In re Continental Airlines Corp.

Decision Date31 May 1985
Docket NumberNo. H-84-1747,Bankruptcy No. 83-04019-H2-5,Adv. No. 83-2493-H3.,H-84-1747
Citation50 BR 342
PartiesIn re CONTINENTAL AIRLINES CORPORATION, et al., Debtors. The NATIONAL MEDIATION BOARD, Walter C. Wallace, Chairman, Robert A. Harris, Member, and Helen Witt, Member, Appellants, v. CONTINENTAL AIRLINES CORPORATION, et al., Appellees.
CourtU.S. District Court — Southern District of Texas




Lenard Parkins, Sheinfeld, Maley & Kay, Houston, Tex., Richard L. Wyatt, Jr., Fisher & Phillips, Atlanta, Ga., John J. Gallagher, Jr., Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., Weil, Gotshal & Manges, New York City, N.Y., for Continental Airlines, debtor, appellee.

Allen L. Lear, Dept. of Justice, Washington, D.C., Letitia Z. Taitte, Asst. U.S. Atty., Houston, Tex., for National Mediation Board, appellant.

Wilma B. Liebman, Washington, D.C., for International Brotherhood of Teamsters.


SINGLETON, Chief Judge.


Here unfolds yet another chapter in the continuing Continental Airlines bankruptcy saga. This particular chapter involves three parties:

1) the plaintiffs—Continental Airlines Corporation, Continental Airlines Inc., Texas International Airlines, Inc., and TXIA Holding Corporation (collectively "Continental")—presently operating as a Debtor-In-Possession under the U.S. Bankruptcy Code, 11 U.S.C. §§ 1101(1), 1107, 1108,1
2) the defendants—the National Mediation Board and its members (the "NMB" or "Board")—an independent federal administrative-agency established to administer the Railway Labor Act and effectuate that Act\'s purposes;2 and
3) the intervenor defendant—the Airline Division of the International Brotherhood of Teamsters (the "IBT" or "Teamsters")—a labor union seeking to represent certain groups of Continental\'s employees.

To understand how these entities' interrelationships developed to produce this particular lawsuit, one must first understand the basic statutory foundation for the NMB proceedings underlying this suit.

A. Statutory Foundation of NMB Proceedings

Congress enacted the Railway Labor Act (RLA) expressly in order

(1) to avoid any interruption to commerce or to the operation of any carrier engaged therein;
(2) to forbid any limitation upon freedom of association among employees or any denial . . . of the right of employees to join a labor organization;
(3) to provide for the complete independence of carriers and of employees in the matter of self-organization to carry out the purposes of this Act; and
(4) to provide for the prompt and orderly settlement of all disputes concerning employment conditions and employment contracts.

45 U.S.C. § 151a. To further those purposes, 45 U.S.C. § 152 Fourth grants to the majority of any "craft" or "class" of employees the right to determine who shall represent that craft or class in collective bargaining with the employer. Brotherhood of Railway and Steamship Clerks v. Association for the Benefit of Non-Contract Employees, 380 U.S. 650, 659, 85 S.Ct. 1192, 1197, 14 L.Ed.2d 133 (1965) ("Railway Clerks").

Section 152 Ninth protects that employee right by giving the NMB "the power to resolve controversies concerning that right and as an incident thereto to determine what is the appropriate craft or class in which the election should be held." Id. More fully, that Section provides that

If any dispute shall arise among a carrier\'s employees as to who are the representatives of such employees . . . it shall be the duty of the Mediation Board, upon request of either party to the dispute, to investigate such dispute and to certify to both parties, in writing, within thirty days3 . . . the name or names of the individuals or organizations . . . authorized to represent the employees involved in the dispute, and certify the same to the carrier. Upon receipt of such certification the carrier shall treat with the representative so certified as the representative of the craft or class for the purposes of this Act. In such an investigation, the Mediation Board shall be authorized to take a secret ballot of the employees involved, or to utilize any other appropriate method of ascertaining the names of their duly designated and authorized representatives in such manner as shall insure the choice of representatives by the employees without interference, influence, or coercion exercised by carrier. In the conduct of any election for the purposes herein indicated the Board shall designate who may participate in the election and establish the rules to govern the election. . . . The Board shall have access to and have power to make copies of the books and records of the carriers to obtain and utilize such information as may be deemed necessary by it to carry out the purposes and provisions of this paragraph.

45 U.S.C. § 152 Ninth (footnote inserted).

"Representation disputes" under § 152 Ninth include situations where a single union applies to be a certified employee representative or where questions arise as to the definition of the relevant crafts or classes. IBT (Airline Division) v. Texas International Airlines, 717 F.2d 157, 159 (5th Cir.1983) ("TIA"); see also Summit Airlines v. Teamsters Local 295, 628 F.2d 787, 795 n. 4 (2d Cir.1980). Since the IBT has applied for a certificate to represent certain Continental employees and Continental questions the proper crafts or classes to include in that certificate, this case involves a representation dispute within the meaning of § 152 Ninth.

Continental's not being a railroad does not render these provisions of the Railway Labor Act inapplicable. 45 U.S.C. § 182 (extending coverage to air carriers); see also TIA, 717 F.2d at 158 (RLA applies to Continental). Nor does Continental's bankruptcy excuse it from § 152, for the RLA specifically provides that

The term "carrier" includes . . . any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of the business of any such "carrier".

45 U.S.C. § 151 First.

Having received the IBT's certification application, § 152 Ninth therefore imposes upon the NMB a duty to investigate this labor representation dispute. As the following factual background explains, Continental accuses the Board of violating that statutory duty.

B. Factual Background of this Lawsuit

It appears undisputed that the interrelationships among the Board, Teamsters, and Continental developed as follows:

In May 1980 the Board certified the Teamsters as the collective bargaining representative for the approximately 1800 office, clerical, fleet service, and passenger service employees of Texas International Airlines ("TIA"). TIA with its 3,000 employees and Continental Airlines with its 10,000 employees merged in October 1982. The resultant corporation, Continental, immediately refused to recognize the IBT as the collective bargaining representative for the combined TIA/Continental Airlines work force. The Fifth Circuit refused to enforce the former—TIA employees' collective bargaining agreement. TIA, 717 F.2d 157. The Teamsters accordingly filed with the Board the certification application at issue in this suit.

That application asked the Board to divide the larger Continental work force into three separate bargaining units: the office/clerical employees, the fleet service employees, and the passenger service employees. Continental objected that, inter alia, the passenger service and fleet service employees should be combined into one unit. After nine days of hearings, the Board issued a decision on 11 August 1983 adopting the IBT's three proposed crafts/classes for upcoming representation elections among Continental employees.

On 24 September 1983 Continental filed a voluntary petition in bankruptcy pursuant to Chapter 11 of the U.S. Bankruptcy Code. Approximately two-thirds of its 12,000 employees were then furloughed or on strike; and it ceased flights to 55 of the 87 cities it had previously serviced. Based upon its bankrupt position and such post-bankruptcy changes, Continental asked the Board to stay the upcoming elections and reconsider the appropriate definition of employee bargaining units. The IBT, meanwhile, asked the Board to reword that election's proposed ballots—principally changing the ballot alternatives from an "IBT or no union" choice to a "unionization or no unionization" choice.

Denying the requests of both Continental and the IBT, the Board on 2 November 1983 ordered the elections to proceed as planned in the passenger service and fleet service bargaining units. The Board did not order elections among the clerical/office employees since it had found those employees insufficiently interested in unionization. The ballots went out in mid-November; and a November 16th NMB Order allowed Continental to file challenges to those ballots. The Board scheduled the ballot tallying for January 12th and 13th.

A Board representative ruled on the IBT's and Continental's ballot challenges on 3 January 1984. Continental appealed these rulings to the full Board on January 10th. On that same date the Board, responding to Continental's continued request to stay the elections, stated that the Board would not disrupt the planned election but rather would consider the relevance of Continental's post-bankruptcy condition when assessing the ballot returns and when deciding whether to certify the IBT on the basis of those returns.

Meanwhile in the Bankruptcy Court, Continental had filed this lawsuit on 16 November 1984. Accusing the Board of ignoring Continental's post-bankruptcy condition, this lawsuit alleges that the Board has done a statutorily insufficient investigation of the Continental's crafts and classes. Continental seeks a declaratory judgment adjudging the Board's investigation insufficient, and seeks to enjoin the NMB elections until (1) the Board sufficiently investigates Continental's post-bankruptcy condition, and (2)...

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