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Ballard v. American Airlines, Inc.

United States District Court, N.D. Illinois, Eastern Division

December 18, 2017

THOMAS BALLARD, on behalf of himself and all others similarly situated, Plaintiff,
v.
AMERICAN AIRLINES, INC., a Delaware corporation, Defendant.

          MEMORANDUM OPINION AND ORDER

          John Robert Blakey Judge

         Plaintiff Thomas Ballard, on behalf of himself and all others similarly situated, sued Defendant American Airlines, Inc., claiming breach of oral contract, estoppel, fraud, unjust enrichment, and negligent misrepresentation. Defendant moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that Plaintiff's claims are all preempted under the Railway Labor Act. For the reasons explained below, Defendant's motion is granted.

         I. Factual Background & Procedural History

         Plaintiff's First Amended Complaint (FAC) [20] sets forth the following relevant facts, which the Court accepts as true for purposes of Defendant's motion. Prior to his employment with American, Plaintiff worked as an aviation maintenance technician for twenty-four years and earned more than $30.00 an hour. FAC, ¶ 6. After learning about American's “Hiring Program, ” which offered years-of-service credit and top-of-scale pay rates for new hires, Plaintiff applied to work at American. Id. ¶ 7. In March of 2015, Plaintiff interviewed with American for an aviation maintenance technician position. Id. ¶ 8. American told Plaintiff during the interview that, if employed by American, he would have to join the Transportation Workers Union of America, AFL-CIO, the labor union representing American employees; Plaintiff did not meet with a Union representative, and did not receive any Union documentation, at that time. Id. American hired Plaintiff at the end of the interview, and gave Plaintiff a hiring letter dated March 24, 2015. Id. ¶ 9. Plaintiff accepted the position and began working for American in June 2015 at a starting wage of $25.70 an hour. Id. ¶¶ 7, 10-11. Consistent with the discussion at his interview, Plaintiff then became a member of the Union.

         Approximately two months after Plaintiff started the job, American informed the Union that it was discontinuing the Hiring Program under which Plaintiff was hired. Id. ¶ 12. Plaintiff alleges that American knew it was going to discontinue the Hiring Program when it hired him, but failed to tell him it planned to do so. Id. ¶ 13.

         Plaintiff alleges that American and the union met in August 2016 to negotiate the collective bargaining agreement and, that American announced that, as of August 5, 2016, it would no longer honor agreements with employees hired under the Hiring Program. Id. ¶¶ 15, 17-18. American later extended that date to November 5, 2016. Id. ¶ 16. As a result of this decision, employees (like Plaintiff) who had not met their years of service prior to the discontinuation date had to work additional years before they could achieve the top-of-scale pay promised under the Hiring Program. Id. ¶ 19.

         Plaintiff alleges that American pulled a fast one, and that its refusal to honor the benefits it agreed to under the Hiring Program constitutes a breach of contract. Id. ¶¶ 19-20, 23. Plaintiff contends that American “never had any intention of honoring its Hiring Program” and that American “knew or should have known” when hiring Plaintiff and the Class that it “intended to cancel, revoke, rescind, and/or breach their agreement with Plaintiff and the Class.” Id. ¶ 21.

         On February 28, 2017, Plaintiff sued American in state court, claiming breach of contract, equitable estoppel, promissory estoppel, fraud and unjust enrichment. American removed the case to this Court on April 3, 2017 and moved to dismiss. See [12]. In response, Plaintiff elected to amend his complaint; he filed an amended class action complaint on May 24, 2017. See [20]. Plaintiff's amended complaint, filed on behalf of himself and the class of persons who, from 2014 to the date of judgment, were hired by American and, as new hires, were credited with years of service and top-of-scale pay rates, claims breach of oral contract, equitable estoppel, promissory estoppel, fraud, unjust enrichment, and negligent misrepresentation. See id.

         American again moved to dismiss under Rules 12(b)(6) and 12(b)(1). See [27]. American argues that Plaintiff's claims should be dismissed under Rule 12(b)(6) because they are preempted under the Railway Labor Act (RLA) and thus fail to state a claim. Alternatively, American argues, the claims should be dismissed under Rule 12(b)(1) because Plaintiff's claims are all “minor disputes” subject to the exclusive jurisdiction of the Board of Adjustment established by American and the Union.

         II. Legal Standard

         A motion under Rule 12(b)(6) tests the sufficiency of the complaint under the plausibility standard, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), not the merits of the suit, Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To meet the plausibility standard, “the complaint must supply ‘enough fact to raise a reasonable expectation that discovery will reveal evidence' supporting the plaintiffs allegations.” Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012) (quoting Twombly, 550 U.S. at 556). In deciding a Rule 12(b)(6) motion, the Court accepts as true all well-pleaded facts in Plaintiff's complaint and draws all reasonable inferences in his favor. Burke v. 401 N. Wabash Venture, LLC, 714 F.3d 501, 504 (7th Cir. 2013). These same standards apply when evaluating a facial challenge to subject matter jurisdiction under Rule 12(b)(1). Silha v. ACT, Inc., 807 F.3d 169, 174 (7th Cir. 2015) (citations omitted).

         III. Analysis

         A. Preemption Under the Railway Labor Act

         The RLA requires air carriers to negotiate “rates of pay, rules, and working conditions” with their employees' collective bargaining representatives. 45 U.S.C. §151 et seq. Accordingly, the entire collective bargaining process is governed by federal law through the RLA. In 1959, the Supreme Court established, in SanDiego Building Trades Council v. Garmon, that when an activity is governed by the National Labor Relations Act, state and federal courts must defer to the National Labor Relations Board and all state and federal claims are preempted. 359 U.S. 236, 244-45 (1959). In 1969, the Court extended preemption to the Railway Labor Act in Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. ...


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