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NORTHWEST AIRLINES, INC. v. AIR LINE PILOTS ASSN.

November 21, 1974

NORTHWEST AIRLINES, INC., Plaintiff,
v.
AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Defendant


Flannery, United States District Judge.


The opinion of the court was delivered by: FLANNERY

This suit concerns the validity of an arbitration award made pursuant to section 204 of the Railway Labor Act, 45 U.S.C. § 184 (1970), involving a seniority grievance following a strike. The parties are now before the court on cross-motions for summary judgment. A brief recitation of the facts of the case is useful in arriving at a clear understanding of the issues.

 Plaintiff Northwest Airlines, Inc. (NWA) is a common carrier engaged in interstate commerce and is subject to the provisions of the Railway Labor Act, 45 U.S.C. § 151, et seq. (1970). Defendant Air Line Pilots Association, International (ALPA) is a labor organization recognized for collective bargaining purposes as representative of pilots in the employ of NWA. Section 204 of the Railway Labor Act, 45 U.S.C. § 184 (1970), establishes the procedure by which contractual interpretation and application are to be determined for airlines and their employees. See International Association of Machinists, AFL-CIO v. Central Airlines, Inc., 372 U.S. 682, 685-86, 10 L. Ed. 2d 67, 83 S. Ct. 956 (1963). Pursuant to the mandate of § 204 Northwest and the ALPA have, by agreement, established the NWA Pilot's System Board of Adjustment for the purpose of adjusting and deciding disputes which may arise under the terms of the Pilots Agreement. The Board consists of five members, two appointed by the company, two by the Association, and a neutral member, selected by agreement or appointed by the National Mediation Board for each dispute. The neutral member is Chairman of the Board and presides at meetings and hearings, guiding the parties in the presentation of their evidence. A majority vote of the Board is final, binding and conclusive.

 In accordance with the Agreement, Northwest and ALPA submitted to the Board a dispute concerning the airline's selection and use of pilot instructors during a strike by a separate craft group in 1970. The basic issue was whether there was an obligation on the part of the company to select its instructors only from those pilots on active payroll status, or whether it might hire both active and furloughed pilots. ALPA contended that the company had an obligation, based on past practice and the apparent acquiescence of the company, to hire only active pilots. Northwest contested this assertion, arguing that nothing in the Agreement, past practice, or actions of the parties prohibited the airline from selecting its instructors either from active or furloughed pilots. A primary bone of contention was a letter of June 19, 1969 from Northwest's Director of Flight Training to ALPA's Chairman of the Master Executive Council which indicated that Northwest had selected and would continue to select instructor pilots from those on the "pilot seniority list." The company claims that this was merely an agreement not to "hire off-the-street" while ALPA viewed it as support for its contention that only active pilots would be hired.

 A hearing on this grievance was held on June 17, 1971. George A. Stone and Herman P. Muto were the ALPA representatives on the Board; Albert E. Floan and Stewart G. Lee were the Northwest representatives, and Nicholas H. Zumas, an attorney, was the neutral member. After the hearing Board members received copies of the hearing transcript and exhibits, and post-hearing memoranda were submitted by counsel for ALPA and Northwest. The Board was convened twice in executive session to review the matter and at the second session the Northwest members moved to reopen the hearings to take further evidence regarding past practice in selecting pilot instructors. That motion was later denied in writing by the neutral. On October 10, 1972 Zumas sent a signed original of his award to Floan, who was secretary of the Board, for distribution to the other members and for their signatures. That award contained a finding that the parties agreed that reference to a pilot seniority list in the letter of June 19, 1969 was limited to those pilots on the active roster. The parties, in their pleadings, acknowledge that no such agreement was made.

 The award concluded that the letter of June 19 indicated a commitment by the company to hire instructor pilots only from those pilots on active status unless they were not qualified. Thus the neutral sustained ALPA's position on the grievance and Northwest was directed to compensate senior pilots on a "one-for-one" basis *fn1" if they were passed over for employment. Since the neutral also concluded that the evidence presented concerning two other matters, the provisions of the agreement and the understanding between the parties, was insufficient to show that the company had hired out-of-seniority, the award appears to be based on an erroneous finding of fact.

 There was a space of several months between the time the arbitrator issued his award (Oct. 1972) and the time the second ALPA representative signed the award and made it final (Feb. 1973). Northwest claims that during this time ALPA Board members knew of the erroneous finding but did not inform the neutral or do anything to correct it. Floan, a Northwest representative, called this matter to the attention of Zumas, discussed it with ALPA representatives and attempted to enlist the aid of the Northwest and ALPA legal departments. He also apparently withheld distribution of the award to the ALPA Board members. There was considerable discussion and communication, not completely without acrimony, as Northwest attempted to have the erroneous finding corrected. ALPA was agreeable to some change in the language of the award, but not to the extent that the result would be altered. ALPA Board members eventually obtained and signed copies of the award and it was forwarded to the National Mediation Board for filing. Northwest has refused to comply with the order and has brought this action seeking to set aside the award.

 Normally courts are most reluctant to intervene in labor arbitration matters. In 1960, in a series of cases labeled the Steelworkers Trilogy, *fn2" the Supreme Court enunciated a clear policy of encouraging arbitral resolution of labor disputes by limiting judicial review of arbitration awards. The Supreme Court stated:

 
The refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards. United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960).

 See Union Employers Division of Printing Industry of Washington, D.C. v. Columbia Typographical Union, 353 F. Supp. 1348, 1349 (D.D.C. 1973), aff'd, 160 U.S. App. D.C. 403, 492 F.2d 669 (D.C. Cir. 1974). This rationale has been incorporated in the Railway Labor Act itself which requires the district court to accept the System Adjustment Board's determination of the merits of the grievance. See Thorgeirsson v. Trans World Airlines, 288 F. Supp. 71, 75-76 (S.D.N.Y. 1968); 45 U.S.C. § 153 (1970). The Act provides in essence that the district court shall have jurisdiction to review an award of a Board only for failure of the Board to comply with the statute, for failure of the order to conform or confine itself to the jurisdiction of the Board, or for fraud or corruption by a member making the order. 45 U.S.C. § 153 First, (q) (1970). While that section deals with railroad boards, plaintiff concedes that courts look to it in examining awards under the air transport regulations. See International Association of Machinists, AFL-CIO v. Central Airlines, Inc., supra ; Rossi v. Trans World Airlines, 350 F. Supp. 1263, 1269 (C.D. Cal. 1972). Northwest contends that the court may review the present award since Northwest was denied due process, and since the actions of the ALPA Board members taken subsequent to Zumas' issuance of the award were tantamount to fraud. Plaintiff also contends that the award can be reviewed since it is wholly baseless and without reason.

 Plaintiff has failed to show any action on the part of the neutral which would constitute denial of due process or of a fair and impartial hearing. A full hearing was conducted and two executive sessions were held. Although Zumas refused to allow reopening for further evidence that in no way constituted an abuse of discretion since it was within his authority to determine at what point the evidence submitted was sufficient. See Catz American Co. v. Pearl Grange Fruit Exchange, Inc., 292 F. Supp. 549, 553 (S.D. N.Y. 1968). The court can discern no evidence of partiality on the part of the neutral which could be construed as a denial of due process by the Board. See Rosen v. Eastern Air Lines, Inc., 400 F.2d 462 (5th Cir. 1968), cert. denied, 394 U.S. 959, 22 L. Ed. 2d 560, 89 S. Ct. 1307 (1969).

 Northwest also contends that the ALPA Board members had a duty to notify the neutral that his finding was in error and that by signing an award containing an erroneous finding the members perpetrated fraud upon Northwest. Although plaintiff uses the term fraud in a general sense it is a specific tort, requiring proof of false representation, in reference to a material fact, made with knowledge of its falsity and with intent to deceive. In addition, action must be taken in reliance upon the representation. U.S. v. Kiefer, 97 U.S. App. D.C. 101, 228 F.2d 448, cert. denied, 350 U.S. 933, 100 L. Ed. 815, 76 S. Ct. 305 (1956); Sankin v. 5410 Connecticut Avenue Corp., 281 F. Supp. 524, 545 (D.D.C. 1968), aff'd sub nom. Benn v. Sankin, 133 U.S. App. D.C. 361, 410 F.2d 1060 (1969) cert. denied, 396 U.S. 1041, 24 L. Ed. 2d 685, 90 S. Ct. 681 (1970). Only by the most strained construction of these elements could a claim of fraud be made out in the present case. Admittedly fraud may arise from an omission as well as an explicit misrepresentation, see Gibbons v. Brandt, 170 F.2d 385, 391 (7th Cir. 1948), cert. denied, 336 U.S. 910, 93 L. Ed. 1074, 69 S. Ct. 511 (1949), but plaintiff has the burden of proving an arbitrator's misconduct. See Catz American Co. v. Pearl Grange Fruit Exchange, Inc., supra, at 551-552. Northwest has not met the burden of proving that the ALPA Board Members were under an obligation to inform the neutral of an erroneous finding. In the general arbitral situation in which each party appoints representatives to the Board and the neutral is selected by them or by a disinterested third-party, the representatives of the parties cannot be expected to play a wholly impartial part. "They are partisans once removed from the actual controversy." Stef Shipping Co. v. Norris Grain Co., 209 F. Supp. 249, 253 (S.D.N.Y. 1962). *fn3" It is commonly accepted that the party-designated arbitrators are not and cannot be neutral in the sense that the independent arbitrator or a judge is. Moreover, members should not be required to agree with all of the findings of the arbitrator prior to affixing their signatures to the award, and even though the ALPA members concede the substantial factual error in the award they nonetheless agreed with its outcome. See letter of February 15, 1973 from H. P. Muto and George Stone to James E. Conway. It, therefore, is apparent that plaintiff seeks to have this court review the findings of the arbitrator on the merits.

 The Supreme Court has emphasized the final nature of System Board awards on several occasions. See Gunther v. San Diego & Arizona Eastern Railway Co., 382 U.S. 257, 263-64, 15 L. Ed. 2d 308, 86 S. Ct. 368 (1965); Brotherhood of Railroad Trainmen v. Chicago River & Indiana Railroad Co., 353 U.S. 30, 1 L. Ed. 2d 622, 77 S. Ct. 635 (1957). The Court of Appeals for the District of Columbia Circuit, in a frequently cited opinion also spoke to this issue stating:

 
" We do not believe Congress intended that [adjustment board awards] should be circumvented by free resort to judicial review or determination de ...

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