In re Northwest Airlines Corp.

Decision Date29 March 2007
Docket NumberDocket No. 06-4468-cv(CON).,Docket No. 06-4371-cv(L).
Citation483 F.3d 160
PartiesIn re NORTHWEST AIRLINES CORPORATION, Debtor, Northwest Airlines Corporation, and all other plaintiffs, Plaintiff-Appellee v. Association of Flight Attendants-CWA, AFL-CIO, and all other defendants, Defendant-Appellant, Air Line Pilots Association, International ("ALPA"), Intervenor-Appellant.
CourtU.S. Court of Appeals — Second Circuit

Before: JACOBS, Chief Judge, WALKER and RAGGI Circuit Judges.

Chief Judge JACOBS concurs in a separate opinion.

JOHN M. WALKER, JR., Circuit Judge:

This dispute between the Association of Flight Attendants ("AFA") and Northwest Airlines ("Northwest") is situated in a peculiar corner of our law more evocative of an Eero Saarinen interior of creative angularity than the classical constructions of Cardozo and Holmes. Northwest, under the protection of Chapter 11 of the Bankruptcy Code and with the bankruptcy court's imprimatur, has rejected the collective-bargaining agreement that until recently governed its relationship with the AFA and imposed new terms and conditions of employment upon its flight attendants. The AFA does not wish to accede to these terms and conditions of employment and threatens a work stoppage unless Northwest agrees to terms and conditions that are more favorable to the flight attendants.

The District Court for the Southern District of New York (Victor Marrero, Judge) issued a preliminary injunction precluding the AFA and its members from engaging in any form of work stoppage. It held that any such work stoppage would cause irreparable harm and, at this juncture, violate the Railway Labor Act. On this basis, the district court concluded that the Norris-LaGuardia Act did not deprive it of jurisdiction to issue the injunction.

We agree, but for substantially different reasons than those advanced by the district court. We hold that Section 2 (First) of the Railway Labor Act forbids an immediate strike when a bankruptcy court approves a debtor-carrier's rejection of a collective-bargaining agreement that is subject to the Railway Labor Act and permits it to impose new terms, and the propriety of that approval is not on appeal.

BACKGROUND

In December 2004, Northwest, one of the nation's largest air carriers, began negotiating changes to the collective-bargaining agreement ("CBA") governing its relationship with its flight attendants, who were then represented by the AFA's predecessor, the Professional Flight Attendants Association ("PFAA"). Since April 2005, these negotiations have been conducted under the auspices of the National Mediation Board ("NMB"), which is authorized by the Railway Labor Act to mediate disputes between carriers and their employees.

In September 2005, Northwest filed for protection under Chapter 11 of the Bankruptcy Code. Northwest's plan for reorganization required that its employees make significant concessions. Most of the unions that represent groups of Northwest employees have since negotiated new agreements.

Unable to reach an accommodation with its flight attendants, on November 7, 2005, Northwest sought bankruptcy court approval of certain interim modifications to the relevant CBA under 11 U.S.C. § 1113. On November 16, the bankruptcy court granted Northwest the requested relief. Nevertheless, the parties continued to negotiate in the hope of reaching a new mutually satisfactory agreement. On March 1, 2006, the PFAA leadership tentatively agreed to a new CBA (the "March 1 Agreement"); the membership, however, rejected the agreement by a margin of four-to-one.

In addition to seeking interim relief from its CBA, Northwest sought in September 2005 to obtain permanent relief from its CBA pursuant to 11 U.S.C § 1113. After the flight attendants rejected the March 1 Agreement, Northwest reiterated this request, and, this time, the bankruptcy court granted Northwest's motion to reject its CBA. The bankruptcy court explained:

[t]he Court would do the flight attendants and the Debtors' thousands of other employees no favor if it refused to grant the Debtors' § 1113 relief, and the Debtors joined the ranks of the many other airlines that have liquidated as a consequence of a Chapter 11 filing.

In re Nw. Airlines Corp., 346 B.R. 307, 330 (Bankr.S.D.N.Y.2006). Along with this relief, the bankruptcy court permitted Northwest to impose the terms of the March 1 Agreement upon the flight attendants. Neither party appealed this decision.

The bankruptcy court conditioned its decision on Northwest's agreement to negotiate for an additional two weeks before it would allow the March 1 Agreement to take effect. Negotiations ensued, this time with the Association of Flight Attendants ("AFA"), which the flight attendants had elected as their new representative on July 7, 2006. On July 17, Northwest and the AFA reached another tentative agreement; again, however, on July 31, the flight attendants rejected the proposed agreement, this time by the narrower margin of 55-45%.

Northwest then imposed the March 1 Agreement. The AFA responded by notifying Northwest of its intent to disrupt Northwest's service by using a tactic suitably named CHAOS ("Create Havoc Around Our System"), which entails mass walkouts for limited periods of time and pinpoint walkouts at certain airports or gates. See Ass'n of Flight Attendants v. Alaska Airlines, 847 F.Supp. 832, 833-34 (W.D.Wash.1993).

Northwest moved to enjoin the strike. Bankruptcy Judge Gropper denied the motion on the basis that Northwest's rejection of the CBA and imposition of the March 1 Agreement amounted to a "unilateral action in changing the status quo that in turn frees the employees to take job action." Nw. Airlines Corp. v. Ass'n of Flight Attendants-CWA (In re Nw. Airlines Corp.), 346 B.R. at 344. On appeal, the district court reversed and granted the preliminary injunction. Judge Marrero held that Northwest had not unilaterally changed the status quo and that the union remained bound by the status quo provisions of the RLA, which forbid the exercise of self-help pending the exhaustion of various mechanisms to resolve disputes, including NMB mediation. Nw. Airlines Corp. v. Ass'n of Flight Attendants-CWA (In re Nw. Airlines Corp.), 349 B.R. 338, 379 (S.D.N.Y.2006) ("[T]his Court finds that an order authorizing rejection of a collective bargaining agreement pursuant to § 1113 does not terminate the Section 6 [of the RLA] process....").

The AFA and intervenor Air Line Pilots Association filed a timely appeal.

DISCUSSION
I. The Statutory Framework

The AFA appeals entry of a preliminary injunction. We review the district court's judgment for abuse of discretion, although our review of its application of the law is de novo. See Green Party v. New York State Bd. of Elections, 389 F.3d 411, 418 (2d Cir.2004). We inquire whether Northwest has shown,

first, irreparable injury, and, second, either (a) likelihood of success on the merits, or (b) sufficiently serious questions going to the merits and a balance of hardships decidedly tipped in [its] favor.

Id.

This appeal turns on Northwest's likelihood of success on the merits, any assessment of which, in turn, requires us to interpret and heed three different statutory schemes: Section 1113 of Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 1113; the Railway Labor Act of 1926 ("RLA"), 45 U.S.C. § 151 et seq.; and the Norris LaGuardia Act of 1932 ("NLGA"), 29 U.S.C. § 101 et seq.

A. The Bankruptcy Code: 11 U.S.C. § 1113

Section 1113(a) of Title 11 provides that a carrier subject to the RLA may "reject a collective bargaining agreement" if the bankruptcy court determines (among other things) that "the balance of the equities clearly favors rejection of such agreement" and that rejection is "necessary to permit the reorganization." 11 U.S.C. §§ 1113(a), (b)(1)(A), (c)(3). However, to make such a determination, the bankruptcy court must specifically find that (1)...

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