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APA sues AA, claiming 1113 does not apply to "expired" CBA

What were the bases of the court decision against NW AFA that disallow self-help?
I'm surprised that someone who posts almost exclusively on union organizing issues isn't already familiar with the decision of the Second Circuit Court of Appeals that affirmed the lower court's ruling that the NW FAs could not strike even though their contract was abrogated. Here's the decision for you:

http://caselaw.findlaw.com/us-2nd-circuit/1034838.html
 
Personal opinion... This will end badly for APA... I agree it may lead to a rebuke, but it will also wind up creating yet another piece of case law & precedent that boxes labor in, just as AFA did when going to court to engage in self-help following abrogation.

Then again, maybe they can get a ruling that the RLA shouldn't apply to airlines. Then everyone wins...
I tend to agree. This may not have been their best shot.

If it's not a collective bargaining agreement under the bankruptcy code, perhaps it's a simple executory contract. Executory contracts may be rejected by the debtor without any of the requirements (or protections for labor) of section 1113.

But if I'm wrong, they'll look like geniuses.
 
An interesting portion of the ruling against the AFA at NWA starts with this...

...In line with our precedent, we hold today that in the absence of carrier bad faith, a union must come closer to exhausting the dispute resolution processes of the RLA than the AFA has in this case in order to satisfy its duty under Section 2 (First).   There is no need at this point to decide when and if the AFA will have fulfilled its duty;  it has not done so yet....

At NWA AFA wasn't in section six negotiations, APA currently is.

APA may indeed be primed for some interesting legal challenges.
 
Fellow pilots,
Last week the APA National Officers and Board of Directors received daily updates from the Negotiating Committee Chairman regarding the status of negotiations. The Negotiating Committee in turn circulated a summary of the updates in a membership update on Feb. 24. Unfortunately, the news hasn’t been good. After APA presented our comprehensive proposals, management summarily discarded our terms.

Your APA leadership is disappointed with the position taken by management’s negotiating team—which is now being led by lawyers—as we were careful to craft counter proposals that align with industry standards. Nonetheless, in preparation for the possibility that management would respond as they have, your leadership spent the majority of last week’s special board meeting considering our various options and mapping the best course of action for our pilot group.

After AMR filed Chapter 11 bankruptcy, I requested that our legal team investigate aspects of the law relating to the “intersection” of the Railway Labor Act (RLA) and Section 1113 of the U.S. Bankruptcy Code, with the intention of protecting our pilots’ interests during restructuring. Authorized by a unanimous vote of the APA Board of Directors, today APA filed a lawsuit in the bankruptcy court challenging management’s legal authority to use Section 1113 to reject our contract.

A brief history would be helpful to understand the legal issues. Congress enacted Section 1113 of the bankruptcy code in 1984 after the U.S. Supreme Court decision NLRB v. Bildisco & Bildisco. In that case, a company used bankruptcy to terminate a collective bargaining agreement and that action was upheld by the U.S. Supreme Court. Congress responded to labor’s concerns by adding various provisions to the bankruptcy code, including Section 1113. While Section 1113 eventually became known as a tool for management to exert leverage, the original intent was to establish a buffer for labor by outlining specific criteria management had to satisfy before seeking to reject a CBA. The interpretation of the law as it relates to the “intersection” of the Railway Labor Act, Section 1113 of the bankruptcy code, the National Labor Relations Act and the Norris-LaGuardia Act has been the subject of considerable litigation.

As we all know, numerous airlines have used Chapter 11 to force deep reductions in pay and benefits and to degrade the working conditions of unionized employees. The net effect of all these “pattern bankruptcies” has been to decimate decades’ worth of gains that airline employees achieved. APA is seeking to take a step in reversing this trend.

The lawsuit APA filed against AMR in the bankruptcy court attacks the applicability of 1113(c) and asks the court to rule that 1113(c) does not allow management to reject or change our pilots’ employment terms. APA’s lawsuit asserts that our pilots’ current compensation and work rules remain unchanged from the 2003 collective bargaining agreement because the RLA prohibits any change until the National Mediation Board proceedings have concluded. Our terms of employment in place today are the result of the status quo provisions provided by the RLA—not a contract. Consequently, there is no contract to reject and 1113(c) does not apply. Click here for a copy of APA’s lawsuit.

Management must file an answer to our lawsuit within 30 days, except when a different time is provided by the court. Thereafter, we expect to schedule a hearing date.

The legal question—whether 1113(c) is applicable when there is no current CBA and the terms of employment continue based upon the RLA—has never been squarely presented or decided by a bankruptcy court. Your APA leadership is fully committed to pursuing our lawsuit and obtaining a favorable resolution for our pilot group while continuing to seek a consensual agreement at the bargaining table. Yesterday, we gave senior management advance notice that we would be filing a lawsuit and also reiterated our commitment to seeking a consensual agreement.

Although management may use the lawsuit as an excuse to hasten their pursuit of 1113(c) relief, we are prepared to fight that battle as well. To date management has not complied with the basic requirements of 1113. By giving us a “take it or leave it” proposal that does not reflect industry standards and by failing to respond with any counter proposals, management has not negotiated in good faith. Additionally, they have yet to respond to a substantial number of requests from us for data necessary to evaluate their proposals

As the APA leadership has emphasized on numerous occasions, we remain convinced that it is in the best interests of all of American Airlines' stakeholders for APA and management to reach a consensual agreement. To that end, your leadership is well equipped and ready to continue negotiations at the table while simultaneously pursuing the legal course of action I have outlined.

As always, your continued support and professionalism are appreciated.

In unity,

Captain Dave Bates
APA President
 
I saw some on here were saying "APA is arguing both sides". I should have highlighted it, but this is the operative sentence in the whole missive.

"Our terms of employment in place today are the result of the status quo provisions provided by the RLA—not a contract."

This seems like pretty crafty legal maneuvering and it will be interesting to see how it plays out. The judge will now have to rule who has jurisdiction - the bankruptcy court, or the NMB. I find it hard to believe the judge will rule himself irrelevant, but stranger things have happened. In light of management just sitting at the table and giving us the finger, I am glad APA and the (high priced) legal firms are fighting back. We are facing the mother of all cramdowns and we have nothing to lose.
 
Again, I think APA is overplaying their hand... And I can see this as the beginning of the end for the RLA, which is probably a good thing in general.
 
I saw some on here were saying "APA is arguing both sides". I should have highlighted it, but this is the operative sentence in the whole missive.

"Our terms of employment in place today are the result of the status quo provisions provided by the RLA—not a contract."

Actually, that's wrong. Since contracts under the RLA don't expire the terms of employment in place today are because of the contract that the APA claims doesn't exist. And that's where the intersection of the RLA and bankruptcy law comes in. The NMB, enforcing the RLA, says that while contracts are amendable the status quo must be maintained until an impasse is declared and the cooling off period expires. However, Congress added section 1113 to the bankruptcy law which allows contracts, amendable or not, to be abrogated. If the intent of Congress was to prevent abrogation of contracts, they could have done that with far fewer words than section 1113 - "Employee contracts shall not be changed by a company during bankruptcy" would have sufficed nicely. The fact that Congress didn't do that is proof their intent wasn't to prevent changes to those contracts in bankruptcy, but rather to add some procedural steps before contracts could be abrogated - negotiations being the main requirement.

The history of the change is important. Prior to the addition of section 1113, employee contracts were treated like any other contract in bankruptcy. Basically, all the company needed to do was tell the judge that rejecting a contract was in the best interests of the debtor and the Judge would approve rejection of that contract. Lorenzo used bankruptcy to do just than, rejecting all the employee contracts for groups that wouldn't agree to what he wanted. Congress wanted to give employees more of a say by requiring negotiation, but didn't prohibit abrogation.

So APA is arguing that 1 - no contract exists so there's nothing to abrogate, but that 2 - the status quo must be maintained because a contract exists and is amendable. Their lawyer isn't a guy named $eham by any chance?

Jim
 
I saw some on here were saying "APA is arguing both sides". I should have highlighted it, but this is the operative sentence in the whole missive.

"Our terms of employment in place today are the result of the status quo provisions provided by the RLA—not a contract."

Actually, that's wrong. Since contracts under the RLA don't expire the terms of employment in place today are because of the contract that the APA claims doesn't exist. And that's where the intersection of the RLA and bankruptcy law comes in. The NMB, enforcing the RLA, says that while contracts are amendable the status quo must be maintained until an impasse is declared and the cooling off period expires. However, Congress added section 1113 to the bankruptcy law which allows contracts, amendable or not, to be abrogated. If the intent of Congress was to prevent abrogation of contracts, they could have done that with far fewer words than section 1113 - "Employee contracts shall not be changed by a company during bankruptcy" would have sufficed nicely. The fact that Congress didn't do that is proof their intent wasn't to prevent changes to those contracts in bankruptcy, but rather to add some procedural steps before contracts could be abrogated - negotiations being the main requirement.

The history of the change is important. Prior to the addition of section 1113, employee contracts were treated like any other contract in bankruptcy. Basically, all the company needed to do was tell the judge that rejecting a contract was in the best interests of the debtor and the Judge would approve rejection of that contract. Lorenzo used bankruptcy to do just than, rejecting all the employee contracts for groups that wouldn't agree to what he wanted. Congress wanted to give employees more of a say by requiring negotiation, but didn't prohibit abrogation.

So APA is arguing that 1 - no contract exists so there's nothing to abrogate, but that 2 - the status quo must be maintained because a contract exists and is amendable. By doing so the APA is effectively saying something that isn't true - that the old contract expired but status quo must be maintained until a new contract is negotiated, which is contrary to both the RLA and bankruptcy law. Their lawyer isn't a guy named $eham by any chance?

Jim
 
Again, I think APA is overplaying their hand... And I can see this as the beginning of the end for the RLA, which is probably a good thing in general.

Wouldn't any management sympathizer without question think this way? Of course that is what you think Eric. We wouldn't expect anything less.

End the RLA and Labor regains a foothold in this bastard industry. The only reason AA hasn't already experienced job actions is because the RLA prevents them.

I vote to end the RLA on Friday!

RLA is not a help to labor, it is a restriction.
 
I'm surprised that someone who posts almost exclusively on union organizing issues isn't already familiar with the decision of the Second Circuit Court of Appeals that affirmed the lower court's ruling that the NW FAs could not strike even though their contract was abrogated. Here's the decision for you:

http://caselaw.findlaw.com/us-2nd-circuit/1034838.html
What were the bases of the court decision against NW AFA that disallow self-help
http://www.nysb.uscourts.gov/opinions/alg/133670_2962_opinion.pdf
Since you are so knowledgeable and (I’m not) can you just answer the question?
Does the unions have a legal right to strike????

http://www.abiworld.org/committees/newsletters/pensionsbenefits/vol2num3/Decisions.html
 
Again, I am no legal expert but this appears to be relevant

Chief Judge Jacobs suggests that we need not decide this question;  rather, he contends that “[t]he question is whether the [imposition of the March 1 Agreement] violated Northwest's duty to maintain the status quo.”   Post at 178, 183.   However, we must look to bankruptcy law to determine the effect of contract rejection before assessing the rights and remedies of each party subsequent to that rejection.   See, e.g., Carey, 816 F.2d at 93;  Bohack, 541 F.2d at 317-18.   Indeed, as we explained in In re Lavigne, “[t]he Bankruptcy Code [generally] treats rejection as a breach so that the non-debtor party will have a viable claim against the debtor.”   114 F.3d at 387 (emphasis added). For reasons explained herein, we conclude that § 1113 is an exception to this general principle;  a debtor who rejects a contract pursuant to that statutory authority abrogates rather than breaches the CBA at issue.Chief Judge Jacobs also suggests that we “miss[ ] the point,” because a collective-bargaining agreement is not a “private bilateral contract” and therefore “not susceptible to ․ analysis” under bankruptcy law.   See post at 183.   It is he who misses the point.   He cannot, simply by invoking “multilateralism,” exorcize bankruptcy law from this case;  indeed, both Carey and Bohack involved purveyors of services in which the public had an interest, and we gave no hint that they were outside the normal bankruptcy rules because the contracts in those cases were “multilateral.”   Compare post at 183-84 (noting that the CBA in this case is “multilateral”) with Carey, 816 F.2d at 85 (noting that the debtor “has been engaged in the business of providing commuter bus service between New York City and Kennedy and LaGuardia Airports”), and Truck Drivers Local 807 v. Bohack Corp., No. 75-C-905, 1975 WL 1213, at *1 (E.D.N.Y.1975), rev'd by Bohack, 541 F.2d 312 (noting that “Bohack operates a chain of retail supermarkets throughout Brooklyn, Queens, Nassau, and Suffolk Counties”).

APA, TWU, and APFA need to combine legal resources. The reason? Because there are many unanswered questions regarding the conflicts between the Railway Labor Act and the Bankruptcy Laws.

Sad thing is, in most cases prior to AA's C11, the company is destroyed and therefore the Union's have not continued a pursuit to the Supreme Court.

So either AA will cease to exist before these unanswered questions are clarified, or ALL Union's on the property will need to combine resources to get to the required end game and answers.
 
I saw some on here were saying "APA is arguing both sides". I should have highlighted it, but this is the operative sentence in the whole missive.

"Our terms of employment in place today are the result of the status quo provisions provided by the RLA—not a contract."

This seems like pretty crafty legal maneuvering and it will be interesting to see how it plays out. The judge will now have to rule who has jurisdiction - the bankruptcy court, or the NMB. I find it hard to believe the judge will rule himself irrelevant, but stranger things have happened. In light of management just sitting at the table and giving us the finger, I am glad APA and the (high priced) legal firms are fighting back. We are facing the mother of all cramdowns and we have nothing to lose.
11 U.S.C. § 1113, “Rejection of Collective Bargaining Agreements,” codifies under what circumstances collective bargaining agreements may be rejected in a Chapter 11 Bankruptcy. When a company seeks to reject or modify a collective bargaining agreement under Chapter 11 of the U.S. Bankruptcy Code, Bankruptcy Code §1113, entitled Rejection of Collective Bargaining Agreements, clarifies the circumstances under which such agreements may be rejected. Section 1113(B) and (c) generally require the following steps:

The debtor must make a proposal to the union to modify the collective bargaining agreement anytime after filing a petition and before an application seeking rejection of the agreement.
The proposal must be based on the most complete and reliable information available at the time of the proposal.
The proposed modifications in employees' benefits and protections are those necessary to permit the reorganization of the debtor.
The proposed modifications must assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably.
The debtor must provide the union with such relevant information as is necessary to evaluate the proposal.The debtor must meet at reasonable times with the union between the time of the making of the proposal and the hearing on the application to reject the collective bargaining agreement.
The debtor must confer in good faith with the union in attempting to reach mutually satisfactory modifications of the agreement.
The union must have refused to accept the debtor's proposal without good cause.
The balance of equities clearly favors the rejection of the collective bargaining agreement.

If ALL three unions are complaining that the company is stonewalling them by failing to provide the necessary information, then the company has failed to meet all the stipulations under Section 1113. The pilots might not be as stupid as you think.
 
Why don't you just click on the link and read the decision to answer your question?

The final answer is not in that decision. Read it, even the Judges themselves conflict over the answer sought.
 

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