Opinion ID: 561782
Heading Depth: 2
Heading Rank: 1

Heading: Validity of Arbitration Award

Text: 12 Appellants contend that the Letter of Agreement, in which United and the AFA agreed to submit the seniority issue to arbitration, is void because it was entered into before their employment with United effectively began. Because they were neither formal employees of United nor members of AFA at the time of the Letter of Agreement, appellants argue, they could not be parties to any arbitration agreement and are not bound by the arbitral outcome. See American Renaissance Lines, Inc. v. Saxis S.S. Co., 502 F.2d 674, 677 (2d Cir.1974); Orion Shipping & Trading Co. v. Eastern States Petroleum Corp., 312 F.2d 299, 300-01 (2d Cir.), cert. denied, 373 U.S. 949, 83 S.Ct. 1679, 10 L.Ed.2d 705 (1963). 13 Although a party is bound by an arbitral award only where it has agreed to arbitrate, an agreement may be implied from the party's conduct. See Teamsters Local Union No. 764 v. J.H. Merritt & Co., 770 F.2d 40, 42 (3d Cir.1985); cf. Kamakazi Music Corp. v. Robbins Music Corp., 684 F.2d 228, 231 (2d Cir.1982) ([i]t is hornbook law that parties by their conduct may agree to send issues outside an arbitration clause to arbitration.). Here, appellants' conduct manifested a clear intent to arbitrate the dispute. The record demonstrates their active and voluntary participation in the arbitration; for example, through the IUFA, they chose a committee to represent them in the arbitration, and, on their behalf, the committee withdrew funds from the bank account set up to cover its expenses, chose counsel to represent the transferring flight attendants in the arbitration and argued vigorously that they should receive full credit for their time of employment with Pan Am. Also, there is no evidence that, at any point before or during the arbitration, appellants objected to the process, refused to arbitrate or made any attempt to seek judicial relief. 14 Appellants' reliance on Saxis and Orion Shipping is misplaced because those cases involved commercial, not labor, arbitration. Under the RLA, terms and conditions of employment for unionized employees are established through collective bargaining between the employer and the union representative for the bargaining unit. 45 U.S.C. Sec. 152 (First) (duty of carriers and employees to settle disputes), (Fourth) (collective bargaining); see also Order of R.R. Telegraphers v. Chicago & N. Western Ry. Co., 362 U.S. 330, 339, 80 S.Ct. 761, 766, 4 L.Ed.2d 774 (1960); Virginian Ry. Co. v. System Fed'n No. 40, Ry. Employees Dep't of the Am. Fed'n of Labor, 300 U.S. 515, 547-48, 57 S.Ct. 592, 599-600, 81 L.Ed. 789 (1937). Unlike a standard commercial contract, a collective bargaining agreement binds both those members within a bargaining unit at the time the agreement is reached as well as those who later enter the unit. J.I. Case Co. v. NLRB, 321 U.S. 332, 335-36, 64 S.Ct. 576, 579-80, 88 L.Ed. 762 (1944); see Wood v. National Basketball Ass'n, 809 F.2d 954, 960 (2d Cir.1987); NLRB v. Laney & Duke Storage Warehouse Co., 369 F.2d 859, 866 (5th Cir.1966). Thus, the 1202 incoming flight attendants are bound by the collective bargaining agreement, including its arbitration provision, even though they were not involved in the negotiation preceding it or employed by United at the time of the negotiation. As the district court found, they were effectively third-party beneficiaries of the Letter of Agreement. See J.I. Case Co., 321 U.S. at 336, 64 S.Ct. at 579. 15 Similarly, appellants' reliance on Beardsly v. Chicago & N. Western Transp. Co., 850 F.2d 1255 (8th Cir.1988), cert. denied, 489 U.S. 1066, 109 S.Ct. 1340, 1341, 103 L.Ed.2d 810 (1989) is misplaced. Unlike Saxis and Orion Shipping, Beardsly implicated a labor arbitration. However, in Beardsly the agreement establishing the seniority status of employees who were hired by Chicago & Northwestern after it had purchased the railroad that employed them was reached without the involvement of the new hires, despite their repeated requests to participate and objections to the arbitration. Beardsly, 850 F.2d at 1262-63, 1269-70. By contrast, appellants here were permitted to participate and did so without objection. 16 Appellants also argue that the arbitrator's award should be vacated because, under 9 U.S.C. Sec. 10(a), it was reached through fraud on the arbitration process. This contention is based on the fact that the AFA failed to inform either the 1202 incoming flight attendants or the arbitrator of an amendment to its constitution, proposed in November 1986 and formally ratified in June 1987, regarding its policy for seniority integration in a merger with an airline whose employees are not represented by the AFA. Under the amendment, seniority integration would be accomplished by compiling an integrated seniority list in the same manner as provided for seniority integration between flight attendants on AFA carriers. New Section J.2., AFA Constitution, Rev. 87 (emphasis added). We reject appellants' contention. The adoption of the AFA amended merger policy was prospective in nature and expressly inapplicable to the United-Pan Am merger transaction. 17 Appellants' final argument for vacatur is that the AFA breached its duty to represent all of its members fairly, as required by the RLA. See Vaca v. Sipes, 386 U.S. 171, 177, 87 S.Ct. 903, 909, 17 L.Ed.2d 842 (1967). Although the district court addressed this argument on its merits, the duty of fair representation claim may be dismissed as barred by the applicable statute of limitations, as the district court found with the more specific claims of violation of the RLA. In DelCostello v. International Bhd. of Teamsters, 462 U.S. 151, 169-71, 103 S.Ct. 2281, 2293-94, 76 L.Ed.2d 476 (1983), the Court held that the six-month limitations period of the National Labor Relations Act applies to claims of breach of duty of fair representation. In this case, the period began to run, at the latest, as of the date the AFA ratified the allegedly violative agreement, March 14, 1986, by which time the 1202 incoming flight attendants already had begun working for United and were aware of the terms of the Letter of Agreement. See Local Lodge No. 1424, I.A.M. v. NLRB, 362 U.S. 411, 415-19, 80 S.Ct. 822, 825-28, 4 L.Ed.2d 832 (1960); United Indep. Flight Officers, Inc. v. United Air Lines, Inc., 756 F.2d 1262, 1273 (7th Cir.1985); Engelhardt v. Consolidated Rail Corp., 594 F.Supp. 1157, 1172 (N.D.N.Y.1984), aff'd, 756 F.2d 1368 (2d Cir.1985). The action was not commenced until December 28, 1987 and thus is time-barred. 18 Moreover, even on its merits, the argument must fail. As the exclusive bargaining representative of United flight attendants, the AFA has a duty under section 8(b) of the National Labor Relations Act, 29 U.S.C. Sec. 158(b), to represent all of those employees, including the Pan Am transferees, both in collective bargaining with United and in enforcing the resultant collective bargaining agreement. See Air Line Pilots Ass'n v. O'Neill, --- U.S. ----, ----, 111 S.Ct. 1127, 1135, 113 L.Ed.2d 51 (1991); Vaca, 386 U.S. at 177, 87 S.Ct. at 909. [T]he exclusive agent's statutory duty to represent all members of a designated [bargaining] 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. Vaca, 386 U.S. at 177, 87 S.Ct. at 910; see also Air Wisconsin Pilots Protection Comm. v. Sanderson, 909 F.2d 213, 216 (7th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 958, 112 L.Ed.2d 1045 (1991). 19 Review of the terms negotiated by a union to determine whether the union breached its duty of fair representation must be highly deferential, recognizing the wide latitude that negotiators need for the effective performance of their bargaining responsibilities. O'Neill, --- U.S. at ----, 111 S.Ct. at 1135. A breach by the union exists only where it is established that the terms negotiated can be fairly characterized as so far outside a 'wide range of reasonableness,' ... that [they are] wholly 'irrational' or 'arbitrary.'  Id. (quoting Ford Motor Co. v. Huffman, 345 U.S. 330, 338, 73 S.Ct. 681, 686, 97 L.Ed. 1048 (1953)). 20 It cannot be said that the decision of United and the AFA to allow an arbitrator to determine the competitive rights of the appellants was arbitrary, discriminatory, in bad faith, or wholly outside a wide range of reasonableness. The AFA was faced with two groups of its members with objectives that were directly at odds. Submission of the impending dispute to arbitration was an equitable and reasonable method of resolving it. Appellants fail to demonstrate that their interests were not fully represented in the arbitration proceeding. See Cook v. Pan Am. World Airways, Inc., 771 F.2d 635, 645 (2d Cir.1985), cert. denied, 474 U.S. 1109, 106 S.Ct. 895, 88 L.Ed.2d 929 (1986) (no violation of union's duty of fair representation where evidence demonstrated that all interests of all employee groups were represented vigorously throughout proceedings). We therefore agree with the district court's finding that the 1202 incoming flight attendants and the incumbent employees were treated under the arbitration agreement with perfect parity.