SAN FRANCISCO — Retired union members who lost a suit against the Transport Workers Union of America (TWU) claiming they were denied equity after the bankruptcy of American Airlines and American Eagle Airlines Inc. have asked the U.S. Ninth Circuit Court of Appeals for a rehearing.
“The plaintiffs filed for a rehearing, but we don’t have to unless the court orders us to reappear,” Connie K. Chan, attorney for Altshuler Berzon LLP, told the Northern California Record. Chan defended the TWU in a suit launched against the union by retired members.
Equity is the value of stocks or shares issued by a company to shareholders.
The court denied the plaintiffs' appeals on May 22 and their contention that the TWU had acted in bad faith. The judgement said the plaintiffs had failed to show the union engaged in fraudulent or deceitful actions.
The decision rendered by Judge Diarmuid O’Scannlain came after American Airlines and American Eagle Airlines Inc. filed for Chapter 11 bankruptcy in November 2011. The TWU, which represents mechanics, fleet service and other transportation workers, negotiated new collective bargaining agreements. The resettlement included cuts in medial and pension benefits and a percentage in equity to be granted to unsecured creditors in the bankruptcy.
“The case was a single claim alleging that the TWU had breached fair representation in an equity allocation plan for its members,” Chan said. “The plaintiffs disagreed with the union plan.”
In December, a restructured American Airlines merged with US Airways to become the world’s largest air carrier. It was the first time a major airline bankruptcy ended with a return on equity for shareholders.
Under an agreement drawn up in September of 2012, union members could opt for early separation or retirement. The TWU formed a committee to decide how to best distribute the equity and drafted a plan in April 2013. A group of retirees who had taken the “early-out” filed a claim against the union in December 2013, alleging that they had not been given their fair share of the equity (set at 4.8 percent), and that the union had discriminated against them and acted in “bad faith.”
District courts dismissed the claim in February 2015, and the plaintiffs appealed.
Chan said the appeals court was simply following long-held federal guidelines.
“Those guidelines make it clear unions are not liable for discretionary decisions they make with which some members disagree,” Chan said.
A decision on the rehearing request is pending.
Calls to Cynthia B. Chapman, an attorney for the plaintiffs, for comment went unreturned.