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Clark v. Frontier Airlines, Inc.

United States District Court, S.D. Iowa, Central Division

August 1, 2018

ADELINE CLARK, et al., Plaintiffs,
v.
FRONTIER AIRLINES, INC., Defendant.

          REPORT AND RECOMMENDATION ON DEFENDANT'S MOTIONS TO DISMISS PLAINTIFFS' COMPLAINT AND TO TRANSFER PURSUANT TO 28 U.S.C. § 1404

          ROBS A A WALTERS UNITED STATES MAGISTRATE JUDGE

         The above resisted motions [8] [13] are before the Court and have been referred to the undersigned for Report and Recommendation. 28 U.S.C. § 636(b)(1)(B), (C). The parties have agreed the motions may be decided on the motion papers as supplemented by transcript selections from a pending arbitration proceeding. (See 6/19/18 Order [22] at 1). The motions are thus fully submitted.

         I.

         Defendant Frontier Airlines, Inc. (“Frontier”) moves to dismiss plaintiffs' Amended Complaint [2] for lack of subject matter jurisdiction or, alternatively with respect to two common-law claims, for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(1), (6). Plaintiffs are some 100 former flight attendants employed by Frontier. The relevant jurisdictional facts appear undisputed and are largely taken from the Amended Complaint.

         Frontier and the Association of Flight Attendants-CWA (“Union”) which represented Frontier's flight attendants entered into a collective bargaining agreement (“CBA”) on October 14, 2011. (Amend. Complt. [2] ¶ 6). A few days before, on October 11, 2011, the Union agreed to salary and benefit concessions to mitigate Frontier's then financial difficulties. The concessions were memorialized in a letter agreement entitled “Flight Attendant Restructuring Investments.” (Id. attach. [3] at 3-4; see Paschke Decl. Ex. 7 (Glasscock Aff.) [23] at 28). Article 24 of the CBA was intended to compensate flight attendants for the concessions. (Amend Complt. [2] ¶ 9). It is captioned “Equity, Profit-Sharing, and Wage & Benefit Snapbacks.” (Id. ¶ 7 and attach. [3] at 1). Paragraph A of Article 24 (“Article 24A”) entitled flight attendants to “Equity Participation” in Frontier as described therein. (Id. and attach. [3] at 1). Paragraph D of Article 24 (“Article 24D”) stipulated Equity Participation would be “exclusively for Frontier Flight Attendants on the Frontier Flight Attendant Seniority List as of January 1, 2012.” (Id. ¶ 8 and attach. [3] at 2). Each of the plaintiffs was on the seniority list as of January 1, 2012 but left Frontier's employment prior to March 15, 2017. (Id. ¶ ¶ 10, 11).

         On March 15, 2017, Frontier and the Union signed a Letter of Agreement (“LOA”) under which Frontier was to pay $40 million in satisfaction of its Equity Participation obligations under Article 24A (the “Equity Payment”). (Amend. Complt. [2] ¶ 12; see Hollinger Decl. [8-2], Ex. C). The LOA gave the Union sole authority to determine which flight attendants were eligible to share in the Equity Payment. (Amend. Complt. [2] ¶ 13).[1] The Union determined only those flight attendants on the seniority list who were continuously employed from January 1, 2012 through March 15, 2017 were eligible to receive a portion of the Equity Payment. As they had ceased employment before March 15, 2017, plaintiffs were denied a share of the payment. (Id. ¶ 14).

         Plaintiffs' Amended Complaint is in three counts. Count I alleges Frontier breached Articles 24A and 24D of the CBA by excluding them from a share of the Equity Payment because the only Article 24D eligibility requirement was inclusion on the flight attendant seniority list as of January 1, 2012. (Amend. Complt. [2] ¶¶ 19, 20). Plaintiffs seek a decree they are eligible to receive Equity Payments, damages for emotional distress and pain and suffering, attorney fees and costs. (Id. at 7). Count II claims promissory estoppel based on the promises made in Articles 24A and 24D “as well as other communications.” (Id. ¶ 28). Count III alleges Frontier was unjustly enriched by the value of the uncompensated for concessions plaintiffs made. (Id. ¶¶ 37-40). Counts II and III seek damages, attorney fees and costs.

         Plaintiffs plead subject matter jurisdiction pursuant to 28 U.S.C. §1337(a). That subsection gives district courts “original jurisdiction of any civil action . . . arising under any Act of Congress regulating commerce . . . .” Plaintiffs assert their claims “arise under” the Railway Labor Act (“RLA”), 45 U.S.C. §§ 151 et seq., an Act regulating commerce. (Amend. Complt. [2] ¶ 3). Frontier's Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction is based on its argument that plaintiffs' claim for breach of the CBA is a “minor dispute” under the RLA within the exclusive jurisdiction of the Frontier Flight Attendants' System Board of Adjustment (“Board” or “Board of Adjustment”) before which the arbitration of plaintiffs' grievance of the denial of Equity Payment participation is currently pending. Evidentiary hearing was held before the arbitration panel on March 20, 2018, and post-hearing briefs were to be filed by June 15, 2018. (Amend. Complt [2] ¶ 17; Hollinger Supp. Decl. [14-1] at 2). Plaintiffs' common-law promissory estoppel and unjust enrichment claims are, says Frontier, preempted by the RLA because both would require interpretation of the CBA.

         In its motion to transfer, Frontier asks that the action be transferred to the United States District Court for the District of Colorado “[f]or the convenience of the parties and witnesses [and] in the interests of justice” as permitted by 28 U.S.C. § 1404(a). Frontier argues many of the events took place in Colorado where it is headquartered and many potential witnesses are located, while no events took place in this district and no witnesses live here. None of the plaintiffs reside in Iowa. (See Amend. Complt. [2] ¶ 2).

         II.

         The initial question is which motion should be decided first. The Court asked the parties to address the issue in light of the United States Supreme Court's opinion in Sinochem Intern. Co. Ltd. v. Malaysia Intern. Shipping Corp., 549 U.S. 422 (2007), and the Eighth Circuit's opinion in Integrated Health Services of Cliff Manor, Inc. v. THCI Co., LLC, 417 F.3d 953 (8th Cir. 2005).

         Integrated Health involved a transfer of venue in circumstances which required the circuit to address “the issue of the district court's power to transfer the case before deciding the issue of its own jurisdiction.” 417 F.3d at 957. The circuit agreed “that a court without subject matter jurisdiction cannot transfer a case to another court under 28 U.S.C. § 1404(a).” Id. (citing Klett v. Pim, 965 F.2d 587, 591 n.7 (8th Cir. 1992)). The court concluded, however, the district court had jurisdiction. Id.

         The issue in Sinochem was “[w]hether a district court must first conclusively establish [its own] jurisdiction before dismissing a suit on the ground of forum non conveniens.” 549 U.S. at 425 (quoting Pet. for Cert. (brackets original to opinion)). Section 1404(a) codifies the common-law doctrine of forum non conveniens when transfer is sought to another federal court. The doctrine remains applicable apart from the statute only where the alternative forum is in another country. In Sinochem the district court had dismissed the action without deciding whether it had personal jurisdiction over the defendant Sinochem, finding the case could be more conveniently decided in the Chinese courts where litigation was pending. Id. at 427-28. The Court of Appeals reversed concluding the district court could not dismiss the case on forum non conveniens grounds until it determined definitively that it had both subject matter jurisdiction of the cause and personal jurisdiction over the defendant. Id. at 428.

         The Supreme Court reversed unanimously holding:

[A] court need not resolve whether it has authority to adjudicate the cause (subject-matter jurisdiction) or personal jurisdiction over the defendant if it determines that, in any event, a foreign tribunal is plainly the more suitable arbiter of the merits of the case.

Id. at 425. The court ended its opinion by cautioning that in “the mine run of cases, jurisdiction ‘will involve no arduous inquiry' and both judicial economy and the consideration ordinarily accorded the plaintiff's choice of forum ‘should impel the federal court to dispose of [those] issue[s] first.'” Id. at 436 (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 587-88 (1999)). But if subject matter (or personal) jurisdiction is “difficult to determine, and forum non conveniens considerations weigh heavily in favor of dismissal, the court properly takes the less burdensome course.” Id.

         Frontier would have the Court determine the transfer motion first. It sees Sinochem as undercutting the Eighth Circuit rule that without subject matter jurisdiction a court cannot transfer a case. See Zavanna, LLC v. RoDa Drilling Co., No. 4:09-cv-022, 2009 WL 3720177, at *15 (D.N.D. November 3, 2009) (“there may be reason to doubt” Integrated Health and like cases in light of Sinochem “if the premise is the lack of judicial power to transfer a case prior to deciding a question of subject matter jurisdiction, given that the transfer is a non-merits determination.”).[2] Frontier notes a court in this circuit, and some courts elsewhere, have post-Sinochem transferred cases without resolving a subject matter jurisdiction challenge. See Woodland's Development, LLCv. Regions Bank et al., Civil Action No. 13-514, 2013 WL 3233472, at *3 (E.D. La. June 24, 2013) (citing cases); Emory v. Duke, No. 4:12CV00404 SWW, 2012 WL 13027254, at *2 (E.D. Ark. August 2, 2012); see also KGM contractors, Inc. v. Heavy Haulers, Inc., Case No. 16-cv-3638 (JNE/LIB); 2017 WL 2437239, at *1, 8 (D. Minn. June 5, 2017)(bypassing personal jurisdiction issue in favor of ...


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