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TWA v. SINICROPI

May 30, 1995

TRANS WORLD AIRLINES, INC. and WILLIAM D. HART and GARY D. DILLEY, as members of the RETIREMENT BOARD OF THE RETIREMENT PLAN FOR PILOTS OF TRANS WORLD AIRLINES, INC., Plaintiffs against ANTHONY V. SINICROPI, H.O. VAN ZANDT, and W.A. MURPHEY, as members of the RETIREMENT BOARD OF THE RETIREMENT PLAN FOR PILOTS OF TRANS WORLD AIRLINES, INC., WILLIAM L. MEUSEL, JR., and the AIR LINE PILOTS INTERNATIONAL ASSOCIATION, Defendants.


The opinion of the court was delivered by: CHARLES S. HAIGHT, JR.

 HAIGHT, District Judge:

 This case centers around the applicable standard of in determining the propriety of a pension benefit eligibility determination made by an arbitration board established pursuant to a collective bargaining agreement between Trans World Airlines ("TWA") and the Air Line Pilots International Association ("ALPA"). The arbitration board made an award in favor of defendant William Meusel, and plaintiffs now seek to vacate and set aside that award. ALPA and Meusel have counterclaimed to have the arbitration board's award confirmed.

 Statement of Facts

 Meusel was employed for twenty-four years as a pilot for plaintiff and counterclaim defendant TWA. He left the company on August 1, 1990, when he was fifty-four years of age.

 At that time, Meusel was fully vested in the Pilots Plan, a defined benefit pension plan covered by ERISA, 29 U.S.C. § 1001 et. seq. (the "Plan"). The Plan pays a fixed retirement annuity to eligible participants (called "Members") computed on the basis of the Member's years of service and earnings at TWA. The Plan was established in 1950 by agreement between TWA and defendant and counterclaim plaintiff ALPA, the collective bargaining representative of TWA's pilots.

 Under the Plan, accrued benefits are calculated with reference to a specified normal retirement age. Normal retirement age under the Plan is "the Member's sixtieth birthday." Ex. 1, at 13. Eligible Plan Members, however, may retire prior to age 60, and begin drawing their accrued benefit any time after age 45. When a Member elects early retirement, the amount of his or her monthly benefit is reduced by a specified amount for each month that the early retirement date precedes the normal retirement date. The value of the Member's accrued benefit, however, remains the same in such a situation, since the reduced monthly payments are expected to be made over a longer period of years.

 There is one exception to this rule, and the underlying dispute centers around the proper scope of this exception. Under Section 4.4 of the Plan, a Member who retires after reaching age 55 or accumulating 30 years of service may draw his accrued retirement benefit in unreduced monthly payments. *fn1" Specifically, in the language of the Plan, a Member's monthly payments will not be reduced "upon his retirement...if the Member has attained age 55 or if the Member has completed 30 years of Continuous Service as a Pilot or Flight Engineer with the Company...".

 In the summer of 1990, Meusel left TWA to take a job with a different airline. He was 54-1/3 years old at the time. Prior to leaving, however, Meusel asked TWA whether he would qualify for the Disputed Benefit if he left the company before age 55, but postponed receipt of his benefit until after his 55th birthday. TWA responded in the negative. In a letter dated June 18, 1990, TWA informed Meusel that "anytime you retire prior to age 55 your benefit will be reduced 4% for each year from age 60." The letter concluded:

 
"...Since you will be leaving before age 55 the reduction will apply if you commence your annuity before age 60. If you were to continue working with TWA until age 55 then you would receive an unreduced benefit from the "A" Plan (i.e., the Pilots Plan]. There has been extensive research done on this subject and if there should be any changes we would notify you but for now this is the interpretation of the plan." Hart, Ex. 3.

 Before leaving TWA, Meusel sent TWA a letter in which he stated that his "retirement date is August 1, 1990". He also requested, however, that the Plan defer payment of his retirement annuity until April 1, 1991, a date just after his 55th birthday.

 On August 8, 1990 ALPA and Meusel filed an appeal under the claims review procedure set forth in the Plan document, seeking a determination that Meusel's deferral of the receipt of his retirement benefits until he had reached age 55 entitled him to the Disputed Benefit. That procedure establishes a Retirement Board (the "Board") "to settle all disputes under the Plan and to aid the Company in the administration of the Plan." ALPA and TWA each choose two members to serve on the Board. Each Board member has one vote, and any Board decision requires the affirmative vote of three members to render a decision. If the initial four Board members deadlock, a fifth voting member is selected to serve as an impartial referee and Chairman of the Board.

 The Plan gives the Board "full power to affirm, reverse or otherwise modify any decision or administrative action or proposed action which gave rise to any dispute." In addition, the Plan specifies that the Board's decision on review is "final and binding upon" TWA, ALPA, and others who deal with the Plan. The only apparent limitation on the Board's review is that it shall have "no power to add to or subtract from or modify any of the terms of the Plan."

 ALPA and Meusel asked the Board to decide whether Meusel would be entitled to the Disputed Benefit by terminating service with TWA at age 54, but deferring receipt of his first monthly payment until after age 55. The four-member Board deadlocked, with plaintiffs and counterclaim defendants William Hart and Gary Dilley, the TWA appointees, voting against Meusel, and defendants H.O. Van Zandt and W.A. Murphey, the ALPA appointees, voting for Meusel.

 As a result of the deadlock, pursuant to the Plan, a fifth Board member, defendant Anthony Sinicropi, was appointed to serve as impartial referee. On October 24, 1991, Sinicropi convened a hearing to consider Meusel's appeal. Both parties presented testimony and argument concerning their reading of the Plan, and two actuaries testified regarding the impact of each party's reading on the funding of the Plan. Finally, during and after the hearing, TWA presented testimony and documents with regard to the manner in which it had administered this particular provision of the Plan in the past.

 The Board's Opinion

 Following the completion of the hearing, Sinicropi drafted a ten-page opinion finding that Meusel was entitled to the Disputed Benefit because he had not retired within the meaning of the Plan until age 55, when he received his first payment under the Plan. Sinicropi then circulated the opinion to the other members of the Board. Hart and Dilley voted to deny Meusel the Disputed Benefit and refused to join Sinicropi's opinion. Van Zandt and Murphey, however, concurred in the decision, and thus, Sinicropi's opinion became the final board opinion (hereinafter, the "Board's Opinion" or the "Board's Decision").

 Plaintiffs *fn2" contend that the Board's Opinion is clearly wrong. First, they argue that Sinicropi improperly framed the issue as "whether William Meusel is entitled to an unreduced benefit under the Retirement Plan for Pilots." In plaintiffs' view, Sinicropi perceived the general rule for actuarially reducing an early retiree's monthly payment as a "penalty", when in fact, the exception to the rule is a subsidy, rather than the norm. Thus, Sinicropi improperly perceived the issue as whether or not Meusel should be penalized, rather than whether or not he should receive an extra benefit.

 Plaintiffs next contend that Sinicropi failed to give adequate deference to TWA's interpretation of the Plan. Section 2.1(A) specifies in relevant part that TWA, as Benefits Administrator, "shall make determinations...as to any question involving interpretation or application of the Plan...." Plaintiffs argue that despite this language, the majority made explicit their belief that TWA's view was entitled to no deference. They also argue that despite noting that the evidence of past practice favored TWA's analysis, the Board's Opinion expressly departs from that practice.

 Finally, plaintiffs contend that the Board's Opinion blatantly misconstrues the terms of the Plan by removing the concept of termination from the meaning of "retirement." According to plaintiffs, the Plan clearly states that an employee who elects to retire after the age of 55 is entitled to the Disputed Benefit. The Board's Opinion, however, defines retirement to be the date upon which retirement benefits commence, rather than the date upon which the employee leaves the company. Thus, simply by waiting to receive benefits until the age of 55, every employee will be eligible for the Disputed Benefit. *fn3" In plaintiffs' view, this interpretation is plainly contradicted by the terms of the Plan, nonsensical as a matter of pension policy, and detrimental to the stability of the Plan by rendering it severely underfunded. *fn4"

 In their complaint, plaintiffs argue that the Board's Opinion violates ERISA as well as the Railway Labor Act, 45 U.S.C. § 151 et. seq. ("RLA"). Plaintiffs ask the Court to vacate the Board's Opinion, declare that it is not binding precedent, and enjoin the defendants from failing to comply with the Plan and ERISA.

 With the exception of Sinicropi, all parties have now moved for summary judgment. For the reasons set forth below, the motion for summary judgment of defendants ALPA, Meusel, Van Zandt and Murphey is granted. *fn5" Plaintiffs' motion for summary judgment is denied.

 The Standard for Summary Judgment

 Under Fed. R. Civ. P. 56(c), the moving party is entitled to summary judgment if the papers "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." On such a motion, "a court's responsibility is to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Coach Leatherware Co., Inc. v. AnnTaylor, Inc., 933 F.2d 162, 167 (2d Cir. 1991) (citing Knight v. U.S. Fire Insurance, 804 F.2d 9 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987)) (citation omitted). The responding party "must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). "The non-movant cannot 'escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts,'... or defeat the motion through 'mere speculation or conjecture.'" Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990) (citations omitted). While the party resisting summary judgment must show a dispute of fact, it must also be a material fact in light of the substantive law. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 Discussion

 While the underlying facts of this case are not in dispute, the parties vigorously dispute the applicable law. In plaintiffs' view, this case is primarily about ERISA and whether or not defendants' actions as fiduciaries of the Plan violated the terms of the Plan, and of ERISA. In the alternative, plaintiffs' argue that the Board's Decision can also be set aside as being in violation of the RLA. In defendants' view, this case is about the extreme deference to be given decisions made by labor arbitration boards under the RLA. According to defendants, plaintiffs' ERISA claims are pre-empted by the RLA, and under the RLA, the Board's Decision survives scrutiny. Thus, as a threshold matter, I must decide the proper interaction of ERISA and the RLA. *fn6"

 The RLA, which governs labor relations in the airline industry, compels binding arbitration of certain labor-management disputes. *fn7" 45 U.S.C. § 181 et seq.; Baylis v. Marriott Corporation, 843 F.2d 658, 661 (2d Cir. 1988). In particular, the RLA requires carriers and unions to establish system boards of adjustment to resolve all "disputes...growing out of grievances, or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions." 45 U.S.C. § 184; See Also Andrews v. Louisville & Nashville Railroad Co., 406 U.S. 320, 323-24, 32 L. Ed. 2d 95, 92 S. Ct. 1562 (1972); Brotherhood of Locomotive Engineers v. Louisville & Nashville Railroad Co., 373 U.S. 33, 38, 10 L. Ed. 2d 172, 83 S. Ct. 1059 (1963); Brotherhood of Railroad Trainmen v. Chicago River & Indiana Railroad Co., 353 U.S. 30, 39, 1 L. Ed. 2d 622, 77 S. Ct. 635 (1957). An employee pension plan is an agreement falling within the scope of the RLA, and a Retirement Board established pursuant to a pension plan that is part of a collective bargaining agreement is a "system board of adjustment" under the RLA. E.g., Long v. Flying Tiger Line, Inc. Fixed Pension Plan for Pilots, 994 F.2d 692, 694 (9th Cir. 1993) ("Flying Tigers"); Loveless v. Eastern Air Lines, Inc., 681 F.2d 1272, 1274 & n.2, 1275 (11th Cir. 1982); De la Rosa Sanchez v. Eastern Airlines, Inc., 574 F.2d 29, 31 (1st Cir. 1978).

 I will say more about the standard of review of system board of adjustment decisions under the RLA later, but it is sufficient for the present purposes to note that a court's role in reviewing such decisions is extremely limited. See, e.g., CSX Transportation, Inc. v. United Transportation Union, 950 F.2d 872, 877 (2d Cir. 1991) ("CSX") (judicial review under the RLA may be a "misnomer"); Skidmore v. Consolidated Rail Corp., 619 F.2d 157, 159 (2d Cir. 1979), cert. denied, 449 U.S. 854, 66 L. Ed. 2d 66, 101 S. Ct. 148 (1980) ("Skidmore") (review under the RLA is "'among the narrowest known to the law'"). Review of pension benefit decisions under ERISA, in a non-RLA case, is less deferential. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989) (denial of benefits challenged under § 1132(a)(1)(B) of ERISA to be reviewed de novo, unless plan administrator or fiduciary has discretion to construe the terms of the plan, in which case decision is to be reviewed under "arbitrary and capricious standard"); Pagan v. Nynex Pension Plan and Nynex Corporation, 1995 WL 215923, at 3 (2d Cir. 1995).

 Plaintiffs contend that it is unnecessary to decide which standard of review applies because, in their view, the Board's Decision can be set aside under either standard. The Court disagrees. As will be explained below, I am convinced that the Board's Decision must stand if reviewed under the standard of review applied to decisions under the RLA. It is less clear that the decision should survive under the standard of review applied to decisions under ERISA. It is thus critical to determine the standard of review to be applied.

 Although the ultimate goal is to determine the proper standard of review, the analysis involves a question of jurisdiction. Plaintiffs maintain that this Court is confronted with the task of reviewing the propriety of the Board's Decision under two separate bodies of law, ERISA and the RLA. Defendants maintain that the RLA pre-empts ERISA in this particular case, so that the Court lacks subject matter jurisdiction to decide plaintiffs' rights under ERISA. Thus, in their view, only one standard of review should be employed, and that standard should be the one used to review system board determinations under the RLA.

 A. Is ERISA pre-empted by the RLA?

 The RLA requires mandatory arbitration for two categories of disputes. The first category, concerning "rates of pay, rules or working conditions," 45 U.S.C. § 151a, are deemed "major" disputes. Such disputes relate to "'the formation of collective bargaining agreements or efforts to secure them.'" Consolidated Rail Corp. v. Railway Labor Executives' Assn., 491 U.S. 299, 302, 109 S. Ct. 2477, 105 L. Ed. 2d 250 (1989), quoting Elgin, J. & E.R. Co. v. Burley, 325 U.S. 711, 89 L. Ed. 1886, 65 S. Ct. 1282 (1945).

 The second category of disputes are "minor" disputes. These are disputes "growing out of grievances or out of the interpretation or application of agreements covering rate of pay, rules, or working conditions", 45 U.S.C. § 151a, and they "involve controversies over the meaning of an existing collective bargaining agreement in a particular fact situation." Trainmen v. Chicago R & I.R. Co., 353 U.S. 30, 33, 77 S. Ct. 635, 1 L. Ed. 2d 622 (1957). If a dispute is a "minor" one, its resolution is governed exclusively by the arbitration scheme contained in the RLA, and a party may not avoid the effect of that scheme by characterizing the claim as arising under some alternative body of law. Hawaiian Airlines v. Norris, 129 L. Ed. 2d 203, 114 S. Ct. 2239, 2244 (1994) ("Hawaiian Airlines"); Atchison, T. & S.F.R. Co. v. Buell, 480 U.S. 557, 563, 94 L. Ed. 2d 563, 107 S. Ct. 1410 (1987) ("Buell"). It is thus necessary to determine if the present dispute is a "minor" one within the meaning of the RLA.

 The Supreme Court has recently held that the determination of whether a dispute is a "minor" one, and accordingly whether its resolution by an RLA system board pre-empts an alternative cause of action, is to be made using the same analysis employed in determining whether a cause of action is reempted by Section 301, 29 U.S.C. § 185, of the Labor Management Relations Act ("Section 301"). Hawaiian Airlines, 114 S. Ct. at 2249. Section 301 allows a party to a collective bargaining agreement to bring an action in federal court to remedy a violation of that agreement. The Supreme Court has held that Congress, in passing Section 301, sought to insure that uniform federal law be applied to the interpretation of collective bargaining agreements. See, e.g., Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 404, 100 L. Ed. 2d 410, 108 S. Ct. 1877 (1987). Therefore, when a claim depends upon an interpretation of the collective bargaining agreement, Section 301 is the exclusive remedy available. Id. at 405-6. When, however, the claim is independent of the collective bargaining agreement, it is not pre-empted. United Steelworkers of America v. Rawson, 495 U.S. 362, 110 S. Ct. 1904, 109 L. Ed. 2d 362; 1909 (1990); Allis-Chalmers v. Lueck, 471 U.S. 202, 211-12, 85 L. Ed. 2d 206, 105 S. Ct. 1904 (1985). It is thus necessary to determine whether any or all of plaintiffs' claims are independent of the collective bargaining agreement.


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