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INTERNATIONAL ASSN. OF MACHINISTS & AERO. WORKERS

June 21, 1994

INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO AND DISTRICT LODGE 142, INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, Plaintiffs,
v.
VARIG BRAZILIAN AIRLINES, INC., Defendant.



The opinion of the court was delivered by: I. LEO GLASSER

 GLASSER, United States District Judge:

 This is a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56 by Varig Brazilian Airlines, Inc. ("Varig" or the "Company"), seeking a dismissal of the three causes of action contained in the complaint brought by the International Association of Machinists and Aerospace Workers, AFL-CIO ("IAM") and District Lodge 142, International Association of Machinists and Aerospace Workers ("IAM District Lodge 142") (collectively, the "Union"). This complaint is the result of a failed effort by the parties to negotiate a new collective bargaining agreement; the Union alleges several violations of the Railway Labor Act, 45 U.S.C. §§ 151-188 (the "RLA"). For the following reasons, Varig's motion is granted.

 FACTS

 Varig is a Brazilian corporation and is a "common carrier by air engaged in interstate or foreign commerce[.]" 45 U.S.C. § 181. Plaintiff IAM is an unincorporated labor organization representing employees in the airline industry and is a "representative" as that term is defined in 45 U.S.C. § 151 Sixth. *fn1" IAM is the certified collective bargaining representative of approximately 320 Varig employees. IAM District Lodge 142 is also an unincorporated labor organization and the bargaining agent for the IAM with Varig.

 The IAM and Varig are parties to a collective bargaining agreement, made and entered into on May 3, 1990; the collective bargaining agreement became amendable on September 1, 1992. *fn2" Pursuant to the statutory procedures for amending collective bargaining agreements in the airline industry, 45 U.S.C. § 156, *fn3" the Union and Varig exchanged their "section 6 notices," so called because they were exchanged pursuant to Section 6 of the RLA (codified as 45 U.S.C. § 156). *fn4" The Company's and IAM's section 6 notices, dated July 17, 1992, and July 21, 1992, respectively, Complaint, P 13, were not made part of the record. The first meeting between the two parties was held on September 16, 1992, Affidavit of Martin C. Seham, March 16, 1994 ("Seham Aff'd"), P 2, and each side exchanged a list of proposed changes for the collective bargaining agreement. *fn5"

 In their list, dated September 11, 1992, Varig proposed, among other things, that "all restrictions on sub-contracting shall be eliminated." Seham Aff'd, Ex. A. *fn6" Varig's September 11, 1992 list runs for eight pages and includes several dozen items, including a proposition to eliminate Article XVIII ("Union Security") of the agreement. *fn7" Plaintiffs' September 1, 1992 list runs for six pages and includes over twenty items, including proposals on bonuses, wage increases and overtime, and holidays. Complaint, Ex. 1.

 In a document dated January 13, 1993, entitled "Varig/IAM Negotiations," and presented to the Union at a meeting on the same day, Varig stated that "in lieu of the Company's proposal to eliminate all restrictions on subcontracting, the Company proposes [several] measures[.]" Complaint, Ex. 3. The changes suggested by the Company included, inter alia, a confirmation in the collective bargaining agreement that work done by a shipper or shipper's agent on premises other than Varig would not constitute subcontracting; a confirmation that work performed by Varig employees at premises not covered by the collective bargaining agreement would not constitute subcontracting; and that severance pay will be paid to any employee permanently displaced because of the application of the new measures. Varig's January 13, 1993 proposal expired by its terms on February 13, 1993, and included a total of five items for discussion: duration, supplemental pension plan, wage scale, medical coverage, and subcontracting.

 On February 9, 1993, Varig applied for mediation services from the National Mediation Board (the "NMB"), pursuant to 45 U.S.C. § 155 First. *fn8" The parties began mediated negotiations in April of 1993 and met on several occasions over a three month period. In a document entitled "Varig Proposals" and dated April 14, 1993, the Company informed the Union that it was its position that "there shall be no limitations on the company's right to subcontract." Complaint, Ex. 5. The April 14, 1993 proposals were also set to expire in one month's time and included a total of seven items: wage rates, duration, medical coverage, subcontracting, seniority rights, holidays, and a reduction in starting and limiting progression of wage scales for those hired after the revised contract is in effect. In a letter dated April 19, 1993, the Company also proposed elimination of Article XII(e) of the collective bargaining agreement which provided that the Union would have the right to designate the broker of record for the life and health insurance and pension plans for unionized employees. Complaint, Ex. 6. In a letter dated June 9, 1993, the Company reiterated its position that it must "negotiate the right of limited subcontracting in the Cargo Department." Complaint, Ex. 7 at 2.

 In a document entitled "IAM-Varig Contract Union Proposal of Settlement," undated, and set by its own terms to expire on July 17, 1993, the Union submitted a "Proposal of Settlement" which, it stated, "is predicated on the Company's withdrawing any proposals dealing with subcontracting of work other than what is in the present collective bargaining agreement." Complaint, Ex. 8. This counterproposal contained a total of ten items including, inter alia, duration, wage increases, early retirement, medical coverage for retirees, a "pause" in Company contributions to the supplemental pension plan, and a new Cigna Network Plan. In a document entitled "Union's Response to Company's Sub-Contracting Proposal," also undated and scheduled to expire on August 3, 1993, the Union stated that its counterproposal was based on the demand that "the Company will withdraw its proposal on sub-contracting." Complaint, Ex. 9. These counterproposals by the Union were rejected. Complaint, P 17 ("In June and August, Plaintiffs presented two comprehensive proposals for settlement that were promptly rejected by Varig.").

 In a letter dated September 7, 1993, the Company responded to the suggestion of the NMB that it submit its "last proposal in anticipation of the mediation scheduled for September 10, 1993." Complaint, Ex. 10. In a document entitled "Final Position Statement of Varig," dated September 7, 1993, the Company proposed the following vis-a-vis the issue of subcontracting: (i) any restriction on subcontracting shall not apply to work performed on the premises of the shipper, agent, or forwarder for his own or for his principal's account; (ii) work performed by any Varig employees at locations outside of the United States shall not be considered subcontracting; and (iii) subject to certain conditions, there shall be no restriction on the Company's right to subcontract work performed by the Cargo Department. Complaint, Ex. 10. The "Final Position Statement" also included proposals regarding duration, wage increase and reduction, the contribution rate used in calculating medical insurance, limiting the number of agents in the Cargo Department, the Cargo Automation Program, reduction or elimination of the Technical Maintenance job positions in certain circumstances, elimination of broker of record, and severance pay for those laid off due to the new subcontracting proposals.

 The Union contends, and the Company vehemently denies, that on November 16, 1993, Martin Seham, Varig's attorney ("Seham"), and William O'Driscoll, President and General Chairman of IAM District Lodge 142 ("O'Driscoll"), reached an oral agreement on new terms to amend the collective bargaining agreement. Complaint, P 22. Declaration of William O'Driscoll, April 27, 1994 ("O'Driscoll Decl."), P 15 ("Mr. Seham and I then agreed that the parties would reach a contract on the basis of the approach I had outlined. This agreement in principle was absolutely clear.")

 In short, the Union submits that Seham agreed on behalf of Varig that the Company would not subcontract cargo work in exchange for, among other things, the Union's willingness to agree to a freeze on the Company's five percent contribution to the supplementary pension plan during the life of the new collective bargaining agreement, and its agreement that Varig would be allowed to accept some pre-palletized cargo. Complaint, P 22; O'Driscoll Decl., P 10; Declaration of Robert Roach, Jr. (General Chairman of IAM District Lodge 142), April 27, 1994 ("Roach Decl."), P 13 ("Mr. O'Driscoll informed me that he and Mr. Seham had arrived at a basis for a contract that would not require granting the right to the Company to subcontract bargaining unit work, based on the cost saving proposals that we had previously discussed. Mr. Seham confirmed that afternoon that 'we have the basis for an agreement.'") Describing this alleged agreement as "The O'Driscoll Hoax," Seham contends that he and O'Driscoll only discussed certain proposals, never reached an agreement, and concludes that "the Agreement ascribed to by Mr. O'Driscoll to me in Paragraph 22 of the Complaint never happened, was never even articulated and is absurd on its face." Seham Aff'd, P 18. (The Union gave the Company a written proposal, allegedly based on the November 16, 1993 agreement, on December 10, 1993.)

 The parties then approached the NMB jointly to request a release from mediation. The Union alleges that this was done in reliance on the agreement allegedly reached with Seham on November 16, 1993. Complaint, P 23. In a letter dated November 17, 1993, the NMB memorialized its understanding that both the Union and Varig had declined to send their dispute to arbitration pursuant to 45 U.S.C. § 155 First, *fn9" and that the NMB's services have been terminated as of November 17, 1993. Complaint, Ex. 12. With the termination of the NMB's services and the parties' refusal to go to arbitration, a thirty-day "cooling off" period began pursuant to 45 U.S.C. § 155 First. *fn10" The NMB informed the parties in its letter of November 17, 1993, that "unless the parties subsequently settle this dispute . . . nonviolent self-help would be available commencing 12:01 A.M. EST, December 18, 1993."

 The Union alleges that during the statutory cooling off period the parties "reaffirmed their agreement in principle, and agreed that the union would put the agreement in writing." Complaint, P 24. Varig contests this characterization and submits that during the meetings which took place during the thirty-day period, "the Union . . . regularly threatened the Company with economic damage if the agreement were not signed to its satisfaction within the cooling off period." Seham Aff'd, P 25. Whereas Varig maintains that it never refused to meet during the thirty-day period, Seham Aff'd, P 25, the Union contends that it refused to honor an agreement to meet on December 13 through 17, 1993, but would first be available on December 16, 1993, at the end of the expiration of the thirty-day period, Complaint, P 25.

 The parties met again on December 17, 1993, together with representatives of the NMB. At this meeting the Company rejected the December 10, 1993 written proposal by the Union and the Union agreed to put the Company's latest offer to a vote of the membership. Complaint, P 26. In a document entitled, "Final Position Statement of Varig Meeting W/ Mediator & NMB Board Member," dated December 17, 1993, the Company proposed that "except for work under the Cargo Automation Program as set out above, there shall be no restriction on the Company's right to subcontract work performed by the Cargo Department." Roach Decl., Ex. B. The "Final Position Statement" is a three page document which includes a total of ten items including, inter alia, duration, wage increase, Cargo Automation Program, technical maintenance, and subcontracting. The Union alleges that Varig, at this December 17, 1993 meeting, via Seham, agreed that it would maintain the status quo pending the ratification vote. Complaint, P 26.

 The parties met again on December 20, 1993, and the Union informed Varig that its vote would take place on December 28, 1993. Complaint, P 28. The Union alleges that Seham again pledged that the Company would observe the status quo pending the vote. Complaint, P 28. Varig denies that any such promise was made. Answer, P 26; Seham Aff'd, P 30 (Varig agreed to maintain the status quo for a total of 48 hours only).

 In a letter dated December 23, 1993, Varig provided the Union with a list of changes that the Company planned on making regarding conditions of employment pursuant to its right to proceed to self-help. Complaint, Ex. 14. The letter was received by the Union on December 27, 1993. The letter stated that "these are all items that were presented to the union as part of the Company's initial list of contract proposals" and that they would become effective December 27, 1993, the day before the scheduled ratification vote. The attached document, entitled "Implementation of Varig's Proposals," dated December 23, 1993, stated that "in addition to the foregoing[,] the Company will implement all provisions of its final proposals of December 17, 1993," which included the statement that, except for certain exceptions, "there shall be no restriction on the Company's right to subcontract work performed by the Cargo Department." The December 23, 1993 implementation document is almost identical to Varig's September 11, 1992 list which included the declaration that Article XVIII (union security clause) would be eliminated. While it is undisputed that the items listed in Varig's implementation document were also included in the Company's section 6 notice, Def.'s 3(g) Statement, P 5, it is also undisputed that several items, including the elimination of Article XVIII, were not specifically negotiated by the parties during the RLA's mandatory mediation procedures, Pls.' 3(g) Statement, P 5. The Union membership rejected the Company's final proposal. Roach Decl., P 32.

 In a "Notice to Varig Employees" which was distributed on or about December 24, 1993, Complaint, P 30, Varig informed its employees that "we are advising [the Union] of the implementation of our proposal to eliminate Article XIII - Union Security. Among other things, it deletes any membership obligation by force of the labor contract." Complaint, Ex. 13. The notice also informed Varig employees how they could, if they wanted to, "terminate any further union obligation[.]" The Union contends that this posting is evidence of the Company's intent to interfere with the organization of the Company's employees in violation of 45 U.S.C. § 152 Third and Fourth. Complaint, P 38. Varig contends that this notice was "posted in response to threats of work stoppage and sabotage which had been made by union representatives[.]" Answer, P 30.

 * * * *

 Based on the foregoing events, the Union served and filed the present complaint on or about February 14, 1994. In their complaint, the Union alleges three causes of action: (1) a violation of 45 U.S.C. §§ 152 First and Seventh, and 156 by virtue of the Company "unilaterally changing fundamental conditions of employment . . . without ever negotiating, mediating or arbitrating those issues, and by implementing terms not included in the Company's final offer," Complaint, P 34; (2) a violation of the Company's obligation to "exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions" pursuant to 45 U.S.C. § 152 First, Complaint, P 36; and (3) a breach of the Company's statutory obligation not to interfere with the organization of its employees pursuant to 45 U.S.C. § 152 Third and Fourth, Complaint, P 38.

 In its Complaint, the Union seeks broad injunctive and declaratory relief although it has not, to date, moved for a temporary restraining order or a preliminary or permanent injunction. The relief sought includes, inter alia, a permanent injunction "directing and enjoining" Varig to bargain in good faith with the IAM; rescinding any rate of pay, rules, or working conditions imposed on or after December 27, 1993, that was not contained in Varig's final offer to the IAM; and refraining from any activities that have the intent or effect of undermining the IAM as a collective bargaining representative. Plaintiffs also seek a declaration that Varig has engaged in "unfair labor practices" or statutory violations of the RLA by, among other things, failing to make a reasonable effort to reach an agreement with the Union and imposing rates of pay, rules, and working conditions not contained in its final offer with the IAM. Plaintiffs also seek punitive damages and attorneys' fees and costs. Complaint, wherefore clause, PP 9, 10.

 DISCUSSION

 I. Summary Judgment Standard

 To review, or even attempt to review the mass of treatise, law review and judicial literature on summary judgment would be an affectation of research. It will suffice to recognize the observations made by the Supreme Court in three relatively recent cases. In Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986), the Court said,

 
When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. . . . In the language of the Rule, the nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial. " . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial."

 (footnote omitted) (citations omitted) (emphasis in original).

 In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986), the Court emphasized once again that granting a motion for summary judgment requires that there be no genuine issue of material fact. "Only disputes over facts that might affect the outcome of the suit under the governing law will preclude the entry of summary judgment." Id. at 248. The Court went on to teach that "if the evidence is merely colorable . . . or is not significantly probative, summary judgment may be granted." Id. at 249-50 (citations omitted).

 And finally, in Celotex Corp. v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986), the Court wrote,

 
Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed "to secure the just, speedy and inexpensive determination of every action." . . . Rule 56 must be construed with due regard not only for the rights of persons asserting claims and defenses that are adequately based in fact to have those claims tried to a jury, but also for the rights of persons opposing such claims and defenses to demonstrate in the manner provided by the Rules, prior to trial, that the claims and defenses have no factual basis.

 With these principles in mind, the bases asserted by the Union for the relief it seeks will be considered separately.

 II. The First Cause of Action

 As noted above, plaintiffs have alleged a violation of 45 U.S.C. §§ 152 First and Seventh, and 156 by "unilaterally changing fundamental conditions of employment" by failing to submit those changes to negotiation, arbitration or mediation, and by making changes which were not included in the Company's final offer. Section 152 First of Title 45 of the United States Code provides in full that,

 
It shall be the duty of all carriers, their officers, agents, 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 ...

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