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WELLS v. DELTA AIR LINES

August 7, 1975

JUANITA WELLS
v.
DELTA AIR LINES, INC.



The opinion of the court was delivered by: LUONGO

 This case is one of several that have been brought in federal district courts in recent years because of the Civil Aeronautics Board's (CAB) attempt to formulate a policy of abstention from hearing labor disputes that arise in connection with airline mergers. The defendant, Delta Air Lines, Inc., has filed a motion to dismiss for lack of jurisdiction over the subject matter and for failure to state a claim for which relief can be granted pursuant to Rule 12(b), F.R.C.P. I agree that this court lacks jurisdiction.

 In May of 1971, Delta and Northeast Airlines, Inc. entered into a merger agreement which was submitted to the CAB for approval pursuant to the provisions of § 408 of the Federal Aviation Act of 1958, 49 U.S.C. § 1378, as amended. The CAB, in accordance with its practice in merger cases, conditioned approval of the merger on certain "Labor Protective Provisions" (LPP) designed to compensate employees dismissed as a result of the merger for their financial losses. Delta/Northeast Merger Case, CAB Order No. 72-5-73 (1972).

 The CAB's authority to require LPP's in airline mergers is well established. United States, et al., v. Lowden, et al., 308 U.S. 225, 238, 84 L. Ed. 208, 60 S. Ct. 248 (1939); Kent v. Civil Aeronautics Board, 204 F.2d 263, 265 (2d Cir.), cert. denied, 346 U.S. 826, 98 L. Ed. 351, 74 S. Ct. 46 (1953); Outland, et al., v. Civil Aeronautics Board, 109 U.S. App. D.C. 90, 284 F.2d 224, 228 (D.C. Cir. 1960); Oling v. Air Line Pilots Association, 346 F.2d 270, 275 (7th Cir.), cert. denied, 382 U.S. 926, 86 S. Ct. 313, 15 L. Ed. 2d 339 (1965); Kesinger v. Universal Airlines, Inc., 474 F.2d 1127, 1130 (6th Cir. 1973).

 Under § 4(a) of the LPP, "no employee of either of the carriers involved in the merger who is continued in service shall as a result of the merger be placed in a worse position with respect to compensation than he occupied immediately prior to his displacement . . . ." Under § 4(d), the protections of the order extend to displacements occurring three years from the effective date of the merger. Section 5(a) lists a schedule of "dismissal allowances" providing compensation of up to 60 per cent of salary for up to 60 months, depending on length of service. Section 5(c) specifically exempts from the protections of the LPP dismissals for "justifiable cause." Section 13(a) provides for arbitration of disputes arising under the LPP.

 The merger was consummated August 1, 1972. Plaintiff had been employed by Northeast at the Philadelphia International Airport from May, 1957 to July 31, 1972. She began as a Ticket Agent and eventually rose to Chief Ticket Agent, a supervisory position. She was continued as an employee of Delta, the surviving carrier. Soon after the merger, however, she began experiencing problems with the new management. She was reprimanded and placed on probation on several occasions because of alleged deficiencies in the discharge of her duties. Ultimately she was offered another position with different responsibilities. There appears to be a dispute as to whether the new position was at the same, or at a lesser, salary. In any event, plaintiff refused the offer of the new position and she was terminated effective January 31, 1973, some six months after the merger.

 Plaintiff, asserting that her discharge is controlled by the LPP, requested arbitration, but Delta refused. Plaintiff then petitioned the CAB for an order compelling Delta to submit to arbitration.

 Before the Board, plaintiff maintained, as she does here, that her discharge was attributable to the Delta/Northeast merger and that she was pressured and harassed "with the premeditated intention of firing her . . . to avoid the Labor Protective Provision of the C.A.B. Order and cloak her dismissal under the caption of disciplinary termination." Complaint, paragraph 3(1). See also Delta/Northeast Merger Case, CAB Order No. 74-5-71, pages 1 and 2 (1974). Delta argued that the discharge was for cause -- specifically, incompetence in handling company funds -- and therefore outside the ambit of the LPP.

 The CAB dismissed the case, but in so doing it adopted the position of neither of the parties. Instead, it chose a third course. Noting that it lacks expertise in labor matters and that it is not charged with being a labor board for the airline industry, it declined to intervene between the parties and order arbitration "where arbitration can be ordered by a court with authority to enforce its decrees." The CAB continued:

 
"Here the dispute is of a factual nature between the air carrier and a single employee over whether the employee's claim is of a bona fide and nonfrivolous nature which would entitle the employee to arbitration of its merits. Such an issue, in our view . . ., is more appropriate for consideration by a court than by the Board." Delta/Northeast Merger Case, CAB Order No. 74-5-71, at page 3 (1974).

 While the plaintiff's brief against the defendant's motion to dismiss is less than transparently clear, she seems to put forward four grounds of jurisdiction: Concurrent jurisdiction between the CAB and the federal district courts for enforcement of LPP's; the Arbitration Act, 9 U.S.C. § 1, et seq.; 49 U.S.C. § 1487 which provides for enforcement of CAB orders in district courts; and diversity of citizenship under the aforementioned third-party beneficiary theory.

 The jurisdiction of the district courts to resolve merger related conflicts between carriers and employees under CAB-ordered LPP's has been considered in a number of other cases. All have held that the CAB has exclusive jurisdiction to hear these matters, that collateral attacks on a CAB ruling in federal district court are not permitted, and that the exclusive method of review of an adverse ruling by the Board is appeal to the Court of Appeals as provided in 49 U.S.C. § 1486. Oling v. Air Line Pilots Association, supra 346 F.2d at 275-77; Hyland v. United Air Lines, Inc., 254 F. Supp. 367, 370-73 (N.D. Ill. 1966); Kesinger v. Universal Airlines, Inc., supra 474 F.2d at 1131-32; Northeast Master Executive Council v. C.A.B., 165 U.S. App. D.C. 36, 506 F.2d 97, 100 (D.C. Cir. 1974); Carey, et al., v. O'Donnell, 165 U.S. App. D.C. 46, 506 F.2d 107, 110-111 (D.C. Cir. 1974). *fn2"

 Several of these cases are procedurally almost identical to the case at bar. In Oling, petitioner received an adverse ruling from the Board when challenging integration of seniority lists following a merger. Without appealing the order dismissing the petition, plaintiff commenced an action in district court alleging violations of the Railway Labor Act. The district court dismissed the case for lack of jurisdiction, and the circuit court affirmed, ...


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