Opinion ID: 487464
Heading Depth: 2
Heading Rank: 2

Heading: Creation of a Replacement Subsidiary

Text: 18 In addition to 45 U.S.C. Sec. 152 First's requirement that the parties exert reasonable efforts to make and maintain agreements and settle disputes, the Act requires, inter alia, that neither party shall in any way interfere with, influence, or coerce the other in its choice of representatives, 45 U.S.C. Sec. 152 Third, and that it shall be unlawful for any carrier to interfere in any way with the organization of its employees ... or to influence or coerce employees in an effort to induce them to join or remain or not to join or remain members of any labor organization. 45 U.S.C. Sec. 152 Fourth.
19 Federal courts have jurisdiction to enforce the provisions of 45 U.S.C. Sec. 152 Third and Fourth prohibiting interference with effective representation and organization. Virginian Ry. Co. v. System Fed'n No. 40, 300 U.S. 515, 543, 57 S.Ct. 592, 597, 81 L.Ed. 789 (1937); Texas & N.O.R. Co. v. Brotherhood of Ry. & S.S. Clerks, 281 U.S. 548, 569, 50 S.Ct. 427, 433, 74 L.Ed. 1034 (1930); Ruby v. TACA Int'l Airlines, 439 F.2d 1359, 1364 (5th Cir.1971); Brotherhood of Ry. Trainmen v. Central of Ga. R.R. Co., 305 F.2d 605, 608-09 (5th Cir.1962). Thus, federal courts have subject matter jurisdiction over claims alleging the establishment of a replacement subsidiary to the extent that those claims are actually within the purview of 45 U.S.C. Sec. 152 Third and Fourth. 20 The district court held that the claims concerning the replacement subsidiary involve a representational dispute falling under 45 U.S.C. Sec. 152 Ninth, not a dispute under 45 U.S.C. Sec. 152 Third or Fourth, and for that reason subject matter jurisdiction is lacking. 3 The district court in so holding relied upon the Second Circuit decision in Air Line Pilots Association, International v. Texas International Airlines, 656 F.2d 16 (2d Cir.1981). 21 In Texas International the corporate parent of an existing airline underwent a corporate restructuring whereby a new subsidiary was created to service a route that the existing airline subsidiary had not serviced, but that the existing subsidiary was authorized to service. ALPA, the plaintiff union in the Texas International case, asserted that pilots employed by the new subsidiary must be covered by the collective bargaining agreement made with the existing subsidiary. The Second Circuit held that the suit constituted a representational dispute under 45 U.S.C. Sec. 152 Ninth, and therefore that the courts did not have subject matter jurisdiction over it. The court's holding was, however, a restricted one. 22 The court distinguished acts giving rise to jurisdiction under Sec. 152 Third and Fourth from those that could give rise only to representational disputes. In the first category it placed such acts as transferring existing business flown by ALPA pilots to a newly formed corporate alter ego in order to take work from the union. 656 F.2d at 19. In the second category, it placed such acts as forming a separate, fully independent company to serve routes neither flown nor certificated to the preexisting carrier. Id. In Texas International, the preexisting subsidiary had never flown the routes assigned to the new subsidiary, although it was authorized to do so. Therefore, the court found that the facts fit in the second category, and gave rise to a representational dispute within the exclusive jurisdiction of the Board. 23 In the instant case, the complaint alleges that Transamerica, along with its corporate parent, acted to devise a second airline subsidiary for [the corporate parent] to operate in Transamerica's marketplace. Consequently, the instant case is closer to the first category noted in Texas International, where the carrier seeks to transfer existing business flown by ALPA pilots to a newly formed corporate alter ego for the purpose of displacing the work of ALPA pilots, id., and, therefore, is an interference with representation and organization within the purview of 45 U.S.C. Sec. 152 Third and Fourth. 24 As the above discussion indicates, Texas International does not support dismissal for lack of subject matter jurisdiction in the instant case. In fact, it recognizes the application of 45 U.S.C. Sec. 152 Third and Fourth to the diversion of work from a subsidiary bound by a collective bargaining agreement to a newly formed, related nonunion subsidiary that would operate in the same marketplace. 25 We hold that a federal court has jurisdiction to hear a dispute in which an employer is alleged to have established a nonunion replacement subsidiary in order to transfer to it work being performed by an existing subsidiary that is bound by a collective bargaining agreement.
26 ALPA asserts that the portion of the complaint referring to the creation of a replacement subsidiary states a claim both with respect to the status quo requirements of the Act and with respect to the portions of the Act prohibiting the undermining of representation and organization. 27 The status quo provision in 45 U.S.C. Sec. 156, states in relevant part: In every case where ... the services of the Mediation Board have been requested by either party, or said Board has proffered its services, rates of pay, rules, or working conditions shall not be altered by the carrier until the controversy has been finally acted upon.... The Supreme Court described the status quo provisions of the Act generally in Detroit & Toledo Shore Line Railroad Co. v. United Transportation Union, 396 U.S. 142, 90 S.Ct. 294, 24 L.Ed.2d 325 (1969), as follows: 28 The obligation of both parties during a period in which any of these status quo provisions is properly invoked is to preserve and maintain unchanged those actual, objective working conditions and practices, broadly conceived, which were in effect prior to the time the pending dispute arose and which are involved in or related to that dispute. 29 Id. at 152-53, 90 S.Ct. at 301. See Trans Int'l Airlines v. International Bhd. of Teamsters, 650 F.2d 949, 967 (9th Cir.1980). ALPA's complaint alleges that, 30 Transamerica has acted with [its corporate parent] to devise a second airline subsidiary for [the parent] to operate in Transamerica's marketplace, wholly or partly as a device and instrument to achieve Transamerica's goal [to dictate rates of pay and working conditions] and to further Transamerica's plan as aforesaid; in further support of that plan Transamerica has threatened to terminate its own operations. 31 The prospect of having work shifted to a replacement subsidiary would constitute a change in the working conditions and practices under the Shore Line standard. See Local 553, Transp. Workers Union v. Eastern Air Lines, 544 F.Supp. 1315, 1327 (E.D.N.Y.1982), modified, 695 F.2d 668 (2d Cir.1983) (the deprivation of a work opportunity involving the type of work traditionally performed by the Union is a change in working conditions, even where the work is new.). 32 Transamerica argues that ALPA has not stated a claim because ALPA never alleged in its Complaint that Transamerica violated the status quo obligations of the RLA. It is true that the complaint does not mention the status quo provisions of 45 U.S.C. Sec. 156. However, [a] 'complaint is not to be dismissed because the plaintiff's lawyer has misconceived the proper legal theory of its claim, but is sufficient if it shows that the plaintiff is entitled to any relief which the court can grant, regardless of whether it asks for the proper relief.'  United States v. Howell, 318 F.2d 162, 166 (9th Cir.1963) (quoting Dotschay v. National Mutual Ins. Co., 246 F.2d 221, 223 (5th Cir.1957)); see 5 C. Wright & A. Miller, Federal Practice and Procedure Sec. 1357 (1969). Because the complaint alleges facts that would constitute a violation of 45 U.S.C. Sec. 156, a claim has been stated. 33 ALPA argues that it also has stated a claim by alleging that [d]efendant's course of conduct, as described ... above, subverts and impairs the representative standing, collective bargaining rights, and legitimate effectiveness of ALPA to represent Transamerica's pilots under the Act. ALPA's claim clearly fits within the language of 45 U.S.C. Sec. 152 Third and Fourth. The complaint, broadly construed, alleges that Transamerica and its parent have sought to establish a subsidiary that could take over Transamerica's business but that would be unencumbered by the collective bargaining agreement with ALPA. The use of a similar runaway shop technique to defeat the pilots' collective bargaining gains, when a carrier moved the pilot base to El Salvador in order to render ALPA's representation illegal under local law, was found to warrant injunctive relief under 45 U.S.C. Sec. 152 Fourth. Ruby v. TACA Int'l Airlines, 439 F.2d 1359, 1364 (5th Cir.1971). 34 Transamerica argues that 45 U.S.C. Sec. 152 Third and Fourth cannot give rise to a claim once a union has been certified as the collective bargaining agent, and ALPA has already been certified in the present case. Transamerica cites International Association of Machinists v. Northwest Airlines, 673 F.2d 700 (3d Cir.1982) for support. The Northwest Airlines court did state that generally 45 U.S.C. Sec. 152 Third and Fourth would not provide for federal court jurisdiction in an action in which a union asserts that the disciplinary measures taken by a carrier during the existence of a collective bargaining agreement were motivated by anti-union animus. Id. at 709 (emphasis in original). However, the court also stated that it does not foreclose the possibility that given the appropriate case and the appropriate circumstances such an action could be brought in federal court. Id. 35 Furthermore, Northwest Airlines recognized that there is authority to the contrary. The Fifth Circuit case, Brotherhood of Railroad Trainmen v. Central of Georgia Railway Co., 305 F.2d 605, 608-09 (5th Cir.1962), granted relief under 45 U.S.C. Sec. 152 Third during the existence of a collective bargaining agreement. Northwest Airlines sought to distinguish Railroad Trainmen on the ground that it was decided merely on the pleadings. The present case, which is before this court on a motion to dismiss under Fed.R.Civ.P. 12(b)(1) and (6), is also being decided on the pleadings. Northwest Airlines, therefore, does not support Transamerica's argument. 4 36 Finally, Transamerica argues that liability under 45 U.S.C. Sec. 152 Third and Fourth once a union had been certified as the collective bargaining agent is possible only in unusual circumstances when there has been some overt, unlawful act on the part of the carrier that had a demonstrable effect upon the union involved. Even if this assertion is true, at this stage in the proceedings we have no evidence that this case does not involve unusual circumstances. The portion of the ALPA complaint alleging the establishment of a replacement subsidiary states a claim under 45 U.S.C. Sec. 152 Third and Fourth, and also states a claim under 45 U.S.C. Sec. 156.