Court Updates

May 16, 2012

The court read an opinion on the motion of the ad hoc PSA committee to prevent the debtors from changing terms and conditions without first going through a section 1113 proceeding. The court denied the motion of the ad hoc PSA committee. Procedurally, the count found that this type of relief needs to be brought by adversary proceeding (law suit) and not by motion. Substantively, the court denied the motion after finding that section 1113 only applies to circumstances where there is a collective bargaining agreement. Under the Railway Labor Act (the "RLA") the employer is permitted to make unilateral changes outside of the bankruptcy process and therefore can also do so during the bankruptcy case. As a final matter, the court declined to direct the debtors to release mailing labels because this additional issue is currently being litigated before the District Court before the Northern District of Texas in connection with other election issues.

May 15, 2012

The Court considered the motion (the "Motion") of the Ad Hoc Committee of Passenger Service Agents to Restrain the Debtors from Making Unilateral Changes in the Terms and Condition of Employment of the PSAs.

The passenger service agents are currently not represented by a union, but the Communication Workers of America (the "CWA") have filed a petition to represent the PSAs under the Railway Labor Act. On February 1, 2012, the Debtors told the PSAs (and other unionized and non-unionized employees) of the Debtors' plans to change the terms of employment for their non-managerial salaried employees, including the PSAs, after a period of "feedback." The Ad Hoc PSA Committee filed this Motion seeking to restrain the Debtors from making these changes until the National Mediation Board determines whether to issue a certification to the CWA as the exclusive bargaining representative for the PSA. The Ad Hoc PSA Committee further requested that if the CWA is so certified, the Debtors be required to satisfy the proceural and substantive requirements of section 1113 of the Bankrutpcy Code before they be permitted to change the PSAs' terms of emploment. Finally, the Ad Hoc PSA Committee in its reply papers requested that the Court compel the Debtors to provide the NMB with mailing labels necessary to conduct the election among the PSAs currently scheduled to go forward on May 17, 2012.

May 02, 2012

Different questions have been raised in the two days since the Company’s Last and Best Offer was finalized. This offer is being put to vote based on the commitment we made at the outset of the Bankruptcy process that the membership would have the opportunity to vote on the LBO. In order to make sure that this vote is based on accurate information about the contents of the proposal and the laws which govern the bankruptcy process, we are putting out answers to commonly asked questions.

1. If our contract is rejected by the Bankruptcy Court, what will be imposed, the Company’s “ask” before the proceedings began on the Company’s motion to reject, or the Last Best Offer (LBO) made after those proceedings began?

April 04, 2012

The section 1113 hearing in this proceeding shall commence on April 23, 2012. Except as otherwise agreed or as may be directed by the Court, the parties shall be prepared to proceed on the schedule set forth in the stipulation and order, some highlights are set forth below:
 
Hearing:
 
a. April 23, 2012: Opening Statements, if any, except that any party other than the Debtor may elect to defer its opening statement until the commencement of the Unions’ responsive case; Debtor’s affirmative case (summary direct testimony, full cross-examination, and re-direct examination of scheduled witnesses for Debtor). Debtor’s affirmative case will continue day to day, subject to the Court’s schedule, until
concluded.

March 25, 2012

The Debtors filed a motion asking the Court to extend the initial period granted by the Bankruptcy Code to assume (keep) or reject (terminate) nonresidential real property leases. Section 365(d)(4)(B) of the Bankruptcy Code gives a debtors 120-days to assume or reject unexpired leases of nonresidential real property (the "Lease Rejection Period").

March 25, 2012

This is a law suit seeking to apply the automatic stay of section 362 of the Bankruptcy Code or, in the alternative, staying or stopping certain law suits against American and certain of American's directors, officers, employees or some others.

March 23, 2012

 The court entered a Stipulation and Order that directs the appointment of a single committee of retired employees (the “Retiree Committee…#157;) consisting of retired unionized and non-unionized employees pursuant to sections 1114(c) and (d) of the Bankruptcy Code. the Stipulation and order further provides that the appointment of a single Retiree Committee is without prejudice to the right of any party or other party in interest to seek appointment of a second retiree committee.

AMR- Stipulation and Order re 1114 Committee - (ECF No. 2007)

March 21, 2012

On March 16, 2012, by an agreement between the Allied Pilots Association (the "Pilots") and the Debtors authorized the Official Committee (the "Committee") of Unsecured Creditors to intervene in the adversary proceeding commenced by the APA on February 28, 2012.  The Pilots seek a determination that section 1113 of the Bankruptcy Code did not apply to its collective bargaining agreement because that agreement had terminated by its terms. The Debtors filed a motion seeking to dismiss the Complaint as a matter of law arguing, among other things, that the Railway Labor Act prolongs agreements that are subject to its provisions regardless of what such agreements say about termination until the parties have exhausted dispute resolution and renegotiation processes. The Committee agrees with the Debtors' view that section 1113 is applicable notwithstanding the termination of the agreement. The Committee further adds that its principal focus is forward-looking towards the Debtors' transformation into a profitable and sustainable global.  The Committee's objectives – including working with the Debtors to achieve a feasible and expeditious transformation of American Airlines and its related businesses that preserves, and hopefully enhances, business enterprise value – cannot be accomplished unless all material elements of the Debtors' revenue and expense structure are aligned with their principal competitors on a timely basis. 

The Debtors' motion to dismiss is scheduled to be heard on March 22, 2012.
 

March 17, 2012

The PBGC filed an objection to the Debtors' motion establishing procedures for settling certain claims.

The PBGC objects to the provisions of the Debtors' proposed procedures that would permit the Debtors to settle claims where the settlement amount is within 10% of the scheduled amount of the creditors claim, without court or creditor scrutiny, so long as the variance is $1 million or less. The PBGC objects that there is no limitation on the size of the settlement within this category.

AMR - Court Update 3/15/2012
March 15, 2012

On March 15, 2012, the Debtors filed an Objection to the TWU's Motion For Entry of An Order Lifting or Modifying the Automatic Stay to Permit James Gregorio to Institute Proceedings Against the Debtors For Improper Wage Garnishment.  James Gregorio presently works in the Debtors’ Facilities/GSE Maintenance division/center/office in Miami, Florida.  In April 2011, Mr. Gregorio filed two grievances related to unpaid overtime work which Gregorio performed.  The Debtors settled the grievances pursuant to a local union settlement. Mr. Gregorio received an overtime payment of $907.60 on or about December 16, 2011.  On February 2012, the Debtors' human resources payroll division garnished Mr. Gregorio's wages in the amount of the $907.60 settlement payment.  On February 2, 2012, the TWU, on behalf of Mr. Gregorio, filed a motion asking the Court to lift (or modify) the automatic stay to allow Mr. Gregorio to institute proceedings under applicable Florida law to remedy this arguably improper garnishment.  By their Objection, the Debtors argue that the garnishment merely served as a "corrective deduction" intended to reverse an allegedly unauthorized payment to Mr. Gregorio, in light of the automatic stay imposed by the bankruptcy filing.  The Debtors argue that because they made the allegedly corrective deduction to comply with the Bankruptcy Code, the proper tribunal to hear the action is the Bankruptcy Court. 
 
A hearing on the stay relief motion is scheduled for March 22, 2012.

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This site is not meant to constitute a legal opinion or legal advice, and does not replace independent consultation with your own attorney as each employer and employee's situation is unique.