IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. ______________________ INTERNATIONAL BROTHERHOOD OF TEAMSTERS, AIRLINE DIVISION Plaintiff, v. FRONTIER AIRLINES, INC., REPUBLIC AIRWAYS HOLDINGS, INC., and FAPAInvest, LLC, Defendants. COMPLAINT NATURE OF THE ACTION 1. This is an action under the Railway Labor Act, 45 U.S.C. §§ 151 et seq. (“RLA”), to invalidate unlawful agreements among Republic Air Holdings, Inc. (“RAH”), Frontier Airlines, Inc. (“Frontier”), Frontier Airline Pilots Association (“FAPA”), and FAPAInvest, LLC that became effective June 17, 2011 and June 24, 2011, a few days prior to plaintiff, International Brotherhood of Teamsters, Airline Division (“IBT”), replacing FAPA as the certified exclusive bargaining representative of pilots employed by Frontier. JURISDICTION AND VENUE 2. This Court has jurisdiction pursuant to the Railway Labor Act, 45 U.S.C. §§ 151 et seq., and 28 U.S.C. §§ 1331 and 1337(a). 1 3. Venue of this action is proper in the District of Colorado pursuant to 28 U.S.C. § 1391(b) because a substantial part of the events giving rise to the claims alleged herein occurred within this district and defendants may be found within this district. PARTIES 4. Defendant Frontier is a common carrier by air engaged in interstate commerce within the meaning of Section 201 of the RLA, 45 U.S.C. § 181, and does business within this district. 5. Defendant RAH is a holding company and corporation organized under the laws of Delaware with principal offices located in Indianapolis, Indiana and does business within this district. At all relevant times herein, Chautauqua Airlines, Inc. ("Chautauqua"), Republic Airlines, Inc. ("Republic"), Shuttle America Corp. ("Shuttle"), Midwest Airlines, Inc. ("Midwest"), Lynx Aviation, Inc. ("Lynx") and Frontier were subsidiaries of RAH and common carriers by air engaged in interstate or foreign commerce within the meaning of Section 201 of the RLA, 45 U.S.C. § 181, and were under the common control of RAH. 6. Defendant FAPAInvest, LLC (“FAPAInvest”) is a limited liability company, the Articles of Organization of which were filed with the Colorado Secretary of State on June 24, 2011. The principal office of FAPAInvest is within this district. FAPAInvest is named herein as a Federal Rule of Civil Procedure 19 defendant. 7. Plaintiff IBT is a labor organization. At all times relevant herein, IBT has been the exclusive bargaining representative of pilots employed by RAH subsidiaries Chautauqua Republic, and Shuttle (collectively referred to hereinafter as “the Republic subsidiaries”). On June 28, 2011, IBT was designated by the National Mediation Board (“MNB”) to be the 2 exclusive bargaining representative of a combined craft or class of pilots employed by the Republic subsidiaries, Frontier, Midwest and Lynx following an election held among the pilots of said RAH subsidiaries in which IBT was supported by a majority of the voting pilots to be their representative. Republic Airlines, 38 NMB 245 (June 28, 2011) FACTUAL ALLEGATIONS COMMON TO ALL COUNTS 8. In or about 2006, Frontier and Lynx became wholly-owned subsidiaries of Frontier Airline Holdings, Inc. ("Frontier Holdings"), a holding company organized under the laws of the State of Delaware. 9. Effective on or about July 31, 2009, RAH acquired Midwest Air Group, Inc., the parent corporation of Midwest, and Midwest pursuant to an Agreement and Plan of Merger. 10. Effective on or about October 1, 2009, RAH acquired Frontier Holdings, Frontier, and Lynx pursuant to an agreement approved by a bankruptcy court in bankruptcy proceedings of Frontier Holdings, Frontier and Lynx. 11. At all times relevant herein prior to June 28, 2011, but not thereafter, FAPA was the exclusive bargaining representative of the Frontier pilots and was a party to a collective bargaining agreement with Frontier governing the terms and conditions of employment of the Frontier pilots. 12. On or about October 10, 2010, the IBT applied to the NMB for a finding that the Republic subsidiaries, Frontier and Lynx comprised a “single transportation system” for RLA representation purposes of the pilots employed by said RAH subsidiaries. 3 13. FAPA was a party to the NMB single transportation system proceedings initiated by the IBT. It was FAPA’s position in said NMB proceedings that Frontier was a separate carrier that was not part of a single transportation system including the Republic subsidiaries. 14. On April 7, 2011, the NMB determined that a single transportation system exists for a single combined craft or class of pilots employed by the Republic subsidiaries, Frontier, Midwest and Lynx. The NMB’s single transportation system determination is reported at Republic Airlines, Inc., et. al., 38 NMB 138 (2011), and a true and correct copy of said NMB determination is attached hereto as Exhibit 1. 15. Among the facts relied upon by the NMB in finding a single transportation system consisting of the Republic subsidiaries, Frontier, Midwest and Lynx were (1) that the same senior managers oversee all the operating carriers; (2) the same individuals were the CEOs, COOs and Vice Presidents of Labor Relations and Human Resources at all the operating carriers; (3) it is represented to the public on both RAH and Frontier websites that Frontier’s “branded” operations are flown by Frontier, Lynx, Republic, and Chautauqua; (4) the employees of all of the operating carriers are subject to the same operational policies and most labor relations policies (except for differences due to different collective bargaining agreements); and (5) employment opportunities on all carriers are listed and recruitment is handled through a single RAH website. 16. On April 11, 2011, FAPA requested reconsideration of the NMB’s single carrier determination. The NMB denied FAPA’s reconsideration request on April 21, 2011. Republic Airlines, Inc., et. al., 38 NMB 175 (2011) 4 17. IBT was the only labor organization that established at least a thirty-five percent (35%) showing of interest of the combined class or craft required under NMB rules to initiate a representation investigation by the NMB. 18. On May 2, 2011, the NMB authorized an election to select an exclusive bargaining representative for the combined craft or class of pilots employed by the Republic subsidiaries, Frontier, Midwest and Lynx. IBT was the only labor organization that appeared on the ballot. Republic Airlines, Inc., et. al., 38 NMB 175 (2011) 19. On May 3, 2011, the NMB scheduled a June 1 – 27, 2011 voting period and a June 27, 2011 ballot tally. 20. Because a majority of voting pilots in the combined craft or class were employed by the Republic subsidiaries and were represented by IBT, RAH, Frontier and FAPA anticipated that IBT would prevail in the representation election. 21. On or about June 10, 2011, FAPA and Frontier agreed in Letter of Agreement 67 (“LOA 67”), which became effective June 17, 2011 following ratification by FAPA-represented Frontier pilots, to amend their collective bargaining agreement to, among other things, grant wage and benefit concessions to Frontier, grant an equity position in Frontier for FAPA- represented pilots, and establish a Frontier profit-sharing plan for FAPA-represented pilots. Frontier further agreed that Frontier and RAH would make a good faith effort to reduce RAH’s equity position in Frontier to forty-nine percent (49%) or less. A true and correct copy of the tentative agreement of LOA 67 ratified by Frontier pilots, and which became effective June 17, 2011, is attached hereto as Exhibit 2. 5 22. Frontier and FAPA further agreed in the ratified version of LOA 67 that became effective June 17, 2011 (Ex. 2) that Frontier would “[i]mmediately redevelop a unique Frontier Airlines, Inc. websites for all sales, operational and recruitment purposes,” and The following steps shall be taken no later than December 31, 2011 so long as this agreement is in effect: a) Separate the management structure to include (at a minimum): b) Appointment of a separate Frontier Airlines Inc. Chief Operating Officer, c) Flight Operations (including all FAA required positions) shall report to the Frontier Airlines, Inc. COO, d) Appoint an independent Director of Labor Relations for Frontier Airlines which shall report to the Frontier Airlines COO. e) Separate Human Resource and Payroll functions from Republic Airways Holdings, or contract said functions to a third party on behalf of Frontier Airlines, Inc. f) Maintain a separate and unique Employee Handbook for Frontier Airlines, Inc. employees. g) Document arms-length agreements (e.g. pro-rate agreements), consistent with agreements with other contracted airlines, with any Republic Airways Holdings Inc. subsidiary that operates on behalf of the Company such that any profits or losses from the agreement shall be charged to that certificate rather than the Company. 23. On June 22, 2011, relying upon the attached Exhibit 2, “the Company” made a request to the NMB that the tally of ballots for the election, “currently scheduled for June 27, 2011, be postponed pending the Board’s consideration of whether a corporate restructuring and planned divestiture of majority ownership of Frontier Airlines, Inc. (Frontier”) affects the Board determination that Frontier is part of a single transportation system with the Republic Airways Holding, Inc. (RAH) operating subsidiaries (Republic Airlines, Chautauqua, Shuttle America and 6 the former Lynx Aviation).” A true and correct copy of “the Company’s” June 22, 2011 request to the NMB is attached hereto as Exhibit 3. 24. On June 24, 2011, the NMB denied the June 22, 2011 request of RAH to postpone the June 27, 2011 tally of ballots for the election. Republic Airlines, Inc., et. al., 38 NMB 242 (2011) 25. On June 24, 2011, FAPA and Frontier entered into a revised LOA 67, a true and correct copy of which is attached hereto as Exhibit 4. 26. Also on June 24, 2011, FAPAInvest, LLC was formed by a filing with the Secretary of State of Colorado, with Jeffrey Thomas, then-President of FAPA, as managing member of the limited liability company.