October 27, 2015
Today, we have taken the following actions on behalf of our American Airlines Flight Attendants clients:
-We have sent a letter setting forth our clients demands to American Airlines, placing the company on notice of our clients’ claims, and demanding the preservation of all evidence in connection with this matter. The text of the letter is reprinted directly below. A PDF copy of the letter can also be viewed and downloaded at this link.
-We have issued a Press Release announcing our investigation and advocacy efforts in this case. The text of our Press Release is reprinted directly below the letter to the company, on this page. A PDF copy of the Press Release can also be viewed and downloaded at this link.
LETTER TO AMERICAN AIRLINES ON BEHALF OF 1300+ FLIGHT ATTENDANTS
Mildenberg Law Firm, P.C.
Attorneys at Law
1735 Market Street
Philadelphia, PA 19103
Tel (215) 545-4870
Fax (215) 545-4871
October 27, 2015
Paul Jones, Esquire
Senior Vice President and
4333 Amon Carter Boulevard
Fort Worth, TX 76155
American Airlines Flight Attendants Claims Investigation for 1,300+ American Airlines Flight Attendants
Notice of Claims and Demand to Preserve Evidence
Dear Mr. Jones:
This letter is written to you as General Counsel of American Airlines, but the content of it is directed to Doug Parker, Chairman and CEO of the Airline.
Please be advised that I have been retained by over 1,300 American Airlines Flight Attendants to advocate on their behalf, investigate their claims and to file complaints with the United States Department of Justice and the United States Department of Labor as necessary.
It is outrageous that as American Airlines reports record profits, and top executives cash out on million dollar stock options and golden parachute plans, the airline’s Flight Attendants—who are most responsible for customer interaction—have had their benefits restricted and have lost all of their profit-sharing in the company.
We can argue about how it happened, and the propriety of the negotiating process that my clients believe involved collusive meetings between American CEO Doug Parker, American President Scott Kirby, and former APFA President Laura Glading, and her family member, American Airlines Treasurer Thomas Weir, or we can get right down to the facts. Our clients believe that these negotiations were wholly inappropriate, and resulted in a collusive, harmful relationship that contributed to the company’s forced extraction of unfair wage concessions, including but not limited to the termination of the Flight Attendants’ traditional, customary, well-deserved and well-earned profit-share in the company. It is estimated that over the six years of their imposed contract, American Airlines Flight Attendants will have lost in excess of $100 Million in profit share.
Our clients’ former union President, Ms. Glading, has now resigned from her position (under threat of recall). Our Flight Attendant clients, however, remain exceedingly disturbed and disappointed with Mr. Parker’s conduct in the negotiations, as well as his steadfast refusal to recognize that Flight Attendants, just as much as corporate executives, deserve to share in the profits of the company. Our clients note that Flight Attendants have had profit-sharing at American Airlines since days immemorial—until Doug Parker showed up, that is. CEO Parker has stripped the Flight Attendants of their customary and traditional profit-share in the corporation, and has done so in an insulting manner.
For instance, CEO Parker’s statement concerning his views on profit-sharing in 2014 was a complete insult to the Flight Attendants and to all employees and trade groups of the airline. Profit-sharing, Mr. Parker said, is “just not the right way to pay” our “employees that don’t have that much impact on the daily profits.” Finger, Richard. More Labor Troubles at American Airlines, Huffington Post Business, 12/1/2014. The arrogance of this statement is shocking. Mr. Parker has shared in the profits of American Airlines and cashed out stock options in June, 2015, alone, worth $4.1 Million. Maxon, Terry. American Airlines CEO Dough Parker nets $4.1 million in stock sale ($2.4 million after tax withholdings), Dallas Morning News, Airline Biz Blog, June 22, 2015. Tom Horton, former CEO of American who agreed to the merger with US Airways that brought Doug Parker in as CEO, received a severance worth $17 Million. Martin, Hugo. American Airlines CEO to get $17 million severance package. Los Angeles Times, December 11, 2013.
Special retirement plans and benefits are provided to corporate executives, while Flight Attendants are starved of their profit-share, and insulted along the way. A great many Flight Attendants of American Airlines have, according to everything I have heard from my multitude of clients, lost all confidence in Doug Parker as a leader. This is not the way good executives behave, by insulting employees, and taking the one thing that gives them the most pride in their employment: a share in the success. Profit-sharing was a primary source of pride for our Flight Attendants—pride of ownership—that Mr. Parker has cruelly insisted on taking away. In the process, he rubbed salt into their wound with his inadvisable comments.
An undesirable contract was imposed on the flight attendants in arbitration at the end of 2014 and then Mr. Parker, in a purported show of “cooperation,” agreed to restore some terms of the previous offer, and offered a slight pay raise, but still withheld all profit-sharing. These crumbs from Mr. Parker’s table are another insult to our Flight Attendants, who well understand that Mr. Parker has taken their profit-share, and pushed them into a corner. My clients demand to be treated with dignity, respect and fairness, and seek the restoration of their customary and usual terms of employment. Most airlines comparable to American pay profit-sharing. Delta Airlines recently paid $1 Billion in profit-sharing benefits to employees. Employees earn more than $1 billion in profit sharing for 2014 performance. Press Release, Delta News Hub, February 113, 2013. Delta’s employees retain that pride of ownership, while American Airlines Flight Attendants have been made to feel like the unwelcome guest at Doug Parker’s party. Instead of sharing the success, Mr. Parker cashes in his own stock options while his compensation soars during this time of record profits. See, e.g., Martin, Hugo. American Airlines reports record profits, again. Los Angeles Times, October 12, 2015 (reporting record earnings of $1.7 Billion for the third quarter). Of great concern is the process by which profit sharing and labor rights were stripped from the flight attendants as a result of, in part, my clients believe, collusive negotiations with my clients’ former union President. On behalf of my clients, this selfish unfairness must come to an end.
The unprecedented outpouring of support for this cause, frankly, is inspiring. So many clients have shared stories of how the cuts to their wages and elimination of profit share has impacted their daily lives, to the point where many new hires are left with absolutely nothing at the end of the month. From senior, active Flight Attendants, to retirees, to new hires, a new movement for employment justice and fairness has taken shape. The viral nature of the complaints, disappointment, discontent, and criticism, is a sign that these are serious, heartfelt issues, that impact the efficiency and employee morale of American Airlines, and specifically, our Flight Attendants, and are likely to have a material impact upon the view of management’s handling (or mishandling) of the integration of the merged airline.
Our Flight Attendant clients have reached out for legal assistance and demand fairness and justice. They will not rest until they demand that Doug Parker, and his US Airways team, be held accountable for any unfair actions and benefits lost. Some of the key demands of our clients for answers include the following:
- Our clients demand to know why and how the Flight Attendants were forced to give up their negotiating rights in favor of binding arbitration, when this was never required. Who made this agreement and what conversations and meetings were held concerning the original proposal of this agreement? Who attended those meetings and were any parties related to former union President Laura Glading? Were any family relationships disclosed at the time of the first meeting, which apparently was a secret meeting?
- Our clients have a series of concerns with the negotiating process and representations that were made by corporate executives along the way. Doug Parker claimed the Flight Attendants would receive an “industry leading contract.” Our clients were presented with a take-it-or-leave-it proposal: either agree to our contract proposals, and lose your profit-sharing and other benefits, or go to arbitration, where you will be certain to get less. The actual voting members of the Flight Attendants’ union voted down the proposal, and a contract much worse was in fact imposed upon the membership. What meetings were held to negotiate this provision guaranteeing American Airlines that it would win either way? Traditionally, if the proposal is rejected, negotiations continue, and if no resolution is reached, after complying with all relevant procedures, unions are authorized to strike. What benefits were provided in connection with this concession? Was this concession discussed at the first secret meeting? Did American Airlines then-CEO Tom Horton and US Airways’ former CEO Doug Parker secretly discuss a merger proposal well before the bankruptcy was filed, and did the US Airways executives, including but not limited to CEO Parker, gain knowledge or inside information that in any way impacted any party’s bargaining position with our clients’ union? According to published reports:
Horton said he initiated talks with Parker about a possible merger in September 2011, shortly after American announced its blockbuster airplane deal for 460 Boeing and Airbus jets, with options for 465 more.
Horton still won’t say where their first secret talk took place, but The Associated Press reported that it was at an exclusive gathering of top airline executives known as Conquistadores del Cielo, or conquerors of the skies. Industry execs like to keep the annual event hush-hush because outsiders might think they’re all cavorting with the enemy.
Horton, who was American Airlines’ president at the time, outlined American’s strategy and US Airways’ possible role in that, and then told Parker to stay tuned.
- Was American’s Last Best Final Offer (“LBFO”) and US Airways’ Conditional Labor Agreement and Bridge Agreement proposed with unspoken cooperation between American and US Airways, in light of the upcoming merger? We are investigating whether US Airways executives were “pulling the strings” behind American’s bankruptcy and labor negotiations during the negotiations.
- Our clients demand to know how and why their former union President was provided by American Airlines with A5 travel benefits, including first class positive travel space for life for her and her family, in connection with her retirement. Was this benefit promised to her during the contract negotiations wherein she became a key player in the merger and in advocacy for union concessions including loss of profit share? This benefit is worth millions of dollars in travel benefits. It is worth noting that many retired Flight Attendants take with them into retirement only basic, standby travel passes, not positive space passes that allows the holder to bump revenue paying customers. And certainly not positive space first class passes. How and why is this payment of special, valuable non-monetary benefits appropriate?
- Our clients demand to know the details of all meetings held by Doug Parker and his team wherein any conditions or proposals concerning the restriction of their contract benefits were discussed with third parties, including Tom Horton or other executives of the pre-merger American.
- Our clients demand to know the details of all meetings wherein American Treasurer Thomas Weir discussed any of these matters with his cousin, the former union President, or CEO Parker, including but not limited to the Conditional Labor Agreement, the Last Best Final Offer, and any other plans or proposals concerning their contract and the potential merger between American Airlines and US Airways, and including but not limited to request for silence as to the proposal for former CEO Tom Horton’s $20 Million severance benefit or any other “executive compensation” terms or exculpations in connection with the merger and the conditional or final labor agreements.
- Why, my clients wish to know, did the principal players involved in this process apparently receive handsome personal benefits, to the exclusion of the Flight Attendants?
Moreover, our research has uncovered cases that support our clients’ view that compliance with the Railway Labor Act (“RLA”) is called into question. Payments or benefits provided to the union or its officials can violate the proscription against the carrier making financial contributions or providing financial assistance to any union or union official. We are also investigating whether any payment of benefits constituted an offense pursuant to Section 152, Tenth, thereof, or otherwise violated our clients’ rights.
The RLA, Section 142, Fourth, provides, in pertinent part, as follows:
it shall be unlawful for any carrier to interfere in any way with the organization of its employees, or to use the funds of the carrier in maintaining or assisting or contributing to any labor organization, labor representative, or other agency of collective bargaining, or in performing any work therefor, or to influence or coerce employees…. Provided, That nothing in this chapter shall be construed to… prohibit a carrier from furnishing free transportation to its employees while engaged in the business of a labor organization.
45 USC 152, Fourth.
Section 152, Tenth, of the same act sets forth criminal penalties for violations of Section 153, Fourth, as follows, in pertinent part:
The willful failure or refusal of any carrier, its officers or agents, to comply with the terms of the… fourth… paragraph of this section shall be a misdemeanor, and upon conviction thereof the carrier, officer, or agent offending shall be subject to a fine of not less than $1,000, nor more than $20,000, or imprisonment for not more than six months, or both fine and imprisonment, for each offense, and each day during which such carrier, officer, or agent shall willfully fail or refuse to comply with the terms of the said paragraphs of this section shall constitute a separate offense. It shall be the duty of any United States attorney to whom any duly designated representative of a carrier’s employees may apply to institute in the proper court and to prosecute under the direction of the Attorney General of the United States, all necessary proceedings for the enforcement of the provisions of this section, and for the punishment of all violations thereof and the costs and expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States….
45 USC 152, Tenth.
Although paragraph Fourth of the RLA contemplates provision of free travel to union officials “while engaged in the business of a labor organization,” 45 USC 152, Fourth, the million dollar A5 first class travel benefits were provided to our clients’ former union President for her retirement, when she is no longer “engaged in the business of a labor organization.” Id. What is the legal standing for this significant financial benefit conferred upon a union official who advocated for concessions and restrictions in our clients’ contract, to, from our clients’ perspective, their detriment and to the benefit of the carrier?
Our clients also question the payment of sums of over $3 Million dollars by American Airlines to the Union’s financial advisors for work undertaken with respect to the bankruptcy and merger. At least one court has held that such payments can call into question compliance with RLA Section 142, Fourth, violation of which, again, constitutes a criminal act under the RLA, Section 142, Tenth. We are investigating whether these or any other improper payments or benefits constitute grounds for declaring the resulting agreements invalid. See, e.g., Barthelemy v. Air Lines Pilots Association, et al., 897 F.2d 999 (9th Cir. 1990).
In Barthelemy, the court held, with reference to the ban on payments to union officials or financial assistance of the union, that there “is no question that this provision applies to air carriers such as TWA.” Id., 899 F. 2d at 1013 (citing 45 USC 181). Although the court ultimately found in that particular case that the investment banking fees paid by TWA to the union in connection with the merger did not violate the RLA, that holding was based upon the fact that the union’s investment banker fees of $1.25 million was in the nature of a contingency agreement for financial advisement relating to the merger, subject to consummation thereof. In the instant case, in both pre-merger American Airlines documents relating to the LBFO, including but not limited to the Settlement Consideration and Bankruptcy Protection Letter of August 22, 2012, as well as the US Airways documents related to the Conditional Labor Agreement and Bridge Agreement, which also incorporated the Bankruptcy Protection Letter, the carrier agreed to payment of millions of dollars of the union’s investment banking fees, which, upon information and belief, were not contingent upon any success of a proposed merger, but were terms offered and negotiated to induce our clients’ union to support the relevant contracts. Moreover, upon information and belief, it appears the fees paid to the union’s financial advisors in this case were not the kind of customary investment banker fee referenced in the Barthelemy case, i.e, based upon the value of the merger benefits, but were (or were supposed to be) payment of fees being charged to the union for hourly services provided in connection with the bankruptcy and contract negotiations.
Our clients question the propriety and legality of these payments and benefits received in connection with these transactions. Our clients believe that these payments and benefits to their union and its President created perverse incentives for the union to support and advocate for the restricted contract benefits. According to one author, Ms. Glading was among those who “played the most prominent roles in getting the creditors to back the deal.” Reed, Ted; Reed, Dan. American Airlines, US Airways and the Creation of the World’s Largest Airline, McFarland & Co. Publishers, 2014.
Another reporter has succinctly summarized these concerns:
At least in the case of the flight attendants[,]… I have gotten some feedback that many are less than happy about the job that APFA… [is] doing representing their interests. Did labor have a strong enough voice at the table? All three unions knew about and approved the $20 million bonus for Tom Horton. All three unions readily agreed to place language in the labor agreements “gagging” employees from complaining about excessive management bonuses. Some are of the opinion that inserting “gag” order language was a quid pro quo for the American Airlines reimbursing APFA $5 million for bankruptcy financial consultants and $2 million to pay investment banking firm Jefferies & Co….
Top management at all the unions receives a designation A-5 travel pass. With this perk, APFA president Laura Glading and her family can travel first class anyplace, anytime and have priority that can bump a full fare passenger. Ms. Glading can retire at the end of her term with this benefit intact. Her predecessor… retired with A-5 travel. At the time it was kept secret from union membership. Why keep it hidden if there is nothing underhanded going on.
Woven all together, a case can be made for an incestuous relationship between union management and executives at American Airlines…. With these “cushy” jobs does there exist a lack of incentive for these agents of the workers to fight their hardest for them. Judging by the results of the latest rounds of labor negotiations, it is at least a possibility.
To the extent the current contract was a result of any improper collusion, conduct or violation of the Railway Labor Act, our clients demand that all restrictions of their benefits and profit-share be restored, immediately, and intend to seek intervention of the United States Departments of Justice and Labor.
There is a fundamental lack of trust at this point that must be addressed by positive communications and good faith movement by the company if there is any chance of repairing the relationship. You should know that as important as the Flight Attendants were through their President’s support of CEO Parker in achieving the merger, is as important as they remain today as an essential component to a successful integration. In the same manner in which our clients demanded, and achieved, the exit of their union President, barring positive developments, I am quite certain that they are prepared to demand the removal of Doug Parker as the CEO of American Airlines. An airline cannot thrive with thousands of dissatisfied Flight Attendants who are humiliated and insulted by the CEO. How many more millions of dollars of profit must the CEO make, personally, before he realizes that his plans to take profit-sharing and other benefits from the Flight Attendants have now backfired?
If there is one thing that Flight Attendants demand, it is respect. The days of trampling on the rights of Flight Attendants without consequence to the responsible parties are over. A new day has dawned, one where American Airlines corporate executives will no longer dictate unjust employee losses without facing advocacy against their own interests and career security. Our clients will not be bullied into silence. Since American Airlines has declared war on its Flight Attendants, know that our Flight Attendants will fight back with all of their energy, hearts, and powers. The foolish idea to mess with the Flight Attendants of American Airlines has now taken its natural course. Be advised that our clients shall not rest until all appropriate avenues for advocacy and legal claims have been exhausted.
This letter is the result of our preliminary investigation and is without prejudice to any future factual or legal position our clients may take after further review. All rights, remedies, claims and defenses of our clients, at law and equity, are reserved, and none are waived by the contents of this letter. We acknowledge that the APFA is the recognized RLA bargaining agent for the Flight Attendants, and that any negotiated revision of the collective bargaining agreement must be negotiated with said union, a step our clients encourage and welcome. Notwithstanding this acknowledgment, our clients have retained us to make their demands and concerns known, to American Airlines, and relevant governmental agencies. Moreover, to the extent that any of our clients’ personal rights have been violated by collusion or illegality, our clients may have remedies available to them in addition to, and separate from, their rights and obligations as members of the APFA. Finally, on page 11 of this letter, please find a demand for preservation of evidence.
I look forward to hearing from you concerning this matter in the event that American Airlines wishes to take positive steps to discuss and address my clients’ complaints. Barring such positive steps in the very near future, I will and must advise my clients of their rights accordingly.
Thank you for your attention to this serious and most urgent matter.
Very truly yours,
MILDENBERG LAW FIRM, PC
BY: Brian R. Mildenberg, Esquire
EVIDENCE PRESERVATION REQUEST
This is to provide notice to American Airlines, and the executives of American Airlines and former US Airways, that they are not to destroy, conceal or alter in any manner whatsoever any or all evidence, documents, information, paper or electronic data and/or other tangible items pertaining or relevant to our client’s claims and issues set forth above.
This notice includes, but is not limited to, all data generated and/or stored on any and all computers and cellular telephones; all data stored on any and all other electronic storage media of any type such as hard disks, CD-ROMs, DVDs, flash drives, backup tapes, online backup services or any other storage media or service; all emails; all instant messages; all SMS text messages; all audio data such as voicemail, tape recordings; and all photographs, videos, writing or other documentary material of any nature. This notice also applies specifically, but without limitation, to any and all emails, instant messages, SMS text messages, email accounts, Internet addresses and/or Internet accounts, whether or not the data is stored locally on a computer or stored by a third party or on an Internet server or any other third party Internet service.
With regard to data or evidence created subsequent to the date of delivery of this letter, relevant evidence is not to be destroyed; whatever steps are appropriate to avoid destruction of evidence must be taken. It is anticipated that these items will be used or sought in evidence in forthcoming legal and/or administrative proceedings, claims, or investigations.
In order to assure that the obligation to preserve documents and things will be met, please forward a copy of this letter to any and all persons and entities with custodial responsibilities for the items referred to herein.
# # #
 Please be advised that Flight Attendants are so upset with American Airlines that over 1,300 Flight Attendants retained us in a period of approximately nine (9) days. This number will be revised as additional Flight Attendants continue to join in this demand for justice.
PRESS RELEASE OF OCTOBER 27, 2015
FOR IMMEDIATE RELEASE
RE: AMERICAN AIRLINES FLIGHT ATTENDANTS
CLAIMS INVESTIGATION ON BEHALF OF 1,300+ FLIGHT ATTENDANTS
OCTOBER 27, 2015
PHILADELPHIA, PA — In October, 2015, our law firm was contacted by Rock Salomon, a senior American Airlines flight attendant and union activist who, along with a group of concerned flight attendants, has challenged the conduct of the negotiations and deal making surrounding American Airlines’ merger with US Airways and related agreements made between US Airways, American Airlines, and the Association of Professional Flight Attendants (“APFA”), the American Airlines Flight Attendants union.
Mr. Salomon has raised important questions concerning several aspects of the merger negotiations and union agreements that were entered into by American Airlines and the APFA, which resulted in the Flight Attendants’ loss of profit sharing terms and other benefits in their contract with the merged airline, and purported to bind the flight attendants to the whims of binding arbitration instead of open market negotiation of contract terms. At the request of Mr. Salomon, our law firm has agreed to become engaged by American Airlines flight attendants seeking counsel in order to formally investigate these issues, advocate on behalf of those concerned, file complaints with the United States Department of Justice, and make legal demands to the airline.
Since the initial contact, over the past week, our law firm has been retained by over 1,300 (one thousand three hundred) American Airlines Flight Attendants. That number continues to increase each day. According to our clients, there is been a growing wave of resentment against American Airlines and CEO Doug Parker by Flight Attendants. In a short period of time we have witnessed an unbelievable outpouring of support for this cause.
Today, October 27, 2015, a letter was sent to American Airlines placing the company on notice of our clients’ claims, demanding reinstatement of their profit-sharing and other lost benefits, and requesting preservation of all relevant documents and other evidence. A copy of that letter is attached to this Press Release and is also available for review and download at our aviation law website, www.LawyerAirline.com.
Media inquiries can be directed to Brian R. Mildenberg, Esquire, at 215-545-4870, or firstname.lastname@example.org.