American Airlines, Inc. v. Allied Pilots Ass'n, 7:99-CV-025-X.
| Decision Date | 23 June 1999 |
| Docket Number | No. 7:99-CV-025-X.,7:99-CV-025-X. |
| Citation | 53 F.Supp.2d 909 |
| Parties | AMERICAN AIRLINES, INC., 4333 Amon Carter Boulevard, Fort Worth, TX 76155 Plaintiff, v. ALLIED PILOTS ASSOCIATION, 14600 Trinity Blvd., Suite 500, Forth Worth, TX, 76155-2512 and Richard T. LaVoy, 4100 Vista Creek Court, Arlington, TX 76016-6407 its President and Brian A. Mayhew, 132 Chesapeake Bay Drive, Stevensville, MD 21666-3864 its Vice President and Robert P. Morgan, 3608 Cold Creek Drive, Valrico, FL 33594-6348 its Secretary-Treasurer and David O. Aldrich, 221 Chasse Circle, Saint Charles, IL 60174-5723 and Robert Ames, 17229 Balboa Point Way, Boca Raton, FL 33487-1014 and Stanley C. Bissell, 28 Glengarry Road, Stratham, NH 03885 and Denis M. Breslin, 894 Singing Trails Drive, Cajon, CA 92019-2756 and Dennis DellaGreca, 456 Redding Road, West Redding, CT 06896 and J.S. Ditty, 2809 200th Ave. E., Sumner, WA 98390 and Ernest L. Dryer, 726 Holly Drive, Annapolis, MD 21401-5553 and David P. Duquemin, 8 South 330 College Road, Naperville, IL 60540 and L.G. Foster, 13475 Lambert Lane West, Roanoke, TX 76262-6197 and Daniel W. Hall, 727 Appleridge Drive, Encinitas, CA 92024 and Charles T. Hepp, 10113 Community Lane, Fairfax Station, VA 22039-2515 and Lloyd D. Hill, 2728 NE 12th Street, Pompano Beach, FL 33062-8261 and Mark L. Hunnibell, 2611 Long Hill Road, Guilford, CT 06437-3616 and Jeff Marchand, 49 Trask Mountain Road, P.O. Box 300, Wolfeboro, NH 03894-0300 and Norman A. Patterson, Jr., 3406 Forestshire Court, Arlington, TX 76001-4848 and Donald W. Pitts, 1119 Woodland Place, Sand Springs, OK 74063-8961 and Steve Roach, 33 Prairie Falcon Drive, Novato, CA 94949-6636 and S. Randy Trommer, 550 Edinburgh Circle, Danville, CA 94526 and Michael R. Mellerski, 2521 Branch Oaks Lane, Lewisville, TX 75028-4696 and John E. Darrah, 1332 Stonecrest Drive, Coppell, TX 75019-3724 and L.P. Turcotte, 79 Beauty Hill Road, Barrington, NH 03825-3522 |
| Court | U.S. District Court — Northern District of Texas |
Dee J. Kelly, Donald E. Herrmann, Kelly, Hart & Hallman, P.C., Fort Worth, Texas, Harry A. Rissetto, Thomas E. Reinert, Jr., Morgan, Lewis, Bockius, L.L.P., Washington, DC, for plaintiff American Airlines, Inc.
Sanford R. Denison, Baab & Denison, Dallas, Texas, Edgar N. James, Steven K. Hoffman, James & Hoffman, P.C., Washington, DC, Robert H. Stropp, Mooney, Green, Baker, Gibson, & Saindon, P.C., Washington, DC, for the defendants.
On February 13, 1999, the Court granted Plaintiff American Airlines, Inc.'s ("American") motion for civil contempt of court1 against Defendants Allied Pilots Association ("APA"),2 Union president Richard LaVoy ("LaVoy"), and Union vice-president Brian Mayhew ("Mayhew").3 These Defendants were held in civil contempt of court, after an evidentiary hearing, for violating a Temporary Restraining Order entered on February 10, 1999 (the "TRO").4
As will be discussed more fully below, this Court has no choice but to hold Defendants APA, LaVoy, and Mayhew responsible for their contemptuous actions in violating this Court's TRO and to hold them accountable for the financial loss their actions caused. By their deliberate and contemptuous actions, these Defendants inflicted millions of dollars in financial losses on Plaintiff American and needlessly disrupted the lives of hundreds of thousands of travelers. Many of these persons suffered financial losses as well, and none had anything to do with this dispute. Furthermore, they had no notice of this action so that they could make realistic alternative travel arrangements.5
Under the facts and applicable law, this Court must award to American the compensatory damages which are attributable to these Defendants' contemptuous actions. This Court therefore awards American $45,507,280.00 in such compensatory damages, and Defendants APA, LaVoy, and Mayhew are held jointly and severally liable for these damages. Appropriate post-judgment interest is also awarded to American.
This drama began with the acquisition of Reno Air, Inc. ("Reno"), a relatively small air carrier, by American. On or about November 19, 1998, American announced its intention to purchase the stock of Reno through a tender offer initiated by American's wholly owned subsidiary, Bonanza Acquisitions.6 On or about December 9, 1998, American received approval from the Department of Justice for the stock acquisition.7 Thereafter, Bonanza Acquisitions acquired approximately 84.5% of the common stock and 99% of the preferred stock of Reno.8 Following the Reno acquisition, American advised APA of its intent to operate Reno separately for a transition period because there were legal, operational, and business constraints that prevented integration instantaneously.9 This proposed procedure was consistent with American's acquisition of Air Cal in 1987, which entailed American operating Air Cal as a separate carrier for a transitional period during which American and APA successfully negotiated an agreement providing for the integration of the pilot workforces.10 However, despite the parties' prior course of dealing on this Air Cal acquisition, the APA did not agree with American's plan of action with respect to Reno. Rather, the APA took the position that American's operation of Reno with pilots not on American's Pilot Seniority List, albeit on a temporary basis, was in direct violation of the Recognition and Scope Clause of Section 1 (the "Scope Clause")11 of the current collective bargaining agreement (the "CBA") in effect between American and the APA.12 The APA took this position even though the language of the Scope Clause of Section 1 of the CBA in effect now is substantially identical to the Recognition and Scope language which bound American and APA at the time of the Air Cal acquisition.13 Although the parties conducted discussions about the issues raised by the merger, those discussions were not successful in reaching a resolution regarding a number of important items.14 Despite American's willingness to do so, the APA declined to adhere to their written agreement with regard to a remedy for an alleged violation of the Scope Clause and compel expedited binding arbitration under the CBA.15 Section 1.L. of the current CBA contains a procedure for expediting the arbitration of grievances arising under the Scope Clause of Section 1.16
Instead of engaging American in binding arbitration over the Scope Clause dispute before a neutral arbitrator with experience in airline industry disputes as they agreed to do in their contract, a large number of APA's pilot members began an unannounced sick-out of massive proportions.17 Instigated by the APA and its current leadership, this sick-out entailed having pilots adding their names to the sick list in overwhelming numbers.18 This illegal job action resulted in a tremendous number of flight cancellations due to lack of crew,19 costing American millions of dollars in revenues,20 and impacting hundreds of thousands of passengers throughout the country in the process.21
The sick-out began on February 6, 1999, and from February 6-9, 1999, over 1600 American flights had been canceled due to lack of crew.22 On February 10, 1999, American came to this Court and sought a Temporary Restraining Order to end the sick-out.23 After spending the better part of a day hearing from both American and the Defendants on the pertinent issues,24 this Court signed the TRO at approximately 4:00 p.m. on February 10, 1999.25 As with most such disputes, the action of signing the TRO should have brought an end to the transportation disruption, but sadly it was only the beginning.
It cannot be legitimately disputed that the sick-out actually increased in size after the signing of the TRO.26 In fact, the largest number of American flight cancellations on a single day during the sick-out occurred on February 11, 1999 (the day after the TRO was signed), when almost 1200 flights were canceled that day alone.27 That same day, American filed a Motion which sought to hold Defendants in civil contempt of court for having violated the TRO,28 and a hearing was scheduled for February 12, 1999 on the contempt motion.29
After hearing evidence on the contempt motion on February 12, 1999,30 this Court issued its Order of Contempt31 and Findings of Fact and Conclusions of Law32 on February 13, 1999. In the Order of Contempt, Defendants APA, LaVoy, and Mayhew were adjudged to be in civil contempt of court.33 Because the amount of actual damages suffered by American due to Defendants' contemptuous conduct was not clear on February 13, 1999, the Court required Defendant APA to place $10,000,000.00 into the Registry of the Court, Defendant LaVoy to place $10,000.00 into the Registry of the Court, and Defendant Mayhew to place $5,000.00 into the Registry of the Court pending resolution of the amount necessary to reimburse the aggrieved party (American) for the amount of money lost because of the Contemnors' conduct.34 The Court reserved the right to remit monies to Defendants should the amount of damages ultimately awarded be less than the monies paid into the Registry of the Court.35 A hearing was also set for February 17, 1999 on the issue of compensatory damages.36
On February 17, 1999, the parties again convened before this Court so that evidence could be taken on the amount of damages suffered by American due to Defendants' contemptuous conduct. American presented evidence at this February 17, 1999 hearing,37 but Defendants did not present any evidence. Instead, Defendants requested a continuance so that they could have adequate opportunity to develop the pertinent facts bearing on damages.38 This motion for continuance was granted, and the hearing on damages was continued until April 12, 1999.39
The hearing on damages...
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