Reply Brief — Delta Air Lines, Inc. v. Air Line Pilots Ass'n, International

Sanremo Court, US.

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No. 88-2064 Seago. a

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IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1988

DELTA AIR LINES, INC.,

Petitioner,

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Aik LINE PiLtots ASSOCIATION, INTERNATIONAL,

DONALD R. HAZELTINE AND EARL E. MEECH,

Respondents.

PETITIONER’S REPLY BRIEF

IN SUPPORT OF PETITION FOR CERTIORARI TO THE

DISTRICT OF COLUMBIA COURT OF APPEALS

Of Counsel: “WILLIAM J. KILBERG

WALTER F. BRILL BARUCH A. FELLNER

GREGORY L. RIGGS JANET M. Cook

DELTA AIR LINES, INC. GIBSON, DUNN & CRUTCHER

1030 Delta Boulevard 1050 Connecticut Avenue, N.W.

Atlanta, Georgia 30320 Washington, D.C. 20036

(404) 765-2600 (202) 955-8500

Attorneys for Petitioner,

Delta Air Lines, Inc.

“Counsel of Record

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

TABLE OF AUTHORITIES

CASES:

AT&T Technologies, Inc. v. Communication Work-

ers of America, 475 U.S. 648 (1986) ..............

Bonin v. American Airlines, inc., 621 F.2d 635 (5th

Cir. 1980), cert. denied, 471 U.S. 1005

hha Oe ACS ADE AS ee OER SPY STEN NN

Brotherhood of Railroad Trainmen v. Denver and

Rio Grande Western Railroad Co., 338 F.2d

407 (10th Cir. 1964), cert. denied, 380 U.S. 972

NIE oc bits cates ees can spac caneuin odccnaaeahoxcaeserncndenveess

Chicago and Northwestern Transportation Co. v.

United Transportation Union, 656 F.2d 274

ER RD Asoc elinan rata cahecsdelntcedavesandvnsatnivnies

Firestone Tire & Rubber Co. v. Bruch,

ae re ens» Se . Ch. BEB (UGRD) n..0020.2.,..-

Miller v. Chicago and Northwestern Transportation

Co., 647 F. Supp. 1482 (N.D. III. 1986) .........

Wilson v. Chicago Northwestern Transportation

Company, 728 F.2d 963 (7th Cir. 1984) .........

Zelder v. Delta Air Lines, Inc., 423 So. 2d 945 (Fla.

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PETITIONER’S REPLY BRIEF

IN SUPPORT OF PETITION FOR CERTIORARI TO THE

DISTRICT OF COLUMBIA COURT OF APPEALS

1. The Air Line Pilots Association’s (‘“‘ALPA’s’’)

Opposition To Delta’s Petition For Certiorari (‘‘Op.

Cert.’’) underscores the far-reaching impact of this

case. ALPA’s request for relief, granted by the court

of appeals, is bottomed on the putative right of an

arbitrator to ignore and even amend the terms of an

ERISA employee benefit plan. Thus, ALPA recog-

nizes that Hazeltine could recover disability benefits

only if the System Board “‘eased’’ the eligibility re-

quirements under the Plan. Op. Cert. at 8. This as-

serted power of the System Board to “‘ease’’ plan

terms must be reviewed by this Court. Such a holding

is contrary to well-established law that plan terms,

and not arbitrator decisions which ‘“‘ease’’ those terms,

govern the disposition of plan benefits. See, e.g., Del-

ta’s Petition for Certiorari (‘‘Pet.’’) at n.17.)

2. ALPA argues that the court below determined

that the System Board not only could act in derog-

ation of plan terms but also could modify the collec-

' ALPA relies on the assumption of the court below that the

fiduciary breaches of the System Board in granting claims in

violation of Plan terms can be rectified through litigation under

section 502 of ERISA, 29 U.S.C. § 1132 (1982). App. A at 18.

It is unclear which ‘‘participant, beneficiary, or fiduciary’”’ is to

bring such an independent challenge to improper System Board

conduct, particularly since Delta, which under the RLA is the

party responsible for arbitrating disputes before the System

Board, is not a “participant, beneficiary, or fiduciary’ under the

Plan. See paragraph 4 infra. Moreover, there would appear to

be no jurisdictional basis for such an action in view of the ex-

ceptionally narrow grounds for review of System Board awards

under the Railway Labor Act (‘‘RLA’’). App. A at 2.

tive bargaining agreement (‘‘CBA”’). ‘The Court of

Appeals concluded that the System Board’s resolution

of Hazeltine’s grievance,... constituted a modifica-

tion of the CBA through the collective bargaining

process.”’ Op. Cert. at 7. It is axiomatic, however,

that a System Board is limited to interpretation of

the CBA as it finds it; it may not alter the collectively

bargained terms which govern its decision. The RLA

expressly limits the power of the System Board to

resolving ‘‘minor’’ disputes involving the interpreta-

tion and application of a collective bargaining agree-

ment. 45 U.S.C. § 153.2 Collective bargaining

agreements may only be altered or amended through

the collective bargaining process. 45 U.S.C. § 152

(Seventh) and § 156.® Section 6 of the RLA, 45 U.S.C

§ 156, establishes specified procedures to alter or

amend collective bargaining agreements. The System

Board has no role in this process.‘ The System Board

2 See, e.g., Brotherhood of Railroad Trainmen v. Denver and

Rio Grande Western Railroad Co., 338 F.2d 407 (10th Cir. 1964),

cert. denied, 380 U.S. 972 (1965) (System Board has no authority

to award punitive or liquidated damages when such authority is

not granted to it by the collective bargaining agreement).

3 See Wilson v. Chicago Northwestern Transportation Com-

pany, 728 F.2d 968 (7th Cir. 1984) (System Board decision over-

turned on basis that it altered the existing agreement by ignoring

its clear language which required compliance with specific time

limits; agreement may only be altered through the collective

bargaining process); Miller v. Chicago and Northwestern Trans-

portation Co., 647 F. Supp. 1432 (N.D. Ill. 1986) (System Board

decision overturned because the Board cornpletely ignored an

unambiguous contract provision providing the agreed-upon rem-

edy and instead fashioned its own form of relief; collective bar-

gaining agreement may only be amended by the parties through

collective bargaining).

+ Disputes over the formation or alteration of collective bar-

|

is simply not empowered to engage in collective bar-

gaining on behalf of ALPA and Delta. The reasoning

of the court of appeals, invoked by ALPA in its Op.

Cert. at 7, would allow a neutral arbitrator to add a

new term to the CBA, to which ALPA and Delta

would both be bound despite the absence of collective

bargaining. It is respectfully submitted that such an

extreme result must be reversed by this Court.

3. ALPA further argues that through the simple

expedient of referring to Hazeltine’s eligibility for dis-

ability benefits in its decision, the System Board

brought within its jurisdiction the power to decide

questions regarding eligibility for disability benefits,

at least for Hazeltine. App. A at 12-13. Thus, even

if the System Board did not have jurisdiction to de-

cide questions regarding eligibility for disability ben-

efits for all pilots, it could expand its jurisdiction to

decide such questions with regard to Hazeltine. It is

respectfully submitted that jurisdictional limitations

are not so malleable that they may be molded to the

contours of an arbitrator’s decision.® It is elementary

gaining agreements are characterized as “‘major’’ disputes under

the RLA and are outside the jurisdiction of the System Board

which has jurisdiction only to resolve ‘‘minor’’ disputes. See, e.9.,

Chicago and Northwestern Transportation Co. v. United Trans-

portation Union, 656 F.2d 274 (7th Cir. 1981) (major disputes

arise from the bargaining process for a new or altered contract

while minor disputes do not involve an attempt to change the

agreement terms but instead involve the interpretation of an

existing agreement; a System Board only has jurisdiction over

minor disputes).

‘This holding is fashioned as an independent and alternative

holding: ‘Even if no other disputes over eligibility for Plan

benefits were subject to arbitration, we think it clear that the

facts of Hazeltine’s grievance require the System Board to en-

that when a System Board exceeds the jurisdictional

parameters established by the CBA, it violates the

provisions of the RLA. 45 U.S.C. § 153 (First) (q).

4. ALPA can make the arguments discussed above

only by mischaracterizing the identity of the parties.

Indeed, that is precisely what ALPA and the D.C.

Circuit have done by characterizing the disputants

over disability benefits as Delta and the grievants.

See Op. Cert. at 1. Rather, it is the Plan that denied

the benefits at issue in this lawsuit, not Delta. The

Plan is a legal entity entirely separate from Delta.

As such, the Plan may sue and be sued. 29 U.S.C.

§ 1132(d\1).¢ Plan benefits are paid through a trust

funded by Delta through actuarially determined con-

tributions. J.A. 187-138. The Plan’s assets, however,

belong to the Plan, and not to Delta or ALPA, and

it is the Plan that pays all benefits due. Throughout

this lawsuit, ALPA has endeavored to blur this dis-

tinction between the Company and the Plan.’ More-

over, this blurring of juridical entities is not a simple

accident of drafting. ALPA’s contentions ignore the

tertain his claim.’’ App. A at 12. The very premise of the de-

cision is that even if the System Board does not have the

jurisdiction to decide questions regarding eligibility for disability

benefits for all Delta pilots, it does for Hazeltine because of the

way it fashioned its opinion regarding his discharge. But if the

System Board does not have jurisdiction to decide questions

regarding eligibility for disability benefits, and if it has done so

for Hazeltine (which Delta disputes), the decision is ultra vires.

6 Whenever both Delta and the Plan have been sued over a

denial of Plan benefits, Delta has been dismissed from the suit

as an improper party. See, e.g., Zelder v. Delta Air Lines, Inc.,

423 So. 2d 945 (Fla. App. 1982).

* See, e.g., Op. Cert. at 1.

fundamental and indisputable fact that the parties

have established a separate legal entity—the Disability

Plan and its Trust—to fund and distribute disability

benefits to eligible participants. Therefore, contrary

to ALPA’s positions in paragraphs 1-3 above, the

Company, through the System Board, has no author-

ity to grant disability benefits.

5. ALPA seeks to persuade this Court that there

is no inter-circuit conflict between the decision below

and the persuasive Fifth Circuit precedent, Bonin v.

American Airlines, Inc., 621 F.2d 635 (5th Cir. 1980),

cert. denied, 471 U.S. 1005 (1985). Contrary to the

decision below, the court in Bonin determined that

plan terms define the procedures for resolving plan

disputes. Because the plan in Bonin did not provide

for arbitral machinery, the Fifth Circuit concluded

that the court, and not the System Board, had juris-

diction over Bonin’s pension claim under ERISA.

In attempting to distinguish Bonin from this case,

ALPA principally relies on the fact that “[t]he plan

in that case ‘significantly’ provided that ‘ ‘‘neither the

interpretation of the Plan nor its administration shall

as such be within the jurisdiction’”’ of the collective

bargaining agreement,’ Bonin, 621 F.2d at 639.”’ Op.

Cert. at 10. ALPA would distinguish Bonin by em-

phasizing that the Bonin plan’s terms were phrased

in the negative. In this case, Delta’s Plan affirmatively

provides for ‘‘exclusive,’’ ‘‘final’’ and ‘‘conclusive”’

administration and operation of the Pian by the Plan’s

Administrative Committee. J.A. 82-83. The vesting of

exclusive jurisdiction in the Plan to resolve Plan dis-

putes could not have been stated more clearly. More-

over, those exclusive Plan procedures were

incorporated into the CBA, thereby binding ALPA to

that exclusive Plan machinery. Thus, the square con-

flict between Bonin and the decision below cannot be

reconciled by distinguishing between prescriptive and

proscriptive plan terms. The teaching of Bonin is

clear—plan terms are paramount. Whether those

terms prescribe exclusive Plan machinery or proscribe

extra-plan procedures does not constitute a principled

distinction between Bonin and the case at bar.

6. ALPA mistakenly argues that Delta reads ER-

ISA to prohibit the parties to a CBA from adopting

a multi-tiered benefit claim procedure—administrative

review as well as arbitral mechanisms. ALPA distorts

Delta’s position. Delta argues no more than the pri-

macy of Plan terms. See Firestone Tire & Rubber Co.

v. Bruch, __ U.S. __ , 109 S. Ct. 948 (1989). It is

undisputed that those terms provide for the exclusive

resolution of benefit claims under Plan procedures,

and not for duplicative and cumbersome multiple lev-

els of review. If Delta and ALPA had wished to adopt

both of the claims review procedures authorized by

ERISA, they could have done so under the explicit

terms of the Plan.* Here, those express terms, to the

contrary, vest the final and exclusive authority to

interpret the Plan and resolve disputes over benefits,

with the Plan’s Administrative Committee. Neither

ALPA nor the court below has suggested how AL-

PA’s position can be accepted without wholly ignoring

those plan provisions. It is incumbent upon this Court

to vindicate the primacy of Plan terms rendered

meaningless by the court below.

* Delta is not aware, however, of any instance where such

duplicative multi-tiered procedures have been adopted.

7. Finally, ALPA has failed to come to grips with

the court’s misapplication of AT&T Technologies, Inc.

v. Communication Workers of America, 475 U.S. 648

(1986). ALPA argues that contract interpretation is

an issue for the System Board and not the court. Op.

Cert. at 11. Under AT&T, however, contract inter-

pretation is for the court, and not the System Board,

when such interpretation is necessary to resolve a

dispute over arbitrability. AT&T at 651.

CONCLUSION

The court of appeals has radically shifted labor,

ERISA and RLA law to bestow unlimited power upon

a System Board to add terms to collective bargaining

agreements and ignore terms in ERISA plans. Such

far-reaching precedent must be overturned.

September 15, 1989 Respectfully submitted,

Of Counsel: WILLIAM J. KILBERG

WALTER A. BRILL BARUCH A. FELLNER

GREGORY L. RIGGS JANET M. Cook

DELTA AIR LINES, INC. GIBSON, DUNN & CRUTCHER

1030 Delta Boulevard 1050 Connecticut Avenue, N.W.

Atlanta, Georgia 30320 Suite 900

(404) 765-2600 Washington, D.C. 20036

(202) 955-8500

Attorneys for Petitioner,

Delta Air Lines, Inc.