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

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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

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