BEFORE THE PRELIMINARY ARBITRATION BOARD

In the Matter of the West Pilots’ Request for a Merger Committee

between

Allied Pilots Association Arbitrators Shyam Das, Steve Crable and Joshua Javits and

American Airlines Pilots Seniority Integration Committee f/k/a Allied Pilots Association Merger Committee

and ALLIED PILOTS ASSOCIATION’S US Airline Pilots Association PRE-HEARING BRIEF

and

US Airline Pilots Association Merger December 3, 2014 Committee

and

West Pilots Merger Committee

and

American Airlines, Inc.

and

US Airways, Inc.

INTRODUCTION

US Airways, Inc. (“US Airways”) and American Airlines, Inc. (“American”) merged into a single airline (“Company”) effective December 9, 2013 (the “US Airways/American

Merger”). Seniority integration for the pilots at the merged carrier is governed by the

McCaskill-Bond Amendment to the Federal Aviation Act (“McCaskill-Bond”), which incorporates the longstanding airline merger principle that pilot seniority lists must be integrated

“in a fair and equitable manner,” including, if necessary, through a final and binding arbitration.

Prior to the merger, the Allied Pilots Association (“APA”) (then the certified representative of the pre-merger American pilots) and the US Airline Pilots Association

(“USAPA”) (then the certified representative of the pre-merger US Airways pilots), and the carriers negotiated a Memorandum of Understanding (“MOU”) that established a seniority integration process (consisting of negotiation and, if necessary, arbitration) consistent with

McCaskill-Bond. As is standard practice in the seniority integration context, APA and USAPA each designated committees to represent the interests of their respective pre-merger pilot groups in the seniority integration process.

On September 16, 2014, the National Mediation Board (“NMB”) certified APA as the collective bargaining representative for all Company pilots and decertified USAPA as the collective bargaining representative for the pilots of US Airways. As the certified bargaining representative, APA now owes a duty of fair representation (“DFR”) to all pilots flying on behalf of the Company, and has the right and the responsibility to ensure that the seniority integration proceeding is fair and equitable as required by McCaskill-Bond. To this end, APA has committed not to interfere with the existing merger committees’ deliberations or decisions.

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To permit the seniority integration arbitration to proceed as currently structured, however, would ignore a critical reality: the Company has three unmerged pilot seniority lists.

In addition to the American Seniority List, there is also the US Airways (East) Seniority List, and the US Airways (West) Seniority List. The two unmerged US Airways lists are a legacy of the longstanding and bitterly-fought seniority dispute that arose following the 2005 merger of US

Airways and America West. The former America West pilots vigorously support a previously- arbitrated seniority list (the “Nicolau Award”), which was driven largely by “pre-merger career expectations” and has never been implemented. USAPA, in contrast, was formed in reaction to the Nicolau award and is constitutionally mandated to oppose its implementation and advocate for seniority integration solely based on date-of-hire principles.

In light of USAPA’s constitutional mandate, the fraught history of the East/West seniority dispute, and the fact that USAPA no longer owes any duty of fair representation, the

West Pilots suggest that APA would breach its duty of fair representation by delegating control over integration of the US Airways (East) and US Airways (West) seniority lists to the USAPA committee. Thus, were APA to permit the USAPA committee to be the sole representative of the former US Airways pilots in the seniority integration process, and not enable the West Pilots to be separately represented, the West Pilots would almost certainly bring suit against APA for a breach of the duty of fair representation. APA takes no position on whether USAPA or the West

Pilots have the better of the argument regarding how the relative seniority of East and West

Pilots should be determined in connection with the US Airways/American seniority integration.

APA does, however, have a strong interest in ensuring that the seniority-integration process is administered in a manner consistent with its DFR obligations and the “fair and equitable” requirements of McCaskill-Bond. APA therefore considers it prudent to designate a separate

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merger committee to represent the interests of the West Pilots in the upcoming seniority arbitration. The designation of such a committee is within APA’s discretion as the certified bargaining representative, under both the duty of fair representation and McCaskill-Bond, and is consistent with past industry practice in seniority integration arbitrations.

During discussions with USAPA over the Seniority Integration Protocol Agreement

(“Protocol Agreement”) to implement the MOU, APA took the position that, pursuant to the court’s decision in Addington v. US Airline Pilots Ass’n, No. CV-13-00471-PHX-ROS, 2014 WL

321349 (D. Ariz. Jan. 10, 2014), USAPA would no longer be a party to the Protocol Agreement

(and therefore able to constrain APA’s discretion to appoint a West Committee) once it ceased to be the certified bargaining representative for the former US Airways pilots. USAPA indicated that if APA exercised its discretion to designate a West Committee, USAPA would sue. USAPA proposed instead that APA permit a neutral panel of arbitrators to decide whether the West Pilots would have separate representation in the seniority arbitration. APA agreed and that compromise is reflected in the final Protocol Agreement. Accordingly, APA now asks this

Preliminary Arbitration Board to affirm APA’s valid exercise of its discretion and grant the West

Pilots’ request that a separate merger committee be designated to represent their interests in the upcoming seniority integration arbitration.

QUESTION PRESENTED

APA is the exclusive certified collective bargaining representative for all Company pilots and considers it prudent, in light of the duty of fair representation and McCaskill-Bond, to designate a separate merger committee to represent the interests of the West Pilots in the upcoming seniority integration arbitration. Pursuant to the Protocol Agreement, however, APA

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has delegated the decision whether to appoint a West Committee to this Preliminary Arbitration

Board.

Should the West Pilots’ request that APA designate a separate merger committee to represent the interests of pilots on the US Airways (West) Seniority List be granted as a valid exercise of APA’s discretion as the exclusive certified bargaining representative for all Company pilots?

FACTUAL BACKGROUND

A. Seniority Dispute Between the East and West Pilots and the Formation of USAPA.

In 2005, US Airways, Inc., then in bankruptcy, and America West Airlines, Inc., combined to create the successor airline, US Airways, Inc. (“US Airways”). US

Airways/America West Airlines, 35 NMB 65, 68 (2008), J. Exh. 28.1 At the time of the 2005 merger, the Air Line Pilots Association (“ALPA”) represented the pilots at the two pre-merger carriers through separate Master Executive Councils (“MEC”): the US Airways MEC represented approximately 5,100 pilots (“East Pilots”), of whom approximately 1,700 were on furlough; the America West MEC represented approximately 1,900 pilots (“West Pilots”), none of whom were on furlough.

In connection with the US Airways/America West merger, the East Pilots and the West

Pilots (through their respective ALPA governing bodies) and the merging airlines agreed, in a collectively-bargained US Airways/America West Transition Agreement negotiated pursuant to the Railway Labor Act (“Transition Agreement”), that the pilot workforces of the two airlines would be combined. Transition Agreement, J. Ex. 1; see also ALPA Merger Policy, J. Ex. 3. A

1 APA and the Company have submitted Joint Exhibits in this Preliminary Arbitration. These Joint Exhibits are referenced throughout this brief as “J. Ex.” 5

dispute arose, however, as to the relative placement of the two groups of pilots on the integrated seniority list that was to be used by the combined, post-merger US Airways.

This dispute proceeded to what was supposed to be final and binding arbitration before a neutral arbitrator, George Nicolau, who issued his award on May 1, 2007 (“Nicolau Award”).

Nicolau Award, J. Ex. 2. Largely driven by the disparity in furloughs and a further disparity in the two pilot groups’ “pre-merger career expectations,” the Nicolau Award placed approximately

500 East Pilots at the top of the seniority list, 1,700 furloughed East Pilots at the bottom of the list, and blended the remainder of East Pilots with West Pilots generally according to their relative positions on their pre-merger seniority lists. On December 20, 2007, US Airways accepted the Nicolau Award. Nevertheless, the Transition Agreement provided that the Nicolau

Award would only be implemented when the parties had reached a single collective bargaining agreement for the East and West Pilots.

In response to the perceived unfairness of the Nicolau Award, a group of East Pilots formed a new organization called the US Air Line Pilots Association (“USAPA”), which was constitutionally mandated to oppose implementation of the Nicolau Award and advocate for seniority integration based solely on date-of-hire principles. USAPA Constitution, J. Ex. 4.

USAPA filed a petition with the National Mediation Board (“NMB”) to have the two carriers declared a single transportation system in order to trigger a representation election to displace

ALPA. The NMB found that US Airways and America West constituted a single transportation system, and—because the East Pilots outnumbered the West Pilots—USAPA prevailed by approximately a 52% margin in the subsequent representation election. US Airline Pilots

Association, 35 NMB 65 (2008), J. Ex. 28; 35 NMB 135 (2008), J. Ex. 29. On April 18, 2008,

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the NMB certified USAPA as the new collective bargaining representative for the combined, post-merger group of East Pilots and West Pilots. 35 NMB 135 (2008), J. Ex. 29.

The dispute between USAPA and the West Pilots over seniority list integration has resulted in long-running litigation between and among USAPA, the West Pilots and US Airways.

See, e.g., Addington v. US Airline Pilots Ass’n, No. CV08-1633-PHXNVW, 2009 WL 2169164, at *8 (D. Ariz. July 17, 2009), J. Ex. 8 (jury trial finding that USAPA breached its duty of fair representation), rev’d 606 F.3d 1174 (9th Cir. 2010) (“Addington I”), J. Ex. 9 (overturning the jury verdict on the basis that the dispute was not yet ripe); US Airways, Inc. v. Addington, No.

CV-10-01570-PHX-ROS, 2012 WL 5996936 (D. Ariz. Oct. 11, 2012) (“Addington II”), J. Ex.

10.

After the Ninth Circuit’s decision in Addington I, USAPA continued to assert the position that it had the right to bargain for a non-Nicolau seniority list, and the West Pilots continued to assert that USAPA could not do so. US Airways filed a declaratory judgment lawsuit against both USAPA and the West Pilots because “[a]ccording to U.S. Airways, if it accepts USAPA’s seniority proposal, the West Pilots have said they will sue U.S. Airways for facilitating or assisting USAPA’s breach of the duty of fair representation. And, if U.S. Airways insists on adopting the new collective bargaining agreement incorporating the Nicolau Award, USAPA has promised a work stoppage.” Addington II, 2012 WL 5996936, at *3.

In Addington II, the court held that “USAPA is bound by the Transition Agreement,” as the successor union to ALPA, but that the “Transition Agreement can be modified at any time

‘by written agreement of [USAPA] and [US Airways].’” Id. at *4. The court then explained that, while USAPA was “free” to abandon the Nicolau Award, “[b]y discarding the result of a valid arbitration and negotiating for a different seniority regime, USAPA is running the risk that

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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.

Because of the unresolved seniority dispute between the West Pilots and USAPA,

US Airways continues, nearly nine years after the merger, to operate with two separate pilot seniority lists: one for the West Pilots, and one for the East Pilots. See Addington v. US Airline

Pilots Ass’n, No. CV-13-00471-PHX-ROS, 2014 WL 321349, at *1-2 (D. Ariz. Jan. 10, 2014)

(“Addington III”), J. Ex. 11.

B. The Merger of American and US Airways

After more than a year in Chapter 11, AMR Corporation, the parent of carrier American

Airlines, Inc. (“American”), entered into an Agreement and Plan of Merger with US Airways

Group, the parent of carrier US Airways, Inc., on February 13, 2013, that provided for a newly renamed parent, AAG, to acquire the US Airways Group. On February 21, 2013, AMR and

American filed a motion with the United States Bankruptcy Court for the Southern District of

New York to authorize entry into the Merger Agreement. In re AMR Corp., Case No. 11-15463,

Doc. 6776 (Bank. S.D.N.Y.). On June 5, 2013, AMR and American filed a Plan of

Reorganization for the merger that was overwhelmingly approved by a vote of the creditors and approved by the Bankruptcy Court in a Confirmation Order dated October 21, 2013. Id. at Doc.

10361. Following settlement of the Department of Justice’s anti-trust suit seeking to block the merger, the Bankruptcy Court granted permission for the merger to proceed on November 27,

2013. Id. at Doc. 11320. The merger formally closed on December 9, 2013. Id. at Doc. 11402.

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At the time of the merger, the approximately 10,000 pilots flying for American were represented by the Allied Pilots Association (“APA”). See Allied Pilots Association, 29 NMB

260 (2002), J. Ex. 30 (certifying APA as the collective bargaining representative for the pilots at

American following the TWA acquisition). The approximately 5,000 East and West pilots flying for US Airways were still represented by USAPA. See US Airline Pilots Association, 35 NMB

135 (2008), J. Ex. 29.

C. The Memorandum of Understanding

Prior to the merger between American and US Airways, the two carriers, USAPA and

APA entered into Memorandum Of Understanding Regarding Contingent Collective Bargaining

Agreement (“MOU”), J. Ex. 5, a collective bargaining agreement that would govern the terms and conditions of employment for pilots following the merger. The MOU also established a framework and process through which the parties agreed to integrate the seniority lists of the

US Airways pilots and the American pilots. See MOU ¶¶ 10, 26-27. Although the MOU was signed by the parties in January 2013, the MOU defined the “Effective Date” as the date of a merger, which ultimately occurred on December 9, 2013.

The MOU provided that the recently-negotiated collective bargaining agreement between

American and APA (“2013 AA/APA Agreement”), as amended by the MOU, would become the collective bargaining agreement for the pilots at both carriers in the event of, and effective on the date of, a merger.2 This initial common collective bargaining agreement was termed the

“Merger Transition Agreement” (“MTA”); however, the parties understood that inevitable

2 Because the 2013 AA/APA Agreement was approved by the Bankruptcy Court on December 19, 2012, it is often referred to as the 2012 CBA, although the effective date of that Agreement for the pilots at American was January 1, 2013.

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differences would exist between the MTA as applied at US Airways and as applied at American and that they would need to reconcile those differences through a process that would eventually lead to a “Joint Collective Bargaining Agreement” (“JCBA”).

The parties to the MOU all agreed that APA would petition the NMB for a finding that

US Airways and American constituted a single transportation system “as soon as practicable after the [merger], when APA determines that the facts support the legal requirements for the filing of a petition but in no event later than four months after the Effective Date.” Id. at ¶ 26.

The MOU also provides that, “[i]f and when the NMB makes a single-carrier finding, the organization certified to represent the pilots of the single carrier . . . shall promptly engage or re- engage in negotiations to achieve a JCBA [.]” Id. at ¶ 27. In the event that the parties failed to conclude the JCBA negotiations within 30 days of the NMB certification of the successor union, the parties agreed to submit the open issues to expedited interest arbitration. Id.

As for seniority integration, the parties agreed to initiate a process consistent with the

McCaskill-Bond Amendment to the Federal Aviation Act, Pub. L. 110–161, Div. K, Title I,

§ 117, 121 Stat 2382 (Dec. 26, 2007), codified at 49 U.S.C. § 42112, note § 117 (“McCaskill-

Bond”), J. Ex. 6, “as soon as possible after the Effective Date.” MOU ¶ 10. The parties would begin by attempting to negotiate a protocol agreement and an integrated seniority list. Id. In the event the parties were unable to agree on a single integrated seniority list, however, a panel of three arbitrators would convene hearings to resolve whatever disputes remained. Id. The arbitration would not commence “prior to final approval of the JCBA pursuant to the deadlines and procedures” set forth in the MOU. Id. Under the MOU, the panel of arbitrators must issue its award within six months of the commencement of the arbitration, but no later than 24 months after the Effective Date of the MOU. Id.

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The MOU did not specifically address the integration of East and West Pilots as part of the overall US Airways/American pilot seniority integration. It did, however, provide in

Paragraph 10(h), that “neither this Memorandum nor the JCBA shall provide a basis for changing the seniority lists in effect at US Airways other than through the [seniority integration] process set forth in … Paragraph 10.”

D. Litigation Over the East/West Seniority Integration Triggered by the MOU

In March 2013, a class of West Pilots filed another case against USAPA claiming, principally, that USAPA “breached the duty of fair representation by entering into the MOU because the MOU abandons a duty to treat the Nicolau Award as final and binding.” Addington

III, 2014 WL 321349, at *4, J. Ex. 11. The plaintiffs sought declaratory and injunctive relief requiring USAPA to use the Nicolau Award to determine the relative ordering of West Pilots and

East Pilots in the MOU seniority integration process.

During a hearing on May 14, 2013, the Court in Addington III requested briefing from the parties regarding the West Pilots’ right under McCaskill-Bond to participate separately from

USAPA in the MOU seniority integration process.

In its opening brief, US Airways argued that, in light of the longstanding seniority dispute between USAPA and the West Pilots, the West Pilots had distinct seniority interests that entitled them to participate separately in the US Airways/American seniority-integration process. In advancing this argument, US Airways relied largely on decisions of the Civil Aeronautics Board

(“CAB”) interpreting Sections 3 and 13 of the Allegheny-Mohawk Labor Protective Provisions

(“Allegheny-Mohawk” or “Allegheny-Mohawk LPPs”), J. Ex. 7, which are incorporated by reference into McCaskill-Bond. Addington III, Doc. No. 98 at 2-4. The West Pilots agreed that

CAB decisions supported their right to participate separately. Addington III, Doc. 97 at 4:16-6:3.

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By contrast, USAPA argued, citing other CAB decisions, that only NMB-certified collective bargaining representatives may participate in the McCaskill-Bond seniority integration process (assuming there was such a representative), thereby precluding separate representation in that process for the West Pilots. Addington III, Doc. 95 at 1:16-11:6, J. Ex. 19; Doc. 108 at 1:5-

8:6, J. Ex. 20.

In its response brief, US Airways noted the incongruity in USAPA’s position, given that

“it is a certainty that, by the time the McCaskill-Bond arbitration begins, APA will be certified to represent all post-merger pilots of the combined airlines and USAPA will no longer be the RLA collective-bargaining representative for any US Airways pilots.” Addington III, Doc. 110 at 5-6 n.5.

On July 30, 2013, after being dismissed from the litigation in connection with a claim by the West Pilots, US Airways moved to intervene in Addington III in order to, among other things, seek “confirmation of its legal position (disputed by USAPA) that its obligation under

McCaskill-Bond to provide for a ‘fair and equitable’ seniority integration entails affording an opportunity to the West Pilots to have a ‘separate seat at the table’ under the circumstances of this case.” Addington III, Doc. No. 128 at 5:11-14. US Airways’ motion was granted, and

US Airways subsequently filed its pleading-in-intervention, in which it asserted its interest in obtaining a declaration affirming the West Pilots’ right, pursuant to McCaskill-Bond, to participate separately in the MOU seniority-integration process. Addington III, Doc. 194 at 3:20-

4:11; Doc. 197 at ¶¶ 8-16.

On August 2, 2013, the West Pilot plaintiffs in Addington III filed an amended complaint, which added a claim against USAPA for declaratory relief, seeking “an order declaring that [the

West Pilots] have party status and the right (but not the obligation) to participate fully (with

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counsel of their own choice) in the MOU Seniority Integration process.” Addington III, Doc.

134 ¶ 134.

On October 11, 2013, US Airways filed a motion for summary judgment on its

McCaskill-Bond claim. Addington III, Doc. 212. US Airways again relied heavily on CAB authority, mostly for the proposition that the “fair and equitable” requirement in Section 3 of the

Allegheny-Mohawk LPPs supported separate participation for the West Pilots, given the longstanding seniority dispute between the West Pilots and USAPA. Id. at 7:9-10:4. In addition,

US Airways argued that, contrary to USAPA’s previously-asserted arguments, McCaskill-Bond does not limit participation in post-merger seniority integration proceedings to the employees’ certified collective bargaining representative under the RLA. Id. at 10:5-13:9. US Airways again noted that:

After the merger between US Airways and American is complete, a new collective bargaining agent will be certified by the NMB for all pilots of the merged carrier. The APA, not USAPA, will, in all likelihood, be certified through this process given the far greater number of pilots currently represented by APA at American. Under the MOU, the McCaskill-Bond seniority-integration arbitration among the pilot groups will not even occur until after this NMB process is completed.

Id. at 7 n.6; see also Doc. 277 at 1 n.1.

Also on October 11, 2013, USAPA filed its own motion for summary judgment in

Addington III. Addington III, Doc. 211. In its supporting memorandum of points and authorities and in its opposition to US Airways’ motion for summary judgment, USAPA again argued that only certified collective bargaining representatives may participate in the McCaskill-Bond seniority integration process and that, therefore, only USAPA could represent US Airways pilots,

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including the West Pilots, in the MOU seniority integration process. Id. at 11:2-15:3; Doc. 270 at 2:1-5:7, J. Ex. 21. USAPA stated:

Section 3 [of the Allegheny-Mohawk LPPs] expressly provides for agreement through collective bargaining between the carriers and the representatives of the employees affected. The only parties to the collective bargaining process are the certified union and the carrier. There are no outside groups or employees permitted in that process … [T]he language of both the statute and Sections 3 and 13 are clear that the bargaining representative is the only participant on behalf of employees within the class or craft it represents.

Id. at 4:13-17 and 5:4-7.

A bench trial took place before the Addington III court on October 22-23, 2013.

On January 10, 2014, the court (Judge Silver) issued her decision, finding in favor of

USAPA on all claims. Addington III, 2014 WL 321349, at * 1, J. Ex. 11.

With respect to the West Pilot’s duty of fair representation (“DFR”) claim, the court held that “while the West Pilots’ DFR claim is ripe, it is an exceptionally difficult claim to prove because no ‘new’ seniority regime has been adopted” in the MOU. Id. at 9. The court clarified, however, that it was not adopting USAPA’s argument that it was “free to ignore the Nicolau

Award” on the basis that “[t]he East Pilots outnumber the West Pilots and the East Pilots allegedly will refuse to ratify any agreement deemed advantageous to the West Pilots.” Id. at *7.

As the court explained:

In effect, 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. [As the certified bargaining representative,] USAPA owes duties to all of its members.

Id. The court further cautioned that “USAPA avoided liability on the DFR claim by the slimmest of margins.” Id. at *12.

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With respect to the West Pilots’ right under McCaskill-Bond to participate separately in the MOU seniority integration process, Judge Silver held, in pertinent part:

With the limited amount of guidance from CAB, and the parties offering no other legal authority or materials that might help illuminate Congressional intent, the Court is left to arrive at the meaning of McCaskill-Bond on its own. Section 3 requires carriers provide a “fair and equitable” integration process. And Section 13 requires arbitration between “the organization or organizations representing the employee or employees.” The Court is persuaded this statutory text should be interpreted in harmony with those CAB decisions allowing participation only by the employees’ certified representatives. When a certified representative exists, that representative owes a duty of fair representation to all employees. A “fair and equitable” integration process will involve that representative acting on behalf of the represented employees. And when a certified bargaining representative exists, introducing an independent group, such as the West Pilots, would “interfere with the established representation format” and also “tamper with and inevitably complicate the procedures used to negotiate seniority list integration.” Nat’l Airlines, Arbitration, 84 C.A.B. 408, 476 (1979). In addition, allowing the involvement of any employee or group of employees with sufficiently distinct interests would be an invitation to chaos; the seniority integration process cannot accommodate the participation of whoever might be affected by the final result. Therefore, the process contemplated by McCaskill- Bond allows only the certified bargaining representatives to participate in seniority integration proceedings. …

USAPA has succeeded here but it is a Pyrrhic victory. As contemplated by the MOU, in the very near future an election will take place and a new representative will be chosen by all of the post-merger pilots. It is almost certain USAPA will lose that election. Once that happens, USAPA will no longer be entitled to participate in the seniority integration proceedings.

Id. at *12 (emphasis added).

Consistent with its order, the Addington III court entered judgment in favor of USAPA on all claims. Addington III, Doc. No. 299.

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E. The Negotiation of the Seniority Integration Protocol Agreement

The first procedural step in the MOU seniority integration process, as set forth in MOU

Paragraph 10(f), is for the parties to negotiate a Seniority Integration Protocol Agreement: “A

Seniority Integration Protocol Agreement (“Protocol Agreement” [or “Protocol”]) consistent with McCaskill-Bond and this Paragraph 10 will be agreed upon within 30 days of the Effective

Date.” Protocol Agreement, J. Ex. 13.

The initial deadline for completion of Protocol Agreement negotiations was January 8,

2014 (i.e., 30 days after December 9, 2013), but the deadline was twice extended and, ultimately, set for February 18, 2014.

Although there was agreement on virtually all issues, the parties were unable to finalize a

Protocol Agreement by the February 18, 2014 deadline because they disagreed about one key issue: what USAPA’s role would be in the seniority integration process after the NMB certified

APA as the exclusive representative of pilots at the Company, and USAPA ceased to be a certified pilot representative. Declaration of Mark Stephens (“Stephens Decl.”), J. Ex. 17, ¶¶

33-34.

In the Protocol negotiations, APA took the same position USAPA had taken in Addington

III, i.e., that the certified bargaining representative was the only proper party to the seniority list arbitration, and that APA would be that representative at the time the arbitration would occur under the MOU. Id. at ¶ 34 (citing Addington III, 2014 WL 321349, at *20-21). APA further proposed that—in its capacity as the certified collective bargaining representative—APA could, consistent with industry practice and McCaskill-Bond, create separate merger committees to represent the East Pilots, the West Pilots and the legacy American pilots. Specifically, APA’s initial proposal would have provided that: 16

Effective on and after the date that the NMB determines the representation of the combined pilot craft and class at New American, the Organization, if any, designated by the NMB as the duly designated representative of the combined craft and class (the “Organization”) shall designate such Merger Committees as are required to represent, for seniority integration purposes, the pilots on the pre-merger seniority lists in the combined craft and class. Consistent with the MOU, this Protocol Agreement, the duty of fair representation, and the Organization’s other legal obligations, the Organization shall delegate to such Merger Committees authority to act for and on behalf of the pilots on their respective pre-merger seniority lists for purposes of concluding an integrated pilot seniority list.

Id. at ¶ 17 (quoting APA SIC [Seniority Integration Committee] Proposal, dated January 17,

2014) (emphasis added).

USAPA, in contrast, took the position that it was entitled to remain an independent party to the seniority integration, even after decertification. Accordingly, the initial USAPA proposal, dated January 29, 2014, expressly provided that USAPA’s designated Merger Committee would

“continue in existence” even after decertification and, along with the APA Merger Committee, be a full participant throughout the seniority-integration process. Id. at ¶ 20. Later in the

Protocol negotiations, USAPA proposed that “[f]urther elements of the seniority integration protocol may be established by written agreement of the parties.” Id. at ¶ 29. This proposal would have given USAPA veto power over any changes to the seniority integration process that

APA might deem appropriate to carry out its duty of fair representation after APA’s certification as the single collective bargaining representative. Specifically, the proposal would have allowed

USAPA, which would no longer have any DFR obligation, to restrict APA’s ability to appoint a separate merger committee to represent the interests of the West Pilots. During the course of these negotiations, USAPA’s counsel stated that “USAPA will not waive its position on these

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issues [i.e., “a West merger Committee and any changes to the Protocol Agreement”], but we would agree to leave any dispute until when/if APA is certified.” Id. at ¶ 33.

With the parties at impasse over USAPA’s status in the seniority arbitration process and the scope of APA’s discretion to designate additional merger committees, the parties failed to reach a Protocol Agreement by the February 18, 2014 MOU deadline.

In the absence of a signed Protocol, on February 27, 2014, USAPA filed suit against US

Airways, American and APA in the U.S. District Court for the District of Columbia, seeking a declaratory judgment that, under McCaskill-Bond, seniority integration was required to proceed under procedures prescribed by Section 13(a) of the Allegheny-Mohawk Labor Protective

Provisions, instead of those dictated by the MOU. USAPA v. US Airways, Inc., No. 1:14-cv-

00328 (the “D.C. Lawsuit”), Doc. 1, J. Ex. 12(a). The carriers and APA filed counterclaims seeking declaratory judgment that, under McCaskill-Bond, the MOU’s seniority integration procedures displaced those of the Allegheny-Mohawk Section 13(a), and that the parties were therefore required to proceed under the terms of that agreement. Id., Doc. 12 at 34–39, J. Ex.

12(b), and Doc. 13 at 40–45, J. Ex. 12(c). In addition, APA filed a counterclaim seeking a declaratory judgment that, under McCaskill-Bond, USAPA’s right to participate in the seniority integration would terminate upon USAPA’s decertification, and its continued participation would be determined by APA in its capacity as the certified bargaining representative. Id., Doc.

12 at 39–40, J. Ex. 12(b).

While the D.C. Lawsuit was pending, APA, USAPA and the Company continued to negotiate over a Protocol Agreement. In discussions with USAPA, APA asserted that—once it had the duty of fair representation for all pilots—it had the authority to appoint a separate merger committee to represent the interests of the West Pilots at the seniority arbitration. USAPA

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informed APA that, if APA appointed a West Committee, USAPA would sue. USAPA then asked if, instead, APA would be willing to refer the question of whether to designate a West

Committee to a panel of neutral arbitrators. APA agreed. In the various proposals traded in

March, April, June and July 2014, the parties attempted to work out the details of that compromise.

On August 6–8, 2014, APA, USAPA and the Company participated in mediation with mediator George Cohen, in an attempt to reach agreement on a Protocol. During the mediation,

USAPA insisted that the question presented to the arbitrators be whether the West Pilots had an independent legal right, under McCaskill-Bond, to participate in the seniority integration arbitration. See Protocol Agreement USAPA Draft 8/6/2014, J. Ex. 18. APA and the Company firmly rejected that formulation, and made clear that the relevant question was whether APA had, and could exercise, the discretion to designate a West Committee. Ultimately, the parties agreed on language to govern the process of determining whether to designate a West Committee, which is reflected in Paragraph 8 of the final Protocol Agreement executed on September 10, 2014. See

Protocol Agreement, J. Ex. 13, ¶ 8.

Paragraph 8 provides as follows:

8a. Effective if and when the NMB certifies APA as the representative of the combined craft and class, the Merger Committees established by APA and USAPA shall continue in existence, solely for the purpose of concluding an integrated pilot seniority list pursuant to the MOU; provided, that all parties reserve their rights and/or positions with respect to the establishment of a separate Merger Committee to represent the interests of the pilots on the US Airways (West) seniority list referenced in paragraph 2(b) including, without limitation, APA' s position that, following certification by the NMB as the single bargaining representative, it will have the discretion to designate such a committee, and USAPA’s position that APA will have no such legal authority. APA shall not interfere in the 19

deliberations and decision making of the Merger Committees. APA shall not interfere with any Merger Committee with respect to filling any vacancy, choosing legal counselor other advisors and experts, or the manner in which legal and other expenses are financed. Nothing in this Protocol Agreement shall be deemed to modify or supersede any provision of the governing documents of any party existing as of the effective date of this Seniority Integration Protocol Agreement that governs the relationship between the party and a Merger Committee which it has established. 8b. APA has received requests from pilots on the US Airways (West) seniority list referred to in paragraph 2(b) and/or their representatives that, following certification of APA by the NMB, a Merger Committee be designated to represent the interests of such pilots for purposes of this Seniority Integration Protocol. Upon such certification by the NMB, those requests will be referred to a "Preliminary Arbitration Board." The parties to such Preliminary Arbitration will be American, APA, USAPA, the existing Merger Committees, and any committee of pilots on the US Airways (West) seniority list making such requests to APA or the Preliminary Arbitration Board not later than 14 days after certification of APA by the NMB. Within five business days following the selection of the Arbitration Board under paragraph 6 above, the selection of the Preliminary Arbitration Board shall be completed by American, APA and USAPA exchanging lists of five arbitrators, none of whom shall be a member of the Arbitration Board. Any names common to the lists will be appointed to the Preliminary Arbitration Board; if there are more than three common names, American, APA and USAPA shall rank order the common names, and the three arbitrators shall be designated based on the relative combined ranking. To the extent that positions on the Preliminary Arbitration Board remain unfilled and American, APA and USAPA are unable to agree on the remaining arbitrators, the remaining arbitrators shall be selected by alternate strike from the arbitrators proposed by American, APA and USAPA. American, APA and USAPA shall determine by agreement or by lot the order of striking. The Preliminary Arbitration Board shall establish an expedited schedule for a hearing on such requests at which the parties may present argument and/or evidence concerning the requests. The hearing shall consist of no more than five hearing days, and shall be concluded within 30 days of the Preliminary Arbitration Board's receipt of the requests, subject to the arbitrators' schedules. The Preliminary Arbitration Board shall issue an order granting or denying any such requests that APA designate the requested Committee. The order shall be 20

issued within 30 days following the first day of the hearing, subject to the arbitrators' schedules. The order shall be final and binding on AP A and USAPA, American and US Airways or their successors, and all of the pilots of American and US Airways. The record of the proceeding before the Preliminary Arbitration Board, and any supporting Opinion of the Preliminary Arbitration Board, shall not be presented to the Arbitration Board. The Preliminary Arbitration Board will have the authority to resolve any dispute regarding the interpretation or application of this Protocol Agreement arising in connection with the proceeding under this paragraph 8.b. Protocol Agreement ¶ 8 (emphasis added).

F. APA’s NMB Certification and the West Pilot Request to Designate West Committee In compliance with its obligations under the MOU, APA filed a petition with the NMB on January 15, 2014, seeking a determination that American and US Airways constituted a single carrier for the purposes of determining the applicable bargaining unit of Flight Deck Crew

Members (i.e., pilots) under the Railway Labor Act (“RLA”).

On August 8, 2014, the NMB found that, American and US Airways were operating as single transportation system under the RLA for the purposes of representing craft or class of

Flight Deck Crewmembers. American Airlines/US Airways, 41 NMB 174 (2014), J. Ex. 15. On

September 16, 2013, the NMB certified APA as the collective bargaining representative for all pilots at the merged carrier. American Airlines/US Airways, 41 NMB 289 (2014), J. Ex. 16.

While USAPA continues to exist as an organization, following its decertification by the NMB, it is no longer the collective bargaining agent for the US Airways pilots and no longer owes any duty of fair representation to the West Pilots or any other pilots who performed flying for pre- merger US Airways. Rather, the duty of fair representation to all Company pilots now lies solely with APA.

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On September 10, 2014, pursuant to Protocol Paragraph 8.b., nine former West Pilots sent a letter to APA President Keith Wilson, requesting that APA designate a West Committee in the seniority integration arbitration. Letter from West Pilots, J. Ex. 14. Upon its certification by the NMB, APA referred the West Pilots’ request to this Preliminary Arbitration Panel. The question of whether APA has the discretion to appoint a West Pilot Merger Committee is now before this Panel.

ARGUMENT

The Railway Labor Act “ma[kes] explicit that the representative selected by a majority of any class or craft of employees should be the exclusive bargaining representative of all the employees of that craft or class.” Intl. Ass’n of Machinists v. Street, 367 U.S. 740, 759-60

(1961). Thus, when APA was certified by the NMB as the Company pilots’ exclusive bargaining representative, it “‘bec[ame] the agent of all the employees, charged with the responsibility of representing their interest fairly and impartially.’” Humphrey v. Moore, 375 U.S. 335, 342

(1964) (quoting Wallace Corp. v. National Labor Relations Board, 323 U.S. 248, 255 (1944)).

As USAPA itself has argued, “[s]eniority is undisputedly a mandatory and central question of collective bargaining,” and therefore “squarely” within the purview of the “exclusive

NMB-certified representative.” Addington III, Doc. 270 at 3, J. Ex. 21 (citing Ford Motor Co. v.

Huffman, 345 US 330, 337 (1953); Industrial Union of Marine & Shipbuilding Workers v.

NLRB, 320 F.2d 615, 620 (3d Cir 1963); Cal. Brewers Assn. v. Bryant, 444 U.S. 598, 608

(1980)). Accordingly, by virtue of its NMB certification, APA has discretion to act on behalf of all Company pilots in the upcoming US Airways/American seniority integration—including discretion to structure the seniority integration process as it deems appropriate under the circumstances. Such discretion is limited only by the contours of its statutory duty of fair

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representation (“DFR”) under the RLA and the requirements of McCaskill-Bond. Thus, here,

APA has the discretion to designate a separate merger committee to represent the interests of the

West Pilots in the upcoming seniority integration arbitration, so long as such designation is consistent with the DFR and McCaskill-Bond.

As shown below, the DFR empowers APA to take rational, non-discriminatory, good faith steps to promote the pilots’ aggregate welfare and fashion a fair seniority integration process. Moreover, McCaskill-Bond requires APA to provide for a “fair and equitable” seniority integration—a responsibility that has historically been evaluated under the DFR standard.

Because designation of a West Committee is consistent with both APA’s DFR obligation and

McCaskill-Bond’s “fair and equitable” requirement, it is within APA’s discretion as the certified bargaining representative. 3 APA therefore respectfully asks that this Preliminary Arbitration

Panel grant the West Pilots’ request that APA designate a separate merger committee to represent the interests of the pilots on the US Airways (West) Seniority List in the US

Airways/American seniority integration.

I. APA Has Discretion to Designate a West Committee Under the Duty of Fair Representation. a. The DFR Affords APA Broad Authority to Act in Seniority Integration. The duty of fair representation requires a certified bargaining representative to “‘make an honest effort to serve the interests of all of those members, without hostility to any.’” Id.

(quoting Ford Motor Co., 345 U.S. at 337–338). A union “breaches [that duty] if its actions are either ‘arbitrary, discriminatory, or in bad faith.’” Air Line Pilots Ass'n, Int'l v. O'Neill, 499 U.S.

3 Just as the challenging party in a DFR suit bears the burden to show that particular union conduct breaches the duty of fair representation, here, USAPA has the burden of proving that APA does not have the discretion to designate a West Committee.

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65, 67 (1991) (quoting Vaca v. Sipes, 386 U.S. 171, 190 (1967)). Critically, the DFR obligation

“gives a bargaining representative not only wide responsibility but authority to meet that responsibility.” Ford Motor Co., 345 U.S. at 339 (emphasis added).

In the seniority integration context, the Supreme Court has recognized that “[a] wide range of reasonableness must be allowed a statutory bargaining representative in serving the unit it represents, subject always to complete good faith and honesty of purpose in the exercise of its discretion.” Ford Motor Co., 345 U.S. at 338 (CBA provision granting enhanced seniority to veterans was reasonable and did not breach DFR). As the Court explained long ago,“[i]nevitably differences arise in the manner and degree to which the terms of any negotiated agreement affect individual employees and classes of employees” and“[t]he complete satisfaction of all who are represented is hardly to be expected.” Id. A certified bargaining representative complies with its

DFR obligation where its actions “rationally promote the aggregate welfare of employees in the bargaining unit.” Rakestraw v. United Airlines, Inc., 981 F.2d 1524, 1535 (7th Cir. 1992) (citing

Barton Brands, Ltd. v. N.L.R.B., 529 F.2d 793, 800 (7th Cir. 1976)). Thus, APA is empowered to take those steps with respect to seniority integration that “rationally promote the aggregate welfare” of all pilots in their bargaining unit, subject to the DFR prohibition against arbitrary, discriminatory and bad faith conduct. Id.; Ford Motor Co., 345 U.S. at 339; O'Neill, 499 U.S. at

67.

A union satisfies its duty of fair representation with respect to seniority integration when it fashions “a fair process for determining seniority in an airline resulting from a merger.” Air

Wisconsin Pilots Prot. Comm. v. Sanderson, 909 F.2d 213, 216 (7th Cir. 1990) (Posner, J.)

(emphasis original). In Air Wisconsin, the Seventh Circuit considered a DFR seniority integration challenge brought by a group of former Air Wisconsin pilots following that carrier’s

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merger with Mississippi Valley Airlines. Id. at 214-215. The Court explained that the certified union, ALPA, satisfied its duty of fair representation when it established a “fair” seniority integration process— consisting of negotiation and then binding arbitration before a neutral panel of arbitrators— that was “not biased in favor of one group of workers or prejudiced against another” and “was as likely to yield an award in favor of Air Wisconsin's pilots as in favor of

Mississippi Valley's.” Id. at 216. Here, APA likewise seeks to satisfy its DFR obligation by ensuring that US Airways/American seniority integration process is fair to all pilot groups.

Accordingly—so long as APA’s actions are not arbitrary, discriminatory, or in bad faith—the

APA’s duty of fair representation vests it with the authority to take those steps it deems prudent to achieve a fair seniority integration process. Ford Motor Co., 345 U.S. at 339.

b. Designation of a West Committee is Consistent with APA’s Duty of Fair Representation and, Therefore, Within APA’s Discretion as Certified Representative.

In APA’s view, the best way to ensure that the US Airways/American seniority integration process is “not biased in favor of one group of workers or prejudiced against another,” Air Wisconsin, 909 F.2d. at 216, is to grant pilots on each distinct seniority list (i.e., the legacy American Pilots, the East Pilots and the West Pilots) an opportunity to be heard at the seniority integration arbitration. That means designating a separate merger committee to represent the interests of the West Pilots. The duty of fair representation limits APA’s discretion to so-designate a West Committee only insofar that action could be considered “arbitrary, discriminatory, or in bad faith.’” O'Neill, 499 U.S. at 67 (quoting Vaca, 386 U.S. at 190). As shown below, however, the opposite is true. Designation of a West Committee is: (1) reasonable in light of the long-running East/West dispute and past industry practice; (2) non-discriminatory; and (3) represents APA’s good faith effort to ensure a fair process for all pilot groups. As such,

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designation of a West Committee is fully within APA’s discretion as the pilots’ exclusive certified bargaining representative.

(1) Designation of a West Committee Is Reasonable, Not Arbitrary

DFR law affords unions wide discretion to carry out their representational duties. Thus, the Supreme Court has explained, “[a] union's conduct can be classified as arbitrary [and therefore proscribed] only when it is irrational, when it is without a rational basis or explanation.” Marquez v. Screen Actors Guild, Inc., 525 U.S. 33, 46 (1998). Under the facts of

US Airways/American merger, where—nine years after the US Airways/America West merger— there is still no single integrated seniority list for the pre-merger US Airways pilots, it is both reasoned and rational for APA to designate a separate merger committee to represent the interests of the West Pilots.

First, at the most basic level, the East Pilots, the West Pilots and the legacy American pilots are on separate seniority lists, and therefore will necessarily have disparate interests regarding the integration of those lists. Thus, it is rational to afford each of those pilot groups an opportunity to present their views on seniority integration to the arbitration panel.

Second, given the years of animosity and litigation between the East and West pilots, and the disruptive effect that dispute has had on US Airways’ operations, it is entirely prudent for

APA to seek to avoid additional litigation by enabling the West Pilots to have separate representation at the seniority arbitration. If APA were to permit the USAPA merger committee to be the sole representative of the US Airways pilots at the seniority arbitration, West Pilots would inevitably claim that APA breached its duty to those on the US Airways (West) Seniority

List because USAPA cannot and would not adequately represent their interests. Indeed, the

West Pilots would likely argue that, even setting aside the history of animosity between the East

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and West Pilots, USAPA’s very constitution requires its representatives to oppose implementation of the Nicolau Award (which the West Pilots vigorously support) and to advocate for seniority integration based solely on date-of-hire principles (which the West Pilots vehemently oppose). See supra at 5–8. The West Pilots would also likely highlight the fact that

USAPA no longer owes them a duty of fair representation, and thus no longer has any legal obligation to fairly represent their interests. See supra at 21–22. The West Pilots would therefore allege that APA was impermissibly deferring to the wishes of the more politically powerful East

Pilots at their expense. As such, to inoculate against these arguments and minimize the likelihood of subsequent litigation, it is rational for APA to designate a separate merger committee for the West Pilots.

Third, it is consistent with past industry practice in seniority arbitrations for separate merger committees to represent pilots on separate seniority lists. For example, following the

1980 merger of Pan Am and National Airlines, a single arbitration was held to integrate the

National Pilot Seniority List, the National Flight Engineers List, and the Pan Pilots’ System

Seniority List (which contained both pilots and flight engineers into two integrated seniority lists). Separate merger representatives were created for the National Pilots, the National

Engineers, the Pan Am Pilots and the Pan Am Engineers. Pan Am/National Award and Opinion,

Op. 1-2 (1981), J. Ex. 24. Similarly, following the Flying Tiger Lines and Seaboard World

Airlines merger, there was arbitration to create a single integrated list from three distinct lists: the

Seaboard World flight engineers list, the Seaboard World pilots list, and the Flying Tiger pilots list. Flying Tiger Lines/Seaboard World Opinion and Award 3 (1981), J. Ex. 25. Again each group was given separate representation at the seniority arbitration. Id. at 7. Likewise, when

Republic Airlines/Chautauqua Airlines/Shuttle America merged with Frontier Airlines, Midwest

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Airlines and Lynx Aviation, separate merger committees were appointed for each of those four pilot seniority lists. See Republic/Frontier/Midwest/Lynx Opinion and Award 24–28 (2011), J.

Ex. 26. Accordingly, here, it is also rational that pilots on the US Airways (East) List, the US

Airways (West) List and the legacy American List each have separate representation at the seniority integration.

For all these reasons, the APA’s designation of a West Committee is well within the

“wide range of reasonableness … allowed a statutory bargaining representative” in the seniority integration context, Ford Motor Co., 345 U.S. at 338, and can neither be deemed arbitrary nor irrational in violation of the duty of fair representation.

(2) Designation of a West Committee is Non-Discriminatory and Fair to All Pilot Groups.

DFR law dictates that, “[t]o establish that the union's exercise of judgment was discriminatory, a plaintiff must adduce ‘substantial evidence of discrimination that is intentional, severe, and unrelated to legitimate union objectives.’” Beck v. United Food & Commercial

Workers Union, Local 99, 506 F.3d 874, 880 (9th Cir. 2007) (quoting Amalgamated Ass'n of St.,

Elec. Ry. & Motor Coach Employees of Am. v. Lockridge, 403 U.S. 274, 301 (1971) (internal quotations omitted)). Significantly, however, the duty of fair representation requires unions to protect the interests of all employees, and forbids discrimination against minority groups. See

Steele v. Louisville & Nashville R.R., 323 U.S. 192, 202-04 (1944) (discrimination against a discrete minority group is breach of the DFR imposed by the RLA). Accordingly, when it comes to seniority integration, “courts have recognized ‘a union may not take away the seniority of some employees for no reason other than that the losers have too few votes to affect the outcome

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of an intra-union election.’” Addington III, 2014 WL 321349, at *6 (quoting Rakestraw, 981

F.2d at 1530).

In this circumstance, the duty of fair representation makes APA responsible for fully representing the interests of both the East Pilots and the West Pilots—both of which are now minority groups within the union— and forbids discrimination against either group. Steele, 323

U.S. at 202; Rakestraw, 981 F.2d at 1530, 1535.

Here, if the interests of the pilots on the US Airways (West) Seniority List are not fully aired in the seniority integration arbitration, APA would be potentially vulnerable to a DFR suit by the West Pilots on the basis that APA discriminated against them by subordinating their interests to the larger—and therefore more politically powerful— East Pilot group. See

Addington III, 2014 WL 321349, at *7 (rejecting USAPA’s argument that it “[wa]s free to treat the West Pilots poorly because that is what the majority of its members wish it to do”), *12

(noting that “USAPA avoided liability on the DFR claim by the slimmest of margins”). Indeed, the West Pilots have made clear that, if denied an opportunity to participate in the seniority integration arbitration, they intend to bring just such a suit. By designating a separate merger committee to represent the West Pilots, APA ensures “a fair process for determining seniority in an airline resulting from a merger” and thus inoculates itself against such a claim. Air

Wisconsin, 909 F.2d. at 216 (emphasis omitted). APA must therefore have the authority to take such steps to minimize any potential breach of its duty to the West Pilots. See Ford Motor Co.,

345 U.S. at 339.

Moreover, the designation of a West Committee in no way prejudices or discriminates against the East Pilots. By designating a West Committee, APA would simply give the East

Pilots, the legacy American pilots, and the West Pilots the same opportunity to make their case to

29

the neutral arbitration panel— a “fair process” that is “as likely to yield an award in favor of [one pilot group] as it is in favor of [another].” Air Wisconsin, 909 F.2d at 216 (emphasis omitted).

Furthermore, as shown above, designation of a West Committee is related to the “legitimate union objective[],” Lockridge, 403 U.S. at 301, of ensuring that the interests of the West Pilots are adequately represented in the seniority arbitration. Thus APA’s designation of a West

Committee cannot be deemed to violate the DFR obligation by discriminating against the East

Pilots.

(3) In Designating a West Committee, APA Would Be Acting in Good Faith.

Finally, APA’s DFR obligation requires “complete good faith and honesty of purpose in the exercise of its discretion” with respect to seniority integration. Ford Motor Co., 345 U.S. at

338. “To establish that the union's exercise of judgment was in bad faith, the plaintiff must show

‘substantial evidence of fraud, deceitful action or dishonest conduct.’” Beck, 506 F.3d at 880 (9th

Cir. 2007) (quoting Lockridge, 403 U.S. at 299). Here, as shown above, APA’s judgment that it is prudent to appoint a separate merger committee to represent the interests of the West Pilots is based on its good faith belief that this is the best way to “rationally promote the aggregate welfare of employees in the bargaining unit,” Rakestraw, 981 F.2d at 1535, and ensure a “a fair process for determining seniority in an airline resulting from a merger.” Air Wisconsin, 909 F.2d. at 216 (emphasis omitted). See supra at 24–25. Thus, the designation of a West Committee cannot be linked to any evidence— let alone “substantial evidence”— of bad faith.

Because APA’s designation of a West Committee is not “‘arbitrary, discriminatory, or in bad faith,’” O'Neill, 499 U.S. at 67 (quoting Vaca, 386 U.S. at 190), it is consistent with APA’s duty of fair representation. Designation of a separate West Pilot merger committee is therefore within APA’s discretion as the NMB-certified bargaining representative for all Company pilots.

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II. APA Has Discretion to Appoint a West Committee Under McCaskill-Bond and the Allegheny-Mohawk LPPs. The parties agree that the US Airways/American pilot seniority integration is governed by the McCaskill-Bond Amendment to the Federal Aviation Act, Pub. L. 110–161, Div. K,

Title I, § 117, 121 Stat 2382 (Dec. 26, 2007), codified at 49 U.S.C. § 42112, note § 117

(“McCaskill-Bond”), J. Ex. 6. 4 That statute, and the Allegheny-Mohawk Labor Protective

Provisions it incorporates by reference (“Allegheny-Mohawk LPPs” or “Allegheny-Mohawk”),

J. Ex. 7, further define the contours of APA’s authority in the seniority integration process. As shown below, designation of a separate merger committee to represent the interests of the West

Pilots is fully consistent with McCaskill-Bond and Allegheny-Mohawk and therefore within

APA’s discretion as certified bargaining representative. 5

4 US Airways and American are “covered air carriers,” and their merger constituted a “covered transaction,” all within the meaning of McCaskill-Bond, 49 U.S.C. § 42112, note § 117(b)(2), (4). Likewise the legacy US Airways and legacy American pilots are “covered employees” within the meaning of McCaskill-Bond, 49 U.S.C § 42112, note § 117(b)(3).

5 In Addington III, USAPA argued that, under McCaskill-Bond and the RLA, the certified bargaining representative alone has the right to participate in and control the seniority integration process. See Addington III, Doc. 270, J. Ex. 21. After conducting an analysis of the relevant statutory language and CAB case law, the Addington III Court agreed with USAPA that McCaskill-Bond vests the certified collective bargaining representative with the exclusive right to act on behalf of represented employees in the seniority integration process. Addington III, 2014 WL 321349, *12, J. Ex. 11. The court argued that, because the certified representative “owes a duty of fair representation to all represented employees,” “[a] ‘fair and equitable’ integration process will involve that representative acting on behalf of the represented employees.” As such, courts should not “interfere with the established representation format” or “tamper with and inevitably complicate the procedures used to negotiate seniority list integration” by granting an “independent group” separate rights in a seniority arbitration. Id. (quoting Nat'l Airlines, Arbitration, 84 C.A.B. at 476). In light of USAPA’s previous position and the court’s reliance on its arguments, it is incongruous for USAPA to now argue that it has the right to interfere with APA’s administration of the seniority integration arbitration. Nevertheless, this Preliminary Arbitration Board need not decide whether McCaskill- Bond gives APA exclusive control over the seniority integration process because APA gained the authority to meet its DFR obligations during seniority integration when it was certified by the 31

McCaskill-Bond requires that employee integration in airline mergers be subject to

“sections 3 and 13 of the labor protective provisions imposed by the Civil Aeronautics Board

[“CAB”] in the Allegheny-Mohawk merger.” 49 U.S.C. § 42112, note § 117(a).6 McCaskill-

Bond further provides that “the requirements of any collective bargaining agreement that may be applicable to the terms of [seniority] integration” will not be affected by that requirement, “so

NMB. See supra at 23–25. Nor does this Board need to decide which pilot groups or subgroups have an independent legal right to participate in the seniority integration process, whether under McCaskill-Bond or otherwise. The sole question before this panel is whether granting the West Pilots’ request for APA to designate a West Committee is a valid exercise of APA’s discretion under the duty of fair representation and McCaskill-Bond, and should therefore be granted.

6 McCaskill-Bond, 49 U.S.C § 42112, note § 117, provides in pertinent part:

(a) Labor integration.--With respect to any covered transaction involving two or more covered air carriers that results in the combination of crafts or classes that are subject to the Railway Labor Act (45 U.S.C. 151 et seq.), sections 3 and 13 of the labor protective provisions imposed by the Civil Aeronautics Board in the Allegheny-Mohawk merger (as published at 59 C.A.B. 45) shall apply to the integration of covered employees of the covered air carriers; except that—

(1) if the same collective bargaining agent represents the combining crafts or classes at each of the covered air carriers, that collective bargaining agent's internal policies regarding integration, if any, will not be affected by and will supersede the requirements of this section; and

(2) the requirements of any collective bargaining agreement that may be applicable to the terms of integration involving covered employees of a covered air carrier shall not be affected by the requirements of this section as to the employees covered by that agreement, so long as those provisions allow for the protections afforded by sections 3 and 13 of the Allegheny-Mohawk provisions.

J. Ex. 6.

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long as those provisions allow for the protections afforded by sections 3 and 13 of the

Allegheny-Mohawk provisions.” 49 U.S.C. § 42112, note § 117(a)(2).

Section 3 of the Allegheny-Mohawk LPPs requires in part that, “[i]nsofar as the merger affects the seniority rights of the carriers’ employees, provisions shall be made for the integration of seniority lists in a fair and equitable manner, including, where applicable, agreement through collective bargaining between the carriers and the representatives of the employees affected.”

Allegheny-Mohawk § 3 (emphasis added).7

Section 13(a) of Allegheny-Mohawk establishes a procedure for binding arbitration of a seniority dispute before a single arbitrator according to an expedited timeline.8 Finally,

7 Section 3 of the Allegheny-Mohawk LPPs states in full:

Insofar as the merger affects the seniority rights of the carriers’ employees, provisions shall be made for the integration of seniority lists in a fair and equitable manner, including, where applicable, agreement through collective bargaining between the carriers and the representatives of the employees affected. In the event of failure to agree, the dispute may be submitted by either party for adjustment in accordance with section 13.

J. Ex. 7.

8 Section 13(a) of the Allegheny-Mohawk LPPs states, in full:

(a) In the event that any dispute or controversy (except as to matters arising under section 9) arises with respect to the protections provided herein which cannot be settled by the parties within 20 days after the controversy arises, it may be referred by any party to an arbitrator selected from a panel of seven names furnished by the National Mediation Board for consideration and determination. The parties shall select the arbitrator from such panel by alternatively striking names until only one remains, and he shall serve as arbitrator. Expedited hearings and decisions will be expected, and a decision shall be rendered within 90 days after the controversy arises, unless an extension of time is mutually agreeable to all parties. The salary and expenses of the arbitrator 33

Allegheny-Mohawk Section 13(b) authorizes the parties to utilize “an alternative method for dispute settlement or an alternative procedure for selection of an arbitrator,” in lieu of that established by Section 13(a), where “the parties by mutual agreement determine that [such alternative] … is appropriate in their particular dispute.”9 Here, the parties agree that—pursuant to McCaskill-Bond § 117(a)(2) and/or Allegheny-Mohawk Section 13(b)—the US

Airways/American seniority integration proceeds under the timelines and procedures established by the MOU and the Protocol Agreement, rather than those set forth in Allegheny-Mohawk

Section 13(a).

Subject to the Allegheny-Mohawk Section 3 requirement that provisions be made “for the integration of seniority lists in a fair and equitable manner,” McCaskill-Bond affords wide latitude to structure a seniority integration process. This is particularly true where, as here, the procedures described in Allegheny-Mohawk Section 13(a) have been displaced by a “collective

shall be borne equally by the carrier and (i) the organization or organizations representing the employee or employees or (ii) if unrepresented, the employee or employees or group or groups of employees. The decision of the arbitrator shall be final and binding on the parties.

J. Ex. 7.

9 Section 13(b) of the Allegheny-Mohawk LPPs states in full:

(b) The above condition shall not apply if the parties by mutual agreement determine that an alternative method for dispute settlement or an alternative procedure for selection of an arbitrator is appropriate in-their particular dispute. No party shall be excused from complying with the above condition by reason of having suggested an alternative method or procedure unless and until that alternative method or procedure shall have been agreed to by all the parties.

J. Ex. 7. 34

bargaining agreement that may be applicable to the terms of [seniority] integration,” 49 U.S.C.

§ 42112, note § 117(a)(2), or “an alternative method for dispute settlement,” Allegheny-Mohawk

Section 13(b). Moreover, nothing in the language of McCaskill-Bond or Allegheny-Mohawk

Sections 3 or 13 specifically speaks to or limits the number of merger committees that may be designated by the current certified collective bargaining representative10 in a seniority arbitration.

10 APA anticipates that USAPA may argue that somehow, for the purposes of seniority integration, McCaskill-Bond permanently vests representational authority over the pre-merger employee groups with those groups’ pre-merger bargaining representatives. Thus, USAPA may argue, they retain the right to represent all former US Airways pilots, including the West Pilots. There is nothing in the language of the statute to support that position. Rather, McCaskill-Bond states that it covers transactions involving the “combination of crafts or classes that are subject to the Railway Labor Act,” and defines “covered employee” as one who “is a member of a craft or class that is subject to the Railway Labor Act.” McCaskill-Bond § 42112, note § 117(a), (b)(3)(B). The statute therefore imports those terms as defined in the RLA. Under the RLA, the NMB has exclusive jurisdiction to determine representation. See Switchmen’s Union v. NMB, 320 U.S. 297, 303-07 (1943). Because McCaskill-Bond does nothing to disturb the NMB’s jurisdiction in this matter, whichever union the NMB currently deems to be the proper representative has the right—and the obligation—to represent the full relevant craft or class of employees as to those seniority integration matters that proceed under its watch. Here, the NMB has determined that APA is now the pilots’ exclusive representative. Therefore, APA alone has the legal right to act on behalf of employees in the seniority integration process going forward. USAPA no longer has any RLA responsibility for representing the Company pilots, and therefore has no vested rights under McCaskill-Bond. CAB precedent confirms that, under Allegheny-Mowhawk, the bargaining representative at the time of seniority integration, and not the pre-merger representative, has the right and responsibility to act with respect to seniority integration. Indeed, as explained at length below, the CAB defined Allegheny-Mowhawk’s “fair and equitable” standard as coextensive with a union’s duty of fair representation. See infra at 38–39 (citing National Airlines Acquisition, Arbitration, 95 C.A.B. at 586; Delta-C&S Seniority List, 29 C.A.B. 1347, 1350 (1959), J. Ex. 22; 40 C.A.B. 903, 907 (1964), J. Ex. 23; Nat'l Airlines, Arbitration, 84 C.A.B. at 476, 1979 WL 49136, at *32; National Airlines Acquisition, 94 C.A.B. 433, 437, 1982 WL 35259, at *4 (Mar. 4, 1982); Seaboard Acquisition, 105 C.A.B. 472, 476, 1983 WL 35470, *4 (Dec. 15, 1983)). That approach makes sense only if the seniority integration process is administered and controlled by an entity that owes such a duty, i.e., the current certified bargaining representative. Among the most telling CAB examples in this regard is Nat'l Airlines Acquisition, Arbitration Request, 94 C.A.B. 433, 433–4, 1982 WL 35259 (Mar. 4, 1982). There, the CAB considered a petition by a subgroup of former National Airlines employees to set aside a seniority list negotiated by the Teamsters, which the NMB had certified as the post-merger 35

Neither McCaskill-Bond nor the Allegheny-Mohawk LPPs define the phrase “fair and equitable.” Nor is the meaning of that language illuminated by McCaskill-Bond’s legislative history: “McCaskill-Bond ‘was enacted in December 2007 as a last-minute amendment to an unrelated budget bill, and was never considered in committee’” and thus has almost “no meaningful legislative history” at all. Addington III, 2014 WL 321349, *10 (quoting Seniority

Integration in Airline Mergers Under the McCaskill–Bond Act, Airline and Railroad Labor and

Employment Law: A Comprehensive Analysis, American Law Institute (October 11–13, 2012),

J. Ex. 27).11 However, because McCaskill-Bond expressly incorporates Allegheny-Mohawk

representative of the merged clerical employee group. The Teamsters had been the pre-merger representative of clerical employees at Pan Am, while the comparable class of workers at National had been represented by ALEA. The CAB observed: “Petitioners acknowledge that their union representative at National, ALEA, was unsuccessful in retaining its representational status for the clerical unit at merged Pan American pursuant to the requirements of the Railway Labor Act. Thus, petitioners concede that their legitimate representative at Pan American was Teamsters.” Id. at 434, *2. The CAB then declined to set aside the negotiated seniority list because the “Teamsters met its duty of fair representation.” Id. at 436, *3. There was never any suggestion that ALEA should have been entitled, either under the RLA or Allegheny-Mohawk, to continue to negotiate seniority with Pan Am, or otherwise participate in the seniority integration process or represent the pre-merger National employees after its decertification. Likewise, here USAPA’s status as the pre-merger representative of the US Airways pilots affords it no independent legal rights to participate in the seniority integration process on behalf of former US Airways pilots; USAPA’s continued participation is thus a function contract (i.e., the MOU and the Protocol Agreement), not statute. Finally, as a policy matter, it makes sense that representational responsibility in seniority integration lies solely with the current NMB-certified representative: a decertified pre-merger representative no longer has any DFR obligation to the craft or class of employees. As such, if McCaskill-Bond somehow gave pre-merger representatives the right to represent all pre-merger members, employees wronged by the pre-merger representative would have no legal recourse to ensure that they were fairly and equitably treated during the seniority integration process. Based on the statutory language and the limited legislative history, see infra at 36, n. 11, there is no reason to believe McCaskill-Bond intended to effect such an absurd result. 11 The “limited information available establishes the statute ‘grew out of American Airlines' acquisition of Trans World Airlines [TWA],’” was “sponsored by two senators who believed the … merger had been unfair to the TWA employees,” and was “meant to ‘ensure workers in the future don't suffer the same fate as the TWA workers.’” Addington III, 2014 WL 321349, at *10 36

Sections 3 and 13 as imposed by the CAB, CAB decisions applying Sections 3 and 13 and comparable labor protective provisions do offer some guidance in interpreting the statute.

Addington III, 2014 WL 321349, at *11 (“Congress is presumed to have been aware of how

Sections 3 and 13 from the Allegheny–Mohawk merger had been interpreted and those interpretations provide useful, but certainly not dispositive, guidance.”) (citing Abebe v.

Gonzales, 493 F.3d 1092, 1101 (9th Cir. 2007); Lorillard v. Pons, 434 U.S. 575, 581 (1978)).

The CAB has explained that, under Section 3’s “fair and equitable” requirement, the current certified bargaining representative is charged with “mak[ing] every effort to see that

[minority employee subgroups] are given extensive consideration, and that their interests are fairly and fully represented” during seniority integration. National Airlines, Acquisition, 84

C.A.B. 408, 477, 1979 WL 49136, at *32 (Oct. 24, 1979). CAB caselaw demonstrates, however, that unions are afforded tremendous flexibility in meeting that obligation. Thus, the CAB found a wide range of seniority integration procedural structures to be “fair and equitable” as required by Section 3, including cases where unions chose to afford certain limited employee-subgroups the chance to participate in seniority integration to varying degrees. See, e.g., United-Capital

Merger Case, 40 C.A.B. 903, 907 (1964), J. Ex. 23 (seniority integration procedures were fair where subgroup of flight crew employees had been “invited … to participate as a full party in the

[seniority-integration] arbitration” and did in fact participate, though declined to do so as a full party); Nat’l Airlines Acquisition, Arbitration, 95 C.A.B. 584, 588, 594-595, 1982 WL 35318, at

*3, *8–9 (Apr. 15, 1982) (procedures were “fair and equitable” where, in the course of a 35-day

(quoting Comm. of Concerned Midwest Flight Attendants for Fair and Equitable Seniority Integration v. Int'l Bhd. of Teamsters Airline Division, 662 F.3d 954, 957 (7th Cir. 2011); Seniority Integration in Airline Mergers Under the McCaskill–Bond Act, J. Ex. 27.

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hearing, subgroup of union members on furlough appeared before the arbitrator twice to present their seniority integration position, though not as a full party, even though they were also represented in that arbitration by their union’s MEC).12 It is likewise consistent with Allegheny-

Mohawk for APA to ensure “that the[] interests [of the East Pilots and the West Pilots] are fairly and fully represented,” National Airlines, Acquisition, 84 C.A.B. at 477, by designating a West

Committee to participate in the seniority arbitration alongside to the existing USAPA and legacy

American merger committees.

Critically, the CAB has long defined the Section 3 “fair and equitable” requirement with reference to—and as coextensive with—the union’s duty of fair representation. Specifically, the

CAB explained that an employee group cannot establish a violation of the “fair and equitable” requirement where it “ha[s] not shown that the procedure used by their members’ certificated bargaining representatives was defective or that the representatives breached their duty of fair representation.” National Airlines Acquisition, Arbitration, 95 C.A.B. at 586, 1982 WL 35318, at

*9. Thus, “an employee is bound by the resolution of seniority and other disputes by his authorized bargaining representative in negotiations or binding arbitration, unless the employee can show that the resolution was tainted by the union's breach of its duty of fair representation.”

Id. (citing Allegheny-Mohawk). See also, e.g., Delta-C&S Seniority List, 29 C.A.B. 1347, 1350

(1959), J. Ex. 22 (seniority integration challenge based on “fair and equitable” requirement dismissed where “it [wa]s not alleged that ALPA, the duly designed representative of the pilots,

12 See also Am.-Trans Caribbean Merger, 57 C.A.B. 581, 586 n.10 (1971) (“[T]here may be a certain divergence of interest between the active and furloughed pilots of both [pre-merger carriers, who were both unionized], and accordingly we would expect that all such groups of pilots or flight engineers would be entitled to have separate or additional representation in the event they so desire”).

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failed to perform its statutory function of representing the pilots” and “[n]o charge [wa]s made

… that Delta or ALPA acted in bad faith or with deliberate intent to subvert the [CAB’s LPP] order”) (applying DFR standard to evaluate compliance with “fair and equitable” requirement);

United-Capital Merger Case, 40 C.A.B. at 906, J. Ex. 23 (same); Nat'l Airlines, Arbitration, 84

C.A.B. at 476, 1979 WL 49136, at *32 (same); National Airlines Acquisition, 94 C.A.B. 433,

437, 1982 WL 35259, at *4 (Mar. 4, 1982) (same); Seaboard Acquisition, 105 C.A.B. 472, 476,

1983 WL 35470, *4 (Dec. 15, 1983) (same) (citing cases).

Here, as explained above, appointment of a separate merger committee to represent the interests of the West Pilots is consistent with APA’s duty of fair representation. See supra at 25–

30. Such designation is therefore also consistent with Allegheny-Mohawk Section 3’s requirement that provisions be made “for the integration of seniority lists in a fair and equitable manner.” Accordingly, it is fully within APA’s discretion under McCaskill-Bond to designate a

West Committee.

CONCLUSION

As the exclusive NMB-certified collective bargaining representative for the Company’s pilots, APA has the discretion to designate a separate merger committee to represent the seniority interests of the pilots on the US Airways (West) Seniority List in the upcoming US Airways/

American seniority-integration arbitration. This exercise of discretion is consistent with APA’s duty of fair representation and McCaskill-Bond’s requirement that provisions be made for a “fair and equitable” seniority integration process. Moreover, APA’s designation of a West Committee is prudent in light of past industry practice, the fraught history between the East and West Pilots,

USAPA’s constitutional mandate, and the fact that USAPA no longer owes any duty to the West

Pilots. APA therefore respectfully asks this Preliminary Arbitration Board to grant the West

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Pilots’ request, pursuant to Paragraph 8.b. of the Protocol Agreement, that a separate merger committee be designated to represent their interests in the upcoming seniority integration arbitration.

Dated: December 3, 2014 Respectfully Submitted,

/s/ EDGAR N. JAMES Edgar N. James Evin F. Isaacson JAMES & HOFFMAN, P.C. 1130 Connecticut Avenue, NW, Suite 950 Washington, DC 20036-3975 (202) 496-0500 (202) 496-0555 (fax) [email protected] [email protected]

Mark Myers Legal Department ALLIED PILOTS ASSOCIATION 14600 Trinity Boulevard, Suite 500 Fort Worth, TX 76155-2512 (817) 302-2181 (817) 302-2187 (fax) [email protected]

Counsel for Allied Pilots Association

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