Krakowski et al v. American Airlines, Inc. et al

UNITED STATES BANKRUPTCY COURT 	FOR PUBLICATION
SOUTHERN DISTRICT OF NEW YORK
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In re: 	Chapter 11
AMR CORPORATION, et al., 	Case No. 11-15463 (SHL)
Reorganized Debtors. 	(Confirmed)
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JOHN KRAKOWSKI, KEVIN HORNER and
M. ALICIA SIKES,
Plaintiffs,
v. 	Adv. Pro. No. 16-01138 (SHL)
AMERICAN AIRLINES, INC., and ALLIED
PILOTS ASSOCIATION,
Defendants.
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MEMORANDUM OF DECISION
A P P E A R A N C E S:
JACOBSON PRESS & FIELDS P.C.
Counsel for John Krakowski, Kevin Horner and M. Alicia Sikes
168 North Meramec Avenue, Suite 150
Clayton, Missouri 63105
By: 	Allen P. Press, Esq.
Lee Seham, Esq.
O’MELVENY & MYERS LLP
Counsel for American Airlines, Inc.
Times Square Tower
7 Times Square
New York, New York 10036
By: 	Mark W. Robertson, Esq.
Sloane Ackerman, Esq.
-and-
400 South Hope Street
Los Angeles, California 90071
By: 	Robert A. Siegel, Esq.
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JAMES & HOFFMAN, P.C.
Counsel for Defendant Allied Pilots Association
1130 Connecticut Avenue, NW, Suite 950
Washington, DC 20036
By: 	Steven K. Hoffman, Esq.
Darin M. Dalmat, Esq.
Daniel M. Rosenthal, Esq.
SEAN H. LANE
UNITED STATES BANKRUPTCY JUDGE
Before the Court are the motions [ECF Nos. 14, 16]1 of the Defendants American
Airlines, Inc. (“American”) and Allied Pilots Association (“APA”) to dismiss the above-
captioned adversary proceeding. Plaintiffs John Krakowski, Kevin Horner, and M. Alicia Sikes
are former Trans World Airlines (“TWA”) pilots that are now employed by American. See
Complaint to Vacate Arbitration Award ¶¶ 2-4 [ECF No. 1] (the “Complaint”). Defendant APA
is the union that represents American’s pilots. See id. ¶ 6. The Plaintiffs seeks to vacate an
award in an interest arbitration conducted under the Railway Labor Act, 45 U.S.C. §§ 151 et seq.
(the “RLA”), to determine certain contractual rights under the collective bargaining agreement
between American and APA. The Plaintiffs allege that their due process rights to a fair
arbitration hearing were violated because of alleged bias on the part of the arbitrators.2
1 	Unless otherwise specified, references to the Case Management/Electronic Case Filing (“ECF”) docket are
to the above-captioned adversary proceeding.
2 	These parties have been engaged in extensive litigation over the years regarding this arbitration, a history
that has been set forth in numerous prior decisions of this Court spread out over three cases. See Krakowski, et al. v.
Am. Airlines, Inc., et al., Adversary Proceeding No. 13-01283 (SHL) (“Krakowski I”); Krakowski, et al. v. Am.
Airlines, Inc., et al., Adversary Proceeding No. 14-01920 (SHL) (“Krakowski II”); Krakowski, et al. v. Am. Airlines,
Inc., et al., Adversary Proceeding No. 16-01138 (SHL) (“Krakowski III”); see also Krakowski v. Am. Airlines, Inc.
(In re AMR Corp.), 2018 Bankr. LEXIS 1726 (Bankr. S.D.N.Y. June 12, 2018).; Krakowski v. Am. Airlines, Inc. (In
re AMR Corp.), 567 B.R. 247 (Bankr. S.D.N.Y. 2017); Krakowski v. Am. Airlines, Inc. (In re AMR Corp.), 538 B.R.
213 (Bankr. S.D.N.Y. 2015); Krakowski v. Am. Airlines, Inc. (In re AMR Corp.), 536 B.R. 360 (Bankr. S.D.N.Y.
2015); Krakowski v. Am. Airlines, Inc. (In re AMR Corp.), 2015 Bankr. LEXIS 1721 (Bankr. S.D.N.Y. May 19,
2015); Krakowski v. Am. Airlines, Inc. (In re AMR Corp.), 2014 LEXIS 2610 (Bankr. S.D.N.Y. June 3, 2014).
Mindful that this case—Krakowski III—is the last of the three related cases filed by the Plaintiffs, the Court did not
issue a decision on the Defendants’ current motions to dismiss this adversary proceeding until the Court had ruled
upon all previously filed motions in the related cases of Krakowski I and Krakowski II.
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The Defendants seek dismissal of the Complaint under Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6), asserting that the Plaintiffs lack standing to vacate the arbitration award,
the action is time-barred under the RLA and the Plaintiffs have failed to state a claim for which
relief can be granted. For the reasons set forth below, the Court grants the motions to dismiss
based on the Plaintiffs’ lack of standing and because the case is time-barred.
BACKGROUND
In November 2011, American filed for protection under Chapter 11 of the Bankruptcy
Code. See Compl. ¶ 15. As part of its reorganization, American sought and obtained approval
under Section 1113 of the Bankruptcy Code to abrogate its then-existing collective bargaining
agreement with APA (the “Old CBA”). See id. ¶ 20; see also In re AMR Corp., 477 B.R. 384,
454 (Bankr. S.D.N.Y. 2012); In re AMR Corp., 478 B.R. 599, 602 (Bankr. S.D.N.Y. 2012). The
Old CBA included a supplement, entitled Supplement CC, which modified American’s pilot
seniority list to incorporate former TWA pilots—including the Plaintiffs—that were brought into
the company when American acquired the assets of TWA in 2001. See Compl. ¶¶ 9-10.
Supplement CC stripped the former TWA pilots of much of the existing seniority that they had
held at TWA. See id. ¶¶ 11-12. To compensate for the loss of seniority, Supplement CC created
a “protective fence” that set aside a minimum number of Captain and First Officer positions at
the St. Louis base, for which former TWA pilots were given preferential bidding. See id. ¶ 13.
The Old CBA—including Supplement CC—was abrogated when the Debtors obtained the
Section 1113 relief in September 2012. See id. ¶ 20.
In December 2012, American and APA came to an agreement on a new pilot collective
bargaining agreement (the “New CBA”), which included a side letter of agreement numbered 12-
05 (“LOA 12-05”). See id. ¶¶ 21-22. During the process of negotiating the New CBA,
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American represented that it intended to close the St. Louis base and eliminate the protective
fence that had existed for the former TWA pilots. See id. ¶ 16. 	LOA 12-05 stated that “a
dispute resolution procedure is necessary to determine what alternative contractual rights should
be provided to TWA Pilots as a result of the loss of flying opportunities due to termination of
Supplement CC and the closing of the STL base.” LOA 12-05 at 1 (attached as Ex. 1 to APA
Mem. in Supp. of Mot. to Dismiss [ECF No. 14-3]); see also Compl. ¶ 22. Regarding the
process, LOA 12-05 provided that “the Company and APA will engage in final and binding
interest arbitration pursuant to Section 7 of the [Railway Labor Act]” in front of a panel
“consist[ing] of three neutral arbitrators who are members of the National Academy of
Arbitrators with Richard Bloch as the principal neutral.” LOA 12-05 at 1-2; see also Compl. ¶
24.
In January 2013, American and APA entered into a protocol agreement regarding the
arbitration (the “Protocol Agreement”). See Compl. ¶ 31. The Protocol Agreement stated that
the arbitration would “provide for party status at the hearings and for substantive presentations
by: (1) American Airlines, Inc.; (2) a representative committee of AA Pilots . . . and (3) a
representative committee of TWA Pilots. . . . APA participation as a party . . . shall not be for
the purposes of advocating a substantive position but to facilitate an orderly process and
resolution of the dispute.” Protocol Agmt. § 1 (attached as Ex. 2 to APA Mem. in Supp. of Mot.
to Dismiss [ECF No. 14-4]). 3 It further provided that “[w]hile party status for purposes of the
3 	While LOA 12-05 and the Protocol Agreement are not attached to the Complaint, they are referenced in the
Complaint and are integral to its allegations. See Compl. ¶¶ 22, 31-34, 66-71. Thus, these documents may properly
be considered when deciding these motions to dismiss. “[A] complaint is deemed to include any written instrument
attached to it as an exhibit or any statement or documents incorporated in it by reference. Moreover, when a
plaintiff chooses not to attach to the complaint or incorporate by reference a [document] upon which it solely relies
and which is integral to the complaint, the court may nevertheless take the document into consideration in deciding
the defendant’s motion to dismiss, without converting the proceeding to one for summary judgment.” Int’l
Audiotext Network v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) (internal citations and quotations omitted);
see also Stratte-Mcclure v. Stanley, 776 F.3d 94, 100 (2d Cir. 2015). All parties seem to concede as much given that
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Board’s hearing proceedings shall be as specified in Section 1 of the Agreement, the ‘parties’ as
to this Agreement and as used in the applicable Railway Labor Act provisions, shall be limited to
AA and APA.” Protocol Agmt. § 7. While the only parties to the arbitration were American and
APA, APA established two committees to present evidence and arguments on its behalf: the
APA AA Pilots Committee and the APA TWA Pilots Committee. See Compl. ¶ 38.
The Protocol Agreement also designated the members of the arbitration panel as
Arbitrator Bloch—previously named under LOA 12-05—and Arbitrators Stephen Goldberg and
Ira Jaffe. See Protocol Agmt. § 2; Compl. ¶¶ 25, 30. Arbitrator Goldberg is the president and
founder of Mediation Research & Education Project, Inc. (“MREP”), an arbitration and
mediation service focusing on labor/management disputes that serves as a referral service for its
more than 60 members. See Compl. ¶¶ 26-27. MREP is a non-profit, but does receive fees for
its services, as well as member contributions. See id. With respect to ex parte contacts, the
Protocol Agreement specified that “[t]he Board may conduct informal ex parte discussions to the
extent it deems such discussions useful in an attempt to obtain a voluntary resolution of the
dispute.” Protocol Agmt. § 4; see also Compl. ¶ 33.
The Protocol Agreement explicitly incorporated Sections 7, Third and Section 8 of the
RLA. See Protocol Agmt. § 7. As to the finality of any award issued by the arbitrators, the
Protocol Agreement provided that “[n]othing in this Agreement should be construed to require
AA or APA to file a copy of the Board’s award with a federal district court in order for the award
their papers make repeated references to these documents. See APA Mem. in Supp. of Mot. to Dismiss [ECF No.
14-2] at 1-2, 5, 9, 13, 15, 18, 21-23; Am. Mem. in Supp. of Mot. to Dismiss [ECF No. 16] at 1, 3, 8-9, 12-14; Pls.’
Combined Resp. to Defs.’ Mot. to Dismiss (the “Plaintiffs’ Response”) [ECF No. 19] at 2, 4-5; Am. Reply Mem. in
Supp. of Mot. to Dismiss [ECF No. 20] at 1, 3, 8, 10; APA Reply Br. in Supp. of Mot. to Dismiss [ECF No. 21] at 9,
14.
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to be final and binding. . . . The award shall be final and binding under Section 9 of the Railway
Labor Act.” Protocol Agmt. §§ 7-8.
The parties submitted their opening arbitration briefs in April 2013, and the arbitrators
held seven days of hearings from April through June 2013. See Compl. ¶¶ 39-40. One of
American’s principal witnesses during the arbitration was Mark Burdette. See id. ¶¶ 29, 42. The
arbitrators issued their opinion in July 2013, which the Plaintiffs assert most closely replicated
American’s proposal. See id. ¶ 43. American and APA then negotiated contract language based
on the arbitrators’ opinion. See id. ¶ 44. Mr. Burdette was one of America’s principal
negotiators during this process. See id. Issues arose during the drafting of the contract language,
and on September 12, 2013 the arbitrators issued a “Ruling on Contract Language.” Id. ¶ 45. A
corresponding supplement to the new CBA, entitled Supplement C, was then approved. See id.
It subsequently came to light that Mr. Burdette and Arbitrator Goldberg communicated
by email on an ex parte basis during the arbitration process. See id. ¶¶ 47-48. These
communications included, among other things, congratulations shared between the two upon
Arbitrator Goldberg’s appointment to the panel,4 discussions regarding Mr. Burdette becoming a
4 	On January 10, 2013, Mr. Burdette emailed Arbitrator Goldberg to congratulate him on being appointed to
the arbitration panel. See Compl. ¶ 48. Mr. Burdette also informed Arbitrator Goldberg of his likely involvement in
the arbitration proceedings. See id. Arbitrator Goldberg replied, “Thx for the note, but I’d rather see you there as a
member of the arbitration panel than as a witness. One of these days. . . .” Id.
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member of MREP,5 and Mr. Burdette’s subsequent MREP membership.6 See id. ¶¶ 47-53. After
the arbitrators issued their decision in the arbitration, Mr. Burdette also shared a mock award
with Arbitrator Goldberg that Mr. Burdette had drafted with respect to the LOA 12-05
arbitration.7 See id. ¶ 54. Arbitrator Goldberg did not disclose these communications to the
parties, nor did he share the fact that Mr. Burdette had become a member of MREP. See id. ¶¶
48, 50, 57.
It also came to light that Arbitrator Bloch had ex parte communications with Thomas
Reinert, American’s counsel in the arbitration, during which Arbitrator Bloch proposed a
possible settlement of the arbitration and asked Mr. Reinert to pass the proposal along to APA.
See id. ¶¶ 58, 59.8
5 	On March 21, 2013, Arbitrator Goldberg and Mr. Burdette exchanged additional emails. See Compl. ¶ 49.
Among other things, Mr. Burdette asked Arbitrator Goldberg, “You mentioned sometime back about training me
and putting me on the MREP panel. Is that still a possibility?” Id. Arbitrator Goldberg and Mr. Burdette then
discussed the logistics of Mr. Burdette receiving MREP training from Arbitrator Goldberg in Chicago. See id. Mr.
Burdette subsequently became a MREP member and attended training in Chicago. See id. ¶ 51.
During the March 21, 2013 email exchange, Arbitrator Goldberg and Mr. Burdette also discussed Edgar
James, APA’s attorney. See id. ¶ 50. Mr. Burdette commented that, “I think Ed James would gladly recommend
you [for mediation work] to Paul Jones [a lawyer for U.S. Airways],” to which Arbitrator Goldberg responded, “By
the way, I know that Ed [James] is a great fan of yours...He told me he thought you should be Senior V-P, HR (to
which I wholeheartedly agreed).” Id.
6 	On July 12, 2013, Mr. Burdette emailed Arbitrator Goldberg stating, among other things, “I will be sending
a voluntary contribution to MREP as suggested in the annual report.” Compl. ¶ 52. Arbitrator Goldberg responded,
“A contribution would be appreciated, but maybe you had better wait until you have some income!” Id.
7 	During the July 12, 2013 email exchange, Mr. Burdette stated that he had prepared a mock award that he
would share with Arbitrator Goldberg after the release of the arbitrator’s opinion. See Compl. ¶ 53. On July 22,
2013—the day the arbitrators issued the initial opinion—Mr. Burdette emailed his mock award to Arbitrator
Goldberg subsequent to the arbitrators issuing their opinion. See id. ¶ 54. On July 23, 2013, Arbitrator Goldberg
responded, “Looks to me like you’re as good an arbitrator as we are...maybe better!” Id. Arbitrator Goldberg also
explained his reasoning on one of the key points in the arbitration opinion, marking this paragraph of his email with
“[CONFIDENTIAL]” at the beginning and “[CONFIDENTIAL: WHAT IS IN THIS PARAGRAPH IS FOR
YOUR EYES ONLY.]” at the end. Id. Mr. Burdette responded, “Understood about confidentiality. Appreciate your
sharing the logic, but it goes no further.” Id.
8 	On May 17, 2013, Mr. Reinert emailed Arbitrator Bloch, asking Arbitrator Bloch to contact him. See
Compl. ¶ 59. A telephone call subsequently took place, following up on the settlement proposal. See id.
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The Plaintiffs assert that they were denied their due process rights to a fair hearing
because one or more of the arbitrators violated the Protocol Agreement and displayed bias or
hostility towards one of the parties. See id. ¶¶ 60-61. Citing to the communications and business
relationship between Arbitrator Goldberg and Mr. Burdette, the Plaintiffs contend that there was
a conflict of interest between Arbitrator Goldberg and Mr. Burdette or that a reasonable person
would believe that such a conflict of interest existed. See id. ¶¶ 61-65. Thus, the Plaintiffs
contend that Arbitrator Goldberg was impermissibly biased in favor of Mr. Burdette during the
proceeding. See id. The Plaintiffs also argue that the Protocol Agreement was violated because
Arbitrator Goldberg and Arbitrator Bloch conducted ex parte communications that were outside
the scope of what was permitted under the agreement. See id. ¶¶ 66-71. 	The Defendants
counter that the Plaintiffs lack standing to challenge an arbitration proceeding in which only the
union and employer were parties, and that the Complaint is time-barred because the applicable
statute of limitations under the RLA has run. The Defendants also contend that the Plaintiffs
allegations in the Complaint are insufficient to state a claim because the Plaintiffs fail to satisfy
the high standard for improper conduct that is necessary to overturn an arbitrator’s award.
DISCUSSION
A. The Plaintiffs Lack Standing to Challenge the Arbitration Award
The Defendants ask that the Complaint be dismissed under Federal Rule of Civil
Procedure 12(b)(1) for lack of subject matter jurisdiction. They argue that these individual
Plaintiffs lack standing to challenge the LOA 12-05 arbitration award because the Plaintiffs were
not parties to the arbitration. The Plaintiffs maintain that the RLA provides them with standing
to challenge the award.
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Federal Rule of Civil Procedure 12(b)(1), made applicable to bankruptcy proceedings by
Federal Rule of Bankruptcy Procedure 7012(b), provides for dismissal for lack of subject matter
jurisdiction, including a lack of standing. See Fed. R. Civ. P. 12(b)(1); Fed. R. Bankr. P.
7012(b); Tasini v. N.Y. Times, 184 F. Supp. 2d 350, 354 (S.D.N.Y. 2000); see, e.g., Fletcher v.
Convergex Grp., 164 F. Supp. 3d 588, 590 (S.D.N.Y. 2016). As the party seeking to invoke the
jurisdiction of the court, the plaintiff bears the burden of establishing subject matter jurisdiction.
See Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). Dismissal of a claim for lack
of subject matter jurisdiction is appropriate when the “court lacks the statutory or constitutional
power to adjudicate it.” Id. “When considering a motion to dismiss for lack of subject matter
jurisdiction . . . a court must accept as true all material factual allegations in the complaint.”
Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998). In addition, a court
“may consider affidavits and other materials beyond the pleadings to resolve the jurisdictional
question.” Margiotta v. Kaye, 283 F. Supp. 2d 857, 861 (E.D.N.Y. 2003).
The LOA 12-05 arbitration here was an “interest” arbitration, conducted pursuant to the
rules and procedures laid out in Section 7 of the RLA, 45 U.S.C. § 157. See LOA 12-05 at 1
(“[T]he Company and APA will engage in final and binding interest arbitration pursuant to
Section 7 of the RLA. . . .”). While Section 9 of the RLA authorizes challenges to arbitration
awards entered pursuant to Section 7, neither Section 7 nor Section 9 speak to the issue of
standing to challenge such awards. See generally 45 U.S.C. §§ 157, 159; see also Pls.’ Resp. at
6-7. But it is well established in this Circuit that “an individual employee represented by a union
[in a labor arbitration] generally does not have standing to challenge an arbitration proceeding to
which the union and the employer were the only parties.” Katir v. Columbia Univ., 15 F.3d 23,
24-25 (2d Cir. 1994); see also Shait v. Millennium Broadway Hotel, 2001 U.S. Dist. LEXIS
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6575, at *27 (S.D.N.Y. May 18, 2001); Duffy v. Legal Aid Soc’y, 2013 U.S. Dist. LEXIS 19456,
at *6-7 (S.D.N.Y. Feb. 12, 2013); Johnson v. Am. Arbitration Ass’n, 1999 U.S. Dist. LEXIS
5319, at *8 (S.D.N.Y. Apr. 15, 1999); Smith v. Wilson, 1997 U.S. Dist. LEXIS, at *9-10
(S.D.N.Y. Dec. 23, 1997); U.S. Postal Serv. v. Am. Postal Workers Union, 564 F. Supp. 545, 550
(S.D.N.Y. 1983). 9 This rule is meant to “effectuate the purposes behind federal labor statutes,
which require that the interests of particular individuals be subordinated to the interests of the
group at the contract-negotiation stage and beyond.” Mitchell v. Cont’l Airlines, Inc., 481 F.3d
225, 232 (5th Cir. 2007). The remedy for an individual is to instead pursue a duty of fair
representation claim against his or her union, should grounds exist to do so. See Katir, 15 F.3d at
24-25; see also Mitchell, 481 F.3d at 232.
The Court finds that the Plaintiffs’ action is foreclosed under this rationale. The
Plaintiffs acknowledge that the parties to the arbitration were American and APA, and that APA
established two committees—an AA Pilots Committee and a TWA Pilots Committee—to present
evidence and arguments during the arbitration. See Compl. ¶ 38; see also Protocol Agmt. §§ 1,
7; LOA 12-05 at 1. The Plaintiffs were not parties to the arbitration but were instead represented
by APA prior to the arbitration and by the TWA Pilots Committee during the arbitration.
The Plaintiffs argue that the RLA nonetheless grants them standing to challenge the LOA
12-05 arbitration award. The Plaintiffs assert that they have standing under Section 3 of the
RLA, 45 U.S.C. § 153. See Pls.’ Resp. at 6-7. Section 3 provides, in part:
9 	The Plaintiffs attempt to distinguish the cases cited above by the Defendants by arguing that many were
decided under the Federal Arbitration Act or the Labor Management Relations Act, not the RLA. But this
distinction has been rejected by other courts as meaningless. While there is not much case law on this issue in the
context of the RLA, the Court of Appeals for the Fifth Circuit labeled this exact argument to be “a distinction
without a difference,” noting that whatever statute the CBA in question was established under, “its existence is
premised on effectuating a key purpose behind federal labor statutes, viz., placing the interests of the group ahead of
the interests of the individual employees.” Mitchell v. Cont’l Airlines, Inc., 481 F.3d 225, 233 (5th Cir. 2007). The
Court finds the reasoning of these cases persuasive in light of the facts and public policy implications of this case,
which are further discussed below.
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[i]f an employee or group of employees, or any carrier, is aggrieved by the failure
of any division of the Adjustment Board to make an award in a dispute referred it,
or is aggrieved by any of the terms of an award or by the failure of the division to
include certain terms in such award, then such employee or group of employees or
carrier may file in any United States district court . . . a petition for review of the
division’s order.
45 U.S.C. § 153, First (q) (emphasis added). The Plaintiffs contend that they are a “group of
employees” that “is aggrieved by . . . the terms of an award,” and they claim standing under
Section 3. Pls.’ Resp. at 6.
But the fit is a poor one. Section 3 addresses challenges to “grievance” arbitration
awards, not awards issued in “interest” arbitrations conducted under Section 7 of the RLA. See
45 U.S.C. § 153, First (i) (disputes “growing out of grievances or out of the interpretation or
application of agreements concerning rates of pay, rules, or working conditions . . . may be
referred . . . to the appropriate division of the Adjustment Board. . . .”); In re Central R.R. Co.,
425 F. Supp. 1055, 1066 (D.N.J. 1976); The Railway Labor Act, Ch. 6.II.E.1 (Chris A.
Hollinger, ed., 3d ed. 2012) (interest arbitration procedures are governed by Sections 7, 8 and 9
of the RLA).
Interest and grievance arbitrations serve two distinct purposes. Interest arbitration is used
to resolve an impasse between parties during bargaining over the formation of a collective
bargaining agreement or certain specific contractual terms. In these circumstances, an arbitrator
settles the differences between the parties that have led to the breakdown in negotiations. See
The Difference Between Grievance and Interest Arbitration, Law. Missouri.edu (Jan. 24, 2019),
http://law.missouri.edu/arbitrationinfo/2016/01/07/the-difference-between-grievance-and-
interest-arbitration/. Thus, “[i]nterest arbitration, in effect, is a way to form a contract, either in
whole, or in part.” Barry Winograd, An Introduction to the History of Interest Arbitration in the
United States, 61 LABOR LAW J., 164, 165 (2010). In contrast, a grievance arbitration is a
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method of deciding disputes regarding the interpretation and application of the terms of a
collective bargaining agreement that is already in place. See id.; see also David S. Dederick,
CHAPTER: Labor Law, 55 GEO. WASH. L. REV. 1012, 1044 n.236 (1987) (“Arbitration of
bargaining impasses is generally known as ‘interest arbitration,’ to distinguish it from arbitration
concerning grievances and contract interpretations.”). Thus, an interest arbitration is used to
establish the terms of a CBA, while a grievance arbitration addresses whether there has been a
violation of a CBA or how a CBA should be interpreted. See Hr’g Tr. 9:5-11 (July 31, 2018)
[ECF No. 28]. Upon its creation, the RLA “sharply distinguished between interest and grievance
disputes and established separate procedures for their resolution.” Dennis R. Nolan and Roger I.
Abrams, American Labor Arbitration: The Early Years, 35 U. FLA. L. REV. 373, 386 (1983).
The Plaintiffs cite to no authority—and the Court has been unable to locate any—in
which a court has used Section 3 to grant individual employees standing to challenge the results
of an interest arbitration. The Plaintiffs cite to Bhd. of Locomotive Eng’rs v. Atchison, Topeka &
Santa Fe Ry. Co., 768 F.2d 914 (7th Cir. 1985) to support their argument that Section 3 is
applicable to interest arbitrations. But that case is distinguishable. In Atchison, the Court of
Appeals for the Seventh Circuit held that the judicial standard of review that was contained in
Section 3, First (q) of the RLA—which normally governs arbitration decisions by the National
Railroad Adjustment Board—should also apply to awards made by Public Law Boards. See
Atchison, 768 F.2d at 921; 45 U.S.C. § 153, First (q). The RLA was silent as to the standard of
review for awards issued by the Public Law Boards and the Court of Appeals acknowledged that
courts had assumed the standard of review was the same for both types of awards, noting that
“this must be right” because “[t]he Public Law Boards are intended to be substitutes for the
chronically overworked National Railroad Adjustment Board.” Id.
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But the Public Law Board and the National Railroad Adjustment Board both exist to
conduct grievance arbitrations. See Nolan & Abrams, American Labor Arbitration: The Early
Years, 35 U. Fla. L. Rev. at 387; Elgin, J. & E. R. Co. v. Burley, 325 U.S. 711, 726-27 (1945);
United Transp. Union v. Norfolk & W. R. Co., 754 F.2d 525, 526 (4th Cir. 1985).10 Thus, the
reasoning in Atchison does not provide this Court with any support for applying the procedures
for grievance arbitrations to interest arbitrations.11 Unlike the two types of boards addressed in
Atchison, grievance and interest arbitrations are clearly not mere “substitutes” for one another.
The distinction between the two types of arbitration is clear from the differing rules that
Congress enacted regarding challenges to grievance and interest arbitrations. For instance,
Congress has established a much shorter statute of limitations for challenges to interest
arbitrations. Compare 45 U.S.C. § 153, First (q) (establishing a two-year period for challenging
grievance arbitration awards), with 45 U.S.C. § 159, Second (establishing 10-day period for
challenging interest arbitration awards). The shorter limitations period clearly reflects
Congress’s desire to “ensure the speedy and conclusive settlement of disputes” in the context of
interest arbitrations. Catalano v. Brotherhood of Ry., Airline & S.S. Clerks, 348 F. Supp. 369,
10 	As one commentator explained the history:
The 1934 amendments addressed these grievance resolution problems by establishing a single
organization, the National Railroad Adjustment Board (NRAB), to settle grievances. Today the
NRAB functions in four divisions, each composed of representatives from management and labor.
Grievances can also be resolved outside the NRAB framework. Individual carriers and unions
have established various special adjustment boards and supplemental adjustment boards to lighten
the caseload in a NRAB division. In addition, amendments to the law in 1966 authorized
establishing ‘public law boards’ to further reduce backlog in the NRAB. Public law boards could
be created on request of either railroads or unions to resolve disputes otherwise referable to the
NRAB.
Nolan & Abrams, American Labor Arbitration: The Early Years, 35 U. Fla. L. Rev. at 387.
11 	No claims in Atchison were made under Section 7 of the RLA. The only two counts at issue in Atchison
were: (1) an alleged violation of Section 2, First of the RLA, imposing a duty to bargain in good faith, and Section 6,
requiring advance notice of unilateral change in working conditions; and (2) a claim under Section 3, First (q) of the
RLA. See Atchison, 768 F.2d at 918.
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371 (S.D.N.Y. 1972) (discussing the 10-day statute of limitations period under Section 9 of the
RLA and noting that general equity principles “must be subordinated to the congressional intent
expressed in the language of the statutes governing arbitration procedures.”).
Given the RLA’s silence regarding individual standing in Sections 7 and 9 and the
congressional concern with finality in interest arbitrations, the Court believes that the default
principle should apply in this case: that “an individual employee represented by a union
generally does not have standing to challenge an arbitration proceeding to which the union and
the employer were the only parties.” Katir, 15 F.3d at 24-25. To hold otherwise would open the
doors to substantial post-award litigation by a single dissatisfied employee within a bargaining
unit, thereby destabilizing a process meant to create a labor contract that governs the interests of
all employees within the unit. As a practical example, the facts of this case involve three
individuals challenging the arbitration process that created a contract which governs the seniority
rights of over 13,000 American pilots. See Hr’g Tr. 9:12-20 (July 31, 2018) (counsel for
American noting that “you have decisions that impact the entire bargaining unit. And here is a
perfect example where you have a decision addressing seniority that impacts the rights of all
13,000 pilots at American. And the arbitration process itself is structured to collectively address
the interests of all those pilots . . . beyond these individuals in exemplifying why individual
pilots are not permitted to challenge such awards.”). Allowing an individual that has not been
designated as a group representative to seek to undo the work that has been achieved by the
union, the actual employee representative, through interest arbitration would only serve to
undermine the system of collective dispute resolution. Such individuals are not left without
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recourse; to the extent that their employee representatives in the APA union have acted
improperly, individuals may pursue a duty of fair representation claim. 12
But even if this Court were to hold that Section 3, First (q) were applicable to interest
arbitration awards, the Plaintiffs here would still lack standing. Even Section 3 does not provide
standing to individual employees when an arbitration involves the interests of a group of
employees rather than the separate interests of the individuals. The Fifth Circuit Court of
Appeals has twice held that even in the context of a grievance arbitration—where Section 3, First
(q) is clearly applicable—an individual employee will not have standing when a union is
pursuing an arbitration on behalf of all members and the dispute did not involve grievances
specific only to those individuals. See Mitchell, 481 F.3d at 228-29, 232-33; Mackenzie v. Air
Line Pilots Ass’n, Int’l, 598 F. App’x 223, 225-26, 226 n.4 (5th Cir. 2014). Both decisions
rejected the argument that Section 3, First (q) provided the individual employees in those cases
with standing. See Mitchell, 481 F.3d at 233 n.24; Mackenzie, 598 F. App’x at 226 n.4. Instead
the Fifth Circuit focused on the federal labor policies favoring collective resolution of disputes,
noting that
[i]f an employee could compel arbitration of a grievance without his union's
blessings, a CBA's contractual conflict-resolution procedures would be
substantially undermined, thus destroying the employer's confidence in the
union's authority and returning the individual grievant to the vagaries of
independent and unsystematic negotiation. The same can be said of an
employee’s ability to seek judicial review of an arbitral award, after being
abandoned by his union.
12 	The Court has already addressed a duty of fair representation claim brought by these Plaintiffs as to other
allegations relating to this arbitration. See generally Krakowski v. Am. Airlines, Inc. (In re AMR Corp.), 2018
Bankr. LEXIS 1726.
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Mitchell, 481 F.3d at 232-33 (internal citations and quotations omitted); see also Mackenzie, 598
F. App’x at 226. 13
The same policy concerns identified by the Fifth Circuit apply in full force to the LOA
12-05 arbitration here. The Plaintiffs were not parties to the Protocol Agreement or the
arbitration itself. They were instead represented by APA and the TWA Pilots Committee during
the negotiation of the arbitration terms and the arbitration proceedings.14 The Plaintiffs now sue
in their individual capacity to overturn the results of an arbitration that reconciled the interests of
thousands of American pilots besides themselves. In fact, the TWA Pilots Committee—which
represented the entire group of TWA pilots during the arbitration and would have a much
stronger argument regarding standing—did not sue to overturn the results of this arbitration. To
now allow these three individual Plaintiffs to undo the process—absent a failure of adequate
representation—would inject an unacceptable level of uncertainty into the collective system of
conflict resolution, impacting the thousands of employees within the bargaining unit. Doing so
would clearly contradict the congressional intent “behind federal labor statutes, which require the
interests of particular individuals be subordinated to the interest of the group at the contract-
negotiation state and beyond.” Mitchell, 481 F.3d at 232.
13 	The Plaintiffs argue that Mitchell and Mackenzie are inapplicable because the CBAs in those cases gave the
unions “the exclusive right to pursue claims” and therefore limited the standing of parties in those circumstances.
Pls.’ Resp. at 10. But in both cases, the applicable CBAs gave the unions the exclusive right to pursue claims in the
grievance arbitration process—not other types of claims. See Mitchell, 481 F.3d at 234; Mackenzie, 598 F. App’x at
226. The Court of Appeals found that the union’s exclusive right to pursue grievance arbitration necessarily implied
an exclusive right to vacate the resulting awards. They stated that “it would be paradoxical in the extreme if a union
that is vested with the exclusive authority to bring an employment grievance and pursue it up to and through binding
arbitration were not likewise vested with the exclusive responsibility to instigate and prosecute a review of an
arbitral award in court.” Mitchell, 481 F.3d at 233. LOA 12-05 and the Protocol Agreement similarly designated
American and APA as the sole parties to the arbitration, with the contract language here being almost identical to the
language contained in Mackenzie. See Mackenzie, 598 F. App’x at 226 (“Letter 3 specifically names American,
Eagle, APA, and ALPA as the parties to the dispute resolution procedures.”).
14 	This Court has previously discussed APA’s use of the TWA and AA pilot committees as a way to address
that these two pilot groups had competing interests in the outcome of this arbitration. See Krakowski, 2018 Bankr.
LEXIS 1726, at *36-40; cf., Krakowski, 2014 Bankr. LEXIS 2610, at *14-15.
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The Plaintiffs erroneously rely on McQuestion v. New Jersey Rail Operations, 892 F.2d
352 (3d Cir. 1990), to argue that non-parties to labor arbitrations conducted under the RLA have
standing to dispute the resulting awards. In McQuestion, two individuals challenged their
termination through the in-house appeals procedures of their employer, New Jersey Transit. See
id. at 353. When those challenges failed, the union filed petitions with the National Railroad
Adjustment Board on behalf of the individuals, seeking to have the discharges set aside. See id.
While the petitions were signed only by a union representative, each petition indicated that it was
submitted on behalf of the individuals. See id. In addition, the individuals were present at the
hearing held by the adjustment board, which dealt only with their individual grievances. See id.
The Third Circuit ultimately held that the individuals had standing under Section 3, First (q) to
challenge the order of the adjustment board. See id. at 354. 	The Court noted that the language
of Section 3, First (q) cited to “any employee . . . aggrieved” by a ruling and authorizes “such
employee” to file a petition for review and that “confining ourselves to the literal wording of the
statute, the appellants did have standing to seek review. . . .” Id. at 354. The Court of Appeals
concluded that “[t]he proceedings before the Board were conducted solely to resolve appellants’
uniquely individual grievances. . . . Indeed, the district court observed that appellants were the
real parties in interest.” Id. (emphasis added) (internal citations and quotations omitted).
Thus, McQuestion is both legally and factually inapposite for two reasons. First,
McQuestion involved an adjustment board proceeding that dealt only with the rights of the two
individuals seeking to challenge a decision relating to their termination, while the case before
this Court involves three individuals challenging a decision that impacts the collective
contractual rights of thousands of employees. As the LOA 12-05 arbitration award does not
involve “uniquely individual grievances,” the reasoning of McQuestion is inapplicable to this
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case. Second, McQuestion involved grievance arbitration and was interpreting Section 3, First
(q), which this Court has already ruled does not apply to this interest arbitration. Indeed, the
McQuestion court distinguished its ruling from another case that involved a group of employees
who were found to lack standing to vacate an arbitration award relating to CBA terms for an
entire employee group. See id. (citing Anderson v. Norfolk & W. Ry. Co., 773 F.2d 880 (7th Cir.
1985)).
B. 	The Plaintiffs’ Claim is Untimely
The Court also concludes that the Complaint should be dismissed as untimely because it
was filed after the expiration of the statute of limitations. “Although the statute of limitations is
ordinarily an affirmative defense that must be raised in the answer, a statute of limitations
defense may be decided on a Rule 12(b)(6) motion if the defense appears on the face of the
complaint.” Ellul v. Congregation of Christian Bros., 774 F.3d 791, 798 n.12 (2d Cir. 2014).
Federal Rule of Civil Procedure 12(b)(6), made applicable by Bankruptcy Rule 7012, provides
that a complaint must be dismissed if it fails to state a claim upon which relief can be granted. In
analyzing a motion to dismiss under Rule 12(b)(6), a court looks to whether a plaintiff has
pleaded “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The court must determine “whether the well-pleaded
factual allegations, assumed to be true, plausibly give rise to an entitlement to relief.” Hayden v.
Paterson, 594 F.3d 150, 161 (2d Cir. 2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)).
A court must proceed “on the assumption that all the allegations in the complaint are true.”
Twombly, 550 U.S. at 555. The court must also draw all reasonable inferences in favor of the
non-moving party. Ganino v. Citizens Utils. Co., 228 F.3d 154, 161 (2d Cir. 2000).
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Section 9 of the RLA provides a 10-day statute of limitations for actions to vacate an
interest arbitration award, stating that “[a]n award . . . shall be conclusive on the parties as to the
merits and facts of the controversy submitted to arbitration, and unless, within ten days after the
filing of the award, a petition to impeach the award . . . shall be filed . . . the court shall enter
judgment on the award, which judgment shall be final and conclusive on the parties.” See 45
U.S.C. § 159, Second. The LOA 12-05 arbitration award was issued on July 22, 2013, and the
arbitrators’ ruling on contract language followed on September 12, 2013. Compl. ¶¶ 43, 45. The
Plaintiffs filed the Complaint on June 27, 2016, almost three years after the arbitration rulings
were issued. See ECF No. 1.
The Plaintiffs concede that the 10-day statute of limitations applies to their claims. See
Pls.’ Resp. at 11. But they argue that limitations period should be equitably tolled until June 15,
2016,15 the date on which they took Mr. Burdette’s deposition.16 The Plaintiffs assert that they
could not have known the facts necessary to bring their claim until that deposition took place.
Citing to Holmberg v. Armbrecht, 327 U.S. 392 (1946), the Plaintiffs argue that equitable tolling
applies to the RLA because “[t]his equitable doctrine is read into every federal statute of
limitation.” Id. at 397 (stating that “where a plaintiff has been injured by fraud and remains in
ignorance of it without any fault or want of diligence or care on his part, the bar of the statute
does not begin to run until the fraud is discovered, though there be no special circumstances or
efforts on the part of the party committing the fraud to conceal it from the knowledge of the other
party.”); but see Iavorski v. United States INS, 232 F.3d 124, 129 (2d Cir. 2000) (noting that “[a]
15 	Assuming that Mr. Burdette’s deposition is the event triggering the start of the statute of limitations, the
tenth day following the June 15, 2016 deposition of Mr. Burdette fell on a Saturday. Because of this, the applicable
time period would continue to run until the end of the following Monday, which was June 27, 2016. This is the date
on which the Plaintiffs filed the Complaint. See Fed. R. Bankr. P. 9006(a)(1)(C); Fed. R. Civ. P. 6(a)(1)(C).
16 	The Burdette-Goldberg emails were produced—and Mr. Burdette’s deposition was conducted—in
Krakowski I, a related adversary proceeding brought by the Plaintiffs against the Defendants.
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statute of limitations may be tolled as necessary to avoid inequitable circumstances” and that
“[n]ot all time limitations are subject to equitable tolling. If Congress enacts a jurisdictional bar
to untimely claims, equitable tolling will not apply. If the time limit is contained in an ordinary
statute of limitations, however, it is assumed that it is subject to equitable tolling. The basic
question to be answered in determining whether . . . a statute of limitations is to be tolled, is one
of legislative intent.”) (internal citations and quotations omitted).17
The Plaintiffs’ position on tolling is incorrect as a matter of law and fact. To begin with,
case law in this jurisdiction prohibits equitable tolling of the 10-day statute of limitations for
seeking to vacate an arbitration award under Section 9 of the RLA, 45 U.S.C. § 159, Second.18
In Catalano v. Brotherhood of Ry. Airline & S.S. Clerks, Fright Handlers, Express & Station
Emps., 348 F. Supp. 369 (S.D.N.Y. 1972), several employees brought an action challenging an
arbitration award issued under the RLA, alleging fraud on the part of the arbitrators. See id. at
370-71. The respondent argued that the action was barred by the 10-day statute of limitations in
Section 9 of the RLA, but the employees asserted the claim was timely because the action did not
accrue until the arbitrators’ alleged fraud was actually discovered. See id. at 371. Like the
17 	While the Plaintiffs cite to Iavorski to support their argument that equitable tolling is applicable to all
federal statutes, the Second Circuit in Iavorski instructs a court to look to the legislative intent of the statue to
determine whether it is subject to tolling. See Iavorski, 232 F.3d at 129. The Plaintiffs have provided no argument
regarding the legislative intent of the RLA on this point.
18 	The Plaintiffs cite to several cases which they argue “consider equitable tolling in RLA cases.” Pls.’ Resp.
at 12 n.5. But the Plaintiffs fail to mention that each of these cases ultimately rejects equitable tolling of the
applicable statute of limitations. See Bhd. of Locomotive Eng’rs v. CSX Transp., Inc., 522 F.3d 1190, 1198-1199
(11th Cir. 2008) (stating that “federal courts have refused to toll” the two-year statute of limitations contained in
Section 3 of the RLA because the statute “should be literally applied in the absence of a clear showing of a contrary
or qualified intention of Congress” and “a court is not justified in finding any exception to, or extension of, this
period.”) (internal citations and quotations omitted); Lekas v. United Airlines, Inc., 282 F.3d 296, 301 (4th Cir.
2002); Woodruff v. AMTRAK, 2009 U.S. Dist. LEXIS 119006, *4-9 (S.D.N.Y. Dec. 21, 2009); Marshall v. Grand
Trunk W., 1984 U.S. App. LEXIS 14398, *3-5 (6th Cir. 1984). In fact, the two cases from this jurisdiction that are
cited by the Plaintiffs to support equitable tolling in RLA cases do not even deal with a statute of limitations period
contained in the RLA. See Woodruff, 2009 U.S. Dist. LEXIS 119006, at *4-9 (failure to bring a discrimination
claim within the statutory period required by the Americans with Disabilities Act); Marshall, 1984 U.S. App.
LEXIS 14398, at *3-6 (failure to bring a claim within the statute of limitations period required by the Federal
Employers’ Liability Act).
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Plaintiffs here, the employees in Catalano cited to the “general equity principles governing the
accrual of actions” espoused in Holmberg. Id. at 370-71. But the court in Catalano rejected this
argument, and instead focused on the language of the RLA, stating that such “general principles
must be subordinated to the congressional intent expressed in the language of the statutes
governing arbitration procedures. It is evidence that in enacting these provisions then Congress
sought to ensure the speedy and conclusive settlement of disputes submitted to arbitration.” Id.
Due to the “underlying congressional concern with speed and finality” and the clear statutory
language of the RLA, the Catalano court held the 10-day statute of limitations period was
absolute and ran from the date of filing of the award. Id.; see also 45 U.S.C. § 159, Second
(stating that “[a]n award . . . shall be conclusive on the parties . . . unless, within ten days after
the filing of the award, a petition to impeach the award . . . shall be filed . . . .”) (emphasis
added).
But even if equitable tolling were applicable to the statute of limitations for interest
arbitrations under the RLA, the Plaintiffs’ action would still be untimely because they have not
established a basis for tolling that would bring them within the 10-day period. “Because statutes
of limitations protect important social interest in certainty, accuracy, and repose, . . . equitable
tolling is considered a drastic remedy applicable only in rare and exceptional circumstances.”
A.Q.C. v. United States, 656 F.3d 135, 144 (2d Cir. 2011) (internal citations and quotations
omitted). “[C]ourts do not apply [equitable tolling's] requirements mechanistically. . . . Rather,
the exercise of a court's equity powers must be made on a case-by-case basis, mindful that
specific circumstances, often hard to predict in advance, could warrant special treatment in an
appropriate case.” Harper v. Ercole, 648 F.3d 132, 136 (2d Cir. 2011) (internal citations and
quotations omitted). Thus, the doctrine is discretionary and requires the Court to examine the
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facts and circumstances of each case so as to fashion the most appropriate relief. See Kassman v.
KPMG LLP, 2015 U.S. Dist. LEXIS 118542, at *19-20 (S.D.N.Y. Sep. 4, 2015). “The burden of
demonstrating the appropriateness of equitable tolling [] lies with the plaintiff.” Boos v. Runyon,
201 F.3d 178, 185 (2d Cir. 2000).
A party is entitled to equitable tolling of a statute of limitations only when “extraordinary
circumstances prevented a party from timely performing a required act, and that the party acted
with reasonable diligence throughout the period he [sought] to toll.” Walker v. Jastremski, 430
F.3d 560, 564 (2d Cir. 2005) (internal citations and quotations omitted); see also Menominee
Indian Tribe v. United States, 136 S. Ct. 750, 755 (2016) (tolling applies “only if the litigant
establishes two elements: (1) that he has been pursuing his rights diligently, and (2) that some
extraordinary circumstance stood in his way and prevented timely filing.”). “The first test,
which requires extraordinary circumstances, stems from the fact that equitable tolling
undermines to some extent the interests served by statutes of limitations.” Kassman, 2015 U.S.
Dist. LEXIS 118542, at *10. Courts have held that “[i]n order for ‘extraordinary circumstances’
to have prevented [a plaintiff] from timely filing [a] complaint, the information [ ] sought . . .
must have been necessary for that complaint to have been legally sufficient.” Walker, 430 F.3d
at 564.
“The second test, which requires reasonable diligence, limits this equitable remedy to
litigants who have not contributed to the delay that, without equitable tolling, would bar their
claims.” Kassman, 2015 U.S. Dist. LEXIS 118542, at *10. The party seeking to toll the statute
of limitations must show that they were diligent, and relief will be denied to those claimants
“whose own actions contributed to the delay that resulted in the filing of an untimely claim.” Id.
at *18-19. In making its determination, a court should examine the cause of the delay. See id.
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Relief is proper "if despite all due diligence [plaintiff] is unable to obtain vital information
bearing on the existence of his claim." Valdez v. United States, 518 F.3d 173, 182 (2d Cir. 2008)
(internal citations and quotations omitted). “Courts have applied a reasonable plaintiff test to
assess opt-in plaintiffs' knowledge of the facts giving rise to their claims—‘whether a reasonable
plaintiff in the circumstances would have been aware of the existence of a cause of action, and
despite all due diligence he was unable to obtain vital information bearing on the existence of his
claim.’” Kassman, 2015 U.S. Dist. LEXIS 118542, at * 16 (quoting Lanzetta v. Florio's Enters.,
Inc., 763 F. Supp. 2d 615, 622 (S.D.N.Y. 2011)).
The Plaintiffs’ claim of tolling fails to satisfy the reasonable diligence part of the test.
The claims asserted in the Complaint are based on the ex parte contacts between Mr. Burdette
and Arbitrator Goldberg and the relationship between the two men. See Compl. ¶¶ 60-71.
According to the Complaint, all contacts between the two took place via email except for an in-
person meeting in Chicago that was planned by email. See Compl. ¶¶ 47-57. Both sides state
that the Plaintiffs received copies of the relevant emails referenced in the Complaint on March
15, 2016, the day that they were produced by American in Krakowski I. See Email from S.
Ackerman to A. Press, dated March 15, 2016 (attached as Ex. 4 to APA Mem. in Supp. of Mot.
to Dismiss [ECF No. 14-6]); Hr’g Tr. 44:15-17 (July 31, 2018) (Plaintiffs’ counsel stating that
“in the threshold elements, there’s not a dispute. I think we agree. March 15, 2016 is when the
documents are produced.”). At the point in time when they received these emails, the Plaintiffs
were put on notice regarding the relationship and contacts between Mr. Burdette and Arbitrator
Goldberg that form the basis of the Complaint.19 While the exact date when the Plaintiffs
19 	The Plaintiffs allude to Mr. Burdette’s trip to Chicago and his membership in MREP as facts of which the
emails did not provide notice, stating that they had no knowledge of either until Mr. Burdette’s deposition. See Pls.’
Resp. at 14. But the Plaintiffs’ own Complaint clearly states that the emails discussed both Mr. Burdette’s interest
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examined the emails is unclear, March 15, 2016 is more than three months prior to the filing of
the Complaint on June 27, 2016. The Plaintiffs have not demonstrated reasonable diligence to
justify the three month delay in filing, which is well outside of the 10-day statute of limitations in
Section 9, Second of the RLA. The Court therefore finds the filing of the Complaint was
untimely.20
The Plaintiffs argue that, as a procedural matter, the Court should not grant dismissal
based on a statute of limitations defense. See Pls.’ Resp. at 13. But the facts supporting the
statute of limitations defense are set forth in the Complaint, including the date of the arbitration
award and the date of the Complaint itself. See Compl. ¶¶ 43, 45, 54; Compl. at 14; see also
Ellul, 774 F.3d at 798 n.12 (“Although the statute of limitations is ordinarily an affirmative
defense that must be raised in the answer, a statute of limitations defense may be decided on a
Rule 12(b)(6) motion if the defense appears on the face of the complaint.”). The Complaint also
sets forth in detail the contents of the emails that are the basis for the Plaintiffs’ Complaint. See
Compl. ¶¶ 48-50, 52-54. The only fact not contained in the Complaint is the date when these
emails were produced to the Plaintiffs; this fact is relevant only to the Plaintiffs’ tolling
argument, which the Plaintiffs have the burden of establishing. In any event, while not contained
in the Complaint, the date of the production of the emails is an undisputed fact brought to the
in joining MREP and the planning of his trip to Chicago for MREP training, as well as his making a voluntary
contribution to MREP as suggested by their annual report. Compl. ¶¶ 49, 52-53.
20 	Courts in this jurisdiction have held that when the statute of limitations is tolled due to the concealment of
facts relating to the claim, “[a]ll that is necessary to cause the [equitable] tolling period to cease is for there to be
reason to suspect the probability of any manner of wrongdoing.” Zola v. Gordon, 685 F. Supp. 354, 367 (S.D.N.Y.
1988) (with respect to the fraudulent concealment, stating that “equitable tolling ceases to operate at the time a
person exercising due diligence should have discovered the probability of fraud” and rejecting what the District
Court characterized as the “standard of actual knowledge” argued for by the plaintiff); see also 131 Main St. Assocs.
v. Manko, 54 F. App’x 507, 513 (2d Cir. 2002). “Courts have held that facts that should arouse suspicion . . . are
equated with actual knowledge of the claim. Thus, a court should look to the time when a significant fact emerges
rather than the time when a particular party realizes he has a claim.” Wolf v. Wagner Spray Tech Corp., 715 F.
Supp. 504, 509 (S.D.N.Y. 1989) (fraudulent concealment exception to statute of limitations) (internal citations and
quotations omitted).
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Court’s attention in the pleadings of both parties. See Banks v. Yokemick, 214 F. Supp. 2d 401,
405 (S.D.N.Y. 2002) (“Judicial admissions are formal concessions in the pleadings, or
stipulations by a party or its counsel, that are bidding upon the party making them.”) (internal
citations and quotations omitted); Bank of America v. Farley, 2001 U.S. Dist. LEXIS 21676, at
*15-16 (S.D.N.Y. Dec. 28, 2001) (treating initial answer in which defendants admitted signing
credit documents as a formal judicial admission); see also Pls.’ Resp. at 14 n.7 (“American
produced the Goldberg/Burdette emails on March 15, 2016 as part of a 2,300 page production.”);
Email from S. Ackerman to A. Press, dated March 15, 2016 (attached as Ex. 4 to APA Mem. in
Supp. of Mot. to Dismiss [ECF No. 14-6]). Under these circumstances, the Court concludes that
it is appropriate to consider the statute of limitations defense now. See Edwards v. Johnson, 198
F. Supp.3d 874, 877 (N.D. Ill. 2016) (“Although generally a plaintiff is not required to plead
around an affirmative defense, such as a statute of limitations, [a] court can dismiss a complaint
as untimely if the plaintiff has admitted all the elements of the affirmative defense.”).
The Plaintiffs also argue that the email production did not end the tolling period because
“unauthenticated hearsay is not a reasonable basis for a lawsuit.” Pls.’ Resp. at 14 n.7. Instead,
the Plaintiffs argue that tolling ran until the date of Mr. Burdette’s deposition because “[p]ursuit
of this lawsuit required a witness” and “Burdette was the one and only witness who could testify
to the emails. Securing his testimony was thus necessary before Plaintiffs could bring the case,
and they did so with reasonable diligence.” Id.21 But that is not the law. A party does not need
21 	As previously discussed, the Complaint also alleges ex parte contacts between Mr. Reinert and Arbitrator
Bloch. Compl. ¶¶ 58-59. The Complaint states that Mr. Reinert sent Arbitrator Bloch an email asking Arbitrator
Bloch to call him, which Arbitrator Bloch subsequently did. Id. ¶ 59. The Plaintiffs do not address the Bloch-
Reinert emails in the context of their tolling argument, possibly because they also received a copy of the Bloch-
Reinert email on March 15, 2016 through the Krakowski I discovery process. In any case, there is no explanation as
to why Mr. Burdette’s deposition would produce any facts relating to the email communications between Arbitrator
Bloch and Mr. Reinert and therefore would justify tolling of the statute of limitations with respect to the
Bloch/Reinert allegations contained in the Complaint.
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to have admissible evidence in hand before they file a complaint. Federal Rule of Civil
Procedure 11 permits the filing of a pleading for which the factual contentions “will likely have
evidentiary support after a reasonable opportunity for further investigation or discovery.” Fed.
R. Civ. P. 11(b)(3); see also Rotella v. Wood, 528 U.S. 549, 560 (2000). The Court finds that the
information contained in the emails was a sufficient basis for filing the Complaint. Thus, the
Plaintiffs have not met their burden to show the reasonable diligence required in this jurisdiction
for the tolling of the statute of limitations. Such a conclusion is consistent with the “underlying
congressional concern with speed and finality” upon which the 10-day limitations period of
Section 9, Second of the RLA is based. Catalano, 348 F. Supp. at 371.22 The Court therefore
finds that even if equitable tolling were available for claims under Section 9 of the RLA, this
Complaint would still be untimely.
At the hearing on the Defendants’ motions to dismiss, the Plaintiffs raised additional
arguments for the first time. For example, they argued that the statute of limitations did not
begin to run here because the arbitration award was not filed with a federal district court. Under
Sections 8 and 9 of the RLA, interest arbitration awards generally become final when they are
filed with a U.S. district court, and the RLA sets the filing date as the date on which the 10-day
statute of limitations period begins to run. See 45 U.S.C. § 158(k)-(l), 45. U.S.C. § 159, Second.
22 	While not explicitly stated in their papers, the Plaintiffs appear to suggest that the 10-day statute of
limitations did not provide them with sufficient time to review the 2,300 page production. See Pls.’ Resp. at 14 n.7;
Hr’g Tr. 44:24-45:1 (July 31, 2018). But the Plaintiffs do not explain how the size of the production alone would
constitute the “extraordinary circumstances” required for equitable tolling. Indeed, one might imagine that the
Plaintiffs had reviewed the produced materials by May 13, 2016, the date that they served Mr. Burdette with a
subpoena, which was more than a month prior to the filing of the Complaint. See Pls.’ Resp. at 14 n.7 (“Plaintiffs
served Burdette with a subpoena at his Texas home on May 13, 2016, and the deposition was then scheduled at a
date mutually agreed upon by Burdette and all counsel.”). In any event, the Plaintiffs have the burden of
establishing their reasonable diligence here, and they have failed to do so. More specifically, they have not
established that they acted with reasonable diligence once they received the documents that alerted them to their
potential claim.
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The Plaintiffs’ papers fail to raise any argument about the failure to file the award, either
on the basis of the statute of limitations or otherwise. See Hr’g Tr. 36:24 (July 31, 2018) (when
questioned by the Court as to where the argument was located in their papers, Plaintiff’s counsel
admitting “[i]t is nowhere in our brief.”); see id. at 37:9-11. Rather, the Plaintiffs waited until
the hearing on the Defendants’ motions to dismiss and then raised the issue for the first time.
See Hr’g Tr. 36:9-42:6 (July 31, 2018). That alone is a basis to reject the argument. “To
countenance such action would promote litigation by ambush and, in any case, deprive
defendant[s] of a fair opportunity to respond.” White v. First Am. Registry, 592 F. Supp. 2d 681,
683 (S.D.N.Y. 2009) (refusing to hear arguments that were raised for the first time in reply
papers). “In the absence of such a rule, parties would have an incentive to withhold certain
claims or defenses until the last moment, lying in wait to spring onto their opponents
unanticipated arguments in reply briefs or in the final moments of oral argument. Such an
outcome would not only be inefficient, but also manifestly unjust.” Goldberg v. UBS AG, 690 F.
Supp. 2d 92, 98-99 (E.D.N.Y. 2010) (stating with respect to argument raised for first time at oral
argument that because it “was not raised until this late point, defendant cannot raise it now. . . . );
see also United States v. Barnes, 158 F.3d 662, 672 (2d Cir. 1998) (“Normally, we will not
consider arguments raised for the first time in a reply brief, let alone at or after oral argument.”);
In re Monster Worldwide, Inc. Sec. Litig., 251 F.R.D. 132, 137 (S.D.N.Y. 2008) (“As to
[defendant’s] second argument . . . this argument was raised for the first time at oral argument
and so was waived in terms of this motion.”).
In any case, the Plaintiffs’ argument on this point fails on the merits. The parties to the
LOA 12-05 arbitration agreed in the Protocol Agreement to waive this filing requirement, and
provided that the arbitration award would be final and binding upon issuance. See Protocol
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Agreement §§ 7-8 (incorporating RLA sections, but stating that [n]othing in this Agreement
should be construed to require AA or APA to file a copy of the Board’s award with a federal
district court in order for the award to be final and binding.”). The Plaintiffs conceded this at the
hearing. See Hr’g Tr. 36:14-15, 39:10-12 (July 31, 2018). Indeed, parties to interest arbitrations
commonly waive statutory procedural requirements contained in the RLA. See APA Mem. in
Supp. of Mot. to Dismiss at 13 (citing The Railway Labor Act, Ch. 6.II.E.1 (Chris A. Hollinger,
ed., 3rd ed. 2012) (“Often the parties, by agreement, elect not to follow all of the processes of
Sections 7, 8, and 9.”); Krieter v. Lufthansa German Airlines, Inc., 558 F.2d 966, 968 (9th Cir.
1977) (“Defects in proceedings prior to or during arbitration may be waived by a party’s
acquiescence in the arbitration with knowledge of the defect.”); United Transp. Union v. Illinois
Cent. R.R., 998 F. Supp. 874, 887 (N.D. Ill. 1998) (same)). 23
CONCLUSION
For the reasons stated above, the Court grants the Defendants’ motions to dismiss the
Complaint based on lack of standing and lack of timeliness.24 Due to the lack of subject matter
jurisdiction and untimeliness of the Complaint, the Court need not address the Defendants’
23 	The Plaintiffs also asserted at the hearing that the failure to file the award with the district court was a
notice issue. See Hr’g Tr. 36:16-18, 41:8-12 (July 31, 2018). But the Plaintiffs did not cite to any case law for that
proposition and concede they have no basis to argue they did not know about the award. See id. at 41:13-17, 41:23-
42:1. At the hearing, the Plaintiffs also made a policy argument that procedural rights under the RLA cannot be
contracted away by the union. See id. at 38:22-39:2. But the cases cited by the Plaintiffs for this argument are
clearly distinguishable as each relates to individual employee rights to submit grievances and participate in the
process, not in the interest arbitration context. See id. at 38:20-39:2, 40:10-22 (citing Capraro v. United Parcel
Service Co., 993 F.2d 328, 336 (3d Cir. 1993); Elgin, J. & E. Ry. Co. v. Burley, 325 U.S. 711, 740 n.39 (1945);
Slagley v. Illinois Cent. R. Co., 397 F.2d 546, 551 (7th Cir. 1968)).
At the hearing, the Plaintiffs also asserted that the Defendants have failed to meet their burden on this filing
issue because a statute of limitations argument is an affirmative defense and the Defendants are therefore required to
make a prima facie case. See Hr’g Tr. 37:16-23 (July 31, 2018). But the filing requirement was squarely addressed
in APA’s motion to dismiss, and it was the Plaintiffs who failed to address this issue in their opposition papers. See
APA Mem. in Supp. of Mot. to Dismiss at 13.
24 	To the extent that an argument made by the Plaintiffs has not been specifically addressed by the Court in
this decision, it is rejected as being insufficient to survive the Defendants’ motions to dismiss.
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motions with respect to the merits of the Plaintiffs’ claims under Federal Rule of Civil Procedure
12(b)(6).
The Defendants should settle an order on three days’ notice. The proposed order must be
submitted by filing a notice of the proposed order on the Case Management/Electronic Case
Filing docket, with a copy of the proposed order attached as an exhibit to the notice. A copy of
the notice and proposed order shall also be served upon counsel to the Plaintiffs.
Dated: New York, New York
March 8, 2019
/s/ Sean H. Lane
UNITED STATES BANKRUPTCY JUDGE
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