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November 6, 1986

JOHN C. COOK, et al., Plaintiffs

The opinion of the court was delivered by: SWEET


In these cases brought under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 623-31, defendant Pan American World Airways ("Pan Am") and the defendant labor unions, the Air Line Pilots Association ("ALPA), the ALPA Master Executive Council for the Pan Am Pilots ("ALPA-PAA"), the Flight Engineers' International Association ("FEIA"), and the FEIA Pan Am Chapter ("FEIA-PAA") (collectively the "Unions"), have moved for summary judgment in their favor. John C. Cook ("Cook"), as the representative of pilots over age 40 employed by Pan Am prior to Pan Am's merger with National Airlines ("National"), challenges as a violation of ADEA the adoption and implementation of a 1981 seniority system integrating the pilot and flight engineer lists of the two merged airlines. Pan Am and the Unions were signatories to the collective bargaining agreement that led to the adoption of the merged system. On the findings and conclusions set forth below, the motions are granted.

 Prior Proceedings

 Cook initiated this action on March 7, 1984, alleging that Pan Am and the Unions, by adopting and implementing a 1981 seniority list integrating the pilots and flight engineers of the two merged airlines, had violated the ADEA and New York Human Rights Law, N.Y.Exec.Law § 296, etal. (McKinney 1982 & Supp. 1984-85), and that the Unions had in addition violated the Failway Labor Act, 45 U.S.C. §§ 151 et seq. (1982). The defendants moved this court, the Honorable Robert J. Ward presiding, to dismiss the complaint on the grounds that the federal claims were time-barred, that the pendent claim should be dismissed for lack of jurisdiction and that the complaint constituted an impermissible attack on a final order of the Civil Aeronautics Board ("CAB"). Judge Ward dismissed the complaint for lack of subject matter jurisdiction, finding that the action constituted an impermissible collateral attack on a final order of the CAB not appealed in accordance with the provisions of § 1006 of the Federal Aviation Act, 49 U.S.C. § 1486(a).

 On appeal, the Second Circuit affirmed in part, reversed in part, and remanded for further proceedings. It reversed the dismissal of the ADEA claims and remanded on the ground that plaintiffs are entitled to the de novo determination in the district court provided for by Congress in its enactment of ADEA. Cook v. Pan American World Airways, Inc., 771 F.2d 635, 641 (2d Cir. 1985), cert. denied, 474 U.S. 1109, 106 S. Ct. 895, 88 L. Ed. 2d 929 (1986). It noted that this case is governed by § 4(f)(2) of the ADEA, 29 U.S.C. § 623(f)(2), which insulates an employer or labor organization from liability for observing the terms of a "bona fide seniority system . . . which is not a subterfuge to evade the purposes" of the ADEA. Cook, 771 F.2d at 644. Among the circumstances to be considered with respect to the requirement that a seniority system not be a subterfuge" are the reasons advanced for the use of a ratio method in the middle of the list as well as the validity of plaintiffs' claim that defendants have engaged in "willful" discrimination. Id.

 The Second Circuit affirmed the dismissal of the fair representation claim under the Railway Labor Act, 45 U.S.C. §§ 151 et seq., as an impermissible collateral attack on the CAB's final order. Finally, it held that plaintiffs' claims were not time-barred since the alleged discriminatory violations were continuous, giving rise to claims on each occasion that the merged seniority list is applied to individual plaintiffs.

 Since remand, discovery has gone forward, and has now been completed.

 The findings and conclusions set forth below have been reached on the basis of over fifteen affidavits, eleven deposition transcripts, voluminous documentary evidence concerning the arbitration proceedings and oral argument presented by skilled counsel on August 7, 1986. While the conclusions to be drawn from the facts found below are in sharp conflict, the facts are not the subject of dispute.

 Findings of Fact

 In late 1979, the CAB approved the application of Pan Am to merge with National, conditioning that approval on the surviving carriers' acceptance of certain labor protective provisions. CAB Order 79-12-164 at 1. In particular, the CAB directed that "provisions shall be made for the integration of [the Pan Am and National] seniority lists in a fair and equitable manner," CAB Order 79-12-164 § 3, and that a dispute unresolved by the parties within twenty days "may be referred by any party to an arbitrator." Id. § 13(a).

 On March 19, 1980, the Unions, the National Airlines Master Executive Council of ALPA ("ALPA-NA") and the National Airlines Chapter of FEIA ("FEIA-NA"). entered into an agreement establishing the procedures for integrating the Pan Am and National seniority lists. In part, the agreement provided that arbitration was "mandatory" if merger representatives were unable to agree within alimited time, see March 19, 1980 Agreement, P 8(a), and that the lists were to be merged in a "fair and equitable" manner. § 8(f). The agreement designated Lewis M. Gill as arbitrator (the "Arbitrator"), P 8(b), and provided that the Arbitrator's decision shall be final and binding as to all flight deck operating members and shall be defended by the parties." P 8(j). Because negotiation and mediation were unsuccessful, the question of how to integrate the airman seniority lists was submitted to arbitration. Beginning in September, 1980, the Arbitrator conducted formal proceedings, fully participated in by the parties to the arbitration FEIA-PAA, FEIA-NA, ALPA-PAA and ALPA-NA. The record of these proceedings covers approximately 35 days of hearings and includes 4,700 transcript pages and hundreds of exhibits. Following the close of the hearings on January 14, 1981, the Arbitrator held two weeks of executive session with the union parties. After a series of Informal meetings with the parties, the Arbitrator issued his final award on March 12, 1981 (the "Award").

 Pan Am, which was not a party to the arbitration proceedings although its representatives attended all of the hearings, was not required to accept the Award. If it had not accepted the Award, it would been have required to submit the seniority integration dispute to an arbitration in which it would have been a party. That arbitration would have been binding on Pan Am.

 Throughout the arbitration, the Pan Am pilots and flight engineers sought integration of the lists based on straight date of hire or length of service, arguing that any inequities could be dealt with by using conditions and restrictions. See Gill Opinion, May 11, 1981, at 15. The Pan Am pilots vigorously opposed any ratio that would put any National pilots with shorter length of service ahead of the earlier hired and generally older Pan Am pilots.

 According to the National pilots, a straight date of hire ("DOH") or length of service ("LOS") list would be inequitable since National was stronger financially and thus would have offered National airmen greater "expectancies." A DOH or LOS would place the later hired National pilots who brought active jobs to the merger below furloughed Pan Am pilots on the merged list. The National pilots proposed a ratio under which they would be put in positions on the list that would allow them to fulfill their pre-merger expectancies.

 The Award

 In the Award, the Arbitrator established two separate lists, one for the pilots and another for the flight-engineers. As the opinion issued in conjunction with the Award explains, the divergent nature of the respective bidding and bumping practices at each carrier necessitated the establishment of two separate seniority lists. Since 1963 Pan Am has hired its pilots directly to the initial position of flight-engineer. Subsequently, this practice led to the development of bidding rights by flight-engineers for pilot vacancies, and conversely, the right of pilots to bump down into flight-engineer positions. Similar cross-bidding and bumping practices never developed at National because it hired pilots directly into the first officer position, and employed non-pilots as flight-engineers. Thus, National's flight-engineers could never bid into pilot vacancies, and pilots could never bump down into flight-engineer positions. The Arbitrator preserved those two long-standing sets of bidding/bumping practices, noting that Pan Am airmen "[w] ill continue to have the cross-bidding and bumping rights vis-a-vis each other which they have had before" and that Pan Am's bidding practices should not be imposed on the National airmen.

 With respect to the engineers' seniority list, the Arbitrator used a straight LOS/DOH method. With respect to the pilots' seniority list, the Arbitrator integrated the Pan Am and National pilots into the top and bottom portions of the list in accordance with date-of-hire and length-of-service. The middle portion of the list challenged here, however, was integrated based upon a ratio method. *fn1" That method placed 3.25 Pan Am pilots into the list for each National pilot and encompassed seniority numbers 1289-2112 on the pre-merger Pan Am list and 241-496 on the National list. Thus at the middle of the pilots' list one National pilot with relatively less length of service seniority was inserted after about every four Pan Am pilots, who as a group had been hired earlier.

 As the Arbitrator explained in his opinion, the complete DOH/LOS list advocated by the Pan Am airmen would have imposed substantial inequities on many National pilots. Specifically, National airmen hired after 1964 would be denied the prospects for advancement to larger aircraft that they could have expected absent the merger. Noting that Pan Am pilots would be subject to no comparable inequity as a result of the ratio, the Arbitrator concluded that a ratio was necessary to insure that the lists were merged in a fair and equitable manner, i.e., that "the airmen on each airline be in a position to fill vacancies in positions for which they had reasonable expectations absent the merger, or positions reasonably comparable thereto or, at least, to achieve a fair balance in the extent to which they may fall short of those expectations." Moreover, since the necessary conditions and restrictions on a straight DOH/LOS list would be very complex and unworkable, a ratio was preferable.

 In addition, the Arbitrator noted the record evidence that Pan Am, at the time of the merger, was experiencing financial difficulties with more than 400 pilots on furlough, many of whom had been on furlough for more than five years. National, on the other hand, was a young domestic carrier with no furloughed pilots. Under these circumstances, he concluded that:

 [A] straight DOH list would place a large number of the furloughees who have not worked as Pan Am airmen for five years, and a substantial number with even longer periods since they flew as Pan Am airmen, ahead of large numbers of National airmen who brought active jobs to the merger, including many who had been flying ...

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