Bautista v. Pan American World Airlines, Inc.

• Decision Date: 21 September 1987
• Docket Number: No. 86-2881,86-2881
• Citation: 828 F.2d 546
• Parties: 126 L.R.R.M. (BNA) 2559, 56 USLW 2252, 107 Lab.Cas. P 10,159 Eduardo C. BAUTISTA, et al., Plaintiffs-Appellants, v. PAN AMERICAN WORLD AIRLINES, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 546

828 F.2d 546

126 L.R.R.M. (BNA) 2559, 56 USLW 2252,

107 Lab.Cas. P 10,159

Eduardo C. BAUTISTA, et al., Plaintiffs-Appellants, v. PAN AMERICAN WORLD AIRLINES, INC., et al., Defendants-Appellees.

No. 86-2881.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 14, 1987.

Decided Sept. 21, 1987.

Dan Siegel, Oakland, Cal., for plaintiffs-appellants.

Richard Schoolman, Malcolm A. Goldstein and Carole O'Blenes, New York City, for defendants-appellees.

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

Before MERRILL and NORRIS, Circuit Judges, and ENRIGHT, ^* District Judge.

MERRILL, Circuit Judge:

Pan American World Airways (Pan Am) sold its in-house catering facilities and contracted with Marriott Corporation to provide catering services. Dismissed Pan Am catering employees sued (1) Pan Am for breach of their collective bargaining agreements, (2) Marriott for tortious interference with contractual relations, and (3) the Transport Workers Union (TWU), the employees' former union, for breach of its duty of fair representation. The district court granted summary judgment to Pan Am and the TWU, and held the tort claim preempted. The former employees appeal. We affirm in part, reverse in part, and remand in part.

I. FACTS

Appellants performed various jobs pertaining to Pan Am's catering services for its airplanes. Their conditions of employment were governed by three collective bargaining agreements, negotiated by their union in 1980. A major issue in the negotiations was Pan Am's desire to phase out its in-house catering facilities and hire an outside catering company. The TWU, which represented some 5000 Pan Am employees, fought to protect the jobs of the approximately 750 catering employees. The resulting compromise was embodied in three (identical) Appendices.

The 1980 Appendices expressly acknowledged Pan Am's right to phase out its in-house catering operations, but also included a "No Layoff Guarantee," in which Pan Am agreed not to lay off current catering employees except in the event of strikes and other circumstances not applicable here. The Guarantee also provided that, "[w]ith the exception of the modifications provided by this [Appendix], the general conditions of the [main] contracts shall remain in full force and effect." The Appendices contained a section entitled "Duration," which stated only that the Appendices "shall become effective on the date of [their] execution." The "Duration" section specified no expiration date, although the main agreement did contain an expiration date. ¹

Pan Am fared poorly from 1980 to 1983. Twice during that period, it requested and received concessions on wages and working conditions from all the unions representing its employees. With the 1980 collective bargaining agreements to expire at the end of 1984, Pan Am notified the TWU on September 7, 1984, that it intended to delete the Appendices containing the "No Layoff Guarantee" and make other changes in the collective bargaining agreement pursuant to section 6 of the Railway Labor Act ("RLA"), 45 U.S.C. Sec. 156. After Pan Am and the TWU failed to reach agreement, they turned to the National Mediation Board, see 45 U.S.C. Sec. 155 First, which proved unable to elicit an agreement. After the statutorily-mandated thirty-day cooling off period, see id., the parties exercised their rights to self help: the TWU struck, and Pan Am sold its catering facilities and contracted with Marriott to provide catering services. Appellants claim that TWU officials, while urging them to strike, told them that their jobs would be protected by the "No Layoff Guarantee."

After a four-week strike, the parties reached an agreement on March 23, 1985. Pan Am agreed to retain up to 75 catering employees. The other catering employees had to choose between dismissal with a severance payment and priority in filling noncatering positions for which they could qualify. The "No Layoff Guarantees" were abolished. These changes were ratified by a majority of the employees represented by the TWU.

Appellants, who lost their jobs after the strike ended, sued Pan Am, Marriott, and the TWU in federal district court. Judge Patel found that she had jurisdiction over the claim against Pan Am, and held as a matter of law that the 1980 Appendices created no right to lifetime employment. She then granted the TWU's motion for summary judgment because the union's renegotiation of the "No Layoff Guarantees" was reasonable under the circumstances. Finally, the district court held that the former employees' claim that Marriott had tortiously induced Pan Am to breach its collective bargaining agreement was preempted by federal law, because it required a court to interpret the labor agreement when that task was properly for the National Railway Adjustment Board. The dismissed employees now appeal as to all three defendants.

II. THE UNION'S DUTY OF FAIR REPRESENTATION

The dismissed employees claim that the TWU breached its duty of fair representation ("DFR") when it agreed in 1984 to the abolition of their "No Layoff Guarantees." Their theory is that the 1980 Appendices gave each appellant a "vested" right to lifetime employment, which the union was powerless to bargain away without each employee's personal consent. Appellant's further allege that the TWU acted in bad faith when union officials, in order to persuade the catering employees to join the strike, told them that the 1980 Appendices would protect their jobs.

Under the Railway Labor Act, ² unions have a duty to represent their members fairly. See Steele v. Louisville & Nash. R.R., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173 (1944). Although the RLA generally gives employees no right of action to sue their employers over labor disputes in federal court, district courts do have jurisdiction under 28 U.S.C. Sec. 1337 to hear unfair representation claims against unions. See Crusos v. United Trans. Union, Local 1201, 786 F.2d 970, 973 (9th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 409, 93 L.Ed.2d 361 (1986). A union breaches its duty when its conduct is "arbitrary, discriminatory, or in bad faith." Vaca v. Sipes, 386 U.S. 171, 190, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). The duty of fair representation extends to a union's conduct in negotiating collective bargaining agreements as well as in pursuing grievances on behalf of individual employees. See Schultz v. Owens-Illinois Inc., 696 F.2d 505, 514 (7th Cir.1982). In the context of representing its members at the bargaining table, a union must be allowed a "wide range of reasonableness" because it must be able to focus on the needs of its membership as a whole without undue fear of lawsuits from individual members disgruntled by the result of the collective process. Ford Motor Co. v. Huffman, 345 U.S. 330, 338, 73 S.Ct. 681, 686, 97 L.Ed. 1048 (1953). " 'The complete satisfaction of all who are represented is hardly to be expected.' " Hays v. National Elec. Contractors Ass'n, 781 F.2d 1321, 1324 (9th Cir.1985) (quoting id.).

The TWU's conduct fell well within the "wide range of reasonableness" we must accord it. When the TWU accepted the 1985 agreement, Pan Am had sold its catering operations and had signed its contract with Marriott. At that point, it was hardly unreasonable for the union to give up its goal of retaining appellants' jobs and to negotiate severance payments and other viable options for the catering employees instead.

Appellants' "vested rights" argument does not persuade us otherwise. We need not decide, as the district court did, whether the 1980 Appendices created rights to lifetime employment that the union could not properly bargain away. Rather, we rule that the lack of an explicit guarantee of lifetime employment like the one in Heheman v. E.W. Scripps Co., 661 F.2d 1115, 1118 (6th Cir.1981) (enforcing a provision that employees "will be continuously employed for the remainder of their working lives...."), cert. denied, 456 U.S. 991, 102 S.Ct. 2272, 73 L.Ed.2d 1286 (1982), coupled with the presence of an explicit expiration date in the main agreements, raised at least enough doubt about the meaning of the Appendices for the union reasonably to conclude that it should renegotiate the provisions in the face of Pan Am's sale of its catering facilities. Cf. Fechtelkotter v. Air Line Pilots Ass'n, Int'l, 693 F.2d 899 (9th Cir.1982) (holding that a union did not violate its DFR even though it erroneously fined several members pursuant to its misinterpretation of the collective bargaining agreement). This result is consistent with this Circuit's view of collective bargaining as establishing a "continuing relationship," designed to promote "rational accommodations to changing economic circumstances." Hendricks v. Airline Pilots Ass'n, Int'l, 696 F.2d 673, 677, 678 (9th Cir.1983). ³

Appellants also claim that certain allegedly misleading statements by local union officials violated the union's DFR. The signed Declaration of Kenneth E. Lundy, one of the appellants, includes the following paragraph:

4. In February, 1985, we were told by the TWU that the mechanics would be striking and that we must honor their picket lines. We were told by the TWU that our jobs would be protected by the 1980 [Appendix] and that we had nothing to worry about. During the strike, the TWU local treasurer, Dale Pendleton, assured us that we had nothing to worry about since our jobs were secured. Once the strike was over, we would be back to work. The commissary workers and port stewards did not want to strike but we were required by the TWU to honor the pickets of the mechanics. (E.R. 149-50)

Intentionally misleading statements by union officials designed to persuade members to join in collective action, such as a strike or ratification of a newly negotiated agreement, can supply the bad faith necessary to a DFR violation. For example, in Anderson v. United Paperworkers Int'l Union, 641 F.2d...