PUBLIC POLICY AND DUE PROCESS EXCEPTIONS TO THE ENFORCEMENT OF ARBITRATION AWARDS

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1 PUBLIC POLICY AND DUE PROCESS EXCEPTIONS TO THE ENFORCEMENT OF ARBITRATION AWARDS Marcus C. Migliore Sr. Attorney Legal Department Air Line Pilots Association, Int l The federal courts have severely limited judicial review of System Board awards. 1 Typical claims that the Board "exceeded" its jurisdiction or "changed" the contract it was requested to interpret are treated as impermissible efforts to displace the Board's interpretation with an interpretation by the court, and are routinely rejected. 2 The scope of judicial review has long been characterized as being "among the narrowest known to the law." Diamond v. Terminal Ry. Alabama St. Docks, 421 F.2d 228 (73:2230) (5th Cir. 1970); Brotherhood of R.R. Trainmen v. Central of Georgia Ry. Co., 415 F.2d 403 (71:3042) (5th Cir. 1969). 3 Below, we discuss two limited exceptions to this broad judicial deference to arbitration awards. 1For the convenience of subscribers to the Bureau of National Affairs' Labor Relations Reference Manual, case citations here include parenthetic citations to LRRM. 2Rossi v. Trans World Airlines, Inc., 507 F.2d 404 (88:2983) (9th Cir. 1974); Kotakis v. Elgin, Joliet & E. Ry. Co., 520 F.2d 570 (90:2966) (7th Cir. 1975); Keay v. Eastern Air Lines, Inc., 440 F.2d 667 (77:2192) (1st Cir. 1971); Northwest Airlines, Inc. v. Air Line Pilots Ass'n, 373 F.2d 136 (64:2485) (8th Cir. 1967); Hunt v. Northwest Airlines, Inc., 600 F.2d 176 (101:2647) (8th Cir. 1979). 3 The scope of review remains equally narrow whether the issue sought to be reexamined in court is characterized as a "purely legal" issue or as one of "contract" or "fact." Union Pacific R.R. Co. v. Sheehan, 439 U.S. 89 (99:3327) (1978). Courts often draw upon the phraseology used in the Steelworkers trilogy, see United Steelworkers of America v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (46:2416) (1960), in order to describe their restraint in reviewing Adjustment Board awards, although an argument can be made that the degree of restraint required by the RLA's legislative history exceeds even that required under the trilogy. For a full discussion of the Legislative History and other issues relevant to judicial review of arbitration awards, see Vol. II, ALI-ABA Study Materials on Airline and Railroad Labor And Employment Law (October 2000). 1

2 A. Public Policy Exception -- Safety There have been a number of decisions discussing the issue of whether a system board award can be set aside by a court on the ground that it is contrary to public policy because it involves a serious safety infraction by an employee. In United Paperworkers Int l Union v. Misco, Inc., 484 U.S. 29 (126:3113) (1987), the Supreme Court addressed but did not provide a definitive answer to the question of whether courts could invoke the public policy of safety as the basis to decline to enforce an arbitration award. That case presented the situation of the arbitrator reinstating an employee who was alleged to have used marijuana where the arbitrator determined that there was insufficient evidence to prove that the employee had done so. The district court and the Eighth Circuit refused to enforce the award on the theory that reinstatement would violate the public policy against operation of dangerous machinery by persons under the influence of drugs. The Supreme Court reversed, primarily concluding that the lower courts had improperly substituted their own factual findings for those of the arbitrator. The Court also concluded that courts have to tread carefully in declining to enforce awards on the grounds of public policy, and may do so only if the arbitrator s interpretation of the contract rights would violate some explicit public policy that is well defined and dominant, not one ascertained by reference to the court s own view of proper public policy. Id. at 43. It soon became clear that Misco left many questions unanswered. This issue was presented to the District of Columbia Circuit in a case involving a pilot discharged after it was discovered that he had served as First Officer on a commercial passenger flight while intoxicated. Northwest Airlines, Inc. v. Air Line Pilots Ass'n, 808 F.2d 76 (124:2300) (D.C. Cir. 1987). A system board found that the pilot had been suffering from alcoholism, and that, after his discharge, he had successfully completed an alcohol rehabilitation program. It ruled that, taking into account all the circumstances (including the gravity of the offense), he should be offered reinstatement, without backpay or benefits, upon certification by the Federal Air Surgeon that he had recovered from the effects of his alcoholism, including total abstinence from alcohol for not less than two years. The carrier challenged the award in court, arguing that it contravened the strong public policy against "drinking and flying" and that, in any event, the Board went beyond its authority in refusing to accept the carrier's 2

3 judgment that the pilot could never again safely be trusted in the cockpit. The district court accepted these arguments, Northwest Airlines, Inc. v. Air Line Pilots Ass'n, 633 F. Supp. 779 (122:2311) (D.D.C. 1985). The court of appeals, however, reversed. The court pointed out that the collective bargaining agreement plainly gave the System Board authority to review the discharge. In the court's view, "[t]he fact that the arbitration touches on issues related to airline safety is irrelevant. There have been numerous arbitrations under the RLA involving grievances that implicate safety issues, and no court had ever ruled that an arbitral board lacked jurisdiction to consider such issues F.2d at 81 & n. 26. With respect to public policy, the court quoted from its own opinion in American Postal Workers Union v. United States Postal Service, 789 F.2d 1, 8 (122:2094) (D.C. Cir. 1986), which in turn relied on the Supreme Court's language in W.R. Grace & Co. v. Local 759, Int'l Union, United Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 766 (113:2641) (1983), emphasizing that "judges have no license to impose their own brand of justice in determining applicable public policy; thus, the [public policy] exception [to judicial enforcement of arbitration awards] applies only when the public policy emanates from clear statutory or case law, 'not from general considerations of supposed public interests.'" 808 F.2d at 83. Accord Union Pac. R.R. Co. v. United Transp. Union, 3 F.3d 255 (144:2027) (8th Cir. 1993). Moreover, the Northwest court concluded that given the FAA's statutory oversight responsibility for air safety, "[i]t would be the height of judicial chutzpah for us to second-guess the present judgment of the FAA recertifying Morrison for flight duty." 808 F.2d at 83. See also St. Mary Home, Inc. v. Service Employees Int l Union, Dist. 1199, 116 F.3d 41 (155:2456) (2d Cir. 1997) (arbitration award reinstating employee following on-the-job arrest for possession of marijuana did not violate public policy); Kennecott Utah Copper Corp. v. Becker, 195 F.3d 1201 (162:2641) (10th Cir. 1999) (upholds reinstatement of trucker who tested positive for drugs after an accident; upholding determination that single positive drug test, without more, is not just cause for termination and does not contravene state public policy); TVA v. Tenn. Valley Trades and Labor Council, 184 F.3d 510 (161:2844) (6th Cir. 1999) (reinstatement of employee who tested positive for marijuana neither violates public policy nor exceeds arbitrator s authority); IBEW, Local 97 v. Niagara Mohawk Power Corp., 143 F.3d 704 (2d Cir. 1998) (conditional reinstatement of nuclear power plant employee fired for tampering with and then failing random drug tests does not violate public policy); UFCW, Local 588 v. Foster Poultry Farms, 74 F.3d 169 (151:2607) (9th Cir. 1995) (upholds award 3

4 overturning employer s unilaterally implemented drug testing policy, designed to comply with DOT regulations, and reinstating two terminated employees; DOT regulations do not require workers testing positive to be fired and therefore award did not violate public policy). 4 On the other hand, in Delta Air Lines, Inc. v. Air Line Pilots Ass'n, 861 F.2d 665 (130:2014) (11th Cir. 1988), the court, on facts virtually identical to those in Northwest Airlines, reached a contrary result, ruling that reinstatement of a pilot accused of improperly using alcohol would violate public policy because it would compromise safety. The difference between the two decisions rests upon the courts' different understandings of the public policy doctrine. The District of Columbia Circuit approach asks whether the arbitrator's award -- reinstating an errant employee -- would offend public policy, while the Eleventh Circuit asks whether the employee's conduct -- flying while drunk -- violates public policy. See also, e.g., Exxon Corp. v. Esso Workers Union, Inc., 118 F.3d 841 (155:2782) (1st Cir. 1997) (arbitrator s award requiring reinstatement of driver who tested positive for cocaine use violated public policy and would not be enforced). Cf. United Transp. Union v. Union Pac. R.R. Co., 116 F.3d 430 (155:2700) (9th Cir. 1997) (reversing district court decision vacating reinstatement order of Adjustment Board and remanding to Adjustment Board issue of whether employee actually had used illegal drugs). The Supreme Court has recently given more definitive guidance on the public policy question, ending this debate in favor of more narrow judicial review. See Eastern Associated Coal Corp. v. UMWA, District 17, 121 S. Ct. 462 (165:2865) (2000). The Court affirmed the lower courts refusal to set aside on 4 See also Air Line Pilots Ass n v. American Eagle, Inc., No. C MMC (N.D. Cal. 1997) (enforcing arbitration award reinstating pilot who tested positive for cocaine due to inadvertent consumption of tea containing coca leaves); BMWE v. Denver and Rio Grande Ry. Co., 963 F. Supp. 946 (D. Colo. 1997) (concluding that award reinstating employee discharged for failed drug test was not subject to public policy review, and that even if it was subject to such review, award did not violate well defined and dominant public policy); Allied Tube & Conduit Corp. v. Steelworkers Local 6939, 164 LRRM 2620 (N.D. Ill. 2000) (upholds reinstatement of employee who voluntarily entered rehabilitation program, was dropped from program, and thereafter twice tested positive for cocaine, on grounds that employer violated its own drug policy; correct analysis is not whether employee s conduct violated public policy but whether the award violates defined public policy). 4

5 public policy grounds the reinstatement award for a truck driver who had twice tested positive for marijuana use. The Court sides with the narrower approach to judicial review taken by the D.C. Circuit in Northwest Airlines, stating that the relevant inquiry was not whether the employee s drug use itself violated public policy, but rather whether the arbitrator s interpretation of the collective bargaining agreement which resulted in the reinstatement (which the court deemed akin to an agreement between the union and the employer pursuant to the just cause provisions of the contract), violated public policy. 121 S. Ct. at 467. The Court reiterated the views earlier stated in Misco that the authority to set aside awards on the grounds of public policy is narrow and can only be applied where the award violates explicit, well-defined and dominant public policies as expressed in governing laws and legal precedents. Id. In this regard, the Court advised that in light of the detailed regulatory drug-testing regime set forth by Congress in the Omnibus Transportation Employee Testing Act of 1991 and as implemented by the Department of Transportation s regulations, courts should approach with particular caution pleas to divine further public policy in that area. Id. at 467. The Court noted that the applicable regulations embodied a complex remedial scheme which included a policy of rehabilitation, did not mandate dismissal of the employee, and favored determination of disciplinary questions through arbitration when chosen as a result of labor management negotiation. Id. at 468. The Court further concluded that reinstatement did not violate public policy as expressed in the DOT regulations because, among other reasons, the award required completion of substance abuse treatment before returning to work, it imposed an unpaid suspension, and did not preclude the employer from reassigning the employee to a non-safety sensitive position until treatment was completed. Id. at Eastern Associated Coal makes clear that courts are not to lightly indulge employer efforts to set aside arbitration awards on the grounds of safety or similar public policy argument. Courts may not substitute the employer s or the judge s own view of appropriate safety policy for that spelled out in the statutes and regulations governing the railroad and airline industries. The appropriate inquiry is to examine the relevant governing rules, including applicable governmental safety regulations, for guidance in determining whether reinstatement would be so inconsistent with these rules as to be impermissible, and the appropriate conditions for such reinstatement. While employers can be expected to attempt to test the expanded scope of judicial 5

6 deference set forth in Eastern Associated Coal, this decision reaffirms that these challenges continue to face an uphill battle. 5 B. Due Process Exceptions Awards of adjustment boards are deemed final and binding under the RLA and, as noted, are subject to only the narrowest judicial review. See Union Pacific Railroad Co. v. Price, 360 U.S. 601 (44:2316) (1959); Gunther v. San Diego & Arizona E. Ry. Co., 382 U.S. 257 (60:2496) (1965). There are very few bases to challenge the procedural fairness of an award, among them those listed in Section 3 of the RLA, 45 U.S.C. 153, which permits challenges based only on fraud or corruption by the arbitration panel, failure of the board to comply with requirements of the statute, or failure by the board to confine itself to matters within its jurisdiction. Such statutory challenges very rarely succeed. On the rail side, the Supreme Court concluded in Union Pacific R. R. v. Sheehan, 439 U.S. 89, 94 (98:3327) (1978), that the statutory limitations on judicial review do not allow for additional due process challenges. The lack of specific statutory procedural requirements for the airline boards in Section 204, 45 U.S.C. 184, may allow for additional grounds for a procedural due process challenge to airline awards. 6 5 Occasionally, courts have been asked to overturn arbitration awards for reasons of public policy that are not specifically safety related. See American Postal Workers Union v. United States Postal Service, 789 F.2d 1, 8 (122:2094) (D.C. Cir. 1986) (even though arbitrator may have violated state law in considering dismissed employee s arrest record, award should not be overturned on public policy grounds). There is no reason to believe that the narrow standards for judicial review outlined in Eastern Associated Coal would not apply outside of the safety arena. 6 Section 3 provides for a number of detailed procedural requirements for arbitrations in the rail industry. These procedural requirements are not necessarily applicable in the airline industry. Covered airline employers and unions have taken advantage of the flexibility afforded by Section 204 to negotiate differing procedural provisions, such as procedures authorizing the Board or the parties to compel airline employees to appear as witnesses, to select from a previously negotiated panel the arbitrator to serve as a neutral, and to permit a five-person Board on the assumption that the four partisan members will deadlock. Some courts, however, have applied the Section 3 limitations on judicial review to airline arbitration boards. See Henry v. Delta 6

7 The hard-core elements of procedural due process, see generally Mathews v. Eldridge, 424 U.S. 319 (1976), are already codified in the provisions of the RLA establishing Adjustment Boards, so that a serious breach of due process is cognizable under the Act as a failure of the Board "to comply with the requirements of this Act." See United Steelworkers Local 1913 v. Union R.R. Co., 597 F.2d 40 (101:2283) (3rd Cir. 1979) (failure to notify grievant of time and place of Board hearing); Jones v. St. Louis-San Francisco Ry. Co., 728 F.2d 257 (115:2905) (6th Cir. 1984). Moreover, it is settled that the Administrative Procedure Act is not applicable to Adjustment Boards, Kotakis v. Elgin, Joliet & E. Ry. Co., 520 F.2d 570 (90:2966) (7th Cir. 1975), and that the Board is not required to comply with the common law rules of evidence, see Gunther, or the Federal Rules of Evidence. 7 Some courts have suggested that a non-statutory basis for judicial review of arbitration awards exists in cases where the grievant alleges that he has been denied the constitutional right to procedural due process. Shafii v. PLC British Airways, 22 F.3d 59 (146:2147) (2d Cir. 1994); English v. Burlington Airlines, 759 F.2d 870 (119:3154) (11th Cir. 1985) (applying Sheehan to exclude due process challenge). But see Edelman v. Western Airlines, Inc., 892 F.2d 839 (133:2212) (9th Cir. 1989) (holding that, despite Sheehan, due process grounds exist). 7 Courts are extremely hesitant to find a procedural due process violation, but will do so if convinced that fundamental fairness has been compromised. In Edwards v. Capital Airlines, 176 F.2d 755 (23:2464) (D.C. Cir. 1949), the court found that the real dispute before the Board was not between an employer and employee, but, rather between two groups of employees with conflicting interests. Because the union supported one group and actively opposed the other, the court decided that the award of a Board upon which two unionappointed members sat was not "immune from judicial examination." Compare Arnold v. United Air Lines, Inc., 296 F.2d 191 (49:2072) (7th Cir. 1961). Since procedural due process requires a non-biased judge, the grievances of employees whose views are opposed by the union occasionally create procedural problems. So far, the weight of authority defers to congressional intent, recognizes that the Board was expected to be bipartisan rather than disinterested, and requires a strong showing of actual bias and hostility sufficient to undermine the fairness of the adjudicatory process. Wells v. Southern Airways, Inc., 616 F.2d 107 (104:2338) (5th Cir. 1980); Stanton v. Delta Air Lines, Inc., 669 F.2d 833 (109:2739) (1st Cir. 1982). 7

8 N. R.R. Co., 18 F.3d 741 (145:2746) (9th Cir. 1994); Rosen v. Eastern Air Lines, Inc., 400 F.2d 462 (69:2065) (5th Cir. 1968); Wells v. Southern Airways, Inc., 517 F.2d 132 (89:3200) (5th Cir. 1975). Cf. Pacific & Arctic Ry. & Nav. Co. v. United Transp. Union, 952 F.2d 1144 (139:2256) (9th Cir. 1991) (overturning award procured by fraud); Jones v. St. Louis-San Francisco Ry. Co., 728 F.2d 257, (115:2905) (6th Cir. 1984) (setting aside award where system board members lacked opportunity to hear or review evidence). Whether based on statutory or constitutional grounds, such due process challenges rarely succeed, however. See Shafii, (due process rights not violated simply because arbitrator ignored facts favorable to grievant); Edwards v. UPS, 163 LRRM 2116 (W.D. Ky. 1999) (no due process violation merely because arbitration went on for sixteen months); Harrison v. Northwest Airlines, Inc., 163 LRRM 2062 (N.D. Ga. 1999) (recognizing that constitutional due process claims are cognizable under RLA, but rejecting claims of arbitrator bias); Robinson v. National R.R. Passenger Corp., 151 LRRM 2112 (S.D.N.Y. 1995) (alleged perjury by witnesses at company hearing; hearing officer s refusal to permit certain questions to witnesses; Board s reliance on defective hearing record insufficient to show fraud by Board); DeClara v. Metropolitan Transport. Authority, 748 F. Supp. 92 (92:2530) (S.D.N.Y. 1990), aff d mem., 930 F.2d 911 (2d Cir. 1991) (alleged fraud by employer s officials, but not by Board, insufficient basis to set aside award). But see Goff v. Dakota, Minn. & Eastern R.R., 163 LRRM 2439 (D.S.D. 2000) (due process violated when carrier failed to disclose that it allowed the same person to act as both the charging officer and hearing officer and allowed a biased hearing officer to create a record that was used as the basis for the Board s decision). 8

9 Atlas Air, Inc. v. ALPA PROTECTING EMPLOYEES ORGNIZATIONAL RIGHTS PRIOR TO A FIRST AGREEMENT Marcus C. Migliore, Sr. Attorney, Air Line Pilots Association, Int l INTRODUCTION Atlas Air, Inc. v. ALPA F. Supp.2d 155 (D.D.C. 1999), rev d, 232 F.3d 218 (D.C. Cir. 2000), petition for rehearing denied January 31, 2001, 8 presented the following issue: is a compensation and profit-sharing plan which excluded employees who subsequently become unionized, and which resulted in an immediate 26% pay cut the day after the union won the election, simply the lawful exercise of a carrier s pre-contractual status quo right to alter working conditions or forbidden retaliation for protected activity under RLA Section 2, Third and Fourth? The district court found that Atlas Air, Inc. ( Atlas ) enacted a lawful change in the status quo prior to an initial agreement permitted by Williams v. Jacksonville Terminal Co., 315 U.S. 386 (1942). The D.C. Circuit ruled, however, that this act was unlawful retaliation, in violation of Section 2, Third and Fourth: Atlas Air violated the RLA by dramatically cutting the take-home pay of its cockpit crewmembers for the sole reason that they exercised their statutory right to unionize. Such an action is not protected by the status quo provisions of the RLA. 232 F.3d at 227. This case sets important limitations upon the Williams rule, and will have important implications for protecting employee groups seeking union representation. BACKGROUND In 1994, Atlas created an Employee Profit Sharing Plan ( Plan ) which contained an eligibility clause excluding employees who were part of a bargaining unit certified for representation by the NMB. At the time this exclusion clause was adopted, there was no union on the property. In 1997, Atlas amended the Plan by adding a Crewmember Compensation Plan providing that henceforth crewmember wages would include a guaranteed 20% override for Captains and a 10% override for other crewmembers as an advance profit-sharing payment that did not depend upon corporate profit or loss. The exclusionary eligibility clause was applicable to this compensation program. 8 Both decisions are attached. 9

10 In 1999, during organizing and election campaigns, Atlas repeatedly reminded crewmembers that if they voted in a union they would immediately be excluded from the profit-sharing plan based on the exclusionary eligibility clause noted above and that they would also lose the guaranteed wage override. The very day ALPA was elected as the Atlas crewmembers collective bargaining representative, the Company implemented those pay cuts, resulting in a 26% reduction in crewmember compensation. Atlas continues to enforce this provision, and continues to deny unionized crewmembers profit-sharing pay. Atlas took the position that implementation of the exclusionary compensation clause was simply a lawful exercise of its right to alter working conditions prior to an initial collective bargaining agreement, relying upon Williams. Williams holds that the status quo obligations of Section 6 of the RLA, 45 U.S.C. 156, which otherwise bar unilateral changes to rates of pay, rules and working conditions prior to the exhaustion of the bargaining process, do not prohibit working condition changes before an initial collective bargaining agreement is in place. ALPA did not assert that adoption or implementation of the exclusionary clause in its compensation and profit-sharing plan was prohibited by the status quo provisions of the RLA. Rather, ALPA relied exclusively upon the RLA s organizational protections, taking the position that the adoption and implementation of the clause was per se unlawful under Section 2, Third and Fourth, 45 U.S.C. 152, Third and Fourth, because Atlas expressly discriminated and retaliated against employees for exercising their statutory right to join and remain a member of a union. Analogous unfair labor practice caselaw under the National Labor Relations Act ( NLRA ) holds that employer acts which are inherently destructive of organizational rights are per se unlawful under Section 8(a)(1) and (3) of the NLRA. See NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 34 (1967). 9 The 9 The inherently destructive test originated in Radio Officers Union v. NLRB, 347 U.S. 17, 45 (1954) (expressly discriminatory employer acts which encourage or discourage union membership, including disparate wage treatment solely based on union status or participation, are inherently unlawful, without regard to employer motive). This doctrine was reaffirmed in NLRB v. Erie Resistor Corp., 373 U.S. 221, (1963) (upholding conclusion that post-strike super-seniority system was facially unlawful because it discriminated against strikers for participating in protected union strike activity). It was then further reaffirmed and refined in NLRB v. Great Dane Trailers, Inc., 388 U.S. at 34 (upholding 10

11 NLRA cases have found that maintenance or enforcement of similar eligibility clauses removing existing benefits if employees subsequently unionize impose a forbidden automatic penalty against employees for exercising their right to join a union. See Kroger Co. v. NLRB, 401 F.2d 682, (6th Cir. 1968); Dura Corp. v. NLRB, 380 F.2d 970, (6th Cir. 1967); Melville Confections, Inc. v. NLRB, 327 F.2d 689, (7th Cir. 1964); E & L Plastics Corp., 305 N.L.R.B. 1119, (1992); A.M.F. Bowling Co., 303 N.L.R.B. 167, 170 (1991), enforced in relevant part, 977 F.2d 141, 145 (4th Cir. 1992); Niagara Wires, Inc., 240 N.L.R.B. 1326, (1979). None of these holdings turn on the NLRA s Katz good-faith bargaining rule prohibiting employers from making unilateral changes to employee working conditions before exhausting the bargaining process. See NLRB v. Katz, 369 U.S. 736, 743 (1962). In response to the Company s status quo defense, ALPA noted that no status quo change could be at issue because the exclusionary clause was the status quo -- it had been in place long before ALPA was certified. ALPA also argued that, in any event, Section 2, Third and Fourth s organizational protections remain independently enforceable without regard to the status quo rights of the parties. See, e.g., RLEA v. Boston & Maine Corp., 808 F.2d 150, (1st Cir. 1986); ALPA v. United Air Lines, Inc., 802 F.2d 886, 900 n. 11 (7th Cir. 1986). ALPA further argued that application of such a status quo defense to explicitly discriminatory employer conduct reads the RLA s organizational protections completely out of the statute, allowing carriers to subject newlyunionized employees to virtually limitless retaliation and discrimination. DISTRICT COURT DECISION After ALPA moved for a preliminary injunction and then summary judgment, Atlas responded with a motion to dismiss. The district court, sua sponte, granted summary judgment to Atlas, accepting Atlas status quo defense, concluding that under Williams, the carrier was free to remove the compensation and profit-sharing benefits from the crewmembers because the bargaining process had not yet begun. The court concluded that because Atlas conduct was permissible under the RLA s status quo provisions, it was lawful without regard to Section 2, Third and Fourth, and without regard to any claim of anti-union discrimination, coercion or retaliation. The district court further concluded that the only potential claim would have related to the carrier s precertification threats to remove existing employee pay and benefits, but that such a claim had been mooted by ALPA s election victory. The court further conclusion that employer s discriminatory refusal to pay accrued vacation benefits to strikers while paying them to non-strikers was facially unlawful). 11

12 suggested that the only postcertification claim that could be possible under Section 2, Third and Fourth prior to the commencement of collective bargaining would be a claim for retaliatory discipline or discharge. D.C. CIRCUIT DECISION The D.C. Circuit reversed, concluding that, while Williams permits employers to make changes in working conditions under Section 6 of the Act prior to an initial agreement, [t]he lack of an enumerated obligation to maintain the status quo pending the negotiation of a collective bargaining agreement does not absolve an employer from its obligation to refrain from activities which undermine employees rights. 232 F.3d at 223. The court looked to the NLRA cases cited above, which, on similar facts, concluded that maintenance or enforcement of similar exclusionary clauses is inherently destructive of organizational rights and per se unlawful, without any showing of anti-union animus. Id. at Noting that the organizational protections of the NLRA and the RLA mean pretty much the same thing, id. at 225, the court held that Atlas Air adopted a facially discriminatory policy that penalized employees by terminating their participation in profit sharing for no other reason than their decision to unionize. The court found that Atlas repeatedly threatened its employees with a substantial decrease in compensation that would have a real and material impact on the conditions of employment." It found that [i]t is difficult to view these actions as anything other than the sort of interference, influence or coercion of employees explicitly barred by the RLA. Id. The D.C. Circuit held that it need not decide whether there is a broad class of inherently destructive acts that are per se illegal under the RLA. Id. However, the court did observe that its earlier decision of Eastern Air Lines v. ALPA, 863 F.2d 891 (D.C. Cir. 1988), was relevant here, because that decision recognized that employer changes in working conditions which impose[d] a differential impact on union members or which discriminate solely on the basis of union membership can be viewed as inherently destructive under Section 2, Third and Fourth without regard to a showing of employer motivation. See 232 F.3d at 225, quoting Eastern, 863 F.2d at 902, 903; also citing NLRB v. Fleetwood Trailer Co., 389 U.S. 375 (1967); NLRB v. Erie Resistor Corp., 373 U.S. 221 (1963); C.H. Heist Corp. v. NLRB, 657 F.2d 178 (7th Cir. 1981). The court held: [E]ven without importing NLRA precedent with full force into the RLA context, we find instructive the concept that the very nature of actions against unionized labor by an employer can in and of itself provide evidence of the animus generating those acts. While we continue to recognize that the employer may alter status quo working conditions, so long as no collective bargaining agreement 12

13 exists between he parties, where the challenged modification to the status quo is far from merely formal, and is in fact a decrease in compensation having a real and material impact on the conditions of employment, and is justified on no other grounds than union certification, we may presume that the carrier s actions were motivated by anti-union animus and are in violation of RLA Section 2, Third and Fourth.... While carriers retain the right to make unilateral changes in status quo working conditions, so long as there is no collective bargaining agreement, they may not make such changes which selectively penalize unionized employees so as to interfere with, coerce, or influence their decision to exercise their rights under the RLA. 232 F.3d at IMPLICATIONS OF THE CASE The implications of this case are significant to issues of employee protected activity and the status quo rights of management prior to an initial agreement. The D.C. Circuit has reaffirmed that the Williams no status quo prior to first contract rule remains applicable under Section 6 where, as in this case, there has been no bargaining and the parties have not reached an initial agreement. 10 At the same time, Atlas makes clear that the Williams rule does not create a safe harbor in the precontractual period for unilateral employer actions that unfairly punish unionized employees or attempt to coerce them in the exercise of their organizational rights under the statute. In applying the organizational protections of Section 2, Third and Fourth, the Atlas court adopts, for practical purposes, the approach to inherently destructive activity first set forth in such NLRA cases as NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 34 (1967) and NLRB v. Erie Resistor Corp., 373 U.S. 221 (1963) that the very nature of actions against unionized labor can in and of 10 Significantly, Atlas does not address employee status quo rights pursuant to Section 2, First of the statute. Compare IAM v. TWA, 839 F.2d 809, (D.C. Cir. 1988) (leaving open the possibility that an employer can violate the goodfaith bargaining obligations of Section 2, First by making unilateral working condition changes after the bargaining process commences, but prior to first agreement); IAM v. Transportes Aereos Mercantiles Pan Americandos, S.A., 924 F.2d 1005, 1008 (11th Cir. 1991) (IAM v. TAMPA) (Section 2, First obligation to make and maintain agreements standing alone, precludes unilateral changes once the bargaining process has begun). 13

14 itself provide evidence of the animus generating those acts. 232 F.3d at 226. Atlas can therefore be interpreted as standing for the proposition that any significant, discriminatory act undertaken in response to unionization violates the RLA, even if undertaken prior to the completion of an initial agreement. Because Atlas broadly reconfirms that the parallel employee organizational protections of the NLRA and the RLA should be similarly construed, this case may facilitate reliance in Section 2, Third and Fourth cases upon the highly developed, analogous caselaw arising under Section 8 of the NLRA. Both the courts and the NLRB have consistently recognized that employers may not enact or apply discriminatory, exclusionary provisions that penalize employees for unionizing or engaging in other protected activity. Atlas is also significant in that the court makes clear that employers are not entitled under Section 2, Third and Fourth to a Wright Line mixed-motive analysis, 11 where, as here, express anti-union discrimination is demonstrated. The logic of the decision is not limited to prohibiting retaliatory pay cuts, but would also bar carriers from making any discriminatory modification to the status quo [which] is far from merely formal, and which has a real and material impact on the conditions of employment of employees who are choosing to unionize. 232 F.3d at 226. It would be equally unlawful, for example, for carriers to threaten to eliminate, eliminate, or alter demonstrably any significant employee working conditions, such as seniority rights, a work scheduling system or similar conditions, should employees unionize. Atlas follows analogous NLRA authorities which hold that it is a violation of organizational (not status quo) rights to discriminatorily eliminate preexisting pay or benefits of unionized employees prior to the time that the parties conclude the bargaining process and the employees become subject to a collective bargaining agreement that does not provide for such conditions or benefits. 12 Atlas should 11 Such analysis allows employers to defend against charges of anti-union conduct if they can demonstrate that they would have taken the challenged action for valid, union-neutral business reasons. See Eastern, 863 F.2d at ; NLRB v. Transportation Management Corp., 462 U.S. 393, 395 (1983) and Wright Line, 251 NLRB 1083 (1980), enf. granted, NLRB v. Wright Line, 662 F.2d 899 (1st Cir. 1981). 12 After employees are organized, an employer need not provide new benefits or conditions that are subsequently put in place for unrepresented employees. See Dallas Morning News, 285 N.L.R.B 807, 808 (1987) (finding it permissible to exclude already-represented employees from newly enacted benefits provided to unrepresented employees because there is no question of... benefits being taken away from unit employees because they are represented ); Lynn-Edwards Corp., 290 N.L.R.B. 202, 204 (1988) (provision excluding represented employees covered by a collective bargaining agreement if benefit coverage was the subject of good faith bargaining was lawful because it does not automatically 14

15 restrain carriers from being tempted to rely upon Williams to attempt to threaten unorganized employees with severe, retaliatory changes in working conditions. What was not addressed in the Atlas decision, of course, is the application of the Williams rule in other circumstances. The Atlas case starkly presents the inherent dangers of the Williams rule to employee rights under the RLA. While management may no longer be tempted to use Williams as a cover for the kind of severe employee retaliation, coercion and discrimination involved in Atlas, the continued existence of the Williams rule 13 may tempt carriers to push the outer limits of the standard set forth in Atlas to engage in slightly less severe forms of discriminatory conduct in efforts to pressure employees. Those management efforts will someday be challenged. The Supreme Court, in Detroit and Toledo Shore Line R.R. v. UTU, 396 U.S. 142 (1969) (Shore Line), took pains to narrow the holding of Williams, indicating that the precontractual status quo limitations under Section 6 were limited to the facts presented in that case -- situations where there has been absolutely no prior history of any collective bargaining or agreement between the parties on any matter. See IAM v. TWA 839 F.2d at 814 (quoting Shore Line, 396 U.S. at 148). And, as the D.C. Circuit also noted in IAM v. TWA, 839 F.2d at 814, the holding of Williams suffered a further erosion in Chicago & Northwestern Ry. v. UTU, 402 U.S. 570, 577 (1971) (Chicago & Northwestern Ry.), where the Court noted that, aside from Section 6, Section 2, First s independent duty to make and maintain agreements was enforceable and prevented parties from engaging in acts which harmed the integrity of the bargaining process. See also IAM v. TAMPA, 924 F.2d at 1008 (applying Section 2, First to preclude precontractual unilateral changes). Williams was also decided long before the Supreme Court decided in Katz that the analogous good-faith bargaining provisions of the NLRA prohibited terminate the employees benefits upon the selection of the Union as its [sic] exclusive representative and allowed continuation of benefits until the parties could later resolve eligibility issue in agreement); Sarah Neuman Nursing Home, 270 N.L.R.B. 663, (1984) (similar provision lawful because the plan contemplates the continued existence of such benefits during the pendency of collective bargaining, while allowing the parties, pursuant to negotiations, to substitute different retirement benefits or to continue the existing profit-sharing plan, thus, the selection of a union would not automatically terminate the employees profit-sharing benefits ). 13 See IAM v. TWA, 839 F.2d 809 (D.C. Cir. 1988); RAPA v. Wings West, Inc., 915 F.2d 1399 (9th Cir. 1990); AMFA v. Atlantic Coast Airlines, Inc., 55 F.3d 90 (2d Cir. 1995). But see IAM v. TAMPA, 924 F.2d 1005 (11th Cir. 1991). 15

16 unilateral working condition changes in similar circumstances. See 369 U.S. at 743. As the Eleventh Circuit has recognized in IAM v. TAMPA (analogizing to Katz), the parallel obligations of Section 2, First may prohibit such changes, without regard to Section 6 s focus on existing agreements. 924 F.2d at Taken together, Katz, Shore Line and Chicago & Northwestern Ry call into serious question the continued viability of Williams, as the D.C. Circuit recognized in IAM v. TWA. Atlas may prove important to a subsequent challenge to Williams. Atlas makes clear that analogies to the NLRA jurisprudence (such as Katz) may be appropriate. The case also confirms that the other protections of employee rights in the statute remain enforceable, without regard to Section 6 rights. It thus may bolster union efforts to urge the Supreme Court to reconsider Williams in light of Katz and the Section 2, First authorities noted above. 16