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AMERICAN AIRLINES, INC. v. AIR LINE PILOTS ASSN.

December 12, 1958

AMERICAN AIRLINES, INC., Plaintiff,
v.
AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, an unincorporated association representing the Air Line Pilots in the service of American Airlines, Inc.; Clarence N. Sayen, individually and as President of Air Line Pilots Association, International; Charles C. Spencer, Jr., as Regional Vice President-Region I of The Air Line Pilots Association, International; Paul G. Atkins, individually, as Chairman of the American Airlines Master Executive Council of The Air Line Pilots Association, International, and as a member of Local Executive Council No. 22 of The Air Line Pilots Association, International; Wray A. Gillette and Daniel L. Hawley, individually, as members of the American Airlines Master Executive Council and as members of Local Executive Council No. 22; Richard F. McElhaney and Byron S. Cramblet, individually and as members of Local Executive Council No. 22; and Paul G. Atkins, Wray A. Gillette, Daniel L. Hawley, Richard F. McElhaney and Byron S. Cramblet, as representatives of a class, namely, all of the Air Line Pilots in the service of American Airlines, Inc., Defendants



The opinion of the court was delivered by: BRYAN

The plaintiff here is a major domestic air line operating nation-wide as a common carrier by air under certificates of the Civil Aeronautics Board. The principal defendant, The Air Line Pilots Association, International, is a labor organization representing all of the air line pilots in plaintiff's service. Also named as defendants are various officers, agents and representatives of the defendant Union, its committees and local, not all of whom have been served.

Plaintiff seeks (1) an injunction restraining the defendant Union and all of its members from striking or causing any strikes or work stoppages against the plaintiff until the provisions of the Railway Labor Act as amended (45 U.S.C.A. § 151 et seq.) *fn1" have been fully complied with, and for such additional 30 day cooling-off periods as the Act provides; (2) judgment declaring that the defendants' acts in conditioning any new collective bargaining agreement between plaintiff and its pilots upon the manning of turboprop and jet aircraft at all flight stations by a qualified pilot are illegal and contrary to the requirements of the Railway Labor Act, and that plaintiff is under no obligation to bargain with its pilots as to such subject matter; and (3) judgment in damages against the defendants in the sum of $ 540,000 alleged to arise from threats made by the defendants to strike against the plaintiff, and for any additional damages which may arise as a result of an actual strike, upon the ground that such strike is illegal and wholly unjustified.

This action was precipitated by a strike call to all the plaintiff's pilots issued by the defendant Union on November 22 which was scheduled to start at 11:59 p.m. on November 25. However, the controversy between the plaintiff Airline and its pilots which led to the strike call is of long standing and commenced in June 1957 shortly prior to the scheduled expiration on August 24, 1957 of a collective bargaining agreement between the parties. Since that time there have been extensive proceedings between the Company and the Union under the Railway Labor Act, including numerous and protracted conferences, mediation by the National Mediation Board, proffer and refusal of arbitration, a report and recommendations by a Presidential Emergency Board. There were further negotiations and steps taken before the Mediation Board subsequent to the report of the Emergency Board. Despite all these efforts no agreement has been reached by the parties.

 The controversies involved a new collective bargaining agreement covering rates of pay, rules and working conditions to replace that which expired on August 24, 1957 during the course of the Railway Labor Act proceedings. But the principal bone of contention on which efforts to effect an agreement foundered was the so-called piston-turbine issue. This involved basically the question of whether there should first be agreement on propeller aircraft (referred to as pistons) which the Company was then flying exclusively, and then on turbo-prop and jet aircraft (referred to as turbines) which it was acquiring in the relatively near future, or whether the agreement should include both types of equipment. I will discuss the details of this controversy later.

 Plaintiff has moved for a preliminary injunction to restrain the strike of its pilots which was originally called for November 25, 1958, pending the hearing and determination of the action.

 On November 24, 1958 the plaintiff applied to me for an order bringing on this motion and temporarily restraining the strike pending the hearing of its motion. Counsel for the defendant Union, having anticipated that such an application would be made, requested an opportunity to be heard thereon. Such opportunity was duly afforded. After argument before me by counsel for the Airlines and counsel for the defendant Union, which lasted several hours, I signed the order temporarily restraining the strike which had been called, until November 28, the return day of the motion for a preliminary injunction. On November 28 the temporary restraining order was extended pending the hearing of the motion, and after two days of argument on December 1 and 2 it was further extended pending the submission of additional affidavits and briefs by the parties and the determination of the motion.

 There were substantial and difficult questions posed in the case, some of which were of first impression. Important public interests were involved, and there was manifest danger of irreparable injury and large economic loss both to the traveling public and to the plaintiff. The controversy had persisted for some eighteen months and it did not appear that any measurable harm could result to defendants if the strike were delayed for a short additional period. It was for these reasons that I determined to maintain the status quo pending resolution of questions posed by the motion for a preliminary injunction. See United States v. United Mine Workers of America, 330 U.S. 258, 67 S. Ct. 677, 91 L. Ed. 884.

 The plaintiff contends that whereas it has consistently attempted to bargain in good faith with the defendant Union and has followed the steps and procedures required by the Railway Labor Act, the defendant Union has refused to bargain with it in good faith and has not complied with the Act as it was required to do. Plaintiff therefore urges that the strike which was called for November 25, 1958 was illegal, and, indeed, forbidden, under the Railway Labor Act, and that an injunction should issue out of this court restraining such strike until the Union has fully complied with the Act's requirements.

 The defendant Union, on the other hand, contends that it has in good faith complied with the provisions of the Act, that it has in fact fully exhausted the procedures and remedies thereunder, and that in view of the deadlock which existed between itself and the plaintiff, the strike which it called was legal and proper. Moreover, it urges that there is nothing in the Railway Labor Act or otherwise which requires employees to refrain from striking while the procedures prescribed by the Act are being followed and that it had the right to strike regardless of whether it had complied with the Act or not. It urges further that in any event, and regardless of the circumstances, this court is without jurisdiction under the Norris-LaGuardia Act, 29 U.S.C.A. § 101 et seq., to enjoin a peaceful strike.

 At the outset of the hearings before me the Union raised certain objections to jurisdiction over its person and certain technical objections to the issuance of the temporary restraining order. These objections were fully dealt with during the course of the lengthy argument before me and were overruled. They do not merit discussion here.

 The Union also raised an objection to the maintenance of this action against it in this district on the ground of improper venue and moved to dismiss the complaint on this ground. This question remains to be disposed of before going to the main issues between the parties.

 Defendant Union is an unincorporated association with its principal office in Chicago, Illinois. However, it has offices at 60 East 42nd Street, New York. Its regional vice president, Spencer, is in charge of such offices and makes his headquarters there. There are regular employees in the office and the Union's business is regularly transacted there. Meetings of the pilots are held and negotiations are conducted in these offices. Without going into further details it is apparent that the Union is present and doing business in this district and its representatives are acting for employees here. The Union raises no real issue as to this.

 The Union contends, however, that, since it is an unincorporated association, venue may properly be laid against it under 28 U.S.C. 1391 only in the judicial district where it 'resides', that the place of such residence is the place where its principal office and place of business is, which is concededly in Chicago, Illinois, and that therefore venue may be properly laid against it only in the District of Illinois and not here.

 Jurisdiction here is founded upon 28 U.S.C. 1331, 1337 and 2201, basically because of federal questions affecting commerce arising under the Railway Labor Act.

 28 U.S.C. 1391, dealing with venue generally, provides:

 '(b) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, except as otherwise provided by law.

 '(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.'

 The cases are plainly in conflict as to whether the 'residence' of an unincorporated association for venue purposes under 1391(b) is only in the district where it has its principal place of business or whether, like a corporation under Section 1391(c) such residence is in any judicial district where it is doing business. Brotherhood of Locomotive Firemen & Enginemen v. Graham, D.C.Cir. 84 U.S.App.D.C. 67, 175 F.2d 802, reversed on other grounds sub nom Graham v. Brotherhood of Locomotive Firemen & Enginemen, 338 U.S. 232, 70 S. Ct. 14, 94 L. Ed. 22; Cherico v. Brotherhood of Railway Trainmen, D.C.S.D.N.Y., 167 F.Supp. 635; McNutt v. United Gas, Coke & Chemical Workers of America, C.I.O., D.C.W.D.Ark., 108 F.Supp. 871; Griffin v. Illinois Central R. Co., D.C.N.D.Ill., 88 F.Supp. 552; and Salvant v. Louisville & Nashville R. Co., D.C.N.D.Ky., 83 F.Supp. 391, hold that such residence for purposes of venue is confined to that of the association's principal place of business, which in this case would be Chicago.

 Portsmouth Baseball Corp. v. Frick, D.C.S.D.N.Y., 132 F.Supp. 922, on the other hand, holds that, within the meaning of Section 1391, an unincorporated association resides in any district in which it does business. Under the Portsmouth case the residence of an unincorporated association is to be determined under the rules applicable to corporations. Since 1391(c) provides that the 'residence' of a corporation for venue purposes is in any district in which it is doing business, an unincorporated association similarly is to be considered a resident of any district in which it is doing business for such purposes.

 The reasoning of the Portsmouth case is in large measure based on Sperry Products, Inc. v. Association of American Railroads, 2 Cir., 132 F.2d 408, 145 A.L.R. 694, certiorari denied 319 U.S. 744, 63 S. Ct. 1031, 87 L. Ed. 1700. It states:

 'Sperry Products v. Association of American R., 2 Cir., 132 F.2d 408, 145 A.L.R. 694, seems to me to hold that the rule for corporations holds for unincorporated associations. That case involved a question of venue of suit against an unincorporated association. Judge Learned Hand, for the court, 132 F.2d at page 411, came to the conclusion that, for venue purposes, those associations should be considered as jural entities, that the test for their location 'must always be what it is for a corporation outside the state of its incorporation' and that such an association is 'present' wherever any substantial part of its activities are carried on.' 132 F.Supp. at pages 924-925.

 This seems to me to be in accord with the practical realities. As Judge Learned Hand said in the Sperry case as to unincorporated association (132 F.2d at page 411):

 '* * * the test must always be what it is for a corporation outside the state of its incorporation. Indeed it is troublesome to see in what other way one can attribute location to such an association at all. It does not violate common understanding to think of a common venture or enterprise as having spatial position wherever any part of those activities take place by which it is realized. That is a practicable test and it is really the only practicable test.'

 Sperry arose prior to the enactment of Section 139 in 1948, under the then patent venue statute (old Title 28 U.S.C. § 109) and not under the general venue statute (old Title 28 U.S.C. § 112). Section 109 provided that patent infringement suits might be brought in any district of which defendant was an 'inhabitant', or where defendant had a regular place of business and committed acts of infringement. At that time the general venue statute, Section 112, required that the defendant be an 'inhabitant' of the district.

 Judge Hand held that, for purposes of the patent venue statute, while an unincorporated association was 'present wherever any substantial part of its activities were continuously carried on', nevertheless because of the two different venue requirements of Section 109 (inhabitance or presence plus infringement) the place where it was an 'inhabitant' under that section could only be its principal place of business.

 But it is plain from the Sperry case that under the general venue statute the word 'inhabitant' meant the same thing when used with respect to an unincorporated association as it did when used with respect to a corporation. Cf. Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 77 S. Ct. 787, 1 L. Ed. 2d 786.

 Thus, when Section 1391 was enacted in 1948 and changed the venue requirement from 'inhabitant' to 'resident' it was already the law as laid down by Judge Hand that an unincorporated association should be treated for venue purposes in the same manner as a corporation. Indeed, as the Supreme Court has indicated, the passage of 1391 was not intended to change the law in any respect. Fourco Glass Co. v. Transmirra Corp., supra. So also the revisers' notes to Section 1391 indicate.

 The line of cases which diverge from Portsmouth all stem from Brotherhood of Locomotive Firemen v. Graham, supra. The Graham case also dealt with the predecessor statute to Section 1391 and mechanically, and in my view erroneously, applied Judge Hand's result under the patent venue statute in Sperry to the general venue statute, and held that an unincorporated association could only be sued under the latter statute at its principal place of business. Graham also misinterpreted the revisers' notes on Section 1391 in its own gratuitous footnote which assumed that the law with respect to the general venue statute prior to the 1948 revision had not assimilated unincorporated associations to corporations for purposes of venue as Sperry had held.

 The cases following Graham have in my view perpetuated this error and I am in accord with the Portsmouth case.

 The soundness of the rule of the Portsmouth case, at least in so far as it applies to labor organizations, is indicated by Section 301 of the Labor Management Relations Act of 1947, enacted prior to Section 1391, which liberalized jurisdiction and venue requirements in suits against them. 29 U.S.C.A. § 185.

 Section 301 provides:

 '(c) For the purposes of actions and proceedings by or against labor organizations in the district courts of the United States, district courts shall be deemed to have jurisdiction of a labor organization (1) in the district in which such organization maintains its principal office, or (2) in any district in which its duly authorized officers or agents are engaged in representing or acting for employee members.'

 It may well be that Section 301 applies to labor organizations generally in suits arising out of federal law. This is indicated by the limited application of subdivisions (a) and (b) of Section 301 as contrasted with the apparently unlimited application of subdivision (c). Nor is this view at all inconsistent with the legislative history of this section. *fn2"

 But quite apart from this, Section 301 showed the mood of Congress with respect to suits against labor organizations arising under federal law at the time when Section 1391 was passed. Cf. United States v. Hutcheson, 312 U.S. 219, 235, 61 S. Ct. 463, 85 L. Ed. 788.

 The test of the Portsmouth case, or that of Section 301 furnish the only practical and realistic approaches to the problem of venue over labor organizations. To quote Justice Holmes, sitting on Circuit, in Johnson v. United States, 1 Cir., 163 F. 30, 32, 18 L.R.A.N.S., 1194:

 'The major premise of the conclusion expressed in a statute, the change of policy that induces the enactment, may not be set out in terms, but it is not an adequate discharge of duty for the courts to say: We see what you are driving at, but you have not said it, and therefore we shall go on as before.'

 I therefore hold that venue against the defendant Union is properly laid in this district and its motion to dismiss the complaint on the ground of improper venue is denied.

 The Union also moved to dismiss the complaint and for a denial of the motion on the ground that under the Norris-LaGuardia Act this court has no jurisdiction to grant the injunctive relief sought. Since the complaint seeks relief by way of damages and declaratory judgment against the defendants as well as injunctive relief, the motion to dismiss the complaint on this ground is not well taken. Nevertheless the defendants' objection goes to the very heart of the court's jurisdiction to grant preliminary injunctive relief against strike. It must therefore be disposed of before proceeding to the merits.

 The Union's position is that Norris-LaGuardia bars relief against a strike even though the Union had failed and, indeed, refused to comply with any requirements of the Railway Labor Act at all.

 The plaintiff concedes that a union has full liberty to strike when the processes of the Railway Labor Act have been exhausted. It contends, however, that a strike prior to compliance with the Act by the union is illegal, forbidden and may be enjoined notwithstanding Norris-LaGuardia which it says has no application under such circumstances.

 This brings us to consideration of the two Acts.

 The Railway Labor Act (45 U.S.C.A. Chap. 8) has the purposes, among others, '(1) to avoid any interruption to commerce or to the operation of any carrier engaged therein * * * (4) to provide for the prompt and orderly settlement of all disputes concerning rates of pay, rules, or working conditions; (5) to provide for the prompt and orderly settlement of all disputes growing out of grievances or out of the interruption or application of agreements covering rates of pay, rules, or working conditions'. § 2(1).

 In order to carry out these purposes the Act imposes a 'duty' upon carriers and employees 'to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions, and to settle all disputes, whether arising out of the application of such agreements or otherwise, in order to avoid any interruption to commerce or to the operation of any carrier growing out of any dispute between the carrier and the employees thereof'. § 2, First.

 Disputes between carriers and employees are divided into (1) minor disputes involving grievances and other differences arising under existing collective bargaining agreements, and (2) major disputes concerning issues as to rates of pay, rules and working conditions which are involved in reaching collective bargaining agreements. There is no doubt that the dispute in this case is a major dispute.

 The procedure for handling the two is quite different. In the case of minor disputes the first step is negotiation and conference between the parties. If, however, the parties are unable to agree disputes may be referred by either or both to an Adjustment Board which determines the disputes after hearing the parties, and the awards of which are final and binding upon both parties to the dispute. § 3. Brotherhood of R.R. Trainmen v. Chicago River & Indiana R. Co., 353 U.S. 30, 77 S. Ct. 635, 1 L. Ed. 2d 622.

 In the case of major disputes, however, while the Act also sets up detailed procedures which the parties are required to follow, none of these result in any final or binding determination, and the parties are under no compulsion to reach agreement at any point.

 If either carrier or employees desire to make any change in the status quo with respect to conditions of employment, either under an existing collective bargaining agreement or in its absence, they must give 'at least thirty days' written notice of an intended change in agreements affecting rates of pay, rules, or working conditions'. § 6.

 Thereafter it is the duty of both parties under the mandate of Section 2 to confer and the Act directs that the time and place for the beginning of conference 'shall be agreed upon within ten days after the receipt of said notice, and said time shall be within the thirty days provided in the notice'. (Emphasis supplied.) § 6.

 If the conferences fail either party may invoke the services of the Mediation Board which 'shall promptly put itself in communication with the parties' and 'shall use its best efforts, by mediation, to bring them to agreement'. If these efforts are unsuccessful the Board 'as its final required action' (except as to the request for a Presidential Emergency Board) 'shall at once endeavor * * * to induce the parties to submit their controversy to arbitration'. (Emphasis supplied.) § 5, First. If both parties agree arbitration proceeds under § 7 and the resulting award is final and binding on the parties. If arbitration is refused, however, the Board 'shall' notify the parties that its mediatory efforts have failed and 'for thirty days thereafter, unless in the intervening period the parties agree to arbitration, or an emergency board shall be created under Section 10 of this Act, no change shall be made in the rates of pay, rules or working conditions or established practices in effect prior to the time the dispute arose'. (Emphasis supplied.) § 5, First.

 Finally, after being notified by the Mediation Board that a dispute threatens 'substantially to interrupt interstate commerce to a degree such as to deprive any section of the country of essential transportation', the President may create a Board which 'shall investigate promptly the facts as to the dispute and make a report thereon to the President within thirty days from the date of its creation'. After the creation of the Board, and for thirty days after it has reported to the President 'no change, except by agreement, shall be made by the parties to the controversy in the conditions out of which the dispute arose'. § 10.

 Thus, the scheme provided by the Railway Labor Act for resolution of major disputes is clear and relatively simple. There is no compulsion on the parties to agree at any stage of the procedure. They are not compelled to reach an agreement by collective bargaining, to follow the recommendations of the Mediation Board, to submit to ...


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