Air Transport Local 504v.Worldwide Flight Services, Inc.

United States District Court, E.D. New YorkSep 29, 2004
03-CV-6439 (FB) (E.D.N.Y. Sep. 29, 2004)

03-CV-6439 (FB).

September 29, 2004

DAVID M. GLANSTEIN, ESQ., O'Donnell, Schwartz, Glanstein Lilly, LLP, New York, NY, for the Plaintiff.

ROGER H. BRITON, ESQ., Jackson Lewis, LLP, Melville, NY, for the Defendant.


FREDERIC BLOCK, District Judge

Plaintiff Air Transport Local 504, Transport Workers Union of America, AFL-CIO ("Local 504") brought this action pursuant to the Railway Labor Act, 45 U.S.C. § 151, et seq. ("RLA"). Local 504 is the bargaining representative for fleet service employees of defendant Worldwide Flight Services, Inc. ("Worldwide"). Local 504 asserts that by making unilateral changes to its employee group health plan, Worldwide violated its duties under the RLA to (1) bargain and (2) not alter pay, rules or working conditions during the pendency of bargaining. Each party moves for summary judgment. Worldwide asserts that its changes to the health plan give rise to a "minor dispute," placing the matter in the exclusive jurisdiction of an arbitral board, and that the Court should, therefore, dismiss for lack of subject-matter jurisdiction. Local 504 argues that the changes give rise to a "major dispute" and that the Court should, therefore, issue an injunction to restore the status quo ante. Local 504 also contends that, even if the dispute is minor, an injunction is nonetheless warranted. For the reasons that follow, the Court grants Worldwide's motion and denies Local 540's motion.


The following uncontroverted facts are taken from the parties' submissions and supporting documents. Local 504 and Worldwide are parties to a collective bargaining agreement ("CBA") effective September 23, 2000 to September 22, 2003. In August 2003, the parties commenced bargaining for a successor agreement. In accordance with the terms of the CBA and the status quo provisions of the RLA, The CBA remains in effect to the present. See CBA at 81; 45 U.S.C. §§ 2 Seventh and 6.

Worldwide is the corporate successor to AMR Services, Inc. Worldwide and its corporate predecessor have had collective bargaining agreements with Local 504 since 1984.

The CBA is annexed to the Affirmation of Roger H. Briton as Exhibit 1.

Article 29 of the CBA provides that "[t]he company will offer a Group Life, Dental Medical Expenses Benefits Plan" to all full time employees and to certain part time employees. See CBA at 75. Article 29 also sets forth, in relevant part, a formula for determining employee contributions, limits on annual adjustments to contributions for both single-employee and family coverage, and the amount of deductibles for both singleemployee and family coverage. See Id. It does not, however, address the number or type of health plan options to be offered. Over the past decade, Worldwide and its corporate predecessor made unilateral changes to its employee benefit plans without opposition from Local 504. These included changes to the number of plan options offered, the types of options offered, the identity of plan providers, and the level of benefits.

The CBA includes the following "management rights" provision:

The Union recognizes that the Company shall have the sole jurisdiction of the management and operation of its business, the direction of its working force, the right to maintain discipline and efficiency in its hangers, stations, shops or other places of employment, and the right of the Company to hire, discipline and discharge employees for just cause, subject to the provisions of this Agreement. It is agreed that the rights enumerated above shall not be deemed to exclude other pre-existing rights of management not enumerated which do not conflict with other provisions of this Agreement.
Id. at 58.

In accordance with the RLA, the CBA establishes a "System Board of Adjustment" ("Board") for the resolution of "disputes between the Company and the Union or any employee growing out of grievances involving interpretation or application of this Agreement." Id. at 61.

In August 2003 the parties commenced bargaining for a successor agreement. In regard to Article 29, Worldwide proposed that the new agreement include several changes to the group health plan. Two of those proposals are at issue here: First, Worldwide had previously offered both a health maintenance organization ("HMO") and a preferred provider option ("PPO"); Worldwide proposed to eliminate the HMO option. Second, employees' student-age (19-23 year old) family members had previously been eligible for coverage under family plans; Worldwide proposed to eliminate their eligibility. Local 504 objected to these changes. In November 2003, Worldwide informed its employees of its intent to make these changes; on January 1, 2004, it implemented them. Worldwide did not, however, implement any of its other proposed changes to the group health plan, based on its understanding that those changes "would have modified one or another of the terms of the collective CBA." Enright Aff. ¶ 29.


A. Major or Minor Dispute Under the RLA

Summary judgment is appropriate when there is no genuine issue of material fact to be tried and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Once the moving party has carried its burden to demonstrate the absence of a genuine issue of material fact, see Celotex Corp., 477 U.S. at 323, the opposing party "must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587 (1986) (quoting Fed.R.Civ.P. 56(e)) (other citations omitted).

The parties disagree as to whether Worldwide had the unilateral right under the CBA to make changes to the health plan and whether that disagreement should be characterized as a major or minor dispute under the RLA. The Supreme Court adopted the major/minor distinction as a shorthand method of describing two classes of controversy addressed by the RLA: "major disputes seek to create contractual rights, minor disputes to enforce them." Consolidated Rail Corp. v. Railway Labor Executives Ass'n, 491 U.S. 299, 302 (1989) (" Conrail").

Major disputes are "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." Id. (quotation omitted). In the event of a major dispute, the parties must undergo a "lengthy process of bargaining and mediation" and until they have exhausted those procedures, "are obligated to maintain the status quo, and the employer may not implement the contested change in rates of pay, rules, or working conditions." Id. at 302-03. Federal district courts "have subject-matter jurisdiction to enjoin a violation of the status quo pending completion of the required procedures, absent the customary showing of irreparable injury." Id. at 303.

Minor disputes are those arising "out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions." Id. (quotation omitted). This category of dispute "contemplates the existence of a collective 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 to the meaning or proper application of a particular provision with reference to a specific situation." Id. (quotation omitted). In the airline industry, minor disputes "must be resolved only through the RLA mechanisms, including the carrier's internal dispute-resolution process and an adjustment board established by the employer and the unions." Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 253 (1994).

In the railroad industry, minor disputes are subject to compulsory and binding arbitration before the National Railroad Adjustment Board or before an adjustment board established by the employer and the unions representing the employees. In the airline industry, there is no national adjustment board.

Employers bear a "relatively light burden" in establishing exclusive arbitral jurisdiction under the RLA:

[I]f an employer asserts a claim that the parties' agreement gives the employer the discretion to make a particular change in working conditions without prior negotiation, and if that claim is arguably justified by the terms of the parties' agreement ( i.e., the claim is neither obviously insubstantial or frivolous, nor made in bad faith), the employer may make the change and the courts must defer to the arbitral jurisdiction of the Board.
Conrail, 491 U.S. at 307, 310 (emphasis added). The Second Circuit has held that "in order to meet Conrail's `arguably justified' test, an employer need demonstrate only that a reasonable trier of fact could adopt the employer's view of the contract." Brotherhood of Locomotive Eng'rs Div. 269 v. Long Island R.R. Co., 85 F.3d 35, 38 (2d Cir. 1996). By contrast, to characterize a dispute as major, "the court must conclude that any reasonable trier of fact would find virtually as a matter of law that the employer has violated the contract." Association of Flight Attendants v. United Airlines, 976 F.2d 102, 105 (2d Cir. 1992).

The Court concludes that Worldwide's changes to the health plan are at least arguably justified by the express and implied terms of the CBA. Article 29 of the CBA provides that Worldwide will offer "a Group . . . Medical Expenses Benefits Plan." CBA at 75. It does not, however, require that Worldwide offer multiple plan options. Article 29 also provides that Worldwide will offer "family coverage" but does not require that such coverage extend to student-age dependants. Article 29 requires that employee contributions not exceed 40 percent of plan costs, that the plan provide deductibles of $150.00 for single coverage and $400.00 for family coverage, and that annual increases in employee contributions not exceed $5.00 per month for single coverage and $10.00 per month for family coverage; nothing about the elimination of either the HMO plan or coverage for student-age dependents is inconsistent with these requirements.

Worldwide's changes also appear consistent with the parties' past practice. See Conrail, 491 U.S. at 310 ("It is well established that the parties' practice, usage and custom is of significance in interpreting their agreement.") ; Brotherhood of Locomotive Eng'rs, 85 F.3d at 38 (finding that in the absence of a contractual prohibition against any particular form of employee discipline, and in light of the parties' past practice, the employer's right to take particular disciplinary action was arguably within its implied rights under the contract). It is uncontested that over the past decade, Worldwide and its corporate predecessor made unilateral changes to the number of plan options offered, the types of options offered, the identity of plan providers, and the level of benefits offered. Local 504 did not object to these prior changes. Given the absence of any contractual provision prohibiting Worldwide's changes to the health plan and the parties' past practice, a reasonable trier of fact could adopt Worldwide's view that it had the implied right to unilaterally make the changes.

Local 504 argues that because Worldwide proposed the plan changes during collective bargaining, it waived any right to subsequently make those changes unilaterally. The Second Circuit has held that the mere inclusion of an issue in a parties' proposal during bargaining does not automatically render major an otherwise minor dispute. See Delaware H. Ry. Co. v. United Transp. Union, 461 F.2d 671, 673 (2d Cir. 1972) (concluding that neither the filing nor the withdrawing of a counterproposal during bargaining determined the nature of the dispute). Rather, if resolution of the dispute requires interpretation of the parties' collective bargaining agreement, the dispute is a minor one under the RLA. See Id. As explained above, the dispute at issue here cannot be resolved without interpreting the CBA to determine if Worldwide had the unilateral right to make the changes.

Local 504 places great reliance on Coker v. Transworld Airlines, Inc., 165 F.3d 579 (7th Cir. 1999), in which the Seventh Circuit determined a dispute over health benefits to be major for purposes of the RLA. However, that case is inapposite. In Coker, TWA had mistakenly, and for a substantial period of time, represented to the plainitff that she was covered by its health plan. TWA then attempted to rescind those benefits after she detrimentally relied on its misrepresentations. The plaintiff argued that TWA was promissorily estopped from doing so. The Seventh Circuit explained that the question of whether TWA had made a promise by mailing the plaintiff new benefit cards every year could not be resolved by interpreting an exisitng collective bargaining agreement. Instead, because the case arose under the federal common law of ERISA, not under a collective bargaining agreement, it was a major dispute properly before the court. Id. at 584. Local 504 does not argue that the plan changes violated ERISA or that Worldwide was promissorily estopped from making those changes; its reliance on Coker is misplaced.

Local 504 also argues that the dispute must be characterized as major because of the hardship and disruption that the plan changes have caused its members and because the "drastic impact on the[ir] health insurance costs and coverage" is the type of issue that leads employees to "engage in job actions." Plaintiff's Mem. Supp. Summ. J. at 14. This argument is foreclosed by Conrail, where the Supreme Court explained that "[t]he formal demarcation between major and minor disputes does not turn on a case-by-case determination of the importance of the issue presented or the likelihood that it would prompt the exercise of economic self-help." 491 U.S. at 305. Rather, courts look 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 such a case is that the dispute may be conclusively resolved by interpreting the existing agreement." Id.

Worldwide has demonstrated that a reasonable trier of fact could adopt its view of the CBA. It has, in other words, met its light burden of persuading the Court that its assertion of a unilateral right to change the health plan is arguably justified by the CBA. Accordingly, the parties' dispute must be viewed as a minor dispute. Whether Worldwide does, in fact, have such a right is for the Board to determine; the Court expresses no opinion on the ultimate resolution of this issue.

B. Injunction During Pendency of Minor Dispute

Local 504 argues that even if the Court should conclude that it lacks subject matter jurisdiction over the parties' minor dispute it should, nonetheless, issue an injunction to restore the status quo ante. Such injunctive relief is appropriate "only in those instances when it appears that its absence would prevent the Adjustment Board from giving a significant remedy to the side that prevails before the Board." Local 553, 695 F.2d at 675. Thus, even in the context of minor disputes, courts may enjoin strikes because they "wreak irreparable harm that cannot be undone by an adjustment board." Id. On the other hand, actions by the employer should be enjoined only to prevent "injury so irreparable that a decision of the Board in the unions' favor would be but an empty victory." Id. (quoting Brotherhood of Locomotive Engineers v. Missouri-Kansas-Texas Railroad Co., 363 U.S. 528, 534 (1960)).

Local 504 asserts that its members will suffer irreparable injury absent an injunction because (1) Worldwide's changes to the group health plan have forced certain of its members to forgo medical insurance, (2) members' out-of-pocket expenses may increase, and (3) an arbitration panel "may be unable to provide any relief for years." Plaintiff's Mem. Supp. Summ. J. at 17. Local 504 offers no support for its conclusory allegation that arbitral relief may not be available for years. Moreover, the Supreme Court has explained that any delay resulting from the submission of minor disputes to Board arbitration is offset by the policies underlying the RLA:

The core duties imposed on employers and employees by the RLA * * * are to make and maintain agreements and to settle all disputes * * * in order to avoid any interruption to commerce. Referring arbitrable matters to the Board will help to maintain agreements by assuring that collective-bargaining contracts are enforced by arbitrators who are experts in the common law of the particular industry.
Conrail, 491 U.S. at 310 (citations and quotations omitted). The Supreme Court also explained that "[i]n most cases where the Board determines that the employer's conduct was not justified by the contract, the Board will be able to fashion an appropriate compensatory remedy which takes account of the delay." Id. n. 8. Local 504 has not demonstrated that the Board would be unable to craft an appropriate remedy; an arbitral decision in favor of Local 504 could easily be effectuated because employees entitled to compensation for uncovered medical treatments or additional out-of-pocket expenses could be readily identified and the quantum of their harm easily calculated. Because Local 504 failed to make the requisite showing of irreparable injury, its request for an injunction pending arbitration of the parties' minor dispute is denied.


Worldwide's motion for summary judgment is granted, Local 504's motion for summary judgment is denied, and the complaint is dismissed in its entirety.