Petition for Writ of Certiorari — Transamerica Airlines, Inc. v. Air Line Pilots Ass'n, International

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, G Supreme Court, U.S

RY -3 73 . ors & D 7

SEP % 987

No.

ULERA

JOSEPH F. SPANIO‘, JR.

In the Supreme Court of the United States

OCTOBER TERM, 1987

}

TRANSAMERICA AIRLINES, INC.,

Petitioner,

VS.

AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ROBERT J. BERGHEL

MICHAEL C. TOWERS

(Counsel of Record)

JAMES J. McDONALD, JR.

FISHER & PHILLIPS

3500 First Atlanta Tower

Atlanta, Georgia 30383

(404) 658-9200

Counsel for Petitioner

E. L. MENDENHALL, INc., 926 Cherry Street, iiansas City, Mo. $4106, (816) 421-3030

QUESTIONS PRESENTED FOR REVIEW

I. Whether federal courts have jurisdiction of a rep-

resentation dispute under the Railway Labor Act in which

a union complains of an air carrier’s participation in the

creation of a separate airline subsidiary (and a separate

craft or class for collective bargainir% purposes), where

the Act has committed all representation disputes to the

exclusive jurisdiction of the National Mediation Board.

II. Whether, during the period in which an air car-

rier and labor union are bargaining collectively subject

to the jurisdiction and control of the National Mediation

Board, federal courts have jurisdiction under the Railway

Labor Act over a union complaint that the carrier’s eco-

nomic proposals constitute bad faith bargaining.

LIST OF PARTIES

The names of all parties to the proceedings in the

United States Court of Appeals for the Ninth Circuit

appear in the caption of the case in this Court. The

parent company of Transamerica Airlines, Inc. is Trans-

america Corporation.

III

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW .................... I

casas ssh isckemesevsenrocerenacvenmmencensanescece II

I ND a sacs cicisnterennccssansscsencsnsnsscscoves III

pe es 8 cy | =. a een ee Vv

REPORTS OF OPINIONS BELOW .......0000000002002.... 1

STATEMENT OF JURISDICTION ......00000.020222.2eee eee 2

PI enna csinennenenneennennsnenenssnecense 2

STATEMENT OF THE CASE AND BASIS FOR FED-

8 Say I 2

REASONS FOR GRANTING WRIT. ..WW00..0002200002.222..-- 5

I. THE NINTH CIRCUIT’S DECISION BELOW

CREATES A CONFLICT AMONG THE CIR-

CUITS AND IGNORES LONG-ESTAB-

LISHED PRECEDENTS OF THIS COURT,

IN HOLDING THAT FEDERAL COURTS

HAVE JURISDICTION OVER REPRESEN-

TATION DISPUTES UNDER THE RAIL-

MI I acim alee hcceesnntecesnncesncee 5

A. This Case Involves a Representation Dis-

pute, and the Act Commits All Such Dis-

putes to the Exclusive Jurisdiction of the

oe BLD U AIS SEEIA TE Bie SI OL a 6

B. The Ninth Circuit s Decision Directly Con-

flicts With the Decision of the Second

Circuit in A Virtually Identical Case .. 8

C. The NMB Routinely Adjudicates Claims

Such As Those Which ALPA Has Raised

Here, and ALPA Has Sought Such an Ad-

judication From the NMB in This Case... 12

D. This Case Presents Issues Much Like

Those in A Pending Case in Which Justice

O’Connor Rejected a Similar Ruling of the

RE IIE pncseciasitiinkcsiihsctapsdapteladatiieistdanarsinien 14

Il. THE NINTH CIRCUIT IMPROPERLY AU-

THORIZED THE DISTRICT COURT TO IN-

TERFERE WITH THE NMB’S MEDIATORY

JURISDICTION; ITS DECISION IMPROP-

ERLY INTERJECTS THE COURT INTO THE

HEART OF THE COLLECTIVE BARGAIN-

ING PROCESS AND PERMITS A PARTY

TO DISCOVER ITS OPPONENT’S BAR.

GAINING STRATEGY DURING NEGOTIA-

TE sinhca sda Se Lianh easels ialincnadip denna iaibscaiiin 16

A. Congress Intended That the NMB’s Juris-

diction Over Collective Bargaining Would

Be Exclusive While Parties Are in Medi-

IN pte deeniiss-itcineahendcapndenicaotliadahastoneiicens 17

B. The Ninth Circuit’s Ruling Permits a

Party to Disrupt the Collective Bargaining

Process by Use of Discovery to Learn of

Its Opponent’s Bargaining Strategy ........ 22

C. The Ninth Circuit’s Decision Conflicts

With This Court’s Long-Standing Rule

That Courts May Not Order Parties in Ne-

gotiation to Modify the Substance of Their

COMGNRIC PIOUS nancies ics, 24

RRNA gL Sb SR ATO AT LUCAS OE 27

TABLE OF AUTHORITIES

I. CASES

Supreme Court Cases

Burlington Northern Railroad v. Brotherhood of Main-

tenance of Way Employees, 95 L. Ed. 2d 381 (1987) 17

Chicago & North Western Railway v. United Trans-

portation Union, 402 U.S. 570 (1971) ............ 18, 21-22, 25

General Committee of Adjustment v. Missouri-Kansas-

Texas Railroad, 320 U.S. 323 (1943) -..0020220.. 7, 12,19

General Committee of Adjustment v. Southern Pacific

Co, Fae Ge See Cae ekki eceenintins 7

H.K. Porter Co. v. NLRB, 397 U.S. 99 (1970) ............ 25

NLRB v. American National Insurance Co., 343 U.S.

ER i ____: Sapetomernremntcnircrien rare meine i nri Mors WCE er ER One FS 25

Switchmen’s Union v. NMB, 320 U.S. 297 (1943) ....6, 7, 13

Terminal Railroad Association of St. Louis v. Broth-

erhood of Railroad Trainmen, 318 U.S. 1 (1943) .... 24

Western Airlines v. International Brotherhood of

Teamsters, 94 L. Ed. 2d 744 (1987) 0.000000. 15, 16

Other Cases

Air Cargo, Inc., 10 N.M.B. 166 (1983) _ W000. 13

Air Florida, 7 ABB. 61 (1978). ..........:....0.0600000.2...... 13

Air Line Employees Association v. Republic Airlines,

798 F.2d 967 (7th Cir.), cert. denied, 93 L. Ed. 2d

IE. CIID | vnniecaclibcidicisnnpinhicncpctisebiaienanen dette dingidr iia on, 8

Air Line Pilots Association v. Texas International Air-

lines, 656 F.2d 16 (2d Cir. 1981) ........ 4, 8-9, 10, 11, 12,15

Air Line Pilots Association v. Texas International Air-

lines, 502 F. Supp. 423 (E.D.N.Y. 1980)

Air Line Pilots Association v. Transamerica Airlines,

123 L.R.R.M. 2682 (E.D.N.Y.), appeal dismissed, No.

Se CH es BID kcenenceiscseccciemntinenbndens 11

Brotherhood of Railway & Steamship Clerks v. United

Airlines, 325 F.2d 576 (6th Cir. 1963), cert. dis-

A ee Et ee ND apr 8, 10

Delta Air Lines/Western Air Lines, 14 N.M.B. 291

CED Senicniiaitasiln sleicstdincsitsasciacnsithge ncledaaiaisaadpaaamueaaecdaciaain 12,13

Division No. 14, Order of Railroad Telegraphers v.

Leighty, 298 F.2d 17 (4th Cir.), cert. denied, 369

SES MEINE CROUID - :caisckicensncsmptncneiccnsb busts adtiiiedaseadalateicaliaat 8

Frontier Holdings, Inc., 11 N.M.B. 138 (1984) ............ 12-13

Ground Services, Inc., 8 N.M.B. 112 (1980) —.............. 13

International Association of Machinists v. NMB, 425

ae eee Ca Sk ee wee. 19

International Association of Machinists v. Northeast

Airlines, 536 F.2d 975 (1st Cir.), cert. denied, 429

Sa ee COED ain a ale Le es

International Brotherhood of Teamsters v. Texas Int’l

Airlines, 717 F.2d 157 (5th Cir. 1983) 200000... 8

International Brotherhood of Teamsters v. Western

Air Lines, 813 F.2d 1359 (9th Cir. 1987) 000... 5, 14

Mercury Services, Inc., 9 N.M.B. 104 (1981) 0000... 13

National Railroad Passenger Corp. (AMTRAK), 12

KN BE) Renee actrees, A ee 12

North Carolina Ports Railway Commission, 9 N.M.B.

EE SE, Sintec esiccenaatgiecendnsctipie amide assole laine 13

Pan American World Airways, 7 N.M.B. 170 (1979) 13

Republic Airlines, 8 N.M.B. 49 (1980) 20. 13

Ruby v. American Airlines, 323 F.2d 248 (2d Cir.

1963), cert. denied, 376 U.S. 913 (1964) 000. :

VII

Seaboard System Railroad, 11 N.M.B. 217 (1964) ...... 12

Texas Air Corp., 8 N.M.B. 488 (1981) -........-..---------------- 13

Texas Pacific-Missouri Pacific Terminal Railroad, 11

ks Re ere ene eee 12

Transamerica Airlines, 12 N.M.B. 204 (1985) .............. 14

Trans World Airlines/Ozark Airlines, 14 N.M.B. 218

COE cathictivetcennnststneicetsiinitianinctiiatstihanaiiinliee natin caanccees 12

Western Pacific Railroad, 12 N.M.B. 80 (1985) ............ 12

Winston Salem Southbound Railway, 11 N.M.B. 255

EIN Aeidssisscsiesciseslbeccncnniesnlabiativcnnlpbanaiediaicitens dacsecionniciiabanniiabesainenins 12

Il. STATUTES

Railway Labor Act

Section 2, First, 45 U.S.C., § 152, First ...2, 3, 6,9, 21, 22

Section 2, Third, 45 U.S.C., § 152, Third ....2, 3,6, 7,9, 15

Section 2, Fourth, 45 U.S.C., § 152, Fourth ...... 2, 3, 6, 7,

9,15

Section 2, Ninth, 45 U.S.C. § 152, Ninth ....2, 6, 7, 12, 13,

Section 5, First, 45 U.S.C., § 155, First —............ 2, 3, 6,18

I ee ls I a ciccorisenccnsannieecctoeniniente 2,6

III. LEGISLATIVE HISTORY

Hearings on H.R. 7180 Before the House Committee on

Interstate and Foreign Commerce, 69th Cong., Ist

I I a i reeelesleaa aeapabdiaat 18

IV. OTHER MATERIALS

National Mediation Board, Fiftieth Annual Report

I Stach ch liege ern hanes ietca decsasscielaganshippeiedh 25

vViII

National Mediation Board, Procedures for Handling

Representation Issues Resulting from Mergers, Ac-

quisitions or Consolidations in the Airline Industry,

ne I I I acc ndcirihcdidaeh sasdinidtibiinnctlehighantdeniinie

Northrup, The New Employee-Relations Climate In

Airlines, 36 Indus. & Lab. Rel. Rev. 167 (1983) ........

No.

In the Supreme Court of the United States

OCTOBER TERM, 1987

TRANSAMERICA AIRLINES, INC.,

Petitioner,

VS.

AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REPORTS OF OPINIONS BELOW

The decision of the United States Court of Appeals

for the Ninth Circuit is reported as Air Line Pilots Asso-

ciation, International v. Transamerica Airlines, Inc., 817

F.2d 510 (9th Cir. 1987), and is reproduced as amended

at Appendix A. The Order of the Ninth Circuit denying

Transamerica’s Petition for Rehearing and Suggestion for

Rehearing En Banc is unreported, but is reproduced at

Appendix B. The June 5, 1985 oral decision of the Dis-

trict Court is unreported, but is reproduced at Appendix

C. The August 6, 1985 decision of the District Court is

reported as Air Line Pilots Association, International v.

Transamerica Airlines, Inc., 615 F. Supp. 371 (N.D. Cal.

1985), and is reproduced at Appendix D.

STATEMENT OF JURISDICTION

The judgment of the Court of Appeals was entered

on May 14, 1987, and was amended July 1, 1987. The

Court of Appeals denied rehearing and rehearing en banc

on August 12, 1987. This petition is filed within ninety

days of the last-mentioned date, and this Court’s jurisdic-

tion is invoked under 28 U.S.C. § 1254(1).

STATUTES INVOLVED

The statute involved in this case is the Railway Labor

Act (“the Act”), 45 U.S.C. §§ 151-188, and in particular

§§ 152, First, Third, Fourth and Ninth and 155, First,

which are reproduced at Appendix E.

STATEMENT OF THE CASE AND BASIS FOR

FEDERAL JURISDICTION

Transamerica Airlines, Inc. (“Transamerica”) was a

commercial air carrier operating in interstate and foreign

commerce prior to its shutdown on September 30, 1986.

For many years, Transamerica recognized and bargained

with the Air Line Pilots Association (“ALPA”) as the

representative of its pilots, and negotiated numerous col-

lective bargaining agreements with ALPA. In March,

1984, Transamerica and ALPA began negotiating over

the terms of a new collective bargaining agreement. Be-

cause deregulation of the airline industry had opened

Transamerica’s markets to numerous low-cost competitors,

Transamerica’s market position was rapidly declining. As

a result, Transamerica sought in negotiations to lower its

operating costs by obtaining wage and work rules conces-

sions from its pilots. In July, 1984, Transamerica and

ALPA jointly invoked the jurisdiction of the National

Mediation Board (“NMB”), pursuant to Section 5, First

of the Railway Labor Act, 45 U.S.C. § 155, First, and con-

tinued to negotiate over the terms of a new contract under

the supervision of NMB mediators, until the shutdown of

the airline in 1986.

On March 27, 1985, while the NMB’s mediation efforts

continued, ALPA filed, in the United States District Court

for the Northern District of California, a complaint con-

taining two central allegations. First, ALPA alleged that,

in the course of negotiations for a new contract, Trans-

america had failed and refused “to bargain in good faith

and to make and maintain agreements.” Specifically,

ALPA complained of the concessionary “rates of pay and

working conditions” that Transamerica allegedly sought

to “impose[]” upon ALPA. Second, ALPA claimed that

as a means of achieving its “goal” in the negotiations,

Transamerica had acted with its corporate parent, Trans-

america Corporation, to establish a separate airline sub-

sidiary (Trans International Airlines, or “TIA”) to op-

erate in Transamerica’s “marketplace.” ALPA did not

allege, however, that Transamerica pilots lost jobs or

suffered any other detriment as a result of the existence

of TIA. ALPA claimed that Transamerica’s actions vio-

lated Section 2, First, Third and Fourth of the Act, 45

U.S.C. § 152, First, Third, and Fourth.

Upon Transamerica’s motion, the District Court on

June 5, 1985 dismissed the “bad faith bargaining” aspect

of ALPA’s lawsuit without prejudice, holding that fed-

eral courts lack jurisdiction over such claims while the

parties continue to bargain under the mediatory jurisdic-

tion of the NMB (opinion reproduced at Appendix C).

The District Court subsequently dismissed ALPA’s

remaining claims concerning the existence of TIA, holding

lalalaliii a

that ALPA’s claims raised a representation dispute within

the exclusive jurisdiction of the NMB (opinion repro-

duced at Appendix D). The Court noted that ALPA’s

claim was virtually identical to the claim brought and

dismissed for lack of subject-matter jurisdiction in Air

Line Pilots Association v. Texas International Airlines,

656 F.2d 16 (2d Cir. 1981). See A30-31.

The Ninth Circuit reversed, holding that federal

courts may exercise jurisdiction over suits challenging

a party’s collective bargaining proposals, even while the

parties continue to bargain under the jurisdiction and

direct supervision of the NMB’s mediators. The Ninth

Circuit further held that federal courts have jurisdiction

over union claims concerning the existence and operation

of separate airline subsidiaries, even though such claims

raise representation disputes under the Act.

The central issue of this Petition for Writ of Cer-

tiorari is thus whether the federal courts have subject-

matter jurisdiction over ALPA’s claims—claims concerning

which Congress in the Act has already placed jurisdiction

and remedial power in the NMB.

REASONS FOR GRANTING WRIT

I. THE NINTH CIRCUIT’S DECISION BELOW

CREATES A CONFLICT AMONG THE CIRCUITS

AND IGNORES LONG-ESTABLISHED PRECE-

DENTS OF THIS COURT, IN HOLDING THAT

FEDERAL COURTS HAVE , JURISDICTION

OVER REPRESENTATION DISPUTES UNDER

THE RAILWAY LABOR ACT

In holding that the District Court has jurisdiction

over ALPA’s claims regarding the existence of TIA, the

Ninth Circuit created a direct conflict in the law between

its own decision and a recent decision of the Second

Circuit. It also departed from this Court’s consistent

interpretations of the Act, as well as from the Act’s inter-

pretation by every other circuit which has addressed the

issue. In its decision below, the Ninth Circuit ignored

the plain design of Congress in placing all airline labor

disputes of a representational nature under the exclusive

jurisdiction of the NMB. Moreover, by permitting unions

to pursue their “single carrier” or “alter ego” claims in

federal courts as well as before the NMB, the Ninth Cir-

cuit’s decision will likely lead to forum shopping, wasteful

duplication of effort among the courts and the NMB, and

uneven development and further conflict in the law.

In its decision below as well as in another recent

case, International Brotherhood of Teamsters v. Western

Airlines, 813 F.2d 1359 (9th Cir. 1987), petition for cert.

pending, No. 86-1855, the Ninth Circuit has attempted to

rewrite the law concerning the NMB’s jurisdiction in a

manner which is fundamentally inconsistent with the Act.

It is essential to the stability of labor relations in the

airline and railroad industries that this Court grant cer-

tiorari to resolve this important issue.

A. This Case Involves a Representation Dispute,

and the Act Commits All Such Disputes to the

Exclusive Jurisdiction of the NMB

In the 1934 Amendments to the Act, 44 Stat. 577

(1934), Congress vested the NMB with exclusive juris-

diction to resolve all rail labor disputes’ involving repre-

sentation issues. 45 U.S.C. § 152, Ninth. While a “rep-

resentation dispute” in its most common form concerns

whether a majority of employees in a “craft or class,”

or bargaining unit, wish to have a particular union as

their bargaining representative, many collateral or related

issues are representational as well. Typical is the issue

of the scope of the craft or class to be represented. In

that vein, the question may arise whether two ostensibly

separate carriers (and separate crafts or classes), because

of the interrelatedness of their operation or the purpose for

which one was created, in reality constitute a “single car-

ier” or “alter egos,” and thus a single craft or class for

representation purposes. See Switchmen’s Union v. NMB,

320 U.S. 297, 301 (1943).

ALPA’s claims relating to the existence and operation

of TIA (at the time of filing suit, Transamerica Corpora-

tion’s other airline subsidiary) raise just such “single

carrier” and “alter ego” issues, and thus unmistakably

raise a representation dispute. ALPA never alleged that

Transamerica pilots were deprived of any then-existing

work as a result of TIA’s operation.’ s saleaas ALPA’s

1, In 1936, Congress placed the then-infant airline industry

under the Act. Pub.L. No. 487, 49 Stat. 1189 (1936). See 45

U.S.C. §§ 181-88.

2. Any such allegation would at any rate have raised a

‘minor dispute’? under the “scope” clause of the collective bar-

gaining agreement, to be decided by the system board of adjust-

ment, see 45 U.S.C. § 184.

only allegation was that TIA was created to operate in

the same “marketplace” as Transamerica. ALPA’s claim

that the mere existence of TIA undermined the union’s

status as representative of Transamerica’s pilots in viola-

tion of Section 2, Third and Fourth of the Act only makes

sense if it is assumed that TIA and Transamerica consti-

tute a single carrier and a single craft or class, and that

ALPA had the right to represent TIA pilots. Those very

assumptions involve representation issues, however, which

Congress has committed to the exclusive jurisdiction of

the NMB.

This Court emphatically and consistently has upheld

the exclusiveness of the NMB’s jurisdiction over repre-

sentation issues. General Committee of Adjustment v.

Southern Pacific Co., 320 U.S. 338 (1943); General Com-

mittee of Adjustment v. Missouri-Kansas-Texas Railroad

(“M-K-T”’), 320 U.S. 323 (1943); Switchmen’s Union v.

NMB, supra. In M-K-T, this Court maintained that

“Thjowever wide may be the range” of representation

disputes covered by Section 2, Ninth of the Act, “Congress

did not select the courts to resolve them. To the con-

trary, it fashioned an administrative remedy and left that

group of disputes to the National Mediation Board.” As

this Court put it, if a dispute falls within § 2, Ninth, “the

administrative remedy is exclusive.” 320 U.S. at 336

(emphasis added). Accord, Switchmen’s Union, supra,

320 U.S. at 302-03. Similarly, only recently in its Pro-

cedures for Handling Representation Issues Resulting

From Mergers, Acquisitions or Consolidations in the Air-

line Industry, 14 N.M.B. 388 (1987), the NMB declared

that “[t]he parties must recognize that the NMB alone

is vested with the final decision-making authority over

representation issues.”

B. The Ninth Circuit’s Decision Directly Con-

flicts With the Decision of the Second Circuit

in A Virtually Identical Case

Except for the Ninth Circuit, every circuit to have

addressed the issue to date has followed this Court’s lead

and has held that federal courts have no jurisdiction over

any disputes under the Act that are representational in

nature, even if such disputes also involve allegations that

the Act has been violated. See, e.g., Air Line Employees

Association v. Republic Airlines, 798 F.2d 967, 968-69 (7th

Cir.), cert. denied, 93 L. Ed. 2d 404 (1986); International

Brotherhood of Teamsters v. Texas International Airlines,

717 F.2d 157, 161 (5th Cir. 1983); Air Line Pilots Asso-

ciation v. Texas International Airlines, 656 F.2d 16 (2d

Cir. 1981); International Association of Machinists v.

Northeast Airlines, 536 F.2d 975, 977 (1st Cir.), cert.

denied, 429 U.S. 961 (1976); Brotherhood of Railway &

Steamship Clerks v. United Air Lines, 325 F.2d 576, 578-80

(6th Cir. 1963), cert. dismissed, 379 U.S. 26 (1964); Ruby

v. American Airlines, 323 F.2d 248, 255 (2d Cir. 1963),

cert. denied, 376 U.S. 913 (1964); Division No. 14, Order

of Railroad Telegraphers v. Leighty, 298 F.2d 17 (4th

Cir.), cert. denied, 369 U.S. 885 (1962).

While the Ninth Circuit’s decision below conflicts in

principle with all of the foregoing cases, it is in direct

conflict with the Second Circuit’s decision in Air Line

Pilots Association v. Texas International Airlines, supra.

In both cases, ALPA brought federal lawsuits challenging

a carrier’s participation in the creation of a second, non-

union airline subsidiary. In Texas International, ALPA

3. ALPA was represented by the same counsel in Texas

International as in the instant litigation.

was the collective bargaining representative of the pilots

employed by Texas International Airlines (“TXI!’).

TXI’s parent company, Texas Air Corporation, established

a separate airline subsidiary, New York Air (“NYA”),

which was certified to fly some of the same routes as

TXI. ALPA alleged in its complaint that TXI trans-

ferred TXI airport landing rights and. TXI aircraft to

NYA and that TXI, along with its corporate parent, “di-

rected and controlled” the operations of NYA. 656 F.2d

at 17. Those factual allegations are indistinguishable

from ALPA’s allegation in the instant case that Trans-

america acted with its corporate parent to “devise a sec-

ond airline subsidiary for [the corporate parent] to op-

erate in Transamerica’s marketplace.”

ALPA’s statutory claims in Texas International and

the instant case are identical as well. In both cases,

ALPA alleged that the defendant carriers’ role in the

creation of second airline subsidiaries violated Section 2,

First, Third and Fourth of the Act. ALPA claimed that

TXI’s role in establishing NYA violated TXI’s Section 2,

First, duty to “make and maintain agreements,” and was

designed to deprive ALPA of “its representative status

and collective bargaining rights” in violation of Section 2,

Third and Fourth of the Act. Air Line Pilots Association

v. Texas International Airlines, 502 F. Supp. 423, 424

(E.D.N.Y. 1980). So, too, in the instant case, ALPA

claimed that Transamerica’s alleged role in the creation

of TIA constituted “a failure and refusal ... to make

and maintain agreements” under Section 2, First: and

that it “subverts and impairs the representative standing,

collective bargaining rights and legitimate effectiveness

of ALPA to represent Transamerica’s pilots,” in violation

of Section 2, Third and Fourth of the Act.

Recognizing the representational nature of ALPA’s

claims in Texas International, the Second Circuit affirmed

the district court’s dismissal of ALPA’s complaint for lack

of subject matter jurisdiction. It found that ALPA’s

complaint essentially alleged a violation of TXI’s duty to

bargain with respect to NYA pilots, a group which ALPA

had never been certified to represent. 656 F.2d at 21-22.

The Second Circuit recognized that ALPA was not

asking the court to designate it as the bargaining repre-

sentative of NYA pilots, but rather was charging that

TXI, through the operation of NYA, was evading its

bargaining obligations and subverting ALPA’s status as

representative of TXI pilots. 656 F.2d at 19. ALPA

brought precisely the same charges in the instant case.

The Second Circuit recognized that in order to reach

ALPA’s claim that NYA’s operation undermined the

union’s rights as bargaining representative of TXI pilots,

it would have to assume that TXI and NYA were a single

carrier. Id. Such an assumption, the court held, was

not within its power to make, as the issue was one

reserved exclusively for the NMB. The court maintained

that where an issue of representation appears in a union’s

lawsuit, “even in the absence of a challenge from a

competing union or an application to the NMB,” the court

is bound to dismiss the action. Id. at 24.

The District Court below, in dismissing ALPA’s law-

suit for lack of subject-matter jurisdiction, found Texas

4. Thus, any protestation by ALPA in this case that it does

not seek from the court a declaration that it is the bargaining

representative of TIA pilots merely begs the question. As the

Sixth Circuit recognized in Brotherhood of Railway & Steam-

ship Clerks v. United Airlines, supra, with respect to a similar

union disclaimer, it is necessary to “look through form to sub-

stance.” If the union’s court action relates to an underlying

but not yet resolved representation issue, the court cannot assume

jurisdiction. 325 F.2d at 579.

International to be precisely on point. The Ninth Circuit,

however, refused to apply Texas International, attempting

to draw a distinction between the two cases. No such

distinction exists in reality, however. True, the Second

Circuit in Texas International noted in dictum that courts

might have jurisdiction under the Act to prevent a carrier

from terminating the work of its own pilots and trans-

ferring that work to an “alter ego” carrier. 656 F.2d

at 19. That dictum is not a proper statement of the law

because even under such a hypothetical, a representation

dispute within the exclusive jurisdiction of the NMB

would nonetheless exist.

That dictum is irrelevant here, however, because

ALPA never alleged in the instant case that any Trans-

america pilots lost their jobs as the result of the creation

of TIA,® as indeed it could not have. All ALPA alleged

was that TIA was created to operate in Transamerica’s

“marketplace’”—a term that is meaningless in light of

the fact that as a charter carrier under deregulation,

Transamerica could carry passengers or freight anywhere

in the world. The Ninth Circuit interpreted ALPA’s

claim below to be that new flying opportunities might

at some time in the future be diverted to non-ALPA TIA

5. Transamerica ceased flight operations on September 30,

1986 and its remaining assets are being disposed of. ALPA

challenged the lawfulness of that shutdown in a separate lawsuit

in the Eastern District of New York, and the court upheld the

shutdown and denied preliminary injunctive relief. Air Line

Pilots Association v. Transamerica Airlines, 123 L.R.R.M. 2682

(E.D.N.Y.), appeal dismissed, No. 86-8084 (2d Cir. 1986). TIA

was sold to ar outside entity on March 31, 1987. These events

occurred as the result of Transamerica Corporation’s decision

to remove itself from the airline business as well as other busi-

nesses not related to its core insurance and financial service

enterprises. These events were not the subject of the instant

action, moreover, since they all occurred well after ALPA filed

its complaint.

pilots instead of ALPA-represented Transamerica pilots,

Al0-11, and found Texas International to be distinguish-

able on that basis. However, that prospect existed in

a much greater magnitude in Texas International in that

NYA’s flying routes which TXI was authorized to fly fore-

closed the possibility that TXI would expand its own opera-

tions to include those routes. This fact did not deter

the Second Circuit from finding that a representation

dispute existed in that case and that the courts lacked

jurisdiction.

Thus, the Ninth Circuit below failed to distinguish

Texas International in any meaningful way. The repre-

sentation issue is no less present in the instant case than

in Texas International, and the Ninth Circuit’s decision

stands in direct conflict with that of the Second Circuit.

C. The NMB Routinely Adjudicates Claims Such

As Those Which ALPA Has Raised Here, and

ALPA Has Sought Such an Adjudication

From the NMB in This Case

As this Court recognized in M-K-T, supra, Section 2,

Ninth of the Act gives the NMB the sole adjudicatory

function in the settlement of representation disputes. 320

U.S. at 330. The NMB routinely exercises this adju-

dicatory function in resolving issues of “single carrier”

or “alter ego” status; it has adjudicated fifteen such cases

since airline deregulation alone. As the NMB explained

in Pan American World Airways, 7 N.M.B. 170 (1979):

6. Delta Air Lines/Western Air Lines, 14 NMB. 291

(1987); Trans World Airlines/Ozark Airlines, 14 N.M.B. 218

(1987); Western Pacific Railroad, 12 N.M.B. 160 (1985); National

Railroad Passenger Corp. (AMTRAK), 12 N.M.B. 80 (1985);

Winston Salem Southbound Railway, 11 N.M.B. 255 (1984);

Texas Pacific-Missouri Pacific Terminal Railroad, 11 N.M.B. 245

(1984); Seaboard System Railroad, 11 N.M.B. 217 (1984); Fron-

(Continued on following page)

The purpose of the Railway Labor Act is to provide

employees of covered carriers with a free choice as

to their collective bargaining representative. The Act

does not contemplate that carriers will be able to

frustrate such rights by the use of corporate shells

which are in fact created for other purposes and the

National Mediation Board will look behind such devices

to determine the appropriate operating entity, thereby

allowing employees the rights which are granted to

them.

Id. at 170 (emphasis added). Similarly, as the NMB re-

asserted just recently, “In fulfilling its responsibilities

under Section 2, Ninth, the Board may ‘pierce the corporate

veil for purposes of rational labor-management relations.’ ”

Delta Air Lines/Western Air Lines, 14 N.M.B. 291, 301

n.1 (1987). The NMB is thus entirely capable of resolving

the claims ALPA has raised in its complaint before the

District Court. ALPA is not without a forum or remedy

for its claims. Cf. Switchmen’s Union, supra, 320 U.S. at

300.

In fact, ALPA has raised before the NMB the

same claims and arguments placed before the District

Court below. Just prior to filing its complaint in this case,

ALPA filed with the NMB a “Petition for Clarification of

Carrier Status and for Technical Amendment of Certifi-

cation” (Appendix F hereto), in which it sought to

have its certification to represent Transamerica pilots ex-

tended to cover TIA pilots as well, and in which it raised

Footnote continued—

tier Holdings, Inc., 11 N.M.B. 138 (1984); Air Cargo, Inc., 10

N.M.B. 166 (1983); North Carolina Ports Railway Commission,

9 N.M.B. 398 (1982); Mercury Services, Inc., 9 N.M.B. 104

(1981); Texas Air Corp., 8 N.M.B. 488 (1981); Ground Services,

Inc., 8 N.M.B. 112 (1980); Republic Airlines, 8 N.M.B. 49 (1980):

Air Florida, 7 N.M.B. 61 (1979).

the identical “alter ego” argument presented to the courts

below.‘ Moreover, soon after filing its complaint in the

District Court, ALPA wrote to the NMB notifying it of

the pending lawsuit and complaining that ALPA was “in

the untenable position of being unable to bargain for the

entire craft or class within which bargaining appropriately

should take place,” and that the “company’s refusal to

bargain with respect to the overall scope of the craft has

plainly impeded the processes of the Act.” A49 (em-

phasis added). ALPA’s own expressed view of the in-

stant dispute thus only reinforces its representational na-

ture.

D. This Case Presents Issues Much Like Those in

A Pending Case in Which Justice O’Connor

Rejected a Similar Ruling of the Ninth Circuit

The Ninth Circuit failed to recognize the NMB’s ex-

clusive jurisdiction over representation disputes in another

recent case as well. In International Brotherhood of

Teamsters v. Western Air Lines, 813 F.2d 1359 (9th Cir.

1987), the Ninth Circuit enjoined the merger of Western

Airlines and Delta Air Lines in response to a union suit

to compel arbitration of successorship grievances, and over

the carriers’ objection that the dispute was a representa-

tion dispute solely within the NMB’s jurisdiction.

Justice O’Connor stayed the Ninth Circuit’s injunc-

tion, however. She explained:

7. The NMB dismissed ALPA’s petition as improperly

brought, but stressed that its dismissal did not prevent ALPA

from properly “raising these issues within the context of an

Application for Investigation of Representation Dispute pursuant

to Section 2, Ninth of the Railway Labor Act.” Transamerica

Airlines, 12 N.M.B. 204 (1985). ALPA subsequently re-filed

its petition, which is presently pending before the NMB (Case

No. CR-5803).

The reasoning of every other Court of Appeals that

has ruled on the issue raised before the Ninth Circuit

casts grave doubt on the validity of the Ninth Circuit’s

action in this case.

Western Airlines v. International Brotherhood of Team-

sters, 94 L. Ed. 2d 744, 749 (1987) (emphasis added).

Justice O’Connor went on to note the rule recognized by

every circuit except the Ninth that “[a] court may not

entertain an action involving |a representation] dispute

even if it arises in the context of otherwise justiciable

claims.” Id. (emphasis added). The basis of the Ninth

Circuit’s decision below, that “federal courts have subject

matter jurisdiction over claims alleging the establishment

of a replacement subsidiary to the extent that those claims

are actually within the purview of 45 U.S.C. § 152, Third

and Fourth,” A8-9, is directly contrary to this principle.

Justice O’Connor in Western Airlines then cited the

“overwhelming and well-developed case law,” including

Air Line Pilots Association v. Texas International Airlines,

supra, holding that the NMB has exclusive jurisdiction over

alleged violations of the Act that involve representation

issues. Justice O’Connor concluded:

The Ninth Circuit’s divergence from this line of Court

of Appeals decisions leads me to find it very likely

that at least four Justices would vote to grant cer-

tiorari, and that the applicants are likely to prevail

on the merits.

94 L. Ed. 2d at 750. Upon the motion of the unions in-

volved, this Court refused to vacate Justice O’Connor’s

ruling, 55 U.S.L.W. 3675 (1987), and a Petition for Cer-

tiorari was filed May 20, 1987. sub nom. Delta Air Lines

v. International Brotherhood of Teamsters, No. 86-1855.

” |

As in Western Airlines, the Ninth Circuit’s diver-

gence in this case from the otherwise unanimous body

of court of appeals authority requires this Court’s re-

view. Virtually all of the railroads and airlines governed

by the Act operate in multiple circuits. To allow a situa-

tion to continue in which federal courts in some circuits

have jurisdiction over representation issues under the

Act, but only the NMB has jurisdiction in others, would

promote forum shopping of the most blatant kind. It also

would result in an eventual emasculation of the NMB’s au-

thority to determine representation questions whenever

some collateral issue could be posed by an ingenious plain-

tiff. This Court therefore should grant certiorari in order

to preserve the NMB’s jurisdiction and provide a uniform,

nationwide resolution of this important question.

II. THE NINTH CIRCUIT IMPROPERLY AUTHO-

RIZED THE DISTRICT COURT TO INTERFERE

WITH THE NMB’S MEDIATORY JURISDIC-

TION; ITS DECISION IMPROPERLY INTER.

JECTS THE COURT INTO THE HEART OF THE

COLLECTIVE BARGAINING PROCESS AND

PERMITS A PARTY TO DISCOVER ITS OPPO-

NENT’S BARGAINING STRATEGY DURING

NEGOTIATIONS

In holding that federal courts may hear lawsuits

challenging the substance of a party’s economic proposals

in collective bargaining while negotiations continue under

the jurisdiction and supervision of the NMB’s mediators,

the Ninth Circuit ignored the unique design of the Act,

which commits regulation of the parties’ bargaining con-

duct to NMB mediation. In addition, the Court of Appeals

ignored the reality of collective bargaining negotiations,

in which both parties often lead with rather extreme

positions and it is not until such negotiations have been

completed that the total picture becomes apparent. More-

over, the Ninth Circuit opened the door to widespread

abuse and disruption of the collective bargaining process

by allowing a party to collective bargaining to file a law-

suit and pursue discovery of its adversary’s negotiating

strategy while negotiations continue. Finally, the Ninth

Circuit ignored the principle repeatedly embraced by this

Court, that courts are not to pass judgment upon the

substance of a party’s economic proposals in collective

bargaining.

A. Congress Intended That the NMB’s Jurisdic-

tion Over Collective Bargaining Would Be Ex-

clusive While Parties Are in Mediation

In its decision below, the Ninth Circuit ignored the

fundamental precept of the Act that collective bargaining

disputes in the railroad and airline industries are to be

resolved, at least initially, through mediation and not

through judicial intervention.

As this Court recently recognized in Burlington

Northern Railroad v. Brotherhood of Maintenance of Way

Employees, 95 L. Ed. 2d 381 (1987), the Act was a unique

solution to labor problems in the transportation industry

that was developed by representatives of management

and labor, and designed to cure the decades of labor un-

rest resulting from prior legislative schemes. Id. at 397.

As this Court maintained in Burlington Northern, the

Act “cannot be appreciated apart from the environment

out of which it came and the purposes for which it was

designed to serve.” Id. The “environment” out of which

the Act came was one in which the use of mediation to

settle railroad labor controversies was pervasive. As

iaeiceaiaa aa i |

Donald Richberg, the union spokesman for the agreement

between management and labor that ultimately became

the Act, testified before Congress: *

[T]he record of mediation is a great record of suc-

cess. It is a record of sustaining the principle of

persuasion as against the principle of compulsion.

And all parties presenting this bill are seeking now

to return to this form of Government intervention

in industrial differences which has shown in the past

the greatest measure of success.

Hearings on H.R. 7180 before the House Committee on

Interstate and Foreign Commerce, 69th Cong., Ist Sess.

14 (1926) (hereinafter ‘“Hearings”). Thus, mediation and

conciliation, not judicial intervention, were at the heart

of the legislation that became the Act.

Section 5, First of the Act sets forth the procedure

by which parties to collective bargaining may invoke the

jurisdiction of the NMB. When the NMB’s jurisdiction

has been invoked, the Act requires that agency to “use

its best efforts, by mediation, to bring them to agree-

ment.” The NMB’s mediators meet with the parties both

separately and together to attempt to persuade them to

reach agreement. The Act vests the NMB with absolute

discretion as to how long to hold the parties in mediation.

Only if the NMB has determined that no agreement is

possible may it then proffer arbitration to the parties,

and if such is refused, release the parties to self-help

after a 30-day “cooling off” period. 45 U.S.C. § 155,

First. The NMB enforces the duty to bargain in good

8. In Chicago & North Western Railway v. United Trans-

portation Union, 402 U.S. 570, 576 (1971), this Court declared

that Richberg’s testimony before Congress is “entitled to great

weight in the construction of the Act.”

faith by holding a recalcitrant party in mediation (and

thus preventing it from engaging in self-help in support

of its position) until the NMB’s mediator is satisfied that

such party has made every reasonable effort to reach

agreement. As the court in International Association of

Machinists v. NMB, 425 F.2d 527 (D.C. Cir. 1970), ex-

plained: -

For there is woven with the conduct of the mediation

process some judgment born of experience and intu-

ition, that calculates the possibility of settlement in

light of an assessment of motives and possibly even

the bona fides of the conduct of each party.

425 F.2d 540.

Nowhere does the Act authorize the courts to become

involved in this mediation process. As this Court itself

stressed in M-K-T, supra, “[t]he concept of mediation is

the antithesis of justiciability.” 320 U.S. at 337 (emphasis

supplied). It is clear that the Act’s framers felt that,

absent extreme circumstances, the courts should not inter-

fere with the mediation process. As Richberg testified

in the hearings on the Act:

I think if either party showed a willful disregard of

the fundamental requirements, that they should make

every reasonable effort to make an agreement—in

other words, if they refused absolutely to confer, to

meet or discuss or negotiate, I think there is a question

as to whether there might not be invoked some judicial

compulsion. ... But outside of that, if the parties

do not make an agreement, I think you face this ques-

tion, first, as to whether the Government board of

mediation could bring them to see the error of their

ways; and second, if that effort was unsuccessful,

whether they could bring them to refer that dispute

to an arbitration, and then if it was of sufficient mag-

nitude so that it actually affected commerce substan-

tially, whether the emergency board could not itself

bring about an adjustment.

Hearings at 66 (emphasis added). No such extreme cir-

cumstances are present in this case. The evidence before

the courts below was undisputed that Transamerica and

ALPA met and negotiated in numerous bargaining sessions

prior to the filing of this action. A50-51. There can be no

claim that Transamerica refused to “confer, to meet or

discuss or negotiate” with ALPA.

The Ninth Circuit thus completely ignored the back-

ground and purpose of the Act in holding that the District

Court may force the NMB’s mediator to step aside® and

have the District Court enmesh itself in the continuing

negotiations to evaluate the substance of the parties’ pro-

posals to date. Such a view not only is completely con-

trary to the Act’s design, but it disregards as well the very

nature of the bargaining process, in which parties typically

lead with one-sided proposals.

ALPA’s basic claim is that Transamerica demanded too

much in its concessionary proposals. In its brief to the

Ninth Circuit, ALPA complained that “Transamerica has

not moved at all from its draconian demand for a 50-

percent wage cut.” Plaintiff-Appellant’s Brief at 8. But a

court cannot determine the bona fides of a party’s bargain-

ing position until its final proposals have been put on the

table and an impasse has been reached. To examine a

party’s position out of context at an intermediate stage of

negotiations invites a distorted view. Tactics and strategy

9. After filing its lawsuit, ALPA specifically requested that

the NMB suspend mediation pending resolution of ALPA's court

action. See A49.

may dictate that a party take an initial position with a

view toward assuming a very different ultimate position;

e.g., taking an initial hard line on issue X anticipating an

eventual trade of X for Y."° Allowing a court to become

involved in negotiations before they are complete is akin

to going into a darkroom while film is still developing

to determine whether the finished photograph will be out

of focus. It would be impossible at that point for a court

to glean a party’s ultimate intentions from its bargaining

maneuvers.

It is important to note that the District Court below

dismissed ALPA’s lawsuit without prejudice to ALPA’s

right to reinstate it after bargaining and mediation had

been completed. As such, Section 2, First would not be

rendered unenforceable, as ALPA argues, by requiring

a court to withhold intervention merely until the NMB

has completed the statutory mediation process.

For the same reason, this Court’s ruling in Chicago &

North Western, supra, does not support the Ninth Circuit’s

decision below. In Chicago & North Western, a carrier

brought suit challenging the good faith of the union’s bar-

gaining conduct, and to enjoin a threatened strike, after

the NMB had released the parties from mediation and re-

linquished juvisdiction. 402 U.S. at 573-74. This Court

held that Section 2, First of the Act was enforceable by

the courts “after the entire statutory scheme has run its

course.” Id. at 596 (Brennan, J., dissenting) (original em-

phasis). This Court in Chicago & North Western never

-_—~-

10. As the District Court below observed:

Bargaining sometimes means stonewalling for awhile. Making

offers. Trying out different theories. So, I think it is

inappropriate in this case for this court to allow a case

to go forward challenging lack of good faith until the bar-

gaining is over. When it is over, we can look at it.

A20.

addressed the situation presented in the instant case. It

is true that this Court stated that Section 2, First should

not be enforceable only by the NMB’s timing of the release

of the parties from mediation, id. at 582, but Transamerica

has never disputed that principle. Transamerica’s point

is simply that a court should not interject itself into the

bargaining process until the parties’ bargaining positions

have become clearly established, and the NMB has finished

its statutorily-assigned task of mediation. This Court

therefore should grant certiorari here to correct the Ninth

Circuit’s encroachment upon the mediatory jurisdiction

of the NMB, and to clarify the reach of Chicago & North

Western in the instant situation.

B. The Ninth Circuit’s Ruling Permits a Party to

Disrupt the Collective Bargaining Process by

Use of Discovery to Learn of Its Opponent’s

Bargaining Strategy

In holding that courts have jurisdiction over bad faith

bargaining claims before negotiations and NMB mediation

have been completed, the Ninth Circuit has authorized

parties to collective bargaining to file lawsuits and use

the federal court discovery process to expose their op-

ponents’ bargaining strategies and ultimate “bottom line.”

Such was precisely ALPA’s object in the instant liti-

gation. Immediately upon filing its lawsuit, ALPA de-

posed several senior Transamerica management officials

concerning Transamerica’s bargaining goals and strategies.

For example, while negotiations were still underway,

ALPA asked Ernest Eastman, Manager of Labor Relations

and a member of Transamerica’s bargaining team, “Would

you describe[] the process for me of how the company

decided what it wanted to achieve in those negotiations

for a new agreement with ALPA?” A67. ALPA asked

Transamerica Vice Chairman Howard Korth, “What was

said [in Transamerica Board of Directors meetings] about

the company’s plans should a strike ensue?” A59, and

whether there was “any benchmark figure that the com-

pany was trying to achieve in concessions” from ALPA.

A54. ALPA inquired of Senior Director of Operations

Hank Bathey, “Has the company made .any pians to hire

any replacement pilots should there be a strike?” A70.”

Finally, during the interrogation by ALPA’s counsel, James

Linsey, of Ernest Eastman concerning Transamerica’s

plans to operate in the event of a pilot strike, counsel for

Transamerica, William F. Kaspers, objected: “I don’t

think it would be appropriate to delve into contingency

arrangements under the guise of this lawsuit.” Linsey re-

sponded. “That is what this lawsuit is all about.” A67.

The whole institution of collective bargaining in the

railroad and airline industries will be disrupted if the

Ninth Circuit’s ruling is permitted to stand. As noted

previously, collective bargaining by its nature involves the

planning and execution of careful strategies, as well as a

certain amount of posturing, on both sides. The col-

lective bargaining process simply cannot operate if the

parties can rush into court with “bad faith bargaining”

claims and counterclaims and proceed to discover one

another’s goals and strategies while bargaining continues.

The Act, which places so much emphasis upon collective

bargaining, could never have contemplated such an absurd

result. This Court must grant certicrari in this case to

prevent such a deterioration of the collective bargaining

process.

11. Excerpts from the Eastman, Korth and Bathey depo-

sitions setting forth these lines of questioning in their entirety

are set forth at A52-70.

C. The Ninth Circuit’s Decision Conflicts With

This Court’s Long-Standing Rule That Courts

May Not Order Parties in Negotiation to Mod-

ify the Substance of Their Economic Proposals

The essence of ALPA’s “bad faith bargaining” claim

in this litigation is that, at the time of filing suit, Trans-

america had not yet offered proposals of wages and bene-

fits in the course of negotiations that ALPA deemed satis-

factory. If the District Court were to award relief on

such a claim, it would have to order Transamerica to mod-

ify its bargaining stance in the midst of negotiations.

Courts clearly lack authority to issue such an order,

however. It is basic to our national labor policy that

courts may not force parties in collective bargaining to

reach agreements, or impose particular terms upon a party.

In Terminal Railroad Association of St. Louis v. Brother-

hood of Railroad Trainmen, 318 U.S. 1 (1943), this Court

explained:

The Railway Labor Act, like the National Labor Rela-

tions Act, does not undertake government regulation

of wages, hours or working conditions. Instead it

seeks to provide a means by which agreement may

be reached with respect to them. The national interest

expressed in those Acts is not primarily in the work-

ing conditions as such. So far as the Act itself is con-

cerned these conditions may be as bad as the employees

will tolerate or be made as good as they can bargain for.

The Act does not fix and does not authorize anyone

to fix generally applicable standards for working

conditions.

Id. at 6 (emphasis added).

Similarly, in H.K. Porter Co. v. NLRB, 397 U.S. 99

(1970), the employer steadfastly refused to accept the

union’s proposal for a dues-checkoff clause in the contract

under negotiation. The NLRB found that the employer’s

refusal constituted bad faith bargaining. This Court re-

versed, holding that the NLRB is without power to order

a party to modify its substantive bargaining proposals.

This Court maintained that

[I]t was recognized from the beginning that agreement

might in some cases be impossible, and it was never

intended that the Government would in such cases

step in, become a party to the negotiations and impose

its own views of a desirable settlement.

Id. at 103-04 (emphasis added). Accord, NLRB v. Ameri-

can National Insurance Co., 343 U.S. 395, 408-09 (1952).

Finally, this Court in Chicago & North Western, supra,

recognized the “strong federal labor policy against gov-

ernmental interference with the substantive terms of col-

lective-bargaining agreements.” 402 U.S. at 579 n.11.

Concessionary bargaining is a fact of life in the post-

deregulation airline industry.” As the NMB’s Fiftieth

Annual Report (1984) said of the period which gave rise

to this action:

Fiscal 1984 was a period of concessionary bargaining,

with airlines negotiating for wage cuts and freezes

. and more productive work rules. On the union

side there was resistance to such changes and media-

tion frequently became a prolonged and difficult pro-

cedure.

12. See generally Northrup, The New Employee-Relations

Climate in Airlines. 36 Indus. & Lab. Rel. Rev. 167, 169, 180

(1983).

Id. at 4. Most airlines have been forced to seek wage and

work rule concessions from their employees in order to

survive in today’s intensely competitive marketplace. The

Ninth Circuit’s ruling below, however, will permit unions

to tie up carriers in federal court litigation in attempts to

avoid the economic realities of the marketplace. The Ninth

Circuit’s ruling is inconsistent with this Court’s repeated

holdings that the courts and the NLRB lack jurisdiction

to examine the substance of a party’s economic proposals.

Likewise, by allowing unions to disrupt negotiations and

embroil carriers in massive litigation over such issues, the

Ninth Circuit’s decision is fundamentally inconsistent with

the Act’s emphasis upon settlement of disputes through

negotiation and mediation. This Court should grant cer-

tiorari in order to correct these serious errors.

CONCLUSION

The Ninth Circuit’s decision below radically departs

from the basic design of the Act, and from this Court’s and

other courts’ consistent interpretations of the Act. The

Ninth Circuit’s holding with respect to federal court ju-

risdiction in representation disputes, if ndt corrected, will

likely cause blatant forum shopping and massive confusion

and inconsistency in the law. Its holding with respect

to federal court jurisdiction over bad faith bargaining

claims, if allowed to stand, will threaten the very institu-

tion of collective bargaining in the railroad and airline in-

dustries. For these reasons, Transamerica submits that

this Court should grant certiorari in this case.

Respectfully submitted,

FISHER & PHILLIPS

By: Rosert J. BERGHEL

MICHAEL C. TOWERS

JAMES J. McDoNALp, JR.

3500 First Atlanta Tower

Atlanta, Georgia 30383

(404) 658-9200

Counsel for Petitioner

APPENDIX

APPENDIX A

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 85-2455

D.C. No. CV-85-2803-SW

Arr LINE PILoTs ASSOCIATION, INTERNATIONAL,

Plaintiff-Appeliant,

TRANSAMERICA AIRLINES, INC.,

Defendant-Appellee.

ORDER AND AMENDED OPINION

Filed May 14, 1987

Amended July 1, 1987

Before: Herbert Y. C. Choy, Alfred T. Goodwin and

Harry Pregerson, Circuit Judges.

Opinion by Judge Pregerson

Appeal from the United States District Court

for the Northern District of California

Spencer Williams, District Judge Presiding

COUNSEL

Michael E. Abram, James Linsey, New York, New York

for the plaintiff-appellant.

James E. McDonald, Jr., Atlanta, Georgia, for the defen-

dant-appellee.

ORDER

The opinion filed May 14, 1987, is amended as follows:

Footnote 1 on page 4 of the original opinion is deleted.

In lieu thereof, the following text is inserted:

We hold that this case is not moot because effects

bargaining may continue despite the cessation of flight

operations, because the complaint seeks damages in addi-

tion to injunctive relief, and because the wrongs alleged

may be capable of repetition yet evading review.

OPINION

PREGERSON, Circuit Judge:

While the Air Line Pilots Association, International

(“ALPA”) and Transamerica Airlines (‘“Transamerica’’ )

were in the process of negotiating a new collective bar-

gaining agreement, and while the parties were in media-

tion to assist this process, ALPA filed the instant suit

against Transamerica. The complaint alleges that Trans-

america violated the Railway Labor Act (“the Act”) by

refusing to bargain and by establishing a nonunion re-

placement subsidiary to which Transamerica would divert

business. Transamerica moved to dismiss the complaint

under Fed. R. Civ. P. 12(b)(1) and 12(b)(6), and the

district court granted the motion. ALPA appeals the

dismissal of the complaint.

We hold that the district court had subject matter

jurisdiction over both aileged violations and that both

violations give rise to claims upon which relief can be

granted.

BACKGROUND

ALPA is the exclusive collective bargaining repre-

sentative under the Act for pilots employed by Trans-

america. In March 1984, ALPA and Transamerica began

negotiating the terms of a new collective bargaining agree-

ment. The parties jointly invoked the assistance of the

National Mediation Board (“the Board”) in July 1984

and have been involved in mediation since that time.

On March 27, 1985, ALPA commenced the instant action

against Transamerica. y

The complaint alleges wiat Transamerica, together

with its corporate parent, Transamerica Corporation, for-

mulated a plan to institute pay scales without the ap-

proval of ALPA; that to further this plan, Transamerica

entered into collective bargaining negotiation with ALPA,

but failed and refused to exert reasonable efforts to reach

agreement or bargain in good faith; and that Transamerica

acted with its corporate parent to achieve the plan’s

wage-lowering goal by establishing a separate subsidiary

to operate in Transamerica’s marketplace. The complaint

also alleges that Transamerica threatened to terminate

its operations. Count I of the complaint alleges that this

conduct violates 45 U.S.C. § 152 First. Count II alleges

that this conduct violates 45 U.S.C. § 152 Third and

Fourth.

Affidavits from the parties describe the following

additional facts. On or about August 11, 1986, Trans-

america announced its intention to cease all flight opera-

tions. On September 30, 1986, Transamerica ceased all

flight operations. Transamerica pilots were permanently

furloughed effective October 2, 1986. Transamerica stated

that it is going out of business permanently. For this

reason, Transamerica moved after the completion of brief-

ing to dismiss this appeal as moot.’

1. We hold that this case is not moot because effects bar-

gaining may continue despite the cessation of flight operations,

because the complaint seeks damages in addition to injunctive

relief, and because the wrongs alleged may be capable of repti-

tion yet evading review.

DISCUSSION

Disposition of a motion to dismiss for lack of subject

matter jurisdiction and disposition of a motion to dismiss

for failure to state a claim are both reviewed de novo

by this court. Peter Starr Production Co. v. Twin Con-

tinental Films, Inc., 783 F.2d 1440, 1442 (9th Cir. 1986)

(subject matter jurisdiction); Fort Vancouver Plywood

Co. v. United States, 747 F.2d 547, 552 (9th Cir. 1984)

(failure to state a claim). The reviewing court must,

with respect to both motions, construe the allegations

of the complaint favorably to the plaintiff, and must

dismiss the complaint only if no set of facts could be

proved that would entitle the plaintiff to relief under

the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236-37

(1974).

I. Enforcement While Mediation is in Progress

45 U.S.C. § 155 First establishes a procedure for

settling disputes between employees and the carrier con-

cerning, inter alia, changes in pay, rules, and working

conditions. See Brotherhood of R.R. Trainmen v. Jack-

sonville Terminal Co., 394 U.S. 369, 377-78 (1969). When

such a dispute arises, both parties or either party as part

of that procedure may invoke the services of the Board,

which “shall use its best efforts, by mediation, to bring

them to agreement. If such efforts to bring about an

amicable settlement through mediation shall be unsuc-

cessful, the said Board shall at once endeavor as its final

required action . . . to induce the parties to submit their

controversy to arbitration ....” 45 U.S.C. § 155 First.

The Act imposes a number of restrictions upon the

conduct of the parties throughout the dispute-settlement

procedure. These restrictions include “the duty of all

ee,

- a ee eee ee

carriers, their officers, agents, and employees to exert

every reasonable effort to make and maintain agreements

concerning rates of pay, rules, and working conditions,

and to settle all disputes, whether arising out of the

application of such agreements or otherwise ....” 45

U.S.C. § 152 First.

A. Subject Matter Jurisdiction

The district court held that there is no subject mat-

ter jurisdiction over a claim under 45 U.S.C. §$ 152 First

while mediation conducted by the Board is in progress.

In support of this holding, Transamerica makes two argu-

ments.

{1] The first is that mediation is a sensitive process

that will suffer as a result of judicial interference. In

support of this argument, Transamerica cites Interna-

tional Association of Machinists v. National Mediation

Board, 425 F.2d 527 (D.C. Cir. 1970), which held that

courts have only limited jurisdiction to scrutinize the

Board’s decision not to terminate mediation. But this

case is not on point. The question whether federal courts

have jurisdiction to review Board decisions is not the

same as the question whether federal courts have juris-

diction to enforce provisions of the Act. This distinction

is central to the Supreme Court’s decision not to allow

judicial review of the Board’s certification of represen-

tatives. Switchmen’s Union v. National Mediation Bad.,

320 U.S. 297, 305-07 (1943). Transamerica has presented

no case in which deference to the mediation process has

restricted the ability of federal courts to enforce the

provisions of 45 U.S.C. § 152 First.

Transamerica’s second argument is that ALPA has

presented no case in which a court has allowed enforce-

ment of 45 U.S.C. § 152 First while mediation was in

progress. This assertion is accurate. Federal courts, how-

ever, do have jurisdiction to enforce the provisions of

45 U.S.C. § 152 First. In Chicago & North Western Rail-

way Co. v. United Transportation Unjon, 402 U.S. 570

(1971), which involved a suit commenced after mediation

had been terminated, the Court stated:

[W]e think the conclusion inescapable that Congress

intended the enforcement of § 2 First [45 U.S.C.

§ 152 First] to be overseen by appropriate judicial

means rather than by the Mediation Board’s retain-

ing jurisdiction over the dispute or prematurely re-

leasing the parties for resort to self-help if it feels

such action is called for.

Id. at 582 (emphasis added).

[2] Transamerica has presented no authority restrict-

ing federal jurisdiction while mediation is in progress,

Similarly, ALPA has presented no case involving litiga-

tion undertaken to enforce 45 U.S.C. § 1522 First while

mediation was in progress. Because Chicago & North

Western instructs that enforcement of 45 U.S.C. § 152

First is to be “overseen by appropriate judicial means

rather than by the Mediation Board’s retaining jurisdic-

tion,” we conclude that subject matter jurisdiction exists.

The district court in its oral ruling held that it lacked

subject matter jurisdiction because it saw “a technical

problem of being able to file a lawsuit while bargaining

is going on, and then being able to take depositions of the

people who are negotiating and screw up the strategy.”

Similarly, Transamerica argues that there is no subject

matter jurisdiction because deference to the discretion

of the Board must be exercised in light of the fact that

“[c]lollective bargaining under the supervision of a Na-

tional Mediation Board mediator involves many intricate

strategic and tactical moves by both parties.” These pru-

dential considerations do not, however, speak to the issue

of subject matter jurisdiction, which is governed by con-

gressional enactment, and not judicial prudence.’

B. Failure to State a Claim

{3} Transamerica contends that ALPA has failed to

allege a violation of 45 U.S.C. § 152 First. In the com-

plaint, however, ALPA alleges that “Transamerica has

entered into collective bargaining negotiations with ALPA,

ostensibly to conclude a new collective bargaining agree-

ment, but in those negotiations it has failed and refused

to exert reasonable efforts to reach agreement with ALPA

or otherwise to negotiate in good faith with ALPA.” This

alleged activity violates the requirement in 45 U.S.C.

§ 152 First that carriers ‘exert every reasonable effort to

make and maintain agreements concerning rates of pay,

rules, and working conditions, and to settle all disputes.”

2. To the extent that Transamerica does attempt to show

that Congress did not provide for subject matter jurisdiction

under these facts, it refers to the testimony of Donald R. Rich-

berg at the House hearings on the proposed Act. The testimony

excerpt is intended to support the proposition that judicial in-

tervention into collective bargaining under the Act should be

limited to outright refusals to bargain. Yet the portion quoted

by. Transamerica contains the following: “if they [either party]

refused absolutely to confer, to meet or discuss or negotiate, I

think there is a question as to whether there might not be in-

voked some judicial compulsion... .” Hearings on H.R. 7180

before the House Committee on Interstate and Foreign Com-

merce, 69th Cong., lst Sess. 66 (1926). The complaint alleges

that Transamerica “has failed and refused .. . to negotiate in

good faith with ALPA,” which is tantamount to refusal “to ne-

gotiate” as stated in the Richberg quote. It is largely on the

basis of the Richberg testimony that the Supreme Court held

that subject matter jurisdiction does exist generally over 45

U.S.C. § 152 First. See Chicago & North Western, 402 U.S. at

576-77.

See Chicago & Northwestern, 402 U.S. at 580 n.11; Trans

Int'l Airlines, Inc. v. International Bhd. of Teamsters, 650

F.2d 949, 962 (9th Cir. 1980), cert. denied, 449 U.S. 1110

(1981) (“The Supreme Court in [Chicago & North West-

ern] held that [45 U.S.C. § 152 First] imposed a substantive

duty on parties, enforceable by injunctive relief, to exert

reasonable efforts during the negotiation process to reach

an agreement.”) Thus, the ALPA complaint states a claim

under 45 U.S.C. § 152 First.

II. Creation of a Replacement Subsidiary

In addition to 45 U.S.C. § 152 First’s requirement that

the parties exert reasonable efforts to make and maintain

agreements and settle disputes, the Act requires, inter alia,

that “neither party shall in any way interfere with, in-

fluence, or coerce the other in its choice of representatives,”

45 U.S.C. § 152 Third, and that “it shall be unlawful for

any carrier to interfere in any way with the organization

of its employees ... or to influence or coerce employees

in an effort to induce them to join or remain or not to

join or remain members of any labor organization.” 45

U.S.C. § 152 Fourth.

A. Subject Matter Jurisdiction

[4] Federal courts have jurisdiction to enforce the

provisions of 45 U.S.C. § 152 Third and Fourth prohibiting

interference with effective representation and organiza-

tion. Virginian Ry. Co. v. System Fed’n No. 40, 300 US.

515, 543 (1937); Texas & N.O.R. Co. v. Brotherhood of

Ry. & S.S. Clerks, 281 U.S. 548, 569 (1930); Ruby v. TACA

Int'l Airlines, 439 F.2d 1359, 1364 (5th Cir. 1971); Brother-

hood of Ry. Trainmen v. Central of Ga. R.R. Co., 305 F.2d

605, 608-09 (5th Cir. 1962). Thus, federal courts have

subject matter jurisdiction over claims alleging the estab-

ee Se ee ee ene a An ey pane nee

lishment of a replacement subsidiary to the extent that

those claims are actually within the purview of 45 U.S.C.

§ 152 Third and Fourth.

The district court held that the claims concerning the

replacement subsidiary involve a representational dispute

falling under 45 U.S.C. § 152 Ninth, not a dispute under

45 U.S.C. § 152 Third or Fourth, and for that reason subject

matter jurisdiction is lacking.* The district court in so

holding relied upon the Second Circuit decision in Air

Line Pilots Association, International v. Texas International

Airlines, 656 F.2d 16 (2d Cir. 1981).

In Texas International the corporate parent of an ex-

isting airline underwent a corporate restructuring whereby

a new subsidiary was created to service a route that the

existing airline subsidiary had not serviced, but that the

existing subsidiary was authorized to service. ALPA,

the plaintiff union in the Texas International case, asserted

that pilots employed by the new subsidiary must be cov-

ered by the collective bargaining agreement made with

the existing subsidiary. The Second Circuit held that the

suit constituted a representational dispute under 45 U.S.C.

§ 152 Ninth, and therefore that the courts did not have

subject matter jurisdiction over it. The court’s holding

was, however, a restricted one.

The court distinguished acts giving rise to jurisdic-

tion under § 152 Third and Fourth from those that could

give rise only to representational disputes. In the first

category it placed such acts as transferring existing busi-

ness flown by ALPA pilots to a newly formed corporate

3. Representational disputes under 45 U.S.C. § 152 Ninth

are disputes over “whether one organization or another was the

proper representative of a particular group of employees.”

Switchmen’s Union v. National Mediation Bd., 320 U.S. 297, 302

(1943). Courts have no jurisdiction over Board determinations

in such disputes. Id. at 305-06.

Al0

alter ego in order to take work from the union. 656

F.2d at 19. In the second category, it placed such acts

as forming a separate, fully independent company to serve

routes neither flown nor certificated to the preexisting

carrier. Id. In Texas International, the preexisting sub-

sidiary had never flown the routes assigned to the new

subsidiary, although it was authorized to do so. There-

fore, the court found that the facts fit in the second cate-

gory, and gave rise to a representational dispute within

the exclusive jurisdiction of the Board.

In the instant case, the complaint alleges that Trans-

america, along with its corporate parent, acted “to devise

a second airline subsidiary for [the corporate parent] to

operate in Transamerica’s marketplace.” Consequently,

the instant case is closer to the first category noted in

Texas International, where the carrier seeks to “transfer

existing business flown by ALPA pilots to a newly formed

corporate alter ego for the purpose of displacing the work

of ALPA pilots,” id., and, therefore, is an interference

with representation and organization within the purview

of 45 U.S.C. § 152 Third and Fourth.

As the above discussion indicates, Texas International

does not support dismissal for lack of subject matter juris-

diction in the instant case. In fact, it recognizes the

application of 45 U.S.C. § 152 Third and Fourth to the

diversion of work from a subsidiary bound by a collective

bargaining agreement to a newly formed, related non-

union subsidiary that would operate in the same market-

place.

[5] We hold that a federal court has jurisdiction to

hear a dispute in which an employer is alleged to have

established a nonunion replacement subsidiary in order

to transfer to it work being performed by an existing

—— es er ew

All

subsidiary that is bound by a collective bargaining agree-

ment.

B. Failure to State a Claim

ALPA asserts that the portion of the complaint re-

ferring to the creation of a replacement subsidiary states

a claim both with respect to the status quo requirements

of the Act and with respect to the portions of the Act

prohibiting the undermining of representation and orga-

nization.

The status quo provision in 45 U.S.C. § 156, states

in relevant part: “In every case where .. . the services

of the Mediation Board have been requested by either

party, or said Board has proffered its services, rates of

pay, rules, or working conditions shall not be altered by

the carrier until the controversy has been finally acted

upon ....” The Supreme Court described the status

quo provisions of the Act generally in Detroit & Toledo

Shore Line Railroad Co. v. United Transportation Union,

396 U.S. 142 (1969), as follows:

The obligation of both parties during a period in

which any of these status quo provisions is properly

invoked is to preserve and maintain unchanged those

actual, objective working conditions and practices,

broadly conceived, which were in effect prior to the

time the pending dispute arose and which are in-

volved in or related to that dispute.

Id. at 152-153. See Trans Int'l Airlines v. International

Bhd. of Teamsters, 650 F.2d 949, 967 (9th Cir. 1980).

ALPA’s complaint alleges that,

Transamerica has acted with [its corporate parent]

to devise a second airline subsidiary for [the parent]

to operate in Transamerica’s marketplace, wholly or

Al2

_ partly as a device and instrument to achieve Trans-

america’s goal [to dictate rates of pay and working

conditions] and to further Transamerica’s plan as

aforesaid; in further support of that plan Transamerica

has threatened to terminate its own operations.

The prospect of having work shifted to a replacement

subsidiary would constitute a change in the working con-

ditions and practices under the Shore Line standard. See

Local 533, Transp. Workers Union v. Eastern Air Lines,

044 F. Supp. 1315, 1327 (E.D.N.Y. 1982), modified, 695

F.2d 668 (2d Cir. 1983) (“the deprivation of a work

opportunity involving the type of work traditionally per-

formed by the Union is a change in working conditions,

even where the work is new.’”).

{6] Transamerica argues that ALPA has not stated

a claim because “ALPA never alleged in its Complaint

that Transamerica violated the status quo obligations of

the RLA.” It is true that the complaint does not men-

tion the status quo provisions of 45 U.S.C. § 156. How-

ever, “[a] ‘complaint is not to be dismissed because the

plaintiff’s lawyer has misconceived the proper legal theory

of its claim, but is sufficient if it shows that the plaintiff

is entitled to any relief which the court can grant, re-

gardless of whether it asks for the proper relief.’” United

States v. Howell, 318 F.2d 162, 166 (9th Cir. 1963) (quoting

Dotschay v. National Mutual Ins. Co., 246 F.2d 221, 223

(5th Cir. 1957)); see 5 C. Wright & A. Miller, Federal

Practice and Procedure § 1357 (1969). Because the com-

plaint alleges facts that would constitute a violation of

45 U.S.C. § 156, a claim has been stated.

[7] ALPA argues that it also has stated a claim by

alleging that “[d]efendant’s course of conduct, as described

. above, subverts and impairs the representative stand-

ee ee

et Ne et 018s He wie

Al3

ing, collective bargaining rights, and legitimate effective-

ness of ALPA to represent Transamerica’s pilots under

the Act.” ALPA’s claim clearly fits within the language

of 45 U.S.C. § 152 Third and Fourth. The complaint,

broadly construed, alleges that Transamerica and its par-

ent have sought to establish a subsidiary that could take

over Transamerica’s business but that *would be unen-

cumbered by the collective bargaining agreement with

ALPA. The use of a similar “runaway shop technique

to defeat the pilots’ collective bargaining gains,” when a

carrier moved the pilot base to E] Salvador in order to

render ALPA’s representation illegal under local law, was

found to warrant injunctive relief under 45 U.S.C. § 152

Fourth. Ruby v. TACA Int'l Airlines, 439 F.2d 1359, 1364

(5th Cir. 1974).

Transamerica argues that 45 U.S.C. § 152 Third and

Fourth cannot give rise to a claim once a union has been

certified as the collective bargaining agent, and ALPA

has already been certified in the present case. Trans-

america cites International Association of Machinists v.

Northwest Airlines, 673 F.2d 700 (3d Cir. 1982) for sup-

port. The Northwest Airlines court did state that gen-

erally 45 U.S.C. § 152 Third and Fourth would not “provide

for federal court jurisdiction in an action in which a union

asserts that the disciplinary measures taken by a carrier

during the existence of a coilective bargaining agreement

were motivated by anti-union animus.” Id. at 709 (em-

phasis in original). However, the court also stated that

it does not “foreclose the possibility that given the appro-

priate case and the appropriate circumstances such an

action could be brought in federal court.” Id.

Furthermore Northwest Airlines recognized that there

is authority to the contrary. The Fifth Circuit case,

Brotherhood of Railroad Trainmen v. Central of Georgia

Al4

Railway Co., 305 F.2d 605, 608-09 (5th Cir. 1962), granted

relief under 45 U.S.C. § 152 Third during the existence

of a collective bargaining agreement. Northwest Airlines

sought to distinguish Railroad Trainmen on the ground

that it was decided merely on the pleadings. The present

case, which is before this court on a motion to dismiss

under Fed. R. Civ. P. 12(b)(1) and (6), is also being

decided on the pleadings. Northwest Airlines, therefore,

does not support Transamerica’s argument.*

Finally, Transamerica argues that liability under 45

U.S.C. § 152 Third and Fourth once a union had been

certified as the collective bargaining agent is possible

only in “unusual circumstances” when there has been

“some overt, unlawful act on the part of the carrier that

had a demonstrable effect upon the union involved.”

Even if this assertion is true, at this stage in the pro-

ceedings we have no evidence that this case does not

involve unusual circumstances. The portion of the ALPA

complaint alleging the establishment of a replacement

subsidiary states a claim under 45 U.S.C. § 152 Third

and Fourth, and also states a claim under 45 U.S.C. § 156.

CONCLUSION

[8] The district court has subject matter jurisdic-

tion over both alleged violations in the complaint in the

instant case. Furthermore, both violations give rise to

claims upon which relief can be granted. Therefore,

the orders granting Transamerica’s motions to dismiss the

complaint are reversed. This action is remanded to the

district court for consideration of all issues that are not

moot.

4. It should be noted that the Fifth Circuit case, Ruby, 439

F.2d at 1364, also involved a dispute after a union had been

certified as the collective bargaining agent.

Al5

APPENDIX B

(Filed August 12, 1987)

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 85-2455

AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL,

Plaintiff-Appellant,

VS.

TRANSAMERICA AIRLINES, INC.,

Defendant-Appellee.

ORDER

Before: CHOY, GOODWIN, and PREGERSON, Circuit

Judges.

The panel as constituted above voted to deny the

petition for rehearing. Judges Goodwin and Pregerson

voted to reject the suggestion for rehearing en banc and

Judge Choy recommends such rejection.

The full court has been advised of the suggestion for

rehearing en banc and no judge of the court has requested

a vote on the suggestion for rehearing en banc. Fed. R.

App. P. 35(b).

The petition for rehearing is denied and the sugges-

tion for rehearing en banc is rejected.

Al6

APPENDIX C

IN THE

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT

OF CALIFORNIA

BEFORE: HON. SPENCER WILLIAMS, JUDGE

NO. C 85-2803 SW

AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL,

Plaintiff-Appellant,

vs.

TRANSAMERICA AIRLINES, INC.

Defendant-Appellee.

REPORTER’S TRANSCRIPT

San Francisco, California

June 5, 1985

FOR THE PLAINTIFF: James L. Linsey, Esq.

FOR THE DEFENDANT: William F. Kaspers, Esq.

[2] June 5, 1984

The Clerk: C 85-2803 SW, Airline Pilots Association

vs. Transamerica Airlines.

(Appearances noted for the record)

The Court: Yes. I have read the papers. I am

prepared to make a decision at this time, unless you want

to add anything to what you have had in the brief. We

have discussed this on the phone.

Al7

I think I said at the time when we discussed this

one and the other lawsuit that it seems premature. First

aspect of the lawsuit concerning bad faith, not dealing

in good faith is premature since the bargaining is still

going on.

I can see a technical problem of being able to file

a lawsuit while bargaining is going on, and then being

able to take depositions of the people who are negctiating

and screw up the strategy.

Mr. Linsey: I would like an opportunity to address

that.

Your Honor, the question raised by defendants, the

primary question is whether or not this court has juris-

diction to entertain a complaint for alleging a violation

of Section 2, First of the Railroad Labor Act before the

National Mediation Board has released the [3] parties

in the 30-day cooling off period.

Careful reading of the Supreme Court decision in

Chicago & Northwestern Railway indicates that the Court

does have jurisdiction and the Court should exercise its

jurisdiction to insure compliance with Section 2, First.

Chicago & Northwestern Railway was a case where the

union argued that the National Mediation Board—

The Court: This is the Second Point. I want to

take it under submission.

Second Point concerns whether the court has juris-

diction or the NNB has jurisdiction to determine the

two entities.

Mr. Linsey: This is on the First Point. Defendant

raises the point that the court should not exercise the

jurisdiction to review whether or not the carrier is bar-

Al8

gaining in good faith under Section 2, First of the Rail-

way Labor Act.

Section 2, First states plainly, your honor, that the

parties must exercise every reasonable effort to make

and maintain agreements under the Railway Labor Act.

The Court: In that case the negotiations terminated.

Mr. Kaspers: That is correct.

Mr. Linsey: That is correct.

The Court: Not the case here.

[4] Mr. Linsey: No, Your Honor. But we have to

look at what the Supreme Court said in that case. Let’s

begin by looking at what the statute says.

The statute itself says “maintain agreements.” It

doesn’t indicate on the face of the words of the statute,

your honor, that the court needs to wait until the bar-

gaining process is over before it can enforce the good-faith

requirement to make and maintain agreements, because

the very face of the statute says “maintain agreements.”

On the very face of the statute, Your Honor, time is

irrelevant. That duty attaches at all times, once the

union is recognized as a collective bargaining represen-

tative, Your Honor.

Now, in Chicago & Northwestern the issue was

whether or not Section 2, First—this bargaining obliga-

tion—

The Court: All these arguments are contained in

your papers. I have considered them.

Mr. Linsey: Yes, Your Honor.

Your Honor, one final point here then, is that the

court should understand very clearly what it would do

if it denies and dismisses the complaint at this time.

Alg

Basically, Your Honor, what the court is doing is

propelling and accelerating self-help. Accelerating an

[5] structure, Your Honor. Because basically this is Butte

Anaconda. That’s the law in those cases. Also the law

in Chicago & Northwestern.

When the parties do not make every reasonable effort

to negotiate, to make and maintain agreements, Your

Honor, what is going to happen is the—there is no re-

course but for the National Mediation Board.

Recognizing the utility when one party is refusing

to negotiate in good faith, the National Mediation Board

recognizes the utility of continuing mediation. At that

point the National Mediation Board issues a release be-

ginning the 30-day cooling off period.

The Court: That’s the process.

Mr. Linsey: That is correct. That’s the process.

That was the problem that the Supreme Court recognized

in Chicago & Northwestern. In footnote 14 of Chicago

the Supreme Court said, number one, that the obligation

to bargain in good faith under Section 2, First of the

Railway Labor Act is unenforceable not by the National

Mediation Board but by the federal courts.

Also in that footnote, Your Honor, the Supreme Court

indicated the thrust of its decision, the focus of its deci-

sion, was not to permit the position that would accelerate

self-help.

The Court: Most of these cases were decided [6]

after the NNB had adjudicated the issue. Anyhow, I

have already decided that it is inappropriate to allow

ALPA to raise this issue while the bargaining is still

in process.

A20

I had a case involving baggage handlers for Quantas.

After it went over, they charged lack of good faith. Then

we went through all the evidence. It was apparent that

Quantas had some—their strategy was to hold back and

then come in near the end with some offers, which they

did. If they had—case had been filed early on it would

have destroyed the strategy and would have disrupted

everything. They were bargaining.

Bargaining some times means stonewalling for a while.

Making offers. Trying out different theories. So I think

it is inappropriate in this case for this court to allow a case

to go forward challenging lack of good faith until the

bargaining is over. When it is over, we can look at it.

On the second question, I would like to have you talk

to that. Question of—what’s the other question here?

Mr. Linsey: Your Honor, that would be the question

of the creation of Trans International Airlines as an alter-

ego entity, in essence, because the party, as in Butte and

Anaconda, Your Honor—Butte and Anaconda almost par-

allels this case.

[7] They say in Butte the carrier was getting ready

to open up a new rail yard. The carrier sought concession

from the union. They wanted to go from five to three

people on the crew. The union did not readily agree to ©

these concessions. So what Butte—

The Court: Separate entity.

Mr. Linsey: Well, the question that the court ad-

dressed in that case was whether for purposes of the

labor statute these two entities, these two corporations,

Butte and Anaconda Railway and the corporation, its

parent, were a single entity for labor relations purposes.

A21

And the Ninth Circuit specifically addressed that

question, Your Honor, and focused on that question. They

focused on the relationship between the two corporations.

They focused on the failure of the one corporation, railroad,

to achieve its concessions by the railroad and then turned

around and through the other corporate entities, in effect,

achieved them.

The Court: Did they really discuss the single entity

question in that case?

Mr. Linsey: Exactly. They specifically did and

found for labor relations purposes, they were a single

employer under the NLRB Act.

Two other cases of the Ninth Circuit, recent cases

where the Ninth Circuit reversed district court [8] dis-

missals—that’s the Con Iverson Trucking Company and

also the Local 70.

Your Honor, in those two cases what the Ninth Cir-

cuit said is that the district courts have jurisdiction to

review employers to see if they are a single entity for

labor relations purposes.

The Texas Air case out of the Second Circuit is very

similar. So I want to look at these cases.

The Court: Well, I will take it under submission and

we'll issue a memo so we can do it very, very carefully,

because there seems to be some difficulty in the Ninth

Circuit approach, but it is there and you have to live

with it.

Mr. Linsey: If I can point out two parallels that I

think would help the court in examining the question. I

will be very brief.

The Court: Are they in your briefs?

A22

Mr. Linsey: Not specifically.

The Ninth Circuit approach on the single employer

is that the District Court can review the employer and

determine whether or not the employer is a single em-

ployer for labor relations purposes.

The Ninth Circuit stops, however, and says that the

administrative agencies such is the NLRB, or in our case

the NNB, would look at the group of employees, [9] not

the employer, to see if they were a proper bargaining

unit and, therefore, Your Honor, in this case this court

should look and see if Trans International and Transamerica

are a single employer and the NNB has a separate function

Your Honor.

The NNB iooks at the group of employees and says

whether or not these groups of employees should be one

group or two groups. But it’s the District Court’s function

to look at the employer.

The Court: That’s what the Ninth Circuit says.

Mr. Linsey: One final point. Even under the Second

Circuit analysis, the critical question or the critical fact

in the Second Circuit, Second Circuit admitted it was a

close question, the critical fact that swayed the Second

Circuit in the TIA case was that there were different

markets. Texas International Airlines was operating air

carrier in the southwest. There were over scheduled

routes.

Now, New York Air, as that name indicates, was con-

templated and did in fact operate a route from New York

City to Washington D.C.

The Court: And Boston.

Mr. Linsey: But they were different routes and they

were scheduled routes. In this case the [10] complaint

PESTA ie Ne

A23

on its face alleges that TIA and TAA operate in the same

marketplace—

The Court: Same type of equipment?

Mr. Linsey: Yes, Your Honor. In fact, they are cargo

aircraft. In fact, TIA leases its equipment from Trans-

american Airlines. Equipment is owned by Transamerican

Airlines, Your Honor.

What occurred is a paint job. We paint the aircraft,

put on Trans International Airlines, and all of a sudden

we have got a new entity and we don’t have to bargain.

The Court: I will take that under submission.

Mr. Kaspers: Could I interrupt? Your Honor, you

are going to take that Second Point under submission?

We had a motion on the discovery as well.

The Court: We will stay discovery pending decision

on that.

(Recess)

A24

APPENDIX D

AIR LINE PILOTS ASSOCIATION INTERNATIONAL,

Plaintiff,

Vv.

TRANSAMERICA AIRLINES, INC.,

Defendant.

No. C 85-2803 SW.

United States District Court,

N.D. California.

Aug. 8, 1985.

On airline’s motion to dismiss pilots union’s claim that

airline’s creation of separate airline subsidiary subverted

and impaired representative standing, collective bargaining

rights and legitimate effectiveness of union to represent

airline’s pilots, the District Court, Spencer Williams, J.,

held that it lacked jurisdiction to consider single employer

question.

Motion granted.

1. Labor Relations (Key) 47

While there are parallels between Railway Labor Act

[45 U.S.C.A. § 151 et seq.] and other labor statutes, such

parallels should be drawn with utmdst care and with full

awareness of differences between statutory schemes. Rail-

way Labor Act, § 1 et seq.; 45 U.S.C.A. § 151 et seq.

2. Labor Relations (Key) 416.6

District court lacked jurisdiction over pilot’s com-

plaint alleging that airline’s creation of separate subsid-

NaF eden eat i sitet Li sci a Geeta Ate aeetyghees dy y

Latte batae WAniGs Oh 0%

A25

iaries subverted and impaired representative standing, col-

lective bargaining rights and legitimate effectiveness of

union to represent airline’s pilots, where ultimate issue

which union sought to have court determine was single

employer question. Railway Labor Act, § 2, 45 U.S.C.A.

$ 152.

3. Labor Relations (Key) 777

Jurisdiction conferred by Labor Management Rela-

tion Act upon federal courts to enforce contracts extends

to determinations of whether particular employer is bound

by collective bargaining agreement. Railway Labor Act,

§ 3, 45 U.S.C. § 153; Labor Management Relations Act,

1947, § 301, 29 U.S.C.A. § 185.

4. Labor Relations (Key) 804

Norris-LaGuardia Act [29 U.S.C.A. § 101 et seq.] pro-

hibits issuance of injunction in Railway Labor Act [45

U.S.C.A. § 151 et seq.] case involving major dispute, but

strike may be enjoined when minor dispute occurs. Rail-

way Labor Act, §§ 1 et seq., 6, 45 U.S.C.A. §§ 151 et seq.,

156; Norris-LaGuardia Act, § 1 et seq., 29 U.S.C.A. § 101

et seq.

Michael E. Abram, Jay P. Levy-Warren, James L.

Linsey, Cohen, Weiss & Simon, New York City, James R.

Ritchie, Henning, Walsh & Ritchie, San Francisco, Cal.,

for plaintiff Air Line Pilots Ass’n, Intern.

Fisher & Phillips, Ned A. Fine, San Francisco, Cal.,

and Robert J. Berghel, William F. Kaspers, James J. Mc-

Donald, Jr., Atlanta, Ga. for defendant Transamerica Air-

lines, Inc.

A26

ORDER GRANTING DEFENDANT'S

MOTION TO DISMISS

SPENCER WILLIAMS, District Judge.

The matter is before the court on defendant Trans-

america Airlines, Inc.’s (hereafter “Transamerica”) motion

to dismiss plaintiff Air Line Pilot Association, Interna-

ticnal’s (hereafter “ALPA”) complaint in its entirety for

lack of subject matter jurisdiction and for failure to st e

a claim upon which relief can be granted. At the con-

clusion of the hearing on this motion, the court dismissed

without prejudice the first count of plaintiff’s complaint.

The court requested supplemental briefing on and took

under advisement that portion of the motion which per-

tained to the second count of the complaint.

In the second count, plaintiff contends that defendant’s

creation of a separate airline subsidiary “subverts and im-

pairs the representative standing, collective bargaining

rights and legitimate effectiveness of ALPA to represent

Transamerica’s pilots . . ., and violates right of ALPA and

Transamerica’s pilots to a collective bargaining relation-

ship free of influence, interference, or coercion by defen-

dant.” ALPA contends that this conduct violates the Rail-

way Labor Act (hereafter “RLA” or “the Act’), 45 U.S.C.

§ 152, Third and Fourth, which, respectively, prohibit in-

terference with the designation of representatives and give

employees the right to organize and bargain collectively

without interference from a carrier. The issue is whether

this claim presents a simple representation dispute, com-

mitted to the exclusive jurisdiction of the National Medi-

ation Board (“NMB”) pursuant to 45 U.S.C. § 152, Ninth,

or whether the claim encompasses factors other than rep-

resentation which this court has jurisdiction to entertain

at this time. After careful consideration of all the argu-

seein

A27

ments and evidence before the court, it is hereby ordered

. that defendant’s motion to dismiss the second cause of

action is GRANTED.

FACTS

Transamerica is a charter airline engaged in the busi-

ness of providing air transportation service in interstate

and foreign commerce. Plaintiff ALPA is the duly au-

thorized exclusive collective bargaining representative of

the airline pilots employed by Transamerica. For many

years, plaintiff and defendant have made and maintained

collective bargaining agreements.

The RLA requires that the parties before the court

“exert every reasonable effort to make and maintain

agreements concerning rates of pay, rules and working

conditions and to settle all disputes . . . in order to avoid

any interruption to commerce.” 45 U.S.C. § 152, First.

Before disputing parties covered by the Act may resort

to self-help, they are required to exhaust a procedure set

out in the Act. Initially, the parties must attempt by good

faith conferences to reach agreement. 45 U.S.C. § 152,

i Second. If the conferences fail, the parties may invoke

the services of the NMB, 45 U.S.C. § 155, First, which is

required to use its best efforts to bring them to agreement.

If the NMB determines that a settlement through media-

tion is not possible, it must endeavor to induce the parties

to arbitrate their controversy. Id. If either party refuses

to arbitrate, the NMB notifies the parties that its mediatory

efforts have failed; the parties then enter a 30-day cooling

off period, after which time they may resort to self-help.

Id.

CUMMINS AR LE TdT RIM No as the his 6 Lg Nie Ri AD tk ANI me Np AT hl ale v3

ALPA and Transamerica commenced negotiations over

the terms of a new collective bargaining agreement in

March 1984. Unable to reach agreement, they jointly

h scisieeneainieieiia eal

A28

invoked the NMB’s assistance and have been engaged in

mediation sessions since July 1984. On March 27, 1985,

plaintiff filed its complaint in which it seeks injunctive

and other relief against defendant for alleged violations

of the RLA, 45 U.S.C. §§ 151 et seq.

In count I of its complaint, ALPA alleges that Trans-

america, together with its corporate parent, “formulated

and commenced to implement a plan to compel Trans-

america’s pilots to operate in accordance with rates of

pay and working conditions to be imposed by Trans-

america whether or not they would be agreed to by

ALPA.” Transamerica and its parent allegedly created ;

Trans International Airline, a subsidiary, to achieve this :

goal. ALPA contends that although Transamerica entered

into collective bargaining negotiations, it has refused to

bargain in good faith and to exert every reasonable effort

to make and maintain disputes and to settle disputes in :

a manner consistent with the requirements of 45 U.S.C.

§ 152, First. Because the court determined that it had

no jurisdiction to entertain this claim prior to the ex- )

haustion of the RLA’s dispute resolution procedures, de-

fendant’s motion to dismiss this count of the complaint

was granted without prejudice.

In the second count of the complaint, ALPA alleges

that defendant’s course of conduct, particularly the crea-

tion of Trans International Air, violates 45 U.S.C. § 152,

First and Fourth, by subverting and impairing “the repre-

sentative standing, collective bargaining rights, and legit-

imate effectiveness of ALPA to represent Transamerica’s

pilots.” Essentially, ALPA believes that defendant to-

gether with its corporate parent established Trans Inter-

national Air, a charter airline which allegedly operates

in Transamerica’s marketplace, so that work which would

seein

A29

otherwise be done by ALPA members will be performed

by Trans International pilots. Defendant contends that

the court lacks jurisdiction to entertain this claim as it

raises a representation dispute committed wholly to the

NMB.

ANALYSIS

The issue for the court to decide is how to properly

characterize plaintiff's second claim. As will be discussed

infra, the Second Circuit has affirmed the dismissal for

lack of subject matter jurisdiction of a substantially sim-

ilar claim brought by ALPA in another proceeding. Plain-

tiff contends, however, that the Ninth Circuit authorities

in Labor Management Relations Act (hereafter “LMRA”)

and in an RLA case demonstrate that the exercise of

subject matter jurisdiction over plaintiff's second cause

of action is appropriate.

In seeking to have the second count of the complaint

dismissed for lack of subject matter jurisdiction, defen-

dant argues that ALPA’s claim arises under 45 U.S.C.

§ 152, Ninth, which provides in relevant part:

If any dispute shall arise among a carrier’s employees

as to who are the representatives of such employees

designated and authorized in accordance with the re-

quirements of this chapter, it shali be the duty of

the Mediation Board, upon request of either party

to the dispute, to investigate such dispute .. .

Defendant contends that ALPA itself demonstrated

that its claim raises a representation dispute when it

filed with the NMB a petition for classification of carrier

status, seeking a ruling on whether Transamerica and

Trans International constitute a single carrier and whether

A390

ALPA has the right to bargain on behalf of pilots em-

ployed by Trans International.

In addition, defendant argues that the claims raised

by ALPA here are nearly identical to those it raised

in ALPA v. Texas Int'l. Airlines, 656 F.2d 16 (2d Cir.

1981). In Texas Int’l., ALPA was the collective bar-

gaining representative of the pilots of Texas International.

The corporate parent of Texas International established

New York Air a separate, non-union airline subsidiary.

ALPA alleged that this corporate restructuring constituted

an effort to defeat the existing collective bargaining

agreement between ALPA and Texas International. This

conduct was alleged to violate Texas International’s stat-

utory duties

“(1) to ‘treat with’ ALPA as the exclusive representa-

tive of (Texas International)’s pilots, § 2, Ninth;

(2) to maintain the collective bargaining agreement,

§ 2, First; (3) to allow representatives to be designated

without interference, influence, or coercion, § 2, Third;

(4) to refrain from interference in the organization

of the employees, § 2, Fourth; and (5) to refrain from

attempting to unilaterally change rates of pay, rules,

and working conditions, § 2, Seventh, § 6.”

Id. at 18. Thus, ALPA’s claim here that the creation of

Trans International violates 45 U.S.C. § 152, Third and

Fourth, essentially tracks claims ALPA made in Texas

Int'l.

The district court’s dismissal of ALPA’s claims was

affirmed by the Second Circuit, which noted at the outset

that the case presented neither a pure representation dis-

pute under 45 U.S.C. § 152, Ninth, nor a pure interference

claim under 4° U.S.C. § 152, Third and Fourth. No tra-

ditional representation dispute existed because there was

A3l

no rival union and there had been an application to nor a

certification by the NMB. Nonetheless, the court held

where a representation dispute appears on the face of a

complaint, the court must dismiss the action in light of 45

U.S.C. § 152, Ninth. Acknowledging that courts tradi-

tionally play a narrow role in enforcing the RLA, the

Second Circuit concluded that “(n)either the framework

and history of the RLA nor the cases authorizing judicial

intervention under the Act’’, Id. at 24, establish that sub-

ject matter jurisdiction over this claim exists.

Were Second Circuit authority controlling here, this

court clearly would lack subject matter jurisdiction over

the claim before it. It is plaintiff’s contention that under

Ninth Circuit authority, which does control, subject matter

jurisdiction does lie.

One argument that plaintiff makes in support of its

position that the court possesses jurisdiction over this

claim is based cases arising under the LMRA.

In Bhd. of Teamsters, Local No. 70 v. California Con-

solidators, Inc., 693 F.2d 81 (9th Cir.1982) (per curiam),

plaintiff filed an action under section 301(a) of the LMRA,

29 U.S.C. § 184(a), seeking a declaratory judgment that

a trucking firm was bound by the union’s collective bar-

gaining agreement with a pool car distributor because

the two entities constituted a single employer. The Ninth

Circuit reversed the district court, which had found that

it lacked jurisdiction because the National Labor Rela-

tions Board had exclusive jurisdiction over the single

employer issue.

Employing the two step analysis adopted by the Su-

preme Court in South Prairie Construction Co. v. Local

627, Int.l Union of Operating Engineers, 425 U.S. 800, 96

S.Ct. 1842, 48 L.Ed.2d 382 (1976) (per curiam), the Ninth

Laaiadenieeaniaaarinaneenntieeaeemaccmeiillae

A32

Circuit determined that questions whether two entities

are bound by a collective bargaining agreement “com-

prise two subsidiary issues”, California Consolidators, 693

F.2d at 82. The court held that a district court “may

decide under § 301 whether two companies constitute a

single employer, (b)ut a single employer conclusion fails

to determine that the employees form a single or an ap-

propriate bargaining unit.” Id. at 83 (citations omitted).

The court held that under § 301 district courts have juris-

diction to decide whether employers constitute a single

employer but do not have jurisdiction to determine the

second part of the issue, the appropriateness of the bar-

gaining unit. See also Northwest Administrators v. Con

Iverson Trucking, Inc., 749 F.2d 1338 (9th Cir.1984)

(court generally has no jurisdiction to decide representa-

tional issues in NLRA cases, but under § 301 it does have

jurisdiction to determine whether one company was a

successor or alter-ego to another which could be bound

by an agreement the other entered, and if so, to determine

whether the successor or alter-ego ever effectively re-

pudiated the collective bargaining agreement).

Plaintiff argues that the same two-step analysis must

govern in this RLA case and that California Consolidators,

South Prairie, and Northwest Administrators demonstrate

that, at a minimum, this court has jurisdiction to consider

the first part of the inquiry, i.e., whether Transamerica and

Trans International constitute a single employer.

[1] While it certainly is true there are parallels be-

tween the RLA and other labor statutes, such parallels

“should be drawn with the utmost care and with full

awareness of the differences between the statutory

schemes.” Chicago and N.W. R. Co. v. United Transpor-

tation Union, 402 U.S. 570, 579 n. 11, 91 S.Ct. 1731, 1736

n. 11, 29 L.Ed.2d 187 (1971). See also Bhd. of R.R. Train-

— eet nn

were 2a el

A33

men v. Jacksonville Terminal Co., 394 U.S. 369, 383, 89

S.Ct. 1109, 1118, 22 L.Ed.2d 344 (1969) (although cases

arising under the NLRA are useful in construing the RLA,

they cannot be “imported wholesale in the railway labor

arena’ and analogies must be drawn “circumspectly, with

due regard for the many differences between the stat-

utory schemes’’).

[2] Even assuming arguendo that the second count

of ALPA’s complaint. raises an issue which should be

analyzed under the two-part analysis originally set out

in South Prairie, the RLA differs from the LMRA in

ways which would make the exercise of jurisdiction over

any part of ALPA’s second claim improper.

[3] Section 301 of the LMRA’ expressly confers

jurisdiction upon federal courts to enforce contracts; that

jurisdiction extends to determinations of whether a par-

ticular employer is bound by a collective bargaining agree-

ment. In contrast, the RLA contains no corollary to

§ 301; rather, as will be discussed infra, questions of

contract interpretation constitute minor disputes which

must be submitted to final and binding arbitration and

are subject to limited judicial review only after such

an arbitration award has been rendered. See 45 U.S.C.

§ 153. Therefore, the fact that the court possesses juris-

diction to adjudicate the single employer question in

NLRA cases does not indicate that it also has jurisdiction

to make the same determinations in RLA cases. The

statutory framework of the RLA demonstrates that Con-

1. Section 301(a) provides in relevant part:

Suits for violation of contracts between an employer and a

labor organization representing employees in an industry

affecting commerce .. . may be brought in any district court

of the United States having jurisdiction over the parties...

29 U.S.C. § 185(a).

A34

gress intended that, with few exceptions, questions of

contract interpretation not be brought before the courts

until binding arbitration has occurred.

Plaintiff's second argument evolves from Butte, Ana-

conda & Pacific Ry. v. Bhd. of Locomotive Firemen and

Enginemen, 268 F.2d 54, 58 (9th Cir.), cert. denied, 361

U.S. 864, 80 S.Ct. 122, 4 L.Ed.2d 104 (1959). In Butte,

the railway established a new switching and loading yard

and ascertained that its employees, who were represented

by the union, were willing to perform at the new yard

under work rules different from those in existence at

its other yard. The railway then served upon the union

a notice proposing amendments to the labor agreements,

and the parties commenced negotiations on the proposed

work rule changes. When the union did not agree readily

to the changes the railway desired, the railway announced

that the work at the new yard would be done by em-

ployees of its corporate parent. The union threatened

to strike, and the railway sued to enjoin the threatened

strike.

The district court dismissed the action and the court

of appeals affirmed. One of the issues before the circuit

was whether the controversy presented a major or a minor

dispute under the RLA. Plaintiff contends that in the

course of its discussion of the major/minor dispute issue,

the Ninth Circuit demonstrated that this court has juris-

diction over single employer questions in RLA cases.

For the following reason, the court disagrees.

Disputes under the RLA are classified either as major

or minor disputes. Major disputes, which involve at-

tempts to form collective bargaining agreements and/or

change rates of pay, rules or working conditions, are

resolved through the conference, mediation, and arbitra-

hata aS aR al SBE IY

A35

tion process described above. Minor disputes, which in-

volve grievances directed to the meaning or proper appli-

cation of a particular provision in an agreement, are to

be resolved through arbitration which is binding upon

the parties and final. See Elgin J. & E.R. Co. v. Burley,

325 U.S. 711, 724, 65 S.Ct. 1282, 1290, 89 L.Ed.2d 1886

(1945).

[4] In RLA cases where injunctions prohibiting a

strike are sought, such as Butte, it is necessary as a thresh-

old matter to determine whether a dispute is major or

minor. The Norris-LaGuardia Act prohibits the issuance

of an injunction in an RLA case involving a major dispute,

but a strike may be enjoined when a minor dispute occurs.

It is for this reason that the Butte court began its

analysis with an examination of whether the dispute be-

fore it was major or minor. In so doing, the court rejected

the railway’s contention that a major dispute had con-

cluded when the union rejected that railway’s proposal,

the railway withdrew its section 6 notice, and the switch-

ing operations at the new yard were transferred to em-

ployees of the railway’s parent.

In discussing the railway’s last assertion—that the

transfer of jobs terminated the dispute—the court stated:

It may be assumed . . . that where an independent

shipper, not acting in concert with a carrier, de-

termines to perform its own switching service on its

own property, section 6 mediation proceedings in-

volving a dispute relative to such service are neces-

sarily terminated.

Here, however, the carrier is the wholly-owned

subsidiary of the shipper... The two have common

principal officers and the unified purpose of serving

the ultimate best interests of the shipper. Under these

A36

circumstances the act of Anaconda in taking over the

switching service, to be performed by employees rep-

resented by another union, must be regarded as the

act of the carrier. Otherwise, a carrier by interrela-

tion with its shipper would always have it within its

power to circumvent the mediation provision of the

RLA.

Id. at 59-60.

Plaintiff argues that this passage demonstrates that

this court has jurisdiction to consider the single employer

question under the RLA. It argues that Transamerica,

like the carrier in Butte, acted in concert with its corporate

parent to use the device of separate corporations to avoid

its bargaining and representation obligations under the

Act.

The court rejects plaintiff’s argument for two reasons.

First, the factual setting in Butte was not similar to the

one before this court. The court in Butte was not ad-

dressing the question whether a court has jurisdiction

to consider whether two employers are bound by a col-

lective bargaining agreement signed by one of them; in-

stead, the court was addressing the separate issue of

whether the major dispute had terminated, leaving only

a minor dispute and depriving the court of jurisdiction

to issue an injunction. In the course of its discussion, the

court did determine that the conduct of one employer

could be attributed to another, but it did so only because

a threshold jurisdictional question was raised by defen-

dant’s assertion that the dispute the court was examining

was a minor one.

The situation before the court in this instance does

not present the same question. The resolution of the

single employer question here is not a necessary precondi-

A37

tion to the determination whether the court has jurisdic-

tion over the case; rather, the single employer question

is the ultimate issue which piaintiff seeks to have the

court determine. This question simply was not before

the Butte court.

Second, the passage quoted above does not constitute

the holding of Butte. It merely is dicta. Because the

factual situation there was so different, this dicta pro-

vides little or no guidance to this court.

In sum, the question whether this court has jurisdic-

tion over plaintiff’s second count has never been addressed

directly in the Ninth Circuit. In view of the careful and

convincing analysis of this issue which the Second Circuit

undertook in Texas Int’l. and the unmistakable congres-

sional intent, evident in 45 U.S.C. § 152, Ninth, to have

representation issues in RLA cases resolved exclusively

by the NMB, the court finds that dismissal of plaintiff's

second count is mandated.

IT IS THEREFORE ORDERED that defendant’s mo-

tion to dismiss the second count of the complaint is

GRANTED.

A38

APPENDIX E

45 U.S.C. § 152

First. Duty of carriers and employees to settle dis-

putes

It shall be the duty of all carriers, their officers,

agents, and employees to exert every reasonable effort

to make and maintain agreements concerning rates of pay,

rules, and working conditions, and to settle all disputes,

whether arising out of the application of such agreements

or otherwise, in order to avoid any interruption to com-

merce or to the operation of any carrier growing out of

any dispute between the carrier and the employees thereof.

* * *

Third. Designation of representatives

Representatives, for the purposes of this chapter,

shall be designated by the respective parties without in-

terference, influence, or coercion by either party over the

designation of representatives by the other; and neither

party shall in any way interfere with, influence, or coerce

the other in its choice of representatives. Representatives

of employees for the purposes of this chapter need not be

persons in the employ of the carrier, and no carrier shall,

by interference, influence, or coercion seek in any manner

to prevent the designation by its employees as their rep-

resentatives of those who or which are not employees of

the carrier.

Fourth. Organization and _ collective bargaining;

freedom from interference by carrier; as-

sistance in organizing or maintaining or-

ganization by carrier forbidden; deduction

of dues from wages forbidden

A39

Employees shall have the right to organize and bar-

gain collectively through representatives of their own

choosing. The majority of any craft or class of employees

shall have the right to determine who shall be the rep-

resentative of the craft or class for the purposes of this

chapter. No carrier, its officers, or agents shall deny or

in any way question the right of its employees to join,

organize, or assist in organizing the labor organization of

their choice, and it shall be unlawful for any carrier to

interfere in any way with the organization of its employees,

or to use the funds of the carrier in maintaining or assist-

ing or contributing to any labor organization, labor rep-

resentative, or other agency of collective bargaining, or

in performing any work therefor, or to influence or coerce

employees in an effort to induce them to join or remain

or not to join or remain members of any labor organiza-

tion, or to deduct from the wages of employees any dues,

fees, assessments, or other contributions payable to labor

organizations, or to collect or to assist in the collection of

any such dues, fees, assessments, or other contributions:

Provided, That nothing in this chapter shall be construed

to prohibit a carrier from permitting an employee, indi-

vidually, or local representatives of employees from con-

ferring with management during working hours without

loss of time, or to prohibit a carrier from furnishing free

transportation to its employees while engaged in the busi-

ness of a labor organization.

” * *

Ninth. Disputes as to identity of representatives; des-

ignation by Mediation Board; secret elec-

tions

If any dispute shall arise among a carrier’s employees

as to who are the representatives of such employees desig-

nated and authorized in accordance with the requirements

A40

of this chapter, it shall be the duty of the Mediation Board,

upon request of either party to the dispute, to investigate

such dispute and to certify to both parties, in writing,

within thirty days after the receipt of the invocation of

its services, the name or names of the individuals or or-

ganizations that have been designated and authorized to

represent the employees involved in the dispute, and certify

the same to the carrier. Upon receipt of such certifica-

tion the carrier shall treat with the representative so

certified as the representative of the craft or class for

the purposes of this chapter. In such an investigation,

the Mediation Board shall be authorized to take a secret

ballot of the employees involved, or to utilize any other

appropriate method of ascertaining the names of their

duly designated and authorized representatives in such |

manner as shall insure the choice of representatives by

the employees without interference, influence, or coercion

exercised by the carrier. In the conduct of any election

for the purposes herein indicated the Board shall designate

who may participate in the election and establish the rules

to govern the election, or may appoint a committee of three

neutral persons who after hearing shall within ten days

designate the employees who may participate in the elec-

tion. The Board shall have access to and have the power

to make copies of the books and records of the carriers to

obtain and utilize such information as may be deemed

necessary by it to carry out the purposes and provisions

of this paragraph.

45 U.S.C. § 155

First. Disputes within jurisdiction of Mediation Board

The parties, or either party, to a dispute between an

employee or group of employees and a carrier may invoke

the services of the Mediation Board in any of the following

cases:

ieee

A4l

(a) A dispute concerning changes in rates of pay,

rules, or working conditions not adjusted by the parties

in conference.

(b) Any other dispute not referable to the National

Railroad Adjustment Board and not adjusted in confer-

ence between the parties or where conferences are refused.

The Mediation Board may proffer its services in case

any labor emergency is found by it to exist at any time.

In either event the said Board shall promptly put

itself in communication with the parties to such con-

troversy, and shall use its best efforts, by mediation, to

bring them to agreement. If such efforts to bring about

an amicable settlement through mediation shall be un-

successful, the said Board shail at once endeavor as its

final required action (except as provided in paragraph

third of this section and in section 160 of this title) to

induce the parties to submit their controversy to arbitra-

tion, in accordance with the provisions of this chapter.

If arbitration at the request of the Board shall be

refused by one or both parties, the Board shall at once

notify both parties in writing that its mediatory efforts

have failed and for thirty days thereafter, unless in the

intervening period the parties agree to arbitration, or an

emergency board shall be created under section 160 of

this title, no change shall be made in the rates of pay,

rules, or working conditions or established practices in

effect prior to the time the dispute arose.

A42

APPENDIX F

BEFORE THE

NATIONAL MEDIATION BOARD

WASHINGTON, D.C.

NMB Case No.

In the Matter of: |

AIR LINE PILOTS ASSOCIATION, INTERNA-

TIONAL, involving the employees of TRANS-

AMERICA CORPORATION, TRANSAMERICA

AIRLINES and TRANS INTERNATIONAL

AIRLINES, as constituting a single carrier for

purposes of §2, Fourth and Ninth of the Railway

Labor Act, 45 U.S.C. §152, Fourth and Ninth

PETITION OF AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL FOR CLARIFICATION OF

CARRIER STATUS AND FOR TECHNICAL

AMENDMENT OF CERTIFICATION

Air Line Pilots Association, International (“ALPA”)

hereby petitions for clarification of the Board’s certifica-

tion of ALPA in No. R-4931, 6 NMB No. 4931, to provide

that ALPA is the duly authorized collective bargaining

representative under tne Act for the pilots employed in

the airline operations of Transamerica Corporation

(“TAC”) as conducted under the names Transamerica

Airlines (“TAA”), Trans International Airlines (“TIA”)

or otherwise.

TAC is a holding company which has engaged in air-

line operations through wholly owned subsidiaries for over

fifteen years. In 1977, TAC’s airline operation, then con-

aici

| A43

ducted under the name of Trans International Airlines,

Inc., merged with Saturn Airways, Inc. After an elec-

tion conducted by the Board, in June, 1977, ALPA was

“duly designated and authorized to represent for the

purposes of the Railway Labor Act, the craft or class of

Pilots, employees of Trans International Airlines, Inc., its

successors and assigns.” 6 NMB No. 853. In 1979, the

name of TAC’s airline operation was changed from Trans

International Airlines to Transamerica Airlines. AFA

continued to represent this craft or class of flight atten-

dants employed in TAC’s airline operations following the

change in name. The most recent agreement between

ALPA and TAA, amendable June 1, 1984, recognizes that

ALPA has been certified to represent pilots “in the service

of Transamerica Airlines... .”

On March 9, 1984, TAC applied to the Civil Aero-

nautics Board to acquire complete control of a Central

American International, Inc., a non-operating carrier,

through various wholly owned entities, and to authorize

domestic and international cargo operations in the name

ef Trans International Airlines, Inc. In October, 1984,

the CAB issued certificates of public convenience and

necessity to TIA for interstate and overseas charter air

transportation, for all-cargo service, and for charter air

transportation of property and mail in foreign air trans-

portation. CAB Nos. 84-7-60, 84-10-50. TIA then applied

for authority to provide charter air transportation of pas-

sengers in interstate and overseas markets, and to provide

charter air transportation of passengers in foreign markets.

TAC has offered worldwide passenger and cargo

charter services for military and commercial customers

1. TAA submitted a notice of intended changes in the

agreement on February 28, 1984. The parties have petitioned

the Board for docketing the dispute, and are currently engaged

in mediation.

hs tiaiineaaeeennenenaienieenindatmmmllll

A44

through its TAA operations for many years. As described

in TAC’s 1982 Annual Report, “Transamerica Airlines’

planes fly in and out of nearly 500 airports in more than

100 countries each year, serving both the passenger and

cargo markets with charter and scheduled services.” TAC

has now stated its intention that “the CAI/TIA operation

will ultimately be providing worldwide passenger and

cargo charter services for both commercial and military

customers.” TAC Appl. March 9, 1984, at 7.

In its initial filings with the CAB, TAC argued that

“[iJn order to expand its air transportation services TAC

must be able to establish an operation with equipment

and wage costs competitive with those of the new en-

trants” into “the charter market for both passenger and

cargo services in both passenger domestic and international

areas.” TAC Appi. at 4 (emphasis added). In its initial

filings, TAC offered two bases for lower costs in this

market: (1) fleet standardization, based on its assertion

that “the only aircraft projected for TIA’s use are DC-8-

61/71s to be leased from TIE” (an entity created to own

the stock of TIA, and wholly owned by TAC); and (2) that

TIA “will not have the burden of high labor-related costs,

i.e., seniority, liberal vacation and benefit programs, that

have accrued over time to the mature air carriers.” TAC

Ans. August 20, 1984, at 4; TAC Appl. March 9, 1984, Ex.

TAC-600, p.l. The “fleet standardization” rationale was

immediately undercut by TIA’s subsequent filing for ap-

proval of passenger operations using “Boeing 747 aircraft

or such other additional aircraft as may be necessary”’

for its passenger operations. TIA Appl., October 29, 1984,

at 2.

The Board of Directors and Cnief Executive Officer

of TIA are TAC officers; the chief pilot of TIA previously

served as chief pilot of TAA. It is believed that TAA has

A45

‘

provided substantial assistance to TIA in commencing and

maintaining its operations. TIA has commenced charter

operations with 1 or 2 DC-8-61s which cannot be used in

domestic operations because of FAA noise restrictions.

These aircraft are leased from a TAC entity. TIA oper-

ations are believed to be primarily directed towards cargo

charter opportunities in Europe and the Middle East at

the current time. TAA currently engages in cargo charter

operations in these geographic markets, and has actively

sought cargo charter opportunities in these markets.

Prior to 1984, TAC competed in the worldwide market

for air charter services through its wholly owned sub-

sidiary TAA. TAC is now attempting to provide these

services through a new corporate entity, TIA. The ec-

onomic justification for this new corporate entity is to

have TIA avoid the “burden” of collectively bargained

“high labor related costs, i.e., seniority, liberal vacation

and benefit programs,” and the burden of Railway Labor

Act obligations to make and maintain agreements con-

cerning rates of pay, rules and working conditions for

pilots engaged in these charter operations.

A carrier may not avoid its obligations to the certified

representatives of its employees by changing the name

of the corporate entity, or by dissolving one corporate

entity and substituting another in its place without any

change in ultimate ownership and control. Similarly, a

carrier may not accomplish in gradual stages what can-

not be accomplished in a single transaction. AFA sub-

mits that a carrier’s obligation to deal with the duly des-

ignated representatives of its employees cannot be avoided

by having the real party in interest (TAC, which has

used TAA to operate its airline business) establish a new

entity (TIA) in the identical business market served by

A46

TAA for the ultimate purpose of TAC’s’/TAA’s avoiding

the economic costs incident to complying with the RLA.

It can hardly be questioned that stability and con-

tinuity in labor relations is a primary policy of the Rail-

way Labor Act. At the time the Railway Labor Act was

enacted, and over the course of the Board’s application

of the Act to the railroad and airline industries prior to

deregulation, the federal regulatory schemes governing

these industries discouraged changes in corporate form

which would be subject to regulatory review, and thus

insulated these industries from labor instability incident

to these changes in a non-regulated environment. While

the legal and economic context for entry into and exit

from air transportation operations has been changed by

the Airline Deregulation Act, which reflects a different

approach to regulating business competition, Congress has

not amended the Railway Labor Act to change its funda-

mental policy concerns with labor stability. To permit

the obligations of the RLA to be negated by the device

of gradually transferring business from a wholly owned

subsidiary subject to a certification order to a newly cre-

ated subsidiary designed to operate in the same business

markets would render the Act ineffectual in achieving

labor stability and avoiding disruptions in air transporta-

tion services.

Accordingly, ALPA requests that the certificate issued

in R-4680, 6 NMB No. 853, be amended to add “employees

of Transamerica Airlines, Inc.” to the ‘employees of Trans

International Airlines, Inc.” to reflect that ALPA won

the 1979 representation election for the craft or class of

pilots employed in TAC’s airline operation; that TAA has

continued to recognize that ALPA is the certified repre-

sentative of pilots employed by TAA; and that TIA, in

A47

its current incarnation, is either a functional part of, or

successor to, the airline operation which has been con-

ducted by TAC under the names of TIA or TAA over

more than fifteen years.

Dated: New York, New York

February 14, 1985

Respectfully submitted,

/s/ Jay P. Levy-Warren

Michael E. Abram

Jay P. Levy-Warren

Cohen, Weiss and Simon

330 West 42nd Street

New York, New York 10036

(212) 563-4100

Attorneys for Air Line Pilots

Association, International

A48

APPENDIX G

AIR LINE PILOTS ASSOCIATION

1625 MASSACHUSETTS AVENUE, N.W.

WASHINGTON, D.c. 20036

(202) 797-4000

April 16, 1985

Mr. Rowland K. Quinn, Jr.

Executive Secretary

National Mediation Board

1425 K Street, N.W.

Washington, D.C. 20572

Re: Transamerica Case No. A-11443

Dear Mr. Quinn:

A number of related matters at Transamerica affecting

the status of mediation bear particular attention by the

Board in its consideration of the above-referenced case.

Enclosed is a stamped file copy of the complaint against

Transamerica Airlines filed by the Association on March

27, 1985. The complaint charges that the airline, together

with its corporate parent Transamerica Corporation, seeks

to impose rates of pay and working conditions on the

Transamerica pilots whether agreed to or not, and that,

accordingly, the airline has bargained in bad faith with

ALPA. A key part included in this corporate program

is the creation and use of Trans International Airlines

as a device to further the plan.

In addition, you are well aware, of course, of the intran-

sigent position that the airline has taken in mediation.

You are also aware that the Association has requested

A49

that the Board clarify its certification to include pilots

employed within all of Transamerica Corporation’s airline

operations. (NMB File No. CR-5702). Given the pen-

dency of this lawsuit and the airline’s blatant bargaining

posture, it is obvious that the public interest would not

be served by terminating the Board’s mediation effort

at this time.

Moreover, with the representation matter unresolved, the

Association is in the untenable position of being unable

to bargain for the entire craft or class within which bar-

gaining appropriately should take place, and is faced with

considerable uncertainty in this critical juncture. The

company’s refusal to bargain with respect to the overall

scope of the craft has plainly impeded the processes of

the Act. We request therefore that the Board proceed

to hearing on the representation matter and that media-

tion efforts resume as soon as that issue and the issues

raised by the lawsuit have been resolved.

Sincerely,

/s/ Seth D. Rosen

Seth D. Rosen

Director of Representation

SDR: jae

cc: W. Wallace w/attachment

H. Duffy

R. Montag

T. Shade

M. Abram

J. Bradley

R. Domholt

P. Benoit

A50

APPENDIX H

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CIVIL ACTION NO. C85-2803 SW

AIR LINE PILOTS ASSOCIATION,

INTERNATIONAL,

Plaintiff,

TRANSAMERICA AIRLLYNES, INC.,

Defendant.

AFFIDAVIT OF HAROLD L. NEFF

(71]

STATE OF CALIFORNIA

COUNTY OF ALAMEDA

AFFIDAVIT

I, HAROLD L. NEFF, being duly sworn, hereby de-

pose and say the following:

1. I am employed by Transamerica Airlines, Inc.,

in the capacity of Vice President-Flight. In this capacity

I have actively participated in the collective bargaining

negotiations between Transamerica Airlines and the Air

Line Pilots Association (“ALPA”).

2. Transamerica Airlines and ALPA commenced ne-

gotiations over terms of a new collective bargaining agree-

ment on March 14, 1984. The parties met for a number

of bargaining sessions in May and June of 1984.

A51

3. The services of the National Mediation Board

(“NMB”) were invoked by the parties, and the NMB

docketed the matter as Case No. A-11443.

4. The NMB assigned a mediator, Charles Barnes.

to supervise negotiations between the parties. The parties

first met with Mediator Barnes on July 31, 1984, and con-

tinued to meet with him in negotiation sessions through-

out 1984.

5. Due ito the illness of Mediator Barnes, the NMB

appointed a new mediator, Richard Cosgrave. The parties

first [72] met with Mediator Cosgrave on January 10.

1985 and have met with him in several negotiation ses-

sions since that date.

6. Transamerica Airlines and ALPA remain under

the jurisdiction of the NMB at the present time. The

NMB has not proffered arbitration to the parties or noti-

fied the parties that its mediatory efforts have failed.

I have read the foregoing statement and swear that

it is true to the besi of my knowledge.

/s/ Harold L. Neff

Harold L. Neff

Subscribed and sworn to before me this 19th day

of April, 1985.

/s/ LaRue K. Hawkins (Seal )

Notary Public

A52

APPENDIX !

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

No. 85 2803 SW

AIRLINE PILOTS ASSOCIATION,

Plaintiff,

Vs.

TRANSAMERICA AIRLINES, INC.,

Defendants.

DEPOSITION OF HOWARD KORTH

May 8, 1985

AZ * *

[55] Q. Mr. Korth, is any one director of Trans-

america Airlines, Inc. more knowledgeable than the others

regarding collective bargaining in general and collective

bargaining on a new agreement with the Airline Pilots

Association in particular?

MR. KASPERS: Objection as to form. You may

[56] answer if you can.

THE WITNESS: Mr. Howard.

MR. LINSEY: Q. Does Mr. Howard, in fact, sort

of assume an informal responsibility for advising the Board

of Directors at each meeting the current status of col-

lective bargaining negotiations with ALPA?

MR. KASPERS: Object to the form. You may an-

swer.

THE WITNESS: Normally it is Mr. Howard, yes.

A53

MR. LINSEY: Q. Do you recall Mr. Howard ad-

dressing the Board of Directors of Transamerica Airlines

concerning collective bargaining, voluntary collective bar-

gaining, for concessions with ALPA during calendar year

1983?

A. Iam sure he gave us a report, but just when and

where, I don’t recall. ’

Q. Do you recall the substance of the first report

that Mr. Howard gave to the Board of Directors of Trans-

america Airlines?

A. Well, it followed the theme that we had lost our

competitive position and the whole effort was to try to

become more competitive.

Q. Mr. Howard made this presentation, is that right,

made a presentation suggesting that the company should

use collective bargaining with the pilots to regain [57]

its competitive edge; is that right?

A. I don’t recall exactly how he handled it, but your

general statement is correct.

Q. Did he say how collective bargaining with the

pilots would achieve this goal of regaining that com-

petitive edge?

A. I would think only in general terms. But the an-

swer would be yes.

Q. What were those general terms that he presented?

A. I am sure they related to pay and to working

conditions.

Q. Did Mr. Howard communicate to the Board of

Directors of Transamerica Airlines, Inc. any percentages

of pay concessions or work concessions that the company

A54

was trying to achieve in its collective bargaining nego-

tiations with ALPA?

A. Not to my recollection.

Q. So to your recollection, it was a general pre-

sentation that the company would seek to regain its com-

petitive edge simply by bargaining with the Airline Pilots

Association without any specific bench mark, if you will,

for that bargaining; is that right?

A. That would be correct.

Q. Have you since that time either at a Board of

[58] Directors meeting or any communication with any

other officers or personnel of Transamerica Airlines, Inc.

learned of any bench mark figure that the company was

trying to achieve in concessions from the Airline Pilots

Association?

A. Yes, I have.

Q. What is that bench mark figure?

MR. KASPERS: I would instruct you not to answer

if it relates to strategy or plans not yet effected.

MR. LINSEY: I am going to have a little bit of a

problem with this, Bill. You know, we have tried to be

cooperative here. If you are going to continue to direct

the witness not to answer questions which are clearly

within the realm of discovery in this court action, we are

going to have to adjourn and go see the Magistrate. At

this point it is just becoming obstruction of this deposi-

tion and we simply can’t permit that to happen.

MR. KASPERS: Would you repeat the question?

(Record read.)

MR. KASPERS: Let me take a minute, all right?

—————————

A55

MR. LINSEY: Certainly.

(Off the record discussion. )

MR. KASPERS: I am going to withdraw my instruc-

tion provided that the witness has an opportunity in re-

sponding to your question to explain his response to the

previous question as well.

[59] MR. LINSEY: I would certainly provide the

witness an opportunity to explain his previous answer

to my previous question.

THE WITNESS: My answer is 50 percent and it

is based on, I believe, it has been in the newspapers and

every place else.

MR. LINSEY: Q. When did you first learn that

this figure of 50 percent bench mark?

A. I don’t recall.

Q. Do you recall who first communicated this 50

percent bench mark to you?

A. No, it might have been in the newspaper.

Q. But that is an accurate—you know, you can’t

believe everything you read in the newspaper, Mr. Korth,

we can believe that this particular item that we read in

the newspaper, can we not?

A. I think so.

Q. Well if you think so, I am convinced. Having

the word of the vice chairman. Mr. Korth, was this

bench mark figure ever discussed at a meeting of the

Board of Directors of Transamerica Airlines, Inc.?

A. Probably, but only in a general way.

A56

Q. Do you recall who would have initiated discus-

sion on that subject, would that have been Mr. Howard

in his role as the informal lead man, if you will, regarding

[60] labor relations on Transamerica Airlines?

A. I don’t recall.

Q. Was there any discussion as to why it was nec-

essary to establish a figure of a 50 percent bench mark

as opposed to other bench marks of say 40 percent, 20

percent, 30 percent, was there any discussion as to how

the figure 50 percent was arrived at?

A. No, not to my knowledge.

Q. Have you had any discussion with any company

personnel outside of meetings of the Board of Directors

to learn of how the figure of 50 percent was arrived at?

A. No, I have not.

Q. Has Transamerica Airlines, Inc. proposed wage

reductions for any management personnel?

A. No, currently, no.

Q. Has Transamerica Airlines, Inc. proposed any

wage or benefit reductions for any of its officers, exec-

utives or directors?

A. Currently, no.

Q. Other than cockpit personnel, than for a cockpit

personnel, has Transamerica Airlines, Inc. proposed any

wage reductions for personnel of the company at all?

A. As of now, no.

Q. You qualify your answers with the words “as of

now.” Are you aware of any present intention or plans

of [61] Transamerica Airlines, Inc. to reduce the wages

A57

of any personnel, any of its personnel, other than cockpit

personnel?

MR. KASPERS: I instruct the witness not to answer

that question.

MR. LINSEY: Okay, again, we obviously take issue

with that, ask the reporter to mark this and other similar

points in the deposition and we will address that with

the Magistrate and, obviously, hold the deposition open

for a ruling and pursue the answers of that clearly dis-

coverable material.

MR. KASPERS: For the record, we are not agreeing

to hold any deposition open.

MR. LINSEY: I think you have made your position

clear.

Q. Mr. Korth at any time during meetings of the

Board of Directors of Transamerica Airlines, Inc. has

there been discussion of a possible strike by the Airline

Pilots Association in the course of these negotiations on

a collective bargaining agreement?

A. Yes.

Q. When was the first time that the subject of a

strike of the airline pilots was addressed at a Board of

Directors meeting?

A. I don’t recall.

{62] Q. Do you recall by whom it was addressed?

A. No, I do not.

Q. Would that have been Mr. Howard?

A. Would have been, I don’t know exactly who

might have brought the subject up.

A58

Q. Would this have come up in the calendar year

1983 or 1984?

A. I don’t recall, but being in this kind of business,

obviously, it comes up in meetings of various kinds.

Q. Placing a time when it was first addressed at

the meeting of the Board of Directors of Transamerica

Airlines, Inc., would you say it came up at least by early

1984?

A. I don’t recall.

Q. Your last meeting of the Board of Directors of

Transamerica Airlines, Inc. was in March of 1985, was

that right?

A. Yes.

Q. Was the subject of a strike by the airline pilots

discussed at that meeting?

A. I wasn’t at that meeting. I missed that meeting.

Q. But you were at the meeting which occurred

before then, the meeting which occurred in or about

January [63] of 1985, were you not?

A. I believe so.

Q. In the Board of Directors meeting of the Trans-

america Airlines, Inc. in January of 1985, was there a

discussion of a strike by the Airline Pilots Association?

A. I don’t recall.

Q. Do you recall if it was at least prior to the

meeting in January of 1985 that there was a reference

to a possible strike by the Airline Pilots Association?

MR. KASPERS: Object to the form.

THE WITNESS: Yes.

A59

MR. LINSEY: Q. So it was at least back into cal-

endar year 1984 that the subject was addressed at meet-

ings of the Board of Directors of Transamerica Airlines,

Inc.; is that correct?

A. I don’t recall. The reason I answered that is

that we are in various meetings of various subjects, vary-

ing times, whether these things came up with the Board

of Directors or one of these other meetings, I don’t recall.

Q. Have you had meetings in which you participated

to discuss collective bargaining with ALPA other than

at the Board of Directors meetings?

A. No.

Q. So normally there is no normal meeting which

occurs in which you participate at which there is a session

[64] concerning collective bargaining between ALPA and

the company; is that right?

A. That’s right.

Q. Do you recall at approximately how many meet-

ings the subject of a possible strike by the Airlines Pilots

Association against the company came up?

A. No, I do not.

Q. Would it be more than three?

A. I just don’t recall.

Q. Was there any discussion during any of the ref-

erences of a possible strike by the Airline Pilots Asso-

ciation against the company, contingency plans of the

company, should a strike actually ensue?

A. In a general way, yes.

Q. What was said about the company’s plans should

a strike ensue?

A60

A. Very little other than the contingency plan was

being looked at, put together.

Q. Who was responsible for putting together the

contingency plan?

A. I don’t know for sure but normally would come

back to Mr. Howard’s jurisdiction.

@. Were there plans to operate during a strike by

the pilots should that ensue?

A. Only a general discussion of that was had, and

[65] the answer to it is yes.

Q. Was there any discussion of how the company

would operate should a strike actually ensue?

A. No.

Q. Was there any discussion concerning the ob-

taining of strike replacements, of replacements for striking

pilots, should a strike actually ensue?

A. No.

A6l

APPENDIX J

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

No. 85 2803 SW

AIRLINE PILOTS ASSOCIATION,

Plaintiff,

vs.

TRANSAMERICA AIRLINES, INC.,

Defendant.

DEPOSITION OF ERNEST EASTMAN

May 8, 1985

* * *

[16] Q. Did you participate in drafting the company’s

opener, Section 6 opener, to ALPA for a new collective

bargaining agreement?

A. Yes, I did.

Q. When did you begin working on such an opener?

A. Actually sat down and began to draft the opener,

I would say, roughly in January of 84.

Q. Did you have any meetings with other personnel,

officers or directors of Transamerica Airlines, Inc. con-

cerning this opener?

A. Fea

Q. When was the first such meeting?

A62

A. I think it was approximately that same time.

Q. January of 1984; is that right?

A. I believe so.

[17] Q. Was there any goal that was established and

communicated to you that the company sought to achieve

in these negotiations?

A. In terms of what?

Q. Say, let’s start with money, was there any, I

assume the company sought economic concessions from

ALPA;; is that correct?

A. In the opener, yes we did.

Q. Was there a percentage for reduction of pilot

pay which was formulated by you and other personnel

of Transamerica Airlines?

MR. KASPERS: Are you talking about in the

opener?

MR. LINSEY: That’s right.

THE WITNESS: We didn’t begin with a percentage,

we began with the observation that we had to bring our

wages in line with the people we were competing against.

MR. LINSEY: Q. By “wages,” you meant wages

of cockpit personnel; is that right?

A. We are talking about the cockpit opener, aren’t

we?

Q. Yes.

A. Then yes, I do mean that.

Q. Who participated in this discussion?

[18] A. Captain Neff, myself, Mr. Berghel, I believe.

eh aod OA fi

A63

Q. At that time was there mentioned a figure of 50

percent or 60 percent reduction in pilot wages?

A. I don’t recall. My recollection is not us talking

to each other that we had to reduce them 50 percent. My

recollection is our conversations were we have to get them

down into this range. That was pretty much established

by the surveys we had done of the competition.

Q. When did you do the surveys of the competition?

A. Captain Neff performed that function.

Q. When did he perform that function?

A. I assume that it was shortly before we began

working on our opener.

Q. So this would have been late 1983; is that correct?

A. Late ’83 and ’84 as I recall, yes.

Q. Did he produce a written report?

A. I believe he did.

Q. Was that report distributed and presented at a

meeting in which you participated?

A. I don’t believe so. I don’t think that’s how I

came to have a copy of the report. I believe it was routed

to me.

Q. Do you recall from whom you received that re-

port?

[19] A. Captain Neff, if my recollection serves.

Q. Have you at any time heard the bench mark

figure of 50 to 60 percent reduction in pilot wages?

A. Of course.

A64

Q@. When was the first time that you heard that

figure?

A. I can’t tell you exactly but, you know, as we

looked at the figures we were working with, it is not

difficult to look and say “Gee whiz, this comes out to

be about a 50 or 60 percent reduction.” I believe that

is how it came about. As I say, I don’t think anyone

came up and told me that there will be a 50 percent

reduction, that is not the way it occurred in my recol-

lection.

Q. Was this adopted as a goal of the company in

collective bargaining with the pilots?

A. Not to my knowledge, no.

Q. So it would be incorrect to say that 50 to 60

percent reduction of pilot costs was a bench mark that

the company had established for these collective bar-

gaining negotiations? |

A. Yes.

Q. Was there any discussion as to the method the

company would use to achieve a reduction of 50 to 60

percent of a reduction of pilot wages?

A. Collective bargaining was the only method we

[20] had ever considered.

Q. Did you discuss the possibility of a strike re-

sulting from these negotiations?

A. Yes.

Q. When do you first recall discussing the possibility

of a strike?

A. I think probably at the time we began working

on the Section 6 opener or during that period of time.

A65

That’s a common approach that we take on every Sec-

tion 6 opener, what might the result of this be?

Q. How many Section 6 openers have you assisted

in preparing here at Transamerica Airlines?

A. Just this pilot opener, the opener for the flight

engineers, the opener for the flight attendants, we have

three unions.

Q. When did you assist in preparing the flight engi-

neers opener?

A. Shortly after the pilots’ opener was prepared.

Q. So that would have been in the spring of 1984?

A. That’s right.

Q. The flight attendants’ opener you participated

in drafting shortly after your arrival here?

A. No, that’s not correct. I joined the negotiating

team during the negotiations. When I arrived that opener

had been served. I am currently preparing a [21] Sec-

tion 6 opener to serve upon the flight aitendants.

Q. Okay, another opener?

A. Right.

Q. With whom did you have discussions concerning

the possibility of a pilot strike in January of 1984?

A. I don’t remember specifically, it could only have

been two or three people. It could only have been Cap-

tain Neff, Mr. Berghel or my supervisor, Mr. Riley.

Q. Did the company make a decision to produce an

operating plan to provide for the contingency of a pilot

strike?

A. Yes.

A66

@. When did work on such a plan begin?

A. I have been working on that document off and

on for the last, I would say, this is June, I would say

close to a year.

Q. That would be since June 1984; is that right?

A. That’s very rough, yeah. I probably was work-

ing on it before then, I mean it is a document that you

take out and polish up and revise periodically. It is not

something created in whole cloth every time.

Q. Approximately how many pages is that document?

A. Roughly 150, I would say. I could be off by 50

pages.

@. During the course of collective bargaining [22]

negotiations with the pilots, did the company begin to

execute any elements of that strike plan?

A. No.

Q. Is one of the elements of that strike plan the hir-

ing or obtaining by contract or other means replacement

pilots to replace striking ALPA pilots?

A. No.

Q. Is one of the elements of that plan the continua-

tion of flight operations during the course of the strike?

A. Yes.

Q. By what means would this occur?

MR. KASPERS: Id instruct him not to answer that

question.

MR. LINSEY: On what basis?

MR. KASPERS: It is confidential, and inappropriate

and unrelated to this lawsuit.

A67

MR. LINSEY: I think that it is.

MR. KASPERS: I don’t think it would be appropriate

to delve into contingency arrangements under the guise of

this lawsuit.

MR. LINSEY: That is what this lawsuit is all about.

MR. KASPERS: Well, if you intend to get that in-

formation, you are going to have to do it from—I have

[23] instructed the witness not to answer.

MR. LINSEY: We would ask that the court reporter

to mark this location in the record and reserve our right

to proceed for an Order to Compel.

Q. What are the other elements of the strike plan

that you have prepared?

A. I am not sure that I can categorize them or name

them all. Security is one that comes to my mind, con-

tinuing operations I guess we have already touched on.

I don’t know how—to have a section on decision making

regarding what flights should be operated and in what

order.

Q. Would you describe the process for me of how

the company decided what it wanted to achieve in these

negotiations for a new agreement with ALPA?

A. I am not sure I understand your question.

Q. Did you receive any instructions from the com-

pany’s Board of Directors or the company’s Executive

Board or Executive Committee concerning goals in these

collective bargaining negotiations?

A. From the Board of Directors, no. I don’t know

what you mean by “Executive Committee.”

Q. Does Transamerica Airlines, Inc., have an Exec-

utive Committee or an Executive Board?

A68

A. Maybe they do. I don’t know what you mean

by that.

[24] Q. Have you ever heard the term?

A. Executive Committee? No, I never have.

Q. How about Executive Board?

A. I never have.

Q. That would be a Board or committee of, say, four

personnei including Howard Korth, H. K. Howard and two

other individuals?

A. If there is such a committee, I don’t know it

by that name.

Q. Did you receive any guidelines concerning these

collective bargaining negotiations from any other group

of executives, officers or directors, of Transamerica Air-

lines, Inc.?

A. From a group of people, no.

Q. You would just receive word from individuals;

is that right?

A. That’s correct.

Q. Did you receive any guidelines or instructions

from H. K. Howard concerning these negotiations?

A. No, I did not.

Q. From whom did you receive any guidelines?

A. The input to me was through, primarily, people

within the operations department and they would come

to me over the course of the term of the previous contract,

memo, “Ernie, we need to think about changing this in

the [25] contract, whatever it is, next time around, it is

giving us a problem.”

A69

APPENDIX K

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

No. 85 2803 SW

AIRLINE PILOTS ASSOCIATION,

Plaintiff,

vs.

TRANSAMERICA AIRLINES, INC.,

Defendants.

DEPOSITION OF HANK BATHEY

May 9, 1985

* & es

[42] * * * around, we were thinking of leasing in

additional equipment to fly passengers.

Q. Mr. Bathey, have you heard that it is a goal of

management in these contract negotiations to achieve a

50 or 60 percent cost reduction in terms of wage reduc-

tions and work rule concessions by the Airline Pilots

Association?

A. Ihave heard it from the pilots.

Q. Have you heard it from any management official

that that is a goal to be achieved in these contract nego-

tiations?

A. No not those numbers.

Q. What type of numbers have you heard from

management personnel?

A70

A. I have not heard a number exactly put out as

an overall goal.

Q. Have you heard any numbers or any percentages?

A. I have read them in the opener.

Q. Other than what you have read in the opener,

have you heard of any numbers or percentages?

A. Not specifically, no, I mean from a company offi-

cials. I have heard them from pilots but not from com-

pany officials.

Q. Mr. Bathey, have you participated in any plans,

should there be a strike, any plans or contingency, should

their be a strike by the Airline Pilots Association in the

[43] course of these collective bargaining negotiations?

A. Negative.

Q. Has the company made any plans to hire any

replacement pilots should there be a strike?

A. Not that I am aware of.

Q. Mr. Bathey, do you serve on the management

negotiating committee for the new agreement with ALPA?

A. No.

Q. Have you ever participated in any meetings of

the negotiating committee for the new collective bar-

gaining agreement with ALPA?

A. Only prior to submission of the opener.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.