Class certification granted for American Airlines pilots on USERRA, breach-of-contract claims

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By Tulay Turan, J.D.

A federal district court in Pennsylvania granted a pilot’s motion for certification of a class action under Rule 23(b)(2), alleging violations of USERRA and breach of contract by American Airlines. The court certified a class of current and former American Airlines pilots, divided into three subclasses, seeking to enjoin the company from failing to credit or compensate short-term military leave the same as jury duty and bereavement leave for purposes of “eligible earnings” under the company’s profit sharing and 401(k) plans. The court, however, excluded non-pilots from the class due to differences in factual circumstances regarding compensation structure and amount of leave taken (Scanlan v. American Airlines Group, Inc., October 8, 2021, Bartle, H.).

The employee, a pilot and an Air Force Reserve Major General, worked for American Airlines since 1999 and participated in the profit-sharing plan of the parent company, American Airlines Group (AAG), since 2016. Throughout his employment with American and while he has participated in the plan, he has taken periods of leave to perform his military service in the reserves. American does not pay its pilots when they take military or other types of leave except for jury duty or bereavement.

Eligible earnings. Under the profit-sharing plan, the airline set aside 5 percent of its pre-tax earnings each year for pro rata distribution to qualifying employees based on each participant’s “eligible earnings” for that year. 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, and AAG has not had profits to distribute since 2019.

AAG does not credit short-term military leave toward a participant’s eligible earnings under the plan when employees are not paid for such leave, but it does credit the leave and impute income for jury duty or bereavement. Thus, the employee 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 credit for such leave.

USERRA claims. The employee brought this putative class action alleging in Count I that AAG’s policy of not crediting short-term military leave to participants’ eligible earnings for purposes of its plan but doing so for jury duty and bereavement leave violates USERRA. In Count III, the employee alleged American’s failure to pay its employees for short-term military leave while paying its employees for leaven taken for jury duty or bereavement violates USERRA. In denying defendants’ earlier motion to dismiss Counts I and III, the court explained that compensation for short-term military leave is a right and benefit within the meaning of USERRA.

In Count II, the employee alleges breach of contract based on the language of the profit-sharing plan. He alleges that AAG is violating the terms of the plan by not including credit or imputed income for American pilots’ short-term military service.

Classes sought for certification. The employee sought to certify under Count I 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 whose profit-sharing award did not include credit or imputed earnings for short-term military leave (Profit Sharing Class). He also sought 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 (Profit Sharing Pilots subclass). Finally, he moved for certification under Count III of a class of current and former American employees harmed by American’s failure to pay them for short-term military leave (Paid Leave Class).

Numerosity requirement met. Addressing the first of the four requirements under Rule 23(a), the court found the employee met his burden to demonstrate numerosity. There are at least 950 American pilots who took short-term military leave between January 1, 2013, and December 31, 2018 who are potential members of the Paid Leave Class. There are at least 500 American pilots who are potential members of the Profit-Sharing Class and the Profit Sharing Pilots subclass).

Common question existed. Next, the court found there was at least one common question for each of the proposed classes. The fact that different work groups may be compensated for jury duty and bereavement leave differently than other work groups was not relevant. USERRA does not require that all leave for military service be compensated, only that such leave be compensated when comparable leave is compensated.

Pilots’ claims typical, but others not. Turning to the typicality requirement under Rule 23(a)(3), the court found the employee’s claims were typical of the claims of the American pilots who took or will take short-term military leave in the years specified for each count but were not typical of the claims of other putative class members. Factual circumstances differed significantly between pilots and the other putative class members because of the many collective bargaining agreements (CBA) across multiple work groups of American and AAG subsidiary employees and the differences in amount of leave taken by pilots compared to non-pilots. There were different factual circumstances within each CBA regarding compensation structure, including material variations for paid leave for jury duty and bereavement leave. It would not be fair or reasonably economical the court said for the employee to represent those who are not American pilots.

Adequacy requirement met for pilots. As discussed with regard to typicality, the court found the employee was an inadequate class representative on behalf of those putative class members who were not American pilots. The interests and incentives of the employee as a pilot were not aligned with the interests and incentives of other putative class members who were not pilots.

Based on its analysis of the four class certification requirements, the court ruled the employee met his burden to serve as the class representative for a class of American pilots under Rule 23(a)(1)-(4) on all three counts.

Injunctive relief class. Turning to the certification requirements, the court found certification of a class of American pilots under Rule 23(b)(2) was proper. The defendants had refused to act on grounds that applied to a class of American pilots as a whole so that final injunctive relief was necessary. In addition, the employee’s request for monetary damages was incidental to the declaratory and injunctive relief sought. The proposed class primarily seeks declaratory and injunctive relief in declaring that AAG and American have violated USERRA by failing to credit or compensate short-term military leave and enjoining AAG and American to credit and compensate this leave the same as jury duty and bereavement leave in the future. This relief applies generally to the entire proposed class of American pilots who were all subject to the same leave polices at American and the profit-sharing distribution scheme under AAG’s profit- sharing plan.

Relief is not individualized. The additional monetary relief sought—profit-share awards consistent with this decision and compensation for short-term military leave as well as liquidated damages—was incidental to the request for declaratory and injunctive relief and flows from the requested injunction. If the employee is successful, profit shares will be distributed, and paid leave will be compensated according to any declaration the court may enter. This relief is not individualized as was the case in Walmart Stores v. Dukes, in which the Supreme Court declined to certify under 23(b)(2) a class of over one million female employees seeking backpay because each plaintiff would have had to show her entitlement to such backpay on a case-by-case basis.

Here, the employee and the rest of the proposed class need not provide individualized evidence for their claims of profit-share awards and compensation for leave. Instead, they will automatically be entitled to this relief if the defendants are found to have violated USERRA and must therefore treat short-term military leave the same as they do jury duty and bereavement leave.

Monetary relief is objective. In addition, monetary relief can be calculated on an objective basis and is not dependent on any subjective difference in circumstance. If the court finds the defendants violated USERRA, the amount of credit for profit sharing or paid leave each class member is entitled to can be readily calculated by applying his or her rate of pay to the amount of short-term leave taken and would not require individual fact finding.

Members of class are ascertainable. Lastly, the court found that members of the proposed class could be readily determined based on the defendants’ records, some of which had already been produced.

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