(CN) - A divided Texas Supreme Court ruled Friday that a pilot union's multimillion dollar lawsuit against Boeing can continue, rejecting the airplane manufacturer's arguments that the union lacked standing to sue on behalf of its members or that federal law preempted its claims.
The case centers around Boeing's infamous 737 Max planes, two of which crashed in 2018 and 2019.
Both crashes occurred outside the United States, killing a combined 346 people. In a criminal case regarding those incidents, Boeing admitted to deceiving federal regulators about the safety of the Max's flight control system, a key factor in the crashes.
Following the accidents, the Federal Aviation Administration grounded the Max for 20 months. During this time, the Southwest Airlines Pilots Association or SWAPA, a nonprofit representing the interests of pilot employees at Dallas-based Southwest Airlines, sued Boeing on behalf of itself and its members.
The union claims that during negotiations over whether its members would be required to fly Max planes, Boeing falsely represented to SWAPA that the Max was essentially the same as the 737 variant Southwest pilots were already flying and that pilots could fly Max planes without any additional training.
As a result of this misrepresentation, SWAPA says, it agreed that its members would fly the Max as a part of a 2016 collective bargaining agreement. That decision caused members to lose over $100 million in wages when the FAA grounded the Max, the union claims.
SWAPA and Boeing did not immediately respond to requests for comment on Friday's ruling.
For its part, Boeing argues the suit was preempted by the federal Railway Labor Act, which established a system of arbitration boards to resolve disputes regarding collective bargaining agreements between railway and airline companies and their employees. The U.S. Supreme Court has ruled that the act preempts such claims in state courts.
Even without the 2016 agreement, a prior collective bargaining agreement from 2006 would have still required Southwest pilots to fly the Max, Boeing argues. As such, the company says damages can't be attributed to its alleged misrepresentations.
The Texas Supreme Court disagreed, ruling in an opinion Friday that SWAPA's claims are not "substantially dependent" on interpreting the 2006 agreement.
"Even if the 2006 CBA [collective bargaining agreement] required the pilots to fly the MAX, SWAPA had no obligation to agree to fly it in the 2016 CBA, and SWAPA asserts that it would not have agreed to fly the MAX in the 2016 CBA but for Boeing's alleged misrepresentations," Justice Jeff Boyd wrote for the court.
Boeing also argued that SWAPA lacked standing to bring claims on behalf of its members. Such claims would require the court to evaluate the damages each individual pilot incurred, the company argued - but under Texas law, a nonprofit lacks associational standing if the case requires the participation of individual members.
Following a motion to dismiss by Boeing, 8,794 union members assigned their individual claims against Boeing to SWAPA. Boeing argued these assignments were void because they violated Texas policy, claiming SWAPA was seeking to get around rules set by Texas lawmakers.
But a majority of Texas Supreme Court justices disagreed on this point as well. "The alternative," they noted, "could be as many as 10,000 individual lawsuits based on the same facts."
Two of the nine justices disagreed with this portion of the ruling. In a dissent authored by Justice Jane Bland, which Justice Rebeca Huddle joined, Bland argued that the rules for associational standing should also apply to the assignment of claims.
"This case involves the assignment of more than 8,000 individual claims to one nonprofit association, something unheard of in Texas law," she wrote. "With the Court's opinion in hand, nonprofit organizations are free to become clearinghouses for mass torts-with none of the protections that other mass-action vehicles afford."
Source: Courthouse News Service
