This lawsuit was filed against the American Airlines, Inc. Pilot Retirement Benefit Program – Variable Income Plan (“the Plan”), State Street Bank & Trust Co., a fiduciary of the Plan, as well as other fiduciaries of the Plan, on behalf of pilots who took leave from American Airlines to serve in the United States Armed Forces since 1997 and received less than the amount of pension contributions that they were entitled to receive under the federal Uniformed Services Employment and Reemployment Rights Act (“USERRA”) and under the terms of the Plan.  The action, Allman v. American Airlines, Inc. Pilot Retirement Benefit Program Variable Income Plan, et al., 1:14-cv-10138 (D. Mass.), was filed on January 17, 2014, in the federal district court in Boston, Massachusetts. 

SETTLEMENT

Plaintiff and Defendants reached a settlement totaling $5 million on July 21, 2016.  Following notice to the class and a final fairness hearing, the Court approved the settlement in a final order on February 15, 2017. Following the terms of the settlement, American paid $500,000 to be distributed (after any awarding of attorney’s fees, service award to the Class Representative, and reimbursement of expenses) amongst all qualifying Class Members. The approved amounts were deposited into the Variable Income Plan accounts of each Class Member in accordance with the Court-approved Plan of Allocation and within IRS restrictions. In addition, American deposited $4.45 million worth of shares of American Airlines Group, Inc. stock into the Settlement Fund, to be liquidated and dispersed to qualifying class members at the direction of Lead Class Counsel.

SUMMARY OF THE CLAIMS

The Complaint alleged that the Plan failed to provide pilots with, and the fiduciaries of the Plan failed to ensure that pilots received, pension contributions for periods of military leave based on each pilot’s own 12-month average earnings before the period of military leave, as required by USERRA and the terms of the Plan Document.  As a result, the Complaint alleged that these American pilots did not receive the full amount of pension contributions that they were entitled to receive.  The Complaint also alleged that the fiduciaries failed to ensure that the Plan received the proper contributions under the terms of the Plan, and failed to take any action to collect the pension contributions owed to the Plan by American Airlines.

Under USERRA, 38 U.S.C. § 4318, employees who take military leave are entitled to receive pension contributions covering the periods when they serve in the United States Armed Forces.  When an employee’s compensation is not “reasonably certain,” USERRA requires that pension contributions be based on the employee’s average earnings for the 12-month period preceding any military leave.  The Complaint alleged that the earnings of the American pilots were not reasonably certain and their pension contributions should have been based on their own average earnings from the 12-month period prior to their military leave.  The Complaint alleged that the terms of the Plan incorporated these provisions of USERRA, but in practice the Plan and its fiduciaries failed to follow USERRA or the terms of the Plan.