Railway Labor Act Blog

Following up on a post from mid-July, the National Mediation Board announced yesterday that it was withdrawing a proposed change to its Representation Manual concerning the status of union representatives in mergers between a union and nonunion carrier.  The new rule would have required an incumbent union to demonstrate that it represented “more than a substantial majority” of employees on the merged carrier in order to be certified by the NMB without an election.

Apart from the inherent vagueness of the term “more than a substantial majority” (how much is that, exactly?), the Board was proposing a threshold for certification that exceeded the statutory standard of a simple majority. Section 2, Fourth and 2, Ninth both state that a “majority” of the employees in a class of employees are to determine whether the unit is to be represented by a union.  Some years ago, the US Court of Appeals for the District of Columbia Circuit struck down NMB rules governing mergers because the court concluded the rules conflicted with the statutory requirements.  This proposed rule would have faced a potential challenge for the same reason.

Critics of the proposed rule charged that it favored airlines over unions in representation disputes.  Board Member Harry Hoaglander criticized the rule last month stating that it created the perception the Board was “biased in favor of carriers in general, and Delta Airlines in particular.”  Numerous unions representing airline employees similarly criticized the proposed rule.

In view of the upcoming Presidential election, there would seem to be no likelihood that the Board will revisit this issue prior to a new Administration taking office.

A Tuesday deadline for the ALPA pilots of Delta Airlines and Northwest Airlines to reach agreement on integration of their seniority lists passed with apparently no agreement being reached.  They will now conduct an arbitration before a three-member panel of neutral arbitrators (two of whom served on an arbitration panel in the 2006 bankruptcy contract dispute between Delta and ALPA.)

Each side will formulate proposals for combining the seniority lists (based on positions already taken in the face-to-face negotiations.)    These proposals will use a methodology adopted by the party in question for placing pilots from each group at a particular location on the seniority list in relation to other pilots.  (The various methodologies that can be used are too complicated to get into here.)

The parties will present in the arbitration probably a mountain of testimony, exhibits and data to prove why their proposal is “fair and equitable” (the applicable standard for seniority integration under ALPA’s internal merger procedures.)  The usefulness of the large amount of evidence presented in such arbitrations can be in the eye of the beholder.  One arbitrator, George Nicolau, made this wry take on the parties’s presentations in such arbitration hearings some twenty years ago:

There are four basic lessons to be learned from those submissions; that each case turns on its own facts; that the objective is to make the integration fair and equitable; that the proposals advanced by those in contest rarely meet that standard; and that the end result, no matter how crafted, never commands universal acceptance.

As noted in earlier posts, the integration of seniority lists seems invariably a contentious and difficult matter.  Seniority can affect the career advancement of a pilot, the pilot’s monthly work schedule and determine order of layoff in the event of a reduction in force.  Pilots place great weight on where they are located on a seniority list.

The reality, however, is that seniority is really purchasing power–akin to a credit card or cash. Its value is in what it buys you; not in a particular spot on a list.  An integration can put a pilot “lower” on the seniority list in terms of the number of pilots ahead of him, while actually maintaining or even increasing the purchasing power of his seniority.  Persuading pilots that is the case is the key to obtaining  acceptance of a seniority integration and doing it in a way that is not disruptive to later relations between the two pilot groups.

The pilots of Delta Airlines and Northwest Airlines, who are both represented by the Air Line Pilots Association, have ratified a new collective bargaining agreement to cover the combined pilot group after the two airlines merge.  The union and airlines sought to resolve the issue of establishing a new collective bargaining agreement covering both groups before the airlines actually closed the merger transaction.  While that approach had been pursued a number of years ago at United Airlines when it considered acquiring the old Trump Shuttle, it had not been used in recent transactions.  The parties intent was to avoid contentious issues that might cause unrest among the pilot group when the two operations are integrated.

The difficult issue of integrating the seniority lists of the pilot groups has not yet been resolved.

A recent decision from the U.S. District Court for the Northern District of Texas helps illustrate one of the differences between arbitration under the National Labor Relations Act and the Railway Labor Act.  Under the NLRA, parties agree in their collective bargaining agreement to submit disputes under the agreement to arbitration.  While that dispute resolution mechanism is facilitated by federal law (for example, enforcing the obligation to arbitrate and the federal courts granting deferential treatment to the review of arbitration awards), the obligation to arbitrate is established by contract.

As seen in Careflite v. Office and Profl. Employees International Union, the RLA establishes a statutory duty under Section 2, First and Second and (for air carriers) Section 204, to resolve disputes over the interpretation of a collective bargaining agreement to arbitration before a System Board of Adjustment.

Careflite involved an employer’s (air ambulance service) lawsuit seeking a declaratory judgment holding that a grievance filed by the union against the discharge of a helicopter pilot was not arbitrable.

The grievance involved the parties’s agreement in the CBA that the  company’s pilots obtain Air Transport Pilot (ATP) licenses.  The parties agreed the pilots would have one year from the date on which the Company provided a necessary training class to then obtain the ATP license.  The company was to pay for the costs.  If pilots had not obtained their ATP license within the year, the contract provided they would be terminated.

The pilot in question was discharged by Careflite shortly after it provided the training class on an issue unrelated to the question of the ATP license.  The union grieved that earlier discharge and an arbitrator later ordered the pilot reinstated.  However, the pilot was not reinstated to his employment until almost a year after the company provided the ATP training class.

Due to his discharge, the pilot had not obtain his ATP license.  The delay in reinstatement allowed him only three weeks to obtain the license.  He failed to obtain the ATP license in that time and Careflite then discharged him, asserting the termination was mandated by the CBA.The union took the position the pilot was entitled to a ten month extension to his period to seek ATP certification as a result of his unjust discharge.

Both sides filed suit in federal court; Careflite seeking an order that the dispute was not arbitrable and the union seeking an order compelling arbitration.  In analyzing the dispute, the district court noted that Careflite’s reliance on case law under the NLRA was inappropriate in the RLA context.  The RLA requires that air carriers and their employees arbitrate any dispute that requirees interpretation of the CBA in order to resolve the dispute (referred to as “minor disputes.”)  The court observed that the RLA in Section 204 requires air carriers to establish arbitration panels (called boards of adjustment) and use that arbitration system to resolve disputes under its CBA.

In short, arbitration is not optional under the RLA, but is mandated by statute. So  long as one party’s position is arguably justified under the CBA–meaning the CBA must be interpreted to resolve the dispute–then it must submitted to arbitration.  This statutory obligations contrasts with the NLRA system of contractually-established arbitration that then requires (where the parties cannot agree) that a court to determine whether the parties agreed to submit the particular dispute to arbitration.

The district court summarized the applicable law as follows:

Applying Central Airlines, Capraro, and the RLA (as well as the RLA’s history and purposes), the Court concludes that Congress has required all air carriers and its employees falling under the RLA to establish a system, group, or regional board of adjustment that shall have jurisdiction to hear and decide all minor disputes. The dispute-resolution for minor disputes are the only permissible mechanisms to resolve minor disputes. See Union Pacific Railroad Co. v. Sheehan, 439 U.S. 89, 94, 99 S. Ct. 399, 58 L. Ed. 2d 354 (1978)(”Congress considered it essential to keep these so-called ‘minor’ disputes within the Adjustment Board and out of the courts.”). Minor disputes cannot be litigated  and decided in the courts and the decision of the board of adjustment is final, binding, and legally enforceable.

The district court concluded that the OPEIU presented an arguable justification for its position that the pilot’s termination was improper under the agreement.  Since the court could not interpret the agreement to resolve the merits of the dispute (that being a power exclusively within the jurisdiction of the adjustment board), it granted the union’s motion for summary judgment and order arbitration of the dispute.

The decision is Careflite v. OPEIU, 2008 U.S. Dist. LEXIS 57684 (N.D. Tex. 2008)

In a recent decision involving Great Lakes Airlines and the International Association of Machinists, the National Mediation Board issued a decision that emphasizes the importance of applicants for representation preserving the integrity of authorization cards submitted to the Board to support an application for representation.

In the case, an individual mechanic employed by GLA filed an application with the Board seeking to obtain a representation election for the mechanics and related craft or class.  The purpose of the employee’s application was to cause an election in which the IAM would be decertified as the mechanics’s representative.

This is a “strawman” application that is akin to a decertification application under the NLRB.  However, the NMB does not recognize decertification petitions (since the RLA does not contemplate them.) The only way an antiunion employee can provoke such a “decertification” is either to create an organization to stand as a representative, or to put himself or herself forward as an applicant for representation.  This means the strawman has to obtain authorization cards from over 50% of employees in the craft or class on behalf of the strawman seeking an election (the employee can’t just obtain cards seeking a decertification.)

The other implication of this difference between the RLA and NLRA is that an employer cannot “withdraw recognition” from the certified union based on an alleged lack of majority showing of support among the craft or class. (Such employer action can occur under the NLRA and usually is combined with a decert petition.  In which the employer is completely uninvolved, of course.)

The Board’s decision establishes the factual context in which this application occurred.  GLA and the IAM were in mediation that was not producing an agreement.  The carrier twice engaged in unlawful unilateral modifications of the status quo on wages in October/November 2007.  The IAM obtained an injunction against GLA’s first unilateral wage increase, yet the carrier implemented another unilateral wage increase in defiance of the injunction.

In December 2007 the strawman filed his application to represent the mechanics.  The IAM filed an objection in the beginning of January 2008 alleging that GLA participated in organizing for the strawman application, thus illegally interfering in the election.  The NMB initiated an investigation after it found the IAM made a prima facie showing of interference.

The facts found by the Board established that the strawman had initially collected authorization cards from other employees that did not identify a representative (the space for representative on the card was blank.)  The strawman filed these “blank” authorization cards with the NMB, which returned the cards as invalid.  Apparently, the strawman didn’t bother collecting new cards that identified a representative (meaning him); rather, he just wrote his name in on the cards and returned them to the Board.

During the investigation,the applicant first claimed to the Board investigator that he obtained the form of authorization card he used from the NMB.  But the NMB does not provide authorization card forms to representatives.  It simply identifies guidelines for the cards (i.e., that they clearly reflect the employee’s intent to request an election and have sufficient identifying information along with signature.)  When asked by the Board’s investigator to substantiate his assertion, the applicant switched his story to claiming to have downloaded the authorization card form from a union website and modified for his purpose.

In deciding the case, the Board focused just on the applicant’s misconduct regarding the authorization cards.  It found that the applicant had compromised the integrity of the cards by unilaterally modifying them to identify himself as representative.  It also found the applicant lacked credibility given his conflicting testimony on his source for the form of authorization card he used.

The Board made the following fundamental statement about the importance of applicants preserving the integrity of authorization cards:

In this case, McNeil stated that the cards he circulated, and which employees signed, were blank with regard to who would file the application. Without a designation of who the employees were authorizing to take action on their behalf and what action they were authorizing to be taken, the cards would not have been accepted by the Board. McNeil states that he was told the blank cards were unacceptable by a Board representative and that he unilaterally modified the authorizing language, designating himself as the authorized representative of the group of employees, and resubmitted the cards. Modification of the authorization language on the cards by a third party after the card has been signed and submitted is unacceptable - just as it would be if a union organizer added in a date to an undated but signed authorization card, or signed a card for an employee who neglected to sign the authorization card. Mr. McNeil’s alteration of the language of the cards after the employees signed the cards voids the cards, thus the Board will not consider them as an unambiguous expression of employee intent.

Based on the applicant’s failure to preserve the integrity of the authorization cards, the Board rejected his showing of interest as tainted.

McNeil’s alteration of the signed cards makes it impossible for the Board to determine the intent of the employees who signed the cards. Under these circumstances, the cards submitted by McNeil are tainted and the Board will not take cognizance of them. Therefore McNeil failed to support his application with the required number of authorizations from the employees in the craft or class as set forth in Part 1206.2(a) of the Board’s Rules.

Lacking a showing of interest, the NMB dismissed the application for representation.  Any effort to decertify the IAM at Great Lakes is now barred for 12 months.

(Of course, the evidence presented in the Board’s decision reflects rather clearly that this application was part of a coordinated effort by Great Lakes to gin up a decertification of the IAM as the mechanics’ union.  But the Board did not find it necessary to reach the question of carrier interference given its findings about the applicant’s misconduct in handling the authorization cards.)

Judge Nina Gershon of the United States District Court for the Eastern District of New York recently provided instruction on the standing of individual employees to bring claims under Section 2, First and 2, Seventh of the Railway Labor Act.  The decision in Marcoux, et al. v. American Airlines, Inc., et al., 2008 U.S. Dist. LEXIS 55751 was issued on July 22, 2008.

Marcoux involved litigation filed by certain flight attendants employed by American Airlines against their employer and the union representing AA’s flight attendants, the Association of Professional Flight Attendants (”APFA”).  It arose from the events surrounding the 2003 concessionary labor agreement concluded between AA and APFA in order to avoid a bankruptcy filing by AA.  (The unions representing AA’s pilots and mechanics also reached concessionary agreements with the Company.)

As is to be expected from negotiations involving a concessionary agreement, the circumstances in 2003 were contentious, with the Company placing significant pressure on the union (including a threat of worse concessions in a bankruptcy proceeding) in order to obtain its requested concessions.  The union negotiated the agreement with the Company in a short period of time.  It then submitted the concessionary agreement for ratification utilizing a telephone balloting method and a compressed ratification schedule.

APFA had not previously used that balloting method (its constitution called for mail balloting); and it had not previously allowed only 15 days for balloting (the constitution calls for 30 days balloting for a CBA under normal circumstances.)  The union deviated from these procedures due to the circumstances of the concessionary bargaining.

The AA flight attendants initially rejected the tentative agreement (the pilots and mechanics ratified their agreements.)  However, the phone balloting method utilized by APFA apparently did not permit FAs to alter their vote after casting it (unlike the pilot and mechanic balloting, which permitted such changes.)

The union concluded that the balloting did not permit FAs to take into account changed in the concessionary agreement (to provide certain beneficial items to the employees.)  It negotiated with AA for an additional 24 hours of balloting. (The union sought a longer extension, but AA refused.)  It also provided for FAs to be able to change their ballot during the extension period. As a result of the balloting extension, the concessionary agreement went from being narrowly rejected to being ratified by a margin of about 1100 votes.

During the balloting extension period, the Company engaged in an aggressive advocacy campaign with the FAs to inform them of the balloting extension and their right to change their vote.  It made repeated communications to FAs (one witness testifying to receiving eight separate communications from the Company.)  APFA objected to AA’s campaign and asked that it stop injecting itself into the balloting process.  AA apparently ignored that request.

The plaintiffs in Marcoux raised claims of violations by AA of Sections 2, First and Seventh of the RLA and by APFA of its duty of fair representation (”DFR”).  It is Judge Gerson’s ruling on the plaintiffs’s claims under Section 2 that are of interest.

The plaintiffs asserted they had standing under the RLA to assert  private causes of action under Section 2, First and Section 2, Seventh.  Those provisions read:

It shall be the duty of all carriers, their officers, agents, and employees to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions, and to settle all disputes, whether arising out of the application of such agreements or otherwise, in order to avoid any interruption to commerce or to the operation of any carrier growing out of any dispute between the carrier and the employees thereof.

45 U.S.C. Section 152, First

No carrier, its officers, or agents shall change the rates of pay, rules, or working conditions of its employees, as a class, as embodied in agreements except in the manner prescribed in such agreements or in section 156 of this title.

45 U.S.C. Section 152, Seventh.

In considering the plaintiffs’s Section 2, Seventh claim, Judge Gershon noted that courts had found a private cause of action in Section 2, Seventh for claims by labor organizations. She went on to note, however, that no court had found such a private right of action by individual employees and to conclude that such a right is inconsistent with the section.

Judge Gershon held that 2, Seventh is intended to regulate the carrier’s dealings with the certified representative.  And it is further directed to employees’s rates of pay, rules and working conditions “as a class.”  This language reflected that 2, Seventh’s proscriptions on carrier conduct go to the collective formulation of employee terms through their certified representative.  She concluded that permitting an individual employee to challenge a settlement between the carrier and representative under 2, Seventh would undermine the statute’s goal of peaceful resolution of collective disputes.

Similar reasoning informed Judge Gershon’s decision that Section 2, First similarly provides a private cause of action only for the certified representative of the craft or class.  As with Section 2, Seventh, she concluded that 2, First is directed to the carrier’s dealings with the certified representative.  The purpose of the statute, in this regard, is to encourage resolution of class-wide disputes and to extinguish the ability for employees to individually set their employment terms.  She observed that Section 2, Second cast Section 2, First as seeking resolution of disputes through agreement with the “designated representative” of employees.  Finally, she concluded that the statutory regime of seeking peaceful settlement of labor disputes would be undermined by granting individual employees the ability to police the carrier’s obligation to make and maintain agreements with the craft or class as a whole.

Judge Gerson’s reasoning on these two issues seems sound. Section 2, Seventh indicates its direction to the terms and conditions of the entire employee class quite plainly with its language prohibiting alteration by the carrier of employment terms for its employees “as a class.”  This obligation is linked to the criminal provisions of Section 2, Tenth of the RLA.

Her take on Section 2, First is well-taken since that provision imposes obligations on both carriers and the representatives of their employees.  While Section 2, Seventh is directed to the conduct of carriers, Section 2, First imposes on both parties the obligation to “make and maintain agreements.”  Effectively achieving that goal of making and maintain agreements requires that the duty be placed on identifiable parties–the carrier on the one hand and the certified representative on the other.  And Judge Gershon is probably correct that permitting individual employees to challenge carrier and union agreements under these provisions of the RLA (as opposed to the conventional route of a DFR claim with its substantial deference to the union) would complicate the collective bargaining process and distract from a union’s ability to speak conclusively for the bargaining unit.

There is only discordant note, however, in Judge Gershon’s reasoning on the plaintiffs’s statutory claim under Section 2, Fourth.  That provision reads

Employees shall have the right to organize and bargain collectively through representatives of their own choosing. The majority of any craft or class of employees shall have the right to determine who shall be the representative of the craft or class for the purposes of this chapter. No carrier, its officers, or agents shall deny or in any way question the right of its employees to join, organize, or assist in organizing the labor organization of their choice, and it shall be unlawful for any carrier to interfere in any way with the organization of its employees, or to use the funds of the carrier in maintaining or assisting or contributing to any labor organization, labor representative, or other agency of collective bargaining, or in performing any work therefor, or to influence or coerce employees in an effort to induce them to join or remain or not to join or remain members of any labor organization, or to deduct from the wages of employees any dues, fees, assessments, or other contributions payable to labor organizations, or to collect or to assist in the collection of any such dues, fees, assessments, or other contributions: Provided, That nothing in this chapter shall be construed to prohibit a carrier from permitting an employee, individually, or local representatives of employees from conferring with management during working hours without loss of time, or to prohibit a carrier from furnishing free transportation to its employees while engaged in the business of a labor organization.

Courts have repeatedly held that Section 2, Fourth creates a private cause of action by an individual employee against a carrier for conduct that retaliates against an employee for union-related activity.  Judge Gershon noted what has (unfortunately) become a common refrain of quoting out-of-context Justice O’Connor’s observation in Indep. Federation of Flight Attendants v. TWA that Section 2, Fourth concerns predominantly “precertification activity” by employees.  (I don’t have space here to extensively discuss IFFA, but Justice O’Connor’s statement was merely a general observation as part of her opinion concluding that post-release activity by a party is not expressly regulated by the RLA.  Nothing in the decision indicates she intended it as some binding interpretation of the statute.) Courts have (both before and after IFFA) treated differently claims under 2, Fourth by employees who are represented by a union (and thus have an arbitration procedure to obtain review of company actions) and nonunion employees who have no such recourse from company actions.

That is unremarkable as far as it goes.  Judge Gershon, however, after writing a rather narrow opinion on Sections 2, First and Seventh, makes a conclusory statement (without citation to authority) that the ability of employees to bring a post-certification 2, Fourth cause of action “is greatly circumscribed.” (Like Justice O’Connor’s earlier statement regarding a purported pre- and post-certification distinction in the application of Section 2, Fourth, Judge Gershon’s broad remark is the type of statement that is later applied more broadly than the judge doubtless intended.)

Judge Gerson went on the dismiss the plaintiffs’s 2, Fourth claim.  She applied to their claim a standard that the plaintiff show the carrier’s actions compromised the union’s ability to represent its members.   The plaintiff must show the carrier’s conduct effectively deprived the employees of representation and has undermined collective bargaining as contemplated by the RLA. She also noted that the focus of the inquiry is the impact of the carrier’s conduct on the union, not individual employees.(Presumably, however, this latter characterization of the focus of a Section 2, Fourth claim would not apply where the employee could show discriminatory disciplinary action taken against him. The plaintiffs in Marcoux argued only that AA’s aggressive campaign for ratification intimidated employees in their vote, but did not allege adverse employment action by AA against any flight attendant.)

The difficulty with the reasoning by Judge Gerson is that appears to set a standard for violation of Section 2, Fourth that essentially requires a plaintiff to show that a carrier succeeded in killing off the union (or destroying the bargaining unit.)  What practical relief could be afforded by a court in such a circumstance?

Judge Gershon’s Section 2, Fourth analysis will probably not be seen by other courts as different from the body of Section 2, Fourth law that has developed since IFFA.  While she does recite a standard of “effectively depriving employees of representation”, there is likely sufficient room within that language to effectively plead a claim where serious employer misconduct has occurred.  Her decision would seem more to foreclose the use of statutory claims under the RLA to second-guess union decisions (and employee ratification) in collective bargaining.

I neglected to provide this follow up to an April post on Bob Crandall’s second-thoughts on deregulation first raised in a New York Times op-ed.  Mr. Crandall expanded on those thoughts in a subsequent speech in June to the Wings Club of New York.  Some excerpts are below.  Here is a link to the speech in full.

Speaking about the thirty-year experiment in deregulation, Crandall asserted

I feel little need to argue that deregulation has worked poorly in the airline industry. Three decades of deregulation have demonstrated that airlines have special characteristics incompatible with a completely unregulated environment. To put things bluntly, experience has established that market forces alone cannot and will not produce a satisfactory airline industry, which clearly needs some help to solve its pricing, cost and operating problems.

In suggesting a shift away from large hubs for connecting traffic, Crandall stated

To my mind, a ’sum of the locals’ rule would likely reduce the ability and motivation of airlines to preserve connecting complexes now being sustained by operating small, relatively inefficient aircraft, or by pricing connecting itineraries far below actual costs or - in far too many cases - doing both!!!!

Crandall also criticized pricing practices by airlines.

In addition to producing huge losses, current pricing and operating practices have produced many negative side effects. In an effort to ameliorate losses, airlines have driven load factors much higher than can comfortably be managed, have outsourced much of their labor to firms employing marginally capable personnel, have introduced hundred of small, inefficient aircraft, have eliminated amenities once considered normal and are imposing a wide range of fees to supplement revenue.

The proliferation of fees irritates already unhappy customers, and some - notably baggage checking fees - slow up the check-in process and encourage passengers to carry aboard even more than they have in the past.

Finally, departing from the airline sector, he urged development of an effective national passenger rail service.

Given the high level of congestion at our major airports and our desire to operate a more energy efficient transportation complex, i am similarly mystified as to why we have heard little or nothing about the development of alternative surface transportation systems for short haul journeys. At our major airports, a significant percentage of flights are to destinations less than 300 miles distant, which could readily be replaced by the modern high speed rail systems found in many countries around the world. Similarly, we could increase long haul aviation capacity to and from our major cities by linking near by airports to those cities with high speed rail links.

The National Mediation Board issued a notice this week that it is proposing changes to its Representation Manual.  While the Board does not consider its Representation Manual to technically be a matter of rulemaking under the Administrative Procedures Act, it routinely invites comments from affected constituencies when its proposes changes.  The comment period ends August 15, 2008.

Here is a link to the Board’s notice

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Update: The NMB extended the comment period to September 3, 2008 after issuing a clarification of its proposed Manual revisions.

Here is a review of recent cases under the RLA for the first part of July.

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UTU v. Burlington No. Santa Fe Ry. and Longview Switching Co., 528 F.3d 674 (9th Cir. June 9, 2008)

In this action, the United Transportation Union sued BNSF and Longview Switching Co. (LSC) over the companies’s trackage rights agreement under which BNSF assigned all switching functions at the Longview Junction Yard to LSC.  The companies implemented the agreement without bargaining with the UTU.  The agreement resulted in the transfer of work to LSC employees and the elimination of jobs at BNSF. (Although it did not result in the termination of any BNSF employees.)  The carriers submitted the agreement to the Surface Transportation Board under the Interstate Commerce Act for approval of an exemption.  The STB approved the exemption.

The district court had dismissed the UTU’s action on the ground the the Interstate Commerce Act vested exclusive jurisdiction over the switching transaction to the STB.  The court of appeals considered the matter on appeal where the question was whether the transaction between BNSF and LSC was exempt under the ICA and therefore within the Board’s exclusive jurisdiction (making dismissal by the district court proper.)

The Ninth Circuit first considered whether the  transaction was exempt under the statute.  “The first step in the analysis is to characterize the trackage rights agreement under the ICA.”  It noted that the parties did not dispute that the agreement was an exempt transaction under the ICA.  It further concluded that the agreement met the requirements for the exemption of trackage rights agreement under the ICA.

It then went on to note that since the trackage rights agreement was exempt, it could be implemented prior to SBA approval.  It was also exempt from state law.  The UTU argued that the exemption for the agreement so as to preempt the RLA’s requirements for negotiation applied only if the STB affirmatively granted such exemption and it argued the Board had not done so. The court of appeals interpreted the phrase “exempted by the Board” in the ICA to mean any transaction that qualifies as exempt under the ICA, including its statutory exemptions, and not only exemptions expressly granted by the SBA.

Because the trackage agreement was exempt under the ICA, the ICA preempted the union’s RLA claim.  The court of appeals concluded the transaction was within the exclusive jurisdiction of the STB and affirmed the district court’s dismissal.

Russell v. American Eagle Airlines

2008 U.S. Dist. LEXIS 50241 (E.D.N.Y. July 2008)

In this decision, the district court considered a challenge to the award of the American Eagle/TWU system board of adjustment.  The grievant, Russell, alleged that the system board refused to admit certain records concerning his attendance and, therefore, improperly upheld his termination by the Company.

The district court considered Russell’s challenge on the question of due process.  It noted

“Where, as here, plaintiff challenges ‘the propriety of an evidentiary ruling, the reviewing court will sustain the award absent a showing that the evidentiary error so prejudiced the rights of a party that it may be said that he was deprived of a fair hearing.’ Shafii, 872 F. Supp. at 1181. In the arbitration context, due process typically entails no more than the provision of a fair hearing, which generally requires that each party have a “sufficient opportunity to prepare its case . . . and the opportunity to call and cross-examine witnesses and to present pertinent evidence in support of its case. NLRB v. Washington Heights Mental Health Council, Inc., 897 F.2d 1238, 1244-45 (2d Cir. 1990) (citations omitted).

Given this minimal due process requirement, the district court dismissed Russell’s challenge, concluding that the system board’s decision to deny admission of the records in question did not rise to the level of depriving him of a fair hearing.

BLET v. Long Island R.R.

2008 U.S. Dist. LEXIS 50243 (S.D.N.Y. July 1, 2008)

This decision is of interest as it addressed a district court’s order of prejudment interest and attorney’s fees in favor of a union upon the court’s order enforcing an arbitration award.  The court held “The issue of prejudgment interest is a matter of discretion; however, there is a ‘presumption in favor of prejudgment interest’ in labor disputes.”  It went on the find that attorney’s fees in favor of the Union were appropriate under Section 3, First (p) of the Act for enforcement of the system board award.

The principle stated in the title may seem obvious, but a recent decision by the Ninth Circuit denying enforcement to a decision of the National Labor Relations Board had to clarify the principle.

In Air Line Pilots Ass’n v. NLRB, 525 F.3d 862 (9th Cir. 2008), the NLRB had found ALPA in violation of Section 8(e) of the National Labor Relations Act by filing a grievance against DHL Holdings (the corporate entity that took over DHL and Airborne’s US ground operation following the acquisition of DHL by Deutsche Post and DHL US’s subsequent acquisition of Airborne) under a letter of agreement between ALPA and DHL Holding’s predecessor providing that all air service for the predecessor would be performed by ASTAR Airlines (the successor to DHL Airways, the air carrier arm of DHL spun off as part of DP’s acquisition of DHL.)

You can read the decision here.

The dispute arose from the fact that when DHL acquired Airborne, that company already had an air arm (what is now ABX Air) to perform its flying.  So ALPA was seeking to use its letter of agreement with the former DHL ground entity to acquire the flying of ABX Air (that it now performed for DHL after the Airborne purchase.)  ABX obviously viewed that as a direct threat to its existence (which it was.)

The NLRB action came about when ABX filed an unfair labor practice charge against ALPA.  Normally, unions that only represent airline employees are not covered by the NLRA (they are covered exclusively by the RLA.)  But ALPA also represented a small group of pilots who performed purely intra-state flying in California for Ross Aviation under contract to the Department of Energy.  Because that pilot group didn’t fly interstate, it is covered by the NLRA.  That made ALPA also subject to the NLRA.

Section 8(e) prohibits any agreement between an employer and a labor organization whereby the employer:

“ceases or refrains or agrees to cease or refrain from handling, using, selling, transporting or otherwise dealing in any of the products of any other employer, or to cease doing business with any other person.” 29 U.S.C. § 158(e).

ABX alleged that ALPA’s enforcement of its agreement with the predecessor DHL Holdings had the effect of causing Holdings to cease doing business with ABX and that ABX qualified as a “person” under Section 8(e).  It also asserted ALPA was a labor organization subject to 8(e)’s prohibitions. ABX was correct on the latter point as I’ve noted already.  It also qualifies as a person under 8(e) as “person” is given a broad meaning in prohibiting the secondary agreements outlawed in 8(e).

But the real question is whether the NLRA applies at all to the dispute. That is the issue on which the Ninth Circuit Court of Appeals focused its inquiry.

[W]hen the traditional railway labor organizations act on behalf of employees subject to the Railway Labor Act in a dispute with carriers subject to the Railway Labor Act, the organizations must be deemed, pro tanto, exempt from the National Labor Relations Act.” Id. at 376-77.

The court went on to conclude that Jacksonville Terminal required it to consider the substance of the dispute in order to determine if the NLRB may exercise jurisdiction over it. In considering the nature of the dispute, the Ninth Circuit concluded

The dispute between ABX and ALPA is the primary dispute in this case, the subject of both the NLRB’s decision below and the present appeal. However, examining the underlying dispute between ALPA and DHL Holdings is instructive in considering the substance of the primary dispute. The underlying dispute that gave rise to ABX’s charge reflected an effort by a traditional railway labor organization (ALPA), acting on behalf of employees subject to the Railway Labor Act (ASTAR pilots), to enforce a collective bargaining agreement entered into under the Railway Labor Act.

In other words, the dispute between ALPA and ABX arose from ALPA’s dispute with DHL Holding.  That dispute concerned ALPA-represented ASTAR pilots’ right under their collective bargaining agreement (the letter of agreement between ALPA and Holdings is part of the ASTAR collective bargaining agreement.)

In light of the fact that the dispute pressed by ALPA concerned enforcement of an RLA-covered agreement concerning RLA-covered employees, the court of appeals held that the fact that DHL Holdings was not a carrier covered by the RLA was not sufficient to affect its holding that the NLRB lacked jurisdiction over the case.  It held ABX had interposed itself into the ALPA/DHL Holdings dispute.  And, of course, ABX itself is a carrier covered by the RLA.  So the, court, concluded “Substantively, both the dispute between DHL Holdings and ALPA, and the present dispute between ABX and ALPA in which ALPA ‘enmeshed’ DHL Holdings, are ‘pure’ Railway Labor Act disputes.”  The Ninth Circuit rejected the NLRB’s holding that the NLRA prohibitions on secondary boycotts applied merely because ALPA was a labor organization under the NLRA as well as a representative under the RLA.  It held the determination must be based on an analysis of the nature of the dispute presented.

Looking at the nature of the dispute, the court of appeals concluded “This case concerns ALPA’s efforts to enforce a scope clause regarding only air transportation work on behalf of Railway Labor Act pilots”  It was, therefore, ”fundamentally a Railway Labor Act dispute” and exempt from the National Labor Relations Act.

This decision provides useful clarification that determining the interplay of the NLRA and RLA requires an analysis of the nature of the dispute presented, rather than a focus on the parties involved.  A union can represent employees who are covered by the NLRA, rather than just the RLA, without going outside the coverage of the RLA.  A company can be a noncarrier involved in a primary dispute with RLA-covered employees arising under an RLA contract, and the dispute is still a RLA dispute.  And a third-party carrier cannot interject itself into that dispute in an effort to trigger the prohibitions of the NLRA on secondary activity.  It is the locus of the dispute as involving RLA-covered employees over a RLA-covered agreement (and RLA-covered work) that makes the dispute a RLA dispute, irrespective of whether the union and company involved may also be covered by the NLRA.

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