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Addington v. U.S. Airline Pilots Ass'n

United States Court of Appeals, Ninth Circuit

June 26, 2015

DON ADDINGTON; JOHN BOSTIC; MARK BURMAN; AFSHIN IRANPOUR; ROGER VELEZ; STEVE WARGOCKI; MICHAEL J. SOHA; RODNEY ALBERT BRACKIN; GEORGE MALIGA, on behalf of themselves and all similarly situated former American West pilots, Plaintiffs - Appellants,
US AIRLINE PILOTS ASSOCIATION; U.S. AIRWAYS, INC., Defendants - Appellees. DON ADDINGTON; JOHN BOSTIC; MARK BURMAN; AFSHIN IRANPOUR; ROGER VELEZ; STEVE WARGOCKI; MICHAEL J. SOHA; RODNEY ALBERT BRACKIN; GEORGE MALIGA, on behalf of themselves and all similarly situated former American West pilots, Plaintiffs - Appellees,
US AIRLINE PILOTS ASSOCIATION, Defendant - Appellant, and U.S. AIRWAYS, INC., Defendant. DON ADDINGTON; JOHN BOSTIC; MARK BURMAN; AFSHIN IRANPOUR; ROGER VELEZ; STEVE WARGOCKI; MICHAEL J. SOHA; RODNEY ALBERT BRACKIN; GEORGE MALIGA, on behalf of themselves and all similarly situated former American West pilots, Plaintiffs - Appellees,
US AIRLINE PILOTS ASSOCIATION, Defendant, and U.S. AIRWAYS, INC., Defendant - Appellant

Argued and Submitted, San Francisco, California: April 14, 2015.

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[Copyrighted Material Omitted]

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Appeals from the United States District Court for the District of Arizona. D.C. No. 2:13-cv-00471-ROS. Roslyn O. Silver, Senior District Judge, Presiding.

Marty Harper (argued), Marty Harper, PLLC, Phoenix, Arizona; Andrew S. Jacob and Jennifer Axel, Polsinelli P.C., Phoenix, Arizona, for Plaintiffs-Appellants.

Patrick Szymanski (argued), Washington, D.C.; Brian J. O'Dwyer and Joy K. Mele, O'Dwyer & Bernstien, LLP, New York, New York; Susan Martin and Jennifer Kroll, Martin & Bo nnett, P.L.L.C., Phoenix, Arizona, for Defendant-Appellee-Cross-Appellant.

Robert A. Siegel (argued) and Chris A. Hollinger, O'Melveny & Myers LLP, Los Angeles, California; Karen Gillen, U.S. Airways, Inc., Tempe, Arizona, for Intervenor-Cross-Appellant.

Before: TASHIMA, GRABER, and BYBEE, Circuit Judges. Opinion by Judge Bybee. TASHIMA, Circuit Judge, concurring in part and dissenting in part.


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BYBEE, Circuit Judge:

In 2005, U.S. Airways merged with America West Airlines, setting their respective pilots on a collision course over a single, integrated seniority list. At the time of the merger, the U.S. Airways pilots (" East Pilots" ) and the America West pilots (" West Pilots" ) were both represented by the Air Line Pilots Association (" ALPA" ) as they attempted to negotiate a

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seniority list. The East Pilots advocated a list based on " date of hire," while the West Pilots advocated a list based on the strength of their pre-merger airline. When these negotiations failed, the dispute went to binding arbitration. The arbitration panel ordered a single list that did not fully accede to the wishes of either group. Unhappy with the result, the more numerous East Pilots forced the decertification of ALPA and the creation of a new union, the U.S. Airline Pilots Association (" USAPA" ), that was expressly opposed to the enforcement of the arbitrator's award and openly committed to a seniority list based on date of hire, which favored the East Pilots.

This is the second time a dispute over the seniority list has come before us. In the prior case, the West Pilots sued USAPA for a breach of the duty of fair representation. Following both a jury and a bench trial, the district court found a breach and ordered USAPA to negotiate a collective bargaining agreement with U.S. Airways based on the arbitrator's award. In Addington v. U.S. Airline Pilots Ass'n (Addington I), 606 F.3d 1174, 1184 (9th Cir. 2010), we dismissed the West Pilots' duty of fair representation claim as unripe. Five years later, as U.S. Airways completes its merger with American Airlines and their respective pilots--including U.S. Airways' feuding East and West groups--attempt to negotiate a single integrated seniority list, the West Pilots' claim is now ripe for decision. The district court, in a decision it found " hard" and " a very close call," concluded that USAPA did not violate its duty of fair representation to the West Pilots. We reverse.


The history of what we have called " a bitter seniority dispute," Addington I, 606 F.3d at 1176, is a detailed one, and one that we will set forth with some care.

A. 2005 U.S. Airways--America West Merger

1. The Merger and the Negotiations

The dispute between USAPA and the West Pilots arose when America West Airlines and U.S. Airways merged to form a single airline carrier called U.S. Airways. After the formal merger was completed in May 2005, the difficult process of combining day-to-day operations began. At that time, a single collective bargaining representative, ALPA, represented both the East and West Pilots. In September 2005, ALPA and the merging airlines entered into a Transition Agreement that set forth the process for achieving operational integration of the two airlines, including issues of pilot seniority relevant here.

Prior to the merger, the East and West Pilots each had their own separate seniority list and collective bargaining agreement. The Transition Agreement provided for the integration of the seniority lists in accordance with ALPA's Merger Policy, which required the two pilot groups to negotiate an integrated list and, if negotiation failed, to submit to binding arbitration. The Merger Policy stated that any award issued by an arbitration board " shall be final and binding on all parties to the arbitration and shall be defended by ALPA." In either event, the Policy bound the parties to reach a " fair and equitable agreement," keeping in mind five goals: (1) preserving jobs; (2) avoiding windfalls to either group of pilots at the expense of the other; (3) maintaining or improving pilots' pre-merger pay and standard of living; (4) maintaining or improving pilots' pre-merger status; and (5) minimizing detrimental changes to pilots' career expectations. Once the two sides arrived at an integrated list, the Transition Agreement provided that the list would be submitted to the airline for acceptance, at which point ALPA agreed to " use all reasonable means

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at its disposal to compel the company to accept and implement the merged seniority list."

The Transition Agreement also provided a timeline for implementing the single seniority list. Specifically, the Agreement stated that the seniority list would be implemented when three things occurred: (1) U.S. Airways obtained a single operating certificate (this occurred in 2007); (2) the two pilot groups created a single seniority list in accordance with the process set forth above; and (3) the pilots and the new airline negotiated a " Single Agreement" --a new collective bargaining agreement--applicable to all pilots. Until that happened, the existing seniority lists and collective bargaining agreements for the respective sets of pilots would remain in place.

Finally, the parties agreed that the Transition Agreement could be modified by written agreement between ALPA and the airline.

Consistent with the procedures set forth in the Transition Agreement, two merger committees--one representing the East Pilots, and one representing the West--entered into negotiations over an integrated seniority list. Several factors complicated the negotiations. The East Pilots were a substantially larger group, consisting of about 5,100 pilots, as compared with 1,900 West Pilots. America West, however, was a newer and financially stronger airline; although its pilots generally had a later hire date, they also enjoyed better wages and greater job security. Most significantly, some 1,700 East Pilots (about one-third of all East Pilots) were on furlough at the time of the merger, while no West Pilots were on furlough. The negotiations, including mediation, failed to generate consensus over a single list, so pursuant to ALPA's Merger Policy, the parties proceeded to binding arbitration.

2. The Nicolau Arbitration

An arbitration panel, led by George Nicolau, held hearings over the course of eighteen days, from December 2006 to February 2007. In all, the arbitration record included testimony from 20 witnesses, 14 volumes of exhibits, and more than 3,000 pages of hearing transcript. In the arbitration, the East Pilots advocated for a seniority list ordered by date of hire, adjusted for length of service, which ended up pushing most of the West Pilots far down the seniority list and placing a number of furloughed East Pilots above active West Pilots. The West Pilots, on the other hand, advocated for a list based on pilot rank and career prospects, which gave comparatively less weight to length of service.

In May 2007, the arbitration panel issued a careful, 35-page decision known as the " Nicolau Award." The panel, noting that the pilots' respective proposals " differed dramatically," observed that, in such mergers, " [i]t is understandable that universal acceptance is never achieved." The arbitration panel adopted neither proposal in full, instead crafting its award using aspects of both proposals. The Nicolau Award placed about 500 senior East Pilots at the top of the seniority list, explaining that the West Pilots were not operating the widebody international aircraft generally flown by the most senior East Pilots at the time of the merger. It also placed at the bottom of the list the 1,700 East Pilots who were furloughed at the time of the merger, explaining that " merging active pilots with furloughees, despite the length of service of some of the latter, is not at all fair or equitable under any of the stated criteria." The Nicolau Award blended the remainder of the East Pilot list with the West Pilot list.

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3. Decertification of ALPA/Certification of USAPA

As the district court aptly observed, " [t]o say the East Pilots were not pleased [with the Nicolau Award] is an understatement." As we described in Addington I, a majority of the East Pilots " strenuously objected" to the Nicolau Award and immediately set about finding ways to prevent its implementation. 606 F.3d at 1177-78. Initially, the East Pilots tried to convince ALPA to find a way to set aside the Award. When that failed, the East Pilots filed suit to set aside the Nicolau Award. ALPA continued to urge the East Pilots to " comply with its representational and legal obligations under the Constitution & Bylaws, ALPA Merger Policy, the Transition Agreement, and implementing resolutions of the Executive Council." Finally, the East Pilots withdrew their representatives from the committee negotiating a Single Agreement with the airline, effectively bringing those discussions to a standstill.

ALPA subsequently presented the Nicolau Award to the airline for acceptance, consistent with its obligation under the Transition Agreement to " use all reasonable means" to compel the airline to accept the arbitrated seniority list. U.S. Airways accepted the Award a few months later, in December 2007. Id. at 1178.

In the meantime, dissatisfied with ALPA's commitment to the Nicolau Award and hoping to prevent the Award from ever going into effect, the East Pilots decided to leave ALPA and form a new union. They consulted lawyers, who cautioned them that " the language you use in setting up your new union . . . can be used against you. You need to stress [t]he positives of the new union and not dwell on the award. Don't give the other side a large body of evidence that the sole reason for the new union is to abrogate an arbitration, the Nicolau award." The pilots and counsel sought a " roadmap . . . based on the premise that a new bargaining agent can get around the award and make the Nicolau award moot." Ultimately, the East Pilots created USAPA, which adopted a constitution committing it " [t]o maintain[ing] uniform principles of seniority based on date of hire and the perpetuation thereof." In November 2007, the National Mediation Board certified a representation election between ALPA and USAPA. Predictably, because of the number of East Pilots, USAPA won the election and was certified as the collective bargaining representative for all pilots in April 2008.

In September 2008--five months after certification and almost a year after the airline accepted the Nicolau Award--USAPA presented a new seniority proposal to U.S. Airways. This proposal ignored the Nicolau Award, instead ordering the pilots according to their date of hire. USAPA's ordering system effectively forced the West Pilots to the bottom of the seniority list, leaving them vulnerable to any furloughs. USAPA made clear that it would never implement the Nicolau Award.

B. 2008 West Pilot Suit Against USAPA (Addington I)

That same month, the West Pilots sued in district court, alleging that USAPA had breached its duty of fair representation by proposing a new seniority list instead of pursuing the implementation of the Nicolau Award. After a trial, a jury found that " USAPA had breached its duty by abandoning an arbitrated seniority list in favor of a date-of-hire list solely to benefit one group of pilots at the expense of another." Addington v. U.S. Airline Pilots Ass'n, No. CV 08-1633, 2009 WL 2169164, at *1 (D. Ariz. July 17, 2009) (unpublished). The district court then held a bench trial on the remaining equitable issues.

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The court found that " USAPA's sole objective in adopting and presenting its seniority proposal to the Airline was to benefit the East Pilots at the expense of the West Pilots, rather than to benefit the bargaining unit as a whole." Id. at *6. It reached this conclusion by determining that the terms of the Nicolau Award were final and binding, and thus any amendment USAPA wished to make to that Award required a legitimate union purpose. Id. at *10. The court rejected, one by one, each of USAPA's asserted objectives. Among other things, it found no merit to USAPA's claim that a different seniority proposal was necessary to break through the East Pilots' impasse and ratify a new collective bargaining agreement, stating that " any asserted impasse was a pretext for bare favoritism of the East Pilots," and that even if an impasse did exist, " it [was] one that USAPA goaded on" when it " misled the majority about its power to improve their seniority prospects at the expense of the West Pilots." Id. at *17-18.

Having found no legitimate union purpose for USAPA's actions, the court entered judgment for the West Pilots and issued an injunction ordering USAPA " to negotiate in good faith for the implementation of the Nicolau Award, defending that Award in negotiations and presenting it with the single new [collective bargaining agreement] to the pilots for ratification vote." Id. at *28. It also ordered USAPA " to negotiate for the implementation of the Nicolau Award as part of any single [collective bargaining agreement], unmodified by additional conditions and restrictions USAPA would place upon it." Id.

The East Pilots appealed. In Addington I, with one judge dissenting, we dismissed the case on ripeness grounds, concluding that the district court did not have jurisdiction to decide the case in the first instance. 606 F.3d at 1179. In so holding, we considered the " fitness of the issues for judicial decision," and the " hardship to the parties of withholding court consideration." Id. (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). We concluded that there were many contingencies that could yet " prevent effectuation of USAPA's proposal and the accompanying injury" and that it was " speculative" whether the West Pilots would be harmed by the withholding of decision, because it was unclear whether a collective bargaining agreement implementing the Nicolau Award could be ratified. Id. at 1179-80. Observing that our judgment was consistent with our other duty of fair representation cases, " which have found DFR violations based on contract negotiation only after a contract has been agreed upon," we remanded the case to the district court with directions to dismiss. Id. at 1181, 1184.

C. 2010 U.S. Airways Declaratory Judgment Action

Shortly after we ordered dismissal of Addington I, U.S. Airways filed a declaratory judgment action against the West Pilots and USAPA in district court, seeking guidance as to whether it could be held liable for assisting in a breach of USAPA's duty of fair representation if it entered into a collective bargaining agreement that did not implement the Nicolau Award. In the same proceeding, USAPA sought summary judgment on its claim that its date-of-hire seniority proposal did not breach any duty of fair representation. Id. The district court made two rulings of note. First, the district court concluded that USAPA was " bound" by the Transition Agreement because USAPA succeeded " to the status of the former representative [ALPA] without alteration in the contract terms" when it became the pilots' new collective bargaining representative. US Airways, Inc. v. Addington, No. CV 10-01570,

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2012 WL 5996936, at *4 (D. Ariz. Oct. 11, 2012) (quoting Int'l Bhd. of Teamsters v. Tex. Int'l Airlines, Inc., 717 F.2d 157, 163 (5th Cir. 1983)) (unpublished). At the same time, however, the court noted that, pursuant to the Transition Agreement's own terms, the Agreement " can be modified at any time by written agreement of [USAPA] and [US Airways]." Id. (internal quotation marks omitted).

Second, the district court warned USAPA of the possible consequences of ignoring the Nicolau Award, and adverted that, " in negotiating for a particular seniority regime, USAPA must not breach its duty of fair representation" :

[I]f USAPA wishes to abandon the Nicolau Award and accept the consequences of this course of action, it is free to do so. By discarding the result of a valid arbitration and negotiating for a different seniority regime, USAPA is running the risk that it will be sued by the disadvantaged pilots when the new collective bargaining agreement is finalized. An impartial arbitrator's decision regarding an appropriate method of seniority integration is powerful evidence of a fair result. Discarding the Nicolau Award places USAPA on dangerous ground.

Id. Citing our decision in Addington I, the court rued that it could not " provide as much guidance as it had hoped it could" because the matter would not be ripe until there was a collective bargaining agreement. Id. at *5. Nevertheless, the court concluded that " [USAPA's] seniority proposal does not breach its duty of fair representation provided it is supported by a legitimate union purpose," and granted partial summary judgment in favor of USAPA. Id. No party appealed from that decision.


Having reviewed the relevant background, we turn to the proceedings that underlie the present suit.

A. 2013 U.S. Airways--American Airlines Merger and MOU

In April 2012, U.S. Airways announced its intention to pursue a merger with American Airlines, following a decision by American Airlines' parent company, AMR Corporation, to commence bankruptcy proceedings. Soon after, U.S. Airways entered into discussions with the Allied Pilots Association (" APA" ), the American Airlines pilots' union, regarding labor contract terms. Although USAPA was not originally included in the negotiations, U.S. Airways subsequently agreed to include USAPA, which in turn tasked a Negotiating Advisory Committee with representing its pilots at negotiations. The Committee was comprised of four pilots: two East Pilots and two West Pilots.

Between late 2012 and early 2013, American Airlines, U.S. Airways, USAPA, and APA negotiated a multi-party agreement called the " Memorandum of Understanding Regarding Contingent Collective Bargaining Agreement" (" MOU" ). The MOU sets forth procedures for reaching a Merger Transition Agreement between APA and " New American Airlines," the merged airline, in addition to a Joint Collective Bargaining Agreement to apply to all pilots employed by New American. Under the MOU, once the Merger Transition Agreement is fully implemented, it will " fully displace and render a nullity any prior collective bargaining agreements applicable to U.S. Airways pilots and any status quo arising thereunder."

The MOU also addresses a number of labor-related issues important to the pilots, including terms and conditions of pay, pension and retirement benefits, vacation time, and furlough guarantees. Both parties

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agree that the MOU contains significant economic benefits for all U.S. Airways pilots, including pay increases. With respect to seniority integration, the MOU provides under Paragraph 10(h):

US Airways agrees that neither this Memorandum nor the [Joint Collective Bargaining Agreement] shall provide a basis for changing the seniority lists currently in effect at U.S. Airways other than through the process set forth in [the McCaskill-Bond Amendment].

This provision, which did not appear in prior drafts of the MOU, was proposed by USAPA. It incorporates the 2007 McCaskill-Bond Amendment, which sets forth a process by which merging airlines must integrate the seniority of their pilots. See 49 U.S.C. § 42112 Note.[1]

The USAPA Board of Pilot Representatives voted to approve the MOU on January 4, 2013. Thereafter, the USAPA Negotiating Advisory Committee embarked on a series of roadshow presentations designed to inform its pilots about the MOU and urge their approval. USAPA, however, tailored its presentation to its divided audiences. When presenting the MOU to the West Pilots, the USAPA representative stated that the MOU was merely " neutral" with respect to seniority. However, when speaking to East Pilots, the representative said that the MOU was beneficial because, in effect, it confirmed that the Nicolau Award was " dead." In a written statement to pilots, USAPA confirmed that under the MOU, the Nicolau Award was dead: " West pilots should not vote in favor of the MOU because they believe it will revive the Nicolau Award, and the East pilots should not vote against it because they are concerned it will cause the Nicolau Award to be implemented." Ultimately, a majority of voting pilots approved the MOU. Of the 1,041 West Pilots who voted, 1,017 voted in favor of the MOU. The MOU was ratified on February 8, 2013.

B. District Court Proceedings Below

In March 2013, shortly after the MOU was ratified, a group of West Pilots filed the present action on behalf of themselves and others similarly situated, bringing several claims against USAPA. In Claim One, the West Pilots alleged that USAPA had breached its duty of fair representation, asserting that " USAPA does not have a legitimate union purpose to use anything other than the Nicolau Award list to integrate East Pilots and West Pilots." Because the MOU " abandons a duty to treat the Nicolau Award as final and binding," the West Pilots claimed, USAPA breached its duty of fair representation by entering into the MOU. As for a remedy, the West Pilots sought a declaratory judgment that " USAPA is continuing to violate the duty of fair representation by insisting that it will use a date-of-hire seniority list rather than the Nicolau Award list" and an injunction " requiring Defendants to conduct seniority integration according to the MOU procedures but using the seniority order in the Nicolau Award list to order the U.S. Airways pilots." [2]

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The district court certified a class of approximately 1,600 West Pilots, held a two-day bench trial in October 2013, and issued a decision in January 2014, in favor of USAPA. The court found that USAPA and its counsel, Pat Szymanski, were " motivated in large part simply by a desire to ensure that the Nicolau Award never take effect." Addington v. U.S. Airline Pilots Ass'n, No. CV 13-00471, 2014 WL 321349, at *3 (D. Ariz. Jan. 10, 2014) (unpublished). The court observed that the text of Paragraph 10(h) of the final MOU was amended from USAPA's original proposal, which read: " This MOU is not intended to nor shall it constitute the 'Single Agreement' referred to in Paragraph VI.A. of the September 23, 2005 Transition Agreement." The court found that by including Paragraph 10(h), USAPA likely sought to abrogate any duty it had to implement the Nicolau Award: " While there is no definitive evidence why [Paragraph 10(h)] was included, USAPA likely believed this provision was necessary because completion of a 'Single Agreement' would have triggered obligations under the Transition Agreement, including implementation of the Nicolau Award." Id. at *2. The court then found that, during its roadshow to inform pilots about the purpose and effect of the MOU, " USAPA undoubtedly played fast-and-loose with its members and changed its explanation of Paragraph 10(h) depending on its audience." Id. at *7 n.9. In general, the district court found, the West Pilots voted to ratify the MOU because they " accepted USAPA's oral and written representations that the MOU was neutral." Id. at *3.

As it had done in the 2012 action, the district court assumed that USAPA had an " existing obligation to use the Nicolau Award." Id. at *6. The question, then, was whether USAPA had " some legitimate union purpose" for ignoring the Nicolau Award. Id. The court noted that, because no new seniority list had been agreed upon, it could not compare a new list with the list required by the Nicolau Award. In the end, the court concluded that the " increased compensation provisions" in the MOU suggested that " legitimate union objectives motivated some aspects of the MOU," although it also found that " USAPA's actions are sufficiently disturbing to make this a very close call." Id. at *5, 7. " The fact that USAPA might have, in truth, been motivated by a desire to weaken the chances of eventual adoption of the Nicolau Award is not enough." Id. at *7. The court expressed hesitation about the West Pilots' plea to examine Paragraph 10(h) in isolation, suggesting that such analysis " may inappropriately enmesh courts in the minutiae of collective bargaining." Id. But the court put aside its reservation and went on to reason: " A rational person could conclude that making the MOU explicitly neutral [by including Paragraph 10(h)] served the legitimate union purpose of securing the additional compensation contained in the MOU while putting off to another day the question of the appropriate seniority regime." Id. Moreover, the court stated, " USAPA could have rationally decided the neutral provision was necessary to prevent the drag-out fight that surely would have accompanied any non-neutral, seniority-related provision." Id. at *7 n.8.

The district court entered judgment in favor of USAPA on the duty of fair representation and separate representation claims and a judgment of dismissal without

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prejudice on the West Pilots' claim for attorneys' fees.[3] Id. at *13. In so holding, the court observed that " USAPA avoided liability on the DFR claim by the slimmest of margins and the Court has serious doubts that USAPA will fairly and adequately represent all of its members while it remains a certified representative." Id. at *12. It " stress[ed]" that it was not holding that USAPA was " free to ignore the Nicolau Award because its members will refuse to ratify anything other than a strict date-of-hire system." Id. at *7. " In effect," the court explained, " this is an argument that USAPA is free to treat the West Pilots poorly because that is what the majority of its members wish it to do. That is not the law." Id. The district court admonished USAPA that ...

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