Texas State Court of Appeals Revives Southwest Airlines’ Pilots’ Union’s Action Against Boeing Arising from the Grounding of the 737 MAX, Ruling that the Railway Labor Act Does Not Preempt the Union’s State-Law Claims because Boeing is not an Air Carrier

The Southwest Airlines Pilots Association (“SWAPA”) sued Boeing in late-2019 in the 160th District Court in Dallas County, Texas, seeking damages arising from the world-wide grounding of 737 MAX aircraft.  Southwest Airlines flies a fleet consisting exclusively of Boeing 737 aircraft, had already taken delivery of many MAX aircraft before the grounding, and was expecting to take delivery of a significantly greater number of MAX aircraft during the two-year grounding.  The grounding reduced Southwest’s fleet and thus its pilots’ opportunities to earn income, and based on that reduced income, reduced the revenue of the union, to which pilots pay dues as a percentage of income.   

SWAPA sued Boeing on behalf of itself and its members for those losses asserting state-law causes of action arising out of Boeing’s false representations and omissions that led to the world-wide grounding, and its direct misrepresentations to SWAPA and its members.  SWAPA alleged that during the time that it was negotiating a new collective bargaining agreement with Southwest Airlines, it did not intend to agree to pilot the 737 MAX without certain concessions from Southwest because, according to SWAPA, the MAX was sufficiently different from prior generations of 737 aircraft that its members were certified to fly.  Those differences had the potential to reduce pilot income because of, among other reasons, pilot time taken away for training as opposed to revenue flying. 

SWAPA argued in its suit against Boeing that it only agreed to the new collective bargaining agreement after Boeing directly assured SWAPA that the 737 MAX was essentially the same as prior generations of 737 aircraft but more fuel efficient, was just as safe as prior 737s, and would require only two-hour computer-based pilot transition training.  However, following two MAX crashes within a five-month period soon after its launch, it became apparent to SWAPA that Boeing’s assurances were false.

Boeing filed to remove the SWAPA lawsuit to the U.S. District Court for the Northern District of Texas on the ground that the Railway Labor Act (“RLA”)1 completely preempts SWAPA’s state-law claims.2  The Northern District court remanded the case to Texas state court, holding that the RLA does not completely preempt every claim involving a collective bargaining agreement (“CBA”) between commercial air carriers and their pilots. 

After remand, Boeing filed a Plea to the Jurisdiction3 in the Texas state trial court.  Boeing argued that the court lacked subject matter jurisdiction over the action for two reasons: (1) SWAPA did not have standing to pursue the claims of its members; and (2) SWAPA’s state-law claims are preempted by the RLA.4  Without explaining its rationale, the court granted Boeing’s Plea and dismissed SWAPA’s action with prejudice, thereby precluding SWAPA from amending its Petition or from bringing a new action against Boeing.5

SWAPA appealed the trial court’s decision in the Texas Court of Appeals, Fifth District, and during the pendency of its appeal, SWAPA filed a new action against Boeing.  By this time, SWAPA had obtained assignments of claims against Boeing from nearly 9,000 of its members, thereby making SWAPA the owner of those claims in an attempt to cure the standing issue and preserve its claims in advance of the potential statute of limitations expiration. 

Boeing moved to dismiss the second action on res judicata grounds.  SWAPA countered that res judicata could not apply because in the first action SWAPA was suing on behalf of its members, but in the second, it owned its members’ claims.  SWAPA argued that where there is not an identity of parties, res judicata cannot apply.  The trial court dismissed SWAPA’s second action, again providing no explanation.  SWAPA appealed this dismissal as well.

On appeal of the first action, SWAPA argued that the trial court erred in dismissing its Petition for several reasons.  First, SWAPA argued that it has standing to bring its own claims against Boeing.  The Court of Appeals agreed, holding that SWAPA has standing to bring its own claims because Texas statutory law provides that SWAPA, as a non-profit association, is entitled to a proceeding in its own name to seek recovery of its own damages.

Second, SWAPA argued that it has standing to assert claims on behalf of its members by virtue of the assignments it received from its members.  Boeing countered that the assignments are void as against public policy, and thus, do not confer standing upon SWAPA.  The Court of Appeals rejected Boeing’s argument, noting that causes of action are freely assignable and that contractually valid assignment can only be invalidated on public policy grounds in certain limited circumstances, none of which apply here.  However, the court held that the assignments, while otherwise valid, did not confer standing upon SWAPA in the first action because they were executed after SWAPA filed the first action, and a party must have standing from the time that the action is commenced.  The court further held that, while the later-acquired assignments cannot cure the jurisdictional defects in the first action, they might confer standing on SWAPA to file suit in the future, i.e., the second SWAPA action.  Accordingly, the court held that the trial court properly dismissed the claims brought on behalf of SWAPA’s members but erred in dismissing the claims with prejudice.   

Lastly, SWAPA argued that the RLA does not preempt SWAPA’s state-law claims because the RLA does not apply to this dispute between an aircraft manufacturer and a pilots’ union.  Boeing countered, arguing that the RLA preempts any case that requires the interpretation of a collective bargaining agreement, regardless of the relationship between the parties to the action, and that the court would have to interpret those agreements here because, according to Boeing, SWAPA’s collective bargaining agreements with Southwest Airlines had all required the pilots to fly the MAX.  The Court of Appeals rejected Boeing’s argument, holding that “a conclusion that a claim is preempted must necessarily be predicated on a threshold determination that the RLA applies to the dispute.”  In order to make that threshold determination in this case, the court analyzed the legislative history and the statutory text of the RLA and concluded that both make clear that the RLA only applies to disputes between a carrier and its employees.  Specifically, the court noted that the main purpose of the RLA is to promote stability in labor-management relations in the air and rail transportation industries by providing a comprehensive framework for resolving labor disputes.6  The court further noted that the statute explicitly provides that the RLA applies to “disputes between carriers by air and its employees.”7

The Court of Appeals further explained that an entity is considered a “carrier by air,” for RLA purposes, only if it holds itself out to the public as being willing to transport for hire.8  The court applied this test and found no basis to conclude that Boeing, a manufacturer and seller of aircraft, is a “common carrier by air.”  Accordingly, the court held that SWAPA’s claims do not implicate the RLA’s purpose of facilitating stability in the labor-management relations in the air transportation industry, and thus, are not preempted by the RLA. 

SWAPA’s appeal of the second action remains pending, but the Court of Appeals’ decision in the appeal of the first action appears to make clear that the second action, brought by SWAPA itself and as owner of nearly 9,000 member claims should not have been dismissed as to either claim. 

 


1 The RLA is a federal statute that governs over certain types of disputes between an air carrier and its employees. 

2 Complete preemption is a federal doctrine relating to whether a case may be removed to federal court because the state-law claims come within a narrow class of federal statutes that have such extraordinary preemptive force that they are considered federal claims arising under federal law.  See Caterpillar v. Williams, 482 U.S. 386, 393 (1987).

3 A Plea to the Jurisdiction is a mechanism provided under Texas law for a party to seek the dismissal of a case for lack of subject matter jurisdiction.

4 A claim is preempted under this category of RLA preemption, also known as ordinary or defensive preemption, when resolution of the claim requires an interpretation of the CBA.  See Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 262-63 (1994).

5 Under Texas law, trial courts are not required to issue a written opinion when a Plea to the Jurisdiction is granted.  While the Texas Rules of Civil Procedure provide a mechanism for a party to request that the court issue its findings of fact and conclusions of law in writing, the court denied SWAPA’s request in this instance.

6 See Norris, 512 U.S. at 252.

7 See 45 U.S.C. §§ 184, 185.

8 See Thibodeaux v. Exec. Jet Int’l, Inc., 328 F.3d 742, 749 (5th Circ. 2003).

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