In re Continental Air Lines, Corp.

60 B.R. 898, 1986 Bankr. LEXIS 6714
CourtUnited States Bankruptcy Court, S.D. Texas
DecidedFebruary 12, 1986
DocketBankruptcy Nos. 83-04019-H2-5, 83-04020-H1-5, 83-04021-H3-5 and 83-04022-H3-5
StatusPublished

This text of 60 B.R. 898 (In re Continental Air Lines, Corp.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Continental Air Lines, Corp., 60 B.R. 898, 1986 Bankr. LEXIS 6714 (Tex. 1986).

Opinion

FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH RESPECT TO CLAIMS FOR ACCRUED SICK LEAVE

T. GLOVER ROBERTS, Bankruptcy Judge.

FINDINGS OF UNCONTESTED FACT

1. On September 24, 1983, Continental Air Lines, Inc. and Texas International Airlines, Inc. filed petitions for reorganization under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 1101, et seq. Upon filing the bankruptcy petition, Continental temporarily suspended all domestic service and on September 27, 1983, Continental began rebuilding the service by reinstating a limited portion of its domestic service, initially requiring fewer employees than immediately prior to bankruptcy.

2. The Debtors implemented new employment policies for each employee group which included changes in the way sick leave would be accumulated and paid. Generally, the new policies reduced the maximum amount of sick leave that could be accrued, and, in some cases, changed the rate at which sick leave would accrue each month. Employees in any group whose accrued hours exceeded the maximum had their accrued hours reduced to the new maximum, not to zero.

3. The Air Line Pilots Association (“ALPA”), the Union of Flight Attendants (“UFA”), the International Association of Machinists (“IAM”), and numerous union and non-union individuals have filed proofs of claims in this Court for millions of dollars in accrued sick leave pay. ALPA’s sick leave pay claim was withdrawn and treated as settled and dismissed with prejudice pursuant to this Court’s Order Relative To Claims, Controversies and Related [900]*900Litigation dated October 31, 1985. UFA included its sick leave claim in its proof of claim for pre-petition wages and benefits filed on behalf of 2,665 flight attendants. These 2,665 flight attendants comprised all flight attendants on the pre-petition seniority list, including those subsequently terminated.

4. Debtors have sought summary judgment disallowing all accrued sick leave claims by or on behalf of terminated Continental employees on the grounds that neither the collective bargaining agreements between Debtors and UFA and IAM, nor the sick leave provisions of the pre-petition Corporate Policy Manual that applied to non-union employees and employees represented by the Transport Workers Union of America (“TWU”) created a right to payment for accrued but unused sick leave. Debtors have also sought, pursuant to 11 U.S.C. § 502(c), to have the accrued sick leave claims of terminated employees estimated to have zero value.

5. Debtors have requested that their motion, insofar as it applies to working Continental employees and to individuals who may return to work in the future, be held in abeyance. However, Debtors continue to press their motion with respect to individuals whose employment with Continental has been terminated. More specifically, Debtors have directed their motion at all employees who have been discharged, or who have resigned or retired from employment with Continental.

6. Neither the sick leave provisions of the collective bargaining agreements between Debtors and UFA or IAM, nor those of the pre-petition Corporate Policy Manual that applied to non-union employees and to employees represented by the TWU, created a right to payment for accrued but unused sick leave under any circumstances. No provision in either the collective bargaining agreements or the Corporate Policy Manual provide for payment for unused sick leave upon request or upon termination, resignation, retirement, furlough or other change of employment status. Rather, the collective bargaining agreements and the Corporate Policy Manual make clear that sick leave pay is a substitute for wages and is available only when an actual illness or injury causes an employee to be absent from work.

7. No employee of Continental subject to this motion has ever received a cash payment for the value of accrued but unused sick leave. It has never been the past practice of Continental to grant any cash payment for accrued but unused sick leave to any individual employee or to any member of an employee group with a currently pending sick leave claim.

8. Neither UFA, IAM, or TWU has ever filed a grievance or otherwise challenged Continental’s practice of not making cash payments for accrued but unused sick leave to employees upon request or upon termination, resignation, retirement, furlough or other change of employment status. Although individual Continental employees have occasionally filed grievances challenging Continental’s practice of not making such payments, such grievances have always been resolved with the union acknowledging that no such obligation exists.

9. UFA, IAM, TWU, the Official Union Labor and Pension Creditors Committee, the Non-Union Labor and Pension Creditors Committee, and various individual claimants have opposed Debtors’ motion upon the ground, generally, that the reduction of the maximum amount of sick leave that can be accrued diminished the value of that benefit to pre-petition employees who, at some point in their employment, might otherwise have been entitled to more sick leave than the new máximums would allow. However, since Debtors have requested that their motion be held in abeyance with respect to all working Continental employees and with respect to all individuals who may, in the future, return to work for Continental, these issues raised by these opposition arguments are, for the present, moot. TWU also challenges this Court’s jurisdiction to decide the allowability of sick leave claims. In addition, a group of non-union employee creditors filed a Cross-[901]*901Motion For Partial Summary Judgment And Estimation Of Value Of Strike Leave Claims.

CONCLUSIONS OF LAW

1. TWU challenges the jurisdiction of this Court through its contention that any dispute concerning the status of accrued sick leave is required by the RLA to be submitted to a system board of adjustment. This contention is meritless because the bankruptcy courts have jurisdiction to decide all claims against an estate. 28 U.S.C. §§ 1334(a); 157(a), (b)(1), (b)(2)(B).

2. Bankruptcy courts also have discretion to resolve claims even if there exists another tribunal for such resolution. Zimmerman v. Continental Air Lines, 712 F.2d 55, 56 (3d Cir.1983), cert. denied, 464 U.S. 1068, 104 S.Ct. 699, 79 L.Ed.2d 165 (1984). TWU relies upon Matter of Gary Aircraft Corporation, 698 F.2d 775 (5th Cir.), cert. denied, 464 U.S. 820, 104 S.Ct. 82, 78 L.Ed.2d 92 (1983), asserting that Congress has committed authority to disallow claims of this type to a specialized tribunal, the system board of adjustment. However, Gary does not hold that bankruptcy courts have no jurisdiction over claims for which there exists another tribunal. Gary was decided on the basis of findings that deferral of a government contract claim to the Armed Services Board of Contract Appeal would not impair the satisfaction of other bankruptcy claims and that government contracts are extremely complex, technical and esoteric.

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60 B.R. 898, 1986 Bankr. LEXIS 6714, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-continental-air-lines-corp-txsb-1986.