In a recent decision, an RLA System Board of Adjustment has ruled that unilateral termination of a pilot retiree health insurance plan was permissible because the underlying CBA had terminated.
Executive Summary: In a recent decision, an RLA System Board of Adjustment has ruled that unilateral termination of a pilot retiree health insurance plan was permissible because the underlying CBA had terminated.
This dispute involved the unique facts arising after the acquisition of Midwest Airlines by Republic Airways Holdings. After the transaction, Midwest ceased operations and furloughed all pilots. The Midwest pilots argued that Republic had become a contractual successor to Midwest and, as a result, the Midwest CBA continued to cover the Midwest pilots (both with respect to their furlough status and in connection with any employment at Republic). The successorship claim was dismissed as untimely, and, in the alternative, the System Board found that there had been no successorship transaction. When the retiree medical program was terminated, the Midwest pilots challenged that action as a violation of the Midwest CBA. Management argued that the Midwest CBA had terminated when Midwest ceased operations as an air carrier. The System Board agreed with the company.
The Midwest CBA contained a traditional industry duration clause, in which a contract is deemed to continue in effect pending its renegotiation under the status quo provisions of RLA, Section 6. Nonetheless, it has previously been established that an RLA contract terminates where there is no union to administer the contract (as can occur, for example, when no representative is certified following a single carrier election). The Midwest System Board award can be read as a corollary to that principle where an air carrier has ceased operations without a contractual successor. In addition, the System Board noted that, while Midwest pilots had been included in a single transportation system with Republic pilots, the NMB had never determined that Midwest (which was no longer an air carrier at the time of the NMB determination) was itself part of a single transportation system with Republic.
Ultimately, because the contract provided for retiree health insurance only for the duration of the CBA, once the CBA terminated, management could also terminate the health insurance plan.
If you have any questions regarding this Alert or other labor or employment issues relating to the airline industry, please contact the author, Lilia Bell, lbell@fordharrison.com, who is a partner in our Atlanta office and member of FordHarrison's Airlines practice group. You may also contact the FordHarrison attorney with whom you usually work.