Susan Smith v. American Airlines ( 2005 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 04-1405
No. 04-1757
___________
Susan Smith, *
*
Plaintiff - Appellant, *
*
v. * Appeals from the United States
* District Court for the
American Airlines, Inc.; TWA * Eastern District of Missouri.
Airlines, LLC; Airline Pilots *
Association Int’l, *
*
Defendants - Appellees. *
___________
Submitted: January 11, 2005
Filed: July 18, 2005
___________
Before LOKEN, Chief Judge, MORRIS SHEPPARD ARNOLD and MURPHY,
Circuit Judges.
___________
LOKEN, Chief Judge.
After American Airlines (AA) purchased the assets of bankrupt Trans World
Airlines, Inc. (TWA), AA refused to hire Susan Smith, a former TWA pilot. The Air
Line Pilots Association (ALPA) filed separate grievances on Smith’s behalf against
TWA and AA. ALPA settled the TWA grievance with TWA’s bankruptcy estate.
When AA rejected Smith’s separate grievance against AA, Smith commenced this
action against AA1 and ALPA. The district court2 granted summary judgment in
favor of defendants on all claims. Smith appeals the dismissal of her Railway Labor
Act (RLA) claims, arguing that the transition collective bargaining agreement gave
her a right to post-acquisition employment with AA, and that she may litigate this
claim in federal court because (i) AA repudiated the exclusive grievance/arbitration
remedies in the collective bargaining agreement, and (ii) ALPA breached its duty of
fair representation by not vigorously pursuing her rights in the grievance process.
Reviewing the district court’s grant of summary judgment de novo, we affirm.
I. Background.
In 1998, while employed by TWA, Smith received an offer of employment
from AA and secretly enrolled in its pilot training program. Smith took the AA pilot
training during a personal leave of absence from TWA. Both airlines then considered
her an employee. Some weeks later, AA discharged Smith, primarily because she
failed to successfully complete the training program. Smith returned to her duties as
a TWA pilot when her personal leave ended.3
The 2001 Asset Purchase Agreement between AA and TWA provided that AA
would offer post-acquisition employment to “all of [TWA’s] U.S.-based union
employees (other than personnel who (A) have previously been terminated by [AA]
1
AA established a wholly owned subsidiary, Trans World Airlines LLC, to
operate TWA’s assets during the post-acquisition transition period. Both AA and its
subsidiary are co-defendants in this action. For convenience, we refer to the actions
of the subsidiary as though they were actions of AA.
2
The HONORABLE HENRY E. AUTREY, United States District Judge for the
Eastern District of Missouri.
3
Smith’s simultaneous employment with AA and TWA violated both airlines’
policies. Smith admits TWA would likely have fired her had she disclosed this fact.
-2-
. . . or (B) would not be qualified for employment under [AA’s] general hiring
policies as in effect at Closing)” (emphasis added). That provision was inconsistent
with ALPA’s existing collective bargaining agreement with TWA, which provided
that any successor of TWA must “employ the pilots on the TWA Pilots System
Seniority List.” But threatened with possible bankruptcy court repudiation of the
entire bargaining agreement, ALPA agreed to modify this aspect of the existing
agreement and, after the closing, to enter into a transition collective bargaining
agreement with AA. According to Smith’s view of the relevant documents, the
transition agreement incorporated by reference a pre-closing letter from AA to ALPA
stating: “It is [AA’s] intention that all of TWA’s U.S. based represented employees
who meet the qualifications described in the Asset Purchase Agreement become [AA]
employees as quickly as possible.”
After the closing, AA hired TWA pilots it considered eligible under the Asset
Purchase Agreement provision but advised that Smith and six others were ineligible
because they were previously terminated by AA or an AA affiliate. ALPA filed
grievances on behalf of the seven pilots. In the months following the asset purchase,
the grievances ALPA filed with TWA for wrongful discharge became claims for
administrative expenses in TWA’s bankruptcy proceedings. AA refused to proceed
with the separate grievances ALPA filed under the transition collective bargaining
agreement on the ground that the ineligible pilots were not AA employees covered
by that agreement. However, AA notified the ineligible pilots that they could appeal
its hiring decisions by submitting “documentation they feel is appropriate to support
their request for review.” In addition, ALPA officials sought meetings for the seven
pilots and informally attempted to plead their cases. Four submitted documentation
and argued that their prior separations should not be characterized as terminations.
AA agreed and hired them. AA later offered to meet informally with the other three.
Smith submitted no documentation supporting her claim that she had resigned from
AA in 1998, and she declined AA’s offer to discuss her case informally. She was not
hired. This lawsuit followed.
-3-
II. The RLA Claims.
Smith argues that AA breached the transition collective bargaining agreement
by failing to hire her after purchasing TWA’s assets and by refusing to process her
grievance under that agreement. AA denies that it was contractually bound to hire
Smith. Moreover, AA contends that Smith has no claim under the RLA because she
was not an AA employee within the meaning of either the RLA, see 45 U.S.C. § 151,
Fifth, or the transition bargaining agreement. The district court agreed.
Whether Smith was an employee within the meaning of the RLA is an aspect
of the merits of her claim. That claim is, in the language of the Act, a “minor dispute”
-- a controversy “over the meaning of an existing collective bargaining agreement in
a particular fact situation.” Bhd. of R.R. Trainmen v. Chicago R. & I.R. Co., 353
U.S. 30, 33 (1957). This is a federal claim that “must be resolved only through the
RLA mechanisms, including the carrier’s internal dispute-resolution processes and
an adjustment board established by the employer and the unions.” Hawaiian Airlines,
Inc. v. Norris, 512 U.S. 246, 253 (1994). Under the RLA, minor disputes are subject
to mandatory arbitration before an adjustment board which has primary jurisdiction
to construe the collective bargaining agreement. The aggrieved employee “may not
resort to the courts in the first instance.” Penn. R.R. v. Day, 360 U.S. 548, 552
(1959).4 However, the Supreme Court has recognized exceptions to this rule,
situations “in which the employee should not be limited to the exclusive remedial
4
Technically, when the employee asserts a state law breach of contract claim,
the claim is preempted by the RLA if it depends on an interpretation of the collective
bargaining agreement. See McCormick v. Aircraft Mechanics Fraternal Ass’n, 340
F.3d 642, 644 (8th Cir. 2003). On the other hand, when the employee asserts a
federal claim under the RLA for breach of the collective bargaining agreement, as
Smith does in this case, the question is not preemption but whether the claim is barred
by the failure to exhaust the contractual adjustment board remedy as construed by the
Supreme Court. See Andrews v. Louisville & N.R.R., 406 U.S. 320, 325 (1972).
-4-
procedures established by the contract.” Vaca v. Sipes, 386 U.S. 171, 185 (1967).
Smith argues that two of those exceptions are applicable here.
1. Emphasizing on appeal an issue that was preserved but not argued in the
district court, Smith argues that she may litigate her RLA breach of contract claim in
federal court, without exhausting the adjustment board remedy provided by the
transition collective bargaining agreement, because AA’s refusal to process her
grievance under that agreement “amounts to a repudiation of those contractual
procedures.” Vaca, 386 U.S. at 185. We disagree.
When AA declared seven pilots ineligible for post-acquisition hire because of
prior terminations, Smith and the others argued they had a contractual right to
become covered employees, and ALPA filed grievances on their behalf. The
transition agreement provided grievance procedures for “pilots covered by this
Agreement.” AA took the position that these contractual procedures did not apply
because Smith and the others were not hired and therefore were not employees
“covered by” the agreement. Instead, AA offered an informal procedure whereby the
seven could seek review of its initial decisions. Four of the seven did so and were
hired; Smith refused AA’s offer of an informal meeting. The transition agreement
further provided that the RLA-mandated adjustment board “shall have jurisdiction
over disputes between any employee covered by this Agreement and the Company,
growing out of . . . interpretation or application of any of the terms of this
Agreement.” AA took the position that the adjustment board lacked jurisdiction over
this dispute, again because Smith was not a covered employee.5
5
Though applicants for employment are not “employees” under the RLA if the
collective bargaining agreement leaves hiring decisions to the employer’s discretion,
a dispute over whether the relevant collective bargaining agreement gives employees
of the selling carrier a right to priority in the buyer’s post-acquisition hiring may well
be an issue that must be submitted to the adjustment board. See Pyles v. United Air
Lines, Inc., 79 F.3d 1046, 1051-52 (11th Cir. 1996).
-5-
The result of this impasse was a classic dispute over “arbitrability,” that is, the
question whether AA and ALPA agreed in the transition agreement to submit this
type of disagreement to the adjustment board. The way to resolve such disputes is by
a suit to compel arbitration. See generally First Options of Chicago, Inc. v. Kaplan,
514 U.S. 938 (1995). In RLA cases, arbitrability determines the adjustment board’s
jurisdiction and is therefore a question for the court. But “in deciding whether the
parties have agreed to submit a particular grievance to arbitration, a court is not to
rule on the potential merits of the underlying claims.” AT&T Tech., Inc. v.
Communications Workers of Amer., 475 U.S. 643, 649 (1986).
Viewed in this light, it is apparent that AA did not “repudiate” the grievance
and arbitration procedures in the transition collective bargaining agreement. It simply
took the position that they did not apply to this dispute. ALPA could have presented
the question of arbitrability by suing to compel AA to submit the dispute to the
adjustment board. But ALPA did not do, and Smith does not contend this was a
breach of the union’s duty of fair representation. Nor does Smith seek to compel
arbitration in this lawsuit. Instead, she asks the federal court to litigate the merits of
her claim, contrary to the strong federal policy that RLA minor disputes should be
arbitrated, not litigated. Where all an employee shows is the need for judicial help
in compelling arbitration, the repudiation exception does not apply. A federal court
may compel arbitration at the employee’s (or the union’s) request, but it may not
intrude upon the adjustment board’s authority by deciding the merits of the collective
bargaining agreement dispute. See Capraro v. United Parcel Serv. Co., 993 F.2d 328,
336-37 (3d Cir. 1993); accord Pyles, 79 F.3d at 1052.
2. Alternatively, Smith renews on appeal her primary RLA argument to the
district court -- that she may bring her breach of contract claim to federal court
without exhausting the mandatory arbitration remedy under the recognized exception
for “hybrid” claims “that allege both a breach of the collective bargaining agreement
by the employer and a breach of the duty of fair representation by the union.”
-6-
McCormick, 340 F.3d at 645. The duty of fair representation is breached “when a
union’s conduct toward a member of the collective bargaining unit is arbitrary,
discriminatory, or in bad faith.” Vaca, 386 U.S. at 190. Smith alleges that ALPA
breached its duty by more aggressively pursuing the claims of the six other ineligible
pilots during the informal review process conducted by AA.
Some circuits have limited this exception to cases where the union’s breach of
duty caused the employee to lose her right to press a grievance before the arbitration
board. See Miklavic v. USAir Inc., 21 F.3d 551, 557 (3d Cir. 1994), and cases cited.
This limitation is consistent with the purpose behind the exception, see Vaca, 386
U.S. at 185, and thus has much to commend it. Smith does not fall within the
exception so limited because (i) ALPA submitted her grievance to the adjustment
board, (ii) Smith does not claim that ALPA breached its duty by failing to bring an
action to compel arbitration, and (iii) Smith failed to show that ALPA’s action
prevented her from pressing her own grievance by suing to compel arbitration.
The district court did not consider this limitation, concluding instead that “the
record establishes that none of the actions taken by ALPA were arbitrary,
discriminatory or in bad faith.” We agree. ALPA filed grievances on behalf of the
ineligible pilots and then assisted them in pursuing relief through AA’s informal
review process. Four pilots presented satisfactory evidence explaining their prior
separations and were hired. Smith refused to meet with AA and acknowledged she
knew of no document establishing that she was not terminated by AA. “A union does
not act arbitrarily simply because it does not pursue a grievance that it has decided
lacks merit.” Schmidt v. IBEW, Local 949, 980 F.2d 1167, 1170 (8th Cir. 1992)
(quotation omitted). In these circumstances, even if true, ALPA’s alleged decision
to assist more aggressively the ineligible pilots who had stronger claims for relief
under the transition collective bargaining agreement than Smith does not come close
to establishing a breach of the union’s duty of fair representation.
-7-
For the foregoing reasons, we conclude that Smith’s RLA claims against both
AA and ALPA were properly dismissed.
III. A Taxation of Costs Issue.
After the district court granted summary judgment dismissing Smith’s claims,
defendants filed bills of costs. Smith failed to object, and the clerk taxed the costs
claimed. One month later, Smith moved to reconsider, arguing that many of the taxed
costs were improper. The district court denied this motion, noting that Smith did not
“set forth any authority under the applicable rules . . . for the Court to reconsider the
taxation of costs,” and that “the costs which were taxed are in accordance with 28
U.S.C. § 1920.” On appeal, Smith urges us to treat her motion to reconsider as a
motion for relief under Rule 60(b)(1). So construed, she argues that its denial was an
abuse of discretion because she terminated her trial counsel before receiving the bills
of costs and should therefore be relieved from complying with the local rule requiring
the filing of objections within fourteen days.
Rule 60(b)(1) authorizes the district court to grant relief from an order based
upon a showing of “mistake, inadvertence, surprise, or excusable neglect.” In this
case, Smith made no such showing to the district court. Indeed, she did not argue
excusable neglect nor even cite Rule 60(b)(1). Thus, the court did not abuse its
discretion in failing to grant Rule 60(b) relief. Moreover, even if Smith had raised
the issue of excusable neglect in the district court, the local rule requiring objections
to the bills of costs within fourteen days was clear, and therefore her failure to comply
“will not constitute excusable neglect under Rule 60(b).” Bennett v. Dr. Pepper/
Seven Up, Inc., 295 F.3d 805, 808 (8th Cir. 2002).
The judgment of the district court is affirmed.
______________________________
-8-