Flight Options, LLC v. Int'l Bhd. of Teamsters

• Decision Date: 17 July 2017
• Docket Number: No. 16-3606,16-3606
• Citation: 863 F.3d 529
• Parties: FLIGHT OPTIONS, LLC; Flexjet, LLC; OneSky Flight, LLC; Flight Options Holding I, Inc., Plaintiffs/Counter–Defendants–Appellants, v. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 1108; International Brotherhood of Teamsters, Airline Division, Defendants/Counter–Claimants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

863 F.3d 529

FLIGHT OPTIONS, LLC; Flexjet, LLC; OneSky Flight, LLC; Flight Options Holding I, Inc., Plaintiffs/Counter–Defendants–Appellants,

v.INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 1108; International Brotherhood of Teamsters, Airline Division, Defendants/Counter–Claimants–Appellees.

No. 16-3606

United States Court of Appeals, Sixth Circuit.

Argued: February 1, 2017

Decided and Filed: July 17, 2017

Rehearing En Banc Denied August 18, 2017

ARGUED: W. Chris Harrison, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Memphis, Tennessee, for Appellants. James Petroff, BARKAN MEIZLISH, LLP, Columbus, Ohio, for Appellees. ON BRIEF: W. Chris Harrison, Audrey M. Calkins, Zachary W. Hoyt, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Memphis, Tennessee, for Appellants. James Petroff, Trent R. Taylor, BARKAN MEIZLISH, LLP, Columbus, Ohio, Nicolas M. Manicone, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Washington, D.C., for Appellees.

Before: COLE, Chief Judge; COOK and WHITE, Circuit Judges.

OPINION

HELENE N. WHITE, Circuit Judge.

This action under the Railway Labor Act (RLA) concerns the merger of two airlines—an acquiring airline with unionized pilots and an acquired airline with newly unionized pilots—and their efforts to bring both groups under a new, joint collective-bargaining agreement. The airlines and their pilots' union dispute whether the creation of an integrated seniority list (ISL) of pilots is exclusively committed to the union, or whether it is subject to collective bargaining with the airlines. The union asks us to find this disagreement to be a "major" dispute under the RLA and to affirm the district court's preliminary injunction ordering the airlines to accept the ISL proffered to them by the union. The airlines ask us to find this dispute to be "minor" and subject to exclusive arbitral jurisdiction, and to vacate the preliminary injunction. The airlines assert the right not to accept a union-proffered seniority list and instead to participate in the seniority-integration process through collective bargaining. Because this assertion is not arguably justified by the parties' existing collective-bargaining agreement, the dispute is major, leading us to AFFIRM in part and VACATE in part.¹

I

The International Brotherhood of Teamsters, Airline Division (Teamsters) and its Local 1108 (together, the Union) represent the pilots of Flight Options, LLC (Flight Options) and Flexjet, LLC (Flexjet, and together with Flight Options, the Carriers), two merged airlines that offer fractional ownership of jet aircraft. Flight Options and its pilots have had a collective-bargaining agreement since 2010 (the 2010 CBA), while Flexjet's pilots are newly unionized and are not yet party to a CBA.

Flight Options is based in Cleveland, Ohio, and is a "carrier" for purposes of the RLA. See 45 U.S.C. § 181. Michael Silvestro (Silvestro) is CEO of Flight Options and Kenneth Ricci (Ricci) is chairman of Flight Options and its parents. Fight Options has approximately 360 pilots who are represented by the Union and operate under the 2010 CBA.

Flexjet, another "carrier" under the RLA, has approximately 340 pilots and was acquired in December 2013 by a Flight Options parent. Prior to the acquisition, Flexjet's pilots were at-will employees. On September 30, 2015, the National Mediation Board (NMB) found that Flight Options and Flexjet were a single transportation system for purposes of labor representation under the RLA. 42 N.M.B. 174, 181 (2015). On December 15, 2015, the Union was certified after an election as the representative of the combined Flight Options and Flexjet pilot groups.² Silvestro and Ricci serve as CEO and chairman at Flexjet, too.

Although the Union was elected to represent the Flexjet pilots, these pilots are not yet parties to the 2010 CBA (or a successor joint CBA). Section 1.5 of the 2010 CBA governs the integration of pilots from an acquired airline; parent entities of Flight Options agreed to be bound by Section 1 of the 2010 CBA on behalf of themselves and their successors.

On appeal, the parties dispute whether the integration of the pilot groups' seniority lists³ is solely a Union matter (in which case, the Carriers must accept the list the Union proffers) or whether the Carriers should have been allowed to participate in negotiating the list.

Section 1.5(c)(1) of the 2010 CBA governs the creation of the ISL when Flight Options acquires another carrier:

If Pilots of the acquired carrier are hired by the Company, the seniority lists of the respective Pilot groups shall be integrated pursuant to Teamsters Merger Policy if both groups are represented by the [Teamsters], or if the Pilots of the acquired airline are not represented by the [Teamsters], then pursuant to Sections 3 and 13 of the Allegheny–Mohawk Labor Protective Provisions. Seniority integration procedures shall be promptly initiated following announcement of an operational merger affecting the seniority of the pilot groups. The Company or other Successor, as appropriate, shall accept the integrated seniority list. There shall be no system flush or removal of Pilots from their positions as a result of seniority list integration.

2010 CBA, R. 8–2, PID 89.⁴

Under this provision, there are two mutually exclusive processes for creating an ISL depending on whether the Union represents both the Flight Options pilots and the acquired pilot group, or only the former. If both pilot groups are represented by the Union, the ISL is created "pursuant to Teamsters Merger Policy," and the Carriers "shall accept the [ISL]." Id. Otherwise, the ISL is created "pursuant to Section 3 and 13 of the Allegheny–Mohawk Labor Protective Provisions," and again, the Carriers "shall accept the [ISL]" that results from that process. Id.

Ricci summed up the process in a presentation he made to the pilots:

If [the Flexjet pilots vote to be represented by the Union], then the Union's first job will be to integrate the seniority lists. That's—that's what they do.

If there is no Union, then it will fall upon management to integrate the seniority lists. So I understand why many people want to know when it is going to happen, but I'm the last guy that gets to do it.

D. Ct. Tr., R. 43, PID 1063.

Soon after it was elected to represent the acquired pilot group, the Union appointed the Flight Options Merger Committee (FOMC) and the Flexjet Merger Committee (FXMC)—two autonomous committees each comprised of three pilots from their respective groups—and charged them with the task of creating an ISL. Laddie Hostalek, business agent for Local 1108 and a Flight Options pilot, testified that the members of the FOMC were appointed by the Flight Options Master Executive Council and the members of the FXMC were appointed by the Flexjet Pilots Leadership Council.

Adam Fine, a Flexjet pilot and chairman of the FXMC, testified regarding the work of the two merger committees. According to Fine, in order to create a fair and equitable ISL, the committees reviewed precedent airline mergers and considered draft lists based on different seniority-calculation methodologies; they also conducted statistical analyses of the impact of different methodologies on pilot subgroups. After evaluating the results, the committees determined that given the different founding dates of Flight Options and Flexjet, a date-of-hire methodology would place half the Flexjet pilots at the "extreme bottom" of the ISL. D. Ct. Tr., R. 43, PID 1159–60. They instead unanimously adopted an ISL based on longevity, which they believed would be fair and equitable to both groups.⁵

The Union proffered the ISL to Silvestro on February 24, 2016, stating that it was unanimously adopted by the merger committees and requesting confirmation of its acceptance pursuant to Section 1.5(c)(1) of the 2010 CBA. Two days later, Silvestro rejected the ISL by letter, asserting that for the ISL process to comply with McCaskill–Bond, the Flexjet pilots must select their own negotiators and the Carriers "must be included to insure the process is fair and equitable."⁶ Verified Counterclaim, R. 6, PID 446–47. Silvestro's letter further justified the rejection by arguing that the ISL appeared to be "quickly put together," that the Union lacked a Teamsters merger policy to govern the process, and that pilots who had taken leaves of absence from Flight Options to fly for Flexjet appeared to be adversely targeted by the longevity-based calculation method.⁷ Id. at PID 447.

The Union sent Silvestro a separate notice, also dated February 24, 2016, invoking Section 6 of the RLA to begin negotiations for a new, joint CBA.⁸ Silvestro's February 26 response rejecting the ISL proffered by the Union also stated that, in accordance with Section 1.5(c)(4) of the 2010 CBA, joint CBA negotiations would not begin until an ISL is finalized.

The Union responded by filing a class-action grievance against the Carriers under Section 1.9 of the 2010 CBA,⁹ and by invoking arbitration under McCaskill–Bond¹⁰ to resolve the ISL dispute. A week and a half after the Union filed its grievance, the Carriers filed the instant action seeking a declaratory judgment that the Union's ISL process violated McCaskill–Bond because the Union must collectively bargain with the Carriers for a fair and equitable ISL, and because Flexjet pilots are "entitled to their own representative." Verified Complaint, R. 1, PID 13.

The Carriers also sought a preliminary injunction to restrain the Union from attempting to enforce the ISL it created, and from further pursuing arbitration regarding the ISL, until it negotiates the list with the Carriers. The Carriers argued that under McCaskill–Bond, they are entitled and obligated to negotiate with the Union over the ISL to ensure the list is "fair and equitable." The Carriers specifically argued that the ISL proffered by the Union, with its longevity-based seniority calculation, is not "fair and equitable" to Flight Options pilots who took leaves of absence to fly for Flexjet,...