Opinion ID: 1266339
Heading Depth: 2
Heading Rank: 4

Heading: Plaintiffs' Claim of a Breach of the Duty of Fair Representation

Text: Plaintiffs submit that the district court erred in granting summary judgment in favor of APFA on the claim of a breach of the union's duty of fair representation. We disagree.
The statutory duty of fair representation was developed [in the 1940s] in a series of cases involving alleged racial discrimination by unions certified as exclusive bargaining representatives under the Railway Labor Act. Vaca v. Sipes, 386 U.S. 171, 177, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967). In these cases, the Supreme Court ruled that the exclusive agent's statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct. Id. ; see Ramey v. Dist. 141, Int'l Ass'n of Machinists & Aerospace Workers, 378 F.3d 269, 276-77 (2d Cir.2004). This tripartite standard applies to `challenges leveled not only at a union's contract administration and enforcement efforts but at its negotiation activities as well,' i.e., to both major and minor disputes under the RLA. Air Line Pilots Ass'n, Int'l v. O'Neill, 499 U.S. 65, 77, 111 S.Ct. 1127, 113 L.Ed.2d 51 (1991) (quoting Communications Workers v. Beck, 487 U.S. 735, 743, 108 S.Ct. 2641, 101 L.Ed.2d 634 (1988)). [9] The Supreme Court has emphasized that a court's substantive examination of a union's performance [is] highly deferential, recognizing the wide latitude that negotiators need for the effective performance of their bargaining responsibilities. Air Line Pilots Ass'n, Int'l v. O'Neill, 499 U.S. at 78, 111 S.Ct. 1127. For that reason, the final product of the bargaining process may constitute evidence of a breach of duty only if it can be fairly characterized as so far outside a wide range of reasonableness that it is wholly irrational or arbitrary. Id. (internal citation and quotation marks omitted). The rationality of a union's decision must be evaluated in light of both the facts and the legal climate that confronted the negotiators at the time the decision was made. Id. To demonstrate bad faith representation by a union, a party must show improper intent, purpose, or motive. Spellacy v. Airline Pilots Ass'n-Int'l, 156 F.3d 120, 126 (2d Cir.1998) (observing that [b]ad faith encompasses fraud, dishonesty, and other intentionally misleading conduct). Even if a party makes such a showing, it must further demonstrate a causal connection between the union's misconduct and the complained-of injury. Id.
Plaintiffs point to numerous decisions taken by APFA in its negotiations with American Airlines that they submit raise triable issues of fact as to the irrationality and arbitrariness of the union's representation. See Fed.R.Civ.P. 56(c). We consider each in turn and conclude that plaintiffs' argument is without merit. At the outset, we note that the record is replete with evidence that American Airlines was, in fact, in dire economic straits at the time the parties entered into the negotiations that led to the Restructuring Participation Agreement. For example, American Airlines had a net loss of $3.5 billion in 2002, and by 2003 the airline was experiencing cash losses of approximately $5 million per day. Further, two of American Airlines' primary competitors, U.S. Airways and United Airlines, had filed for bankruptcy protection in August 2002 and December 2002, respectively. These circumstances preclude any reasonable factfinder from concluding that APFA entered into the challenged negotiations with American Airlines irrationally, arbitrarily, or in bad faith. Nor will the evidence admit an inference of arbitrariness or bad faith in the voting procedures used by APFA in seeking membership ratification of the Restructuring Participation Agreement. Plaintiffs take issue with the union's use of a telephonic balloting service provided by American Airlines rather than mail-in balloting, and with the use of a password supplied by American Airlines to monitor such balloting. Given the time-sensitive nature of the circumstances, APFA's reliance on telephonic balloting and its monitoring of the vote through a website established by American Airlines is insufficient, by itself, to permit a finding of bad faith. Plaintiffs suggest that a jury could infer APFA's bad faith from its agreement to a ratification voting deadline of April 15, 2003, two days before American Airlines filed its 10K form revealing the terms of a Special Executive Retirement Plan. Plaintiffs failed, however, to adduce any admissible evidence supporting their conclusory assertion that APFA officials knew of the retirement plan when they agreed to the voting schedule. Indeed, plaintiffs do not address testimonial evidence that APFA officials did not have any notice of the retirement plan until its public disclosure on April 17. This record is insufficient to demonstrate a genuine dispute of material fact warranting trial. See Fed.R.Civ.P. 56(c). Plaintiffs further submit that APFA's decisions to extend the voting deadline to April 16 and to permit members to change votes were taken in bad faith. Once again, plaintiffs make a bald assertion  that the principal, or sole, reason APFA did so was to reverse the [initial negative] outcome, Appellants' Br. at 42  without pointing to any supporting admissible evidence. In fact, the record evidence demonstrates that APFA sought an extension through the end of April to provide its members with more time to consider the terms of the Restructuring Participation Agreement and to accommodate certain members who had had trouble casting votes. It was American Airlines that refused to agree to such an extension and, on April 15, offered the alternative of one further day of voting. There is no record evidence that would permit a factfinder to identify bad faith in APFA's acceptance of the one-day extension. See generally Parker v. Connors Steel Co., 855 F.2d 1510, 1521 (11th Cir.1988) (finding no breach of the duty of fair representation where union urged ratification of collective bargaining agreement because it accurately reflected its negotiation efforts with the Company and the economic crisis in the steel industry). Like the district court, we also identify no record support for plaintiffs' claim that APFA acted arbitrarily or in bad faith in finalizing the April 25, 2003 acceptance of a modified Restructuring Participation Agreement. Following disclosure of the Special Executive Retirement Plan, on April 22, 2003, APFA determined that the Restructuring Participation Agreement was no longer valid and would have to be put to a re-vote. The next day, a four-person congressional delegation met with various American Airlines officials, including CEO Donald Carty, APFA head John Ward, and the heads of two other unions that had ratified the Restructuring Participation Agreement. As a result of those discussions, American Airlines unilaterally acceded to several APFA demands, including a one-year reduction in the duration of the Restructuring Participation Agreement, an option for the union to reopen that Agreement after three years, and an Annual Incentive Program. Plaintiffs do not dispute that these concessions benefitted APFA members. As a result of these discussions, American Airlines CEO Carty also resigned. APFA leaders met with the new American Airlines CEO, Gerard Arpey, on April 24, 2003. The union requested that the airline defer filing for bankruptcy until after the re-vote, and it sought an additional amendment to the underfly provision of the Restructuring Participation Agreement. American Airlines agreed to remove the underfly provision and to substitute a different concession of equal value in its place, but it informed APFA that, if it did not finalize the Restructuring Participation Agreement by April 25, the airline would declare bankruptcy. The APFA Board of Directors considered this proposal and, on April 25, finalized the agreement. This record provides no support for plaintiffs' assertion that APFA's actions were so far outside a wide range of reasonableness as to be irrational. Air Line Pilots Ass'n, Int'l v. O'Neill, 499 U.S. at 78, 111 S.Ct. 1127 (internal quotation marks omitted). Accordingly, we conclude that summary judgment was appropriately entered in favor of APFA on plaintiffs' claim of breach of the duty of fair representation.