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

• Decision Date: 16 October 2017
• Docket Number: No. 17-3188.,17-3188.
• Citation: 873 F.3d 540
• 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

873 F.3d 540

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. 17-3188.

United States Court of Appeals, Sixth Circuit.

Argued: October 5, 2017

Decided and Filed: October 16, 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, Deirdre Hamilton, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Washington, D.C., for Appellees.

Before: SUTTON, DONALD, and THAPAR, Circuit Judges.

OPINION

THAPAR, Circuit Judge.

Bad weather causes turbulence. As it turns out, so does merging two luxury airlines. A few years ago, Flight Options announced that it would acquire and merge operations with Flexjet. The airlines and their pilots' union have been fighting ever since—and have become frequent fliers in this circuit. This is the second time the parties have been before us this year. Their first appeal was about how to combine the pilots' seniority lists. See Flight Options, LLC v. Int'l Bhd. of Teamsters, Local 1108 , 863 F.3d 529 (2017). This appeal is about how to integrate the pilots under one collective-bargaining agreement.

I.

The International Brotherhood of Teamsters has represented the Flight Options pilots for over ten years. And when Flight Options and Flexjet announced a merger, the Flexjet pilots elected the Teamsters to represent them too. Now the airlines and the union have to find a way to fold the Flight Options and Flexjet pilots into one labor group.

Flight Options and the union already have a collective-bargaining agreement that says what should happen in the event of a merger. Section 1.5(c)(4) requires the airlines and the union to modify the agreement "in those respects necessary to permit the integration" of new pilots. The parties have nine months to execute a modified agreement. If they reach an impasse, Section 1.5(c)(4) mandates that they work it out in binding arbitration.

One snag: The existing collective-bargaining agreement also became "amendable" under the Railway Labor Act shortly after the airlines merged. And after the agreement became amendable, either party could propose broad changes affecting the pilots' rates of pay and working conditions. See 45 U.S.C. § 156. To do so, one party need only serve the other with notice under Section 6 of the Act. Id. Once notice is served, the parties must hold their first conference within thirty days. Id. Sure enough, the union served the airlines with notice just before the parties began their Section 1.5(c)(4) negotiations.

So the parties face two duties to bargain. And they disagree about how those duties interact. The airlines maintain that the parties must resolve their Section 1.5(c)(4) negotiations before turning to the union's Section 6 proposals. But the union thinks that both negotiations will address the same issues and should happen at the same time. Unsurprisingly, the parties' mandatory bargaining conferences have been unproductive. The union presented broad Section 6 proposals, while the airlines focused on the narrower issues they deem necessary for integration. The union eventually asked the district court for a preliminary injunction ordering the airlines to bargain the union's Section 6 proposals in good faith. The district court granted the injunction, and the airlines appealed.

II.

Airlines and their unions must resolve their disputes consistent with the procedures in the Railway Labor Act. Emswiler v. CSX Transp., Inc. , 691 F.3d 782, 785 (6th Cir. 2012). The Act provides two procedural tracks: one for major disputes and one for minor disputes.

Consol. Rail Corp. v. Ry. Labor Execs.' Ass'n , 491 U.S. 299, 302–04, 109 S.Ct. 2477, 105 L.Ed.2d 250 (1989).

Major disputes relate to the formation of a collective-bargaining agreement or the effort to change the terms of a collective-bargaining agreement. Elgin, J. & E. Ry. Co. v. Burley , 325 U.S. 711, 723, 65 S.Ct. 1282, 89 L.Ed. 1886 (1945). In other words, a major dispute concerns "the acquisition of rights for the future, not [the] assertion of rights claimed to have vested in the past." Id. Parties to a major dispute must try to resolve it through private negotiation, and if necessary, mediation. Wheeling & Lake Erie Ry. Co. v. Bhd. of Locomotive Eng'rs & Trainmen , 789 F.3d 681, 690 (6th Cir. 2015). If both of those mechanisms fail, the parties must determine whether or not to proceed to arbitration. Id. at 690–91. But until the parties exhaust these procedures, they may not alter the status quo by implementing a contested change or striking. Id. at 691. If either party jumps the gun, the other can ask a federal court to step in and issue an injunction. Id.

Minor disputes, on the other hand, arise from disagreements about how an existing collective-bargaining agreement applies to a particular situation. Id. Again, the parties must first attempt to negotiate privately. Id . But if negotiations over a minor dispute fail, the parties must proceed directly to binding arbitration. Id. The court plays no role in resolving minor disputes unless a party asks it to review the arbitrator's decision. See Emswiler , 691 F.3d at 785.

When a party claims a dispute is minor, it bears the burden of demonstrating that the resolution of the dispute involves interpreting the existing collective-bargaining agreement. Consol. Rail Corp. , 491 U.S. at 305–07, 109 S.Ct. 2477. To carry this burden, the moving party must demonstrate that its action is "arguably justified" by the terms of the agreement. Id. at 306–07, 109 S.Ct. 2477. But this burden is "relatively light"—so long as the party's proffered interpretation is not "frivolous or obviously insubstantial," the dispute is minor. Id. at 307, 109 S.Ct. 2477.

The district court found that the dispute over the scope of Section 1.5(c)(4) negotiations was minor and left the issue for arbitration. But it assumed that the dispute over the order of negotiations was major. In the district court's view, the airlines had a "distinct duty to immediately engage in good faith bargaining under RLA Section 6" and could not "avoid Section 6 bargaining simply because they want to prioritize the arguably narrower category of Section 1.5(c)(4) issues." Flight Options, LLC v. Int'l Bhd. of Teamsters , No. 1:16-CV-00732, 2017 WL 343346, at *9 (N.D. Ohio Jan. 24, 2017). On appeal, the airlines argue that the dispute over the order of negotiations was minor and thus should have gone to arbitration. We review the district court's classification de novo. CSX Transp., Inc. v. United Transp. Union , 395 F.3d 365, 368 (6th Cir. 2005).

The district court assumed the parties' dispute was major simply because the union served a Section 6 notice. But that assumption was incorrect. A dispute can be minor even if it affects the parties' obligations under Section 6. See, e.g. , id . The proper inquiry is whether the existing collective-bargaining agreement "controls the controversy." Elgin , 325 U.S. at 723, 65 S.Ct. 1282.

So first, we consider whether the airlines claim they have a right under the existing collective-bargaining agreement to prioritize Section 1.5(c)(4) negotiations. Consol. Rail Corp. , 491 U.S. at 305, 109 S.Ct. 2477. They do. The airlines say the collective-bargaining agreement does not apply to the Flexjet pilots until the parties complete Section 1.5(c)(4) negotiations. So, in their view, negotiating the union's Section 6 proposals, which involve rates of pay and work rules for both the Flight Options and Flexjet pilots, would be premature. Instead, according to the airlines, the parties must wait until the Section 1.5(c)(4) negotiations fold the Flexjet pilots into the existing contract terms and then use the modified agreement as a baseline for negotiating those broader issues under Section 6. Thus the airlines claim that this dispute is minor, because it involves interpreting the collective-bargaining agreement.

But it is not enough that the airlines claim their dispute is minor. There remains the second question: whether their reading of the collective-bargaining agreement is arguably justified. Id. at 306–07, 109 S.Ct. 2477. It is. Section 1.5(c)(4) states that "[u]ntil such time as a fully merged agreement is reached, either through bargaining or arbitration, the surviving air carrier may continue to operate the two carriers separately." That language arguably implies that the airlines do not have to bargain over Section 6 proposals involving all the pilots of the combined airlines until "such time as a fully merged agreement is reached." The airlines' argument is not frivolous: It is consistent with the contract's plain language. See Airline Prof'ls Ass'n, Teamster Local Union 1224 v. ABX Air, Inc. , 400 F.3d 411, 416–17 (6th Cir. 2005).

Our decision in CSX Transportation, Inc. is instructive on this point. There, a railroad claimed that a moratorium provision in its collective-bargaining agreement allowed it to delay bargaining under Section 6 for two years. 395 F.3d at 369. This court held the railroad's claim was arguably justified for two reasons: (1) the plain language of the agreement could be read to indicate that the union's Section 6 proposals should not progress, and (2) the union pointed to no conflicting language to cast doubt on that interpretation. Id. at 369–70. That none of the union's arguments "rested on the contract language written by the parties" was significant. Id. at 370. So too here. The union has failed to point to any language demonstrating that the...