Docket No IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT US AIRWAYS, INC., Defendant-Appellant,

Transcription

1 Docket No IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT US AIRWAYS, INC., Defendant-Appellant, v. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS; INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS DISTRICT LODGE 141-M, Plaintiffs-Appellees. Appeal from the United States District Court for the Western District of Pennsylvania, Case No (Cindrich, J.) BRIEF OF APPELLEES INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS AND INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT LODGE 141-M ROBERT A. BUSH MICHAEL J. HEALEY IRA L. GOTTLIEB HEALEY & HORNACK GEFFNER & BUSH PA ID No West Olive Avenue 429 Fourth Avenue, 5 th Floor Suite 1100 Law& Finance Building Burbank, CA Pittsburgh, PA (818) (412) DAVID NEIGUS IAM International 9000 Machinists Place Upper Marlboro, MD (301)

2 Docket No IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT US AIRWAYS, INC., Defendant-Appellant, v. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS; INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS DISTRICT LODGE 141-M, Plaintiffs-Appellees. Appeal from the United States District Court for the Western District of Pennsylvania, Case No (Cindrich, J.) CORPORATE DISCLOSURE STATEMENT AND STATEMENT OF FINANCIAL INTEREST ROBERT A. BUSH MICHAEL J. HEALEY IRA L. GOTTLIEB HEALEY & HORNACK GEFFNER & BUSH PA ID No West Olive Avenue 429 Fourth Avenue, 5 th Floor Suite 1100 Law& Finance Building Burbank, CA Pittsburgh, PA (818) (412) DAVID NEIGUS IAM International 9000 Machinists Place Upper Marlboro, MD (301)

3 CORPORATE DISCLOSURE STATEMENT AND STATEMENT OF FINANCIAL INTEREST Pursuant to Rule 26.1 and Third Circuit LAR 26.1, International Association of Machinists and Aerospace Workers and International Association of Machinists and Aerospace Workers, District Lodge141-M make the following disclosure: 1) For non-governmental corporate parties please list all parent corporations: None. 2) For non-governmental corporate parties please list all publicly held companies that hold 10% or more of the party s stock: None. 3) If there is a publicly held corporation which is not a party to the proceeding before this Court but which has as a financial interest in the outcome of the proceeding, please identify all such parties and specify the nature of the financial interest or interests: None. 4) In all bankruptcy appeals counsel for the debtor or trustee of the bankruptcy estate must list: 1) the debtor, if not identified in the case caption; 2) the members of the creditors committee or the top 20 unsecured creditors; and, 3) any entity not named in the caption which is active participant in the bankruptcy proceeding. If the debtor or trustee is not participating in the appeal, this information must be provided by appellant. Not Applicable. Respectfully submitted, MICHAEL J. HEALEY, ESQUIRE Attorney for Appellees

4 CERTIFICATE OF SERVICE I hereby certify that I caused the foregoing Plaintiffs /Appellees Corporate Disclosure Statement and Statement of Financial Interest were served on this 18 th day of November 2003 upon the following counsel of the record: Sidney Zonn, Esquire Littler Mendelson, P.C. Dominion Tower 625 Liberty Avenue, 26 th Floor Pittsburgh, PA Robert A. Siegel, Esquire O Melveny and Myers, LLP 400 South Hope Street, Suite 1500 Los Angeles, CA Tom A. Jerman, Esquire Rachel A. Shapiro, Esquire Aparna B. Joshi, Esquire O Melveny & Myers, LLP 1625 Eye Street, NW Washington, DC Kristine Grady Derewicz, Esquire Littler Mendelson, P.C. Three Parkway 1601 Cherry Street, Suite 1400 Philadelphia, PA MICHAEL J. HEALEY, ESQUIRE

5 TABLE OF CONTENTS TABLE OF AUTHORITIES iv, v, vi INTRODUCTION STATEMENT OF SUBJECT MATTER JURISDICTION AND APPELLATE JURISDICTION STATEMENT OF THE ISSUE STATEMENT OF THE CASE STATEMENT OF FACTS A. Relevant Contract Language B. Bargaining History C. The Parties Practice D. The Dunsford Arbitration E. Events Leading to the District Court Filing F. The District Court s Rulings STANDARD OF REVIEW SUMMARY OF ARGUMENT ARGUMENT I. THE DISTRICT COURT CORRECTLY FOUND THIS TO BE A MAJOR DISPUTE A. The Purposes and Basic Structure of the RLA B. The Major Dispute/Minor Dispute Distinction i

6 C. The District Court Correctly Found No Arguable Justification for the Company s Unilateral HMV Subcontracting The Delineation of the Status Quo II. 2. The District Court Followed Conrail and its Progeny In Determining that USAirways Offered Justification was Obviously Insubstantial a. The CBA Strictly Prohibits HMV Subcontracting Without Exception b. The 1999 Negotiations Demonstrate that the Company s arguable justification for HMV subcontracting is frivolous c. The Parties Uniform Practice of Never Subcontracting HMV work supports the District Court s Finding d. The Dunsford Award Does Not Support USAirways Position A Minor Dispute Does Not Automatically Arise Where Both Parties Point to Contractual Language and/or Custom and Practice THE DISTRICT COURT PROPERLY FOUND THE THREAT OF IRREPARABLE HARM TO BE PRESENT IN THE ABSENCE OF AN INJUNCTION, THOUGH NOT NECESSARY TO ISSUANCE OF THE INJUNCTION A. No Irreparable Harm Need Be Shown for an Injunction to Issue B. The Injunction Prevents Significant Harm to the Collective Bargaining Process C. USAirways Will Not Be Irreparably Injured, and Has Done Nothing to Avoid the Consequences of its Own Malfeasance and Misfeasance CONCLUSION ii

7 CERTIFICATE OF BAR MEMBERSHIP CERTIFICATE OF COMPLIANCE WITH RULE 32(a) CERTIFICATE OF SERVICE iii

8 TABLE OF AUTHORITIES Cases American Train Dispatchers v. Fort Smith R. Co., 931 F. Supp. 618 (C.D. Ill. 1996) Amcar Div., ACF Industries Inc. v. N.L.R.B., 641 F.2d 561 (8 th Cir. 1981) Airline Pilots v. Shuttle, Inc., 55 F. Supp. 2d 47 (D.D.C. 1999) Arcamuzi v. Continental Airlines, 819 F.2d 935 (9 th Cir. 1987) Brotherhood of Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369 (1969) Brotherhood of Railway and Steamship Clerks v. Florida East Coast Railway Co., 384 U.S. 238 (1966) Brotherhood of Locomotive Engineers v. Long Island Railroad, 85 F.3d 35 (2 nd Cir. 1996) Brotherhood of Locomotive Engineers v. Springfield, 210 F.3d 18 (1 st Cir. 2000) Brotherhood of Maintenance of Way Employes v. Atchison, Topeka & Santa Re, 138 F.3d 635 (7 th Cir. 1997) , 40 Burlington Northern v. UTU, 862 F.2d 1266 (7 th Cir. 1988) Chicago & North Western Railway Co. v. United Transportation Union, 402 U.S. 570 (1971) Conrail v. RLEA, 491 U.S. 299 (1989) , 25, 26, 28, 29, 33, 36, 37, 41, 42, 43 Detroit & Toledo Shore Line R. Co. v. United Transportation Union, 396 U.S. 142 (1969) , 22, 23, 24, 26, 37, 43, 46 iv

9 Elgin, J & E.R. Co v. Burley, 325 U.S. 711 (1945) , 22 Eisenberg v. Wellington Hall Nursing Home, 651 F.2d 902 (3 rd Cir. 1981) General Committee of Adjustment v. CSX, 893 F.2d 584 (3 rd Cir. 1990) , 39 Gary-Hobart Water Corp., 210 N.L.R.B. 742 (1974), enf'd, 511 F.2d 284 (7th Cir. 1975) Hirsch v. Dorsey Trailers, Inc., 147 F.3d 243 (3 rd Cir. 1998) Independent Ass n of Continental Pilots v. Continental Airlines, 155 F.3d 685 (3 rd Cir. 1998) International Association of Machinists v. British Airways, 718 F. Supp. 134 (E.D.N.Y. 1989) International Brotherhood of Teamsters v. Chautauqua Airlines, 186 F. Supp. 2d 901 (S.D. Ind. 2001) , 40, 41 Manning v. American Airlines, Inc., 329 F.2d 32, 35 (2d Cir. 1964), cert. denied, 379 U.S. 817 (1964) Machinists v. Central Airlines, Inc., 372 U.S. 682, 83 S.Ct. 956, 10 L.Ed.2d 67 (1963) Moore-Duncan ex rel. NLRB v. Horizon House, 155 F. Supp. 2d 390 (E.D. Pa. 2001) National Railway Labor Conference v. International Assn. of Machinists and Aerospace Workers, 830 F.2d 741 (7 th Cir. 1987) v

10 Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharmaceuticals Co., 290 F.3d 578 (3 rd Cir. 2002) , 49 Opticians Ass n of America v. Independent Opticians of America, 920 F.2d 187 (3 rd Cir. 1990) , 49 Pappan Enters., Inc. v. Hardee s Food Sys., Inc., 143 F.3d 800 (3 rd Cir. 1998).. 19 RLEA v. Norfolk & Western, 833 F.2d 700 (7 th Cir. 1988) SEPTA v. Brotherhood of Railroad Signalmen, 882 F.2d 778 (3 rd Cr. 1989) , 37, 38, 39 Shire US Inc. v. Barr Laboratories, 329 F.3d 348 (3rd Cir. 2003) St. Louis Southwestern Ry. Co. v. Brotherhood of Railroad Signalmen, 665 F.2d 987 (10 th Cir. 1981) , 33 United Air Lines v. International Association of Machinists, 243 F.3d 349 (7 th Cir. 2001) United Transportation Union v. Penn Central Co., 443 F.2d 131 (6 th Cir.), cert. denied, 404 U.S. 938 (1971) U.S. Steel Corp. v. NLRB, 711 F.2d 772 (7 th Cir. 1983) W-I Canteen Service, Inc. v. N.L.R.B. 606 F.2d 738 (7 th Cir. 1979) Statutes 28 U.S.C. Section 1292(a)(1) U.S.C. 151a U.S.C U.S.C vi

11 INTRODUCTION The District Court properly enjoined USAirways ( carrier, company, or employer ) from engaging in economic self-help in violation of the Railway Labor Act ( RLA or the Act ) by subcontracting airframe heavy maintenance ( HMV ) work, since that action is prohibited by the extremely broad and comprehensive language in the parties collective bargaining agreement ( CBA or agreement ) (JA 016) 1, and the 54-year bargaining history and practice engaged in by the carrier and the IAM 2 reinforcing that ban. Indeed, the Court found that the company by its own bargaining conduct recognized that it did not have the right to subcontract airframe heavy maintenance work. (JA 010). The Court held that the Company's HMV subcontracting triggered the Act s major dispute mechanism, since its proffered justification for that action was obviously insubstantial. (JA 18). As demonstrated below, this is a major dispute under the RLA because USAirways sought to unilaterally change the terms of the 1 This brief will refer to the Joint Appendix as JA: [page number]. 2 The IAM will refer collectively to appellees International Association of Machinists and Aerospace Workers ( IAM ) and IAMAW District Lodge 141-M ( District Lodge 141-M ). 1

12 parties CBA. Elgin, J & E. Ry. v. Burley, 325 U.S. 711, 723 (1945). Accordingly, the District Court s ruling should be affirmed. STATEMENT OF SUBJECT MATTER JURISDICTION AND APPELLATE JURISDICTION Appellee agrees with USAirways statement that this Court has appellate jurisdiction pursuant to 28 U.S.C. Section 1292(a)(1), and agrees that USAirways filed a timely Notice of Appeal. Contrary to Appellant s contention, however, the District Court had subject matter jurisdiction over this major dispute under the Railway Labor Act. The federal courts are authorized to enforce through issuance of equitable relief the requirement that the parties maintain the status quo pending exhaustion of the Act s major dispute procedures, without the customary showing of irreparable harm. Conrail v. RLEA, 491 U.S. 299, 303 (1989); Detroit & Toledo Shore Line R. Co. v. United Transportation Union, 396 U.S. 142, 149 (1969); Independent Ass n of Continental Pilots v. Continental Airlines, 155 F.3d 685, 691 (3 rd Cir. 1998). 2

13 STATEMENT OF THE ISSUE Whether the District Court correctly found that USAirways justification for its subcontracting of airframe heavy maintenance work was obviously insubstantial -- thus triggering a major dispute under the Railway Labor Act -- where the parties collective bargaining agreement has broad subcontracting prohibitions against subcontracting airframe heavy maintenance, the company in collective bargaining negotiations recognized it had no right to subcontract the work, and no such work had ever been subcontracted in the 54-year collective bargaining relationship between the parties. 3

14 STATEMENT OF THE CASE In response to USAirways October 6, 2003 announcement that it was unilaterally subcontracting airframe heavy maintenance work on its Airbus aircraft, called S-Checks, the IAM filed suit that day in the United States District Court for the Western District of Pennsylvania, seeking to enjoin the company from outsourcing work (JA 090, 095). The verified complaint asserted that the company had prompted a major dispute under the RLA by threatening to send its Airbus aircraft to Singapore Technologies Mobile Aerospace Engineering, located in Mobile, Alabama (JA ). On October 9, 2003, USAirways submitted its opposition to the IAM s motion for temporary restraining order ( TRO ), and the IAM submitted one supplemental declaration in support of its motion. On October 10, the parties appeared before Judge Cindrich for oral argument. Thereafter, the parties agreed that the TRO motion could be converted to one for a preliminary injunction; neither side chose to further supplement the record the parties developed. On October 21, the District Court issued a preliminary injunction prohibiting the company from subcontracting HMV work, ruling that the Company s 4

15 subcontracting of HMV work gave rise to a major dispute under the RLA, and that the justification it offered for that unilateral action was obviously insubstantial. (JA 018). On October 23, 2003, the District Court held a hearing on the Company s motion for a stay of the injunction, and, on October 24, 2003, denied the Company s stay motion (JA ). 3 On October 27, 2003, USAirways moved this Court for an Emergency Stay of the injunction pending appeal, which the IAM opposed. On November 5, 2003, this Court denied that stay motion. 3 The Court modified the injunction to permit the completion of HMV work on one Airbus aircraft that had been delivered to the subcontractor and dismantled, subject to the IAM s claim for damages relating to that single aircraft. 5

16 STATEMENT OF FACTS A. Relevant Contract Language As the Court below observed, the parties agreed to extremely broad and comprehensive language in the CBA (JA 016) defining the work to be performed by IAM-represented employees. That language is as follows: ARTICLE II SCOPE OF AGREEMENT (B) The Company agrees that the following described work, wherever performed, is recognized as coming within the jurisdiction of the International Association of Machinists and Aerospace Workers, and is covered by this Agreement: the making, assembling, erecting, dismantling, and repairing of all machinery, mechanical equipment, engines and motors of all description, including all work involved in dismantling, overhauling, repairing, fabricating, assembling, welding, and erecting all parts of airplanes, airplane engines, avionics equipment, electrical system, heating system, hydraulic system, and machine tool work in connection therewith, including all maintenance, construction and inspection work in and around all shops, hangars, buildings, and including the servicing, cleaning and polishing of airplanes and parts thereof, and the servicing and handling of all ground equipment performed in and about Company shops, Maintenance bases, Aircraft Base Maintenance bases, and Line service stations. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * The duties of aircraft cleaning, lavatory servicing, potable water servicing, receipt and dispatch, ancillary duties associated with receipt and dispatch, and operation of ground power units may be performed by employees covered by this Agreement and/or other employees and vendors as described in Article 4 paragraphs J and N at those locations/shifts where such covered employees are not staffed. Aircraft towing may be performed by employees not covered by this Agreement at those locations/shifts where such covered employees are not staffed. It is not the intent of this paragraph to have non-mechanical and Related employees perform such work on shifts where covered employees are staffed except as provided for elsewhere in this agreement. It is the Company's 6

17 intent, however, to utilize all its equipment and facilities in performing work in its own organization. In the event that a situation should develop whereby the equipment and facility limitations are not available or sufficient to perform such work, the Company will confer with the Union in an effort to reach an understanding with respect to how the problem is to be resolved. Receipt and dispatch, including the ancillary duties associated with receipt and dispatch, of Commuter Aircraft may be accomplished by employees not covered by the mechanic and related agreement. 4 The parties do not dispute that the language in the Scope clause encompasses HMV work. The Company and Union did not stop at broadly defining and describing the work to be done by IAM-represented employees. In addition, USAirways and the IAM agreed on strict prohibitions against subcontracting of such work (JA 016) in a Letter of Clarification that both expressly prohibits 4 The Company s attempt to divert this major dispute to a System Board of Adjustment extends even to the misleading partial quotation of the language of this paragraph found in its opening brief (Appellant brief, p.11). The Company starts with the first paragraph describing work that includes tasks performed within the definition of HMV work, then omits the second paragraph and most of the third separate paragraph, which starts with a list of tasks -- like lavatory servicing, potable water servicing, receipt and dispatch.... not related to HMV work, which may be performed by employees covered by this Agreement and/or other employees and vendors as described in Article 4. It is in that context that the paragraph speaks of the company confer(ring) with the Union to reach an understanding about how to address a situation whereby the equipment and facility limitations are not available or sufficient to perform such work. (JA 170). This sentence, which is unrelated to the entire first paragraph of 2(B), was not even raised as a part of the Company s arguable justification prior to the Court s issuance of the injunction. Nowhere in that paragraph is the Company granted authority to do anything in the event the parties do not reach an understanding. 7

18 farming out of all such work and reiterates that the work shall be accomplished by IAM-represented employees. 5 The only exceptions to the broad nosubcontracting rule of the CBA are found in another clarification, pertinent portions of which are as follows: CLARIFICATION OF ARTICLE 2(B) Relative to Article 2 (Scope of Agreement) of the Agreement between US Airways, Inc., and the International Association of Machinists and Aerospace Workers, it is agreed that, within the limits hereinafter specified, the following listed exceptions to the coverage of Article 2 shall not be deemed in violation thereof: 5 LETTER OF CLARIFICATION (A) As a clarification of Article 2 (Scope of Agreement) of the Agreement between US Airways, Inc., and the International Association of Machinists and Aerospace Workers, it is agreed that: 1. Section (B) of said Article 2 is recognized by both parties as prohibiting the "farming out" of the types of work specified in said Section (B). 2. The intent of said Section (B) is that the types of work specified therein (and in Article 4 of the aforementioned Agreement) shall be accomplished by the employees of US Airways, Inc., described in the said Article The preceding clarification shall apply to the aforementioned Agreement, and any and all supplements thereto or modifications thereof reached under the Railway Labor Act, as amended, and shall be and remain in effect until modified by mutual agreement or until a contradictory renegotiated Article 2 of the aforementioned Agreement is made effective, whichever occurs first. (B) This clarification is agreed to, signed and effective this 6th day of August, (JA 194) 8

19 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * (JA 195). (G) Types of work customarily contracted out, such as parts and material which the Company could not be expected to manufacture, such as engine and airframe parts, castings, cowlings, seats, wheels and other items which are commonly manufactured as standard items for the trade by vendors. Work subcontracted out to a vendor will be of the type that cannot be manufactured or repaired in-house by existing skills/equipment or facilities of the Company. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * (I) Due to lack of facilities, the Company may subcontract the major overhaul of aircraft engines during the life of this Agreement. Neither airframe heavy maintenance nor any other maintenance work on aircraft airframes is mentioned in the list of subcontracting exceptions contained in the list collected in the Clarification of Article 2(B). There is no dispute that HMV work is not the type of work that has been customarily contracted out ; in fact, the District Court found that HMV work has never been subcontracted by USAirways. (JA 016, 041, 071). B. Bargaining History In 1999, in negotiations for a successor agreement - - a major dispute under the Act - - the company sought to obtain the right to subcontract airframe heavy maintenance of its Boeing fleet then scheduled for such work, claiming as it does in this case that it lacked the facilities to perform the work in-house under the agreement 9

20 (JA , 095, 276). 6 The IAM rejected all such proposals, and the company did not achieve its objective of gaining the authority to subcontract heavy maintenance work (JA 010, 089, 276). As the IAM s lead negotiator William Freiberger explained in an undisputed 7 account of the negotiations: (JA 276) (W)e had a discussion with the Company about why it needed to outsource the HMV work. (USAirways President) Rakesh Gangwal stated that the Company needed to outsource because it lacked the facilities to perform the work in a timely manner, and the work was taking too long to complete in house, thus causing the aircraft to be grounded, rather than providing revenue for the Company. Mr. Freiberger goes on to detail the IAM s repeated rejections of the company s outsourcing proposals, declaring that no such proposal was ever agreed 6 Paragraph 12 of the complaint filed and served on October 6 states: In collective bargaining negotiations between the Union and the Company in 1999, the Company recognized that it did not have the right to subcontract airframe heavy maintenance work, and it sought to obtain that subcontracting right from the IAM in the negotiations by proposing that it be allowed to subcontract heavy maintenance on equipment then in need of such service. The Union rejected the Company s proposal to obtain that right to subcontract airframe heavy maintenance work. (JA 095). 7 One of the Company s negotiators in 1999, Al Hemenway, submitted an affidavit in this case, but did not address Mr. Freiberger s description of the talks. 8 Mr. Freiberger s declaration attached copies of the Company's own bargaining proposals. (JA ). 10

21 to by the IAM or included in the parties Collective Bargaining Agreement. (JA 276). Thus, as the District Court found as a matter of fact, the Company knew it did not have the right to subcontract heavy maintenance work, knew it had to use the RLA s major dispute vehicle to try to obtain it, and failed to do so. (JA 010). Nor did the Company gain such authority during negotiations in the context of its bankruptcy proceeding in C. The Parties Practice USAirways has never subcontracted heavy maintenance work in its entire 54- year relationship with the IAM (JA 016, 041, 071). IAM-represented employees have always performed such work, regardless of the model of aircraft (JA 071). 9 Heavy maintenance denotes work done an aircraft mainframe consisting of stripping the structure to its skeleton, examining it for defects such as structural cracks and leaks and ensuring that any necessary repair is done. (JA 009, ). All aircraft must have such scheduled maintenance performed at regular intervals; 9 The aircraft upon which IAM-represented employees performed HMV work included foreign and domestic-manufactured aircraft McDonnell Douglas models, DC-9 s, Folkers, Boeings of all sizes, without exception. (JA 071) 11

22 thus, the maintenance schedules are known, and can be planned for, well in advance of the deadline for each required scheduled maintenance check. (JA 009). In the case of the Airbus aircraft, the S-Checks must be performed within five years after they were acquired by USAirways, beginning in (JA 009, 258). The work required for a heavy maintenance check on an Airbus is similar to, though more intensive than, other scheduled maintenance -- A-, B- and C- checks -- that has been exclusively performed by IAM-represented employees since the Airbuses were first acquired (JA 009, , 071). The Company acquired a hangar in Tampa, Florida, where it could have performed the S-Checks (JA 079), although it voluntarily closed the facility in November, (JA 079). The Company presently has in excess of 4000 mechanics on its active payroll, and more than 2500 mechanics on layoff status, with rights to recall (JA 070). D. The Dunsford Arbitration In , the IAM disputed the right of the Company to outsource engine overhaul work on the CFM-56 engine used on Boeing and aircraft. (JA ). As the decision narrates, since engine overhaul at USAirways historically had been both outsourced and performed in-house, the parties custom and practice with respect to that type of work is notably distinct from that relating 12

23 to airframe HMV work at the Company. While overhaul of the CFM-56 engine had not been performed in-house, overhaul of other aircraft engines used on other aircraft had been performed by IAM-represented employees. To justify that outsourcing, the Company relied on the exceptions language quoted above from the Clarification of Article 2(B) relating to work customarily contracted out i.e., subsection (G) and the exception expressly permitting subcontracting of engine overhaul due to lack of facilities. (subsection (I)). Arbitrator Dunsford found that subsection (G) the second sentence of which is the primary contractual basis upon which the Company rests its claim for minor dispute status in this case deals with types of work customarily contracted out. (JA 218). Arbitrator Dunsford found it obvious() that if work on the new (engine [or airframe]) is of a type that previously was performed [in-house] on other (engines [or airframes]), it does not come within the exception of Paragraph (G). (JA 221). It is precisely because the Court below determined, as a matter of fact, that HMV work is not the type of work customarily contracted out by USAirways (JA 016) that Arbitrator Dunsford s decision offers no support for Appellant s position. Arbitrator Dunsford then turned to subsection (I), an express lack of facilities exception to the no-subcontracting rule specifically and only for the major overhaul 13

24 of aircraft engines. (JA ). After finding as a matter of disputed fact that the Company satisfied that qualified exception, he found in favor of the Company. E. Events Leading to the District Court Filing In August 2003, the Company announced it was considering outsourcing its upcoming Airbus S-Checks. The IAM protested, advising the company in correspondence that it considered any such action to provoke a major dispute (JA 237). The Company offered to arbitrate, but also stated that it had not decided how it would handle the upcoming heavy maintenance of the Airbus fleet. (JA 247). On October 6, the Company formally announced to the IAM that it was subcontracting the HMV work, and would begin sending Airbus aircraft to Mobile, Alabama. (JA 251). On October 6, the IAM filed and served the complaint upon USAirways counsel. At the same time, the IAM filed and served its motion for temporary restraining order and supporting evidence. Included in the supporting papers were declarations explaining how the company could perform the Airbus HMV work inhouse with existing facilities, equipment and mechanics, both active and on layoff status. (JA 38-43, 70-73, 78-79). In addition, the IAM provided a declaration from William Freiberger, who was the IAM s chief negotiator in the 1999 negotiations. In 14

25 that declaration, Freiberger stated: During the course of the [1999] negotiations, the Company proposed that the parties collective bargaining agreement be amended to permit it to subcontract the heavy maintenance work it was then performing on the Boeing fleet. The IAM rejected that proposal, because of the Union s concern about the impact such subcontracting would have on its members livelihood, both because of the immediate loss of jobs, and because of the negative precedent it would set for the future. That proposal by the Company was not agreed upon in the collective bargaining agreement the parties executed, and no such subcontracting authority for any heavy maintenance work has ever been agreed to by the IAM at USAirways. (JA 089). Nowhere in the TRO opposition papers filed by USAirways on October 9 did the company address this bargaining history. On October 9, per the parties prearranged briefing schedule, the IAM served USAirways counsel with a supplemental declaration from Mr. Freiberger, providing additional detail and documentation of this bargaining history. (JA 276, ). At the October 10, 2003 hearing before Judge Cindrich, the IAM argued that the totality of the relevant circumstances on the subject of HMV subcontracting - - the CBA language, the parties historical practice, and the 1999 negotiations - - all clearly established a strict prohibition against HMV Airbus subcontracting, and no 15

26 substantial evidence or factors contradicted that conclusion. 10 Despite repeated references to the 1999 negotiations by IAM counsel (JA , , 335), and the Court s comment that bargaining.. (history) would be obviously important (JA 309), USAirways counsel offered not a single responsive word on the subject. After the October 10 hearing, carrier counsel agreed to have the hearing considered one for a preliminary injunction (see JA 331), thus foregoing an opportunity to present more evidence and/or argument prior to an appeal, and leading the Court to declare that the parties have apparently submitted everything they deem necessary for the court to make [the major vs. minor dispute] determination. Neither side has indicated that any additional information is needed for the court to make a final decision on the matter. (JA 018 n.5). F. The District Court s Rulings 10 Contrary to the Company s argument, the IAM did not abandon its argument that USAirways had sufficient facilities to perform the HMV work in-house. (Appellant s brief, p.7). The IAM presented a sufficient facilities argument because it did not believe the company could realistically counter it (JA ), but always maintained the position that the lack of facilities language in the CBA did not apply to the HMV context (e.g., JA 071, paragraphs 5, 6). 16

27 On October 21, the District Court granted the IAM s motion for a preliminary injunction, noting that: (JA 010). Since the beginning of the parties collective bargaining relationship in 1949, USAir has never subcontracted this type of heavy maintenance work on any aircraft equipment in its fleet. Indeed, in collective bargaining negotiations between the IAM and USAir in 1999, USAir recognized that it did not have the right to subcontract airframe heavy maintenance work. During those negotiations, USAir sought to obtain that subcontracting right from the IAM by proposing that it be allowed to contract out heavy maintenance work, like the S-Check, on its Boeing aircraft then in need of such service. The IAM rejected that proposal. The Court further noted that the collective bargaining agreement is extremely broad and comprehensive in its coverage of work that must be performed by IAMrepresented employees and clearly includes S-Checks. (JA 016). It found no even arguable justification for the company s HMV subcontracting in the CBA language, a determination supported by the following undisputed facts: 1) the longstanding and uninterrupted practice and custom that heavy maintenance types of work such as an S-Check has always been performed by IAM-represented employees; 2) the fact that such work has always been considered within the exclusive province of those employees under the CBA as evidenced by the aforementioned history of the parties actions under the CBA; and 3) the fact that US Air recognized through bargaining conduct as late as 1999 that it had no right to subcontract such work, even though section (G) had 17

28 (JA 017). been part of the CBA for many years. Indeed, there can be no argument that heavy maintenance work like the S-Check has been customarily contracted out to vendors because there are no facts to support such an argument. On October 24, the District Court denied USAirways motion for a stay of the injunction pending appeal. In its ruling, the Court concluded that the company could not make a strong showing of likelihood of success on the merits, remarking that (u)nder the guise of a claimed dispute about the meaning of the language in the CBA, US Air is attempting to remake or amend the most elemental and consequential provisions of the CBA. Thus, the parties dispute is a major dispute under the RLA (footnote omitted). (JA ). In rejecting the carrier s argument that the IAM and its members would somehow be injured by the injunction, or that there was an adequate remedy at law, the Court declared that (a)llowing US Air to go forward with its unilateral modification of the CBA would undermine the union and the collective bargaining process in a way that cannot be remedied by a later payment of back wages. Id. at JA 024. The District Court also dismissed the employer's arguments about its alleged inability to perform the heavy maintenance work in-house for two reasons: We find specifically that US Air s claim that it has no employees and no equipment and no facilities to commence the S-Check work to be inherently 18

29 incredible. US Air has known the precise date for the scheduled maintenance for five years and during that time has performed all Airbus scheduled maintenance work with US Air employees on US Air facilities, with US Air equipment. Id. at JA 025 (emphasis added). The Court also found that: any harm US Air might suffer would be caused by its own conduct. US Air has known since 1998, when it purchased the Airbus aircraft, of the necessity for S-Checks at this precise time (i.e., October, 2003). Although circumstances changed in light of a subsequent bankruptcy filing and corresponding reduction in its active fleet, it knew as early as December 2002 of its current maintenance requirements, including S-Checks. The company also knew in December, 2002, that the IAM considered any subcontracting of heavy maintenance work such as S-Checks to be in violation of the express terms of the CBA. Yet, it took no action to acquire the necessary manpower, facilities and equipment to perform the scheduled maintenance. Id. at JA This critique set the stage for the Court's later observation that "US Air is attempting to avoid the CBA and RLA required status quo based on a self-imposed shortage of facilities and equipment and a claimed 'crisis' which it could have easily... avoided", citing Opticians Ass'n v. Independent Opticians, 920 F.2d 187, 197 (3 rd Cir. 1990); Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck, 290 F.3d 578, 596 (3 rd Cir. 2002); Pappan Enters., Inc. v. Hardee's Food Sys., Inc., 143 F.3d 800, 806 (3 rd Cir. 1998). (JA 26). 19

30 The Court rejected the Company s characterization of its major dispute analysis, noting that it had not interpreted the CBA: The threshold issue the court had to decide is whether the parties dispute is a major or minor dispute under the RLA. If the dispute is minor, the court does not have subject matter jurisdiction. If, on the other hand, the dispute is major, the court has jurisdiction. The court must consider whether US Air s action in subcontracting the S-Checks is arguably justified by the terms of the parties collective bargaining agreement to make this jurisdictional determination, which obviously can only be done by looking at the terms of the CBA and the parties bargaining history. (citing Conrail v. RLEA, 491 U.S. 299, 307(1989)). Thus, the court did not interpret the CBA, but determined instead that US Air s contention that it could subcontract S-Checks based on the terms of the CBA was not arguably justified. Indeed, the court would be abdicating its duty to make the minor/major dispute determination, as we are charged with the responsibility of doing, by accepting US Air s position without considering the terms of the CBA. (JA 024 n.1). STANDARD OF REVIEW This Court exercises plenary review over the issue of whether the dispute between the IAM and USAirways is a major or minor one, since it is a question of law. (JA 018 n.5); General Comm. Of Adjustment v. CSX, 893 F.2d 584, 598 (3 rd Cir. 1990). Factual findings are reviewed under the clearly erroneous standard. Shire US Inc. v. Barr Laboratories, 329 F.3d 348, 352 (3 rd Cir. 2003); RLEA v. Norfolk & Western, 833 F.2d 700, 707 (7 th Cir. 1988). SUMMARY OF ARGUMENT 20

31 The District Court correctly analyzed all the relevant information about the parties bargaining relationship, and held that USAirways proffered justification for HMV subcontracting expressly prohibited by the CBA was obviously insubstantial. (JA 18). The District Court correctly found that the Company was attempting to remake or amend the agreement s prohibition against HMV subcontracting. (JA 18). Therefore, the parties dispute is a major dispute under the RLA. The IAM demonstrated the breadth of the CBA s subcontracting prohibition and the scope of work mandated to be performed by IAM-represented employees. The 1999 major dispute negotiations -- where the Company tried and failed to obtain the right to subcontract HMV work by invoking the same alleged lack of facilities excuse it now claims -- reaffirmed that prohibition. Finally, there is an undisputed half-century of uniform practice of performing heavy maintenance inhouse. In light of this showing, the District Court correctly held that USAirways cannot satisfy even its relatively light burden to meet the minor dispute standard, by merely pointing to scattered and irrelevant CBA language, by failing to offer any explanation for the critical exchange in the 1999 negotiations, and by misreading an arbitration award concerning engine overhaul, not airframe heavy maintenance. The 21

32 District Court properly ruled Appellant s arguments obviously insubstantial and, therefore, properly issued an injunction to prevent the Company s unilateral resort to economic self-help in violation of the RLA. (JA 18). ARGUMENT I. THE DISTRICT COURT CORRECTLY FOUND THIS TO BE A MAJOR DISPUTE A. The Purposes and Basic Structure of the RLA The RLA was enacted in order to avoid interruptions to commerce. Detroit & Toledo Shore Line R. Co. v. United Transportation Union, 396 U.S. 142 (1969), (JA 012). That public interest and policy is violated and commerce is threatened when either a union or a carrier violates the status quo imposed on collective bargaining parties. The requirement to maintain the status quo not only prohibits unions from engaging in job actions, but also prevents management from changing the rates of pay, rules or working conditions related to the dispute. Id. at 153 (emphasis added.) (JA ). That symmetry is embedded in the bilateral balanced character of the Act and is central to its integrity and its operation in governing the parties relations. See, e.g., Elgin,. J & E.R. Co v. Burley, 325 U.S. 711 (1945). 22

33 The RLA establishes a detailed procedure that must be followed by carriers and labor organizations before changing collective bargaining agreements or working conditions of employees. Brotherhood of Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, (1969). These procedures of the Act are purposely long and drawn out, based on the hope that reason and practical considerations will provide in time an agreement that resolves the dispute. Brotherhood of Railway and Steamship Clerks v. Florida East Coast Railway Co., 384 U.S. 238, 246 (1966). Sections 2, First, Second and Seventh, and Sections 5 and 6 of the Act prohibit a carrier from making a unilateral change in existing conditions, or taking any form of economic self-help, during the term of an existing agreement or while engaged in negotiations. The significance of this status quo obligation was emphasized by the Supreme Court in Detroit & Toledo Shore Line R. Co. v. United Transportation Union, supra, 396 U.S. at 150: The Act s status quo requirement is central to its design. Its immediate effect is to prevent the union from striking and management from doing anything that would justify a strike.... Moreover, since disputes usually arise when one party wants to change the status quo without undue delay, the power which the Act gives the other party to preserve the status quo for a prolonged period will frequently make it worthwhile for the moving party to compromise with the interests of the other side and thus reach agreement 23

34 without interruption to commerce. The status quo requirements are intended to prevent rocking of the boat by either side until the procedures of the Railway Labor Act [are] exhausted... Manning v. American Airlines, Inc., 329 F.2d 32, 35 (2d Cir. 1964), cert. denied, 379 U.S. 817 (1964). The status quo provisions of the Act apply during the term of an existing collective bargaining agreement not yet subject to change under Section 2, Seventh and Section 6 of the Act. United Transportation Union v. Penn Central Co., 443 F.2d 131 (6 th Cir.), cert. denied, 404 U.S. 938 (1971). The strictest compliance with the mandatory bargaining and status quo provisions is required. Chicago & North Western Railway Co. v. United Transportation Union, 402 U.S. 570, 578 (1971). A violation of the status quo pending completion of the required procedures is a major dispute. Detroit & Toledo, supra. In contrast, the minor dispute category is predicated on 2, Sixth and 3, First (i) of the RLA, which set forth conference and compulsory arbitration procedures for a dispute arising out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions. This second category of disputes 24

35 contemplates the existence of a collective agreement already concluded or, at any rate, a situation in which no effort is made to bring about a formal change in terms or to create a new one. The dispute relates either to the meaning or proper application of a particular provision with reference to a specific situation or to an omitted case. In the latter event the claim is founded upon some incident of the employment relation, or asserted one, independent of those covered by the collective agreement, e.g., claims on account of personal injuries. In either case the claim is to rights accrued, not merely to have new ones created for the future. Burley, 325 U.S. at 723, 65 S.Ct. at In the airline industry, a minor dispute is resolved by an adjustment board (i.e., arbitration) established by the airline and the unions. 49 Stat. 1189, 45 U.S.C See Machinists v. Central Airlines, Inc., 372 U.S. 682, 83 S.Ct. 956, 10 L.Ed.2d 67 (1963). B. The Major Dispute/Minor Dispute Distinction The formal demarcation between major and minor disputes does not turn on a case-by-case determination of the importance of the issue presented or the likelihood that it would prompt the exercise of economic self-help. Conrail, supra, 491 U.S. at 305; National Railway Labor Conference v. International Assn. of Machinists and Aerospace Workers, 830 F.2d 741, 747, n. 5 (7 th Cir. 1987). Rather, the line drawn in Burley looks to whether a claim has been made that the terms of an existing agreement either establish or refute the presence of a right to take the disputed action. If a carrier threatens to exercise, or exercises the unilateral right to alter the terms 25

36 and conditions of employment of employees, it has triggered a major dispute under the RLA that authorizes injunctive relief against the carrier, unless it can invoke a provision in the collective bargaining agreement that authorizes that alteration. Brotherhood of Locomotive Engineers v. Springfield, 210 F.3d 18, (1 st Cir. 2000) (Major dispute triggered when carrier gives unit work to non-union entity); Burlington Northern v. UTU, 862 F.2d 1266, (7 th Cir. 1988); International Brotherhood of Teamsters v. Chautauqua Airlines, 186 F. Supp. 2d 901, (S.D. Ind. 2001); Airline Pilots v. Shuttle, Inc., 55 F. Supp. 2d 47, 52 (D.D.C. 1999). Where an employer asserts a contractual right to take the contested action, the ensuing dispute is minor if the action is arguably justified by the implied or express terms of the parties collective- bargaining agreement. Where, by contrast, the employer's claimed justification for the action is frivolous or obviously insubstantial, the dispute is major. Conrail, 491 U.S. at 307, 310. In cases where an employer diverts work that ordinarily has been done by union-represented employees to workers outside the established unit, thereby risking a strike, such conduct may constitute an enjoinable major dispute. 12 Springfield, supra, 210 F.3d at 33 ( The 12 As the Supreme Court observed in Detroit & Toledo, 396 U.S. at 155, where the Union struck to protest extra-contractual work assignments: The railroad, however, refused to maintain the status quo and, instead, proceeded to make the disputed 26

37 mere prospect of having work shifted to a replacement subsidiary would constitute a change in the working conditions and practices sufficient to trigger a major dispute. ); St. Louis Southwestern Ry. Co. v. Brotherhood of Railroad Signalmen, 665 F.2d 987, 998 (10 th Cir. 1981) (Where no evidence of an alleged implied right to subcontract, injunction against such contracting is permitted); see also, International Association of Machinists v. British Airways, 718 F. Supp. 134, (E.D.N.Y. 1989) (Because subcontracted work was never performed by unit workers, no violation of the status quo). C. The District Court Correctly Found No Arguable Justification for the Company s Unilateral HMV Subcontracting 1. The Delineation of the Status Quo In order to determine the nature of a dispute between parties under the RLA, a court must first define the contours of the status quo that existed when the dispute arose. As illustrated in Conrail and cases preceding and post-dating that decision, the outlying assignments. It could hardly be expected that the union would sit idly by as the railroad rushed to accomplish the very result the union was seeking to prohibit by agreement. The union undoubtedly felt it could resort to self-help if the railroad could, and not unreasonably, it threatened to strike. Because the railroad prematurely resorted to self-help, the primary goal of the Act came very close to being defeated. 27

38 parameters of the status quo entail all that has developed between the parties in contract language, bargaining history, and practice. In Conrail, the Court made its determination based solely on an exhaustive review of the parties past practice; neither party relied on their collective bargaining agreement to support its position. While both parties relied on the same past practice and differed only as to its meaning, the Court did not merely assert -- contrary to Appellant s view -- that it must be a minor dispute because the parties agreed on what items of practice and history were pertinent to the dispute. What mattered to the Court was that the authority the carrier claimed it possessed to increase the use of employee drug tests was arguably encompassed within its conceded breadth of authority to impose the drug tests as a matter of its existing practice. In other words, the Court considered it an arguably justifiable logical step from the drug testing the carrier was already performing to the drug testing that the union challenged. 491 U.S. at The employer in Conrail had had a longstanding practice of requiring employees to undergo physical examinations, which included the testing of urine for blood sugar and albumin, and in some circumstances, for drugs. 491 U.S. at 300. Thus, the company already concededly had authority to perform urinalysis on its employees, and to use that urinalysis to test for controlled substances. That 28