American Eagle Airlines v. Air Line Pilots

• Decision Date: 14 August 2003
• Docket Number: No. 02-10467.,02-10467.
• Citation: 343 F.3d 401
• Parties: AMERICAN EAGLE AIRLINES, INC., Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, v. AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Defendant-Counter-Claimant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

343 F.3d 401

AMERICAN EAGLE AIRLINES, INC., Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, v. AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Defendant-Counter-Claimant-Appellant-Cross-Appellee.

No. 02-10467.

United States Court of Appeals, Fifth Circuit.

August 14, 2003.

COPYRIGHT MATERIAL OMITTED

Dee J. Kelly, Sr. (argued), Roger C. Diseker, Brandon Troy Hurley, Kelly, Hart & Hallman, Fort Worth, TX, for American Eagle Airlines.

Eugene B. Granof (argued), John Edward Wells, IV, Air Line Pilots Ass'n, Herndon, VA, Jerry D. Anker, Air Line Pilots Ass'n Intern., Washington, DC, for Air Line Pilots Ass'n, Intern.

Appeals from the United States District Court for the Northern District of Texas.

Before WIENER, BENAVIDES, and DENNIS, Circuit Judges.

BENAVIDES, Circuit Judge:

Before this court is a labor-arbitration dispute between an airline company and a pilots' association arising from an arbitration board's hearing and the subsequent appeal to the district court. While judicial review of an arbitration board's determination is admittedly confined, this controversy is one of the unwonted cases in which overturning an arbitrator's award is proper. As such, we affirm the judgment of the district court, which vacated the arbitrator's award.

I.

The issues in this appeal concern a collective bargaining agreement ("CBA" or "Agreement") entered into in September 1997 by American Eagle Airlines, Inc. ("American Eagle"), and Air Line Pilots Association, International ("ALPA") to govern the working conditions of pilots employed at American Eagle. Included within the Agreement were provisions dictating the conditions for which a pilot may be terminated as well as the procedures to be followed by American Eagle to secure a termination. The CBA permits American Eagle to terminate pilots only for "just cause," a term the Agreement fails to define.

Section 20 of the CBA elucidates the grievance process by which an employee may challenge his termination. A pilot must request initiation of the grievance process within 14 days of receiving written notice of the charges against him, or the employment decision of American Eagle becomes final. If the process is timely invoked, "[a] first step hearing will be held at the pilot's domicile within 14 days of the date written request is received" by American Eagle. Within 14 days of the hearing, American Eagle must issue an opinion on the matter. If the decision is unsatisfactory to the pilot, he may appeal within 30 days by furnishing written notice to the System Board (the "Board"), which serves as a neutral arbitrator under the contract.

Section 20(G)(2) then notes:

If [American Eagle] fails to provide a written decision to the pilot ... or hold a required hearing within the time limits specified, the pilot and the Association may consider the grievance denied.

Section 21 then details the duties and functions of the Board. Composed of three members, the Board has "jurisdiction over grievances filed pursuant to the terms of this Agreement." The CBA also protects the Board's right to "act in an independent manner" without consequences for its relationship to American Eagle or ALPA.

On November 3, 1999, Captain Terry Balser, an American Eagle pilot, struck up a discussion with Boris Walckhoff, a cleaning and catering employee of American Eagle, on board the aircraft Balser piloted at the Los Angeles International Airport. Over the course of the conversation, Balser discussed the ongoing war in Chechnya, and questioned why Walckhoff, an immigrant of African, Russian, and German decent, was not fighting in it. Balser then displayed a medal with a reverse swastika on it and mentioned his displeasure that government money was being spent on African-Americans and Latinos. Walckhoff felt intimidated by this conversation and filed a complaint with American Eagle.

In response to Walckhoff's complaint, American Eagle conducted an investigation of Balser, which included holding two investigative meetings in November 1999. These meetings revealed that Balser regularly carried a dirk with a three and one-half-inch blade into secure areas of the airport, as well as on board the aircraft he flew. Captain Balser also admitted to having "nodded off" at times while on the clock.

On November 29, 1999, American Eagle issued a notice of termination to Balser, advising him that he was being discharged for harassing Walckhoff, failing to observe security regulations regarding weapons in secure areas, violating California penal law and Federal Aviation Administration regulations by bringing weapons on board an aircraft, and violating company policy against sleeping on board an aircraft. On December 9, 1999, 10 days after receiving the notice of termination, ALPA grievance chair Mark Taylor wrote to American Eagle informing it of Balser's intention to invoke the grievance procedures outlined in the CBA. Taylor again wrote American Eagle on February 4, 2000, noting that American Eagle had not scheduled a first-step hearing. The letter referenced a conversation with Los Angeles Chief Pilot Janette McMurtrie on January 22, 2000, in which McMurtrie indicated her desire to forego the first-step hearing, and told Balser and ALPA to treat the grievance as denied by American Eagle. The matter was then submitted to the Board by ALPA.

After arguments were presented, the Board made several determinations. First, the Board found that American Eagle's failure to schedule the first-step hearing constituted a breach of the CBA, despite the language contained in Section 20(G)(2), which states that failure to schedule a hearing may be considered tantamount to a denied grievance. Second, the Board found that Balser seriously violated the CBA. Specifically, the Board noted that substantial evidence supported American Eagle's contention that Balser had harassed Walckhoff and that such conduct was abhorrent, finding that "the Employer had not only a right, but a duty to rid the workplace of such conduct." The Board also concluded that Balser had violated American Eagle's security rules and California law by bringing his dirk on board his aircraft and into secure areas of the airport. The Board found insufficient evidence to support a finding that Balser had slept while his plane was airborne. The Board, however, concluded that American Eagle had "not only a right, but a duty" to rid itself of Balser's behavior. Finally, the Board concluded that because both Balser and American Eagle had seriously violated the Agreement, both sides deserved a substantial penalty. Accordingly, the Board imposed a ten-week unpaid suspension on Balser and ordered his reinstatement with back pay due for the remaining period in which Balser was suspended.

American Eagle appealed the Board's decision to the United States District Court for the Northern District of Texas, pursuant to the Railway Labor Act, 45 U.S.C. §§ 151-88, arguing in its motion for summary judgment that the Board's decision (i) failed to conform to the terms of the CBA, (ii) was beyond the jurisdiction of the Board, and (iii) violated public policy. The district court determined that implicit within the Board's opinion was a finding that Balser was fired for "just cause." Once such a determination was made, the district court reasoned, the Board lacked further authority to fashion an alternate remedy based on American Eagle's alleged procedural shortcoming of not holding the first-step hearing. Accordingly, the district court vacated the Board's arbitration award, holding that the Board should have upheld Balser's termination. The district court rejected ALPA's argument that the Board had not found just cause for Balser's termination because American Eagle did not meet the procedural requirements of the CBA, stating that ALPA introduced no authority for the proposition that such requirements could be considered in arriving at the just cause determination. The district court, however, did reject American Eagle's argument that the arbitration award violated public policy. Shortly thereafter, ALPA filed a timely notice of appeal and American Eagle cross-appealed on the public policy issue.

II.

We review de novo a district court's decision vacating an arbitration award as not grounded in the agreement of the parties. E.I. DuPont de Nemours v. Local 900 of the Int'l Chemical Workers Union, 968 F.2d 456, 458 (5th Cir.1992). Summary judgment should be granted where the record indicates no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law. Rogers v. International Marine Terminals, 87 F.3d 755, 758 (5th Cir.1996). In considering summary judgment, we must view the evidence in the light most favorable to the nonmoving party. See Matsushita Elect. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Yet, "the nonmoving party must set forth specific facts showing the existence of a `genuine' issue concerning every essential component of its case." Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998).

Judicial review of a labor-arbitration decision by this Court, or by the district court, is extremely limited. Where the arbitrator is "even arguably construing or applying the contract and acting within the scope of his authority the fact that a court is convinced he committed serious error does not suffice to overturn that decision." Eastern Associated Coal Corp. v. United Mine Workers of America, 531 U.S. 57, 62, 121 S.Ct. 462, 148 L.Ed.2d 354 (2000) (internal quotations omitted). Thus, if there is ambiguity as to whether an arbitrator is acting within the scope of his authority, that ambiguity must be resolved in favor of the arbitrator, as the mere "inference" of ultra vires action is an insufficient "reason for refusing to enforce the award." United Steelworkers of America v. Enterprise Wheel & Car Co., 363 U.S. 593, 598, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (196...