Petition for Writ of Certiorari — Cook v. Pan American World Airways, Inc.

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87-2170 (marr

Ne. | FILED

/ AUD 9 3987

IN THE “JOSEPH F SPANIOL, JR.

Supreme Court of the United BpLERK

OCTOBER TERM, 1987

JOHN C. COOK, et al.,

and

F.J. LEWANDOWSKI, et al.,

" Petitioners,

PAN AMERICAN WORLD AIRWAYS, INC.; AIR LINE PILOTS

ASSOCIATION, INTERNATIONAL; AIR LINE PILOTS ASSO-

CIATION, PAN AM CHAPTER; FLIGHT ENGiNEERS IN-

TERNATIONAL ASSOCIATION; FLIGHT ENGINEERS INTER-

NATIONAL ASSOCIATION, PAN AM CHAPTER,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

JEFFREY C. LONDA

HUTCHESON & GRUNDY

3300 Citicorp Center

1200 Smith Street

Houston, Texas 77002-4579

(713) 951-2812

ROBERT E. COHN

KEVIN F.. FLYNN

SHAW, PITTMAN, POTTS

JEFFREY BERNBACH & TROWBRIDGE

521 Fifth Avenue 2300 N Street, N.W.

New York, New York 10175 Washington, D.C. 20037

(212) 687-9730 (202) 663-8060

Of Counsel for Petitioners Counsel for Petitioners

WILSON - EPes PRINTING Co., INC. - 789-O096 - WASHINGTON, D.C. 20001

i :

QUESTION PRESENTED FOR REVIEW

Did the lower courts err in holding, contrary to the

Age Discrimination in Employment Act (“ADEA”) and

applicable regulations and case precedent, that the Pan

Am pilot seniority system is as a matter of law entitled

to exemption from the ADEA pursuant to Section

4(f) (2) of that statute, when (i) such system is not

“bona fide” because it is based not on length of service

but rather on the career expectations of younger, junior

employees, and (ii) such system is a subterfuge to evade

the ADEA’s purposes because it was not implemented by

Pan Am for legitimate business purposes, but rather with

reckless disregard for the ADEA?

(1)

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TABLE OF CONTENTS

STATEMENT OF THE CASE ............................

A. Procedural History .......... ELLE SD Rohe aOR

ne EE ee

REASONS THE WRIT SHOULD BE

EE ile bisidiipeieabipyetiaiendicnatiinnsseansasitisnn siconanbesiensanan

THE LOWER COURTS’ HOLDING THAT

PAN AM’S PILOT SENIORITY SYSTEM IS

AS A MATTER OF LAW “BONA FIDE”

WITHIN THE MEANING OF ADEA SEC-

TION 4(f) (2) IS LEGALLY ERRONEOUS,

CONFLICTS MARKEDLY WITH APPLICA-

BLE PRECEDENT AND EEOC INTERPRE-

TATIONS ON THIS ISSUE, AND PURPORTS

TO DECIDE IMPORTANT QUESTIONS OF

FEDERAL LAW WHICH SHOULD BE SET-

pny 5) Get) 9 een

THE LOWER COURTS’ HOLDING THAT

PAN AM’S PILOT SENIORITY SYSTEM IS

A MATTER OF LAW NOT A “SUBTERFUGE

TO EVADE THE PURPOSES OF THE

ADEA” WITHIN THE MEANING OF SEC-

TION 4(f)(2) IS LEGALLY ERRONEOUS,

CONFLICTS WITH APPLICABLE PRECE-

DENT AND EEOC INTERPRETATIONS ON

THIS ISSUE, AND PURPORTS TO DECIDE

AN IMPORTANT QUESTION OF FEDERAL

LAW WHICH SHOULD BE SETTLED BY

asin tniinsstecaepnisacensenacnepchass soeesenscs

A. The Lower Courts Erred In Holding That

Pan Am Adopted The Pilot Seniority System

For Legitimate Business Purposes ................

(iii)

TABLE OF CONTENTS—Continued

Page

B. The Lower Courts Erred In Holding That

Pan Am’s Bad Faith And Discriminatory

Motive Cannot Be Established By Evidence

Showing Its Reckless Disregard Of The

ADEA In Adopting The Pilot Seniority

UNI seni ciitadenerte cr seers. dy 21

An Employer’s Actual Discriminatory In-

tent Must Be Proven By Direct Evidence In

Order To Show That A Seniority System Is

A “Subterfuge To Evade The Purposes of

we Gece ee 25

oe Ce se 29

TABLE OF AUTHORITIES

CASES Page

Air Line Pilots Ass’n v. Trans World Airlines,

Inc., 547 F. Supp. 1221 (S.D.N.Y. 1982); aff'd

in part, rev’d in part, 713 F.2d 940 (2d Cir.

1984) ; aff'd in part, rev'd in part, 469 U.S. 613

STII sicsicicncsibidatinitpslcaiilintinssaciapaiesiadgdiek captnamccedmanbbabiebanlinaea 26

Allison v. Western Union Telegraph Co., 680 F.2d

a I I cia cisinsneen chariioicccmndtiiaiadcants 28

American Tobacco Co. v. Patterson ........................ 26

California Brewers Ass’n v. Bryant, 444 U.S. 598

CIEE = his beitnsctacohccteedecciteaphiatiiensdeabiniedaain<apenacnibatedsnaa duis 14, 16

Cipriano v. Board of Education, 785 F.2d 51 (2d

A FN ecbicetita icsradincencsiheanksusdaietectionsdaedieatesle passim

Cook v. Pan American World Airways, Inc., 647

F. Sapp. 816 (8.D.N.Y. 1986) ..........................-... passim.

Cook v. Pan American World Airways, Inc., 771

F.2d 635 (2d Cir. 1985), cert. denied, 106 S.Ct.

Ne CI aitaseiiedessidetninnte neteadteamnicecensteanddeianaueesbiniass passim

Crosland v. Charlotte Eye, Ear & Throat Hospital,

GO6 F264 BOG (40m Cie. 1668) 2002 enccensecees..... 7

Darby v. United States, 132 F.2d 928 (5th Cir.

MID ctctscienscoticecictecesceinidtientiana ead laeeeiae deme eer, 22

Dowd v. Blackstone Cleaners, Inc., 306 F. Supp.

Se Ce. Be TD cbeedeccicccceeenieaans 24

EEOC v. Home Ins. Co., 672 F.2d 252 (2d Cir.

SD cxvccccinechisinlacacdsetavagieabedienareadesilie adel iedmmaisised passim

EEOC v. Sandia Corp., 639 F.2d 600 (10th Cir.

SRR ENTE REE POE eC ONE HE ITS PE IO 28

EEOC v. Western Elec. Co., 713 F.2d 1011 (4th

Cir. 1968) ....... SOS La eM HR ETS PAE TT RP) 28

F.X. Messina Constr. Corp. v. Occupational S. &

pp AR Be Rs Pe ees eae ee 24

Geller v. Markham, 635 F.2d 1027 (2d Cir. 1980),

cert. denied, 451 U.S. 945 (1981) .........022.2.. passim

Gray v. New England Tel. & Tel. Co., 792 F.2d 251

RE Se, ME wxctaosots bu. cnieleterkecucimastsetond taktemans 19

Holt v. Gamewell Corp., 797 F.2d 36 (1st Cir.

PD sthrencttnninksicisdecblomcahanciceignnnsethbessastinitniandbeisbedeipens 28

Kelly v. American Standard, 640 F.2d 974 (9th

BN MUD sansesncadapcidnclcnsasdaciabasboscebeunbebecenateeaee 28

TABLE OF AUTHORITIES—Continued

Page

Laffey v. Northweat Airlines, Ine., 667 F.2d 429

(D.C, Cir, 1976), cert, denied, 484 U.S, 1086

CHIP CTED . Cuvsincstennsncnnisnecitisttallabasecbiiibiseitiaiite ated ces bore ea 23

Leftwich v, Harria-Stowe State College, 702 F.2d

Ce Ce Ce, Bee cence 28

Loeb v, Textron, Ine,, 600 F.2d 1008 (lat Cir.

ae pensasnsnnananstentajasaamiaieiiiinice ds ualbtacaasisittekser es 20

Matthysse v,. Securities Processing Serv., Ine., 444

We BU. OGD Cae Ec BCU cctcicctdcucsneetsincccencest 21

Nabob Oil Co, v, United States, 190 F.2d 478 (10th

Cir.), cert. denied, 242 U.S. 876 (1951) 000000... 22

Paolillo v. Dresser Industries, Inc., 813 F.2d 583

i Be, Ry id ON Coe ine eT ee ME 7,19

Sins v. Mme. Paulette Dry Cleaners, No. 82-5438,

slip op. (S.D.N.Y. June 26, 1986) ......................... 24

Thornborough v. Columbus and Greenville Rail-

road Co., 760 F.2d 633 (5th Cir. 1985) —............ 28

Trans World Airlines v. Thurston, 469 U.S. 111

CIEE. unsencececemninvialeaalicécancr aie ee passim

United Air Lines, Inc. v. McMann, 484 U.S. 192

CIID D .. nsnacssstisnnitnsinensunisiiineaielaiecstiaes arena eiaaee 25

United States v, Illinois Cent. R. Co., 303 U.S. 239

ERINIIED : exccasesniesenembseetininnisiniaiiatanicaeatal ieee 23

United Statea v. Murdock, 290 U.S, 889 (1983) | 22

STATUTES AND REGULATIONS

Age Discrimination in Employment Act, 29 U.S.C,

§ 628-681 (1986) . a passim

New York Human Rights Law, N, y. “Exec, ‘Law

oe FS: | eA LD ical 2

BO C.F. § 1625.8 (1986) .....c.ccccsccsccssssscssssscsssscseseces passim

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

No,

JOHN C. CooK, et al.,

and

F.J. LEWANDOWSKI, et al.,

. Petitioners,

PAN AMERICAN WORLD AIRWAYS, INC.; AIR LINE PILOTS

ASSOCIATION, INTERNATIONAL; AIR LINE PILOTS ASSO-

CIATION, PAN AM CHAPTER; FLIGHT ENGINEERS IN-

TERNATIONAL ASSOCIATION; FLIGHT ENGINEERS INTER-

NATIONAL ASSOCIATION, PAN AM CHAPTER,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioners John C. Cook, et al., and F.J, Lewandowski,

et al., file this Petition for a Writ of Certiorari (‘Peti-

tion”) in the above-captioned action.

I. STATEMENT OF THE CASE

This Court should grant a writ of certiorari to review

the decision issued on May 8, 1987, by the U.S. Court

of Appeals for the Second Circuit in the above-captioned

case, Petitioners will discuss the procedural history and

the basic facts involved in this case in this section of

the Petition,

A. Procedural History

On March 7, 1984, 489 of the 773 Petitioners filed a

Complaint in the U.S, District Court for the Southern

District of New York, alleging that Respondents Pan

American World Airways, Inc. (“Pan Am”), and the

Air Line Pilots Association, International (“ALPA”),

Air Line Pilots Association, Pan Am Chapter (“ALPA-

PAA”), Flight Engineers International Association

(“FEIA”) and Flight Engineers International Associa-

tion, Pan Am Chapter (“FEIA-PAA”) (collectively

“Unions”) had violated, inter alia, the Age Discrimina-

tion in Employment Act (“ADEA”), 29 U.S.C. §§ 623-

631 (1987), and New York Human Rights Law

(“NYHRL”), N.Y. Exec. Law § 290, et seg. (1987), in

implementing Pan Am’s pilot seniority system. Petition-

ers are all over 40 years of age, are and/or have been

employed as pilots and/or flight engineers by Respondent

Pan Am, and are members and/or apprentice members

of Respondent Unions,

On March 27, 1985, Lewandowski, et al. v, Pan Ameri-

can World Airways, Inc,, et al,, 85 Civ, 2871, was filed,

in which 153 additional Pan Am pilote/flight engineers

raised legal and factual issues identical to those in Cook;

that case has been consolidated with the Cook case, and

181 more Petitioners have legally “opted in” to the action

since such consolidation,

On October 31, 1984, the District Court granted Re-

spondents’ motions for summary judgment and/or for

dismissal of the complaint in Cook on procedural grounds.

On August 22, 1985, the Second Circuit reversed that

decision and remanded the Cook case to the District

Court for consideration on the merits. Cook v. Pan

American World Airways, Inc., 771 F.2d 685 (2d Cir.

1985), cert. denied, 106 S.Ct. 895 (1986).

On June 27, 1986, Pan Am and the Unions filed mo-

tions for summary judgment seeking dismissal of Cook

and Lewandowski on the grounds that the seniority sys-

tem challenged by Petitioners is allegedly exempt as a

matter of law from the ADEA, The District Court

granted Respondents’ motions by Opinion (“Cook Opin-

ion’) issued November 6, 1986, See Cook v. Pan Ameri-

can World Airways, Inc., 647 F. Supp. 816 (S8.D.N.Y.

1986), which appears at pp. 54a-74a in the Appendix

which accompanies this Petition. On May 8, 1987, the

Second Circuit affirmed the District Court’s decision,

adopting in toto and without elaboration the Cook Opin-

ion issued by the District Court; the Second Circuit’s

order appears in the accompanying Appendix at 77a. Be-

cause they issued but one opinion in this case between

them, the Second Circuit and District Court shall be

referred to herein collectively as “the lower courts,” un-

less otherwise noted, and the decision on appeal here as

“the lower courts’ decision,”

B, Basic Facts

The following factual account is as set forth in the

Appendix attached hereto, which has been extracted from

the Joint Appendix (“JA”) and deposition transcripts

on file with the Clerk of the Court for the Second Circuit,

In 1980, Pan Am merged with National Airlines, Ine.

(“National”), Respondents ALPA and FEIA, through

their respective chapters, represented Pan Am and Na-

tional pilots and flight engineers. Respondent Unions

submitted to an arbitrator, Mr. Lewis M. Gill, the issue

of how the Pan Am and National pilot and flight engi-

neer seniority lists were to be merged; the basis of this

action is the pilot, not the flight engineer seniority sys-

tem.! Pan Am was not a party to such arbitration and

expressly reserved the right to accept or reject the re-

sulting arbitration award (“Gill Award” or “Award”).

Pan Am representatives attended all of the Gill arbitra-

tion hearings. Cook Opinion, App. at 59a. As explicitly

stated in the Cook Opinion, “Defendant Pan Am was

aware that pre-merger Pan Am pilots as a group were

older than pre-merger National pilots, and that any in-

tegrated seniority system which disadvantaged pre-

merger Pan Am pilots would at the same time disad-

vantage older pilots.” Cook Opinion, App. at 64a. The

same can be said for Respondent Unions. This issue was

discussed repeatedly during the Gill arbitration hearings

which Pan Am representatives attended.

On March 12, 1981, Mr. Gill issued his Award. It

created a seniority system comprised of two components:

(1) an integrated list of all Pan Am and National pilots,

and (2) provisions “conditioning and restricting” the

straightforward allocation of employnient benefits to

pilots according to their sequence on the list.

First, the Gill Award incorporated a “ratio” method

of integrating a substantial member of fcrmer National

pilots into the Pan Am pilot seniority list, thereby dis-

advantaging hundreds of pre-merger Pan Am (i.e., more

senior and older) pilots. App. at 42a-43a. It is undis-

puted that, as the lower courts themselves even recog-

nized, the ratio had the effect of putting “National pilots

with shorter length of service ahead of the earlier hired

and generally older Pan Am pilots.” Cook Opinion, App.

at 60a. Moreover, while the part of the final list actu-

1 The flight engineer system is not relevant to Petitioners’ claims.

While some of the Petitioners currently hold flight engineer vosi-

tions, all of the Petitioners are part of the pilot system and it is

inarguable that (i) pilot positions are generally more lucrative and

prestigious than flight engineer positions, and (ii) only the pilot

system determines the allocation of pilot positions to Pan Am

airmen.

ally integrated by ratio constituted 49 percent of the

total number of pilots employed by Pan Am and National

as of the merger, the employment rights of pilots on no

less than 61 percent of the merged pilot list were either

directly or indirectly affected by the ratio. See Chart,

App. at 80a. Obviously, the bottom part of the pilot

seniority list cannot be said to have been integrated by

length of service when hundreds of junior former Na-

tional pilots who would, based on pure length of service,

be below the more senior Pan Am pilots at that part of

the list have instead been moved above them because of

the ratio. Hence, it is most accurate to say that over 60

percent of the Pan Am pilot seniority list (7.e., the 49

percent of the list ‘‘ratioed” plus the 12 percent of the

list which is below the ratioed portion) is constructed in

a manner which is anti-length of service. (Further in-

formation on how the ratio is anti-length of service can

be found in the Appendix at pp. 24a-28a.)

Second, the “conditions and restrictions” imposed by

the Gill Award on the operation of the integrated list

also were designed to disadvantage hundreds of pre-

merger Pan Am (2e., more senior and older) pilots.

Those conditions and restrictions were originally pro-

posed by the younger, more junior National pilots for

the specific purpose of advancing their interests and

subordinating those of the older, senior Pan Am pilots.

App. at 42a-43a. The conditions and restrictions have

been incorporated into the pilot system to the detriment

of older employees. (Further information on how the

conditions and restrictions are anti-length of service can

be found in the Appendix at pp. 36a-39a and 43a.)

The Unions adopted and presented the Gill Award to

Pan Am as a joint proposal. Pan Am adopted the Gill

Award as its pilot and flight engineer seniority system

on June 26, 1981, three and one-half months after it was

issued. Cook Opinion, App. at 64a.2 With the acquies-

cence and support of the Unions, Pan Am has continued

to implement the Gill Award to the detriment of older

and more senior pilots.

II. REASONS THE WRIT SHOULD BE GRANTED

Under the applicable criteria set forth in Rule 17 of

the Rules of the United States Supreme Court, a writ of

certiorari should be granted in this case. The lower

courts’ decision purports to decide an important question

of federal law which has not been, but should be, settled

by this Court. Furthermore, the lower courts’ decision

is legally erroneous, and conflicts markedly with other

applicable precedent on this issue and with the inter-

pretation of the ADEA by the agency charged with its

enforcement, 1.¢., the U.S. Equal Employment Oppor-

tunity Commission (“EEOC”).

The basic legal issues in this case are not complex.

Petitioners have alleged on the basis of abundant and

generally undisputed statistical and testimonial evidence

that the Pan Am pilot seniority system has a severe ad-

verse impact on pilots over the age of 40. As acknowl-

edged by the lower courts, “the parties seem to assume

that the system resulted in a discriminatory impact on

older pilots.” Cook Opinion, App. at 65a, fn. 3. Eight

federal circuits have adopted the view, which no federal

circuit has rejected, that an employment policy, such as

the Pan Am pilot senority system, which has such an ad-

? It is essential to note the irrelevance of the fact that the original

proposal for structuring Pan Am’s pilot seniority system was set

forth by an arbitrator rather than by Pan Am or the Unions. It

is absolutely unquestioned, and was conceded as such by the lower

courts, that the arbitration proceeding in no way bound Pan Am.

Cook Opinion, App. at 59a, 64a. Pan Am was free to accept or

reject the Gill Award proposal, and did in fact accept it for its

own operational reasons. This Court is to treat the Pan Am pilot

seniority system as it would any other seniority system or employ-

ment policy.

verse impact violates the ADEA. See, e.g., Geller v.

Markham, 635 F.2d 1027 (2d Cir. 1980), cert. denied,

451 U.S. 945 (1981). However, the lower courts in

granting and upholding summary judgment in favor of

Respondents in this case have erroneously decided that

evidence which clearly demonstrates such an impact need

not be submitted to the trier of fact, and that Pan Am’s

pilot system is deserving of exemption from the ADEA

by virtue of Section 4(f) (2) of that statute.

Section 4(f)(2) is a very important part of the

ADEA. It states:

It shall not be unlawful for an employer, agency, or

labor organization—

. . . (2) to observe the terms of a bona fide sentor-

ity system or any bona fide employee benefit plan

such as a retirement, pension, or insurance plan,

which is not a subterfuge to evade the purposes of

(the Act)...

29 U.S.C. § 623(f) (1986) (emphasis added).

When an employer and/or union claims to be pro-

tected by Section 4(f) (2) from liability for any and all

discriminatory effects of a seniority system, it assumes

the burden of proving that the system conforms to the

above standards. See Paolillo v. Dresser Industries, Inc.,

813 F.2d 583 (2d Cir. 1987); EEOC v. Home Ins. Co.,

672 F.2d 252, 260 (2d Cir. 1982). See also Crosland v.

Charlotte Eye, Ear & Throat Hospital, 686 F.2d 208,

212 (4th Cir. 1982).

The lower courts have determined, and Petitioners

agree, that the following EEOC regulation sets forth the

proper definition of a “bona fide” seniority system under

Section 4(f) (2) of the ADEA:

Though a seniority system may be qualified by such

factors as merit, capacity or ability, any bona fide

seniority system must be based on length of service

as the primary criterion for the equitable allocation

of available employment opportunities and preroga-

tives among younger and older workers.

29 C.F.R. § 1625.8(b) (1987) (emphasis added). See

also Cook, 771 F.2d at 644; Cook Opinion, App. at 66a.

Thus, in order for a seniority system to be “bona fide”

within the meaning of Section 4(f) (2), it must be

proven that it is primarily based on length of service

and that it is not qualified by factors unrelated to job

competence or performance. The burden of proof in both

respects is on Respondents. Home Ins., 672 F.2d at 260;

Crosland, 686 F.2d at 212.

Even if the system is proven to be “bona fide,” in

order for Respondents to prevail and obtain the Section

4(f) (2) exemption they must still prove that the system

is not a “subterfuge” to evade the ADEA’s purposes.

The EEOC’s regulation as to the “subterfuge” require-

ment provides in pertinent part:

Adoption of a purported seniority system which gives

those with longer service lesser rights, and results in

discharge or less favored treatment to those within

the protection of the Act, may, depending upon the

circumstances, be a subterfuge to evade the purposes

of the Act.

29 C.F.R. § 1625.8(b) (1987) (emphasis added). See

also Cook, 771 F.2d at 644; Cook Opinion, App. at 67a-

68a. Thus, to carry their burden of showing “no sub-

terfuge,” Respondents must prove that the seniority sys-

tem in question does not adversely affect older employees

and that it was adopted and implemented for legitimate,

nondiscriminatory reasons. Home Ins., 672 F.2d at 260.

Respondents did not carry their burden of proof.

' The importance of this case, and of the issues decided

incorrectly by the lower courts, cannot be overem-

phasized. In even the narrowest sense, its impact is

enormous: it will directly affect the employment rights

of over two thousand Pan Am pilots, almost a thousand

of whom are Petitioners here whose careers will be de-

stroyed if the lower courts’ decision is allowed to stand.

Even more important, however, are the interests of mil-

lions of employees over age 40 whose working lives are

governed by seniority systems, and whose employment

rights will be imperiled by the lower courts’ unreasonably

restrictive interpretation of Section 4(f)(2) of the

ADEA—an interpretation which derives no support from

the language nor the history of the statute or the appli-

cable EEOC regulations. This Court should grant the

requested writ, if for no other reason than to issue a

definitive interpretation of the ADEA’s Section 4(f) (2)

exemption.

This Court should grant the writ of certiorari for

the following reasons, which will be discussed separately

in the remaining sections of this Petition:

1. The lower courts’ holding the Pan Am’s pilot

seniority system is as a matter of law “bona fide”

within the meaning of ADEA Section 4(f) (2) is

legally erroneous, conflicts markedly with appli-

cable precedent and EEOC interpretations on this

issue, and purports to decide important questions

of federal law which should be settled by this

Court.

2. The lower courts’ holding that Pan Am’s pilot

seniority system is as a matter of law “‘not a sub-

terfuge to evade the purposes of the ADEA”

within the meaning of Section 4(f) (2) is legally

erroneous, conflicts with applicable precedent and

EEOC interpretations on this issue, and purports

to decide an important question of federal law

which should be settled by this Court.

Ill. THE LOWER COURTS’ HOLDING THAT PAN AM’S

PILOT SENIORITY SYSTEM IS AS A MATTER OF

LAW “BONA FIDE” WITHIN THE MEANING OF

ADEA SECTION 4(f)(2) IS LEGALLY ERRONE-

OUS, CONFLICTS MARKEDLY WITH APPLICA-

BLE PRECEDENT AND EEOC INTERPRETA-

TIONS ON THIS ISSUE, AND PURPORTS TO

DECIDE IMPORTANT QUESTIONS OF FEDERAL

LAW WHICH SHOULD BE SETTLED BY THIS

COURT

In holding that the Pan Am pilot seniority system is

“bona fide’ within the meaning of Section 4(f) (2) of

the ADEA, the lower courts stated as follows:

The integration .. . of two bona fide seniority lists

in a way reasonably designed to preserve pre-merger

expectations is itself a bona fide seniority system.

Cook Opinion, App. at 67a. This holding is completely il-

logical, could lead to dangerous consequences at odds

with the ADEA’s purposes, and accordingly should be

reviewed and reversed by this Court. If allowed to stand,

the lower courts’ holding would render meaningless the

EEOC’s regulations on this issue, which both the District

Court and Second Circuit have adopted as binding in

this case. The holding would also establish a principle,

contrary to the ADEA, that the structure and effect of

a seniority system is completely irrelevant to its legality.

First, the lower courts determined in the above-quoted

holding that because both the pre-merger Pan Am and

National pilot seniority lists were based primarily on

length of service and therefore as a matter of law “bona

fide,” the integration of the two lists was also auto-

matically bona fide. This holding has serious implica-

tions. It would mean that if the seniority lists of two

companies are each based on length of service, and the

two companies merge, the resulting merged seniority list

will itself be considered to be based on length of service,

and therefore exempt from the ADEA, regardless of what

method or formula was used to merge the lists, and re-

gardless of the effect of such merged list—i.e., regard-

less of whether the merged list is in fact based primarily

on length of service.

A common sense interpretation of the ADEA and

pertinent cases and regulations demands that the actual

_method of integrating two seniority lists, and the actual

effect of this integration, must be scrutinized to deter-

mine whether the integration results in a seniority sys-

tem which is itself based primarily on length of service

within the meaning of Section 4(f) (2). In this case,

Pan Am’s post-merger pilot seniority system governs

the employment rights of all Pan Am’s pilots, and should

be examined to determine whether it is based primarily

on length of service and therefore bona fide. Pan Am’s

and National’s pre-merger pilot seniority systems are

irrelevant to this analysis.

The problems which could be caused by the lower

courts’ ill-considered analysis on this point become obvi-

ous when one posits the following situation. Suppose

that the seniority list of one company consists solely of

employees over age 50 with an average of 30 years serv-

ice in a craft, with such employees arranged in order of

length of service. The seniority list of another company,

merging with the first, consists solely of employees under

age 30 with an average 10 years of service in the same

craft, arranged the same way. Under the lower courts’

holding in Cook, the two lists could he legally integrated

by placing all the employees over age 50 below all the

more junior employees under age 30, simply because the

two companies’ pre-merger lists were based on length of

service. This is surely not a result contemplated by the

drafters of the ADEA. The fact is that the applicable

EEOC regulation states that the seniority system itself—

in this case, the merged Pan Am and National pilot sys-

tem—must be based primarily on length of service.

The lower courts’ holding precludes analysis of the

merged system by mistakenly focusing on the Pan Am

and National lists before the merger.

Second, the lower courts further erred in holding that

a merged seniority system is “bona fide” by virtue of its

being qualified by the pre-merger “expectations” of em-

ployees governed by its terms. The lower courts’ hold-

ing on this issue was based on their acceptance of the

spurious argument that (1) before the merger of Pan

Am and National, the National pilots had a greater ex-

pectation of advancement than did the Pan Am pilots

and (2) it was proper and legal for considerable credit

to be given for those expectations under the merged sys-

tem—even though the National pilots were younger and

less experienced than their Pan Am counterparts. The

lower courts found that if the merged Pan Am pilot

seniority system had been based completely on length of

service, it would have disturbed the “expectations” of

the concededly junior National pilots. Cook Opinion,

App. at 61a. Taking this into account, the lower courts

upheld as bona fide the Pan Am pilot seniority system

and particularly those aspects thereof specifically in-

tended to fulfill junior pilot expectations.

Such an approach stands in blatant contravention of

the EEOC’s “bona fide” regulation quoted in Section II

of this Petition. Under that regulation, quoted in full

above, a seniority system must be based primarily on

length of service but “may be qualified by such factors

as merit, capacity, or ability.” 29 C.F.R. § 1625.8

(1987) (emphasis added). The similarity of the mean-

ings of the words “merit,” “capacity” and “ability”

clearly indicates that the regulation was intended to per-

mit an employer to establish a seniority system to some

extent qualified by objective, measurable standards of

actual job competence and performance. It was not in-

tended to permit the establishment of a seniority system

qualified by one group of junior employees’ wholly spec-

Nia ine —~

ulative “expectations” that they would or should advance

in their new employer’s organization more quickly than

another group of senior employees—particularly when

such “expectations” are in no way based on objective

criteria of job qualification or competence.

The junior National pilots’ pre-merger “expectations,”

on which the Pan Am pilot seniority system is based,

bear no relation to any of the criteria set forth in

EEOC’s “bona fide” regulation. At no time in the Gill

arbitration hearings or during this case was the argu-

ment ever made that the National pilots as a group were

in any way superior in “merit, capacity or ability” to

the Pan Am pilots as a group. Arbitrator Gill never

made such an arguiment in his Award or Opinion, and

Pan Am and the Unions have never made such an argu-

ment in the course of this action. If anything, it was

acknowledged by all of the parties to the Gill Award that

the Pan Am pilots, some of whom had ten years more

credited experience than National pilots to whom the

Pan Am pilot system gave superior rights, were more

able, in the sense of being more seasoned, than the junior

National group.

The “expectations” on which the Pan Am pilot senior-

ity system was based were not even indirectly derived

from considerations of “merit, capacity and ability.” They

were instead derived from the rights and entitlement

which the generally junior National pilots had developed

vis-a-vis each other in their own pre-merger seniority

system, as well as from an extremely speculative assess-

ment that, unmerged, National Airlines had better future

financial prospects than Pan Am. In large part, each

National airman could credit any expectation for advance-

ment which he may have had in his previous employ to the

fact that he was competing with a far less senior group

of pilots at National than were employed by Pan Am at

the same time. None of this, of course, has anything to

do with “merit, capacity and ability.” The National pilots’

expectations also bore no relation to any measure of the

National pilots’ time served in employment; as found by

the lower courts, the very consideration of such expecta-

tions constituted a deviation from the establishment of a

system based on length of service.

The Pan Am pilot seniority system, as approved by the

lower courts because of the system’s purpose of preserving

pre-merger pilot “expectations,” violates the letter of the

pertinent EEOC “bona fide” regulation. It also violates

its spirit, and indeed runs counter to the entire rationale

underlying the ADEA. One of the ADEA’s primary pur-

poses is to prevent the dilution of the seniority rights of

older employees by considerations unrelated to job per-

formance or competence. In promulgating its “bona fide”

regulation, the EEOC, citing this Court, stated that “the

principal feature of any and every [bona fide] seniority

system is that preferential treatment is dispensed on the

basis of some measure of time served in employment.”

46 Fed. Reg. 47725 (September 29, 1981) ; citing Cali-

fornia Brewers Ass’n v. Bryant, 444 U.S. 598 (1980). By

stating generally that a bona fide seniority system may be

qualified by the “expectations” of a group of junior em-

ployees, regardless of whether those expectations are rea-

sonable or in any way related to job performance or com-

petence, the lower courts have repudiated this funda-

mental tenet of the ADEA.

Even if this Court holds that a bona fide seniority sys-

tem may be “qualified” by the “expectations” of junior

employees whose employment rights are governed by its

terms, which it should not, it should still hold that the

lower courts erred in deciding that the Pan Am pilot

seniority system is “bona fide” under prevailing law. The

Pan Am pilot system is not simply qualified by junior em-

ployee expectations; it is in fact based completely on this

factor, both in conception and in practical application.

The Gill Opinion, reproduced in the Joint Appendix at

78-136, describes explicitly the basis on which the pilot

—"

system adopted by Pan Am and the Unions was con-

structed. Arbitrator Gill stated that his proposed system

was designed to accomplish four “basic objectives.” See

J.A. at 99-100. The primary two objectives for which the

pilot seniority system was designed by Arbitrator Gill

relate directly to satisfying pilot “expectations,” which

Arbitrator Gill proceeded to expand in the case of the

junior National pilots. None of the four objectives relates

directly or indirectly to the principle that “preferential

treatment must be dispensed on the basis of some measure

of time served in employment.”

In practical application as well, the Pan Am pilot sys-

tem has operated predominantly under the influence of

those of its provisions incorporated exclusively to preserve

the expectations of the junior National pilots. As ex-

plained above, the Pan Am pilot system has not distributed

every employment benefit in every case to pilots in the

strict order of their sequence on the integrated list. Cer-

tain provisions in the Gill Award explicitly “conditioned

and restricted” the straightforward operation of the inte-

grated list in many circumstances. Unfortunately for

Petitioners, these “conditions and restrictions” were not

designed to ameliorate, but rather to exacerbate, the im-

pact of the list on older, more senior pilots. Petitioners

have produced affidavit testimony, reproduced in the Ap-

pendix, showing that the sole reason for the inclusion of

such conditions and restrictions in the system “was to

benefit the former National pilots by reserving positions

for them to which they would not be assigned under a

date of hire/length of service list” (i.e., to fulfill junior

National pilet expectations). App. at 42a. Pan Am could

have foreseen that the conditions and restrictions would

greatly influence the distribution of pilot assignments

under the pilot system and would have a severely adverse

effect on senior, generally older pilots.

In sum, the Pan Am pilot seniority system is illegally

based on the “expectations” of junior, generally younger,

employees governed by its terms. The lower courts have

in effect ruled that a seniority system can allocate superior

benefits to younger employees, not because of how long

those employees have served or what their abilities are,

but simply because of what those younger employees think

they deserve.

The lower courts’ decision undermines not only the

EEOC’s regulation, but also a body of more general au-

thority applicable to seniority systems. Most notable

among such cases is one decided by this Court, California

Brewers Ass’n v. Bryant, 444 U.S. 598 (1980). Bryant

involved a company rule which established two seniority

tracks: one for employees of more than 45 weeks, the

other for employees of less. The Court held that the 45-

week rule was part of the company’s seniority system, and

was thus governed by Title VII provisions applicable to

seniority systems, because it was time-based: “(L)ike

any seniority rule, the 45-week requirement focuses on

length of employment.” 444 U.S. at 609-610. In so hold-

ing, this Court stated:

In the area of labor relations, “seniority” is a term

that connotes length of employment. A “seniority sys-

tem” is a scheme that, alone or in tandem with non-

seniority criteria, allots to employees ever-improving

employment rights and benefits as their relative

lengths of pertinent employment increase. Unlike

other methods of allocating employment benefits and

opportunities, such as subjective evaluations or edu-

cational requirements, the principal feature of any

and every “seniority system” is that preferential

treatment is dispensed on the basis of some measure

of time served in employment.

Id. at 606. This principle is undermined by the Pan Am

pilot system, which is in no way time-based but rather

expectation-based.

In sum, the lower courts seriously erred in holding that

“the integration of two bona fide seniority lists in a way

reasonably designed to preserve pre-merger expectations

is itself a bona fide seniority system.” The first part of

the lower courts’ holding undermines the letter and spirit

of the ADEA and applicable EEOC regulations and case

authority by disregarding the structure and effect of a

merged seniority system, and instead focusing irrelevantly

on pre-merger issues which are of no consequence to a

merged company’s employees. Second, the idea that a

seniority system can be considered ‘bona fide’ within the

meaning of ADEA Section 4(f)(2) when it is wholly

based on the “expectations” of younger, junior employees

finds no support in the statutory dictates of the ADEA

or any regulation or case authority issued pursuant

thereto.

IV. THE LOWER COURTS’ HOLDING THAT PAN AM’S

PILOT SENIORITY SYSTEM IS AS A MATTER OF

LAW NOT A “SUBTERFUGE TO EVADE THE PUR-

POSES OF THE ADEA” WITHIN THE MEANING

OF SECTION 4(f)(2) IS LEGALLY ERRONEOUS,

CONFLICTS WITH APPLICABLE PRECEDENT

AND EEOC INTERPRETATIONS ON THIS ISSUE,

AND PURPORTS TO DECIDE AN IMPORTANT

QUESTION OF FEDERAL LAW WHICH SHOULD

BE SETTLED BY THIS COURT

As noted above, even if the Pan Am pilot seniority sys-

tem were “bona fide” as a matter of law within the mean-

ing of the ADEA’s Section 4(f) (2) exemption, which it

definitely is not, the lower courts’ decision should still be

reviewed and reversed by this Court. The lower courts

erred in holding that the system has not been maintained

as a “subterfuge to evade the purposes of the ADEA.”

Under the EEOC’s “subterfuge” regulation, quoted in

Section II of this Petition, a system may, “depending on

the circumstances,” be considered a subterfuge if it gives

those with longer service lesser rights and results in less

favored treatment to those protected by the ADEA. 29

C.F.R. § 1629.8(b) (1987). As to the “treatment” issue,

the lower courts essentially conceded that older, more

senior pilots were disadvantaged by the system; the iynch-

pin of their analysis of the bona fide issue, rebutted above,

is that such disadvantageous treatment was justifiable. The

lower courts’ inquiry into the “cireumstances” surround-

ing the pilot seniority system’s implementation was con-

fined to a determination that Pan Am and the Unions

had valid business purposes in adopting and effectuating

the system. The lower courts’ legal analysis of this issue

was erroneous and their decision should be reviewed and

reversed by this Court.

A. The Lower Courts Erred In Holding That Pan Am

Adopted The Pilot Seniority System For Legitimate

Business Purposes

The lower courts found that Pan Am’s purpose in adopt-

ing the pilot system “was its desire to integrate the air-

lines as quickly as possible with a system that was oper-

ationally manageable.” Cook Opinion, 647 F. Supp. at 823.

According to the lower courts, this constituted a legitimate

business purpose sufficient to result in a holding on sum-

mary judgment that the pilot system could not be a sub-

terfuge to evade the ADEA’s purposes: “Pan Am’s desire

to ‘get on with its business’ is a legitimate reason for

adopting the [Gill] award,” Cook Opinion, App. at 69a-

70a, citing Cipriano v. Board of Education, 705 F.2d 51

(2d Cir. 1986).

This holding contorts the business purpose defense,

which is based on the assumption that an employer with

a legitimate purpose for structuring a seniority system in

a certain way could not have adopted the system to avoid

the ADEA. The business purpose defense does not extend

to an employer such as Pan Am, which argues that it was

eager to adopt and implement any seniority system simply

to “get on with its business.” The lower courts are con-

tradicted by the same authority they cite for support on

this point; under Cipriano, the employer must show a

legitimate business purpose for the structure of the sys-

tem in question. See Cipriano, 785 F.2d at 58 (employer

has obligation of “showing a legitimate reason for struc-

turing the plan as it did”). Neither Pan Am nor the

Unions have offered any legitimate business purpose for

structuring the pilot seniority system so as to subordinate

senior, older employees to junior, younger employees, as

the current system does. For this reason alone, a writ of

certiorari should be granted in this case and the lower

courts’ holding reversed. Since tle business purpose de-

fense has been recognized in decisions involving not only

the ADEA but also Title VII of the Civi! Rights Act, 42

U.S.C. § 2000e et seg. (1987), it is not unreasonable to

suggest that the lower courts’ ruling on this issue imperils

reasonable application of both of those statutes.

Furthermore, Petitioners have submitted evidence cast-

ing considerable doubt on whether Pan Am actually imple-

mented the current pilot system for the purposes new

alleged, and showing that the ends with which Pan Am

contends it was then concerned could not possibly have

been achieved by adopting this system.* But the lower

courts refused to even consider the reascnableness of Pan

Am’s alleged business purposes, stating that “what is im-

portant here is what Pan Am believed at the time of adop-

tion of the system.” Cook Opinion, App. at 69a (emphasis

added). This statement constitutes a dangerous precedent

which this Court should repudiate. The statement is di-

rectly contradicted by the only case which the lower courts

cited as supporting its position, Gray v. New England Tel.

3 For example, Pan Am now claims that it decided to adopt the

system for economic operational reasons, but as the lower courts

themselves noted, Pan Am did no cost analysis of the system before

so deciding. The lower courts’ holding nonetheless approving Pan

Am’s decision cannot be rationally squared with the Second Circuit

case Paolillo v. Dresser Industries, Inc., 813 F.2d 583 (1987), in

which the Second Circuit held that an employer is liable under the

ADEA if it cannot demonstrate a clear cost justification for an

employment policy which adversely affects older workers.

& Tel. Co., 792 F.2d 251 (1st Cir. 1986). In Gray, the

court was called upon to determine whether an employer

had a valid business purpose for implementing an al-

legedly discriminatory policy. The court stated:

Our focus must be on the perception of the decision-

maker . . . and whether this perception was credible

and reasonable, in determining whether there is a

jury issue.

Id. at 256 (emphasis added), citing Loeb v. Textron, Inc.,

600 F.2d 1008, 1012 n.6 (1st Cir. 1979) (“The reason-

ableness of the employer’s reasons mav, of course, be pro-

bative of whether they are pretexts [for discrimina-

tion]’’). In this case, the reasonableness of the “‘business

purpose” offered by the employer merits particular close

judicial scrutiny. Here, the lower courts relied, at best,

not on what Pan Am believed, but on what Pan Am offi-

cials sey Pan Am believed when it decided to adopt the

Gill Award. Pan Am bases its assertions in this regard

not on documentary evidence prepared contemporaneously

with its decision, but on recent deposition testimony of

company officials reconstructing a decisionmaking process

in the distant past.

It is especially important in a case such as this for a

court and/or jury to examine from an objective standpoint

the reasonableness of Pan Am’s representations as to its

purposes for adopting this employment policy. The Dis-

trict Court should have undertaken such analysis, not so

as to second-guess Pan Am’s business judgment, but so as

to responsibly exercise its obligation to determine whether

the employer has borne its burden of showing, and not

simply claiming, that it had a legitimate business reason

for its actions. See Cipriano, 785 F.2d at 58 (employer

has the obligation of “showing a legitimate business rea-

son for structuring the plan as it did’). Pan Am did not

indisputably show a valid business purpose for adopting

the seniority system set out in the Gill Award and the

lower courts erred in deciding that it did.

B. The Lower Courts Erred In Holding That Pan Am’s

Bad Faith And Discriminatory Motive Cannot Be

Established By Evidence Showing Its Reckless Dis-

regard Of The ADEA In Adopting The Pilot Sen-

iority System

The lower courts held that substantial evidence, sub-

mitted below by Petitioners, that Pan Am acted with

reckless disregard of the ADEA in deciding to adopt the

pilot seniority system does not establish a fact question

for trial concerning Pan Am’s bad faith and discrimina-

tory motive. By so holding, the lower courts flouted com-

pelling precedent and common sense.

The Second Circuit itself stated, when it decided pro-

cedural issues in this action two years ago, that among

the circumstances to be considered in connection with the

substantive question of “subterfuge” within the mean-

ing of Section 4(f) (2) is whether Pan Am engaged in

“willful discrimination.” Cook, 771 F.2d at 644. The

Second Circuit further stated that as to this issue, evi-

dence bearing on whether or not Pan Am and the Unions

acted “in bad faith or with discriminatory motives” in

adopting or agreeing to the seniority system should be

explored. 7d. The definition of “bad faith,” established

in longstanding precedent in the Second Circuit and others,

includes “willfulness.” See, e.g., Matthysse v. Securities

Processing Serv., Inc., 444 F. Supp. 1009, 1821

(S.D.N.Y. 1977) (“bad faith” is equivalent to “willful

ignorance’). Clearly, the Second Circuit bound itself to

consider, in its analysis of whether the Pan Am pilot

system is a “subterfuge,” facts which provided the basis

for Petitioners’ contention that Pan Am “willfully” vio-

lated the ADEA and thereby acted in bad faith.

In Trans World Airlines v. Thurston, 469 U.S. 111,

105 S.Ct. 613 (1985), this Court held that an employer

“willfully” violates the ADEA if it “knew or showed

reckless disregard for the matter of whether its conduct

was prohibited by the ADEA.” (Emphasis added.) Id.

at 624, quoting the Second Circuit opinion in the same

ease, Air Line Pilots Ass’n v. Trans World Airlines, Inc.,

713 F.2d 940, 956 (1984). This Court elaborated upon

the above definition by citing language from cases in-

volving allegedly “willful” violations of other statutes.

See Nabob Oil Co. v. United States, 190 F.2d 478 (10th

Cir.), cert. dented, 342 U.S. 876 (1951); Darby v.

United States, 182 F.2d 928 (5th Cir. 19438) (Fair

Labor Standards Act); United States v. Murdock, 290

U.S. 389 (1933) (tax violation). Hence, an employer

“wilfully” violates the ADEA if (1) it “wholly disre-

gards the law . . . without making any reasonable effort

to determine whether the plan he is following would con-

stitute a violation of the law”; (2) its conduct is

“marked by careless disregard for whether or not one

has the right to so act”; or (3) it shows “a disregard

for the governing statute and an indifference to its re

quirements.” Id. at 624-625.

In Thurston, this Court applied the above standard to

the conduct of TWA and determined that it had not

“willfully” violated the ADEA by implementing a trans-

fer/retirement policy applicable to 60 year-old pilots.

The Court stated: “TWA officials acted reasonably and

in good faith in attempting to determine whether their

plan would violate the ADEA.” This Court emphasized

that “TWA officials met with their lawyers to determine

whether the mandatory policy violated the ADEA” and

later noted that TWA “sought legal advice and consulted

with the union” on this specific issue. Jd. at 626.

Applying the standards set forth in Thurston and the

cases upon which it relied, Pan Am clearly acted with

“reckless disregard” of the ADEA, and thus willfully

violated that Act, by adopting the Gill Award and imple-

menting the pilot seniority system which it mandated.

This Court is in fact presented with a textbook case of a

willful violation of the ADEA. Pan Am concedes that it

had full knowledge of the specific provisions of the ADEA

and was aware that the Gill pilot seniority system would

definitely have an adverse impact on employees over the

age of 40. Nonetheless, by its own admission, offered re-

peatedly in depositions, Pan Am never investigated,

either on its own or through legal counsel, whether the

system might possibly violate the ADEA. In fact, Pan

Am never even investigated or inquired as to whether

the system would possibly violate any federal or state

statute. In short, Pan Am undertook absolutely no in-

vestigation to determine the legality of a seniority sys-

tem which was to govern indefinitely the careers and

lives of over two thousand of its employees. The senior

Pan Am official responsible for Pan Am’s decisions in

this matter explicitly stated in deposition that even

though “any logic would say that there would be an

impact” on older pilots if Pan Am adopted the Gill

Award, he had a predisposition to “go with it’”—“unless

it was horribly expensive or blatantly illegal, immoral

and wrong.” 4

The actions of Pan Am officials in this case stand in

stark contrast to those of the TWA officials in Thurston,

who were found not liable for willfully violating the

ADEA because they sought advice from both company

and union counsel on the legal issues raised in that case.

T’ urston, 105 S.Ct. at 626. But Pan Am’s actions are

similar to, and if anything evidence more recklessness

than, those of numerous defendants found liable of will-

ful statutory violations.® In fact, in no reported case has

4 See Deposition of Martin Shugrue, Pan Am’s Vice Chairman,

on file with the Clerk of the Court for the Second Circuit; p. 56-57

(emphasis added).

5 See United States v. Illinois Cent. R. Co., 8038 U.S. 239 (1938)

(willful violation found where defendant showed “careless disre-

gard for whether or not it had the right to so act”); Laffey v.

Northwest Airlines, Inc., 567 F.2d 429 (D.C. Cir. 1976), cert. de-

a defendant disregarded a statute as blatantly as Pan

Am did here without being held liable for a willful or

bad faith violation thereof. That Pan Am apparently

did not undertake an inquiry into its legal obligations in

this matter after learning of the Gill system’s potential

(and ultimately realized) adverse impact on older pilots

with longer service can only be attributed to a conscious

effort on its part to close its eyes to the requirements of

the law.

The lower courts were similarly blind to the long line

of authority compelling the result urged by Petitioners.

In deciding this issue in Respondents’ favor, the lower

courts attempted to distinguish between the “inten-

tional” and “willful” standards in the ADEA, contend-

ing that the willful standard is only to be applied to

the question of whether liquidated (7.e., double) damages

should be assessed as to a violation already found to be

intentional. The lower courts ignored a basic point of

law: in any criminal or civil mens rea analysis, the

term “willful” defines a more culpable state of mind,

calling for a more stringent penalty, than does the term

“intentional.” Under the ADEA, a violation judged to

be “intentional” is penalized by an assessment of com-

pensatory damages; a violation judged to be “willful” is

penalized by an assessment of double damages. 29 U.S.C.

§ 625(b) (1987). This is not a quirk in the law. It re-

flects a sensible determination that if a defendant is

nied, 434 U.S. 1086 (1978) (willful violation found where defend-

ant knew of statutory obligation but did not take steps reasonably

calculated to resolve doubt about its application); F.X. Messina

Constr. Corp. v. Occupational S. & H.R.C., (1st Cir. 1974) (willful

violation found where defendant was “indifferent to the require-

ments of the law”); Sims, 82-5438, slip op. (S.D.N.Y. June 26,

1986) (bad faith violation found where defendant made no effort

to learn and comply with law’s requirements) ; Dowd v. Blackstone

Cleaners, Inc., 306 F. Supp. 1276 (N.D. Tex. 1969) (willful viola-

tion found where defendant did not obtain legal opinion as to ap-

plication of statute).

‘

ce]

confronted with a legal requirement (¢.g., a prohibition

of employment policies which adversely affect older

workers) and deliberately refuses to investigate its obli-

gations under that requirement, its intent to violate the

requirement is to be assumed and it is to be punished

additionally for its willfulness. Under the ADEA, as in

the case of a simple speed limit on a highway, a funda-

mental rule applies: ignorance of the law is not an

excuse.

This Court has defined the term “subterfuge,” as it

appears in ADEA Section 4(f) (2), as “an artifice of

evasion.” United Airlines, Inc. v. McMann, 434 U.S. 192

(1977). It is not possible for a company to more bla-

tantly evade a statute’s purposes than by completely ig-

noring it in its rush to implement a policy which it

knows will adversely affe2t older workers.

C. The Lower Courts Erred in Holding That An Em-

ployer’s Actual Discriminatory Intent Must Be

Proven By Direct Evidence In Order To Show That

A Seniority System Is A “Subterfuge To Evade The

Purposes of The ADEA”

The lower courts’ holding on the subterfuge issue is based

on the premise that direct evidence of actual discrimina-

tory intent—.e., a “smoking gun’”—must be presented

by a plaintiff in order to prove that a seniority system

is a “subterfuge to evade the purposes of the ADEA,”

and thereby avoid summary judgment on this issue. The

lower courts’ ruling shifts the burden of proof on the

subterfuge issue to Petitioners in this action, when in

fact it should have been placed upon Respondents. See,

e.g., Crosland, 686 F.2d at 212 (4th Cir. 1982). As dis-

cussed above, Petitioners have adduced evidence which

bears directly on the subterfuge issue, and which should

have been sufficient to assure that this issue would not

be decided by summary judgment against Petitioners.

The ADEA does not require Petitioners to show more

than they have, nor should the lower courts have done so.

In stating summarily that “when a seniority system

is at issue, plaintiffs must show discriminatory intent as

part of their prima facie case,” Cook Opinion, App. at

70a, fn. 7, the lower courts could only cite for support

one case: Air Line Pilots Ass’n Int'l v. Trans World

Airlines, Inc., 547 F. Supp. 1221 (8.D.N.Y. 1982), aff'd

in part and rev’d in part, 713 F.2d 940 (2d Cir. 1983),

aff'd in part and rev'd in part, 469 U.S. 613 (1985).

That case is hardly compelling precedent. First, the ulti-

mate issues in that case, as to which the District Court

was reversed by the Second Circuit and this Court, did

not pertain at all to the District Court’s dictum on Sec-

tion 4(f) (2). Second, as explained below, the District

Court in the above-cited case blatantly misapplied Title

VII authority ° with no regard for clear differences be-

tween the seniority system provisions in Title VII and

the ADEA.

Section 4(f) of the ADEA, quoted above, does not ad-

dress the issue of whether a seniority system is main-

tained with discriminatory intent. Furthermore, the

EEOC’s interpretation of the “subterfuge” clause clearly

dictates that a seniority system violates the ADEA if it

“gives those with longer service lesser rights,” regard-

less of the employer’s intent. 29 C.F.R. § 1625.8 (1987).

In contrast, Section 703(h) of Title VII contains a pro-

vision, not contained in the ADEA, that specifically ex-

empts from Title VII’s prohibitions a bona fide seniority

system maintained free of discriminatory intent:

Sec. 703

(h) Notwithstanding any other provision of this

title, it shall not be an unlawful employment practice

8 American Tobacco Co. v. Patterson, 456 U.S. 63 (1982).

juieg aid

ah ae coir RSet aed NSW breetoe eile aA

PC a ee Te ee OP ee ee ey Pe te a Ae ee Ue

for an employer to apply different standards of com-

pensation, or different terms, conditions, or privileges

of employment, pursuant to a bona fide seniority or

merit system, or a system which measures earnings

by quantity or quality of production or to employees

who work in different locations, provided that such

differences are not the result of an intention to dis-

criminate because of race, color, religion, sex, or

national origin.

42 U.S.C. § 2000e-2 (1987). There is no corollary “in-

tent” requirement in the ADEA.

Furthermore, the absence of the “intent” language in

Section 4 of the ADEA refiects a considered legislative

judgment that seniority systems should be treated differ-

ently under the ADEA than under Title VII. The

ADEA was passed three years after the Civil Rights

Act of 1964. Several of its most significant sections are

quite similar to the corresponding sections of Title VII,

including those which generally describe the various pro-

hibited employment practices’ and which govern the

timeliness of discrimination charges.* However, where

Title VII and the ADEA address the same issue by using

totally different language, it clearly reflects a legislative

decision that the two statutes involve different legal and

policy considerations as to that issue, and the sections

should not be viewed as interchangeable. Such is the

case with the bona fide seniority system exemptions. If

Congress had desired that “unintentionally” discrimina-

tory seniority systems be exempt from the ADEA, it

could have easily incorporated the language contained in

Section 703(h) of Title VII into the ADEA, just as it

utilized other Title VII provisions. But instead of mim-

icking Title VII’s intent requirement, Congress excluded

TTitle VII: 42 U.S.C. § 2000e-2(a)-(d); ADEA: 29 U.S.C.

§ 623(a)-(d).

8 Title VII: 42 U.S.C. § 2000e-5(e); ADEA: 29 U.S.C. § 626(d).

the “intent” langvage from the ADEA and only ex-

empted systems which are not “a subterfuge to evade

the purposes of the Act.”® Hence, to transplant Title

VII to the ADEA arena in regard to the intent issue ig-

nores the deliberate omission in the ADEA, and the

EEOC regulations, of the requirement, found only in

Title VII, that grievants challenging a seniority system

on age grounds must prove discriminatory intent.

In their misguided invocation of Title VII authority

on the intent issue, the lower courts have undermined

two established lines of cases decided under the ADEA.

First, no less than eight federal circuits have adopted,

and none have rejected, the view that an employment

policy which is shown to have a disadvantageous impact

on older workers constitutes a violation of the ADEA,

even if there is no showing that the employer had a dis-

criminatory intent in implementing the policy. This

Court has not rejected this view, despite having had the

opportunity to do so. See Geller v. Markham, 635 F.2d

1027 (2d Cir. 1980), cert. denied, 451 U.S. 945 (1981).

See also Holt v. Gamewell Corp., 797 F.2d 36 (1st Cir.

1986); EEOC v. Western Electric Co., 713 F.2d 1011

(4th Cir. 1983); Thornborough v. Columbus and Green-

ville Railroad Co., 760 F.2d 633 (5th Cir. 1985); Left-

wich v. Harris-Stowe State College, 702 F.2d 686 (8th

Cir. 1983); Kelly v. American Standard, 640 F.2d 974

(9th Cir. 1981); EEOC v. Sandia Corp., 639 F.2d 600

(10th Cir. 1980); Allison v. Western Union Telegraph

Co., 680 F.2d 1318 (11th Cir. 1982). In the absence of

explicit language in Section 4(f)(2) of the ADEA or

the EEOC’s regulations, it is not reasonable to impose

an “intent” requirement in this case, particularly in the

face of overwhelming evidence that Pan Am’s pilot

seniority system has a severely adverse impact on older

pilots.

®See 113 Cong. Rec. 31,254 (statement of Sen. Yarborough) ;

Id. at 34,752 (statement of Rep. Dwyer).

Second, even if this Court determines that Section

4(f) (2) does carry some “intent” requirement, it is a

matter of established law in other circuits that such in-

tent can be proven by circumstantial evidence:

To be sure, this [i.e., showing discrimination because

of age] can be done in many ways. Direct evidence

of discriminatory intent, e.g., a paper scrap with the

notation “lay-off—too old” beside a plaintiff’s name,

would of course suffice. (But) circumstantial evi-

dence of employer subterfuge also would suffice so

long as it serves the general purpose of supporting

the asserted proposition and excluding other prop-

ositions.

Williams v. General Motors Corp., 656 F.2d 120, 130

(5th Cir. 1981).

Finally, the policy reasons for excluding the “intent”

requirement from the ADEA’s seniority system exemp-

tion are easily deduced. As this Court has recognized in

Bryant, quoted above, seniority systems by their very

nature are supposed to favor senior, generally older, em-

ployees. Thus, any seniority system which operates, as

Pan Am’s pilot system does, to the detriment of senior

workers should be presumed to have been designed inten-

tionally for that purpose, and should not be extended

preferential treatment under the Section 4(f)(2) ex-

emption.

In sum, the lower courts’ holding on this issue is be-

reft of both precedental and policy support.

Ill. CONCLUSION

For the reasons stated above, the Petition for Writ of

Certiorari should be granted. The lower courts erred in

holding on summary judgment that the Pan Am pilot

seniority system is “bona fide.” The lower courts’ analy-

sis fails to properly focus on the construction and effect

of a merger company’s integrated seniority system, and

whether that merged system is based primarily on length

of service, and instead focuses irrelevantly and illogically

on the two companies’ pre-merger seniority systems. The

lower courts’ analysis also attacks the very underpinnings

of the ADEA by exalting the career expectations of

younger, more junior employees and subordinating those

of older, more senior employees within the ambit of the

ADEA’s protection. Further, the lower courts erred in

holding that the Pan Am system is not a “subterfuge to

evade the ADEA.” The Pan Am pilot system has not

been proven to have been adopted for a legitimate busi-

ness purpose. It has been shown to have been adopted in

reckless and willful disregard of the ADEA.

In sum, this case merits the Court’s attention. The

legal errors committed by the lower courts below, and

discussed herein, threaten the interests of literally mil-

lions of older individuals in every industry whose em-

ployment rights are governed by seniority systems, and

who ultimately depend on a rational application of the

ADEA’s provisions to ensure that those rights are not

taken from them.

Respectfully submit: ed,

JEFFREY C. LONDA

HUTCHESON & GRUNDY

3300 Citicorp Center

Houston, Texas 77002-4579

ROBERT &}. COHN

KEVIN F.. FLYNN

JEFFREY BERNBACH SHAW, PITTMAN, PoTTs

521 Fifth Avenue & TROWBRIDGE

New York, New York 10175 2300 N Street, N.W.

(212) 687-9730 Washington, D.C. 20037

Of Counsel for Petitioners Counsel for Petitioners

APPENDIX

Ee de’)

APPENDIX

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

Index No. 84 CIV.

JURY TRIAL DEMANDELC

JOHN C. Cook, et al.;

Plaintiffs

- against -

PAN AMERICAN WORLD AIRWAYS, INC.; AIR LINE PILOTS

ASSOCIATION, INTERNATIONAL; AIR LINE PILOTS ASSo-

CIATION, PAN AM CHAPTER; FLIGHT ENGINEERS INTER-

NATIONAL ASSOCIATION; FLIGHT ENGINEERS INTERNA-

TIONAL ASSOCIATION, PAN AM CHAPTER;

Defendants.

COMPLAINT

John C. Cook, et al., Plaintiffs, by and through their

attorneys, Butler & Binion, file this Complaint against

Pan American World Airways, Inc. (“Pan Am’); Air

Line Pilots Association, International (“ALPA”); Air

Line Pilots Association, Pan Am Chapter (“ALPA-

PAA”); Flight Engineers International Association

(“FEIA”’); and Flight Engineers International Associa-

tion, Pan Am Chapter (“FEIA-PAA’’). In suppori of

this Complaint, Plaintiffs will show the Court the fol-

lowing:

PARTIES

1. Appendices A and B, attached hereto and made a

part hereof, constitute a list of 489 Plaintiffs compiled

as of the date of filing. Additional Plaintiffs are expected

to “opt in” to this action.

2. Defendant Pan Am has continuously been and is

now a New York corporation. It has no registered agent

listed with the office of the Secretary of State for the

State of New York. Therefore, it may be served with

process by serving an officer of said corporation at its

headquarters offices, located at the Pan Am Building,

200 Park Avenue, New York, New York, 10166. Pan

Am is doing business in and has substantial contacts with

the State of New York and City of New York, where it

is engaged in the aviation business and employs more than

twenty employees. Defendant Pan Am has continuously

been and is now an employer engaged in an industry

affecting commerce within the meaning of Sections 11(b),

(g) and (h) of the ADEA, 29 U.S.C. $$ 630(b), (g) and

(h).

3. Defendant ALPA has continuously been and is now

an unincorporated association which represents pilots em-

ployed by Pan Am and other airlines concerning terms

and conditions of employment. Defendant ALPA is made

up of “chapters,” each of which represents the pilots em-

ployed by a particular airline. Defendant ALPA may be

served with process by serving the president, Secretary/

Treasurer, or a business representative of said associa-

tion at its offices located at 1625 Massachusetts Ave.,

N.W. Washington, D.C. 20036. Defendant ALPA has

substantial contacts with the State of New York and

City of New York. Defendant ALPA has continuously

been and is now a labor organization engaged in an in-

dustry affecting commerce within the meaning of Sec-

tions 11(d and (e) of the ADEA, 29 U.S.C. §§ 630(d)

and (e). Defendant ALPA is subject to and must com-

ply with the Railway Labor Act, 45 U.S.C. § 151 et seq.,

made applicable to the aviation business by 45 U.S.C.

§ 181, et seq.

Vee -

4. Defendant ALPA-PAA has continuously been and

is now an unincorporated association which represents

pilots employed by Pan Am concerning terms and condi-

tions of employment, and is a chapter of Defendant

ALPA. It may be served with process by serving the

President, Secretary/Treasurer, or a business representa-

tive of said association at its offices located at 200 Park

Avenue, New York, New York, 10166. Defendant ALPA-

PAA has continuously been and is now a labor organiza-

tion engaged in an industry affecting commerce within

the meaning of Sections 11(d) and (e) of the ADEA,

29 U.S.C. §§ 630(d) and (e). Defendant ALPA is sub-

ject to and must comply with the Railway Labor Act,

45 U.S.C. § 151 et seg., made applicable to the aviation

business by 45 U.S.C. § 181, et seg.

5. Defendant FEIA has continuously been and is now

an unincorporated association which represents flight en-

gineers employed by Pan Am and other airlines concern-

ing terms and conditions of employment. Defendant FEIA

is made up of “chapters,” each of which represents the

flight engineers employed by a particular airline. De-

fendant FEIA may be served with process by serving the

President, Secretary/Treasurer, or a business representa-

tive of said association at its offices located at 905 - 16th

St., N.W., Washington, D.C. 20006. Defendant FEIA

has continuously been and is now a labor organization

engaged in an industry affecting commerce within the

meaning of Sections 11(d) and (e) of the ADEA, 29

U.S.C. 8§ 630(d) and (e).

6. Defendant FEIA-PAA has continuously been and

is now an unincorporated association which represents

flight engineers employed by Pan Am concerning terms

and conditions of employment, and is a chapter of De-

fendant FEIA. It may be served with process by serv-

ing the President, Secretary/Treasurer, or a business

representative of said association at its offices located at

Roosvelt Field, Garden City, N.Y. Defendant FETA-

PAA has continuously been and is now a labor organiza-

tion engaged in an industry affecting commerce within

the meaning of Sections 11(d) and (e) of the ADEA,

29 U.S.C. $$ 680(d) and (e).

Il.

JURISDICTION AND VENUE

7. Jurisdiction of this Court is invoked to a) 28 U.S.C.

$$ 451 and 1848; b) 28 U.S.C. § 1837; and c) the prin-

ciple of pendant jurisdiction. This is an action author-

ized and instituted pursuant to a) Section 7(c), 29 U.S.C.

§ 626(c), of the Age Discrimination in Employment Act

of 1967, as amended (““ADEA’’), 28 U.S.C. § 621, et seq.,

which incorporates by reference Sections 16(b) and 17,

29 U.S.C. $§ 216(b) and 217, of the Fair Labor Stand-

ards Act of 1938, as amended, 29 U.S.C. § 201 et seq.;

b) the Railway Labor Act, 45 U.S.C. § 151, et seq., as

made applicable to the above-named Defendants by 45

U.S.C. $181, et seg., and c) the New York Human

Rights Law, N.Y. Exec. Law § 290, et seg. (McKinney

1983).

8. The unlawful employment practices alleged below

have been and are now being committed within the State

of New York, in the Southern District. Venue in this

Court is thus proper under 28 U.S.C. §§ 13891(b) and

1392 (a).

III.

FACTUAL ALLEGATIONS

9. Plaintiffs John C. Cook, et al., are all over 40 years

of age, are and/or have been employed as Pilot-Flight

Engineers by Defendant Pan Am, and are members and/

or apprentice members of the Defendants ALPA, ALPA-

PAA, FEIA, and FEIA-PAA. All of the Plaintiffs whose

names are listed in Appendix A filed charges, containing

some or all of the allegations stated herein, in one or more

of the following federal and state equal employment of-

fices: a) the New York Regional Office of the U.S. Equal

Employment Opportunity Commission;' b) the Miami

District Office of the U.S. Equal Employment Opportu-

nity Commission;? ¢c) the San Jose Area Office of the

U.S. Equal Employment Opportunity Commission;* d)

the New Jersey Division on Civil Rights;* e) the New

York State Division of Human Rights;*® and f) the

California Department of Fair Employment and Hous-

ing.© The above-referenced charges were filed between

the dates of April 12, 1983, and September 2, 1983. This

civil action is thus being commenced more than sixty

days after the filing of all of the above-referenced charges,

in compliance with the requirements in Section 7(d) of

the ADEA, 29 U.S.C. § 626(d). The Plaintiffs listed in

Appendix B did not file charges in federal or state equal

employment offices, but are similarly situated individuals,

with similar or identical claims against the Defendants,

and are thus properly joined as Plaintiffs. This Com-

plaint will be amended by the addition to Appendix B

of other similarly situated Plaintiffs “opting in” to the

action.

10. In 1980, Defendant Pan Am merged with Na-

tional Airlines (“National”). Defendants ALPA and

FEIA, through their chapters representing Pan Am and

National pilots and flight engineers (i.e. chapters now

consolidated as Defendants ALPA-PAA and FEIA-

vV Church Street, Room 1501, New York, New York 10007.

? DuPont Plaza Center, Suite 414, 300 Biscayne Boulevard Way,

Miami, Florida 33131.

% Crocker Plaza Building, 84 West Santa Clara, San Jose, Cali-

fornia 95113.

#180 University Avenue, Newark, New Jersey.

5270 Broadway, New York, New York.

6 322 W. First Street, Los Angeles, California 90012.

PAA), submitted to an arbitrator the integration of the

pilot and flight engineer seniority lists of the to-be-merged

companies. Defendant Pan Am expressly reserved the

right to accept or reject the resulting arbitration award,

which was issued on March 12, 1981. However, Defend-

ant Pan Am subsequently accepted and implemented the

Award in its entirety.

11. The pilot seniority list resulting from the arbitra-

tion award was first implemented on a system-wide basis

on March 28, 1983, has been implemented continuously up

until the present time, and will continue indefinitely to

be implemented, by Defendant Pan Am with the active

support and/or acquiescence of Defendants ALPA, ALPA-

PAA, FEIA, and FEIA-PAA. The major characteristics

of Pan Am’s current pilot seniority system are as follows.

First, there are three cockpit positions on Pan Am’s

aircraft: two are pilot positions (Captain and First

Officer), the third is the less rewarding and less lucrative

Flight Engineer position. Under the current Pan Am

pilots seniority system, pilots who worked for National

before the merger of Pan Am and National may not be

“bumped down” to the Flight Engineer position. Pilots

who worked for Pan Am before the merger may be so

demoted.

Second, rather than merging the pilot seniority lists of

Pan Am and National such that the seniority position of

each pilot would depend on his amount of credited ex-

perience, the current pilot seniority list uses a ratio to

insert large numbers of former National pilots under age

40 ahead of older and more experienced Pan Am pilots

over the age of 40.

Third, all pilot furloughs (i.e., layoffs) before 1986

are to proceed according to a one-for-one formula,

whereby equil numbers of former Pan Am and former

National pilots are furloughed, regardless of relative

credited experience or relative position on the seniority

list.

12. On March 28, 1983, Defendant Pan Am caused to

be issued assignments (“assignrhents”) to its flight deck

crew personnel, based on the pilot and flight engineer

seniority system.

13. On June 15, 1988, Defendant Pan Am caused to

be furloughed, under the above-described pilot seniority

system, three of the Plaintiffs named in Appendix A:

Robert L. Jarboe, Clifford E. Cool, and Richard V. Paul.

IV.

LEGAL CAUSES OF ACTION

14. By using and adopting, and by indefinitely con-

tinuing to use and adopt, the above-described seniority

system in making employment decisions, Defendant Pan

Am has limited, segregated and classified the Plaintiffs

so as to deprive or tend to deprive them of employment

opportunities and otherwise adversely affect Plaintiffs’

status as employees, because of Plaintiffs’ age, and will

continue to do so, in willful and continuous violation of

Section 4{a) of the ADEA, 29 U.S.C. § 628(a).

15. By using and adopting, and by indefinitely con-

tinuing to use and adopt, the above-described seniority

system in making employment decisions, Defendant Pan

has discriminated and will continue to discriminate

against Plaintiffs in compensation and terms, conditions

and privileges of employment because of age, in willful

and continuous violation of Section 296 of the New York

Human Rights Law, N.Y. Exec. Law § 296.

16. By actively supporting and/or acquiescing in, and

by indefinitely continuing to actively support and/or

acquiesce in, the above-described seniority system, De-

fendants ALPA, ALPA-PAA, FEIA, and FEIA-PAA

have limited, segregated, and classified their membership

so as to deprive or tend to deprive the Plaintiffs of em-

ployment opportunities, limit Plaintiffs’ employment op-

portunities, and otherwise adversely affect the Plaintiffs’

status as employees, and will continue to do so, on the

basis of their age, in willful and continuous violation of

Section 4(c) of the ADEA, 29 U.S.C. § 623(c), and Sec-

tion 296 of the New York Human Rights Law, N.Y.

Exec. Law § 296.

17. By actively supporting and/or acquiescing in, and

by indefinitely continuing the support and/or acquiesce

in, the above-described seniority system, Defendants

ALPA, ALPA-PAA, FEIA, and FEIA-PAA have dis-

eriminated and will continue to discriminate against

Plaintiffs because of age, in willful and continuous vio-

lation of Section 296 of the New York Human Rights

Law, N.Y. Exec. Law § 296.

18. By actively supporting and/or acquiescing in, and

by indefinitely continuing the support and/or acquiesce

in, the policies and practices complained of in the above

paragraphs, the representation of Plaintiffs’ interests by

Defendants ALPA, ALPA-PAA, FEIA, and FEIA-PAA

has been and will continue to be arbitrary, discriminatory

and/or in bad faith. Defendants have thereby breached

their duty under the Railway Labor Act, 29 U.S.C.

§ 151 et seq., to fairly represent the interests of the

Plaintiffs.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs respectfully request that this

Court:

A. Grant preliminary and permanent injunctions pro-

hibiting defendants Pan Am, ALPA, ALPA-PAA, FEIA,

and FEIA-PA from taking or causing to be taken any

actions based on the illegal seniority system described

herein, and correcting all past actions taken on the basis

thereof, and further ordering Defendant to construct and

implement a seniority system which eradicates the effects

of the past and present unlawful employment practices

described herein.

B. Order Defendants Pan Am, ALPA, ALPA-PAA,

FEIA, and FEIA-PAA to make Plaintiffs whole by an

award of damages.

C. Order defendants Pan Am, ALPA, ALPA-FEIA,

FEIA, and FEIA-PAA to pay liquidated damages to

Plaintiffs, in light of Defendants’ willful violation of the

law.

D. Order Defendants to pay Plaintiffs’ attorneys’ fees

and costs, including court costs.

E. Grant such other and further relief as this Court

may deem just and proper.

Respectfully submitted,

BUTLER & BINION

/s/ Jeffrey C. Londa

By: JEFFREY C. LONDA

1600 Allied Bank Plaza

Houston, Texas 77002

(713) 237- 3270

ROBERT E. COHN

KEVIN F. FLYNN

1747 Pennsylvania Ave., N.W.

Suite 900

Washington, D.C. 20006

(202) 466-6900

Counsel for Plaintiffs

Of Counsel:

/s/ Jeffrey Bernbach

JEFFREY BERNBACH

521 Fifth Avenue

New York, New York 10175

(212) 687-9730

JURY TRIAL

Plaintiffs request a jury trial on all questions of fact

raised by their Complaint.

/s/ Jeffrey C. Londa

JEFFREY C. LONDA

Dated, March _, 1984

10a

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

Sa hh el OND

Index No. 84 CIV.

JOHN C. Cook, et al.;

- against - Plaintiffs

PAN AMERICAN WORLD AIRWAYS, INC.; AIR LINE PILOTS

ASSOCIATION, INTERNATIONAL; AIR LINE PILOTS ASsso-

CIATION, PAN AM CHAPTER; FLIGHT ENGINEERS INTER-

NATIONAL ASSOCIATION; FLIGHT ENGINEERS INTERNA-

TIONAL ASSOCIATION, PAN AM CHAPTER;

Defendants.

VERIFICATION OF COMPLAINT

STATE OF NEW YORK )

= *

COUNTY OF NEW YORK )

JOHN C. COOK, being duly sworn, deposes and says:

1. I am one of the Plaintiffs in the above action.

2. The facts pleaded in the foregoing Complaint are

true and correct to the best of my knowledge, informa-

tion and belief.

/s/ John C. Cook

JOHN C. Cook

Sworn to before me this

14th day of March, 1984

/s/ Linda L. Natoli

Notary Public

Linba L. NATOLI

Notary Public, State of New York

No. 24-4743274

Qualified in Kings County

Commission Expires March 30, 1985

lla

MERGER OF PAN AM AND ARBITRATION

NATIONAL AIRLINES FLIGHT

DECK CREW MEMBER

SENIORITY LISTS

AWARD

TABLE OF CONTENTS

Page

I. INTEGRATED SENIORITY LISTS .................. 1

Sa Sn sania biblinanetienmeabe 1

EI oo peieeiapiaeuintentannens 2

i el, I a EN «Ce eS A 3

III. RESOLUTION OF DISPUTES ................0000...... 5

IV. CONDITIONS AND RESTRICTIONS ..............

I I i estat 6

B. Restriction on 747 and DC-10-30 Captain

EET IGEPS SSN eee Es SOC doa 6

i a slaahanieibunenmanes 7

ESAS Re SS Ce 7

Ne a isidssianseabdomneentes 7

F. Protection of Flying Until January 1, 1986.. 8

G. Sale of B-747 or DC-10-30 Prior to January

Bis FIED dpindiidlidesteinsibadintdekstiacdietideakbthmiacddgbbedaloubans 11

H. Sale of L-1011 or DC-10-10 Prior to January

CNL eee etn Ge eo Acre We ere see 12

Bh | MU a 13

V. MISCELLANEOUS PROVISIONS. .....W00000000...... 13

12a

AWARD

I. INTEGRATED SENIORITY LISTS

There shall be two integrated seniority lists, one in-

cluding National Pilcts and all persons on the Pan Am

Pilots’ System Seniority List on January 18, 1980, and

the other including National Flight Engineers and all

persons on the Pan Am Pilots’ System Seniority List on

January 18, 1980.

A. Pilot List. This list shall be constructed as follows:

For airmen hired before February 22, 1964, by

date of hire.

Thereafter, straight length of service through

D. J. Slattery (P1289).

Beginning immediately after Slattery, insert Na-

tional Pilots fror- Seattle (N231) through God-

win (N241).

Immediately below Godwin, begin a ratio in

sequence of 1 National, 3 Pan Am (repeated 3

times), then 1 National and 4 Pan Am, then 1-3

4 times, 1-4 once, and so on through Southard

(N496) and Bandy (P2112). Exception: Add

1 Pan Am Pilot at a point one-quarter of the

way down the ratio portion of the list, 1 more

Pan Am at the halfway point, 1 more Pan Am at

the three-quarter point.

Beginning immediately below Southard, resume

straight length of service for all those in active

service as of January 18, 1980.

Those on furlough on January 18, 1980, with re-

call rights, shall be slotted into the list at the

time of their recall, based on the relative length

of service of the others on the list at that time.

Exception: Those on furlough who had been

13a

given notice of recall before January 18, 1980,

and either had actually resumed work shortly

after that date or had their scheduled recalls

4 cancelled upon announcement of the merger,

shall, upon recall, be slotted into the list based on

the relative length of service of the others on the

list as of January 18, 1980. This covers those on

‘ Pan Am roster McConnell (P2232) through

Myers (P2265).

B. Engineer List.

‘ 1. Straight date of hire for all NAL Flight Engi-

i neers hired before February 22, 1964 and all

; PAA Flight Engineers hired prior to February

22, 1964; followed by

2. All PAA Pilots hired prior to February 22, 1964,

and who, by virtue of the Pan Am Crew Comple-

ment Agreement dated May 13, 1968, have a

right to bid Flight Engineer positions; followed

3. All remaining NAL Flight Engineers, and all

remaining PAA Pilots through Myers (P2265)

merged by length of service on January 18, 1980;

followed by

4. Those remaining PAA Pilots on furlough on

January 18, 1980 with recall rights, who shall be

slotted into the list at the time of their recall,

based upon the relative length of service of the

others at that time.

II. DEFINITIONS

As used hereinafter, the following terms shall have

the meanings indicated:

A. A “NAL” Pilot is a Pilot who was in the employ

of National Airlines prior to January 18, 1980. A “NAL

l4a

Flight Engineer” is a Flight Engineer who was in the

employ of National Airlines prior to that date. A “PAA

Pilot” is a Pilot who was in the employ of Pan American

prior to that date. Unless the context otherwise pro-

vides, that term includes all individuals on furlough as

of that date and those individuals hired as Pilots who

are now serving as Flight Engineers on Pan Am. A

“PAA Flight Engineer” refers to the PAA Appendix A

Flight Engineers. The term “group” has reference to

all of either the NAL or PAA Pilots or NAL or PAA

Flight Engineers in the employ of their respective com-

panies prior to January 18, 1980.

B. “Status” means the state or condition of a Cap-

tain, First Officer or Flight Engineer.

C. “Equipment” means a particular type of aircraft,

i.e., B-747, DC-10, L-1011 or B-727.

D. “Category” or “Position”, used interchangeably

herein, means an airman position of Captain, First Of-

ficer or Flight Engineer in particular equipment, i.e.,

B-747 First Officer, B-727 Captain, or L-1011 Flight

Engineer.

E. “Vacancy” means an available position not yet

occupied by an airman.

F. “Bid” means the contractual process by which

Pilots and Flight Engineers at the time of a proffer,

affirmatively express their desire for a given vacancy or

vacancies. Following the receipt of bids, the Company

awards vacancies.

G. “Assignment” means the contractual process by

which Pilots or Flight Engineers are involuntarily given

positions by the Company.

H. “Reduction in Force” means the contractual proc-

ess by which the Company reduces the number of posi-

tions in a given status and equipment.

15a

I. “Bump” means the contractual process by which a

more senior Pilot or Flight Engineer may exercise his

seniority to displace a more junior Pilot or Flight Engi-

neer from the junier Pilot’s or Flight Engineer’s posi-

tion.

J. “Displacement” means the contractual process by

which a Pilot or Flight Engineer loses or relinquishes

his position as a result of either a reduction in force or

a bump.

K. “Furlough” means the process by which airmen

are removed from the Company’s active foree by reason

of lack of work.

L. Company shall refer to Pan American World Air-

ways.

M. “Proffer” means the process by which the Com-

pany makes vacancies available for bid.

N. “Base” means a location at which Pilots and

Flight Engineers are stationed or domiciled and from

which the Company conducts flight operations in one or

more type(s) of equipment.

O. “Replacement aircraft” means any new type of

aircraft acquired by the Company for use in lieu of any

similar (in terms of range and capacity) aircraft now in

the fleet. Specifically, with regard to the B-727, replace-

ment aircraft may include B-737, B-757, B-767, A-300

and/or DC-9 aircraft, without being limited to those

types.

Ill. RESOLUTION OF DISABILITY

Any dispute relating to the application, implementa-

tion, or interpretation of this Award shall be initially

presented to a standing commtitee composed of two (2)

NAL Pilot, two (2) PAA Pilot, two (2) NAL Flight

Engineer, and two (2) PAA Flight Engineer Merger

Representatives, to be appointed by their respective Mas-

16a

ter Executive Councils (or appropriate FEIA bodies)

immediately following the issuance of this Award. In the

event that the dispute cannot be resolved by the Com-

mittee by majority vote and reduced to writing and

signed, it shall be submitted for resolution to a neutral

arbitrator. The neutral arbitrator shall be one mutually

agreed upon by all the parties, if he is available. If he is

not, nine (9) names shall be drawn from a hat contain-

ing the names of all arbitrators on the then-effective

ALPA approved list. The parties shall then engage in

the striking procedure set forth in ALPA’s Merger Pol-

icy. All disputes resolved under these procedures, either

by standing committee or arbitration, shall become a

part of the Award and shall be final and binding.

Any dispute arising between the Merger Representa-

tives on the one hand and the Company on the other shall

be arbitrated. The method of selecting the arbitrator

shall be as specified in the Agreement. between the Com-

pany and the Air Line Pilots Association, International

In no event shall System Board of Adjustment proce-

dures be utilized to resolve such disputes, unless all af-

fected Merger Representatives agree. In the event of the

death, resignation or other inability of any Merger Kep-

resentative to serve, the other Merger Representative

from that group (NAL Pilot, PAA Pilot, NAL Flight

Engineer, PAA Flight Engineer) shall have the right to

designate a successor representative from the group he

represents.

IV. CONDITIONS AND RESTRICTIONS

A. No system flush. Pilots or Engineers holding base

station category awards on the date of this Award may

not be displaced by Pilots or Engineers formerly em-

ployed by the other airline, regardless of system senior-

ity, unless specifically permitted by a provision in this

Award, nor shall the expiration of the conditions and

restrictions set forth herein, in themselves, be the oc-

17a

easion for the displacement or excess of any Pilot or

Engineer from a base station category award held on

such expiration date.

B. Restriction on 747 and DC-10-30 Captain Vacan-

cies. Subsequent to January 1, 1986, so long as the sum

of 747 and DC-10-30 aircraft does not exceed 51, all

Captain vacancies on such aircraft shall be allocated on

a ratio of 9.66 Pan Am to 1 National, as follows: 10 Pan

Am to 1 National, then 9 Pan Am to 1 National, then

10 Pan Am to 1 National, then repeat same sequence.

(See explanatory comments. )

All such Captain vacancies exceeding 437 (the num-

ber corresponding to 45 747’s and 6 DC-10-30’s) shall be

awarded by system seniority.

(No allocation is provided as to First Officer or

Flight Engineer seats on 747 and DC-10-30 aircraft.

After January 1, 1986, all of those vacancies shall be

awarded by system seniority. )

C. Cross bidding. As before on each airline. Pan Am

airmen continue cross-bidding practices vis-a-vis each

other, but Pan Am Pilots cannot bump National Engi-

neers. National Pilots cannot bid Engineer positions,

National Engineers cannot bid Pilot positions. National

Engineers to have some rights as Pan Am Appendix A

Engineers against being displaced from Engineer seats

by Pilots.

D. New flying. Up until January 1, 1986, except as

otherwise provided in this Award, all vacancies above the

reserved levels on 747, 1011, DC-10 and 727 aircraft

and all vacancies on other types of aircraft which may

be placed in service, shall be awarded in the ratio of

2 Pan Am airmen to 1 National airman.

E. Furloughs. After January 1, 1986, furloughs go

by the list. Up until January 1, 1986, furloughs shall be

made in the following sequence:

18a

1. National airmen in the “constructive notice”

category (defined below) and any Pan Am air-

meri who have heen recalled from furlough and |

slotted into the list below some or all of the con-

structive notice airmen. As between those two

groups, the furloughs will be proportionate to

the numbers in each group. (Examples: If

there are 100 in the constructive notice group

and 200 returned furloughees below them on the

list, the sequence would be i National to 2 Pan

Am; if there were 150 such returned fur-

loughees, the sequence would be 1 National, 2

Pan Am, 1 National, 2 Pan Am; if there were

50 such returned furloughees, the sequence would

be 2 National, 1 Pan Am.)

2. Above those two groups, the furloughs shall be

on a one-to-one basis, in the following sequence:

3 Pan Am airmen, then 2 National Pilots and

1 National Engineer.

3. Recalls of all those thus furloughed shall be in

the inverse order of the furloughs.

- ; peter yy ‘Ghaci’s szpdeiak

Definition of “constructive notice” airmen. Includes

all National Engineers beginning with Conley (N275)

and all National Pilots beginning with Chiabotti (N583).

F. Protection of flying until January 1, 1986.

1. Protection of 747, 1011 and DC-10 flying.

Category vacancies up to the numbers specified

below, and any additional vacancies occasioned

by the number of aircraft listed, shall be re-

served for the airmen of the respective airlines

which flew the aircraft prior to the merger:

19a

Category Aircraft Number Vacancies

Captain 747 45 396

F/O 747 45 513

FEO 747 45 527

Captain 1011 12 97

F/O 1011 12 114

FEO 1011 12 108

Captain DC-10 16 110

F/O DC-10 16 98

FEO DC-10 16 108

Vacancies in excess of those listed above which

are created by additional aircraft in any of these

categories above the number of aircraft listed

(45, 12, or 16) shall be allocated in the propor-

tion of 2 Pan Am airmen to 1 National airman

as specified in the New Flying provision.

2. Protection of 727 flying.

(a)

(b)

All B-727 flying (Captains, F/O’s and

FEO’s) in connection with the IGS flying

now based in Berlin shall be reserved to the

Pan Am Pilots & FEO. The total number of

Captain, F/O, and FEO positions thereby

reserved and occupied at any time shall be

counted as Pan Am positions in the opera-

tion of the ratio provisions below.

All awarding of vacancies, reductions in

force, or other staffing changes in the B-727

(or any replacement aircraft) shall be accom-

plished in order to allocate Captain, F/O

and FEO positions to the two groups in ac-

(c)

(d)

20a

cordance with the ratio which most closely

approximates the following:

National Pan Am

Captain 242 86

F/O 414 86

FEO 219 91

On any particular proffer, vacancies shall be

awarded first to the airmen of one group or

the other to the extent necessary to achieve

or maintain the desired ratio(s) below the

levels specified in (b) above. Once the

ratio(s) is achieved, awards up to the spec-

ified levels shall then go to the groups in

accordance with the ratio(s) set forth in

(b) above. Additional vacancies above the

levels set forth above shall be awarded in

accordance with the proportion of 2 Pan Am

to 1 National, as specified in the New Fly-

ing provisions.

If there is a reduction in the number of

Captain F/O and/or FEO positions on the

B-727, such reduction shall be accomplished

in the following manner: The allocation of

displacements between the two groups shall

be determined by the reverse order in which

the respective groups achieved such positions

by application of the New Flying provision,

until the levels specified in (b) above are

reached. Thereafter displacements shal! be

allocated in accordance with the ratio set

forth in (b) above.

G. Sale of B-747 or DC-10-30 prior to January 1,

1986. In the event that, prior to January 1, 1986, the

Company sells or otherwise withdraws from service any

21a

B-747 or DC-10-30 aircraft in active service as of the

effective date of this Award, and there remain in service

fewer than 45 B-747’s or 5 DC-10-30’s (or in the event

the DC-10-30 now being withheld from service is not in

service at the time of a DC-10-30 sale, 4 DC-10-30’s),

the affected group(s) shall be entitled to the following:

1. If the total of Pan Am airmen in B-747 Captain,

F/O or FEO positions falls below 396, 513, or

527, respectively, and/or

2. If the total of National airmen in DC-10-30 Cap-

tain, F/O or FEO positions falls below 34 (or in

the event of the DC-10-30 now being withheld

from service is not in service at the time of a

DC-10-30 sale, 28),

the affected group shall be awarded Captain, F/O and/or

FEO vacancies from the other group’s positions on the

other equipment up to the number by which the sale or

withdrawal has reduced the affected group’s positions;

provided, however, that if there are insufficient positions

over and above the numbers for the other group set forth

in 1. and 2. to restore the reduction in the affected

group’s positions, the shortage shall be shared propor-

tionally between the two groups, using for the propor-

tions the figures listed above. Subsequent vacancies shall

be awarded to maintain in proportion any deficiencies

until the numbers set forth in 1. and 2. above are again

reached.

This provision shall not operate retroactively to give

rise to any entitlements based on the sale or holding out

of service of any aircraft before the effective date of

this Award. It only applies to the sale or holding out of

service of aircraft taking place after the effective date

of this Award.

The term “affected airman group” means the number

by which the total number of airmen flying that type of

22a

aircraft is reduced by the sale or withdrawal from serv-

ice in question.

H. Sale of L-1001 or DC-10-10 aircraft prior to Janu-

ary 1, 1986. In the event that, prior to January 1, 1986,

the Company sells or otherwise withdraws from service

any L-1011 or DC-10-10 aircraft in active service as of

the effective date of this Award, so that there remain in

service fewer than 12 L-1011’s or 11 DC-10-10’s, the

affected group(s) shall be entitled to the following:

1. If the total of Pan Am airmen in L-1011 Cap-

tain, F/O or FEO positions fails below 97, 114

and 108, respectively, and/or

2. The total of National airmen in DC-10-10 Cap-

tain, F/O or FEO positions falls below 76, 64

and 74, respectively,

the affected group shall be awarded Captain, F/O and/or

FEO vacancies from the other group’s positions on the

other equipment up to the number by which the sale or

withdrawal has reduced the affected group’s positions;

provided, however, that if there are insufficient positions

over and above the numbers for the other group set forth

in 1. and 2. to restore the reduction in the affected

group’s positions, the shortage shall be shared propor-

tionally between the two groups, using for the propor-

tions the figures listed above. Subsequent vacancies shall

C. If there are vacancies for which no bids are re-

ceived and assignments must be made by the Company,

the vacancies shall be assigned by inverse order of senior-

ity in accordance with the applicable provisions of the

then current Working Agreements.

D. In the event a National Pilot does not have a

seniority number sufficient to permit him to bid and hold

a Pilot position, he shall, nonetheless, have a prior right

23a

to a First Officer position in the most junior Pilot equip-

ment until such time as he is furloughed in accordance

with the provisions of this Award.

In the event a National Pilot on furlough is recalled

to duty, he shall have a prior rijut to a First Officer

position even though his seniority number is not sufficient

to permit him to bid and hold such a position.

Subject to the foregoing, an airman on furlough, whose

recall is anticipated due to quota calculations, shall be

proffered system vacancies concurrent with active airmen

and may execute his system seniority accordingly.

/s/ Lewis M. Gill

LEwIs M. GILL, Arbitrator

March 12, 1981

24a

AFFIDAVIT

THE STATE OF TEXAS _)

)

COUNTY OF HARRIS )

BEFORE ME, the undersigned authority, on this day

personally appeared Ira Stuart Chorush who under oath

did state the following:

My name is Ira Stuart Chorush. I am over the age of

twenty-one years and am fully competent to make this

affidavit.

I received a Ph.D. degree in statistical genetics from

Purdue University in 1970 and have spent the last six-

teen years employed as a statistical consultant. Much of

my work during that time has been devoted to statistical

analysis of employment decisions. Further details of my

education and employment history are available in At-

tachment 1 which is attached to this affidavit.

I have been retained by Jeffrey C. Londa of the law

firm of Butler & Binton, whe is representing a group of

airplane pilots who are challenging the pilot seniority

system which is based on the Gill arbitration award and

which was adopted and implemented by Pan Am. It is

my understanding that Mr. Londa and his clients claim

that such system operates to the detriment of older pilots.

I have conducted several analyses which are probative of

this claim. The foliowing is a correct description of my

work in this matter. To the best of my knowledge and

belief, the analyses contained herein have been conducted

according to generally accepted principles of statistics.

The data used to conduct this analysis are a listing of

airplane pilots employed by Pan Am ordered by date of

hire. This date may be the date hired by either Pan Am

or National Airlines, depending upon which predecessor

airline the airman worked for. In addition, the date of

‘

25a

birth of each airman and his pilot seniority number by

virtue of the Gill award are used. A listing of the data

used is attached to this affidavit as Attachment 2.*

Of primary interest in the section of the list where

airmen have been assigned seniority numbers that are

not consistent with their date of hire. These anomalies

occur from position 1035 on the list (page 14 of Attach-

ment 2, airman W. C. Swift) to position 2096 (page 30

of Attachment 2, airman R. B. Southard). Within these

positions it is true that the more recently hired airmen

were never assigned pilot seniority numbers that would

make them less senior than they would have been had

date of hire been used as the sole basis for pilot seniority.

Indeed, in many cases, pilot seniority is substantially

greater for more recently hired pilots.

As an ilustration, consider page 25 of Attachment 2.

Airman W. H. Sanford would have been pilot number

1843 if length of service had been used. Instead, he is

pilot number 2083. In contrast, Airman R. D. Sellars

would have been pilot number 1855 if length of service

were the criterion; instead, he is pilot number 1142.

Thus, Sellars is 941 positions above Sanford on the sen-

iority list despite having less service with his carrier.

It is likewise possible to examine the effects of the Gill

award, as adopted and implemented by Pan Am, upon

older pilots. Airman Sanford was born in 1937 while

Airman Sellars was born in 1944. Thus, the older air-

man, Sanford, lost 240 positions in seniority vis-a-vis his

length of service (1843 to 2083) while the younger Sel-

lars gained 713 positions (1855 to 1142).

It is my purpose to examine whether the inversions in

the seniority list that were the result of the Gill award,

as adopted and implemented by Pan Am, seemed to re-

sult in a systematic deleterious effect upon older airmen.

For this purpose, I defined airmen born before 1940 as

* NoTE: Attachment 2 is set forth in Joint Appendix at 303-335.

26a

older, while airmen born in 1940 cr later were younger.

This would make older airmen 40 years old or more at

the time of the merger of National Airlines and Pan Am,

while younger airmen were under 40. The actual pilot

seniority number and the length of service seniority

number were compared for each airman, in the area of

the seniority list where inversions occur, and the differ-

ence between the two was calculated. In all, 267 airmen

gained seniority positions as a result of the Gill award,

as adopted and implemented by Pan Am, while 916 air-

men lost seniority. The first question that might be

asked is whether older and younger pilots fared simi-

larly under Pan Am’s pilot seniority system which is

based on the Gill award.

TABLE 1

Older Pilots Younger Pilots

Airman gained seniority 93 * 174 ’ f

Airman lost seniority we" 137 **

Chi-square = 269

* All of these airmen worked for National before the National/

Pan Am merger.

** All of these airmen worked for Pan Am before the National/

Pan Am merger.

Table 1, above, shows that 174 younger pilots fared bet-

ter under Pan Am’s system which is based on the Gill

award while 137 fared worse. Conversely, only 93 older

pilots gained under such system while 779 lost seniority.

Thus, 55.9% of the younger airmen benefitted, while

only 10.7% of the older airmen did.

The above data was subjected to a chi-square test to

determine whether statistically significant discrepancy

existed. A chi-square value of 269 was obtained which

has a probability of less than one in one million of oc-

eurring by chance. The conclusion is that it is exceed-

ingly unlikely that the phenomenon arises by chance;

younger airmen fared substantially better than older

airmen under the Gill award.

27a

A second question that should be asked is whether the

average improvement in younger airmen’s seniority is

significantly greater than zero; conversely, whether the

decline in older airmen’s seniority is likewise greater

than zero. It has already been stated that 174 younger

airmen gained seniority while 137 lost seniority. For

each airman, the number of positions gained or lost was

calculated. The mean (average) change in seniority was

computed with gains in seniority assigned a plus (+)

sign and losses a minus (—) sign. In addition, the

standard deviation of the mean was calculated. Results

are shown in Table 2.

TABLE 2

Mean Gain in Seniority for Younger Airmen

Average number of ranks increase 167.045

Standard deviation of mean 17.380

t 9.611

The average younger airman advanced more than 167

ranks in the seniority list as a result of Pan Am’s sys-

tem which is based on the Gill award. The standard

deviation was 17.380 which leads to a t value of 9.611.

The probability of obtaining so high a t value by chance

is less than one in one million.

With the number of airmen involved in this analysis,

the t statistic takes on many of the characteristics asso-

ciated with the normal distribution. Thus, the t value of

9.611 has approximately the same meaning as a dis-

crepancy of 9.611 standard deviations between zero, the

hypothesized value and 167, the actual number of ranks

advanced.

It should therefore not be too surprising that the re-

sult for older airmen is opposite and likewise highly

significant.

TABLE 3

Mean loss in seniority for Older Airmen

Average Number of ranks decrease — 59.455

Standard deviation of mean 8.238

t 7.218

28a

As shown in Table 3, the average older airman lost more

than 59 positions in the seniority list. With a standard

deviation of 8.238, a t value of —7.218 was obtained.

This has a probability of occurring by chance of less

than one in one hundred thousand. It is therefore ex-

tremely unlikely that the average 59 positions lost repre-

sent a random event.

In summary then, the effects of Pan Am’s seniority

system which is based on the Gill award have been exam-

ined relative to age. It can be concluded that the results

emphatically indicate that Pan Am’s seniority system

which is based on the Gill award has acted and acts to

the detriment of older airmen (i.e., airmen over 40 years

of age).

/s/ Ira Stuart Chorush

IRA STUART CHORUSH

SUBSCRIBED AND SWORN TO BEFORE ME by

the said Ira Stuart Chorush on this the 14th day of July,

1986, to certify my hand and seal of office.

/s/ Nancy L. Dean

Notary Public in and for the

State of TEXAS

My Commission Expires:

NANCY L. DEAN

Notary Public, State of Texas

My Commission Expires May 16, 1987

Bonded by Lovett Agency, Lawyers Surety Corp.

JCL/PAPF3/3

24a

IRA STUART CHORUSH, Ph.D.

Education

Ph.D., Statistical Genetics, Purdue University, West

Lafayette, Indiana, 1970

M.Sce., Statistical Genetics, Purdue University, West

Lafayette, Indiana, 1968

B.Se., Mathematics and Genetics, McGill University,

Montreal, P.O. Canada, 1965

Consulting Experience

Fourteen years’ consulting experience

Pertinent Experience

Consultant, St. Joseph’s Hospital. Aided hospital in

planning for future services by forecasting demands

for different specialized treatments.

Consultant, Major metropolitan newspaper. Worked

with large metropolitan newspaper to establish most

cost-effective delivery system of product. In addi-

tion, developed forecasting system to predict opera-

tional variables of concern to the newspaper.

Technical Coordinator, Federal Reserve Bank of

Dallas. Worked with the Federal Reserve Bank and

with the eight major Dallas-Fort Worth commercial

banks to determine, by computer simulation, the

probable impact on each bank of the establishment

of a Regional Check Processing Center in the area.

Technical Coordinator, National candy manufac-

turer. Designed and helped implement an inventory

comtrol, production scheduling and standard cost

syscem.

Senior Consultant, United Virginia Bankshares.

Established optimum check clearing methodology for

30a

bank holding company and developed model to eval-

uate clearing alternatives.

In addition, general consulting services have been fur-

nished on behalf of the following organizations:

American National Bank—Chicago

Bank of the Southwest

Baker & Botts

Baylor College of Medicine

City of Dallas, Texas

City of Denton, Texas

City of Garland, Texas

Citicorp

Dallas-Fort Worth Clearinghouse Association

First National Bank of Atlanta

First National Bank of Dallas

First National Bank of Fort Worth

Friendswood Development Corporation

Fulbright & Jaworski

Houston Lighting & Power

IBM

Lewis & Coker, Inc.

Mitsubishi, Ltd.

Morton Southwest

Rapides Packing Company

Texas Commerce Bank

Texas Instruments

TRW/ Mission

Vinson & Elkins

EEO Consulting Experience

Prudential Insurance Company. Development em-

ployment model in conjunction with other analyses

to determine whether discrimination against Blacks

had occurred. Testified as expert witness.

National Supply Company. Developed analyses to

determine whether discrimination against females

has occurred. Testified as expert witness.

3la

Fluor Engineers and Constructors. Development

analyses to determine whether discrimination based

on national origin had occurred in the hiring process.

Testified as expert witness.

In addition, EEO consulting services have been furnished

on behalf of the following organizations:

American Cast Iron Pipe Company

Aramco Services Corporation

Arthur Brothers

Bethlehem Steel

Central Freight Lines

Champion Paper Company

Chemetron Corporation

Cities Service Company

Continental Trailwavs

~ Curtin Matheson Scientific

Drilco

Federal Reserve Bank of Dallas

Houston Chronicle

Houston Lighting & Power

Houston Police Department

IBM

J. P. Stevens

Lockheed

Memorial Hospital System

Petrotex

Republic Steel

Rockwell

Shell Oil

Southern Pacific Railroad

State Farm

Swift Packing Company

Texas Commerce Bank

United Gas Pipeline

U.S. Department of Justice

Weaver Oil & Gas

Western Electric

32a

Wilson Industries

Zapata

Served as expert counsel to the following law firms:

Baker & Botts (Houston)

Fulbright & Jaworski (Houston)

Butler, Binion, Rice, Cook & Knapp (Houston)

Andrews, Kurth, Campbell & Jones (Houston)

Hutcheson & Grundy (Houston)

Hewett, Johnson, Swanson & Barbee (Dallas)

Thomas, Taliaferro, Burr, Foreman & Murray (Bir-

mingham)

Publications and Awards

Author of six papers dealing with statistical genetics.

Awarded membership in Sigma Xi.

33a

AFFIDAVIT

DISTRICT OF COLUMBIA) | s.s.

BEFORE ME, the undersigned authority, on this day

personally appeared Mr. Harold M. Gay, Jr., who under

oath did state as follows:

1. My name is Harold M. Gay, Jr. I am over the age

of twenty-one years and fully competent to make this

affidavit.

2. I am presently 44 years of age. I was born on

January 31, 1942. I have been employed by Pan Amer-

ican World Airways, Inc. (‘Pan Am’’) as a pilot since

December 20, 1965. I am a member and an officer of the

Air Line Pilots Association (“ALPA’’), currently serving

as Chairman, Air Line Pilots Association, Pan American

World Airways, Inc. (““ALPA-PAA’’), Local Executive

Council #6.

3. I have read Plaintiffs’ Complaint dated March 7,

1984. I am familiar with the pilot seniority system re-

ferred to in the Complaint, with events concerning its

construction and implementation, and particularly with

its subsequent impact on all pilots in the employ of

Pan Am.

4. Before the merger of Pan Am and National, Pan

Am’s fleet consisted of the Boeing 747 (‘“B-747”), Lock-

heed 1011 (“L-1011”) and Boeing 727 (“B-727”). Na-

tional’s fleet consisted of the DC-10 and B-727. Under

the Gill Award, the terms of which Pan Am adopted as

its pilot seniority system, the pre-merger assignments of

Pan Am airmen on the B-747 and L-1011 and former

National airmen on the DC-10 were to be preserved until

January 1, 1986. A “fence” was thus constructed which

prevented pre-merger Pan Am airmen from obtaining

assignments on the DC-10 and pre-merger National air-

men from obtaining assignments on the B-747 and

34a

L-1011. The “fence” was constructed so that during the

pre-1986 ‘freeze” period, the members of the respective

pilot groups would receive the same intra-group promo-

tions and demotions as they would have absent the mer-

ger. Under the terms of the pilot seniority system, this

“fence” would be crossed and the “freeze” ended only if

Pan Am were to sell or withdraw from service aircraft

which had belonged solely to either Pan Am of National

before the merger (i.e., the B-747, L-1011 or DC-10).

Pan Am’s sale or withdrawal of any of the above aircraft

would trigger certain “conditions and restrictions” con-

tained in the Gill Award designed to permit crossing of

the “fence” in the event of such sale or withdrawal. If

before January 1, 1986, Pan Am sold or withdrew from

service none of the above-listed aircraft, the flight opera-

tions of Pan Am and National would be maintained as

before the merger with respect to those aircraft (i.e.,

completely separate).

5. In or about September 1981, Pan Am posted the

integrated pilot seniority list, but stated that such list

was “tentative” and that pilots could submit protests to

Pan Am concerning their seniority position for an un-

specified period following the posting of the tentative list.

The “final” integrated pilot seniority list, based on Pan

Am’s adoption of the Gill Award, was issued in or about

March 1982.

6. Between the time of its posting of the “final” inte-

grated pilot seniority list and early February 1983, Pan

Am did not sell or withdraw from service any B-747,

L-1011 or DC-10 aircraft. Hence, Pan Am’s and Na-

tional’s flight operations remained essentially separate.

Even though the B-727 operations of Pan Am and Na-

tional were nominally “integrated,” this had no practical

impact on Pan Am’s business because (1) Pan Am had

owned B-727 aircraft before the merger and thus reaped

no unique or significant benefits in gaining access to

B-727’s formerly owned by National; and (2) crossover

85a

of Pan Am and National airmen on the B-727 was lim-

ited in practice by the Gill Award. See paragraph 10(c),

infra.

7. In early 1983, Pan Am commenced the first of a

series of transactions involving the acquisition, sale or

withdrawal from service of a number of its aircraft.

These transactions have triggered “conditions and restric-

tions” under the Pan Am pilot seniority system, some of

which continue to affect the allocation of opportunities

and prerogatives to pilots in the system. These “condi-

tions and restrictions” have since operated in tandem

with, and have exacerbated the discriminatory impact of,

the seniority list integrated by ratio. To wit, the “condi-

tions and restrictions” have resulted in extensive cross-

overs of young former National airmen to equipment

formerly flown only by Pan Am airmen, denied older Pan

Am pilots, including Plaintiffs in this action, with ionger

service and flying experience the same opportunities, and

thereby had an adverse impact on Pan Am pilots over the

age of 40 throughout the seniority list.

8. On March 28, 1988, Pan Am issued an “award”

reassigning pilots under its pilot seniority system. These

reassignments were the first governed by the crossover

“conditions and restrictions” discussed above. As a direct

result of the application of these “conditions and restric-

tions” to the operation of the integrated seniority list, the

reassignments of March 28, 1983, had the following

adverse impact on senior Pan Am pilots over the age of

40 with more flying experience, including Plaintiffs in

this action:

(a) Approximately one hundred (100) former Na-

tional pilots under the age of 40 were given

Captain or First Officer positions superior to

those of several hundred Pan Am pilots over the

age of 40 with greater actual seniority (i.e.,

longer service or earlier date of hire).

36a

(b) Of those one hundred (100) former National

pilots under the age of 40, approximately six-

teen (16) were given First Officer positions on

wide-bodied aircraft, and approximately six (6)

were given Captain positions superior to those

of several hundred Pan Am pilots over the age

of 40 with greater actual seniority.

(ec) Three (3) Pan Am pilots (Richard Jarboe,

Clifford Cool and Richard Paul), who were all

over the age of 40 and had over 16 years of

credited experience as of March 28, 1983, lost

their jobs on June 15, 1983, pursuant to the

terms of the pilot seniority system. Over one

hundred (100) former National pilots under

the age of 40 and with less actual seniority than

Messrs. Jarboe, Cool and Paul remained em-

ployed by Pan Am. See paragraph 10(e), infra.

(d) In hundreds of other instances, Pan Am pilots

over the age of 40 received assignments inferior

to those of former National pilots who were

younger and had less actual seniority than their

Pan Am counterparts.

9. Pan Am has since issued a number of awards reas-

signing pilots in the Pan Am pilot seniority system. Each

of these awards has been heavily affected by the above-

described “conditions and restrictions” in the Gill Award,

in addition to the operation of the integrated pilot senior-

ity list. Each of the awards has had an adverse impact

on senior pilots over the age of 40, including Plaintiffs,

which impact has been similar to, if not greater than,

that caused by the Award of March 28, 1983. Each of

the awards has been substantially influenced by the “con-

ditions and restrictions” in the Gill Award.

10. The “conditions and restrictions” in the Gill

Award have disadvantaged Pan Am pilots, including

37a

Plaintiffs, who are older and have longer service and fly-

ing experience than those benefitted. For example:

(a) No system flush (p. 6)—had the effect of keep-

ing Pan Am and National pilots in their pre-

merger positions between 1981 and 1983, thus

allowing younger National pilots to hold posi-

tions and receive salaries to which older Pan

Am pilots with longer service were entitled.

(b) Restrictions on 747 and DC-10-30 Captain va-

cancies (p. 6)—was to take effect as of Janu-

ary 1, 1986, but Pan Am is contending that it

is not applicable; issue is in arbitration.

(ce) Cross-bidding (p. 7)—allowed former National

pilots to retain higher-paying Captain and First

Officer positions while older and more senior

Pan Am pilots remained in or in some cases

were even demoted to lesser-paying Flight Engi-

neer positions.

(d) New flying (p. 7)—provided that if Pan Am

were to increase its utilization of any aircraft

before January 1, 1986, new assignments on

such aircraft would not be distributed by actual

seniority (i.e., by length of service or date of

hire), nor even by the integrated seniority list,

but rather by a ratio of two Pan Am airmen to

one National airman. This provision thus had

the effect of incorporating into the pilot seniority

system another ratio, even more age discrimi-

natory and less seniority-based than the one

used in the Gill Award to merge the two lists.

Since Pan Am pilots outnumber National pilots

by more than three to one, and Pan Am pilots

as a group are older and more senior, this two-

to-one ratio distributed “new flying” assign-

ments in a pattern which disadvantaged older

Pan Am pilots with longer service.

38a

(e) Furloughs (p. 7)—provided that furloughs (i.e.,

layoffs) before January 1, 1986, would not be

governed by actual credited seniority (i.e., with

pilots with lesser service or more recent dates of

hire furloughed first) nor even by the seniority

list (ie., with pilots at the bottom of the list

furloughed first), but rather by a formula

whereby one Pan Am airman would be fur-

loughed for each National airman furloughed.

This provision was used to effectuate the fur-

lough discussed in paragraph 8(c) above, which

had an adverse impact on these pilots over age

40. Moreover, an accompanying provision gov-

erning recalls of furloughed pilots has also been

interpreted by Pan Am so as to disadvantage

pilots over age 40.

(f) Protection of flying until January 1, 1986

(p. 8)—

(1) Protection of 747, L-1011 and DC-10 fly-

ing—had the effect of barring older, more

senior Pan Am pilots from receiving as-

signments on aircraft formerly owned by

National.

(2) Protection of 727 flying (p. 9)—required

older, more senior Pan Am pilots to move

to Berlin, West Germany, in order to re-

ceive B-727 Captain positions, while

younger, less senior National pilots were

able to remain in the United States and

hold such positions. This provision also al-

located other positions on the B-727 by

ratios which had an adverse impact on

senior Pan Am pilots over the age of 40.

As interpreted by Pan Am, this provision

was extended to deny positions on newly

acquired B-727 and A-300 aircraft to older,

more senior Pan Am pilots.

30a

(g) Sale of B-747 or DC-10-30 prior to January 1,

1986—had same effect as (f) (1).

(h) Sale of L-1011 or DC-10-10 aircraft prior to

January 1, 1986—had same effect as (f) (1).

(i) Recapture provisions—took effect as of Januarv

1, 1986, and will allow younger, less senior Na-

tional pilots to regain positions which they re-

ceived prior to January 1, 1986, and which

older, more senior Pan Am pilots would other-

wise be abie to claim in the absence of this

provision.

11. Pan Am pilots are put into groups called “base

station categories” for the purpose of determining work-

ing conditions such as the following: monthly lines of

flying; blank lines of fiying (a schedule of days on and

off) ; vacations; open time board (additional flying time) ;

and temporary assignments. The composition of, and

treatment of pilots under, each “base station category”

is derived entirely from the composition of, and treat-

ment of each pilot under, the main pilot seniority list

(referred to as the “system” seniority list). Because of

the composition of the system seniority list, as set forth

by the Gill Award and adopted and implemented by Pan

Am, Pan Am pilots over the age of 40 have suffered

monetary and other actual damage as a result of the

above-described “base station categories.”

12. Since its adoption by Pan Am, the Gill Award has

been incorporated into and made a part of the “Agree-

ment Between Pan American World Airways, Ine. and

Its Airline Pilots As Represented by the Air Line Pilots

Association, International.”

13. I and similarly situated pilots over age 40 have

suffered severe financial damage as a result of the adop-

40a

tion and implementation of the Pan Am pilot seniority

list.

/s/ Harold M. Gay, Jr.

HAROLD M. GAY, JR.

SUBSCRIBED AND SWORN TO BEFORE ME by

the said Harold M. Gay, Jr., on this the —th day of

July, 1986, to certify my hand and seal of office.

/s/ Margaret Mae Gardiner

Notary Public in and for the

District of Columbia

My Commission Expires:

May 14, 1990

4la

AFFIDAVIT

DISTRICT OF COLUMBIA) s.s.

BEFORE ME, the undersigned authority, on this day

personally appeared Mr. Marvin Osburn, who under oath

did state as follows:

1. My name is Marvin Osburn. I am over the age of

twenty-one years and fully competent to make this affi-

davit.

2. I am presently 52 years of age. I was born on July

5, 1934. I have been employed by Pan American World

Airways, Inc. (“Pan Am’) as a pilot since April 26,

1967. I am a member of the Flight Engineers Interna-

tional Association, Pan Am Chapter (“FEIA-PAA’”’) and

am currently a Pre-Merger Pan American Flight Engi-

neer Representative on the Gill Award Disputes Resolu-

tion Committee representing flight engineers and _ pilot-

flight engineers who were employed by Pan Am before

the merger of Pan Am and National Airlines, Inc. (“Na-

tional”). I have served in this position since June 6,

1984.

3. I have read Plaintiffs’ Complaint dated March 7,

1984. I am familiar with the pilot seniority system re-

ferred to in the Complaint and with events concerning its

construction and implementation.

4. Pan Am merged with National in 1980. Defend-

ants ALPA and FEIA, through their respective chapters

(collectively “Defendant Unions”), represented Pan Am

and National pilots and flight engineers. Defendant

Unions submitted to an arbitrator, Mr. Lewis M. Gill,

the issue of how the Pan Am and National pilot and

flight engineer seniority lists should be merged.

5. During the Gill arbitration, I was Support Statis-

tician for the FEIA-PAA Merger Committee, and as-

sisted Mr. Richard Phenneger in preparing FEIA-PAA’s

42a

presentation to Arbitrator Gill. FEIA-PAA was repre-

senting the interests of 1) the Pan Am professional flight

engineers (i.e., who do not possess pilot bid rights) as

to the integration of the flight engineer lists, and 2)

more important to this proceeding, the Pan Am pilot-

flight engineers (“PFEs”) (te, those Pan Am flight

engineers who are licensed and certificated to hold pilot

positions and who are also certificated to hold flight en-

gineer positions) as to the integration of the pilot system.

6. ALPA and FEIA representatives of the pre-merger

Pan Am pilots proposed to Arbitrator Gill that the pilot

seniority lists of Pan Am and National be integrated

according to the “dates of hire” or “lengths of service”

of airmen on the two lists. ALPA representatives of the

pre-merger National pilots proposed that the pilot senior-

ity lists be integrated by a ratio, such that individual

members of the National pilot group would be slotted

into the larger and more senior Pan Am pilot list based

on a numerical formula. The National pilots further

proposed that if a “date of hire” or “length of service”

method of integration were adopted, the operation of

such a list should be limited by “conditions and restric-

tions” which would benefit the former National pilots by

reserving positions for them to which they would other-

wise not be assigned under a date of hire length of serv-

ice list. The pre-merger National pilots were generally

younger than the pre-merger Pan Am pilots. The “con-

ditions and restrictions” which the pre-merger National

pilots proposed were thus on their face designed to bene-

fit younger National pilots vis-a-vis the older and senior

Pan Am pilots.

7. Attorneys representing Pan Am were present at

all of the recorded Gill arbitration hearings as observers.

8. The Gill Award was issued on March 12. 1981. It

incorporated a “ratio” method of integrating approxi-

mately one-half of the pilots (1053 or 49%) on the prior

43a

Pan Am and National pilot seniority lists, thereby bene-

fitting pre-merger National pilots as a group and disad-

vantaging hundreds of pre-merger Pan Am, i.e., older

and more senior, pilots. At the same time, the Gill Award

also adopted the “conditions and restrictions’ which had

been proposed by the pre-merger National pilots for use

if a date of hire/length of service method of integration

was used.

9. Pan Am and all of the parties to the Gill arbitra-

tion were made aware that the “conditions and restric-

tions” as eventually incorporated into the Gill Award

would work to the benefit of pre-merger National pilots

(1.e., younger and with less service and flying experience )

and the detriment of pre-merger Pan Am pilots (i.e.,

older and with more service and flying experience).

10. Pan Am could have foreseen that the adoption and

implementation of the Pan Am pilot seniority system

would save Pan Am millions of dollars in airman train-

ing costs. Each time an airman is reassigned from one

aireraft to another or one seat to another on one air-

craft, he must be retrained. This training is very costly.

Any seniority system which causes a large group of air-

men to stay in positions for a long period of time will

cause an airline’s airman retraining costs to be reduced.

It could have been foreseen that by imposing “conditions

and restrictions” on the advancement of senior Pan Am

airmen over the age of 40 (e.@., restricting movement

from one aircraft to another or one seat to another air-

craft), the Pan Am pilot seniority system would cause

a large group of airmen to stay in a position for a long

period of time, thereby reducing Pan Am’s airman train-

ing costs.

11. Since its adoption by Pan Am, the Gill Award has

been incorporated into and made a part of the “Agree-

ment Between Pan American World Airways, Inc. and

44a

Its Flight Engineers As Represented by the Flight En-

gineers International Association.”

/s/ Marvin Osburn

MARVIN OSBURN

SUBSCRIBED AND SWORN TO BEFORE ME by

the said Marvin Osburn, on this the —— day of

1986, to certify my hand and seal of office.

/s/ Margaret Mae Gardiner

Notary Public in and for the

District of Columbia

My Commission Expires:

May 14, 1990

45a

AFFIDAVIT

DISTRICT OF COLUMBIA ss:

BEFORE ME, the undersigned authority, on this day

personally appeared Kevin Flynn, Esq., who under oath

did state as follows:

1. My name is Kevin Flynn. I am over the age of

twenty-one years and fully competent to make this affi-

davit.

2. I am an associate with the law firm of Shaw, Pitt-

man, Potts & Trowbridge, 1800 M Street, N.W., Wash-

ington, D.C. 20036. I am a member of the District of

Columbia Bar and have been admitted to the bar of this

Court pro hac vice.

3. Exhibit A to this Affidavit is a true and complete

copy of the Labor Protective Provisions (“LPPs’) im-

posed by the Civil Aeronautics Board (“CAB”) in CAB

Orders 79-12-163/164/165, in which it approved the ac-

quisition by Pan American World Airways, Inc. (“Pan

Am”) of National Airlines, Inc. (“National”).

4. Section 3 of the LPPs states in its entirety:

Section 3. Insofar as the merger affects the senior-

ity rights of the carriers’ employees, provisions shall

be made for the integration of seniority lists in a

fair and equitable manner, including, where appli-

cable, agreement through collective bargaining be-

tween the carriers and the representatives of the

employees affected. In the event of failure to agree,

the dispute may be submitted by either party for

adjustment in accordance with section 13.

5. Section 13(a) of the LPPs states in its entirety,

with emphasis added:

Section 13(a). In the event that any dispute or

controversy (except as to matters arising under sec-

46a

tion 9) arises with respect to the protections pro-

vided herein, which cannot be settled by the parties

within 20 days after the controversy arises, it may

be referred by any party to an arbitrator selected

from a panel of seven names furnished by the Na-

tional Mediation Board for consideration and de-

termination. The parties shall select the arbitrator

from such panel by alternatively striking names

until only one remains, and he shall serve as arbi-

trator. Expedited hearings and decisions will be ex-

pected, and a decision shall be rendered within 90

days after the controversy arises, unless an exten-

sion of time is mutually agreeable to all parties. The

salary and expenses of the arbitrator shall be borne

equally by the carrier and (i) the organization or

organizations representing the employee or em-

ployees, or (ii) if unrepresented, the employee or

employees or group or groups of employees. The de-

cision of the arbitrator shall be final and binding

on the parties.

/s/ Kevin Flynn

KEVIN FLYNN

SUBSCRIBED AND SWORN TO BEFORE ME by

the said Kevin Flynn, on this the 18th day of July, 1986,

to certify my hand and seal of office.

/s/ Margaret Mae Gardiner

Notary Public on and for

the District of Columbia

My Commission Expires:

May 14, 1990

47a

AFFIDAVIT

STATE OF S.S.

COUNTY OF

BEFORE ME, the undersigned authority, on this day

personally appeared Mr. James Bailey, who under oath

did state as follows:

1. My name is James Bailey. I am over the age of

twenty-one years and fully competent to make this affi-

davit.

2. I am presentiy 53 years of age. I was born on

March 5, 1983. I have been employed by Pan American

World Airways, Inc. (“Pan Am’) since May 31, 1966.

I am a member of the Air Line Pilots Association

(“ALPA’”’).

3. I have read Plaintiffs’ Complaint dated March 7,

1984. I am familiar with the pilot seniority system re-

ferred to in the Complaint, with events concerning its

construction and implementation, and particularl: with

its subsequent impact on all pilots in the employ of Pan

Am.

4. In the spring of 1981, shortly after the Gill Award

was issued on March 12, I visited the office of the Chief

Pilot of Pan Am on several occasions within a short

period of time for the purpose of arranging my flying

schedule so as to accommodate frequent visits to my sis-

ter in New York, who was terminally ill. During this

time, I had frequent contact with Mr. William Erkies,

then-Vice President of Flight Operations four Pan Am.

Mr. Erkies was to be responsible for the operational de-

tails of manning Pan Am flights based on the integrated

Pan Am-National seniority list. During one lengthy con-

versation, I strongly recommended to him that Pan Am

not adopt the Gill Award because if it were implemented,

48a

it would have an illegal impact on older pilots. Mr.

Erkies replied that he was aware that this problem ex-

isted, that he did not feel that the Gill Award was fair,

and that he would look into the matter. This conversa-

tion was held well in advance of late May 1981, which

I understand is when Pan Am officially adopted the Gill

Award.

/s/

JAMES BAILEY

SUBSCRIBED AND SWORN TO BEFORE ME by

the said James Bailey, on this the ——- day of —————,

1986, to certify my hand and seal of office.

/3/

Notary Public in and for the

State of

My Commission Expires:

49a

AFFIDAVIT

STATE OF CALIFORNIA )

) ss.

COUNTY OF CONTRA COSTA )

BEFORE ME, the undersigned authority, on this day

personally appeared Mr. Samuel Woolsey, who under oath

did state as follows:

1. My name is Samuel Woolsey. I am over the age of

twenty-one years and fully competent to make this affi-

davit.

2. I am presently 53 years of age. I was born on Sep-

tember 16, 1932. I was employed by Pan American

World Airways, Inc. (“Pan Am’’) as a pilot from June

20, 1966 to February 12, 1986. I am currently employed

by United Airlines, Inc. as a pilot.

3. On December 12, 1984, I wrote a letter to Mr. C.

Edward Acker, Chairman of the board of Pan Am, con-

cerning Pan Am’s implementation of the Gill Award.

Mr. Acker replied to me by letter dated January 4, 1985.

See Exhibit A. Mr. Martin Shugrue, Vice Chairman of

Pan Am, also replied to me by letter dated January 17,

1985. See Exhibit B.

/s/ Samuel D. Woolsey

SAMUEL D. WOOLSEY

SUBSCRIBED AND SWORN TO BEFORE ME by the

said Samuel Woolsey on this the 16th day of July, 1986,

to certify my hand and seal of office.

/s/

Notary Public in and for the

State of California

My Commission Expires:

March 25, 1988

50a

C. Edward Acker

Chairman of the Board

January 4, 1985

Mr. S. Woolsey

14 Creekwood Court

Danville, CA 94526

Dear Mr. Woolsey:

Your letter of December 12, 1984 is appreciated. It is

appreciated because it is far better that an employee who

believes his Company is perpetuating an injury to him,

communicates that belief to the Company so the facts

may be explored in a rational manner.

As you state in your letter, the Gill Award was presented

to the Company in 1980 when we were asked to accept

the Award and thereby become a party to it.

The sole aim of the Company was to determine whether

or not the Award caused any undue hardship on our

operation. We did not then nor do we now have any

desire to intrude on seniority questions beyond the scope

of their administrative practicalities.

Our view at the time was that, although highly com-

plex, the Award was administratively practical. The al-

ternative was another protracted and costly arbitration.

It was our understanding that the parties to the Award

had the opportunity for a full and fair hearing before

the arbitrator.

As to your allegations that Pan Am has consciously and

selfishly distorted the Gill Award, nothing could be fur-

ther from the truth.

You have obviously studied the Gill Award and are

therefore familiar with Article III; the Resolution of

Disputes. You then must also be familiar with the fact

5la

that Article III of the Gill Award established a Disputes

Resolution Committee composed of airmen representa-

tives and requires that in the event of a dispute among

the Committee concerning the interpretation or applica-

tion of the Award, such dispute must be resolved through

arbitration.

Only after that process has been completed may the Com-

pany arbitrate questions of interpretation or application

of the Award.

At this point I would like to advise you of some facts

about which you may not be aware. On each and every

occasion of a Proffer since the implementation of the Gill

Award and prior to the Award date of each such Proffer,

the Company has requested meetings with the Dispute

Resolution Committee although there is no requirement

under the Gill Award to do so. Why have we sought

these meetings, even to the point of providing transporta-

tion and paying for lost patterns for the Committee?

In order to review the Proffer with the Committee and

to seek the Committee’s guidance in applying the Gill

Award to the Proffer. Indeed, we have implored the Dis-

putes Resolution Committee to arbitrate disputes regard-

ing the application of the Gill Award prior to the Award

of every Proffer so it would not become necessary for

the Company to get into the business of interpreting the

Gill Award! And on every occasion the Committee has

declined to carry out its obligations prior to the Com-

pany being compelled to make its own best faith inter-

pretations.

Pan Am does not want to interpret the Gill Award

Mr. Woolsey. We believe that Article III of the Award

places that obligation on the Dispute Resolution Commit-

tee. But in the absence of any timely action on the part

of the Committee, Pan Am is compelled to render its own

decisions (all of which to date have been upheld in sub-

sequent arbitrations).

iteeiteseiiiianeiainaeaniiaeaieaiaeaiiaiil

52a

The failure of the Disputes Resolution Committee to

carry out its obligations under the Award has perfectly

predictable results—letters such as yours charging the

Company with deliberately distorting the Gill Award for

its own self interests.

The Company has not had nor does it now have any

desire or motivation to interpret the Gill Award. The

record on this is clear and the facts undeniable: The

Company has consistently requested the Dispute Resolu-

tion Committee to carry out its responsibilities of resolv-

ing disputes of interpretation and application of the Gill

Award. They have consistently failed to do that. They

have transformed their responsibilities under the Gill

Award into an unfair burden on the Company.

I would therefore suggest that you contact your repre-

sentatives and advise them that you desire to have the

Gill Award applied without Company interpretations—

that ability is and has always been within their power.

In closing I wish to again thank you for giving me the

opportunity to provide you with the facts and hopefully

dispell any idea that Pan Am is or has attempted to

utilize the Gill Award to improperly restructure senior-

ity for its own purpose.

Sincerely yours,

C. EDWARD ACKER

ec: M. R. Shugrue

C. R. Grebey

D. E. Pritchett

W. P. Kimmins

53a

PAN AM Martin R. Shugrue, Jr.

Vice Chairman

January 17, 1985

Mr. S. Woolsey

14 Creekwood Court

Danville, CA 94526

Dear Mr. Woolsey:

I am in receipt of your letter dated December 12, 1984

copies of which, identical in content, were addressed to

Mr. Acker, me and Mr. Kimmins.

By letter dated January 4, 1985, Mr. Acker responded

to the content of your letter. That response was reviewed

with me and I concur with Mr. Acker’s thoughts.

Thank you for taking the time to express your concerns

and affording us the opportunity to present you with

the facts.

Sincerely,

s/ Martin R. Shugrue, Jr.

MARTIN R. SHUGRUE, Jr.

54a

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

84 Civ. 1651 (RWS)

JOHN C. Cook, et al.,

Plaintiffs,

—against—

PAN AMERICAN WORLD AIRWAYS, INC., AIR LINE PILOTS

ASSOCIATION, INTERNATIONAL, AIR LINE PILOTS ASSO-

CIATION, PAN AM CHAPTER, FLIGHT ENGINEERS INTER-

NATIONAL ASSOCIATION, FLIGHT ENGINEERS INTERNA-

TIONAL ASSOCIATION, PAN AM CHAPTER,

Defendants.

85 Civ. 2371 (RWS)

F. J. LEWANDOWSKI, et al.,

Plaintiffs,

——against—

PAN AMERICAN WORLD AIRWAYS, INC., AIR LINE PILOTS

ASSOCIATION, INTERNATIONAL, AIR LINE PILOTS ASSO-

CIATION, PAN AM CHAPTER, FLIGHT ENGINEERS INTER-

NATIONAL ASSOCIATION, FLIGHT ENGINEERS INTERNA-

TIONAL ASSOCIATION, PAN AM CHAPTER,

Defendants.

OPINION

APPEARANCES:

HUTCHESON & GRUNDY, ESQS.

Attorneys for Plaintiffs

3300 Citicorp Center

1200 Smith Street

Houston, Texas 77002

By: JEFFREY C. LONDA, Esq.

Of Counsel

SHAW, PITTMAN, Potts & TROWBRIDGE, ESQS.

Attorneys for Plaintiffs

2300 N Street, N.W.

Washington, D.C. 20037

By: ROBERT E. COHN, Esq.

KEVIN FLYNN, Esa.

Of Counsel

JEFFREY M. BERNBACH, Esq.

Attorney for Plaintiffs

521 Fifth Avenue

New York, New York 10175

PAN AMERICAN WORLD AIRWAYS, INC.

Legal Department—Room 918

Attorneys for Defendant

Pan American World Airways, Inc.

200 Park Avenue

New York, New York 10166

By: RICHARD SCHOOLMAN, Esa.

Of Counsel

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL

Attorney for Defendant

Air Lines Pilots Association, International

1625 Massachusetts Avenue, N.W.

Washington, D.C. 20036

By: JONATHAN A. COHN, Esq.

Of Counsel

56a

SHAPIRO, SHIFF, BEILLY, ROSENBERG & FOX, ESQS.

Attorneys for Defendant

Air Line Pilots Association

225 Broadway

New York, New York 10007

By: SIDNEY Fox, Esq.

GARY GREEN, ESQ.

Of Counsel

O’DONNELL & SCHWARTZ, ESQS.

Attorneys for Defendant

Flight Engineers International Association

285 Madison Avenue

New York, New York 10017

By: ASHER SCHWARTZ, Esq.

DAVID ROSEN, Esq.

Of Counsel

SWEET, D. J.

In these cases brought under the Age Discrimination

in Employment Act (“ADEA”), 29 U.S.C. §§ 623-31,

defendant Pan American World Airways (“Pan Am”)

and the defendant labor unions, the Air Line Pilots As-

sociation (““ALPA’’), the ALPA Master Executive Coun-

ceil for the Pan Am Pilots (“ALPA-PAA”’), the Flight

Engineers’ International Association (“FEIA”’), and the

FEIA Pan Am Chapter (“FEIA-PAA”’) (collectively the

“Unions”), have moved for summary judgment in their

favor. John C. Cook (‘Cook’), as the representative of

pilots over age 40 employed by Pan Am prior to Pan

Am’s merger with National Airlines (“National”), chal-

lenges as a violation of ADEA the adoption and imple-

mentation of a 1981 seniority system integrating the

pilot and flight engineer lists of the two merged air-

lines. Pan Am and the Unions were signatories to the

collective bargaining agreement that led to the adoption

of the merged system. On the findings and conclusions

set forth below, the motions are granted.

57a

Prior Proceedings

Cook initiated this action on March 7, 1984, alleging

that Pan Am and the Unions, by adopting and imple-

menting a 1981 seniority list integrating the pilots and

flight engineers of the two merged airlines, had violated

the ADEA and New York Human Rights Law, N.Y.

Exec.Law § 296, et al. (McKinney 1982 & Supp. 1984-

85), and that the Unions had in addition violated the

Railway Labor Act, 45 U.S.C. §§ 151 et seg. (1982). The

defendants moved this court, the Honorable Robert J.

Ward presiding, to dismiss the complaint on the grounds

that the federal claims were time-barred, that the

pendent claim should be dismissed for lack of jurisdiction

and that the complaint constituted an impermissible at-

tack on a final order of the Civil Aeronautics Board

(“CAB”). Judge Ward dismissed the complaint for lack

of subject matter jurisdiction, inding that the action

constituted an impermissible collateral attack on a final

order of the CAB not appealed in accordance with the

provisions of § 106 of the Federal Aviation Act, 49

U.S.C. § 1486(a).

On appeal, the Second Circuit affirmed in part, re-

versed in part, and remanded for further proceedings.

It reversed the dismissal of the ADEA claims and re-

manded on the ground that plaintiffs are entitled to the

de novo determination in the district court provided for

by Congress in its enactment of ADEA. Cook v. Pan

American World Airways, Inc., 771 F.2d 635, 641 (2d

Cir. 1985), cert. denied, 106 S.Ct. 895 (1986). It noted

that this case is governed by § 4(f)(2) of the ADEA,

29 U.S.C. § 623(f) (2), which insulates an employer or

labor organization from liability for observing the terms

of a “bona fide seniority system ... which is not a

subterfuge to evade the purposes” of the ADEA. Cook,

771 F.2d at 644. Among the circumstances to be con-

sidered with respect to the requirement that a seniority

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system not be a “subterfuge” are the reasons advanced

for the use of a ratio method in the middle of the list as

well as the validity of plaintiffs’ claim that defendants

have engaged in “willful” discrimination. I/d.

The Second Circuit affirmed the dismissal of the fair

representation claim under the Railway Labor Act, 45

U.S.C. §$ 151 et seg., as an impermissible collateral at-

tack on the CAB’s final order. Finally, it held that plain-

tiffs’ claims were not time-barred since the alleged dis-

criminatory violations were continuous, giving rise to

claims on each occasion that the merged seniority list is

applied to individual plaintiffs.

Since remand, discovery has gone forward, and has

now been completed.

The findings and conclusions set forth below have been

reached on the basis of over fifteen affidavits, eleven

deposition transcripts, voluminous documentary evidence

concerning the arbitration proceedings and oral argu-

ment presented by skilled counsel on August 7, 1986.

While the conclusions to be drawn from the facts found

below are in sharp conflict, the facts are not the subject

of dispute.

Findings of Fact

In late 1979, the CAB approved the application of Pan

Am to merge with National, conditioning that approval

on the surviving carriers’ acceptance of certain labor

protective provisions. CAB Order 79-12-164 at 1. In

particular, the CAB directed that “provisions shall be

made for the integration of [the Pan Am and National]

seniority lists in a fair and equitable manner,” CAB

Order 79-12-164 § 3, and that a dispute unresolved by the

parties within twenty days “may be referred to any

party to an arbitrator.” Jd. § 13(a).

On March 19, 1980, the Unions, the National Airlines

Master Executive Council of ALPA (“ALPA-NA”) and

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the National Airlines Chapter of FEIA (“FEIA-NA”)

entered into an agreement establishing the procedures

for integrating the Pan Am and National seniority lists.

In part, the agreement provided that arbitration was

“mandatory” if merger representatives were unable to

agree within a limited time, see March 19, 1980 Agree-

ment, 7 8(a), and that the lists were to be merged in a

“fair and equitable’ manner. § 8(f). The agreement

designated Lewis M. Gill as arbitrator (‘the Arbitra-

tor’), 78 (b), and provided that the Arbitrator’s deci-

sion “shall be final and binding as to all flight deck oper-

ating members and shall be defended by the parties.”

7 8(j). Because negotiation and mediation were unsuc-

cessful, the question of how to integrate the airman sen-

iority lists was submitted to arbitration. Beginning in

September, 1980, the Arbitrator conducted formal pro-

ceedings, fully participated in by the parties to the

arbitration—FEIA-PAA, FEIA-NA, ALPA-PAA and

ALPA-NA. The record of these proceedings covers ap-

proximately 85 days of hearings and includes 4,700

transcript pages and hundreds of exhibits. Following the

close of the hearings on January 14, 1981, the Arbitra-

tor held two weeks of executive session with the union

parties. After a series of informal meetings with the

parties, the Arbitrator issued his final award on March

12, 1981 (the “Award”’).

Pan Am, which was not a party to the arbitration pro-

ceedings although its representatives attended all of the

hearings, was not required to accept the Award. If it

had not accepted the Award, it would have been required

to submit the seniority integration dispute to an arbitra-

tion in which it would have been a party. That arbitra-

tion would have been binding on Pan Am.

Throughout the arbitration, the Pan Am pilots and

flight engineers sought integration of the lists based on

straight date of hire or length of service, arguing that

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any inequities could be dealt with by using conditions

and restrictions. See Gill Opinion, May 11, 1981, at 15.

The Pan Am pilots vigorously opposed any ratio that

would put any National pilots with shorter length of

service ahead of the earlier hired and generally older

Pan Am pilots.

According to the National pilots, a straight date of

hire (“DOH”) or length of service (“LOS”) list would

be inequitable since National was stronger financially

and thus would have offered National airmen greater

“expectancies.” A DOH or LOS would place the later

hired National pilots who brought active jobs to the

merger below furloughed Pan Am pilots on the merged

list. The National pilots proposed a ratio under which

they would be put in positions on the list that would al-

low them to fulfill their pre-merger expectancies.

The Award

In the Award, the Arbitrator established two separate

lists, one for the pilots and another for the flight-

engineers. As the opinion issued in conjunction with the

Award explains, the divergent nature of the respective

bidding and bumping practices at each carrier neces-

sitated the establishment of two separate seniority lists.

Since 1963 Pan Am has hired its pilots directly to the

initial position of flight-engineer. Subsequently, this

practice led to the development of bidding rights by

fiight-engineers for pilot vacancies, and conversely, the

right of pilots to bump down into flight-engineer posi-

tions. Similar cross-bidding and bumping practices never

developed at National because it hired pilots directly into

the first officer position, and employed non-pilots as

flight-engineers. Thus, National’s flight-engineers could

never bid into pilot vacancies, and pilots could never

bump down into flight-engineer positions. The Arbitra-

tor preserved those two long-standing sets of bidding/

bumping practices, noting that Pan Am “[w]ill continue

6la

to have the cross-bidding and bumping rights vis-a-vis

each other which they have had before” and that Pan

Am’s bidding practices should not be imposed on the

National airmen.

With respect to the engineers’ seniority list, the Arbi-

trator used a straight LOS/DOH method. With respect

to the pilots’ seniority lists, the Arbitrator integrated the

Pan Am and National pilots into the top and bottom

portions of the list in accordance with date-of-hire and

length-of-service. The middle portion of the list chal-

lenged here, however, was integrated based upon a ratio

method.' That method placed 3.25 Pan Am pilots into

the list for each National pilot and encompassed seniority

numbers 1289-2112 on the pre-merger Pan Am list and

241-496 on the National list. Thus at the middle of the

pilots’ list one National pilot with relatively less length

of service seniority was inserted after about every four

Pan Am pilots, who as a group had been hired earlier.

As the Arbitrator explained in his opinion, the com-

plete DOH/LOS list advocated by the Pan Am airmen

would have imposed substantial inequities on many Na-

tional pilots. Specifically, National airmen hired after

1964 would be denied the prospects for advancement to

larger aircraft that they could have expected absent the

merger. Noting that Pan Am pilots would be subject to

no comparable inequity as a result of the ratio, the

Arbitrator concluded that a ratio was necessary to insure

that the lists were merged in a fair and equitable man-

ner, 2.e., that “the airmen on each airline be in a position

to fill vacancies in positions for which they had reason-

able expectations absent the merger, or positions reason-

ably comparable thereto or, at least, to achieve a fair

balance in the extent to which they may fall short of

1 The plaintiffs also challenge certain conditions and restrictions

in the Award which were designed to preserve portions of the pre-

merger lists.

62a

those expectations.” Moreover, since the necessary condi-

tions and restrictions on a straight DOH/LOS list would

be very complex and unworkable, a ratio was preferable.

In addition, the Arbitrator noted the record evidence

that Pan Am, at the time of the merger, was experienc-

ing financial difficulties with more than 400 pilots on

furlough, many of whom had been on furlough for more

than five years. National, on the other hand, was a

young domestic carrier with no furloughned pilots. Under

these circumstances, he concluded that:

[A] straight DOH list would place a large number

of the furloughees who have not worked as Pan Am

airmen for five years, and a substantial number

with even longer periods since they flew as Pan Am

airmen, ahead of large numbers of National airmen

who brought active jobs to the merger, including

many who had been flying for National for upwards

to five years. I regard that as an inequitable result.

(Gill Opinion, at 14).

The flight-engineers’ seniority list, however, was inte-

grated completely by DOH/LOS. There, the Arbitrator

agreed with FEIA’s Pan Am Chapter that the ratio

method was unnecessary because the National flight-

engineers, not being pilots or pilot-qualified, lacked the

same promotion expectations held by the National pilots.

The Arbitrator was aware of the Pan Am pilots’ bit-

ter opposition to a ratio, and applied the ratio only as

a last resort, and to a limited portion of the list. He

noted that ALFA merger guidelines (which, while not

binding in this case because of the presence of FEIA,

were given weight because most of the affected airmen

were ALPA members) authorize such a departure if

necessary to achieve an equitable integration. The Arbi-

trator summarized the guidelines as follows:

I think it is fair to summarize by saying that these

provisions call for giving consideration first to a

63a

DOH list, then (if “acceptable accommodation” of

the equities is not accomplished by such a list) to

look at an LOS list, then (if “satisfactory accom-

modation” of the equities is still not accomplished)

to attempt to accommodate the remaining inequities

through temporary restrictions or conditions, and

finally (if a “satisfactory accommodation” of the

inequities is still not accomplished) to try ‘“devia-

tion” from the DOH and LOS manner of construct-

ing the list in order to reach a “fair and equitable

solution.” This “deviation” has often taken the form

of ratio arrangement for all or part of the merged

list.

Gill Opinion at 12. The Arbitrator concluded that “there

are some ‘substantial practical inequities’ in unrestricted

operation of straight length of service which . . . could

not feasibly be cured in workable and readily admin-

istrable fashion by special protective provisions.” The

ratio that the Arbitrator adopted covers a much smaller

portion of the list than the National pilots advocated.

In rejecting the Nationa! pilots’ contention that the ratio

should extend farther down the list, the Arbitrator ex-

plained that the degree of disparity in length of service

between Pan Am and National pilots increased farther

down the list and thus, extending the ratio as the Na-

tional pilots sought would, on balance, result in too great

a disparity in length of service between Pan Am and

National pilots who would be ratioed together at that

point in the list. The Arbitrator also noted that even

though those National pilots below the ratio portion

would not reach their promotion expectancies until long

after the Pan Am airmen on the list near them reached

theirs, this inequity was offset by the fact that these

National pilots were, on average, younger and thus had

more time to reach their expectancies.

In addition to his use of the ratio, the Arbitrator im-

posed several conditions and restrictions designed to pre-

64a

vent either group of airmen from achieving a “windfall”

at the expense of the other, including provisions for cross-

over bidding in the event of sale of certain equipment,

furlough ratios, and the reservation of 747 slots on a 9

to 1 basis for Pan Am pilots after January 1986.

After issuance of the award on May 18, 1981, the

merger representatives presented the award to the com-

pany and defended the award before the CAB as they

had agreed to do in the four-party agreement. Pan Am,

which had not been a party to the four-party agreement

or to the proceedings before the Arbitrator, accepted the

award in its entirety on June 26, 1981.

At the time of the adoption, Pan Am was aware that

pre-merger Pan Am pilots as a group were older than

pre-merger National pilots and that any integrated sen-

iority system which disadvantaged pre-merger Pan Am

pilots would at the same time disadvantage older pilots.

Pan Am did not undertake a detailed cost analysis of the

Award or consider the pension and training costs as fac-

tors in deciding whether to accept the Award.

While Pan Am did not post a final integrated pilot list

until April, 1982, ten months after it adopted the

Award, the acceptance of the Award permitted Pan Am

to integrate into one system the two separate Pan Am

and National systems of aircraft and crews without the

prior written consent of ALPA.

I. Summary Judgment

Pan Am and the Unions have moved for summary

judgment dismissing the claims against them in Cook and

its companion case Lewandowski* relating to the portion

* The Second Circuit’s affirmance of the dismissal of the Railway

Labor Act claims in Cook v. Pan Am World Airways, Inc., 771 F.2d

635, 646 (2d Cir. 1985), cert. denied, 106 S.Ct. 895 (1986), is

dispositive of those claims in Lewandowski, which was filed after

Cook was dismissed by the district court but which is essentially

identical to Cook.

65a

of the list in which the ratio was applied. The motions

are based on §4(f)(2) of the Age Discrimination in

Employment Act (“ADEA”), 29 U.S.C. § 623(f) (2),

which insulates employers and labor unions from liability

under the ADEA with respect to a seniority system if

the employers and unions observe the terms of a senior-

ity system that is “bona fide” and “is not a subterfuge to

evade the purposes” of ADEA.*

Fed.R.Civ.P. 56(c) provides that a court shall grant a

motion for summary judgment if it determines that

“there is no genuine issue a

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