# Petition for Writ of Certiorari — Allied Pilots Ass'n v. Civil Aeronautics Board > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_0370%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1975 - **Citation:** 420 U.S. 972 ## Text 4 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; 4) 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 if | 6 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— 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 2 344 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 (c) The promotion of adequate, economical, and ef- 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 \ ve 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 : f 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 x 3 © 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: ee 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 wt 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. fe 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 Less: Mutual Aid 7407 2,402 » ©2 17.943 46,064 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. : ey 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 | © LL LE 6 a ARERR NE EE. Pa TERE 5 0D AE PROS Dia hts 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 4% =“ 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. pee 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, there is even less reason to approve the Agreement for a temporary period. In the judgment of the Examiner it wouid be an undue ourden on the parties and inconsistent with the proper dispatch of the Board’s business to require the parties to participate in another proceeding at a prescribed time in the future. Approval for an indefinite period does not mean that the Board would be powerless if circumstances should arise which call for reexamination of the Agreemert. Section 412 of the Federal Aviation Act expressly authorizes the Board to disapprove agreements “whether or not previously approved hy it” if the Board finds the Agreement to be adverse to the public interest or in violation of the Act. Accordingly, if justified by future events, the Board can take appropriate action. Other Conditions The prior approval by the Board was subject to several conditions none of which were in controversy in the instant proceeding. There are no changed circumstances which warrant modifying or omitting the conditions. Indeed, some of the conditions are necessary to aid the Board in keeping reasonable surveillance over the Agreement to ascertain whether action by the Bourd in regard to the Agreement may be required. Accordingly, all the \condi- tions will be imposed again. re > CHARLES MILLER, RUSSELL CARPENTER and ROBERT SAYLER for American Airlines, Inc.; Braniff Airways, Inc.; Continental Air Lines, Inc.; Eastern Air Lines, Ine.; Na- tional Airlines, Inc.; Northwest Airlines, Inc.; Pan Ameri- ean World Airways, Inc.; Trans World Airlines, Inc.; United Air Lines, Inc.; and Western Air Lines, Ine. RAYMOND J. RASENBERGER and WARREN C. NIGHS- WANDER for Hughes Air Corp. d/b/a Air West; Frontier Airlines, Inc.; Mohawk Airlines, Inc.; North Centra] Air- lines, Inc.; Ozark Air Lines, Inc.; Piedmont Aviation, Inc.; and Texas International Airlines, Inc. JAMES L. Hicusaw, Jr. and WILLIAM G. MAHONEY for Air Line Dispatchers Association; Brotherhood of Rail- way, Airline and Steamship Clerks, Freight Handlers, F~- press and Station Employes; Communication Worker- Se 1 PR Tr Cpe be vo weet ane 98 a 226a Opinion America; Flight Engineers International Association; In- ternational Association of Machinists and Aerospace Work- ers; and Transport Workers Union of America. ROBERT S. SAVELSON for Air Line Pilots Association, In- iernational. MARTIN SEHAM and Frep C. Kurtin for the Aircraft Mechanies Fraternal Assuciation, Locals 24 and 32, and the Allied Pilots Association. WILLIAM A. KUTZKE for the Department of Transporta- tion. NATHANIEL B. Brerp, Jr., and ALEXANDER N. ARGE- RAKIS for the Bureau of Operating Rights, Civil Aero- nauties Board. Opinion By THE Boarp: In this proceeding we are once again considering the Air- lines Mutual Aid Agreement, and particularly certain amendments, effective October 1969 and January 1971, Which provide respectively for increased guaranteed pay- ments to struck carzviers and participation e the local serv- ice carries. The Mutual Aid Agreement was first instituted by six trunkline carriers in October 1958, and was approved by the Board for a one-year period.’ It provided solely for so- called “windfall” payments by participating earriers to a carrier suffering a strike. Payments were authorized only for strikes in support of umion demands in excess of the recommendations of a Presidential Emergency Board ap- 1 Six-Carrier Mutual Aid Pact, 29 CAB 108 (1959). 99a 2274 Opinion pointed under the Railway Labor Act, which were called before union exhaustion of the Railway Labor Act pre- strike procedures, or which were otherwise unlawful. The “windfall” payments constituted payments equivalent to the increased revenues of non-struck carrier parties that were attributabie to the strike, less any added direct ex- penses. The Board found that although the Agreement would increase management’s abilities to withstand the economic impact of a strike, there was no basis for any i “ence that the agreement would constitute an impedi- ment to bona fide collective bargaining, or would interfere with the prompt settlement of disputes. In 1962 the trunkline carriers (now civht), amended their agreement to provide for a guaranteed minimum pay- ment to a struck carrier in the form of “supplemental” pay- ments which, together with the windfall payments, would provide the struck carrier with a reecvery equivalent to 25% of its normal operating expenses, The maximum con- tribution to “supplemental” payments vy any participating carrier was limited to '5 of 1% of the carrier's operating revenues for the prior calendar year. In addition, the coverage of the Agreement was extended to strikes called in the absence of appointment of a Presidcatial Emergency Board, or where the Report of the Exsergency Board failed to make recommendations on the merits of the dispute, pro- vided the struck carrier had in all respects acted in compli- ance with the Railway Labor Act. In approving the amended Agreement in 1964,* followitig an evidentiary hearing, the Board found that the Agreement offered, at _a not unreasonable cost for the protection obtained, a sub- stat.tial measure of relief against the costs of strikes, and thereby contributed to industry stability in an industry particular’y vulnerable to, and plagued by, strikes. 2? Matual Aid Pact Investigation, 40 CAB 559 (1964). PARA PLS TT FI FRR ee PNY TLL TAN GRR: PRS Re BRencenerpereesne ne: AUT TR 100 a 228a Opinion The present proceedings initially sought approval of the renewal of the 1962 Agreement, as approved by the Board in 1964. However, in Octover 1969, following hearing and the Administrative Law Judge's approval of tie renewal, the trunkline carriers amended their agreement in two major respects, as follows: 1. The level of “supplemental” payments to a struck carrier was increased from 25% to a 35-504; sliding scale (50° for the first two weeks, then decreasing o'« Weekly to 359° in the fifth week) of the struck ‘arrier’s “normal air transport operacing expenses.” 2. The maximum annual obligation of a participat- ing carrier to contribute to supplemental payments to a struck carrier was increased from 1. to 1% of the paying carrier’s air transport operating revenues in the preceding calendar years By Order 70-7-114, July 23, 1970, the Board, without further evidentiary proceedings, approved the Mutual Aid Agreement as it had been amended by the October 1969 amendments. The Board agreed with the Administrative Law Judge that the Agreement was fully consistent with national labor policy; that the developments since the prior proceeding further supported the contribution of the Agree- * Other amendments, which are not disputed by the parties, provide for muatined entry requirements which permitted new Parties, of trunklnie carters previeusly parties to the Agreement, to become parties by November 13, 1909, without any requirements for back payments or a waiting perieal (as a consequence of this amendment. Continental aad National rejoined the Agreemen* effective November 15, 19809 and Western became a party as of October 3, 1970) ; stricter withdrawal procedures requiring that the parties give a one year's Written notice of intent to withdraw from the Agreement: and revision tthe arhitroten procedures te cover disputes mvo! Ing aniounts due vr owing under the Agreement. Bvcrstemameety er sre er etc peg sertnenes fern SP ETEg TS SAE RADR RED 95a 2232 Opinion ae.v. FOL. U.S. App. D.C. , F. 2d , (No. 22,605, October 27, 1970) (Slip opinion at 11). Accord- ingly, we will remand the matter for the taking of further evidence with respect to the amended agreement on events which occurred since the close of the earlier hearing.‘ ACCORDINGLY, IT IS ORDERED THAT: 1. Order 70-7-114 dated july 23, 1970, is vacated to the extent that it approved the amended agreement. 2. This proceeding be and it hereby is remanded to the examiner for further evidentiary hearing in accordance with the views expressed herein. 3. Except to the extent granted herein, the petition for reconsideration of the Six Union Parties is hereby denied. By the Civil Aeronautics Board: HARRY J. ZINK Secretary (SEAL) * Inter alia, the Moard desires evidence as to the agreement's role, if any, in affecting the bargaining balance between labor and manage- ment in the air transportation industry. In addition, in the event that we reach a ditferent ultimate conclusion on the merits of the amended agreement, we will nevertheless give consideration to whether our action should be prospective only. BPN ALLIS TN IL NAN TET BRUTE EE RMA RINT ROPE ROA Y PR Ree oreretis UresREssiom 963 224a Opinion MEMBERS MINETTI AND MURPHY CONCURRING: We concur in the remand for the reasons set forth i in our dissent to Order 70-7-114 as well as the additional matters subsequently raised by the petitioners. Vice Chairman Gillilland Filed the Attached Concurrence. GILLILLAND, VICE CHAIRMAN, CONCURRING: As pertaining to the reasons stated by the Board for its decision, which, in a sense became the law of the case, the Union Parties have, I believe, the better of it on their re- quests for remand. Accordingly, I vote to remand. However, there is another and to me more persuasive reason for not overturning the agreement than those stated. It appears to be clearly established that strike insurance is not per se unlawful. Furthermore, it is readily acknowi- edged that if the insurers were other than air carriers the Board would have no jurisdiction. It follows that if the carriers had chosen to make similar agreements with U. S. Steel or the Great Atlantic and Pacifie Tea Company the matter would be beyond the reach of the Board. Conse- quently it seems to me that the mere fact the carriers have found ‘that they can make a better contract by insuring each other, and have chosen to do so, is no more than a circumstance not justifying the Board’s intrusion. Although I am aware of the precedents and have par- ticipated in some of the earlier cases, I am inclined to regard this as one of the Board's gratuitous time consuming involvements, tending to confuse but not dispose, and from which, for the good of everybody, it should be drawing away. Caan Bod bd PEELE IE PERN IES LENE LIRR TN IME PE PERE LOEH AN TT FIT CLE OE ERO TAS ea Ree EN Ue APPENDIX D Airlines Mutual Aid Agreement Order 73-2-110 (February 27, 1973) Opinion of the Board Opinion of Members Mineiti and Murphy, Initial Decision of Examiner Arthur S. Present ( 1972) 1044 232a Opinion oral argument heard. Accordingly, the case is ready for decision. Upon consideration of the record and the contentions of the parties, we find that we must confirm ou; original view, expressed in Order 70-7-114, that the various amendments do not so change the basic nature of the Agreement as to make the amended Agreement, unlike its predecessor, ad- verse to the public interest. We find no evidence of record to persuade us that our original reasons are invalid. Thus we cannot avree with the conclusion of the Administrative Law Judge that the respective amendments should be dis- approved. We have also concluded that, subject to a con- dition which will insure that mutual aid payments will not inerease subsidy, local service carriers should be permitted to participate in the Agreement. Accordingly, we find that the Agreement as amended by the amendments of October, 1969 and December, 1970 should be approved, subject to conditions. We will, nevertheless, limit our approval to a neriod of five years. Judge Present found that the Mutual Aid Agreement, in the absence of the increases in the supplemental payments effectuated by the 1969 amendments, and without participa- tion by the local service carriers, would not be adverse to the public interest or in violation of the Act, and should be approved. He further found that the record “does not estab- lish that any carrier has incurred or prolonged a strike because of the increased level of mutual aid. Nor does it demonsirate that the viability of any carrier has been criticaily threatened because of the higher level of contri- butions reuuired under the amended Agreement.” * Thus, Judge Present found no direct showing on the reopened record that the amended Agreement, limited as indicated, * LD. 25, 31-32, 41. MESS SEA TY he ear . — — Ser So he A'S PORN EEDA ERE AMT SLE ROI AE PLLA BEE MLTR S EOE ITE LED MEE OY apa Oe Say 1 By reese sees seear corners 105a 235a Opinion has operated in a manner inconsistent with the public inter- est, and we agree. We therefore adopt as our own the find- ings and conclusions of Judge Present in his Initial Decision, attached hereto as an Appendix, except as modified by, or inconsistent with, the views expressed herein. \ I. The Administrative Law Judge found that there were many significant pressures upon a carrier to settle a strike and hence there was no likelihood that a carrier receiving mutual aid payments would prolong a strike indefinitely. However, he saw a potential danger that the 1969 amend- ments which increased the supplemental payments might encourage a carrier party to the Agreement, particularly a weak airline, to prolong a strike for the short-term benefits of the increased payments. Thus, the increases, in his view, would be adverse to ih publie interest. Although, as Judge Present noted, the record fails to demonstrate that the increased payments have in fact had any significant effect on labor-management negotiations, it must be recognized that the increases in supplemental pay- ments were specifically intended to enhance airline manage- ment’s ability to resist the economic pressures of a strike. It would be naive to assume that management, in its negoti- ations with labor, would totally ignore the financial cushisn that the increased level of mutual aid payments provide. However, in our view, the appropriate question is not whether a strike might be terminated in some cases more rapidly if increased mutual aid payments were not avail- able. Rather, it is whether the mutual aid payments so shift the bargaining balance in favor of carriers as to create 4 serious likelihood that a carrier might resist settlement of ~ Opinion a strike on a reasonable basis in circumstances where such a settlement wag possible. We are unable to conclude that the Mutual Aid Agreement, either in its original form, or as amended to provide for the increased level of supple- mental payments, has altered the negotiating balance be- tween airline management and airline employees in any manner which would be inconsistent with the public interest. Nor can we conclude that the mutual aid payments, of them- selves, could become a Significant factor in prolonging a strike that otherwise was capable of settlement on a reason- able basis, The evidence is persuasive that the amended Mutual Aid Agreenient has not resulted in any unwarranted shift in the negotiating balance in favor of airline management. In the first place, the expert testimony of record demon- strates,’ and we agree, that the nature of the air trans- port product is such that the position of management in labor negotiations in the air carrier industry is somewhat weaker than managements in other types of industries, by reason of the greater impact of a strike on air carriers. The air transport industry, as a service industry, diters from industries suc Manufacturing in that the commodity itsellsis pe’. ole. Air transport service cannot be stored, like manu ctured goods, in contemplation of a strike. Once the plane door closes on empty available seats, that com- modity is lost. The air transportation industry, even more than other transportation industries, is subject to this phe- nomenon because of its heavy dependence upon passenger transport, which is almost totally incapable of stockpiling. In addition, the evidence with respect lo Wage settlements in the airline industry demonstrates that the employees re- tain substantial and effective bargaining power regardless 7 TCE 80, pp. 11-12. j. 107 a 235a Opinion of the Mutual Aid Agreement. Thus. the record shows thzt air carrier wages, both average for ail employees, and aver- age for ground (rank and file! employees, aré higher than, and increases have increased faster than, wages in other industries, including other transportation industries.* For the period 1967-1970, airline employment costs increased by some 33°7 , while the consumer price index increased only some 17‘«.” Furthermore, although in the 1960's increased airline employment costs were more than offset by increases in airline employee productivity, commencing in 1968, wage increases have outstripped increases in employee produc- tivity by a substantial margin. For example, in 1970 em- ployment costs in:reased some 13.347, while employee pro- ductivity increased only some 2.3°7.'° Indeed, this 13.2°% increase in employment costs in 1970 {during which ‘the increased level of mutual aid payments was first in effect) surpassed the 8.3°7, 6.8%, and 9.1% increases in the prior three years 1967, 1968, and 1969, respectively. These facts do not show that the increased level of payments deprived employees of effective barzain- ing power. We recognize that the increased paymenis are specifically designed to, and indeed may well increase a earrier’s will- ingness or ability to resist union demands which the carrier considers to be unreasonable. However, it does no‘ follow that the Agreement thereby becomes adverse to the public interest. The pressures upon a carrier to settle a strike, despite the increased mutual aid payments, are so great that we perceive little danger that a carrier could be significantly influenced, by reason of such payments alone, * TCE 41, 41a, 42. ® TCE 4ia, 44, 45 © TCE 46, 47 (p. 4). 101 a 229a Opinion ment to airline stability; that the evidence established that the Agreement had had little, if any, impact upon labor management relations; and that the evidence did not show that the Pact had had any material effect upon the collec- tive bargaining process. Specifically with respect tc the October, 1969 amendments, the Board concluded that, “while the recent amendments strengthen the Agreement, they do not change its basic nature or add any new element which suggests that it, unlike its predecessor, is adverse to the public interest.”” The Board noted that it was unable to conclude that the agreement, as amended, would 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 ob- jectives of the Act. The amended Agreement, the Board found, was consistent with national labor policy and violates neither the Federal Aviation Act nor the Railway Labor Act. The favorable aspects of the Agreement in making a specific contribution to airline stability under conditions of increased cost pressures and declining earnings and profit margins, and in providing at a not unreasonable cost a sub- stantial measure of relief against the costs of strikes, would override any detriments that might arise from the greater recoupment by the airlines of strike losses. The Board recog?ized that the amendments would provide substan- tially g: .ater recoupment of strike losses, particularly in the case oi short strikes when maximum benefits were pro- vided. However, in this connection the Board stated: “Tt hardly s.2ms 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 maxi- mum benefits. Carriers must, under the new Acree- ment, as under the old, face the prospect that in all Se FET ee Oe en xy? PENS —_— PE a aes rn ean i; bg Fs a k i z RNG ISG Perce tereanesyerite: 3 1024 230a Opinion probability mutual aid will not meet their strike losses. Finally, the possibility of permanent di- version of traffic to competing carriers will serve as a positive incentive for carriers to avoid strikes.” On reconsideration, the Board, by Order 70-11-110, No- vember 23, 1970, vacated its prior Order to the extent it épproved the amended Agreement, and remanded the pro- ceeding for the taking of further evidence with respect to the amended Agreement on events which had occurred since the close of the earlier hearing. These events included not only the amendments, but also the impact of two subsequent labor disputes. In reaching this determination, the Board stated: “We are not presently persuaded that our earlier determination was in error. However, in fairness to the parties and to ourselves, we believe that we should reserve making a final judgment in this im- portant matter until we have before us a fully de veloped record on the current facts, with all parties afforded an opportunity to present their evidence and arguments and to be fairly judged on that evi- dence and those arguments.” Following the Board’s remand, the carriers, on Decem- ber 10, 1970 adopted an additional amendment, effective January 1, 1971, to permit entry and participation in the Agreement by local service carriers.‘ *In Order 70-7-114, the Board rejected the requests of Mohawk and North Central to withhold approval of the Mutual Aid Agreement until provision was made for participation of the local service carriers, The geri ne i. nevertheless, that such participation was a sictter which mi vell be considered by the two segments of the industry, ond its ileci ion denying this request was without prejudice to any future agreement of suc ha nature which might be filed. 103 a 235 1u Opinion In his Initial Decision in the remanded proceeding, Ad- ministrative Law Judge Arthur S. Present concluded that the principal 1969 amendments to the Mutual Aid Agree- ment, providing for an increase in the supplemental pay- ments from 25% to 35-50%, and an increase in the maxi- mum of supplemental payment contributions from 1% to 1% of the participating carriers’ air transport operating revenues in the preceding calendar year, should be dis- approved. In addition, he concluded that the December 1970 amendment providing for participation of the local service carriers should likewise be disapproved. The disapprovals were, nevertheless, to run prospectively only. On the other hand, Judge Present found that the Agreement, in. the ab- sence of applicability of the disapproved amendments, would not be adverse to the public interest or in violation of the Federal Aviation Act, and should be approved for an in- definite period, subject te conditions. By Order 72-4-59, the Board exercised discretionary re- view. Exceptions to the Administrative Law Judge’s dis- approval of the amendments to the Agreement were filed by the trunkline carrier parties to the Agreement, the local service carrier parties, and the Bureau of Operating Rights. (The Bureau also proposes that approval should be limited to five years.) ALPA and Six Union Parties (jointly) (ALDA, BRAC, FEIA, IAMAW, TWU and CWA) filed ex- ceptions to Judge Present's decision insofar as he approved the Mutual Aid Agreement. Briefs have been filed® and * Briefs to the Board were filed by the trunkline carriers, the local service carriers, AT PA. the Six Union Parties. and the Bureau, APA and Airline Mechares Fraternal \sseciation adopted their joint brief to the Administrative Law Judge as their brief to the Poard. Alic- gheny Airlines fled a statement of postiten stating its belief that mem, hership in the Agreement should be open to all certifieated carriers, and that its decision not to join should net be construed a Opposition. PRA PRORGE NR * sage Nien te C0 4 iN » £9 iat 2 bes 208° $9 0b oy “ddag es sanuaaoy —_= I¢ — cr = tr — Os = os 4350S" 8TO'k 480° €22'6 ert arent) | 3506" 110°'02 te O06'2 eto" css‘? 25ST Ol “PUAN Wey, SyUIUIAR JO JUdIIOg addy ary fsonsimg peiouvuty aauae9 any gy.) saaaneg a asOuM MWEYOTY pur Ip cb 19001 290'Z £02 iZs°9 Slo'l Lor'z OSS'Z LOG VI Ole ONS Ore ST Aiv'l Zi Ogle “ddng ~ (0008) syuowArg 1461 INal— 0401 SMNANTARNM WAINNVD OW SLNANAVd GIV “IVALAN AO LNADNad ‘PUAN CLUS OLZ 9121 STP 199" CST St Susur OL sy fos loz’ (12/9°0261) (000$) sonuasasy q{ you pip (Loup WII SIAL pure ‘por tod a sup SOYLYS ISOM WON *‘euouun auv poepupour WN ¢ Woatlpayy yer [eau ) YON AY AYE SUNNY] AQUOS WILY TWN OO] powmuyy VAAL ULL ue Wado hay peau») Mana UEMaanty? SNANL .Ssdtuue9 127 3 pare | Opinion MINETTI and Murruy, Members, Concurring and Dis- senting: We cannot join the majority in giving unqualified ap- proval to the Mutual Aid Agreement in its currently amended form. At the same time, we do not urge total dis- approval of, the Agreement. Rather, we would allow the Agreement to stand in the form in which it existed prior to the major amendments of October 1469, which increased both the level of “supplemental” payments to a struck car- rier and the maximum annual obligation of a participating carrier to make such payments.' We also would approve, subject to the subsidy condition imposed by the majority, the December £970 amendment which permits participa- tion in the Agreement by local service carriers. However, we would disapprove as adverse to the public interest the October 1969 amendments relating to increased “supple- mental” payments. Finally, we would remand for further hearing the issue of whether an additional condition should be imposed precluding payment of benefits under the Agree- ment to a struck carrier which has violated the Railway Labor Act subsequent to the commencement of a strike. In letting stand the Mutual Aid Aevreement as it existed prior to October 1969, we do not consider it necessary to find, and do not find, that the Agreement has been or will! be affirmatively beneficial to the public interest, either by contributing to the “stability” of airline industrial rela- tions or by assisting carrier managements in resisting union wage demands. In this connection, we regret that the Board's majority opinion here goes as far us it does in seeming to identify the public interest with strengthening the bargaining position of carrier management in airline * The lesser amendments of October 1969 give us no concern and, like the majority, we would approve then. aoe se 1283 20a Opinion labor disput x, which is the evident purpose of the Mutual Aid Agreerient. Such an air of partnership between man- agement and labor by a regulatery agency is antithetical te the national labor policy, and should be strictly avoided. The Board's dilemma, of course, is a real one: under most circumstances, in view of its promotional role teward the air transportation ‘industry and its regulatory respon- sibilities toward the traveling public, the Board is bound to regard whatever lowers airline co..s as wood, and what- ever increases those costs as bad. Nevertheless. the Board cannot take that attitude toward airline Wages without becoming a partisan on the side of management against labor. We do not suggest that the Board majority has here in any way deliberately set out to align itself with one side or the other of airline labor disputes, Nonetheless, it is diffi- cult to read the majority opinion as a whole, with its re current emphasis on the “stability” assertediy afforded by the Mutua! Aid Agreement and one the “reason..bleness” of management positions i with no explicit recognition that union positions may be equally reasonable from the stand- point of the workers’ interests), without deriving a dis- tinet impression that the majority believes that strength- ening management's bargaining power in wage disputes is an affirmatively beneticial thing. However difficult it is for the Board to preserve a stance of total neutrality in labor-management conflicts, once the parties have fultiled their st: tutory obligations under the Railway Labor Act, we believe the Board must bend every effort to do so. To that end, we would rigorously avoid making any judgments as to the reasonableness of either management or unien positions and actions, either in gen- LO CEA 0 BAR MS 5 LO estan adh 1224 25Va Opiiiion worse to travelers, economic loss to shippers and consumers, lower revenues to airport uperators, foreclosure of numer- vus business opportunities and reduced economic life to the community as a whuie—all are the immediate results of airline strikes, particularly over routes which only the struck carrier is au’‘:orized and willing to serve. Obviously, a strike is far from the ideal way of resolving labor disputes. Fortunately, as the record reveals, the great majority of labor disputes are resolved by negotia- tion between the parties without recourse to a strike. Nevertheless, under the national labor policy, a strike re- mains available as an ultimate resource in reaching an accommodation between employee demands and terms ac- ceptable to managements. Whether the disruption caused by work stoppages in the air transportation field is sufficient to warrant. revision of the national labor iaw so as to prevent or control them is a question of policy for the Congress. However, we do not believe the appropriate remedy is to compe! carriers— whether by law or by undue economic pressure—to accept all requests of employees, just as we would not agree that employees should be forced to accept al! proposals of carrier managements. Collective bargaining in good faith remains the corner- stone of national labor policy. Collective bargaining is en- couraged when there is substantial economic pressure on both sides of the bargaining table. As we have observed, the perishable nature of air transportation makes individual carriers peculiarly vulnerable to strike threats. The Mu- tual Aid Agreement is an effort on the part of the carriers collectively to strengthen the bargaining position of the indi- vidual carricr. We conclude that it is not contrary to the public interest for the carriers to de so, in the form and Bpeterresneen pregernerrrer ee eprarE TE HNTE Y IRE NANCIE] — _— DPI OE ~The lp at 123 a 25ha Upinion to the extent provided in the Agreement now before us. As we have found, the Agreement does not so udter the bargaining balance as to lift from the carriers hens y eco- nomic incentive to settle work disputes and hence does not remove the pressures essential for collective barg#ining in good faith. At the same time, the Agreement does afford the czrriers a greater measure of influence over Jlubor costs ultimately are reflected in higher fares and rates to the traveling and shipping public, additional restraints corsistent with coilective bargaining are, in our opinion, not contrary to the public interest. We have given due consideration to all of the contentions of the parties and find, except to the extent indicated, that they do not alter cur decision. Accordingly, in view of the foregoing and all the facts of record, it is found: 1, That the Airlines Mutual Aid Agreement, including the Airlines Mutual Aid Agreement as amended by the. amendments of October 1969 and December 1970, is not adverse to the public interest or in violation of the Act and should be approved for a period of five years, subject to the following conditions: (a) The approval shal! not be deemed a determination of the reasonableness of the financial provisions of the Agree- ment for future ratemaking or other regulatory provisions under the Act;** ” We find no justification for departure from those condi [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_0370%3A1. Public record. Not legal advice.