Petition for Writ of Certiorari — Allied Pilots Ass'n v. Civil Aeronautics Board

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Text

Hearings were begun in 1962, but in the midst of the

hearings, the Paet members filed additional amendments to

the Paet. Basically, these amendments provided for addi-

tional **supplemental payments’? to a struck earrier. They

guaranteed a carrier member would receive 25% of its nor-

mal air transport operating expenses for flight operations

shut down because of a strike. The additional pay-

ments over ‘*windfall’’ necessary to meet this guarantee

would be contributed by each member in proportion to its

air transport operating revenue for the prior year to the

total revenue for all members. A maximum annual liability

for each member of one-half of one pereent of the prior

year’s air transport operating revenue was also provided.

After an Initial Decision by Examiner 8S. Thomas Si-

mon, the CAB approved the amended Pact for three years,

in July 1964. Mutual Aid Pact Investigation, 40 C.A.B. 559

(1964). Viee Chairman Murphy dissented in part and mem-

ber Minetti dissented.

In May 1967, the Pact members again requested CAB

approval for extension of the Pact. The CAB ordered an

additional evidentiary hearing before renewal. Order E-

26000 (1967). Following hearings, the Initial Deeision of

Examiner Arthur S. Present of Mareh 1969 approved re-

newal; but before the CAB could render a final decision,

the Pact members, in October 1969, made further significant

changes to the Pact which:

1. Inereased the ‘‘supplemental payments’’ of 25%

of normal air transport operating expenses, for flight

operations shut down, to:

-50% of such expenses during the first 14 days of

the strike;

45° of such expenses during the next 7 days o.* the

strike ;

40% of such expenses during the next 7 days of the

strike ;

35° of sueh expenses during the remaining days

of the strike.

2. Inereased the maximum annual liability of every

Pact member from one-half of one percent to one per-

cent of air transport operating revenues for the eal-

endar year preceding the strike.

3. Eased entry for new members, lengthened the

period for withdrawal notice and provided for more

extensive arbitration of disputes.

In July 1970, the Board approved the amended Pact,

with members Murphy and Minetti dissenting. Order 70-

7-114 (1970). Tiowever, in November 1970, the Board, upon

reconsideration, vacated that Order and remanded the pre-

ecedizg to Examiner Present for further evidentiary hear-

ings. Order 70-11-110 (1970).

In December 1970, there was another Pact amendment

permitting local service carriers to join the Pact for the

first time. As a result of the various Pact amendments,

all truck earriers except Delta Airlines, Ine., and ali local

serviee carriers, except Allegheny Airlines, Tne. and South-

ern Airways, Ine., became Pact members, bringing virtually

the entire scheduled airline industry together under the

Pact.

The reopened hearing before Examiner Present een-

tered on the record of actual experience while the 1969-1970

amendments were in effeet. That experience included three

of the longest strikes in airline history—a 119-day National

Airlines-Airline Employees Association dispute, a 160-day

strike by the Brotherhood of Railway and Airline Clerks

against Northwest Aiclines, and a 154-day Mohawk Air-

lines pilot strike. In the four 1970-1971 strikes (National,

Northwest, TWA, Mohawk) total Pact benefits were

$83,585,000, including $49,688,000 in supplemental pay-

ments.

After this evidentiary hearing, Examiner Present. is-

sued a decision approving the Pact as not adverse to the

publie interest or in violation of the Federal Aviation Act,

but disapproving the 1969-1970 amendments to the Pact

with respect to supplemental payments, increased carrier

liability and local service carriers. However, on February

23, 1973, the CAB, although adopting the findings and con-

clusions of Examiner Present, except as modified or incon-

sistent with its opinion, approved the Pact and the 1969-

1970 amendments for a five-year period, with members

Murphy and Minetti dissenting in part. Order 73-2-110

(1973).

On appeal, pursnant to 49 U.S.C. $1486, the Court of

Appeals for the District of Columbia held that the Mutual

Aid Pact, as amended, was consistent with national labor

policy and that the Board’s approval of the Paet was based

on findings which were adequately supported; it affirmed

the decision of the CAB.

The Allied Pilots Association (‘the APA‘) is a labor

organization representing only the pilots on American Air-

lines, Ine. It is not affiliated with any other union nor with

the AFL-CIO. Collective bargaining covering American

Airlines’ pilots takes place direetly between the APA and

American Airlines.

REASONS FOR GRANTING THE WRIT

POINT I

The Civil Aeronautics Board has assumed congres-

sional powers and exceeded its authority in deliberately

altering the balance of economic power between labor

and carriers.

Under Section 412 of the Federal Aviation Act, 49

U.S.C. (1382, the CAB was required to disapprove the Mu-

tual Aid Pact if it found the Pact ‘‘to be adverse to the

pubiic interest, or in violation of this Act * * *.’’ A finding

that the Pact violates the Railway Labor Act would require

disapproval of the Pact as 49 U.S.C. $1371 expressly re-

quires that carriers comply with the Railway Labor Act as

a condition of holding a CAB certificate.

The CAB’s approval of the Mutual Aid Pact bears di-

rectly and decisively on the fundamenta! social and political

issue of the balance of economic power between labor and

management in the airlines industry. The Board’s opinion

is replete with findings and comments that such is the pur-

pose and effeet of its actio.s. B= heombegtseener—<ateS.

At the same time the Board has no reservations about the

fact that labor relations policy is an area outside its ex-

pertise. Union of Professional Atrmen v. Shawnee Air-

lines, Order 73-38-45 (1978). Although the Board has neither

power to direct carrier labor relations nor expertise to pass

judgment, it does have a responsibility not to take action

which is ineonsistent with national labor poliey and the

courts have the responsibility of enforcing that limitation.

Burlington Truck Lines vy. United States, 83 $.Ct. 239,

248 (1962).* During the long course of the proceedings

culminating in the present Pact, the Soard has never given

proper consideration to the unique character o° the Rail-

way Labor Act which is perhaps the most thoroughly and

openly negotiated piece of legislation ever enacted.

In testifying on the legislation, Donald R. Richberg,

counsel for the Organized Railway Employees, stated:

‘*T emphasize at the outset that this is an agreement

not in any way as seeming to attempt to coerce your

judgment by the fact that the parties here have agreed

upon what they are presenting, because they are seck-

ing legislation for which you have your public re-

sponsibilities, not for the purpose of in that manner

influencing your judgment, but for the }.urpose of point-

ing out at the outset the nature of the proposed law

which is here presented for your sanction.*’**

His views were echoed by A. P. Thom, General Counsel

of the Association of the Railway Executives, who stated:

‘‘Mr. Chairman, you will readily appreciate that in

reaching an agreement on so controversial a matter as

the varying interests beiween the carriers and their

employees naturally present, it was necessary for both

partics to make concessions as to what might be in-

serted in the agreement. Both varties did make con-

eessions. This bill as presented here is not just such a

bill as labor would have written if it could write its own

bill—it is not such a bill as the carriers would have

written if they could write their own bill. But it is the

* Hearings on H.R. 7180 Before the Committee on Interstate

Commerce, 69 Cong., Ist Sess., at 9 (1926) [hereinafter cited as

1926 Hearings on H.R. 7180].

** 1926 Hearings on I! R. 7180 at 11.

view on which they were able finally to agree to present

to the Congress of the United States as a method that

would work in preventing interruptions of commerce

and in preventing any sacrifice of the public's inter-

est.?”*

Mr. Thom went on to point out how accommodation had

been reached between labor and management on specifie

provisions of the Railway Labor Act:

“Towas saving that there were matters in this bill

Which were probably not entirely satisfactory te one

party. and other provisions in the bill probably not

entirely satisfactory to the other. The bill has been

brought into existenee by » method of give and take.

For example, take section 10 ef this bill, which relates

to the facttinding body. Phat was one of the matters

most seriously treated in these negotiations and about

Which there was the most diffien!ty in \reaching an seree-

ment.”***

“We made the concession of not going further in

section 10 than it is now written into the law, and we

advocate to vou that you do not require us to go further,

not only as a matter of loyalty to an agreement but as

a matter of judgment of what is best for the country.

‘We say to you that an agreement between the par-

ties is worth more than any additional coervion you

might write into that action * * *.°?**

If anything, the concern among the Congressmen was

that the legislation was so clearly a product of labor-man-

agement cooperation that it might foster bargaining agree-

ments at the expense of the publie interest. See e.q.. col-

loquy between Senator Dill and D, B. Robertson, President

* 1926 Hearings on H.R. 7180 at 115.

** 1926 Hearings on H.R. 7180 at 116-117.

of Locomotive Firemen and Engineers, 1926 Hearings on

IL.R. 7180 at 4.

In face of these misgivings Labor and Management

urged and Congress heeded the appeal that there be no

tinkering with the agreed legislation.

“Mr. Newton. Lagree with you, but L also feel this,

that this legislative child comes here sponsored by two

rather worthy parents, vouching that it is the best

child ever and that ‘the child’ will work."’

“Mr. Thom. Don't put a different child o-- the

doorstep of the publie.”’

“Mr. Newton, And expect it to perform like the

original ehild.*’*

See alse Statement of Donald Richberg, Hearings on 8. 2306

Before the Committee on Interstate Commerce, 69th Cong.,

Ist Sess. at S8 (i826) [hereinafter 1926 Hearings on S.

25061.

Mr. Richborg characterized the final legislative produet

in the following words:

“tiis all a part of the machinery. Yon ean not

write a ¢hiuse here which will affeet a party of this

machinery which will not affect the rest of the ma-

chinery. You can not write a clause which will affect

the operation of a part of the machinery which will rot

affeet the operation of the rest of the machinery, It is

just about as wise to add a little to thir law on the basis

of *Well, this wilt not affect the rest of it’, as to add

to a radio on the same basis. Somebody might come

along and say ‘You had better add another battery

here,” or tdt needs another wire here.” The result will

be that you will throw your delicately balaneed radio

* 1626 Hearings on TLR. 7180 at 383.

ale.

out of commission. The situation here is that we have

a delicately balanced piece of machinery to insure both

parties a fair and equal opportunity to press their

point of view home to insure adequate public inter-

vention and adequate public pressure on the parties to

the agreement’’ (emphasis added).*

Our primary point is that, without practieal expertise or

legislative warrani, the CAB has presumed to throw a

monkey wrench into that **delicately balaneed piece of ma-

chinery’* which ‘tis the exbnination of S81 years of experi-

enee with Federal legislation to govert the labor relations”

in the railroad and airline industries.** Both by legislative

history and by its own terms the first purpese of the Rail-

way Labor Act is ‘tte avoid any interruption to commerce

or to the operation of any earrier engaged therein."* 45

U.S.c. §152(1). The Board admits that mutual aid pay-

ments ‘*may well’? prolong interruptions to air commerce

but it eontemplates other benefits. The right to even make

such a judgment is neither the right nor the role of the

Board. There is no question but that this Mutual Aid Pact

could not be implemented without the affirmative action of

the CAB. See Appendix D, Order 73-2-110 at 107-108.

When Congress approved the extension of the Railway

Labor Act to the airline industry in 1986, no ‘*mutual aid”

pact existed. Congress aceepted the industrial balatce of

economic strength as it existed and cannot be deemed to

have delegated to the Civil Aeronautics Board the power to

change that balanee. Clearly such a change must take

*19206 Hearings on S. 2306 at 182.

** National Mediation Board, Administration of the Railway

Labor Act by the National Mediation Board, at 1 (1970).

place by affirmative government—both beesuse of the

essential political character of such action and because

Congress intended to reserve this kind of power io itself.

This was precisely the view of the Board itself when with a

different membership and a far more limited Pact before it,

it ruled on the Six Carrier Mutual Aid Pact in 1969 saying,

29 C.A.B. 168, 173:

‘*We next turn to the question whether the agreement

threatens, by aggravation of labor disputes to hinder

achievement of the objectives set forth in Seetion 102

of the Federal Aviation Act. The public interest which

we must guard, though not broadly one of employee

welfare, includes attainment of a degree of stability

and efficieney in air transportation that freedom from

industrial strife will provide.”’

“The range of our inquiry, however, is limited to a

determination of the effect of the agreement upon these

statutory objectives. Matters of general policy as to

labor disputes are not to be considered by the Board in

assessing whether the agreement is adverse to the

‘publie interest’. It is the function of Congress, and

not of the Board, to weigh the wisdom of such agree-

ments as a factor in the furtherance of labor poli-

cies not directly related to the promotion of a sound air

transportation system.’’

The effect of the Board’s approval is to encourage, if

not foree, multi-carrier bargaining in the airline industry.

This is contrary to the design for representation which is

quite clearly spelled out in the Act or being on a single

earrier basis* and results in an expansion of industrial

strife and interruption to transportation—the most critical

form of commerce.

A multi-employer bargaining unit under the Railway

Labor Act is unlawful in the absence of union consent. The

* Railway Labor Act, as amended 45 U.S.C. $152 (Ninth).

eases make it indisputgbly clear that conseit is an essential

prerequisite of multi-employer bargaining. The National

Labor Relations Board, for example, has held, with the

approval of two Courts of Appeal, that a multi-employer

bargaining unit eannot be initially esteblished without the

consent of all parties and, moreover, that even where there

is a long history of multi-emplover bargaining, either the

emplover or the union may withdraw from the multi-em-

ployer bargaining for aay reason, provided that withdrawal

is timely and unequivocal. The Evening News Ass'n, 154

N.L.RB. No. 121) (1965), enfd., 3872 F.2d 569 (6th Cir.

1967); Hearst Consolidated Publications, lne., 156 NLRB.

No. 16 (1965), enf’d, 364 F.2d 298 (2nd Cir. 1966) ; see also

Multi-Emplouer Saraaining and the National Labor Rela-

tions .Act, 66 Harv. L. Rev. 886, 889 (1953).

Moreover, analogous eases arising under the RLA (in-

volving the obligation to submit disputes to so-ealled ‘*na-

tional handling**) indicate: (a) that one party has no abso-

lute right te insist on multi-party bargaining by the other

side, Bhd. of RR. Trainmen v. Atlantic Coast Line R.R. Co.,

383 F.2d 225, 229 (D.C. Cir. 1967), even where that side (the

union in the ease just cited) fias made identical demands

on a number of employers, i/., and (b) there may be an

obligation to bargain on a multi-party basis, but ov/y where

the issue on which such bargaining is sought is appropriate

for multi-party bargaining avd where there is a history of

multi-party bargaining. Bhd. of R.R. Trainmen vy. Atlantic

Coast Line R.R. Co., supra, 383 F.2d at 229; [AM yv Na-

ticnal Railway Labor Conference, 210 F.Supp. 905, 911

(D.D.C. 1970). Chicago, Burlington « Quincy R.R. v. Rail-

way Employees Dep’t, PFFL-CIO, 301 F.Supp. 605, 607

POF AUTOR NES I TN NT

Bees FEN MB OF ES

(D.C. Cir., 1969). In any event, consent (as manifested

by past participation) is elcarly a prerequisite to any such

obligation.

There is no history of iulti-employer bargaining with

labor organizations representing cockpit personnel, and in

particular with Allied Pilots, Association.

Muiti-earrier bargaining does not exist in the airline

industry although the effect of the Pact is to promote that

result. Even under the National Labor Relations Aet,

multi-employer ceonomie action is only permissible, for

‘defensive’? purpose of ‘*presery{ing| the multi-employer

bargaining basis from the disintegration threatened by the

Union’s strike action * * *"? NURB vy. Truck Drivers Local

449.77 S. Ct. 648, 648 (1957); NLRB vy. Brown, 85 8. Ct.

980 (1965); NLRB y. Great Atlantic & Pacific Tea Co., 340

F.2d 690 (2nd Cir. 1965).*

The limitations on employer self-help should, if any-

thing, be more stringently applied to carriers covered by

the Railway Labor Act. This Court in Brotherhood of

Railway & Steamship Clerks v. Florida E.C. Railway Co.,

86 S.Ct. 1420 (1966), made it plain that carriers under the

Railway Labor Act are not relieved of all constraints on

their actions because they are engaged in an eeonomie

struggle with their employees. In all instances, the publie

interest is paramount. Certainly in the instant case where

the effect of the Pact will be to prolong and broaden the

* Kennedy v. Long Island Railroad Co., 319 F.2d 366 (2nd Cir.

1963). aff'd, 211 F. Supp. 478 (S.D. N.Y. 1962), cert. denied, 84

S. Ct. 75 (1963), approving railroad strike insurance, to the extent

it is contrary authority, 1s distinguishable as action taken in response

to selective strikes in a context where multi-carrier bargaining had

taken place. See (United Transportation Union v. Burlington

Northern, Inc., 325 ¥. Supp. 1125 (D.D.C. 1971).

scope of the industrial conflict, the Board’s action is direct-

ly counter to the purposes of the Railway Labor Act. Even

if it could be argued that adding the sirength of every

carrier in a bargaining dispute otherwise affecting only

one, will somehow enhance the prospects of industrial

peace, that is not a decision within the competence or

power of the CAB. Such a balancing of strength within

the industrial relations context is a decision Congress has

reserved to itself, lest that finely balanced apparatus

which it has wrought with the aid of the parties them-

selves be turned into junk by technocrats with only a par-

tial view.

POINT Il

The CAB arbitrarily applied industry-wide con-

siderations to the petition r’s single carrier status.

The Petitioner, Allied Pilots Association, is an inde-

pendent Union representing only the pilots employed by

American Airlines. APA does not belong to the AFT -CIO;

it does not have an affiliation w:th any other Union; it doer

not have any agreement—express or implied—with any

other anion for mutual support or coordination. Yet in any

economie conflict American Airlines will receive the support

of virtuaily the entire industry while APA will stand alone.

All of the arguments we have made with respect to

the general impropriety of the Pact apply with even

greater vigor to bargaining relationships which are con-

cededly on a *tone-to-one”’ basis. Brief for Petitioner at 13.

The Board wholly ignored APA’s position as did the

Court beiow when it wa: urged there. Beeause APA is

not a giant, ifs right to i~dependent survival cannot be so

RTE SE REST RUN T 8

RES RA A

[See eg RR Roe ED

ny en eee:

. . 4

trivially dismisse?. Perhaps the reason why APA's posi-

*irerns ete create teens foreateeds Hoos Fen tie faa tint tie Ranevds

should acknowledge it, logie commands that the position

must be accepted. The pr¥mise (faulty, we believe) for the

Pact and the Board's approval of it rests on the asserted

power of major unions with representation rights on more

than one carrier. Presumptuously, the Board contends that

this has been an evil overweening power which it must cor-

rect. However, if the Board is correct as a general propo

sition the Paet is consistent with the publie interest, then

the applieation of the Paet to APA mus! be inconsistent

with the publie interest; for the necessary effeet of the Pact

will be to discourage independent trade unionism an! force

such organizations as APA to seek, at least, gre iter co-

ordination with other carrier trade unions. On the basis

of the Board’s own rationale the appheation of the Pact

to APA is not consistent with the public interest*® and is an

arbitrary and capricious administrative act.

Conclusion

For the foregoing reasons it is respectfully sub-

mitted that the Petition for a Writ of Certicrari be

granted.

Respectfully submitted,

By: os Martin C. Sena

Marvin CL Senam

900 Fifth Avenue

New York, New York 10056

Attorney for Petitioner

Of Counsel:

Surrey, Karastk, Morse & Seuam

New York, New York

* The Board must disapprove such agreements, Federal Avia-

tion Act of 1958, 49 U.S.C. §$1382(b).

APPENDIX A

Decision of United States Court of Appeals

(D. C. Cir., 1974)

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 73-1214

AIR LINE PILOTS ASSOCIATION INTERNATIONAL,

PETITIONER

Vv.

CIVIL AERONAUTICS BOARD, RESPONDENT

AMERICAN AIRLINES, INC., ET AL

ALLIED PILOTS ASSOCIATION & AIRCRAFT

MECHANICS FRATERNAL ASSOCIATION &

FRONTIER AIRLINES, INC.

HUGHES AIR CORPORATION d/b/a HUGHES AIRWEST

NORTH CENTRAL AIRLINES, INC.

OZARK AIR LINES, INC. :

PIEDMONT AVIATION, INC.

TEXAS INTERNATIONAL AIRLINES, INC.

Suk

No. 73-1229

AIR LINE DISPATCHERS’ ASSOCIATION, ET AL,

PETITIONERS

Vv.

CIVIL AERONAUTICS BOARD, RESPONDENT

AMERICAN AIRLINES, INC.

BRANIFF AIRWAYS, INC.

CONTINENTAL AIRLINES, INC.

EASTERN AIR LINES, INC.

NATIONAL AIRLINES, INC.

NORTHWEST AIRLINES, INC.

UNITED AIR LINES, INC.

PAN AMERICAN WORLD AIRWAYS, INC.

TRANS WORLD AIRLINES, INC. s

WESTERN AIR LINES, INC.

ALLIED PILOTS ASSOCIATION AND THE AIRCRAFT

MECHANICS FRATERNAL ASSOCIATION

FRONTIER AIRLINES, INC.

HUGHES AIR CORPORATION d/b/a HUGHES AIRWEST

NORTH CENTRAL AIRLINES, INC.

PIEDMONT AVIATION, INC.

TEXAS INTERNATIONAL AIRLINES, INC.

Petitions For Review of an Order of the

Civil! Aeronautics Board

Decided August 8, 1974 S

Robert S. Savelson, of the bar of the Court of Ap-

peals of New York, pro hac vice, by special leave of

court, with whom Donald J. Capuano was on the brief,

for petitioner in No. 73-1214. Patrick C. O'Donoghue

and Martin F. O'Donoghue, Jr., also entered appearances

for petitioner in No. 73-1214.

William G. Mahoney, for petitioners in No. 73-1229.

Martin C. Seham, of the bar of the Supreme Court of

the United States, pro hac vice, by special leave of court

for intervenor, Allied Pilots Association and Aircraft

Mechanies Benevolent Association. Richard Hibey and

James P, Davenport, entered appearances for intervenors

Allied Pilots Association and Aircraft Mechanics Benevo-

lent Association.

Glen M. Bendixsen, Attorney, Civil Aeronautics Board

for respondent. Richard Littell, General Counsel, Civil

Aeronauties Board, O. D. Czment, Deputy General Coun-

se!, Robert L. Toomey, Acting Associate General Counsel,

Litigation and Research, Civil Aeronautics Board and

Robert B. Nicholson, Attorney, Department of Justice,

were on the brief, for respondent. R. Tenny Johnson,

General Counsel, Civil Aeronauties Board, at the time the

record was filed and Warren L. Sharfman, Associate

General Counsel. Civil Aeronautics Board, at the time

the record was filed, also entered appearances for re-

spondent. Howard E. Shapiro, Attorney, Department of

Justice also entered an appearance for resnondent.

Charles A. Miller with whom Robert N. Saylor and

Eugene D. Gulland were on the brief, for intervenors

trunkline carriers.

Raymond J. Rasenberger and James L. Devall were

on the brief for intervenors, Frontier Airlines, Inc., et al.

Before: BAZELON, Chief Judge and MACKINNON, Cir-

cuit Judge and CHRISTENSEN,* United States

Senior District Judge for the District of Utah

* Sitting by designation pursuant to 28 U.S.C. § 294(d).

Opinion for the Court filed by Chief Judge BAZELON.

BAZELON, Chief Judge: Petitioners, who are various

groups of airline employees, challenge the CAB’s ap-

proval of the airlines’ Mutual Aid Pact, as amended.

They contend that the Pact, as approved, violates the

national labor policy, the Railway Labor Act (RLA)

and the antitrust laws; and that there is no substantial

evidence to support the CAB’s finding that the Pact is

not adverse to the public interest.

Created in 1958 by six airlines, the Mutual Aid Pact

represented a joint effort to soften the impact of strikes

against individual companies. At its inception, the Pact

provided only for “windfall paymenis.” A _ strikebound

company received payments from other Pact members

equal to their increase in revenues resulting from the

strike minus their added operating expenses in servicing

the new business. The Pact was soon amended to pro-

vide for “supplemental payments.” This feature enabled

a carrier member to receive 25% of its normal air trans-

port operating expenses for operations shut down by the

strike. A 1969 amendment to the Pact raised that figure

to 50° during the first fourteen days of the strike,

dropping by stages to 35% after a strike period of four

weeks or longer. The additional payments over windfall

to meet this allotment were to be contributed by each

member in the proportion which its air transport oper-

ating revenues bore to the total revenue for all members.

Individual carrier liability for supplemental payments

was limited at first to one-half of one percent of the

earrier’s intake for the prior year. That limitation was

upped in 1969 to one percent by agreement of the Pact

members.

Both the increase in supplemental payments rates and

the higher ceiling on individual carrier liability were

PHAETON VST |

5 4a

approved in the Board’s 1973 order,’ which followed an

initial decision by the Adiministrative Law Judge refus-

ing to allow the esvalations.* These elements of the

amended Pact are the primary focus of the unions’ at-

tack on the Board’s avtion. Petitioners also contest the

CAB’s consent to a 1571 amendment to the Pact author-

izing the participation of local service carriers.

II.

The Supreme Court has recognized the responsibility

of transportation agencies like the CAB to make deci-

sions consistent with national labor policy. Burlington

Truck Lines v. United Siutes, 371 U.S. 156, 173. This

responsibility was explicitly recognized in the Board’s

opinion and is not a matter of dispute on appeal. What

is in dispute is the substance of national labor policy

relevant to this case.

The national labor policy rests on the principle that

parties should be free to marshall the economic resources

at their disposal in the resolution of a labor dispute.

consistent with the specific rights and prohibitions es-

tablished by the labor statutes. It is not generaily given

to government agencies to “regulate what economic

weapons a party might summon to its aid.”* And this

principle, of course, underlies the RLA, which is made

applicable to air carriers by 45 U.S.C. $181 and by

section 401(k) (4) of the Federal Aviation Act, 49 U.S.C.

§$ 1371(k) (4). That Act does establish certain proce-

dures that must be followed in the direct bargaining

‘CAB Order 73-2-110, Feb. 27, 1973, Joint App. 268a.

* Initial Decision of Examiner Arthur S. Present, Joint

App. 27la.

* NLRB v. Insurance Agents’ Int’! Union, 361 U.S. 477, 490

(1960).

;

PP A

‘.

6 a

process,‘ but once these procedures are exhausted with-

out a settlement, either side is free to resort to economic

self-help in an attempt to force a settlement most favor-

able to it.’

This is not to suggest that warfare between unions

and the airlines may rage uninhibited under the RLA.

Like other substantive labor legislation, the RLA im-

puses a duty on both employers and employees to bar-

gain in good faith," and it recognizes the right of em-

ployers to organize without employer interference.” But

in this case the CAB specifically noted that “the record

is replete with evidence of the earnest and consistent

good faith efforts of [the Mutual Aid Pact Members]

to find a resolution to their strikes throughout the course

of difficult labor negotiations.”* The Board also points

to evidence refuting any notion that the Pact functions

as an employer device to control the formation of bar-

gaining units.”

The permissibility of the Mutual Aid Pact under the

RLA is supported by Kennedy v. Long Island R.R., 319

F.2d 366 (2d Cir.), cert. denied, 375 U.S. 830 (1963).

The case involved a union attack on a strike insurance

plan in the railroad industry, a device whose similarity

to the Mutual Aid Pact in the airlines industry was

‘See 45 U.S.C. §§ 154-63, 183-85.

‘See Brotherhood of R.R. Trainmen vy. Jacksonville Termi-

nal Co., 394 U.S. 369, 378-79.

*45 U.S.C. § 152 First.

‘Id. § 152 Fourth.

*Opinion of the CAB, Feb. 27, 1973, Joint App. 240a-41a.

One instance of an alleged RLA violation by an airline is

noted, but it was not shown to have any connection to carrier

membership in the Pact. /d., Joint App. 241a.

* See id., Joint App. 240a n.14.

A RNA ENE REIT

AEWA RATE STG TEEPE LIE TI ae I ee

74a

specifically noted in the Second Circuit’s opinion. In up-

holding the plan, the court began with the principle set

out above and found further support for its result in

section 20 of the Clayton Act '’ and section 4 of the

Norris-La Guardia Act,"’ which sanction the payment of

benefits to parties engaged in a labor dispute. Petition-

ers’ efforts to undermine the rationale of the Kennedy

decision are unconvincing.'’ We find the Board’s ap-

proval of the Pact, as amended, fully consistent with the

national labor policy and the RLA.

"29 U.S.C. § 104.

*? Petitioners’ argument is based in part on a later holding

of the Second Circuit, NLRB v. A. & P. Stores inc., 340 F.2d

690, that a lockout by employers who were not in the sare

bargaining unit as the company being struck was violative

of the Netional Labor Relations Act. Petitioners urge that this

case implies that multiemployer aid is impermissible except

in the context of multiemployer bargaining units, which pres-

ently do not exist in the airlines industry. A. & P. is easily

distinguished from Kennedy in that the court’s result in

A. & P. turned on a finding that the lockout violated section

&(a) (1) of the NLRA as a device to force the unions to accept

multiemployer bargaining units. As we have noted, text ac-

companying note 9 supra, the Pact does not appear to have

such coercive tendencies.

The unions also resort to Brotherhood of Railway &

Steamship Clerks v. Florida East Coast R. Y., 384 U.S. 238

(1966), which held that during a strike period a railroad

could make some alterations in its contracts with the unions

without submitting these alterations to the lengthy negotia-

ions procedures required by the Act. The unions attempt

to read into this case a principle limiting the use of em-

ployer self-help whose effect is to prolong strikes. In fact, the

decision vindicates the right of self-help in the face of the

technical requirements of the Act by allowing “se employer

to make adjustments necessary for continued operations dur-

ing the strike subject only to approval by the district court.

8 a

ITI.

There is no indication either in the initial opinion of

the Administrative Law Judge or in the CAB’s opinion

that the unions presented their antitrust objections to

the Pact in the proceedings before the agency.: As a

technical matter, therefore, we are precluded from con-

sidering the antitrust attack absent any reasonable

grounds for failure to pursue that attack before the

CAB." As a practical matter, we cannot exercise an

appellate function in the review of administrative mat-

ters unless the problems have been fully aired and fo-

cused in the proceedings below. The Federal Aviation

Act (FAA) specifically exempts agreements approved

by the CAB from the operation of the antitrust laws."

The initial forum in which to raise antitrust objections

remains the agency which is charged with the primary

determination of the public interest.’

IV.

In passing on agreements among air carriers under

49 U.S.C. § 1382, the CAB is required to disapprove any

** 49 U.S.C. § 1486(e) provides:

No objection to an order of the Board . . . shall be con-

sidered by the court unless such objection shall have been

urged before the Board ... or if it was not so urged,

unless there were reasonable grounds for failure to do so.

"49 U.S.C. § 1384.

'*In prior rulings, the CAB has dealt with antitrust ob-

jectious to the Pact. See, e.g., Opinion of the CAB, July 10,

' 1964, Jost App. 44a, 66a-67a. It concluded that the Pact

“has not op<rated in restraint of trade or lessened competition

between air carriers ... .” However, we do not consider

these prior rulings, or the findings which they contain, to be

proper subjects of review at this juncture. See 49 U.S.C.

§ 1486(a) (precludiny; appeals from orders of the CAB after

60 days of decision excey:t by leave of court on a showing of

reasonable grounds for failure to file in timely fashion).

Reet ge rrr ye ne sD ATR IES FS TT LI LED BEE LE Td

agreements which it finds to be “adverse to the public

interest.” The courts may not overturn the CAB’s find-

ings of fact unless they are unsupported by substantial

evidence on the record.“ Nor may they upset the final

judgments of the CAB unless they fall outside a zone of

reasonableness.'’ It is urged, however, that because the

CAB lacks expertise in labor matters, its decisions im-

pinging on the activities of unions in the airlines indus-

try are to be accorded less weight than these standards

imply, although petitioners fail even to articulate an al-

ternative standard.”

The CAB is not a labor board, of course, as it is first

to concede.” Yet we have already concluded that its

decision in this case is consistent with national labor

policy, such as it may be discerned. Beyond that, a

proper evaluation of the Pact’s effect on the unions and

their members necessarily involves a firm grasp of in-

dustry practices under the agreement, and the CAB’s

grasp has reason to be firm. Against a background

knowledge of the industry’s economic structure, the CAB

has monitored the Pact since its inception sixteen years

ago and has the benefit of three full evidentiary hear-

ings conducted on the Pact in 1962, 1966 and 1970.”

49 U.S.C. § 1486{e): “The findings of fact by the Board

.., if supported by substantial evidence, shall be conclusive.”

7 See, e.g., American Airlines, Inc. v. CAB, 98 U.S. App.

D.C. 348, 354, 235 F.2d 845, 851 (1956).

' Brief for Petitioner Air Line Pilots Ass’n, Int’l at 8-9.

’ Brief for Respondent CAB at 16.

*°Cf. National Aviation Trades Ass’n v. CAB, 136 U.S.

App. D.C. 367, 372, 420 F.2d 209, 214 (1969) (endorsing

CAB’s competence to make findings relevant to antitrust

i despite its lack of expertise as such in the antitrust

eld).

10 a

Despite the CAB’s experience with the Pact, we would

not affirm, of course, if issues of employee welfare had

been ignored or slighted. This court has previously

pointed out “the Board’s duty to consider the welfare of

carrier employees under the public interest standard

when it approves agreements under Section 412.” But

in a finding that the unions do not dispute, the Board

in this case declared

that the employees retain substantial and effective

bargaining power regardless of the Mutual Aid

Agreement. Thus, the record shows that air carrier

wages ... are higher than, and . . . have increased

faster than, wages in other industries, including

other transportation industries.”

We do not think the Board need have gone further in

this respect.

In assessing the net impact of the Pact and its new

amendments, the CAB also took into account, inter alia:

the industry’s vulnerability to strikes; the tendency of

the Pact, as amended, to promote or prolong strikes;

and the impact which the agreement has on the viability

of marginal companies. Since the basis of the CAB’s

findings on each of these points is vigorously attacked

by the unions, we will review in some detail the evi-

dence on which the Board bases its findings.

The Board found that the air transport industry “suf-

fers a greater impact by strike than do other industries,

and is therefore more vulnerable to strike[s] . . . than

are other industries.” The unions claim that this finding

is based on a misreading of the testimony of Dr. Herbert

R. Northrup of the Wharton School of the University

* Air Line Pilots Ass’n, Int’] v. CAB, 154 U.S. App. D.C.

316, 321, 475 F.2d 900, 905 (1973).

7? Opinion of the CAB, F+b. 27, 1973, Joint App. 234a-35a.

BOVINE REY

| ae we

114

of Pennsylvania.** On our reading of the statement, Dr.

Northrup seems quite explicit that airlines—like other

service industries in which the ability to sicekpile is

|:mitea—are particularly vulnerable to strikes and fur-

thermore that they are more vulnerable to strikes than

other transportation industries with a higher percentage

of freight traffic, which can be stored pending settle-

ment.’ In defending the peculiar suitability of the Mu-

tual Aid Pact for the airlines industry, the Board did

not purport to find that air carriers were more sensi-

tive to work stoppages than a// other transport industries;

nor was such a finding necessary.

The two remaining findings of the Board which come

under special fire are: (1) that the Pact, as amended,

is not likely to have a serious impact on the willing-

ness of companies to sustain or prolong strikes; (2) that

the payments required by the Act do not and are not

likely to affect the viability of small or economically

marginal airlines. These findings are defensive in na-

ture. They are central to the Board’s answer to al-

legations that the Pact poses risks to the stability and

smooth operation of the airlines system which out-

weigh the benefits on which we have touched. If either

finding were unsupported, we would have difficulty in

countenancing the Board’s decision. But we do not so

conelude.

Although the CAB followed the Administrative Law

Judge’s view that “the record does not establish that

any carrier has incurred or prolonged a strike because

of the increased level of mutual aid,” * it differed from

his assessment of a substantial danger that the amended

* Trunkline Carrier Exhibit No. 80.

** Id. 11-12.

* Initial) Decision of Examiner Arthur S. Present, Joint

App. 30la.

cn it | a ia ac ae |

eae SN

i 4 SRR DEAL

124

Pact would result in significantly longer and more fre-

quent work stoppages. In concluding that this risk was

not substantial, the Board noted the relative infrequency

with which negotiations in the airlines industry have

erupted into strikes in recent years. The statistics cited

cover the period from 1968-1971, during at least part of

which the new amendments were actually in effect.”

The CAB’s finding on the prolongation issue is further

supported by the Board’s determination that significant

financial pressures to settle remain on the airlines despite

their participation in the Pact. The unions point out

that in 1970 some airlines actually experienced operating

profits during periods of strike when supplemental pay-

ments under the Pact were taken into account. But the

Board reasonably believed that in assessing the dynamics

of the companies’ position during strikes, operating prof-

its should be compared to “normal profits” for a similar

period—profits which the company would have enjoyed

if it had not sustained a strike. Similarly, it included

in its model “‘post-strike losses.” These take in the cost

of resuming operations, losses attributable to the ab-

sence of advance bookings and “the long-term loss of

traffic attributable to the loss of carrier identity in the

ee... s

Clearly “normal profits” and ‘post-strike losses” are

based to some degree, as petitioners assert, on “specula-

tion and hypothecation,” * but the absence of certainty

does not preclude the Board from making a considered

“ [ronically, the unions cite the same statistics in their

attempts to refute the CAB’s findings on the strike prolonga-

tion issue. Brief of Petitioner Air Line Dispatchers’ Ass’n at

‘7. This would seem to ignore that the Pact was in effect

during the entire period covered by the figures.

‘Opinion of the CAB, Feb. 27, 1973, Joint App. 236a.

~ Brief of Petitioner Air Line Dispatchers’ Ass’n at 30.

13 4

judgment on the best information available. One could

wish that the Board had addressed itself to the meth-

odological problems inherent in estimating these loss fac-

tors: it simply stated that it considered the companies’

figures to have been “reasonably estimated” and adopted

them as its own.*” Yet the unions do not point to evi-

dence that the companies reached their estimates by mis-

guided or meritricious. methods. And the CAB did seek

to control the risk of error by limiting its arproval of

the agreement to a period of five years. Thus, if the

CAB’s “hypothecations” prove wrong, they may be cor-

rected.

The Board also found that the Pact offers no significant

threat to the financial stability ef its members. Although

the Administrative Law Judge reached a different as-

sessment of the risk involved, he believed the record did

not “demonstrate that the viability of any carrier has

been critically threatened because of the higher level of

contributions required under the amended agreement.” *’

The CAB reinforced its own evaluation by reference w

the amounts paid out by various airlines as compared

with strike losses incurred.*' These statistics cover the

period from January 1970 to June 30, 1971, when the

new higher ceilings were in effect. The Board con-

cluded, not unreasonably, that the payments are not

out of proportion to the gains from the protection of-

fered. The balance of costs and benefits in favor of al-

lowing the agreement was found to be particularly true

for financially weak carriers, which stand to lose most

* These methodological problems do receive extensive treat-

ment by company experts on the record. See Trunkline Car-

rier Exhibit Nos. 50-52. Presumably these discussions pro-

vided the basis of the CAB’s acceptance of the estimates.

“Initial Decision of Examiner Arthur S. Present, Joint

App. 301a.

* Opinion of the CAB, Feb. 27, 1973, Joint App. 243a-44a.

144

from strikes or threats of strike.~ This fine of justi-

fication also supports the Board’s approval of the 1971

amendment allowing local service carriers to join the

Pact, for these carriers, as a group, are likely to be less

stable, and therefore more vulnerable to strikes than

trunkiine carriers.

Of course, the ceiling imposed by the Pact provides

some safeguard against oppressive payments. And al-

though liability for windfall payments may bring a car-

rier’s total obligation to more tha:: one percent of its

operating revenues, the Board argues correctly that the

windfali payments represent no added burden to the

company which must pay them, because they represent

only profits which the company could not have expected

to enjoy absent the strike suffered by its competitor.

We conclude that the findings on which the Board

rests its decision are adequately supported and that the

result reached is a reasonable one.

We have carefully considered t»e unions’ remaining

contentions."" We believe that only one warrants dis-

cussion. The unions say the CAB erred in failing to

adopt a condition that would have precluded considera-

tion of amounts paid out under the Pact as expenses for

the purpose of establishing rates. As the CAB recog-

nized,* the petitioners are seeking to pursue this issue

in the wrong procedural context. The authority of the

Board to review and prescribe air carrier rates is ex-

“Td., Joint App. 245a.

* These include a claim of bias on the part of CAB, which

we deem without substantial foundation.

‘The CAB refused to take evidence on this point. Brief

of Petitioner Air Line Pilots Ass’n, Int'l at 72.

| POSE Hes " “2 at Re te ee TEE AE Oe area a LO ee emetnelahs Bei. neon Antinet,

ae .

15a

ercised in distinct proceedings under the FAA. If

the unions feel that the rates charged by the airlines

are unreasonable because they include allowances for pay-

ments under the Pact, they may institute proceedings

before the CAB under 42 U.S.C. § 1482(d). Petitioners

suggest that their objection would be “buried” in a rate-

making proceeding.” If this should happen, and if the

unions are so advised, they may seek judicial review.”

Affirmed.

** 49 U.S.C. § 1482(d).

* See Brief of Petitioner Air Line Pilots Ass’n, Int’l at 72.

** See 49 U.S.C. § 1486(a).

APPENDIX B

One P7414 thie 2h 1970)

| Opinion of the Brard

Opinion of Chairman Browne, Concurring P

Opinion of Members Minetti and Murphy, Dissenting

Initial Decision of Examiner Arthur S. Present (1968)

Sopmenmrgn nar +

164

143a

Opinion

ALAN OSTER for Allied Piiots Association.

HERBERT A. ROSENTHAL and ALEXANDER N. ARGERAKIS

for the Bureau of Operating Rights, Civil Aeronautics

Board.

Opinion

By THE BOARD:

Once again the Mutual Air Agreement, providing for

inter-carrier financial assistance in certain types of strikes,

is before the Board. The original Agreement was approved,

effective for one year, in 1959,’ and an aniended Agreement

was approved in 1964 for a period of three years.? Seven

carriers then parties to the Agreement applicd for renewal

of the amended Agreement, ard the matter was assigned for

hearing before Examiner Arthur S. Present. In his initial

decision of March 7, 1969, the examiner found that the

Agreement is not adverse to the public interest or in viola-

tion of the Act and should be approved for an indefinite

period subject to conditions. We granted review, and briefs

and oral argument have been received on behalf of the

Carrier Parties,® the Six Union Parties,‘ and the Air Line

'Six-Carrier Mutual Aid Pact, 29 C.A.B. 168, reconsideration

denied, 30 C.A.L. 90 (1959).

* Mutual Aid Pact Investigation, 40 C.A.B. 559 (1964).

3 The seven carrier parties to the proceeding are American Airlines,

Brant? Airways. astern Air Lines, Nerthwest Airlines, Pan Ameri-

can World Airways, Trans World Airlines, and United Air Lines.

Pursuant to amendments to the Agreement adopted as of October 31,

1969, Continental Air Lines, National Airlines, and Western Air

Lines have joined.

* The Air Line Dispatchers Association, the Brotherhood of Rail-

way amd Steaustip Clerks, the Communication Workers of America.

the Flght Huemeers International Association of Machinists and

Aerospace Workers, and the Transport Workers Umon of America.

ee di

17a

1444

Opinion

Pilots Aszociation, International (ALPA). In addition

Mohawk Airlines and North Central Airlines filed a joint

brief as amici curiae and participated in oral argument.

In addition to review of the initial decision, there are two

developments occurring since its issuance which must be

considered here. First are amendments to the Agreement

entered into as of October 31, 1969. Second is the request of

Mohawk and North Central that the Board withhold ap-

proval of the Agreement until appropriate steps are taken

to assure the participation of these carriers and any other

local service carrier in the Agreement at issue or a com-

parable one with terms at least as favorable and with par-

ticipation by the same trunkline carriers.

Upon consideration we find that the Agreement, both in

the form passed on by the examiner and as amended on

October 31, 1969, should be approved for an indefinite

period subject to the conditions imposed by the examiner

and that the request of Mohawk and Lake |sicj Central

should be denied.

The Agreement considered by the examiner is summar-

ized in the initial decision at paze 2 and is set forth in full

in Appendix A to the initial decision. Its terms were also

discussed in detail] in the Board’s prior decision.” The

Agreement. in brief, provides that if a specified type of

strike occurs, non-struck carriers shall pay a struck carrier

or carriers “windfall” paymerts, the increased revenues

attributable to the strike, plus “supplemental” payments,

if the windfall payments do not equai 25 percent of the

struck carrier’s normal operating expenses. While we shall,

subsequently, compare terms of this Agreement affected by

recent amendments, no further discussion of its provisions

appears warranted.

740 CLAN. at 573-577, 599-G00.

pati oe OF

18 a

145a

Opinion

As indicated above, the examiner concluded that the

Agreement is not adverse to the public interest or in viola-

tion of the Act and should be approved for an indefinite

period subject to conditions. His principal findings under-

lying this conclusion are that the Agreement is fully con-

sistent with national labor policy; that developments since

the prior proceeding further support the contribution of the

Agreement to airline stability; that the evidence establishes

that the Agreement has had little, if any, impact on labor-

management relations; and that the evidence does not show

that the pact has had any material effect upon the collective

bargaining process.

We have carefully considered the contentions of the

parties in the light of the record and find that we are in

agreement with the examiner’s decision, except as to the

relatively minor aspects noted below. Accordingly, except

to the extent modified herein, we adopt as our own the find-

ings and conclusions of the examiner as contained in the

initial decision attached hereto as an Appendix.

The contentions of the Six Union Parties and ALPA in

opposition to the Agreement addressed to the Board are

substantially the same as those raised with the examiner.

His treatment of these conteniions is comprehensive and

thorough, and we shall consider here only (1) those con-

tentions involving the Agreement approved by the examiner

which we feel justify further discussion, (2) issues relating

to the October 31, 1969 amendments, and (3) the question

of exclusion of local service carriers.

19 3a

l4ba

Opinion

As before, an attempt is made to demonstrate by statis-

tics that the Agreement has contributed to industrial strife

and strikes. Referring to Carrier Exhibit 20, the Six Union

Parties point to the fact that during 110 months prior to

the Agreement there were 40 strikes and that during an

equivalent period under the Agreement there were 42,° an

incident increase of 5 percent. Further, they calculate that

there were 514 strike days lost during 110 months prior

to the Pact and 612 for an equivalent period under the

Pact, an increase of 17 percent. The Six Union Parties are

also critical of the examiner’s comparison of strikes against

parties to the Agreement as against strikes against non-

participating carriers. They assert that the comparison is

arbitrary and unexplained au that the statement that such

a comparison discloses no important difference in the num-

ber of strikes or duration thereof is erroneous on the basis

of the data employed and is supported only by a juggling

of the data.

As the Board has previously held, “the bare fact that

there may have been a deterioration in labor-management

relations during the period of operation of the Pact covered

by the record does not raise a presumption that the de-

terioration was caused by the Pact and such fact, standing

alone, dces not make out a ‘prima facie case’ that the Pact

violates the public interest.’’* In our view the figures relied

upon by the Six Union Parties do not make out such a

prima facie case. There is no such marked upsurge in the

incidence or length of strikes as to lead to any allowable

inference that the Agreement is responsible for either.

“Omitted are strikes against GOAC and Quantas | sic].

740 CAB. at 562-563.

20 3a

147a

Opinion

This is particularly the case in the context of the entire

record which does not show that the Agreement has had

any material effect upon the collective bargaining process.

Moreover, the comparisons made by both the Six Union

Parties and the examiner to reach opposite results rely

on unweighted data* which, in our judgment, are of

insufficient probative value to reliably indicate either that

the Agreement has or has not contributed to industry

strife and strikes so as to adversely affect the public

interest.” Finally, even if we v ere to indulge in the as-

sumption that the increases ‘r the number and length of

strikes were caused by the mutual aid pact, these increases

have not been of such magnitude as to have resulted in

a qualitative adverse change in labor relations, offsetting

the contributions to that stability which the Agreement

brings.

The Six Union Parties characterize as a “myth” the

examiner’s conclusion that the airlines involved need the

financial stability provided by the mutual aid agreement.

They argue that in 10 years Pact members incurred a

total strike loss of 246 million dollars of which 82 miliion

was made up of Pact payments, leaving a final loss of

164 million dollars. Of this, some 116 million dollars,

or 70 percent, was lost in the 1966 IAM strike. “Yet,”

they state, “it is clear in terms of the financial stability

® As to duration of strikes, the data do not distinguish among strikes

against trunk carriers, all-cargo carriers, local service carriers, heli-

copter carriers, or foreign air carriers, although the Six Union Parties

do exclude the latter from their figures. As to incidence, each strike

is given equal weight regardless of the duration of the strike or the

type of carrier struck.

® Accordingly. we do not adopt the examiner's statement, on the

hasis of the data, that the Agreement has not led to increased iabor

strife or the statistical comparisons cmploved by bin im this connection.

(LD. 24-25).

— Fa ow

214

lddua

Opinion

of the airlines involved that they would have been much

better off to have met the original IAM demands without

quibbling than to follow the course they did.” But the

argument assumes an unsubstantiated predicate—that if

there had been no Pact, there would have been no strike.

We find, as did the examiner,'’ that the record does not

support the claim that the availability of mutual aid was

the determinative factor in inducing the carriers to take

the 1966 strike."

ALPA argues, among other things, that the Pact as

applied to it is inconsistent with the national labor policy“

and violates the Railway Labor Act. The examiner re-

jected the argument,'* we believe correctly, but additional

discussion is appropriate because ALPA has cited to us

cases not cited to the examiner.

ALPA asserts that, contrary to the initial decision,

court decisions in cases involving multi-employer economic

activity against employees have limited its permissible

scope to action which is (1) confined to a multi-employer

1D, 35.

Mt may be noted also that we do not read the initial decision (1.D.

35-37). as do the Six Union Parties, as criticizing union refusal to

accept the 3.2 percent offer. In any event, we neither criticize nor

enlorse this refusal.

'2 The examiner concluded that the Board must heed-the ational

labor policy, and it must accomodate the objectives of the Act to the

purposes of the national labor policy (See LD. 10-13). The Six

Union Parties contend that the examiner erred in considering national

labor policy. citing certain dicta in the 1959 decision (29 C.A.b. at

173). While there is language in the first Board opinion that matters

of general policy as to labor disputes are not to be considered as a

public interest factor, it is clear from the opinion on reconsideration

as well as the 1966 decision that the Board has always regarded as a

relevant consideration whether the Agreement is consistent with na-

tietal labor policy (See 30 CLANK. at 92; 40 CLA. at 562, GUY-610).

'S |.D. 14-17,

me Jag ad

224

149a

Opinion

bargaining unit, and (2) only for purposes of protecting

the multi-employer bargaining unit in the face of union

activity directed at its common front or integrity. The

reach of the decisions cited by ALPA is far from sustain-

ing its position that, since the airline industry does not

bargain as a unit with ALPA, any multi-employer eco-

nomic action—and specifica!ly mutual aid—is unlawful

as applied to it.

Three decisions cited by ALPA hold that a lockout by

ail members of a multi-employer bargaining group in

response to strike against one member is lawful.'* But

none of these cases hold that multi-employer economic

action is lawful only for purposes described by ALPA,

nor do they even discuss the question. In NLRB v. Great

Atlantic & Pacific Tea Co.,'* the Court of Appeals for the

Second Circuit, in an opinion by Judge Kaufman, held

that a lockout by an employer group violated the National

Labor Relations Act. Since the employees had not com-

mitted themselves to industrywide bargaining, it was

found the employers’ conduct lost the protective quality

which would otherwise justify the lockout’* and instead

assumed the character of an offensive weapon which would

unfairly advantage the employers in their demands for

a multi-employer unit.

It is a very long step—and one we are not prepared to

take—to conclude that because the lockout in the A&P

ease violated section 8{a}{3} and (7} of the National

MNLRE vs. Truck Drivers Local Union No. 449. 353 U.S. 87

(1957): NLRB v. Brown, 380 ULS. 278 (1965); International Ass'n

of M. & A. W. v. National Ry. Labor Conf., 310 F. Supp. 905

(D.C.D.C., 1970).

* 340 F.2d G90 (CLA. 2, 1965).

*® See NLRB v. Truck Drivers Local Union No. 449, supra.

(OS eee Amd

go) ae aet

Ce —-* “ay

233

150a

Opinion

Labor Relations Act,'* the Mutual Aid Agreement vio-

lates the Railway Labor Act.'* There is no evidence what-

soever that the Agreement in any way infringes on the right

of employees to organize and bargain collectively through

representatives of their own choosing under Section 2,

Fourth; or requires any person seeking employment to

sign a contract or agreement prohibited by Section 2,

Fifth; or obstructs carrier-employee agreements sanc-

tioned by Section 2, Eleventh. Nor are there any facts

or circumstances set forth by ALPA from which a per se

violation may be inferred.'” Moreover, we do not, as does

ALPA, construe Judge Kaufman’s opinion in the A&P

case as qualifying in any degree his opinion in Kennedy v.

Long Island Railroad Company** upholding the legality

of the railroads’ strike insurance plan. Accordingly, we

find that ALPA’s arguments are without merit.

For the foregoing reasons and those set forth in the

initial decision, as modified herein, we conclude that the

Agreement which was the subject of the renewal proceed-

ing should be approved. We next consider the Agreement

as subsequently amended.

'7 These sections provide, respectively, that it shall be an unfair

labor practice for an employer (1) to interfere with, restrain or coerce

cuiployees in the exercise of the rights of employees as to organization,

collective bargaining, ete. and (2) by discrimination m regard to hire

or tenure of employment or any terms or condition of employmert to

encourage or discourage membership.

1® The only sections of the R.L.A. cited by ALPA in this connec-

tion are Sections 2, Fourth, Fifth and b eventh, covering rights sisnilar

io those referred to in the previous footnote.

™ See Kennedy v. Long Island Rail Road Company, infra.

*° 319 I. 2d 366 (C.A. 2, 1963), cert. den. 375 U.S. 830 (1963).

244

lila

bs Opinion

Il.

Ry letter of October 31, 1969, filed in this docket, the

Carrier Parties advised the Board that as of that date they

had agreed to several amendments to the Agreement. Pre-

viously, they noted, in the event of strikes covered by the

Agreement, the other struck members paid their net wind-

fall revenues to the struck carrier or carriers and, in addi-

tion, made supplemental payments to the extent necessary

so that the receipts of the siruck carrier or carriers would

equal 25 percent of normai operating expenses for the

operations shut down by the strike. The amendments in-

crease the level of supplemental payments to 50 percent of

the struck caryier’s normal operating expenses during the

first two weeks of the strike, 45 percent for the third week,

40 percent for the fourth week, and 35 percent for any

period thereafter. The amendments also increase the an-

nual maximum liability of any carrier for supplemental

payments from one-half percent to one percent of its air

transport operating revenue for the previous calendar

year.

Other principal features of the amendments to the Agree-

ment include:

(1) Alteration of the conditions of entry to permit

any trunk carrier to join the Agreement by November

15, 1969, without a waiting period or back payment.

(2) Modification of the conditions of withdrawal to

provide that withdrawal may take effect at the end of

21 Except that the parties may agree at any time in writing that the

liability for additional payments in a particular calendar year shall be

subject to a higher percentage lintitation, in which event any carrier

that thereafter joins the Agreement shall be subject to such Agree-

ment to increase liability in the calendar year in which its adherence

becomes effective.

254

1524

Opinion

any calendar year beginning December 31, 1972, pro-

vided that one-year’s notice of withdrawal be given.

(3) Modification of the arbitration clause to provide

that disputes concerning the amount of any payment

shall be subject to arbitration. Previously, only dis-

putes over the requirement to make or the right to

receive payment were subject to arbitration.

On December 2, 1969, the Agreement, in substantially

the same form as attached to the letter, was formally filed

under section 412 of the Act (C.A.B. 21445). In their

brief, the Carrier Parties state that pursuant to the fore-

going amendments, Continental, National, and Western

have joined the Agreement, the latter’s adherence becoming

effective August 3, 1970.

In response to the carriers’ notice of arnending the Agree-

ment, the Allied Pilots Association renewed their request

that the Agreement not be approved with respect to Amer-

ican Airlines. A request of the Six Union Parties, sup-

ported by ALPA, to remand this proceeding for further

evidentiary hearings on the amended agreement was de-

ferred.**

We have decided to pass on the amended Agreement at

this time without remand. Lengthy proceedings have been

had on two earlier versions of the Agreement,.and there

has been thorough exploration of the basic issues affecting

the public interest in each proceeding. Moreover, it has

not been demonstrated why a further hearing is necessary

or what new facts would be brought out on remand. We,

therefore, do not believe that the public interest, or the

proper dispatch of the Board’s work, would be served by

further hearings on the latest version. We have before

*2 Order 70-1-100.

264

153a

Opinion

us, we believe, sufficient facts on which to predicate a judy-

ment as to whether the amended Agreement is adverse

to the public interest or in violation of the Act. We con-

clude that the amended Agreement should be approved.

The Carrier Parties assert that several factors necessi-

tated the increase in the protection provided by the recent

amendments. Briefly, it is asserted that: (1) strike losses

have continued to mount; (2) the financial ability of air-

lines to withstand strikes has significantly deteriorated;

(3) the prior level of supplemental payments was insuffi-

cient to enable the carriers to resist excessive and highly

inflationary union demands; (4) the effectiveness of Mu-

tual Aid is directly related to the number of trunklines

participating in it: membership of all principal competitors

of a struck carrier greatly strengthens the “windfal!” pro-

visions, 2nd the availability of protection to virtually all

trunklines adds significantly to the industry’s ability to

resist excessive demands. In their brief, the Six Union

Parties contend that the carriers’ arguments are nothing

more than a claim that failure justifies more extended ef-

forts, and the carriers appear to have become “boxed in”

by their own past failures and the inability to back up and

take a good lock at the situation and find some other course.

Further approval, they assert, “will simply be one more

step on the road to escalation of industrial warfare, one

more step into the mess from which the air carriers and the

Board will find it increasingly difficult to extricate the in-

dustry, and one more step on the road to disaster.”

This baleful prophecy is accompanied by no facts There

is no record support for the supposition that the Agree-

ment considered by the examiner resulted in an “escala-

tion of industrial warfare,” and there is no reason to be-

lieve that the amended Agreement will have any such result.

Bota 3 heeeg'c As —

Be MESH iene

27a

l54da

Opinien

While the recent amendments strengthen the Agree-

ment, they do not change its basic nature or add any new

element which suggests that it, unlike its predecessors, is

adverse to the public interest. Thus, in light of the record

compiled with respect to the previous Agreement, we are

unable to conclude that the amended Agreement will induce

strikes or exacerbate labor-management relations or create

an imbalance in the collective bargaining process so as to

pose a threat to the attainment of the public interest objec-

tives of the Act.** Further, as in the case of the prior

Agreements submitted to the Board and for the reasons

previously assigned, we find that the amended Agreement

is consistent with national labor policy and violates neither

the Federal Aviation Act nor the Railway Labor Act.

As to the positive contribution of the amendment Agree-

ment to airline stability, we have had occasion recently to

take note of the accelerated cost pressures on the carriers

and the marked decline in their earnings and profit mar-

gins.** In its 1964 opinion the Board stated: “The Part

offers, at a not unreasonable cost for the protection ob-

tained, a substantial measure of relief against the costs

of strikes, in this fushion and to this extent contributing

to industry stability.”** The cost of protection is still not

unreasonable,** in light of their deteriorated financial posi-

tion the need for protection is greater, avd the cost of

23 See 29 CLA.B. at 173-174.

* Order 69-9-08, September 12, 1909.

29.40 CAT. at 561.

26 The liability of any carrier for supplemental payments ts liniited

to one percent of its air transport revenues for the previous calendar

year.

ooo]

eee

28 a

55a

Opinion

strikes has increased sharply.?7, What was said concerning

the contribution of the prior Agreement to air carrier sta-

bility applies with greater force today. We recognize that

the new Agreement will provide substantially greater re-

coupment of strike losses, particularly in the case of short

strikes when mzeximum benefits will be provided.** How-

ever, for the reasons set forth above, we do not believe that

this factor overrides the favorable aspects of the Agree-

ment. Furthermoye, it hardly seems reasonable to believe

that a carrier will risk a strike on speculation that the

strike will be short and that the carrier will realize the

maximum benefits. Carriers must, under the new Agree-

ment, as under the old, face the prospect that in all prob-

ability mutual aid will not meet their strike losses. Finally,

the possibility of permanent diversion of traffic to compet-

ing carriers will serve as a positive incentive for carriers

to avoid strikes. ;

For the foregoing reasons we shall approve the amended

Agreement, subject to terms imposed with respect to the

prior Agreement and for an indefinite period for the reason

given by the examiner in his decision on the prior Agree-

ment.?* ;

27 During the period 1961-1966, carriers Struck two or more times

have experienced tie following strike losses per day: Eastern: 1961—

$466,000 ; 1962—S$300,000 ; 1966—S006,600; Pan American: 1961—

$523,000 ; 1964— $356,000 : 1965—S$585.000 ; TWA : 1961 —$386,000:

1966—$1.363,000; United: 1963—$330,000; 1966—-$1 422,000.

(Carrier Exh. 32).

** As noted previously, a struck carrier receives 50 percent of nor-

mal operating expenses for the first two weeks, with a 5-percent

tapering off in each successive week until a 35-percent ievel is reached.

*# The signatories to the Agrcenrat are cautioned that our approval

does not extend to any agreement entered into pursuant to Paragraph

1(B(2) raising a party's Halality for supplemental payments in any

calendar vear bevond one percent of a party's air transport revenues

for such prior calendar year.

29 4a

loba

Opinion

Ill.

We turn finally to the request of Mohawk and North

Central that the Board withhold approval of the new Agree-

ment until apprepriate steps are taken to assure the par-

ticipation of local service carriers in the Agreement or in

a’‘comparable one with terms at least as favorable and with

participation by the same trunkline carriers. The Six

Union Parties and ALPA oppose the participation of local

service curriers. The Carrier Parties urge that the Board

approve the Agreement, and they state that after this is

done, the trunk carriers are prepared to turn to the ques-

tion of local service participation.

The request of Mohawk and North Central will be de-

nied. The exclusionary provision in the new Agreement

is the same as that in the Agreement considered in the

renewal proceeding. Yet the two-carriers did not seek

to intervene until nine months after the initial decision

issued. We denied this request for intervention on the

ground that the petition was untimely and that grant

of intervention at that stage would not be conducive to

the orderly conduct of the proceeding.* While the carriers

were permitted to file a statement in the nature of an

amicus curiae brief, it was to be limited to the question

of whether the Board should approve that portion of the

Agreement which limits participation in the Agreement

to trunkline carriers. The relief requested, however, ap-

pears to go beyond this issue, and to withhold approval of

the Agreement, as they ask, would be no more conducive

to the orderiy conduct of the proceeding than would their

intervention have been.

™ Corder 7U-1-100.

_ ™ ” —_ Ds san - ST Ne ns

Mano)

304

157a

Opinion

Moreover, on the issue on which Mohawk and North

Central have been permitted to be heard, they have not

shown that the exclusionary provisions of the Agreement

are anti-competitive in their purpose or effect, or that

they or local service carriers generally have been preju-

diced by it. On the very secant record before us on the

question we are not prepared to find that the provision

is adverse to the public interest.

We are also mindful of the fact that Mohawk and North

Central speak only for themselves and not for Iccal service

carriers generally and that the trunk carrier pariies do

not oppose in principle local service participation. This

is a matter which may well be considered by the two

segments of the industry and our decision denying the

request of Mohawk and North Central is without prejudice

to any future agre. ment of this nature which muy be filed.

We have given due consideration to all the contentions

of the parties, and find, except to the extent indicated,

that they do not alter our decision herein.

Accordingly, in view of the foregoing and al! the facts

of record, it is found that tae Mutual Aid Agreement,

including the amended Agreement filed on February 5,

1970, is not adverse to the public interest or in violation

of the Act and should be approved, subject to the foilowing

conditions:

1. The approval shall not be deemed a determination

of the reasonableness of the financial provisions of the

Agreement for future ratemaking or other regulatory

_ provisions under the Act;

2. The approval shall not affect the rights and obliga-

tions of the parties, or of their employees, under the Rail-

way Labor Act;

Loa,

Opinion

excluded from the agreement, that Mohawk and North

Central are late comers to this proceeding, and deferral of

action on this agreeinent is unnecessary to afford them

relief, and that the trunkline carriers are committed to

extending full consideration to local service carrier partici-

pation in the agreement.

Under section 412 of the Act, the Board may always re-

consider approval of an agreement if the facts indicate that

continuing approval is adverse to the public interest. Mo-

hawk and North Central are free to bring the issue before

the Beard at a later time if the trunkline carriers fail to

afford them the proper consideration.

Murpuy and MINeETTI, Members, Dissenting:

The record befere the Board is incomplete and we would

remand the case to the examiner for further proceedings.

The agreement as submitted to the examiner involved seven

trunkline carriers. It provided that “windfall” payments

would be supplemented where necessary to provide a struck

carrier with 25 percent of its normal operating expenses

and that the annual maximum liability of any one carrier

for supplemental payments would be limited to 14% of

its operating revenues for the previous year.

However, subsequent to the initial decision, the carriers

changed the agreement in three significant respects. The

number of trunk carriers covered by the agreement was

expanded so that the agreement is now essentially an in-

dustry-wide pact among trunk carriers.'. The amount of

supplemental payments to a struck carrier has been doubled

to a full 50°° of its operatin expenses for the initial period

of a strike and finally, the liability of each non-struck ear-

'Only Northeast and Delta ave outside the agreenient and North-

east is secking to merge with Northwest which is a pact member.

m4 > 5 2 Pans edie g> tr

r fssiietionsr*

32 4

1604

Opinion

rier for supplemental payments has been doubled. The

Board is now being asked to approve not the agreement

which was before the examiner but a significantly revised

version of that agreement. In our view, there is insuffi-

cient reliable or probative evidence before the Board upon

which to judge whether the new agreement is or is not

adverse to the public interest.

As the majority recognizes, the new agreement provides

substantially greater recoupment of strike losses by the

carriers than would the earlier agreement particularly in

the first stages of a strike. In fact, if the present agree-

ment had been in effect from the beginning, it appears that

the struck carriers would have received mytuai aid benefits

in excess of their actual strike losses in at least fivé of the

18 strikes occurring during the period 1958-1968 on which

cost information is contained in the record.* There is a

serious question, therefore, whether the rate of payments

under the new agreement is not set at so high a level as

to encourage a carrier to accept a work stoppage rather

than settle a labor dispute. Some affected parties contend

there is a point at which snpplemental payments would

be high enough to have such an effect and we believe this

aspect of the revised agreement, among others, must be

fully explored before an examiner. In our view, basic

concepts of administrative due process require no less.

We cannot join the majority in approving the agreement

with these new provisions for an indefinite period of time

solely on the basis of a record compiled in the light of sig-

nificantly different provisions and the self-serving briefs

by the parties.

> See carrier extubit 33

33 4

lia

Opinion

ORDER

A full public hearing having been held in the above-

entitled proceeding in Docket 9977 and argument having

been received with respect to Agreement CAB 21445, and

the Board, upon consideration of the record and the sub-

mission made, having issued its opinion containing its

findings, ¢gonclusions, and decision, which is attached

hereto and made a part hereof:

It Is ORDERED:

1. That Agreement CAB 12633, as amended by Agree-

ments CAB 12633A1 through A&, and Agreement 21445

(either hereinafter referred to as the “Agreement”), be

and they hereby are approved, subject to the following

conditions:

(a) The approval shall not be deemed a determination

of the reasonableness of the financial provisions of the

Agreement for future ratemaking or other regulatory

provisions under the Act;

(bj) The approvel shall not affect the rights and obliga-

tions of the parties, or of their employees, under the Rail-

way Labor Act;

(ce) In accounting for the amounts due to others and

the amounts due from others under the Agreement, the

carrier parties shall comply with the general accounting

and reporting requirements for financial and statistica!

information as prescribed by Part 241 of the Economic

Regulations (Uniform System of Accounts and Reports)

or as otherwise may be directed by the Director of the

Board’s Bureau of Accounts and Statisties. The carrier

parties also shail subinit such other information relating

344

Mizu

Opinion

to the operations of the Agr-ement as may be reasonably

required by Director of the Board's Bureau of Operating

Rights; and

{d) Copies of #ll arbitrators’ decisions and awards is-

sued under this Agreement shall be filed with the Board's

Docket Section within 15 days of service thereof on the

carrier parties; and briefs and other documents filed in

the arbitration progeeding by carrier parties shall be made

availabie to the Board for examination upon request.

2. That except to the extent granted herein, all applica-

tions, requests and motions involved in this proceeding be

aad they hereby are denied and the investigation insti-

tuted by Order E-26000 be and it hereby is terminated.

INITIAL DECISION OF EXAMINER

ARTHUR S. PRESENT, MARCH 7, 1969

Preliminary Statement

For the third time the Mutual Aid Agreement therein-

after referred to as the “Agreement”: is before the

Board. The original agreement among air carricrs pro-

viding for mutual aid in the event of a strike, effective

for only one year, was approved by the Board in 1909.

Siz-Carricr Mutual Aid Pact, 29 C.A.B. 168, reconsidera-

tion denied, 30 C.A.B. 90 (1959). The currently effective

Agreement was approved by the Board in /964 for a

period of three years. Mutual Aid Pact Investigation,

40 C.A.B. 559. By timely application filed on May 2,

1967, the seven present Carrier Parties' to the Agreement

' American \irhines, Ine. Uranitl Aiwass, Ine. bastern Air Lines,

Inc. Northwest Airlines. Ine. Pan American World Airways, luc.,

Trans Work Airlines, Ine., amd Coned Air Lines, Ine.

35 a

lGoa

Opinion

ask the Board to renew the approval of the Agreement

for an indefinite period.

Upon consideration of the application, answers filed by

certain employee organizations requesting that the applica-

tion be denied or, in the alternative, be set down for

hearing, and a reply submitted by the Carrier Parties, the

Board decided to institute this investigation to determine

whether continued approval ef the Agreement is not ad-

verse to the public interest and not in violation of the

Federal Aviation Act of 1958, as amended, and, if the

Agreement should be approved, what terms, conditions,

and limitations, if any, should be attached to the approval.

Order E-26000, November 17, 1967. The Board’s order

also assigned the matter for hearing.

After due notice, public hearing was held. Initial and

reply briefs have been filed.

The Agreement

The terms of the Agreement are set forth in Appendix A

and were described in detail in the Board’s prior decision,

40 C.A.B. at 573-577, 599-600. However, for the purposes

of this decision, a brief resume may be helpful at this

juncture.

The Agreement provides for mutual! assistance in the

event any party’s flight operations should be shut down by

a strike which has been called (1) fer reasons which in-

clude the enforcement of demands in excess of or opposed

to the recommendations of a board established by the

President of the United States under section 10 of the

Railway Labor Act and applicable to such party; or (2)

in the absence of the establishment of such a board or

in case such a board fails to make specific recommenda-

pas

ess

PGE

Fi, AP AND CANIN SAE MCLE PANNE

£3 PPPS TALLER SISSIES PR SYN Le

| oo GE Ee EWS

36 4a

l6da

Opinion

tions on the merits for the settlement of the issues in

dispute and the struck party has in ali respects complied

with the Railway Labor Act; or (3) before the employees

on strike have exhausted the procedures of the Railway

Labor Act; or (4) otherwise unlawfully.

If a strike fulfilling the requirements of the Agree-

ment should occur, the parties remaining in operation

pay to the strike-bound carrier their increased revenues

during the term of, anc attributable to, the strike less

applicable added direct expenses. Moreover, if these so-

called “windfall” payments do not equal 25 percent of the

normal air transport operating expenses of the flight

operations shut down as a result of the strike, each

operating carrier must pay a proportionate share (“sup-

lementary” payment), limited in any one calendar year

to an amount equal to one-half of one percent of its air

transport operating revenues for the previous calendar

year, of the sum needed to furnish the minimum per-

centage.

Only trunkline carriers are eligible to become parties

to the Agreement. Any trunkline carrier which elects to

become a party to the Agreement is liable for all payments

it would have had to make if it had been a party on and

after January 1, 1962, less all amounts which it would have

been entitled to receive for such period. In’ lieu thereof,

a carrier which had not been a party to the Agreement

prior to January 1, 1962, may choose to become a party

by giving six months’ notice of its desire to become a party.

A party may withdraw from the Agreement as of

December 31 of any year by providing at least 60 days’

written notice. In such case, the carrier remains obligated,

for a period of 12 months following the menth in wich

the withdrawal became effective, to make the payments re-

37 a

165a

Opinion

quired by the Agreement to the extent it has received, on

or after January 1, 1962, supplementary payments in ex-

cess of the supplementary payments it has made.

Pertinent Statutory Provisions

The basic statutory provision applicable is section 412

of the Federal Aviation Act of 1958, as amended, which

covers certain agreements between air carriers affecting

air transportation. Under subsection (b):

The Board shall by order disapprove any such con-

tract or agreement, whether or not previously ap-

proved by it, that it finds to be adverse to the public

interest, or in violation of this Act, and shall by order

approve any such contract or agreement, or any mod-

ification or cancellation thereof, that it does not find

to be adverse to the public interest, or in violation of

this Act; * * *

Section 102 of the Act requires that the Board consider

in the public interest, among other things:

(a) The encouragement and development of an air-

transportation system properly adapted to the present

and future needs of the foreign and domestic commerce

of the United States, of the Postal Service, and of the

national defense;

(b) The regulation of air transportation in such

manner as to recognize and preserve the inherent ad-

vantages of, assure the highest degree of safety in. and

foster sound econemie conditions in, such transporta-

tion, and to improve the relations between, and coordi-

nate transportation by, air carriers:

38 a

66a

Opinion

ficient service by air carriers at reasonable charges,

without unjust discriminations, undue preferences or

advantages, or unfair or destructive competitive prac-

tices;

(d) Competition to the extent necessary to assure

the sound development of an air-transportaticn system

properly adapted to the needs of the foreign and

domestic commerce of the United States, of the Postal

Service, and of the national defense;

(e) The promotion of safety in air commerce; and

(£) The promotion, encouragement, and develop-

ment of civil aeronautics.

Furthermore, under section 401(k! (4) of the Act:

It shail be a condition upon the holding of a certifi-

cate by any air carrier that such carrier shall comply

with title II of the Railway Labor Act, as amended.

Issues

The issues, as determined at the prehearing conference,

are of broad scope. Without attempting to delineate all

the subissues, and recognizing that there is some overlap

among the issues stated, they are as follows:

Will renewal of the Agreement be adverse to the public

interest?

If renewal of the Agreement is approved, what condi-

tions, limitations, or restrictions, if any, should be imposed?

Have the existence of the Agreement and the activities

pursuant to it been adverse to the applicable provisions or

policies of the Railway Labor Act, as amended?

oo —_

v i

39 a

17a

Opinion

Will the Agreement result in restraints on competition

or other forms of discrimination against air carriers which

are not parties to the Agreement?

Will renewal of the Agreement adversely affect labor-

management relations in the air transportation industry?

Has the existence of the Agreement prevented or encour-

aged the institution of industry-wide collective bargaining

and, if so, is such a prevention or encouragement adverse

to the public interest?

Has the existence of the Agreement resulted in a deroga-

tion of the duty to bargain collectively in good faith on the

part of management or labor?

Will the renewal of the Agreement have an adverse effect

on industrial peace and the public convenience?

Does the Agreement have the effect of directly or indi-

rectly broadening Government participation in collective

bargaining and labor-management relations?

Have the carrier parties to the Agreement complied with

the reporting and other requirements as prescribed in prior

Board orders?

What effect should actions of the Board such as the orders

granting exemption authority to nonstruck carriers to pro-

vide additional service to points on their own route systems

during the 1966 strike by the International Association of

Machinists and Aerospace Workers (IAM) have in the

instant proceeding? _

How should the availability to struck carriers of military

contract revenues affect the instant proceeding?

What have been the effects of the broadening of coverage

of the Agreement, to include supplemental payments as well

as windfall payments, since 1958?

However, as will become apparent from the contentions

of the parties, described hereinafter, there is no controversy

in regard to some of the issues.

OM gt ern

40 a

168a

Opinion

Contentions of Parties

Carrier Parties

The Carrier Parties request approval of the Agreement

for an indefinite period. They contend that disapproval of

the Agreement by the Board would contravene the national!

labor policy and constitute a gross abuse of the Board's

diseretion. It is their position that the Agreement represents

a positive force in the airline industry by contributing to

airline stability. Furthermore, they maintain that the

Agreement his not adversely affected the collective bargain-

ing process or labor reations on mutual aid carriers.

Finally, the Carrier Parties aver that developments since

the last proceeding strengthen the conclusion that the

Agreement is consistent with the public interest.

Six Union Parties

The Six Union Parties* oppose the application and ask

that the Agreement be disapproved as adverse to the publiz

interest. They do not claim that the Agreement violates any

specific provision of the Federal Aviation Act or of the Rail-

way Labor Act. although they contend that the Agreement

defeats the purposes of the latter statute. The Six Unions

maintain that the Board's jurisdiction over the Agreement

does not extend to the consideration of general labor policy,

and the basic criterion to be applied concerns the impact of

the Agreement upon indusirial strife in the air transporta-

tion industry. Employing that standard, the Six Unions as-

=A jeint presemation was made tw othe Air Line Dasiatchers As-

sectition. the Brotherhood of Rathweay. Narline and Meamship Clerks,

the 4 wrvstiearetai yiaeey \\ ters at Nees: a. the Vetoes dae longineers Inter-

rational Asswiinion (eld NG. the EAM, and the Transport Workers

Union of America,

a FILS

REINO TAL ATA IT

41a

1659

Opinion

sert the Agreement has brought increased labor strife and

interruptions to interstate air commerce. Moreover, they

contend that the Agreement creates a conflict of interest in

the conduct of labor-management relations in the air trans-

port industry and that the Agreement is detrimental to the

carriers. They urge that for these reasons the Agreement

is adverse to the public interest and defeats the purposes of

the Railway Labor Act.

Air Line Pilects Association, International

The Air Line Pilots Association, International (ALPA),

notes that in the earlier proceedings it participated jointly

with other unions and states that it is now appearing

separately because of substantial changes in the industry

and pilot-carrier labor relationships since the conclusion

of the prior hearing and because of the serious impact of

possible Board approval. ALPA requests denial of the

application in its entirety or at least with respect to

ALPA.

ALPA alleges that the Agreement is unnecessary, vio-

lates the Railway Labor Act with respect to multi-

employer economic activity against employees, is incon-

sistent with Federal court decisions which limit the eco-

nomic options available to a carrier during a strike, and

is adverse to the public interest because it has not con-

tributed to freedom from industrial strife or fostered

sound economic conditions in the air transport industry:

rather, it has functioned to disrupt the collective bargain-

ing process and negatively ailect pilot-carrier relation-

ships.*

7Rv letter of December 26. L%S8, ALPA requests the Examiner

to strike from the recerd certam portions of the Carrier Parves’ mitral

brief on the ground that those portions contain references to matters

ER CRORE

WEE NSE I was nay

- ?

wines

Pape ar? WE Mery sige a AW 29k

424

VW7va

Opinion

Allied Pilots Association

The Allied Pilots Association (APA) is the exclusive

bargaining representative for the pilots in the employ

of American Airlines, Inc. APA submits that renewal of

the Agreement would be contrary to the public interest and

the application should nut be approved. APA contends

that the Agreement increases the likelihood, and prolongs

the duration, of work stoppages in the airline industry.

As an alternative, APA urges that the Agreement should

not be approved with respect to American or any other

carrier which fails to demonstrate that its employees’ in-

terests and organizations are so interrelated with those of

organized en:ployees on other carriers that the carrier in

question must, of necessity, conduct its industrial relations

in concert with other carriers.*

i A

PAWS PARLE ART Pe ee hak,

OREO:

Bureau of Operating Righis

The Board’s Bureau of Operating Rights (Bureau:

recommends that the Agreement be approved for a period

of five years. It oe that ie Badings and conclusions

not pesto in the rece ak The Corer r arties answered by letter

dated Hanuary 3, 1909, and ALVA replied in a letter dated January

6, LYE.

ALPA‘s Jeter of December 26 constitutes, in effect, a motion to

strike governed by Rule TS of the Board's Rules at Practice. As

such, it must conform with Rules 3 and 4 of the Board's Rules of

Practice. However, # does aot comply with the requirements of the

Rules, and netiher docs the answer or reply. In auidibioe. no per-

iission te file a reply was gramed pursuant to Rule I8S(e). In these

circumstances, APIA'S letters and the letter of the Carrier Parties

shall be disregarded.

FOL REINER YR TARR

* Although APA appeared at the he: aring and participated in the

cross-exuimination of Carrier P attics’ witnesses, i did not present

affirmative dhlaegiev' and did net subanit a brief to the Exaniner. The

position recnedt above was iohen at the prehearing conference and

presuniably thas not been changed.

Beeceemeesmetp erro y ea:

43 4a

W7la

Opinion

made by the Board in the prior proceeding remain valid

and the present record does not furnish a satisfactory

basis for disapproval. The Bureau also maintains that the

factual considerations which moved the Board to approve

the Agreement for a temporary period—unresolved over-

capacity problems and unsettled crew complement issues—

are still applicable. Accordingly, the Bureau helieves that

the Agreement should be reexamined at some voint in the

future, and it suggests five years from July 1967 as a

time consistent with the Board’s prior temporary approval.

Discussion

In setting this matter for hearing, the Board sought the

benefit of a record developed through a full evidentiary

hearing to resolve the disputed questions of fact and im-

portant policy issues involved here. The Board said, “The

investigation will furnish a means for a complete reexami-

nation of the issues previously considered by the Board

in the light of such new matters as may have developed

since 1964.” Order F-26900 at 2. Consequently, the focus

of inquiry is on whether there is additional evidence or

evolution in the law since the last proceeding which, con-

sidered alone or together with the record of the prior

proceeding, cail for a result different from that twice

reached by the Board.

The Examiner has carefully considered the evidence and

the contentions of the parties and, on the basis thereof,

is convinced that the Agreement should be approved with-

out a time limit. Events which have transpired since the

last decision have been added to the record. Reference

has ‘been made to court decisions since the prior Board

approval. Nevertheless, in the main, the essence of the

a eee Se

4432

liza

Opiirion

record and the arguments of the parties are the same as

when previously reviewed by the Board. While details as

to labor-management relations may differ since the record

leading to the 1964 decision was developed, in substance

there has been little change. And although some novel

arguments have been advanced in the current proceeding,

the applicabie legal principles remain unaltered. In these

circumstances, it serves no useful purpose to deal with

all the contentions of the parties; such an approach would

entail a detailed repetition of findings and conclusions in

the prier Board decisions to an unnecessary extent. Ac-

cordingly, the Examiner will contine his discussion to those

contentions which because of their importance or unique-

ness merit comment.

Issues Not in Controversy

The parties have not adduced iny evidence directed 2t

anti-trust considerations. That matter was discussed in

the prior decision. 40 C.A.B. at 581-582, and no departure

from the findings and conclusions therein is warranted.

Nor is there evidence that the Carrier Parties have failed

te fulfill the requirements of prior Board orders involving

the Agreement.

Role of National Labor Policy

In determining whether or not the Agreement is adverse

to tne public interest, there is substantial dispute over

the plaice of national labor policy. The Carrier Parties

conterd that the national labor policy is incorporated into

the public interest standard of section 412 of the Federal

Aviaticn Act. They assert that the Board nvust give great

weight to the national labor policy and must accomodate

that yolicy to the considerations contained in section 102

45a

V73a

Opinion

of the Act. It is the position of the Carrier Parties that

if the labor policy authorizes mutual employer self-heip

arrangements, such as that afforded by the Agreement,

it would be an abuse of the Board's discretion to dis-

approve ihe Agreement in the absence of some unique and

compelling air transpertation consideration.

Tee Sx Usiens centers haz che Braves farisSeccr:

over the Agreement does not extend to consiceration of

general labor policy. They quote from the Board's initial

opinion on mutual aid as follows (29 C.A.B. 173):

The range of our inquiry, however, is limited to a

determination of the effect of the agreement upon

these statutory objectives. [Refers to section 102 of

the Federal Aviation Act.] Matters of general pol-

icy as to labor disputes are not to be considered by

the Board in assessing whether the agreement is

adverse to the public interest. It is the function of

Congress, and not of the Board, to weigh the wisdom

of such agreements as a factor in the furtherance

of labor policies not directly related to the promotion

of a sound air transportation system. [Footnote

omitted. ]

The Six Unions claim the Board has thereby made clear

that the basic criterion to be applied to the Agreement is

its impact upon industrial strife in the air transportation

industry.

The language quoted by the Six Unions does not mean

that the Board can, without adequate justification, over-

ride general labor policy in administering the Federal

Aviation Act. Thus, before reaching the point in its opin-

ion where the quoted language lies, the Board had directed

its attention at whether the Agreement violated the Rail-

46a

Lida

Opinion

way Labor Act, which Act prescribes the national policy

for labor-management relations in the air transportation

industry. Moreover, section 401(k) (4) of the Federal

Aviation Act expressly requires that air carriers holding

certificates comply with the Railway Labor Act. Therefore,

while it is not generally the role of the Board to regulate

airlirie labor policies or to evaluate the advisability of ar-

rangements in connection therewith,* when labor matters

come to the fore in relation to the Board’s functions under

the Federal Aviation Act, the policies of that Act and na-

tional labor policies must be accommodated, one to the

other. Burlington Truck Lines v. U.S., 371 U.S. 156, 172

(1962).

Any doubt in this regard was settled by the Board in the

prior proceeding. The Board declared (40 C.A.B. at 609-

610) :

Prior to the enactment of the Act, Congress had

prescribed the national policy relating to the regu-

lation of labor-management relations in the air

transportation industry by the enactment of title II

of the Railway Labor Act in 1936. In so doing, it

placed the air transportation industry im genere

with the railroad industry and within the frame-

work of labor legislation which had developed in

that industry since 1888. However, by subsequent-

ly enacting section 40‘k) of the Act, Congress made

compliance with the Railway Labor Act a condition

for holding a certificate of public convenience and

necessity and, as a consequence, made the Board an

enforcing agency of the Railway Labor Act insofar

"The Board's experience coud expertise is with transportation not

labor relations problems” Ovthaid \ Civil eleronautics Board, 284

’ FF. 2d 224, 228 (D.C. Civ. 1900)

47 4a

75a

Opinion

as air carriers subject to the Act are concerned.

Although Congress in that Act also gave the Board

ithe prerogative to regulate the air transportation

industry solely as required by the public interest

objectives set out in section 102 of the Act, it did

not by this legislation transfer the general regula-

tion of labor-management relations in the iodustry

to the.Board. Although the Board is invested with

plenary authority within its sphere, its competency

is in the field of air transportation and not in the

area of labor relations. It follows, therefore, that

although not proscribed from regulating labor man-

agement relations in the industry, it should exer-

cise extreme circumspection when acting within its

sphere of authority over air transportation so as

not to affect labor-management relations in a man-

ner contrary to the national labor policy, unless, as

in the correlated area of antitrust confliction, it

finds its action is required “by a serious transporta-

tion need in order to secure important public bene-

fits.’ In order to refrain from indirectly interfer-

ing with the national labor policy affecting air

transportation embodied in the Railway Labor Act,

it should accommodate its responsibilities under the

Act to the provisions of the Railway Labor Act, if

it is feasible to do so. [Footnotes omitted.]

This point was emphasized again later (40 C.A.B. at

614-615) :

The Government’s traditional passive role in the col-

lective bargaining process is particularly applicable

to the Board since, under the Act, its authority over

\ labor management relations in the air transpaga-

484

176a

Opinion

tion industry is incomplete, being limited to the reg-

ulation of only one party, the carrier. In addition

to the statutory limitation of its authority, the Board

and the courts have recognized that the competency

of the Board lies in air transportation and not in the

labor-management relations area. In the opinion of

the examiner, a policy decision curtailing the use by

air carriers of an economic weapon not invalid under

the national labor policy, in the absence of a manifest

substantial “need,” would be an improvident exer-

cise of discretion. * * * [Footnote omitted.]} °

Accordingly, the Board must heed the national iabor

policy, and it must accommodate the objectives of the Fed-

eral Aviation Act to the purposes of the national labor

policy. The Board cannot properly take action derogating

from the national labor policy unless required by a serious

transportation need.

Agreement and National Labor Policy

The Carrier Parties declare that the Agreement is sanc-

tioned by national labor policy, which permits the parties

to a major labor dispute to resort to self-help in settling

their differences once the procedures of the Railway Labor

Act have been exhausted. The Carrier Parties urge that the

government is forbidden to interfere with the bargaining

tactics used by the parties to the collective bargaining

process unless such tactics are independently illegal. It is

their position that mutual employer financial assistance is

within the ambit of permitted activity in labor disputes.

ALPA challenges the position of the Carrier Parties. It

contends that the Agreement, as applied te ALPA, is not

* See also 40 CLA. at S02.

TEL NL TANS TA EI LTH EOE Td CAPE EINE IN NOT EN Ne

SY if

Peer

PR IOC PEN VENI RNR RRR AE ANIL TR VALE BRUINS

lita

Opinion

reconcilable with the limitations of national labor policy

and the Railway Labor Act on multi-employer economic

activity against employees. ALPA also maintains that the

Agreement does not constitute proper carrier self-help

under the Railway Labor Act because carriers subject to

that Act must limit their responses to a strike on an ad hoc

basis in accordance with the particular situation.

The previoys Board decisions did not conclude that the

Agreement is inconsistent with national labor policy or the

Railway Labor Act. None of ALPA’s arguments persuade

the Examiner that a different result should obtain now.

In- support of the position that the Agreement cannot

properly be applied to it, ALPA asserts that (1) multi-

employer economic measures against employees are limited

to multi-employer bargaining units, and (2) multi-employer

economic action to protect multi-employer bargaining units

can be invoked only when the multi-employer bargaining

units are confronted with activity directed at their common

front or integrity, citing Labor Board v. Truck Drivers

Union, 353 U.S. 87 (1957), known as the “Buffalo Linen”

case, Labor Board v. Brown, 380 U.S. 278 (1965), and New

York Mailers’ U. Number Siz, Inter. Typo. U. v. N.L.R.B.,

327 F. 2d 292 (2nd Cir. 1964). These cases do not sustain

ALPA’s position.

All of the cases cited by ALPA involved lockouts of their

employees by employers joined in multi-employer bargain-

ing associations. In every case, the charge that such self-

help violated the National Labor Relations Act was rejected

by the Court. Nevertheless, in substance, ALPA argues

that because these cases involved multi-employer bargain-

ing associations a different conclusion would prevail with

respect to the Agreement inasmuch as the carriers do not

bargain collectively with ALPA. The Examiner finds noth-

ES |

ey PORTO

oe os

4) TA RORY RO OPP

Se D eeaite tks ke a at

geal

50 3

178a

Opinion

ing in these cuses which supports ALPA’s argument. In-

deed, the Buffalo Linc case was cited by the Board in its

1964 Board opinion in buttressing the conclusion that the

Agreement represents legitimate self-help.’

In any event, Aciuuedy Vv. Long Island Railroad Company,

211 F. Supp. 478 (S.D. N.Y. 1962), affd., 319 F. 2d 366

(2nd Cir. 1963), cert. denied, 375 U.S. 8380 (1963), dis-

poses of ALI’A’s position. That case involved a strike

insurance plan among railroads quite similar to the Agree-

ment. The Brotherhood of Railroad Trainmen (BRT)

had struck the Long Isiand Railroad Company, and the

latter received assistance under the strike insurance plan.

Subsequently, BRT and iis officers filed a suit for money

damages against the Long Island, 22 other railroads, the

Association of American Railroads, and a bank alleging

that the strike was the proximate result of the strike in-

surance and that the strike insurance arrangement violated

the Railway Labor Act, the Interstate Commerce Act the

Sherman Act, and was tortious under Nev’ York law. The

complaint was dismissed, and the strike insurance plan

was held lawful. Thus, this case upheld the legality of

multi-employer mutual aid where a single union went on

strike avainst an individual railroad,

ALPA argues that the Acviedy case does not incorporate

limitations on multi-carrier activity diiferent from the

cases previously discussed. To support this position, it

quotes the following statement from the court’s opinion

(211 F. Supp. at 488):

Multicarrier bargaining of labor demands, referred

to as regional and national handling, has been and

OCA Re at A a, Row ts AK ee Se rivers ae

Dairy teiny ecal Crtan No 3Néd, BAL FL 9d 2 (2nd Cir, 1965),

cert. dented, 5

382 US. BIG (iM%63), abso ented by ALPA, apposite.

ke bee

we es

MENA eR ENP Re

Le MRD RANE RE PAS by

see

Peers

514

179a

Opinion

is (since the Act) the customary method of collec-

tive bargaining.

ALPA also asserts that it does not appear from the court’s

opinion that any argument was raised to the effect that the

railroad insurance plan could not be applied to situations

involving single-carrier bargaining.

"At the outset, it should be noted that ALPA’s entire

argument is predicated on a spurious premise. For, as

the Examiner has discussed, the cases cited by ALPA do

not place limitations on multi-carrier self-help activity.

Moreover, ALPA’s contentions do not square with the

court’s opinion in the Kennedy case. The statement quoted

by ALPA from the Kennedy case was made in the course

of a discussion in which the court rebuffed plaintiffs’ con-

tention that the strike insurance plan violated the Railway

Labor Act by introducing an element of multi-party bar-

gaining without the plaintiffs’ consent. The essential point

made by the court is that plaintiffs erred in their assump-

tion that the Long Island, by receiving strike benefits to

which other railroads had contributed, was being financed

to represent an industry-wide point of view and the inter-

ests of others instead of only its own interests vis-a-vis

plaintiffs. Clearly the situation concerned single-union

and single-carrier collective bargaining, and, in that con-

text, the court sustained the program of mutual aid among

the carriers.

ALPA further contends that the Florida East Coast

Railway cases” establish that carriers subject te the Rail-

* Flvida F.C. Ry. Co. vy. Bretheihood of R. Trainmen, 336 F. 2d

172 (3h Cir. 1904). cert. dented, 37° US. PD ( 165): Florida Last

Coast Ratlwey Company vo United States, 348 Fo 2d O82 OMh Cir,

1965). affd.. seb nom. Rarlcay Clerks vo tlorida 1.C.B. Co., 384

U.S. 238 (1906).

eer

QI ae ee

LPR OEE TTI FOURIER

eed ee

tele

bad

Praveen

SF ICL MAI RDI AB RAL AT Bt the Bhai

a2 4

ldva

Opinion

way Labor Act and faced with a strike may not take what-

ever econuini¢ action is thought necessary by management

but must limit their response on an ad huc basis in accord-

ance With the particular situation at hand.

These cuses in no way detract from the validity of the

Agreement in light of natiunai labor policy. They did not

involve the question of the nature of the self-heip to which

a carrier could resort when the processes of the Railway

Labor Act had in ali respects been exhausted or the strike

was iliegal. Rather, the cases concerned a situation where

the railroad, suffering a lawful strike, unilaterally changed

existing collective bargaining agreements without pursuing

the steps required by the Railway Labor Act. The courts

held that even in these circumstances the railroad could

turn to self-help in order to fulfill its obligation to operate,

but, with regard to matters still subject to the procedures

of the Railway Labor Act, such self-help was restricted

to measures reasonably required to conduct operations.”

The Examiner concludes that the Agreement is fully

consonant with national labor policy. Furthermore, the

application to renew the approval of the Agreement must

be granted unless such action would conflict with the pro-

visions, or defeat the purposes, of the Federal Aviation Act.

Public Interest Considerations

It is appropriate now to view the Agreement in light of

the public interest standard of section 412 of the Federal

Aviation Act.

“Tr was deft with the Unned States District Court Judge to pass on

the changes vecessary to continue operations. Compare with Loco-

wuttie bigineecrs VG. OR. Co., 372 U.S. 284 (1963).

U 4

93 4

sla

Opinion

Stability of Airlines

The promotion, encouragement, and development of air

transportation are cardinal objectives of the Iederal Avia-

tion Act. The Agreement advances these aims by shoring

up airline stability.

In its last opinion, the Board found (40 C.A.B. at 561):

Air carriers are particularly vulnerable to strikes,

and the industry has, in the recent past, been plagued

by strikes. The Pact [Agreement] offers, at a not

unreasonable cost for the protection obtained, a sub-

stantial measure of relief against the costs of strikes,

in this fashion and to this extent contributing to

in iustry stability.

Developments since the prior proceeding further support

the contribution of the Agreement to airline stability.

There have been two major strikes against parties to

the Agreement since the last proceeding. In i965, ALPA

was on strike against Pan American for ten days. In 1966,

IAM struck four parties to the Agreement (Eastern, North-

west, TWA, and United) and Nationa! Airlines, Inc.,'" for

43 days.

The loss to Pan American during the period of the ALPA

strike amounted to $5,848,000. Mutual aic covered approx-

imately 59 percent of this loss, so that the net strike loss

was $2,412,000 before taxes. In addition, as a consecuence

of the strike, Pan American’s post-strike losses, for which

no mutual aid is available, constituted an estimated $2

million.

” National became a party to the Agreement on March 11, 1900,

" but withdrew effective December 31, 1901.

54 4

lsZu

Opinioi

The 1966 IAM strike produced strike-period losses for

parties to the Agreement as follows (in millions) :

Fustern Nort! west mW. 1 United Total

Loss $26,079 $17,008 $58,000 $o1.131 $162,818

Net Strike [oss SIS412 $14,316 $40.38 $43, ISS $116,734

The heavy, adverse effect of the strike is evident from the

foregoing data.'' But mutual aid did serve to soften the

Josses by approximateiy 28 percent.!*

The evidence demonstrates that the Carrier Parties cur-

rently need financial stability and that such a need will

continue into the future. Over the five-year period 1963

through 1967, the rate of return on investment of the

Carrier Parties, excluding the tax savings resulting from

investment tax credits, ranged from 6.1 percent in 1963

to 11.4 percent in 1965.'* For 1967, the rate was 7.6

percent, These percentages may be compared with the

average of 10.5 percent found by the Board in the General

Passenger-Fare Investigation, 32 C.A.B. 291, 308-309, 331

(1960), to be a fair and reasonable rate of return, albeit

"From the meeption of mutual aid to the present, there have been

20 strikes on carriers party to the Agreement which mvolved the pay-

mente. mutual aid. The losses for the periods of the sirikes totaled

$247 nullion before mutual and, mutual aid payments amounted to

$82 million, and the net strike losses betore income taxes comprised

$165 million.

The Carrier Parties did net furnish the savings in income taxes

flowing from the losses.

The rae of return for 196 was U8 pereem. The Carrier Parties

estimated that a the 100 LAM strke had not occurre! the rate of

return would have been 12.3 percent. Ut the investiient tax credit

were applied, all rates of return would be approxiniatels one percentage

point higher.

55 4

doa

Opinion

not a minimum return. Moreover, the long-term debt of

the Carrier Parties doubled in the five-year period from

1963 through 1967, reaching $2.7 billion in the latter year,

producing larger, fixed interest costs. In addition, projec-

tions show capital expenditures of $7.9 billion in the period

1968-1971. It appears, therefore, that the Carrier Parties

fully need their existing financial resources and must de-

velop even greater financial resources internally and

externally, to meet their future capital and operating

requirements. The record, which goes back to 1946, shows

no year strike free. This history signifies that steps to

bolster the foundation of the airlines’ financial capabilities

are not unreasonable and are consistent with the public

interest.

ALPA avers that there is no evidence that strikes have

jeopardized the financial stability of the Carrier Parties.

However, the mutual aid received by Eastern as a con-

sequence of the '° "2 FEIA strike was essential to maintain

an acceptab:: position and avoid default under the

working cap jirements of the loan agreements then

in effect.

ALPA submits a number of other contentions directed

at demonstrating that the Agreement is no longer needed

by the Carrier Parties, at least in regard to the pilots.

These eontentions concern favorable changes for the indus-

try over t: 2 decade since 1958, improvements in labor rela-

tions, other : venues of support available to the carriers,

and the lack or comparability between nilot strike benefits

and assistance pursuant to the Agreement.

Regarding favoralb:> changes in the industry, ALPA

points out that the airlines have virtually completed up-

grading to jet ficets. This does not mean, however, that

the airlines will enjoy problem-free days in the future. The

56a

ld4da

Opinion

integration of the Boeing 747 and like aircraft, the opera-

tioa of supersonic aircraft, and the introduction of other

aircraft as yet unknown, no doubt will confront the airlines

with sizeable problems, both with respect to operations and

financially.

ALVA claims the “arrier Parties have improved finan-

cially and expect continued growth. Judgments as to air-

line financial status at any given point of time are not

dependable. A fundamental aspect of the airline industry

is the cyclical nature of its carnings. General Passenger-

Fare Investigation, 32 C.A.B. 291, 328 (1960); General

Passeuger-Fare Investigation, 17 C.A.B. 230, 234-235

(1953). Moreover, the Board recently determined that

higher fures for the industry are warranted. Domestic

Trunkline Carriers, Proposed Fare Increases, Order 69-2-

98, February 19, 1969. In any event, even if it were to be

concluded that the Carrier Parties have improved finan-

cially, as already discussed, sustained financial stability

of the airlines is vital to continued growth and the Agree-

ment affords some help in maintaining the necessary

stability.

ALPA contends that the record does not establish that

the Carrier Parties are increasingly or particularly vuiner-

able to styices or that any decline in profits is attributable

tu pilot-cal rier labor relations. ALPA points out that in

1965, when I’. American suffered a pilots’ strike, the

carrier's earnines were higher than in 1964.

Whether or not the Carrier Parties are increasingly or

particularly vulnerable to strikes is of no great significance.

The fact is that the Carrier Parties are vulnerable to

strikes. Thus, there are immediate and direct losses during

the period of « strike when revenues are lost while many

expenses continue. In addition, anticipated profits are not

o7 4

Lsou

Opiition

realized. Moreover, there are post-strike losses with rev-

enues increasing nore slowly than expenses. Furthermore,

there is the real danger that traflie which transferred to

a competing carrier during the course of a strike will

remain with that carrier. The Agreement plays a part in

ameliorating such problems. With regard to the 1965

strike against Pan American, manifestly, the carrier’s

profits in 1965 would have been larger but for the losses

suffered by it during the ALPA strike.

Accepting the proposition submitted by ALPA that pilot-

management relations in the industry have impreved in no

way justifies denial of the application. The improvemert

in labor relations does not preclude pilots from going on

strike if they consider such action warranted. Accordingly,

it is not inconceivable that at some future time the Carrier

Parties may need to resort to the Agreement to secure a

measure of relief against a strike by pilots.

ALPA urges thet the Carrier Parties do not need the

benefits of the Agreement because pilot no-strike agree-

ments covering military flight operations provide addi-

tional strength to the carriers and Board exemption orders

duriag major labor disputes maximize windfall benefits to

struck carriers.

As the Board made clear in its initial opinion on mutual

aid, allegations concerning relative employee-employer

bargaining powers must be disregarded “unless the as-

serted imbalance in labor-management relations poses a

threat to the development of a stable and efficient air trans-

portation system.” 29 C.A.B. at 173. Certainly, even when

considered with the factors noted by ALPA, the Agreement

does not cause such an imbalance. Thus, despite the avail-

ability of military contract revenues,'' the issuance of

™ See Appendix b.

RYOTE LORY EPL LE NER PR

RQ’

58.a

ldbu

Opin ion

exemptions by the Board broadening the operations per-

mitted non-struck earriers,'” and mutual! aid, in 1966 the

Carriey Parties still suffered the large strike losses pre-

viously set forth ‘see p. 19, supra.).

The contentien that there is a lack of comparability be-

tween pilot strike benefits and assistance under the Agree-

ment must also be cast aside for reasons indicated in the

preceding paragraph. '* Moreover, there is no evidence that

the pilots have suffered through any disadvantage in bar-

gaining power. Despite the existence and application of the

Agreement, pilots’ wages have increased substantially and

they have gained improved working conditions and en-

hanced fringe benefits through the collective bargaining

process.

Labor Relations

The Six Unions allege that the Agreement has brought

increased labor strife and interruptions to interstate air

commerce. They contend that since the Agreement has been

in eTect there has been an average yearly increase of 1.2

strikes, or approximately 35 percent, in the airline industry

and the average length of the strikes has risen by approx-

imately 15 percent. Moreover, they assert that in the pe-

riod from the last Board appreval of the Agreement through

1967 there has been a similar increase in the number of

1 See, for example. Earergency slr Transportation Requrements,

Order F-23028. In Wy 9, 1906. ‘Vie record does not indicate the effect

of the excmipuen weds on the Carrer Parties. of course, there is

no War of fon retelling wiiether any future sirthe would move the Board

to fete Gnvlar exemption order-. No such order was issued in con-

nection with the aad strike against Pan American in 1963.

1 Ty any event, before a mean Ing cial comparison conld be made, it

wotrkdbe tiece ssury to Mitroduce t ee the record evidence (mow alscut)

showing the firanetal resources of the individual pilots as well as their

finaneal obligations. :

17a

Opinion

strikes and the average length of each strike as compared

with the pre-Agreement period. The Six Unions claim that

even if strikes growing out of the crew complement issue

were eliminated there would be an increase over the pre-

Agreement period in the number of strikes and a substan-

tial increase in their average length.

In the last proceeding, the Board rejected this statistical

approach of imputing increased labor strife to the Agree-

ment. The Board said (40 C.A.B. at 562-563) :

The unions claim * * *: “Once the record demon-

strates that there has been an aggravation of labor

disputes and an increase in labor strife within the

air transport industry under the Pact, it is sub-

mitted that there is a prima facie case that the Pact

violates the public interest and that the burden then

rests upon the carrier parties to demonstrate that

this increase in labor strife cannot be attributed to

the Pact.”

In our opinion the bare fact that there may have

been a deterioration in labor-management relations

during the period of operation of the Pact covered by

the record does not raise a presumption that the de-

terioration was caused by the Pact, and such fact,

standing alone, does not make out a “prima facie

case” that the Pact violates the public interest.

Furthermore, the data persuade the Examiner that the

Agreement has not led to increased labor strife. If there is

any significance in the data advanced by the Six Unions, it

lies in comparing strikes against parties to the Agreement

(7.¢., an air carrier which was a party to the Agreement at

the time it suffered the strike) with strikes against other

Sie: art

60 a

1&$a

Opinion

air carriers. Such a comparison discloses no important dif-

ference in the number of strikes or their duration.

Since the Agreement has been in operation, the number

of strikes, the number of days flight operations were halted,

and the average number of days flight operations were

shut down per strike, have been as follows:

Parties to Other Air

Agreement"? Carriers =

Strikes 25 20 45

Days Flight Operations Halted 707 586 1,2%5

Average Days per Strike 28 29 29

An analysis of strikes since the last decision of the Board

approving mutual aid yields the following data:

Parties to Other Air

Agreement Carvizrs Total

Strikes 6 9 15

Days Flight Operations Halted 183 250 433

Average Days per Strike 31 28 29

Because the 1966 IAM strike possessed singular aspects

(discussed infra, pp. 34-37), the results of elim nating that

strike from consideration are noteworthy. With respect to

strikes since the Agreement went into effect, the data are

as follows: : i

Particsto Other Air

cigreement = Carriors Total

Strikes 21 19 40

Days Flight Operations Halted 535 5-3 1,078

Average Days per Strike 25 29 27

17 See Appendix C.

18 See Appendix D.

; Mie ib yb ’

wa prummaee

61a

189a

Opinion

Since the last Board decision on mutual aid the data are:

Parties to Other Aw

Agreement Carriers Total

Strikes 2 8 10

Days Flight Operations Halted 11 207 218

Average Days per Strike 6 26 22

In view of the foregoing, extended comment is unneces-

sary on the Six Unions’ claim that eliminating strikes at-

tributable to the crew complement issue would not yield a

different result. However, it is noteworthy that in the prior

proceeding the Board found that “the controversy between

two unions over jurisdictional representation of flight crew

members has been the primary cause of labor-management

disputes, at least since 1958.” 40 C.A.B. at 563.*°

Moreover, the emphasis placed by the Six Unions on the

number and length of strikes ignores the fact that in the

period 1958-1968 the Carrier Parties to this proceeding

negotiated 221 labor contracts. In addition, in the last six

years, Pan American, TWA, and United have reached a

total of six agreements providing for arbitration of un-

resolved issues in major disputes. The iarge number of

negotiated settlements without recourse to strikes is fur

ther evidence that the Agreement is not an impediment to

labor peace.

19 Appendix E contains a list of strikes involving carriers party to

the Agreement, indicating those ascribable to the crew complement

controversy, as taken from the initial brief of the Six Unions. The Six

Unions have not attributed to the crew complement controversy cer-

tain strikes which the Board found did stem from that controversy

These are the American and Eastern strikes ia 1958 (40 CAB. at

620), strikes against Northwest and Pan American in 190 (/d. at

21), and a strike against Pan American in 19%2 (/d. at 624). Fur-

thermore, National was not a party to the Agreement at the times it

’ sutiered strikes in 1964 and 1900.

~~ =

62 4

190a

Opinion

The Six Unions aiso maintain that the Agreement has

created mistrust in the minds of employees and serves as

an irritant to the employer-employee relationship in the in-

dustry. The airline coordinator for IAM testified that union

members term the Agreement a “strike breaking” arrange-

ment.?° ALPA argues that the mere risk that the Agree-

ment will lead to an otherwise unnecessary work stoppage

is sufficient to deny renewal.

The Agreement cannot properly be disapproved on the

basis of subjective factors such as mistrust in the minds of

employees. With regard to ALPA’s contention, if there

should be an unnecessary work stoppage, the employees

would be the ones to embark upon such a maneuver. If

substantial weight were given to these contentions, the logi-

cal extension would call for stripping the air carriers of all

means of self-help. It would be manifestly unfair to con-

fine the resources for self-help available to air carriers

when the Board has no jurisdiction over the unions and

cannot regulate the weapons of self-help they might use.

Moreover, the Board would be unwarranted in taking such

a step, Labor Board v. Insurance Agents, 361 U.S. 477, 490

(1960), unless justified by its duties pursuant to the fed-

eral Aviation Act.

From an objective point of view, the evidence does not

show that the Agreement has had any important effect on

labor-management relations. Two union representatives

testified. The testimony of the IAM witness and other evi-

dence establish that the union makes its proposals on the

basis of what it believes its members are entitled to earn

and that the Agreement has not deterred the union from

battling for and gaining its objectives. The testimony of the

20 Certain characterizations in the introductory clauses of the Agree-

ment are ill-suited for facilitating labor-management relations.

a sk

63 a

19la

Opinion

ALPA witness reveals that, despite the existence of the

Agreement, the pilots and carrier management have been

able to settle their differences in recent years based on

mutual trust. Moreover, the witness recognized that most

contract negotiations in the industry during the past decade

had concluded with agreements reached in the absence of

strikes or lockouts and declared that this was “due to a

problem solving atmosphere taken by both the management

and the unions themselves.” (Tr. 431). He anticipates

labor peace, as far as the pilots are concerned, for the fore-

seeable future unless the carriers should attempt to make

fundamental changes in existing collective bargaining

agreements. In the opinion of this witness, the Agreement

had no effect on the resolution of the crew complement issue

which plagued the industry in the early days of jet opera-

tions. He also indicates that the Agreement has had little

impact on the formulation of the issues by the parties to

collective bargaining or on the solution of the issues.

From the carriers’ standpoint, the evidence also shows

that the Agreement does not play a role in the development

of carrier bargaining positions or during the negotiating

process. It is only at the point a strike appears imminent

that the carriers give consideration to the Agreement in

deciding whether to suffer the strike.

The evidence establishes, therefore, that the Agreement

has had little, if any, impact on labor-management rela-

tions.

The Six Unions state that the basic test of the impact of

the Agreement upon the public interest is the Agreement’s

success in avoiding or reducing the number and length of

strikes which occur. Similarly, ALPA contends that the

record does not indicate that the Agreement has contributed

to improvements in labor relations.

64 4

192a

Opinion

eril Aviation Act, the Agreement need not have a favor-

able bearing on labor relations as long as it does not exacer-

bate labor relations to the extent of impeding attainment of

the objectives of section 102 of the Act. Thus, as pointed

out by the Board when it first approved mutual aid, the

question is only “whether the agreement threatens, by ag-

gravation of labor disputes, to hinder achievement of the

objectives set forth in section 102 of the Federal Aviation

Act.” 29 C.A.B. at 173. Accordingly, the contentions of the

Six Unions and ALPA must be rejected.

However, to gain approval under section 412 of the Fed-

Collective Bargaining Process

An integral part of the subject of the preceding section

is the question of the effect of the Agreement on the collec-

tive bargaining process. Consequently, much of the discus-

sion in the preceding section applies here also. Some addi-

tional comment is appropriate, however.

» To show the effect of the Agreement on the collective bar-

gaining process, the Six Unions assert that the Agreement

was a contributing factor to IAM’s position during the 1966

negotiations. In support, they rely on direct testimony of

the IAM airline coordinator as follows (Tr. 539-540) :

Q. In your opinion, did the Mutual Aid Pact have

any effect upon the IAM position during the nego-

tiations?

A. Well, I think it was one of the contributing

factors. I think that due to the reluctance on the

part of the carriers to make any type of an offer for

such a long extended period of time, and then fol-

lowing an emergency board report which they re-

luctantly said, “We will agree that,” that they did

Opinion

not make a proposal that in my opinion’ they knew

they were going to eventually have to make to avoid

the strike. It was quite obvious to me that the Mu-

tual Aid assistance that they would receive from

non struck carriers played a very prominent part

in it.

The testimony does not indicate that IAM changed its

bargaining position in any respect because of the Agree-

ment. Rather, the testimony shows that IAM determined

to strike against the carriers because the latter failed to

submit a proposal satisfactory to [AM.*

If there is any doubt on this score, it should be eliminated

by the following testimony of the witness on cross-exami-

nation by counsel for the Carrier Parties (Tr. 565-566) :

Q. One other question I wanted to ask you: Does

the existence of the mutual aid agreement have any

effect on the demands served by IAM on airline mem-

bers to the agreement?

A. On the demands that we are proposing?

Q. Either at this time or any negotiation?

A. No, I don’t say they have. We make proposals

based upon what we think the members are entitled

to. The question as far as mutual aid is concerned

is the deterrent that it represents to keep us from

getting those things.

Q. Do you figure it is a deterrent to your achiev-

ing your demands?

A. Definitely.

21 The absence of a suitable proposal from the carriers was attrib-

uted by the witness to tu.ir reliance on the support furnished under

thé Agreement.

OG pS LELAND gk PE HATEMELIERELA PY NLY P ITT ee ants ak |

EAE NEAT

Br tt reereere nse rumen nis orytang ee (oer aS

194a

Opinion

ALPA contends that the Agreement functions to disrupt

the collective bargaining process, The union claims that the

objective of the Agreement is to change the relative posi-

tions of the parties in collective bargaining. ALPA con-

cedes that the question of imbalance at the bargaining table

is beyond the scope of the proceeding, but it maintains that

the Board may consider the principal objective of the Agree-

ment insofar as it negatively affects the collective bargain-

ing process. To support its position, ALPA asserts that the

Agreement has the effect of changing carrier bargaining

attitudes and positions in the period immediately prior to

announced strikes by lowering the cost of suffering a strike,

decreasing the sense of urgency to reach agreement, and

exaggerating open issues through the increase in carrier

economic strength derived from the Agreement. ALPA ar-

gues that the objective of changing bargaining relationships

through increased carrier economic strength is not based

upon any legitimate business end and that the Agreement

represents a carrier attempt to secure economic strength

and a bargaining advantage without formal amendment of

the Railway Labor Act. ALPA urges that the Agreement

is unsuitable to relationships which must rely for their

success on mutual confidence and respect and that it is a

tax on those carriers which maintain a constructive rela-

tionship with their employees.

These contentions have been considered by the Board in

the past proceedings and discarded. In its original decision

on mutual aid, the Board rejected the contention that the

Agreement would detract from the carriers’ obligation un-

der the Railway Labor Act to bargain in good faith and

would interfere with the prompt settlement of disputes.**

= T le opinion of the Court of Appeals in the Kennedy case cites the

1959 Board decision as a “recent and authoritative decision” demen-

strating that a mutual assistance agreement “quite simular to the strike

insurance plan before us” is nu impediment to good faith bargaining.

319 F. 2d at 372.

67 4

195a

Opinion

The Board pointed out that the substantial losses even with

mutual aid plus possible permanent diversion of traffic to

competing carriers were powerful incentives to avoid

strikes. 29 C.A.B. at 171. On reconsideration, the Board

further underlined the Congressional intent in the Railway

Labor Act to permit the parties “to engage in reciprocal

tests of economic strength within the framework of collec-

tive bargaining.” 39 C.A.B. at 92. In the last proceeding it

was found (40 C.A.B. at 628) :

There is no substantial evidence in the record that

the Pact has had any material effect upon the collec-

tive bargaining process in the industry. Nor does the

record indicate that the Pact has resulted in actions

by the Pact members repugnant to the purposes and

spirit of the Railway Labor Act.’*

**In fact, disregarding negotiations in which the

jurisdictional flight crew controversy overrode the

economic considerations, the record shows that the

carriers have not experienced any difficulty in nego-

tiating contracts with the air transport unions since

1958.

It also said (40 C.A.B. at 631):

Although the supplemental payments provision,

even as its liability is diminished by “windfall” pay-

ments, appears to be a costly form of insurance for

a prudent management of a carrier with stable labor

relations to underwrite, no one carrier is immune

from labor difficulties and the exercise of manage-

ment discretion in this respect is not subject to re-

view in this proceeding. The overall effect of the

agreement on the Pact members as a group appears

minimal, although the effect on profits or losses of in-

at A

Pye

68 2

196a

Opinion

dividual carriers may be severe. As an insurance

arrangement it is economical, in that costs of admin-

istration are minimal, with no override such as

would be payable in the case of commercial insur-

ance, and no interest payable. Moreover, the car-

riers have not given a “blank check” te a member

carrier to obligate them without limitation for strike

losses. The limitation of liability in any one calen-

dar year, based upon one-haif of 1 percent of the ad-

justed air transport operating revenues for the prior

calendar year, is keyed to a degree to the ability to

pay and is not so large as to cause the paying carrier

to get into financial difficulty from this expense

alone. On the other hand, the agreement is of use

only for brush fires and not holocausts since in the

case of a single carrier strike involving one of the

larger carriers, the maximum liability would be ex-

huusted in 51 to 85 days, but in the event of simul-

taneous multicarrier strikes, such as the illegal

strike of February 1961, the maximum payments

would have been exhausted in 4.8 days.

The examirer’s scrutiny of the financial provisions

of the agreement does not confirm the Bureau's fear

that the agreement financially is of such strength as

to create an imbalance in bargaining positions ad-

verse to the public interest objectives. The insur-

ance provis.en 3s not attractive enough financially to

cause the carriers to refrain from negotiating collec-

tive bargaining agreements in good faith or to in-

vite unnecessary strikes for the purpose of present-

ing an industry position. While admittedly costly,

the agreement does not impose a financial burden

upon an individual carrier member which would

affect its capability to fulfill its obligations under

eres ree amy sere tet ORO SENT EOE UNE ET L OMENTIN ROTNNRT LY OTNT Cy O

69a

197a

Opinion

the Act, nor is the liability of the carriers as a group

so great as to interfere with the development of a

sound economic air transportation industry. [Foot-

note omitted. ]

ALPA’s contentions carry no more weight now than in

the past, and the factual allegations are not sustained by

the evidence developed at the hearing.

Furthermore, if the occasion should arise when the Car-

rier Parties employ the Agreement as a shield against good

faith bargaining, the unions have recourse.

The Railway Labor Act, section 2, First, provides (45

U.S.C.A. § 152):

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

agents, and employees to exert every reasonable ef-

fort to make and maintain agreements concerning

rates of pay, rules, and working conditions, and to

settle all disputes, whether arising out of the appli-

cation of such agreements or otherwise, in order to

avoid any interruption to commerce or to the opera-

tion of any carrier growing out of any dispute be-

tween the carrier and the employees thereof.

Thus, if the carriers fail to bargain in good faith, they

would violate that Act. Upon appropriate application,

either the courts or the Board wil] require the carriers to

bargain in good faith. Ruby v. Amcrican Airlines, Inc.,

329 F. 2d 11 (2nd Cir. 1964) ;** Air Line Pilots v. Southern

Airways, Enforcement, 36 C.A.B. 430 (1962).24

*3 Judgment vacated and case remanded to the District Court with

direction to dismiss the complaint as moot, sb now., O'Connell vy.

Manning, 381 U.S. 277 (1905).

"* Petition for review dismissed as moot, sub nom., Southern Pilots

Association v. Civil slcronantics Board, $23 F. 2d 288 (1.C. Cir.

1963), cert. denied, 376 U.S. 954 (1964 i

YEA TT BR FR eT Settee oa |

70a

198a

Opinion

Detriment to Carriers

The Six Unions aver that the Agreement is actually detri-

mental to the Carrier Parties because the Agreement pro-

vided the margin which persuaded the carriers to undergo

the 1966 IAM strike and the strike cost the carriers a sub-

stantially greater sum than if they had accepted the original

union demands.** They suggest that there is a substantial

question whether the carriers intended to negotiate in good

faith, noting that for those difficult negotiations the car-

riers appointed as a principal spokesman an individual who

had no prior experience in labor relations under the Rail-

way Labor Act. They further contend, to support this posi-

tion, that the carriers did not make a proposal on the eco-

nomic issues until the very end of the mediation sessions

under the auspices of the National Mediation Board

(NMB).

Plainly, it is in the interests of the carriers to avoid

strikes. Any strike resuits in economic loss. Nevertheless,

occasions arise when a carrier believes it is more in its in-

terest to suffer a strike than to acede to union demands.

The Six Unions would have the Board, on a hindsight basis,

judge whether the carriers were wise to undergo the 1966

IAM strike:

It is unnecessary to enter into the murky atmosphere sur-

rounding the contentions of the Six Unions, for the record

23 This contention takes into account the original union demands

and the final settlement terms and also the strike losses suffered by the

carriers as estimated in “Study of the Financial Impact on the Airline

Industry of the [AM Strike.” Civil Aeronamics Board. July 17.

Although there is a dispute between LAM and the Carrier Parties re-

garding the dollar values of the original union demzavis and the final

settlement terms, the Six Unions have enploved the Carrier Parties’

estimates. On these bases. the Six Unions claim the carriers would

have been hetter off in the amount of $74.7 miliion if they had accepted

the or*sinal union proposal.

TO Gl

71a

199a

Opinion

simply does not contain reliable and probative evidence to

support the claim that the availability of mutual aid was the

determinative factor in inducing the carriers to take the

1966 strike. ,

Significantly, one of the carriers struck was National, a

carrier not a party to the Agreement. And IAM'’s airline

coordinator made it clear that National was not a weak

factor in the negotidting process.

The fact that the carriers’ principal spokesman had no

prior experience in labor relations under the Railway Labor

Act lends little support to the Six Unions’ position. The

principal spokesman was not a neophyte in labor negotia-

tions. He had had approximately ten years of experience

in such negotiations pursuant to the National Labor Rela-

tions Act, and, in addition, the negotiating committee in-

cluded expert carrier representatives.

Moreover, the tarriers did attempt to reach a settlement

prior to the strike. They made an offer during the course

of mediation. Furthermore, following the failure of medi-

ation efforts, the NMB profferred arbitration. The proposal

was accepted by the carriers and refused by IAM. Later

the carriers accepted the recommendations of an Emergency

Board appointed by the President of the United States pur-

suant to section 10 of the Railway Labor Act as a basis for

settlement, but IAM declined to submit the recommenda-

tions to its membership. The recommended settlement would

have resulted in an average annual pay increase of 3.6 per-

cent as compared with 3.2 percent in the President’s Wage-

Price Guidelines. .

The real goal of IAM in this controversy appears to have

superseded immediate objectives peculiar to the airline in-

dustry. Thus, IAM, with a total membership of approx-

imately 1,025,900, only 68,000 of whom are employed in the

SVG

724

200a

, Opinion

air transport ‘ndustry, strove to demolish the President’s

Wage-Price Gui 'elines and succeeded in doing so.

The focus of IAM on the wage-price guidelines is plain

from the statements of union leaders. In March 1966, an

IAM vice president explained the union’s refusal to accept

the NM8’s offer to arbitrate on the ground that arbitration

would be detrimental to IAM members “considering the

present atmosphere with so-called guide lines for wage

agreements.” Carrier Ex. 26, Att. B, p. 1. Ina letter trans-

mitting the ultimate contract terms to the membership for

their assent, the president sf the IAM declared that the

agreement “destroys all existing wage and price guidelines

now in existence; in fact, it completely shatters them for

all unions.” Carrier Ex. 26, Att. J, p. 2. Again, the presi-

dent of IAM, in remarks made on January 23, 1968, before

the Western Conference of the Brotherhood of Teamsters,

said about the 1966 strike, “As a further result we broke

the administration’s attempt to limit worker’s wages—

though not management profits—through the so-called

guidelines,” and “It resulted in one of the best settlements

we ever achieved in this industry—and it buried the Gov-

ernment’s guide lines—forever, we trust.” Carrier Ex. 26,

Att. K, p. 2. Finally, at the opening of the 27th convention

of the IAM on September 3, 1968, the president of the or-

ganization referred to past problems with Congress and the

White House especially when we broke the wage guide

lines in the air transport strike of ’66.” Carrier Ex. 26,

Att. L, p. 3.

In view of I[AM’s emphasis on destroying the President’s

Waye-Price Guidelines, it does not scem that the carriers

could have avoided the 1966 strike unless they joined with

IAM in a challenge to the guidelines.

aS oa ables . PPAF Ae ir Baas SON Phe MAS th AOL Me Le OI Ral EM ts pk

73a

201a

Opinion

Government Participation

ALPA submits that the Agreement adversely affects the

collective bargaining process by encouraging and involving

government participation through the Civil Aeronaucics

Board. According to ALPA, the Agreernent improperly en-

courages the Carrier Parties to rely on Board action approv-

ing the Agreement for added economic strength.

Contentions regarding Board participation in labor dis-

putes were raised in the last proceeding and found lacking

in merit. 40 C.A.B. at 584-586. Here, ALPA takes the un-

usual approach that air carriers are not justified in enter-

ing into an arrangement which, because of the provisions

of the Federal Aviation Act, requires Board approval and

which, if approved, helps sustain the economic viability of

the air carriers in the event their employees go on strike

under the circumstances triggering the Agreement.

ALPA’s position is ill-conceived. An administrative

agency cannot deny relief on the ground that the appiicant

should not have entered into a transaction requiring ap-

proval by the agency. If it is undesirable for the Board to

accredit the Agreement for the reasons advanced by ALPA,

the Board should be relieved of jurisdiction over such agree-

ments and thereby free the agreements from regulation by

the Board. Furthermore, it is not inappropriate for air

carriers to seek economic strengthening through Board ac-

tion. The provisions of section 102 of the Federal Aviation

Act make it clear that the Board has this very role to per-

form in its administration of the Act.

Conflict of Interest

Since the air transportation business affects the public

interest, the Six Unions consider it essential that the air-

} lines not be placed in a conflict-of-interest situation. The

=“

74a

2024

Opinion

record indicates that, at the point a Carrier Party is con-

fronted with the likelihood of a strike, the carrier takes in-

tc’account the assistance it can anticipate pursuant to the

Agreement in reaching its decision whether or not to sub-

mit to the strike. Apparently it is the Six Unions’ position

that the Agreement thereby creates a conflict of interest in

the conduct of labor-management relations by inserting an

incentive derogating from the public interest in the con-

tinued operation of airline service through the minimizing

of labor strife and strikes. The Six Unions deem it unim-

portant that the payments under the Agreement constitute

only a portion of a struck carrier’s losses; they believe the

basic consideration is that the public interest in avoiding a

strike is determined within a different financial framework

under the Agreement than without the Agreement.

These contentions are without merit. If the theory of

the Six Unions were given play, any means of self-help em-

ployed by air carriers would present a conflict-of-interest

problem, But the national labor policy, as exemplified in

the Railway Labor Act, does not require air carriers to

assent to union demands and avoid interruptions of service.

I. only requires that the air carriers, and the unions, bar-

gain in good faith and observe the provisions of the Railway

Labor Act. If they cannot reach agreement after exhaus-

tion of the procedures of that Act, the carriers and the

unions may have recourse to self-help, which includes mu-

tual assistance such as that afforded by the Agreement.

Kennedy v. Lorg Island Railroad, supra. And where, as the

record here establishes, the Agreement does not pose a

threat to the development of a stable and efficient air trans-

portation system, but instead enhances the attainment of

such a system, the Agreement is not adverse to the public

interest. |

75a

2034

Opinion

Railway Labor Act

Multi-Carrier Bargaining

ALPA contends that the Agreement functions to inter-

pose carriers other than the bargaining carrier into a pend-

ing dispute and thereby provides a means for the carriers

to impose multi-carrier negotiations on tiie pilots without

regard to Railway Labor Act procedures. ALPA maintains

it has at all relevant times bargained with the carriers on

a single-carrier basis and it cannot be forced tc bargain on

a multi-carrier basis.

It is true that under the Railway Labor Act joint bar-

gaining cannot be required of either the employees or th

employers. But the Agreement does not thrust such ®ar-

gaining on ALPA. The Board has twice found allega-

tions of compulsory joint bargaining wanting, 29 C.A.B.

at 172 and 40 C.A.B. at 601-609, and the same contention

was rejected by the court in the Kennedy case, 211 F.Supp.

at 488.

Nor does the record developed in the instant proceeding

support ALPA’s contentions. ALPA relies on testimony of

its witness that during concurrent negotiations with East-

ern and United the pilots feund the proposals of the two

carriers were identical on some issues. This hardly demon-

strates that the Agreement compels multi-carrier bargain-

ing. First, it appears that the issues on which the positions

of the carriers coincided were limited in number. Second,

there is no showing that the concurrence of position on the

part of the airlines was in any way attributable to the

Agreement. Third, it is not unreasonable or unlawful for

the airlines to take a common position on a common issue.

As the Board said when it first approved carrier mutual

aid (29 C.A.B. at 172):

ee ee ee a oe

76a

204a

Opinion

It may well be, of course, that carriers have and

under the agreement increasingly will consult with

each other concerning labor questions of common

concern. Such a practice, however, would not neces-

sarily entail any sacrifice of each carrier’s complete

and exclusive control over its collective bargaining.

In addition, the testimony of the ALPA witness indicates

that the issues were resolved differently on the two airlines.

Finally, the IAM, which had a policy of favering joint bar-

gaining,** has receded from that policy and, pursuant to

an IAM Air Transport Committee Report passed at the

1968 convention, now negotiates on a separate but coordi-

nated basis. It is evident, therefore, that the Agreement

does not compel joint bargaining.

Application of Agreement to Individual Unions

ALPA asks that, in the event the Agreement should other-

wise be approved, such approval be made inapplicable to the

pilots. APA seeks principally to avoid approval of the

Agreement with respect to American.

ALPA’s request is bottomed on the fact that pilot collec-

tive bargaining is conducted individually with each carrier

by a committee of line pilots in the service of the airline in-

volved, with ALPA home office assistance. ALPA contends

that inter-union mutual assistance does not exist, that the

future ALPA carrier labor relations picture is favorable,

that there have been only two ALPA strikes against Car-

rier Parties since 1958, that the carrier financial resources

far exceed those of ALPA, that no strike benefits have been

paid by the pilots since 1963, that no benefits are paid for

26 The 1966 IAM nesetiations were handled on a joint bargaining

" basis at the request of LAM.

+2. Se SER Dom ae le an = ly

77a

205a

Opinion

the first 30 days of a strike, and that such benefits as are

available to striking pilots would not be sufficient to have

any influence on collective bargaining.

These contentions do not convince the Examiner that it

would be adverse to the public interest or in violation of the

Act to allow the Agreement to go into effect with respect to

the pilots. The Kennedy case, supra, establishes that a mu-

tual assistance arrargement among carriers does not vioiate

the Railway Labor Act in a major dispute between an indi-

vidual union and an individual] carrier. Furthermore, as

was discussed earlier, it is not properly within the Board’s

province to deal with the relative bargaining powers of em-

ployers and employees unless there were such an imbalance

as to threaten the development of a stable and efficient air

transportation system. The record does not demonstrate

any such imbalance.** Accordingly, ALPA’s request is de-

nied.

APA’s position arises from the fact that it represents

pilots ory on American. The reasons justifying denial of

ALPA’s request warrant the same action with respect to

APA.

Conditions

Period of Approval

In the last mutual aid proceeding, the Examiner ap-

proved the Agreement without a time limit, but the Board

restricted the approval to three years. The Board predicated

its action on the ground that the years since creation of the

27 Even if the allegations of ALPA accurately represent the facts,

the factors are subiect to change regardless of whether the Agreement

should be approved. Thus. inter-union assistance could develop, pilots

represented by ALPA could increase their resort to strikes in the fu-

ture, pilot finzncial resources could grow, and ALPA policies with

respect to strike benefits could alter.

I ee eet ee

784

206a

Opinion

Agreement had not been typical for the industry, plagued

with a capacity problem, or for labor-management relations,

preoccupied with the crew complement issue.

The Bureau recommends that approval again be limited

to a term of years, claiming that the same factors previously

persuading the Board to place a time period on its approval

are still outstanding. The Bureau asserts that the over-

capacity problem has not been resolved and that the crew

complement for the Boeing 737 and aircraft yet to be

placed into service has not been settled. The Bureau sug-

gests five years from July 1967 as a period consistent with

the Board’s prior temporary approval.

ALPA states that the pattern of improved labor relations

between the parties can only be negatively affected by pro-

viding the carriers with indefinite assurance of the con-

tinuity of the Agreement.

The Six Unions, on the other hand, maintain that the

Bureau’s position avoids the problem. They urge that

there will always be unique labor relations in the industry

and that, if the impact of the Agreement in aggravating

labor relations is sufficient to warrant its periodic reex-

amination, such reason also supports disapproval of the

Agreement.

The Examiner does not believe temporary approval

serves a useful purpose at this stage of the Agreement’s

existence. If throughout ten years of life for the Agree-

ment industry conditions have not been typical and are

not presently representative, it is likely that there is no

such measure as a normal period for purposes of the

Agreement. Moreover, after three proceedings, two of

which have involved comprehensive evidentiary public

hearings, it does not appear that there are any legal or

factual issues of importance remaining for exploration.

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Oe OTe BE. GY INA LD Oi: Ti BOE

79a

2074

Opinion

The basic principles applicable in evaluating the Agree-

ment have been established. Nothing significantly new in

the nature cf the evidence has been developed over the

years; only the details of the bargaining between employees

and employers and the context in which strikes were called

have differed to some extent. If, as ALPA contends, the

crew complement issue has been resclved and pilot-carrier

labor peace is the prognosis for the future, the

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