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CAUDLE v. PAN AM

November 23, 1987

Charles P. Caudle, et al., Plaintiffs,
v.
Pan American World Airways, Inc., et al., Defendants



The opinion of the court was delivered by: GREEN

 JOYCE HENS GREEN, United States District Judge.

 This case presents vivid proof that horizontal mergers can, on occasion, produce severe diseconomies in operation and management. The 1981 merger of Pan American World Airways (Pan Am) and National Airlines (National) forms the backdrop for the present controversy. Plaintiffs are 37 Pan Am pilots who flew for National prior to the merger of the two companies. *fn1" They allege that defendant Air Line Pilots Association (ALPA) violated its duty of fair representation, and that defendant Pan Am violated its contractual obligations, by resolving several grievance disputes in a manner that favored pre-merger Pan Am pilots to the detriment of pre-merger National pilots. Presently pending are defendants' motions for summary judgment and plaintiffs' opposition thereto. For the reasons outlined below, defendants' motions will be granted.

 I. Background

 At the time of their merger in 1981, Pan Am and National flew different types of aircraft (B-727s and L-1011s for Pan Am, DC-10-10s and DC-10-30s for National), offered separate flying routes, and maintained distinct pilot and flight engineer seniority lists. In order to assure the equitable integration of the seniority lists (which in turn determine the availability of the most desirable flying routes), the pilots and engineers turned to Arbitrator Lewis M. Gill, whose March 12, 1981, Award (the Gill Award) comprehensively integrated the pre-merger seniority lists. *fn2" The heart of the Gill Award, Section IV, established a complex system of formulas to allocate pilot and engineer positions under normal conditions and in the event of a furlough or reduction in the number of Pan Am aircraft.

 In December 1982, such a reduction in air fleet took place when Pan Am issued a proffer, or notice, to its airmen indicating that the company was removing its fleet of 12 L-1011 airplanes from service because continued flying of these aircraft was no longer economical. In February 1983, however, Pan Am changed course and issued a new proffer that returned nine of the L-1011s to service but provided that the planes were to be "lightly crewed." Consistent with its new proffer, Pan Am sent a letter on March 3, 1983, to the airmen who were adversely affected by the changes in the L-1011 fleet. Although some of these airmen, who flew with Pan Am prior to the merger, were able to "cross-over" and assume slots on DC-10-10 planes pursuant to Section IV(H) of the Gill Award, many were dissatisfied with the new positions announced in the March 3 letter. Two proceedings were initiated. First, the former Pan Am L-1011 pilots pursued, and ultimately lost, an arbitration proceeding in which they sought additional cross-over positions on DC-10-10 planes. Second, on June 2, 1983, ALPA's Pan Am Master Executive Council (ALPA-MEC), the ALPA organization selected by Pan Am pilots to represent them in negotiations with the airline, filed Grievance 82-83 to protest the award of certain positions at Pan Am's Miami and New York bases. *fn3"

 Several other events took place in the summer and fall of 1983 that further complicated the relationship between Pan Am and the Union. In June 1983, Pan Am decided to reactivate the three grounded L-1011s but refused ALPA's request that it issue a new proffer reflecting the change. Asserting that Pan Am's refusal violated the collective bargaining agreement, ALPA-MEC filed another Grievance, 116-83, on June 20, 1983. In early September, Pan Am prepared, but later retracted, a proffer that would have recognized the June reactivation of the three L-1011s. Because the company now had 12 fully operational L-1011 aircraft but lacked the necessary crew complement, Pan Am issued a letter on September 22 to 35 former Pan Am airmen cancelling their excess notices of March 3, 1983, and the positions established by the February proffer; these individuals were therefore returned to their original L-1011 positions. And, on October 14, 1983, Pan Am sold to American Airlines all of its DC-10-10s and four of its five DC-10-30s -- planes that had belonged to National before the merger. The company issued a proffer in November 1983 reflecting these events. Thereafter, ALPA filed Grievance 233-83, which challenged Pan Am's September 22, 1983 letter reinstating the former L-1011 pilots to their original routes. Arbitrator George Nicolau sustained ALPA's position on December 21, 1983, finding that the September 22, 1983, letter violated the collective bargaining agreement, and ordered Pan Am to rescind the letter it had issued to the former Pan Am pilots. *fn4" Nicolau withheld awarding ultimate relief of repositioning pilots, however, because of the pendency of Grievances 82-83 and 83-116, the resolution of which could also impact other flight routes. Amended Complaint, Exh. F at 11-12.

 Pan Am then sought to settle these two outstanding grievances with ALPA. Discussions took place over the next several weeks, culminating in the January 12, 1984 settlement agreement that is the focus of this litigation. The former National pilots, alleging that the settlement agreement failed to adequately protect their interests, filed internal union charges against Captain James MacQuarrie, chairman of ALPA-MEC, claiming that he violated the ALPA Constitution and Bylaws in conducting his negotiations with Pan Am. Those charges were ultimately rejected by the ALPA Appeals Board on August 9, 1984.

 II. The Instant Lawsuit

 In this action plaintiffs assert that ALPA breached its duty of fair representation to the former National pilots in its conduct of negotiations leading up to, and including, the signing of the settlement agreement. Specifically, they allege that the settlement agreement upset their entitlements under the Gill Award to a number of L-1011 positions and caused a "ripple effect" that denied promotion possibilities to a number of former National pilots. In addition, plaintiffs contend that, by entering into the settlement agreement, Pan Am breached its contractual duties under the Gill Award and collective bargaining agreement and aided and abetted ALPA in its breach of its duty of fair representation. Plaintiffs seek a declaration that the settlement agreement is unlawful, an injunction prohibiting defendants from carrying out the settlement agreement and reinstating the December 21, 1983, Nicolau Award, and damages for monetary losses resulting from the allegedly improper assignment of pilot positions. *fn5"

 III. Applicable Law

 A. The Duty of Fair Representation

 Plaintiffs bring this suit under the Railway Labor Act, 45 U.S.C. ยงยง 151 et seq., against ALPA, their exclusive bargaining representative, and Pan Am, their employer. *fn7" In Steele v. Louisville & Nashville R.R. Co., 323 U.S. 192, 89 L. Ed. 173, 65 S. Ct. 226 (1944), the Supreme Court first acknowledged that, because the Act empowered unions to act as exclusive agents for all the employees in a given bargaining unit, a correlative duty existed "to exercise fairly the power conferred upon it in behalf of all those for whom it acts, without hostile discrimination against them." Id. at 203. Since that time, the Court has stressed that the bargaining agent "is responsible to, and owes complete loyalty to, the interests of all whom it represents," Ford Motor Co. v. Huffman, 345 U.S. 330, 338, 97 L. Ed. 1048, 73 S. Ct. 681 (1953), and its duty extends to "the negotiation, administration, and enforcement of collective-bargaining agreements." International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 47, 60 L. Ed. 2d 698, 99 S. Ct. 2121 (1979). See also Conley v. Gibson, 355 U.S. 41, 46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957) (duty extends beyond making of collective bargaining agreement to adjustment of rights and resolution of disputes under the contract).

 The touchstone of the union's duty to its members is fundamental fairness. Thus, the duty requires the bargaining agent "to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct." Vaca v. Sipes, 386 U.S. 171, 177, 17 L. Ed. 2d 842, 87 S. Ct. 903 (1967). Because, however, the very nature of collective bargaining requires an agent to balance interests that quite often are contradictory, see, e.g., Humphrey v. Moore, 375 U.S. 335, 349-50, 11 L. Ed. 2d 370, 84 S. Ct. 363 (1964), it is clear that "a wide range of reasonableness must be allowed a statutory bargaining representative in serving the unit it represents." Huffman, 345 U.S. at 338. The Court elaborated:

 
Inevitably differences arise in the manner and degree to which the terms of any negotiated agreement affect individual employees and classes of employees. The mere existence of such differences does not make them invalid. The complete ...

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