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Shannon v. United Airlines, Inc.

United States District Court, Northern District of Illinois, Eastern Division

March 30, 2015

UNITED AIRLINES INC. formerly known as Continental Airlines, and CONTINENTAL PILOTS RETIREMENT PLAN, Defendants.



Plaintiff Timothy Shannon (“Shannon”) filed a three-count complaint against United Airlines Inc. (“United”), formerly known as Continental Airlines, Inc. (“Continental”), and Continental Pilots Retirement Plan (the “Plan”) (together “Defendants”) alleging violations of the Employee Retirement Income Security Act (“ERISA”) under 29 U.S.C. § 1132 (a)(1)(B) (Count I), § 1132(a)(3) (Count II), and § 1132(c)(1) (Count III).[1] Defendants move to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons stated below, the Court grants the motion and dismisses the complaint.


Plaintiff Shannon is a former Continental pilot who retired from the company in 2007 after 23 years of service. During his employment, Shannon was a member of a union, the Air Line Pilots Association (“ALPA”). ALPA negotiated the terms of his employment and employee benefits, including a collective bargaining agreement between Continental and ALPA dated April 1, 2005 to December 31, 2008 (the “CBA”). Among the benefits ALPA negotiated was a defined benefit pension plan that would pay retired pilots a monthly annuity for life. These benefits were provided for by the Plan which was incorporated into the CBA and administered by Continental. Shannon participated in the Plan.

The Plan provides that a pilot’s pension will be a percentage of his Final Average Compensation, defined as the average of the participant’s highest 60 consecutive completed calendar months of compensation received in the last 120 months while in Credited Service. Credited Service years are those in which a pilot earns 2, 000 hours of service. When the Plan went into effect in April 2005, Continental recognized that a pilot was in Credited Service while on leave.

Continental terminated the Plan in 2005 and froze benefits as of May 31, 2005. In June 2005, Continental and the Plan gave each pilot an individual benefits statement as of the freeze date which listed the data used to determine the pilot’s frozen annuity benefit payable at age 60, as well as the calculation of that benefit. Those benefits statements included the periods when a pilot took leave within the 60 consecutive months considered to calculate Final Average Compensation and the resulting annuity. At some point thereafter, Continental began interpreting the Plan to treat periods of leave as interruptions to a pilot’s continuous Credited Service. Continental and the Plan told the pilots that periods of leave would not be included in years of Credited Service upon their retirement.

Shannon’s June 2005 benefit statement showed an accrued monthly benefit of $4, 192.25, which was calculated including a three-month period of leave in 2002. Upon retirement in 2007, his Final Average Compensation period was calculated as to exclude this period of leave and his monthly annuity is $3, 761.59.

In May 2010, Shannon along with three other retired Continental pilots, Edward Ballew, Craig Bowcock, and William Bauer (the “Retirees”), filed a class action complaint in the Southern District of Texas against Continental and the Plan, Ballew v. Continental Airlines, Inc., No. H-10-1699 (S.D. Tex.) (“Ballew”). Each of the pilots was a named plaintiff. The Retirees each asserted a claim under § 1132(a)(1)(B) to recover benefits due as a result of Continental’s “reinterpretation” of the Plan. Prior to filing suit, Mr. Ballew, acting for the Retirees and the proposed class, sought review of the adverse benefit determination before Continental’s Retirement Board, an established System Board under the Railway Labor Act (“RLA”). The Retirement Board issued a unanimous decision rejecting his interpretation of the Plan. The district court considered this decision and in March 2011 dismissed the Retirees claims for lack of jurisdiction, holding that the RLA applied to the Retirees and that the RLA provides for exclusive jurisdiction to the administrative resolution process. The Retirees appealed and in January 2012, the Fifth Circuit affirmed the district’s court’s dismissal.

In June 2013, Shannon wrote to Defendants[2] explaining why he should be entitled to benefits based on calculations done prior to Continental’s reinterpretation. In December 2013, he received a letter from the United Retirement Benefit Appeals Committee stating that it had made an adverse benefit determination and that “the Committee acknowledges that a court may allow Mr. Shannon to bring suit under section 502(a) of ERISA in this situation.” (Compl. ¶ 52.) In February 2014, Shannon sent the Appeals Committee a letter requesting a copy of the administrative record regarding his claim determination. Shannon then filed the present complaint against Defendants.

Legal Standard

A court must dismiss any action which lacks subject matter jurisdiction. The party asserting jurisdiction has the burden of establishing it under Rule 12(b)(1). United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003). “On a motion to dismiss for lack of subject matter jurisdiction, the court is not bound to accept the truth of the allegations in the complaint, but may look beyond the complaint and the pleadings to evidence that calls the court’s jurisdiction into doubt.” Bastien v. AT & T Wireless Servs., Inc., 205 F.3d 983, 990 (7th Cir. 2000). However, when reviewing a defendant’s Rule 12(b)(6) motion to dismiss, the Court accepts all well-pleaded factual allegations in the complaint as true and draws all reasonable inferences in the non-movant’s favor. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). Detailed factual allegations are not required, but the plaintiff must allege facts that when “accepted as true … state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when the complaint’s factual content allows the Court to draw a reasonable inference that the defendants are liable for the misconduct alleged. Id.


Counts I and II

In Count I Shannon asserts a claim under § 1132(a)(1)(B) alleging he is entitled to the full benefits he was promised under the terms of the Plan prior to Defendants’ “reinterpretation.” In Count II, he brings a claim under § 1132(a)(3) alleging Defendants breached their fiduciary duties when they recalculated his retirement annuity resulting in a downward adjustment of his pension benefits. He seeks an injunction ordering Defendants to apply the Plan interpretation affording him the full benefits he was promised and to pay him the balance owed. Defendants argue that both claims should be dismissed ...

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