Cunningham v. Air Line Pilots Ass'n, Int'l, No. 14-1453 (7th Cir. 2014)

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Justia Opinion Summary

After Continental and United Air Lines merged, they needed to produce unified seniority and longevity rosters for pilots. The Air Line Pilots Association represents all of the pilots. In 2012 the new United and the Union reached an agreement that sets pilot pay based on: rank (captain vs. first officer), type of aircraft flown, and longevity, defined as all time since the date a pilot was hired, including time spent on furlough. Pre-merger, pilots on furlough accrued seniority but not longevity. Plaintiffs challenged ancillary Agreement 25, under which pilots in active service longer than four years and seven months would receive no credit for furlough time; pilots who had four years and six months of service could claim only one month of furlough; and so on. Plaintiffs claimed that the provision slots 475 former United pilots into the table behind former Continental pilots who were hired before May 6, 2008, in violation of the main agreement, and accused the Union of inadequate representation (DFR claim). Defendants replied that the main agreement governs the future, after Agreement 25 determines the pilots’ starting positions. The district judge dismissed United as a party because disputes about the meaning of an airline industry collective bargaining agreement are within the exclusive authority of an adjustment board under the Railway Labor Act, leaving plaintiffs unable to establish both that United violated the contract and that the union did not represent workers fairly. They then argued that the Union negotiated a bad contract. The district court concluded that Agreement 25 is not irrational. The Seventh Circuit affirmed, noting that, with pilots on different sides of the issue, a compromise that favored some over others was inevitable.

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In the United States Court of Appeals For the Seventh Circuit ____________________   No.  14-­ 1453   SCOTT  CUNNINGHAM  and  ANDREW  HOLZMANN,   Plaintiffs-­ Appellants,   v.   AIR  LINE  PILOTS  ASSOCIATION,  INTERNATIONAL,   Defendant-­ Appellee.   ____________________   Appeal  from  the  United  States  District  Court  for  the   Northern  District  of  Illinois,  Eastern  Division.   No.  13  C  5522    James  F.  Holderman,  Judge.   ____________________   ARGUED  SEPTEMBER  22,  2014    DECIDED  OCTOBER  8,  2014   ____________________   Before   WOOD,   Chief   Judge,   and   EASTERBROOK   and   SYKES,   Circuit  Judges.   EASTERBROOK,   Circuit   Judge.   After   United   Air   Lines   and   Continental  Airlines  merged,  forming  a  new  United  Airlines,   they  needed  to  produce  unified  seniority  and  longevity  ros-­ ters   for   pilots.   The   process   was   contentious;   any   improve-­ ment   in   the   position   of   one   carrier s   pilots   meant   a   relative   demotion   for   pilots   coming   from   the   other   carrier.   A   single   2   No.  14-­ 1453   union,   the   Air   Line   Pilots   Association,   represents   all   of   the   pilots  and  had  to  work  out  many  contests  internally.   In  December  2012  United  and  the  Union  reached  a  collec-­ tive  bargaining  agreement  that  sets  each  pilot s  pay  based  on   three   principal   factors:   a   pilot s   rank   (captain   vs.   first   of-­ ficer),   type   of   aircraft   flown   (more   pay   goes   with   larger   planes,  such  as  the  Boeing  747),  and  longevity.  The  greater  a   pilot s   longevity,   other   things   equal,   the   higher   the   pay though   longevity   exceeding   12   years   does   not   add   to   com-­ pensation.   Seniority   and   longevity   are   distinct   under   the   agreement;   this   case   concerns   longevity,   a   term   that   the   agreement   defines   as   all   time   since   the   date   a   pilot   was   hired,   including   time   spent   on   furlough.   This   is   a   change   from   the   pre-­ merger   situation,   in   which   pilots   on   furlough   accrued  seniority  but  not  longevity.   Along   with   this   main   agreement,   United   and   the   Union   forged   a   number   of   ancillary   agreements   that   specified   pi-­ lots   starting   positions   when   the   main   agreement   went   into   force.   This   suit   concerns   what   the   parties   call   Letter   of   Agreement   25   ( Agreement   25   for   short).   Paragraph   4   of   this  side  agreement  provides  that  any  pilot  whose  longevity   is   less   than   that   of   other   pilots   hired   on   or   before   May   6,   2008,  is  entitled  to  longevity  credit  for  furlough  time   only  to   the  extent  that  such  credit  does  not  provide  a  pay  longevity   date  prior  to  May  7,  2008.  In  other  words,  furlough  time  for   this   group   of   pilots   cannot   be   used   to   produce   more   than   four   years   and   seven   months   of   longevity   (as   of   December   2012)  when  added  to  time  on  the  job.  Pilots  in  active  service   longer   than   four   years   and   seven   months   thus   receive   no   credit  for  time  on  furlough  (but  full  credit  for  time  worked);   pilots   who   had   four   years   and   six   months   on   the   job   could   No.  14-­ 1453   3   benefit   from   only   one   month   of   furlough   time;   and   so   on.   The   two   plaintiffs,   who   worked   for   the   pre-­ merger   United,   contend   that   the   effect   of   Agreement   25   is   to   slot   approxi-­ mately  475  former  United  pilots  into  the  longevity  table  be-­ hind   a   group   of   former   Continental   pilots   who   were   hired   before  May  6,  2008.  Another  part  of  Agreement  25  provides   that,   once   an   integrated   seniority   list   has   been   established,   the   former   United   pilots   may   receive   additional   longevity   credit   for   any   furlough   time   not   credited   at   the   first   stage,   provided   that   the   application   of   additional   credit   does   not   result  in  any  former  United  pilot  having  more  longevity  than   the  next  most  senior  former  Continental  pilot.   This   suit   began   as   a   hybrid   contract   /   duty-­ of-­ fair-­ representation  claim  against  United  and  the  Union.  See  Vaca   v.  Sipes,  386  U.S.  171  (1967).  Plaintiffs  accused  United  of  not   giving   them   longevity   credit   for   all   time   they   had   spent   on   furlough,   as   they   believe   the   main   agreement   requires,   and   accused   the   Union   of   not   adequately   representing   their   in-­ terests  by  letting  United  get  away  with  this.  United  and  the   Union  replied  that  the  main  agreement  governs  only  the  fu-­ ture,   after   Agreement   25   (and   a   host   of   other   side   agree-­ ments)   determine   the   starting   position   for   the   post-­ merger   seniority   and   longevity   rosters.   United   asked   the   district   judge  to  dismiss  it  as  a  party,  observing  that  disputes  about   the  meaning  of  a  collective  bargaining  agreement  in  the  air-­ line   industry   are   within   the   exclusive   authority   of   an   ad-­ justment   board   under   §2   Sixth   and   §204   of   the   Railway   La-­ bor   Act,   45   U.S.C.   §§  152   Sixth,   184.   The   judge   agreed   and   dismissed  the  suit  against  United.  2014  U.S.  Dist.  LEXIS  13414   at  *8 28  (N.D.  Ill.  Feb.  4,  2014).   4   No.  14-­ 1453   That  left  plaintiffs  up  the  creek,  because  success  in  a  hy-­ brid   contract/DFR   suit   depends   on   showing   both   that   the   employer   violated   the   contract   and   that   the   union   did   not   represent  the  workers  fairly.  Vaca,  386  U.S.  at  187;  DelCostello   v.  Teamsters  Union,  462  U.S.  151,  164 65  (1983).  Without  a  fa-­ vorable   decision   from   an   adjustment   board,   which   has   ex-­ clusive  authority  over  a  breach-­ of-­ contract  claim,  the  stand-­ ard  of  Vaca  cannot  be  met.  That  led  plaintiffs  to  contend  that   the  Union  violated  its  duty  of  fair  representation  not  (neces-­ sarily)  by  letting  United  get  away  with  a  breach  of  contract,   but   by   negotiating   a   bad   contract   (Agreement   25)   that   fa-­ vored  a  group  of  pre-­ merger  Continental  pilots  over  a  group   of  pre-­ merger  United  pilots.  The  Supreme  Court  held  in  Air   Line  Pilots  Association,  International  v.  O Neill,  499  U.S.  65,  67,   77 78   (1991),   that   a   union   can   be   held   liable   for   negotiating   an   irrational   agreement   with   an   employer.   But   the   district   court   concluded   that   Agreement   25   is   not   irrational,   so   the   Union   prevailed.   2014   U.S.   Dist.   LEXIS   13414   at   *28 36.   An-­ other  district  court  reached  the  same  conclusion  in  dismiss-­ ing  a  challenge  by  other  pilots  to  Agreement  26.  Gullaksen  v.   United   Air   Lines,   2014   U.S.   Dist.   LEXIS   131213   (D.   D.C.   Sept.   17,   2014).   Plaintiffs   have   appealed   the   judgment   in   favor   of   the  Union  but  do  not  contest  the  ruling  in  United s  favor.   O Neill   holds   that   the   approach   of   Vaca under   which   a   union   violates   the   duty   of   fair   representation   by   action   that   is   arbitrary,   discriminatory,   or   in   bad   faith ,   386   U.S.   at   190 applies  to  negotiating  collective  bargaining  agreements   as  well  as  to  enforcing  them.  A  union  would  act  in  bad  faith   if,  for  example,  it  disfavored  members  who  supported  a  los-­ ing   candidate   for   union   office.   Plaintiffs   do   not   accuse   the   Union   of   doing   that.   A   union   would   act   discriminatorily   if,   for   example,   it   favored   members   of   one   race   over   members   No.  14-­ 1453   5   of  a  different  race.  Plaintiffs  do  not  contend  that  race  or  any   other   prohibited   characteristic   played   a   role   in   the   Union s   negotiations,   though   plaintiffs   do   insist   that   the   Union   dis-­ criminated  in  favor  of  pilots  from  pre-­ merger  Continental.   If  the  Union s  leadership  did  that  systematically,  it  would   be  political  suicide;  pre-­ merger  United  was  the  larger  carrier,   and  its  pilots  would  not  allow  the  union  to  subordinate  their   interests.   Anyway,   this   is   not   the   sort   of   discrimination   that  O Neill  (another  case  arising  from  how  the  Air  Line  Pi-­ lots  Association  treated  some  pilots  at  Continental)  envisag-­ es   as   problematic.   The   plaintiffs   in   O Neill   made   an   argu-­ ment  similar  to  the  one  our  plaintiffs  advance,  and  the  Court   gave   a   brusque   reply,   noting   that   some   form   of   allocation   [between   competing   groups   of   pilots]   was   inevitable.   A   ra-­ tional  compromise  on  the  initial  allocation  was  not  invidious   discrimination   of   the   kind   prohibited   by   the   duty   of   fair   representation.  499  U.S.  at  81.   Just   so   in   this   case.   If   plaintiffs   were   arguing   that   pilots   who  came  from  Continental  won  all  the  battles,  or  even  the   lion s  share  of  them,  they  might  have  a  point.  But  plaintiffs   have   never   argued   that   the   Union   disregarded   the   interests   of   pilots   from   pre-­ merger   United,   or   that   Agreement   25   re-­ duced   their   benefits   (recall   that   the   collective   bargaining   agreement  at  pre-­ merger  United  had  not  afforded  longevity   credit  during  furlough  time).  All  Agreement  25  does  is  limit   the  extent  to  which  the  credit-­ on-­ furlough  provisions  of  the   2012   agreement   apply   retroactively.   Because   the   suit   was   dismissed   on   the   pleadings,   we   cannot   tell   why   the   Union   and   United   struck   the   precise   bargain   they   did,   but   allega-­ tions   of   the   complaint,   plus   terms   of   the   agreements,   are   enough  in  themselves  to  defeat  a  claim  of  discrimination.   6   No.  14-­ 1453   This   leaves   the   question   whether   the   Union   acted   arbi-­ trarily.   The   Court   had   this   to   say   in   O Neill,   499   U.S.   at   78   (citations  omitted):   Any   substantive   examination   of   a   union s   performance,   there-­ fore,   must   be   highly   deferential,   recognizing   the   wide   latitude   that   negotiators   need   for   the   effective   performance   of   their   bar-­ gaining  responsibilities.  For  that  reason,  the  final  product  of  the   bargaining   process   may   constitute   evidence   of   a   breach   of   duty   only   if   it   can   be   fairly   characterized   as   so   far   outside   a   wide   range   of   reasonableness,   that   it   is   wholly   irrational   or   arbi-­ trary.   The   [contrary]   approach   of   the   Court   of   Appeals   is   par-­ ticularly  flawed  because  it  fails  to  take  into  account   ¦  the  strong   policy  favoring  the  peaceful  settlement  of  labor  disputes[.]   The  Court  in  O Neill  found  the  union s  decision  not  discrim-­ inatory   because,   with   different   pilots   on   different   sides   of   a   strike,   a   strike-­ ending   compromise   that   favored   some   over   others  was  inevitable.  The  Justices  saw  the  union s  negotiat-­ ing   position   as   rational   (=   not   arbitrary)   for   essentially   the   same   reason,   adding   that   a   different   position   (the   one   fa-­ vored  by  the  court  of  appeals)  would  have  jeopardized  labor   peace   and   dropped   the   striking   pilots   into   a   lawsuit   that   they  might  well  have  lost  outright  to  the  pilots  who  crossed   the   picket   lines.   Likewise   there   was   need   of   compromise   here.  Combining  work  forces  following  an  airline  merger  is   not  for  the  faint-­ hearted.  The  Union  and  United  worked  out   a   series   of   deals,   large   and   small,   that   have   enabled   two   groups   of   pilots   to   work   as   one   without   undue   friction.   That s  a  significant  accomplishment,  not  a  source  of  legal  li-­ ability.   AFFIRMED