Class Action Suit Filed by Former TWA Pilots
Conspiracy, violations of federal law and denial
of constitutional rights are the core accusations made in a class
action lawsuit regarding the pension benefits denied to former TWA
pilots by financier Carl Icahn, the Pension Benefit Guaranty
Corporation (PBGC) and the Airline Pilots Association (ALPA).
The lawsuit was filed on May 15, 2002 in the U.S. District Court
for the District of Columbia by Quarles & Brady Streich Lang,
LLP, representing the more than 1,000 TWA pilots who are now
receiving pensions as much as $1,500 per month lower than what they
had been promised.
"Carl Icahn and the other defendants robbed us coming and
going," said Devon "Al" Francis, president of the plaintiff's group
dubbed the "A Plan Defense Fund, Inc." and named after TWA's "A
Plan" retirement program for pilots. "Icahn acquired the company
with the help of the TWA employees. He couldn't have done it
without us. He promised to help us transform the company into the
world's 'Premier Airline' and we agreed to drastically reduce our
wages and benefits in consideration of receiving stock equity in
the company and job security items including enhanced retirement
benefits."
These were hollow promises, Francis explained. The pilots lost
their Employee Stock Ownership Plan (ESOP) when Icahn's stewardship
failed and he filed for bankruptcy. "He, on the other hand,
reputedly walked away with over one billion dollars in profits,"
said Francis. "Later, when faced with having to fully fund the
retirement plans, he made a deal with the unions and the PBGC to
gut the plans without even asking for our input or opinions."
The multiple page complaint, available at a
special website (below), along with other information on the
case, details how Icahn played a shell game by transferring TWA's
pension programs to a newly created entity, Pichin Corporation.
Then, in January 2001, Icahn instigated termination of the pension
plans which, at that time, were underfunded by approximately $700
million, including an estimated $200 million shortfall in the
pilot's A-plan.
"The termination violated multiple provisions of ERISA, the
Employee Retirement Security Act," said Richard Walker of Quarles
& Brady Streich Lang.
Additionally, Walker explained, his clients' constitutional
rights were violated because they were not provided with any sort
of court or administrative proceeding at which they could express
their viewpoint about Icahn's decisions.
Icahn's actions required the approval of both the PBGC and ALPA,
which is why they are also defendants in the case.
"We know that any logical person would ask, 'why would PBGC and
ALPA go along with Mr. Icahn's scheme?' We think that that's a very
good question, and we expect the truth to come out in legal
proceedings about the behind-the-scenes dealings that sacrificed
the pilots' pensions benefits on the altar of greed," said
Francis.