Barthelemy v. Air Lines Pilots Ass'n

• Citation: 897 F.2d 999
• Decision Date: 06 March 1990
• Docket Number: No. 88-15180,88-15180
• Parties: 133 L.R.R.M. (BNA) 2812, 58 USLW 2587, 114 Lab.Cas. P 12,021 Richard P. BARTHELEMY; Edison L. Denney, Plaintiffs-Appellants, v. AIR LINES PILOTS ASSOCIATION; Association TWA Master Executive Council; Henry Duffy; Harry Hoglander; Does 1 through 50, inclusive et al., Defendants-Appellees. Ninth Circuit
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 999

897 F.2d 999

133 L.R.R.M. (BNA) 2812, 58 USLW 2587,

114 Lab.Cas. P 12,021

Richard P. BARTHELEMY; Edison L. Denney, Plaintiffs-Appellants, v. AIR LINES PILOTS ASSOCIATION; Association TWA Master Executive Council; Henry Duffy; Harry Hoglander Does 1 through 50, inclusive et al Defendants-Appellees.

No. 88-15180.

United States Court of Appeals,

Ninth Circuit

Argued and Submitted June 27, 1989.

Decided March 6, 1990.

Richard Barthelemy, Pro. per., Napa, Cal., in pro. per.

Robert F. Gore, National Right to Work Legal Defense Foundation, Springfield, Va., for plaintiffs-appellants.

Eugene B. Granof, Air Line Pilots Ass'n, Washington, D.C., and Ken Markowitz, Fisher and Hurst, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before BROWNING, PREGERSON and THOMPSON, Circuit Judges.

PER CURIAM:

Plaintiffs appeal from summary judgment granted against them on the basis of orders entered by the district court March 31, 1987 and June 20, 1988. We affirm the judgment for the reasons stated by District Judge Robert F. Peckham in two orders quoted in full in Part I and for the additional reason set out in Part II.

I.

A.

Judge Peckham's Order of March 31, 1987

INTRODUCTION

In this suit, two TWA flight deck crewmembers are challenging an August 5, 1985 agreement ("Agreement") between the Airline Pilots Association ("ALPA") and financier Carl Icahn. In that agreement, ALPA agreed to certain reductions in pay and benefits in its collective bargaining agreement with TWA if Icahn was successful in his attempt to gain control of TWA. Plaintiffs seek injunctive, declaratory, and monetary relief under the Railway Labor Act ("RLA"), 45 U.S.C. Sec. 151 et seq. They raise three issues: (1) that ALPA violated its duty of fair representation in assenting to the August 5 Agreement with Icahn, because its leadership had improper personal motivations which prompted that assent; (2) that the Agreement is void as contrary to the RLA because Icahn did not control TWA when the Agreement was signed and was therefore not the pilots' employer, and for other procedural reasons; and (3) that the Agreement is void as contrary to the RLA because it required the Icahn Group, if successful in its TWA takeover bid, to pay the fees of ALPA's investment banker, Lazard Freres. (ALPA used Lazard to seek out potential buyers for TWA who were less hostile to pilots' interests than Frank Lorenzo, the Texas Air chairman who was TWA management's choice to take over the airline.) Plaintiffs also seek to compel production of various discovery materials.

TWA and Icahn have been joined as indispensable parties, since plaintiffs seek to void both the Agreement and the collective bargaining agreement ("CBA") pursuant to that Agreement, which TWA and ALPA entered into after Icahn took control of TWA.

For the reasons described below, we grant summary judgment for defendants on plaintiffs' claim of breach of the duty of fair representation and plaintiffs' claim that the August 5 Agreement is contrary to the RLA because Icahn did not control TWA when the Agreement was signed, and for other procedural defects. We further deny plaintiffs' request to compel answers to interrogatories. We request further information and briefing about the nature of Lazard's contract with ALPA and Icahn's agreement to pay ALPA's bill from Lazard.

FACTS

Deregulation has intensified competition in the airline industry. In 1985 TWA had an operating loss of $62.4m, and like many other airlines, sought concessions from labor as well as other economies. This put ALPA, which represents 39,000 commercial airline pilots on more than 40 carriers, in a difficult position. (ALPA's president since 1982 has been Captain Henry Duffy, a Delta Air Lines pilot. He was re-elected in November 1986 to another four-year term.)

In the spring of 1985, just before the start of contract negotiations between TWA and ALPA, Icahn announced he had acquired a large interest in TWA and was seeking control of it. TWA management convinced the ALPA Master Executive Council for TWA ("TWA-MEC") that they should oppose Icahn as a corporate raider who would dismantle the airline. The TWA-MEC contains 18 local council representatives plus three officers elected by the MEC for two-year terms. From June 1982 to June 1986, Captain Harry Hoglander, an active TWA pilot, was chairman of the TWA-MEC. Hoglander attended congressional hearings about Icahn's bid in early June 1985, and reported to ALPA leadership that despite ALPA's fears about Icahn, TWA management had not made out a very convincing case for their own abilities and that Icahn seemed sincere in wanting to preserve the airline intact. In addition, ALPA was working with other relevant unions to put together a proposal for an employee leveraged buyout of TWA and had scheduled meetings with TWA senior management to discuss it. ALPA Memorandum of Points and Authorities ("ALPA memo") at 6-7.

On June 13, 1985, TWA management announced it had reached agreement with Texas Air Corporation, the parent of Continental Airlines and New York Air (and now People Express) allowing Texas Air to take over TWA. No advance notice was given to ALPA. Texas Air is controlled by Frank Lorenzo. He is a particular bete noire to ALPA:

ALPA representatives, both pilots and staff, who had sought to engage in collective bargaining with Mr. Lorenzo when he bought Texas International Airlines and then when he took over Continental reported that he was hostile to the collective bargaining process, was not interested in establishing a relationship with ALPA based on any degree of mutual trust, and reneged on understandings which ALPA negotiators thought they had reached with him.

ALPA memo at 9. Lorenzo had established New York Air as a separate non-union subsidiary which pays its pilots considerably less than comparable ALPA carriers. He had also taken Continental Airlines into bankruptcy in September 1983, permitting him to abrogate its existing labor agreements, thereupon establishing a new wage scale which "was approximately half the previous wage. The existing medical and retirement plans were eliminated, and working conditions were drastically ... altered." Id. The ensuing bitter strike was ongoing when TWA announced its plan to sell to Lorenzo. As Hoglander put it in a letter to TWA pilots, "We were sold like chattel to the one person everyone knew we found unacceptable." 12 August 1985 letter, Exhibit 5 to Hoglander Aff. The TWA-MEC feared that Lorenzo would cut TWA pilots' compensation drastically and/or transfer TWA assets to Continental, New York Air or other carriers so he could furlough TWA pilots. Hoglander Aff. at pp 8, 11. "Accordingly, the [TWA] MEC, with expert assistance, sought an alternate buyer for TWA--a 'white knight' in current financial jargon--who, in exchange for employee concessions, would make certain guarantees regarding job security, wages, benefits, and other working conditions." ALPA memo at 3.

Hoglander and the TWA-MEC then tried to find an alternate buyer for TWA. The MEC met frequently (120 hours in the days following June 13, 1985) and hired Lazard to pursue offers by potential buyers to join with the pilots or all three unions involved to buy TWA. "None of the offers proved satisfactory, however, because the potential buyers demanded absolute security or collateral for themselves while asking for heavy commitments from the pilots over long periods of time." ALPA memo at 10. In any event, ALPA realized from the start that Icahn could end the game by selling to Lorenzo, so it started talking to him as soon as TWA announced its plan to sell to Lorenzo. Hoglander's first meeting with Icahn was on June 15. "Mr. Icahn indicated he was interested in owning TWA, but that employee concessions were necessary to make it a profitable enterprise." Id. at 10-11. Detailed discussions ensued between ALPA and Icahn which resulted in the August 5 Agreement.

Hoglander says that the TWA-MEC was pursuing other possible suitors for TWA during July while it negotiated with Icahn, but

our search in this regard was limited by two critical factors: (1) there had to be a fair likelihood that the TWA pilots would have better wages and working conditions with such a purchaser than we would with Mr. Icahn; and (2) there had to be a strong likelihood that such a potential purchaser would actually succeed in taking control of TWA. Inasmuch as Mr. Icahn and his associates had already amassed a considerable block of stock of TWA stock [sic]--close to a majority interest by August 5th--and were being quite receptive to our efforts to arrive at a mutually acceptable agreement, I regarded him as by far the best prospect. Our investment bankers searched for potential purchasers who would meet our qualifications, but failed to find any. I thought time was of the essence here, and the MEC was in accord. The longer we waited to find a viable alternative to Texas Air and Mr. Lorenzo, the more remote our chances of Hoglander Aff. at p 12. The plaintiffs claim that ALPA's blind hatred of Lorenzo meant that it did not really explore other alternatives or offer to others what it offered to Icahn.

blocking the TWA/Texas Air deal would become.

On July 1, ALPA and Icahn reached an agreement, which was superseded by a more detailed one on August 5. The basic elements of the August 5 Agreement were as follows: (1) It committed Icahn to seek control of TWA; (2) After the Icahn group gained control, ALPA would enter into a collective bargaining agreement with the "New TWA," effective January 1, 1986, which would cut aggregate pay and benefits by 26% from their June 1985 level (4% of which would come from "soft dollars," i.e., non-pay benefits); (3) The pilots received various compensating benefits: an Employee Stock Ownership Plan ("ESOP") would be established with 20% of the company's stock, of which...