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AIR LINE PILOTS ASSN. v. NORTHWEST AIRLINES

January 20, 1978

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, et al., Plaintiffs,
v.
NORTHWEST AIRLINES, INC., Defendant



The opinion of the court was delivered by: WADDY

 This is an action for a declaratory judgment and damages arising out of the Northwest Airlines, Inc. Pilots' Pension Plan, part of a collectively bargained agreement between the Air Line Pilots Association, International (ALPA) and Northwest Airlines, Inc. (Northwest). Plaintiffs are ten (10) Northwest pilots, on behalf of all others similarly situated, and their collective bargaining representative, ALPA. Northwest is the defendant.

 Contemporaneously with the filing of the Complaint plaintiffs filed and served on defendant requests for discovery consisting of a First Set of Interrogatories and a First Request for Production of Documents.

 The plaintiffs have alleged in their Complaint that the defendant has violated the terms of the Northwest Airlines, Inc. Pilots' Pension Plan as Amended August 7, 1975. It is not disputed that the pension plan and amendments were collectively bargained between and agreed upon by the defendant and plaintiff Air Line Pilots Association pursuant to the Railway Labor Act, 45 U.S.C. §§ 151, et seq.

 Until August 7, 1975 the pension plan consisted of two funds: Trust Fund "A", established to provide fixed retirement benefits, and Trust Fund "B", created as a hedge against inflation to provide variable benefits. In addition to Northwest's contributions to both Fund "A" and Fund "B", each pilot was permitted to make voluntary contributions to Fund "B" to be invested along with other contributions for his benefit.

 The collectively bargained August 7, 1975 amendments to the pension plan abolished the variable benefits Fund "B" and replaced the two separate trust funds with a single fund, to which contributions are made exclusively by Northwest. Section 7.2 of the Amended Pension Plan provided that any pilot who had made optional contributions to Fund "B" could elect to have distributed to him the accrued value of those contributions. Alternatively, a pilot could leave the assets attributable to such optional contributions in the pension fund for distribution at the date of retirement in accordance with the variable benefits provision of the prior plan.

 Distribution of the "B" Fund assets to those pilots who elected to "cash out" was made by Northwest beginning in November, 1975, three months after the operative date of the pension plan amendments. In accordance with section 7.2 of the plan the pilots' contributions were valued as of the date of the amendments, August 7, 1975. This Complaint seeks, inter alia, the interest on the accrued value of the optional contributions held in Fund "B" between August 7, 1975 and the actual date of disbursement of those monies to pilots electing to "cash out". Plaintiffs also seek as damages any profits which Northwest may have made through the use of the interest, punitive damages, and a declaration of the parties' rights under the Amended Pension Plan.

 The Complaint alleges that Northwest's failure to pay interest on the "B" Fund disbursements violates the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1381. Plaintiffs assert that this is an action under 29 U.S.C. §§ 1132(a)(2) and (a)(3) over which exclusive jurisdiction is conferred in the district courts by 29 U.S.C. § 1132(e)(1). It is their position that ERISA was intended to provide "ready access to the Federal courts." 29 U.S.C. § 1001(b).

 Defendant's Motion to Dismiss raises the question of this Court's subject matter jurisdiction over this dispute in light of the Railway Labor Act (RLA), 45 U.S.C. §§ 151-188. Northwest contends that although ERISA allows suits to recover pension benefits, it does not operate to divest an RLA arbitration panel of its exclusive jurisdiction to interpret collectively bargained agreements. Therefore, Northwest argues, this controversy is subject to the RLA's compulsory arbitration provisions, and this Court has no jurisdiction.

 The Court agrees.

 The RLA 1936 amendments extended the Act, except Section 3 (45 U.S.C. § 153), to interstate commercial air carriers such as defendant Northwest. 45 U.S.C. § 181, International Association of Machinists, AFL-CIO v. Central Airlines, Inc., 372 U.S. 682, 685, 10 L. Ed. 2d 67, 83 S. Ct. 956 (1963). Section 2 (45 U.S.C. § 152) requires all carriers and their employees to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules and working conditions and to settle all disputes, whether arising out of the application of such agreements or otherwise. Section 204 (45 U.S.C. § 184) of the RLA provides, inter alia, that disputes between carriers by air and their employees growing ". . . out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions . . . shall be handled in the usual manner . . .; but, failing to reach an adjustment in this manner, the disputes may be referred by petition of the parties or by either party to an appropriate adjustment board . . ." The statute also requires the parties to establish such boards of adjustment. The procedure so established by the statute constitutes compulsory arbitration and the resulting decisions are final and binding. Cf. Walker v. Southern Railway, 385 U.S. 196, 17 L. Ed. 2d 294, 87 S. Ct. 365 (1966); Brotherhood of Railroad Trainmen v. Chicago R. & I. R.R., 353 U.S. 30, 1 L. Ed. 2d 622, 77 S. Ct. 635 (1957).

 The parties agree that resolution of this dispute requires an interpretation and determination under section 7.2 of the Amended Pension Plan of whether Northwest is obliged to pay interest on Fund "B" assets which have been disbursed to its pilots after August 7, 1975. The parties have also agreed as part of their collectively bargained pension plan that, "[The] Retirement Board shall hear all disputes arising out of the application and interpretation of the Plan, . . . ." Amended Pension Plan, section 9.3. The Retirement Board in this case constitutes the adjustment board mandated by the statute. Thus, under the RLA, inasmuch as the August 7, 1975 agreement is a collective bargaining agreement within the meaning of §§ 2 and 204 (45 U.S.C. §§ 152 and 184) of that Act, all disputes arising out of the application or interpretation of that pension plan must be submitted to the Retirement Board established by Northwest and ALPA pursuant to the provisions of the Act. Central Airlines, supra, see Republic Steel Corp. v. Maddox, 379 U.S. 650, 13 L. Ed. 2d 580, 85 S. Ct. 614 (1965), Slocum v. Delaware, Lackawanna & Western R.R., 339 U.S. 239, 94 L. Ed. 795, 70 S. Ct. 577 (1950), Haney v. Chesapeake & Ohio R.R., 162 U.S. App. D.C. 254, 498 F.2d 987 (1974).

 Plaintiffs contend, however, that the ERISA policy favoring uniform federal decisions of pension disputes overrides both the mandatory arbitration provisions of the RLA and the parties own collectively bargained agreement to submit such disputes to their Retirement Board. In support they rely upon ...


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