United States District Court, Northern District of Illinois, E.D
October 6, 1983
UNITED INDEPENDENT FLIGHT OFFICERS, INC., ET AL., PLAINTIFFS,
UNITED AIR LINES, INC. AND AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, DEFENDANTS.
The opinion of the court was delivered by: Aspen, District Judge:
MEMORANDUM OPINION AND ORDER
Plaintiffs, United Independent Flight Officers, Inc., and
certain of its members, William J. Plank, L. Frank Murphey,
Thomas C. Cook, N. Wayne Hughes, Jack W. Parshall, H. Harvey
Hunter, Harry J. Langosh, George Norwood, Robert M. Schisler and
LeRoy A. Shaver, have filed this action against United Air Lines
("United") and the Air Line Pilots Association, International
("ALPA") pursuant to the Employee Retirement Income Security Act
of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), the Age
Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et
seq. ("ADEA") and the Railway Labor Act, 45 U.S.C. § 151 et
seq., as applied to air carriers under 45 U.S.C. § 181. Presently
pending before the Court are plaintiffs' motion for class
certification and ALPA's and United's motions for summary
judgment. For reasons set forth below, plaintiffs' motion for
class certification is denied. United's and ALPA's motions for
summary judgment are granted.
The named plaintiffs are members of UIFO, an organization
comprised of current and former United employees who were or have
been pilots. All of the named plaintiffs except Murphey are
retired from United. The subject matter of the present litigation
is a pension plan known as the United Air Lines, Inc. Pilots'
Fixed Benefit Retirement Income Plan, effective January 1, 1976
("the plan"), which is incorporated into the collective
bargaining agreement between United and ALPA. The present plan
was preceded by a voluntary fixed benefit plan which was in
effect from January 1, 1941, through December 31, 1964 ("the
pre-1965 plan"). In this employee-contributory plan,
participation was voluntary; participation credit was not given
for periods during which a pilot chose not to contribute.
On January 1, 1965, United undertook to fund the plan
completely. Prior employee contributions, however, were not
refunded. For employees who began working for United after
January 1, 1965, the number of years of participation in the plan
is the same as the number of years of service minus one, since
participation in the post January 1, 1965, fixed plan became
automatically effective after a year of continuous employment.
Participation credit of years before 1965 remained dependent upon
whether the pilot was eligible to participate and had chosen to
make voluntary contributions.
In early 1972, United and ALPA agreed to change the benefit
accrual formula used to calculate annual retirement income under
the post January 1, 1965, plan. The number of years of
participation in United fixed benefit plans was multiplied by
1.2% (later 1.25% and presently 1.3%) times "final average
earnings." (Final average earnings are one-fifth of the earnings
on the sixty consecutive months of a participant's last 120
months of employment with United which produce the highest sum).
For pilots hired since January 1, 1965, their years of service
minus one equals years of participation, but for many pilots
employed by United from 1941 through 1964, years of service minus
one are not the same as years of participation for purposes of
the benefit accrual formula under the present plan. Thus, with
regard to pilots hired between 1941 and 1965, the amount of
benefits would vary according to the extent of a pilot's
voluntary participation in the Original Fixed Plan.
Plaintiffs seek to credit all plan participants with all of
their years of service with United minus one, claiming that
pilots hired prior to 1965 were never given notice that failure
to participate continuously in the pre-1965 plan would adversely
affect their retirement benefits. Plaintiffs also want a refund
of all voluntary contributions made under the pre-1965 plan. They
have moved to certify claims under Counts I, II and IV as a class
action pursuant to Fed.R.Civ.P. 23. Class certification is not
available for Count III, which is brought pursuant to the Age
Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et
seq.*fn1 Additionally, plaintiffs seek certification with respect to
(1) All pilots hired by United Air Lines, Inc.
before January 1, 1965 and who did not participate in
the original fixed pension benefit plan on a
continuous basis and who either retired after January
1, 1976 or are still working for United.
(2) All pilots who ever made contributions into the
original fixed plan and who retired after January 1,
I. The Motion for Class Certification
A plaintiff has the burden of proving that a case is
appropriately a class action and fulfills all of the requirements
in Fed.R.Civ.P. 23. Valentino v. Howlett, 528 F.2d 975, 978 (7th
Cir. 1976). A trial court has broad discretion in determining
whether a class action may be maintained and whether subclasses
should be created as well. In re General Motors Corp. Engine
Interchange Litigation, 594 F.2d 1106, 1129 n. 38 (7th Cir.
1979), cert. denied, 444 U.S. 870, 100 S.Ct. 146, 62 L.Ed.2d 95
(1979). A decision of a district court as to class representative
satisfaction of Rule 23 prerequisites will only be set aside for
abuse of discretion. Patterson v. General Motors Corp.,
631 F.2d 476, 480 (7th Cir. 1980), cert. denied, 451 U.S. 914, 101 S.Ct.
1988, 68 L.Ed.2d 304 (1981). In resolving the instant motion,
class certification is a procedural matter, and we are not to
consider the merits of the case. Garcia v. Gloor, 618 F.2d 264,
267 (5th Cir. 1980), cert. denied, 449 U.S. 1113, 101 S.Ct.
923-24, 66 L.Ed.2d 842 (1981). See also Eisen v. Carlisle &
Jacquelin, 417 U.S. 156, 177, 94 S.Ct. 2140, 2152, 40 L.Ed.2d 732
(1974). It is with these standards in mind that we turn to the
question of whether plaintiffs have met the requirements of
Rule 23(a) contains four prerequisites to bringing a suit as a
(1) the class is so numerous that joinder of all
members is impracticable, (2) there are questions of
law or fact common to the class, (3) the claims or
defenses of the representative parties are typical of
the claims or defenses of the class, and (4) the
representative parties will fairly and adequately
protect the interests of the class.
Plaintiffs assert that over two thousand current and retired
United pilots are members of the proposed class, and that joinder
is therefore impracticable. Defendants argue, inter alia, that
since only approximately two hundred persons have chosen to "opt
in" to the ADEA count, joinder is indeed practicable. They add
that the crucial inquiry under Rule 23(a)(1) is the practicality
of joinder, which requires consideration of the size of the
class, ease of identifying its members and their addresses, ease
of service and geographic dispersion. These factors are indeed
relevant. Garcia v. Gloor, 618 F.2d 264, 267 (5th Cir. 1980),
cert. denied, 449 U.S. 1113, 101 S.Ct. 923-24, 66 L.Ed.2d 842
(1981); 3 B Moore's Federal Practice ¶ 23.05 (2d ed. 1979). We
however, that plaintiffs have satisfied the numerosity
requirement of Rule 23(a)(1). It is undisputed that 1,500 to
1,800 pilots contributed to the benefit plan prior to 1965.
Moreover, the class members are widely dispersed geographically.
Finally, the individual claims of certain class members may be
too small to warrant individual actions, since participation in
the benefit plan prior to 1965 varied widely among plaintiffs.
This is a factor to be considered when examining the
practicability of joinder. Swanson v. American Consumer
Industries, Inc., 415 F.2d 1326, 1333 n. 9 (7th Cir. 1969).
This factor requires us to consider whether there are questions
of law or fact common to the class. The Seventh Circuit has
observed that such an inquiry is ordinarily not a difficult
matter. Eggleston v. Chicago Journeymen Plumbers, Local Union No.
130, 657 F.2d 890, 895-96 (7th Cir. 1981), cert. denied,
455 U.S. 1017, 102 S.Ct. 1710, 72 L.Ed.2d 134 (1982). We agree with
plaintiffs that there are several common issues in the present
matter, both factual and legal. All members of the proposed class
are or were pilots and members of the pilot fixed benefit plan.
While damages may vary among class members, the benefit accrual
formulas involved in this matter may have adversely affected all
class members. Differences in the amount of damages suffered by
members of a class are not a reason to deny class certification.
Evans v. City of Chicago, 522 F. Supp. 789, 806 (N.D.Ill. 1980),
aff'd in part, vacated in part, 689 F.2d 1286 (7th Cir. 1982).
Plaintiffs raise common issues of law under § 204(b)(1) and §
404(a) of ERISA, as well as the question of whether ALPA breached
its duty of fair representation under the Railway Labor Act,
45 U.S.C. § 181 et seq. We thus conclude that there are issues of
fact and law common to the members of the class.
The third prerequisite for class certification is that the
claim of the representative parties be typical of the claims of
the class. We must therefore decide whether the named
representatives' claims have the same essential characteristics
as the claims of the class at large; this requirement may be
satisfied notwithstanding factual distinctions between the claims
of the named plaintiffs and those of other class members.
DeLaFuente v. Stokely-Van Camp, Inc., 713 F.2d 225 at 232 (7th
Cir. 1983). A named plaintiff's claim is typical if it arises
from the same event or course of conduct giving rise to the
claims of other class members and his or her claims are based on
the same legal theory. Resnick v. American Dental Assn., 90
F.R.D. 530, 539 (N.D.Ill. 1981).
Defendants make several arguments challenging the typicality of
the named plaintiffs vis-a-vis the class. But the fact that each
pilot's case may require individual examination to determine the
extent of his injury reflects a mere factual distinction and does
not mean that the plaintiffs' claims lack the necessary
typicality. The same result is true despite the differing degrees
of voluntary participation among pilots hired before 1965. The
named plaintiffs' claims are thus sufficiently typical of the
claims of the class.
4. Adequacy of Representation
The final factor in Rule 23(a) requires us to consider whether
the named plaintiffs will fairly and adequately protect the
interests of class members not personally involved in the
litigation. This requirement is perhaps the most difficult aspect
of Rule 23(a) to resolve. Eggleston v. Chicago Journeymen
Plumbers, Local Union No. 130, 657 F.2d 890, 896 (7th Cir. 1981),
cert. denied, 455 U.S. 1017, 102 S.Ct. 1710, 72 L.Ed.2d 134
(1982). Courts have divided this requirement into two distinct
factors, the competency of named plaintiffs' counsel and the
existence of any conflicts of interest between the named class
representatives and members of the class. General Telephone Co.
of the Southwest v. Falcon, 457 U.S. 147, 102 S.Ct. 2364, 2371 n.
13, 72 L.Ed.2d 740 (1982); Susman v. Lincoln American Corp.,
561 F.2d 86, 90 (7th Cir. 1977). Whether a party would adequately
protect the interests of the class is a question
of fact depending upon the circumstances of each case. Schy v.
Susquehanna Corp., 419 F.2d 1112, 1116 (7th Cir. 1970), cert.
denied, 400 U.S. 862, 91 S.Ct. 51, 27 L.Ed.2d 55 (1970).
Moreover, a plaintiff may not maintain his or her action as a
class suit when his or her interests are antagonistic to the
interests of the persons he or she seeks to represent. Hansberry
v. Lee, 311 U.S. 32, 44-45, 61 S.Ct. 115, 119-120, 85 L.Ed. 22
Defendants have pointed to a number of possible conflicts
between the named plaintiffs and other members of the proposed
class which lead us to conclude that the proposed class
representatives would not adequately represent the remainder of
the class. First, the named plaintiffs belong to UIFO, a labor
organization that is at least somewhat antagonistic to ALPA, the
collective bargaining representative of United pilots, members of
the putative class. We believe that plaintiffs are being
disingenuous in minimizing the tension between UIFO and ALPA,
tension which this lawsuit itself embodies. It is apparent from
the present record that at least some class members oppose
negotiation of the benefits and benefit changes plaintiffs seek.
There also appears to be some merit in ALPA's argument that
tension exists between members of the two subclasses. Pilots with
the greatest stake in an award of past service credit, members of
subclass 1, voluntarily contributed the least to the pre-1965
pension plan; while pilots with a major stake in the return of
contributions, those in subclass 2, contributed the most and may
not oppose the present plan formula to the same extent. While
some presently active pilots have joined the ADEA count, one
named plaintiff admitted in his deposition that a number of ALPA
members fear that improvements in retirement benefits may come
from the "pay package." There is thus a very real risk of
conflict between active pilots and retired pilots.
Contrary to plaintiffs' assertions, we believe that differences
among United pilots concerning their economic interests with
regard to benefit plans represent a substantial conflict going to
the subject matter of the litigation, thus rendering class
certification inappropriate. Sperry Rand Corp. v. Larson,
554 F.2d 868, 874 (8th Cir. 1977). Plaintiffs' suggestion that pilots
who do not wish to sue ALPA may simply opt out of the class is
not truly responsive, for the procedures of Rule 23 should not be
invoked unless a plaintiff initially meets his or her burden of
showing that class certification is appropriate. Thompson v.
T.F.I Co., 64 F.R.D. 140, 149 (N.D.Ill. 1974). We therefore deny
plaintiffs' motion to certify the class.
Our resolution of the motion under Rule 23(a) obviates the need
to consider arguments pursuant to Rule 23(b), for the Rule 23(a)
requirements must be satisfied in full prior to examining Rule
23(b). Alex v. Allen, 409 F. Supp. 379, 381 (W.D.Pa. 1976); see
also, Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 163, 94 S.Ct.
2140, 2145, 40 L.Ed.2d 732 (1974).
II. Defendants' Motion for Summary Judgment
A. ERISA: Counts I and II
Count I of plaintiffs' complaint asserts that United and ALPA
breached their fiduciary duties under § 404(a) of ERISA,
29 U.S.C. § 1104(a) as a result of the following actions:
the formulation, negotiation, operation, and
continued implementation of the Current Fixed Plan,
particularly the "years of participation" segment of
the benefit accrual formula; the refusal to credit,
as years of participation under the Current Fixed
Plan, years of service with United in which voluntary
contributions to the Original Fixed Plan were not
made; the refusal to return voluntary contributions
made under the Original Fixed Plan; the management of
the contribution account with respect to the
retention of the vested voluntary contributions under
the Original Fixed Plan at an annual interest rate of
only 3 per cent;*fn2 the unequal treatment given
under the Current Fixed Plan when compared to the
treatment given to participants in other fixed
benefit plans maintained by United, with respect to
credit received for years of service with United and
with respect to the return of voluntary participant
As an initial matter, both defendants argue that Count I should
be dismissed because it involves conduct which occurred prior to
the effective date of ERISA. According to § 514 of ERISA,
29 U.S.C. § 1144
(a) Except as provided in subsection (b) of this
section, the provisions of this subchapter and
subchapter III of this chapter shall supersede any
and all State laws insofar as they may now or
hereafter relate to any employee benefit plan
described in section 1003(a) of this title and not
exempt under section 1003(b) of this title. This
section shall take effect on January 1, 1975.
(b)(1) This section shall not apply with respect to
any cause of action which arose or any act or
omission which occurred, before January 1, 1975.
(Emphasis added). Defendants aver that plaintiffs' breach of
fiduciary duty claims are based upon a necessary consequence of
amendments to the benefit plan in 1965 when United undertook to
completely fund the plan. Thus, it was settled long ago that
plaintiffs' past years of service, during which they had not
contributed to the original benefit plan, would not be credited
to them, and that their past contributions to the plan would not
be refunded to them. The breach of fiduciary claims are allegedly
based upon acts or omissions before 1975 and set forth a cause of
action which was complete before that date. In response,
plaintiffs assert that defendants took various affirmative
actions between 1975 and 1982 which constitute a cause of action
under ERISA; courts do not lack jurisdiction over complaints
based upon both pre-ERISA and post-ERISA conduct. Moreover, the
failure to amend the benefit plan, plaintiffs argue, constitutes
continuing violations of ERISA.
The change in computing the benefit accrual formula from career
average earnings to final average earnings occurred in 1972, a
point in time prior to the effective date of ERISA. Amendments to
the benefit accrual formula in 1976, 1979 and 1982, in which the
multiplier was increased, indeed heightened the disparity in
retirement benefits between pre-1965 hire and post-1965 hire
pilots. But the basis for the disparity remains the 1965 and 1972
changes in the benefit plan, both of which occurred before 1975.
Plaintiffs also assert that the redrafting of the benefit plan to
comply with ERISA in the late 1970's was an independent violation
of the statute emphasizing the substantive nature of those
changes. They do not, however, explain how those changes
themselves have violated ERISA. Again, the basis for plaintiffs'
complaint appears to have occurred prior to any changes in the
benefit plan during the late 1970's. The crucial events, in our
view, giving rise to plaintiffs' complaint occurred prior to
ERISA's effective date.
We initially observe that ERISA is solely prospective. Malone
v. White Motor Corp., 435 U.S. 497, 499 n. 1, 98 S.Ct. 1185, 1186
n. 1, 55 L.Ed.2d 443 (1978). Acts or omissions that occurred
prior to the effective date of ERISA are not controlled by the
provisions of the Act. Reuther v. Trustees of the Trucking
Employees of Passaic
and Bergan County Welfare Fund, 575 F.2d 1074, 1078 (3d Cir.
1978). The term "act or omission" under § 514(b)(1) has been
defined as "those significant facts which give rise to a claim
but which fall short of establishing a cause of action." Winer v.
Edison Brothers Stores Pension Plan, 593 F.2d 307, 313 (8th Cir.
1979). This clause exists to prevent past conduct of pension plan
fiduciaries and contributors from being judged retroactively
under the standard set forth in ERISA because the conduct
generates post-ERISA consequences that give rise to an
independent cause of action. Quinn v. Country Club Soda Co.,
639 F.2d 838, 840-41 (1st Cir. 1981). A "cause of action" under this
section has been defined as "a state of facts which would entitle
a person to sustain an action and to seek a judicial remedy on
his behalf." Woodfork v. Marine Cooks & Stewards Union,
642 F.2d 966, 971 (5th Cir. 1981).
As the Seventh Circuit recently observed, a party cannot rely
upon pre-ERISA conduct to escape application of ERISA if the
critical acts serving as the basis for the claim occurred after
ERISA went into effect. Coward v. Colgate-Palmolive Co.,
686 F.2d 1230, 1233 (7th Cir. 1982), cert. denied, ___ U.S. ___, 103 S.Ct.
1526, 75 L.Ed.2d 948 (1983). However, the Seventh Circuit refused
to adopt the argument that the continuous act of denying the
Coward plaintiffs' pension benefit credits was a continuous
breach of duty bringing their claim within the scope of ERISA.
Plaintiffs in that case had voluntarily withdrawn from the
pension plan prior to the enactment of ERISA by signing waiver
cards, and the Court held that signing the waiver cards were
pre-ERISA acts. To treat the company's denial of pension benefits
as a continuous breach of duty would thus read out the exception
contained in § 514(b)(1). Id. at 1234. We believe that
application of a continuous violation theory in the instant
matter would similarly contravene § 514(b)(1). The significant
facts which give rise to plaintiffs' claim predate the enactment
of ERISA, and we therefore grant defendants' motion for summary
judgment as to Counts I and II of the complaint.*fn4
But even if the instant matter were within this Court's subject
matter jurisdiction, and barring any statutory limitation
provisions, see note 4, supra, we do not believe that defendants
have violated § 404 of ERISA. Section 404 of ERISA establishes a
number of duties with which fiduciaries must comply.*fn5 For the
definition of a fiduciary
however, we must turn to 29 U.S.C. § 1002(21), which provides, in
pertinent part, that
a person is a fiduciary with respect to a plan to the
extent (i) he exercises any discretionary authority
or discretionary control respecting management of
such plan or exercises any authority or control
respecting management or disposition of its assets,
(ii) he renders investment advice for a fee or other
compensation, direct or indirect, with respect to any
moneys or other property of such plan, or has any
authority or responsibility to do so, or (iii) he has
any discretionary authority or discretionary
responsibility in the administration of such
ALPA initially asserts that it is not a fiduciary under the
aforecited section, since the authority to control and manage the
plan is vested in United. ALPA, according to this argument,
negotiates the terms of a collective bargaining agreement with
United, which imposes a duty upon United to establish the plan.
However, this does not constitute authority over the management
of the plan nor over its assets. In response, plaintiffs point to
a statement by United in which United declared that
it was prepared to put up the money necessary to
refund contributions and grant past service credit
for pre-1965 employees if that was how the pilots and
their union really wanted to allocate the additional
unfunded liability United was prepared to assume.
According to plaintiffs, this statement indicates that United
granted ALPA full authority to dispose of $70 million of the
plan's assets. But we are persuaded by ALPA's argument that the
$70 million at issue here were not assets of the benefit plan.
Rather, that sum represents the increase in unfunded liability
which United stated it was prepared to assume, and which would
have amounted to annual contributions to the plan of
approximately $4.6 million. We do not believe that this offer by
United in the context of negotiations concerning a collective
bargaining agreement gave ALPA discretionary control or authority
over the managements of the benefit plan, its assets or its
administration. ALPA's rejection of this offer does not, in our
view, render it a fiduciary under ERISA. Moreover, other courts
have observed that unions neither control nor oversee an
employer's contributions to a pension or benefit fund and are
therefore not subject to ERISA's fiduciary standards with regard
to an employee's contributions to a fund. E.g., Rosen v. Hotel
and Restaurant Employees & Bartenders Union, 637 F.2d 592
n. 10 (3d Cir. 1981), cert. denied, 454 U.S. 898
, 102 S.Ct. 398
70 L.Ed.2d 213 (1981).
United does not dispute its status as a fiduciary. But it joins
ALPA in asserting that the amending of the benefit plan, in which
the terms of the plan were changed, does not violate any of the
fiduciary obligations under ERISA. Similarly, refusal to return
plaintiffs' pre-1965 voluntary contributions to the pension plan
does not run afoul of the statute. The Supreme Court recently
emphasized that ERISA leaves pension calculation techniques
subject to the discretion of pension plan designers. Alessi v.
Raybestos-Manhattan, Inc., 451 U.S. 504, 525, 101 S.Ct. 1895,
1907, 68 L.Ed.2d 402 (1981). In fact, courts intervene in the
decisionmaking processes of fiduciaries only where they have
acted arbitrarily or capriciously. Bayles v. Central States,
Southeast & Southwest Areas Pension Fund, 602 F.2d 97, 100 (5th
Cir. 1979). In the present case, as in Salazar v. Sandia Corp.,
656 F.2d 578 (10th Cir. 1981), voluntary employee contributions
to a benefit plan were not returned to employees after a
benefit plan became completely funded by an employer. As that
[t]he Act in section 404(a) (29 U.S.C. § 1104(a))
requires that contributions be used by the fiduciary
for "benefits to participants and their
beneficiaries," and reasonable administrative
expenses. There is nothing in the record to show that
the funds were used for any other purposes. Sandia
was and is required to provide whatever may be
necessary to pay all retirement benefits described in
the Plan. . . .
The plaintiffs under the Plan had, and have, a right
to retirement benefits but they do not have rights to
particular contributions and never did.
Id. at 580 (citations omitted). Neither the failure to return
pre-1965 voluntary contributions to the plan nor the change in
the method of calculating benefits in 1972 violated the fiduciary
obligations set forth in ERISA. This provides additional support
for granting summary judgment as to Count I.*fn6
According to Count II of plaintiffs' complaint, the benefit
accrual formula of the plan violates § 204(b)(1) of ERISA,
29 U.S.C. § 1054(b)(1), because it limits the years of service
credited to plaintiffs based upon their level of participation in
the plan prior to 1965 and applies retroactively a different
benefit accrual requirement upon participants in the pre-1965
plan which is not imposed upon participants hired after 1965.
Plaintiffs insist that under § 204(b)(1), the benefit accrual and
vesting provisions of a plan may not differentially affect
similarly-situated employee groups. Section 204(b)(1) sets the
outer limits on permissible benefit accrual practices, rather
than imposing mandatory benefit calculation procedures. Alessi v.
Raybestos-Manhattan, Inc., 451 U.S. 504, 512, 101 S.Ct. 1895,
1901, 68 L.Ed.2d 402 (1981). In enacting § 204(b)(1), Congress
did not intend to restrict differences in the computation of
Moreover, plaintiffs are not similarly situated with respect to
other pilots, for plaintiffs' years of participation in the plan
vary depending on their voluntary decision to contribute to it
before 1965. And section 204 does not require identical benefits
for employees with different years of participation in a plan.
ERISA itself allows plans to exclude both periods of service
prior to age 25, 29 U.S.C. § 1052(a)(1)(A), and those periods
during which an employee declines to contribute to a plan,
29 U.S.C. § 1053(b)(1)(B). Accordingly, defendants'
motion for summary judgment on Count II is granted.
In Count III, plaintiffs assert that ALPA and United willfully
violated § 4 of the Age Discrimination in Employment Act,
29 U.S.C. § 623, by adopting the years of participation formula for
the benefit plan, by refusing to credit as years of participation
those years when plaintiffs did not voluntarily contribute to the
pre-1965 plan, by not returning any voluntary contributions, by
managing the contribution account at a three percent interest
rate, by treating plaintiffs differently than members of other
fixed benefit plans with regard to the credit for years of
service and refund of voluntary contributions, and by creating a
hostile atmosphere of discrimination against older pilots. These
actions, in addition to representing intentional discrimination,
have had a disparate impact upon plaintiffs. In their response to
defendants' motion for summary judgment, plaintiffs confine their
arguments to defendants' refusal to credit as years of
participation those years in which plaintiffs did not voluntarily
contribute to the plan.
According to 29 U.S.C. § 623, it is unlawful for employers
(1) to fail or refuse to hire or to discharge any
individual or otherwise discriminate against any
individual with respect to his compensation, terms,
conditions, or privileges of employment, because of
such individual's age;
(2) to limit, segregate, or classify his employees
in any way which would deprive or tend to deprive any
individual of employment opportunities or otherwise
adversely affect his status as an employee, because
of such individual's age; or
(3) to reduce the wage rate of any employee in
order to comply with this chapter.
Allegations that a facially neutral policy has disparate impact
upon members of a class state a claim under the ADEA. Several
courts have considered this issue and have concluded that a
disparate impact theory may be used in age discrimination
actions; the ADEA is not limited to remedying intentional age
discrimination. E.g., Douglas v. Anderson, 656 F.2d 528, 529, 531
n. 1 (9th Cir. 1981); Geller v. Markham, 635 F.2d 1027, 1032 (2d
Cir. 1980), cert. denied, 451 U.S. 945, 101 S.Ct. 2028, 68
L.Ed.2d 332 (1981). Contra, Note, Age Discrimination and the
Disparate Impact Doctrine, 34 Stan.L.Rev. 837 (1982). We will
first consider plaintiffs' disparate impact theory before turning
to their allegations of intentional discrimination.*fn7
In order to present a prima facie case of discriminatory
impact, a plaintiff must demonstrate that an employer's facially
neutral employment practice has a disparate impact upon members
of plaintiffs' class. Griggs v. Duke Power Co., 401 U.S. 424,
429-30, 91 S.Ct. 849, 852-53, 28 L.Ed.2d 158 (1970). An employer
may defend by showing that business necessity is the basis for
the challenged practice or that the practice is a bona fide
occupational qualification. Id. at 432, 91 S.Ct. at 854. A
plaintiff, however, may attempt to show that other employment
practices with less of a discriminatory effect would serve the
employer's interest. Albermarle Paper Co. v. Moody, 422 U.S. 405,
425, 95 S.Ct. 2362, 2375, 45 L.Ed.2d 280 (1975). We therefore
first consider whether defendants' refusal to grant pilots hired
prior to 1965 credit for all their years of service or to return
pre-1965 voluntary contributions to the plan to plaintiffs has
had a disparate impact upon plaintiffs.
United argues that there is no causal link between the adverse
impact alleged by plaintiffs and plaintiffs' age, and that
plaintiffs were not treated differently from similarly-situated
employees. ALPA adds that the plan has no discriminatory impact
whatsoever, for pilots hired before 1965 have had, and will have,
a greater chance to accrue years of participation under the plan.
Plaintiffs argue that the plan disparately impacts upon them, for
the amount of nonparticipation in the plan among pilots hired
after 1965 is zero, but for most pilots hired before 1965 there
is a disparity between their years of active service and their
participation in the plan.*fn8
Plaintiffs have not satisfied their burden of showing a prima
facie case of disparate impact in the present matter. First, we
must ask what the nature of the asserted disparate impact is.
Furnco Construction Co. v. Waters, 438 U.S. 567, 577, 98 S.Ct.
2943, 2949, 57 L.Ed.2d 957 (1978). Plaintiffs seek to compare two
differently-situated employee groups — pilots hired prior to 1965
and pilots hired after that year. These groups are not similarly
situated but for their ages. They were hired under different
terms of employment. We also do not believe that the employment
terms offered to plaintiffs and other United employees prior to
1965 can be compared to the present terms of employment offered
to United employees to show disparate impact. Plaintiffs would
have this Court hold that an employer must provide any
improvements to a pension plan retroactively to any active
employees for past services. This is not, in our view, the
mandate of the ADEA.
Secondly, age is not the reason for the pension plan's alleged
adverse impact upon the plaintiffs. There is no nexus between the
employment practice plaintiffs have challenged and their age. As
the Supreme Court has observed, "[e]ven a completely neutral
practice will inevitably have some disproportionate impact on one
group or another. Griggs does not imply, and this Court has never
held, that discrimination must always be inferred from such
consequences." City of Los Angeles Department of Water & Power v.
Manhart, 435 U.S. 702, 711 n. 20, 98 S.Ct. 1370, 1376-1377 n. 20,
55 L.Ed.2d 657 (1978). Plaintiffs do not have credit for years
they did not voluntarily contribute to the plan not because of
their age, but because some voluntarily chose not to contribute
to the benefit plan or because they may have been ineligible to
contribute at the time. In short, no material issues of fact
exist concerning whether the plan has a disparate impact on
plaintiffs because of age.
In an effort to support its allegations of intentional age
discrimination, plaintiffs refer to another case in this
district, in which United was adjudged to be in willful violation
of the ADEA with respect to the employment of older pilots.
Monroe v. United Air Lines, 31 Empl.Pract.Dec. ¶ 33,329 (N.D.Ill.
1982). This litigation allegedly created a "hostile and
invidious" atmosphere against older pilots, and plaintiffs' age
was therefore a determining factor which made a difference in
plaintiffs not receiving past service credit and the return of
voluntary contributions. This issue, plaintiffs add, is incapable
of resolution on summary judgment, as it raises material factual
disputes concerning defendants' motives. Plaintiffs, however,
have failed to present evidence or factual issues concerning the
existence of intentional age discrimination in this case; rather,
plaintiffs' arguments are based on conjecture and speculation.
United, moreover, has adequately rebutted the plaintiffs' various
efforts to create factual issues and
defeat summary judgment with respect to this issue.*fn9 Thus, United
has met its burden of showing that "sufficient evidence
supporting the claimed factual dispute does not require a jury or
judge to resolve the parties' differing versions of the truth."
Hadley v. County of DuPage, 715 F.2d 1238 at 1241 (7th Cir.
1983), citing Cedillo v. Int'l Ass'n of Bridge, etc., 603 F.2d 7,
9 (7th Cir. 1979). Accordingly, defendants' motion for summary
judgment as to Count III is granted.*fn10
C. The Duty of Fair Representation: Count IV
Count IV of plaintiffs' complaint asserts that ALPA, with
United as a party, breached its duty of fair representation under
45 U.S.C. § 151 et seq. as applied to air carriers by
45 U.S.C. § 182.*fn11 ALPA allegedly acted arbitrarily and
capriciously by (1) the misrepresentation of and failure to
disclose its collective bargaining position concerning (a)
amending the plan to credit pilots for years before 1965 in
which they did not make voluntary contributions, and (b) the
return of such voluntary contributions, and (2) the negotiation
and implementation of the years of participation formula.
The duty of fair representation requires a union to serve the
interests of all its members without hostility or discrimination,
to exercise its discretion with good faith and honesty and to
eschew arbitrary conduct. Vaca v. Sipes, 386 U.S. 171, 177, 87
S.Ct. 903, 910, 17 L.Ed.2d 842 (1967). Duty of fair
representation cases may involve allegations that a union
breached its duty in the negotiation of a collective bargaining
agreement or a charge that a union improperly administered the
collective bargaining agreement. Schultz v. Owens-Illinois, Inc.,
696 F.2d 505, 514 (7th Cir. 1982). The instant matter involves
allegations that ALPA breached its duty in the negotiation of the
collective bargaining agreement. In this context, the Supreme
Court has defined the appropriate standard by which to judge
a union's conduct. The fact that unions have a duty to
represent all members of an appropriate [bargaining]
unit requires them to make an honest effort to serve
the interests of all of those members, without
hostility to any.
The complete satisfaction of all who are represented
is hardly to be expected. A wide range of
reasonableness must be allowed a statutory bargaining
representative in serving the unit it represents,
subject always to complete good faith and honesty of
purpose in the exercise of its discretion.
Ford Motor Co. v. Huffman, 345 U.S. 330, 337-38, 73 S.Ct. 681,
686, 97 L.Ed. 1048 (1953) (citations omitted). It is with these
standards in mind that we consider plaintiffs' claims.*fn12
Plaintiffs assert that whether ALPA has acted with good faith
is an issue of fact which is inappropriate for summary judgment.
Specifically, they argue that ALPA members who negotiated the
collective bargaining agreement ignored two resolutions by the
Master Executive Council ("MEC") to obtain the relief plaintiffs
seek; ALPA negotiators also failed to learn of the actual cost of
granting past service credit, and they learned that United
planned to change the assumption rate, which would have paid for
the benefit improvements, but failed to disclose that
information. United, according to plaintiffs, is also liable for
breach of ALPA's duty of fair representation by participating in
the negotiations which caused plaintiffs' injuries,
misrepresenting the cost of the relief sought and offering
employment and increased benefits to ALPA officers.
United and ALPA have met their burden of demonstrating the
absence of material facts with respect to the issue of ALPA's
good faith, thus entitling them to summary judgment. The evidence
does not support plaintiffs' charges concerning the negotiators'
rejection of the MEC's orders. The fact that the MEC ordered
pension negotiators to seek credit for pre-1965 service in
January, 1980, and February, 1981, must be viewed in the context
of the negotiations between United and ALPA from 1979 through
1982. Plaintiffs proffer no evidence of ALPA's bad faith in
connection with these negotiations sufficient to raise any
factual issues. Rather, ALPA has demonstrated an absence of bad
faith on its part.
Moreover, there is no evidence that ALPA misrepresented the
cost of plaintiffs' proposal or failed to disclose material facts
concerning the cost of the proposal. Plaintiffs attempt to
develop these allegations by unsupported statements in their
memorandum opposing summary judgment; there is no concrete
evidence of misrepresentation, failure to inform the membership
of benefit costs or of ALPA's position toward plaintiffs'
proposals. Thus, there is no genuine issue for trial. Posey v.
Skyline Corp., 702 F.2d 102, 103, 105 (7th Cir. 1983).
With respect to United's liability for breach of the duty of
fair representation, it is clear that an employer may be held
liable along with a union for the injury suffered as a result of
a breach of the duty of fair representation. Jones v. Trans World
Airlines, Inc., 495 F.2d 790, 798 (2d Cir. 1974). Such lawsuits
against the employer are generally brought pursuant to § 301 of
the Labor Management Relations Act, 29 U.S.C. § 185. In the
present case, plaintiffs assert that United was a party to ALPA's
alleged breach of duty. We initially note that it would be
conceptually anomalous to hold United liable with ALPA for breach
of the duty of fair representation in light of our holding that
ALPA did not breach this duty. See Superczynski v.
P.T.O. Services, Inc., 706 F.2d 200, 203-04 (7th Cir. 1983).
Furthermore, plaintiffs have not sufficiently demonstrated the
existence of material factual issues concerning conspiracy or
collusion between United and ALPA. United is correct in noting
its statutory duty to bargain with ALPA, NLRB v. American
National Insurance Co., 343 U.S. 395, 402, 72 S.Ct. 824, 828, 96
L.Ed.2d 1027 (1952).
United's mere participation in collective bargaining
negotiations with ALPA, in which plaintiffs' proposals were not
realized, is not sufficient to hold United liable. Plaintiffs do
not support their charge that United misrepresented the cost of
the relief they sought. Testimony by United's actuary, moreover,
clearly rebuts plaintiffs' allegations. Evidence of self dealing
and collusion simply because United has hired former ALPA
officials, many of whom would have in fact benefitted from
plaintiffs' proposal, is similarly lacking. In short, plaintiffs
have not demonstrated a factual basis upon which to infer the
existence of collusion between United and ALPA, and for this
reason summary judgment will be granted in defendants' favor as
to Count IV.
For the foregoing reasons, plaintiffs' motion for class
certification is denied, and defendants' motion for summary
judgment is granted. It is so ordered.