Independent Assoc of Continental Pilots v. Cont Airlines

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
9-10-1998
Independent Assoc of Continental Pilots v. Cont
Airlines
Precedential or Non-Precedential:
Docket 97-7282
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Filed September 10, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-7282
INDEPENDENT ASSOCIATION OF CONTINENTAL PILOTS
v.
CONTINENTAL AIRLINES, a Delaware Corporation
Independent Association
of Continental Pilots ("IACP"),
Appellant
On Appeal from the United States District Court
for the District of Delaware
D.C. Civil No. 96-cv-00389
Argued: January 22, 1998
Before: BECKER, Chief Judge, STAPLETON, Circuit Judge
and POLLAK, District Judge*
(Filed: September 10, 1998)
Roland P. Wilder, Jr. (argued)
Christy Concannon
Baptiste & Wilder, P.C.
1150 Connecticut Avenue, N.W.
Suite 500
Washington, DC 20036
Attorneys for Appellant
_________________________________________________________________
* Honorable Louis H. Pollak, United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.
Jon A. Geier (argued)
Margaret H. Spurlin
Paul, Hastings, Janofsky &
Walker LLP
1299 Pennsylvania Avenue, N.W.
10th Floor
Washington, DC 20004-2400
Josy W. Ingersoll
Laura D. Jones
Robert S. Brady
Young, Conaway, Stargatt & Taylor
Rodney Square North, 11th Floor
P.O. Box 391
Wilmington, DE 19899
Margaret Coullard Phillips
Continental Airlines, Inc.
Post Office Box 4607
Houston, Texas 77210-4607
Attorneys for Appellees
OPINION OF THE COURT
POLLAK, District Judge.
This appeal concerns the allocation of authority between
judicial and arbitral tribunals under the Railway Labor Act,
45 U.S.C. S 151 et seq. The International Association of
Continental Pilots (IACP) brought this action against
Continental Airlines, Inc. ("Continental") in the District
Court for the District of Delaware, seeking a declaration
and order directing that (1) Continental was required to
arbitrate the merits of an issue assertedly raised in an
employee's grievance, and (2) the grievance should be
submitted to the arbitral tribunal on a class-wide basis.
Continental counterclaimed, seeking an order directing that
the arbitral tribunal determine the issues the IACP sought
determination of by the district court. Thereafter
Continental moved for judgment on the pleadings. That
motion was granted and the case was dismissed. The IACP
2
has appealed the district court's order granting judgment
on the pleadings. For the reasons set forth below, we affirm.
I.
We rehearse the facts as set forth in IACP's complaint
and brief on appeal. In 1992, after Continental filed its
second petition for protection under Chapter 11 of the
bankruptcy code, the airline froze, and then sought to
reduce, the pay of its pilots. In response to the airline's
announcement of its intent to reduce pilots' pay, a group of
pilots undertook negotiations with the airline's
management; these talks resulted in a written agreement,
the "Cost Reduction Memorandum" ("CRM"). Paragraph 6(A)
of the CRM made provision for the phased restoration,
according to an agreed-upon formula, of any reduction in
pilot pay:
The wage reductions (i.e. fuel bonus, line divisor,
training, per diem, and crew meals) . . . will be restored
progressively by Continental, in accordance with the
formula set forth in Attachment A, with full restoration
projected by July 1, 1993. As part of the restoration,
the program of quarterly fuel bonus payments to pilots
shall end, and in lieu thereof pilots rates of pay
progressively restored shall be . . . the April 1, 1992
rates of pay.
Paragraph 6(B) of the CRM (the so-called "me-too"
provision) provided that, until the pilots' pay was restored
according to paragraph 6(A), if the airline granted a raise to
any employee group other than the pilots, the pilots would
receive a comparable wage increase:
Should Continental grant a wage or salary increase to
any employee group, including management and
executive employees, prior to restoration of pilot wage
reductions, then the company shall at the same time
restore pilot wages on a comparable basis.
In late 1993, after the airline and the pilots' group entered
into this agreement, the IACP was certified as the
bargaining unit for the pilots. The CRM continued to be
operative until Continental and the IACP executed their
first collective bargaining agreement.
3
After the IACP was certified as the pilots' bargaining
representative, the airline and the union entered into an
agreement entitled the "Interim Grievance Procedure"
("IGP") pending the completion of the parties'first collective
bargaining agreement. In accordance with S 204 of the
Railway Labor Act, 45 U.S.C. S 184, the IGP established a
system board of adjustment ("System Board") for the
arbitration of grievances.1 The grievance procedure
contemplated by the IGP consisted of two preliminary
stages--denominated as "Step I" and "Step II" hearings--
followed by appeal to the system board of adjustment of
any grievance not resolved in the first two stages.
On September 9, 1994--after implementation of the IGP
but before the effective date of the first collective bargaining
agreement--pilot Jackson Martin filed a grievance stating:
The Cost Reduction Memorandum establishes that fuel
bonus will be restored, it establishes a protocol for the
use of a higher hourly rate in lieu of quarterly fuel
bonus payments and it defines Continental's total
liability toward restoration of pilot wage reductions to
April 1, 1992 pay rates plus the value of the fuel bonus
program. Continental Airlines should honor the
Agreement it reached with its pilots under the Cost
Reduction Memorandum and fully restore pilot wage
reductions; to not do so would substantially alter the
letter and intent of the current Pilot Employment
Policy.
Martin pursued his grievance, unsuccessfully, through the
first two steps of the grievance procedure. On January 4,
1995, Martin filed a notice of appeal to the System Board.
On February 8, 1995, the IACP refiled Martin's appeal,
stating "herewith is submitted the grievancefiled on behalf
of Jackson Martin and all other similarly situated
_________________________________________________________________
1. Section 204 of the Railway Labor Act is among the amendments to the
statute that extended its coverage to the airline industry. This provision
declares that "it shall be the duty of every carrier and of its employees,
acting through their representatives . . . to establish a board of
adjustment." 45 U.S.C. S 184. A "board of adjustment" so established is
an arbitral tribunal to which the parties may refer any grievances that
are not otherwise resolved. Id.
4
Continental Airlines pilots." The IACP's appeal formulated
the question at issue as "whether the Company is in
violation of the Cost Reduction Memorandum . . . and all
related provisions for failure to properly enact pilot pay
restoration rate effective July 1, 1994."
Prior to the arbitration hearing, Continental took the
position that (1) the IACP could not bring the appeal on
behalf of similarly situated pilots, and (2) the System Board
could not entertain the merits of any claim under
paragraph 6(B) of the CRM (the "me too" provision) because
Martin had not invoked this provision at the earlier stages
of the grievance proceeding. When the arbitration hearing
commenced, the IACP announced that it refused to proceed
unless Continental agreed that any determination made by
the arbitrator with respect to Martin's waiver of the "me
too" provision or the IACP's right to raise claims for
similarly situated pilots would be reviewable de novo by a
federal court. When Continental refused to make this
concession, the IACP voiced its intent to go to court to
secure a judicial determination of the two issues. The
arbitrator thereupon ended the hearing.
The IACP brought suit in the district court, seeking an
order (1) declaring that Continental was required to
arbitrate the issue of whether the airline violated paragraph
6(B) of the CRM, and (2) compelling Continental to accept
the System Board's authority to resolve the paragraph 6(B)
issue on a class-wide basis. Continental counterclaimed,
seeking an order remanding for arbitration by the System
Board the issues IACP sought to have the district court
determine. Continental then moved for judgment on the
pleadings, urging that the IACP's complaint sought judicial
determination of issues that properly should be addressed
by the System Board as part of its overall arbitration of the
Martin grievance as recast by the IACP--the issues the
IACP requested judicial determination of being whether the
System Board should entertain the merits of a claim under
paragraph 6(B) and whether any relief awarded pursuant to
paragraph 6(B) should inure to all similarly situated pilots.
In opposition to Continental's motion for judgment on the
pleadings, the IACP urged that these were issues of
"substantive arbitrability" for the court to decide in advance
5
of arbitration. The district court granted Continental's
motion for judgment on the pleadings, stating in its order
that "[t]he case is dismissed." IACP then brought this
appeal. Our review of the district court's decision is
plenary. Jablonski v. Pan American World Airways Inc., 863
F.2d 289, 290 (3d Cir. 1988).
II.
In order to bring the questions posed in this appeal into
sharper focus, it may be useful to review the statutory
setting within which these questions arise. The Railway
Labor Act ("RLA") was enacted in 1926 to provide "a
comprehensive framework for the resolution of labor
disputes in the railroad industry." Atchison Topeka & Santa
Fe Ry. Co. v. Buell, 480 U.S. 557, 562-63 (1987). Among
the "[g]eneral purposes" of the legislation, as set forth in the
1934 amendments to the statute, are "[t]o avoid any
interruption to commerce or to the operation of any carrier
engaged therein" and "to provide for the prompt and orderly
settlement of all disputes growing out of grievances or out
of the interpretation or application of agreements covering
rates of pay, rules or working conditions." Act of June 21,
1934, ch. 691 S 2, 48 Stat. 1185, 1186-87 (codified at 45
U.S.C. S 151a). To these ends, the legislation, as amended
in 1934, required the establishment of an arbitral tribunal,
denominated "the National Railroad Adjustment Board," for
the resolution of such disputes, and authorized carriers
and their employees to create "system, group, or regional
boards" for the resolution of such controversies, provided
that any party dissatisfied with the decision of a
subordinate tribunal might still present the grievance to the
National Board.2 RLA S 3, 45 U.S.C. S 153.
_________________________________________________________________
2. The RLA was the product of the joint efforts of labor and industry
representatives, who drafted the legislation in an effort to correct the
weaknesses of the Transportation Act of 1920, 41 Stat. 456, a statute
which provided for the establishment of adjustment boards to hear
disputes, but did not require the establishment of such boards nor
render their awards judicially enforceable. See International Association
of Machinists v. Street, 367 U.S. 740, 758 (1961); Katherine Van Wezel
Stone, Labor Relations on the Airlines: The Railway Labor Act in the Era
6
In 1936, the RLA was amended to cover the infant airline
industry. Act of April 10, 1936, ch. 166, 49 Stat. 1189
(codified at 45 U.S.C. S 181). As amended, all provisions of
the RLA, save S 3, 45 U.S.C. S 153--the provision creating
the National Railroad Adjustment Board--apply to airlines
and their employees. 45 U.S.C. S 181. In so amending the
statute, Congress deferred the issue of whether to establish
a national adjustment board for the airline industry, and
empowered the National Mediation Board ("NMB") to
determine when the creation of such a board would be
appropriate. 45 U.S.C. S 185. The NMB has not yet made
such a determination.
As amended, the RLA directs air carriers and their
unions to establish arbitral tribunals--"system, group, or
regional boards"--for the resolution of "disputes between an
employee or group of employees and a carrier or carriers by
air growing out of grievances, or out of the interpretation or
application of agreements concerning rates of pay, rules, or
working conditions." 45 U.S.C. S 184. The statute requires
that such a dispute "be handled in the usual manner up to
and including the chief operating officer of the carrier
designated to handle such disputes; but, in the event of
failure to reach an adjustment in this manner, the dispute
may be referred by petition of the parties or by either party
to an appropriate adjustment board." Id. Consequently,
until a national adjustment board is created for the airline
industry, a decision rendered by a "system, group or
regional board" is the terminal stop in the pre-judicial
grievance process. Id. Once the appropriate adjustment
_________________________________________________________________
of Deregulation, 42 Stan. L. Rev. 1485, 1498 (1990). The 1926 legislation
made it the "duty of all carriers, their officers, agents, and employees .
. .
to settle all disputes," and mandated the establishment of system boards
for the resolution of disputes. Railway Labor Act, ch. 347 SS 2-3, 44
Stat.
577, 577-78 (1926). But when the requirements of the 1926 legislation
proved to be easily evaded, further labor and management dissatisfaction
with the process led to amendments in 1934, strengthening the dispute-
resolution provisions of the statute. Act of June 21, 1934, ch. 691 S 2,
48 Stat. 1186. The history leading up to the 1934 amendments is
recounted in Elgin, Joliet & Eastern Railway Co. v. Burley, 325 U.S. 711,
725-26 (1945).
7
board enters an award, its decision is enforceable in the
federal courts, see International Ass'n of Machinists v.
Central Airlines, 372 U.S. 682, 685 (1963), and is subject to
narrow judicial review. Bower v. Eastern Airlines, 214 F.2d
623, 625 (3d Cir. 1954).
As the foregoing summary makes plain, the RLA's
dispute-resolution machinery is central to the statutory
scheme. As set forth in the statute, and elaborated by
Supreme Court precedent, the RLA regime governs three
different types of disputes: "representation disputes"
(disputes concerning the selection of collective-bargaining
representatives), "major disputes," and "minor disputes."
Depending upon the type of dispute involved, the RLA
regime imposes different procedural requirements on the
parties and prescribes different dispute-resolution fora.3
This appeal concerns "major disputes" and "minor
disputes."
Under the RLA, questions about whether a dispute is
subject to arbitration are usually answered with reference
to the distinction between "major" and "minor" disputes:
"minor disputes" are resolved through arbitration (by the
system boards in the case of the airline industry or by the
National Railroad Adjustment Board in the railroad
_________________________________________________________________
3. "Representation disputes" are committed to the exclusive jurisdiction
of the National Mediation Board. 45 U.S.C. S 152 Ninth; Switchmen's
Union v. National Mediation Board, 320 U.S. 297, 302 (1943). Major and
minor disputes involve, respectively, efforts to secure and to implement
contractual rights; these distinctions will be discussed more fully in the
text. Further, it should be noted that certain of the rights and
correlative
obligations created by the RLA--particularly the provisions ensuring the
free choice of bargaining representatives found in Section 2 of the
statute, 45 U.S.C. S 152--are also enforceable in federal court. Because
the RLA (unlike the National Labor Relations Act) has not established an
administrative body for the enforcement of statutory rights, certain of
the
rights created by the statute are enforceable in the courts. See, e.g.,
Virginian Ry. v. System Fed'n No. 40, 300 U.S. 515, 544 (1937)(duty to
negotiate judicially enforceable); Texas & New Orleans Railroad v.
Railway & Steamship Clerks, 281 U.S. 548, 567 (1930)(right to free
choice of bargaining representative judicially enforceable). Although a
leading treatise on the RLA--The Railway Labor Act (Douglas Leslie, ed.
1994)--refers, for analytic purposes, to disputes raising such issues as
"statutory disputes," this label has not caught on in the courts.
8
industry) while "major disputes" are subject to a lengthy
process of bargaining and mediation.
The Supreme Court set forth the major/minor framework
in Elgin, Joliet & Eastern Railway Co. v. Burley, 325 U.S.
711 (1945).4 This classification scheme determines what
kind of dispute resolution mechanisms may be brought to
bear on the controversy and also determines the extent to
which the federal courts may become involved. Association
of Flight Attendants, AFL-CIO v. USAir, Inc., 960 F.2d 345,
348 (3d Cir. 1992).
The "major dispute" category, as the Supreme Court
explained in Burley, "relates to disputes over the formation
of collective agreements or efforts to secure them. They
arise where there is no such agreement or where it is
sought to change the terms of one, and therefore the issue
is not whether an existing agreement controls the
controversy." 325 U.S. at 723. If the parties are involved in
a major dispute, they must bargain over the issue; while
bargaining, the parties are required to maintain the status
quo and exhaust the lengthy mediation procedures set forth
in S 6 of the statute, 45 U.S.C. S 156, before they may
resort to self-help. Compliance with these requirements is
enforceable in the federal courts. Detroit & Toledo Shore
Line Railroad v. United Transportation Union, 396 U.S. 142,
149 (1969). If, upon the conclusion of the mediation
procedures, the parties are at an impasse, they may then
employ economic weapons (e.g., strikes or lockouts). See
Burley, 325 U.S. at 725, Consolidated Rail Corp. v. Railway
Labor Executives' Ass'n, 491 U.S. 299, 303 (1989).
While the major dispute category concerns efforts to
establish or change the terms of a collective bargaining
agreement, the minor dispute category, in the Burley
Court's formulation,
_________________________________________________________________
4. The terms "major" and "minor" are not found within the RLA. The
Supreme Court first used the major/minor typology in the Burley
decision. In doing so, the Court adopted the nomenclature that had
developed within the railroad industry. See 325 U.S. at 723-28. As the
Court later clarified in Consolidated Rail Corp. v. Railway Labor
Executives' Ass'n, 491 U.S. 299, 305 (1989), the designations "major"
and "minor" are not to be understood as reflecting the relative
importance of particular labor controversies.
9
contemplates the existence of a collective bargaining
agreement already concluded or, at any rate, a
situation in which no effort is made to bring about a
formal change in terms or to create a new one. The
dispute relates either to the meaning or proper
application of a particular provision with reference to a
specific situation or to an omitted case. . . . . [T]he
claim is to rights accrued, not merely to have new ones
created for the future.
325 U.S. at 723. Minor disputes are subject to mandatory
arbitration by the relevant board of adjustment, and may
not be the subject matter of strikes and lockouts.
Jurisdiction to entertain the merits of a minor dispute rests
exclusively with the arbitral forum: "Congress considered it
essential to keep these so-called `minor' disputes within the
Adjustment Board and out of the courts." Union-Pacific
Railroad Co. v. Sheehan, 439 U.S. 89, 94 (1978)(per
curiam).
Although the Burley Court established the general
contours of the distinction between major and minor
disputes, it did not articulate a standard for differentiating
the two. In Consolidated Rail Corp. v. Railway Labor
Executives' Association, 491 U.S. 299 (1989) ("Conrail"), the
Court undertook to advance the analysis. "[T]he line drawn
in Burley," said the Conrail Court, "looks to whether a claim
has been made that the terms of an existing agreement
either establish or refute the presence of a right to take the
disputed action. The distinguishing feature of [a minor
dispute] is that the dispute may be conclusively resolved by
interpreting the existing agreement." Id. at 305. Accordingly
the Court adopted a standard that sought to synthesize the
various verbal formulations adopted by the several courts of
appeals that had addressed the issue: "Where an employer
asserts a contractual right to take the contested action, the
ensuing dispute is minor if the action is arguably justified
by the terms of the parties' collective-bargaining agreement.
Where, in contrast, the employer's claims are frivolous or
obviously insubstantial, the dispute is major." Id. at 307.
III.
In the case at bar, the district court determined that the
"underlying issues in this case"--Continental's alleged
10
violations of paragraphs 6(A) and 6(B) of the CRM--
"constitute minor disputes under the RLA." Slip opinion at
6. The district court then stated that "although the RLA
requires that minor disputes be settled in arbitration rather
than by strikes or by the federal courts, it does not prohibit
the parties to a collective bargaining agreement from setting
procedural limits to the system boards' jurisdiction.
Whether the parties have complied with the procedural
requirements of the collective bargaining agreement such
that the arbitrator may address the merits of a dispute is
a matter for the arbitrator to decide." Slip opinion at 8-9
(citation omitted). The district court went on to conclude
that the issues presented in the IACP's complaint "are
minor disputes" which "must, therefore be decided through
arbitration." Slip opinion at 9.
There is no doubt that, as a general matter, a dispute
over whether Continental violated paragraphs 6(A) and 6(B)
of the CRM is a minor, rather than major, dispute. And,
more particularly, there is no doubt that the issues posed
by the grievance relating to pilot wages filed by Jackson
Martin against Continental are issues of the sort that are
subject to arbitration by the board of adjustment. This
appeal focuses on the question whether the IACP's
recasting of the Martin grievance into one of broader scope
has introduced additional and antecedent issues that
should be resolved judicially as a predicate to arbitration or
whether those additional issues are themselves subject to
arbitration. Characterizing these issues as matters of
"substantive arbitrability," the IACP contends that they
must be resolved by the district court rather than by the
board of adjustment.5 In pressing this contention on
appeal, the IACP argues that the issues that it asked the
district court to resolve prior to arbitration--namely,
whether the alleged violation of paragraph 6(B) of the CRM
is properly before the arbitrator, and whether the 6(B)
question must be addressed on a class-wide basis--are
_________________________________________________________________
5. On page 15 of its brief, the IACP attributes to the district court the
statement that "the doctrine of substantive arbitrability has no
application under the RLA." This language, however, appears neither on
the page to which the IACP's brief refers nor anywhere else in the
opinion.
11
questions of "substantive arbitrability" for the court to
decide.
The term "substantive arbitrability" derives from National
Labor Relations Act jurisprudence but has been utilized in
other contexts. It is used to describe the question whether
the parties' dispute involves a subject matter that is within
the ambit of a contractual arbitration agreement. See John
Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557-58
(1964); United Steelworkers of America v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582-83 (1960). The Supreme
Court used the term "substantive arbitrability" for the first
time in John Wiley, a case arising under the NLRA, to
differentiate "substantive" issues--whether the parties have
agreed to arbitrate the subject matter of the dispute--from
"procedural" issues--"whether grievance procedures or
some part of them apply to a particular dispute, whether
such procedures have been followed or excused, or whether
the unexcused failure to follow them avoids the duty to
arbitrate." 376 U.S. at 557-58. The question of"substantive
arbitrability"--that is, "whether a collective bargaining-
agreement creates a duty for the parties to arbitrate the
particular grievance"--is, as the Supreme Court instructs,
"undeniably an issue for judicial determination." AT & T
Technologies, Inc. v. Communications Workers, 475 U.S.
643, 649 (1986). Issues of "procedural arbitrability," on the
other hand, are for the arbitrator to decide. John Wiley, 376
U.S. at 558.
Responding to the IACP's contention that its complaint
implicates issues of "substantive arbitrability" for the court
to decide, Continental makes two arguments: Thefirst
argument is that, as the district court ruled, the IACP's
complaint presents a minor dispute solely within the
jurisdiction of the board of adjustment. The second
argument is that the IACP's complaint raises questions not
of "substantive arbitrability" but of "procedural
arbitrability"--questions which are for the arbitrator to
decide.
A. Does Continental's Complaint Present a "Minor
Dispute"?
In urging the correctness of the district court's
determination that the IACP's complaint presents a minor
12
dispute, Continental contends that the defenses that it
advanced to the Martin grievance and to the IACP's
proposed recasting of the grievance are defenses which, to
use the terminology of Conrail--"[a] dispute is minor if the
action is arguably justified by the terms of the parties'
collective-bargaining agreement"--are "arguably justified"
by, respectively, the Cost Reduction Memorandum ("CRM")
and the Interim Grievance Procedure ("IGP"). Thus, in
Continental's view, we need look no further than the
definition of a minor dispute to resolve this case.
Although the Court's Conrail discussion of minor
disputes is pertinent, we are called upon to answer a
somewhat different question from that posed by the
distinction between major and minor disputes. The function
that a court performs when determining whether a dispute
is major or minor is not the function that a court performs
when deciding whether an issue is one of "substantive
arbitrability" or "procedural arbitrability." As the Supreme
Court has pointed out, the "arguably justified" standard
announced in Conrail "was employed only for policing the
line between major and minor disputes." Hawaiian Airlines,
Inc. v. Norris, 512 U.S. 246, 265 (1994). That line
determines which statutory route must be followed as
between (1) bargaining, followed by compulsory mediation
procedures under the auspices of the National Mediation
Board, which procedures are judicially enforceable, and (2)
binding arbitration, subject to limited judicial review. Thus,
the major/minor question allocates the respective authority
of the National Mediation Board on the one hand, and the
arbitral boards of adjustment on the other, and also
delineates the judiciary's role in each respective statutory
path.6 See Burley, 325 U.S. at 722.
This appeal presents a related, but nonetheless different,
question. It presents the question whether, in the
adjudication of a dispute concededly to be decided by an
_________________________________________________________________
6. The definition of a minor dispute also comes into play when
determining whether a state-law claim raised by a worker covered by a
collective bargaining agreement governed by the RLA is preempted. See
Hawaiian Airlines, 512 U.S. at 265. But the preemption inquiry has no
bearing on the case at bar.
13
arbitral tribunal (under the RLA, a board of adjustment), it
is the arbitral tribunal or the court which determines the
scope of the arbitration. To be more specific, a decision that
the controversy about the adequacy of Continental's pilots'
wages is a "minor" dispute sets the stage for a further
question: Granted that Jackson Martin's grievance is
arbitrable, are the additional issues posed by Continental's
objections to the IACP's recasting of the Martin grievance
matters to be decided by the district court or by the System
Board?
Hence this appeal concerns not whether this case goes to
arbitration (as opposed to another statutory route), but
instead concerns what issues the arbitral tribunal should
decide and on whose behalf those issues are to be decided:
the IACP's complaint asks the court to determine (1)
whether the arbitral tribunal must, in entertaining Martin's
grievance, decide whether or not Continental violated
paragraph 6(B) of the CRM (the "me-too" provision), and (2)
whether the arbitral tribunal must decide that issue on a
class-wide basis. It is the IACP's contention that these
questions fall under the rubric of "substantive arbitrability"
and thus must be decided by the court. Because this
contention is not definitively answered one way or another
via the major/minor distinction, we now turn to the
question whether the IACP's complaint involves issues of
"substantive" or "procedural" arbitrability.
B. Does the IACP's Complaint Raise Issues of
"Substantive" or "Procedural" Arbitrability?
In support of its argument that its complaint raises
questions of "substantive arbitrability," the IACP relies
heavily on our discussion in PaineWebber v. Hartmann, 921
F.2d 507, 512-13 (3d Cir. 1990), and PaineWebber, Inc. v.
Hofmann, 984 F.2d 1372, 1378 (3d Cir. 1993), two cases
arising not under the RLA or the NLRA, but under the
securities laws and the Federal Arbitration Act. In
Hartmann and Hofmann, securities brokerage houses sued
to enjoin the arbitration of customers' claims of fraud and
mismanagement. Both cases concerned contractual
language found in the arbitration provisions of the New
York Stock Exchange rules and the National Association of
Stock Dealers Code of Arbitration Procedure, to wit: "No
14
dispute, claim, or controversy shall be eligible for
submission to arbitration . . . where six (6) years have
elapsed from the occurrence or event giving rise to the act
or dispute, claim or controversy." 921 F.2d at 509. Relying
on the specific language, absent in the case at bar, relating
to disputes "eligible for submission to arbitration," we held
in Hartmann (and reiterated in Hofmann) that the
application of the quoted provision was a question of
"substantive arbitrability" for the court. 921 F.2d at 513;
984 F.2d at 1379. In Hartmann, however, we specifically
noted the narrowness of our holding, stating that
"[l]anguage less distinct than `eligible for submission to
arbitration' might well be insufficient to overcome the
strong jurisprudential pull toward arbitration." 921 F.2d at
514.
The IACP urges that the agreement in this case--and in
particular the exhaustion requirement of the IGP--presents
a "substantive bar" to arbitration such that our rulings in
Hartmann and Hofmann apply. The IACP places principal
reliance on language in the "Jurisdiction" portion of Section
III of the IGP. The language relied on provides: "The System
Board shall have authority to hear only matters which are
within the scope of this Agreement and which have been
handled through the prior steps of this grievance
procedure." This is not, however, the only part of the
agreement which sets forth exhaustion principles. In
Section IV of the IGP, under the heading "General
Provisions," the agreement states in relevant part:
Unless the Company and the grievant or the IACP
mutually agree otherwise, a grievant is precluded from
raising in subsequent steps issues not raised in his
original grievance. Further, the Step II Hearing Officer
and System Board of Adjustment are precluded from
considering issues not raised in the grievant's original
grievance unless the Company and the grievant or the
IACP mutually agree otherwise. Such issues may only
be submitted as new grievances subject to all time
limits, jurisdictional restrictions, and any other
pertinent provisions of this Agreement.
We do not find the language of Sections III and IV of the
IGP to be as "distinct" as the language at issue in the
15
Hartmann and Hofmann cases. The mere fact that the
exhaustion provisions are framed in obligatory terms does
not necessarily render the provisions a "substantive bar"
requiring judicial, rather than arbitral, interpretation. In
Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d
1023 (11th Cir. 1982), a case we referred to in Hartmann,
the arbitration portion of the agreement between the
investor and the broker read, in pertinent part, "Arbitration
must be commenced within one year after the cause of
action accrued." Id. at 1026 n.4. The Eleventh Circuit
concluded that compliance with this provision was an issue
for the arbitrator to decide. Id. at 1028. Noting that the
provision at issue in Belke presented a "stark contrast" with
the NYSE and NASD's "eligib[ility] for submission to
arbitration" formulation, we observed in Hartmann that the
Belke court "quite reasonably" held that"its application
should be decided by the arbitrator." 921 F.2d at 513-14.
Even if the exhaustion provisions of the IGP could
properly be read as approximating the distinctness of the
Hartmann/Hofmann "eligible for submission to arbitration"
provision, we would be slow to conclude that interpretation
and application of the exhaustion provisions were matters
for the district court rather than matters for the System
Board. We think the case for judicial circumspection in
defining the boundaries of the arbitral process is less
compelling in the Hartmann/Hofmann setting, where the
disputes to be addressed arise out of the relationship
between a brokerage house and an individual customer,
than in settings governed by a collective bargaining
agreement which covers scores or hundreds or thousands
or even tens of thousands of employees. In the collective
bargaining setting, the primacy of the arbitral role is crucial
to the stability of the work place. The Supreme Court made
this plain almost forty years ago in United Steelworkers of
America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578
(1960):
Thus, the run of arbitration cases, illustrated by Wilko
v. Swan, 346 U.S. 427 [a securities case], becomes
irrelevant to our problem. There the choice is between
the adjudication of cases or controversies in courts
with established procedures or even special statutory
16
safeguards on the one hand and the settlement of them
in the more informal arbitration tribunal on the other.
In the commercial case, arbitration is the substitute for
litigation. Here arbitration is the substitute for
industrial strife. . . . For arbitration of labor disputes
under collective bargaining agreements is part and
parcel of the collective bargaining process itself.
Id. at 578.
A recent illustration of the centrality of arbitration in the
collective bargaining context is our decision in Association
of Flight Attendants v. USAir, 960 F.2d 345 (3d Cir. 1992).
In Association of Flight Attendants, an RLA case, we were
called upon to decide whether the district court erred in
ruling that a particular item of evidence--the grievant's
expunged criminal records--must be admitted in the
arbitral proceeding. While finding that this issue could not
correctly be characterized as presenting either a major or a
minor dispute, we determined that the issue was one of
procedure for the arbitrator to decide. Id. at 348-49.7
In so holding, we found guidance in John Wiley, which
held that under the National Labor Relations Act, "[o]nce it
is determined . . . that the parties have agreed to submit
the subject matter of the dispute to arbitration, `procedural
questions' which grow out of the dispute and bear on its
final disposition should be left to the arbitrator." Id. at 557.
Following the logic of John Wiley, we concluded in
Association of Flight Attendants that the general subject
matter of the dispute--i.e., the termination of the grievant--
was subject to arbitration and that the evidentiary question
was one for the arbitrator to decide.8 960 F.2d 349-350.
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7. It bears noting that we decided Association of Flight Attendants after
Hartmann.
8. The "procedural arbitrability" doctrine of John Wiley, long a mainstay
of NLRA jurisprudence, has been held applicable to RLA cases by other
courts of appeals as well. In Brotherhood [of] Railway Carmen v. Atchison,
Topeka & Santa Fe Railway Co., 956 F.2d 156 (7th Cir. 1992), the court
came to a conclusion similar to the one we reached in Association of
Flight Attendants, albeit in a case arising in a different procedural
posture. In that case, the union sued on the basis of an arbitral award
entered in favor of a discharged employee by an RLA board of
17
In the case at bar, the IACP, in its first count for relief,
asked the district court to rule that the arbitrator must
determine the merits of the issue of whether Continental
violated paragraph 6(B)--an issue which Continental
contended, in advance of arbitration, was not previously
raised in the grievance procedure. Thus the IACP requested
a judicial determination of whether or not any applicable
exhaustion requirement was met (and, if not, whether there
was ground for excusing exhaustion). In doing so, IACP
raised, in the RLA context, an argument which, in the
NLRA context, the Supreme Court in John Wiley had
occasion to reject. In John Wiley, the employer resisted
arbitration of an employee's grievance on a number of
grounds, one of which concerns us here: the employer's
argument that the court should find arbitration precluded
because the employee failed to exhaust the preliminary
steps of the grievance procedure. 376 U.S. at 556 & n.11.
Rejecting the employer's argument that it was for the court
to decide the exhaustion issue (as well as the issue whether
the grievance was timely instituted) the Court stated:
Doubt whether grievance procedures or some part of
them apply to a particular dispute, whether such
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adjustment. On appeal, the issue was whether the district court erred in
ruling, in the first instance, that the employer "had waived its right to
oppose the full award" because it failed to introduce the evidence that
supported its opposition during arbitration. Id. at 158. The court held
that the interpretation of the contractual provision relating to the
manner in which grievances were to be presented to the arbitrators--
"each written submission shall be limited to the material submitted by
the parties to the dispute [in the earlier stages of the grievance
proceeding]"--was a procedural question for the arbitrators to decide. Id.
at 158, 159. In doing so, the court pointed out that it is "customary for
collective bargaining agreements to require the exhaustion of the
preliminary stages of the grievance procedure before resorting to
arbitration . . . for why establish remedies if the parties are free to
bypass them?" Id. at 158. And in Larsen v. American Airlines, Inc., 313
F.2d 599 (2d Cir. 1963), the court noted "[W]here a labor agreement
provides for arbitration or other internal resolution of disputes, this
court has held that questions of `procedural arbitrability' are for the
arbitrator" (citing Livingston v. John Wiley & Sons, Inc., 313 F.2d 52 (2d
Cir. 1963), subsequently affirmed as John Wiley & Sons, Inc. v.
Livingston, 376 U.S. 543 (1964)).
18
procedures have been followed or excused, or whether
the unexcused failure to follow them avoids the duty to
arbitrate cannot ordinarily be answered without
consideration of the merits of the dispute which is
presented for arbitration. . . . . It would be a curious
rule which required that intertwined issues of
"substance" and "procedure" growing out of a single
dispute and raising the same questions on the same
facts had to be carved up between two different
forums, one deciding after the other. Neither logic nor
considerations of policy compel such a result.
376 U.S. at 557. We find this reasoning and result fully
applicable to the case at bar.
The second issue raised in IACP's complaint, whether the
arbitrator must entertain the Martin grievance on behalf of
all pilots, is likewise an issue for the arbitrator to decide.
This issue is not only "procedural" in nature, but also
requires considerable investigation into the meaning of the
parties' agreements. The IACP in effect requests that the
court certify the grievance as a class action before the
arbitrator proceeds to hear the case, a proposed party-
joinder ruling that would be "procedural" as that term is
normally understood. Furthermore, resolving this issue
would involve an analysis of the interplay between the
CRM's wage-restoration provision--paragraph 6(A)--and the
"me too" provision--paragraph 6(B)--on the one hand, and
the IGP's provisions governing the conduct of grievance
proceedings on the other. If we were to assume that an
arbitrator would find any applicable exhaustion
requirement satisfied, then the arbitrator might also find
within the language of the parties' agreements, as
elucidated by the law of the shop, a basis for considering
paragraph 6(B) claims to mandate or permit class-wide
relief (that is to say, perhaps the "me too" clause is better
understood as an "us too" clause). But such a
determination requires a much more searching
interpretation of the contract than the courts are permitted
under the RLA. In this case, as in John Wiley, this
procedural issue cannot "be answered without
consideration of the merits of the dispute which is
presented for arbitration." 376 U.S. at 557.
19
The IACP seeks not a determination of the subject matter
covered by the agreement to arbitrate, but a judicial
determination of the parameters and scope of the award
that the system board may permissibly enter, that is, (1)
whether the "me-too" clause was properly invoked (and if
not, whether the union can interpolate this claim at the
arbitral stage), and (2) whether the arbitrator has authority
to grant relief on a class-wide basis. In the latter regard, it
bears noting that Section III.B of the IGP contains the
following general grant of remedial authority (also under the
subheading "Jurisdiction"):
The System Board shall have the authority to issue
rulings and make awards necessary to compensate a
pilot for actual damages suffered as a result of any
policy violations it finds to have occurred. The System
Board's jurisdiction to award damages is strictly
limited to actual, compensatory damages, and does not
include jurisdiction or authority to award damages in
the nature of a penalty, i.e., punitive damages. The
Board shall have the authority, however, to order a
party to comply with any provision(s) of the [agreement]
or policies as necessary to remedy or correct violations,
or to require specific enforcement of a provision of the
[agreement] or policies.
The interpretation of such remedial provisions is a task for
which arbitrators conversant with industry practice are
likely to be better suited than judges. Cf. Carey v. General
Elec. Co., 315 F.2d 499, 508 (2d Cir. 1963)("We cannot
divine now, nor do we deem it proper to predict, the precise
form in which the arbitrator will frame his decree."), cert.
denied, 377 U.S. 908 (1964).
When a court is called on to determine whether aspects
of a dispute arising out of a collective bargaining agreement
are to be determined by an arbitrator or by the court,
judicial restraint is an institutional imperative. Excessive
judicial intrusion can undermine arbitral expertise and
authority.9 Further, lengthy court proceedings can seriously
_________________________________________________________________
9. "It is particularly underscored that the arbitral process in collective
bargaining presupposes that the parties wanted the informed judgment
of an arbitrator, precisely for the reason that judges cannot provide it."
Concurring Opinion of Brennan, J., joined by Frankfurter and Harlan,
JJ., in United Steelworkers of America v. American Manufacturing
Company, 363 U.S. 564, 570 (1960).
20
undermine the capacity for prompt adjudication which is
the hallmark of arbitration. As the Court cautioned in John
Wiley,
the opportunities for deliberate delay and the
possibility of well-intentioned but no less serious delay
created by separation of the "procedural" and
"substantive" elements of a dispute are clear. . . . [S]uch
delay may entirely eliminate the prospect of a speedy
arbitrated settlement of the dispute, to the
disadvantage of the parties (who, in addition, will have
to bear increased costs) and contrary to the aims of
national labor policy.
376 U.S. at 558.10
Accordingly, both of the matters raised by the IACP's
complaint are questions of procedure for the arbitral
tribunal to decide.
Conclusion
For the foregoing reasons, the judgment of the district
court is affirmed.11
_________________________________________________________________
10. As pointed out in Part II of this opinion, supra note 1, the RLA's
provisions for arbitration by boards of adjustment were drafted in
response to the Transportation Act's ineffectual dispute-resolution
machinery; but even those procedures established by the original statute
proved less than satisfactory. Before the RLA's mechanisms for resolving
grievance and contract-application disputes were strengthened by the
1934 amendments to the statute, "parties were free at all times to go to
court to settle [grievances]" and the intended dispute-resolution process
broke down. Burley, 325 U.S. at 725-26. Consequently, the 1934
amendments created a compulsory arbitration system"to remove the
settlement of grievances from this stagnating process and bring them
within a general and inclusive plan of decision." Id. at 728. Hence it is
unsurprising that the 1934 amendments were enacted under the title:
"An Act to amend the Railway Labor Act approved May 20, 1926, and to
provide for the prompt disposition of disputes between carriers and their
employees." Act of June 21, 1934, ch. 691, 44 Stat. 577.
11. Continental concluded its brief on appeal with the recital that "the
judgment [the judgment of the district court which granted Continental's
21
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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motion for judgment on the pleadings and recited that "[t]he case is
dismissed"] should be affirmed." Continental has not asked this court to
address the counterclaim it filed prior to moving for judgment on the
pleadings. Whether that counterclaim has any continuing viability, or (as
pointed out in the district court's memorandum opinion but not in the
district court's order) vanished with the district court's grant of
judgment
on the pleadings and consequent dismissal of the case, is not a question
that is before this court. If this matter reaches the System Board of
Adjustment, we presume that the threshold issues before the Board will
be those identified in Continental's counterclaim, e.g., whether, under
the Interim Grievance Procedure, (1) the IACP may bring a grievance on
behalf of "similarly situated" pilots other than the individual pilot who
filed the grievance; (2) a grievant is precluded from raising before the
System Board an issue not raised in the original grievance; and (3)
Jackson Martin raised Paragraph 6(B) of the Cost Reduction
Memorandum in his original grievance filed on September 9, 1994.
22