INTERNATIONAL ASS'N OF M. & AW v. Northeast Airlines, Inc., Civ. A. No. 73-303.
| Citation | 337 F. Supp. 499 |
| Decision Date | 03 February 1972 |
| Docket Number | Civ. A. No. 73-303. |
| Parties | INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS and District 147 of the International Association of Machinists and Aerospace Workers, Plaintiffs, v. NORTHEAST AIRLINES, INC., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Robert M. Segal, Segal, Roitman & Coleman, Boston, Mass., for plaintiff.
Loyd Starrett, Foley, Hoag & Eliot, Boston, Mass., for defendant.
This case was heard on January 27, 1972 on an application for a temporary restraining order and a preliminary injunction. The issues were submitted on plaintiffs' verified complaint, affidavits from all parties, and briefs.
After consideration, and for reasons set forth below, the Court concludes that it must deny injunctive relief to the plaintiffs.
The plaintiffs, International Association of Machinists and Aerospace Workers (IAM) and District 147 of IAM, request a preliminary injunction (1) restraining the defendant, Northeast Airlines, Inc. (Northeast) from consummating any merger with Delta Air Lines, Inc. (Delta), until Northeast has negotiated with and bargained in good faith with them about the "proper provisions for the protection of employees' seniority, employment and other rights", and (2) directing Northeast to negotiate with and bargain in good faith with them about the protection of employees' seniority, employment and other rights.
The relief ultimately sought by the plaintiffs in this action, in addition to the above injunctions, is "a judgment directing the defendant, Northeast Airlines, Inc., to incorporate the results of the negotiations and good faith bargaining with the plaintiffs in any final merger agreement with Delta Air Lines, Inc." (Prayer (4))
The plaintiffs cite the following Article III(B) of two collective bargaining agreements with Northeast, one dated April 18, 1969, covering employees in the mechanics' craft, and the other dated November 6, 1969,1 covering supervisory employees:
The plaintiffs also rely upon the provisions of 45 U.S.C. Sec. 152 First, reading as follows:
"... It shall be the duty of all carriers, their officers, agents, and employees to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions, and to settle all disputes, whether arising out of the application of such agreements or otherwise, in order to avoid any interruption to commerce or to the operation of any carrier growing out of any dispute between the carrier and the employees thereof."
For purposes of the matter now before me, the most relevant facts appear to be as follows:
On May 12, 1971, Northeast and Delta, pursuant to resolutions of their boards of directors, entered into a formal merger agreement, a copy of which is before the Court. Northeast's decision to merge was an outgrowth of what it represents to be its desperate financial plight (detailed in an exhibit to the Peterson affidavit). Northeast on May 31, 1971 had a negative net worth of $36,616,000. It is undisputed that Northeast, a small, mainly regional carrier, is, and has for some years been, in acute financial distress. There is nothing before me to contradict Northeast's assertions that the merger is essential to its survival.
The merger agreement provides that the two corporations shall be combined by merging Northeast into Delta. After the merger, the surviving corporation, Delta, is to be governed by a board of directors consisting of Delta's board on the date of the merger plus two named individuals. The shareholders of Northeast will receive fractional shares of Delta's stock. Delta is larger than Northeast. Northeast will, in effect, be absorbed into Delta. Northeast's employees represented by IAM number about 1,000. Delta has 20,786 employees, none of whom, with the exception of the pilots, are members of a union.
The merger agreement provides that the merger will become effective upon filing and recording of the agreement in Delaware. This is to occur as soon as practicable after approval of the merger by the stockholders of the two corporations and by the C.A.B. under sections 408 and 801 of the Federal Aviation Act of 1958.* (A meeting of the stockholders of Northeast was scheduled for January 31, 1972, at which time the question of approval of the merger agreement was scheduled to be acted upon.) The agreement terminates if the merger is not approved by the C.A.B., by the latest, June 30, 1972. (See par. 15, (a) (3).)
The merger agreement contains provisions imposing liability upon Delta, after the merger, for all of Northeast's obligations, liabilities and duties, and transferring to Delta all of Northeast's rights and property.
The agreement also contains a clause entitled "Labor Protective Conditions". This provides that the surviving corporation will accept "reasonable labor protective provisions of the character and extent previously prescribed by the Civil Aeronautics Board". The Civil Aeronautics Board's trial examiner has written extensive labor protective provisions (Peterson affidavit, exhibit 7), which, according to the defendant (memorandum, p. 11), will be incorporated into any final Civil Aeronautics Board order approving merger. The merger agreement further provides that after the date of the merger, Delta will retain as its employees such employees of Northeast as is consistent with economic and efficient performance of the expanded operations of Delta, and will endeavor to provide continuing employment for them with Delta. Group insurance and retirement benefits for former Northeast employees are to be determined pursuant to existing Northeast plans.
It was asserted by counsel for Northeast, and not disputed, that the proposed merger was common knowledge prior to the execution of the May 12, 1971 agreement, and that the making of the agreement itself was also commonly known immediately thereafter.
It is asserted by Northeast (Peterson affidavit) that in 1945, 1950, 1960 and 1964, mergers of Northeast with other airlines were negotiated or agreed to, although never consummated. In November 1969, Northeast entered into a merger agreement with Northwest Airlines, Inc. That agreement, although approved by the C.A.B., was terminated by Northwest early in 1971. Mr. Peterson asserts in his affidavit that the plaintiffs never demanded negotiations in connection with any of the above proposed mergers, even though Article III(B) has been in every contract with them since April 1, 1949.
On October 28, 1971, the company sent the union a so-called "Sec. 6 Notice" (notice pursuant to Section 6, Title I of the Railway Labor Act, as amended; 45 U.S.C. Sec. 156) stating its intention to propose a change in the existing mechanics agreement, which would extend the agreement "for a period of a few months". (Exhibit 2A of the verified complaint.) On October 31, 1971, the union, pursuant to Sec. 6, notified the company of its proposed changes. (Exhibit 2B of the verified complaint.) In neither letter was there mention of the Northeast-Delta merger; however, among the union's proposed changes in the agreement was an expansion of Article III(B) to set forth procedures for negotiations before any merger should occur. (Orlando affidavit, exhibit 2C.)
Negotiations on a new contract opened on November 11, 1971, at which time the union representative, William J. Sutherland, asked for immediate negotiations, pursuant to Article III(B) of the existing agreement, for post-merger protective provisions for Northeast employees. (Complaint, exhibit 4.) The Northeast representative, Herbert E. Orlando, replied that he was uncertain whether or not his company was "prepared to negotiate" and would consult with Northeast's officers. (Orlando affidavit, p. 3.) According to Sutherland, Northeast on November 22, 1971 again refused to answer his request for negotiations, saying Delta would be consulted. Northeast maintains that in all encounters subsequent to the November 11 meeting, it has told the union that, though not obligated under Article III(B) to negotiate prior to merger, "it would be willing to discuss all such issues". (Orlando affidavit, p. 3.) On December 17, 1971, responding to Sutherland's letter of December 2 demanding negotiations (Complaint, exhibit 4.), Orlando stated: "... we are prepared in the future, as we have on several days in the past, to discuss fully the issues referred to in your letter as well as other matters about which we are bargaining." (Sutherland affidavit, exhibit 2.) Presumably such issues were those arising under Article III(B). However, the company has always maintained that it was not obligated to bargain over any terms of employment under Delta, and Orlando says that he has "stated candidly that he does not see how an agreement on post-merger conditions can be reached prior to the approval and consummation of the merger". (Orlando affidavit, p. 3.) According to Sutherland, on the other hand, the company consistently refused to negotiate protective provisions up to and including the last meeting of the parties on December 21, 1971. (Sutherland affidavit, p. 3.) At that meeting the union broke off further negotiations over proposed changes in the collective bargaining contract. (Orlando affidavit, p. 4.)
On December 28, 1971, Northeast filed an application before the National Mediation Board, requesting mediation of the dispute over pre-merger negotiations (as well as mediation of the dispute over the union's proposed changes in the contract)....
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- INTERNATIONAL ASS'N OF M. & AW v. Northeast Airlines, Inc.
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INTERNATIONAL ASSN., M. & A. WKRS. v. NORTHEAST AIR., INC., Civ. A. No. 72-303-T.
... ... NORTHEAST AIRLINES", INC., and Delta Airlines, Inc., Defendants ... Civ. A. No. 72-303-T ... United States District Court, D. Massachusetts ... July 25, 1975. \xC2" ... ...