[ ] grow out of grievances or out of the interpretation or application of agreements covering rates of pay, rules, or working conditions. Minor disputes involve controversies over the meaning of an existing collective bargaining agreement in a particular fact situation ... [they] develop from the interpretation and/or application of the contracts between the labor unions and the carriers ... [and] pertain[ ] only to disputes invoking contract-based rights.") (internal quotation marks and citations omitted); cf. Conrail v. Ry. Labor Executives' Ass'n, 491 U.S. 299, 302, 109 S.Ct. 2477, 105 L.Ed.2d 250 (1989) ("This Court ... adopted the major/minor terminology, drawn from the vocabulary of rail management and rail labor, as a shorthand method of describing two classes of controversy Congress had distinguished in the RLA: major disputes seek to create contractual rights, minor disputes to enforce them."); id. at 307, 109 S.Ct. 2477 ("Where an employer asserts a contractual right to take the contested action, the ensuing dispute is minor if the action is arguably justified by the terms of the parties' collective-bargaining agreement. Where, in contrast, the employer's claims are frivolous or obviously insubstantial, the dispute is major."). Stated another way, this Court has defined a claim as "minor" if "the disputed action of one of the parties can `arguably' be justified by the existing agreement or, in somewhat different statement, if the...