Opinion ID: 3051931
Heading Depth: 2
Heading Rank: 1

Heading: Restructuring of the DHL Entities

Text: The DHL network restructured its U.S. operations in both March 2001 and July 2003. The March 2001 restructuring was necessary because a foreign entity (DHL International, Ltd.) wanted to acquire majority ownership of the DHL Holdings network. U.S. law requires that a minimum of seventyfive percent of the voting power of a U.S. airline be held by U.S. citizens, that the president and at least two-thirds of the board of directors and other managing officers be U.S. citizens, and that the airline be under the “actual control” of U.S. citizens. 49 U.S.C. §§ 40102(a)(15), 41102. Thus, in March 2001, DHL Holdings transferred the ground operations of DHL Airways to a new, wholly-owned DHL Holdings subsidiary called DHL Worldwide Express, Inc. (DHL Worldwide). DHL Airways was left with only the assets related to the air operations. In light of the U.S. ownership restrictions, a majority of the voting and equity interest in DHL Airways was sold to a U.S. citizen. DHL Holdings, DHL Worldwide, and DHL Airways entered into contractual arrangements with each other that enabled the air and ground network to be operated just as it had prior to the restructuring. The DHL Airways air operations personnel remained employees of DHL Airways and continued to perform roughly the same work that they had previously performed. DHL Holdings sold its remaining shares of DHL Airways on July 14, 2003. Following the sale, DHL Airways was wholly-owned by a group of independent investors, one of whom was its chief executive. The new owners changed DHL Airways’ name to ASTAR Air Cargo, Inc. On July 14, 2003, ASTAR and DHL Worldwide entered into a new Aircraft, Maintenance and Insurance Agreement with respect to the provision of freight services. AIR LINE PILOTS ASS’N v. NLRB 5109 Meanwhile, in March 2003, the parent company of DHL Holdings announced an agreement to merge with Airborne, Inc. Airborne was similarly engaged in the business of timesensitive delivery of documents, small packages, and other freight. Airborne had its own flying subsidiary, ABX. ABX pilots are represented by the Teamsters and governed by the Railway Labor Act. When the merger was completed on August 15, 2003, ABX became an independent company1 and Airborne, consisting only of ground operations, became a wholly-owned subsidiary of DHL Holdings. ABX entered into its own Aircraft, Maintenance and Insurance Agreement with Airborne. The ABX pilots serve more cities, serve different cities, fly different machinery, and handle considerably more volume than ASTAR pilots. ABX pilots use a hub system, with Wilmington, Ohio, as the primary hub. ASTAR pilots do not have a regional hub system. The ABX pilots serve over 100 different markets, while the ASTAR pilots serve only about thirtythree. The ABX pilots fly different airplanes than the ASTAR pilots because the ABX airplanes are specifically configured for a different type of container (on which ABX holds a patent) than that used by ASTAR and others in the freight transportation industry. The loading of the ABX containers requires a unique conveyer belt system (also covered by an ABX patent). The ABX pilots typically fly two-man crews, whereas the ASTAR aircraft require three-man crews. ABX pilots transport about 8.5 million pounds of cargo a day, while ASTAR handles only about 900,000 pounds. Finally, ASTAR pilots have category I certifications, whereas ABX pilots have category II and III certifications, which enable them to land under weather conditions with more limited visibility. 1 ABX was separated from Airborne to comply with the U.S. ownership limitations discussed above. 5110 AIR LINE PILOTS ASS’N v. NLRB B. ALPA’s Efforts To Enforce the Collective Bargaining Agreement On June 16, 2003, prior to completion of the Airborne merger, ALPA sent DHL Holdings a letter asserting that the flying generated by the former Airborne operations would be subject to the scope provisions of the DHL Airways (now ASTAR) collective bargaining agreement. Representatives from ALPA and the DHL Holdings network met to discuss the matter on August 7, 2003. At the conclusion of the meeting, ALPA submitted a grievance against DHL Holdings and DHL Worldwide, alleging violations of the collective bargaining agreement and requesting expedited arbitration as required by the agreement. DHL Holdings then filed an action against ALPA in the District Court for the Southern District of New York. DHL Holdings sought a declaratory judgment that the collective bargaining agreement did not require that ASTAR perform future flying on behalf of Airborne. In the alternative, DHL Holdings sought an order that ALPA’s claim over the Airborne work was a representation dispute within the exclusive jurisdiction of the National Mediation Board under the Railway Labor Act. ALPA filed an answer and counterclaim, contesting the allegations and requesting that the District Court compel DHL Holdings to submit the underlying dispute to arbitration, declare that the collective bargaining agreement was in full force and effect, and restrain DHL Holdings from implementing any agreement with ABX pursuant to which any flying on behalf of DHL Airways or its subsidiaries would be performed by non-ASTAR pilots. On September 10, 2003, ABX filed a Charge with the NLRB against ALPA alleging that, by filing the grievance and attempting to force DHL Holdings not to do business with ABX, ALPA had violated the National Labor Relations Act. The District Court action was stayed pending resolution of ABX’s Charge. AIR LINE PILOTS ASS’N v. NLRB 5111 The NLRB issued a formal Complaint against ALPA on December 10, 2003. The Complaint alleged that ALPA’s filing of the counterclaim as well as the grievance violated the secondary boycott provisions of the National Labor Relations Act. ALPA countered that the NLRB did not have jurisdiction over the dispute, arguing in part that the present dispute was a Railway Labor Act dispute and that, under the Supreme Court’s holding in Brotherhood of Railroad Trainmen v. Jacksonville Terminal Co., 394 U.S. 369 (1969), the National Labor Relations Act did not apply; the Railway Labor act did.2 ALPA also argued that it had not violated the secondary boycott provisions of the National Labor Relations Act. An Administrative Law Judge (ALJ) held a hearing on the NLRB’s Complaint against ALPA on March 10 and 11, 2004. In a July 2, 2004, decision, the ALJ found that ALPA had committed the violations alleged in the Complaint and recom- 2 In Jacksonville Terminal, the Supreme Court considered whether a state court could enjoin the picketing of a rail terminal facility by railroad employees. The operator of the terminal, which sought the injunction in state court, was a corporation jointly owned and controlled by four railroad companies. The picketers were employees of one of the railroads. Jacksonville Terminal, 394 U.S. at 372-75. The unions representing the employees argued that the state court’s jurisdiction was displaced by the exclusive jurisdiction of the National Labor Relations Act. Id. at 375. The Supreme Court disagreed on the ground that the National Labor Relations Act exempts employees and employers subject to the Railway Labor Act. Id. at 376. The unions contended that the dispute was covered by the National Labor Relations Act by virtue of the fact that the unions’ national membership included a small number of employees who were not subject to the Railway Labor Act but might be subject to the National Labor Relations Act. The Court rejected this argument. Id. at 375. Instead, the Court held, “when the traditional railway labor organizations act on behalf of employees subject to the Railway Labor Act in a dispute with carriers subject to the Railway Labor Act, the organizations must be deemed, pro tanto, exempt from the National Labor Relations Act.” Id. at 376-77. The Supreme Court concluded that the dispute between the unions and the terminal operator was “a railway labor dispute, pure and simple,” notwithstanding the fact that the unions represented some non-Railway Labor Act employees. Id. at 378. 5112 AIR LINE PILOTS ASS’N v. NLRB mended a remedial order. ALPA filed exceptions to this decision. C. The NLRB’s Decision and Order On August 21, 2005, by a vote of two to one, the NLRB issued a Decision affirming the rulings, findings, and conclusions of the ALJ and adopting his recommended order. NLRB Member Liebman dissented. On review, the NLRB concluded that the ALJ had properly found that the NLRB had jurisdiction over the dispute. The NLRB found that, as ALPA conceded, ALPA was a “labor organization” under the National Labor Relations Act and therefore subject to its prohibitions, including the secondary boycott provisions.3 This finding was based on ALPA’s representation of the seventeen employees of Ross Aviation, who were in no way involved in the present dispute but who were covered by the National Labor Relations Act. The NLRB found further that DHL Holdings, the object of ALPA’s alleged coercion, was subject to the National Labor 3 The secondary boycott provisions of the National Labor Relations Act make it unlawful for a “labor organization”: “(ii) to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce, where in either case an object thereof is — (A) forcing or requiring any employer . . . to enter into any agreement which is prohibited by section 8(e); (B) forcing or requiring any person . . . to cease doing business with any other person.” 29 U.S.C. § 158(b)(4)(ii). Section 8(e) of the National Labor Relations Act generally prohibits any agreement between an employer and a labor organization whereby the employer “ceases or refrains or agrees to cease or refrain from handling, using, selling, transporting or otherwise dealing in any of the products of any other employer, or to cease doing business with any other person.” 29 U.S.C. § 158(e). AIR LINE PILOTS ASS’N v. NLRB 5113 Relations Act. The NLRB reasoned that “ALPA (an NLRAcovered labor organization) chose to enmesh DHL (an NLRA-covered employer) in its dispute with ABX (an RLA employer).” The NLRB concluded that ALPA’s “extension of this dispute to an NLRA-covered employer distinguishes this case from Jacksonville Terminal.” The NLRB found that, unlike Jacksonville Terminal, the present dispute was not a “pure” Railway Labor Act dispute. Responding to dissenting NLRB Member Liebman’s characterization of the case as requiring accommodation of two statutory regimes — the Railway Labor Act and the National Labor Relations Act — the NLRB determined that the plain language of the National Labor Relations Act, which permitted jurisdiction in this case, was the best means of determining whether the NLRB should exercise jurisdiction. The NLRB reiterated that ALPA subjected itself to NLRB jurisdiction by representing employees covered by the National Labor Relations Act. The NLRB found further that enforcing the National Labor Relations Act’s secondary boycott provisions would not subvert the Railway Labor Act. The NLRB also concluded that ALPA’s pursuit of its grievance and counterclaim constituted unlawful secondary conduct. The NLRB found that the object of ALPA’s conduct was to require DHL Holdings and its Airborne subsidiary to cease doing business with ABX. The NLRB considered whether ALPA’s activity had a lawful work preservation object but determined that ALPA’s conduct instead had an impermissible work acquisition object. Having affirmed the Administrative Law Judge’s holdings that the NLRB had jurisdiction over the dispute and that ALPA had violated the National Labor Relations Act, the Board adopted the ALJ’s recommended remedy. In part, the Board’s Order requires ALPA to cease and desist from violating the National Labor Relations Act, withdraw its grievance and counterclaim, reimburse DHL Holdings for reasonable 5114 AIR LINE PILOTS ASS’N v. NLRB expenses and legal fees in defending against the grievance and counterclaim, and post a notice to its members regarding its remedial actions. NLRB Member Liebman dissented from the Board’s Decision and Order on the ground that the dispute should properly be adjudicated under the Railway Labor Act, not the National Labor Relations Act. The dissent concluded that the majority cited no persuasive reason or authority for asserting jurisdiction over the case and that, “at a minimum,” Jacksonville Terminal “strongly counsel[ed] that the Board refrain from asserting jurisdiction.” The dissent reasoned that the “essence” of the dispute was “between an RLA-covered employer [ABX] and an RLA-covered union [ALPA], representing RLA-covered, union-represented employees [the ASTAR pilots].”