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CCH® PENSION — 03/6/12

Dispute over pension claim governed by Railway Labor Act, not by ERISA

Federal courts lacked subject matter jurisdiction to review the adverse benefit determination of a Retirement Board established under the Railway Labor Act (RLA), despite express language in the pension plan guaranteeing participants' right to sue under ERISA §502(a), the U.S. Court of Appeals in New Orleans (CA-5) has ruled.

Pension benefit dispute

Retired airline pilots disputed the plan administrator's calculation of their final sixty months' salary, which the plan used to determine each participant's pension benefit amount. The governing collective bargaining agreement and pension plan provided that an adverse benefit determination must be reviewed by the internal Retirement Board, which was a "System Board" established under the provisions of the RLA and comprised of an equal number of employer and union representatives. The pension plan also stated that retirees could challenge the Board's adverse benefit decision by filing suit under ERISA §502(a). The retirees did file suit, but the district court dismissed their action for lack of subject matter jurisdiction and the appellate court affirmed.

RLA jurisdiction

The Railway Labor Act, which governs airline pilots, vests exclusive jurisdiction to resolve so-called "minor" disputes (including pension plan interpretation) in a "System Board" such as the one provided for by the pilots' CBA and pension plan. The court conceded that case law supported the proposition that parties may contract to allow an RLA-governed claim to go to court under ERISA, but that was not what the parties agreed to in this situation. Instead, the court explained, the parties to this CBA attempted to include disputes within the RLA's dispute resolution process, yet also expressly provide for judicial review of System Board decisions.

Parties to a contract cannot avoid the exclusivity of the RLA's arbitration scheme. Further, ERISA does not supersede the mandatory arbitration provisions of the RLA. Parties can choose one of two ways to resolve ERISA claims that fall under the RLA: (1) provide for RLA dispute resolution or (2) exclude certain disputes from RLA mandates. They cannot do both. As to the language in the plan providing for judicial review, the court notes that parties to an agreement cannot agree to confer subject matter jurisdiction on a federal district court.

Source: Ballew v. Continental Airlines, Inc. (CA-5).

For more information, visit http://www.wolterskluwerlb.com/rbcs.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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