Pruter v. Local 210's Pension Trust Fund

Background

The plaintiffs were former employees of World Airways, Inc., a now-defunct airline. In 1996, they transferred their membership to Local 210, International Brotherhood of Teamsters, and participated in negotiations for a new collective bargaining agreement. The plaintiffs wanted improved retirement benefits, including coverage under Local 210’s defined-benefit pension plan.

A June 17, 1996 union flyer stated that Local 210 and its members were willing to accept liability and assume risk to protect the employees’ retirement benefits. A July 9, 1996 letter from Local 210’s chief negotiator stated that the pension plan had a cost to the union of more than $700,000, which the union was willing to pay, and that the union would use its resources to protect the employees’ rights. The flight attendants later ratified the collective bargaining agreement. The pension plan’s trustees then admitted World as a contributing employer and provided past-service credits to the World flight attendants after a five-year vesting period.

In 2008, the pension plan’s governing agreement was amended to allow trustees to cancel past-service credits to preserve the fund’s actuarial soundness. After World filed for bankruptcy in 2012 and its withdrawal liability was discharged, the plan faced a shortfall. In December 2012, the trustees canceled the World flight attendants’ past-service credits, reducing the plaintiffs’ monthly pension benefits.

The plaintiffs alleged that Local 210 either never obtained an agreement from World to fund the credits or failed to enforce such an agreement, and also failed to contribute the $700,000 it had promised. Their earlier fraud and contract claims were dismissed or preempted, and the case proceeded on a claim under the Railway Labor Act that Local 210 breached its duty of fair representation.

Motion and Legal Standards

Local 210 moved for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is appropriate when there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law. The court must view the evidence in the light most favorable to the party opposing the motion.

A duty-of-fair-representation claim has two relevant elements here. First, the union’s conduct toward a member must have been arbitrary, discriminatory, or in bad faith. Bad faith includes fraudulent, deceitful, or dishonest conduct. Second, the plaintiff must show a causal connection between the union’s wrongful conduct and the claimed injury.

Bad Faith

The plaintiffs argued that Local 210 led them to believe that the union itself, rather than the separate pension plan, would provide or guarantee funding for their past-service credits. Local 210 argued that the plaintiffs had no evidence that the union or its agents made such a representation.

The court held that the June 17 flyer could be read as promising that the union and its members—not merely the separate pension plan—would accept responsibility for protecting and funding the past-service credits. The July 9 letter also could be read as representing that Local 210 itself would contribute money to secure the benefits. Although Local 210 offered alternative interpretations of these communications, the court was required at the summary-judgment stage to view the evidence in the plaintiffs’ favor.

The court found that the representative plaintiffs’ deposition testimony added limited support because the witnesses generally could not recall specific statements that Local 210 would pay for or guarantee the credits. Still, the written communications, considered with the testimony, could allow a reasonable jury to find that Local 210 made dishonest statements. The court therefore denied Local 210’s motion for summary judgment on bad faith.

Causation

Local 210 also argued that the plaintiffs could not show that the union’s statements caused their injuries. The court explained that the plaintiffs had to show that the statements affected ratification of the collective bargaining agreement because, without that agreement, they would not have participated in the pension plan. The court had previously ruled that the plaintiffs could seek compensation for the lost pension benefits rather than only for allegedly lost wage increases.

Local 210 pointed to the size of the ratification vote and argued that the plaintiffs’ 87 votes could not have changed the result. The court agreed that the plaintiffs ultimately would need to show that a majority of the flight attendants would not have ratified the agreement without the representations. But the court found substantial evidence that pension funding was an important voting issue. The three representative plaintiffs testified that past-service-credit funding was central to their votes, and the union prominently discussed that subject in its written and personal communications.

The court concluded that a jury could infer that enough flight attendants were influenced by the representations to change the vote. The court noted that the plaintiffs’ proof at trial would also have to establish that Local 210’s failure to honor its funding commitment caused the later reduction in their pension benefits. Because Local 210’s motion addressed only whether the statements affected ratification, the court left that additional causation issue for trial and denied the motion for summary judgment on causation.

Disposition

The court denied Local 210’s motion for summary judgment. The order did not decide whether the plaintiffs would ultimately prevail; it determined that the evidence presented factual questions for a jury. The clerk was directed to terminate the motion, and the court scheduled trial for August 31, 2020, at 9:00 a.m.