Executive Summary: Airlines achieved a major victory on May 19, 2015, with an order from the Central District of California granting Southwest Airlines Co.'s motion to dismiss in McKinley v. Southwest Airlines Co., United States District Court, Central District of California Case No. 2:15-cv-02939-AB-JPR, finding the plaintiff's overtime claims to be preempted by the Railway Labor Act (RLA). Significantly, McKinleymakes clear that when an employee's claims focus on or require extensive analysis of the terms of a Collective Bargaining Agreement (CBA), the appropriate course for a court is to divest itself of jurisdiction in order to avoid creating inconsistent interpretations regarding the terms of the CBA.
McKinley was a former union employee who brought a putative class action against Southwest, alleging that he was not compensated for all overtime due to him under California law because the employer had used the incorrect rate of pay for purposes of calculating overtime. Similar to the standards under the Fair Labor Standards Act, most employers in California are required to calculate and pay overtime using the "regular rate of pay," which is legally defined to include not only the employee's base hourly rate, but all other forms of compensation, with limited exceptions.
RLA Preemption of Overtime Claims
However, given that McKinley was a union employee whose wages, hours and working conditions were governed by a CBA, Southwest moved to dismiss the action, in part, on RLA preemption grounds. Under RLA preemption, a court lacks jurisdiction to hear disputes related to state law claims when the dispute involves rights conferred under a CBA, or when resolving the claim requires interpretation or application of a CBA. The underlying rationale for this principle derives from the fact that CBAs under the RLA are applied nationwide. Thus, preemption is designed to promote uniformity and not allow a CBA's validity, interpretation or enforceability to be undermined by varying state law standards. This rationale makes perfect sense given that the historical purpose of the RLA was to promote stability in labor-management relations in the critical airline and railroad industry and to keep disruption of the nation's transportation system to a minimum.
After considering Southwest's arguments, the district court granted Southwest's motion on preemption. As part of its rationale, the district court noted that the very nature of McKinley's claims, which sought to attack how Southwest calculated the regular rate of pay, would have required the district court to interpret the CBA to identify each form of pay provided by the CBA, determine when that pay was due, and then decide whether the pay was the type of remuneration that should have been included in Southwest's overtime calculation. Accordingly, the district court concluded that because the merits of McKinley's claims hinged on an in-depth analysis of the various provisions of the CBA, the RLA deprived the court of subject matter jurisdiction, and thus preempted the claims.
Bottom Line for Employers
The McKinley opinion significantly strengthens an employer's preemption arguments against state law claims under the RLA, making these types of cases easier and quicker to defeat in federal court. So long as there is evidence of an applicable CBA that governs the railway or airline employee's employment that a court would need to interpret and analyze in-depth to evaluate the plaintiff's claims, a plaintiff's state law claims are practically dead-on-arrival. Likewise, the decision affirms a long-standing purpose of the RLA to not only keep labor disputes to a minimum, but also to promote the independence of the airline industry to resolve issues regarding compensation—including overtime pay—and working conditions through collective bargaining and the dispute resolution processes specified by the RLA.