American Airlines, Inc. v. CAB, 1083

• Decision Date: 23 July 1971
• Docket Number: Docket 71-1610.,No. 1083,1083
• Citation: 445 F.2d 891
• Parties: AMERICAN AIRLINES, INC., Petitioner, and Allied Pilots Association, Intervenor-Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent, and Master Executive Council of the Pilots of Trans Caribbean Airways, Intervenor-Respondent.
• Court: U.S. Court of Appeals — Second Circuit

445 F.2d 891 (1971)

AMERICAN AIRLINES, INC., Petitioner, and Allied Pilots Association, Intervenor-Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent, and Master Executive Council of the Pilots of Trans Caribbean Airways, Intervenor-Respondent.

No. 1083, Docket 71-1610.

United States Court of Appeals, Second Circuit.

Argued July 14, 1971.

Decided July 23, 1971.

Joseph Barbash, Debevoise, Plimpton, Lyons & Gates, New York City (Gene E. Overbeck, New York City, of counsel), for petitioner.

Martin C. Seham, Surrey, Karasik, Greene & Seham, New York City (Fred C. Klein, New York City, of counsel), for intervenor-petitioner.

O. D. Ozment, Deputy Gen. Counsel (Richard W. McLaren, Asst. Atty. Gen., Howard E. Shapiro, Atty., Dept. of Justice, R. Tenney Johnson, Gen. Counsel, Warren L. Sharfman, Associate Gen. Counsel, Litigation and Research, Robert L. Toomey and Alan R. Demby, Attys., C.A.B., of counsel), for respondent.

Ronald B. Natalie, Verner, Liipfert, Bernhard & McPherson, Washington, D. C. (James M. Verner, John H. Wanner, Harry C. McPherson, Washington, D. C., of counsel), for intervenor-respondent.

Before FRIENDLY, Chief Judge, and LUMBARD and OAKES, Circuit Judges.

FRIENDLY, Chief Judge:

Every airline merger presents difficult human and financial problems of the relative privileges of the employees of the two carriers. Knowing that such problems would arise in the merger of Trans Caribbean Airways, Inc., (TCA) into American Airlines, Inc., which, indeed, had already been aired at the hearings, the Civil Aeronautics Board in its order of approval, effective December 31, 1970, announced that it would impose the labor protective provisions adopted in the United-Capital Merger Case, 33 CAB 307 (1961), which it had uniformly applied in every subsequent merger and route transfer case. Among these conditions, 33 CAB at 342-47, were the following:

Section 3. Insofar as the merger affects the seniority rights of the carriers\' employees, provisions shall be made for the integration of seniority lists in a fair and equitable manner, including, where applicable, agreement through collective bargaining between the carriers and the representatives of the employees affected. In the event of failure to agree, the dispute may be submitted by either party for adjustment in accordance with section 13.

* * * * * *

Section 13. In the event that any dispute or controversy (except as to matters arising under sec. 9) arises with respect to the protection provided herein, which cannot be settled by the carrier and the employee, or his authorized representative, within 30 days after the controversy arises, it may be referred, by either party, to an arbitration committee for consideration and determination, the formation of which committee, its duties, procedure, expenses, etc., shall be agreed upon by the carriers and the employees, or the duly authorized representatives of the employees.

The merger was consummated on March 8, 1971.

Prior to that date the Master Executive Council of the pilots of TCA (TCA-MEC) filed a petition asking the Board to direct American, Allied Pilots Association (APA) (the bargaining agent for American's pilots), and itself to submit the integration of the pilot seniority list to final and binding arbitration. Answers were filed by American, APA, and the Flight Engineers International Association (FEIA) representing American's flight engineers.¹ Later submissions revealed that on February 4, 1971, American and APA had entered into a memorandum of understanding on seniority list integration, which provided for signature on behalf of the TCA pilots but had not been signed by them. The TCA pilots considered unacceptable certain aspects of the proposed integration of the pilots still in service on a date-of-hire basis and, even more so, a provision with respect to the recall of furloughed pilots on the basis of "last furloughed, first recalled." TCA-MEC claimed that the practical effect of the latter provision would be that all American's pilots furloughed as of the date of the merger would be recalled before any of TCA's furloughed pilots. It contended also that the proposed method of integration was simply an adoption by American of proposals made by APA and that the latter had "resolutely refused to adopt any procedures leading to a fixed period of negotiation, to be followed by arbitration failing a negotiated settlement." APA and American opposed the petition, asserting that integration had already been accomplished "on a fair and equitable basis." In an order dated May 7, 1971, the Board noted its "long standing policy" that matters encompassed in labor protective conditions of a merger "should be resolved by voluntary agreement between the carrier and the labor groups or employees involved, or, failing agreement, by arbitration"; judicial recognition "that the Board lacks expertise in labor matters and that seniority is basically a matter for negotiation or arbitration," see Outland v. CAB, 109 U.S.App.D.C. 90, 284 F.2d 224, 228 (1960) (Burger, J.); and other judicial statements that, under the Interstate Commerce Commission's labor protective provisions similar to those here imposed, either party has "`the absolute right to select arbitration as a means for settling the dispute and when such selection is made then arbitration is mandatory upon the other party,'" quoting from New Orleans & N. E. Ry. v. Bozeman, 312 F.2d 264, 267 (5 Cir. 1963); Brotherhood of Locomotive Engineers v. Chicago & Nw. Ry., 314 F.2d 424, 433 (8 Cir.), cert. denied, 375 U.S. 819, 84 S.Ct. 55, 11 L.Ed.2d 53 (1963). Accordingly, it directed "that American shall within 30 days submit all pending disputes with respect to the seniority list integration of the American and TCA pilots and flight engineers to a neutral arbitrator or committee of arbitrators."

On May 28, 1971, American filed with the Board a petition for reconsideration. It annexed to this a letter from APA advising American of the union's position that no arbitration could change or vary the agreements already reached between American and APA and asking American to "be assured that the pilots in the employ of American Airlines, as represented by the Allied Pilots Association, will use every means available to protect and insure the Company's compliance with our Collective Bargaining Agreement." Pointing to the dangers of labor strife implicit in the APA letter and alleging various difficulties in proceeding with the arbitration in the face of APA's announced refusal to participate, American asked that the Board "appoint a hearing examiner to determine whether the Memorandum of Understanding dated February 4, 1971 between American and the Allied Pilots Association provides a fair and equitable method of seniority integration and, if not, to prescribe the manner in which disputes concerning the method of integration should be resolved." In support of this proposal, it cited the Board's attempt to resolve a seniority dispute by itself establishing a list in the North Atlantic Route Transfer Case, 12 CAB 422 (1951), aff'd sub nom. Kent v. CAB, 204 F.2d 263 (2 Cir.), cert. denied, 346 U.S. 826, 74 S.Ct. 46, 98 L.Ed. 351 (1953).

TCA-MEC responded that while it saw no reason justifying reconsideration, "as still another good faith effort at accommodating the dispute, it had no objection to the appointment of a hearing examiner for the same purpose as in the Kent case — namely, the creation of an integrated seniority list." On the other hand, it vigorously objected to proceeding as American had proposed, namely, first considering whether the arrangement already worked out between American and APA was fair and equitable and, if and only to the extent that this was decided in the negative, prescribing still further procedures for resolving remaining issues.

APA also filed an answer which was labeled as in "support" of American's petition for reconsideration. It conceded the Board's power to determine whether the existing arrangement was "fair and equitable," but challenged the Board's authority to permit an arbitrator to order a departure from an agreement between a surviving carrier and the collective bargaining representative of its employees, and was conspicuously silent on whether the Board itself could do this — as distinguished from merely directing the dominant carrier and its union to try again.

On June 11, 1971, the Board denied reconsideration. It reiterated that it did "not consider it appropriate to entertain this dispute beyond directing compliance with the labor protective conditions imposed as a condition to our approval of the merger." It found "no basis for assuming that the legal effect of an integration of the seniority lists by arbitration would be any different from that which would result from integration by the Board after what would undoubtedly be protracted evidentiary and other proceedings." Further, while the Board expressed the "hope" that APA would take part in the arbitration proceeding, it concluded that "if APA chooses not to do so, and the decision of the arbitral tribunal should be considered by it to be adverse to its interests, it would have no basis for...