Opposition Brief — Sowers v. Federal Express Corp.

~~

eternal

No. 91-1919

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1991

tICHARD M. SOWERS,

Petitioner,

V.

FEDERAL EXPRESS CORPORATION,

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

RESPONDENT’S BRIEF IN OPPOSITION

R. LARRY BROWN E. Scott SMITH

CLIFFORD P. JOHNSON Counsel of Record

Federal Express Corporation PauL D. JONES

2005 Corporate Avenue ForD & HARRISON

Memphis, Tennessee 38132 600 Peachtree at the Circle -

(901) 395-3457 = * Building

1275 Peachtree Street, N.E.

Atlanta, Georgia 30309

(404) 888-3800

Attorneys for Federal Express

Corporation

So eee cement 1 etch tte crm

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

ET ASE La

7 Tere

COUNTERSTATEMENT OF THE

QUESTIONS PRESENTED

1. Whether Petitioner’s failure to assert, at any

time before filing his Petition for Re-hearing with

Suggestion for Rehearing En Banc in the Court of

Appeals, that rejection of his common-law theory of

anticipatory breach would be tantamount to a viola-

tion of Sections 2, Third, Fourth, and Ninth of the

Railway Labor Act, 45 U.S.C. §§ 152, Third, Fourth,

and Ninth, precludes consideration of that issue in

this Court?

2. Whether the questions presented in the Petition

are sufficiently grounded in the factual record to per-

mit this Court any meaningful opportunity to review

the ruling of the Court of Appeals?

3. Whether the Petition adequately presents any

special and important reasons justifying this Court’s

exercise of discretionary review?

il

LIST OF PARTIES

The names of all parties to the proceedings in the

United States Court of Appeals for the Ninth Circuit

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

‘ There are no parent companies or subsidiaries (except wholly

owned subsidiaries) to be identified pursuant to Supreme Court

Rule 29.1.

ill

TABLE OF CONTENTS

Page

COUNTERSTATEMENT OF THE QUESTIONS

TIRES SSO 1

no cid olisca Sess ecocapesceannacnessc i]

SABLE OF CONTENTS. ..............00000cc0.c.sccsescccccesees... lll

TABLE OF AUTHORITIES. .................c.ccccc.cceeeees..... iV

oe osc va cnacvarnevecsnonseencsesesccs 1

cop = iy yt ) cc rr 1

COUNTERSTATEMENT OF FACTS AND PROCEED.-

INGS BELOW NECESSARY TO CORRECT INAC.

CURACIES OR OMISSIONS IN THE PETITION ...... 2

SUMMARY OF ARGUMENT. ........cccccccccccsccccceccceccece, 4

REASONS FOR DENYING THE WRIT

I. Neither The Decision Below Nor The Record

Raises Either Of The Questions Presented In

_ Aa 6

II. The Questions Presented Are Important Only

To The Parties, Reflect No Circuit Conflict,

And Present No Significant Legal Matter

Warranting Resolution By This Court ......... 10

i esc isaisedivassinnntvedsessansaercoeneconeess 12

TABLE OF AUTHORITIES

Cases:

Barthelemy v. Air Line Pilots Ass’n, 897 F.2d 999

ee a SII co acta eeteiaaie aca

Belcher v. Stengel, 429 U.S. 118 (1976) (per

I eealtlas alors satvcnataratetackadinncstaceen pcadia voce

Brotherhood of Ry. & S.S. Clerks v. Virginian Ry.

Co., 125 F.2d 853 (4th Cir. 1942) ...........

City of Springfield v. Kibbe, 480 U.S. 257 (1987) .

EEOC v. FLRA, 476 U.S. 19 (1986) oo.....eceeeeeeeeees

Electromation, Inc. & Int'l. Bhd. of Teamsters,

NLRB Case No. 25-CA-19818, ALJ Dee’n

SE winsakdsissccss sashigunndeatantaiegieaiealea ces teteiddsdiéte cis

FTC v. Grolier, Inc., 462 U.S. 19 (1983) ........

Hertzka & Knowles v. NLRB, 503 F.2d 625 (9th

Cir. 1974), cert. denied, 423 U.S. 875 (1975) .

Mishkin v. New York, 383 U.S. 502 (1966) ...........

NLKB v. Cabot Carbon Co., 360 U.S. 203 (1959) .

Texas & N.O. Ry. Co. v. Brotherhood of Ry. & S.S.

Clerks, 281 U.S. 548 (1980) oo... cece ecessecceeees

Statutes:

Railway Labor Act

RP Weis Se Wy HOI nscsicerccccecshasecsesniecsnancsecs

TD WBRs. © BGR, FOO vaiivscsssciccescvcersssscvesansves

National Labor Relations Act

Be Acre, TE BID wsncsecccsncvsacesosescncccsacsocceose

Labor Management Relations Act

Ber SR Ae I esciladicor is secwiicinuchsdawehnblnicaccentace

Page(s)

Table of Authorities Continued

Page(s)

ARTICLES:

Melvin Hutson, ‘“Electromation: Employee Involve-

ment or Employer Domination,” 8 LAB. LAW.

FU FL 5... Bee er Om Oley anc eee 11

Bennet D. Zurofsky, “‘Everything Old is New Again:

Company Unions in the Era of Employee In-

volvement Programs,”’ 8 LAB. LAW. (ABA)

OR ERED: cn aintsiodiaboadeen nae "33

RULES:

I Gets he UE sacavesnstcaseceantal Steere i

IN THE

Supreme Court of the GCnited States

OCTOBER TERM, 1991

No. 91-1919

RICHARD M. SOWERs,

Petitioner,

Vv.

FEDERAL EXPRESS CORPORATION,

Respondent. _

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

RESPONDENT’S BRIEF IN OPPOSITION

Respondent Federal Express Corporation (‘‘Federal

Express’’) respectfully urges denial of the Petition for

a Writ of Certiorari to review the judgment and order

entered by the United States Court of Appeals for

the Ninth Circuit on January 30, 1992.

JURISDICTION

The jurisdictional requisites are adequately set forth

in the Petition.

STATUTES INVOLVED

No federal or state statute was involved in either

the District Court or in Petitioner’s appeal to the

Ninth Circuit. In this Court, however, Petitioner raises

questions arising under Sections 2, Third, Fourth, and

Ninth of the Railway Labor Act, as amended (“RLA’’),

45 U.S.C. §§ 152, Third, Fourth, and Ninth. These

provisions are set out at pp. 47-51 of the Petition.

COUNTERSTATEMENT OF FACTS AND PROCEEDINGS

BELOW NECESSARY TO CORRECT INACCURACIES OR

OMISSIONS IN THE PETITION

There is no record support whatsoever for

Petitioner’s suggestion that his “individual contract

(the FCH) contained provisions for modification via a

revision process [record citation omitted] wherein

SOWERS was to be represented by a revocable agent

[the FAB.]” (Petition, p. 10) (emphasis in original).

The parties stipulated to the role played by the FAB

in the FCH revision process (Petition, pp. 52-54), and

no mention was ever made of Petitioner’s alleged uni-

lateral right to “revoke” the FAB’s authority to ap-

point pilot members to FCH revision committees for

the purpose of effecting binding modifications to the

FCH agreement. The FAB’s authority in that regard

is conferred by the contract, not by Petitioner (Id.).

Likewise, the record does not support Petitioner’s

statement to this Court that the FAB is “an orga-

nization that was the child of Federal Express man-

agement and whose $1.1 million budget is paid

completely by Federal Express ... .”’ (Petition, p. 10).

The record contains neither any allegation nor any

evidence addressed to either point. The only evidence

adduced below concerning either the origin, the na-

ture, or the operation of the FAB was also the subject

of a stipulation between the parties:

There exists within Federal an elected or-

ganization known as the Flying [sic, Flight]

Advisory Board (the “FAB”’). The FAB is

elected by the pilot group and is responsible

for, among other things, dealing with man-

agement concerning matters of concern to

crewmembers.

(Appendix B, p. 8a, ¢ 14). The record is silent as to

both the FAB’s creation and the amount and source

of its budget.

The Petition misinforms this Court that Petitioner

“properly terminated his revocable agency with the

... FAB ...; this also being a stipulated fact be-

tween the parties.” (Petition, p. 11). No such stipu-

lation has ever existed. All matters stipulated to below

were set forth in the Pretrial Order entered in the

District Court (Appendix B, pp. 5a-11a), and they con-

tain no suggestion that the FAB’s authority to ap-

point revision committee members was either

revocable or revoked. (See Jd., 44 1-3, 13-16, 20).

No pleading, motion, brief, or oral argument in the

District Court ever raised any question arising under

the RLA. (Appendix B, pp. 3a-14a). Nor was the RLA

mentioned or considered in connection with any issue

Petitioner presented for review by the Ninth Circuit

(Appendix C, pp. 15a-16a, “‘A Statement of the Issues

Presented for Review” from Petitioner’s Opening

Brief to the Ninth Circuit). Petitioner’s first mention

of the RLA came in his Petition for Re-Hearing with

Suggestion for Re-Hearing En Bant, which he pre-

sented to the Ninth Circuit on or about February 14,

1992 (Appendix D, pp. 17a-18a). That petition was

denied, apparently without any consideration being

given to any issue said to arise under the RLA

(Petition, p. 40). Accordingly, neither the District

Court nor the Ninth Circuit has considered or passed

upon the RLA’s applicability, if any, to the facts of

this case.

~ SUMMARY OF ARGUMENT

What began and was decided below as a breach of

contract action between parties of diverse citizenship

(Petition, p. 15) is presented to this Court as raising-

far-reaching, if improbable, questions of federal labor

policy under the RLA. To pose these questions that

were neither raised nor decided below, Petitioner must

either distort a detailed, stipulated factual record ‘or

create a new one as he goes along. His petition at-

tempts to do both.

Petitioner’s thesis turns on the proposition that the

Federal Express Flight Advisory Board (“‘FAB’’) must

be either one of only two things: (1) his “revocable

agent,’ (Petition, pp. 10, 11), or (2) a carrier-domi-

nated labor organization, the existence or mainte-

nance of which violates the RLA. Petitioner’s analysis

ignores a third possibility: that the individual em-

ployment contract into which he entered with Federal

Express itself invested the FAB with authority to

bind Petitioner to contract modifications.

The record supports only this third alternative

(Petition, pp. 52-54) and compelled the conclusion be-

low that, “[a]ecording to its terms, the FCH [Flight

Crewmembers Handbook] can only be modified pur- ~

suant to action of the FAB and Federal management

.... The FAB-approved revision committee can bind

Sowers to FCH revisions.” (Appendix A, p. 2a).2 Ac-

cordingly, having stipulated to a record that defeats

his breach of contract theory, Petitioner no longer

complains of any conduct on the part of Federal Ex-

press. Instead, his new complaint is that, on his own

appeal, the Ninth Circuit,

exceeded its jurisdiction by essentially anoint-

ing this [now allegedly] employer-dominated

‘quality circle’ (the FAB) with all of the rights

of an exclusive collective bargaining unit [sic,

representative] under the Railway Labor Act

but without any of the safeguards and re-

sponsibilities [required by the RLA.]

Petition, p. 28).

These ‘‘issues” formed no part of the case

Petitioner alleged, tried, lost, and appealed below. No

record exists by which this Court, or any other, could

possibly adjudicate the FAB’s alleged status as a car-

rier-dominated labor organization proscribed by the

RLA. Such a finding, though, must precede consid-

eration of Petitioner’s present lament, that the ‘‘Ninth

Circuit’s ... order . ... transmogrified this case from

a simple contract action into a statutory quagmire

.... (Petition, p. 27 n. 5). This case was and remains

“a simple contract action,” and it properly presents

no issue for resolution by this Court.

* Appendix A is the Ninth Circuit’s two-page Memorandum

also set out at pp. 32-35 of the Petition. We include it here

because the Petition’s version inadvertently drops an impcrtant

line from the penultimate paragraph of that court’s decision.

REASONS FOR DENYING THE WRIT

I. Neither The Decision Below Nor The Record Raises

Either Of The Questions Presented In The Petition.

Each Question Presented in the Petition (pp. 2-3)

complains of an alleged disharmony between the lower

courts’ conclusions that Federal Express did not

breach Petitioner’s individual contract of employment,

on the one hand, and various requirements of the

Railway Labor Act, on the other. But the Ninth Cir-

cuit decided no such question in this proceeding.

Moreover, the record will Support no such determi-

nation of those issues by this Court.

Like the District Court’s decision it affirmed

(Petition, pp. 36-39), the Ninth Circuit’s decision does

no more than hold that Petitioner’s “employment con-

tract was not breached by repudiation or otherwise.”

(Appendix A, p. 2a). As Petitioner has always as-

serted, and continues to assert, the agreement giving

rise to this dispute was ‘“‘an individual contract of

employment’’ (Petition, p. 10), not a collective bar-

gaining agreement. Thus, the Ninth Circuit had no

occasion to consider, and did not consider, any portion

of the questions now presented in the Petition. This

Court ‘‘ordinarily will not decide questions not raised

or litigated in the lower courts.” City of Springfield

v. Kibbe, 480 U.S. 257, 259 (1987); FTC v. Grolier,

Inc., 462 U.S. 19, 23 n. 6 (1983). As Kibbe also states,

“‘[t]hat rule has special force where the party seeking

to argue the issue has failed to[raise or preserve it.]’’

480 U.S. at 259.

If the writ requested were granted to review the

Questions Presented by Petitioner, it would be dis-

missed as improvidently granted after plenary con-

~]

sideration. Belcher v. Stengel, 429 U.S. 118 (1976) (per

curiam). The linchpin of each of the Questions Pre-

sented is the allegation that the FAB is a “carrier-

dominated labor organization” maintained in violation

of the RLA. But because that assertion lacks any

record support whatsoever, the Petition should be de-

nied now, rather than the writ dismissed later. See

EEOC v. FLRA, 476 U.S. 19, 23 (1986).

Petitioner’s Questions Presented assume that the

FAB is a carrier-dominated labor organization, but

this contention was neither raised nor proved below.

That assumption is itself composed of two parts: that

the FAB is a “labor organization”’ and, if it is, that

Federal Express ‘“‘dominates”’ ii.

The RLA treats the subject of ‘‘carrier domination”’

in Section 2, Fourth. That section states, in relevant

part, that:

[I]t shall be unlawful for any carrier to in-

terfere in any way with the organization of

its employees, or to use the funds of the

carrier in maintaining or assisting or con-

tributing to any labor organization, labor rep-

resentative, or other agency of collective

bargaining, or in performing any work there-

OO oka

45 U.S.C. § 152, Fourth. That section’s proscriptions

are tied to Congress’s concern with eliminating a car-

rier’s “actual interference with the liberty of [its] em-

ployees in the selection of their representatives[,]’’

Texas & N.O. Ry. Co. v. Brotherhood of Ry. & S.S.

Clerks, 281 U.S. 548, 560 (1930), a concern that has

never been implicated in this case.

Safeguards against improper carrier or employer

influence over labor organizations are neither new nor

arcane. Federal labor policy, as applied by this Court

and the courts of appeal, has protected employee

rights in this area for over fifty years. See, e.g., Sec-

tions 2, Third, and Fourth of the Railway Labor Act,

45 U.S.C. §§ 152, Third, Fourth; Section 8(a)(2) of the

National Labor Relations Act (““NLRA’’), 29 U.S.C.

_§ 158(a(2); Section 302(a) of the Labor Management

Relations Act, 29 U.S.C. § 186(a); and NLRB v. Cabot

Carbon Co., 360 U.S. 203 (1959). These concerns are

not unknown to the circuit courts and are fully con-

sidered when presented in appropriate cases. See, e.g.:

Barthelemy v. Air Line Pilots Ass’n, 897 F.2d 999,

1014-1017 (9th Cir. 1990) (carrier did not violate RLA

Section 2, Fourth by assuming labor organization’s

$1.25 million investment-banking expense); Hertzka &

Knowles v. NLRB, 503 F.2d 625 (9th Cir. 1974), cert.

denied, 423 U.S. 875 (1975) (no violation of Section

8(aX2) of NLRA where cooperative employee-man-

agement arrangement reflects employee free choice

and not management instigation and coercion); Broth-

erhood of Ry. & S.S. Clerks v. Virginian Ry. Co., 125

F.2d 853, 858-59 (4th Cir. 1942) (describing indicia of

carrier domination of labor organization in violation

of RLA).

But the “appropriate cases” are those which pres-

ent factual records upon which the courts can answer

two questions: (1) the origin and operation of the

employee group in question, i.e., is the group actually

a “labor organization” under the relevant statute?

and (2) the nature and extent of carrier or employer

control, interference, assistance, or influence, i.e., is

9 66

the ‘‘labor organization”’ ‘‘carrier-dominated?” The re-

cord in this case answers neither question.

The only evidence before the District Court and

Ninth Circuit concerning the origin and nature of the

FAB is found in the parties’ one-sentence stipulation

describing the FAB as “.. . elected by the pilot group

and ... responsible for, among other things, dealing

with management concerning matters of concern to

crewmembers.” (Appendix B, p. 8a, ¢ 14). What this

Court can know about the FAB’s function is limited

to the single fact that the FAB appoints three of the

seven members of FCH Revision Committees for pur-

poses of considering modifications to the FCH con-

tract. (Petition, p. 52). This meager record provides

no basis for a determination that the FAB is a “labor

organization” under the RLA.

Even less supported is the second prong of the

determination Petitioner asks this Court to make. The

record contains no evidence whatsoever that Federal

Express created, influenced, controlled, or financially

assisted the FAB'in any way. Petitioner merely asks

this Court to accept on faith his suggestion that the

FAB is ‘“‘an organization that was the child of Federal

Express and whose $1.1 million budget is paid com-

pletely by Federal Express ....” (Petition, p. 10).

Petitioner did not allege or prove one word of that

statement below (Appendix B, pp. 3a-14a); and he

cannot properly ask this Court to be the initial arbiter

of such significant contentions of fact.

Nowhere present in the record made below are any

of the allegations, facts, or findings that must nec-

essarily precede consideration of the Questions Pre-

sented in the Petition. The Petition seeks an advisory

opinion upon a hypothetical set of assumptions that

10

has never before been alleged or proved. There is,

simply, nothing for this Court to review, and, for this

reason alone, the Petition should be denied.

II. The Questions Presented Are Important Only To The

Parties, Reflect No Circuit Conflict, And Present No

Significant Legal Matter Warranting Resolution By This

Court.

Aware that the decisions below that Federal Ex-

press did not breach his individual, common-law, em-

ployment contract affect only the parties to this case

and create no circuit conflict, Petitioner strains to

suggest that he raises a question ‘‘the national sig-

nificance and importance of [which ...] is just cur--

rently coming into focus.” (Petition, p. 28). He does

not explain how this can be so, given the age of the

‘employer domination” cases, and the asserted ‘“‘sig-

nificance’”’ of the issue he raises is all the more reason

for this Court not to consider the question on the

hypothetical record Petitioner presents. Mishkin v.

Ivew York, 383 U.S. 502, 512-13 (1966) (writ dismissed

as improvidently granted where ‘‘far-reaching and im-

portant questions tendered ... are not presented by

the record with sufficient clarity to require or justify

their decision.’’)

Petitioner points.to two cases now pending before

the National Labor Relations Board and the National

Mediation Board in which the legality of ‘quality cir-

cles” or “employee involvement programs” is being

tested under the NLRA and the RLA.? His reliance

on these pending cases proves too much.

* One of the pending cases, Electromation, Inc. & Int'l. Bhd.

of Teamsters, NLRB Case No. 25-CA-19818 ALJ Dec’n (1990),

has provoked some recent commentary among members of the

OT

1]

Petitioner himself notes that, in Electromation, an

administrative law judge ‘has made findings of fact

and conclusions of law that would indicate a ‘quality

circle’ or ‘action committee’ . . . are [sic] inimical to

the ability of labor to organize.” (Petition, p. 29). If

the agencies charged with administering the NLRA

and RLA should determine that ‘‘quality circles” are

inimical to federal labor policy, the federal courts will

have ample opportunity to review those conclusions

on properly-developed records. It is precisely the ab-

sence of any similar record here that makes this case

especially inappropriate for review by this Court.

This case, therefore, presents no significant federal

question or other legal matter warranting resolution

by this Court. The decision below rests entirely upon

the adequate, independent, common-law ground that

Petitioner’s individual contract of employment ‘was

not breached by repudiation or otherwise.”’ (Appendix

A, p. 2a). Because nothing else, or greater, can prop-

erly be made of this case, this Court should decline

Petitioner’s invitation to consider the questions he

presents.

labor-law bar. Compare, Bennet D. Zurofsky, “Everything Old

Is New Again: Company Unions in the Era of Employee In-

volvement Programs,” 8 Lab. Law. (ABA) 381 (1992), with,

Melvin Hutson, ‘‘Electromation: Employee Involvement or Em-

ployer Domination,” 8 Lab. Law. (ABA) 389 (1992).

12

CONCLUSION

For the foregoing reasons, the Petitioner for a Writ

of Certiorari should be denied.

Respectfully submitted,

R. LARRY BROWN E. Scott SMITH

CLIFFORD P. JOHNSON Counsel of Record

Federal Express Corporation PaAuL D. JONES

2005 Corporate Avenue ForD & HARRISON

Memphis, Tennessee 38132 600 Peachtree at the Circle

(901) 395-3457 Building

1275 Peachtree Street, N.E.

Atlanta, Georgia 30309

(404) 888-3800

Attorneys for Federal Express

Corporation

APPENDIX

x

‘*

TSS

is

—

rare

er

>

7

‘

yi

wi),

ef Med .

J nn

ee eee Be

é +

ty

2

é

Ns

ere ee

la

APPENDIX A

UNITED STATES COURT OF APPEALS |

FOR THE NINTH CIRCUIT

No. 90-16752

D.C. No. CV-89-00474-BRT

\

RICHARD M. SOWERS,

Plaintiff-Appellant,

v.

FEDERAL EXPRESS CORPORATION,

Defendant- Appellee.

Appeal from the United States District Court

for the District of Nevada

Bruce R. Thompson, Senior District Judge, Presiding

Argued and Submitted January 13, 1992

San Francisco, California

MEMORANDUM*

Before: SNEED, SCHROEDER, T.G. NELSON, Circuit

Judges. Mer

Richard Sowers appeals the district court’s grant of

summary judgment in favor of Federal Express Corpo-

ration (‘Federal’). We review de novo, Kruso v. Inter-

*This disposition is not appropriate for publication and may not be

cited to or by the courts of this circuit except as provided by 9th Cir.

R. 36-3.

2a

national Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.

1989), cert. denied, 110 S. Ct. 3217 (1990), and affirm.

We may affirm on any ground finding support in the

record. Jd. Sowers’ employment contract was not breached

by repudiation or otherwise. The FCH was at all times

amendable, according to its terms, with or without Sowers’

individual consent. The revision process concluded on Au-

gust 4, 1989, in a FAB-approved revision which complied

with the FCH revision process. The district court correctly

concluded that Federal properly revised Section 1-96 of

the FCH before performance was due, and that Sowers’

anticipatory breach theory was no more than a fiction.

Furthermore, as the district court explained, Sowers

failed to treat the alleged repudiation as a breach by re-

signing his employment or otherwise putting Federal on

notice that he considered his employment contract to be

terminated. The filing of lawsuits by Sowers did nothing

to affect his employment contract. We reject Sowers’ ar-

gument that by continuing his employment with Federal

he was merely mitigating his damages. Sowers’ arguments

are an ad hoc explanation of a series of events which in

reality do not support his position.

Sowers would have us believe that because he ‘‘fired”’

the FAB, the modification of the FCH was invalid as to

him. According to its terms, the FCH can only be modified

pursuant to action of the FAB and Federal management.

Sowers notified FAB that he had ‘terminated his agency

with them.’’ Sowers removed himself from the amendment

process; this did not affect the process or the resulting

modification. The FAB-approved revision committee can

bind Sowers to FCH: revisions.

We have considered the other contentions of the parties

and conclude that no additional discussion is necessary.

The district court’s entry of summary judgment is AF-

FIRMED.

3a

APPENDIX B

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

Case No. CV-N-89-403 BRT

RICHARD M. SOWERS,

Plaintiff,

vs.

FEDERAL EXPRESS CORPORATION;

TIGER INTERNATIONAL, INC.;

THE FLYING TIGER LINE INC.,

a wholly owned subsidiary of TIGER INTERNATIONAL,

INC.;

Defendants.

Case No. CV-N-89-474 BRT

RICHARD M. SOWERS,

Plaintiff,

: VS.

FEDERAL EXPRESS CORPORATION,

Defendant.

PRETRIAL ORDER

Following pretrial proceedings in this cause pursuant to

Local Rule 190-3, IT IS ORDERED:

I.

These Cases are actions for injunctive relief and dam-

ages sought to remedy Defendant’s alleged breach of its

4a

employment contract with Plaintiff, material portions of

which are embodied in the Federal Express Flight Crew-

members Handbook (‘‘FCH’’). The alleged breach arose out

of Defendant Federal Express Corporation’s (‘‘Federal’’)

merger with Tiger International, Inc. and its wholly-owned

subsidiary, The Flying Tiger Line, Inc. (‘“Tiger’’), on Au-

gust 7, 1989. On December 16, 1988, as part of its Agree-

ment and Plan of Merger with Tiger International, Inc.,

Federal voluntarily adopted certain Labor Protective Pro-

visions (‘‘LPPs’’). The LPPs require the fair and equitable

integration of the seniority lists of the two pilot groups

and provide that Federal must arbitrate any challenge to

the fairness or equity of that integration. Following that

merger, Federal is proceeding with the fair and equitable

combination of the former Federal pilot seniority list and

the former Tiger pilot seniority list into a single, inte-

grated seniority list.

Plaintiff contends that when, on or about December 16,

1988, Defendant FEDERAL EXPRESS CORPORATION vol-

untarily entered into Labor Protective Provisions (LPPs)

and did other acts as a part of their merger agreement

with TIGER INTERNATIONAL/FLYING TIGERS, they did

so knowingly and willfully violating a pre-existing individ-

ual contractual right contained in the aforementioned 1-

96 of the FCH. FEDERAL EXPRESS entered into these

LPPs for economic gain in violation of a pre-existing con-

tractual right.

These actions by FEDERAL EXPRESS inevitably caused

the loss of 600 to 800 seniority positions for Plaintiff

SWOERS [sic] and drastically effected his future earnings,

retirement benefits and job satisfaction.

Plaintiff seeks compensation sufficient to protect his ex-

pectancy in inter>st in the underlying contract of employ-

ment as partially expressed by 1-96 of the FCH.

Federal contends that Section 1-96 of the FCH was at

all times amendable; that the FCH was properly amendec

a

according to its terms, before the merger of Tiger into

Federal; that the contract has not been breached; and that

Plaintiff is not entitled to any relief whatsoever. Alter-

natively, Defendant contends that Plaintiff had knowledge

of Federal’s intention to comply with the LPPs from on

or about December 16, 1988, and knew that such compli-

ance would be inconsistent with his alleged right under

FCH Section 1-96; that Plaintiff first informed Federal of

his objection to Federal’s announced course of action on

or about July 14, 1989, three days before he filed the first

of these suits against Federal; that between December

1988 and July 1989 Plaintiff knew that Federal was ex-

pending great sums of money and amounts of time pre-

paring to comply with the LLPs [sic, LPPs] and that much

of that time and money was expended on behalf of Plaintiff

and the other Federal pilots; that Federal reasonably con-

strued Plaintiff's silence as his acquiescence to Federal’s

frequently-announced intentions to comply with the LPPs;:

and that Plaintiff's conduct amounts to laches and equi-

tably estops him from recovering any damages or other

relief from Federal.

Il.

This Court has diversity jurisdiction over the subject

matter of this action under 28 U.S.C. § 1332(a)(1). Plaintiff

is a citizen and resident of the State of Nevada; Federal

is a Delaware corporation with its principal place of busi-

ness in Memphis, Tennessee; and the amount in contro-

versy between the parties exceeds the sum or value of

$50,000.00, exclusive of interest and costs.

III.

The following facts are admitted by the parties and

require no proof:

1. On July 17, 1989, the Plaintiff filed his initial com-

plaint in the action styled as Richard Sowers v. Federal

6a

Express Corporation, Tiger International, Inc. and Flying

Tiger Line, Inc., CV-N-89-403-BRT (D. Nev.), claiming that

the seniority he had earned while working as a pilot for

Federal was being jeopardized by the merger of Flying

Tigers and its pilot workforce into Federal Express.

2. According to the Plaintiff, Federal was threatening

to integrate the seniority lists of the two carriers in a

‘fair and equitable manner,’’ in contravention of his con-

tractual right to insist on having all Flying Tigers’ flight

crewmembers placed at the bottom of any integrated sen-

iority list.

3. The Plaintiff requested injunctive relief as well as

$2.5 million in compensatory damages, $5 million for men-

tal distress and an unspecified amount for general dam-

ages, punitive damages, actual, consequential and incidental

losses and attorneys’ fees and prejudgment interest.

4. Plaintiff alleges and Federal agrees that, Plaintiff has

an individual contract of employment with Federal, the

material terms and conditions of which are governed by

the FCH.

5. Section 1-96, added to the FCH in August, 1988,

provided:

In the event the Company acquires or merges

with another airline employing Flight Crewmem-

bers, any such crewmembers selected for reten-

tion will be awarded seniority in accordance with

FCH 1-85, Crewmembers Seniority, with the ex-

ception of FCH 1-88 [relating to the relative sen-

iority of crewmembers hired on the same date].

6. Section 1-86 of the FCH stated that:

Seniority will begin to accrue on the date a pilot

is employed by the Company as a crewmember

and begins Initial Training and Basic Indoctri-

nation. It will continue to accrue during his entire

‘i

employment period, except as specified in FCH

Sections 1-88 and 1-91 [relating to crewmembers

assigned to non-flying duty].

7. The FCH contains an internal dispute resolution pro-

cedure known as the Guarantee of Fair Treatment Policy

(“GFTP”’) which, had it been invoked in this case, could

have resulted in Plaintiff’s complaint being finally resolved

by a Board of Review consisting of five Federal pilots,

three of whom would have been chosen by Plaintiff. Sen-

lority grievances are expressly redressable by the GFTP.

Plaintiff was aware of the GFTP procedures and had pre-

viously invoked those procedures to resolve an earlier

grievance, but he made no attempt to do so in this case.

8. On December 16, 1988, Federal and Tiger Interna-

tional entered into an Agreement and Plan of Merger. As

part of that Agreement, Federal agreed to adopt labor

protective provisions no less favorable to employees of both

carriers than those imposed by the Civil Aeronautics Board

in the Allegheny-Mohawk Merger Case, 59 C.A.B. 19 (1972).

9. In accordance with that obligation, Federal voluntar-

ily assumed the Federa! Express-Flying Tigers Labor Pro-

tective Provisions (the ““LPPs’’).

10. Section 3 of the LPPS specifies that:

Insofar as the merger affects the seniority rights

of the carriers’ employees, provisions shall be

made for the integration of seniority lists in a

fair and equitable manner, including, where ap-

plicable, agreement through collective bargaining

between the carriers and the representative of

the employees affected. In the event of failure

to agree, the dispute may be submitted by either

party for adjustment in accordance with Section

13 [providing for final and binding arbitration

before a neutral arbitrator selected by the par-

ties].

=

8a

12. In December, 1988, The Flying Tiger Line, Inc. was

a party to a collective bargaining agreement with the Air

Line Pilots Association, International, which agreement

governed the rules, working conditions, and rates of pay

of the Flying Tiger pilots. That agreement required, inter

alia, that:

In the event of a consolidation or merger of the

business of the Company [Flying Tiger], with the

business of another air carrier, the Company, if

it is the surviving air carrier, will provide the

pre-merger or pre-consolidation Company pilots

covered by this Agreement with the labor pro-

tective provisions specified by the Civil Aeronau-

tics Board in the Allegheny-Mohawk merger (the

‘Labor Protective Provisions’’). If the Company

is not the surviving air carrier the Company shall

use its best efforts to cause the surviving air

carrier to provide the pre-merger or pre-consol-

idation Company pilots with the Labor Protective

Provisions. ...

13. At no time prior to three days before he filed his

original lawsuit did Richard Sowers tell Federal that he

objected to Federal’s adoption of the LPPs.

14. There exists within Federal an elected organization

known as the Flying [sic, Flight] Advisory Board (the

“FAB”’). The FAB is elected by the pilot group and is

responsible for, among other things, dealing with man-

agement concerning matters of concern to crewmembers.

15. The FCH contains a Revision Process, which is ad-

ministered by a Revision Committee consisting of three

(3) pilots appointed by the FAB, three (3) management

members appointed by the System Chief Pilot, and the

System Chief Pilot. Two basic methods are specified in

the FCH by which a modification to the terms of the FCH

can be effectuated. Under the formal Revision Process,

the Revision Committee meets to consider changes that

Ya

have been proposed. A quorum of five of the six crew-

members, plus the Chief Pilot, is required to conduct the

revision process. All crewmembers are thereafter notified

of the proposed changes and have three (3) weeks to sub-

mit comments to the Revision Committee. After receiving

those comments, the Revision Committee determines

whether to recommend the changes to the FCH, and any

recommended revisions are sent to the Senior Vice Pres-

ident of Air Operations who decides whether to accept the

recommended revision. Any member of the Revision Com-

mittee can appeal the decision of the Senior Vice President

of Air Operations to the Chief Operating officer who, along

with the Chairman and Chief Executive Officer, will render

the final opinion regarding the proposed revision.

16. The other means for revising the FCH is the Bul-

letin Process. A Notice of Exception Bulletin is used to

permit exceptions to the normal FCH procedures to be

made for single instances where appropriate. At least six

(6) of the seven (7) Revision Committee members must

endorse the proposed exception in order for it to be sent

to the Senior Vice President of Air Operations for ap-

proval. The determination of the Senior Vice President of

Air Operations to accept or reject the exception can be

appealed by any member of the Revision Committee to

the Chief Operating Officer who, acting in conjunction with

the Chairman and Chief Executive Officer, will render the

final opinion regarding the proposed exception.

17. On July 15, 1989, T. Allen McArtor, the Senior Vice

President for Air Operations at Federal, sent a memoran-

dum to David Sanders, the Chairman of the FAB, and to

the other members of the Revision Committee, notifying

them of a proposed revision to Section 1-96 of the FCH.

18. Instead of designating the three (3) pilot members

to serve on the Revision Committee from the FAB, Sand-

ers sent a memorandum to McArtor, advising him that

the FAB refused, at that time, to participate in any man-

10a

ner in a Revision Committee that was considering revising

Section 1-96 of the FCH.

19. Managements’ Revision Committee Members, acting

in the absence of the pilot members from the FAB, there-

after convened and a proposed revision to Section 1-96

was then sent to all crewmembers for their consideration

and comments.

20. The Plaintiff then filed his second Complaint, styled

as Richard Sowers v. Federal Express Corporation, CV-N-

89-474-BRT (D. Nev.), contending that the Revision Com-

mittee could not adopt a change to the FCH in the absence

of the FAB-appointed pilot-committee members. Based on

this alleged breach of his contract, the Plaintiff sought

$2.5 million in compensatory damages, $5 million for anx-

iety, mental stress, humiliation and despair, injunctive re-

lief to prevent any revision to the FCH, unless

accomplished in accordance with the Revision Process, and

his attorneys’ fees.

21. At the request of the FAB, the entire Revision Com-

mittee, including all FAB-appointed Committeemen, met

on August 4, 1989. The Revision Committee agreed to

withdraw the proposed revision published for comment on

July 15th, and, instead, unanimously approved a Bulletin

exception to Section 1-96 of the FCH.

22. Under the terms of that exception, Bulletin 89-25,

Section 1-96 is to remain‘-unchanged except that integra-

tion of the seniority lists of the Federal and the Flying

Tigers flight crewmembers is to be accomplished in a fair

and equitable manner in accordance with Sections 3 and

13 of the LPPs. Bulletin 89-25 also requires that, until the

integration process has been completed, the pilots of both

carriers retain their previous seniority rights, and they are

restricted from bidding on one another’s aircraft and

routes.

23. In conformity with the Bulletin Exception process,

Bulletin 89-25 as proposed by the full Revision Committee

lla

was approved by the Senior Vice President of Air Oper-

ations on August 4, 1989, before the merger of Flying

Tigers into Federal occurred on August 7. At all times

since then, Federal has complied with the terms of Bulletin

89-25, and the integration of the seniority lists of the

Flying Tigers and the Federal pilots is being resolved by

an impartial arbitrator selected by the parties who began

hearings on December 7, 1989. To date, Plaintiff has not

asserted or complained of any violation of Section 1-96 of

the FCH, as modified by Bulletin 89-25.

24. As of the date of this Pretrial Order, Plaintiff has

suffered no economic loss whatsoever as a result of the

addition of Bulletin 89-25 to the FCH as an exception to

the operations of Section 1-96 of the FCH.

25. The offer and acceptance of employment were made

while Plaintiff was a resident of Sacramento, California,

telephonically and in writing. Subsequently, the FCH was

delivered to Plaintiff during his initial training in Memphis,

Tennessee.

26. FRED SMITH is the Chief Executive Officer of the

FEDERAL EXPRESS CORPORATION.

27. The facts stated above in II regarding jurisdiction.

IV.

The following facts, though not admitted, will not be

contested at trial by evidence to the contrary: None.

¥.

The following are the issues of fact to be tried and

determined at trial:

‘ Defendant submits that there is no genuine issue of material fact

as to Defendant’s liability in these cases and, therefore, that there is

nothing for a jury to determine. Accordingly, Defendant will move for

summary judgment, as to the entirety of both of Plaintiff’s complaints,

and will serve such motion on or before May 4, 1990.

12a

1. Where is the place of performance of the contract

of employment between Plaintiff and Federal?

2. What State has the most significant interest in con-

tacts with the contract of employment between Plaintiff

and Federal?

3. Whether or not a breach of the covenant of good

faith and fair dealing occurred when Defendant FEDERAL

EXPRESS CORPORATION entered into the LPPs, on or

about December 16, 1988, with knowledge of the under-

lying and pre-existing individual contractual rights of

Plaintiff, as expressed in 1-96 of the FCH.?

4. Did Plaintiff unreasonably delay his claim of breach

of his contract of employment with Federal?

5. Did Federal change its position or suffer injury or

disadvantage during or as a result of Plaintiff's delay in

asserting his said claim?

VI.

The following are the issues of law to be tried and

determined upon trial or to be earlier disposed of by mo-

tion:

1. Whether the FAB-approved insertion of Bulletin

89-25 into the FCH as an exception to FCH Section

1-96 amounted to a breach of contract?

2. Upon the issue of liability, may the Court properly

consider events occurring after the filing of this

action but before the merger of Flying Tigers into

Federal?

? As noted infra in the issues of law, Federal objects to consideration

of any issue relating to the covenant of good faith and fair dealing

because it has not been pleaded by Plaintiff. Federal further objects

to the phrase “pre-existing individual contractual rights’’ because it

implies the FCH “contract” could not be changed in accordance with

its terms.

wo

9.

10.

11.

12.

13.

13a

. Whether Plaintiffs claims for injunctive relief

should be dismissed for Plaintiff’s failure to join

indispensable parties?

. Whether Plaintiff's claims are barred by Plaintiff’s

admitted failure to exhaust the contractual remedy

of processing a claim under the Guarantee of Fair

Treatment Policy contained in the FCH?

. Whether Plaintiff's claims are barred by laches?

Whether Plaintiff is estopped from asserting his

claims?

Whether Plaintiff has an adequate remedy at law

so that he is not entitled to injunctive relief?

. Whether Plaintiff has properly pleaded a claim for

breach of the implied covenant of good faith and

fair dealing?

Whether Plaintiff is entitled to punitive damages?

Whether or not Paragraph 1-96 of the FCH was

a pre-existing individual contractual right between

Plaintiff and Defendant FEDERAL EXPRESS.

Whether or not FEDERAL EXPRESS anticipa-

torially [sic] breached the aforementioned individ-

ual contract of employment when they voluntarily

entered into the LPPs with TIGER INTERNA-

TIONAL/FLYING TIGER LINE, INC. on or about

December 16, 1988.

If this was a [sic] anticipatory breach of Plaintiff's

contract of employment as expressed in 1-96 of

the FCH, did this breach cause damages to

Plaintiff on August 2, 1989, when the instant law-

suit was filed.

Whether or not the revisions of the FCH made

prior to August 2, 1989, mitigated/negated the

14.

15.

l4a

contractual rights of Plaintiff as expressed in Par-

agraph 1-96 of the FCH.

Whether or not any modifications to the FCH,

Section 1-96, made after the filing of the instant

lawsuit on August 2, 1989 serve to mitigate/ne-

gate Plaintiff's damages, if any.

The issues of declaratory relief; the Court deter-

mining the rights of the parties concerning the

provisions of the FCH (individual contract of em-

ployment between Plaintiff (employee) and

Defendant (employer) vis-a-vis the LPPs which are

contrary to the contract of employment entered

into between Defendant FEDERAL EXPRESS and

TIGER INTERNATIONAL, INC./THE FLYING TI-

GER LINE, INC.

15a

APPENDIX C

BRIEF OF APPELLANT

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

APPEAL NO. 90-14752

RICHARD M. SOWERS,

Plaintiff/A ppellant,

v.

FEDERAL EXPRESS CORPORATION,

Defendant/Appellee.

APPEAL FROM JUDGMENT OF DISTRICT COURT

I. A STATEMENT OF THE ISSUES PRESENTED

FOR REVIEW

1. Did the Trial Court err in ruling that SOWERS’ in-

dividual contract of employment was not terminated by

FEDERAL EXPRESS’ (“FEDERAL”) anticipatory breach

and SOWERS’ subsequent lawsuit?

2. Did the Trial Court err in ruling that FEDERAL’S

attempted modification of the Flight Crewmembers’ Hand-

book (“‘FCH”’) (which was agreed to by the Flight Advisory

Board (‘‘FAB’’) and FEDERAL management after the filing

of this lawsuit, but never agreed to by SOWERS or any

agent authorized by him) severed the legal remedies avail-

able to SOWERS?

3. Did the Trial Court err in ruling that SOWERS’ con-

tinued employment by FEDERAL following the filing of

this lawsuit was a waiver by him of legal remedies oth-

l6a

erwise available to him; rather than merely a reasonable

and good faith attempt to mitigate his damages?

17a

APPENDIX D

BRIEF FOR APPELLANT

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

APPEAL NO. 90-14752

RICHARD M. SOWERS,

Plaintiff/Appellant,

v.

FEDERAL EXPRESS CORPORATION,

Defendant/Appellee.

_—_—_—_—

APPEAL FROM JUDGMENT OF DISTRICT COURT

PETITION FOR RE-HEARING

WITH SUGGESTION FOR RE-HEARING EN BANC

I. STATEMENT OF THE REASONS FOR FILING THE MO-

TION FOR RE-HEARING WITH SUGGESTION FOR RE-

HEARING EN BANC

A. Reasons for Request for Re-Hearing

A material point of fact or law was overlooked/misap-

prended in the decision.

B. Reasons for Suggesting a Re-Hearing En Banc

The instant proceeding before this Court involves a ques-

tion of exceptional importance going directly to the use

of employer-sponsored, employee “quality circle”, commit-

tees, unions, etc., such as the Flight Advisory Board (FAB)

18a

that violate either the NLRA (29 USC 151, et seq.) or the

RLA (45 USC 151-180) provisions and (in this case) strip

SOWERS of all individual contract rights.