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Independent Ass'n of Continental Pilots v. Continental Airlines

September 10, 1998

INDEPENDENT ASSOCIATION OF CONTINENTAL PILOTS
v.
CONTINENTAL AIRLINES, A DELAWARE CORPORATION INDEPENDENT ASSOCIATION OF CONTINENTAL PILOTS ("IACP"), APPELLANT



D.C. Civil No. 96-cv-00389

Before: Becker, Chief Judge, Stapleton, Circuit Judge and Pollak, District Judge*

The opinion of the court was delivered by: Pollak, District Judge.

On Appeal from the United States District Court for the District of Delaware

Argued: January 22, 1998

* Honorable Louis H. Pollak, United States District Judge for the Eastern District of Pennsylvania, sitting by designation.

OPINION OF THE COURT

This appeal concerns the allocation of authority between judicial and arbitral tribunals under the Railway Labor Act, 45 U.S.C. § 151 et seq. The International Association of Continental Pilots (IACP) brought this action against Continental Airlines, Inc. ("Continental") in the District Court for the District of Delaware, seeking a declaration and order directing that (1) Continental was required to arbitrate the merits of an issue assertedly raised in an employee's grievance, and (2) the grievance should be submitted to the arbitral tribunal on a class-wide basis. Continental counterclaimed, seeking an order directing that the arbitral tribunal determine the issues the IACP sought determination of by the district court. Thereafter Continental moved for judgment on the pleadings. That motion was granted and the case was dismissed. The IACP has appealed the district court's order granting judgment on the pleadings. For the reasons set forth below, we affirm.

I.

We rehearse the facts as set forth in IACP's complaint and brief on appeal. In 1992, after Continental filed its second petition for protection under Chapter 11 of the bankruptcy code, the airline froze, and then sought to reduce, the pay of its pilots. In response to the airline's announcement of its intent to reduce pilots' pay, a group of pilots undertook negotiations with the airline's management; these talks resulted in a written agreement, the "Cost Reduction Memorandum" ("CRM"). Paragraph 6(A) of the CRM made provision for the phased restoration, according to an agreed-upon formula, of any reduction in pilot pay:

The wage reductions (i.e. fuel bonus, line divisor, training, per diem, and crew meals) . . . will be restored progressively by Continental, in accordance with the formula set forth in Attachment A, with full restoration projected by July 1, 1993. As part of the restoration, the program of quarterly fuel bonus payments to pilots shall end, and in lieu thereof pilots rates of pay progressively restored shall be . . . the April 1, 1992 rates of pay.

Paragraph 6(B) of the CRM (the so-called "me-too" provision) provided that, until the pilots' pay was restored according to paragraph 6(A), if the airline granted a raise to any employee group other than the pilots, the pilots would receive a comparable wage increase:

Should Continental grant a wage or salary increase to any employee group, including management and executive employees, prior to restoration of pilot wage reductions, then the company shall at the same time restore pilot wages on a comparable basis.

In late 1993, after the airline and the pilots' group entered into this agreement, the IACP was certified as the bargaining unit for the pilots. The CRM continued to be operative until Continental and the IACP executed their first collective bargaining agreement.

After the IACP was certified as the pilots' bargaining representative, the airline and the union entered into an agreement entitled the "Interim Grievance Procedure" ("IGP") pending the completion of the parties'first collective bargaining agreement. In accordance with § 204 of the Railway Labor Act, 45 U.S.C. § 184, the IGP established a system board of adjustment ("System Board") for the arbitration of grievances.*fn1 The grievance procedure contemplated by the IGP consisted of two preliminary stages--denominated as "Step I" and "Step II" hearings-- followed by appeal to the system board of adjustment of any grievance not resolved in the first two stages.

On September 9, 1994--after implementation of the IGP but before the effective date of the first collective bargaining agreement--pilot Jackson Martin filed a grievance stating:

The Cost Reduction Memorandum establishes that fuel bonus will be restored, it establishes a protocol for the use of a higher hourly rate in lieu of quarterly fuel bonus payments and it defines Continental's total liability toward restoration of pilot wage reductions to April 1, 1992 pay rates plus the value of the fuel bonus program. Continental Airlines should honor the Agreement it reached with its pilots under the Cost Reduction Memorandum and fully restore pilot wage reductions; to not do so would substantially alter the letter and intent of the current Pilot Employment Policy.

Martin pursued his grievance, unsuccessfully, through the first two steps of the grievance procedure. On January 4, 1995, Martin filed a notice of appeal to the System Board. On February 8, 1995, the IACP refiled Martin's appeal, stating "herewith is submitted the grievancefiled on behalf of Jackson Martin and all other similarly situated Continental Airlines pilots." The IACP's appeal formulated the question at issue as "whether the Company is in violation of the Cost Reduction Memorandum . . . and all related provisions for failure to properly enact pilot pay restoration rate effective July 1, 1994."

Prior to the arbitration hearing, Continental took the position that (1) the IACP could not bring the appeal on behalf of similarly situated pilots, and (2) the System Board could not entertain the merits of any claim under paragraph 6(B) of the CRM (the "me too" provision) because Martin had not invoked this provision at the earlier stages of the grievance proceeding. When the arbitration hearing commenced, the IACP announced that it refused to proceed unless Continental agreed that any determination made by the arbitrator with respect to Martin's waiver of the "me too" provision or the IACP's right to raise claims for similarly situated pilots would be reviewable de novo by a federal court. When Continental refused to make this concession, the IACP voiced its intent to go to court to secure a judicial determination of the two issues. The arbitrator thereupon ended the hearing.

The IACP brought suit in the district court, seeking an order (1) declaring that Continental was required to arbitrate the issue of whether the airline violated paragraph 6(B) of the CRM, and (2) compelling Continental to accept the System Board's authority to resolve the paragraph 6(B) issue on a class-wide basis. Continental counterclaimed, seeking an order remanding for arbitration by the System Board the issues IACP sought to have the district court determine. Continental then moved for judgment on the pleadings, urging that the IACP's complaint sought judicial determination of issues that properly should be addressed by the System Board as part of its overall arbitration of the Martin grievance as recast by the IACP--the issues the IACP requested judicial determination of being whether the System Board should entertain the merits of a claim under paragraph 6(B) and whether any relief awarded pursuant to paragraph 6(B) should inure to all similarly situated pilots. In opposition to Continental's motion for judgment on the pleadings, the IACP urged that these were issues of "substantive arbitrability" for the court to decide in advance of arbitration. ...


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