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December 31, 2003
ALPA’s Mesaba Pilots Sue Employer for Mishandling of 401(k) Funds
MINNEAPOLIS --- Mesaba Airlines pilots have filed a lawsuit against their employer for the mishandling of contributions to their individual 401(k) retirement plans. According to documents filed with U.S. District court in Minneapolis today, the pilots allege Mesaba withheld money from their paychecks that was earmarked for their 401(k)s, but never actually deposited the money into the pilots’ retirement accounts.
"Mesaba has been deducting money from our paychecks that was supposed to go into our 401(k) accounts, but instead they’ve kept the money in the company’s coffers," said Kris Pierson, Mesaba pilot and ALPA spokesman.
In addition, the lawsuit alleges that Mesaba failed to make all of the matching contributions required under the plan, made certain other contributions outside of the legal time limits, and did not promptly rectify these errors which date back to at least 1996.
According to the lawsuit, Mesaba’s failure to identify and promptly fix the irregularities constitutes a breach of its fiduciary duties. The court filing alleges that "Mesaba knew or should have known" of its errors since under federal law Mesaba is required to engage an independent qualified public accountant to audit the plan. Mesaba is also required to publish an annual report of the Plan that includes a financial statement of the assets and liabilities of the plan.
The Air Line Pilots Association, International (ALPA), the union that represents Mesaba’s pilots, learned of the funding shortfalls in late September. ALPA initially believed that the retirement plan problems could be resolved without resorting to litigation.
"Management has flatly refused to disclose even the government filings related to this matter. Without any supporting data, our pilots can not be assured that a full remedy will be provided" stated Pierson. "Moreover, we have reason to believe the funding shortfalls affect most of Mesaba’s pilots and many other Mesaba employees. In some cases, pilots are owed several thousand dollars." Mesaba had promised employees that it would pay at least some of the monies owed by November 30, 2003, but it missed its own deadline.
The lawsuit filing comes just days before a possible strike by Mesaba pilots. Contract talks were declared to be at impasse by the National Mediation Board earlier this month, setting a contract-or-strike deadline of January 9, 2004 at 11:01 p.m. CST.
Retirement benefits are a sticking point in contract negotiations for the Mesaba pilots who retire with 25-30 percent less in their retirement than pilots at similar regional airlines. That issue is compounded by the union’s concern that Mesaba pilots have been further disadvantaged by the contribution irregularities.
"We filed the lawsuit because we need to be certain that our pilots will get back the money that they are entitled to – and that they will need when they retire," said Pierson. Half of Mesaba’s 844 pilots earn less than $32,500, with starting pay less than $17,000.
More details about the Mesaba pilot contract negotiations, and this issue are available on the Mesaba pilots’ public website http://mesabapilots.alpa.org.
Mesaba Airlines operates as a Northwest Jet Airlink and Northwest Airlink partner for Northwest Airlines. Mesaba serves 114 cities in 30 states and Canada from Northwest's three major hubs: Detroit, Minneapolis/St. Paul and Memphis. Mesaba employs 844 professional airline pilots who operate an advanced fleet of 103 regional jet and jet-prop aircraft.
Founded in 1931, ALPA is the world’s largest pilot union representing 66,000 pilots at 42 airlines in the U.S. and Canada. Visit the ALPA Web site at www.alpa.org.
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ALPA CONTACT: Kris Pierson (612) 839-0789