On March 30, 2022, the Court of Appeals for the Fifth District of Texas reversed the Dallas trial court’s order granting The Boeing Company’s (“Boeing”) Plea to the Jurisdiction1 and dismissing with prejudice the claims the Southwest Airlines Pilots Association (“SWAPA”) asserted against the manufacturer of the 737 MAX and held that SWAPA may commence a new action to bring claims assigned to it by its member pilots.
SWAPA filed its original petition, on behalf of itself and its member pilots, in the 160th District Court in Dallas County, Texas on October 7, 2019, alleging several state-law causes of action arising out of Boeing’s false representations and omissions that led to the worldwide grounding of the 737 MAX and caused SWAPA and its member pilots to sustain millions of dollars in damages, including lost compensation, membership dues, and legal fees incurred in connection with government investigations. After SWAPA commenced the action, nearly 9,000 of its members assigned their rights to any claims against Boeing to SWAPA.
Boeing removed the case to the U.S. District Court for the Northern District of Texas on the ground that the Railway Labor Act (“RLA”)2 completely preempts SWAPA’s state-law claims.3 The Northern District court remanded the case to Texas state court, holding that the RLA does not completely preempt any claim involving a collective bargaining agreement (“CBA”) between commercial air carriers and their pilots.
On remand, Boeing filed a Plea to the Jurisdiction, arguing 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 at the time it commenced the action; and (2) SWAPA’s state-law claims are preempted by the RLA.4 Without explaining its rationale, the trial court granted Boeing’s Plea and dismissed SWAPA’s Original Petition with prejudice, thereby precluding SWAPA from amending its Petition.5
SWAPA filed an appeal of the trial court’s decision in the Texas Court of Appeals, Fifth District, and during the pendency of its appeal, also filed a new action against Boeing, on its own behalf as the assignee of its members, thereby attempting to cure the standing issue.
On appeal, SWAPA argued that the trial court erred in dismissing its Original Petition for several reasons. First, SWAPA argued that it had standing to bring claims against Boeing on its own behalf and on behalf of its members under Texas law. The Court of Appeals agreed in part, 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. However, the Court of Appeals ruled that the Texas statute governing associational standing did not give SWAPA the right to pursue claims on behalf of its members.
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 were void as against public policy, and thus, did 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 applied to the present case. However, the court held that the assignments, while otherwise valid, did not confer standing upon SWAPA in the present case because they occurred after SWAPA filed the 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 Original Petition, they might confer standing on SWAPA to file suit in the future. 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 CBA, regardless of the relationship between the parties to the action. 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 they both make it clear that the RLA only applies to disputes between an air 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
An entity is considered a “carrier by air,” for RLA purposes, if the entity 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.
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1 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.
2 The RLA is a federal statute that governs over certain types of disputes between an air carrier and its employees.
3 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).
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.
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).