American Airlines Pilots Seek Approval of $6M Pension Settlement

Parties to a dispute over American Airlines pilots’ pension benefits are seeking to wrap up litigation with a $6.2 million class action settlement.

The plaintiffs filed their unopposed motion for final settlement approval on Jan. 9. Attorneys for the plaintiff Class say the settlement, consisting of both stock transfers and cash payments, should yield a total settlement fund of $6.2 million to over 1,270 American Airlines pilots.

Class counsel says the settlement amount is more than enough to cover the total amount of the Class Members’ losses.

Lead plaintiff James Allman filed this American Airlines class action lawsuit in January 2014. He alleged American Airlines failed to make all the pension contributions required by law to pilots who took long-term military leave of 30 days or more since 1997.

Allman claimed the airline’s calculation of contributions was unlawfully inconsistent with the legally-mandated calculations in the Uniformed Services Employment and Reemployment Rights Act, or USERRA. He also raised claims under the Employee Retirement Income Security Act, or ERISA.

In April 2014, the parties agreed to put litigation on hold while they worked out a settlement. The court granted the plaintiff’s unopposed motion for Class certification in March 2016.

After extensive negotiation and informal discovery, the parties reached a final settlement agreement this past July. The court granted preliminary approval of the settlement in August.

Under terms of the American Airlines settlement, most of the settlement value for Class Members will come from about 136,000 shares of stock in American Airlines Group Inc. Class counsel plans to sell the stock shortly after it’s received from American Airlines.

The parties estimate that at current prices, the settlement fund will receive at least $5.7 million from the stock transfer. The settlement also provides for a cash payment of $500,000.

Class counsel notes that the American Airlines settlement is an excellent deal for Class Members.

The settlement amount exceeds even the highest estimates of the plaintiff Class’s losses. The total recognized claims of all Class Members are estimated to be just over $3.2 million. Accounting for lost interest at a rate of eight percent increases the estimate to $5.1 million – still lower than the total value of the settlement.

Counsel estimates that each Class Member will receive 100 percent of their recognized claims even after other costs associated with the settlement are accounted for.

The attorneys note that no Class Members have objected to the settlement. One Class Member opted out, and one other requested that American Airlines pay for attorneys’ fees.

The certified plaintiff Class covers American Airlines pilots who since 1997 took long-term military leave while subject to the contested pension policy.

The Class of pilots are represented by attorneys Matthew Z. Crotty of Crotty & Son Law Firm PLLC, Peter Romer-Friedman of Outten & Golden LLP, R. Joseph Barton and Jason M. Leviton of Block & Leviton LLP, and Thomas G. Jarrard of the Law Office of Thomas Jarrard PLLC.

The American Airlines Military Leave Pension Contribution Class Action Lawsuit is James Michael Allman v. American Airlines Inc. Pilot Retirement Benefit Program Variable Income Plan, et al., Case No. 1:14-cv-10138, in the U.S. District Court for the District of Massachusetts.