BEFORE THE McCASKILL-BOND AMENDMENT SECTION 13(b) PRELIMINARY ARBITRATION PANEL

) In re ) ) The application by former ) America West pilots for ) party status in the Section 3 and 13 ) Joshua Javits, Chair seniority list integration dispute ) Stephen Crable, Member between the Pilots of the American ) Shyam Das, Member Airlines, Inc. and the Pilots of ) US Airways, Inc. ) )

PREHEARING BRIEF OF THE USAPA MERGER COMMITTEE AND THE US PILOTS ASSOCIATION

This Preliminary Arbitration Panel must reject the application by former America

West Airlines pilots for separate party status in the McCaskill-Bond Amendment Sections

3 and 13 seniority list integration dispute between the pilots of , Inc. and US Airways, Inc. The Applicants have already litigated and lost a claim against the

US Airline Pilots Association (“USAPA”) under the McCaskill-Bond Amendment, 49

U.S.C. § 42112, Note 117, for party status in the seniority dispute among the American and

US Airways pilots in Addington v. US Airline Pilots Association, 13-cv-471-ROS

(Addington III). Their claim is currently on appeal to the Court of Appeals for the Ninth Circuit. This Panel must give preclusive effect to that final judgment of the

United States District Court. The Applicants may only obtain relief on their claim to separate party status in this McCaskill-Bond proceeding from the Ninth Circuit Court of

Appeals.

The parties' Section 13(b) seniority integration protocol agreement established this preliminary arbitration panel to resolve the issue whether the request by these West Pilots

1 for separate representation status in the SLI process should be granted or denied. Section

8(b) of the Section 13(b) agreements states, “The Preliminary Arbitration Board shall issue an order granting or denying any such requests that APA designate the requested

Committee.” The issue before this Board is not, as the Applicants may suggest, whether

APA has authority under the McCaskill-Bond Amendment to appoint the committee they request. APA has no such authority under McCaskill-Bond. And even if it did, that issue is now moot since APA declined to make a decision on the Applicants’ request and instead submitted the issue to this Panel. The Panel must answer the question identified in

Section 8(b), not a statutory dispute over APA’s claimed authority under McCaskill-Bond.

Even were the Applicants not precluded by law from again litigating their claim under McCaskill-Bond for separate party status in the Sections 3 and 13 dispute, the application should be denied. The Applicants do not seek separate party status because of a unique equitable interest under Section 3 held by former America West pilots vis-à- vis the American Airlines pilots, which requires their separate participation in order to achieve a fair and equitable integration of the three seniority lists governing the American and US Airways pilots. Rather, the Applicants demand separate party status to continue their partisan interest in an internal seniority dispute among US Airways pilots. They seek party status in order to press a particular proposal—the ranking of US Airways pilots on a seniority list in the way established by Arbitrator George Nicolau in his 2007 award in the Air Line Pilots Association Merger Policy proceeding among the former pilots of

America West and US Airways. But, as with their failed claim for separate party status under McCaskill-Bond, the Applicants have failed repeatedly in litigation to impose the seniority list resulting from that ALPA Merger Policy dispute as the governing seniority system among the pilots of US Airways. They cannot now again seek to impose that list

2 through the artifice of separate party status in this McCaskill-Bond proceeding. For that amounts to a collateral attack on the adverse judgments entered upon the Applicants’ breach of the duty of fair representation claims against USAPA, and a transparent attempt to impose the result of a private arbitration in the earlier US Airways/America West transaction through a forbidden retroactive application of McCaskill-Bond.

Equally important, granting Applicants separate party status would prejudice the overall US Airways pilot group by dividing its representation in the SLI proceeding with the American pilots and pitting two committees covering the same premerger craft or class against one another. Permitting Applicants to assert a rejected ALPA seniority list proposal that has never been implemented and has never governed the seniority of any

US Airways pilot as the premerger list for US Airways pilots would also turn the Section

3 and 13 proceeding into a fiction by integrating pilots based on artificial seniority positions they never held. By no measure can such an artificial and fictional application of seniority rights accord with the “fair and equitable” standard of Section 3. The

Applicants do not have a protected legal interest in reconstituting the status quo in their favor, and thus cannot assert any such interest in this proceeding.

FACTUAL BACKGROUND

1. The America West/US Airways Merger.

In 2005 US Airways and America West merged to become a single airline known as US Airways. Both pilot groups were represented by the Air Line Pilots Association, and, as a result, seniority integration was controlled by ALPA’s then current Merger and

Fragmentation Policy. ALPA and the carriers entered into a Transition Agreement (the”

2005 Transition Agreement”) which in part recognized that seniority would be integrated

3 under the ALPA Merger Policy but that the result could not be implemented until it was part of a joint collective bargaining agreement negotiated by ALPA and the carriers and separately ratified by the two pilot groups. The ALPA process led to an Award issued by

George Nicolau in May 2007. The award of Arbitrator Nicolau was viewed by the US

Airways Master Executive Council as unfair to US Airways pilots and contrary to ALPA

Merger Policy. The US Airways MEC filed an action in June 2007 against the America

West MEC in the Superior Court for the District of Columbia to vacate the Nicolau Award.

USAPA MC Att 12, US Airways Master Executive Council v. America West Master

Executive Council, No. 4358-07 (D.C. Sup. Ct.), Complaint. The America West MEC unsuccessfully sought to remove the action to the United States District Court for the

District of Columbia on the basis that the action should be considered a DFR against

ALPA since the Nicolau Award was, as they maintained, only a bargaining proposal for

ALPA and did not establish enforceable seniority rights. USAPA MC Attachment 13,

Notice of Removal; US Airways Master Executive Council v. America West Master

Executive Council, 525 F.Supp.2d 127 (D..C. 2007)

USAPA was formed by a number of US Airways Pilots in an effort to change representation of US Airways pilots. USAPA filed an application with the National

Mediation Board for investigation of a single transportation system among the pilot craft or class arising from the merger of America West Airlines and US Airways, Inc., in

November 2007. The NMB determined that a single transportation system existed and conducted a representation election among the pilots upon its determination of a single craft or class. USAPA was certified as representative of the single US Airways pilot craft or class in April 2008. The litigation over the Nicolau Award between the US Airways

MEC and the America West MEC was voluntarily dismissed once ALPA was decertified

4 as representative of the pilots. USAPA MC Attachment 14, Joint Stipulation of Dismissal.

Consistent with the 2005 Transition Agreement, the Nicolau Award was never implemented because ALPA never negotiated a joint collective bargaining agreement covering the two pilot groups.

Following its certification as representative, USAPA entered negotiations with US

Airways under the procedures of Section 6 of the Railway Labor Act for a collective bargaining agreement. In September 2008, USAPA presented a seniority proposal to US

Airways. US Airways never responded to the proposal and no joint collective bargaining agreement was ever negotiated.

2. Addington I (The 2008 DFR Action).

In 2008, several former America West pilots commenced an action in United

States District Court for the District of alleging in part that USAPA violated its

DFR by not adopting the Nicolau Award as its seniority proposal to US Airways. The plaintiffs alleged that USAPA breached its DFR “because it abandoned the Nicolau Award in favor of a date-of-hire list solely to benefit the East Pilots at the expense of the West

Pilots.” Addington v. USAPA, 606 F.3d 1174, 1178 (9th Cir. 2010). Plaintiffs were certified as the representatives of a class of former America West pilots. The plaintiffs prevailed in the district court on their DFR claim and obtained injunctive relief requiring USAPA to

“make all reasonable efforts” to enter into an agreement with US Airways that implemented the Nicolau Award. Id.

USAPA appealed to the Ninth Circuit Court of Appeals. In June 2010, the Ninth

Circuit issued a decision vacating the district court’s decision on ripeness grounds and remanded the case to the district court with directions for dismissal. Id. at 1184. In so ruling, the Court made the following determinations:

5 It is . . . at best, speculative that a single CBA incorporating the Nicolau Award would be ratified if presented to the union membership. ALPA had been unable to broker a compromise between the two pilot groups, and the East Pilots had expressed their intentions not to ratify a CBA containing the Nicolau Award. Thus, even under the district court’s injunction mandating USAPA to pursue the Nicolau Award, it is uncertain that the West Pilots’ preferred seniority system ever would be effectuated. That the court cannot fashion a remedy that will alleviate Plaintiffs’ harm suggests that the case is not ripe. Id. at 1180.

USAPA’s final proposal may yet be one that does not work the disadvantages Plaintiffs fear, even if that proposal is not the Nicolau Award. Id. at 1181.

We do not address the thorny question of the extent to which the Nicolau Award is binding on USAPA. We note, as the district court recognized, that USAPA is at least as free to abandon the Nicolau Award as was its predecessor, ALPA. The dissent appears implicitly to assume that the Nicolau Award, the product of the internal rules and processes of ALPA, is binding on USAPA. Id. at n.3.

3. Addington II (The 2010 Declaratory Judgment Action)

In July 2010, shortly after Addington I was dismissed, US Airways filed a declaratory judgment action naming the Addington I plaintiffs and USAPA as defendants and asking whether the Company would violate the law if it entered into a CBA with

USAPA that did not implement the Nicolau Award. US Airways, Inc. v. Addington, No.

10-cv-01570 ROS (D. Ariz. July 26, 2010). Plaintiffs again were certified as class representatives of all former America West pilots.

In October 2012, the district court granted USAPA’s motion for summary judgment on Count II of US Airways’ complaint, holding in part that “entry into a collective bargaining agreement which does not incorporate the Nicolau Award would not constitute a breach of USAPA’s duty of fair representation to the West Pilots in violation of the Railway Labor Act and therefore US Airways is not prohibited from accepting or implementing a non-Nicolau seniority list.” US Airways, No. 10-cv-01570-

ROS, Complaint, Doc. 1, at 18, ¶48 (emphasis in original). In its ruling, the district court

6 held that USAPA “is free to pursue any seniority position it wishes,” USAPA MC

Attachment 1, 2:10-cv-01570-ROS, Order, Doc. 193, at 1, and that a seniority proposal other than the Nicolau Award “does not automatically breach its duty of fair representation.” Id. at 8. The court denied the West Pilots’ motion for summary judgment that entry into a CBA that did not include the Nicolau Award would violate

USAPA’s DFR. West Pilots did not appeal, and the appeal filed by US Airways was withdrawn once the merger with American became effective.

4. The American Airlines/US Airways Merger.

In November 2011, AMR commenced a voluntary Chapter 11 case in the United

States Bankruptcy Court for the Southern District of New York. In February 2013, US

Airways and American entered into an Agreement and Plan of Merger (“Merger

Agreement”) which was approved by the Bankruptcy Court in March 2013. After the anti- trust action filed by the Department of Justice was settled, the merger closed on

December 9, 2013.

5. The American/US Airways/APA/USAPA MOU.

In late 2012 and early 2013, prior to announcement of the merger, the Unsecured

Creditors Committee encouraged the pilot representatives (USAPA and APA) and the carriers (American and US Airways) to negotiate a Memorandum of Understanding that would eliminate collective bargaining provisions (principally in the existing US Airways agreement) that would interfere with the merger, would secure pilot support of the merger and would set the terms and conditions of employment for the combined pilot group in the event of a merger. The parties were well aware of the unresolved seniority dispute between East and West pilots at US Airways. The UCC, US Airways and American management and APA all made clear they would not enter into any agreement that

7 attempted to set the terms of seniority integration in the US Airways/America West seniority dispute. The parties instead agreed that seniority integration between the pilots of the then merging carriers would be resolved through the McCaskill-Bond process.

MOU, Paragraph 10. The MOU provided (Paragraph 10) that seniority would be integrated through a “process consistent with McCaskill-Bond” (Paragraph 10.a) and that

“the seniority lists currently in effect at US Airways” would not be changed “other than through the process set forth in this Paragraph 10” (Paragraph 10.h). The MOU established numerous other improvements in rates of pay, rules and working conditions for American and US Airways pilots.

On January 4, 2013, the USAPA Board of Pilot Representatives, which is comprised of representatives from all US Airways domiciles including the Phoenix domicile (which consists exclusively of the former America West pilots), voted unanimously to send the

MOU out for pilot ratification with a BPR recommendation to approve.

On February 8, 2013, the MOU was ratified by 75% of pilots entitled to vote

(members of USAPA in good standing). The MOU was approved by 98% of the West pilots who voted.

6. Addington III (The 2013 DFR Action).

In March 2013, the Addington plaintiffs again filed suit against USAPA (and US

Airways), alleging that USAPA would breach its duty of fair representation “if it used anything other than the Nicolau Award list to integrate East Pilots and West Pilots,”

(USAPA MC Attachment 2, Addington v. USAPA, No. 13-cv-00471 ROS, Doc. 1,

Complaint, at ¶¶96-97), that USAPA breached the 2005 Transition Agreement by failing to include the Nicolau Award in the MOU (Id., Complaint, at ¶¶101-112) and that USAPA should be required to pay attorneys’ fees expended by the plaintiffs not only in the instant

8 case but also in the two prior cases in which plaintiffs were unsuccessful (Id., Complaint, at ¶¶113-119). Plaintiffs later amended their complaint to allege that under the McCaskill-

Bond Amendment they “have party status and the right (but not the obligation) to participate fully (with counsel of their own choice) in the MOU Seniority Integration process.” (USAPA MC Attachment 3, Addington v. USAPA, No. 13-cv-00471 ROS, Doc.

134, Amended Complaint, at ¶132.)

Following a two-day bench trial and extensive briefing, the District Court issued a decision on January 10, 2014, finding “the former America West pilots have not established [USAPA] breached its duty of fair representation” by failing to adhere to the

Nicolau Award and that they “are not entitled to participate in the upcoming statutory procedure required for the integration of the US Airways and American Airline pilots.”

The Order dismissed all claims. (USAPA MC Attachment 4, Addington v. USAPA, No. 13- cv-00471 ROS, Doc. 298, Decision, at p. 1.) Explaining its decision denying Plaintiffs’

McCaskill-Bond claim, the District Court stated: “[T]he process contemplated by

McCaskill-Bond allows only the certified bargaining representatives to participate in seniority integration proceedings.” (Id., at p. 20.)

US Airways moved to correct the judgment to state that it was binding on the West

Pilot Class which included all former America West Pilots and to modify the order to exclude a statement (footnote 15) concerning the rights of APA after it was certified as the representative of the combined pilot craft or class (Doc. 300). The motion to correct the judgment to include the entire West Pilot Class was granted. The motion to modify the order was denied. (Doc. 304-05.)

9 Plaintiffs appealed. USAPA and US Airways filed cross-appeals. The appeal is currently pending before the United States Court of Appeals for the Ninth Circuit. (Nos.

14-15757, 14-15874, 14-15892.)

7. The Seniority Integration Protocol Agreement.

Following approval of the merger (December 9, 2013), USAPA Merger Committee

Chair Jess Pauley met with Mark Stephens Chair of the APA Seniority Integration

Committee to begin discussing a Protocol Agreement pursuant to Paragraph 10.f of the

MOU. Negotiations were delayed while US Airways/American and APA attempted to insert representatives from a “West Merger Committee” into the process even though the question of whether such committee had any right to participate was then still pending before the United States District Court in Addington III. Once the Court issued its decision on January 10, 2014, US Airways/American and APA agreed that the “West

Merger Committee” was not entitled to participate.

The parties extended the deadline for agreeing upon a Protocol Agreement through

February 9, 2014. US Airways/American and APA then took the position that once APA became the certified bargaining representative, it could unilaterally establish a West

Merger Committee and give it the right to participate in the SLI process. US

Airways/American also claimed that once APA became the bargaining representative they would have the right to change any part of the Protocol Agreement without the consent of

USAPA or the USAPA Merger Committee. The USAPA Merger Committee refused to agree, and the parties were at impasse.

USAPA then asked the National Mediation Board to issue a list of arbitrators as provided by the McCaskill-Bond Amendment under Section 13(a) of the Allegheny-

Mohawk LPPs. US Airways/American and APA notified the NMB and USAPA that they

10 did not believe the procedures outlined in the McCaskill-Bond Amendment applied because of the provisions of Paragraph 10.f of the MOU and that they refused to select from any list provided by the NMB.

On February 27, 2014, USAPA filed suit in the United States District Court in the

District of Columbia (USAPA v. American Airlines et al., No. 14-cv-28 BAH) to compel

US Airways, American and APA to follow the procedure set forth in the McCaskill-Bond

Amendment under Section 13(a) to select an arbitrator and promptly present the seniority dispute for resolution under the “fair and equitable” standard embodied in the statute.

US Airways/American and APA denied that they were required to follow the

McCaskill-Bond procedure under Section 13(a). APA asserted a counterclaim seeking a declaration that it had the right to constitute a committee to represent the former America

West pilots that would have the right to participate as a full party in the SLI proceeding.

(USAPA MC Attachment 6, USAPA v. American Airlines et al., No. 14-cv-28 BAH, Doc.

12, at pp. 10-43). USAPA denied the counterclaim allegations.

The parties subsequently renewed discussions for a Protocol Agreement that would resolve the dispute. In July, the National Mediation Board suggested that the parties engage a private mediator to assist them in reaching agreement. The parties did so and met in person with Mediator George Cohen in early August for several days. The parties continued their efforts with the assistance of Mediator Cohen and reached tentative agreement. The tentative agreement subsequently was approved by all parties.

On the principal issues that created the impasse, the Protocol Agreement provides that the issue of whether a committee representing former America West pilots will be allowed to participate in the McCaskill-Bond process will be decided through a preliminary arbitration proceeding before a panel of three neutral arbitrators in lieu of

11 submission to the seniority list integration Arbitration Panel established under the

Agreement. The Protocol Agreement also provides that it may not be amended without the agreement of the USAPA Merger Committee.

Following the parties’ agreement concerning the Section 13(b) Protocol

Agreement, the McCaskill-Bond action in the District of Columbia, including the APA’s counterclaim against USAPA asserting control over the SLI process, was dismissed with prejudice by stipulation. USAPA MC Attachment 8, No. 14-cv-328-BAH, Doc. 35 (Joint

Stipulation of Dismissal) and USAPA MC Attachment 9, Minute Order of Dismissal.

On September 16, 2014, the National Mediation Board certified APA as the bargaining representative for a combined craft or class of American and US Airways pilots and extinguished the certification of USAPA.

ARGUMENT

I. Arbitrators must give preclusive effect to prior final judgments

“Arbitrators are not free to ignore the preclusive effect of prior judgments under the doctrines of res judicata and collateral estoppel”. Elkouri & Elkouri, How Arbitration

Works, 7th ed., 11-34 (2012), quoting Aircraft Braking Systems Corporation v. Local

856, United Auto Workers, 97 F.3d 155, 159 (6th Cir. 1996). An arbitrator is usually given first opportunity to decide whether to give the prior judgment preclusive effect.

In Aircraft Braking Systems, the employer and union had litigated the company’s action to stay arbitration of a grievance on the ground that the parties had no collective bargaining agreement. 97 F.3d at 157. The district court held that an interim agreement existed, including an agreement to arbitrate, at the time the grievance arose and refused to issue an injunction staying the arbitration. Id. at 158. The court of appeals affirmed.

12 The employer later sued to enjoin arbitration of two other grievances. Id. The district court did not stay arbitration of one of the grievances and the parties proceeded to a hearing before the arbitrator on that grievance. Id. The arbitrator issued a decision on the grievance concluding that the district court’s decision in the prior litigation that an agreement to arbitrate existed was not binding on him and he held that the parties’ did not have an agreement. Id.

The parties filed respective motions to confirm and vacate the arbitrator’s award.

Id. at 158. The district court vacated the arbitrator’s award on the ground that the parties had not submitted the issue of arbitrability to the arbitrator and because the employer was barred by collateral estoppel and res judicata from relitigating whether the parties had an agreement requiring arbitration. Id. at 159. It then remanded the case to a different arbitrator, concluding that the arbitrator who ignored the prior district court judgment was not competent to rehear the matter. Id. The district court also awarded attorney’s fees against the employer.

On appeal, the Sixth Circuit Court of Appeals noted that other circuits considering whether an arbitrator is bound by res judicata or collateral estoppel when deciding a matter previously litigated in federal court between the same parties “have held uniformly that arbitrators are bound by prior federal court decisions under the doctrines of collateral estoppel and/or res judicata.” Id. at 159 (citations omitted). The court agreed with its sister circuits and held that “arbitrators are not free to ignore the preclusive effect of prior judgments.” Id.

The Sixth Circuit went on to recite the principle of collateral estoppel ‒ “a right, question or fact distinctly put at issue and directly determined by a court of competent jurisdiction . . . cannot be disputed in a subsequent suit between the same parties or their

13 privies.” Id., quoting Montana v. United States, 440 U.S. 147, 153 (1978). The doctrine precludes a party from relitigating an issue of fact or law that was necessarily decided in prior litigation. Id.

The court of appeals affirmed the lower court’s judgment vacating the arbitrator’s award, holding that the arbitrator’s decision to decide the issue of whether an agreement to arbitrate existed “was in excess of his authority and in disregard of the law.” 97 F.3d at

160. It reasoned that the arbitrator was not permitted to decide the issue of the existence of an agreement to arbitrate since that issue was resolved by the prior district court decision. Id. at 161-62. It also affirmed the district court’s decision to remand the case to another arbitrator, concluding that the arbitrator’s refusal to follow the prior court judgment made it appropriate to remand the case to another arbitrator. Id. at 163.

Under the doctrine of res judicata, moreover, a judgment on the merits of a claim precludes a party to the action from relitigating that claim or any other claim seeking the same relief against the same parties or their privies in a later action. Apotex, Inc. v.

Federal Drug Admin, 393 F.3d 210, 217 (D.C. Cir. 2004).

This Panel must, as a matter of law, give preclusive effect to the prior court judgment in Addington III, which rejected Applicants’ claim for party status separate from the USAPA Merger Committee in the McCaskill-Bond Sections 3 and 13 proceeding, on either or both res judicata or collateral estoppel grounds. Either doctrine requires denial of the Applicants’ request to participate as a party in the SLI proceeding.

14 II. Applicants have already litigated and lost their claim to have separate party status from the USAPA Merger Committee in this McCaskill-Bond Sections 3 and 13 seniority list integration proceeding covering the pilots of American and US Airways; they cannot relitigate that issue before this panel

A certified class of West Pilots asserted a claim against USAPA in Addington III under the McCaskill-Bond Amendment demanding a right to participate as a party separate from the USAPA Merger Committee in the Section 3 and 13 proceeding imposed by the statute. The United States District Court for the District of Arizona rejected the plaintiffs’ McCaskill-Bond claim in an order issued January 10, 2014. See USAPA MC

Attachment 4, Doc. 298 (Order) in 13-cv-471-ROS. The court held that “The West Pilots seek a declaration that they are entitled to participate in the upcoming seniority integration process for all pilots at the post-merger airline. That process is governed by the McCaskill-Bond Amendment to the Federal Aviation Act, 49 U.S.C. § 42112, Note 117

(“McCaskill-Bond”). Under that statute, the West Pilots are not entitled to participate.”

Id. at 12-13. The judgment binds all former America West pilots.

The plaintiffs appealed the district court’s judgment to the United States Court of

Appeals for the Ninth Circuit. Their appeal is pending as Case No. 14-15757. In addition to arguing to the court of appeals that they are entitled to such separate party status under the language of Section 3 of the LPPs, the Applicants assert they are entitled to separate participation because USAPA cannot fairly represent them in the Section 13 process due to an alleged history of hostility toward the West Pilots. See USAPA MC Attachment 10,

No. 14-515757, Doc. 13-1, Appellants Brief, at pp. 52-58.

Since all class members are bound by the adverse final judgment of the district court on their claim to participate under McCaskill-Bond, the relief sought by the

15 Applicants is available only from the Ninth Circuit Court of Appeals.1 They may not submit to this Arbitration Panel any claim under McCaskill-Bond against USAPA and its

Merger Committee, whether based on the language of the statute, the language of Sections

3 and 13, or on their rejected allegations of USAPA’s hostility toward them. Tripati v.

Henman, 857 F.2d 1366 (9th Cir. 1988) (“The established rule in the federal courts is that a final judgment retains all of its res judicata consequences pending decision of the appeal. . . ."), quoting 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure

§ 4433, at 308 (1981).2 Since APA is the successor to USAPA as representative of the West

Pilots, Applicants are also barred from asserting this McCaskill-Bond claim against APA.

See Ass’n of Flight Attendants v. US Air, Inc., 24 F.3d 1432, 1438 (D.C. Cir. 1994) (“AFA’s insistence that the Eastern-TWU agreement necessarily ceased to be the status quo when

1 The Applicants are precluded from asserting any theory by which they are entitled to separate party status under McCaskill-Bond, including an assertion that they should have their own committee because the former America West pilots continue to operate under a seniority list separate from former US Airways pilots. The MOU that was before the district court in Addington III recited that the status quo seniority structure among the pilots was three separate seniority lists. MOU ¶ 10(h). The Applicants asserted that USAPA breached its DFR to them by incorporating the status quo of three seniority lists in the MOU. USAPA/USAPA MC Attachment 4, Doc. 298, Order, at pp. 10-12. The district court recited that the McCaskill-Bond process between the American and US Airways pilots would result in all pilots combined on a single list from the status quo of three separate lists. Id. Any claim of right to separate representation under McCaskill- Bond based on the separate seniority lists governing US Airways pilots was necessarily rejected by the District Court in rejecting the plaintiffs’ claims for breach of the DFR and under McCaskill-Bond. And, in any event, the applicants were required to submit the issue of their separate seniority list as a basis for the relief they sought under McCaskill- Bond. Res judicata now prohibits them from asserting that theory to this Panel. Samuels v. Northern Telecom, 942 F.2d 834, 836 (2d Cir. 1991) (“A dismissal with prejudice is res judicata not only as to the matters actually litigated in the previous action, but as to all relevant issues which could have been but were not raised and litigated in the suit.").

2 The court of appeals noted that if it did not give preclusive effect to the district court judgment pending appeal, “Litigants would be able to refile identical cases while appeals are pending, enmeshing their opponents and the court system in tangles of duplicative litigation.” Id. at 1366.

16 AFA succeeded TWU as the certified representative of Shuttle flight attendants is undercut by precedent holding that contractual agreements generally survive a change in representative.”) Res judicata runs to the parties and those in privity with the parties.

Since Applicants are barred from asserting their claims against their premerger representative, they necessarily are barred from asserting it against their post-merger representative.

None of the parties may assert that USAPA and the USAPA Merger Committee waived their defense of res judicata against the Applicants’ claim. Res judicata is an affirmative defense. See, e.g., Fed. R. Civ. P. 8(c)(1). A party may assert an affirmative defense unless it is waived. Neither USAPA nor its merger committee waived the res judicata defense and no waiver appears in the parties’ Section 13(b) Protocol Agreement.

Nor can it be asserted that USAPA somehow “implicitly” waived any defense by agreeing to set up this preliminary Sections 3 and 13 arbitration panel to hear their application in lieu of the Sections 3 and 13 arbitration panel that will hear the pilot seniority dispute on the merits. Both panels are statutory arbitration panels established under the authority of McCaskill-Bond. This Panel is not a private arbitration panel akin to an ALPA Merger Policy arbitration panel. Because the Sections 3 and 13 panel is empowered by statute with authority over the pilot seniority dispute, no party could prevent employees who are covered by the McCaskill-Bond dispute, as the Applicants are, from submitting a request for party status to the arbitration panel. They could do so whether or not the parties agreed. The parties to the Section 13(b) proceeding, however, did not want the SLI Arbitration Panel to hear Applicants’ request because it could taint its consideration of the seniority dispute on the merits. Agreeing that this preliminary

McCaskill-Bond arbitration panel could hear the Applicants’ request meant nothing more

17 than that USAPA acknowledged the authority of the arbitrators under McCaskill-Bond over the seniority integration dispute and that arbitrators “generally are entitled to determine in the first instance whether to give the prior judicial determination preclusive effect.” Aircraft Braking Systems, 97 F.3d at 159. USAPA did not waive its res judicata defense to the application of these West Pilots.

III. The issue before this Panel is whether to grant the Applicants’ request for a separate seniority committee in the Sections 3 and 13 process; the Panel must deny that request

A. The issue before the Panel is to decide whether to grant or deny the Applicants’ request

The Applicants have taken the position before the Ninth Circuit that the issue before this Preliminary Arbitration Panel is whether APA has the authority under

McCaskill-Bond to grant their request for a separate committee. See USAPA MC

Attachment 11, No. 14-15757, Doc. 28, Applicant’s Response Brief, at 11).3 That assertion is wrong because Section 8(b) states that this Panel is to decide whether to grant or deny the Applicants’ request. That question is not answered by a determination that APA has authority to grant the request any more than a determination that an arbitrator has the authority to grant a grievance answers the question of whether the grievance should be granted or denied. That issue statement simply begs the question.4

3 By contrast, the Applicants asserted to the court of appeals that this Panel will not determine their rights under McCaskill-Bond and that issue is solely for determination by the court of appeals. See USAPA/USAPA MC Attachment 11, at p. 11.

4 The Applicants have no standing to assert a claim by APA that it assumes control over the McCaskill-Bond process upon its certification as representative of a post-merger craft or class, and there would be no reason for their “application” or participation in this proceeding if APA’s alleged authority under McCaskill-Bond was the issue before this Panel.

18 Section 8(a) of the Protocol Agreement states that no party waived its legal position concerning APA’s assertion that it has authority as the post-merger bargaining representative of the combined pilot craft or class to grant Applicants’ request to be designated a separate committee in the Sections 3 and 13 proceeding. But APA agreed under Section 8(b) to defer any such decision to this Panel, thus mooting the disputed issue of APA’s authority under McCaskill-Bond. That is because when a bargaining representative defers exercising its claimed authority to resolve a dispute among its members and instead allows those members to submit their claims to arbitration, the union satisfies its duty of fair representation concerning the issue in dispute among the members.

This principle is illustrated by recent litigation between APA and former TWA pilots concerning APA’s deferral of renegotiation with American Airlines of Supplement

CC to the APA pilot contract covering the seniority integration of TWA pilots.5 During its bankruptcy, American elected to close the St. Louis pilot base covered by Supplement CC.

This operational change required renegotiation of Supplement CC because that agreement afforded priority rights at St. Louis to former TWA pilots. American and APA agreed to allow an arbitration panel determine the remedy that would be given to former

TWA pilots. The APA/American agreement restricted the authority of the arbitration panel to determining a remedy for TWA pilots based on their existing seniority rights established under Supplement CC. The panel was prohibited from considering any claim

5 It was APA and American Airlines’ treatment of the seniority rights of former TWA pilots under Supplement CC that led Congress to adopt the McCaskill-Bond Amendment. See Committee of Concerned Midwest Flight Attendants v. Int’l Brotherhood of Teamsters, 662 F.3d 954, 957 (7th Cir. 2011) (“Midwest Flight Attendants”)(“this statute grew out of American Airlines’ acquisition of ”).

19 by TWA pilots to seniority rights predating the April 2001 date established by Supplement

CC.

A group of former TWA pilots sued APA for breach of its duty of fair representation to them by agreeing to abrogate Supplement CC and restricting the authority of the arbitration panel to formulate a remedy. Krakowski v. American Airlines, Inc., 2014

Bankr. LEXIS 2610 (SDNY Bankr 2014). The United States Bankruptcy Court for the

Southern District of New York rejected their DFR claim, noting that APA was required to balance the interests of all American pilots, not simply the former TWA pilots, in determining this seniority question. Id. at *14-15. The court rejected the plaintiffs’ allegation that APA breached its DFR by requiring the arbitration panel to adhere to the status quo of existing seniority rights among American pilots. Id. at *16-18. And it concluded that submitting the dispute to arbitration was an appropriate method for resolving it. Id. at *19. The court also concluded that the plaintiffs’ DFR claim against

APA was speculative and unripe since the result of the arbitration was unknown. Id. at

*16-17 (“the Plaintiffs are arguing that none of the possible remedies in that process— remedies that presumably include all manner of job protections—could ever be sufficient”).

Likewise, these Applicants will have no claim against APA for breach of its DFR if their claim is rejected by this Arbitration Panel. That DFR was satisfied by APA’s allowing the Applicants to submit their claim to arbitration.

20 B. This Panel has no authority to interpret McCaskill-Bond, but even if it did, APA’s assertion that its status as the pilots’ post-merger representative gives it control over the Sections 3 and 13 process is contrary to the language of the statute and would undermine Congress’ purpose in ensuring that employees are protected against unilateral action by a post-merger representative.

The parties’ Section 13(b) Protocol Agreement was established under Paragraph

10(f) of the parties’ Memorandum of Understanding. See Section 13(b) Agreement

(Protocol Agreement), at ¶1. The MOU provided in Paragraph 10(e) that any claim of right under McCaskill-Bond was subject to the jurisdiction of the federal courts. See MOU

¶ 10(e). Nothing in the Section 13(b) agreement changes MOU Paragraph 10(e) to now permit questions of rights under McCaskill-Bond to be submitted to this Panel.

Even assuming for the sake of argument that APA now controls the McCaskill-

Bond process, the Applicants’ claim for separate party is defeated by the very language of the controlling statute. As the Seventh Circuit Court of Appeals observed in interpreting

McCaskill-Bond, “Legislatures do not mean things in the abstract; as Justice Holmes once put it, the right question is what they meant by what they said.” Midwest Flight

Attendants, 662 at 956. The statute provides for a seniority list integration process in the combination of premerger crafts or classes, as follows: “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.” 49 U.S.C. § 42112, Note 117(a). The statute defines a “covered employee” as one who “is a member of a craft or class that is subject to the Railway Labor Act.” 49 U.S.C. § 42112, Note 117(b)(3)(B). Employee rights under the

21 statute are therefore defined solely based on the employees’ membership in their premerger crafts or classes, as defined by the NMB, which are to be combined into a single craft or class as part of the transaction.

In Midwest Flight Attendants, the Seventh Circuit Court of Appeals overturned a decision in which the district court, relying on interpretations by the former Civil

Aeronautics Board (“CAB”) of the labor protective provisions (“LPPs”) established in the

Allegheny Airlines/Mohawk Airways transaction (referenced in paragraph (a) of the statute), determined that the plaintiffs, former Midwest flight attendants, were not entitled to the protections of McCaskill-Bond. The district court concluded that the CAB did not impose LPPs to address a carrier’s economic failure that resulted in cessation of operations, but only to address the adverse effects of a merger. 662 F.3d at 956 (“The

[district] court stated that ‘McCaskill-Bond was never meant to protect the employees of an air carrier that simply goes out of business.’")

On appeal, the Seventh Circuit rejected the district court’s interpretation of the statute based upon CAB precedent. The court of appeals held that the language of

McCaskill-Bond controlled its application, stating,

Nothing in the text of the statute asks whether one of the merging carriers is bankrupt and about to vanish when the transaction closes. . . . [W]hat those ‘words would mean in the mouth of a normal speaker of English, using them in the circumstances in which they were used, is that they govern all transactions in which an acquisition is followed by joint operations, whether or not one carrier was on the brink of collapse.

Id. at 957-58. The court of appeals concluded the former Midwest flight attendants were covered by the statute and entitled to its protections.

Under the plain language of McCaskill-Bond, the “covered transaction” that invoked the application of McCaskill-Bond for the American and US Airways pilots,

22 including the Applicants, was the merger of American Airlines and US Airways into a single air carrier. 49 U.S.C. § 42112, Note 117(b)(4). The West Pilots are “covered employees” under McCaskill-Bond because they are “members” of the US Airways pilot craft or class established by the NMB in Case No. R-7147, 35 NMB 65 (2008). 49 U.S.C.

§ 42112, Note 117(b)(3)(B). USAPA was the NMB-certified representative of that premerger craft or class of pilots at US Airways. 35 NMB 135 (2008).

Leaving aside the adverse judgment against them, the Applicants cannot invoke the protections of the statute based on their status as former employees of America West.

That air carrier no longer exists and was not the “air carrier” within the meaning of

McCaskill-Bond that combined with American to “form a single air carrier” in a covered transaction triggering the protections of the statute. The former America West pilot craft or class combined with the former US Airways pilot craft or class to form the single pilot craft or class at US Airways found by the NMB in 2008. That America West pilot craft or class therefore disappeared and did not combine with the American pilot craft or class.

See In re American Airlines, Inc./US Airways, Inc., 41 NMB 174 (2014) (finding that

American Airlines and US Airways constitute a single craft or class of pilots at merged

American Airlines). And Congress expressly excluded from coverage under McCaskill-

Bond any airline merger that occurred prior to its enactment on December 26, 2007.6

The 2005 America West/US Airways merger is therefore not covered by the statute.

That McCaskill-Bond grants rights to employees based on their membership in their premerger craft or class defined by the RLA necessarily incorporates the exclusive

6 49 U.S.C. § 42112, Note 117(c) (“Application.—This section shall not apply to any covered transaction involving a covered air carrier that took place before the date of enactment of this Act”).

23 statutory process committing questions of employee representation to the NMB. The

Supreme Court long ago held that federal courts have no authority to resolve the question of who will represent employees under the RLA since Congress vested that exclusive authority in the NMB. “The [NMB] has exclusive jurisdiction to determine union representation disputes under the RLA; an NMB representation determination is essentially unreviewable in federal court.” McNamara-Blad v. Ass’n of Prof. Flight

Attendants, 275 F.3d 1165, 1170 (9th Cir. 2002) (citing Switchmen’s Union v. NMB, 320

U.S. 297, 303-07 (1943)).

Nothing in McCaskill-Bond overturns the well-settled authority of Switchmen’s

Union and its progeny that federal courts have no authority to resolve questions of representation among employees subject to the RLA; to the contrary, the statute incorporates the premerger representation structure of employees so that application of

McCaskill-Bond does not raise questions of representation. In Ass’n of Flight Attendants v. , 2010 U.S. Dist. LEXIS 134715 (D.D.C. 2010), AFA sued Delta to enjoin the airline from invoking arbitration under McCaskill-Bond between the flight attendants of Delta and Northwest following the merger of those airlines. Delta moved to dismiss for lack of subject-matter jurisdiction on the basis that AFA’s claims raised a representation dispute. The district court rejected Delta’s argument, concluding that AFA’s claims merely raised issues of representation related to Delta’s interference in AFA’s organizing effort and did not constitute a representation dispute. Id., at *14-15.

In so holding, the district court noted that the employees’ premerger representation was settled and not in dispute, stating: “[T]he question of which representative was certified was distinct and settled. At the time Delta filed its motions to dismiss, AFA was the Northwest flight attendants' certified bargaining representative,

24 while Delta's flight attendants were nonunionized. See In re AFA, 37 NMB at 323; Manual

§ 19.7.” Id., at *16. Here, as in AFA v. Delta, the dispute over McCaskill-Bond rights does not present a representation dispute cognizable by the NMB because nothing in the

Amendment alters the “distinct and settled” question of who represents the premerger employees.

The exclusively premerger craft or class focus of McCaskill-Bond and the premerger representational structure of those crafts or classes incorporated by the statute is also shown by the two exceptions to the statute’s coverage under subsection §117(a) of the Amendment. The exceptions read:

(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.

49 U.S.C. § 42112, note, 117(a)(1) & (2). These exceptions show that Congress intended nothing more than to ensure that seniority integration protections are administered by the employees’ premerger “collective bargaining agent” if they have one. The exception under 117(a)(1) only applies to preserve the effectiveness of internal union seniority policies in a transaction if the same union represents both of the premerger crafts or classes that are “combining” in the merger.7 The second exception applies the terms of

7 The exception does not read “the combined craft or class”, which would be the single, postmerger craft or class that results from the combination of premerger crafts or classes.

25 agreements negotiated by the premerger representatives to grant affected employees protections equivalent to those of Sections 3 and 13. The statute incorporates the premerger structure of representation established by the NMB for the involved employees.

Unsurprisingly given the premerger structure of McCaskill-Bond, there is no mention in the statute of a “post-merger representative” of the combined craft or class of covered employees. The protections of the statute apply to the combination of the premerger crafts or classes. 49 U.S.C. § 42112, Note 117(a) (“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”) (emphasis added). The protections are necessarily triggered prior to the actual occurrence of that combination of crafts or classes so that it may apply to their integration into one craft or class. Nothing in the statute’s language supports the view that its provisions are “retriggered” by the certification of a post-merger representative after that integration occurs. As set forth above, the statute’s protections are triggered once by the covered transaction defined under Note 117(b)(4)(C). The assertion that APA assumes control over the statutory process that has already commenced upon the later event of its postmerger certification as single representative is contrary to the language and structure of the McCaskill-Bond Amendment.

Allowing APA to take control of the McCaskill-Bond process following the merger would undermine Congress’ purpose in adopting McCaskill-Bond as a direct response to the actions of APA and American toward TWA employees in 2001. As the Seventh Circuit concluded in Concerned Midwest Flight Attendants, Congress adopted McCaskill-Bond in response to the unfair treatment of former TWA employees in the American/TWA

26 merger. 662 F.3d at 758. Noting that TWA was financially failing at the time of its merger with American, id., at 759, the Seventh Circuit reasoned that denying coverage to employees under McCaskill-Bond because their carrier was financially insolvent and on the verge of disappearing would frustrate the Congressional design behind the statute.

Id. at 759. The treatment of TWA employees that Congress sought to prevent in future airline mergers occurred because APA and the Association of Professional Flight

Attendants asserted authority as single bargaining representatives to negotiate the seniority rights of pilots and flight attendants with the postmerger carrier. Interpreting

McCaskill-Bond to enable the post-merger representative of the craft or class to control the seniority integration process would eviscerate the statute by permitting the precise evil Congress sought to prevent .8

C. APA is precluded from asserting a claim to control over the McCaskill- Bond process

Even if APA had not mooted the issue of its control over the McCaskill-Bond process by deferring the Applicants’ request to this Panel, it is precluded from asserting

8 In a dictum to its holding rejecting the West Pilots’ claim against USAPA under McCaskill-Bond, the district court concluded that APA did take control over the seniority integration process following its certification as single representative of a combined pilot craft or class. See Order, USAPA MC Attachment 4, Doc. 298, at pp. 20-21. This erroneous conclusion led inevitably to the district court’s subsequent statement that no arbitration would occur because APA would be left as the only party to the SLI process since American agreed to remain neutral in the process. Id. at p. 21, n.15. The district court turned the statute on its head by concluding that no arbitration under Section 13 would result even though that was Congress’ plain intent in adopting McCaskill-Bond. Its erroneous conclusion showed that the notion a post-merger representative assumes control over the SLI process subject only to its DFR is contrary to the “the statutory text and frustrate[es] the design behind” McCaskill-Bond. Concerned Committee, 662 F.3d at 778. Doubtlessly recognizing the district court’s error, the Applicants’ response brief in the Ninth Circuit agreed that this erroneous conclusion was dictum. See USAPA MC Attachment 11, Doc. 28, at 20-21.

27 any claim under McCaskill-Bond to control the Sections 3 and 13 process. As part of litigation referred to in Paragraph 18 of the Section 13(b) Protocol Agreement, USAPA v.

US Airways, Inc., et al., 14-cv-328-BAH (D.D.C.), APA asserted a counterclaim against

USAPA contending that upon its certification as the single, post-merger representative of the American and US Airways pilots it would assume control over the McCaskill-Bond process and USAPA could only participate with the permission of APA. See USAPA MC

Attachment 6, Doc. 12, 14-cv-328-BAH, at pp. 39-43. In settlement of that litigation, APA agreed to dismiss this claim with prejudice. The parties filed a stipulation of dismissal of all claims and counterclaims with prejudice, and an order was entered by the United

States District Court for the District of Columbia on the stipulation. See USAPA MC

Attachments 8-9, Doc. 35, and minute order dismissing action.

The district court’s dismissal with prejudice of APA’s claim under McCaskill-Bond precludes APA from litigating that claim again in any forum. It makes no difference that it resulted from a stipulation of the parties. See Samuels, 942 F.2d at 836 (“A stipulation dismissing an action with prejudice can have the preclusive effect of res judicata). See also Neimaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1985), where the court of appeals reversed the lower court and dismissed under res judicata plaintiff’s ERISA claim after the plaintiff stipulated to dismissal with prejudice of a state law contract claim arising from same operative facts. The Second Circuit Court of Appeals rejected the plaintiff’s argument that the stipulation was not intended to preclude the later filing of a federal

ERISA claim. Hence, this Panel must give preclusive effect to the District of Columbia

District Court’s final order dismissing APA’s McCaskill-Bond counterclaim against

USAPA.

28 IV. Even if Applicants were not barred from obtaining the relief they seek from this Panel as a matter of law, their request must be denied because they are seeking only to perpetuate an internal seniority dispute with other premerger US Airways pilots and do not have any unique interest in the Sections 3 and 13 process with premerger American pilots that requires their separate participation

If Applicants’ request could be considered, it must be denied as not meeting the requirements of Section 3 of Allegheny-Mohawk that their separate participation is necessary for the SLI Arbitration Panel to formulate a fair and equitable integration of the seniority lists covering American and US Airways pilots. The Applicants cannot articulate any unique interest of their putative group of former America West pilots vis-à-vis the premerger American pilots which requires their separate participation.

Rather, they seek separate party status merely to perpetuate their parochial position in an internal seniority dispute among premerger US Airways pilots. But it is the single craft or class of premerger US Airways pilots operating in an integrated US Airways operation that is combining with the premerger American Airlines pilot craft or class. The representation of a pilot group flying as a single, premerger craft or class cannot be divided without prejudicing the seniority interests of the overall pilot group. Such a division of representation will artificially split the premerger US Airways pilot group and pit the divided segments against each other—to their mutual detriment in attempting to achieve a fair and equitable integration with the American pilots. Such prejudice to the

US Airways pilots cannot be justified under Section 3. Nor is it justified by unsubstantiated claims of “hostility” by USAPA toward the Applicants that have already been rejected by the federal courts. Since USAPA’s Merger Committee has not yet presented its proposal for seniority list integration before the SLI Arbitration Panel,

29 moreover, the application must be denied even on its merits as unjustified and speculative.

A. This Panel is a Sections 3 and 13 arbitration panel and its evaluation of the Applicants’ request must occur under Section 3 of the LPPs

This Panel’s authority comes only from the Section 13(b) Protocol Agreement entered into by the parties. It is “preliminary” to the Sections 3 and 13 SLI panel and was established by the parties to hear this dispute in lieu of that SLI panel. So this Panel is also a Sections 3 and 13 panel under McCaskill-Bond. The only basis under Sections 3 and 13 for considering the Applicants’ request requires them to demonstrate a unique equitable interest vis-a-vis the American pilots in the SLI process that can only be adequately presented to the arbitrators through a separate committee to enable the SLI

Panel to reach a fair and equitable result. And this Panel’s authority may only be exercised within the scope of McCaskill-Bond, which confers rights to employees based on their membership in their premerger craft or class. The Applicants do not have a right to participate as a party simply to put forward a different proposal from the USAPA Merger

Committee slanted in favor of their particular interests. There are always segments of a pilot group with differing interests compared to another part of their group, for example, more junior employees versus more senior or active versus furloughed employees. But the Section 3 process does not seek to satisfy individual seniority interests of an employee.

Rather, the SLI process integrates pilot groups in their entirety based on the overall balance of equities of the pre-merger groups.

B. The West Pilot Applicants bear the burden of proving their entitlement to separate representation from the USAPA Merger Committee recognized under the Protocol Agreement

30 The parties’ Section 13(b) agreement recognizes the APA Merger Committee and the USAPA Merger Committee as parties to the SLI Arbitration. Section 13(b) Agreement, p. 2 (“Whereas, APA has established a Merger Committee and USAPA has established a

Merger Committee.”). Paragraph 9 of the Protocol Agreement further states that the

Merger Committees and the Company are the parties who will litigate the SLI arbitration hearing. Section 13(b) Agreement, p. 11. The Applicants seek relief from this Panel to change the established structure of representation in the SLI process. Like an employee filing a non-disciplinary grievance under a collective bargaining agreement, Applicants bear the burden of proof and persuasion that they are entitled to their requested remedy.

Elkouri & Elkouri, p. 8-102.

C. The West Pilot Applicants cannot prove their right to separate representation under Section 3 since they only seek this remedy to press their position in an internal seniority dispute and have refused to participate in the USAPA Merger Committee

1. Merger representation is established based on premerger crafts or classes

As noted, Applicants are not asserting any unique interest with respect to the

American pilots in the seniority integration dispute, but only seek to perpetuate the long- running, internal seniority dispute against their fellow premerger US Airways pilots.

Internal disputes in a premerger craft or class have never been recognized as a basis for separate party status under Sections 3 and 13. The Applicants cannot point to any authority for such a proposition under McCaskill-Bond or even in the decisions of the former Civil Aeronautics Board.

The only instances where a group of employees was permitted some form of separate participation in a Section 13 proceeding, whether as a party or in an amicus brief to the arbitrator, occurred when the employees could identify a unique interest that

31 affected their integration with the other premerger employee group and the existing representatives agreed to their separate participation. Otherwise, the CAB routinely declined to allow fragmented representation. For example, during the CAB proceedings related to the merger of Pan American World Airways and , a group of furloughed pilots petitioned the CAB to participate separately in the Section 13 seniority integration arbitration occurring among the pilots. See National Airlines

Acquisition, 84 C.A.B 408, 1979 CAB LEXIS 73, 119 (1979). The pilots asserted that because they were on furlough, the active pilots making up the Pan Am merger committee would not adequately protect their interests in the seniority integration with National pilots. They did not seek separate representation on the basis of a dispute with fellow Pan

Am pilots. Nonetheless, the CAB rejected their application, concluding:

Our grant of independent arbitration rights to a group already covered by the LPPs and entitled to be represented in the seniority list integration proceedings would interfere with the established representation format and, in effect, set up another bargaining unit. We do not think that the Board should tamper with and inevitably complicate the procedures used to negotiate seniority list integration by setting up a third force.

1979 CAB Lexis 73, 120.

2. The Applicants cannot rely on the fact of their separate seniority list from East pilots to obtain separate representation

Applicants cannot support their claim to separate representation by asserting they are on a separate seniority list from US Airways “East” pilots. That fact was before the district court when it rejected the Applicants' first attempt to compel their separate party status under McCaskill-Bond. See, Footnote 1, infra. McCaskill-Bond does not mention seniority lists as the basis for employees’ eligibility as “covered employees” under the statute; instead, for eligibility purposes, it focuses on their membership in a premerger craft or class. 49 U.S.C. § 42112, Note 117(b)(4)(B). Section 3 of the LPPs nowhere

32 mentions employees’ status on a seniority list, but only generically refers to “employees” and their representatives, which the CAB interpreted as referring to the premerger crafts or classes established by the NMB. National Airlines Acquisition, 97 C.A.B. 565; 1982

CAB LEXIS 167, *2-3 (1982) (“Under the Railway Labor Act, the National Mediation

Board (NMB) has exclusive jurisdiction to determine class or craft composition for airline employee bargaining units and representational rights.”)

McCaskill-Bond covers nonunion employees, who lack a collective bargaining agreement, so there may not even be an effective seniority list among a group of premerger employees since seniority is a creature of contract. See Ass’n of Flight

Attendants v. Delta Air Lines, 2010 U.S. Dist. LEXIS 134715, *16 (D.D.C. 2010)(treating nonunion Delta Air Lines flight attendants as covered by McCaskill-Bond). It is also well established that a single craft or class can have multiple collective bargaining agreements and there is no statutory requirement that the employees be covered by a single contract.

AFA v. US Air, 24 F.3d 1436, 1437-38 (D.C. Cir. 1994) (“nothing in the RLA per se requires employees of the same craft or class in a particular system to be subject to the same terms and conditions of employment.”) Separate contracts typically include separate seniority lists. A claim for separate representation merely based on the existence of multiple lists within a single craft or class is without merit, for it flies in the face of McCaskill-Bond’s conferral of statutory rights on the basis of an employee’s membership in a premerger craft or class.

Similarly, the CAB’s administration of Sections 3 and 13 did not recognize representation based on the existence or nonexistence of seniority lists, but was based on the structure of premerger crafts or classes. See National Airlines Acquisition, 95 C.A.B.

584; 1982 CAB LEXIS 316, *1, note 1 (1982) (concluding that the premerger certified

33 representatives of the four affected premerger crafts or classes were the proper representatives in the Sections 3 and 13 process). In the Flying Tigers/Seaboard Airlines merger, ALPA represented all pilots at Tigers and Seaboard, but the Teamsters represented Seaboard flight engineers. Seaboard Acquisition, 105 C.A.B. 472; 1983 CAB

LEXIS 16, *3 (1983). The CAB recognized the representatives of the separate premerger crafts or classes as the Sections 3 and 13 representatives, including IBT for the Seaboard flight engineers. Id. at *3. It was only with the later agreement of the parties that ALPA represented the separate craft or class of Seaboard flight engineers in the proceeding. Id.

Under the Merger Policy of the Air Line Pilots Association, merger representation also has been established on a craft or class basis even where employees within the craft or class are on separate seniority lists. In the recent ALPA Merger Policy proceeding among the pilots of , Inc. and , separate pilot and professional flight engineer seniority lists were maintained within the single flight deck crewmember craft or class at Atlas Air.9 See Atlas Air/Polar Air Cargo, 11 (Harris 2006) (“Atlas has always had two lists, one for pilots and the other for flight engineers”). But ALPA Merger

Policy established a single merger committee for pilots and flight engineers at Atlas. The arbitral panel later issued an award with separate seniority lists for pilots and flight engineers. (“It was decided, for reasons which are discussed more fully below, that the career expectations of the pilots were so different from those of the professional flight engineers that the Atlas system of separate lists had to be utilized.”) That the Atlas pilots and flight engineers had separate seniority lists, and that the arbitral panel concluded

9 Mr. Freund, counsel for the Applicants, represented the Atlas Air Merger Committee.

34 pilots and flight engineers had very different career expectations, did not affect the single representation of the Atlas crewmember craft or class under ALPA Merger Policy.

3. Employees’ seniority equities in the seniority list integration process are based on their carrier’s operation and their premerger expectations within that single operation, not simply their relative position on a seniority list

That representation in Sections 3 and 13 under McCaskill-Bond conforms to historic industry practice based on the concept of craft or class structure should be no surprise. The equities of an employee group in the seniority integration process flow from their carrier’s operation and their premerger expectations within that system, not simply from a seniority list. Employees within a list can have equitable interests toward the other premerger group different from those of their fellow premerger employees depending on their relative seniority positions, their length of service with their airline, their age, their status as captain or first officer, their position in widebody or narrowbody aircraft, to name some examples. Yet those different interests at different points on a seniority list exist in every seniority integration proceeding and have never warranted separate representation that fragments the overall interests of the employee group. The SLI process is not intended or designed to equitably integrate the pilot seniority lists based on a particular pilot’s position. And it cannot allow segments of a pilot group to pursue their parochial interests at the expense of the interests of the overall group.

4. The Applicants want separate party status in the McCaskill-Bond process in order to continue their failed effort to impose the rejected Nicolau Award IMSL as the basis for seniority integration of US Airways pilots

The Applicants want separate party status, not because of their separate premerger seniority list, but because of their unyielding contention that there is in fact already a combined seniority list among US Airways pilots established under an ALPA Merger

Policy proceeding before George Nicolau arising from the merger of America West and

35 US Airways. They have repeatedly litigated and lost that claim. They now seek separate party status so that they can put forward a SLI proposal in this proceeding using the

Nicolau Award seniority list since the courts have rejected their efforts to force that proposal upon USAPA.

The Applicants have no right to demand a particular proposal be put forward by

USAPA concerning integration of seniority lists. The Ninth Circuit Court of Appeals rejected the claim by these West Pilot Applicants in their first DFR lawsuit against USAPA

(Addington I) that USAPA’s DFR compelled it to present the Nicolau IMSL as its proposal for seniority integration among East and West pilots. Addington v. US Airline Pilots

Ass’n, 606 F.3d 1174 (9th Cir. 2010). It concluded their DFR claim was not ripe because

USAPA had not been allowed to bargain an agreement with US Airways settling the

East/West seniority integration. Id., at 1179-80. The demand of these Applicants to separate status to again advocate the Nicolau Award IMSL is an impermissible collateral attack on their failed DFR claims against USAPA, as well as the adverse judgment on their claim under McCaskill-Bond.

Likewise, any argument by Applicants that USAPA is hostile to their interests and cannot fairly represent them must be rejected. They failed in litigation against USAPA under McCaskill-Bond on that theory. They have submitted their claim that USAPA will not fairly represent them in the Sections 3 and 13 process to the Ninth Circuit Court of

Appeals in support of their effort to overturn their adverse district court judgment on their

McCaskill-Bond claim. See USAPA MC Attachment 10, Doc.13-1, at pp. 54-55. Their remedy, if any, can be obtained only in that forum.

As the Ninth Circuit held in Addington I and the Bankruptcy Court concluded in

Krakowski v. American Airlines, Inc., a complaint that an employee is not being fairly

36 represented in an arbitration process is not ripe until that process has concluded. 606

F.3d at 1181 (“USAPA's final proposal may yet be one that does not work the disadvantages Plaintiffs fear, even if that proposal is not the Nicolau Award.”). It is the

Sections 3 and 13 process culminating in arbitration that satisfies the Applicants’ right to fair representation. Pilots Protection Comm. v. Sanderson, 909 F. 2d 213,

217 (7th Cir. 1990) (“If the system is fine and only the specific arbitration award is improper, the plaintiffs are in the wrong forum. They should have challenged the award in court when it was rendered.”). Their seniority rights on a combined seniority list will be established by the arbitrators. The arbitrators are charged with establishing a fair and equitable integration of seniority lists and will have a variety of methods available to best achieve that result. As Sanderson determined, the proper recourse to objecting to an arbitration award as not satisfying the Section 3 standard is to sue to set aside the arbitration award, which these Applicants, or any other pilot who is a “covered employee” in the McCaskill-Bond dispute, could do. Since the arbitration process has not commenced, and the USAPA Merger Committee has been given no opportunity to present a proposal on behalf of all US Airways pilots to the SLI panel, any complaint of unfair representation is speculative. Krakowski, 2014 Bankr. LEXIS *16 (“Prior to completing arbitration, though, the actual harm to the Plaintiffs is speculative.”).

Not a single fact has been put forward by the Applicants to show that the USAPA

Merger Committee is incapable of fairly representing the seniority interests of all US

Airways pilots in the SLI proceeding. Rather, it is the former America West pilots who have refused to cooperate with the USAPA Merger Committee in the seniority integration process. USAPA appointed former America West pilots to the USAPA Merger Committee, including Ken Stravers, the former merger chairman for the America West MEC, and

37 Rocky Calveri, a West Pilot member of the USAPA Negotiating Advisory Committee. But those pilots quit the Committee on January 30, 2014 after Judge Silver rejected the West

Pilots’ DFR and McCaskill-Bond claims against USAPA because the Merger Committee would not adopt the Nicolau Award IMSL in its proposal. The other USAPA Merger

Committee members wanted to explore alternative methods to date of hire and the

Nicolau Award to achieve a fair and equitable integration for all pilots in the seniority dispute. The West Pilot members refused to consider any alternative to the Nicolau award. Employees cannot manufacture a right to separate representation based on alleged hostility when they refuse to cooperate in their representation.

5. The Applicants cannot assert a right to present the Nicolau Award IMSL in the McCaskill-Bond proceeding since that award is not the governing status quo of seniority among US Airways pilots and presenting it would turn the SLI process into a fiction based on nonexistent seniority rights among US Airways pilots.

The Applicants cannot assert a right to separate representation to present the

Nicolau Award IMSL as their proposal since the McCaskill-Bond Amendment expressly excluded the America West/US Airways merger from its coverage.10 The federal courts have already determined that the Nicolau Award IMSL is not the governing seniority list among US Airways pilots. The parties’ MOU under which the Section 13(b) agreement was established recites that it did not modify the status quo of three seniority lists among the pilots. MOU, Paragraph 10.h. And the Section 13(b) agreement which established this Panel also states that the seniority status quo among the pilots is the three separate seniority lists in effect on the merger closing date of December 9, 2013. Section 13(b)

10 49 U.S.C. § 42112, Note 117(c) (“Application.—This section shall not apply to any covered transaction involving a covered air carrier that took place before the date of enactment of this Act”)

38 agreement ¶2(b). In fact, counsel for the Applicants, Mr. Freund, asserted to the United

States District Court for the District of Columbia on behalf of the America West Airlines

Master Executive Council that the Nicolau Award “[did] not establish any enforceable seniority rights in a collective bargaining agreement with the Company.” See USAPA MC

Attachment 13, Doc. 1, in No. 07-cv-01309-EGS (D.D.C.), at p. 4 (notice of removal by

America West Airlines Master Executive Council, the “arbitration award” “merely sets out

ALPA’s bargaining position to be presented to the Company”). Putting forward the rejected Nicolau Award IMSL through the artifice of a separate “West pilot” committee is an attack on the established status quo of seniority rights among the pilots contrary to the requirements of the Railway Labor Act, as determined three times against the Applicants in litigation against USAPA, and the provisions of the parties’ agreements.

The use of the Nicolau Award would also give the Applicants a leg up over all other pilots in the SLI process by crediting them with seniority positions they do not have and status/category positions they do not hold. It would essentially make McCaskill-Bond retroactively applicable to the America West/US Airways merger despite the statute’s express exclusion of that transaction from its coverage. And it would effectively apply

1991 ALPA Merger Policy to this seniority dispute which is not subject to ALPA Merger

Policy.

The Nicolau Award IMSL as a proposed binding list for US “East” and “West” pilots would treat US Airways “East” pilots in this American/US Airways merger as if it were still April 2005, rather than 2014—as though the actual condition of US Airways at the time of its merger with American Airlines did not exist. In addition to giving the

Applicants’ fictional seniority rights in the SLI process with the American pilots by allocating to them positions actually held by other US Airways pilot, the Nicolau Award

39 IMSL would establish an artificial 2005 US Airways “East” operation by imposing the factual findings concerning the 2005 condition of American West and US Airways as the basis for evaluating the seniority equities of the US Airways pilot group in this 2013 transaction. The Applicants would be advanced and the “East” pilots suppressed in their seniority equities based on nonexistent seniority positions. Using the Nicolau Award

IMSL as a proposal would make the SLI process between the American and US Airways pilots a fiction using phantom positions for US Airways pilots they do not in fact hold.

That would also prejudice American pilots by elevating the Applicants’ seniority position in comparison to American pilots. Such a false exercise will not advance the work of the

SLI Panel and will only waste the Panel’s time.

CONCLUSION

The Preliminary Arbitration Panel must deny the Applicants’ request to be designated as a separate merger committee for former America West pilots in the Sections

3 and 13 proceeding between the pilots of American and US Airways. The Applicants are barred by the adverse judgment against them under McCaskill-Bond from litigating that claim for before the Panel. They do not escape the preclusive effect of that judgment in litigation against USAPA and its merger committee because APA succeeded to USAPA’s

RLA rights as representative of US Airways pilots. Instead, they are barred from asserting such a claim against APA as USAPA’s successor.

On the merits under McCaskill-Bond‘s Section 3, the Applicants’ request is contrary to the established standard of seniority representation based on premerger crafts or classes of the combining air carriers. The request would prejudice the premerger US

Airways pilot group in the SLI process by dividing their representation and diminishing their equities. It would set the pre-merger US Airways pilots against each other, arguing

40 against each other’s claimed seniority equities and competing for equities based on their pre-merger carrier’s operation. And, finally, the Applicants’ unyielding intent to impose the Nicolau Award IMSL to order seniority among premerger US Airways pilots would artificially advance them at the expense of the other pilots in the dispute and turn the SLI process into a fiction.

Dated: December 3, 2014.

Respectfully submitted,

Patrick J. Szymanski William R. Wilder Counsel for USAPA Merger Committee

Brian J. O’Dwyer Gary S. Silverman Counsel for US Airline Pilots Association

cc: Panel Members All Counsel

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