• Court Prohibits Pan Am From Transferring B-727 Flying to Boston-Maine
  • January 20, 2005
  • Law Firm: Ford & Harrison LLP - Atlanta Office
  • A federal court in New Hampshire recently adopted a magistrate's report and recommendation enjoining Pan Am from, among other things, transferring the flying of B-727 aircraft from Pan Am (whose pilots are represented by ALPA) to Boston-Maine (whose pilots are not unionized). See ALPA v. Guilford Transportation Ind., Inc. (unpublished decision). Pan Am and Boston-Maine are subsidiaries of the same parent company, Pan American Airlines, Inc. Guilford leases B-727s to both companies. Neither Boston-Maine nor Guilford is a party to the CBA between Pan Am and its ALPA-represented pilots.

    In August 2004, Boston-Maine began operating B-727 aircraft formerly flown by Pan Am. Prior to that, it had flown passengers only on Jetstream 31 turboprop aircraft, which seat 19 as opposed to the 149 passengers the B-727 can accommodate. At a hearing before the magistrate, Pan Am pilots testified that their flying hours had been reduced by approximately 25% since Boston-Maine started operating B-727s. Pan Am had previously notified the FAA that it planned to cease operations by October 31, 2004. According to the defendants' general counsel, Boston-Maine planned to operate the same services performed by Pan Am after that carrier discontinued its operations.

    ALPA filed suit in federal court after Pan Am began transferring the work of flying B-727s from Pan Am to Boston-Maine, arguing that this interfered with the with the organization of Pan Am's pilots and violated the status quo requirements of the RLA. ALPA sought an injunction preventing this transfer until the dispute resolution processes under the RLA could be exhausted. The magistrate recommended entering the injunction and the defendants objected.

    The defendants argued that the transfer should be considered a minor dispute under the RLA (which would not authorize the court to issue a status quo injunction) because it was arguably permitted under the CBA. In support of this argument, the defendants relied on the scope clause of the CBA, which, among other things, provided that Pan Am could enter into aircraft interchange agreements with other carriers if such agreements did not result in the furlough of Pan Am pilots. The defendants pointed out that during negotiations of the CBA, ALPA had proposed an additional term that stated that Pan Am would not create or acquire an alter ego to avoid the terms and conditions of the CBA, but had executed the CBA without that language. Thus according to the defendants, ALPA's willingness to execute the CBA "without its requested language makes it arguable that ALPA agreed that Pan Am could transfer its work to an affiliated non-union entity." The court rejected this argument, stating that a CBA that allows the employer to avoid all of its obligations through the use of an alter ego is not a CBA at all "but merely the grant of a unilateral option to the employer to de-unionize its operations."

    The defendants also argued that the transfer of the B-727 flying did not trigger a major dispute under the RLA because in this situation the carrier did not seek to bargain with the union about whether the work could be diverted. The court also rejected this argument, holding that if the diversion of work to a non-union affiliate could never present a major dispute absent prior unsuccessful union negotiations on that point, "it stands to reason that carriers would regularly seek to immunize themselves from pre-mediation injunctions by skipping the negotiations and going straight to the diversion," which would be inconsistent with the purposes of the RLA.

    The court also agreed with the magistrate's determination that Boston-Maine was an alter-ego of Pan Am, based on the fact that the companies have the same president, chief operating officer, and general counsel, and that Boston-Maine regularly depended on and used Pan Am's human resources department. The court further held that the plan by the companies' owner to cease B-727 operations at Pan Am and commence B-727 operations at Boston-Maine to fly the same routes serviced by Pan Am permitted the conclusion that Pan Am planned to use Boston-Maine "for the purpose of evading the [CBA] and the status quo requirements of the RLA."

    Additionally, the court adopted the magistrate's determination that the transfer of B-727 operations from Pan Am to Boston-Maine constituted a "direct attempt to destroy a union," which was enjoinable under the RLA. In doing so, the court relied on the testimony of one of Pan Am's former regional managers regarding anti-union comments by the president of Pan Am, Boston-Maine and Guilford.

    ALPA subsequently sought a contempt order against Guilford after it offered what had been Pan Am flights through Boston-Maine's charter service. The magistrate denied ALPA's motion, finding that the district court's injunction did not prohibit Boston-Maine from developing its large aircraft business independently from Pan Am.