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
"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
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
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.
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
Mesaba Responds: Official Statement in Response to ALPA
Mesaba Aviation, Inc.,
a subsidiary company of MAIR Holdings, Inc. issued the following
statement from its president and chief operating officer John
Spanjers today, concerning the lawsuit filed by ALPA:
"Mesaba Airlines regrets the errors that occurred in certain
employees' 401(k) accounts, and we have disclosed these errors to
the IRS and the Department of Labor. We also have communicated to
all employees the nature of the errors and our plan for both
correcting them and preventing their recurrence. We believe this
lawsuit is unnecessary given our commitment to correcting the
"We are disappointed that ALPA deemed a lawsuit necessary at
this time, because since we self-disclosed these errors, we have
worked closely with ALPA to address the concerns of the Mesaba
pilots -- and all Mesaba employees -- and to rectify the
"In addition, the timing of this lawsuit adds another layer of
distraction as Mesaba approaches the Jan. 9 deadline in its pilot