Before HASTINGS, Chief Judge, CASTLE and KILEY, Circuit Judges.
CASTLE, C. J.: This action was brought*fn1 by plaintiffs-appellants, Harold E. Arnold and thirty-three other pilots*fn2 in the employ of United Air Lines, Inc. against the defendants-appellees, United Air Lines, Inc. (United), United Air Lines Pilots Association, International, AFL-CIO (ALPA), the members*fn3 of the United Air Lines Pilots System Board of Adjustment (System Board) and David A. Wolff, as referee, to set aside a decision of the System Board which dismissed a grievance of plaintiffs on the ground that the dispute had already been decided on the merits. Plaintiffs seek judgment that the System Board be directed to hear and determine the grievance on its merits and that United and ALPA assign impartial persons as members of the Board for that purpose.
The case was tried by the District Court on a stipulation of facts. The court stated findings of fact and conclusions of law and entered judgment dismissing the complaint. The judgment of the District Court was based on its conclusion that on the facts it did not have jurisdiction to review the determination of the System Board. Plaintiffs appealed and contend the court erred in not finding and concluding that inherent bias and prejudice of the Board, and arbitrary and capricious action on its part, constitute denial of due process to plaintiffs and entitle them to the relief they seek.
The question which this court is called upon to decide is whether the District Court properly dismissed the complaint because it lacked jurisdiction to review the System Board decision. The parties are agreed that the District Court has no right to review an order of the Board absent a denial of due process. Ellerd v. Southern Pacific Railroad Co., 7 Cir., 241 F.2d 541, 544. Thus the main contested issues presented by plaintiffs' appeal are:
(1) Whether bias or prejudice of the System Board deprived plaintiffs of due process.
(2) Whether arbitrary or capricious action of the System Board deprived plaintiffs of due process.
Prior to December 1954 plaintiffs were employed by United as flight engineers, a craft then separately certified by the National Mediation Board and governed by separate bargaining agreements and seniority lists. The grievance asserted by plaintiffs is that the July 1957 system pilots' seniority list posted by United does not accord plaintiffs the relative position of seniority*fn4 to which each is entitled because of failure to recognize for pilot seniority purposes the period each was employed as a flight engineer prior to being employed as a pilot in December 1954. In August 1957 plaintiffs set in motion the grievance machinery of the bargaining agreement by submitting protests which were prosecuted through the initial stages, denied at each step, and culminated in an appeal to the System Board from the adverse ruling of United's Vice President-Flight Operations, Petty, that the controversy had already been the subject of a grievance and a final and binding decision rendered.
In their appeal to the Board plaintiffs stated that they were placed at the bottom of the 1955 pilots' seniority list following their December 1954 employment or reassignment as co-pilots and "have retained the same relative positions on successive lists, and prior protests were never given complete consideration on their merits."
United moved to dismiss the appeal on the ground*fn5 that plaintiffs had previously processed the same grievances through the grievance machinery established under the agreement and had obtained a final and binding decision and that the Board had previously ruled that it had no jurisdiction to consider the grievance because of plaintiffs' failure to invoke its authority in a timely manner.
The pilots' seniority list which was posted in January 1955 did not recognize seniority accumulation during plaintiffs' tenure as flight engineers. In February 1955 plaintiffs, among others, instituted grievance proceedings which culminated in an adverse ruling on the merits by United's Petty under date of April 25, 1955. In the letter of decision plaintiffs were notified that under the agreement further appeal lay to the System Board and that such an appeal had to be taken within thirty days from the date of the decision. The April 25, 1955 decision was not so appealed but plaintiffs chose instead to institute a proceeding in the United States District Court for the District of Colorado in which they asked that court to declare their rightful positions on the seniority list. The suit was dismissed on United's motion for failure of plaintiffs to exhaust their administrative remedies by not appealing to the System Board.*fn6
In June 1955, more than thirty days after the April 25, 1955 decision, plaintiffs attempted an appeal to the System Board which rejected it for want of jurisdiction because of untimely presentation. Thereafter plaintiffs commenced another proceeding in the Colorado District Court seeking a declaration of their position on the list and a trial de novo. The District Court's dismissal*fn7 was affirmed in Crusen, et al. v. United Air Lines, Inc., 10 Cir., 239 F.2d 863 on the ground that plaintiffs had not exhausted their administrative remedies by failing to file a timely appeal with the System Board.
Before the System Board heard argument on United's motion to dismiss the appeal which followed the 1957 protest and grievance procedures plaintiffs requested the Board to provide them "an impartial referee either sitting alone or as a member of this Board, who has had no prior association with the grievants or with the Company" stating that the Board chairman had appeared as an attorney of record for United in the Crusen case in the United States Court of Appeals and that members of the Board "sitting as they are as appointees of the respective parties to the contract may be deemed prejudiced insofar as the grievants here are concerned" and that the grievance was not being presented by a party having representation on the Board.
Plaintiffs' request was denied and the Board proceeded to hear United's motion and at the conclusion of the hearing met in executive session. No poll was taken of the members relative to the motion. It was determined instead that the Board could properly deadlock in order to meet the request of plaintiffs that a referee be appointed.*fn8 The Board agreed that the decision of the referee would be accepted as the decision of the Board. It did not advise counsel or the parties that the deadlock had been agreed upon without a consideration of the motion on its merits. The Board issued a letter of deadlock notifying the parties that the Board had not arrived at a decision on United's motion and declaring itself deadlocked. Subsequently it advised the parties that David A. Wolff, whose competency or impartiality plaintiffs do not question, had been selected as referee to sit with the Board in order to end its deadlock and dispose of United's motion to dismiss the appeal.
Plaintiffs advised that there was no new evidence or new matter not in the original transcript and record furnished the referee and, without further hearing, the Board met with Wolff who presented a draft order and opinion prepared by him, without prior consultation with the Board or any of its members, based on the record furnished him. The Board unanimously accepted the referee's determination that plaintiffs' asserted grievance "goes to the issue of the placements in the 1954*fn9 list, the relative positions there established being unchanged since that time. As this is the dispute at issue, and as this dispute has already been decided on the merits in a decision which became final and ...