Petition for a Writ of Certiorari — Air Lines Dispatchers' v. Civil Aeronautics Bd. (No. 74-1174)

IN THE

Supreme Court of the Ani

OctToBeR TERM, 1974

No. 74-1174

Alk LINE DiIspaATCHERS’ ASSOCIATION, ET AU.,

Petitioners,

v.

CI vu. AERONAUTICS Boab, ET AL., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

WiLLiAM G. MAHONEY

Suite 506

1015 Eighteenth Street, N.W.

Washington, D. C. 20036

Attorney for Petitioners

Air Line Dispatchers’

Association, et al.

March 1975

Press or Byron S. ApaMs Patntinc, Inc., WasHINctoN, D. C.

—

TABLE OF CONTENTS

Page

— UU—I—U— ·˙·wwðĩ 2

S ˙ q — h’!Fff˖ b 3

QUESTIONS Enno 3

Statutory PROvISTONS INVOLIVyuhuhᷣ )) 3

STATEMENT OF THB CaãWa . 4

Reasons FoR GRANTING THE WRIT:

I. By Authorizing the Respondent Carriers To

Employ AIR Conference as Their Exclusive

Collective Bargaining Representative, Respond-

ent CAB Has, in Effect, Sanctioned a Material

Alteration of the Scheme for Collective Bar-

gaining Designed and Established by Congress

for the Air Transport Industry .............. 8

II. By Approving the Creation of AIR Conference,

Respondent CAB Has Empowered the Air Car-

riers To Utilize a System of Collective Bargain-

ing Which Effectively Forces Individual Unions

To ngage in Involuntary Multi-Carrier Bar-

ON ss ᷑ͤ . O . .. 10

III. By Approving Both the AIR Conference Agree-

ments and the Latest Mutual Aid Pact, Re-

spondent CAB Has Disrupted and Interfered

With the Statutory Obligation To Exert Every

Reasonable Effort To Make and Maintain Agree- 5

nnen es

o inne 15

ii Table of Contents Continued

INDEX TO CITATIONS

Page

CasEs:

Airlines Negotiating Conference Case, 8 C.A.B. 354

/ RS Sie 12

Brotherhood of Railroad Trainmen v. Atlantic Coast

Line R. R., 127 U.S. App. D.C. 298, 383 F.2d 225

(1967), cert. denied, 389 U.S. 1047 (1968) were 10

Chicago & N. W. Ry. v. United Transportation Union,

% 8

Srarurzs:

Federal Aviation Act (49 U.S.C. §§ 1302, et seq.) . . 3, 6, 7

a Labor Relations Act (29 U.S.C. §§ 158, * im

eq.)

Railway Labor Act (45 U.S.C. §§ 151, et seq.)....3, 4, 8, 9,

MISCELLANEOUS:

United States Code, Title 28, Section 1254(1) ........ 3

Pe shy ee

IN THE

Supreme Court of the United States

OoroBER TERM, 1974

No.

Arr Line DispaTCHERS’ ASSOCIATION, ET AL.,

Petitioners,

v.

Cry. AERONAUTICS BOARD, ET AL., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS‘

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioners,’ Air Line Dispatchers’ Association;

Brotherhood of Railway, Airline and Steamship

Clerks, Freight Handiers, Express and Station Em-

1 Respondents in this case are the Civil Aeronautics Board [here-

inafter referred to as ‘‘CAB”’ or ‘‘Board’’] and intervenors below,

the Airline Industrial Relations Conference [hereinafter, ‘‘ AIR-

CON”’ or AIR Conference’’], and its members Alaska Airlines,

Inc.; Aloha Airlines, Inc.; American Airlines, Inc.; Continental

Air Lines, Inc.; Eastern Air Lines, Inc.; The Flying Tiger Line,

Inc.; Frontier Airlines, Inc.; Hawaiian Airlines, Inc.; Hughes

Airwest; National Airlines, Inc.; North Central Airlines, Inc.;

Northwest Airlines, Inc.; Ozark Air Lines, Inc.; Pan American

World Airways, Inc.; Piedmont Airlines; Reeve Aleutian Airways,

Inc.; Texas International Airlines, Inc.; Trans World Airlines,

Ine.; United Air Lines, Inc.; Western Airlines, Inc.; and Wien

Consolidated Airlines, Inc.

2

ployes; Flight Engineers’ International Association ;

International Association of Machinists and Aerospace

Workers; and Transport Workers Union of America,

respectfully request that a writ of certiorari issue to

review the judgment of the United States Court of

Appeals for the District of Columbia entered in this

proceeding on December 17, 1974.

OPINIONS BELOW

The opinions issued by the lower tribunals in this

case are not reported but appear in the Appendix vol-

ume to this petition. The unreported per curiam

judgment of the United States Court of Apr ls issued

in this case on December 17, 1974, appears at pages la-

2a of the Appendix volume as Appendix A. That judg-

ment affirmed Civil Aeronautics Board Order 73-6-96,

decided June 22, 1973, which appears in the Appendix

volume at pages 3a-8a, as Appendix B. Order No.

73-6-96 adopted and affirmed in large part the Initial

Decision of the Administrative Law Judge issued in

this case on December 1, 1972. That Initial Decision

appears in the Appendix volume as Appendix C at

pages 9a-87a. It approved with modifications the

agreements establishing the ‘‘ Airline Industrial Rela-

tions Conference.“ Appendix D, pages 89a-109a, is a

copy of CAB Order 71-4-167, which deferred action on

the agreements at issue and established a procedural

schedule for their consideration. Order 71-11-23,

issued November 3, 1971, Appendix E, pages 111a-13a,

set this matter for a hearing, and Order 73-9-15, issued

September 6, 1973, Appendix F, pages 115a-17a, con-

cluded this matter before the Civil Aeronautics Board

by approving the agreements as amended.

*

}

j

3

:

j

i

i

3

3

JURISDICTION

The judgment of the Court of Appeals was entered

on December 17, 1974, and this petition for a writ of

certiorari was filed within ninety days of that date.

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1254(1).

QUESTIONS PRESENTED

1. Whether the CAB is empowered to authorize ©

the airlines to engage in conduct which will alter

materially the scheme for collective bargaining as de-

signed and established by Congress for the air trans-

port industry in the Railway Labor Act?

2. Whether the CAB has the authority to approve

agreements among air carriers which effectively com-

pel unions to engage in involuntary multi-employer

bargaining ?

3. Whether the combination of the Mutual Aid

Pact and the AIR Conference agreements present an

unlawful threat to the duty to exert every reasonable

effort to make and maintain agreements... ,’’ as re-

quired by the Railway Labor Act?

STATUTORY PROVISIONS INVOLVED

Sections 1 Sixth, 2, 2 First to Fourth, and 201 of the

Railway Labor Act (45 U.S.C. §§ 151 Sixth, 151a, 152

First-Fourth, and 181) and Sections 102, 204(a), 401

(k) (4) and 412 (b) of the Federal Aviation Act (49

U.S.C. §§ 1302, 1824(a), 1871(k)(4) and 1382(b)),

are material to disposition of this petition and are re-

printed as Appendix G, pages 119a-22a of the Appen-

dix volume.

4

STATEMENT OF THE CASE

Concerned by what they considered to be an inher-

ent imbalance in the Congressionally enacted scheme

for collective bargaining, twelve airlines* banded to-

gether to form AIR Conference on March 17, 1971. The

„imbalance'“ was caused, so the air carriers claimed,

principally by the fact that the Railway Labor Act

requires collective bargaining in the air transport in-

dustry to be conducted between crafts or classes of

employees and their individual employers instead of

between all employees and all empleyers on an indus-

try-wide bargaining basis, and partly by the fact that

the unions chosen by the employees are generally

unions which are national in scope. (See, e. g., J.A.E.,

106, 133-34, 168-70.)*

AIRCON is the latest in a series of efforts by the

air transport industry to eliminate the disadvantage

at which it believes Congress placed it by the enact-

ment of the Railway Labor Act and, to place itself in

a securely dominant position in its collective bargain-

ing relationship with the representatives of its em-

2 The air carriers filing the initial agreement were Alaska Air-

lines, Inc., American Airlines, Inc., Continental Air Lines, Inc.,

Eastern Air Lines, Inc., National Airlines, Inc., North Central

Airlines, Inc., Northwest Airlines, Inc., Pan American World Air-

ways, Inc., Piedmont Aviation, Inc., Trans World Airlines, Inc.,

United Airlines, Inc., and Western Air Lines, Inc. Following the

filing of the original agreements with the Civil Aeronautics Board,

additional air carriers joined AIRCON: Air West, Inc., Aloha

Airlines, Inc., The Flying Tiger Line, Inc., Hawaiian Airlines,

Ine., Ozark Air Lines, Inc., Reeve Aleutian Airways, Inc., Texas

International Airlines, Inc., and Wien Consolidated Airlines, Inc.

The separately paginated document, Exhibits to the Joint Ap-

pendix, is a one-volume item which was filed with the Court of

Appeals and transmitted to this Court; it is referred to herein as

J. A. E.“

—

5

ployees.“ AIR Conference was designed to overcome

the ‘‘craft or class representation’’ impediment to

equal bargaining strengths by providing the carriers

with a united front’’ against the numerous unions

they must face in negotiating contracts. To achieve

this united front,“ AIRCON would function as a

clearing house for information as to the various posi-

tions taken by the unions throughout the industry and,

more importantly, AIRCON would, upon carrier au-

thorization, ‘‘act as the exclusive representative of

member carriers in collective bargaining, mediation,

arbitration and conciliation ....’’ Article 1V(a),

Articles of Association, Appendix D at page 102a

(Emphasis added).

According to the AIRCON witnesses, craft or class

representation, as sanctioned by the provisions of the

Railway Labor Act, has been the crux of the air car-

riers’ bargaining difficulties since it required them to

negotiate separately with several different unions, each

of which represented only a fraction of a particular car-

rier’s total work force. And since each union has the

ability to call for a strike, even though it might repre-

sent only a small portion of the carrier’s employees, the

dangers of disruption of service due to a strike were in-

creased. J. A. E. 134, 148, 173. Further aggravating the

carriers’ problems, so they asserted, was their inability

under our national labor policy to engage in multi-

carrier bargaining without union acquiescence. Ace-

*The first major effort by the air transport industry was its

creation of the Mutual Aid Pact in 1958. The Pact did not have

its desired effect and the benefit of the Pact were continually in-

creased until, in its most recently approved version, it provides

the struck carrier with a profit during the strike. The Board’s

approval of the latest Mutual Aid Pact is the subject of a peti-

tion for a writ of certiorari now pending before this Court as No.

74-709.

6

cording to the carriers, many of the unions confronting

them represented employees on numerous air carriers.

Such unions could engage in so-called ‘‘whipsawing’’

tactics which were described by AIR Conference wit-

nesses as the means by which an unreasonable gain

extracted from one carrier is utilized as a justification

for securing similar, or even more, unreasonable gains

from other carriers. The labor union parties challenged

the accuracy of AIRCON’s contentions. Neither the

Administrative Law Judge nor the Board confirmed

AIRCON’s contentions. Appendix C at pages 23a-24a.

By uniting behind one exclusive representative, the

carriers hoped to undo the harm that they thought

Congress had caused them. As Dr. Herbert Northrop,

AIR Conference’s expert witness explained:

Beyond this [dissemination of general informa-

tion and advice to airline negotiators], the extent

to which AIR Conference can improve the over-

all position of the industry in collective bargain-

ing will depend on the extent to which it succeeds

in persuading the carriers to adopt a united front

or a common strategy as to issues where they have

a common interest. J. A. E. 496.

By adopting that united front“ and by standing firm

behind that position, the carriers could prevent the

unions from obtaining ‘‘excessive gains“ from one

carrier and building upon those ‘‘excessive gains“ in

negotiations with other carriers. J. A. E. 37-38.

As originally drafted and submitted to the Board

for approval under Section 412 of the Federal Avia-

tion Act, 49 U.S.C. § 1382, the AIR Conference Arti-

cles would have AIRCON police that united front“

through irrevocable powers of attorney, enforced by

an almost unlimited damage provision. Articles II(b)

, CCC

7

and X, Artieles of Association, Appendix D at pages

99a-100a, 106a-107a. Those provisions, however, were

removed from the agreements as finally approved since

poth the Administrative Law Judge and the Board

found that, on its face, an irrevocable power of attor-

ney, especially when coupled with the damages provi-

sion, would result in a breach of the duty to bargain in

good faith. It was, they held, ‘designed to thwart the

desire of the individual employer most intent on reach-

ing agreement with his employees. Appendix C at

page 38a.

Once the irrevocable power of attorney and the pro-

visions for damages for unauthorized revocation of

that authority were removed, the Board found that the

plan to make AIRCON the exclusive bargaining repre-

sentative of the consenting carriers was consistent with

both the national labor policy and the public interest.

After the carriers submitted the required modifications,

the CAB approved the agreements on September 9,

1973. Appendix F.

Several of the union parties, including Petitioners

herein, petitioned the United States Court of Appeals

for the District of Columbia Cireuit, pursuant to Sec-

tion 1006 of the Federal Aviation Act, 49 U. S. C. § 1486,

for a review of the Board’s decision of June 22, 1973,

which had upheld those agreements and, on December

17, 1974, the Court of Appeals denied that review,

affirming the Board’s decision. Appendix A. This

petition followed.

5 The Administrative Law Judge also found that the structure

of AIRCON’s board of directors was adverse to the public inter-

est and, while the CAB upheld that finding, it modified the method

of correcting the adverse aspects of the composition of ATRCON’s

board.

REASONS FOR GRANTING THE WRIT

I.

By Authorizing the Respondent Carriers To Employ AIR

Conference as Their Exclusive Collective Bargaining Rep-

resentative, Respondent CAB Has, in Effect, Sanctioned a

Material Alteration of the Scheme for Collective Bar-

gaining Designed and Established by Congress for the

Air Transport Industry.

Unlike the National Labor Relations Act, which re-

quires that employers and employees simply bargain

in good faith, 29 U.S.C. § 158(d), the Railway Labor

Act commands both parties ‘‘to exert every reasonable

effort to make and maintain agreements... .’’ 45

U.S.C. § 152 First. As this Court has stated, the dic-

tate of that Section is more than a mere statement of

policy; it is, in fact, the heart of the Act. Chicago &

N.W. Ry. v. United Transportation Union, 402 U.S.

570, 574 (1971). Because of the need ‘‘[t]o avoid any

interruption to commerce or to the operation of any

carrier engaged therein[,]’’ 45 U.S.C. § 151a (1), the

Railway Labor Act extracts the higher obligation from

those it covers to exert every reasonable effort,“

rather than the National Labor Relations Act’s mere

duty to ‘‘confer in good faith.“ Moreover, in enact-

ing the Railway Labor Act, Congress decided that

the better way to achieve ‘‘agreements concerning

rates of pay, rules, and working conditions“ was

to utilize craft or class bargaining rather than the

„bargaining unit“ scheme of the National Labor Rela-

tions Act. Compare 45 U.S.C. § 152 Fourth, with, 29

U.S.C. § 159(b).

In the case at bar, the carriers have specifically and

emphatically expressed their dissatisfaction with the

collective bargaining framework in which the Railway

Labor Act requires them to operate (e.g., J.A.E. 133-

AP ER IOL LEME NEL ðVCçãͥ0ũ LEI T8

9

34, 148-49; Appendix D at pages 94a-95a). They have

designed AIRCON to mitigate the disadvantages which

they see as stemming from that congressional scheme.

Besides providing for a clearing house for collective

bargaining information, a concept with which Petition-

ers do not quarrel, the carriers have established a pro-

cedure whereby a third party would act as the common

exclusive bargaining representative for all. The only

conceivable purpose for such a common bargaining

representative is to provide all of the carriers who

utilize AIRCON’s services with a united front“

against the employees of all of the carriers. Indeed,

as the carriers freely admit, that is a primary purpose

of AIRCON. E. g., J. A. E. 496.

While it is clear that carriers have the right to choose

outside individuals or groups as their bargaining rep-

resentatives, 45 U.S.C. § 151 Sixth, those representa-

tives must have the interests of their particular carrier

at heart, and not the goals of some third party, such as

the uniform position of other carrier members of AIR-

CON. Moreover, deciding to take a uniform position

and to stand firmly by it (e. g., J.A.E. 37-38) is con-

trary to the express dictates of the Railway Labor Act

‘to exert every reasonable effort to make and main-

tain agreements,”’ and on its face, evidences a desire

to frustrate the entire purpose of negotiation —i. e.,

compromise.

This clear threat to the congressionally designed

scheme for air transport collective bargaining was

apparent to the Board, but it chose to gloss over it by

asserting that the CAB could not interfere with an

employer’s choice of a bargaining representative. Ap-

pendix C at pages 28a-34a, 75a. By thus determining

that one provision of the Railway Labor Act the free

eee eee

10

choice of a bargaining representative—controlled all

other provisions of that Act, the Board, and a fortiori

the reviewing Court, failed to give proper weight to

the dual statutory duties of both labor and manage-

ment ‘‘to exert every reasonable effort to make and

maintain agreements’’ and to bargain on a eraft-by-

craft and management-by-management basis. Because

of this error, the Board and the lower Court in effect

have authorized the carrier members of AIRCON to

engage in collective bargaining conduct in contraven-

tion of the statutory framework established by the

Railway Labor Act.

II.

By Approving the Creation of AIR Conference, Respondent

CAB Has Empowered the Air Carriers To Utilize a Sys-

tem of Collective Bargaining Which Effectively Forces

Individual Unions To Engage in Involuntary Multi-Carrier

Bargaining.

The Railway Labor Act permits carrier and em-

ployee representatives to engage in multi-carrier bar-

gaining, provided, the commitment by all to partici-

pate in such industry-wide bargaining is voluntary.

Neither side can compel the other to engage in that

form of collective bargaining. Brotherhood of Rail-

road Trainmen v. Atlantic Coast Line R. R., 127 U.S.

App. D.C. 298, 383 F.2d 225 (1967), cert. denied, 389

U.S. 1047 (1968). Involuntary multi-carrier bargain-

ing is prohibited because, while oftentimes efficient,

it contains the inherent danger that individual parties

may have to sacrifice their individual interests for a

common good or common goal.

During the hearings and in its brief to the Admin-

istrative Law Judge, AIRCON recognized that multi-

employer bargaining is a consensual matter under the

law“ (Appendix Cat page 31a; J.A.E. 95-97). AIR

SOLA AAS ARE e ene ORRIN eee NG EDIE OE RE CELE GHB TERT A

11

Conference contended that it did not at that time con-

template group carrier bargaining in the absence of

consent by all carriers to have AIRCON act as exclu-

sive bargaining agent and consent by the unions to

group bargaining which was unlikely. J ALE. 96-97.

However, the founding carriers provided AIRCON

with the machinery to achieve involuntary de facto

multi-employer bargaining by providing for issu-

ance of powers of attorney to AIR Conference mak-

ing it the exclusive representative of all AIRCON

members. Both the carriers’ and AIR Conference’s

witnesses stated that a basic, primary purpose of AIR

Conference was to provide a ‘‘ynited front“ against

the unions. E. g., J A.B. 496; accord, Agreement to

Establish AIRCON, Appendix D at page 95a. By as-

suming a uniform position through a common represen-

tative, the member carriers will effect de facto multi-

carrier bargaining contrary to the wishes of the unions.

AIRCON will merely take the same position with each

union on behalf of each carrier if AIRCON develops

as its sponsors desire and the provisions of its Articles

permit. (J. A. E. 22-24, 97, 496.)

The desire for a united front“, of necessity, would

carry with it the concessions by carrier members of

their individual interests to the common good.“

Such sacrifice is inherent in multi-employer bargain-

ing since the common front must be maintained lest

one carrier break ranks and settle for more than

AIRCON deems wise, thereby subjecting the faithful

carriers to whipsawing.“ J A. E. 92-95. From the

evidence adduced at the hearing, it is clear that with

or without irrevocable powers of attorney, the airlines

vigorously will attempt to remain united once they

utilize the powers of attorney provided for in their

AIRCON agreements. J.A.E. 19, 92-95, 156.

12

Moreover, by assuming a united stance the carriers

can effectively compel the unions, for the survival of

their own interests, also to assume a united stance.

As Mr. R. Conrad Cooper, President of AIRCON,

explained from his experience in the steel industry, a

united stance by the employers can force the employees

to follow suit. J.A.E. 83.

Fully aware of the pitfalls lurking in AIRCON’s

exclusive representation features, the Board chose to

ignore those dangers by relying upon a past CAB case,

Airlines Negotiating Conference Case [hereinafter,

ANC“, 8 C.A.B. 354 (1947), and upon decisions

under the National Labor Relations Act, which the

Board concluded gave employers under the Railway

Labor Act the absolute right to determine the compo-

sition of their own bargaining committee. Appendix

C at pages 28a-30a, 43a-46a. The Board failed or

refused to recognize that AIRCON’s avowed pur-

pose of presenting a united front’’ to all unions

distinguished this case from the ANC case. The

Board also failed to adhere to this Court’s admo-

nition that parallels between the Railway Labor Act

and the National Labor Relations Act must be drawn

with the ‘‘utmost care“ and with a full awareness of

differences“ in their statutory schemes.“ Indeed, the

Board erroneously sanctioned a course of conduct

which will materially alter collective bargaining in the

air transport industry and effectively will eliminate

one of the differences in the statutory schemes delib-

erately designed and established by Congress—the

‘eraft or class—individual employer“ versus the

‘bargaining unit—multi-employer”’ concept of collec-

tive bargaining.

* Chicago & N. W. Ry. v. United Transportation Union, supra,

402 US. at 579 1.11.

13

III.

By Approving Both the AIR Conference Agreements and the

Laten Mutual Aid Pact, Respondent CAB Has Disrupted

and Interfered with the Statutory Obligation To Exert

Every Reasonable Effort To Make and Maintain Agree-

ments”.

A few months before the Board issued its decision

in this case, but after the Administrative Law Judge

had issued his Initial Decision herein, the Board on

February 27, 1973, by a 3-2 vote, approved certain

amendments to the Mutual Aid Agreement [herein-

after referred to as Mutual Aid Pact’’]. The Board

in doing so, overruled the Administrative Law Judge

who had heard the case and sanctioned an agreement

which provides a member earrier with a profit dur-

ing the course of a strike of its employees. See note 4,

supra. 7

Nine of the ten carriers who were members of the

Mutual Aid Pact in 1970 (CAB Order 70-11-110, at

n.2), were among the twelve carriers who formed

AIRCON (note 3, supra). AIRCON provides the

earriers with a united front against the unions, and

the Mutual Aid Pact provides them with a shield, not

only to withstand the threat of strike, but also to en-

dure a strike at a profit.

As the Administrative Law Judge stated in his Ini-

tial Decision in the case at bar:

[T]he relative economic power of the two sides

rests, on the one hand, on the ability of the em-

ployees to back up their demands with an effec-

tive strike and, on the other, of the air carrier to

refuse to yield and withstand a strike and enforce

also, as an alternative, a lockout of its employees.

Appendix C at page 60a.

14

Clearly, Congress intended both sides to have economic

sanctions available to help enforce their demands, but

under the scheme of the Railway Labor Act, the use of

economic weapons is limited by the Act’s purpose of

„avoidſ ing] any interruption to commerce or to the

operation of any carrier growing out of any dispute

between the carrier and the employees thereof.“ 45

U.S.C. § 152 First; see also, 45 U.S.C. § 153-60. It

was for this purpose that Congress exacted that higher

duty of carriers and employees to exert every rea-

sonable effort to make and maintain agreements.”’

45 U.S.C. § 152 First.

By allowing airlines to participate in both AIRCON

and the Mutual Aid Pact, the CAB has completely re-

vised labor relations in the air transport industry.

Once the carriers unite behind the exclusive represen-

tation of AIRCON, they can with impunity refuse to

compromise, for if a strike should be called for by the

unions, Mutual Aid would allow the struck carriers to

operate at a profit until the union and those they rep-

resent were no longer financially able to maintain a

strike and were compelled to capitulate to the carriers’

united front’’ demands. And, if the unions should

call for a strike of the entire industry, Congress un-

doubtedly would act, as it has so often in railroad in-

dustry strikes, to prevent continuation of such a strike.

The effects of AIRCON, therefore, when combined

with those of the Mutual Aid Pact, nullify that strin-

gent duty mandated by Congress to all parties subject

to the Railway Labor Act ‘‘to exert every reasonable

effort’’ to reach agreements. The AIRCON and Mu-

tual Aid Pact agreements, when considered in the light

of their collective effects, thus clearly contravene

E

.

5.

5

8

s

—

*

15

the National Labor Policy. By concluding otherwise,

the Board has chosen to ignore the effects of its deci-

sions.

CONCLUSION

For these reasons, a writ of certiorari should issue

to review the judgment of the United States Court of

Appeals for the District of Columbia circuit.

Respectfully submitted,

WILIA G. MAHONEY

1015 18th Street, N. W.

Washington, D. C. 20036

(202) 833-2020

Attorney for Petitioners Air Line

Dispatchers’ Association, et al.

March 1975

ie COURT, U. = MAR 12

APPENDIX TO PETITION FOR] NE pon;

WRIT OF CERTIORARI ) :

IN THE

Supreme Court of the United States

Ocroser TERM, 1974

No. 7421174

Am Live Dispatcuers’ Association, ET AL., Petitioners,

v.

Crvm AknoxAUrTics Boarp, ET AL., Respondents.

On Petition for a Writ of Certiorari

‘to the United States Court of Appeals

for the Disirict of Columbia Circuit

WuLIAu G. Manoney

Suite 506

1015 Eighteenth Street, N. W.

Washington, D. C.

Attorney for Petitioners Air Line

Dispatchers’ Association, et al.

March 1975

Press or Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C.

— —

Appendix H

INDEX TO APPENDIX

Judgment of the United States Court

of Appeals for the District of Columbia

Circuit of December 17, 1974 la

CAB Order 73-6-96 decided June 22,

T—!!. . 3a

Initial Decision of Administrative Law

Judge issued December 1, 1972 ...... 9a

CAB Order 71-4-167 issued April 26,

7c 89a

CAB Order 71-11-23 issued November

PPTP T 11a

CAB Order 73-9-15 issued September

VVV 115

Statutory Provisions Involved:

Railway Labor Act (45 U.S.C. $§ Sixth,

151a, 152 First-Fourth, and 1817 119a

Federal Aviation Act (49 U.S.C.

§§1302, 1324(a), 1371 (k) (4), and 1382

P! ͤ bees hee rab ess 121a

Amendments to Article of Association

% 123a

Appendix I Bylaws of AIRCON

Bylaws of AIRCON as proposed ..... 127a

Bylaws of AIRCON as amended ..... 138a

1.

2.

PR BIER CRATER, MOOR eee

*

PPP TNE EES PII EL Ge Ste? ERS NN Rha ey Se eR; emcee

IN THE

Supreme Court of the United States

Octoper TERM, 1974

No.

Am Live Dispatcuers’ ASssociaTION, ET AL., Petitioners,

v.

Crvm Ak RONAUTICS Boarp, et AL., Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the District of Columbia Circuit

APPENDIX TO PETITION FOR A

WRIT OF CERTIORARI

Se

la

Appendix A

Judgment of the United States Court of Appeals for the

District of Columbia Circuit of December 17, 1974

I Filed Dec. 17, 1974]

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1974

[No Opinion]

No. 73-1758

Am Live Dispatcuers’ AssociaTION, ET AL., Petitioners

er

Crvm Agaonavtics Boarp, Respondent

TRE AmlixES InpustriAL RELATIONS CoNFERENCE AND Its

Members Carriers, Intervenor

No. 73-1759

Am Line Pors Association, INTERNATIONAL, Petitioner

Cry Agronavutics Boarp, Respondent

V.

Tue AmIINES INDUSTRIAL RELATIONS CoxrEREN CR AND IIS

Member Carriers, Intervenor

Petitions for Review of an Order of the Civil Aeronau-

tics Board.

Before: Moonk,“ Senior Circuit Judge, and Wricut and

Ross, Circuit Judges.

* Of the Second Cireuit, sitting by designation pursuant to 28

U.S.C. § 294(d).

2a

0 JUDGMENT

These causes came or to be heard on petitions for review

of an order of the Civil Aeronautics Board and were ar-

gued ‘by counsel. While the issue presented occasion on

need for an opinion, they have been accorded full consid-

eration by the court. See Local Rule 13(c).

The factual findings of the Board are supported by sub-

stantial evidence in the record taken as a whole, and the

Board’ 8. conclusions are free from reversible legal error.

See Universal Camera Corp. v. NLRB, 340, U.S. 474 (1951).

We note that, in approving the AIR Conference agree-

ments (GAB 22367 and CAB 22368), subject to modifica-

tions and, conditions, the Board stated: On the other

hand, the Board has a continuing responsibility under

section 412 [49 U.S.C. § 1382 (1970)] to insure that a car-

rier association approved by it is not operating in a man-

ner violative of the Act or adverse to the public interest.“

We read this statement by the Board as a recognition of

its responsibility of continuing oversight of the activities

of the AIR Conference to make certain that it operates

within the law and in the public interest, and to act

promptly in the event it does not.

On consideration of the foregoing, it is OrperED and Ap-

JUDGED by this court that the order of the Civil Aeronau-

ties Board sought to be reviewed in these proceeding is

hereby affirmed.

Per Curiam

8 For the Court

Is] Hon E. Kure

Hugh E. Kline

Clerk

APPENDIX B

CAB Order 796-98 decided June 22, 1973

OTe i we iC ar se emo SAH Ry a

aor LH aR P

‘ 2

’

see

3a

Appendix B

CAB Order 73-6-96 decided June 22, 1973

Airline Industrial Relations Conference Investigation

Order 73-6-96

UNITED STATES OF AMERICA

CrviL AERONAUTICS BOARD

WASHINGTON, D. C.

Docket 23267

Agreements C.A.B. 22367 and 22368

Adopted by the Civil Aeronautics Board

at its office in Washington, D. C.

on the 22nd day of June, 1973

ORDER

On December 1, 1972, Administrative Law Judge Mil-

ton H. Shapiro issued his initial decision in the above

case. He found that the Airline Industrial Relations Con-

ference (“AIR Conference”) agreements are not adverse

to the public interest or in violation of the Federal Avia-

tion Act if modified to (1) exclude all provisions prohibit-

ing revocation of a power of attorney granted by a mem-

ber carrier to the Conference for collective bargaining

purposes, (2) exclude all provisions for damages for an

unauthorized withdrawal from the Conference or for other-

wise causing a breach or termination of such a power of

attorney, and (3) replace the tiered system of representa-

tion on the Board of Directors of the Conference by a sys-

tem granting each member carrier an equal voice on the

Board. Petitions for discretionary review and answers

4a

Airline Industrial Relations Conference Investigation

Order 78-6-96

thereto were filed.“ By Order 73-4-28 the Board granted

the petitions for review and ordered the issues on review

to be the same as those in the proceeding before the ALJ.

Briefs to the Board have been filed,” and oral argument

held before the Board on June 18, 1973,

Upon consideration of the record and the contentions of

the parties, the Board hereby adopts as its own the reason-

ing, findings and conclusions of the Administrative Law

Judge as expressed in the initial decision in this case“ ex-

cept to the extent inconsistent with this order.

In disapproving the provisions of the agreement relating

to the use of irrevocable powers of attorney we note that

multi-employer bargaining has not been a pattern of the

air transportation industry and consequently that the facts

developed in this case do not present the question of the

extent to which such powers of attorney might or might not

be appropriate in a case in which the carriers and unions

have entered into a multi-employer bargaining situation.

Since no such situation is present here, we do not under.

take to judge what the law or the public interest might re-

quire under such circumstances.

We agree with the Administrative Law Judge, for the

reasons stated in his initial decision, that the tiered system

' and

TWU), International Sled n (BT) and Allied

Association. Answers filed AIR

The Administrative Law Judge’s initial decision is attached here-

to as an appendix. ;

eae dal Sitti Mette APIA Re

RL ee

5a

Airline Industrial Relations Conference Investigation

"Order 78-6-96

of representation contemplated by the agreements would

be adverse to the public interest. However, the require-

ment that each member be individually represented on the

Board of Directors would result in a Board of unwieldy

size and would appear unnecessary in order to protect the

interests of the various members, their employees, and the

public. Similar questions of carrier representation have

previously arisen in connection with Board consideration

of the activities and practices of the Air Transport Asso-

ciation (“ATA”). Thus, in Order E-19260 (adopted Janu-

ary 31, 1963) we conditioned our approval of the ATA

agreements to require equal voting for all members, and to

require that each of the various classes of members be

represented on the ATA Board of Directors unless all the

members of any class elect not to be represented on the

Board of Directors for any particular year. We shall adopt

that approach here.

We have noted AIR Conference’s argument that the visi-

tation condition imposed by the Administrative Law Judge

would deprive it of the confidentiality necessary for col-

lective bargaining and would discourage carriers from

utilizing the Conference. On the other hand, the Board has

a continuing responsibility under section 412 to insure

that a carrier association approved by it is not operating

in a manner violative of the Act or adverse to the public

interest. In an effort to reconcile these two competing con-

siderations, we have determined to confirm the right of

visitation as a condition to our approval of the agreements;

however, as a matter of discretion, the Board will not exer-

cise this right as to matters of carrier bargaining strategy

directly affecting pending negotiations. AIR Conference

activities rélating to any particular pending negotiations

will, of course, be fully subject to the right of visitation

following the conclusion of such negotiations.

6a F

Airline Industrial Relations Conference Investigation

| Order 73-6-96

ACCORDINGLY, IT Is ORDERED THAT: |

1. Agreements CAB 22367 and 22368, hereinafter re-

ferred to as “agreements”, be and they hereby are ap-

proved, subject to the following modifications and condi-

tions:

a. Not later than 30 days after the effective date

of this order as the order of the Board, there shall be

filed with the Board amendments to the agreements

conforming with the following required modifications:

1. All provisions which prohibit revocation

in whole or in part of a power of attorney granted

by a member carrier to AIR Conference to con-

duct collective bargaining on its behalf, including

related provisions for suspension or withdrawal

of membership, assessment of damages, or other

sanctions against such revocation, shall be elimi-

nated; |

2. All provisions for assessment of damages

against a member carrier for “an unauthorized

withdrawal from the Conference” as defined in

the agreements, or for otherwise causing a breach

or termination of a power of attorney granted

by a member carrier to AIR Conference to con-

duct collective bargaining on its behalf shall be

eliminated ;

8. The provisions for a tiered system of

representation of member carriers on the Board

of Directors of AIR Conference whereby each

trunkline and Pan American Airways is repre-

sented on the Board by its chief executive, or his

designee, while all other member carriers com-

' 7a

Airline Industrial Relations Conference Investigation

Order 73-6-96

bined are permitted up to three representatives

on the Board, are to be replaced by provisions for

a system whereby (1) each member carrier of

: AIR Conference shall have an equal vote in se-

3 lecting the Board of Directors; and (2) each of

| the classes of AIR Conference members shall be

: represented on the AIR Conference Board of Di-

rectors, unless all the members of any class elect

not to be represented on the Board of Directors

for any particular year.

:

i

b. The approval of the agreements shall not be

Pe ee er ee

deemed a determination as to the reasonableness of

the financial provisions thereof for future ratemaking

; or other regulatory provisions under the Act.

e. The approval shall not affect the rights and

obligations of the parties, or of their employees, under

q the Railway Labor Act.

d. Copies of all powers of attorney granted pur-

: suant to the provisions of the Articles of Association

(Agreement CAB 22368) shall be filed with the

j Board’s Docket Section and the Director, Bureau of

{

4

Operating Rights, within five days after the grant

thereof, and, except for powers of attorney granted

by member carriers to AIR Conference to conduct col-

lective bargaining on their behalf, no such power of

attorney shall take effect until twenty days thereafter.

e. The air carrier members of AIR Conference

shall file with the Board within 15 days of adoption,

} a copy of detailed procedures adopted for handling the

arbitration of matters made subject to arbitration.

8a

Airline Industrial Relations Conference Investigation

Order 73-6-96

f. The air carrier members of AIR Conference

shall file with the Board within 30 days of prepara-

tion copies of written opinions and reports or actions

of the Board of Directors and Advisory Board, or de-

cisions of arbitrators which result in a refusal of

membership, the expulsion of a member, or other dis-

ciplinary action.

g. AIR Conference and its air carrier members

agree that the Board and its authorized agents shall

have access to and authority to inspect all accounts,

records, and memoranda, including all documents,

papers, and correspondence belonging to or in posses-

sion of AIR Conference; provided, however, that the

Board shall not have access to and authority to inspect

materials which are in fact legally privileged against

disclosure by reason of an attorney-client privilege

which AIR Conference (or, as to documents hereto-

fore created, a member of AIR Conference) is entitled

to assert.

h. Jurisdiction in this proceeding be and it hereby

is retained for the purpose of imposing such further

conditions as the Board may from time to time find to

be required in the public interest.

By the Civil Aeronautics Board:

EpwWIN Z. HOLLAND

Secretary

(SEAL)

9a

Appendix C

Air'ine Industrial Relations Conference Investigation

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

UNITED STATES OF AMERICA

CIVIL AERONAUTICS BOARD

WASHINGTON, b. c.

Docket 23267

Served: December 1, 1972

The AIR Conference agreements are found not adverse

to the public interest or in violation of the Federal Aviation

Act of 1958, as amended, if modified to (1) exclude all pro-

visions prohibiting revocation of a power of attorney

granted by a member carrier to the Conference for collective

bargaining purposes, (2) exclude all provisions for dam-

ages for an unauthorized withdrawal from the Conference

or for otherwise causing a breach or termination of such a

power of attorney, and (3) replace the tiered system of

representation on the Board of Directors of the Conference

by a system granting each member carrier an equal voice

on the Board.

Amendments of the agreements making the required

modifications shall be filed not later than 30 days after the

effective date of this decision.

Contingent on the filing of the said amendments, the AIR

Conference agreements are approved subject to conditions.

Appearances:

Charles A. Miller and Russell H. Carpenter for the Air-

line Industrial Relations Conference and its members.

William G. Mahoney for the Air Line Dispatchers Asso-

ciation, the Brotherhood of Railway and Airline Clerks, the

10a

Airline Industrial Relations Conference Investigation

The above requests for postponement of the start of the

hearing are hereby denied. The parties will recall that on

April 7, 1972, at the request of ALPA, joined in by other

union parties and by the AIR Conference, and without ob-

jection by any of the other parties, the hearing was post-

poned for three weeks. In granting this postponement of the

hearing to June 6, 1972, the examiner advised the parties

that because of the Board’s direction that the hearing be

expedited, they were then being put on notice that the June

6 hearing date would be treated as firm. The AIR Confer-

ence has repeatedly advised the examiner and the other

parties that it is prepared to go forward with its witnesses

on the scheduled hearing date. No party has indicated that

it would be unable to proceed with the hearing of the AIR

Conference case on June 6, 1972. Under the circumstances,

no postponement is warranted.

Recognizing that the failure of the union parties to com-

ply with the ground rules of the case may, in fact, necessi-

tate a break in the hearing, it would be premature, however,

to rule before the start of the hearing on the AIR Confer-

ence request for a recess after the presentation of its own

and the APA and AMFA direct cases. Whether such a re-

cess will actually be necessary, and if so, for how long, are

matters which will depend to a large extent on the progress

and development of the hearing and on future compliance

of the union parties with the ground rules and rulings of

the examiner.

Finally, the examiner hereby directs all parties to supply

by June 12, 1972, any information sought by other parties

in their Information Requests approved at the prehearing

conference which they have not already provided.

/s/ MILTON H. SHAPIRO

Milton H. Shapiro

Hearing Examiner

lla

Airline Industrial Relations Conference Investigation

International Association of Machinists and Aerospace

Workers, the Transport Workers Union of America and the

Flight Engineers’ International Association.

Henry Weiss, Robert S. Savelson and Stephen B. Moldof

for the Air Line Pilots Association, International.

Martin Seham, Daniel Freeman and Fred Klein for the

Allied Pilots Association and the Aircraft Mechanics Frat-

ernal Association.

Angelo V. Arcadipane and Herbert A. Levy for the Inter-

national Brotherhood of Teamsters, Chauffeurs, Ware-

housemen and Helpers of America.

Neil G. McBride for the Aviation Consumer Action Pro-

ject.

Joel H. Fisher and Marshall Sinick for Seaboard World

Airlines, Inc. under Rule 14 of the Board’s Rules of

Practice.

Alexander N. Argerakis for the Bureau of Operating

Rights.

12a

INITIAL DECISION OF MILTON H. SHAPIRO,

ADMINISTRATIVE LAW JUDGE

Statement of the Proceeding

This case stems from the efforts of a group of scheduled -

air lines to coordinate the labor relations and collective bar-

gaining of all scheduled U. S. air carriers, and the opposi-

tion to those efforts of various types of unions representing

air-line employees.

On April 6, 1971, twelve scheduled air lines’ filed an

agreement (CAB 22367) pursuant to section 412 of the

Federal Aviation Act of 1958, as amended, (Act) entitled

“Agreement to Establish the Airline Industrial Relations

Conference” (AIR Conference) and a second agreement

(CAB 22368) which constitutes the Articles of Association

of AIR Conference. These agreements are intended to re-

main in effect until December 31, 1975, and thereafter from

year to year subject to withdrawal provisions as specified

in the Articles of Association. By Order 71-4-167, April 26,

1971, the Board deferred action on the agreements and di-

rected that the air carrier parties to the agreements file

detailed comments justifying approval, and that other in-

terested persons have an opportunity to file answers thereto.

The Board by Order 71-11-23, November 3, 1971, set this

matter down for hearing following opposition to the agree-

1 Alaska Airlines, Inc., American Airlines, Inc., Continental Air-

lines, Inc., Eastern Air Lines, Inc., National Airlines, Inc., North

Central Airlines, Inc., Northwest Airlines, Inc., Pan American World

Airways, Inc., Piedmont Aviation, Inc., Trans World Airlines, Inc.,

United Air Lines, Inc. and Western Air Lines, Inc. ~

13a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

ments by a number of unions and requests by several of

them for a hearing. The Board’s order also made the unions

which had filed comments in opposition to the agreements,”

AIR Conference, and each of its members, and the Depart-

ments of Justice, Labor and Transportation parties to this

proceeding.

The Aviation Consumer Action Project (ACAP) sought

and was granted leave to intervene.

After notice, a hearing was held and briefs were filed by

AIR Conference, ALPA, APA and AMFA jointly,’ BOR,

the Five Union Parties (Five Unions) and IBT.* With the

2 Air Line Employees Association (ALEA); the Air Line Pilots

Association (ALPA); the Allied Pilots Association (APA); the

Aircraft Mechanics Fraternal Association (AMFA); the following

unions, which have joined herein as the Five Union Parties: Air Line

Dispatchers Association (ALDA), Brotherhood of Railway and Air-

line Clerks (BRAC), Flight Engineers International Association

(FEIA), International Association of Machinists and Aerospace

Workers (IAM), Transport Workers Union of America (TWU);

and the International Brotherhood of Teamsters (IBT).

3 Both are referred to hereinafter as APA.

4 The IBT brief asks the Administrative Law Judge to reconsider

his ruling in the notice to the parties dated June 5, 1972, in which

he denied the IBT motion to defer these proceedings pending the

final determination of the IBT complaint for enforcement filed with

the Board in Docket 24499 against AIR Conference for alleged

bargaining problems AIR Conference is not “a person engaged in any

phase of aeronautics” within the meaning of sections 408 and 409 of

no way modified by the Board’s orders in the Airline Tariff Publishers

(ATP) case, 41 C.A.B. 726 (1964), or the Consolidated Airline

Purchasing Corporation (CAPCO) case, 40 C.A.B. 986 (1964), as

contended by IBT. The a did not involve i

tions engaged in labor related activities, and made no reference

whatever to the ANC case. They dealt with corporations owned by a

14a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

exception of BOR and IBT, the same parties also filed reply

briefs.

THE ISSUES

The primary issues are whether the agreements under

consideration should be approved pursuant to section 412

of the Act as not adverse to the public interest or in viola-

tion of the Act, and if so, what conditions, if any, should be

imposed on approval. In addition, the Board in its order

instituting this investigation (Order 71-11-23, November

3, 1971) specified that the following issues, among others,

are relevant in determining whether the agreements are

consistent with the public interest and do not violate any

provision of the Act:

1. Do the agreements by themselves, or in conjunction

with the operation of the Mutual Aid Pact, violate any

applicable provisions of the Railway Labor Act?

2. Will the operation of the agreements improve or im-

pair labor-management relations in the industry?

3. Will the agreements discriminate in restraint of

trade against certificated carriers not party to the agree-

ments, or in any way violate anti-trust laws?

4. What effect, if any, will the agreements have upon

the bargaining balance between labor and management?

number of carriers which were engaged in commercial aspects of

the air-line business. ATP was concerned with the preparation and

publication of tariffs, while CAPCO was concerned with the purchase

of equipment and supplies.

In view of the foregoing, there is no reason to revise the previous

ruling that AIR erence is not a person engaged in a phase of

aeronautics and that no questions of control and interlocking relation-

ships are raised within meaning of sections 408 and 409 of the

Act.

5 As an issue relevant to this question, is the present tiered system

of representation on the Board of Directors (one director for each

trunk and Pan American, and up to three directors for all other

certificated carriers combined) in the public interest?

Saen. P . EE

15a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

5. What are the implications and effects of Phase II of

the Wage-Price Freeze as it pertains to these agreements?

At the instance of ACAP, the following was also included

as an issue: What will be the effect of the agreements on

the productivity and efficiency of labor?

THE NATURE OF THE AGREEMENTS

According to the preamble to the agreement to establish

AIR Conference it was formed because the parties and other

air lines have been subjected to and are threatened with

extreme and unreasonable demands by representatives of

certain of the classes and crafts of their employees; the

competing interests and rivalries between certain of the

employee collective bargaining representatives and between

different locals of single international unions have made

spiraling demands on the carriers in successive negotia-

tions; the multi-carrier representation of some of the unions

is used to formulate bargaining strategies resulting in

excessive costs to the carriers; it is in the carriers’ and the

public interest that the air carriers cooperate in handling

labor relations and collective bargaining matters; and be-

cause the labor-related costs of providing air transportation

should be kept commensurate with the reasonable cost to

the public of receiving such services.

Any certificated scheduled United States air carrier is

eligible to become a member of AIR Conference’, which is

an unincorporated voluntary association. Membership may

be terminated by a carrier at the end of any calendar year

after giving not less than 90 days’ notice. A member which

has given AIR Conference a power of attorney to represent

it in collective bargaining negotiations which have begun

may not revoke the power until those negotiations have

6 At the time the agreements were filed, 39 carriers were eligible.

16a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

ended, whether or not the member has given a withdrawal

notice. If a carrier has given a withdrawal notice, it will

not be effective until ninety days after the negotiations are

completed.

Subject to the provisions of the bylaws and powers of

attorney executed by member carriers, AIR Conference will

act as the exclusive representative of members in collective

bargaining, mediation, arbitration and conciliation with

labor organizations specified by each member.

AIR Conference is governed by a Board of Directors com-

posed of the chief executive officer of each of the trunk car-

riers and Pan American, or his designee, and the chief exe-

cutives of up to three other carriers from the regional, local,

territorial and all-cargo groups. In addition, provision has

been made for an Advisory Board consisting of the chief

industrial relations officer of each member carrier having

its chief executive officer or his designee on the Board of

Directors. The Advisory Board is to carry out the policies

and objectives of the Conference as established by the Board

of Directors. The president of the Conference, who is to be

selected by a two-thirds majority vote of the Board of

Directors, is Chairman of both the Board of Directors and

the Advisory Board. All actions of the Board of Directors

and the Advisory Board require a two-thirds affirmative

vote of the members, and, except in certain limited situa-

tions, the president has an unrestricted proxy to vote for

each member not present.

The Advisory Board, with the approval of the Board of

Directors, determines the operating budget. The general

expenses of the AIR Conference are borne by members on

the basis of the ratio of each carrier’s operating revenues

to the total operating revenues of all member carriers in

the year prior to the assessment.

| 17a

i nce ir RAN lala ths meta eben bed e LU Nl

hin Aah

pantie vy

Nene wane meee: Rts Oe Ab bh) YEN Roe Es ES wear a te

ret ee

2 .

rn

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

The specific objects and purposes of AIR Conference are

planning and recommending a program to all member car-

riers for promoting a more consistent position on issues in

labor negotiations involving such carriers; collecting and

distributing information regarding industrial relations

matters and providing a forum for the discussion of such

matters for all members, and at fees for eligible carriers

which do not become members; determining the position of

the member carriers on legislation involving labor relations

and implementing such determinations in cooperation with

the AIR Transport Association; furnishing general labor

law research; representing members before courts, adminis-

trative agencies, and boards as authorized by the Advisory

Board; with the approval of a two-thirds majority vote of

the Board of Directors, representing one or more member

carriers in labor relations matters upon authorization by

the carrier through a written power of attorney which will

be revocable at a meeting of the Board, except for powers

of attorney involving labor negotiations; and advising and

consulting with the member carriers in order to promote

uniformly good employee relations and minimize grievances.

Any member of the association becomes liable to other

members for damages if it withdraws from it except as pro-

vided by the Articles, or if it enters into any “unauthorized

agreement”, or breaches or terminates a power of attorney

in violation of the Articles. The Articles define “an unau-

thorized agreement” as any agreement or understanding

negotiated by a member carrier on its behalf or any modifi-

cation thereof, negotiated or voluntarily agreed to in any

manner except in accordance with the power of attorney

granted by the member to the AIR Conference.

Besides the agreement to form the AIR Conference and

the Articles of Association, the members of AIR Conference

have adopted bylaws for the conduct of its affairs. Pursu-

ant to the bylaws the officers of AIR Conference are elected

18a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

by the Board of Directors and consist of the President, an

_ Executive Vice-President, a Secretary-Treasurer and such

other officers as may be designated by the Board. All the

officers are to be full-time employees of AIR Conference.

Most ‘of the efforts of AIR Conference during its first

year of operation have been devoted to the Wage-Price

Stabilization Program. It has also advised member car-

riers on their collective bargaining problems and furnished

information services, but as of the conclusion of the hearing

had not been authorized to act or acted for any carrier as a

bargaining agent.

POSITIONS OF THE PARTIES

AIR Conference:

The Board is required by section 412 of the Act to ap-

prove the instant agreements unless they are adverse to the

public interest or in violation of the Railway Labor Act, as

incorporated in the Federal Aviation Act. The agreements

do not violate the Railway Labor Act but, as instruments of

employer self-organization for bargaining, are affirmatively

sanctioned by the national labor policy. That affirmative

sanction is the controlling consideration in the Board’s pub-

lic interest determination in the absence of compelling

transportation considerations to the contrary.

The issues as to the impact of these agreements on the

Railway Labor Act and as to whether they are adverse to

the public interest were resolved by the Board in the ANC

case, supra, which approved the agreements establishing the

ANC, an industry collective bargaining organization with

similar powers and, purposes to those of AIR Conference.

The decision in that ease requires approval of the agree-

ments under consideration here.

a a ee enn

19a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

AIR Conference is far from being new and revolutionary.

What the air lines are attempting to do through it is no

more than what other transportation companies in the rail-

road, shipping and trucking industries have been doing

through their associations for years.

The generous settlements the air-line unions have con-

sistently won, which have kept their members ahead of all

other American workers, graphically illustrate the need of

the air line for help in collective bargaining. They also

prove the heavy imbalance of bargaining power favoring

the unions in this industry.

The members of AIR Conference are unanimous that

their interests will be served by pursuing coordi nated rather

than independent courses of action. Such coordination is

clearly in the public interest, not only in reducing the like-

lihood of service disruptions and making air transporta-

tion more economical for the public, but aiso in helping to

arrest inflation in the national economy.

The Unions in General:

The agreements are structured to impose industry-wide

bargaining on the unions without their consent. This ap-

proach violates the Railway Labor Act and the Federal

Aviation Act and prevents compliance with the obligation

to bargain in good faith.

The agreements also violate the anti-trust laws. They

provide a means by which the few large carriers can control

the collective bargaining of all other carriers by requiring

the latter to surrender their freedom of action in negotia-

tions.

The structure of the Board of Directors of AIR Confer-

ence providing for one director for each trunk and Pan

American and up to three directors for all the other certifi-

20a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

cated carriers combined is clearly against the public inter-

est. This creates a situation in which the trunk carriers

may dictate the AIR Conference position on issues which

are of special concern to local service or regional carriers

and their employees.

There has been no evidence in the record to demonstrate

any bargaining imbalance. Despite AIR Conference claims,

union whipsawing and inter-union coordination have not

been proven.

If AIR Conference achieves its objective of a united front

of air carriers which permits no carrier to break ranks,

major confrontations will occur which will force the unions

to coordinate their efforts and will result in either selective

or nationwide strikes.

The agreements will adversely affect the productivity and

efficiency of labor because of the increased possibility of

strikes of greater duration and breadth.

Removing the irrevocable nature of the power of attorney

provisions from the agreements will not correct the basic

defects, nor will approval of the agreements without any

power of attorney to conduct negotiations. As an unneeded

and undesirable intrusion into air-line labor relations the

AIR Conference agreements should be disapproved.

Additional Individual Union Positions:

ALPA:

The carriers have established an organization which is

unique in American industry. It has attempted to intro-

duce radical changes in labor relations in the air-line in-

dustry which ignore the relative distinctions between in-

dividual carriers, as well as the needs and desires of their

employees. It has provided a way to divest individual

%

d

1

|

4

SSE ne ne ee

2¹a

Initial Decision of Milton H. Shapiro,

Administrative Lau Judge

carriers of control of collective bargaining in violation of

law and the public interest.

APA:

If the Board should approve AIR Conference and its

power to bargain for air carriers, it should prohibit AIR

Conference from being designated the bargaining agent

for negotiations with unions primarily identified with in-

dividual carriers. AIR Conference has not demonstrated

that the purported justifications for the association apply

to APA in its dealings with American Airlines or to AMFA

in its dealings with Ozark Airlines and Air West.

Neither the Board, nor any other agency, has been

granted authority to rectify the purported imbalance in

collective bargaining relationships. By admitting that the

purported imbalance in bargaining power of the airline

industry results from the structure of collective bargaining

in the industry, the carriers are really not complaining

about the actions of the unions but about the system of

collective bargaining ordained by Congress in the Railway

Labor Act. Only Congress may alter the structure of col-

lective bargaining under the Railway Labor Act.

AIR Conference should be disapproved, but if approved,

it should be with the specific proviso that it not be em-

powered to bargain through a power of attorney for any

carrier in any situation where the union involved objects.

Five Unions:

The agreements violate section 2, First, of the Railway

Labor Act in that they permit a member carrier to turn

over the negotiation of a collective bargaining agreement

to AIR Conference, thus precluding itself from either re-

voking that authorization or making its own agreement

without the risk of damages. This would constitute aban-

22a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

donment of its responsibility under that section to bargain

in good faith.

The agreements should be disapproved, but if approved,

only on condition that the association shall not hargain or

represent its members through powers of attorney for any

purpose, and shall not be permitted to coordinate bargain-

ing positions among air lines in order to maintain a united

front which would necessarily impair labor relations in

this industry.

IBT:

Labor and management in the air-line industry have de-

veloped attitudes and habits which regularly lead them to

peaceful settlement of collective bargaining issues. There-

fore, it seems irresponsible to propose that these successful

relationships should now be discarded in favor of a new

and untried scheme.

The Board cannot grant the authority sought by AIR

Conference without aligning the United States with the

collective bargaining objectives of management and against

air-line employees. This role has been consistently avoided

by the government.

Challenges to the Pay Board made by AIR Conference

with respect to eight Category III units on six air lines, if

successful, would partially nullify existing collective bar-

gaining agreements. These challenges were a clear diver-

gence from the national labor policy compelling carriers to

maintain agreements.

BOR:

Excluding the provisions for the grant of an irrevocable

power of attorney to engage in collective bargaining, there

are no functions of AIR Conference adverse to the public

interest. Nothing in the AIR Conference agreements is

23a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

intended to create labor turmoil, encourage strikes or cause

member carriers to ignore their statutory mandate and the

national labor policy by refusing to bargain collectively and

in good faith. Approval of AIR Conference will be con-

sistent with Board and legal precedent if the provisions

regarding the irrevocable power of attorney to engage in

collective bargaining and damages for termination of such

a power are eliminated.

AIR Conference may be useful to answer the pressing

need for effective measures to control air-line labor costs.

It may facilitate employer cooperation and coordination in

an industry characterized by class and craft bargaining

which requires individual carriers to negotiate with a num-

ber of unions.

Because AIR Conference members must deal with large

national unions which exercise a high degree of centralized

control over collective bargaining strategy, they have to

seek industry coordination in labor matters.

THE NEED For AIR CONFERENCE

Much of this record reflects the efforts of AIR Conference

to demonstrate an urgent need for the formation of the

association as a response to various economic, financial and

labor relations problems of the air lines which it alleges are

union generated. Predictably, much of the rest of the record

is filled with the unions’ rebuttal to these claims. While

relevant, the reasons for the organization of AIR Confer-

ence are not in themselves material to the disposition of the

issues, nor is the outeome of the controversy between AIR

Conference and the unions as to whether, and to what ex-

tent, it has proved a need for the association. Since the ulti-

mate issues are whether the AIR Conference agreements

will be adverse to the public interest or violate the Railway

24a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Labor Act or the Federal Aviation Act, the focal considera-

tions are the objectives, structure, probable operation, and

impact of Air Conference. Accordingly, no findings are

made herein as to whether AIR Conference has established

the validity of its allegations concerning the need for the

association. Still, to understand and evaluate these matters

according to the criteria of the Act, a brief review of the

AIR Conference statement of the need for the organization

is required.

According to AIR Conference, that need and its own role

must be viewed from the perspective of the history and

structure of collective bargaining in the air-line industry.

Thus, it contends that the unions have excelled in their

ability to secure improvements in wages and benefits for

their air-line members; and that they have been able to

achieve their gains through aggressive bargaining and by

willingness to use their strike power to obtain settlements

in excess of those considered fair and reasonable under

“official and neutral standards.” It also claims that, apart

from the impediments to the carriers’ ability to bargain

resulting from the provisions of the Railway Labor Act, and

the bargaining disadvantage of transportation employers,

the carriers have not made effective use of whatever bar-

gaining resources they do have.

AIR Conference characterizes labor relations in the air-

line industry since World War II as frequently turbulent

because of strikes over exceptionally large demands and the

intense rivalry among unions. It recalls that the first Presi-

dential Board convened in an air-line dispute resulted from

pay demands by ALPA for pilots flying four-engine air-

craft. Since that Board was formed in 1946, it points out

that a score more have been appointed in air-line disputes,

and that the strike has been a common negotiating tactic of

r

ener

F ee

25a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

air transport unions. The association credits a strike by

IAM against Capital Airlines in 1958, one of a number by

IAM that year, as causing the formation of the Mutual Aid

Pact.

AIR Conference alleges that since 1966, the year of the

strike against five trunk carriers by the IAM, there has

been an inflationary spiral in the air-line industry contem-

poraneous with “the less severe spiral” in the national

economy which led ultimately to the 197 1 economic stabiliza-

tion program and Phase II controls. In addition, it com-

plains that since 1966 air-line labor relations have been

marked by a substantial increase in jurisdictional disputes

and raiding by the unions, and by strikes by both the raid-

ing unions and the threatened incumbents.

The air lines are also dissatisfied with the structure of

bargaining in their industry, which they attribute to the

Railway Labor Act. They say that, by providing for union

representation by class or craft, the Act leads to dividing a

carrier’s staff into as many as a dozen parts for representa-

tion purposes, generally with a different union representing

each part. Therefore, instead of engaging in system-wide

or company-wide bargaining, the air lines are constantly

in negotiation with one union or another and are constantly

in danger of being struck.

This pattern of bargaining in the air-line industry is

contrasted by AIR Conference with the long-standing rail-

road industry practice of industry-wide multi-employer

bargaining on major national issues between an employer

association and a group of unions. It refers also to the prac-

tice of regional multi-employer bargaining in the maritime

and trucking industries.

26a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge 5

AIR Conference also justifies its formation as a defense

against the allegedly strong centralized control exercised

by industry-wide unions over their local units bargaining

with individual carriers. The central unions are said to

participate directly in negotiations with the individual car-

riers and either make or dominate critical bargaining de-

cisions. One example it cites of how a union coordinates

its bargaining strategy is the technique described in the

ALPA Negotiator’s Handhwok of seeking different con-

cessions on different air lines so that the various conces-

sions may later be incorporated into one agreement con-

taining all of the union’s original objectives. This is

supposed to be done by the negotiator’s insisting that all

carriers match any concession granted by any one carrier

in order to eliminate “inequity”. It also points to the lan-

guage of the Handbook which describes this as a tech-

nique of “playing off one air line against another” or

“whipsawing”’.

Besides these claims about intra-union coordination, AIR

Conference also believes the unions enjoy more effective

bargaining because of inter-union coordination involving

meetings of the officials of the various unions with repre-

sentation rights on a given carrier, the clearances made

possible by the Industrial Union Department of the AFL-

CIO, and observance of each other’s picket lines.

It was to counter all of these purported advantages of

the unions that the AIR Conference says it decided to im-

prove the carriers’ own self-organization for collective

bargaining purposes and determine how best to coordinate

the collective bargaining of the air lines. On the other hand,

as indicated, the unions challenge and attempt to refute

almost every one of the above claims of AIR Conference.

27a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Do THE AGREEMENTS VIOLATE THE FEDERAL AVIATION ACT

OR THE RAILWAY LABOR Act?

The Duty to Bargain in Good Faith

The question whether the agreements violate the Railway

Labor Act arises because Title II of that Act is incorporated

in the Federal Aviation Act by section 401(k) (4) thereof.’

Section 2, First, of the Railway Labor Act, which is the

erux of the major legal arguments of the unions, makes it

the duty of carriers “to exert every reasonable effort to

make and maintain agreements concerning rates of pay,

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

whether arising out of the application of such agreements

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

merce or to the operation of any carrier growing out of

any dispute between the carrier and the employees thereof.”

The unions insist that the agreements will prevent the

carriers fom exerting every reasonable effort to make and

maintain agreements and, accordingly, will prevent their

bargaining in good faith as required by the Railway Labor

Act.

The Supreme Court has held that it is the basic premise

of collective bargaining that the parties deal with each

other in a serious, good faith effort to reach agreement and

to enter into a contract ordering their industrial relation-

ship.* It has also held that the duty to bargain in good

Section 401 (k) (4) of the Act reads: It shall be a condition

upon the holding of a certificate by any air carrier that such carrier

shall comply with Title II of the Railway Labor Act, as amended.”

„National Labor Relations Board v. Insurance Agents’ Interna-

tional Union, 361 U.S. 477, 483 et seq. (1960). The Railway Labor

Act does not define “collective bargaining” or “bargaining in good

faith”. In the absence of Railway Labor Act authority, the meaning

of good faith bargaining as defined in the cases involving the Na-

tional Labor Relations Act may be considered relevant to the appli-

cation of section 2, First, of the Railway Labor Act.

28a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

faith is incorporated in section 2, First, of the Railway

Labor Act, and is the “heart” of the Act.“

The unions’ objections that the agreements violate the

good faith bargaining provisions of the Railway Labor Act

are addressed to AIR Conference’s plans to coordinate the

air-line members’ collective bargaining and to the means

by which AIR Conference may seek to attain its objectives,

including the possible introduction of multi-employer bar-

gaining in the air-line industry. Therefore, these union

charges of illegality are considered next.

Coordination of Collective Bargaining

AIR Conference maintains that the kind of coordination

in collective bargaining that it is attempting to realize

through its organization is not new in labor relations either

on the part of unions or employers, and that, moreover,

such coordination has been sustained in the courts, as,

for example, in the so-called coordinated bargaining cases.

The chief instance it cites is the arrangement approved in

General Electric Co. v. N. L. R. B., % The specific holding of

this leading case is that a union’s inclusion of members of

other unions on its bargaining committee does not justify

an employer’s refusal to bargain. It was the position of

the unions in that case that the company had suceessfully

followed the practice of divide and conquer by making a

separate firm offer almost simultaneously to each union and

then whipsawing one against the other. The unions’ re-

sponse was to have eight of the unions involved join a

committee on collective bargaining to coordinate bargaining

with General Electric and Westinghouse, its chief com-

Brotherhood of R. R. Trainmen v. Jacksonville Terminal Co.,

394 U.S. 369, 377 (1969); Chi and N. W. Ry. v. United Trans-

portation Union, 402 U.S. 570, 575 (1971).

10 412 F. 2d 512 (2d Cir. 1969).

29a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

petitor, to formulate national goals and otherwise to sup-

port one another. This is but one of a number of recent cases

in which the courts have held that union efforts to join to-

gether in bargaining with certain companies, particularly

conglomerate corporations, by conducting coordinated bar-

gaining are consistent with the provisions of the National

Labor Relations Act.“

In the General Electric case the NLRB stated that the

same right to determine the composition of its own bar-

gaining committee exists for an employer as well as

employees.“

AIR Conference finds further support for coordinated

bargaining in cases where it has been held that multi-

employer bargaining units should be favored as an instru-

ment of national policy.’* In these cases and text mate-

rial’* AIR Conference detects a steady trend toward broad-

ening of collective bargaining units and increased coordina-

tion among employers and unions particularly where the

union has attempted to whipsaw individual employers.

The unions’ rebuttal to the AIR Conference position on

coordinated bargaining stresses the provision made in the

agreements for an irrevocable power of attorney and for

damages for withdrawal from membership. In addition

ALPA claims that the weighted voting structure on the

Board of Directors is also peculiar to AIR Conference and

distinguishes it from other employer or union organiza-

tions. While these objections are pertinent as to other

11 E. g. Minnesota Mining and Manufacturing Co. v. N.L.R.B., 415

F. 2d 174 (8th Cir. 1969); Standard Oil Co. v. N.L.R.B., 322 F. 2d

40 (6th Cir. 1963).

12 General Electric Co., 173 N. LR B. 253, 256 (1968).

13 Detroit Newspaper Publishers Association v. N.L.R.B., 372 F.

2d 569, 572 (6th Cir. 1967); N.L.R.B. v. Miller Brewing Company,

408 F. 2d 12, 15 (9th Cir. 1969).

Yi ewes, to Collective Bargaining (The American Assembly

1967), pp. 13,.23-24.

30a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

contentions of the unions, and are, therefore, considered

at length later, they do not establish the illegality of the

move to coordinate collective bargaining.

In the light of the General Electric and related cases,

supra, which interpose no bar to coordinated bargaining

of employers or unions, and in the absence of any contrary

authority or evidence, it is found that the collective bar-

gaining coordination objectives and purposes of AIR Con-

ference are not in violation of the Railway Labor Act nor,

accordingly, of the Federal Aviation Act.

Multi-Employer Bargaining

No aspect of the AIR Conference agreements is more dis-

tressing to the unions than the possibility that the collec-

tive bargaining coordination aims of AIR Conference are

nothing less than a Trojan horse harbering the forces of

multi-employer and even industry-wide bargaining. As the

unions see the threat, these forces can assume different

shapes in order to intrude themselves on collective bargain-

ing in the air-line industry. Although the AIR Conference

witnesses granted that industry-wide bargaining in the for-

mal sense involves the consent of the employees, the unions

insist that there are other ways for industry-wide collective

bargaining to become a reality. ALPA, for one, maintains

that there is little difference between multi-employer bar-

gaining and the negotiation of collective bargaining agree-

ments for member carriers on a single carrier basis. The

union predicts that AIR Conference will assume virtually

the same positions in each negotiation in order to achieve its

goal of common industry positions, and that the effect of

such bargaining strategies will be the same as if conventional

multi-employer bargaining were in fact employed. ALPA

concludes that the attempt to impose industry-wide collec-

tive bargaining on non-consenting unions, whether explicit

or implicit, through the advocacy of common positions by

31a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

a common bargaining agent in separate, negotiations is

contrary to section 2, First, of the Railway Labor Act.“

Since AIR Conference has made it clear both on the rec-

ord and in its arguments on brief that it is fully aware

that multi-employer bargaining is a consensual matter

under the law, there is no reasonable current prospect that

it will attempt to impose such bargaining on the unions

directly. |

Putting to one side, for the moment, the controversial

provisions of the agreements which make powers of attor-

ney for bargaining negotiations irrevocable, and the re-

lated provisions triggering an errant member carrier’s lia-

bility for damages, and focusing on other powers of AIR

Conference which may lead to multi-employer bargaining,

there is Board authority in the ANC case, supra, indicating

that, to this extent at least, the instant agreements do not

violate the Railway Labor Act, and are not adverse to the

public interest.

In that case the Board approved two agreements estab-

lishing ANC, an unincorporated, nonprofit organization

formed by 18 certificated air carriers to act as representa-

tive for each of its members to negotiate by collective bar-

gaining and conclude agreements with employee repre-

sentatives on matters concerning wages, working conditions

and other conditions of employment. AIR Conference con-

tends that the decision is controlling precedent requiring

approval of the agreements. involved in this case largely

because the agreements approved there over union opposi-

U

15 This contention is based on the legal doctrine that, in the ab-

sence of agreement of the parties to a multi-employer ai unit,

or unless there is a history of multi-carrier bargaining, such =

posed. B of R. R. Trainmen v.

Atlantic Coastline R. R, 383 F. 2d 225 (D. C. Cir. 1967), cert.

denied, 389 U.S. 1047 (1968). a

32a

Initial Decision of Milton H. Shapiro,

Administrative Lau Judge .

tion involved an induatry collective bargaining organiza-

tion with similar powers and si it a ac an

Conference.

The Articles of Association and ‘hans of ANC desig-

nated it the exclusive representative of each of its members

for negotiating collective bargaining agreements with pilots

and empowered it to act in the same way for treating with

representatives of other employees when requested by any

member carrier and on approval of the Conference.

IAM and ALPA opposed approval of the ANC agree-

ments on grounds paralleling some of the more important

’ objections which they and other unions have against ap-

proval of AIR Conference. The major complaint against

the ANC agreements was that ANC would be used by the

carriers to impose industry-wide or multi-carrier bargain-

ing on pilots and other employees, and that under those

agreements each member carrier would ‘turn over to an

organization which was composed of officers of other and

often competing air lines the control of a very important

part of its business, possibly to the detriment of a particular

carrier and, therefore, that the agreements were adverse

to the public interest.

The Board rejected these contentions, holding that the

agreements disclosed no requirements for industry-wide

bargaining and that it could not assume that the member

carriers intended to violate the terms of the agreement or

that ANC would function beyond its authorization in the

agreements. It considered industry-wide or multi-carrier

bargaining optional and dependent upon agreement of all

parties involved in any dispute. It pointed out that the

Railway Labor Act does not mention industry-wide bar-

gaining and does not attempt to legislate as to the expedi-

33a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

ency or value of any particular basis of bargaining. It went

on to say:

“In enacting the Railway Labor Act and in requir-

ing certificated air carriers to comply with Title II

of that act Congress has spoken as to the standards

of public policy, or public interest, that should apply

in the settling of labor dispv'.es between air carriers

and their employees. We cannot substitute our opin-

ions for the considered judgment of the Congress

and since no specific basis upon which labor negotia-

tions must be carried on has been established but this

is left to the agreement of the parties involved, we

cannot find the agreements now before us to be ad-

verse to the public interest upon any consideration

of whether or not the bargaining in which the con-

ference may participate is on a single-carrier, multi-

carrier, or industry-wide basis.

Like the ANC arrangement, the instant agreements do

not mention any particular form of collective bargaining.

But, as discussed later, unlike the ANC agreement, they

do contain unacceptable provisions designed to hold the line

in collective bargaining.

As might be expected, the unions do not view the ANC

decision in the same light as AIR Conference. For example,

APA argues that that case cannot. be controlling in this

proceeding because the air-line indusiry has changed sub-

stantially in the 25 years since it was decided. It wants the

Board’s decision in the instant proceeding to be made on

the basis of current conditions. But APA has offered

nothing to show what difference the passage of time has

made.

16 f C. A. B. 354, at 357 (1947).

34a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Accordingly, the Board’s rulings in the ANC case are

found to be controlling here as to the legality of the AIR

Conference agreements, with one major exception. It stems

from the fact that the Board had no occasion to consider

in the earlier case the legality of provisions akin to the

irrevocability and related damage features of the instant

agreements because the ANC agreements contained no such

authority. With that exception, it is further found that

the agreements do not violate the duty to bargain in good

faith or otherwise offend the Railway Labor Act.

Bargaining Pursuant to the Irrevocable Power of Attorney

It is fair to say that those parts of the agreements relat-

ing to the irrevocable power of attorney have been the chief

target of the unions’ campaign to block approval because

they appear to offer the most efficient apparatus in the

agreements that AIR Conference can use to impose multi-

employer bargaining on the air-line industry. The under-

lying purpose of the irrevocability feature seems to be the

effort of AIR Conference to maintain a united front in its

bargaining and keep individual carriers from breaking

ranks. This is part of the overall coordination strategy of

the carriers which is really the guiding spirit of AIR Con-

ference itself. AIR Conference considers it sufficient jus-

tification for this type of authority if the carrier believes

its bargaining interest will be served by irrevocability.

Because AIR Conference had been operating little more

than a year by the time of the hearing in this case, and had

done no collective bargaining in that period, the unions’

opposition to it has been confined mainly to hypothetical

arguments built around the bare framework of the lan-

guage of the agreements, including, of course, the provisions

as to the grant of an irrevocable power of attorney. AIR

Conference challenges such opposition as being based on a

35a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

notion that the agreements violate the Railway Labor Act

per se, and argues that the courts have rejected attempts

to establish per se violations of the duty to bargain in good

faith pursuant to section 2, First, of the Railway Labor

Act without consideration also of the events surrounding

bargaining conduct in a particular negotiation.

While the unions have not pressed their case explicitly

in the terms characterized by AIR Conference, given the

lack of bargaining experience of AIR Conference reflected

in the record, they have, in fact, had no option but to chal-

lenge the legality of the agreements on their face, if they

were to question them at all. As a broad statement of law,

the above legal defense of AIR Conference to this challenge

is generally sound. But it overlooks the special, and possibly

unique, nature of the irrevocability provisions of the AIR

Conference agreements, which brings it within the precise

and narrow confines of the rule defining per se violations

stated by the Court in the case cited by AIR Conference

which is most directly in point.“

The Kennedy case involved the legality of the Strike In-

surance Plan adopted by the railroads. While rejecting the

unions’ arguments that the Plan was a per se violation of

section 2, First, and other parts of the Railway Labor Act,

the Court said that the principle of per se illegality

“is to be applied only to conduct which of necessity

produces consequences violative of the statute. . .

or produces proscribed consequences in. an over-

whelming proportion of the cases. es

17 Kennedy v. Long Island R. R., 319 F. 2d 366 (2d Cir. 1963),

cert. denied, 375 U.S. 830 (1963).

18 Id. at 370.

36a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Analysis of the irrevocability language of the instant

agreements demonstrates that it meets this stringent test.

As already noted, the sole purpose of the language is to

maintain a united front of member carriers. Such a pur-

pose is normally associated with multi-employer bargain-

ing, and is reflected in the national labor policy. For, as

AIR Conference itself points out, the national labor policy

prescribes that after multi-employer negotiations have be-

gun, withdrawal from bargaining by an employer without

the employees’ consent is not allowed. However, holding

the line in the case of single-employer bargaining has not

been a part of the national labor policy for evident reasons.

In short, the AIR Conference device is an anomaly.”°

Thus, the irrevocability of the power of attorney will be

invoked only when the air carrier which has engaged AIR

Conference to bargain for it finds itself at odds with AIR

Conference. And since at that point the association will be

subordinating the employer’s wishes and interests to those

19 N.L.R.B. v. Dover Tavern Owners’ Association, 412 F. 2d 725

(3d Cir. 1969); N.L.R.B. v. John J. Corbett Press, 401 F. 2d 673

(2d Cir. 1968); N.L.R.B. v. Sheridan Creations, Inc., 357 F. 2d 245

(2d Cir. 1966), cert. denied, 385 U.S. 1005 (1967).

In fact, the national labor policy renders the irrevocability language

three multi-employer associations in the transportation industry cited

as a model by the AIR Conference, namely,

Labor Conference, Trucking Employers, Inc.

time Association, prevents an em from withdrawing from the

association after a short period of notice or exposes him to liability

for damages for doing so.

37a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

of other employer members of AIR Conference, what began

as a one-to-one bargaining relationship with the representa-

tive of the carrier’s employees, will, of necessity, be con-

verted to bargaining on the basis of multi-employer interests

as opposed to the interests of the single employer, and,

presumably, on the facts of this record, without the consent

of the employees’ bargaining representative. Once the em-

ployer is subjected to the lock-step of the irrevocability

provision, not only is he denied further control over his own

destiny, including his normal freedoms to terminate bar-

gaining, change his representative at will or reach an agree-

ment, but his employees are also confronted with a com-

pletely new bargaining relationship, controlled not by the

employer with whom they started bargaining, but by AIR

Conference. Therefore, the necessary consequence of in-

voking the irrevocability feature is to set in motion a train

of events in derogation of good faith bargaining and, there-

fore, violative of section 2, First, of the Railway Labor

Act.

The cases cited by AIR Conference to emphasize the bear-

ing of specific bargaining conduct on claimed per se viola-

tions do not compel a different conclusion.” Since the

21 The AIR Conference argues in its brief, citing testimony of its

Executive Vice-President on cross-examination, that a carrier may

condition the power of attorney so as to negate the dare wih e

feature. This argument and testimony sim i

language of Article II (b) (1) of the icles of Association which is

i of

the negotiations covered by the power of attorney are concluded -

No leeway is afforded the member carrier to modify this aspect of the

22 The instant case is readily ble from the in

Piedmont Aviation, Inc. v. ALPA, 41 F. 2d 633 (4th Cir. 1969),

cert. denied, 397 US. 926 (1970), cited by AIR Conference, that

an ALPA bylaw did e

as a reason to

38a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

purpose of the irrevocability provisions is to keep individual

employers from breaking ranks and entering into contracts

considered by AIR Conference as not in the interests of

the greater good of the employer group, they are peculiarly

designed to thwart the desire of the individual employer

most intent on reaching agreement with his employees.

That is, restraint would be applied against the very em-

ployer whose conduct in withdrawing in order to consum-

mate his own agreement is entirely consistent with good

faith bargaining. Under these circumstances, of necessity,

the action of AIR Conference to keep close rein on the

employer would result in a breach of the duty to bargain

in good faith.“ Accordingly it is found that the provisions

case ex a policy against jet crews of less than three pilots, and

allowed the union Board of Directors by a two-thirds vote to exempt

an aircraft from this policy. Piedmont argued that the union would not

— 1 for a crew of less than three men because its bylaws for-

over that subj

union to bargain in good faith. 68.

parent on its face. Nor did the Court clarify that point. It may well

have been intended to express a safety policy, and the union need

was not the bylaw, but the union's reliance on it as a reason for

the issue of crew complement in the face of an

the B-737 for two-man crews, that was not

consistent with the ee eng e e eee

In view of all of the foregoing, the Piedmont decision is in no sense

of the issue of whether the irrevocability provision is a

ae e en ge ee

ployer bargaininz may suffer the same fate, one overriding distinction

preserve the stability of the mult-employer bargaining unit (Reta

preserve the stability ti-employer bargaining unit. i

N. 8, 393 (1958)). The second dis-

39a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

with respect to the irrevocability of powers of attorney

violate the Railway Labor Act insofar as they involve

collective bargaining.“

Since, through enforcement of the irrevocability pro-

visions, AIR Conference can bargain on behalf of indi-

vidual employers without the unions’ consent, it can realize

the hold-the-line benefits of multi-employer bargaining by

indirection. Under the circumstances, the readiness of AIR

Conference to disclaim any interest in multi-employer bar-

gaining in the conventional sense for the foreseeable future

is understandable. AIR Conference need not wait for the

consent of the employees which is not presently forthcom-

ing if it can achieve its bargaining objective of holding

the line without it.

It should be evident from all of the foregoing that even

if the irrevocability feature of the agreements were found

not to violate the Railway Labor Act, it is adverse to the

public interest. This conclusion is particularly compelled

by the procedure allowing a carrier to renounce in advance

of bargaining its right to control any decisions affecting

its own interests such as whether it would be subjected

to a strike, an inerease in the level of wages it must pay,

or a change in work rules and fringe benefits of its em-

ployees. Moreover, the arrangement is also adverse to the

public interest to the extent that the effort to hold the

line and prevent carriers from breaking ranks leads to

24 It would be idle for AIR Conference to suggest that the irre-

vocability facet of the power of attorney does not necessarily violate

the Railway Labor Act because the association might choose not to

use it to exercise control over a carrier ing to 3

I , AIR Conference h alternative. Its failure to

tive bargaining by maintaining a united front, and, indeed, at least

to that extent, its raison d’etre.

40a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

hard-line bargaining which tends to exacerbate the risk of

strike action and interruption of service to the public.

As noted above, the general rule is that members of multi-

employer bargaining units ordinarily lose their freedom

to leave the unit without the employees’ consent once bar-

gaining has begun, or to refuse to accept the agreement

negotiated by their bargaining representative.** None-

theless, an employer may withdraw from negotiations with

the union’s consent after impasse has occurred, or even

without the union’s consent where there are unusual cir-

cumstances.** Therefore, even in the conventional multi-

employer bargaining situation, as in single-employer bar-

gaining, the instant irrevocable power of attorney would

mean an employer’s foregoing his right to withdraw in

order to defend his own interests under certain circum-

stances, including a case of urgent need, as in the Spun-Jee

situation.

The instant agreements compound the risk of holding a

financially weak air carrier to a multi-employer bargaining

unit by exposing it to an ill-definded liability for damages

to other carriers if it should seek withdrawal from the

bargaining unit. The carrier could well face the choice

of an unfavorable labor agreement or exposure to an un-

known amount of damages if it finds the agreement which

r 5 Fae

Cream, Frozen Custard Industry Employees, et al.,

N.L.R.B. 865 (1964) (no unfair labor practice where union executed

r i ec tite dat Pan oot toon Uae Se

191 N.L.R.B. No. 121 (1971).

ee Corp. and The James inc 171 N.L.R.B.

968), the N.L.R.B. held that because of the employer’s eco-

4la

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

is acceptable to the multi-employer unit potentially harm-

ful to itself. While it may be the prerogative of an em-

ployer to assume such risks in an industry unaffected with

a public interest, air carriers do not have such an unre-

stricted choice. The combination of the irrevocability and

damages features of the instant agreements, unique in the

field of labor relations, poses too great a danger to the

preservation of efficient service to be deemed consistent

with the public interest. In view of the foregoing it is

found that in the multi-employer bargaining situation, as

well as single-carrier negotiations, the irrevocable power of

attorney contained in the agreements in issue is adverse to

the public interest.

The right of a carrier member of ANC to retain control

over its own welfare and destiny was specifically commented

on by the Board in the ANC case:

“If any carrier believes that its best interest is not

being served by the conference that carrier, under

the terms of the agreements, may resign from the

conference, which is required upon receipt of notice

of resignation immediately to cease from repre-

from

ies have reached agreement. This provision was not referred to

the Board. Like the rest of the agreement, it was subscribed to as

a mutual undertakin —— wipes 235 mya eA hokonng

the union involved. The agreement applied only to a single negotia-

tion, a fact the Board expressly took note of. Nor did it expose

parties to any liability for damages in the event of an attempt

withdraw. It is also noteworthy that the Eastern case was published

at about the time the national labor policy, as reflected in N.L.R.B.

decisions, began to allow withdrawal from a multi-bargaining unit in

42a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

senting such carrier. Thus no carrier places in the

control of any other carrier or group of carriers

final disposition of any matter that may adversely

affect its separate welfare. Its choice of the con-

ference as its representative to carry on labor nego-

tiations is a free choice subject at all times to can-

cellation.””* .

The Board’s specific references to the above rights of

ANC members carry with them a distinct implication that

these were matters important to its approval of the agree-

ment and that, without them, a different result might have

been reached. The foregoing passage, therefore, underlines

the importance of the differences embodied in the irrevoca-

bility and related damage provisions of the AIR Confer-

ence agreements withholding as they do the options which

were open to the ANC members. |

In view of the foregoing and all of the evidence of tecord

it is hereby found that Article II(b) (1) of the Artieles of

Association of AIR Conference violates Title II of the Rail-

way Labor Act insofar as it provides that “if negotiations

have commenced as to which a member, pursuant to these

Articles, has granted to the Conference a power of attorney,

such power shall not be revoked by the member until the

negotiations covered by the power of attorney are concluded,

whether or not a withdrawal notice has been given by the

member and in the event a withdrawal notice has been

given, it shall not be effective until ninety (90) days after

such negotiations are concluded”. It is further found that,

regardless of the foregoing finding of a violation of the

Railway Labor Act, the said Article is adverse to the public

interest within the meaning of section 412 of the Federal

2° 8 C.A.B. 354, at 357.

43a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Aviation Act. Accordingly, approval of the agceements in

issue will be made contingent on AIR Conference’s modify-

ing them to remove the unlawful and unacceptable provi-

sions which prohibit a member carrier from revoking a

power of attorney it has granted to the Conference to act

as its bargaining agent in labor negotiations.

Single-Employer Bargaining

The elimination from the agreements of the provisions

for irrevocable powers of attorney for bargaining purposes

and the related liability for damages converts them to sub-

stantially the same form as the agreements reviewed and

approved by the Board in the ANC case. In the light of

that decision and the agreements as modified, the various

objections of the unions to AIR Conference’s bargaining

for individual air lines are found to be without merit.

The Five Unions contend that the agreements violate

section 2, Ninth, of the Railway Labor Act which requires

the carrier to “treat with each representative” of its em-

ployees. The burden of the contention is that the record

establishes that once powers of attorney are issued the

carrier’s employees will treat with someone appointed by

AIR Conference; that that representative may not under-

stand the particular carrier-employee problems involved

on the air line in question; and that, in short, the carrier

will have no control over who represents its interests and

who treats with its employees.

Section 2, Third, of the Railway Labor Act makes it the

duty of each party not to interfere with, influence, or coerce

the other in its choice of bargaining representatives. In

addition, section 1, Sixth, of that Act expressly provides

that the representative selected may be an “organization”

and may be the representative of more than one carrier.

These rights granted by the Railway Labor Act are of

44a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

overriding importance in establishing the freedom of both

employees and employers from outside interference in

organizing for collective bargaining purposes.

On this very point the Board said in the ANC case:

“The right to choose a bargaining representative

without interference or coercion is basic under the

Railway Labor Act and is a right over which we

have no control and with which we have no right to

interfere. The same right of free choice is guaran-

teed to the employees with whom the carriers must

negotiate and, . . . the representative chosen by

either party need have no other qualification than

that he be selected freely and independently by the

group which he represents. Whether the choice is

a wise one is not for us to decide. Were we to dis-

approve these agreements because of any belief on

our part that the choice of representative therein

made were not wise we would be substituting our

choice for that of the carriers and such action would

be in contradiction of the unequivocal language of

the Railway Labor Act. Clearly the agreements

cannot be disapproved on that ground.“

The right to select an organization as a bargaining rep-

resentative answers the contention of the Five Unions that

the representative who would treat with the employees

would not be the bargaining agent of the carrier principal

or principals but the bargaining agent of AIR Conference

which would have become a principal in its own right. As

for the further argument of Five Unions that the repre-

sentative meeting with the employees would not satisfy the

definition of section 1, Sixth, because he would not be

8 C. AB. 354, at 357.

45a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

someone “designated by a carrier or group of carriers”

but someone designated by AIR Conference, such a con-

struction would defeat the plain language of the Act giving

free access to bargaining representatives, and must there-

fore be rejected.

While acknowledging that under section 2, Third, of the

Railway Labor Act “neither party shall in any way inter-

fere with, influence, or coerce the other in its choice of rep-

resentatives”, APA contends that the General Electric case,

supra, is distinguishable from the instant case in a funda-

mental way. The difference, according to APA, is that

General Electric's refusal to bargain with the union on the

ground that its negotiating committee was made up in

part of representatives of other unions was ruled unlawful

because the outside representative explicitly renounced any

intention to bargain for unions other than the electrical

workers. Since no such declaration has been made by AIR

Conference, APA argues that the agreements in issue con-

template that when AIR Conference negotiators bargain

they will be doing so not only for the particular carrier

which has granted the power of attorney but also to co-

ordinate that carrier’s settlement with the agreements of

other carriers. This possibility APA deems inconsistent

with the public interest and proposes, therefore, that AIR

Conference not be permitted to bargain for an individual

carrier unless it first makes clear that it is bargaining

solely as a representative of the carrier whose power of

attorney it is exercising.

APA’s request is found to be unnecessary and unreal-

‘istic. While the AIR Conference bargaining agent may

have a dual allegiance when acting on behalf of a member

carrier in labor negotiations, his prior and primary fealty

46a

Initial Decision of Milton H. Shapiro,

Administrative Lau Judge

is to the carrier which engaged the AIR Conference. This

allegiance takes precedence over any coordinating design

of the AIR Conference, but it is not adverse to the public

interest or a violation of the Railway Labor Act for the

agent to further that design if, to do so, does not conflict

with the best interests of the member carrier, and does not

depend on enforcing a power of attorney against its will.

On the other hand, if there is a conflict of interest, and

the carrier is prepared to accept a settlement adverse to

the coordinating efforts of AIR Conference, it should be

free to do so, as it would be under the terms of the condi-

tion imposed herein barring the grant of irrevocable powers

of attorney. Thus, while a particular negotiation may, or

may not, advance the coordination objective of AIR Con-

ference, it must.conform to the needs and wishes of the car-

rier member for whom bargaining has been undertaken.

The ALPA objections to the structure of AIR Confer-

ence as a bargaining model in individual carrier negotia-

tions are an elaboration of the APA and Five Unions’

position. In addition, ALPA’s claim that the control of

- bargaining authority will be in the hands of AIR Confer-

ence assumes an irrevocable power of attorney to bargain.

As to ALPA’s contention that AIR Conference as the

representative in negotiations, is not the party that must

live with the consequences of such negotiations, it hardly

needs to be noted that this is usually true of most bargain-

ing representatives. In any event, the carrier which has

granted the power of attorney and must bear the conse-

quences of the negotiation, will be well aware of this fact

when it selects AIR Conference as its negotiator.

*

47a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

The rest of the ALPA arguments that the use of AIR

Conference as a bargaining agent necessarily involves bad

faith bargaining are either speculative or unpersuasive.

They turn largely on the objection that bargaining will be

coordinated with industry objectives, a facet of the AIR

Conference organization previously found compatible with

the Railway Labor Act.

The specter of the stalking horse conjured up by ALPA

and other unions whereby ATR Conference determines to

advance industry objectives by selecting one carrier as a

model in collective bargainirg springs mainly from the

disapproved provision as te irrevocability. Absent such a

provision, the stalking horse figure loses whatever sub-

stance it may have had under the agreement as submitted

by AIR Conference.

In view of all of the foregoing, and the evidence of record,

it is found that ALPA has failed to demonstrate that, with-

out the provisions for irrevocabie powers of attorney, the

structure of AIR Conference as a model for collective bar-

gaining on behalf of individual carriers violates the Rail-

way Labor Act or the Federal Aviation Act.

The AIR Conference Agreements in Conjunction

with the Mutual Aid Pact

AIR Conference denies that the Mutual Aid Pact affects

the lawfulness of AIR Conference. It regards the Pact as

a form of employer’s self-help sanctioned by the national

labor policy, and as being similar to AIR Conference in

that both seek to deal with problems raised because of the

air lines’ collective bargaining position. It notes, however,

that the AIR Conference agreements are concerned with

the way in which carriers conduct their collective bargain-

48a

4

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

ing while the Pact takes effect only after collective bar-

gaining has failed and a strike has resulted. Its main

argument is that the availability of protection such as

Mutual Aid does not have any bearing on the ways in

which carriers are permitted to organize themselves for

collective bargaining purposes.

BOR agrees with AIR Conference that its operation in

conjunction with the Mutual Aid Pact does not violate the

Railway Labor Act. But ALPA and the Five Unions op-

pose the combination of AIR Conference and the Mutual

Aid Pact as a violation of the duty to bargain in good faith.

When the Board first approved the Mutual Aid Pact, it

stated that the Pact did not purport to affect an air carrier’s

duty under the Railway Labor Act to bargain in earnest.“

It was activated to protect carriers from some of the finan-

cial loss attendant on a strike. On the other hand, AIR

Conference is designed to improve the coordination of col-

lective bargaining in the air-line industry at least insofar

as the members of AIR Conference are concerned. A fur-

ther notable difference between the two pacts is that the

Mutual Aid Pact is now open only to trunk and local serv-

ice certificated carriers whereas membership in AIR Con-

ference is open to all certificated air carriers.

One measure of the success of Air Conference, in terms

of the public interest, would be the avoidance of strikes and

thereby the reduction and possible elimination of depend-

ence of air carriers on Mutual Aid.

ALPA has constructed two scenarios to display the illegal

interaction of AIR Conference with the Mutual Aid Pact,

31 Six-Carrier Mutual Aid Pact, 29 C.A.B. 168, at 171 (1959).

49a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

and how both would be manipulated in violation of section

2, First, of the Railway Labor Act. One of the scenes rests

on props from those parts of the Articles of Association

which are disapproved herein. Thus, ALPA foresees that

the weighted voting structure of the Board of Directors

will enable the trunklines to choose a stalking horse from

among the member carriers so that it might take a strike

on behalf of the other carriers. It also predicts the stalking

horse may or may not be a Mutual Aid Pact member, de-

pending on AIR Conference’s interests. The rein on the

stalking horse would be an irrevocable power of attorney.

But, as already found, this portion of the Articles should

be disapproved, and, therefore, the set of this projected

scenario is destined to collapse.

The other scenario conceived by ALPA assumes that an

AIR Conference member carrier which is also a party to

the Pact will be persuaded to become the industry's stalking

horse and take a strike after being guaranteed by Pact

members that it will not suffer financially. This assurance,

says ALPA, can be given because the evidence in the most

recent hearing on proposed amendments to the Mutual Aid

Pact, held November 1971 (Docket 9977), indicates that

struck carriers have actually shown profits during a strike

owing to the bounty of payments from other Pact members.

The assumptions supporting this scene are too conjec-

tural to deserve serious weight. Even accepting ALPA’s

figures as to the carriers’ profits during a strike period,

other considerations would influence, and more likely, deter

the decision of a carrier to take so drastic a step. The

long-run financial impact of a strike might easily nullify

the short-run financial gains of the actual strike period.

Against the altruism it might display toward the rest of

50a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

the member carriers, a carrier would have to weigh the

damage to its own goodwill, the possibly permanent loss

of its customers, the added expenses of resuming opera-

tions after a lay-up, losses from turnover of employees, and

other drains on its treasury that could transform it from

stalking horse to sacrificial lamb. On the whole, therefore,

while a voluntary stalking horse could conceivably present

itself, the risk is too remote to conclude that the conjunction

of the Mutual Aid Pact and AIR Conference foreordain

violations of the duty to bargain in good faith. For that

matter, if this variation of the stalking horse metaphor

were a practicable scheme, it could be enacted without the

intervention of AIR Conference at all. The Mutual Aid

Pact members could handle the whole affair.

In sum, therefore, whatever credible threat of violation

of the Railway Labor Act might have been posed by the

ability of AIR Conference to rely on the financial backing

of the Mutual Aid Pact will be forestalled by the modifica-

tions of the agreements required herein. In view of all of

the foregoing and the evidence of record, there is no sub-

stantial evidence to support a finding that the interaction

of the modified AIR Conference agreements with the Mu-

tual Aid Pact will violate the Railway Labor Act.

ARE THE AGREEMENTS ADVERSE TO THE PUBLIC INTEREST

The Impact on Labor-Management Relations

With one voice, the unions foresee a serious impairment

of labor-management relations resulting from the advent

of AIR Conference and its participation in collective bar-

gaining in the air-iine industry. They also largely echo

each other’s reasons for these fears. One of their major

arguments revolves about their assumptions with respect

to the adoption of multi-employer or industry-wide bargain-

err

5la

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

ing in one guise or another as the reason for the existence

of AIR Conference. They fear that whatever form multi-

employer bargaining takes it will result in a broadening

of strikes and labor disputes and, accordingly, result in

widespread service interruptions adverse to the public

interest.

Without exception, the witnesses for AIR Conference tes-

tified that the Conference has no present intention of seek-

ing or accepting bargaining authority for its members or

of seeking multi-employer bargaining. It is significant,

in view of the uniform opposition of the unions to multi-

employer bargaining, that the officials of AIR Conference

emphasized in their testimony that they were aware that

multi-employer bargaining is feasible only with union

consent. In any case, the exclusion of the irrevocability

feature of powers of attorney to AIR Conference for col-

lective bargaining purposes will foreclose the possibility of

back-door imposition of multi-employer bargaining which

the unions consider a major threat to stable labor-manage-

ment relations.

There is no persuasive evidence that a more consistent

treatment by the carriers of similar issues among different

parties will incite labor disruptions or even cause a higher

incidence of strikes or broaden their scale. On the contrary,

more consistent carrier bargaining positions might encour-

age more consistent settlements, and thereby inhibit rival

unions from raiding incumbent unions, reduce employee

discontent as between carriers, and reduce the temptation

of unions to try to play off one carrier against another in

their efforts to obtain more favorable settlements.

The Five Unions argue that if faced with a common in-

dustry position, the unions will be forced to coordinate

52a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

efforts to meet that position with the results that there will

be major confrontations and general strikes. These broad

assertions are not supported by convincing evidence. It

should be evident that each side of the bargaining table has

an overriding interest in avoiding such disruptive tactics.**

The record offers no reasonable basis for any contrary

inferences.

Another fear expressed by the various unions is that the

intrusion of the AIR Conference and its negotiators into

air-line industry negotiations will upset a delicate balance

which has been established over the years between the two

sides and will tend to blur the individual variations among

the different companies. ALPA contends that this can

only harm peaceful labor-management relations and is,

therefore, adverse to the public interest.

There is no evidence that AIR Conference intends to ig-

nore genuine differences among the carriers. In fact, the

unions have not established that air carriers’ employees

are any more diverse and need more specialized treatment

than the employees of other transportation industries where

employer associations are the typical means of bargaining.

As for the unions’ concern over the effect of AIR Con-

ference on the delicate bargaining relationship between the

employees and representatives of the individual carriers

which have been nutured during years of bargaining, it is

difficult to understand why the problem should be more

troublesome on the carrier side of the table than on the

union side which has included central office representatives.

For that matter, these relationships apparently have been

32 To illustrate, the IAM general vice- who testified was

emphatic that he had no intention of 66

even if he were to find himself in a joint bargaining situation.

53a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

hardy enough to withstand the turnover of individual bar-

gaining representatives of carriers and unions alike, and

of the unions chosen by the employees at various times to

represent them. Finally, since both employers and em-

ployees under the Railway Labor Act have the right to a

bargaining representative of their own choosing without

interference from each other or anyone else,** it is anoma-

lous to suggest that the exercise of that right is adverse

to the public interest.

ALPA and the Five Unions also consider the AIR Con-

ference agreements inimical to labor-management rela-

tions insofar as they make it possible for AIR Conference

to have irrevocable control of its members for collective

bargaining purposes. Of course, any such threat is removed

by the condition on approval requiring the elimination of

this authority.

The unions offer still other arguments to establish that

AIR Conference will result in the deterioration of labor-

management relations, but they are even less substantial

than those discussed above, and, upon consideration, do not

support a finding that, after the required revisions, the

operation of the agreements will impair air- line labor-

management relations.

In view of all of the foregoing and the evidence of record,

it is found that the agreements as modified herein will not

have an adverse impact on, or lead to deterioration of,

labor-management relations in the air-line industry.

83 Airlines Negotiating Conference, 8 C.A.B. 354, at 357 (1947).

54a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

The Effect on the Bargaining Balance between Labor and

Management

Among the main reasons for the formation of AIR Con-

ference is the conviction of the air lines concerned that

there is a pronounced imbalance between the collective

bargaining power of the air lines and that of the unions

in favor of the latter. It is reflected in the testimony of

Mr. Tillinghast, Chairman of the Board and Chief Execu-

tive Officer of Trans World Airlines,

“That in my judgment, there is an imbalance of

power in this industry which reflects itself very

clearly in extraordinary rates of increase which

have characterized the last few years and that there

needs to be a better balance achieved if the industry

is to continue as a private unsubsidized industry.”

AIR Conference’s labor relations consultant, Professor

Northrup, was in complete agreement:

“The air-line industry is . . . a classic example of

an industry badly in need of increased cooperative

effort among employers in collective bargaining.”

In his opinion, despite the fragmentation of the work force

in air-line industrial relations dictated by the Congress and

the Railway Labor Act which has contributed substantially

to industrial unrest, there is a substantial amount of coor-

dination and mutual assistance among unions across craft

lines. He cites the example of the Industrial Union Depart-

ment of the AFL/CIO which has established a major pro-

gram of union coordination in some industries where each

company deals with a large number of unions.

In a similar vein an authority on collective bargaining in

transportation heavily relied on by Professor Northrup has

said in defense of the mutual support activities of employ-

ers,

55a

\

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

\

“So long as collective bargaining presumes the right

to utilize economic power, there is little basis for

distinguishing between the scope of concerted action

now allowed to unions and that recommended here

to be permitted to employers. What distinctions

have existed in the past in these respects have been

based on the long history of legal imbalance in favor

of employers. Since that imbalance has by now been

quite fully corrected, at least so far as the trans-

portation industry is concerned, little basis remains

for continuing the restraints on the fuller exercise of

employer cooperative action. \

Such opinion evidence typifies the voluminous documenta-

tion of the AIR Conference in this record designed to estab-

lish the need of the air lines to improve their bargaining

position vis-a-vis the unions.

AIR Conference sees itself as the mechanism for over-

coming the advantage which it says unions have long held

over the carriers in collective bargaining, as indicated in

the unions’ alleged ability to win unrivaled wages and bene-

fits, their long history of rejection of recommendations of

neutral tribunals such as the Presidential Emergency

Boards, and their frequent use of the strike power. Though

it admits that it cannot overcome the bargaining disad-

vantages of the air lines which are due to the characteristics

of transportation service industries and of the bargaining

structure imposed by the Railway Labor Act, it expects the

organization to benefit the air carriers and achieve a better

balance between the two bargaining sides. By the exchange

of information, prior consultation regarding proposed new

20 Levi Collecti sning and Techuological Change i

American Transportation (1971) p. 675. nai

56a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

departures in individual settlements, and consideration of

the long-term collective interest as affected by particular

negotiations, it says it will be doing the things which are

routinely done by the major unions within their multi-

employer union structure.

Yet, even a record as fully developed as this one cannot

serve as a scale to measure the balance between the bar-

gaining power of the dir lines and that of the unions either

before or after the availability of AIR Conference. How-

ever, one feasible approach to the resolution of this issue is

to compare the collective bargaining tools available to the

unions with those available to the air lines in order to

appraise the possible influence of AIR Conference.

Major unions such as IAM, ALPA, and IBT have central

organizations which act as clearing houses of information

for various locals which bargain with individual carriers.

While there is evidence that the air lines have consulted

each other in the past during a round of negotiations with

respective locals of a particular union, they had no com-

parable clearing house before the formation of AIR Con-

ference. To this extent the unions have had a collective

bargaining tool not available to the air lines. If effective,

AIR Conference should enable carriers to reduce those cases

where an individual carrier acts without consideration of

the bargaining needs of other carriers or establishes prece-

dents incorsistent with industry aizns even while failing to

win any long-term advantage for itself.

The Personnel Relations Conference of the Air Transport As-

sociation, successor to ANC, has served latterly as a data gathering

and distributing office without 2 thority in the collective bargaining

arena.

57a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

The evidence submitted by AIR Conference to demon-

strate that it is at a barxaining disadvantage because the

financial resources of AIR Conference are s ibstantially less

than those of the air-line unions combined is not persuasive.

A more realistic comparison of the relative economic power

of the air lines and the unions would be based on the finan-

cial resources of the individual air lines as compared with

those of the air-line unions rather than just the resources

of Air Conference itself. The result, of course, would be

entirely different, and clearly not to the disadvantage of the

air lines.

AIR Conference asserts that one of its purposes in achiev-

ing more consistent settlements among the various carriers

for employees who do the same or similar work is to offset

ALPA’s “inequity system” of negotiation. AIR Conference

claims that these “inequities” are deliberately introduced

into the labor contracts as a predicate for later efforts to

enlarge the benefits to be obtained in labor settlements. In

addition, it hopes that greater consistency will be an answer

to the so-called stepping-stone strategy of gradual increases

in wage levels during a given bargaining round. This

strategy has elsewhere been described by AIR Conference

as whipsawing, a term challenged by ALPA’s transporta-

tion consultant as pejorative and the center of some con-

troversy as to what it really means and whether such a

practice exists.“

As originally used “whipsawing” referred to a strike tactic. In

this record it has been used to describe a collective bargaining tactic.

The ALPA consultant who objected to the term whipsawing as pejora-

„ tavqqable A —

pany) as the t or leverage to win

from (as a related 3 He abo tested that whipsawing

is a n accepted practice of collective bargaining to improve on

— accepted Pom labor — on the besis of

this definition, that, to a substantial extent, whipsawing “has been

achieved everywhere in unionized American industry.”

58a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

The evidence as to whipsawing submitted by ALPA,

based on its settlements with carriers in the 1970-1971

round of negotiations, supports the union’s claim that those

settlements reveal no such practice. Yet, there is consider-

able other evidence in the record which shows that, if not

actually employed or achieved by ALPA in its 1970-1971

round of negotiations, it has been a device generally used by

air-line unions, including ALPA, in labor negotiations,

whether it is described as a stepping-stone strategy, whip-

sawing, or by some other term. And it has been a bargain-

ing tool favoring the unions which the air lines are still

trying to cope with.

The IBT perception of the issue of the balance of bargain-

ing power stresses personality, nuances of inter-personal

relationships, the intangibles of atmosphere, experience and

attitude on one side or the other of the bargaining table. It

contends that it is not possible to generalize as to the bar-

gaining success and power of a particular industry-wide

union; that, instead, the nature of a particular union’s

bargaining position vis-a-vis the employing air line depends

on the record of the individual local and its ability to deal

with all the subtleties off the bargaining attitude of its op-

posite number, the air line involved in the negotiations.

This analysis, it submits, explains why some air lines have

more frequent work stoppages than others, even though the

striking employees may be members of the same nationwide

union representing nonstriking employees on other carriers

where there has never been a work stoppage.

This accent on a need for an “intuitive feel for the essence

of the complex employer-employee relationship on each air

line” tends to minimize the emphasis on power struggle

which permeates the AIR Conference presentation. The

59a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

IBT slant on the bargaining balance between labor and

management is patently difficult to establish by objective

proof. Yet, IBT failed to submit even opinion evidence to

back up its analysis. Had it done so, it might have made a

provocative contribution to the record possibly offsetting the

impression created by AIR Conference as to the play of the

bargaining balance and opening up a different perspective

by which to examine this issue.

APA stresses that, as the air-line industry itself has rec-

ognized, the supposed imbalance in bargaining power is the

result of the structure of collective bargaining in the in-

dustry which, in turn, has been dictated by Congress in the

Railway Labor Act. APA insists, therefore, that any at-

tempt to restructure the pattern of collective bargaining in

the airline industry must be directed to Congress and not

the Board. However, the attempt of AIR Conference to

improve the bargaining position of the air lines within the

framework of the Railway Labor Act follows the precedent

of the National Railway Labor Conference which represents

an industry which was the original model for the collective

bargaining structure decreed by Congress in the Railway

Labor Act.

It is apparent from all of the foregoing that, 1» the extent

that the record admits of conclusions with regard to the na-

ture of the bargaining balance in the air-line industry, the

unions enjoy certain important bargaining advautages.

They include the availability of central clearing houses for

information within major unions, and better lines of com-

munication at some locals which are more aggressive and

more effective from their point of view in labor-manage-

ment negotiations. In turn, these advantages have enabled

the unions to make maximum use of their bargaining power

60a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

and work more efficiently and consistently toward achieving

their bargaining goals. If AIR Conference can supply simi-

lar bargaining tools to air lines in a relatively weak posi-

tion, it will enable them to improve their bargaining posi-

tion. At the same time, other carriers, more strongly

situated vis-a-vis their employees, will also be strengthened.

On the whole, however, the evidence does not support a

finding that any such air carrier gains from AIR Confer-

ence with respect to the balance of bargaining power will

have an adverse effect on the public interest.

In the final analysis, the relative economic power of the

two sides rests, on the one hand, on the ability of the em-

ployees to back up their demands with an effective strike

and, on the other, of the air carrier to refuse to yield and

withstand a strike and enforce also, as an alternative, a

lockout of its employees. While AIR Conference may act as

a catalyst to marshal and support the air lines’ exercise of

their considerable economic power, its own economic power

to influence the bargaining balance appears to be quite

Effects of Phase Il of the Wage-Price

ization Program

AIR Conference’s handling of the air lines’ interests as

affected by Phase II of the Wage-Price Freeze affords the

most extensive concrete evidence in this record of the or-

ganization’s actual conduct of labor-management affairs.

Of course, the Articles of Association make no reference

to the freeze program. But the Conference has adopted a

policy that no member shall agree to a settlement in excess

of the guidelines set up by the Pay Board. And it has

obtained powers of attorney (revocable automatically for

all involved whenever 25 percent of the carriers giving

6la

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

them revoke them individually) to challenge under Pay

Board procedure, wage increases in excess of Pay Board

standards. Armed with these authorizations, AIR Con-

ference brought challenges before the Pay Board of con-

tracts made by a number of carriers with their employees

which contained deferred wage increases in excess of Pay

Board guidelines, but gave no notice to the unions of these

actions. AIR Conference seeks to vindicate its handling

of Pay Board matters by describing itself as an instrument

of official government policy contributing to the fight

against inflation in the national economy as well as to the

public interest.

Without exception, the unions have severely criticized

AIR Conference for these moves. ALPA has charged it

with a violation of section 2, First, of the Railway Labor

Act; IBT, with “bypassing” the national labor policy.

The unions point out that it is not illegal for a union to

take the position that it will insist upon contract provisions

in excess of the wage guidelines; that under the law the

Pay Board has the function of reviewing the propriety cf

implementing agreements where the guidelines have been

exceeded; and that the Wage-Price Stabilization Program

has not attempted to interfere with collective bargaining

but is intended to make it subject to control by the Pay

Board.

There is no evidence that the Pay Board has acted on

the AIR Conference challenges or that the unions have

taken counter-measures. While AIR Conference would

have it appear that it acted in furtherance of the Admin-

istration’s anti-inflation program and on behalf of the

public interest, the unions accuse it of meddlesome inter-

62a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

ference with collective bargaining agreements. The nub of

the union position is that the Pay Board episode demon-

strates an officiousness on the part of AIR Conference which

has already damaged labor-management relations, exem-

plifying the mischief AIR Conference will be capable of in

the future.

After the thickets of union charges are cleared away, the

evidence revealed is that AIR Conference challenged exist-

ing wage agreements providing for wage increases in con-

formance with Pay Board regulations but without taking

care to inform the unions, as parties directly concerned.

The fact that the unions were seriously distressed by chal-

lenges to wage increases already contracted for is certainly

understandable. And while it cannot be gainsaid that the

rather embittered response of the unions reflects some

strain put on air carrier labor-management relations,

neither can it be found that the Pay Board episode as

depicted by this record demonstrates that AIR Confer-

ence’s conduct was adverse to the public interest, or that

it presages other as yet unknown conduct that will be

inimical to the public interest. Nor is there any basis for

finding, as charged by certain unions, that there was a

violation of national labor policy or any illegality in AIR

Conference’s handling of this affair. On the contrary, with-

out minimizing the unions’ sense of resentment over these

incidents, the most significant aspect of the AIR Confer-

ence relationship to the Wage-Price Stabilization Program

which the record presents is the Conference’s purpose to

hold the line on wages, and, accordingly, its potential for

thus assisting the objective of the Program to restrain in-

flation in the national interest.

— 7

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63a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

The Effect of the Agreements on Productivity

and Efficiency of Labor

ACAP requested and was granted consideration of this

issue, but having taken no part in the proceeding except

for an appearance at the prehearing conference, it has of-

fered no evidence on this or any other issue in the case.

The evidence on this point is scant and only incidental to

other matters covered.

Presumably, one of AIR Confrence’s objectives is to im-

prove productivity and efficiency. Whether it is successful

will depend, of course, on its ability to resist restrictive

work rules which tend to reduce productivity. It may be

anticipated that most of the impact of AIR Conference on

productivity and efficiency of labor will make itself felt

during the collective bargaining process. The danger pro-

jected by all the unions is that hard-line collective bargain-

ing tactics on the part of AIR Conference and its members,

including unyielding opposition to work restrictive rules,

may precipitate an interference with productivity through

slowdowns or even work stoppages. Of course, once effec-

tive contracts have been negotiated and signed with par-

ticular groups of employees, the operations of AIR Confer-

ence will have no direct bearing on productivity and effi-

ciency.

Since it has been found that, after modifications of the

agreements, AIR Conference will not impair labor-manage-

ment relations, it may also be anticipated that it will not

have an adverse effect on productivity or efficiency. But

AIR Conference is still an experiment which will have to

withstand the test of time and experience. If, as the AIR

Conference members anticipate, and as the record tends to

indicate, the services of AIR Conference preserve and even

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

improve the climate of labor-management relations, pro-

ductivity and efficiency of labor should be at least main-

tained. If AIR Conference succeeds in resisting work re-

strictions without also causing work stoppages or slow-

downs, productivity and efficiency should be improved. But

given the nature of this issue, and little more than specula-

tion to go on, it cannot be satisfactorily resolved on the

basis of this record.

Discrimination in Restraint of Tradc and the

Anti-Trust Laws

In view of the relation between section 412(b) and sec-

tion 414 of the Act conferring immunity from the anti-

trust laws for agreements approved under section 412, the

agreements in issue must be reviewed to determine whether

they violate the policy and provisions of the anti-trust laws.

Section 6 of the Clayton Act provides that labor is not

a commodity or article of commerce within the purview of

the anti-trust laws.“ The courts have held that agreements

of employers relating to their labor relations do not fall

within the anti-trust prohibitions unless they involve a

purpose to restrain competition with respect to a product

or service market.** The Board has followed this doctrine

in approving the Mutual Aid Pact“ and the agreement

creating the ANC. In neither case did the Board find that

the agreements under consideration contravened the policy

or provisions of the anti-trust laws.

#7 15 U.S.C. § 17.

38 United Mine Workers of America v. Pennington, et al., 381

U.S. 657 (1965); Amalgamated Meat Cutters v. Jewel Tea Co., 381

U.S. 676 (1965); Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940).

% Mutual Aid Pact Investigation, 40 C. A. B. 559, 581 (1964).

65a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Nothing in the agreements in issue nor in the record

discloses any design on the part of AIR Conference or its

members to restrict commercial competition among the air

lines, or to gain some competitive: advantage on the part

of some air carriers as against others, or that the AIR

Conference will actually result in the fixing of prices or

restrict air carrier operations or otherwise restrain or

eliminate competition. Furthermore, it is clear that, inas-

much as the organization has been open equally to all do-

mestic certificated air carriers, there is no intention to

discriminate against nonmember carriers. And so far as

such carriers are concerned, if the purposes of AIR Con-

ference are achieved, they may well benefit from any gains

realized by AIR Conference rather than be exposed to any

injury.

The Five Unions and ALPA contend that by removing

the freedom of the carriers to bargain and decide bargain-

ing policy, whether by irrevocable power of attorney or by

the tiered structure of representation on the Board of Di-

rectors and policy enforced by the large carriers, the agree-

ments violate the anti-trust laws. They rely on United Mine

Workers of America v. Pennington, et al.,“ for the prop-

osition that any agreements in the field of labor relations

are objectionable where the parties surrender freedom of

action.

The Pennington case is not applicable to the agreements

even as proposed, and certainly not as altered by the condi-

tions imposed herein excluding irrevocable powers of at-

torney and prohibiting the prop tiered system of rep-

resentation on the AIR Conference Board of Directors.“ In

10 381 U.S. 657 (1965).

41 The need for the latter condition is discussed next.

OE SOA CoRR Rasen ot ES!

66a

Initial Decision of Milton H. Shapiro,

Administrative Law Judae

that case the union agreed, in return for higher wages, to

permit and assist rapid mechanization in the mines and to

impose the terms of its agreement with tiie iarge producers

on all other producers without regard to their ability to pay.

The increased wages consisted in part of larger payments

into the union welfare and retirement fund, representing

the union’s share of gains resulting from increased produc-

tivity. Small producers, whose mines were not mechanized,

were compelled to make the same contributions to the fund.

The court held the agreement illegal under the anti-trust

laws because it bound the union to pursue a fixed policy in

dealing with employers outside the bargaining unit covered

by the agreement. The agreement clearly offended the anti-

trust laws by requiring the union to agree to impose the

terms on other employers for the purpose of driving com-

petitors out of business.

No such scheme is involved in the AIR Conference agree-

ments or organization. Moreover, the conditions imposed

herein remove any valid objection that the air carriers’

freedom of action would be surrendered contrary to the

holding in the Pennington case.

Finally, it is noteworthy that the Court in the Kennedy

case, supra, which referred approvingly to the Board’s ac-

ceptance of the Mutual Aid Pact, also concluded that co-

operative efforts by carriers in combatting the risks of

labor unrest do not result in “anti-competitive regulation

of the pricing, supply, or distribution of goods or services.“

In view of all of the foregoing and the evidence of record,

it is found that the agreements do not discriminate in

restraint of trade against any air carrier, or otherwise

violate the anti-trust laws.

2 319 F. 2d 366, at 373.

Initial Decision of Milton H. Shapiro,

Administrative Lau Judge

The Representation Structure of the W

Board of Directors

The system of representation on the AIR Conference

Board of Directors set up by the agreements has drawn

almost as much of the unions’ fire as the provisions allow-

ing irrevocable powers of attorney. Their objection is that

non-trunkline carriers are being discriminated against

because the agreements allow each of the trunkline carriers

and Pan American to be represented on the Board by its

chief executive or a designee, whereas all the other members

of the Conference, consisting of regional, local, territorial,

and all-cargo carriers, are permitted a maximum of three

directors for the group combined.

AIR Conference considers this tiered system of repre-

sentation to be entirely reasonable as a reflection of the

interests of the carriers and their financial commitment to

AIR Conference. Thus, AIR Conference points out that the

nine largest carrier members «employ nearly 90 percent of

all the unionized employees of the total number of Con-

ference members; and that inasmuch as the financial obli-

gations of the Conference are apportioned according to

relative revenues, they fall on the largest carriers to the

greatest extent. The association emphasizes that the Board

of Directors has no authority over any vital concern of an

individual carrier without the latter’s specific prior consent

by means of an executed power of attorney. It contends

that most decisions of the Board of Directors requiring a

formal vote relate to finances, and none involves air-line

traffic or other commercial activities where the interests

of different categories of carriers might conflict. Finally,

AIR Conference apparently finds reassurance in the fact

that none of the smaller carriers has objected to the repre-

N — BES —— Pk: A

— ty ——— *

68a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

sentation arrangement and that no carrier has cited it as

a ground for refusing to join.

The responsibilities of the Board of Directors do not

begin and end with financial disbursements and receipts.

In the words of Article V of the Articles of Association,

“The policy of the Conference shall be established by a

hody to be known as the Board of Directors”. The central

interest and concern of AIR Conference is collective bar-

gaining and labor relations and the nature of such labor

negotiations is subject to the ultimate control of the Board

of Directors. They determine whether a grant of the power

\ of attorney by a member carrier should be accepted, choose

the Conference president, and have the final decision on

the assessment of damages. The record shows that at least

some of the large carrier members of AIR Conference are

in the association to enable them to have some influence

on the decisions of the smaller carriers in the area of pay,

fringe benefits and work rules. This suggests that, con-

trary to AIR Conference’s assumptions, different categories

of air lines do not necessarily concur on collective bar-

gaining and labor relations issues and that the large car-

riers will use all the influence they can muster to influence

the decisions of smaller carriers. Insofar as the public

interest is concerned, it is immaterial that the smaller

carriers have not voiced dissatisfaction with the tiered

system of representation on the Board of Directors. This ‘

is a matter for the Board’s determination, not the carriers’. 5

—

The tiered representation arrangement subjects the non-

trunkline carriers to the domination of the trunkline car- 7

riers and denies those non-trunkline carriers which have

no individual vote effective means of having their positions

adopted unless the trunk carriers go along. The members

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69a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

without a seat on the Board suffer the inequity of having

to depend on the inclinations of those non-trunkline mem-

bers with seats who may differ with them about the han-

dling of AIR Conference business,

The Board has had occasion to dispose of a similar ques-

tion of representation in the course of proceedings involving

a general inspection and review of the activities and prac-

tices of the AIR Transport Association. In its orders in

that proceeding issued in 1963 and 1964 the Board left no

doubt that it regarded a weighted voting structure, such

as the one in issue in this proceeding, as adverse to the

public interest:

“The Articles of Association of ATA have in recent

years provided for a system of weighted voting under

which a carrier’s voting strength is measured by

the revenue ton-miles it carried in the prior year.

As originally constituted, each carrier member of

ATA had an equal vote. In 1946, as the increase in

the number of certificated carriers reduced the vot-

ing control of the larger carriers, a formula equating

voting strength with size of carrier was adopted.

Under the present formula, the “Big Four“, with

Pan American, are in a position to dominate the

selection of the board of directors in which is vested

(Article V) ‘The general management and control

of the affairs, funds and property’ of the Associa-

tion. Each director may designate an alternate

from the executive staff of his company. The direc-

tors choose the officers of the Association, including

the president, who is the executive officer with full

powers of supervision and appointment of employees.

70a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

It would be only on the basis of a compelling need

in the public interest that a provision for accord-

ing voting control of the trade association to a small

group of the larger carriers could be justified. None

of the other air carrier trade associations has pres-

ently any comparable voting system. The Board finds

that there is no basis in the public interest for

continuing to approve such control.

The only difference between the above ATA system and

the one under consideration is that here the domination of

the large carriers is preordained by the tiered representa-

tion structure on the Board of Directors established in the

Articles without the intervening step of the ver of the

members to permit the same result in the ATA case. More-

over, the parallel between the authority and responsibilities

of the Boards in each instance is striking. Clearly, the

record here discloses no compelling need for weighted rep-

resentation on the Board of Directors.

The effect of the two cases cited by AIR Conference to

support its representation structure is in no way contrary

to the rationale and objective of the Board’s decision in the

ATA case, supra. Thus, the primary reference“ involved

the decision of the Board to require equal voting by all

members as to all functions of the Air Express Committee

—the Board having previously found the carriers’ pro-

posal for weighted voting adverse to the public interest—

except that it allowed weighted voting as to (1) advertising

and sales promotion expenses, and (2) tariff charges, in-

— —

48 ATA Articles of Association, 39 C. A. B. 887, at 889 (1963).

Allegheny Air Lines, Inc., et al., Order E-23066 (January 3,

1966).

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71a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

surance and accounting provisions. Given the nature and

functions of the Air Express Committee, which governs air

express operations of the air lines, weighted voting in these

limited respects preserves equality, rather than denying it.

The second case cited“ is even less persuasive support

for the AIR Conference position. The Board there required

the ATA Articles of Association to provide for (1) equal

voting on an unweighted basis for each regular member,

and for (2) representations on the Board of Directors of

the various classes of ATA members, unless all members

of any class elected not to be represented on the Board

for any particular year. This ruling in no way justifies

the representation system advocated by AIR Conference.

In view of the foregoing and the evidence of record it is

found that the tiered representation system of the AIR

Conference Board of Directors discriminates against non-

trunkline carriers and, therefore, is adverse to the public

interest. Accordingly, a provision for granting all member

carriers of AIR Conference an equal voice on the Board of

Directors will be made a condition of approval of the

agreements.

CONDITIONS ON APPROVAL OF THE AGREEMENTS

Besides the conditions on approval already found neces-

sary requiring the elimination of the irrevocability provi-

sions tied to powers of attorney granted by member car-

riers to AIR Conference for collective bargaining purposes,

and calling for the revision of the representation structure

of the AIR Conference Board of Directors, consideration

must also be given to other conditions proposed by BOR and

APA, as well as a condition relating to the liability for

damages for “unauthorized withdrawal”.

«8 Air Transport Association, Order E-20511 (February 25, 1964).

72a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Damages for “Unauthorized Withdrawal” from

AIR Conference

An integral part of the AIR Conference plan to main-

tain a united front for collective bargaining purposes is the

provision for damages in the Articles of Associations and

the bylaws in the event a member carrier does break

ranks.“ Pursuant to section II (b) (2) of the Articles of

Association “The execution of any unauthorized agreement

by a member, or the termination of a power of attorney in

violation of subsection (1) . . . without the unanimous

consent of the Board of Directors shall constitute an unau-

thorized withdrawal from the Conference and shall subject

that member to the damages prescribed in the bylaws.” An

“unauthorized agreement” is defined as “any agreement

or understanding negotiated by a member carrier on its

behalf, or any modification thereof, negotiated or volun-

tarily agreed to in any manner except pursuant to the

power of attorney granted by such member to the Confer-

ence.” The record shows that the above provision for

damages is just as unique in the articles of employer as-

sociations as the irrevocability feature. No similar penalty

has been cited as being a part of the structure of any other

employer association.

According to Article V of the bylaw3, any employer mem-

ber found guilty by the Board of Directors of an unau-

thorized withdrawal which “appears to have caused direct

and immediate monetary loss to the Conference or one of its

members, or jeopardizes pending negotiations of any mem-

ber of the Conference, or appears likely to affect the

46 As the Executive Vice-President of AIR Conference testified,

“The damage clause . . . was drafted with the power of attorney situa-

tion primarily in view. There is no question about that.”

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73a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

present or future effectiveness of the Conference... will

be liable for “actual damages provable by the Conference

or by any member of the Conference as having been caused,

in whole or in part, by such act or omission, and for such

other damages as may be specified in any applicable power

of attorney executed by such member and approved by the

Board of Directors.” Any dispute as to the amount of dam-

ages to be assessed against any transgressing member is

to be referred to final and binding arbitration at the in-

stance of any party to the agreement.

On the basis of testimony of AIR Conference witnesses

it appears that the extent of the liability which may be

incurred and other implications of the damage provisions

have not been fully explored. On their face, the damage

provisions expose all member carriers to inordinate finan-

cial penalties and could mean disaster for a weak or small

carvier.

In view of the foregoing, it is found that the provisions

for damages in the Articles of Association and the bylaws —

of AIR Conference covering unauthorized withdrawal

where a power of attorney for collective bargaining pur-

poses is involved are adverse to the public interest and are

hereby disapproved. It is also found that, inasmuch as the

said provisions for damages are the sanction specified in

the agreements to prevent revocation of a power of at-

torney, they also interfere with the duty to bargain in good

faith, and violate section 2, First, of the Railway Labor

Act. Accordingly, approval of the agreements in issue will

be made contingent on the elimination of all provisions

for damages which may be assessed against member car-

riers for action taken with respect to powers of attorney

granted AIR Conference for collective bargaining pur-

poses.

74a

Initial Decision of Milton H. Shapiro,

Administrative Law Judge

Disapproval of such provisions for damages is warranted

without regard to whether the infra

This text is long and has been trimmed here. Open the source document for the complete record.