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Asset Management Holdings, LLC v. Alelia Hernandez (In re Hernandez)

Summarizing by Lars Fuller

Demetris v. Transport Workers Union of America, AFL-CIO

Case Type:
Case Status:
15-15229 (9th Circuit, May 22,2017) Published
9th Cir. affirmed district court's (N.D. Cal.) dismissal of consolidated actions brought under Railway Labor Act, alleging union breached duty of fair representation in offering disparate bankruptcy distribution to two classes of members. Union negotiated new collective bargaining agreement with chapter 11 debtor airlines providing senior members with option for early termination with payout. Non-opting members would receive equity stake equivalent to unsecured creditors in bankruptcy. Panel held no breach of duty because different treatment not arbitrary, discriminatory, or bad faith.
Procedural context:
Union members sued union, alleging breach of Railway Labor Act. District court dismissed consolidated suits. Plaintiff members appealed to 9th Circuit.
American Airlines, Inc. and American Eagle Airlines, Inc. filed for chapter 11 bankruptcy and negotiated new collective bargaining agreements with Transport Workers Union of America, AFL-CIO, which represented mechanics, fleet service workers, and other laborers. The new agreements cut pension and medical benefits for union members and granted the union a stake in the equity that would be granted to unsecured creditors in the bankruptcy. The union and American also negotiated an early separation program whereby more senior union members could choose to voluntarily leave American in exchange for lump-sum cash payments. Union members who took advantage of the early separation program alleged that the union breached its duty of fair representation by excluding them from the bulk of the equity distribution. The panel held that there was no breach of duty because the union's conduct was not arbitrary, discriminatory, or in bad faith.
O'Scannlain, Gould, Smith

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