Atlas Air, Inc. v. Int'l Bhd. of Teamsters

• Decision Date: 13 March 2018
• Docket Number: 17–cv–903 (KBF)
• Citation: 293 F.Supp.3d 457
• Parties: ATLAS AIR, INC. and Southern Air, Inc., Plaintiffs, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, International Brotherhood of Teamsters, Airline Division, and Airline Professionals Association of the International Brotherhood of Teamsters, Local Union No. 1224, Defendants.
• Court: U.S. District Court — Southern District of New York

293 F.Supp.3d 457

ATLAS AIR, INC. and Southern Air, Inc., Plaintiffs,

v.INTERNATIONAL BROTHERHOOD OF TEAMSTERS, International Brotherhood of Teamsters, Airline Division, and Airline Professionals Association of the International Brotherhood of Teamsters, Local Union No. 1224, Defendants.

17–cv–903 (KBF)

United States District Court, S.D. New York.

Signed March 13, 2018

Mark Wayne Robertson, Sloane Ackerman, O'Melveny & Myers LLP, New York, NY, Michael Gerard McGuinness, Robert A. Siegel, Partner/O'Melveny & Myers LLP, Los Angeles, CA, for Plaintiffs.

Denis Patrick Duffey, Jr., Franklin K. Moss, Spivak Lipton LLP, New York, NY, Edward M. Gleason, Law Office of Edward Gleason, PLLC, Washington, DC, for Defendants.

OPINION & ORDER

KATHERINE B. FORREST, District Judge:

This action relates to the merger of two air carriers—Atlas Air, Inc. ("Atlas") and Southern Air, Inc. ("Southern") (collectively, "plaintiffs"). On January 19, 2016, Atlas' corporate parent, Atlas Air Worldwide Holdings, Inc. ("AAWH"), announced plans to acquire Southern's corporate parent, Southern Air Holdings, Inc. ("SAHI"). Since that time, the parties to this action have been tangled in a protracted dispute regarding the proper means of integrating Atlas's and Southern's respective employees and operations. Plaintiffs assert that the applicable collective bargaining agreements ("CBAs") require defendants¹ to negotiate a new joint collective bargaining agreement ("JCBA") that covers both companies' pilots. Defendants disagree, and would prefer to amend the standalone CBAs that existed before the merger. The sole question before the Court is whether the parties' dispute should be resolved in arbitration.

Having carefully reviewed the parties respective submissions, the relevant law, and the CBAs at issue, the Court concludes that this dispute is subject to mandatory arbitration under the Railway Labor Act ("RLA"), 45 U.S.C. §§ 151 et seq. Accordingly, for the reasons stated below, plaintiffs' motion for summary judgment and to compel arbitration at ECF No. 35 is GRANTED, and defendants' motion for summary judgment² at ECF No. 41 is DENIED.

I. BACKGROUND

In order to fully understand the parties' respective positions, it is necessary to understand some of the complicated history and corporate structure of the involved air carriers. The following recitation of facts is derived from the parties' submissions under Local. Civ. R. 56.1 ("Rule 56.1") (ECF Nos. 37, 45)³ and certain documents filed in connection with the pending motions. The facts are undisputed unless otherwise noted.

A. The Air Carriers

1. Atlas

Atlas Air, Inc. ("Atlas") is a wholly owned subsidiary of Atlas Air Worldwide Holdings, Inc. ("AAWH"). In 2001, AAWH acquired another air carrier, Polar Air Cargo, Inc. ("Polar").⁴ Following that acquisition, both Atlas and Polar continued to maintain separate operations and separate United States Department of Transportation ("DOT") operating certificates. Furthermore, although Atlas's and Polar's pilots were represented by the same union—Air Line Pilots Association, AFL–CIO ("ALPA")—they remained subject to distinct, preexisting collective bargaining agreements ("CBAs") with their respective companies.

In June 2005, AAWH decided to merge Atlas's and Polar's business operations under a single DOT air certificate while continuing to maintain separate public-facing brands. The Polar pilots objected to a full operational merger, and eventually went on strike (the Atlas pilots, on the other hand, did not object). The Polar strike eventually ended, and in March 2006 the Atlas and Polar pilots commenced negotiations to integrate their respective seniority lists pursuant to ALPA's merger procedures. The parties were unable to reach an agreement, and ultimately submitted their dispute to an arbitrator. On November 24, 2006, Arbitrator Robert O. Harris issued an award integrating the two pilot groups' seniority lists.

While the Atlas and Polar pilots were negotiating the integration of their respective seniority lists, AAWH reversed its prior decision to fully merge the two companies' operations. Instead, Atlas and Polar sought to commence negotiations on a new "single collective bargaining agreement" ("SCBA") that would cover both companies' pilots. ALPA initially resisted, and as a result both Atlas and Polar filed management grievances under their respective CBAs. The Atlas pilots ultimately conceded that they were obligated to negotiate, but the Polar pilots continued to resist.⁵

On May 9, 2008, the ALPA Executive Council directed ALPA's president to present the combined seniority list to Atlas and Polar and to commence negotiations for a SCBA. ALPA presented the combined list on May 23, 2008, thereby triggering a nine-month negotiation window after which open issues were subject to final and binding arbitration. On September 29, 2008, in the middle of that negotiation window, the National Mediation Board ("NMB") decided that Atlas and Polar constituted a "single carrier" for labor representation purposes. Subsequently, on December 22, 2008, the International Brotherhood of Teamsters, Airline Division ("IBTAD") replaced ALPA as the certified labor representative of both the Atlas and Polar pilots.

In February 2009, Atlas, Polar, and IBTAD executed a "Negotiation Framework for Merged Collective Bargaining Agreement" (the "Framework Agreement"), which established a procedure for SCBA negotiations. (Decl. of Robert Kirchner Ex. F ("Framework Agreement"), ECF No. 42–2.) It specified that if the parties were unable to execute a SCBA by August 13, 2009, "all outstanding issues shall be submitted to binding interest arbitration." (Id. § C.1 at 3.) Notably, AAWH was not party to the Framework Agreement.

The parties were unable to agree on terms for a SCBA, and consequently submitted their dispute to interest arbitration in late 2010. During those proceedings, IBTAD argued that AAWH should be included as a "Related Entity" subject to the scope provisions of the SCBA. (Decl. of Jeffrey D. Carlson ("Carlson Decl.") Ex. 30 ("Arbitration Award") at 8–9, ECF No. 38–30.) Atlas and Polar, on the other hand, argued that AAWH should not be bound by the SCBA because it was not signatory to the underlying CBAs. (Id. at 18–19.) Ultimately, Interest Arbitrator Richard R. Kasher sided with Atlas and Polar, and as a result AAWH was not included as a "Related Entity" subject to the SCBA's scope provisions. (Id. at 32.) The resulting SCBA (hereinafter, the "Atlas CBA") became effective on September 8, 2011 and became amendable five years later on September 8, 2016.

2. Southern

Southern Air, Inc. ("Southern") is a direct subsidiary of Southern Air Holdings, Inc. ("SAHI"). Like Atlas and Polar, Southern is a contract air carrier that, inter alia, provides express cargo operations for DHL. In 2010, the Southern pilots' existing labor association merged with IBTAD. The NMB subsequently certified IBTAD as the Southern pilots' labor representative on February 24, 2010. The Southern pilots are currently subject to a CBA (the "Southern CBA") that became effective on November 6, 2012 and became amendable four years later on November 6, 2016.

B. The Applicable Collective Bargaining Agreements

1. The Atlas CBA

The Atlas CBA contains a provision regarding certain "Labor Protections" that apply, inter alia, "in the event the Company decides there will be a complete operational merger between the Company and an affiliated air carrier[.]" (Carlson Decl. Ex. 4 ("Atlas CBA") § 1.F.2, ECF No. 38–4.)⁶ The Atlas CBA further provides that:

[i]f the crewmembers of the acquired carrier are represented by the Union, then the parties shall on a timely basis begin negotiations to merge the two pre-integration collective bargaining agreements into one agreement. If a merged agreement has not been executed within nine (9) months from the date that the Union presents to the Company a merged seniority list ... the parties shall jointly submit the outstanding issues to binding interest arbitration.

(Atlas CBA § 1.F.2.b.iii.) The Atlas CBA defines "Company" as referring to "Atlas Air, Inc. and Polar Air Cargo Worldwide, Inc." (Atlas CBA § 1.A.)

The Atlas CBA also includes a provision creating a System Board of Adjustment (the "Atlas Adjustment Board") to resolve certain grievances regarding interpretation and application of the Atlas CBA. (Atlas CBA § 21.) As relevant here, that provision provides that the Atlas Adjustment Board:

shall have jurisdiction over all disputes between a Crewmember and the Company, or between the Company and the Union, growing out of the interpretation or application of any of the terms of this Agreement [the Atlas CBA] or amendments thereto.

(Id. at § 21.B.1.)

2. The Southern CBA

The Southern CBA contains a provision stating that "[i]n the event of a merger, this Agreement shall be merged with the merging air carrier's crewmember collective bargaining agreement, if any[.]" (Carlson Decl. Ex. 18 ("Southern CBA") § 1.B.3, ECF No. 38–18.)⁷ The Southern CBA further provides that:

if such merged agreement is not completed within nine (9) months from the date an integrated Master Seniority List is submitted to the surviving entity, the parties shall submit all outstanding issues to binding interest arbitration.

(Id. )

Like the Atlas CBA, the Southern CBA also includes a provision creating a System Board of Adjustment (the "Southern Adjustment Board") to resolve certain grievances regarding the interpretation and application of the Southern CBA. (Southern CBA § 19.D.) As relevant here, that provision provides that the Southern Adjustment Board:

shall have jurisdiction over disputes growing out of grievances or out of the interpretation or application of any of the terms of this Agreement. The jurisdiction of the Board shall not extend to proposed changes in hours of employment, rates of compensation, or working conditions.

(Southern CBA § 19.D.2.)

C. The Merger and Resulting Dispute

As previously noted, AAWH...