Virgin Atlantic Airways, Ltd. v. National Mediation Board

Citations: 956 F.2d 1245; 139 L.R.R.M. (BNA) 2541Docket: Nos. 687, 688, Dockets 91-6211, 91-6223, 91-6225 and 91-6253

Court: Court of Appeals for the Second Circuit; February 19, 1992; Federal Appellate Court

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The appeals and cross-appeals pertain to the validity of a review by the U.S. District Court for the Eastern District of New York regarding the certification of an employee representative under the Railway Labor Act (RLA). The National Mediation Board (NMB), authorized under section 2, Ninth of the RLA, investigates disputes over employee bargaining representatives. Once certified, a carrier must negotiate with that representative. The district court incorrectly asserted jurisdiction over the union certification and ruled the certification invalid, while also dismissing several counterclaims from the union against the carrier. However, the court appropriately dismissed the union's counterclaim regarding the RLA's status quo provisions due to the absence of a prior bargaining relationship. The district court did not abuse discretion when it found the NMB violated Federal Rule of Civil Procedure 11 by filing a repetitive motion.

On February 17, 1988, the International Brotherhood of Teamsters, Local 851, sought NMB intervention regarding a dispute among Virgin Atlantic Airways employees, amid ongoing discussions of unionization. Concurrently, the Union and several discharged Virgin employees initiated a federal lawsuit alleging unlawful interference with employee rights to select a bargaining representative, including claims of wrongful termination against vocal union supporters. The NMB investigated the representation dispute, and in March 1988, a conference was held with Virgin and the Union. Virgin requested the exclusion of four plaintiffs from voting eligibility in the upcoming election due to their legal status from the Hodges action, despite NMB rules allowing such employees to vote. The NMB authorized the election, scheduled for April 25, 1988, including the plaintiffs, and informed the parties of their right to appeal the decision, which Virgin failed to do within the designated timeframe.

On April 19, 1988, Virgin requested the NMB to postpone the vote count in the Hodges case, scheduled for the same day as an election, to allow its attorneys to attend. Virgin also asked for the sequestering of challenged ballots pending the district court's expected ruling on reinstatement claims. The NMB postponed the ballot count due to eligibility questions but later reversed its decision, stating that the count would proceed on April 27, including all ballots from eligible voters as of April 25. On that date, the district court ruled that four employees were not entitled to reinstatement, leading Virgin to request that their votes be excluded. The NMB denied this request, and the Union secured a majority of votes, including the challenged ones. On May 2, 1988, the NMB certified the Union as the bargaining representative. Despite the certification, Virgin refused to negotiate and solicited employees to sign a statement against union representation, prompting the Union to strike on July 6, 1988. Virgin did not engage in mediation on August 8, 1988, leading to secondary picketing against United Air Lines. Subsequently, Virgin and six employees filed suit against the NMB, the Union, and others in the Eastern District of New York, alleging violations of the RLA, First and Fifth Amendments, and the Administrative Procedure Act, while seeking to enjoin Union picketing. The Union counterclaimed for enforcement of the NMB certification and alleged that Virgin had interfered with employees' rights regarding their bargaining representative.

The NMB moved to dismiss a complaint, asserting its certification of a bargaining representative was not subject to judicial review unless it had grossly violated the RLA, which it claimed did not occur. The district court denied this motion on February 24, 1989, acknowledging the limited review available but allowing jurisdiction due to the NMB counting votes from individuals not classified as 'employees' under the RLA. Both parties agreed to stay the litigation pending an interlocutory appeal, which was later denied by the appellate court on March 15, 1990. Subsequently, on June 6, 1990, the NMB filed a motion to dismiss or for summary judgment, relying on its previous arguments. The district court denied this motion, citing a local rule on reargument timing and the law of the case doctrine, and imposed Rule 11 sanctions on the NMB for the repetitive motion. Virgin then moved for summary judgment, which the district court granted in June 1991, ruling that the NMB had grossly violated the RLA by improperly counting votes and thus invalidating the Union's certification. The court dismissed the Union's counterclaims and granted summary judgment to the NMB regarding Virgin's claims under the First and Fifth Amendments and the Administrative Procedure Act. All parties involved—Virgin, the Union, and the NMB—appealed various district court determinations. The district court's ruling on certification was based on Fed. R. Civ. P. 56(c), with no material fact disputes, but disagreement on which party was entitled to judgment as a matter of law. The RLA mandates NMB investigation and certification in employee disputes over representation, but federal court review of such certifications is extremely limited, only allowing intervention in cases of constitutional issues or gross statutory violations.

Virgin argues that the National Mediation Board's (NMB) actions should undergo stricter judicial scrutiny under the Administrative Procedure Act (APA), which the district court rejected. The APA's judicial review does not apply when agency actions are committed to agency discretion by law. Representation disputes under the Railway Labor Act (RLA) fall under the exclusive jurisdiction of the NMB, as established in previous case law. Consequently, certification review is not available under the APA unless the NMB grossly violates the RLA or constitutional principles. 

The district court asserted jurisdiction, finding that the NMB had grossly violated the RLA by including individuals not classified as 'employees' in the representation election. The RLA specifies the NMB's duty to investigate disputes among a carrier's employees regarding their representatives and permits, but does not mandate, a secret ballot. ‘Employee’ is defined under the RLA as individuals in the service of a carrier subject to its authority. Virgin contends that the NMB could not include certain voters because a federal court denied their reinstatement. However, the NMB is responsible for determining voter eligibility in RLA elections, as stated in the statute, which grants the NMB the authority to decide who may participate in elections and to establish the relevant rules.

The NMB's regulation, 29 C.F.R. 1206.6, permits discharged employees with pending reinstatement requests due to wrongful dismissal to vote in representation elections, excluding those whose guilt has been established seeking leniency. Virgin contends that the votes of four discharged employees should not have been counted as their reinstatement claims were not pending at the time of vote counting. However, the NMB follows a practice to preserve the status quo if vote counting is delayed, which was applied here by counting votes from April 25, when the reinstatement claims were still pending. This practice is consistent with the NMB’s mandate to protect employee representation from carrier influence, as established in 45 U.S.C. 152, and past cases. The NMB is not required to postpone elections due to wrongful discharge disputes and can reverse decisions about staying elections. Virgin's claim that the NMB violated due process by not adhering to its internal procedures is unsupported, as such procedures do not confer public due process rights. Additionally, since the NMB did not violate its regulations regarding the counting of votes, it did not infringe upon Virgin's due process rights. The district court's decision to set aside the NMB's certification was therefore erroneous.

Several Virgin employees contest the National Mediation Board's (NMB) certification of the Union as their representative, asserting that it infringes on their First Amendment right of free association. They argue that this right includes the ability to reject representation by a group elected by less than a majority. However, legal precedents indicate that the First Amendment does not impose a requirement of 'majority rule' in labor relations. The court cites cases such as *Railway Employes’ Department v. Hanson* and *International Ass’n of Machinists v. Trans World Airlines*, establishing that employees do not have a valid First Amendment claim in such contexts. The district court concluded that the NMB's certification did not violate any constitutional rights, affirming that the certification should be maintained.

Additionally, the Union appeals the district court's summary judgment favoring Virgin regarding the Union's counterclaims. The Union sought declaratory and injunctive relief, asserting that the NMB certification was valid and that Virgin's unilateral changes and refusal to recognize the Union breached the Railway Labor Act (RLA). The district court dismissed these claims based on its prior ruling invalidating the Union's certification. However, the appellate discussion clarifies that the Union is entitled to a declaration affirming the certification's validity and that Virgin's failure to bargain constitutes a breach of the RLA. The Union also alleges that Virgin violated sections 2, Third and Fourth of the RLA by interfering with employees' choice of representatives, claiming that Virgin discharged employees engaged in a strike to enforce the certification and solicited repudiation of the Union. If proven, these actions would demonstrate unlawful interference with employees’ rights under the RLA.

An increase in benefits aimed at discouraging union support is considered unlawful under the National Labor Relations Act (NLRA). Coercion can be inferred from supervisor involvement in anti-union petition efforts. The counterclaim in this case alleges violations of 45 U.S.C. § 152, specifically sections Third and Fourth, which the district court improperly dismissed. Additionally, the Union claims that Virgin violated sections 2, First and Seventh of the Railway Labor Act (RLA) by unilaterally changing pay rates. Section 2, First requires carriers to make every reasonable effort to reach agreements on working conditions, while section 2, Seventh prohibits changes to rates of pay or working conditions except as prescribed in existing agreements or section 156, which mandates thirty days’ written notice of intended changes. The Supreme Court has interpreted this to mean that section 2, Seventh applies only to agreements established after collective bargaining. In a relevant case, changes made before a collective bargaining agreement was in place were deemed permissible. Although some courts have suggested that informal agreements may invoke RLA protections, in this instance, there was no prior bargaining between the Union and Virgin, thus section 2, Seventh does not apply.

Unilateral changes in pay rates by an employer are permissible under the Railway Labor Act (RLA) when no bargaining efforts have occurred, as established in Regional Airline Pilots v. Wings West Airlines. The district court correctly dismissed a counterclaim on these grounds. The National Mediation Board (NMB) filed a motion to dismiss Virgin's action to challenge Union certification in February 1989, asserting the district court lacked jurisdiction, but the court denied this motion, recognizing its limited review scope. Sixteen months later, the NMB submitted a 'Resubmitted Motion to Dismiss' based on new case law, claiming it was justified under Fed. R. Civ. P. 54(b), which allows for revisions of court orders before final judgment. The district court denied this motion, labeling it as an attempt to reargue the previous motion, which was prohibited by local rules requiring such motions to be filed within ten days. It also found no significant new legal arguments and rejected the NMB's rationale for filing, concluding that the NMB's objections to a summary judgment for Virgin were insincere and thereby violated Fed. R. Civ. P. 11. Consequently, the court ordered the NMB to pay Virgin's reasonable costs for opposing the motion, affirming that the filing was neither legally justified nor made in good faith.

The NMB argues that the district court incorrectly determined it violated Rule 11 by submitting a second motion to dismiss. Appellate review of Rule 11 sanctions follows an abuse-of-discretion standard, which applies if the district court's ruling is based on an incorrect legal interpretation or a clearly erroneous factual assessment. The NMB maintains that its motion was legally justified; however, the district court sanctioned it not for the motion's substance but because its timing violated Local Rule 3(j) and the law of the case doctrine. The court asserted that the NMB's motion lacked justification under existing law or a good faith argument for changing the law. While the appellate court found the district court erred in denying the NMB’s initial motion to dismiss, it upheld the denial of the resubmitted motion due to the law of the case doctrine. The district court properly deemed the resubmitted motion as a motion for reargument, which was untimely under Local Rule 3(j). The law of the case doctrine is discretionary and allows reconsideration within a court's authority, but it should not be ignored without valid reasons. The district court found no grounds for reconsideration, such as new evidence or errors that would prevent manifest injustice. The NMB’s cited cases did not pertain to the specific facts of the case, and thus, the district court's imposition of Rule 11 sanctions was not an abuse of discretion.

The procedures employed by the National Mediation Board (NMB) to identify the bargaining representative for the disputed group of Virgin employees did not significantly breach the Railway Labor Act (RLA) or raise constitutional issues, thus precluding the district court from reviewing the Union's certification. The district court incorrectly dismissed some of the Union's counterclaims. However, due to the absence of prior collective bargaining, the court appropriately determined that Virgin's unilateral changes to employment terms did not contravene 45 U.S.C. 152, Seventh. The imposition of sanctions on the NMB related to its resubmitted motion was justified and not an abuse of discretion, leading to the affirmation of these sanctions. The court reverses the district court's invalidation of the NMB's certification of the Union as the employees' representative and reverses the dismissal of the Union's counterclaims, except for the one under 45 U.S.C. 152, Seventh. The judgment is vacated, and the case is remanded for further proceedings consistent with this opinion.