Court: District Court, W.D. Pennsylvania; June 12, 2014; Federal District Court
A motion to dismiss filed by U.S. Airways, Inc. under Federal Rule of Civil Procedure 12(b)(6) has been granted by the Court. The Plaintiff, U.S. Airline Pilots Association (USAPA), sought to vacate an arbitration award related to the Railway Labor Act, claiming the arbitrator disregarded clear language in their agreements and failed to adhere to procedural requirements of the RLA. U.S. Airways argued that these allegations did not constitute a valid claim for relief.
The relevant facts include a Collective Bargaining Agreement (CBA) between U.S. Airways and the Air Line Pilots Association, International (ALPA) effective January 1, 1998, which governed pilot pay rates. In response to financial challenges in 2002, U.S. Airways and ALPA negotiated a Restructuring Agreement effective July 1, 2002, which reduced pilot pay rates to those from April 30, 2001, cancelled a scheduled parity review, and eliminated a planned lump sum increase. In exchange, U.S. Airways committed to annual compounded pay increases starting May 1, 2003, culminating in a 3% increase after the CBA's amendable date of December 31, 2008.
Subsequently, U.S. Airways filed for Chapter 11 bankruptcy on August 11, 2002, and allegedly pressured pilots for additional concessions through a Letter of Agreement titled “Supplementary Cost Reductions” (LOA 84), which further reduced pilot pay rates starting January 1, 2003, by adjusting the hourly pay rates below those established in the Restructuring Agreement.
Hourly pay rates for pilots are subject to adjustments based on a Restructuring Agreement, with separate rates effective from January 1 to April 30 and from May 1 to December 31 each year. Under Letter of Agreement (LOA) 84, U.S. Airways was obligated to increase pilot pay rates by 2.0% for 2007 and 2008. For 2009 and later, pay adjustments would follow the Restructuring Agreement, which the plaintiff argues included a scheduled 3% increase effective May 1 after the Collective Bargaining Agreement (CBA) amendable date. LOA 84 reinforced that all terms of the CBA remained intact unless explicitly modified.
Following a second Chapter 11 bankruptcy filing in 2004, U.S. Airways negotiated further concessions from pilots, leading to the signing of LOA 93 on October 21, 2004. This agreement extended the CBA's amendable date to December 31, 2009, and mandated several pay rate changes, including a freeze on current rates from May 1, 2004, through December 31, 2009, an 18% reduction in those frozen rates, and alterations to international pay overrides. The plaintiff contends that LOA 93 did not revoke the scheduled 3% increase and that all terms of the CBA, as amended, remained in effect unless specifically altered by LOA 93. The language of LOA 93 emphasizes that only expressly modified terms would change, maintaining the scheduled raise as part of the “other terms” of the CBA.
U.S. Airways, on February 27, 2009, informed USAPA that pay rates effective December 31, 2009, would continue from January 1, 2010. In response, USAPA filed Grievance No. BPR 09-06-02 on June 16, 2009, asserting that the Collective Bargaining Agreement (CBA) required Pilots' pay rates to revert to what they would have been on January 1, 2010, instead of the reduced rates then in effect. This matter, known as the Restoration Issue, was submitted to a System Board of Adjustment (SBA) on September 9, 2009.
The SBA's focus was on whether U.S. Airways misinterpreted CBA provisions regarding pay rates after December 31, 2009. USAPA did not include the 3% pay increase scheduled for May 1, 2010, in this submission, as it was not certain if U.S. Airways would honor it. The SBA consisted of five members: two from USAPA, two from U.S. Airways, and a neutral arbitrator, Richard Kasher. An arbitration hearing took place from February 1 to February 4, 2010, where the issue was stipulated as whether the January 1, 2010 pay rates violated LOA 93 and what remedy should be applied if they did.
After the record closed on April 21, 2010, the pilots anticipated a 3% pay increase on May 1, 2010, as per the amended CBA, but U.S. Airways refused to implement this increase. On June 1, 2010, about 20 pilots filed grievances regarding this refusal. While these grievances were in progress, USAPA and U.S. Airways submitted post-hearing briefs on the Restoration Issue on June 11, 2010. On October 8, 2010, three pilots pursued their grievances regarding the 3% increase through the CBA grievance procedure.
Following a hearing on March 29, 2011, Capt. Ed Schmidt denied these grievances on April 11, 2011, asserting they were already included in the ongoing Restoration Issue. USAPA Board Member Ciabattoni filed an individual grievance regarding the 3% issue, indicating it was not considered part of the original Grievance arbitrated in February 2010. The appeals regarding the 3% Issue were held in abeyance pending the resolution of the Restoration Issue. Despite the arbitration hearing concluding in February 2010, the Restoration Issue remained unresolved for over eighteen months without direction from Arbitrator Kasher.
On August 11, 2011, Arbitrator Kasher provided a draft statement of background facts to the SBA. By November 9, 2011, he circulated a draft opinion on the Restoration Issue, indicating a denial of the Grievance, but did not address the 3% Issue. On March 6, 2012, during an SBA executive session, USAPA Board Members sought clarification on whether the 3% Issue was within Arbitrator Kasher's consideration. He acknowledged it was not part of the Restoration Issue submitted 25 months prior and was unaware that it was before him. Despite USAPA's request to reopen the record and hold hearings on the 3% Issue, Kasher ordered the parties to submit briefs based on the existing record, which was dated February 1-4, 2010, predating a key allegation against U.S. Airways regarding the 3% raise. The parties complied, submitting briefs by April 9, 2012.
On October 9, 2012, Kasher issued a second draft opinion on the Restoration Issue and a subsequent draft on the 8% Issue the following day, denying the 3% increase to Pilot pay rates last raised in 2002. USAPA Board Members requested an executive session to discuss this draft opinion and Kasher's refusal to hold hearings. During a January 3, 2013 executive session, Kasher admitted to "memory issues" due to health concerns but again denied the request for additional hearings. On January 9, 2013, he issued a final award denying the Grievance regarding the Restoration Issue.
Subsequently, USAPA exchanged letters with Kasher about the 3% Issue over the next five months, requesting him to relinquish jurisdiction or conduct hearings. On May 19, 2013, Kasher requested duplicate documents related to the 3% Issue from USAPA. Ultimately, on August 14, 2013, nearly three and a half years after the arbitration concluded, he issued a final Opinion and Award denying USAPA relief on the 8% Issue, stating that the Restructuring Agreement did not reference post-amendable date pay increases.
Plaintiff contends that Arbitrator Kasher failed to reference the language in LOA 93, which preserved all terms of the amended Collective Bargaining Agreement (CBA) not altered by LOA 93, including a scheduled 3% pay raise. The Award does not clarify how a pay freeze until December 31, 2009, negates the CBA's existing 3% raise effective May 1, 2010. Plaintiff asserts that Kasher overlooked this critical language and denied its existence.
The procedural history indicates that Plaintiff initiated this action on January 2, 2014, invoking federal question jurisdiction under the Railway Labor Act (RLA). Count I challenges the Award's validity on grounds of the arbitrator ignoring clear LOA 93 language. Count II claims the arbitrator violated the RLA by disallowing testimony related to the 3% raise and preventing USAPA from presenting its case in person. Following the filing of the complaint, Defendant submitted a motion to dismiss on March 11, 2014, with subsequent briefs exchanged.
The standard of review for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires a complaint to present factual allegations that plausibly support a claim for relief. Courts must identify the necessary elements of a claim, disregard unsupported legal conclusions, and evaluate well-pleaded facts for their sufficiency. Documents integral to the complaint may be considered without converting the motion to one for summary judgment. Plaintiff argues that Defendant’s motion improperly incorporates materials beyond the complaint, including arbitration transcripts, while Defendant maintains that these documents, referenced in the complaint, are appropriate for consideration.
The Collective Bargaining Agreement (CBA), the arbitration award, and related documents are deemed appropriate for consideration in the motion to dismiss, with the arbitration transcript being an authentic document referenced in the Complaint. However, the Defendant's assertion that the Complaint relies on briefs and correspondence sent to Arbitrator Kasher is rejected, as no precedent supports this in the context of a motion to dismiss.
The Defendant contends that Count I should be dismissed on the grounds that the arbitration award indicates Arbitrator Kasher thoroughly considered the relevant documents and that the Plaintiff merely disagrees with the outcome. Additionally, the Defendant notes that the arbitration process included a four-day hearing with the Plaintiff represented by counsel, and that there were no procedural irregularities.
In response, the Plaintiff argues that the award does not address the key terms of the agreements and contends that the Court must evaluate the arbitration record to confirm a “full and fair hearing,” which they assert did not occur. They highlight that the arbitrator issued the award 42 months after the last hearing and did not allow further testimony on the matter.
In a reply, the Defendant asserts that the Plaintiff has misrepresented the award by omitting language that shows the Arbitrator considered and dismissed USAPA's arguments regarding the Restructuring Agreement. They also argue that the Plaintiff's claims about the inability to present evidence are unfounded, as USAPA was aware of the 3% Issue pending before the SBA and did not provide specifics on evidence they wished to present. The Defendant further contends that any uncertainty from the Arbitrator about the 3% Issue is irrelevant due to the parties' agreement on the SBA’s jurisdiction. Lastly, the Defendant argues that no time requirement exists for rendering a decision under the CBA or the Railway Labor Act (RLA).
In its sur-reply, the Plaintiff maintains that the award does not address the relevant language of the agreements and emphasizes the importance of USAPA Board Members' beliefs regarding potential witnesses. They argue that the Defendant's reliance on selective excerpts from a large record is inappropriate in a motion to dismiss context. The Plaintiff also points to a case involving a 14-month delay, asserting that it supports their position regarding the significance of the 42-month delay in this case.
The court has jurisdiction to affirm, set aside, or remand orders from the division under the Railway Labor Act (RLA), with findings deemed conclusive unless the division fails to comply with RLA requirements, exceeds its jurisdiction, or acts with fraud or corruption. The Supreme Court describes this scope of review as very limited. In this case, the Plaintiff claims that the SBA (System Board of Adjustment) did not adhere to its jurisdiction and failed to meet RLA requirements, while the Defendant disputes these assertions.
The Plaintiff argues that the Award contradicts the Collective Bargaining Agreement (CBA) and cites four relevant case precedents demonstrating instances where arbitration awards were vacated due to failure to adhere to CBA language or exceeding jurisdiction. For example, in American Eagle Airlines, the arbitration board was found to have misinterpreted the CBA by equating failure to schedule a hearing with denying a grievance. In Consolidated Rail Corp., an arbitrator's decision was overturned for substituting his judgment for the CBA terms. Brotherhood of Locomotive Engineers involved the arbitrator addressing an unpresented issue, leading to a vacated award. Lastly, in United Transportation Union, the board's reliance on irrelevant past incidents without a factual basis resulted in exceeding its authority. The Defendant contends these cases do not apply, asserting that Arbitrator Kasher did not ignore CBA language and that the cited cases involved different issues than those presented in this case.
Defendant asserts that USAPA claimed U.S. Airways violated the Restructuring Agreement and Letter of Agreement 93 by not providing a 3% pay raise to pilots on May 1, 2010. However, Arbitrator Kasher determined that the key language in LOA 93, which does not mention the 3% raise, did not support USAPA's position. He indicated that LOA 93 allowed USAPA to propose terms that could ensure the 3% raise would survive any freeze, but USAPA failed to do so. The court's role is not to evaluate the correctness of Arbitrator Kasher’s decision but to assess if it was rationally inferable from the agreements. As long as the arbitrator was arguably interpreting the contracts within his authority, a perceived error does not warrant overturning his decision. Consequently, Count I's motion to dismiss will be granted.
Regarding compliance with the Railway Labor Act (RLA), disputes between employees and carriers must be addressed through established procedures, escalating to the chief operating officer and potentially to the Adjustment Board. Any failure by the System Board of Adjustment (SBA) to adhere to RLA requirements can invalidate an award. The Collective Bargaining Agreement (CBA) allows for evidence presentation in various forms. Plaintiff contends that Arbitrator Kasher breached these protocols by denying live testimony on the 3% issue and requesting lengthy briefs after the record closed. Additionally, Plaintiff argues that the delay in issuing the award warrants vacating it. Defendant counters that Arbitrator Kasher complied with RLA requirements and that the cited case regarding late awards is not applicable.
During the arbitration hearing from February 1 to 4, 2010, where USAPA was represented by counsel, testimony and documentary evidence concerning the 3% Issue were presented in relation to the Restoration Issue. Following the hearing, the parties submitted post-hearing briefs as directed by Arbitrator Kasher. Plaintiff contends that Defendant selectively referenced only 21 pages from a 728-page transcript and argues that it was compelled to submit briefs. The federal court's review of board decisions under the RLA typically focuses on procedural compliance, specifically ensuring due notice and hearing opportunities, not on the necessity of additional hearings if prior proceedings are deemed sufficient by the SBA.
Plaintiff cites Hart v. Overseas National Airways, Inc. to argue for scrutiny of the arbitration award for a "full and fair hearing," but Defendant counters that this due process analysis has been rejected in RLA reviews, making Plaintiff's reliance on it inappropriate. The Court's potential scrutiny of the arbitration award would overstep the limited review scope for RLA cases.
Plaintiff emphasizes that neither USAPA nor Arbitrator Kasher recognized the 3% Issue as part of the arbitration in February 2010. However, the record shows that evidence regarding the 3% Issue was presented, and despite initial uncertainty, Arbitrator Kasher later concluded that the issue fell within the SBA's jurisdiction and ordered supplemental briefs. USAPA disagreed with this ruling, asserting a need for a supplementary hearing due to the complexities involved and the time elapsed since the initial hearing. Ultimately, Arbitrator Kasher decided that he could resolve the matter based on the 2010 hearing and the subsequent briefs, rejecting USAPA’s request for an additional hearing.
Plaintiff's only potential claim is that Arbitrator Kasher's actions denied it a fair opportunity to present the 3% Issue; however, the Court of Appeals has previously rejected such due process claims in Railway Labor Act (RLA) cases. The Court's focus is on whether procedural requirements of the RLA were violated, not on the quality of Arbitrator Kasher's handling of the matter or the necessity of a supplemental hearing in 2013. Plaintiff argues that the Award, issued 42 months post-hearing, is untimely, citing Jones v. St. Louis-San Francisco Railway Co. which invalidated an award rendered 14 months after the hearing, ruling it unreasonable. However, in this case, the Collective Bargaining Agreement (CBA) lacks a specific time limit, distinguishing it from Jones. The court also notes that no precedent from the Third Circuit under the RLA recognizes a “reasonable time thereafter” principle or the specific 60-day timeline mentioned in Jones. Additionally, Plaintiff has not demonstrated that it complained about the delay before the Award was issued or that it suffered prejudice due to the delay, which weakens its position. The motion to dismiss Count II will be granted, with the Court stating that allowing an amendment would be futile as the attached documents indicate that Plaintiff cannot effectively challenge the Award. Consequently, the Complaint will be dismissed with prejudice, and the defendant's motion to dismiss will be granted.
On June 12, 2014, the court granted Defendant's motion to dismiss (ECF No. 11) and dismissed the Complaint with prejudice (ECF No. 1). The excerpt outlines a grievance process involving USAPA, which replaced ALPA as the collective bargaining representative for the Pilots on April 18, 2008. Captain Lyle Hogg, Vice-President of Flight Operations, conducted an initial grievance hearing on July 24, 2009, ultimately denying the grievance on August 20, 2009, and maintaining existing pay rates as of December 31, 2009, effective January 1, 2010. Under the Collective Bargaining Agreement (CBA), the dispute was submitted to the System Board of Adjustment (SBA) for resolution. Dissent from USAPA Board Members was noted, and the Plaintiff's claims were argued to be acceptable as alternative pleadings despite the Defendant's assertion of inconsistency. The Supreme Court's previous ruling was referenced regarding circuit precedent on grievance interpretations. A dissenting opinion from Judge Dennis indicated that the board's interpretation of the CBA should not have been disturbed by the court. The Plaintiff criticized the arbitration process for fairness issues, specifically regarding delays in decision-making and the non-compliance of the arbitration board with the Railway Labor Act's requirements due to the participation of a member who had not heard the evidence. The Plaintiff's calculation of a 42-month delay was contested, suggesting the measure should start from the completion of final briefs rather than the hearing date.
