Opinion ID: 2812254
Heading Depth: 3
Heading Rank: 2

Heading: The Nicolau Arbitration

Text: An arbitration panel, led by George Nicolau, held hearings over the course of eighteen days, from December 2006 to February 2007. In all, the arbitration record included testimony from 20 witnesses, 14 volumes of exhibits, and more than 3,000 pages of hearing transcript. In the arbitration, the East Pilots advocated for a seniority list ordered by date of hire, adjusted for length of service, which ended up pushing most of the West Pilots far down the seniority list and placing a number of furloughed East Pilots above active West Pilots. The West Pilots, on the other hand, advocated for a list based on pilot rank and career prospects, which gave comparatively less weight to length of service. 7 In May 2007, the arbitration panel issued a careful, 35-page decision known as the “Nicolau Award.” The panel, noting that the pilots’ respective proposals “differed dramatically,” observed that, in such mergers, “[i]t is understandable that universal acceptance is never achieved.” The arbitration panel adopted neither proposal in full, instead crafting its award using aspects of both proposals. The Nicolau Award placed about 500 senior East Pilots at the top of the seniority list, explaining that the West Pilots were not operating the widebody international aircraft generally flown by the most senior East Pilots at the time of the merger. It also placed at the bottom of the list the 1,700 East Pilots who were furloughed at the time of the merger, explaining that “merging active pilots with furloughees, despite the length of service of some of the latter, is not at all fair or equitable under any of the stated criteria.” The Nicolau Award blended the remainder of the East Pilot list with the West Pilot list. 3. Decertification of ALPA/Certification of USAPA As the district court aptly observed, “[t]o say the East Pilots were not pleased [with the Nicolau Award] is an understatement.” As we described in Addington I, a majority of the East Pilots “strenuously objected” to the Nicolau Award and immediately set about finding ways to prevent its implementation. 606 F.3d at 1177–78. Initially, the East Pilots tried to convince ALPA to find a way to 8 set aside the Award. When that failed, the East Pilots filed suit to set aside the Nicolau Award. ALPA continued to urge the East Pilots to “comply with its representational and legal obligations under the Constitution & Bylaws, ALPA Merger Policy, the Transition Agreement, and implementing resolutions of the Executive Council.” Finally, the East Pilots withdrew their representatives from the committee negotiating a Single Agreement with the airline, effectively bringing those discussions to a standstill. ALPA subsequently presented the Nicolau Award to the airline for acceptance, consistent with its obligation under the Transition Agreement to “use all reasonable means” to compel the airline to accept the arbitrated seniority list. US Airways accepted the Award a few months later, in December 2007. Id. at 1178. In the meantime, dissatisfied with ALPA’s commitment to the Nicolau Award and hoping to prevent the Award from ever going into effect, the East Pilots decided to leave ALPA and form a new union. They consulted lawyers, who cautioned them that “the language you use in setting up your new union . . . can be used against you. You need to stress [t]he positives of the new union and not dwell on the award. Don’t give the other side a large body of evidence that the sole reason for the new union is to abrogate an arbitration, the Nicolau award.” The 9 pilots and counsel sought a “roadmap . . . based on the premise that a new bargaining agent can get around the award and make the Nicolau award moot.” Ultimately, the East Pilots created USAPA, which adopted a constitution committing it “[t]o maintain[ing] uniform principles of seniority based on date of hire and the perpetuation thereof.” In November 2007, the National Mediation Board certified a representation election between ALPA and USAPA. Predictably, because of the number of East Pilots, USAPA won the election and was certified as the collective bargaining representative for all pilots in April 2008. In September 2008—five months after certification and almost a year after the airline accepted the Nicolau Award—USAPA presented a new seniority proposal to US Airways. This proposal ignored the Nicolau Award, instead ordering the pilots according to their date of hire. USAPA’s ordering system effectively forced the West Pilots to the bottom of the seniority list, leaving them vulnerable to any furloughs. USAPA made clear that it would never implement the Nicolau Award. B. 2008 West Pilot Suit Against USAPA (Addington I) That same month, the West Pilots sued in district court, alleging that USAPA had breached its duty of fair representation by proposing a new seniority list instead of pursuing the implementation of the Nicolau Award. After a trial, a 10 jury found that “USAPA had breached its duty by abandoning an arbitrated seniority list in favor of a date-of-hire list solely to benefit one group of pilots at the expense of another.” Addington v. US Airline Pilots Ass’n, No. CV 08-1633, 2009 WL 2169164, at  (D. Ariz. July 17, 2009) (unpublished). The district court then held a bench trial on the remaining equitable issues. The court found that “USAPA’s sole objective in adopting and presenting its seniority proposal to the Airline was to benefit the East Pilots at the expense of the West Pilots, rather than to benefit the bargaining unit as a whole.” Id. at . It reached this conclusion by determining that the terms of the Nicolau Award were final and binding, and thus any amendment USAPA wished to make to that Award required a legitimate union purpose. Id. at . The court rejected, one by one, each of USAPA’s asserted objectives. Among other things, it found no merit to USAPA’s claim that a different seniority proposal was necessary to break through the East Pilots’ impasse and ratify a new collective bargaining agreement, stating that “any asserted impasse was a pretext for bare favoritism of the East Pilots,” and that even if an impasse did exist, “it [was] one that USAPA goaded on” when it “misled the majority about its power to improve their seniority prospects at the expense of the West Pilots.” Id. at –18. 11 Having found no legitimate union purpose for USAPA’s actions, the court entered judgment for the West Pilots and issued an injunction ordering USAPA “to negotiate in good faith for the implementation of the Nicolau Award, defending that Award in negotiations and presenting it with the single new [collective bargaining agreement] to the pilots for ratification vote.” Id. at . It also ordered USAPA “to negotiate for the implementation of the Nicolau Award as part of any single [collective bargaining agreement], unmodified by additional conditions and restrictions USAPA would place upon it.” Id.