IAM v. Varig Brazilian Airlines, Inc.

• Decision Date: 21 June 1994
• Docket Number: No. CV-94-0628.,CV-94-0628.
• Citation: 855 F. Supp. 1335
• Parties: INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO and District Lodge 142, International Association of Machinists and Aerospace Workers, Plaintiffs, v. VARIG BRAZILIAN AIRLINES, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

855 F. Supp. 1335

INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO and District Lodge 142, International Association of Machinists and Aerospace Workers, Plaintiffs, v. VARIG BRAZILIAN AIRLINES, INC., Defendant.

No. CV-94-0628.

United States District Court, E.D. New York.

June 21, 1994.

COPYRIGHT MATERIAL OMITTED

Joseph Guerrieri, Jr., David P. Dean, Guerrieri, Edmond & James, P.C., Washington, DC, Sidney Fox, Gerald Richman, Shapiro, Shiff, Beilly, Rosenberg & Fox, New York City, for plaintiffs.

Lee R.A. Seham, Seham, Seham, Meltz & Petersen, New York City, for defendant.

MEMORANDUM AND ORDER

GLASSER, United States District Judge:

This is a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56 by Varig Brazilian Airlines, Inc. ("Varig" or the "Company"), seeking a dismissal of the three causes of action contained in the complaint brought by the International Association of Machinists and Aerospace Workers, AFL-CIO ("IAM") and District Lodge 142, International Association of Machinists and Aerospace Workers ("IAM District Lodge 142") (collectively, the "Union"). This complaint is the result of a failed effort by the parties to negotiate a new collective bargaining agreement; the Union alleges several violations of the Railway Labor Act, 45 U.S.C. ?? 151-188 (the "RLA"). For the following reasons, Varig's motion is granted.

FACTS

Varig is a Brazilian corporation and is a "common carrier by air engaged in interstate or foreign commerce." 45 U.S.C. ? 181. Plaintiff IAM is an unincorporated labor organization representing employees in the airline industry and is a "representative" as that term is defined in 45 U.S.C. ? 151 Sixth.¹ IAM is the certified collective bargaining representative of approximately 320 Varig employees. IAM District Lodge 142 is also an unincorporated labor organization and the bargaining agent for the IAM with Varig.

The IAM and Varig are parties to a collective bargaining agreement, made and entered into on May 3, 1990; the collective bargaining agreement became amendable on September 1, 1992.² Pursuant to the statutory procedures for amending collective bargaining agreements in the airline industry, 45 U.S.C. ? 156,³ the Union and Varig exchanged their "section 6 notices," so called because they were exchanged pursuant to Section 6 of the RLA (codified as 45 U.S.C. ? 156).⁴ The Company's and IAM's section 6 notices, dated July 17, 1992, and July 21, 1992, respectively. Complaint, ? 13, were not made part of the record. The first meeting between the two parties was held on September 16, 1992, Affidavit of Martin C. Seham, March 16, 1994 ("Seham Aff'd"), ? 2, and each side exchanged a list of proposed changes for the collective bargaining agreement.⁵

In their list, dated September 11, 1992, Varig proposed, among other things, that "all restrictions on sub-contracting shall be eliminated." Seham Aff'd, Ex. A.⁶ Varig's September 11, 1992 list runs for eight pages and includes several dozen items, including a proposition to eliminate Article XVIII ("Union Security") of the agreement.⁷ Plaintiffs' September 1, 1992 list runs for six pages and includes over twenty items, including proposals on bonuses, wage increases and overtime, and holidays. Complaint, Ex. 1.

In a document dated January 13, 1993, entitled "Varig/IAM Negotiations," and presented to the Union at a meeting on the same day, Varig stated that "in lieu of the Company's proposal to eliminate all restrictions on subcontracting, the Company proposes several measures." Complaint, Ex. 3. The changes suggested by the Company included, inter alia, a confirmation in the collective bargaining agreement that work done by a shipper or shipper's agent on premises other than Varig would not constitute subcontracting; a confirmation that work performed by Varig employees at premises not covered by the collective bargaining agreement would not constitute subcontracting; and that severance pay will be paid to any employee permanently displaced because of the application of the new measures. Varig's January 13, 1993 proposal expired by its terms on February 13, 1993, and included a total of five items for discussion: duration, supplemental pension plan, wage scale, medical coverage, and subcontracting.

On February 9, 1993, Varig applied for mediation services from the National Mediation Board (the "NMB"), pursuant to 45 U.S.C. ? 155 First.⁸ The parties began mediated negotiations in April of 1993 and met on several occasions over a three month period. In a document entitled "Varig Proposals" and dated April 14, 1993, the Company informed the Union that it was its position that "there shall be no limitations on the company's right to subcontract." Complaint, Ex. 5. The April 14, 1993 proposals were also set to expire in one month's time and included a total of seven items: wage rates, duration, medical coverage, subcontracting, seniority rights, holidays, and a reduction in starting and limiting progression of wage scales for those hired after the revised contract is in effect. In a letter dated April 19, 1993, the Company also proposed elimination of Article XII(e) of the collective bargaining agreement which provided that the Union would have the right to designate the broker of record for the life and health insurance and pension plans for unionized employees. Complaint, Ex. 6. In a letter dated June 9, 1993, the Company reiterated its position that it must "negotiate the right of limited subcontracting in the Cargo Department." Complaint, Ex. 7 at 2.

In a document entitled "IAM-Varig Contract Union Proposal of Settlement," undated, and set by its own terms to expire on July 17, 1993, the Union submitted a "Proposal of Settlement" which, it stated, "is predicated on the Company's withdrawing any proposals dealing with subcontracting of work other than what is in the present collective bargaining agreement." Complaint, Ex. 8. This counterproposal contained a total of ten items including, inter alia, duration, wage increases, early retirement, medical coverage for retirees, a "pause" in Company contributions to the supplemental pension plan, and a new Cigna Network Plan. In a document entitled "Union's Response to Company's Sub-Contracting Proposal," also undated and scheduled to expire on August 3, 1993, the Union stated that its counterproposal was based on the demand that "the Company will withdraw its proposal on subcontracting." Complaint, Ex. 9. These counterproposals by the Union were rejected. Complaint, ? 17 ("In June and August, Plaintiffs presented two comprehensive proposals for settlement that were promptly rejected by Varig.").

In a letter dated September 7, 1993, the Company responded to the suggestion of the NMB that it submit its "last proposal in anticipation of the mediation scheduled for September 10, 1993." Complaint, Ex. 10. In a document entitled "Final Position Statement of Varig," dated September 7, 1993, the Company proposed the following vis-a-vis the issue of subcontracting: (i) any restriction on subcontracting shall not apply to work performed on the premises of the shipper, agent, or forwarder for his own or for his principal's account; (ii) work performed by any Varig employees at locations outside of the United States shall not be considered subcontracting; and (iii) subject to certain conditions, there shall be no restriction on the Company's right to subcontract work performed by the Cargo Department. Complaint, Ex. 10. The "Final Position Statement" also included proposals regarding duration, wage increase and reduction, the contribution rate used in calculating medical insurance, limiting the number of agents in the Cargo Department, the Cargo Automation Program, reduction or elimination of the Technical Maintenance job positions in certain circumstances, elimination of broker of record, and severance pay for those laid off due to the new subcontracting proposals.

The Union contends, and the Company vehemently denies, that on November 16, 1993, Martin Seham, Varig's attorney ("Seham"), and William O'Driscoll, President and General Chairman of IAM District Lodge 142 ("O'Driscoll"), reached an oral agreement on new terms to amend the collective bargaining agreement. Complaint, ? 22. Declaration of William O'Driscoll, April 27, 1994 ("O'Driscoll Decl."), ? 15 ("Mr. Seham and I then agreed that the parties would reach a contract on the basis of the approach I had outlined. This agreement in principle was absolutely clear.").

In short, the Union submits that Seham agreed on behalf of Varig that the Company would not subcontract cargo work in exchange for, among other things, the Union's willingness to agree to a freeze on the Company's five percent contribution to the supplementary pension plan during the life of the new collective bargaining agreement, and its agreement that Varig would be allowed to accept some pre-palletized cargo. Complaint, ? 22; O'Driscoll Decl., ? 10; Declaration of Robert Roach, Jr. (General Chairman of IAM District Lodge 142), April 27, 1994 ("Roach Decl."), ? 13 ("Mr. O'Driscoll informed me that he and Mr. Seham had arrived at a basis for a contract that would not require granting the right to the Company to subcontract bargaining unit work, based on the cost saving proposals that we had previously discussed. Mr. Seham confirmed that afternoon that `we have the basis for an agreement.'"). Describing this alleged agreement as "The O'Driscoll Hoax," Seham contends that he and O'Driscoll only discussed certain proposals, never reached an agreement, and concludes that "the Agreement ascribed to by Mr. O'Driscoll to me in Paragraph 22 of the Complaint never happened, was never even articulated and is absurd on its face." Seham Aff'd, ? 18. (The Union gave the Company a written proposal, allegedly based on the November 16, 1993 agreement, on December 10, 1993.)

The parties then approached the NMB jointly to request a release from...