ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil Action No. 71-2945).
Adams and Weis, Circuit Judges and John F. Gerry,*fn* District Judge.
Appellant Deboles represents a class of approximately 300 members*fn1 of the International Association of Machinists and Aerospace Workers (hereinafter "IAM") who were originally employed by appellee Trans World Airlines ("TWA") at the Kennedy Space Center in Merritt Island, Florida, for various periods of time prior to January 28, 1970. The employees alleged below that the TWA-IAM collective bargaining agreements providing the Kennedy Space Center employees with seniority rights inferior to those enjoyed by all other employee-members elsewhere in the TWA system violated the duty of fair representation implied under the Railway Labor Act, 45 U.S.C. §§ 151 et seq. (1970), as applied to air carriers by 45 U.S.C. § 181 (1970). The employees also claimed that certain false statements by IAM officials regarding the IAM's failure to secure equal system seniority rights violated the union's duty of fair representation.
After a non-jury trial on the issue of liability, the District Court for the Eastern District of Pennsylvania*fn2 found that the seniority provisions of the collective bargaining agreements were not discriminatory and did not violate the IAM's duty of fair representation. The district court also found, however, that the defendant unions breached their fiduciary duty of fair representation in failing to make full and honest disclosure concerning both the nature of union efforts toward achievement of equal system seniority and the reasons why the union was unable to achieve such system seniority in misstatements to these employees in connection with the 1966 and 1970 collective bargaining agreements. TWA was held not to be liable for these untruthful statements of union officials, and a final judgment order was entered in favor of TWA.
In No. 76-1369, the plaintiff below appeals pursuant to 28 U.S.C. § 1291 from the final judgment in favor of TWA. The district court determined that there was no just reason for delay and properly entered judgment under F.R. Civ. P. 54(b), inasmuch as a single appeal from that judgment reasonably could be expected to decide the issue of TWA's liability without delaying appellate review until after the conclusion of bifurcated proceedings, not involving TWA, on the amount of damages.
In No. 76-1535, the plaintiff's class of employees and defendant unions appeal by permission of this court under 28 U.S.C. § 1292(b) from the interlocutory order determining liability in favor of the plaintiffs below and against the unions. The employees urge that the district court erred in not also finding that the collective bargaining agreement unfairly discriminated against these employees, while the unions assert that it was error to hold the unions liable for false statements in the absence of prejudicial effect upon the ultimate outcome of the ratification ballot.
We affirm the district court's finding that the seniority differences do not violate the duty of fair representation,*fn3 and we reverse the finding that the union is liable for false statements to these employees under the facts of this case.*fn4 We also affirm the finding of no liability with respect to TWA.
In February 1964, TWA entered into a contract with the National Aeronautics and Space Administration (NASA) to provide base support services at the Kennedy Space Center in Merritt Island, Florida. At the time, TWA had a collective bargaining agreement with the IAM*fn5 covering many employees throughout the TWA system in the aircraft industry. In early 1964, after ratification of the main collective bargaining agreement for TWA employees but before TWA's operations commenced at the Space Center, TWA and the IAM entered into a supplemental agreement applicable only to the TWA employees at the Kennedy Space Center. These employees were subject to the same series of collective bargaining agreements in 1964, 1966 and 1970, applicable to other IAM members throughout the TWA system, except as modified by supplemental agreements.
In the job classifications relevant to this action, the TWA-IAM agreement generally applied to personnel maintaining and servicing aircraft in TWA's facilities at major American airports and at the central maintenance base in Kansas City. The Kennedy Space Center employees of TWA were a small minority of the employees in TWA's national "system."
Throughout the rest of the TWA system, employees represented by IAM accrued "system seniority" since at least 1960. Generally, system seniority recognizes seniority rights which accrue from the date of entering a job classification on a regular assignment. Employees in a given job classification are ranked on a national system seniority roster based upon their length of time in the classification, regardless of the TWA location at which they work. An employee with greater system seniority who faces furlough (layoff) may displace an employee with lesser seniority in the same job classification anywhere in the TWA system. An employee with greater seniority has the right to a "preference bid" for transfer to other jobs in the same classification where vacancies exist.
The group of TWA employees at Kennedy Space Center were treated differently. Under the TWA-IAM supplemental agreement of 1964 (as extended in 1966), these employees did not enjoy the benefit of system seniority. The appellants accordingly did not accrue system seniority credit for their period of employment at the Space Center prior to January 28, 1970, at which time a new collective bargaining agreement was reached between IAM and TWA. The 1970 agreement provided that the Space Center employees would enjoy system seniority but on a non-retroactive basis. Appellants assert that the disregarding of their pre-1970 period of employment at the Space Center resulted in a situation whereby other system employees with less time in the company but greater system seniority received preference in the bidding for available positions throughout the TWA system.*fn6 The appellant employees allege that the denial of system seniority was designed to protect employees hired at other locations from the exercise of seniority rights by the Space Center employees.
The appellants were themselves protected, however, by provisions of the supplemental agreement which prevented senior system employees from "bumping" Space Center employees. A newly-hired Space Center employee was thus free from concern for losing his or her job to a non-Space Center person with greater seniority. A person who transferred to the Space Center from elsewhere in the TWA system was placed at the bottom of the Space Center seniority list, although system seniority credit accrued to such an employee in the event of his transfer back to the system.*fn7 To further discourage transfers to the Space Center, the supplemental agreement required any system employee who was accepted at the Space Center to remain for at least one year prior to bidding back into the system.
During the growth of the national space effort in the 1960's, promotions occurred significantly more rapidly for Space Center employees than for their counterparts elsewhere in the TWA system.*fn8 The employees already at the Space Center filled the promotion slots, since they were protected from "bidding in" by others elsewhere in the system; layoffs were rare at the Space Center, in contrast to the regular TWA stations.*fn9
The district court found that in 1964 TWA opposed transfers to and from the Space Center because of its concern for a stable work force in the space program. TWA was found to be concerned about "snowbird" transfers (i.e., system employees who would use higher seniority rights to transfer to the Space Center in Florida in the winter and return to their regular post in the TWA system in the summers). The meshing of skills between the space-oriented employees in Florida and the TWA aircraft workers elsewhere was also a concern. The problems of "snowbirds" and meshing of skills were thus minimized, and a more stable work force was made possible by erecting a seniority barrier between Space Center employees and those in the TWA system.
The appellants urge that the reason for the different treatment for the Space Center was not TWA's desire for a stable work force, as the court below found, but was instead IAM's desire to protect its own members elsewhere in the system from the risk of being bumped from their positions in the event of termination of TWA's contract with NASA at the Space Center. Some support for this assertion is found in the direct testimony of TWA's Calvin Filson, negotiator of the 1964 supplemental agreement, and also in a 1964 letter by TWA's J. J. Manning, manager of labor relations at the Space Center.*fn10 The denial of system seniority to Space Center employees was, however, only one part of a package of special job stability provisions, described above, many of which benefited the appellants to the detriment of their system counterparts. Ample evidence supports the district court's finding that TWA's desire for a stable work force was the dominant motivation for the 1964 distinctions.*fn11
The district court found that members of Local 773 (Space Center) favored elimination of system seniority restrictions from the supplemental agreement prior to the 1966 negotiations, and that officials of the IAM made several misstatements from 1966 to 1970 regarding the IAM's efforts and enthusiasm in attempting but failing to achieve this gain.
The first misstatements occurred after the 1966 negotiations failed to produce for the appellants the desired abolition of seniority restrictions. Employees at the Space Center, acting through Local 773, had submitted such a ...