Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-07-01611/USCOURTS-ca8-07-01611-1/pdf.json

Parties Involved:
Richard H. Anderson
Appellee
Michael Becker
Appellee
Robert Brodin
Appellee
Hiram Cox
Appellee
John H. Dasburg
Appellee
Mickey P. Foret
Appellee
Tom Goebel
Appellee
Bernard L. Han
Appellee
Neil Hastings
Appellant
Bill Johnston
Appellee
Jennifer Karpiuk
Appellant
Terri L. Keimig
Appellee
Jim MacKenzie
Appellee
James G. Mathews
Appellee
Daniel Matthews
Appellee
Timothy J. Meginnes
Appellee
Steve Miller
Appellee
Thomas Momchilov
Appellee
Douglas Steenland
Appellee
Unknown Fiduciaries 1-100
Appellee
Len Willey
Appellee
Gary L. Wilson
Appellee
Steve Wilson
Appellee
Rick Woolley
Appellee

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 07-1611

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Neil Hastings; Jennifer Karpiuk,

individually and on behalf of all

others similarly situated,

Appellants,

v.

Gary L. Wilson; John H. Dasburg;

Steve Wilson; Douglas Steenland;

Richard H. Anderson; Terri L.

Keimig; Timothy J. Meginnes;

Daniel Matthews; Michael

Becker; Robert Brodin; Mickey P.

Foret; Hiram Cox; Thomas

Momchilov; James G. Mathews;

Bernard L. Han; Steve Miller;

Tom Goebel; Bill Johnston; Len

Willey; Rick Woolley; Jim

MacKenzie; Unknown Fiduciaries

1-100,

Appellees.

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Appeal from the United States

District Court for the

District of Minnesota.

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 Submitted: November 14, 2007

 Filed: February 22, 2008 (Corrected 3/7/08)

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Before MURPHY, HANSEN and GRUENDER, Circuit Judges.

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Appellate Case: 07-1611 Page: 1 Date Filed: 03/07/2008 Entry ID: 3410553
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The Honorable Richard H. Kyle, United States District Judge for the District

of Minnesota.

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GRUENDER, Circuit Judge.

Neil Hastings and Jennifer Karpiuk were employees of Northwest Airlines, Inc.

(“NWA”). They brought a class action lawsuit against alleged fiduciaries of two

separate NWA pension plans claiming the defendants breached their fiduciary duties

under §§ 409 and 502(a)(2) of the Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. §§ 1109, 1132(a)(2). The district court1

 dismissed the action

with respect to one of the pension plans, concluding that the Railway Labor Act’s

(“RLA”) mandatory arbitration provision, 45 U.S.C. § 184, divested federal courts of

subject matter jurisdiction. The district court also dismissed the action with respect

to the second pension plan for lack of standing because Hastings and Karpiuk were

not participants, beneficiaries or fiduciaries of that plan. We affirm. 

I. BACKGROUND

In 1993, NWA and the International Association of the Machinists and

Aerospace Workers (“IAM”) entered into a collective bargaining agreement (“IAM

Equity Agreement”). Under the IAM Equity Agreement, NWA employees who were

IAM union members received shares of NWA Series C Voting Convertible

Exchangeable Preferred Stock in consideration for wage concessions. Three other

NWA employee groups reached similar agreements: the Air Lines Pilots’ Association

International (“ALPA”), the International Brotherhood of Teamsters, and NWA

management. NWA placed the preferred stock into the Northwest Airlines

Corporation Employee Stock Plan (“Employee Plan”), a new profit-sharing plan. The

Employee Plan was divided into separate trust accounts for each of the four employee

groups. 

Appellate Case: 07-1611 Page: 2 Date Filed: 03/07/2008 Entry ID: 3410553
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As part of and simultaneous with the IAM Equity Agreement, NWA and IAM

entered into a trust agreement (“IAM Trust Agreement”). The IAM Trust Agreement

established the rules governing IAM’s separate trust in the Employee Plan, including

the powers and duties assigned to the IAM trustees. The IAM trustees are the named

fiduciaries who have the “authority to control and manage the operation and

administration of the plan.” 29 U.S.C. § 1102(a)(1). Both the IAM Equity Agreement

and the IAM Trust Agreement allowed the IAM to appoint and remove trustees;

however, such actions required NWA’s concurrence.

In 2002, the Employee Plan was terminated. IAM and NWA entered into a

merger agreement, pursuant to which the preferred stock was transferred from the

Employee Plan to a NWA-sponsored 401(k) Retirement Savings Plan for Contract

Employees (“IAM Plan”). The IAM Trust Agreement continued to apply, and the

IAM trustees retained their authority over the NWA preferred stock held in the IAM

Plan. 

The ALPA had a similar arrangement. Their preferred stock was transferred

to a NWA-sponsored 401(k) Retirement Savings Plan for Pilot Employees (“Pilot

Plan”). A Retirement Board consisting of two members selected by NWA and two

members selected by the ALPA served as trustees of the Pilot Plan.

According to the collective bargaining agreements, the NWA preferred stock

could not be sold on the open market. Rather, it had an exercisable put option. This

option required NWA to buy the preferred stock back at a fixed price of $46.96 per

share if the trustees exercised the put after June 1, 2003 and before August 2, 2003.

The IAM trustees timely exercised the put option, but NWA did not redeem the

shares. The trustees then obtained a court order requiring NWA to honor its

agreement. However, the IAM trustees accepted NWA common stock, in lieu of cash,

for the repurchase of the preferred stock. Hastings and Karpiuk assert that the Pilot

Plan also obtained NWA common stock through similar circumstances. 

Appellate Case: 07-1611 Page: 3 Date Filed: 03/07/2008 Entry ID: 3410553
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From January 1, 2001, to June 20, 2005, NWA suffered operating losses of $3.6

billion and its debt increased by $5 billion. During this period, several NWA

executives, who Hastings and Karpiuk allege are fiduciaries to the pension plans, sold

their personal shares of NWA common stock. Nonetheless, the IAM Plan and the

Pilot Plan retained their shares of NWA common stock as the price of the stock fell.

On September 14, 2005, NWA filed for bankruptcy. 

Hastings and Karpiuk were IAM members employed by NWA and were

participants in the IAM Plan. On April 28, 2006, Hastings and Karpiuk commenced

this class action lawsuit against certain NWA executives (“NWA Defendants”),

alleging that they were fiduciaries of both the IAM Plan and the Pilot Plan, and the

Pilot Plan Retirement Board (“Pilot Defendants”) as fiduciaries of the Pilot Plan.

Although the NWA Defendants were not trustees of the IAM Plan, Hastings and

Karpiuk assert that they are fiduciaries because they have the authority under the

collective bargaining agreements to reject IAM’s appointment or removal of trustees.

Hastings and Karpiuk claim that the NWA Defendants and the Pilot Defendants

breached their fiduciary duty under ERISA, 29 U.S.C. §§ 1109, 1132(a)(2).

Specifically, Hastings and Karpiuk allege that (1) the defendants failed to prudently

and loyally manage the IAM Plan’s and Pilot Plan’s assets; (2) the NWA Defendants

failed to adequately monitor the IAM trustees and the Pilot Defendants by not

ensuring that they had accurate information regarding NWA’s deteriorating business

prospects; and (3) certain NWA Defendants breached their duty to avoid conflicts of

interest because they failed to ensure that the IAM Plan and the Pilot Plan divested

their holdings of NWA common stock when it appeared imprudent to continue

holding it, thus ensuring that their personal NWA common stock holdings could be

sold at a higher price.

The defendants filed motions to dismiss pursuant to Federal Rules of Civil

Procedure 12(b)(1) and 12(b)(6). With respect to the IAM Plan, the district court

dismissed the case against the NWA Defendants because the RLA’s mandatory

Appellate Case: 07-1611 Page: 4 Date Filed: 03/07/2008 Entry ID: 3410553
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Although the district court stated that the RLA preempted the ERISA claims,

“[p]reemption is not the applicable doctrine under these circumstances, since the

question whether one federal law takes precedence over another does not implicate the

Supremacy Clause.” Coker v. Trans World Airlines, Inc., 165 F.3d 579, 583 (7th Cir.

1999). The district court no doubt meant that the RLA applied in this case and

divested the federal courts of subject matter jurisdiction. 

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arbitration provision, 45 U.S.C. § 184, divested the district court of subject matter

jurisdiction.2

 With respect to the Pilot Plan, the district court dismissed the case

against the Pilot Defendants and the NWA Defendants, holding that Hastings and

Karpiuk did not have statutory standing under ERISA, 29 U.S.C. §§ 1132(a)(2),

(e)(1), because neither was a participant, beneficiary or fiduciary of the Pilot Plan.

Hastings and Karpiuk appeal. 

II. DISCUSSION

“We review de novo the grant of a motion to dismiss for lack of subject matter

jurisdiction under Rule 12(b)(1) and the grant of a motion to dismiss for failure to

state a claim under Rule 12(b)(6).” OnePoint Solutions, LLC v. Borchert, 486 F.3d

342, 347 (8th Cir. 2007) (internal citations omitted). We must accept all factual

allegations in the pleadings as true and view them in the light most favorable to the

nonmoving party. Kohl v. Casson, 5 F.3d 1141, 1148 (8th Cir. 1993) (stating the

standard of review regarding an appeal from the grant of a Rule 12(b)(6) motion);

Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990) (finding that “the nonmoving party receives the same protections [for facial attacks under 12(b)(1)] as it

would defending against a motion brought under Rule 12(b)(6)”).

A. The IAM Plan

Congress expanded the RLA to the airline industry to promote stability in labormanagement relations between carriers by air and their employees. 45 U.S.C. §§

Appellate Case: 07-1611 Page: 5 Date Filed: 03/07/2008 Entry ID: 3410553
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151a, 181, 184; Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 252 (1994). To

accomplish this goal, the RLA requires parties to arbitrate all “minor disputes” before

an adjustment board, which Congress authorized to settle labor-management disputes

regarding collective bargaining agreements in the airline industry. Hawaiian Airlines,

512 U.S. at 252; see 45 U.S.C. § 185; Jenisio v. Ozark Airlines Inc. Ret. Plan for

Agent & Clerical Employees, 187 F.3d 970, 972-73 (8th Cir. 1999). Minor disputes

involve “disputes . . . growing out of . . . the interpretation or application of [collective

bargaining] agreements concerning rates of pay, rules, or working conditions.”

Jenisio, 187 F.3d at 972-73 (quoting 45 U.S.C. § 184). “[T]here is a presumption that

disputes are minor and thus arbitrable.” Id. at 973. “The [adjustment] [b]oard has

mandatory, exclusive, and comprehensive jurisdiction over minor disputes . . . .” Id.

(citing Bhd. of Locomotive Eng’rs v. Louisville & Nashville R.R., 373 U.S. 33, 39

(1963)). 

Hastings and Karpiuk assert that Congress did not intend the RLA’s mandatory

arbitration scheme to apply to ERISA claims. However, this court has held that the

RLA’s arbitration requirement applies to ERISA claims if the pension plan is (1) itself

a collective bargaining agreement or (2) maintained pursuant to a collective

bargaining agreement. Id. Hastings and Karpiuk do not dispute that the IAM Equity

Agreement, the IAM Trust Agreement and the merger agreement constitute collective

bargaining agreements and that the IAM Plan was maintained pursuant to them.

Therefore, the RLA’s arbitration requirement can apply to these ERISA claims. 

Hastings and Karpiuk next argue that their ERISA breach of fiduciary duty

claims are not minor disputes because they do not concern rates of pay, rules, or

working conditions. See id. at 972-73 (holding that “disputes . . . growing out of . .

. the interpretation or application of agreements concerning rates of pay, rules, or

working conditions” constitute minor disputes within the exclusive jurisdiction of the

RLA’s arbitration board). Here, the IAM Equity Agreement and the IAM Trust

Agreement concerned the rate of pay between NWA and IAM members because

Appellate Case: 07-1611 Page: 6 Date Filed: 03/07/2008 Entry ID: 3410553
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NWA preferred stock was provided to IAM members as consideration for wage

concessions. Therefore, any interpretation or application of the IAM Equity

Agreement or the IAM Trust Agreement constitutes a minor dispute within the

exclusive jurisdiction of the RLA adjustment board.

Hastings and Karpiuk contend that the determination of a breach of fiduciary

duty in this case is independent of an interpretation or application of the collective

bargaining agreements. The district court, rather than the RLA arbitration board, has

jurisdiction over ERISA claims that are independent of an interpretation or application

of any collective bargaining agreements, even if the pension plan is created or

maintained pursuant to a collective bargaining agreement. See Air Line Pilots Ass’n,

Int’l v. Northwest Airlines, Inc., 627 F.2d 272, 277 (D.C. Cir. 1980). In Air Line

Pilots, NWA collected interest accumulated as a result of its unreasonable delay in

payments due under a pension plan. Id. at 274. In rejecting NWA’s efforts to compel

RLA arbitration, the court held that ALPA’s breach of fiduciary duty claim was

independent of the collective bargaining agreement because even if NWA’s conduct

in keeping the interest was permissible under a proper interpretation of the plan,

NWA’s failure to act solely for the benefit of the plan participants could still

constitute a breach of fiduciary duties under ERISA. Id. at 277. However, in Everett

v. USAir Group, Inc., 927 F.Supp. 478 (D.D.C. 1996), aff’d, 194 F.3d 173 (D.C. Cir.

1999), the district court determined that it lacked subject matter jurisdiction due to the

RLA because the breach of fiduciary duty claim was not independent of a collective

bargaining agreement. Id. at 483. There, the collective bargaining agreement

included the method for calculating pension benefits. Id. at 480. To determine

whether USAir wrongfully excluded dividends from its calculation of plan benefits

required first the proper interpretation of the benefit calculation method described in

the collective bargaining agreement. Id. at 483. Therefore, the court held that the

breach of fiduciary duty claim was not independent of the collective bargaining

agreement because determining if USAir improperly calculated plan benefits “turn[ed]

on whether USAir’s interpretation of the plan [was] incorrect or misleading.” Id.

Appellate Case: 07-1611 Page: 7 Date Filed: 03/07/2008 Entry ID: 3410553
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As in Everett, Hastings’s and Karpiuk’s breach of fiduciary duty claims are not

independent of the collective bargaining agreements. The NWA Defendants deny that

they are fiduciaries of the IAM Plan. The NWA Defendants are not trustees of the

IAM Plan. However, because the IAM Equity Agreement and the IAM Trust

Agreement require NWA’s concurrence whenever the IAM appoints or removes

trustees, Hastings and Karpiuk argue that NWA effectively has the power to appoint

and remove trustees and, therefore, is a fiduciary of the IAM Plan. See Hickman v.

Tosco Corp., 840 F.2d 564, 566 (8th Cir. 1988) (holding that the power to appoint

trustees makes one a fiduciary under ERISA). By their own assertions, the

determination of NWA’s power to appoint and remove a trustee requires an

interpretation and application of the collective bargaining agreements. Thus, the

determination of whether or not the NWA Defendants owe fiduciary duties to IAM

Plan participants is not independent of an interpretation or application of the collective

bargaining agreements. Because the breach of fiduciary duty claims involving the

IAM Plan require an interpretation and application of the collective bargaining

agreements, they constitute minor disputes within the exclusive jurisdiction of the

RLA adjustment board. See Jenisio, 187 F.3d at 973.

Finally, Hastings and Karpiuk claim that the NWA Defendants are estopped

from asserting that the RLA arbitration board has jurisdiction because NWA

distributed pamphlets indicating that IAM Plan participants may file suit in federal

court. However, “parties to a [collective bargaining agreement] may not circumvent

the RLA’s arbitration requirement (and thereby vest subject matter jurisdiction in the

district court) by contractual agreement.” Jenisio, 187 F.3d at 974; accord Bowe v.

Northwest Airlines, Inc., 974 F.2d 101, 103-104 (8th Cir. 1992) (“Parties to an

agreement cannot create federal subject matter jurisdiction by consent.”). Therefore,

the district court correctly concluded that it lacked subject matter jurisdiction over the

claims that the NWA Defendants breached fiduciary duties owed to IAM Plan

participants.

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B. The Pilot Plan

“To bring a civil action under ERISA, a plaintiff must have . . . statutory

standing.” Leuthner v. Blue Cross & Blue Shield of Northeastern Pa., 454 F.3d 120,

125 (3d Cir. 2006); accord Adamson v. Armco, Inc., 44 F.3d 650, 655 (8th Cir. 1995)

(holding that plaintiffs lacked statutory standing). To have statutory standing under

ERISA for a breach of fiduciary duty claim, a plaintiff must be “a participant,

beneficiary or fiduciary” of the ERISA plan. 29 U.S.C. § 1132(a)(2). Hastings and

Karpiuk, as IAM members, have not alleged that they were participants, beneficiaries

or fiduciaries of the Pilot Plan. Therefore, Hastings and Karpiuk lack standing over

their claims that the NWA Defendants and the Pilot Defendants breached their

fiduciary duties to Pilot Plan participants and beneficiaries. 

Nonetheless, Hastings and Karpiuk argue that they have standing by virtue of

having brought a class action pursuant to Federal Rule of Civil Procedure 23 because

“an individual in one ERISA benefit plan can represent a class of participants in

numerous [ERISA benefit] plans other than his own, if the gravamen of the plaintiff’s

challenge is to the general practices which affect all of the plans.” Fallick v.

Nationwide Mut. Ins. Co., 162 F.3d 410, 422 (6th Cir. 1998); accord Forbush v. J.C.

Penney Co., 994 F.2d 1101, 1105-06 (5th Cir. 1993). Our circuit has not adopted this

rule, and we need not decide whether to adopt such a rule at this time. Because the

district court does not have subject matter jurisdiction over the breach of fiduciary

duty claims involving the IAM Plan, Hastings and Karpiuk cannot rely on those

claims to establish standing for similar causes of action brought on behalf of the Pilot

Plan participants and beneficiaries. As a result, Hastings and Karpiuk must have

standing to pursue their breach of fiduciary duty claims involving the Pilot Plan and

cannot rely on Fallick and Forbush to obtain such standing. See Hall v. Lhaco, Inc.,

140 F.3d 1190, 1196 (8th Cir. 1998) (holding that an individual who lacks standing

to pursue a claim under one ERISA benefit plan cannot obtain standing over that same

plan through a class action lawsuit). Because Hastings and Karpiuk were not

Appellate Case: 07-1611 Page: 9 Date Filed: 03/07/2008 Entry ID: 3410553
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We also deny the Pilot Defendants’ pending motion to strike or, in the

alternative, to respond to certain matters contained in Hastings’s and Karpiuk’s reply

brief.

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participants, beneficiaries or fiduciaries of the Pilot Plan, the district court correctly

held that Hastings and Karpiuk lacked standing to bring claims on behalf of the Pilot

Plan participants and beneficiaries. 

III. CONCLUSION

Because we conclude that the district court did not err in granting the motions

to dismiss, we affirm.3

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