Air Line Pilots Ass'n Intern. v. Eastern Air Lines, Inc.

Decision Date28 October 1988
Docket NumberAFL-CIO,Nos. 88-7201,s. 88-7201
Citation863 F.2d 891
Parties129 L.R.R.M. (BNA) 2691, 130 L.R.R.M. (BNA) 2250, 274 U.S.App.D.C. 202, 57 USLW 2304, 110 Lab.Cas. P 10,762, 110 Lab.Cas. P 10,824, 110 Lab.Cas. P 10,941 AIR LINE PILOTS ASSOCIATION, INTERNATIONAL v. EASTERN AIR LINES, INC., Appellant. TRANSPORT WORKERS UNION OF AMERICA,, et al. v. EASTERN AIR LINES, INC., Appellant INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS, , et al. v. EASTERN AIR LINES, INC., Appellant Texas Air Corporation, et al. In re EASTERN AIR LINES, INC. to 88-7204.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia and Petition for Writ of Mandamus (Civil Action Nos. 87-02002, 88-00364 and 88-00870).

John J. Gallagher, with whom, Michael J. Madigan, Washington, D.C., and David Boies, New York City, were on the brief for appellant.

James L. Linsey, New York City, and Joseph Guerrieri, Jr., Washington, D.C., with whom, Jonathan A. Cohen and Arthur M. Luby, Washington, D.C., were on the brief for appellees. Stephen Presser, Asher W. Schwartz, New York City, Edgar James and Richard Ruda, Washington, D.C., also entered appearances for appellees.

James J. McDonald, Jr., and Robert J. Delucia were on the brief for amicus curiae, Airline Indus. Relations Conference, urging reversal.

Before BUCKLEY, WILLIAMS and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

STEPHEN F. WILLIAMS, Circuit Judge:

On July 22, 1988 Eastern Air Lines announced that effective August 31, 1988 it would implement schedule changes that would eliminate 204 unprofitable flights per day. Because Eastern would add 61 new flights in its core markets at the same time, the net reduction in flights would be 143 per day. Eastern planned to close its Kansas City hub; 1 this decision accounted for 84% of the reduction in the aircraft hours. The other schedule changes affected the Northeast-to-Florida routes and eliminated three round-trip flights from the Philadelphia hub.

In addition, Eastern announced that it intended to furlough 3388 employees who would no longer be needed after the reduction in service. Of the employees that Eastern planned to furlough, 1050 were flight attendants represented by the Transport Workers Union of America ("TWU"); 1172 were mechanics and baggage handlers represented by the International Association of Machinists ("IAM"); and 1166 were non-union or management employees. The schedule changes also eliminated the need for 500 pilots, represented by the Air Line Pilots Association ("ALPA"), but Eastern planned to reduce its pilot force through attrition rather than through furlough, and accordingly issued no pilot furlough notices. The reduction in personnel would reduce Eastern's payroll expense by $6.9 million per month.

Eastern's announcement occurred as the company's financial condition steadily worsened. Since 1980, Eastern has lost $1 billion. Its economic plight was not alleviated by its acquisition in November 1986 by Texas Air Corporation, an airline holding company whose principal subsidiaries are now two wholly-owned carriers, Eastern and Continental Airlines. Eastern lost $194 million in 1987 (before adjustment for the sale of assets) and $120 million in the first half of 1988. In the second quarter of 1988, Eastern was losing $1 million every day. One of plaintiffs' experts estimated that in the absence of major changes, the company would continue to lose $200 to $250 million a year. Appellant's Appendix ("Appellant's App.") II-7-8 (testimony of Farrell Kupersmith). Moreover, Eastern had borrowed heavily to stay in business despite such enormous losses. As of June 30, 1988, Eastern's debt totaled $2.53 billion, and it spent $544 million annually to service the debt. Id. at II-493 (declaration of Phil Bakes, President and Chief Executive Officer of Eastern).

On July 28, 1988, ALPA and IAM filed motions for a preliminary injunction to halt Eastern's plans to implement the schedule changes and the furlough. On August 1, 1988, TWU joined as an additional plaintiff. The unions alleged that the changes would violate several provisions of the Railway Labor Act ("RLA"), 45 U.S.C. Secs. 151, et seq. (1987). 2 They argued that the changes were part of a massive restructuring plan that was designed to destroy the unions and to transfer assets and business away from the unionized Eastern Airlines and to the much less unionized Continental.

Specifically, the unions claimed that the disputes over the schedule changes and furlough should be considered "major disputes" under the RLA and that Eastern's conduct violated Sec. 6 of the Act (also called the status quo provision), which prohibits either party to a collective bargaining agreement from altering the existing rates of pay, rules or objective working conditions until it has exhausted the collective bargaining process. 45 U.S.C. Sec. 156; see also id. at Sec. 152 First (all carriers have the duty to "exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions, and to settle all disputes, ... in order to avoid any interruption to commerce or to the operation of any carrier"); id. at Sec. 152 Seventh (explaining the process for resolving disputes). The unions also alleged that Eastern's reductions were an illegal attempt to transfer work to Continental and to weaken or destroy the unions, in violation of Sec. 2 Third and Fourth of the RLA. These provisions prohibit employers from interfering with, coercing or influencing the representational choices of workers and from interfering with the right of employees to organize in labor unions. Id. at Sec. 152 Third and Fourth.

Though finding that Eastern's operational changes were "motivated by sound financial reasons" and that the withdrawal from the Kansas City hub was prompted by "legitimate and compelling business reasons," Air Line Pilots Ass'n Int'l v. Eastern Air Lines, Memorandum Opinion, Civil Action No. 87-2002, at 28 (D.D.C. Aug. 30, 1988) ("Mem.Op."), the district court on August 30 enjoined the proposed furlough as an impermissible violation of the status quo working conditions. Air Line Pilots Ass'n Int'l v. Eastern Air Lines, Notice of Ruling, Civil Action No. 87-2002, at 2 (D.D.C. Aug. 30, 1988). The court allowed Eastern to proceed to implement the planned schedule changes.

On August 31 Eastern filed a Notice of Appeal, an Emergency Motion for a Stay Pending Appeal, and a Petition for a Writ of Mandamus. This court dissolved the preliminary injunction entered by the district court on the condition that Eastern post a $4.7 million bond, a sum that represented a month's payroll expense for the union-represented employees who would be furloughed, and granted the motion for an expedited appeal. Further briefing ensued, and the case was argued September 26, 1988.

We reverse the district court and hold that it should not have granted the motions for a preliminary injunction because the unions did not show a substantial likelihood of success on the merits. The preliminary injunction, which we previously dissolved on condition of Eastern's posting security covering furloughed union employees' pay for September, is now dissolved unconditionally. 3

I. SCOPE OF REVIEW

The party seeking a preliminary injunction under the Railway Labor Act must show a "reasonable probability of success" on the merits. Delaware & Hudson Ry. Co. v. United Transp. Union, 450 F.2d 603, 619 (D.C.Cir.), cert. denied, 403 U.S. 911, 91 S.Ct. 2209, 29 L.Ed.2d 689 (1971). Although the parties have disagreed about what other showings are required for the issuance of an injunction under Sec. 6 of the Act, no one has disputed the threshold necessity of demonstrating a likelihood of success on the merits.

In reviewing the lower court's decision to grant a preliminary injunction, we must be aware of "the latitude given to the District Court ... to determine what evidence can properly be adduced in the limited time that can be devoted to a preliminary injunction hearing." Friends for All Children v. Lockheed Aircraft, 746 F.2d 816, 835 n. 32 (D.C.Cir.1984). We note, however, that the district court in this instance conducted a seven-day evidentiary hearing which included live testimony from eleven witnesses and testimony by written declarations from several more. Thus the latitude afforded to the discretion of the district court judge should reflect this opportunity to develop the facts fully.

Just as with any factual determinations, this court will reject the district court's findings of fact only if they are "clearly erroneous." Foundation on Economic Trends v. Heckler, 756 F.2d 143, 153 (D.C.Cir.1985). A factual finding is clearly erroneous if it is "without substantial evidentiary support or if it was induced by an erroneous application of the law." Cuddy v. Carmen, 762 F.2d 119, 124 (D.C.Cir.), cert. denied, 474 U.S. 1034, 106 S.Ct. 597, 88 L.Ed.2d 576 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)).

Despite the formula that an appellate court may reverse a district court's preliminary injunction only for "abuse of judicial discretion," see Natural Resources Defense Council, Inc. v. Morton, 458 F.2d 827, 832 (D.C.Cir.1972), the court may review issues of law de novo, Friends for All Children, 746 F.2d at 835 n. 32; Morton 458 F.2d at 832. When the district court's estimate of the probability of success depends on an incorrect or mistakenly applied legal premise, "the appellate court furthers the interest of justice by providing a ruling on the merits to the extent that the matter is ripe, though technically the case is only at the stage...

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