# Petition for Writ of Certiorari — LPP v. Continental Airlines, 216 B.R. 1049 (1998) (No. 97-1030)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1998

## Text

= Supreme Court, U.S.
FILED

97 10380 DEC 221997

No. ___oeriae OF THE CLERK

In The

Supreme Court of the United States
October Term, 1997

*
IN RE: CONTINENTAL AIRLINES,
Debtor,
LPP CLAIMANTS,
Petitioners,
against
CONTINENTAL AIRLINES,

Respondents.

4

On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Third Circuit
*

PETITION FOR WRIT OF CERTIORARI
¢

Mytes J. TRALINS

Counsel of Record

Suite 3310 One Biscayne Tower
2 South Biscayne Boulevard
Miami, Florida 33131

(305) 374-3300

Counsel for Petitioners

RicHARD M. GALE

Suite 3310 One Biscayne Tower
2 South Biscayne Boulevard
Miami, Florida 33131

(305) 374-3300

Co-Counsel for Petitioners

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED FOR REVIEW

Whether The Third Circuit’s Opinion Which Authorizes
The Debtor To Unilaterally Alter Or Terminate The Labor
Protective Provisions Of A Collective Bargaining Agree-
ment Under Circumstances Where 11 U.S.C. § 1113 Was
Not Complied With Violates The Mandate Of Congress
And Is In Direct Conflict With Decisions Of The Second
And Sixth Circuit Courts Of Appeal.

il

LIST OF ALL PARTIES TO THE PROCEEDING
IN THE COURT BELOW

LPP Claimants, Petitioners

The names of the individual LPP Claimants are listed
in Appendix F.

Continental Airlines, Debtor
Effective Date Committee

Honorable John Stonitsch, Trustee

iii

TABLE OF CONTENTS

Page
QUESTION PRESENTED FOR REVIEW ............ i
PARTIES TO THE PROCEEDING BELOW .......... ii
OE By ga yy. ae Vv

OPINIONS AND ORDERS ENTERED IN THE CASE 1

ek 1
STATUTES INVOLVED IN THE CASE ........ ewes ee
PUES GO BEES CAGE. 2... ccc e cn csccnnvee -
REASONS FOR GRANTING THE WRIT ........... 9

The Third Circuit’s Opinion Which Authorizes The
Debtor To Unilaterally Alter Or Terminate The
Labor Protective Provisions Of A Collective Bar-
gaining Agreement Under Circumstances Where 11
U.S.C. § 1113 Was Not Complied With Violates Th e
Mandate Of Congress And Is In Direct Confl:ct
With Decisions Of The Second And Sixth Circuit
eer eke uca sk sees vs ccs seesee es 9

APPENDIX

Appendix A: In re Continental Airlines, 125 F.3d
ee ee. rr App. 1

Appendix B: Order Denying Petition for Rehearing,
rendered September 23, 1997....... App. 43

Appendix C: Excerpt from In re Continental Air-
lines, et al., No. 93-163 (D. Del. Nov.
8 EE anne

iV

TABLE OF CONTENTS - Continued

Page
Appendix D: L. D. Schulte Grievance, Eastern Air
Lines Pilots System Board of Adjust-
ment, ALPA Case No. 1-86....... App. 49
Appendix E: Allegheny-Mohawk Labor Protec-
CVO TEOTMIIOUD 60s ec vecssiiewes App. 87

Appendix F: List of Individual LPP Claimants.. App. 100

TABLE OF AUTHORITIES
Page
CASES

Eastern Air Lines, Inc. v. Air Line Pilots Association,
International, 861 F.2d 1546 (11th Cir. 1988)..6, 11, 13

In re Continental Airlines, 125 F.3d 120 (3rd Cir.

In re Continental Airlines, et al., No. 93-163 (D. Del.
ee ig a eee ee en cere care 1, 8

In re Continental Airlines, Inc., et al., Nos. 90-932
through 90-984 (Bankr. D. Del. February 11,
PG iawn SPCR aE ERE ERA ca CR ei kek es 1

PEPPER TT eT eT eeTrC ee TET TT Creer TT errr passim

In re Unimet Corp., 842 F.2d 879 (6th Cir.), cert.
denied, 466 U.S. G26 CISGB) «ow cew cc vceces 10, 11, 14

L. D. Schulte Grievance, Eastern Air Lines System
Board of Adjustment, ALPA Case No. 1-86
eo ree, eee TEE Te TEE ee Tey ET ay 7, &ay ay 235, 13, 37

STATUTES AND RULES

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£2 UBL. | FO) s. 0 cvvcceses Vaewe bun case neeaane 14
eG eee Deere rer rere rr. passim

We ee noise cee 9, 10, 14

vi

TABLE OF AUTHORITIES - Continued

Page
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ZB UDA. § UZ5R1) 2... cc cccccsccescscccvcvescecees ]

BO WTR. § TSS) onc cc cccccccsnccscvedsevccvdncnes 7

OPINIONS AND ORDERS ENTERED IN THE CASE

In re Continental Airlines, 125 F.3d 120 (3rd Cir. 1997);
In re Continental Airlines, Inc., et al., No. 93-163 (D. Del.
Nov. 29, 1995); In re Continental Airlines, Inc., et al., Nos.
90-932 through 90-984, (Bankr. D. Del. February 11, 1993)
(Order Granting Motion for Partial Objection to
Allowance of Claims), (Bankr. D. Del. February 11, 1993)
(Order Granting Motion for Partial Summary Judgment),
(Bankr. D. Del. April 16, 1993) (Findings of Fact, Conclu-
sions of Law and Order Confirming the Debtors’ Revised
Second Amended Joint Plan of Reorganization)

+

BASIS FOR JURISDICTION

The jurisdiction of this Court is invoked pursuant to
Section 1254(1) of Title 28, United States Code to review by
writ of certiorari the judgment and opinion of the United
States Court of Appeals for the Third Circuit dated
August 29, 1997, (App. A at page App. 1), rehearing
denied September 23, 1997, (App. B at page App. 43),
affirming a judgment of the United States District Court
for the District of Delaware entered on November 29,
1995, which affirmed a final order of the United States
Bankruptcy Court for the District of Delaware rendered
in April 16, 1993. This petition has been filed within 90
days of the denial of rehearing as required by Supreme
Court Rule 13.1.

STATUTES INVOLVED IN THE CASE

Section 1113 of Title 28, United States Code, which is
involved in this case, provides:

§ 1113. Rejection of collective bargaining
agreements

(a) The debtor in possession, or the trustee
if one has been appointed under the provisions
of this chapter, other than a trustee in a case
covered by subchapter IV of this chapter and by
title I of the Railway Labor Act, may assume or
reject a collective bargaining agreement only in
accordance with the provisions of this section.

(b)(1) Subsequent to filing a petition arid
prior to filing an application seeking rejection of
a collective bargaining agreement, the debtor in
possession or trustee (hereinafter in this section

“trustee” shall include a debtor in possession),
shall -

(A) make a proposal to the authorized
. representative of the employees covered by
such agreement, based on the most com-
plete and reliable information available at
the time of such proposal, which provides
for those necessary modifications in the
employees benefits and protections that are
necessary to permit the reorganization of
the debtor and assures that all creditors, the
debtor and all of the affected parties are
treated fairly and equitably; and

(B) provide, subject to subsection
(d)(3), the representative of the employees
with such relevant information as is neces-
sary to evaluate the proposal.

fie ES 5 Dee

ae

oe ae Se eee

(2) During the period beginning on the
date of the making of a proposal provided for in
paragraph (1) and ending on the date of the
hearing provided for in subsection (d)(1), the
trustee shall meet, at reasonable times, with the
authorized representative to confer in good faith
in attempting to reach mutually satisfactory
modifications of such agreement.

(c) The court shall approve an application
for rejection of a collective bargaining agree-
ment only if the court finds that -

(1) the trustee has, prior to the hear-
ing, made a proposal that fulfills the
requirements of subsection (b)(1);

(2) the authorized representative of
the employees has refused to accept such
proposal without good cause; and

(3) the balance of the equities clearly
favors rejection of such agreement.

(d)(1) Upon the filing of an application for
rejection the court shall schedule a hearing to be
held not later than fourteen days after the date
of the filing of such application. All interested
parties may appear and be heard at such hear-
ing. Adequate notice shall be provided to such
parties at least ten days before the date of such
hearing. The court may extend the time for the
commencement of such hearing for a period not
exceeding seven days where the circumstances
of the case, and the interests of justice require
such extension, or for additional periods of time
to which the trustee and representative agree.

(2) The court shali rule on such application
for rejection within thirty days after the date of

. the commencement of the hearing. In the inter-
ests of justice, the court may extend such time
for ruling for such additional period as the
trustee and the employees’ representative may
agree to. If the court does not rule on such
application within thirty days after the date of
the commencement of the hearing, or within
such additional time as the trustee and the
employees’ representative may agree to, the
trustee may terminate or alter any provisions of
the collective bargaining agreement pending the
ruling of the court on such application.

(3) The court may enter such protective
orders, consistent with the need of the autho-
rized representative of the employee to evaluate
the trustee’s proposal and the application for
rejection, as may be necessary to prevent dis-
closure of information provided to such repre-
sentative where such disclosure could
compromise the position of the debtor with
respect to its competitors in the industry in
which it is engaged.

(e) If during a period when the collective
bargaining agreement continues in effect, and if
essential to the continuation of the debtor’s
business, or in order to avoid irreparable dam-
age to the estate, the court, after notice and a
hearing, may authorize the trustee to implement
interim changes in the terms, conditions, wages,
benefits, or work rules provided by a collective
bargaining agreement. Any hearing under this
paragraph shall be scheduled in accordance
with the needs of the trustee. The implementa-
tion of such interim changes shall not render the
application for rejection moot.

SDs itr ie owe

(f) No provision of this title shall be con-
strued to permit a trustee to unilaterally termi-
nate or alter any provisions of a collective
bargaining agreement prior to compliance with
the provisions of this section.

e

STATEMENT OF THE CASE

On February 23, 1986, Eastern Air Lines and its
pilots’ union ratified a collective bargaining agreement.

(App. A at page App. 5.)

The collective bargaining agreement included sec-
tions 2(a), 3 and 13 of the Allegheny-Mohawk Labor
Protective Provisions (LPPs). (App. A at pages App. 5-6;
App. E at pages App. 87-88, App. 99.)

The LPPs provide for protection of the seniority
rights of Eastern pilots “in the event of a merger between
Eastern and another airline [ ] through the integration of
Eastern’s seniority list with the merging carrier’s
seniority list.” (App. A at page App. 6.)

Texas Air Corporation, the parent of Continental,
acquired Eastern on February 24, 1986. (App. A at pages
App. 5-6.)

The union, on the basis that Texas Air’s acquisition
constituted a merger within the meaning of the LPPs,
requested a meeting with Eastern, Continental and Texas
Air to integrate Eastern and Continental's seniority lists.

(App. A at page App. 6.)

Eastern and Continental refused to meet. (App. A at
page App. 7.)

The union initiated arbitration proceedings before
the National Mediation Board to compel Eastern and
Continental to integrate their seniority lists because of the
carriers’ merger. (App. A at page App. 7.)

Eastern filed bankruptcy in March, 1989, and refused,
with the approval of the bankruptcy court, to submit to
the National Mediation Board arbitration, relying on the
automatic stay provision of the Bankruptcy Code, 11
U.S.C. § 362. (App. A at page App. 7.)

The union appealed, the district court reversed and
the Second Circuit Court of Appeals affirmed in In re
Ionosphere Clubs, Inc., 922 F.2d 984, 989 (2nd Cir. 1990),
ordering Eastern to arbitration and holding that “other
provisions of the Bankruptcy Code are inoperable to the
extent that they allow a debtor to bypass the require-
ments of section 1113.”

In addition to Eastern’s refusal to arbitrate, the air-
line and the union disputed the substantive meaning of a
handwritten portion of the collective bargaining agree-
ment which included the LPPs.

Unable to reach agreement, the union “filed a griev-
ance with the Eastern Air Lines Pilots System Board of
Adjustment, the arbitral panel responsible under the RLA
[sic: Railway Labor Act] for adjudicating disputes arising
out of the labor contracts between Eastern and its pilots.”
Eastern Air Lines, Inc. v. Air Line Pilots Association, Interna-
tional, 861 F.2d 1546, 1548 (11th Cir. 1988).

Following litigation initiated by the airline which
sought to avoid the arbitration, the Eleventh Circuit
Court of Appeals directed that “The SBA [sic: System

Board of Adjustment] will be charged with determining
the contours of the disputed provisions.” Id. at 1555.

Subsequently, the System Board ruled that monetary
damages in lieu of jobs was not a remedy under the
collective bargaining agreement, that “the heart” of the
labor protective provisions was seniority integration and
that “the board should not issue any award . . . which is
not definitely intended and calculated to recognize mean-
ingful LPP protection for pilots as a matter of contractual |
right under the February 23 Agreement.” L. D. Schulte
Grievance, Eastern Air Lines System Board of Adjustment,
ALPA Case No. 1-86 (App. D at page App. 82.)

The LPP arbitration proceedings commenced, how-
ever now Continental, which had filed Chapter 11 bank-
ruptcy proceedings, advised the arbitrator, after the
Second Circuit ruled on the identical issue asserted by
Eastern, that it would not participate because of the auto-
matic stay provision. (App. A at page App. 8.)

The arbitrator rejected Continental’s position and, in
August, 1992, issued a decision based upon the Second
Circuit’s ruling in In re Ionosphere Clubs, Inc., 922 F.2d 984,
that he had jurisdiction. (App. A at pages App. 8-9.)

This action subsequently commenced as an adversary
proceeding pursuant to 11 U.S.C. § 502, 28 U.S.C.
§ 1334(b), from a civil proceeding arising under the Bank-
ruptcy Code, and arising in and related to Continental
Airlines’ Chapter 11 proceedings, wherein Continental
sought to avoid its duty to arbitrate the LPP claims. (App.
A at page App. 9.)

On April 16, 1993, the Delaware bankruptcy judge
entered an order confirming Continental’s Joint Second
Plan of Reorganization permanently enjoining any arbi-
tration involving the LPPs, (App. A at page App. 38),
determining that “the equitable remedy of seniority inte-
gration constituted a ‘claim’ within the meaning of
§ 101(5) of the bankruptcy code” and that “the remedy
could be converted to an award of money damages” as a
“general, dischargeable, unsecured claim that was enti-
tled to no administrative priority.” (App. A at page App.
11.)

The LPP claimants appealed to the District Court
pursuant to 28 U.S.C. § 158(a)(1) which reversed the
injunction and required Continental but affirmed the ren-
dition of the LPP claim into money, opining that “the
right to arbitrate the LPP dispute may be of limited
practical utility to the LPP Claimants. Any award that
might be granted by the arbitrator would be an
unsecured pre-petition claim and may come after the
assets of the bankruptcy estate have been wholly
depleted.” (Excerpt from In re Continental Airlines, et al.,
No. 93-163 (D. Del. Nov. 29, 1995); (App. C at pages App.
47-48, n. 31.)

The Petitioners then appealed to the Third Circuit
pursuant to 28 U.S.C. § 158(d), which issued its judgment
and opinion August 29, 1997, affirming the district court
“in all respects.” (App. A at page App. 42.) Rehearing
was denied September 23, 1997. (App. B at page App. 43.)

«

REASONS FOR GRANTING THE WRIT

The Third Circuit’s Opinion Which Authorizes The
Debtor To Unilaterally Alter Or Terminate The Labor
Protective Provisions Of A Collective Bargaining Agree-
ment Under Circumstances Where 11 U.S.C. § 1113 Was
Not Complied With Violates The Mandate Of Congress
And Is In Direct Conflict With Decisions Of The Second
And Sixth Circuit Courts Of Appeal

The Third Circuit’s decision requires review as a
matter of great importance as it directly violates the
Congressional mandate of 11 U.S.C. Section 1113(f)
(1988):

No provision of [the Bankruptcy Code] shall
be construed to permit a trustee to unilaterally
terminate or alter any provisions of a collective
bargaining agreement prior to compliance with
the provisions of [section 1113].

Under circumstances where the Third Circuit recog-
nized that “Continental’s failure to reject the collective
bargaining agreement consistent with the mandate of sec-
tion 1113 of the Code renders the injunction [preventing
Continental from being required to participate in
National Mediation Board labor arbitration proceedings
regarding enforcement of the labor protective provisions
of the collective bargaining agreement] invalid,” (App. A
at page App. 38), the Third Circuit nonetheless autho-
rized the bankruptcy court to alter and, in effect, termi-
nate the collective bargaining agreement by holding that
“any claim based on an award of seniority integration
arising out of the resolution of the LPP dispute will be
treated as a claim in bankruptcy giving rise to a right of
payment.” (App. A at page App. 36.)

10

By so ruling, the Third Circuit is also in direct con-
flict with decisions of the Second Circuit and the Sixth
Circuit in In re Ionosphere Clubs, Inc., 922 F.2d 984 (2nd Cir.
1990)! and In re Unimet Corp., 842 F.2d 879 (6th Cir.), cert.
denied, 488 U.S. 828 (1988).?

The Second Circuit, finding that “Section 1113 was
enacted as the legislative response to the Supreme
Court’s decision in Bildisco” which was “representative of
the ill that Congress sought to cure,” concluded:

Subsection 1113(f) evinces an intent that other
provisions of the Bankruptcy Code are inoper-
able to the extent that they allow a debtor to
bypass the requirements of section 1113.

In re Ionosphere Clubs, Inc., 922 F.2d at 989.

Moreover,

[t]he language of the statute indicates that Con-
gress intended Section 1113 to be the sole
method by which a debtor could terminate or
modify a collective bargaining agreement and

1 In re Ionosphere Clubs, Inc., 922 F.2d 984, which required
Eastern Air Lines to arbitrate whether it had been merged with
Continental Airlines and, if so, to determine how the LPP
Claimants are to be integrated into Continental’s pilot work
force, is particularly relevant as the Third Circuit’s conflicting
decision concerns the identical collective bargaining agreement,
subject matter and parties.

2 In In re Unimet, 842 F.2d at 885, which concludes that
“Congress intended [1113] to give broad protection to
collectively bargained for rights which are threatened by a
corporate reorganization,” the Sixth Circuit rejected arguments
that another section of the Bankruptcy Code could be utilized to
reject the claim and that Section 1113 must be narrowly
interpreted.

11

that application of other provisions of the
Bankruptcy Code that allow a debtor to bypass
the requirements of Section 1113 are prohib-
ited.

Id. at 989-990 (emphasis supplied).

Here, the Third Circuit’s decision, premised on the
theory that “substitution of the equitable remedy in no
way amounts to an alteration or termination of the terms
of the collective bargaining agreement,” (App. A at page
App. 40 n. 15), is in direct conflict with the Second
Circuit’s decision in In re Ionosphere Clubs, Inc., 922 F.2d at
989-990 and the Sixth Circuit’s decision in In re Unimet
Corp., 842 F.2d 879, 884 (6th Cir.), cert. denied, 488 U.S. 828
(1988) holding that:

Section 1113 prohibits the employer from uni-
laterally modifying any provision of the collective
bargaining agreement.

The scope of the subject collective bargaining agree-
ment was to be determined by the Eastern System Board
of Adjustments in L. D. Schulte Grievance, Eastern Air Lines
System Board of Adjustment, ALPA Case No. 1-86 (App. D
commencing at page App. 49), pursuant to the order of
the Eleventh Circuit Court of Appeals in Eastern Air Lines,
Inc. v. Air Line Pilots Association, International, 861 F.2d
1546, 1555 (11th Cir. 1988).

“ALPA filed a grievance with the Eastern System
Board of Adjustments, the body established to hear and
determine disputes concerning the collective bargaining
agreement.” In re Ionosphere Clubs, Inc., 922 F.2d at 987.

12

The System Board considered Eastern’s position that
the collective bargaining agreement “provides LPP pro-
tection for pilots only as specified in Sections 3 and 13 of
the Allegheny-Mohawk LPP’s” and ALPA’s position that
the LPP’s “incorporates the full package of Allegheny-
Mohawk LPP’s” or “all of the protections of the TWA
LPP’s.”3 L. D. Schulte Grievance, (App. D at page App. 55.)

Included in the “full package” was Section 7 of the
LPPs which provides for “lump sum [] separation
allowance|s]” in lieu of a job. (App. E, LPP Section 7 at

page App. 94.)

In rendering its decision, the System board elimi-
nated monetary damages as 4 remedy under the LPPs in
the collective bargaining agreement.

The record in this case does not justify any conclu-
sion “that the reference to LPP’s in the February 23
Agreement entitles the pilots to the full package of Alle-
gheny-Mohawk LPP’s.” L. D. Schulte Grievance, (App. D
at page App. 72.)

Thus,

_. . the evidence in the present case does not
sustain ALPA’s contention that the pecuniary
allowances provided in the Allegheny-Mohawk

3 There are 13 sections in the labor protective provisions of
the Allegheny-Mohawk LPPs. (App. E). All, excepting thetight
to seniority integration, the application date of benefits and the
protection of jobs in the same class, craft and field of endeavor
provide for money payments.

_—_————

13

LPP’s may be asserted, in addition to the protec-
tion of Sections 3 and 13, as a matter of contrac-
tual right by Eastern’s pilots.*

L. D. Schulte Grievance, (App. D at page App. 79.)

Accordingly, ignoring the fact that the Eleventh Cir-
cuit held that the System Board’s determination of the
“contours of the disputed provisions” by the SBA would
be binding on the airline and the union, Eastern Air Lines,
Inc., 861 F.2d at 1555, the Third Circuit’s ruling that
“monetary payment is an alternative for the equitable
remedy of seniority integration,” (App. A at page App.
29), impermissibly altered the collective bargaining
agreement which expressly excluded “lump sum [| sep-
aration allowance[s]” in lieu of a job. (App. E, LPP
Section 7 at page App. 94.)

Moreover, in authorizing “lump sum [] separation
allowance[s],” id., in lieu of jobs by holding that “the
right to seniority integration gives rise to a ‘right of
payment’ such that the remedy constitutes a ‘claim’ dis-
chargeable in bankruptcy” (App. A at page App. “*/, the
Third Circuit has violated the directive of Congres. “hich
prohibits application of “other provisions of * « Sank-
ruptcy Code” in order to “allow a debtor to bypass the
requirements of Section 1113.” In re Ionosphere Clubs,
Inc., 922 F.2d at 990.

4 The Third Circuit mistakenly relies on section 1 of the
LPPs to conclude that “monetary damages is consistent with the
articulated scope and purpose and is therefore appropriate.”
Section 1 - and monetary damages - pursuant to the System
Board decision are not part of the subject collective bargaining
agreement. (App. A at page App. 28 n. 12).

14

According y, the Third Circuit’s express reliance on
11 U.S.C. § 1C1(5) to alter the right to seniority integration
provided for in the collective bargaining agreement into a
“claim” which “gives rise to a right of payment” (App. A
at page App. 25), directly conflicts with the Second Cir-
cuit’s holding in In re Ionosphere Clubs, Inc., 922 F.2d at
989, that “Subsection 1113(f) evinces an intent that other
provisions of the Bankruptcy Code are inoperable to the
extent that they allow a debtor to bypass the require-
ments of section 1113.”

The decision likewise conflicts with the Sixth Cir-
cuit’s determination in In re Unimet Corp., 842 F.2d at 884,
that Section 1113 does not yield to 11 U.S.C. § 503(b) for
purposes of determining whether qualification as an
administrative expense is necessary for the union to pre-
vail.

_ section 1113 unequivocally prohibits the
employer from unilaterally modifying any provi-
sion of the collective bargaining agreement.
Accordingly, we hold that Unimet cannot escape
its obligations in this regard merely because the
requirements of section 503 have not been satis-
fied.

Indeed, the effect of the Third Circuit’s ruling is to
impermissibly eviscerate the collective bargaining agree-
ment.

The System Board held that “Sections 3 and 13 are
the heart of the Allegheny-Mohawk LPP’s because they
control seniority:”

_. even without the pecuniary allowances, as
desirable as they may be, the protection of
seniority integration itself by application of

i a ill

15

Sections 3 and 13 is of such critical importance
that this without more does constitute mean-
ingful protection under the February 23 Agree-
ment.

L. D. Schulte Grievance, (App. D at page App. 79
(emphasis supplied).)

Accordingly, the System Board concluded that it
“should not issue any award in this case which is not
definitely intended and calculated to recognize meaning-
ful LPP protection for pilots as a matter of contractual
right under the February 23 Agreement.” L. D. Schulte
Grievance, (App. D at page App. 82.)

The Third Circuit’s ruling, “in the absence of Conti-
nental’s compliance with the requirements to reject the
collective bargaining agreement” (App. A at page App.
40), which terminates the critically important meaningful
protection of seniority integration provided under the
express terms of the collective bargaining agreement and
substitutes a general unsecured pre-petition claim in
bankruptcy, inipermissibly acts to “nullify effectively the
arbitration clause in the collective bargaining agreement
and would substitute the court’s judgment for that of the
arbitrator.” In re Ionosphere Clubs, Inc., 922 F.2d at 992.

Finally, the Third Circuit, opining as a finder of fact,
justifies its approval of the unilateral alteration of the
collective bargaining agreement because seniority inte-
gration “has the potential to create an environment rife
with hostility and low employee morale, not to mention a
detrimental effect on employer-employee relations”
which “circumstances indicate that seniority integration
would not be a feasible remedy and that an alternative

16

remedy of monetary damages would be appropriate.”
(App. A at pages App. 35-36).

First, Continental Airlines contracted for and agreed
to the LPPs which the Third Circuit worries over. More-
over, Continental elected not to alter or terminate the
collective bargaining agreement providing for seniority
integration under Section 1113 and, indeed, contracted
for and is bound by the LPPs irrespective of the Third
Circuit’s perceptions about what may or may not happen
if Continental is required to honor its contract. As the
decision notes:

Throughout this litigation, Continental has

premised its arguments on the assumption that

it is bound by the LPPs and has a duty to

arbitrate the LPP dispute . . . In light of the

overwhelming advantage that Continental
derived from maintaining the position that it
was bound by the collective bargaining agree-
ment, and thus, had a duty to arbitrate the LPP
dispute, we refuse to allow Continental to
repudiate that representation and return to the

district court to litigate the issue whether it is
bound by the agreement.

(App. A at page App. 41 (emphasis supplied).)

Section 1113 simply does not allow the court, sua
sponte, to strike out Continental’s contractual obligation
on the supposition that strife might result if the agree-
ment were enforced.

Second, as the Second Circuit observed in In re Iono-
sphere Clubs, Inc., 922 F.2d at 992, in direct conflict with
the Third Circuit’s worry: “if the Trustee believes that
the threat of slowdowns or other disturbance is such
that he wishes to undo the arbitration award, he has

17

open to him either a return to the arbitrator or a rejec-
tion of the contract in the manner Congress prescribed
in 11 U.S.C. Section 1113.” Congress provided a remedy
for the Third Circuit’s concern; one which Continental
elected not to avail itself of when it did not seek to alter
or terminate the collective bargaining agreement.

Third, “the debtor in possession or trustee has the
contractual duty to adhere to the substantive provisions
of the agreement...” In re Ionosphere Clubs, Inc., 922 F.2d
at 992.

The Third Circuit’s ruling authorizes Continental to
ignore the “substantive provisions of the agreement” by
removing “the heart of the Allegheny-Mohawk LPP’s”
which “control seniority” from the collective bargaining
agreement. L. D. Schulte Grievance, (App. D at page App.
80.)

Finally, the impact of the Third Circuit’s ruling is the
impermissible termination of the collective bargaining
agreement.

The right to seniority integration through enforce-
ment of the labor protective provisions of the collective
bargaining agreement accepted by Continental Airlines
will provide jobs to pilots whose airline merged with
Continental.

Transforming the jobs protected as a result of the
merger through operation of the terms of the collective
bargaining agreement into a money damages claim in the
bankruptcy effectively destroys the collective bargaining

18

agreement itself as no employees covered by the agree-
ment will have the right to a job. As such, the decision
requires reversal:

“We conclude, from the language of the stat-
ute, statements made by the sponsors of the
legislation, and the context in which it was
enacted, that Congress intended that a collec-
tive bargaining agreement remain in effect and
that the collective bargaining process continue
after the filing of a bankruptcy petition unless
and until the debtor complies with the provi-
sions of section 1113.”

In re Ionosphere Clubs, Inc., 922 F.2d at 992.

The Third Circuit’s decision, in violation of the man-
date of Congress and in clear conflict with the rulings of
the Second and Sixth Circuits, operates to unilaterally
terminate the collective bargaining process. Accordingly,
this Court should grant certiorari.

Dated: December 19, 1997

Respectfully submitted,

Mytes J. TRALINS

Suite 3310 One Biscayne
Tower

Miami, Florida 33131

(305) 374-3300

Counsel for Petitioner

RicHarD M. GALE

Suite 3310 One Biscayne
Tower

Miami, Florida 33131

(305) 374-3300

Co-Counsel for Petitioner

APPENDIX A
In re Continental Airlines, 125 F.3d 120 (3rd Cir. 1997)

App. 1

Filed August 29, 1997

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 96-7028 and 96-7038

IN RE: CONTINENTAL AIRLINES,
Debtor
AIR LINE PILOTS ASSOCIATION
v.

CONTINENTAL AIRLINES
LPP CLAIMANTS; EFFECTIVE DATE COMMITTEE,

Claimants
HONORABLE JOHN STONITSCH,
Trustee
LPP CLAIMANTS,
Appellant No. 96-7028

(Caption amended in accordance with
Clerk’s Order dated 3/4/96)

IN RE: CONTINENTAL AIRLINES,
Debtor

App. 2

AIR LINE PILOTS ASSOCIATION
V.

CONTINENTAL AIRLINES
LPP CLAIMANTS; EFFECTIVE DATE COMMITTEE,

Claimants
HONORABLE JOHN STONITSCH,

Trustee
CONTINENTAL AIRLINES, INC.,

Appellant No. 96-7038

(Caption amended in accordance with
Clerk’s Order dated 3/4/96)

ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

(D.C. Civil No. 93-cv-00163)

ARGUED MARCH 13, 1997

BEFORE: MANSMANN, LEWIS and
MICHEL,’ Circuit Judges.

(Filed August 29, 1997)

* Honorable Paul R. Michel, Circuit Judge for the United
States Court of Appeals for the Federal Circuit, sitting by
designation.

App. 3

Jon. A. Geier (ARGUED)

Paul, Hastings, Janofsky & Walker
1299 Pennsylvania Avenue, N.W.
10th Floor

Washington, DC 20004

Laura D. Jones

Robert S. Brady

Young, Conaway, Stargatt & Taylor
Post Office Box 391

Rodney Square North, 11th Floor
Wilmington, DE 19899-0391

Attorneys for Continental Airlines

Michael J. Isaacs

Agostini, Levitsky & Isaacs
623 King Street

Post Office Box 2323
Wilmington, DE 19899

Myles J. Tralins (ARGUED)
Tralins & Associates

One Biscayne Tower

2 South Biscayne Boulevard
Suite 3310

Miami, FL 33131

Attorneys for LPP Claimants

John A. McGuinn (ARGUED)
Schmeltzer, Aptaker & Shepard
2600 Virginia Avenue, N.W.
Suite 1000

Washington, DC 20037

Attorney for Eastern Pilots Merger
Committee

App. 4

OPINION OF THE COURT

LEWIS, Circuit Judge.

In this appeal and cross-appeal, we are confronted
with a tension between bankruptcy law and labor law.
The dispute arose when the Air Line Pilots Association,
Inc. (“ALPA”), collective bargaining agent for Eastern Air
Lines’ (“Eastern”) pilots, filed proofs of claim in bank-
ruptcy court against Continental Airlines Holdings, Inc.
and Continental Airlines, Inc. (“Continental”). These
claims were based on alleged seniority integration rights
stemming from a pending labor arbitration dispute and
were filed following Continental’s acquisition of Eastern
and subsequent refusal to bargain over the seniority inte-
gration of Eastern’s pilots.

The bankruptcy court determined that the claims
could be satisfied by monetary awards in lieu of specific
performance and enjoined scheduled arbitration proceed-
ings to enforce the seniority rights under the collective
bargaining agreement. The district court affirmed the
bankruptcy court’s determination relating to the claims,
but vacated the injunction. Two groups of former Eastern
pilots, the LPP Claimants and the Group of 31, both of
which are no longer represented by ALPA, appealed to
this court.!

1 “LPP Claimants” refers to a group of former Eastern
pilots whose claims in this appeal are based on certain “labor
protective provisions” (LPPs) contained in the collective
bargaining agreement. The “Group of 31” is a group of former

App. 5

Resolution of this dispute requires us to determine:
(1) whether the bankruptcy claims that the LPP Claimants
and the Group of 31 seek to enforce constitute “claims”
within the meaning of the bankruptcy code and thus are
satisfiable, in the alternative, by a monetary award; and
(2) whether the arbitration of a labor dispute that may
give rise to the right to seniority integration under a
collective bargaining agreement can be enjoined, where
the debtor has not explicitly rejected the agreement. We
conclude that the rights to seniority integration do consti-
tute “claims” within the meaning of the bankruptcy code.
Accordingly, we find that the right to seniority integra-
tion gives rise to a right of payment and that any equita-
ble remedy recovered against Continental via arbitration
of the underlying labor dispute may be satisfied through
an award of monetary damages. We further conclude that
the district court properly vacated the injunction barring
arbitration of the underlying labor dispute. Thus, we will
affirm.

I.
A. The Underlying LPP Dispute
On February 23, 1986, following intense negotiations,

Eastern and its pilots’ union, ALPA, ratified a collective
bargaining agreement. On February 24, 1986, the Texas

Eastern pilots, who originally were part of the “LPP Claimants”
group and who have retained separate counsel for purposes of
this appeal. See discussion infra Part I.D. While both groups
claims were filed in bankruptcy court by ALPA on their behalf,
these two groups are no longer represented by ALPA. See
discussion infra note 5.

App. 6

Air Corporation (“Texas Air”), parent corporation to Con-
tinental, acquired Eastern. Believing that the acquisition
constituted a “merger” within the meaning of certain
“labor protective provisions” (LPPs) contained in the col-
lective bargaining agreement, ALPA requested a meeting
with Texas Air, Eastern, and Continental to discuss the
integration of Eastern’s and Continental’s seniority lists.
Under the LPPs, Eastern’s pilots secured protection of
their seniority rights in the event of a merger between
Eastern and another airline carrier through the integra-
tion of Eastern’s seniority lists with the merging carrier’s
list. Specifically, the LPP terms provide:

Section 2(a). The term “merger” as used herein
means joint action by the two carriers whereby
they unify, consolidate, merge, or pool in whole
or in part their separate airline facilities or any
of the operations or services previously per-
formed by them through such separate facilities.

* * *

Section 3. Insofar as the merger affects the
seniority rights of the carriers’ employees, pro-
visions shall be made for the integration of
seniority lists in a fair and equitable manner,
including, where applicable, 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.

* * *

Section 13(a). In the event that any dispute or
controversy . . . arises with respect to the protec-
tions provided herein, which cannot be settled

App. 7

by the parties within 20 days after the contro-
versy arises, it may be referred by any party to
an arbitrator selected from a panel of seven
names furnished by the National Mediation
Board for consideration and determination.

(Labor Protective Provisions, sections 2(a), 3, and 13(a)).2

Despite ALPA’s requests, both Eastern and Continen-
tal refused to bargain with ALPA about the integration of
the seniority lists. Consequently, ALPA requested the
National Mediation Board to proffer a list of seven arbi-
trators from which a neutral arbitrator could be chosen to
determine whether an alleged merger occurred between
Eastern and Continental that triggered the LPP seniority
integration provision (LPP dispute). Eastern, however,
filed for bankruptcy in March, 1989, and refused to sub- -
mit to arbitration pursuant to the bankruptcy code’s sec-
tion 362 automatic stay provision. 11 U.S.C. § 362
(providing that petitions filed pursuant to Chapter 11
operate as a stay of the commencement or continuation of
judicial, administrative, or other actions or proceedings
against the debtor). In bankruptcy court, ALPA sought
relief from the automatic stay to compel Eastern to arbi-
trate the LPP dispute. The bankruptcy court denied
ALPA’s petition. After much litigation, however, the

? The LPPs were based on the standard Allegheny-Mohawk
LPPs, which were designed to provide “displacement and
dismissal allowances to employees adversely affected by
[merger] transaction[s], the equitable integration of seniority
lists, and binding arbitration of disputes relating to the LPPs.”
(Decision of the Eastern Air Lines Pilots System Board of
Adjustment). See Air Line Pilots Ass'n v. Dept. of Transp., 838 F.2d
563, 565 (D.C. Cir. 1988) (citing Allegheny-Mohawk Merger Case,
59 C.A.B. 22 (1972)).

App. 8

Court of Appeals for the Second Circuit held that the
section 362 automatic stay provision did not preclude
arbitration in this instance. See In re Ionosphere Clubs, Inc.,
922 F.2d 984 (2d Cir. 1990).

ALPA and Eastern proceeded to arbitration in April,
1991, commencing with a pre-hearing conference before
Richard R. Kasher (Kasher Arbitration). In this proceed-
ing, ALPA sought prospective integration of seniority
lists, back pay from the effective date of the merger to the
date of the arbitration award, and front pay from the date
of the arbitration award to the date that the Eastern pilots
would complete training and begin flying for Continen-
tal. Prior to the pre-hearing conference, Arbitrator Kasher
solicited brief statements of position from the parties to
the dispute, and from all potential parties. Eastern consis-
tently maintained that the LPP dispute was not properly
within the arbitrator’s jurisdiction.* Continental filed a
statement informing Arbitrator Kasher that it had filed a
Chapter 11 petition for reorganization in December, 1990.
Therefore, it maintained that the arbitration pursued by
ALPA was stayed under section 362 of the bankruptcy
code and could not proceed without the express approval
of the bankruptcy court.

In August, 1992, Arbitrator Kasher issued a decision
concluding that he had jurisdiction over the LPP dispute,
and could render a determination of the appropriate

3 Eastern maintained that only the System Board of
Adjustment had jurisdiction to determine whether a merger
occurred that triggered the LPPs. On the merits, Eastern
contended that if the arbitration proceeded, the Arbitrator
should conclude that no merger occurred.

App. 9

remedies under the circumstances. Kasher, relying on the
bankruptcy court’s determination in In re Ionosphere
Clubs, Inc., 114 B.R. 379 (Bankr. S.D.N.Y. 1990), speci-
fically rejected Continental’s suggestion that the arbitra-
tion was barred by the automatic stay. Kasher scheduled
hearings on the merits of the dispute, to commence in
February, 1993.

B. The Bankruptcy Court Proceedings

In September, 1991, while the initial Kasher Arbitra-
tion decision was pending, ALPA, on behalf of its mem-
bers, filed proofs of claim against Continental in
Delaware Bankruptcy Court. Their claims were based on
the asserted right to seniority integration under the LPPs
and specified an unliquidated amount as the debt for
which Continental was obligated. In response, Continen-
tal initiated an adversary proceeding in bankruptcy court
against ALPA, seeking injunctive and declaratory relief
relating to the proofs of claim. In that action, Continental
filed a Partial Objection To Allowance of Claims and a
Motion for Partial Summary Judgment on its Partial
Objection.* In both motions, Continental contended that

* Prior to the Kasher Arbitration decision, Continental filed
an initial motion for partial summary judgment, seeking a
preliminary injunction. Continental argued that the arbitration
should be enjoined to protect the jurisdiction of the bankruptcy
court over the administration of its estate. It also maintained
that the automatic stay provision of the bankruptcy code
precluded the arbitration from proceeding. Finally, Continental
contended that it was not a party to the collective bargaining
agreement between Eastern and ALPA and that it could not be
bound by the result of any arbitration over the LPPs.

App. 10

the seniority integration that the claimants sought was
not feasible because it would be detrimental to Continen-
tal’s successful reorganization. Thus, Continental sought
a declaration that the claims were, at best, “general, dis-
chargeable, pre-petition, unsecured claims,” compensable
by an award of monetary damages.

ALPA and the LPP Claimants each filed a separate
response to Continental’s Partial Objection and Motion
for Partial Summary Judgment.5 ALPA contended that,
contrary to Continental’s argument, the claims pursued
were not general, unsecured pre-petition claims that
could be converted to a payment of money damages.
ALPA also argued that only an arbitrator had jurisdiction
to determine the appropriate remedy under the LPPs. The
LPP Claimants essentially maintained that an arbitration
proceeding was the appropriate forum to determine the
issue of whether a merger occurred that triggered the
LPPs, and that the proper remedy was integration of
Eastern’s seniority lists with Continental’s lists.

In February, 1993, the bankruptcy court judge, in two
orders, granted Continental’s Partial Objection To
Allowance of Claims and its related motion for partial
summary judgment, determining that there was no genu-
ine issue for trial and that Continental was entitled to
judgment as a matter of law. In re Continental Airlines,

5 ALPA’s representation of the LPP Claimants ceased after
the LPP Claimants instituted actions in federal court against
ALPA. The actions alleged causes of action for the breach of the
duty of fair representation and defamation arising out of the
publication and dissemination of a “blacklist” and for alleged
violations of the civil provisions of RICO.

App. 11

Inc., et al., Nos. 90-932 through 90-984 (Bankr. D. Del. Feb.
11, 1993) (order granting motion for partial objection to
allowance of claims); In re Continental Airlines, Inc., et al.,
No. 91-153 (Bankr. D. Del. Feb. 11, 1993) (order granting
motion for partial summary judgment). Addressing the
jurisdictional argument asserted by ALPA, the bank-
ruptcy court concluded that the issue of whether any
award granted to ALPA would constitute general,
unsecured, prepetition claims was a core matter under
the bankruptcy code. Thus, it concluded that it had juris-
diction to resolve the matter. In re Continental Airlines,
Inc., et al., Nos. 90-932 through 90-984, slip op. at 1-2
(order granting motion for partial objection to allowance
of claims); In re Continental Airlines, Inc., et al., No. 91-153,
slip op. at 2 (order granting motion for partial summary
judgment). The court then determined that the equitable
remedy of seniority integration constituted a “claim”
within the meaning of § 101(5) of the bankruptcy code.
Accordingly, the court concluded that the remedy could
be converted to an award of money damages. In re Conti-
nental Airlines, Inc., et al., Nos. 90-932 through 90-984, slip
op. at 3-4 (order granting motion for partial objection to
allowance of claims); In re Continental Airlines, Inc., et al.,
No. 91-153, slip op. at 3-4 (order granting motion for
partial summary judgment). Finally, the court determined
that any right of payment asserted by ALPA was, at best,
a general, dischargeable, unsecured claim that was enti-
tled to no administrative priority. In re Continental Air-
lines, Inc., et al., Nos. 90-932 through 90-984, slip op. at 4-5
(order granting motion for partial objection to allowance
of claims); In re Continental Airlines, Inc., et al., No. 91-153,

Ss ie

App. 12

slip op. at 5 (order granting motion for partial summary
judgment).

In April, 1993, Continental’s Second Amended Joint
Plan of Reorganization was confirmed by the bankruptcy
court. The court’s confirmation order incorporated its
prior rulings from the two orders issued in February,
1993. Essentially, it clarified that any valid claims based
on the LPPs would give rise to a right of payment dis-
chargeable in bankruptcy and that no right to injunctive,
equitable or other prospective relief would flow from any
valid claim based on an award under the LPPs. In re
Continental Airlines, Inc., et al., Nos. 90-932 through 90-984
(Bankr. D. Del. April, 1993) (Findings of Fact, Conclusions
of Law and Order Confirming the Debtors’ Revised Sec-
ond Amended Joint Plan of Reorganization). The court
also enjoined the arbitration of the LPP dispute. Conti-
nental’s plan of reorganization was consummated in late
April, 1993.

C. The ALPA/Continental Settlement

ALPA and the LPP Claimants appealed the bank-
ruptcy court’s February and April, 1993 orders to the
district court. While the appeals were pending, ALPA and
Continental settled the LPP dispute. The Settlement
Agreement, ultimately approved by the bankruptcy
court, finally resolved all of ALPA’s claims including
those pursued in Continental’s bankruptcy proceeding
and those based on the enforcement of the LPPs in the
Kasher Arbitration. Under the terms of the agreement,
ALPA agreed to withdraw its appeals to the district court.
The Settlement Agreement also provided an option to the

App. 13

“pilots formerly employed by Eastern” who were no longer
represented by ALPA, and who had filed proofs of claim in
the bankruptcy proceeding, to participate in the settlement.
Approximately two-thirds of these pilots did so.

D. The District Court Proceedings

Prior to the ALPA/Continental settlement, Continen-
tal filed a motion to dismiss ALPA’s and the LPP Claim-
ants’ appeals. Continental argued that the appeals from
the confirmation order were moot because: (1) the plan of
reorganization had been substantially consummated; (2)
it was not feasible for the plan to be undone; and (3) any
alteration to the plan’s fundamental terms would be ineq-
uitable. After the settlement, Continental filed a second
motion to dismiss the appeals as moot, contending that
the LPP Claimants had no individual right to maintain
their claims based on the LPPs because ALPA, as the
exclusive bargaining representative of the Eastern pilots,
had full authority to settle the LPP grievance. Thus, Con-
tinental argued, the pilots were bound by the settlement
agreement.

In a comprehensive memorandum opinion, the dis-
trict court addressed the issues appealed by ALPA and
the LPP Claimants and presented in Continental’s
motions to dismiss.® As to the first motion to dismiss, the
court concluded, inter alia, that ALPA’s and the LPP

© Although the ALPA/Continental settlement agreement
provided that ALPA would dismiss its appeal to the district
court, ALPA failed to do so prior to the district court’s
disposition. Ultimately, ALPA did withdraw its claims against
Continental. ALPA is not a party to this appeal.

App. 14

Claimants’ appeals relating to the claim for administra-
tive priority was moot. In support of its conclusion, the
court emphasized the substantial consummation of the
plan. Specifically, the court noted that the investment
leading to the consummation of the plan was based on an
overall limit on administrative claims and a determina-
tion that ALPA and the LPP Claimants were not entitled
to equitable relief. In re Continental Airlines, Inc., et al., No.
93-163 (D. Del. Nov. 29, 1995). As to Continental’s second
motion to dismiss as moot, the court determined that it
could not consider the merits of whether the LPP Claim-
ants had standing under the LPPs to pursue seniority
integration individually. Specifically, the court concluded
that this issue should be determined by the arbitrator.
Therefore, the court refused to dismiss their claims based
on their alleged lack of standing to assert the contractual
right. Id. at 22-25. The court also rejected Continental's
argument that the LPP Claimants were bound by the
ALPA/Continental settlement. Id. at 23.

Turning to the merits of the appeals, the court
affirmed the orders of the bankruptcy court in all
respects, except for the bankruptcy court’s injunction of
the arbitration proceedings. Id. at 26-45. Relating to the
injunction, the court concluded that the bankruptcy
court’s failure to adequately set forth the reasons for the
issuance of the injunction and to describe the acts
restrained in its order, as mandated by Federal Rule of
Civil Procedure 65(d), was fatal to the validity of the
injunction. Id. at 34-37. Although it vacated the injunc-
tion, the district court refused to remand the matter to the
bankruptcy court with instructions to strike the injunc-
tion. Rather, the court concluded that under section 1113

App. 15

of the bankruptcy code, the bankruptcy court could not
enjoin the arbitration even if the requirements of Rule
65(d) were met. Id. at 37-40.’

The LPP Claimants appealed the district court’s
order. Continental cross-appealed on the issues of the
mootness of the claims and the dissolution of the injunc-
tion. On appeal, the Group of 31, a group of former
Eastern pilots who previously had been represented by
counsel for the LPP Claimants, have obtained substitute
counsel, and have filed a separate brief. For purposes of
brevity, the Group of 31 and the LPP Claimants will be
referred to collectively as “the Claimants” where permiss-
ible.

The district court had jurisdiction under 28 U.S.C.
§ 158(a). We exercise jurisdiction of the appeal and the
cross-appeal from the district court’s order pursuant to 28

U.S.C. § 158(d).

Il.

Our review of the district court’s determination is
plenary. Brown v. Pennsylvania State Employees Credit
Union, 851 F.2d 81, 84 (3d Cir. 1988); see In re Ionosphere
Clubs, Inc., 922 F.2d 984, 988 (2d Cir. 1990). We exercise
the same review of the district court’s decision as that

7 The court reached this issue only after determining that in
spite of the invalidity of the injunction under Rule 65(d), the
statutory injunction under 11 U.S.C. § 524, referenced by the
bankruptcy court in its order, survived. In re Continental
Airlines, Inc., et al., No. 93-163, slip op. at 37, (D. Del. Nov. 29,
1995).

App. 16

exercised by the district court. Brown, 851 F.2d at 84. The
bankruptcy court’s findings of fact are reviewable only
for clear error. Id. Legal determinations are subject to
plenary review. Id.

Before we reach the merits of the parties’ claims, we
must address Continental’s two challenges to the Claim-
ants’ appeals contending that the appeals should be dis-
missed. First, Continental maintains that the LPP
Claimants’ notice of appeal is defective for lack of ade-
quate identification of the parties to the appeal under
Federal Rule of Appellate Procedure 3(c). Next, Continen-
tal argues that the Claimants’ lack standing to assert
claims for individual seniority integration under the LPPs
and that the appeals should be dismissed as moot.

A. Appellate Jurisdiction

Continental requests that the LPP Claimants’ appeal
be dismissed pursuant to Federal Rule of Appellate Pro-
cedure 3(c) for failure of their notice of appeal to identify
each member of its group participating in this appeal.
The notice of appeal filed by the LPP Claimants simply
identifies the appellants as “the LPP Claimants.” Conti-
nental argues that this identification is insufficient,
emphasizing that a number of the LPP Claimants partici-
pated in the Continental/ALPA settlement and, conse-
quently, waived their claims on appeal. Continental
contends that the notice of appeal did not specify those
members who did not waive their claims and who are
appealing from the district court’s order. We reject this
argument, and conclude that the LPP Claimants notice of
appeal adequately identifies the appellants.

App. 17

The requirements of Rule 3(c) are jurisdictional.
Torres v. Oakland Scavenger Co., 487 U.S. 312, 320-21, 108 S.
Ct. 2405, 2411, 101 L.Ed.2d 285 (1988). In Torres, the
Supreme Court explained that permitting a court to exer-
cise jurisdiction over parties not named in a notice of
appeal would be equivalent to extending the time pre-
scribed to file a notice of appeal, a power not granted to
the court. Id. at 315. Thus, the failure of a notice of appeal
to name a party constitutes a jurisdictional bar to the
appeal, and thus a failure of that party to appeal. Dura
Systems, Inc. v. Rothbury Investments, Ltd., 886 F.2d 551,
554 (3d Cir. 1989).

Generally, rules of procedure should be liberally con-
strued. Torres, 487 U.S. at 316. In Torres, the Supreme
Court emphasized that, “mere technicalities should not
stand in the way of consideration of a case on its merits.”
Id. (internal quotations omitted). Thus, in the context of
Rule 3(c), jurisdiction may be appropriate if a litigant’s
actions are functionally equivalent to the requirements of
Rule 3(c). Masquerade Novelty v. Unique Industries, 912 F.2d
663, 665 (3d Cir. 1990). We have applied this construction
numerous times to support a finding of jurisdiction in the
absence of strict, technical compliance with the require-
ments of Rule 3(c). See id. (where the contents of docu-
ments filed within the time prescribed to file a notice of
appeal contain the information required by Rule 3(c), the
party will be deemed to have complied with the rule and
the case will not be dismissed for lack of appellate juris-
diction); Dura Systems, Inc., 886 F.2d at 554-55 (Consent
Order filed by the appellants within the time prescribed
to file a notice of appeal served as the “functional equiva-
lent” of what Rule 3(c) required such that the technical

App. 18

failure of the actual notice of appeal was not a bar to
jurisdiction); see also In re Bertoli, 812 F.2d 136 (3d Cir.
1987) (litigant’s filing of a “Notice of Motion for Certifica-
tion of An Interlocutory Appeal” in the district court
within the thirty-day time period allowed to file a notice
of appeal was sufficient to satisfy Rule 3(c) where the
litigant failed to file an actual notice of appeal; the docu-
ment communicated an intention to appeal and identified
the judgment appealed from and the court to which the
appeal was taken).

The purpose of Rule 3(c)’s identification requirement
is to provide notice to the court and the opposing parties
of the identity of the appellants. Torres, 487 U.S. at 318;
Dura Systems, Inc., 886 F.2d at 555. Since ALPA and the
LPP Claimants filed their appeals in the district court, the
LPP Claimants have been identified as a group of former
Eastern pilots, no longer represented by ALPA, seeking to
enforce their seniority integration rights under the LPPs.
When ALPA settled its claims with Continental, both
Continental and ALPA, via the settlement agreement,
granted the LPP Claimants the opportunity to participate
in the settlement. Continental was well aware of the
individuals who elected to exercise this option. The set-
tlement agreement specifically required those pilots elect-
ing to participate in the settlement to execute one of two
forms indicating an intent to participate in the settlement
and to return the form to Continental. Those individuals
who opted to settle their claims waived their right to
appeal. Thus, the group of LPP Claimants dwindled to an
identifiable, discrete entity made up of those individual
pilots who chose not to participate in the settlement.

App. 19

The term “LPP Claimants” has been subject to a
common understanding among all parties to this litiga-
tion relating to the individuals comprising the group.
Accordingly, we conclude that the LPP Claimants’ notice
of appeal sufficiently identifies the entity such that Conti-
nental, as well as this Court, is adequately apprised of the
identity of the appellants such that appellate jurisdiction
is proper. In so doing, we follow the Supreme Court’s
directive to construe Rule 3(c) liberally and to avoid a
construction that would permit “mere technicalities” to
bar the consideration of this case on the merits. Masquer-
ade Novelty, 912 F.2d at 666 (quoting Dura Systems, 886
F.2d at 555).

B. Whether the Claimants’ Appeals are Moot

Continental argues that the Claimants’ appeals are
moot, relying on ALPA’s settlement of its LPP dispute
with Continental. Essentially, Continental maintains that
the claim settled by ALPA was a “group” claim. Thus,
Continental argues, when ALPA settled the dispute, it
settled the claim on behalf of the entire group on whose
behalf it filed the bankruptcy claims, including the Group
of 31 and the LPP Claimants. According to Continental,
then the relevant question is whether “if [individual
rights to seniority integration arbitration under the LPPs]
existed at all, [those] rights survived ALPA’s settlement
of the group grievance.” In the district court, Continental
challenged the LPP Claimants’ individual standing under
the LPPs to prosecute their rights to seniority integration.
The district court declined to consider the merits of this
argument, explaining that the issue constituted a “minor”
dispute under the Railway Labor Act, 45 U.S.C.

App. 20

§§ 151-163, and was subject to the jurisdiction of the
arbitrator. We conclude that because the Claimants’ indi-
vidual rights to prosecute their claims for seniority inte-
gration have not been established under the LPPs, we
need not address whether the Claimants’ individual
rights to seniority integration survived ALPA’s settlement
of the dispute.

The right to seniority integration under the LPPs
turns on whether a “merger” between Eastern and Conti-
nental occurred within the meaning of the LPPs. This
determination depends on the meaning, interpretation
and proper application of the LPPs. In turn, the issue of
standing to maintain an individual claim for seniority
integration under the LPPs is a “minor” dispute under
the Railway Labor Act, 45 U.S.C. §§ 151-163. See Consoli-
dated Rail v. Labor Executives, 491 U.S. 299, 302 (1989)
(“major disputes seek to create contractual rights, minor
disputes to enforce them”) (quoting Elgin, ] & E. Ry. Co. v.
Burley, 325 U.S. 711, 723, 65 S. Ct. 1282, 1289-90, 89 L.Ed.
1886 (1945) (minor disputes are those relating either to
the meaning or proper application of a particular provi-
sion with reference to a specific situation)); Chicago &
Northwestern Transp. v. Local Union 214, 829 F.2d 1424,
1427 (7th Cir. 1987). Accordingly, the issue of standing is
subject to the exclusive jurisdiction of the arbitrator, and
the district court properly concluded that its role relating
to this issue was to protect the jurisdiction of the arbitra-
tion board. Consolidated Rail, 491 U.S. at 304 (“the
[National Railroad Adjustment] Board . . . has exclusive
jurisdiction over minor disputes. Judicial review of the
arbitral decision is limited.”); Chicago & Northwestern
Transp., 829 F.2d at 1428.

App. 21

Consistent with the federal courts’ role relating to
minor disputes, i.e., to protect the jurisdiction of the
arbitration board, federal courts cannot inquire into the
merits of an underlying dispute except to the extent
necessary to determine its proper characterization as
minor or major. Chicago & Northwestern Transp., 829 F.2d
at 1428. Nor may the courts decide what remedy is appro-
priate if the agreement is interpreted to require recovery
of a remedy. General Com of Adj., United Transp. Union v.
CSX R.R., 893 F.2d 584, 592-93 (3d Cir. 1990). Thus, the
district court properly concluded that it could not con-
sider the merits of Continental’s argument that the
Claimants did not have standing under the LPPs. As the
Claimants’ right to prosecute their claims for seniority
integration have not been established under the LPPs, we
find that we need not address Continental’s argument
that their individual rights did not survive ALPA’s settle-
ment of the LPP dispute.

C. Merits of the Appeal

1. Bankruptcy Court's Jurisdiction

Before we determine whether the bankruptcy court
properly determined the status of the Claimants’ claims,
we must address the Claimants’ contention that the bank-
ruptcy court did not have jurisdiction over the matter.
The Claimants maintain that because the LPP dispute
arose wholly outside the bankruptcy context, the matter
is a “non-core” dispute over which the bankruptcy court
did not have jurisdiction. The flaw in the Claimants’
argument is that they confuse the disposition of the
merits of the underlying LPP dispute with the treatment

App. 22

of their claims in bankruptcy. The bankruptcy court had
exclusive jurisdiction over the latter.

A bankruptcy court has jurisdiction over all “core
proceedings arising under title 11, or arising in a case
under title 11.” 28 U.S.C. § 157(b)(1) (1993); In re Wood,
825 F.2d 90, 95 (5th Cir. 1987). Section 157(b) does not
define “core proceedings.” However, the phrase has been
interpreted to apply to those rights that are created by
federal bankruptcy law:

If the proceeding involves a right created by the
federal bankruptcy law, it is a core pro-
ceeding . . . If the proceeding is one that would
arise only in bankruptcy, it is also a core pro-
ceeding; for example, the filing of a proof of
claim or an objection to the discharge of a par-
ticular debt.

In re Wood, 825 F.2d at 97. See Beard v. Braunstein, 914 F.2d
434 (3d Cir. 1990) (acknowledging the standard for “core
proceedings” articulated in Wood).

There can be no dispute that the issue as to whether
the bankruptcy claim could be satisfied by a monetary
award is a “core bankruptcy matter.” By filing a proof of
claim against Continental’s estate in bankruptcy court,
the Claimants “invoke[d] the special rules of bankruptcy
concerning objections to the claim, [and] estimation of the
claim.” Wood, 825 F.2d at 97. Further, the issue decided by
the bankruptcy court was how the claim would be treated
in bankruptcy. Thus, the bankruptcy court was well
within its authority to exercise jurisdiction over the issue
of the status of the bankruptcy claim. Our conclusion is
consistent with principles that govern the disposition of
issues when bankruptcy law and labor law intersect. See

App. 23

L.O. Koven & Brothers, Inc. v. Local Union No. 5767, 381
F.2d 196, 205 (3d Cir.1966) (“Questions involving an inter-
pretation of the Bankruptcy Act should be decided by the
court, while questions involving an interpretation of the
collective bargaining agreement should if feasible be
decided by the arbitrator.”); see also Garland Coal & Min-
ing Co. v. United Mine Workers, 778 F.2d 1297, 1304 (8th
Cir.1985) (“Once the arbitrator has decided the liability
issue, the case should be returned to the bankruptcy
court to decide the questions of allowability and priority
of claims.”). Accordingly, we conclude that the bank-
ruptcy court had jurisdiction to determine whether the
Claimants’ claims could be satisfied by a monetary award
in lieu of specific performance.®

8 For the same reasons, we reject the Group of 31’s efforts to
invoke the Norris-LaGuardia Act, 29 U.S.C. § 101, et seq., to
implicate the bankruptcy court’s jurisdiction to determine how
the claims will be treated in bankruptcy. Section 1 of the Norris-
LaGuardia Act provides:

No court of the United States as defined in this
chapter, shall have jurisdiction to issue any
restraining order or temporary or permanent
injunction in a case involving or growing out of a
labor dispute, except in a strict conformity with the
provisions of this chapter; nor shall any such
restraining order or temporary or permanent
injunction be issued contrary to the public policy
declared in this chapter.

29 U.S.C. § 101.

The Group of 31 contends that despite the district court’s
order vacating the injunction the ruling that the remedy in
arbitration can be “reduced” from full seniority integration to a
claim for front pay “is as clearly an injunction and interference
with the Kasher arbitration as was the bankruptcy court’s

App. 24

2. Whether the Equitable Remedy Constitutes a Claim
Under the Bankruptcy Code

The LPP Claimants’ and the Group of 31’s primary
contention on appeal is that the right to the equitable
remedy of seniority integration under the LPPs cannot be
converted into a claim for money damages. The Claim-
ants emphasize that they seek specific performance under
the LPPs, and they vehemently argue that the payment of

blanket injunction against the continuation of the arbitration.”
The conversion of the equitable remedy to front pay, upon
successful challenge at the arbitration proceedings, only affects
the administration of the claim in bankruptcy. It does not
operate to enjoin the arbitrator, nor does it dictate any particular
remedy. Cf. Lukens, 989 F.2d at 677 (order directing an arbitrator
not to preside over any newly ordered arbitration and deeming
prior arbitration ineffectual involved operated as an injunction).
Thus, we will not disturb the bankruptcy court’s exercise of
jurisdiction over the matter.

Similarly we reject the Claimants’ argument that the
determination whether the equitable remedy can be converted
to a payment of money damages is inconsistent with the district
court’s conclusion that the individual right to seniority
integration under the LPPs involves a “minor” dispute, subject
to the exclusive jurisdiction of the arbitrator. See discussion,
supra Part II.B. We discern no inconsistency between the
bankruptcy court’s exercise of jurisdiction to determine the
status of the bankruptcy claim and the district court’s
characterization of the issue of the Claimants’ standing under
the LPPs as a “minor” dispute. The bankruptcy court’s ruling
related only to the manner in which the Claimants’ claims in
bankruptcy would be treated if a right to seniority integration is
established. This ruling, unlike the standing issue, does not turn
on an interpretation of the LPPs. Thus, the bankruptcy court’s
determination of the status of the claims and the district court’s
refusal to consider the merits of the standing issue was not
inconsistent.

App. 25

money damages is not a viable alternative to the equita-
ble right to seniority integration.

The district court rejected the Claimants’ argument,
holding that seniority integration under the LPPs gave rise
to a “right of payment” within the definition of a “claim”
under the bankruptcy code. In support of its conclusion,
the district court further determined that money damages
are a viable alternative to seniority integration.

The bankruptcy code defines “claim” as

(B) right to an equitable remedy for breach of
performance if such breach gives rise to a right
to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured.

11 U.S.C. § 101(5). The term “claim” as defined in the
bankruptcy code is construed broadly to permit debtors
to meet all of their legal obligations in bankruptcy and to
enable holders of claims to participate in the bankruptcy
proceedings. See Ohio v. Kovacs, 469 U.S. 274, 279, 83
L.Ed.2d 649, 105 S.Ct. 705 (1985) (“Congress desired a
broad definition of claim.”); see, e.g., Pennsylvania Dep't of
Public Welfare v. Davenport, 495 U.S. 552, 558 (1990)
(debtors’ obligation to pay restitution as a condition of
probation which arose out of a criminal conviction for
welfare fraud constituted a “debt” within the meaning of
the bankruptcy code that gave rise to a “claim” under the
code).

Under section 101(5), an equitable remedy can be
deemed a “claim” if that remedy “gives rise to a right of
payment.” We are guided as to what constitutes a “right

a

a App. 26

of payment” under the bankruptcy code by the Supreme
Court’s analysis in Ohio v. Kovacs. In Kovacs, the peti-
tioner, the State of Ohio, obtained an injunction ordering
the respondent, William Kovacs, to clean up a hazardous
waste site. After Kovacs failed to comply with the injunc-
tion, the State obtained the appointment of a receiver,
who was directed to take possession of all of Kovacs’
assets and property and to clean up the waste site. Subse-
quent to the appointment of the receiver, Kovacs filed for
bankruptcy. In response, the State filed a complaint in
bankruptcy seeking a declaration that Kovacs’ obligation
under the injunction was not dischargeable in bankruptcy
because it was not a liability on a “claim” under the
bankruptcy code.

The Supreme Court held that the obligation imposed
by the injunction had been converted to an obligation to
pay money that was dischargeable in bankruptcy. Kovacs,
469 U.S. at 283. Critical to the Court’s conclusion was its
determination that the appointment of a receiver had
dispossessed Kovacs of the property and therefore, had
removed Kovacs’ ability to cooperate with the receiver
and remove the waste from the site in compliance with
the injunction. Specifically, the Court stated:

The injunction surely obliged Kovacs to clean
up the site. But when he failed to do so, rather
than prosecute Kovacs under the environmental
laws or bring civil or criminal contempt pro-
ceedings, the State secured the appointment of a
receiver, who was ordered to take possession of
all of Kovacs’ nonexempt assets . . . and to
comply with the injunction. . . . As wise as this
course may have been, it dispossessed Kovacs,
removed his authority over the site, and

App. 27

divested him of assets that might have been
used by him to clean up the property

. Although Kovacs had been ordered to
“cooperate” with the receiver, he was disabled
by the receivership from personally taking
charge of and carrying out the removal of
wastes from the property. What the receiver
wanted from Kovacs after bankruptcy was the
money to defray cleanup costs . . . Had Kovacs
furnished the necessary funds, either before or
after bankruptcy, there seems little doubt that
the receiver and the State would have been sat-
isfied.

Id. at 283. Thus, the Court concluded that under the
circumstances, the clear up order had been converted
into an obligation to pay money. Id. at 283.

In In re Torwico Electronics, Inc., 8 F.3d 146 (3d
Cir.1993), we addressed the issue whether a regulatory
obligation directing a Chapter 11 debtor to develop a
plan to ameliorate an ongoing environmental hazard
could be converted into a “claim” in bankruptcy. In that
case, Torwico Electronics, a manufacturing business, filed
for Chapter 11 bankruptcy and listed the New Jersey
Department of Environmental Protection and Energy (the
“Department”) as a creditor with a disputed and unliqui-
dated claim. After Torwico filed its petition for bank-
ruptcy, the Department performed an on-site inspection
of Torwico’s property and found hazardous waste, for
which it issued a notice of violation to Torwico. Two
months later, the deadline for filing proofs of claim in
Torwico’s bankruptcy case passed. The Department had
failed to file any proof of claim by this deadline.

cs ae

App. 28 ;

The Department, seeking to enforce Torwico’s obliga-
tion under state and federal environmental laws, issued
an Administrative Order requiring Torwico to submit a
written closure plan for the hazardous site and assessing
a monetary penalty for failure to take action under the
earlier notice of violation. The Order specifically stated:
“All obligations are imposed pursuant to the police
powers of the State of New Jersey, intended to protect the
public health, safety, welfare, and environment.”

In bankruptcy court, both parties sought summary
judgment. Torwico maintained that the obligation consti-
tuted a “claim” under the bankruptcy code and that the
State’s failure to file a timely proof of claim was fatal to
the State’s position that Torwico was responsible for the |
obligation. The State, however, argued that the claims
involved were regulatory obligations, not bankruptcy
claims, and that Torwico was obligated to remedy the
violations addressed in the Order pursuant to state and [
federal law.

Turning our attention to the Supreme Court's anal-
ysis in Kovacs, we explicitly noted that this case was
unlike Kovacs in that the State was not demanding that
Torwico pay money to it, but rather was requesting it to
take action to ameliorate an ongoing hazard. Torwico Elec-
tronics, 8 F.3d at 150. Next, we shifted our focus to the
nature of the obligation imposed by the Order and con-
cluded that it was not an order for breach of an obligation
that gave rise to the right of payment. Specifically, we
noted:

The state here found that the seepage pit was a
continuing problem that was leaking hazardous
material into the surrounding environment.

App. 29

Thus, the state is not asserting a “repackaged
claim for damages”; rather there is an ongoing
and continuing threat and . . . an obligation on
the part of the debtor to “ameliorate ongoing
pollution emanating from accumulated wastes”
. . . The state has no “right to payment” here.
What it has is a right to force the debtor to
comply with applicable environmental laws by
remedying an existing hazard

Id. (quoting In re Chateauguay, 944 F.2d 997, 1008 (2d
Cir.1991)).9

Kovacs indicates, and Torwico Electronics implies, that
a right of payment under the bankruptcy code is, essen-
tially, an obligation to pay money. Thus, the issue we
must decide is whether monetary payment is an alterna-
tive for the equitable remedy of seniority integration. See
Matter of Udell, 18 F.3d 403, 407 (7th Cir.1994) (“[an]
example of a ‘claim’ is a right to an equitable remedy that
can be satisfied by an ‘alternative’ right to payment”).

9 In Torwico Electronics, we were persuaded by, and
explicitly applied, the approach adopted by the Court of
Appeals for the Second Circuit in In re Chateauguay, 944 F.2d 997
(2d Cir.1990). In that case, the court addressed the issue of what
constituted a claim in the context of the bankruptcy of an entity
that operated hazardous waste sites. There, the court stated:

Where an order imposes obligations distinct from any
obligation to stop or ameliorate ongoing pollution,
the order presents a claim if the government could
have done the work itself and then sought
reimbursement; under such circumstances there is a
breach of an obligation that gives rise to a right of
payment.

In re Chateauguay, 944 F.2d at 1008.

App. 30

The district court answered this question affirmatively,
and we agree.

We begin our analysis by noting that here, when
ALPA filed its proof of claim in bankruptcy court, it
enumerated the claim as one for money damages, in
addition to specific performance, arising out of the
underlying LPP labor arbitration dispute. Indeed, in its
supplemental pre-hearing statement filed at the arbitra-
tion, ALPA specifically noted that it sought “damages in
the form of back pay and front pay against . . . Conti-
nental . . . in addition to integrated pilot positions.” This
is not the end of our inquiry, however. Consistent with
the analyses in Kovacs and Torwico Electronics, we are
compelled to examine the nature of the remedy sought
and to ascertain whether it can give rise to a right of
payment. We conclude that it does.

Unlike the obligation at issue in Torwico Electronics,
seniority integration is not a remedy tailored to enforce
compliance with any federal or state laws or regulations.

The source of the remedy is a provision contained in
an agreement. By its contractual nature, it is clear that the
remedy was not created to enforce compliance with any
particular mandate. Rather, by its terms, seniority inte-
gration is a discrete remedy, specifically created to pro-
tect a group of employees.!° Thus, the remedy is a vehicle

10 The LPPs specifically state:

Section 1. The fundamental scope and purpose of
the conditions hereinafter specified are to provide for
compensatory allowances to employees who may be
affected by [a] proposed merger. ...

(Labor Protective Provisions, section 1).

App. 31

by which to provide a benefit or compensation to individ-
uals who are covered by the explicit terms of the agree-
ment and who, by the agreement's terms, are entitled to
enforce the remedy.

Although the collective bargaining agreemeni is
silent as to the remedy following a breach of the agree-
ment, it is reasonable to conclude that a “corollary right
to payment of liquidated damages” would flow from a
breach giving rise to the equitable remedy under the
LPPs. See Matter of Udell, 18 F.3d at 408 (holding that a
right to an equitable remedy for breach of performance is
a claim if the same breach also gives rise to a right of
payment with respect to the equitable remedy or if the
right to payment is an alternative to the right to an
equitable remedy). See generally Chauffeurs, Teamsters, Etc.
v. Terry, 494 U.S. 558, 110 S.Ct. 1339, 108 L.Ed.2d 519
(1990) (claim based on breach of a collective bargaining
agreement is comparable to a breach of contract claim for
which a legal award of money damages in the form of
back pay is permitted); Stewart v. KHD Deutz of America
Corp., 75 F.2d 1522 (11th Cir.1996) (breach of [collective
bargaining claim] claim is most analogous to a claim for
breach of contract). The Court of Appeals for the Ninth
Circuit’s opinion in Van Waters & Rogers, Inc. v. Int'l
Brotherhood of Teamsters, 913 F.2d 736 (9th Cir.1990), is
instructive.

In that case, the court upheld an award of monetary
damages for breach of a contract mandating seniority
integration. There, Van Waters, a seller and distributor of
chemicals, purchased its competitor, McKesson. Pursuant
to the acquisition, Van Waters agreed to assume the terms
and conditions of a collective bargaining agreement that

App. 32

existed between McKesson and its employees’ union,
Local 70. Although the collective bargaining agreement
contained a seniority integration clause triggered by a
purchase or sale of McKesson, Van Waters refused to
honor the terms of the clause after the purchase was
complete. Accordingly, Local 70 filed a grievance based
on Van Waters’ failure to integrate the seniority of the
former McKesson employees with Van Waters’ seniority
list.

Arbitration of the dispute was complicated by two
additional factors. First, Van Waters maintained a collec-
tive bargaining agreement with another union, Local 287.
Second, the collective bargaining agreement between
Local 70 and McKesson/Van Waters contained a clause
precluding the arbitrator from determining any jurisdic-
tional dispute arising between Local 70 and any other
union. The effect of the latter factor was that any ruling
on a jurisdictional dispute would be outside of the scope
of the arbitrator’s authority. As seniority integration of
Local 70’s employees would affect the seniority of Van
Waters’ employees and create a potential conflict between
the two unions, resolution of the dispute implicated the
arbitrator’s authority to resolve the dispute.

At the arbitration hearing, the arbitrator granted
Local 70’s grievance demanding that the seniority of the
former McKesson employees be considered as integrated.
However, the arbitrator declined to enforce seniority inte-
gration to avoid any jurisdictional dispute. Instead, the
arbitrator ruled that the employees would receive dam-
ages for any wages and other benefits lost due to Van
Waters’ failure to consider their seniority. In so ruling, the
arbitrator noted that the Local 70 agreement contained a

App. 33

provision that permitted the recovery of damages by
employees arising out of an employer’s failure to require
a purchaser to assume the obligations of the collective
bargaining agreement. The Ninth Circuit upheld the arbi-
trator’s award, concluding that the arbitrator properly
fashioned a monetary award to the former McKesson
employees “for the breach of the terms of Local 70’s
collective bargaining agreement.” Id. at 742.

Van Waters illustrates that a monetary damage award
can be enforced as an alternative to, or can arise with
respect to, the equitable remedy of seniority integration.
The award is not cumulative, nor does it address a sepa-
rate remedial concern. Rather, it serves as a substitute for
the performance of an equitable remedy that cannot oth-
erwise be enforced. See Van Waters, 913 F.2d at 741 (“if
violated, [the seniority rights provided under the collec-
tive bargaining agreement] could be remedied by an
award of damages rather than specific performance.”).

We find support for the proposition that monetary
awards are a viable alternative to the equitable remedy of
seniority integration in wrongful discharge cases where
we have enforced awards of monetary damages in lieu of
reinstatement. Much like reinstatement, seniority integra-
tion is a “make whole” remedy, the purpose of which is to
restore the employee to the economic status quo that
would exist but for the employer’s conduct. See Franks v.
Bowman Trans. Co., 424 U.S. 747, 766 (1976).

Although we have recognized that reinstatement is
the preferred remedy to address cases of wrongful dis-
charge, we have enforced monetary awards as a viable

App. 34

alternative where reinstatement is impractical. See Max-
field v. Sinclair International, 766 F.2d 788 (3d Cir.1985)
(front pay is an appropriate alternative to reinstatement
where the relationship between the parties may be so
damaged by animosity that reinstatement is impracticable
and the remedial purposes of the statute would be frus-
trated if front pay were not available as an alternative

remedy); Goss v. Exxon Office Systems Co., 747 F.2d 885 (3d _

Cir.1984) (same); see also Ellis v. Ringgold School District,
832 F.2d 27 (3d Cir.1987) (reinstatement may be denied
when animosity between the parties makes such remedy
impracticable). Cf. Squires v. Bonser, 54 F.3d 168 (3d
Cir.1994) (special circumstances indicating that tensions
between the parties exceed those which normally accom-
pany reinstatement or indicating “irreparable” animosity
among the parties involved justifies denial of reinstate-
ment).11 Similar to the conditions that can result from the

11 Squires is distinguishable. That case involved an
employee who challenged the district court’s failure to direct
reinstatement to his former position after a jury sustained a First
Amendment constitutional challenge to his employer’s failure
to reappoint him. Reversing the district court’s decision not to
reinstate the employee, we stated, “[t]he fact that reinstatement
might have disturbing consequences, revive old antagonisms,
or breed difficult working conditions usually is not enough to
outweigh the important first amendment policies that
reinstatement serves [absent] probable adverse
consequences[that] weigh so heavily that they counsel the court
against imposing this preferred remedy.” Squires, 54 F.3d at 175
(quoting Banks v. Burkich, 788 F.2d 1161, 1165 (6th Cir.1988)).
Thus, it is clear that our decision to remand with instructions to
reinstate the appellant was driven by the constitutional nature
of the claims and the compelling need to enforce reinstatement
to remedy the violation. As the claims here do not involve

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App. 35

enforcement of reinstatement, disruption to the work
environment, irreparable damage to work relationships,
and hostility and animosity are all very probable condi-
tions that can result from the enforcement of seniority
integration. Considering the similarity in purpose
between the two remedies, the rationale underlying the
enforcement of an alternative remedy to fulfill their reme-
dial purposes, and the similarity in the impracticality of
enforcing the remedies under particular circumstances,
we are certain that a money damage award is an appro-
priate alternative to seniority integration.

Moreover, we are convinced that the particular cir-
cumstances of this case might make the enforcement of
the equitable remedy of seniority integration impractical
such that an alternative money damage award would be
appropriate. The seniority integration sought by the LPP
Claimants and the Group of 31 could potentially result in
the displacement of many Continental pilots. Such dis-
placement has the potential to create an environment rife
with hostility and low employee morale, not to mention a
detrimental effect on employer-employee relations.12 The

constitutional concerns, we cannot conclude that any remedy
short of seniority integration will not suffice to remedy the
alleged violation.

12 We note that nothing about the imposition of monetary
damages as a substitute for seniority integration frustrates the
remedial purpose of the LPPs. Cf. Franks, 424 U.S. at 771 (in a
Title VII case, “the denial of seniority relief to victims of illegal
racial discrimination in hiring is permissible ‘only for reasons
which, if applied generally, would not frustrate the central
statutory purposes of eradicating discrimination throughout the
economy and making persons whole for injuries suffered
through past discrimination.’ ”). Indeed, the LPPs set forth as its

App. 36

circumstances indicate that seniority integration would
not be a feasible remedy and that an alternative remedy
of monetary damages would be appropriate. Therefore,
we conclude that the right to seniority integration gives
rise to a “right of payment” such that the remedy consti-
tutes a “claim” dischargeable in bankruptcy.

We take care to note the boundaries of our holding. It
is not our purpose to suggest the award the arbitrator
should grant, if an award is warranted upon disposition
of the LPP dispute. Our holding is limited to how the
claims should be treated in bankruptcy. Simply put, we
hold that any claim based on an award of seniority inte-
gration arising out of the resolution of the LPP dispute
will be treated as a claim in bankruptcy giving rise to a
right of payment. As such, the right to seniority integra-
tion is satisfiable by the payment of money damages.

D. Arguments of Appellee/Cross-Appellant Continental
1. Dissolution of the Injunction

Continental challenges the district court’s ruling
vacating the injunction against the continuation of the
Kasher Arbitration on two grounds. First, it argues that
contrary to the district court’s conclusion, the permanent

scope and purpose “to provide for compensatory allowances to
employees who may be affected by the proposed merger of” the
carriers. See discussion supra note 2. An award of monetary
damages is consistent with the articulated scope and purpose,
and is therefore appropriate.

App. 37

injunction, imposed by the Plan of Confirmation, com-
plied with the mandate of Rule 65(d).!5 Next, it contends
that if the permanent injunction did not comply with
Rule 65(d), the statutory injunction referenced in the
bankruptcy court’s confirmation order survived the per-
manent injunction and is valid. We need not decide
whether the permanent injunction failed to comply with
the mandate of Rule 65(d). We conclude that even assum-
ing that the statutory injunction survived the permanent
injunction and is not subject to the requirements set forth

13 Section 12.19 of the plan of reorganization provided:

{ 1219. Injunction Relating to Eastern Claims. This Joint
Plan permanently enjoins, and the Confirmation
Order shall constitute and provide for a permanent
injunction against, any Person or entity, including
without limitation, (i) any present or former
employee of Eastern . . . (ii) any labor union or
collective bargaining representative acting or
purporting to act on behalf of any such employees or
former employees . . . from commencing, conducting
or continuing any suit, arbitration, action or other
proceeding in any place or forum against any

Debtor, . . . This injunction shall apply, without
limitation, to any suit, arbitration, action or
proceeding.

(Debtors’ Revised Second Amended Joint Plan of
Reorganization, § 12.19).

Federal Rule of Civil Procedure 65(d) states:

Every order granting an injunction and every
restraining order shall set forth the reasons for its
issuance; shall be specific in terms; shall describe in
reasonable detail, and not by reference to the
complaint or other document, the act or acts sought to
be restrained. ...

Fed.R.Civ.P. 65(d).

App. 38

in Rule 65(d), Continental’s failure to reject the collective
bargaining agreement cunsistent with the mandate of sec-
tion 1113 of the Code renders the injunction invalid.

The Confirmation Order issued by the bankruptcy
court specifically incorporated the statutory injunction
prescribed by the bankruptcy code. The order states:

In accordance with section 524 of the Bank-
ruptcy Code .. . this Order:

(ii) operates as an injunction against the com-
mencement or continuation of an action, the
employment of process, or an act, to collect,
recover or offset any such debt or Claim as a
personal liability of the Debtors. . . .

(Findings of Fact, Conclusions of Law and Order Con-
firming The Debtors’ Revised Second Amended Joint
Plan of Reorganization).

Assuming, as the district court did and as Continen-
tal argues, that the section 524 statutory injunction is not
subject to the requirements of Rule 65(d), we conclude
that the district court properly vacated the injunction
against the Kasher Arbitration. Section 1113 of the Code
provides:

(a) The debtor in possession, or the trustee if
one has been appointed under the provisions of
this chapter . .. may assume or reject a collective
bargaining agreement only in accordance with
the provisions of this section.

11 U.S.C. § 1113(a). The provision outlines the procedure
that a debtor or appointed trustee must follow to suc-
cessfully reject a collective bargaining agreement, includ-
ing, but not limited to: (1) the submission of a proposal to

App. 39

an authorized representative of the employees affected by
the terms of the agreement prior to the filing of an
application to reject the agreement, 11 U.S.C.
§ 524(b)(1)(A); and (2) good faith attempts to reach a
“mutually satisfactory modification” of the agreement, 11
U.S.C. § 524(b)(2).

The intent behind section 1113 is to preclude debtors
or trustees in bankruptcy from unilaterally terminating,
altering, or modifying the terms of a collective bargaining
agreement without following its strict mandate. In re
Ionosphere, 922 F.2d at 989-90. Moreover, the provision
operates to preclude the application of other bankruptcy
code provisions to the advantage of debtors and trustees
to permit them to escape the terms of a collective bargain-
ing agreement without complying with the requirements
of section 1113. See id.

Continental does not dispute that it did not follow
the requirements set forth in section 1113 to reject the
collective bargaining agreement. Instead, Continental
suggests that the imposition of the injunction was consis-
tent with the bankruptcy court’s authority to determine
the administrative priority and status of the bankruptcy
claims. Thus, it argues, section 1113 cannot divest the
bankruptcy court of jurisdiction to exercise this authority
and impose the injunction. We disagree.!4

14 We have not been required previously to address the
applicability of arbitration under collective bargaining
agreements when the employer is in bankruptcy, although the
issue was raised in a case we decided last year. See Antol v.
Esposto, 100 F.3d 1111, 1121 n. 4 (3d Cir.1996) (“[W]e need not
decide that interesting issue here.”). This case, however,
requires us to do so.

App. 40

The injunction allowed Continental to avoid its oblig-
ation to arbitrate the merger dispute under the LPPs. In
In re Ionosphere, the Court specifically held that the appli-
cation of the section 362 automatic stay provision to
effectuate this result in the absence of the debtor’s com-
pliance with the requirements of section 1113 was imper-
missible, as “its application would allow a debtor
unilaterally to avoid its obligation to arbitrate.” In re
lonosphere, 922 F.2d at 993. Here, the enforcement of the
statutory injunction in the face of Continental’s failure to
follow the requirements of section 1113 is no different. As
the enforcement of the injunction would have the effect of
permitting Continental to escape its duty to arbitrate
under the collective bargaining agreement, we decline to
enforce the statutory injunction in the absence of Conti-
nental’s compliance with the requirements to reject the
collective bargaining agreement.'°

15 Despite our conclusion that failure to comply with
section 1113 bars an injunction of the arbitration, we reject the
Claimants’ contention that the substitution of a monetary
damage award, in lieu of seniority integration, is not permitted
under section 1113 because it alters or modifies the terms of the
collective bargaining agreement. The bankruptcy court’s
determination of the administrative priority and status of the
claims was not based on an interpretation of the LPPs. Nor did it
predetermine the appropriate remedy warranted under the
LPPs, thus “nullifying” the agreement and infringing on the
arbitrator’s jurisdiction. Substitution of the equitable remedy in
no way amounts to an alteration or termination of the terms of
the collective bargaining agreement.

App. 41

2. Duty to Arbitrate

Finally, we reject Continental’s argument that it has
no duty to arbitrate the LPP dispute. Throughout this
litigation, Continental has premised its arguments on the
assumption that it is bound by the LPPs and has a duty to
arbitrate the LPP dispute. In so doing, Continental reaped
enormous benefits: (1) it was able to obtain a ruling that
the claim based on seniority integration could be treated
as a right to payment in bankruptcy, satisfiable by a
monetary award; and (2) in turn, it received backing from
investors for its plan of reorganization, which was critical
to plan confirmation by the bankruptcy court.'© Now,

16 It is apparent that Continental assumed this position in
efforts to obtain judicial confirmation of its plan of
reorganization. In its Motion for Partial Summary Judgment,
Continental stated:

1. [Debtors] make this Motion For Partial Summary
Judgment On Their Partial Objection to Claims Based
On Certain Alleged Labor Protective Provisions
Involving The Air Line Pilots Association,
International (“ALPA”) And Eastern Air Lines, Inc.
(“Eastern”) in order to ensure that they will be able to
reorganize successfully and, more specifically, to
satisfy a condition of the Investment Agreement
dated November 9, 1992 (“Investment Agreement”),
by and among [the investors] and the Debtors. In
addition to monetary damages, these claims seek to
require Continental to hire several thousand Eastern
Air Lines pilots, which if granted would necessitate
the displacement of an equal number of incumbent
Continental pilots. Debtors seek in this Motion a legal
determination that the “LPP Claims” .. . are, at best,
dischargeable, prepetition general unsecured claims
within the meaning of the Bankruptcy Code Section
101(5).

App. 42

Continental maintains that there has been no determina-
tion that it is bound by the LPPs and that the case should
be remanded to the district court for a determination on
the merits of its duty to arbitrate the dispute.

In light of the overwhelming advantage that Conti-
nental derived from maintaining the position that it was
bound by the collective bargaining agreement, and thus,
had a duty to arbitrate the LPP dispute, we refuse to
allow Continental to repudiate that representation and
return to the district court to litigate the issue whether it
is bound by the agreement. See EF Operating Corp. v.
American Bldgs., 993 F.2d 1046, 1050 (3d Cir.1993) (“one
cannot casually cast aside representations, oral or writ-
ten, in the course of litigation simply because it is conve-
nient to do so. . . a reviewing court may properly
consider the representations made in the appellate brief
to be binding as a form of judicial estoppel, and decline
to address a new legal argument based on a later repudia-
tion of those representations.”). Accordingly, we conclude
that Continental is bound by its prior representations that
it has a duty to arbitrate the LPP dispute.

Ill.
For the foregoing reasons, we affirm the district

court’s decision in all respects.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

APPENDIX B

Order Denying Petition for Rehearing,
rendered September 23, 1997

App. 43

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 96-7028 and 96-7038

IN RE: CONTINENTAL AIRLINES,
Debtor
AIR LINE PILOTS ASSOCIATION
vs.
CONTINENTAL AIRLINES
LPP CLAIMANTS; EFFECTIVE DATE COMMITTEE,
Claimants
HONORABLE JOHN STONITSCH,
Trustee
LPP CLAIMANTS,
Appellant No. 96-7028

(Caption amended in accordance with
Clerk’s Order dated 3/4/96)

App. 44

IN RE: CONTINENTAL AIRLINES,
Debtor
AIR LINE PILOTS ASSOCIATION
vs.
CONTINENTAL AIRLINES
LPP CLAIMANTS; EFFECTIVE DATE COMMITTEE,
Claimants
HONORABLE JOHN STONITSCH,
Trustee
CONTINENTAL AIRLINES, INC.,
Appellant No. 96-7038

(Caption amended in accordance with
Clerk’s Order dated 3/4/96)

SUR PETITION FOR REHEARING

PRESENT: SLOVITER, Chief Judge, BECKER, STA-
PLETON, MANSMANN GREENBERG, SCIRICA,
COWEN, NYGAARD, ALITO, ROTH, LEWIS, McKEE,
and MICHEL,’ Circuit Judges.

The petition for rehearing filed by appellant, LPP
Claimants, in the above-entitled case having been submit-
ted to the judges who participated in the decision of this
court and to all other available circuit judges in regular
active service, and no judge who concurred in the deci-
sion having asked for rehearing, and a majority of the

* Honorable Paul R. Michel, Circuit Judge for the United States
Court of Appeals for the Federal Circuit, sitting by designation,
whose vote is limited to panel rehearing only.

App. 45

circuit judges in regular active service not having voted
for rehearing by the court en banc, the petition for rehear-
ing is denied.
BY THE COURT,
/s/ illegible
Circuit Judge

Date: Sep. 23, 1997

APPENDIX C

Excerpt from In re Continental Airlines, et al.,
No. 93-163 (D. Del. Nov. 29, 1995)

App. 46

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

In re:

CONTINENTAL AIRLINES, INC.

ie
et a Bankruptcy Court

Case Nos. 90-932
through 90-984

Debtors,

AIRLINE PILOTS ASSOCIATION,
INTERNATIONAL, and LPP
CLAIMANTS,

C.A. No.: 93-163,
Appellants,

93-164, 93-177,
93-178, 93-250,
93-255, 94-496

V.
CONTINENTAL AIRLINES, INC.

al Consol.
or ee 93-163 LON

Appellees.

meee eee ee”

Stephen W. Spence, Esquire, Phillips, Goldman & Spence,
Wilmington, Delaware, Attorney for Claimant-Appellant
Air Line Pilots Association; Michael J. Isaacs, Esquire,
Agostini, Levitsky & Isaacs, Attorney for Claimant-
Appellant LPP Claimants.

Laura D. Jones, Esquire, Young, Conaway, Stargatt &
Taylor, Wilmington, DE; Attorneys for Debtors-Appellees.

App. 47

MEMORANDUM OPINION

November 29, 1995
Wilmington, Delaware

* * *

[p. 41] adjudication of this dispute in the bank-
ruptcy court would nullify effectively the arbi-
tration clause in the collective bargaining
agreement and would substitute the court’s
judgment for that of the arbitrator.

The collective bargaining agreement
expressly provides for arbitration as the method
of dispute resolution.

Id. at 992. The bankruptcy court does not have jurisdic-
tion to decide the merits of the LPP claims. See 28 U.S.C.
§ 157. Yet, exercise of that jurisdiction would abrogate the
provision of the collective bargaining agreement that
mandated arbitration. Therefore, the bankruptcy court
should have allowed an arbitrator to determine the
merits of the LPP claims against Continental.*° This in no
way restricts the bankruptcy court’s authority to deter-
mine the priority of those claims. Any arbitration award
would be, in accordance with the bankruptcy court's
determination, a general unsecured pre-petition claim.*!

30 The court does not imply that an arbitrator should reach
any particular decision. In fact, an arbitrator may decide not to
reach a decision on the merits. See, e.g., Seaboard Acquisition,
1983 WL 35470 (C.A.B. December 15, 1983) (dismissing seniority
integration petition for delay in bringing claim).

31 The court realizes that the right to arbitrate the LPP
dispute may be of limited practical utility to the LPP Claimants.
Any award that might be granted by the arbitrator would be an
unsecured pre-petition claim and may come after the assets of

App. 48

The appropriate remedy under these circumstances is
to vacate the injunction, which this court hereby orders.
See Newark Stereotypers’ Union No. 18 v. Newark Morning
Ledger Co., 353 F.2d

the bankruptcy estate have been wholly depleted. While there
was some evidence in the record of a reserve of unallocated
stock (D.I. 15, Exhibit I, pp. 25-26), there is no evidence that such
a reserve still exists or that it would exist at the time such an
arbitration award might be granted.

APPENDIX D

L. D. Schulte Grievance, Eastern Air Lines System Board
of Adjustment, ALPA Case No. 1-86

App. 49

Before the
Eastern Air Lines Pilots System Board of Adjustment

EASTERN AIR LINES, INC.
- and -

THE AIR LINE PILOTS
ASSOCIATION

L. D. Schulte Grievance
ALPA Case No. 1-86

me me ee ee ee ee!

The L. D. Schulte grievance was heard on April 19-21,
May 11-12, June 14, and November 15-16, 1988, at Miami,
Florida, by the 5-member Pilots System Board of Adjust-
ment composed of Company Members Noel R. Honohan
and William R. Tegtman, Association Members J. P. Distel
and George T. Jehn (Larry C. Wells sat with the Board in
the place of George T. Jehn as Association Member for the
June 14 and November 15-16 sessions), and Neutral Ref-
eree Frank Elkouri.

Appearing for the Company were David P. Callett,
Mark J. Schwartz, and Martin A. Soll, and appearing for
the Association was James L. Linsey (Russell Hollander
participated in the Association's brief; William A. Roberts
appeared for the Association at the November 15 session,
and with James L. Linsey at the November 16 session).

Briefs were mailed by both Parties on January 20,
1989 (the Association mailed a corrected brief on January
24).

App. 50

The Board met at Miami, Florida, on February 7,
1989, for discussion of the case in executive session. It
was then understood that the Referee would prepare a
proposed decision, and that the Board Members would
have two weeks (from the date of the letter transmitting
that proposed decision) in which to request another exec-
utive session.

The Neutral Referee mailed copies of the proposed
decision to the Board Members on March 4, 1989. United
States Bankruptcy Court jurisdiction over Eastern Air
Lines ensued on March 9, 1989, and on September 11,
1989, that Court authorized the System Board to issue its
decision in the present case. No additional executive
session was thereafter desired by either Party.

OPINION BY NEUTRAL REFEREE

A handwritten document hastily drafted by the Com-
pany as its bargaining Proposal No. 7 and signed just a
few hours later by the Company and ALPA as their
agreement under date of February 23, 1986, has been held
by the U.S. Court of Appeals, Eleventh Circuit, to consti-
tute in fact a binding collective agreement between East-
ern and ALPA in behalf of Eastern’s pilots. That
document which hereafter in this Opinion is often
referred to as “the February 23 Agreement,” contains the
language or provision which is now before the Board for
interpretation or construction in the present case. In addi-
tion to holding the February 23, 1986, document to consti-
tute a binding collective agreement between the Parties,
the Court of Appeals held also that the Eastern Air Lines
Pilots System Board of Adjustment “will be charged with

App. 51

determining the contours of” certain disputed “provi-
sions contained in the February 23 Agreement (griev-
ances had been filed on the disputed provisions).! In the
present case one of those disputed provisions is before
the Board for final resolution.

In addition to other facts which will be noted in the
course of the present Opinion, some of the pertinent facts
as found and collated by the Court of Appeals in its
decision may be noted now. The Court of Appeals
explained that:2

Eastern and its unions together faced a
serious dilemma in the early weeks of 1986.
Eastern’s above-industry labor costs contributed
substantially to its deteriorating financial condi-
tion, and the airline realized that if it could not
reduce those costs by securing wage concessions
from ALPA, the machinists’ union, and the
flight attendants’ union, it would be compelled
to opt either for bankruptcy or loss of its inde-
pendent. Neither alternative appealed to East-
ern or to its pilots, who were then engaged in |
rocky negotiations with the carrier over a new
collective-bargaining agreement. While an
agreement with ALPA alone would not prevent
a sale or bankruptcy, the lack of a contract
would probably cause one or the other, and
would leave the pilots unprotected after such an
event occurred. Reaching some sort of agree-
ment was thus of critical importance to both
parties.

1 Eastern Air Lines v. Air Line Pilots Association, 130
LRRM 2284, 2291 (CA 11. 1988).

2 Id. at 2285-2286.

App. 52

Collective-bargaining negotiations between
Eastern and ALPA, under the eye of the
National Mediation Board (NMB), began in
December of 1985. In late January 1986, after an
impasse, the NMB declared a mandatory thirty-
day “cooling off” period under the Railway
Labor Act (RLA), after which both the pilots and
the carrier could engage in “self-help.” Self-help
for the pilots entails striking the airline; the
airline avails itself of self-help by unilaterally
implementing the terms of its final offer. The
cooling-off period was to end on February 26.

Intense negotiation continued during the
cooling-off period. In the final days of the
period, Eastern was approached by a potential
suitor, the Texas Air Corporation, Eastern seri-
ously considered accepting Texas Air’s offer if it
could not resuscitate itself by slashing its labor
costs. The offer was due to expire at midnight
on February 23, 1986, yet by the 23rd, Eastern
and ALPA had not been able to agree to a new
contract.

Compounding the external pressure to
reach an agreement imposed by the potential of
a sale or bankruptcy, the pilots voted on Febru-
ary 21 to strike the airline at the end of the
cooling-off period. On February 23, then, the
negotiating parties began to work feverishly in
the face of the looming deadline, while Texas
Air apparently agreed to extend its offer for a
few more hours. Wide areas of disagreement
still separated the parties.

Sometime in the evening of February 23,
ALPA requested Eastern’s final offer, and to the
ALPA team Eastern offered “EAL No. Sa
handwritten four-page document peppered with

- eccmeimeiiaii,

App. 53

“buzzwords” and loose phrases. The terms of
EAL No. 7 summarized concepts that the nego-
tiating parties had been discussing over the
course of the talks. After some inconclusive hag-
gling, ALPA negotiators submitted the docu-
ment to the Eastern Air Lines Master Executive
Committee (the “MEC”), ALPA’s local govern-
ing body, without recommending that the draft
_be ratified. The MEC questioned its negotiators
about various provisions of the document, and
the negotiators, aware that they did not com-
pletely understand EAL No. 7, were not able to
answer every question posed them. The MEC
initially rejected EAL No. 7. Then, in the early
hours of February 24, informed that it would
have to ratify the document or steer Eastern
toward bankruptcy or toward a sale, the MEC
ratified. Following the ratification, Eastern ten-
dered EAL No. 7 for the signature of the rele-
vant ALPA officials, who then signed the
document. Eastern’s officials has already signed
EAL No. 7. Eastern’s Vice President then substi-
tuted the word “AGREEMENT” for “PRO-
POSAL” as the title of the document. On
February 25, Eastern and ALPA executed a sig-
nature page in blank.

Despite the apparent success in reaching an
agreement with ALPA Eastern was unable to
reach an agreement with its machinists’ union.
Eastern was therefore sold to Texas Air on Feb-
ruary 24.

* * *

From the end of February, the parties
attempted to flesh out the terse phrases con-
tained in EAL No. 7. As early as February 25, if
not sooner, the parties realized that certain

App. 54

important terms were unclear. While they never
were able to agree on precise definitions for six
key terms, other parts of the agreement were not
in dispute.

* + *

One of the “key terms” which the Court states the
Parties “never were able to agree on precise definitions
for,” is the February 23, Agreement term which is before
the Board in the present case. As quoted by the Court
from the handwritten February 23 Agreement, this term
states: “2. LPP’s & Takeover Similar to TWA - need to
work out between EAL/ALPA legal counsel” .? The Court
of Appeals specifically indicated that the just-quoted pro-
vision is an “unclear” term of the February 23 Agree-
ment.t The Board now must determine what, under the
evidence of record in this case, is the most reasonable
construction to be given to this unclear contractual refer-
ence to LPP’s. At least it is now in order for the Board to
make that determination unless the Board finds merit
either (1) in the Company’s contention that the present
grievance “is not ripe for decision,” or (2) in the Com-

— 6

pany’s contention that the “grievance is untimely.”°

Actually, six basic questions or contentions are
treated and answered below in this Opinion (but they are
not necessarily considered in any particular order). They
concern:

3 Id. at 2286, fn 1.

4 Id. at 2286. Subsequently the Court again acknowledged
“the lack of clarity in” the term. Id. at 2290.

5 Co. Brief, pp. 39-40.

i .

App. 55

1) The Company’s contention that the griev-
ance “is not ripe for decision.”

2) The Company’s contention that the “griev-
ance is untimely.”

3) The Company’s basic position that the Feb-
ruary 23, 1986, Agreement between the Parties
provides LPP protection for pilots only as speci-
fied in Sections 3 and 13 of the Allegheny-
Mohawk LPP’s, and that even those Sections
“would become effective only if Eastern merged
its pilot seniority list with the pilot seniority list
of another carrier.”

4) ALPA’s basic position that the reference to
LPP’s in the February 23 Agreement incorpo-
rates the full package of Allegheny-Mohawk
LPP’s.

\

5) ALPA’s position in the alternative that if the
claim to the full package of Allegheny-Mohawk
LPP’s is rejected, then the Eastern pilots are
entitled to “all of the protections of the TWA
LPP’s.”

6) The question of what is the most reasonable
construction of the reference to LPP’s in the
February 23 Agreement if the contentions of
ALPA and the Company concerning that refer-
ence are all rejected.

Regarding the Company contention that the griev-
ance “is not ripe for decision,” the Company urges that a
ruling on the merits of the grievance would constitute an

App. 56

advisory opinion or declaratory judgment. The Company
explains:® r

“Assuming arguendo that ALPA is correct
and that the parties agreed to Allegheny-
Mohawk LPP’s, there is, nevertheless, no dis-
pute for this Board to decide. Allegheny-
Mohawk LPP’s provide protections and com-
pensation for employees affected by the merger
of two airlines. Thus, unless Eastern has merged
with another carrier, the issue presented by
ALPA’s grievance is not ripe for decision. As the
Chairman observed, it is not within the Board’s
jurisdiction to determine [in the present case]
whether there has been a merger between East-
ern and another airline. Accepting this, and the
fact that Eastern has not announced a merger
with another airline and that no administrative
or judicial body has concluded that such a
merger has taken place, no employee can argue
that he has been affected by a merger. Therefore,
the controversy before the Board is not ripe.”

Even though the question whether there actually has
been any merger is not before the Board in the present
case, the Board’s ruling on the merits in the case will not
constitute merely an advisory opinion or declaratory
judgment. An important issue is properly before the
Board and is ripe for decision on the merits. That issue
concerns the scope of LPP protection to which the pilots
are entitled as a matter of contractual right and the con-
comitant scope of Company LPP obligation under the
February 23 Agreement.

6 Ibid, footnote and citation omitted. Also see Co. Brief, p.

App. 57

The grievance in the present case is dated August 6,
1986, and contains the following statement as to what is
alleged:7

“(T]he undersigned hereby files this MEC griev-

ance based on the Company’s disclosure that it

will refuse to recognize ‘standard’ Labor Protec-

tive Provisions (Allegheny-Mohawk) as pro-

vided in the current EAL/ALPA Agreement

dated February 23, 1986.”

The Company’s belief that the grievance is not ripe for
decision by the Board possibly has resulted in part at
least from the Company’s unduly narrow view regarding
what the grievance statement inherently seeks. In this
connection, one of the Company’s contentions in this case
is that “The scope of ALPA’s grievance is limited and
ALPA should not be permitted to expand the scope of its
grievance.”® The Company urges that, if the Board does
rule on the merits, “The Board should limit its ruling to
the question which ALPA’s grievance raises: whether, in
the February 23, 1986 Agreement, the parties agreed to
Allegheny-Mohawk LPP’s.”? Although the grievance
statement does call, of course, for an affirmative or nega-
tive answer to the question whether the Parties agreed to
the Allegheny-Mohawk LPP’s, the grievance statement
inherently seeks more than that.!° The fact that the griev-
ance statement does inherently seek more is relevant not

7 Joint Ex. #1, Submission Ex. # 1.
8 Company Brief, p. 37.
9 Id. at 39.

10 Even if the grievance statement did only seek a ruling on
the question whether the Parties, in the February 23 Agreement,
agreed to the Allegheny-Mohawk LPP’s, the case arguably

App. 58

—

only to the Company’s contention that ALPA has
attempted to expand the scope of its grievance, but is
relevant also to the contention that the grievance is not
ripe for decision.

In substance and import, if not in literal words, the
grievance asserts: (1) the right of pilots to know the
general scope of LPP protection they have as a matter of
contractual right under the February 23 Agreement, (2)
the right of pilots to insist that the Company likewise be
cognizant of that general scope of LPP protection and the
concomitant Company LPP obligation, so the Company
may be prepared to fulfill the obligation as it may become
due consequent to future developments; and (3) the right
of pilots to insist that the Company not deny the exis-
tence of pilot LPP protection of the general scope that
actually exists under the February 23 Agreement.

One of the very important benefits inherent in some
types of rights comes from merely knowing, without
more, that the rights are there. Few understanding per-
sons would deny that an exceedingly important benefit
which comes from having life insurance, for example, is
the assurance and peace of mind that comes merely from
knowing that it is there. LPP’s could be considered, in a
sense, to be a type of life or casualty insurance. But in any
event, LPP’s are definitely insurance of some type. The

would still be ripe for decision. This is so because knowing
whether they have a contractual right to = full package of
Allegheny-Mohawk LPP’s is of such obvious and great
importance to the pilots that it would be unreasonable to deny
them the answer until a merger has occurred or allegedly
occurred.

OEE OO

App. 59

pilots are entitled to know whether they have contractual
LPP’s; and if they do have LPP’s, the pilots are entitled to
know what contractual provisions will apply to control
the scope of that protection. Moreover, the pilots are
entitled, as a matter of right, to insist that the Company
also know these things to enable it to evaluate its contrac-
tual LPP obligation. This is essential for the sound man-
agerial planning and decisions critical to the fulfillment
of pilot LPP protection.

Thus, the present grievance must be considered ripe
for decision. Or at least this is so unless any decision
concerning the general scope of LPP’s under the February
23 Agreement would be too speculative at this time. It
would not be too speculative. Information for resolving
the grievance is as much available and as adequate now
as it would be later. A ruling on the merits will be no
more speculative now than it would be later. The conten-
tion that the grievance “is not ripe for decision” is
rejected. And as now will be explained, the contention
that the “grievance is untimely,” is also rejected.

Much of what has been said above concerning the
“not ripe for decision” contention, is relevant also to the
contention that the “grievance is untimely.” That is, the
right of pilots to know the general scope of their contrac-
tual LPP protection, and their right to insist that the
Company likewise know, and their right to insist that the
Company not deny the existence or general scope of the
contractual LPP protection, are all continuing rights: each
and every day that these rights are denied to the pilots by

App. 60

the Company, their right to protest by grievance arises
anew.!!

But even apart from the fact that the grievance by
nature involves a continuing violation, another consider-
ation in rejecting the contention that the grievance is
untimely, is the fact that discussions on LPP’s were ongo-
ing between the Parties through the spring and much of
the summer of 1986. In the latter regard, ALPA states:!2

“ALPA first learned that Eastern had fore-
closed any possibility of providing Allegheny-
Mohawk LPP’s on July 10, 1986, when Eastern
amended its complaint [in its court action] to
assert that no valid collect

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_1940%3A1. Public record. Not legal advice.