Horner v. Am. Airlines, Inc.

• Decision Date: 11 December 2017
• Docket Number: Civil Action No. 3:17-CV-0665-D
• Parties: KEVIN HORNER, et al., Plaintiffs, v. AMERICAN AIRLINES, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

KEVIN HORNER, et al., Plaintiffs, v. AMERICAN AIRLINES, INC., et al., Defendants.

Civil Action No. 3:17-CV-0665-D

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

December 11, 2017

MEMORANDUM OPINION AND ORDER

Four pilots employed by defendant American Airlines, Inc. ("American") and represented by the Allied Pilots Association ("APA") bring this action seeking to vacate an arbitration award and a preliminary injunction enjoining implementation of the award. American and APA move to dismiss, APA moves in the alternative for summary judgment, and plaintiffs move for partial summary judgment. For the reasons explained, the court grants American's and APA's motions to dismiss, grants APA's motion for partial summary judgment, denies plaintiffs' motions for partial summary judgment and for a preliminary injunction, and dismisses this action by judgment filed today.

I

This case is the latest chapter in a multi-year dispute over the integration of former Trans World Airlines ("TWA") pilots into the American pilot seniority list. In 2001 American merged with TWA. Following the merger, American and APA negotiated the integration of TWA pilots into the American pilot seniority list.¹ Plaintiffs Kevin Horner ("Horner"), John Krakowski ("Krakowski"), Keith Bounds ("Bounds"), and Joseph Tersteeg ("Tersteeg") (sometimes referred to collectively as "the former TWA pilots") were employed as pilots by TWA before the American-TWA merger, and by American after the merger.

The pilot-integration agreement, known as Supplement CC, was an addendum to the then-operative APA/American collective bargaining agreement. Under the integrated seniority list, the majority of former TWA pilots were not fully accredited for the seniority they accrued at TWA. Supplement CC, however, created a "protective fence" in St. Louis that reserved a minimum number of Captain and First Officer positions for the former TWA pilots that otherwise would not have been available to them under the integrated seniority list. American and APA historically submitted grievances filed by former TWA pilots regarding Supplement CC to a single neutral arbitrator.

The Supplement CC protections continued to be observed until American filed for bankruptcy in 2011. With bankruptcy court permission, American rejected the collective bargaining agreement between American and APA. This rejection abrogated Supplement CC as well.

APA and American agreed to a new collective bargaining agreement ("CBA") in 2012. Under a provision of the new CBA known as Letter of Agreement 12-05 ("LOA 12-05"), the parties agreed to "engage in final and binding interest arbitration" pursuant to § 7 of the Railway Labor Act ("RLA") to determine what preferential flying rights the former TWA pilots would receive to replace the protections formerly provided by Supplement CC. The parties arranged for a panel of three neutral arbitrators, "with Richard Bloch as the principal neutral." Ps. App. 73; APA App. 43. LOA 12-05 specified that, following the panel's decision, "Richard Bloch shall have continuing jurisdiction to resolve disputes over the implementation and interpretation of the decision by the panel." Id. After the LOA 12-05 arbitration panel made its decision, APA and American translated the ruling into contractual language to supplement the CBA. The panel approved this language, known as Supplement C, in 2013.

Supplement C's protections reserve Captain positions on 260 narrow-body aircraft and 86 small wide-body aircraft for former TWA pilots. These protections, however, are not perpetual. Each is subject to conditional events that trigger their expiration. Supplement C provides that the 260 narrow-body Captain positions will no longer be reserved for former TWA pilots when a particular former TWA pilot—Magnus Alehult ("Alehult")—has sufficient seniority to bid for a Captain position "on any aircraft." Ps. App. 28.

Supplement C also contains dispute resolution procedures. It provides that, after Supplement C's approval, all disputes

will be handled in accordance with the CBA, Sections 21, 22, and 23. If available, Richard Bloch shall sit as the neutral member of the System Board for disputes arising under this Supplement. If Richard Bloch is unable or unwilling to serve, the parties will select the first available date from either StephenGoldberg or Ira Jaffe, the other two members of the LOA 12-05 Interest Arbitration Panel. In the event that neither of them is willing or able to serve, the arbitrator selection procedures of Section 23 of the CBA will be utilized to select an arbitrator.

Ps. App. 30.

As referenced in Supplement C, Sections 21, 22, and 23 of the CBA establish American and APA's grievance procedures. They provide that a grievant is entitled to an initial hearing with his base's Chief Pilot, then an appeal hearing with American's Vice President-Flight. A grievant may chose to submit a grievance directly to the appeal hearing. When these procedures are exhausted, the President of APA may choose to pursue a grievance in a binding arbitration before a System Board of Adjustment ("System Board"). A grievance proceeds to the System Board following a Pre-Arbitration Conference ("PAC"). Section 23 specifies that, for contract interpretation disputes, "[t]he System Board of Adjustment may be constituted as either a Four Member Board or a Five Member Board." Ps. App. 52. A four member board consists of two members selected by the President of APA and two members selected by American. A five member board adds a neutral arbitrator as the fifth member.

In 2013 American merged with US Airways. When American and APA first implemented Supplement C, American operated four different aircraft groups: Group II, Group III, Group IV, and Group V. Through the US Airways merger, however, American acquired a fleet of smaller planes called Group I aircraft. Group I Captains are paid at a lower rate than Captains of aircraft in Groups II through V. In 2016, when US Airwayspilots were fully integrated into the American seniority list, Alehult had sufficient seniority to bid for a Captain position on the new Group I Aircraft. American maintained, however, that the phrase "any aircraft" in Supplement C did not include Group I aircraft. APA officials also stated that Group I Captain positions should not count for purposes of Supplement C. Therefore, American continued to observe Supplement C's protections for former TWA pilots.

Thereafter, three legacy American pilots filed grievances against American, contending that, because Alehult was eligible to bid for a Group I Captain position, Supplement C's narrow body protections had expired. Each legacy American pilot waived his right to an initial hearing. Bounds filed an opposition grievance, contending that the Supplement C protections were still in place. Bounds requested that his grievance be consolidated with those of the legacy American pilots (collectively, the "Supplement C grievances") and be "given 'equal footing' in all hearings and arbitrations scheduled and conducted." Ps. App. 41. In correspondence with APA, Bounds also asked "to waive the initial [hearing], appeal and PAC and proceed directly to the system board" arbitration. APA App. 6.

American and APA agreed to advance the grievances directly to a single-member System Board with Richard Bloch ("Arbitrator Bloch") as the sole neutral arbitrator. The remaining Supplement C grievants waived all pre-arbitration steps in the CBA grievance process, and APA formally submitted the Supplement C grievances to the single-member System Board. Although American and APA both decided to remain neutral regarding theSupplement C grievances, APA provided each group of grievants $74,000 to retain its choice of counsel and prepare its cases.

Bounds filed a motion to dismiss with Arbitrator Bloch, arguing that he did not have jurisdiction to hear the dispute under the single-member System Board format. Arbitrator Bloch denied the motion, finding that Supplement C provided him jurisdiction. Separately, Horner, Krakowski, and Charles Hartman (another former TWA pilot now employed by American) sued APA and American in this court, seeking a temporary restraining order to stay the Supplement C arbitration proceedings so that they could complete a separate arbitration of seniority integration grievances. After the court denied the motion,² Arbitrator Bloch held a hearing on the Supplement C grievances.

Following a two-day hearing, Arbitrator Bloch ruled in favor of the legacy American pilots, finding that the Supplement C narrow body protections should have expired when Alehult became eligible for a Group I Captain position. He remanded the dispute to APA and American to fashion an appropriate remedy. In his ruling, Arbitrator Bloch again affirmed his jurisdiction.

Horner, Krakowski, and Bounds later filed a second amended complaint against APAand American.³ They seek to vacate Arbitrator Bloch's award, contending that Arbitrator Bloch lacked jurisdiction because the modified grievance and arbitration process violated the RLA and the CBA and because the Supplement C grievances did not qualify as an arbitrable dispute. Plaintiffs also assert that APA breached its duty of fair representation by allowing these modifications to the grievance and arbitration process, in addition to refusing to honor a prior agreement that Group I aircraft would not count against Supplement C's protections.⁴ Plaintiffs request that the court vacate Arbitrator Bloch's award, "order Defendants to process the Supplement C grievances as required by the RLA and the CBA," and award costs and attorney's fees. 2d Am. Compl. 18.

Plaintiffs now move for partial summary judgment on count 1 of the second amended complaint, seeking vacatur of Arbitrator Bloch's award based on his lack of jurisdiction, and a preliminary injunction to enjoin American from implementing the award. APA moves to dismiss under Fed. R. Civ. P. 12(b)(...