# 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%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1975 - **Citation:** 420 U.S. 972 ## Text — CIBRAR Y pn"Supreme court, U. FILED DEC 6 1974 CHAEL RODAK, JR. IN THE Supreme Court of the United States OCTOBER TERM, 1974 No 7 710 AR LINE PILOTS ASSOCIATION, INTERNATIONAL, Petitioner, —against— CIVIL AERONAUTICS BOARD, Respondent, —and— AMERICAN AIRLINES, INC., et al., Intervenors. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT See —— —— SAMUEL J. COHEN Attorney for Petitioner | | | 605 Third Avenue New York, N. Y. 10016 Tei. No. (212) 682-6077 Of Counsel: COHEN, WEISS and SIMON HENRY WEISS ROBERT S. SAVELSON STEPHEN B. MOLDOF MICHAEL E. ABRAM ewe . INDEX Questions Presented ......-...-+-+seeeeceeeees — 10 ̃⅛ ds ꝛ˙Üܹüĩ 2 Statement of the Cage . Current Mutual Aid Paet and CAB Response Earlier Limited Forms of the Mutual Aid Pact and CAB Response q ö ARGUMENT— Point I—By permitting a carrier to bargain with financial assurance that acceptance of a strike may be more profitable than continued service, widening industrial disputes, allowing an air carrier to render such or no service as it may choose irrespective of its certificated obligations and requiring contributions from all members without regard to ability to pay, the Mutual Aid Pact is adverse to the public interest as defined in the Federal Aviation Act of 1958. Statutory Framework .............-+++00+- The Adverse Effects of Mutual Aid are Well- r ¾ ¾ ¼˙ ... ͤ ͤ ͤ eeaees sos 11 13 13 14 4 . ⁵ ote RAS ae cng PRIA te wr Rage Pb Ctl eine. awh ow | werent e ii 1. Profit-Making Strikes 2. Partial Strike- Bound Operations ......... 3. The Board Responded to the Dangers of Pro- longed Industrial Strife in a Manner Totally Adverse to the Public Interest .......... a. Redefinition of the Public Interest; “Reasonable” Settlements ........... b. Myth of Promoting Financial Stability c. Myth of Pressure to Settle Strikes ..... 4. The Pact Requires Contributions from Members Without Regard to Ability to Pay Point II—The Mutual Aid Pact widens the scope of industrial conflict beyond the parties to a dispute and violates limitations on multi- employer action and carrier self-help under the Railway Labor Act .................... The Pact Widens the Scope of Labor Disputes and is Inconsistent with Limitations on Multi-employer Economic Activity Against ö·˙d«˙ R ⅛¾ “nAÄ 2 The Pact Does not Constitute Proper Carrier “Self-Help” in Accordance with the Railway —.. ̃ ᷣ K ⁵˙· rt err Point III As a multicarrier combination to con- trol and depress labor costs, the Mutual Aid Pact violates the antitrust laws and is not ex- empted from antitrust regulation by CAB —! ² mm %⅛ð⸗ „d ²̃ „„... „„er SSV A SLE RIPE LK) 22 PAGE 14 16 18 18 19 21 21 25 27 29 31 NA CPD LEO iii AUTHORITIES CITED Court Cases American Ship Building Co. v. NLRB, 380 U.S. 318 P. ͤ ũõ (“fk ͤ (v besesaens Brotherhood of R. R. Trainmen v. Jacksonville Ter- minal Co., 394 U.S. 369 (1969) .............. Brotherhood of Railway Clerks v. Florida E.C. Ry., % rae ee eee Chicago and N.W. Ry. v. United Transportation e ndccsatassoands Cordova v. Bache & Co., 321 F. Supp. 600 (S.D.N.Y. PP . Pn a. ee Hughes Tool Co. v. Trans World Airlines, Inc., 409 / ˙ĩ᷑—T—,. ͤ eee ees Kennedy v. Long Island R. R., 211 F. Supp. 478, 488 (S. D. N. V. 1962) aff' d., 319 F.2d 666 (2d Cir. 1963), cert. denied 375 U. S. 830 NLRB v. Brown, 380 U.S. 278 (1965) .......... NLRB v. Erie Resister Corp., 373 U.S. 221 (1963) NLRB v. Fleetwood Trailer Co., 389 U.S. 375 (1967) NLRB v. Great Atlantic & Pacific Tea Co., 340 F.2d t Wek ö! NLRB v. Inland Trucking Co., 440 F.2d 562 (7th Cc NLRB v. Insurance Agents’ Int’] Union, 361 U.S. OUT CHR) hos Stree ST EN NLRB v. Mackay Radio & Telegraph Co., 304 U.S. TAT NLRB v. Truck Drivers Local 449, 353 U.S. 87 — ⅛ ß . ͤ New York Mailers’ Local 6 v. NLRB, 327 F.2d 292 1 ² oc kK ˙ VmA ⅛˙ům ¼ 0. PAGE 25 25 IK 122 ed e Ne, ere iv Northwest Airlines, Inc. v. ALPA, 442 F.2d 246 8th Cir. 1970), cert. denied, 404 U.S. 8711 17 Pan American World Airways, Inc. v. United States, e œũQmGmfm . 11, 30 \ United Transportation Union v. Burlington North- ern, Inc., 325 F. Supp. 1125 (D. D.C. 1971) .... 27 CAB Decisions and Orders Airlines Mutual Aid Agreement, —— CAB ——, Order 73-2-110 (1973)))) 6, 7, 8, passim Airlines Mutual Aid Agreement (Renewal), —— CAB ——, Order 70-7-114 (1970) ............ 2 ALPA v. Southern Airways, Inc., 37 CAB 748 — aaa TWA’s profits for 1973 wili be better off if before year end, Tillinghast noted. That's because TWA is receiving income under mutual aid’ agreements with other airlines. And mean- while salary, fuel and other expenses have been shut off. Should the strike end now, the mutual-aid income would end and all the ex- penses would resume. Yet for several weeks. TWA’s revenues would be — since reservations fell with the strike news, Tillinghast explained.” Spr cermin 222 € > N = re . RS eee ISR eS * Ne e e eee eee I aes Ne e eee e 5 * Ne eee eee n U e eee oh bernd. LR eth . „„ 8 The Board then held that U.S. air carriers would not “re- sist settlement on a reasonable basis. (App. 234a). With respect to the financial drain of high levels of Pact liability, the Board held that Mutual Aid is a form of insurance and that the “choice of whether to pay what it costs to have such insurance is . . . for the individual car- rier to make.” (App. 246a). Members Murphy and Min- etti, agreeing with Judge Present that the 1969 Pact amendments should be disapproved, stated: “The critical point is that under the 1969 amend- ments a struck carrier’s mutual aid benefits can be so generous that it can show an operating profit while its operations are shut down by a strike.” (App. 261a). * * * “We also agree with the judge - though this in our view is a lesser factor that the increased liability of participating carriers to pay supplemental bene- fits under the 1969 amendments poses an unaccept- able threat to the financial stability of the paying carriers. As the judge pointed out, the defect of the Agreement’s provision for supplemental payments is that it takes no account of the current financial condition of a paying carrier; and, indeed, the bulk of the mutual aid payments since the 1969 amend- ments took effeci have been to otherwise highly profitable carriers from carriers who were currently either losing money or earning less than a reason- able return on investment.” (App. 264a). Earlier Limited Forms of the Mutual Aid Pact and CAB Response The Mutual Aid Pact began as a highly limited arrange- ment and has been gradually broadened to increase the pressure on airline unions with continued acquiescence by * ——UUU— — 9 the CAB. The original Pact had only six members“ and in essence provided that in the event of strikes seeking settle- ments in excess of or opposed to presidential emergency board recommendation, called before exhaustion of Railway Labor Act procedures, or “otherwise unlawful,” a Pact member would receive only windfall payments from the other members. To maximize windfall, the Pact also pro- vided that struck carriers would direct as much traffic as possible to other Pact members. Despite this limited form, however, the plan was clearly an opening wedge in a long- term airline industry labor relations carapaign. As later found by the Board’s Hearing Examiner, “ . . itis evident that one of the motivating factors [for the first Pact] was a dissatisfaction with the operation of the Railway Labor Act in the air trans- portation industry. The carriers under the leader- ship of the ATA apparently extensively explored ways and means to rectify the deficiencies which the air carriers believed made it unsuitable for the air transportation industry regardless of its effec- tiveness in the railroad industry.” (App. 82a-83a). The Board approved this original Mutual Aid Pact under Section 412 of the Federal Aviation Act on the theory that the Pact would promote “freedom from industrial strife” in the airline industry. (App. 10a). The Board disap- proved the traffic referral clause intended to maximize windfall payments, but otherwise approved the Pact against antitrust attack and held that its “order of ap- proval would grant immunity from the antitrust laws.” (App. 1la-12a). * American Airlines, Capital Airlines, Eastern Airlines, Pan Amer- ican World Airways, Trans World Airlines, United Air Lines. 10 Thereafter the carriers began their program of amend- ing and broadening the Mutual Aid Pact. In amendments from 1959 through 1962 the Pact was made applicable to almost all strikes against a Pact member. (App. 84a). Four additional carriers (National, Braniff, Northwest, Continental) joined the Pact, extending membership to ben airlines carrying approximately ninety percent of all trunkline traffic in 1959 (App. 43a), and the Pact was continued in effect on an indefinite basis with limited with- drawal rights. Thereafter in 1962 the Pact was again amended to provide for the first supplemental payments feature, which guaranteed that a carrier member would receive twenty-five percent of its normal air transport operating expenses for shutdown flight operations and which provided a maximum annual supplemental payment liability for each member of one-half of one percent of the prior year’s air transport operating revenues. (App. 123a). Over dissents of member Minetti and Vice-Chairman Murphy, the CAB in 1964 approved these amendments for three years, finding the recent past had “not been typical either as to the industry, played with the capacity problem, or labor-management relations, preoccupied with the crew compliment issue. (App. 48a). This was followed by the 1969-1970 Pact a nendments doubling supplemental payment liability and opening the Pact to local service carriers for the first time. The Pact as thus amended was approved by the Board in proceedings under review here. Court of Appeals Proceedings ALPA and six other labor organizations sought review of the Board’s 1970 and 1973 orders approving the Mutual Aid Pact as amended. Two other unions intervened in the eee —— RM. 11 proceedings on the side of petitioners; the trunkline car- rier and local service carrier members of the Mutual Aid Pact intervened on the side of the CAB. The Court of Appeals sustained the Board’s orders against ALPA’s con- tentions based on the public interest, Railway Labor Act, and antitrust laws. (App. p. iv). Reasons for Granting the Writ The chief attributes of the Mutual Aid Pact have been briefly described. These attributes indicate the public interest, labor policy and antitrust issues raised by the Board majority decisions approving the widened Pact. The Pact permits a certificated air carrier to bargain with a single union on the assurance that acceptance of a strike can be more profitable than continued service, and is ad- verse to the interest of the public whose benefit is paramount in air regulation. The plan enables the carrier to render such or no service as it may choose irrespective of its cer- tificated obligation, so that the Board’s decisions allowing the plan to go forward requires scrutiny at the highest judicial levels. The need for review in the present case is compounded by the demonstrated loss of critical working capital to such carriers as Pan American World Airways and United Air Lines; the financial conditions of these and other carriers suggests that the CAB would have better served the public by regulating the industry as required by law rather than approving the Mutual Aid system with no provision for the finances of unprofitable carriers. The Court of Appeals below was also in a position to scrutinize the Mutual Aid system with reference to Rail- way Labor Act obligations, for it is the role of the federal 12 Courts to interpret and apply the RLA in light of the na- tional labor policy. Unfortunately, the Court declined to exercise its responsibilities with reference to labor policy issues raised by Mutual Aid and approved the Pact as a routine instance of economic self-help, on the basis of a Taft-Hartley decision that on analysis has no bearing here. Correctly viewed, however, the Pact does not represent a self-help effort, but is an industry-wide economic effort in the context of single-carrier bargaining relationships. This type of effort is antithetical to our national labor policy of containing labor disputes to the employer who is bargaining over the disputed contract. in addition, what the Court below missed is the large difference between the Taft-Hartley and Railway Labor Act schemes, for the latter statute regulates an employer’s economic weapons always with an eye on certificated carrier obligations. But the effect of the Pact, contrary to RLA limitations, is to enable and encourage a regulated air carrier to accept a strike and render such service as will increase Pact bene- fits—even by shutting down service on monopoly routes. oe — R The Pact exists as an inter- carrier combination with the purpose of jointly containing labor costs; this violates the Sherman Act on its face, for this kind of multiemployer activity is exempted from the Sherman Act only where the employees affected have agreed on multiemployer bargain- ing. However, the Board holds that it has power to exempt the Pact from the antitrust laws, contrary to the rulings in Pan American World Airways, Inc. v. United States, 371 U.S. 296 (1963) and Hughes Tool Co. v. Trans World Air- lines, Inc., 409 U.S. 363 (1973). These issues, significant as they are, are of double im- portance by virtue of their industry-wide character. For ne 2 . 2 8 1 —— U ICR LEE ——— 22 NL Re CC — ——— DO — — — BE BD 13 nearly the entire United States aviation industry have pooled their resources in the Mutual Aid Pact. The CAB has all but abdicated its regulatory function toward this industry by approving the Pact as amended, and the Court below acquiesced in the Board’s failures as if the Mutual Aid Pact were not a case of critical significance for one of the most important industries in the United States. It is respectfully suggested that this Court should rectify the Board’s unwillingness to confront the serious dangers posed by Mutual Aid. ARGUMENT POINT I By permitting a carrier to bargain with financial assurance that acceptance of a strike may be more profitable than continued service, widening industrial disputes, allowing an air carrier to render such or no service as it may choose irrespective of its certificated obligations and requiring contributions from all mem- bers without regard to ability to pay, the Mutual Aid Pact is adverse to the public interest as defined in the Federal Aviation Act of 1958. Statutory Framework Section 412(b) of the Federal Aviation Act of 1958, 49 U.S.C. S 1382, required the Board to disapprove the Mutual Aid Pact and amended Pact if the Pact was found “adverse to the public interest or in violation of this Act... .” The public interest objectives mandated by the Aviation Act plainly include the public. interest in uninterrupted air » 5 — . —— — — —ö—4—4TZ Au — ̃ — . — — 14 a service and the financial well-being of all certificated car- i riers. See Federal Aviation Act, Section 102, 49 U.S.C. 7 § 1302. The Adverse Effects of Mutual Aid : are Well-Documented The multiple defects of the Mutual Aid system are well- documented on the record of the case. N sinter 32> 1. Profit-Making Strikes The national labor policy assumes that employee strikes are an available technique for moderating the goals of both parties to a dispute, but the Mutual Aid Pact as amended actually permits a carrier to bargain with a single union with financial assurance that the acceptance of a strike may be more profitable than continued service. The record re- veals the remarkable fact as noted by Members Murphy and Minetti that “a struck carrier’s mutual aid benefits can be so generous that it can show an operating profit while its operations are shut down by a strike.” (App. 26la). As a result, the 1969 amendments produce the actual danger of longer and longer airline strikes. These are the uncon- troverted facts found by Judge Present: “National, although it conducted no operations during the approximately four-month strike by ALEA, with the aid of mutual aid receipts amount- ing to $27,985,000, earned, during the strike period, net income of $810,000 after $8.4 million in charges for depreciation and amortization. “Northwest, which during the five-month strike by BRAC conducted an average of about 29 percent of its operations, achieved a net profit before income taxes of $17.9 million during the strike period after * FUr N tance eee eee e ee ce ee edu ad under oad MOBS OS ee A SS 7 15 deducting $32.8 million in charges for depreciation and amortization. The carrier’s mutual aid receipts totaled $47,287,000. “TWA incurred a net loss before income taxes of $879,000 during the two-day strike to which it was subjected in October 1970. That result reflects charges for depreciation and amortization in the amount of $621,000 and mutual aid receipts of $2,452,000. The carrier maintained about 25 per- cent of its operations during the two days. How- ever TWA estimated that, if it had not suffered the strike, it would have lost $1,687,000 during the two-day strike period, so that the carrier actually gained $808,000 for the period of the strike. “Mohawk received mutual aid for the first quarter of 1971. It conducted no operations during the strike and received no subsidy for that period. Yet, it hd a net profit of $29,000 for this quarter after taking ‘ato account $1.8 million in depreciation and amor- tization and $1.4 million in nonoperating expenses.” (App. 287a-288a; emphasis added). Increasing management’s capacity to resist union bar- gaining positions, demonstrated by Pan American’s testi- mony in the 1968 hearing for the pre-1969 Pact, was like- wise recognized by the Board as a primary objective of the 1969 amendments. (App. 233a). The effect of Pact payments on industrial strife is par- ticularly dramatic when a financially weak carrier is in- volved in a strike. As found by Judge Present: “Tt was earlier noted that TWA was financially better off during the two-day strike it incurred in 1970 than if it had fully operated on those days. The really dramatic picture is shown when a weak 16. carrier is involved. Thus, for the quarter ended March $1, 1971, the period for which Mohawk re- ceived mutual aid, without any operations or sub- sidy the carrier enjoyed an operating profit of $1,445,000 and a net income after special items of $29,000. In contrast, for the three months ended March 31, 1969, on the basis of its Form 41 reports, the carrier realized from its operations (including $592,000 in subsidy) an operating profit of only $890,000. Furthermore, after special items it suf- fered. a net loss of $421,000.” (App. 296a-297a, footnotes omitted). The Pact as amended has in fact been accompanied by strikes among the longest in airline history. From the Pact amendments through 1972, there were six major strikes on Pact carriers; 119 days, 160 days, 154 days, 115 days, 95 days and 71 days. Northwest’s two strikes total 255 days from July 1970—October 1972. Local service carriers Mohawk, Hughes Airwest and Ozark were struck a total of 340 days, a figure previously unheard for regional air- lines with the exception of the 1900-1962 Southern-ALPA dispute.* (App. 218a-219a). 2, Partial Strike-Bound Operations Since the Pact has functioned principally in Northwest’s interest (App. 298a), and Northwest has likewise pioneered the use of a partial operation and the Pact to maximize its net profit, the 1970 Northwest-BRAC’* strike merits special consideration. Starting in July 1970, Northwest conducted a partial operation throughout the five month strike. At different See ALPA v. Southern Airways, Inc., 37 CAB 748 (1962). ** Brotherhood of Railway and Airline Clerks. — 24 eee 17 times, it sought injunctive relief to prohibit mechanics and pilots from respecting legal BRAC picket lines. In Decem- ber 1970, the Eighth Circuit actually prohibited pilots from concerted honoring of picket lines. See Northwest Airlines, Inc. v. ALPA, 442 F. 2d 246 (8th Cir. 1970), cert. denied, 404 U.S. 871. This combination of events (1) eliminated effective inter-union assistance while (2) allowing effective inter-carrier assistance through Pact payments to North- west. In the absence of any constraint or regulation by the CAB, Northwest itself decided the service which was to be eliminated, in a manner indicating intent to maximize profits and Pact payments, at the expense of the public and its fellow paying carriers, rather than taking action based upon the needs or convenience of the public over its route system. In pursuing its objectives, Northwest eliminated (1) vir- tually all service over its monopoly routes, where no alter- native routing was available to the public; (2) a large proportion of service over routes which were served by another Pact member from which it would receive windfall and other payments; and (3) the smallest proportion of service over routes on which it was competing with airlines which were not Pact members. These latter were prin- cipally long and generally profitable overseas routes also served by foreign carriers. The net effect of this opera- tion was to obtain large Pact benefits, while continuing to obtain revenue from the operations where the competition did not belong to the Pact. (ALPA II, Exs. 1-4). North- west pioneered in this effort to maximize Pact benefits while continuing to operate. While it did not take ad- 18 vantage of every opportunity in this regard, it showed how it could be done, thereby providing the model likely to be followed in the future. This pattern of shutdown operations is not consistent with public service require- ments. 3. The Board Responded to the of Prolonget Industrial ial Strife in a Manner Totally Adverse to the Pablic Interest. a. Redefinition of the Public Interest; “Reasonable” Settlements The 1959 Board decision defined the “public interest” in terms of whether the Pact: “,.. threatens, by aggravation of labor disputes, to hinder achievement of the objective set forth in Sec- tion 102 of the Federal Aviation Act. The public interest which we must guard, though not broadly one of employee welfare, includes attainment of a degree of stability and efficiency in air transporta- tion that freedom from industrial strife will pro- vide.” (App. 10a) As previously discussed, the 1972 Board decision, recog- nizing the effect of the Pact on negotiations and its intent to increase carrier fortitude in strikes, defined the issue as whether the Pact so shifted bargaining balance “as to create a serious likelihood” of resistance to strike settle- ments “on a reasonable basis in circumstances where such a settlement was possible”, rather than as whether strikes would end more rapidly in the absence of the Pact (App. 233a-234a). In 1973, the Board was willing to accept in- creased industrial strife if there was no “serious likeli- hood” that carriers would resist strike settlement on a “rea- sonable basis“ — defined solely by the carrier in its own 19 self-interest while receiving Pact payments—“in circum- stances where such a settlement was possible“ —again as defined by the carrier in its own interest while receiving Pact payments. The Board’s redefinition of the issues in terms of “reason- able” labor settlements is an unacceptable claim cf au- thority to decide the terms of labor settlements. Moreover, regardless of Board attempts to define and redefine the standard for determining whether the Pact is “adverse to the public interest” or violates the statute, the prior de- tailed discussion of the record conclusively demonstrates that the Pact is contrary to the public interest in “freedom from industrial strife”, does create a serious likelihood that carriers will resist strike settlements and makes lengthy strikes inevitable. b. Myth of Promoting Financial Stability The Board also held that the risk of prolonged strife is outweighed by airline financial stability promoted by in- increased Pact payments. Nonetheless, the 1971 record finally disposed of the myth that increased Pact payments are intended, designed or required to maintain financial stability on struck carriers. Examiner Present found: “There is no denying that the higher level of bene- fits bolsters a struck carrier, but the Trunkline Car- rier Parties have made no showing that an increase in mutual aid benefits was required to maintain the stability of any of the carriers involved in these strikes. Certainly, the record does not indicate that the 1966 experience established a need for a higher level of payments. As shown in Appendix F, the carriers struck by IAM realized rates of return on investment in 1966 ranging from 7.30 percent by 3 20 Eastern to 21.88 percent by Northwest. National, which did not belong to the mutual aid agreement at the time, enjoyed a rate of return on investment of 15.87 percent. Indeed, it was not until a meeting among pact members held on August 7, 1969, that the proposal was made to raise the ‘standard amount’. The record is silent as to the events which prompted this meeting, but the meeting was held during the course of the IBT strike on Western (not then a pact member) and just two days prior to the IBT strike against Pan American.” (App. 286a- 287a) e inneren ede Se BI > See > hme | bea The record fully supports these findings, which were not modified by the CAB decision. There was also no effort ly the carriers to introduce evidence that increased payments would be likely to be required for financial stability in the future. What the record does show is that these enormous increases were made without any fiscal study (Tr. II 50, 61). Indeed, there was not even any financial analysis of payments which would cover a carrier’s actual continuing expenses during a strike with or without a partial opera- tion. Even the expenses to be covered were undefined, except as “the salaries are that you have to pay to your existing employees, the ones you keep on, the rents you have to pay, the interest you have to pay to the banks on your loans, that sort of thing.” (Tr. II 56). The results, as set forth above, show that the new payments do not even approximate an attempi w merely cover so called out-of- pocket expenses, per contra regularly produce profits for the strike period. — Been ce srk nes 208 thE Mian iene ere ee ea a ee ee — 21 c. Myth of Pressure to Settle Strikes Rather than confront specific record evidence of profit- making strikes, the Board found that in general carriers are under pressure to settle strikes. But if a carrier is better off by permitting a strike to continue, thus reaping operating profits instead of normal losses, there is no meaningful pressure to settle the strike (See App. 262a). In other respects, too, the Board’s effort to discount the danger of profit-making strikes is most unconvincing. Thus, operating profits under the amended Pact would go still higher if the carriers did not take strike losses for “depreciation” of equipment that is not being used and is not substantially depreciating because its useful life is extended by the length of service. The Board’s emphasis on “post-strike” losses as discounting strike profits is equally baseless. The Board has never studied the nature or incidence of post-strike losses, and the facts are that many post-strike losses, such as starting-up costs, occur whatever length the strike may take. (See App. 263a). Finally, it is significant that the Board and Court failed to conside. the dangers of profitable exploitation of the Pact through partial strike bound operations, i. e., the 1970 Northwest experience. Js the certificate-granting Federal authority, the CAB was ind is responsible for preventing the Northwest pattern of evading public obligations for immediate profit. The Board’s failure to deal with this issue further indicates that approval of the Pact should be reversed. 4. The Pact Requires Contributions from Members Without Regard to Ability to Pay. Uncontroverted data demonstrates that the increased supplemental payments required by the 1969 amendments . A PE se ewe ree have been largely received by carriers which did not need support and have been paid by carriers which couid not afford to give away large amounts of their working capital. Judge Present properly found: “A review of mutual aid data over the life of the agreement again shows that the greatest recipients have been among the relatively more profitable mem- bers. Thus, the recipient of the largest amount of mutual aid has by far been Northwest, which has had net receipts cf $49,871,000. Yet, in eight of the ten vears from 1961 through 1970, Northwest had the highest rate of return on investment of any of the present trunkline pact members. National was the next highest recipient of pact aid, a net of $26,185,000. But, over the period 1961 through 1970, it had the highest rate of return on investment in one year, the second highest in four years, and in only two years was not among the top haif of the present group of trunkline members of the Pact.” (App. 299a; footnotes omitted.) Judge Present also found, in the absence of any carrier studies or provision in the Pact taking into account the relative financial conditions of paying and receiving car- riers, that the principal contributors have been the weaker airlines and that the contention “that the carriers were able to make the payments called for by the agreement without impairment of their financial condition is hollow.” (App. 299a). The 1972 Initial Decision said in part: % the highest contributor under the agree- ment has been United, with net payments in the amount of $28,223,000. United has been in the top half of the ten present trunkline members of the pact only once in terms of rate of return on invest- 1 23 ment during the ten-year period reviewed. That was in 1969 when the carrier reached fifth place. The carrier’s rate of return on investment over this pe- riod did not exceed 9.82 percent and was as low as 0.59 percent. Other evidence of the adverse effect on United of mutual aid is refiected in the carrier’s working capital. As of December 31. 1968, United’s working capital amounted to 845.994.000. At De- cember 31, 1970, the carrier s working capital to- talled $17,520,000. The carrier estimated that if there were no mutual zid «greeiment its working capital would have been {7.225.900 at December 31, 1970. The n xt highest pever of mutual aid has been Pan Amorie in, in the net 2mount of $21,846,000. Pas Amer u has been in the top half of the pact mer. e:, om terms of rate of return on investment, te: ~. in the ten-yerr period, but since 1963, it has ‘ed the topf only once, fifth place in 1967. de carrier had a negative rate of return on inves. ,ent in 1969 and a return of only 0.51 percent in 1970.” (App. 299a-300a) Moreover, Pan American has not suffered a strike since a brief five-day work stoppage in August 1969—contradict- ing carrier allegations that the weakest carriers experience the most strikes. (See App. 262a.) Yet, according to public record Form 41 documents filed with the CAB, Pan Amer- ican from 1969 through the third quarter of calendar 1974 has distributed Pact payments in the net amount of $22,815,745, including $2,765,029 paid out in the third quarter of 1974 alone. In fact, Pan American’s total cash distribution under Mutual Aid for the first three quarters of 1974 alone has been $5,924,654 or approximately four- teen cents per share of common stock outstanding. In re- turn, Pan American has received no Pact benefits since 1969. j 2 5 4 4 - 3 72 2 The Board sought to sustain the discriminatory impact of the Pact by denominating the Pact as a “form of strike insurance, stating that the choice of paying the costs of this “insurance” is for the carrier to make. On the con- trary, the Pact is not a form of insurance. Neither the inception of a strike nor its duration are altogether beyond the control of management. Moreover, the Board, not the carriers, must decide whether the costs of Mutual Aid are not adverse to the public interest. In the present case, the high level of Pact liability coupled with discriminatory impact on carriers with weak finances and peaceful labor relations, required disapproval of the Pact. POINT Iii The Mutual Aid Pact widens the scope of industrial conflict beyond the parties to a dispute and violates limitations on multiemployer action and carrier self- help under the Railway Labor Act. It is undisputed that the Board was required to disap- prove the Mutual Aid Pact if the Pact violates or is incon- sistent with the Railway Labor Act, 45 U.S.C. Sec. 151 et seq. See Section 401 (d) (4), Federal Aviation Act, 49 U.S.C. § 1371. The Board and Court held that it is con- sistent with the Railway Labor Act for an entire industry to amass its economic strength to fortify the bargaining position of a single struck carrier. These decisions are contrary to established RLA limitations. — ̃ LOE ILD ,. 7 SDA ALD COALS: 25 The Pact ä and is Inconsistent with Limitations on Multi- employer Economic Activity Against Employees The Mutual Aid Pact focuses the economic power of an entire industry against striking employees on a single carrier where all bargaining is conducted on a single- carrier basis, widening the scope of industrial conflict and implicating employers who are not party to the underlying labor dispute. However, national labor policy generally limits the scope of industrial dispute to the employer im- mediately affected to prevent local or particular disputes from widening into national industry-wide industrial con- frontation. It is particularly established that multiemployer economic activity against employees is consistent with na- tional labor policy only where it is a) confined to a multi- employer bargaining unit, and b) protects the multi- employer bargaining group in the face of union action directed at its common front or integrity. NLRB v. Truck Drivers Local 449, 353 U.S. 87 (1957) (“Buffalo Linen“); NLRB v. Brown, 380 U.S. 278 (1965) ; New York Mailers’ Local 6 v. NLRB, 327 F.2d 292 (2d Cir. 1964); NLRB v. Great Atlantic & Pacific Tea Co., 340 F.2d 690 (2d Cir. 1965). In no instance may multiemployer actions focus on single-employer bargaining relationships where the em- ployees have refused to consent to multiemployer bargain- ing. In NLRB v. Brown, supra, the Court held that a tem- porary iockout by employer members of a muitiemployer bargaining unit in response to 4 whipsaw strike, when fol- lowed by hiring temporary replacements for the strike- lockout period, was not an unfair labor practice, inasmuch as the lockout-replacement combination “was all part and 1 . AOD PRA Re ARENAS 7 eee Nee e „ Fe ena A parcel of the respondents’ defensive measure to preserve the multi-employer group in the face of the whipsaw strike.” 380 U.S. at 284. In NLRB v. Great Atlantic & Pacific Tea Co., supra, the Second Circuit also recognized the limitation on multi- employer action advanced here. There the respondent stores locked out employee members of the Meat Cutters Union in response to a Meat Cutters strike against another store chain. The Court found: Slinee the Meat Cutters had not, either by word or deed, committed themselves to industry-wide bar- gaining, the food chains’ conduct lost the protective quality which justified the Buffalo Linen lockout . . . 340 F.2d at 692-693. Like the multiemployer lockout in A & P, supra, the Mutual Aid Pact is an offensive weapon of the carriers for amassing multiemployer strength against employees of a single carrier where no multiemployer bargaining has been established. It is thus inconsistent with the elementary national labor policy confining economic warfare to the parties to the economic dispute. As a tactic for turning a single-carrier brushfire war into an industry-wide con- flagration, the Pact should be disapproved under the Rail- way Labor Act. See also Kennedy v. Long Island R. R., 211 F.Supp. 478, 488 (S.D.N.Y. 1962), aff'd, 319 F.2d 666 (2d Cir. 1963), cert. denied, 375 U.S. 830, where the Court upheld inter-carrier financial assistance in a context where ml ulticarrier bargaining of labor demands, re- ferred to as regional and national handling, has been and is (since the Act) the customary method of collective bar- gaining.” 211 F.Supp. at 488. And see United Trans- 92. „ aE CSP S$ AEP ARIE LA SLOP BILE SPE he GR. OE. 27 portation Union v. Burlington Northern, Inc., 325 F.Supp. 1125 (D.D.C. 1971) ; Cordova v. Bache & Co., 321 F.Supp. 600, 607 (S. D. N. V. 1970). The Pact Does not Constitute Carrier “Self-Help” in Accordance with Railway Labor Act. Under the Railway Labor Act the right of carrier “self- help” is a strictly limited right, to be interpreted in light of the carrier’s responsibility to make “reasonable efforts to maintain the public service” during a strike. In Brother- hood of Railway Clerks v. Florida E. C. Ry., 384 U.S. 238, 245 (1966), the Court held that a carrier faced with a strike could take responsive economic action in the form of continuing operations with replacements, but could only make changes in the collective bargaining agreement of the striking employees if they were “reasonably necessary” to continue the operation. 384 U.S. at 248. It is apparent from tne Court’s opinion that an employee strike under the Railway Labor Act is not an occasion for unlimited eco- nomic warfare, but that any carrier self-help which has the effect of prolonging interruption of regular service is inconsistent with the Railway Labor Act. 384 U.S. at 248, n. 8. This holding is consistent with the comparable con- cept under the Taft-Hartley Act, where the Court has indicated it is not an unfair labor practice for an employer “to replace . . striking employees with others in an effort to carry on the business.” NLRB v. Mackay Radio & Tele- graph Co., 304 U.S. 333, 345 (1938). Yet, one of the prin- cipal effects of the Mutual Aid Pact is to provide economic motivation to Pact carriers in order to enable them to con- tinue a strike until management has achieved objectives which could not otherwise be attained. 28 The Board and Court held that NLRB v. Insurance Agents’ Int'l Union, 361 U.S. 477 (1960), precludes judi- cial limits on economic warfare under the Railway Labor Act. However, self-help rights under the RLA are much more limited than under Taft-Hartley, because of public service requirements. See Brotherhood of R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 383 (1969). Moreover, under the Railway Labor Act ii is the role of the Federal Courts to give specific content to the broad provi- sions and concepts of the Act, “ ‘in the way in which the common law has developed.. Chicago & N. W. Ry. v. United Transportation Union, 402 U.S. 570, 577 (1971). Finally, the Board's interpretation of Insurance Agents is much too broad, for that case only held that the Board may not find that a union slowdown tactics while negotia- tions are in progress are per se a refusal to bargain in good faith, 361 U.S. at 489. Administrative and judicial regulation of economic tac- ties in fact has not ceased with the Insurance Agents case. See, ¢.g., NLRB v. Fleetwood Trailer Co., 389 U.S. 375 (1967); NLRB v. Erie Resistor Corp., 373 U.S. 221 (1963); NLRB v. Inland Trucking Co., 440 F.2d 562 (7th Cir. 1971). See also American Ship Building Co. v. NLRB, 380 U.S. 318 (1965) (White, J., concurring in the result). Rather, as these cases show, employer economic taeties are carefully limited. The Mutual Aid Pact should also be disapproved as a multicarrier combination against single-carrier bargaining units that broadens industrial disputes and enables struck carriers to avoid any public service operations. — ——U—Ü— — — GAA EE IL! ——— —äʒ4m BLE AD — POINT III As a multicarrier combination to control and de- press labor costs, the Mutual Aid Pact violates the antitrust laws and is not exempted from antitrust regulation by CAB approval. The Mutual Aid Pact is a multicarrier effort to control and depress wages and working conditions on an over-all basis throughout the scheduled airline industry, despite historie single carrier bargaining relationships and agree- ments in all instances. Indeed, the 1973 Board decision expressly relied upon a finding that the Pact gave the mem- ber carriers “a greater measure of influence over labor costs than they would have without the agreement.” (App. 25la). This multicarrier course of conduct violates Section 1 of the Sherman Act, 15 U.S.C. §1. As stated by the Court in Cordova v. Bache & Co., 321 F.Supp. 600, 607 (S. D. N. V. 1970) (emphasis added): Aln essential prerequisite to the legality of such multi-employer combinations with respect to in- dustry-wide wages or working conditions in the existence or prospect of a joint collective bargaining agreement with the union, which all parties concede to be immune from the antitrust laws. * Absent such conditions, however, a combination of employ- ers to reduce their employees’ compensation does not share labor’s exemption [under Section 6 of the Clayton Act, 15 U.S.C. § 17].” The Mutual Aid Pact is not within the category of car- rier activity which the CAB has authority to exempt from the antitrust laws under Section 414 of the Federal Aviation Act, 49 U.S.C. 1384. As a joint carrier effort with respect to labor relations it is quite distinct from route awards, rate making, mergers and simile, matters which are funda- mental to the Board’s statutory authority for regulation of air transportation. See Pan American World Airways, Inc. v. United States, 371 U.S. 296 (1963); Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363 (1973). The Court’s holding that no consideration should be given to antitrust issues on this proceeding is clear error. The 1969 Initial Decision, part of the proceedings under review in the Court of Appeals, stated as an issue for con- sideration whether the Agreement will “result in restraints on competition.” (App. 167a). The CAB has had full op- portunity to consider the antitrust issues implicit in the Pact, and it is the responsibility of the Board, not the air- line unions, to marshall evidence with respect to the public interest impact of an inter-carrier agreement. Further- more, the Pact violates the antitrust laws as a matter of law, leaving no necessity for further development of the record on this issue. In any event the Court should review the Board’s hold- ing, apparently approved by the Court of Appeals, that Board approval of the Mutual Aid Pact “would grant im- munity from the antitrust laws.” (App. 11). As shown, the Pact is well outside the scope of the Board’s exemption power, and it is clearly in the interests of justice to reach this issue at the first opportunity. See Hughes Tool Co. v. Trans World Airlines, Inc., supra. I —„—y—— Ea 31 CONCLUSION The issues presented in this case are among the most fundamental aviation, labor law and antitrust issues raised in recent years. They immediately affect an entire industry and will have wide repercussions through American indus- trial life. For these and the foregoing reasons, it is respect- fully urged that the Supreme Court issue a writ of certiorari to review the decision of the United States Court of Appeals for the District of Columbia. Respectfully submitted, SAMUEL J. COHEN Attorney for Petitioner 605 Third Avenue New York, New York 10016 Tel. No.: 212-682-6077 Of Counsel: COHEN, WEISS AND SIMON HENRY WEISS RoBERT S. SAVELSON STEPHEN B. MOLDOF MICHAEL E. ABRAM December 6, 1974 EPP --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_0370%3A3. Public record. Not legal advice.