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DOJ Sues AMR Over Reservist Pilot Benefits

Thursday January 12, 8:40 PM EST

SAN FRANCISCO -(Dow Jones)- The Department of Justice said Thursday it is suing American Airlines (AMR), alleging the company denied three pilots employment benefits during their military service.

The suit, filed in U.S. District Court in Dallas, alleges that American Airlines (AMR) violated the Uniformed Services Employment and Reemployment Rights Act of 1994.

The complaint alleges that American Airlines (AMR) conducted an audit of the leave taken for military service by American Airline pilots in 2001, and that based on that audit, the airline reduced the employment benefits of pilots who had taken military leave, while not reducing the same benefits of pilots who had taken similar types of nonmilitary leave.

"This nation depends on our reservists to faithfully carry out their duty," Wan Kim, assistant attorney general for the civil rights division, said in a statement. "No reservists - indeed, no members of our armed forces - should ever be punished or discriminated against for answering the call of duty."

The complaint was filed on behalf of pilots Mark Woodall, Michael McMahon and Paul Madson. Woodall is a captain and McMahon a commander in the Naval Reserve, according to the Justice Department. Madson is a lieutenant colonel in the South Dakota Air National Guard, federal officials said.

Officials at AMR Corp. (AMR) (AMR), American Airlines' (AMR) parent company, didn't immediately return a phone call seeking comment.

The lawsuit represents the first proposed class action complaint filed by the U.S. under USERRA.

Earlier this week, American Airlines (AMR) said it's thanking U.S. military personnel by extending through June 1 special offers for discounted airfares, relaxed advance purchase requirements and preferred boarding privileges for active-duty members.

"We appreciate and admire the courageous efforts of U.S. military personnel around the world to keep our country safe and strong," Dan Garton, executive vice president of marketing, said in a statement. "And we recognize the great sacrifice that their family members also make. As a result, American Airlines (AMR) is pleased to extend these special offers to military members and their loved ones."

Shares of AMR closed at $20.86, down 3.4%.