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Hedman v. Northwest Airlines, Inc.: US District Court : LABOR LAW | ARBITRATION - Railway Labor Act applies; ERISA claims dismissed for lack of jurisdiction

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Jan Hedman,
Plaintiff,
MEMORANDUM OPINION
v. AND ORDER
Civ. No. 07-1847 ADM/RLE
Northwest Airlines, Inc.,
Defendant.
______________________________________________________________________________
James W. Balmer, Esq., Falsani, Balmer, Peterson, Quinn & Beyer, Duluth, MN, argued on
behalf of Plaintiff.
Timothy R. Thornton, Esq., Briggs and Morgan, P.A., Minneapolis, MN, argued on behalf of
Defendant.
______________________________________________________________________________
I. INTRODUCTION
On April 4, 2008, the undersigned United States District Judge heard oral argument on
Defendant Northwest Airlines, Inc.’s (“Northwest”) Motion to Dismiss For Lack of Subject
Matter Jurisdiction [Docket No. 17]. In his Complaint [Docket No. 1], Plaintiff Jan Hedman
(“Hedman”) asserts claims under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. §§ 1001-1461. For the reasons set forth below, Northwest’s Motion is
granted.
II. BACKGROUND
The Complaint alleges that for an unspecified time period prior to August 23, 2004,
Hedman was employed by Northwest. Compl. ¶ 5. Since August 23, 2004, Plaintiff has been
unable to work because he has spondylitis. Id. ¶ 5.
Hedman has not disputed Northwest’s assertion that the Aircraft Mechanics Fraternal
Association (“AMFA”) represented Hedman while he was employed by Northwest. Def.’s
1 The Court may consider documents that are central to Hedman’s Complaint without
converting Northwest’s Motion to Dismiss into a motion for summary judgment. Stahl v. Dep’t
of Agric., 327 F.3d 697, 700-01 (8th Cir. 2003).
2 Hedman’s Complaint also named CIGNA Companies as a defendant. Hedman
subsequently stipulated to dismissal without prejudice of CIGNA Companies. Stipulation
[Docket No. 7]; Order of Dismissal [Docket No. 8].
2
Mem. in Supp. of Mot. to Dismiss [Docket No. 19] at 2. During all relevant times, the
relationship between Northwest and AMFA was governed by a collective bargaining agreement
(“CBA”) entitled the “Agreement Between Northwest Airlines Inc. and Aircraft Mechanics
Fraternal Association” (the “Northwest-AMFA CBA”). Brodin Aff. [Docket No. 20] Ex. 1.1
Hedman participated in the Northwest Airlines Pension Plan for Contract Employees (the
“Pension Plan”). Id. Ex. 2; Compl. ¶ 5. The Pension Plan provides a disability retirement
pension for certain participants whose employment terminates because of a disability, which is
defined as a “total and permanent disability which renders the Participant incapable of any
employment with the Employer.” Brodin Aff. Ex. 2 at §§ 1.2.8, 3.3.1.
After he was no longer able to work, Hedman filed a claim for disability retirement
benefits under the Pension Plan. Compl. ¶ 8. On December 23, 2005, Northwest denied
Hedman’s claim. Id. On April 10, 2007, Hedman filed this Complaint in federal court alleging
that Northwest2 violated ERISA because: (1) Northwest’s decision “was made under palpable
conflict of interest . . . and involved serious procedural irregularities; (2) Northwest “violated the
standards and procedures under [the Pension Plan] and claims-handling policies and practices;”
and (3) Northwest’s decision “was wrongful, arbitrary, contrary to the terms of the plan, contrary
to law, and unsupported by medical and vocational evidence.” Id. ¶¶ 4, 9-11.
3
III. DISCUSSION
A. Standard of Review
Rule 12(b)(1) of the Federal Rules of Civil Procedure provides that a party may move to
dismiss a complaint for lack of subject matter jurisdiction. On a motion to dismiss under Rule
12(b)(1), a defendant may challenge the complaint on its face, or the defendant may contest the
truthfulness of the alleged facts. Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990).
Here, Northwest challenges the facial validity of the Complaint. Thus, the Court “restricts itself
to the face of the pleadings, and the non-moving party receives the same protections as it would
defending against a motion under Rule 12(b)(6).” Id. (citations omitted). In considering a
motion to dismiss under Rule 12(b)(6), the pleadings are construed in the light most favorable to
the nonmoving party, and the facts alleged in the complaint must be taken as true. Hamm v.
Groose, 15 F.3d 110, 112 (8th Cir. 1994); Ossman v. Diana Corp., 825 F. Supp. 870, 879-80 (D.
Minn. 1993). Any ambiguities concerning the sufficiency of the claims must be resolved in
favor of the nonmoving party. Ossman, 825 F. Supp. at 880. “A motion to dismiss should be
granted as a practical matter . . . only in the unusual case in which the plaintiff includes
allegations that show on the face of the complaint that there is some insuperable bar to relief.”
Frey v. City of Herculaneum, 44 F.3d 667, 671 (8th Cir. 1995).
B. Subject Matter Jurisdiction
Northwest argues that the Railway Labor Act (“RLA”), 45 U.S.C. § 184, divests this
Court of subject matter jurisdiction. “The RLA requires air carriers and unions to establish a
system board of adjustment . . . to resolve all ‘disputes . . . growing out of . . . the interpretation
or application of agreements concerning rates of pay, rules, or working conditions.’” Jenisio v.
4
Ozark Airlines, Inc., 187 F.3d 970, 972-73 (8th Cir. 1999) (quoting 45 U.S.C. § 184). These
disputes, known as “minor disputes,” “must be resolved only through the RLA mechanisms,
including the carrier’s internal dispute-resolution processes and an adjustment board established
by the employer and the unions.” Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 253 (1994).
“There is a presumption that disputes are minor and thus arbitrable.” Bloemer v. Northwest
Airlines, Inc., 401 F.3d 935, 939 (8th Cir. 2005). “‘Despite [ERISA’s] express provision
allowing suits over the coverage and application of [employee benefit] plans to be brought in
federal court, ERISA was not intended to, nor did it, [supersede] the mandatory arbitration
provisions of the Railway Labor Act.’” Bowe v. Northwest Airlines, Inc., 974 F.2d 101, 103
(8th Cir. 1992) (quoting Beard v. Carrollton R.R., 893 F.2d 117, 123 (6th Cir. 1989)) (first two
alterations in original).
In Jenisio v. Ozark Airlines, Inc., the Eighth Circuit held that “[t]he RLA’s arbitration
requirement applies to pension disputes . . . if the pension is (1) itself a CBA or (2) maintained
pursuant to a CBA.” 187 F.3d at 973. “A pension plan is maintained pursuant to a CBA when it
is incorporated by reference in that CBA.” Id. A CBA that merely mentions a pension plan does
not incorporate the pension plan by reference. Id. Instead, the references in the CBA must
effectively incorporate the pension plan. Id. The Jenisio court held that the pension plan at issue
was incorporated by reference into a CBA because: (1) the CBA set forth material amendments
to and elements of the pension plan, (2) the pension plan referenced the CBA, and (3) the
language of the CBA indicated that the employer and the union “bargained for the amendments
to the Plan, if not for the Plan in its entirety.” Id. at 973-74.
The facts of the instant case are indistinguishable from Jenisio. The Northwest-AMFA
5
CBA sets forth material amendments to the Pension Plan, including new benefit levels, escalator
provisions, and early retirement options. Brodin Aff. Ex. 1 at A.5-A.7, A.20-A.21.
Additionally, the Pension Plan itself references the Northwest-AMFA CBA. The Pension Plan
states in part that a Northwest employee becomes a “participant” on the first date the “employee
is employed in Recognized Employment.” Id. Ex. 2 at § 2.1. “Recognized Employment” is
defined in relevant part as “all services performed for the Employer by an individual who is in a
unit of employees whose terms and conditions of employment are subject to a collective
bargaining agreement . . . which collective bargaining agreement provides for the inclusion of
that individual in this Plan . . . .” Id. Ex. 2 at § 1.2.24. The Pension Plan’s grievance procedure
also refers to the Northwest-AMFA CBA. Id. Ex. 2 at § 7.3.3 (“Any claim for benefits not
resolved in accordance with the above procedures shall be subject to the System Board of
Adjustment processes of the collective bargaining agreement.”). Further, the language of the
Northwest-AMFA CBA states that Northwest and AMFA agreed, “by collective bargaining,” to
amend the Pension Plan. Id. Ex. 1 at A.5, A.20.
Based on these facts, the Court concludes that the Pension Plan was maintained pursuant
to the Northwest-AMFA CBA. Therefore, Hedman’s pension dispute is a minor dispute subject
to the RLA’s arbitration requirement. As a result, this Court lacks subject matter jurisdiction.
Hedman’s arguments to the contrary are unpersuasive. At oral argument, Hedman’s
counsel argued for the first time that the Eighth Circuit’s decision in Bloemer supports the
argument that Hedman’s pension dispute is not a minor dispute under the RLA. However,
nothing in Bloemer supports Hedman’s attempt to escape the RLA’s mandatory arbitration
requirement.
6
In his Memorandum in Opposition to Northwest’s Motion to Dismiss [Docket No. 23],
Hedman contends that Northwest waived its subject matter jurisdiction argument because
Northwest did not notify Hedman of his right to arbitration when it denied his disability benefits
claim in December 2005. However, assuming arguendo that Northwest explicitly consented to
federal subject matter jurisdiction, its consent would be ineffectual because “[p]arties to an
agreement cannot create federal subject matter jurisdiction by consent.” Bowe, 974 F.2d at 103-
104.
In the alternative, Hedman requests that this Court compel the system board of
adjustment to arbitrate his claim despite the fact that the deadline specified by the Pension Plan
for requesting arbitration has passed. Brodin Aff. Ex. 2 § 7.3.3 (discussing arbitration before the
system board of adjustment); Ex. 1 at 13.8-13.10 (specifying procedures and deadlines for
arbitration). However, because of the RLA this Court lacks subject matter jurisdiction to compel
the system board of adjustment to toll the deadline and arbitrate Hedman’s claim. In order to
challenge Northwest’s denial of disability benefits, Hedman must follow the grievance
procedures mandated by the RLA, including a request that the system board of adjustment
arbitrate his claims. Judicial review of the system board of adjustment’s decision will be limited
to due process violations and the limited parameters specified by 45 U.S.C. § 153(q). Goff v.
Dakota, Minn. & E. R.R. Corp., 276 F.3d 992, 997 (8th Cir. 2002).
7
IV. CONCLUSION
Based upon the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Defendant Northwest Airlines, Inc.’s Motion to Dismiss For Lack of
Subject Matter Jurisdiction [Docket No. 3] is GRANTED.
LET JUDGMENT BE ENTERED ACCORDINGLY.
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: April 21, 2008.
 

 
 
 

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