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Roland v. Air Line Employees Association

January 29, 1985

RONALD ROLAND, INDIVIDUALLY AND AS CHAIRMAN OF LOCAL COUNCIL 1, ET AL., PLAINTIFFS-APPELLANTS,
v.
AIR LINE EMPLOYEES ASSOCIATION, INTERNATIONAL AND REPUBLIC AIRLINES, INC., DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 84 C 6168 -- Thomas R. McMillen, Judge.

Author: Coffey

Before ESCHBACH and COFFEY, Circuit Judges, and DUPREE, Senior District Judge.*fn*

COFFEY, Circuit Judge. The plaintiffs-appellants, Ronald Roland, et al., appeal the denial of their motion for preliminary injunctive relief to dissolve the trusteeships imposed upon eleven Local Councils of the Air Line Employees Association, International ("ALEA"), by Victor Herbert, president of the ALEA. We affirm.*fn1

I

The ALEA is the certified bargaining representative for employees of various national and regional airlines, including some 6,200 clerical, office, fleet, and passenger service employees of Republic Airlines.*fn2 The ALEA is structured into thirty-three Local Councils and each Council is composed of employees from a single airlines within a defined geographical area.*fn3 The members of each Local Council elect a chairman who presides over the local union affairs and who automatically serves on the ALEA's thirty-three member Board of Directors. The Local Council chairmen, in turn, choose a president who server a five-year term as the ALEA's chief executive officer. The employees of Republic Airlines account for approximately three-quarters of the ALEA's total membership and twenty-one of the ALEA's thirty-three Local Councils consist exclusively of Republic employees. The chairmen of Republic's twenty-one Local Councils form the Republic Master Executive Council and five of those chairmen compose the Negotiating Committee for the Master Executive Council. The named plaintiffs in this lawsuit are eleven members of the twenty-one member Republic Master Executive Council.

The record reveals that Republic Airlines incurred financial losses at an average rate of $37 million annually during the three year period from January 1, 1980 thru December 31, 1982. Republic lost an additional $115 million during the first three fiscal quarters of 1983. Confronted with this disastrous financial information, the ALEA and Republic Airlines agreed, on August 31, 1983, to amend their existing collective bargaining agreement, reducing employee wages by fifteen percent for the nine-month period from September 1, 1983 thru May 31, 1984. This concessionary amendment was approved by the Master Executive Council and ratified by the affected ALEA membership of Republic employees. Soon thereafter, the Master Executive Council obtained the ALEA's approval to join with four of the five other unions representing Republic employees and organize the Coalition of Unions of Republic Employees ("CURE"). In addition to the Master Executive Council, the member unions of CURE included the Air Line Pilots Association, the Association of Flight Attendants, the American Airways Supervisors Association, and the Transport Workers Union. The only union representing Republic employees that refused to join CURE was the International Association of Machinists. The purpose of CURE was to promote joint discussions between the Republic management and the various union representatives concerning the feasibility of an employee stock ownership plan. The labor organizations realized that further concessions were necessary if Republic employees were to retain their jobs and, according to the CURE leadership, an employee stock ownership plan represented the most advantageous form of concession. Following an exchange of proposals and counterproposals, Republic submitted an offer to CURE in the spring of 1984 calling for the issuance of 5 1/2 million shares of Republic common stock to the Republic employees. CURE rejected the offer.

Despite CURE's rejection, the Air Line Pilots Association, the American Airways Supervisors Association, the Association of Flight Attendants, and the non-CURE member International Association of Machinists, negotiated separate concessionary agreements with Republic between the months of March and June 1984. These agreements assured the union members of continued employment and, at the same time, provided Republic with the capital necessary to continue daily operations. Moreover, each agreement included an employee stock ownership plan that essentially incorporated the terms of the 5 1/2 million share offer that Republic proposed earlier in the spring of 1984. As of June 1984, only the ALEA, representing some 6,200 of Republic's 12,000 employees' and the Transport Workers Union, representing some 70 Republic employees, had failed to approve a further concessionary agreement with Republic. Even though three of the five CURE member labor organizations had negotiated individual agreements with Republic, the Master Executive Council sought to continue joint negotiations with the Transport Workers Union under the banner of CURE. The ALEA president, Victor Herbert, was of the opinion that CURE, now representing only two labor organizations, no longer served a useful purpose. Herbert thus directed that any further negotiations with Republic on behalf of the clerical, office, fleet, and passenger service employees would be conducted by the certified collective bargaining representative of those employees, the ALEA.

On June 22, 1984, the ALEA notified the Master Executive Council that a negotiating meeting had been scheduled in Washington, D.C. for Sunday, June 1, 1984, between the ALEA, the Negotiating Committee of the Master Executive Council, and Republic Airlines. The Master Executive Council responded that "due to flight schedule problems" they would be unable to assemble in Washington, D.C. on the first day of July. The Council proposed, instead, that a joint session be held with the Transport Workers Union the following day, July 2, 1984, in Washington, D.C. The meeting was not rescheduled and on July 1, 1984, the ALEA entered into an agreement with Republic to extend the period of the fifteen percent employee wage reduction until December 31, 1986, provide Republic with an additional eight percent reduction in labor costs through work rule changes to be agreed upon in future negotiations, and accept Republic's offer of an employee stock ownership plan. The ALEA agreement contained essentially the same terms as the concessionary agreements previously negotiated between Republic and the Air Line Pilots Association, the American Airways Supervisors Association, the Association of Flight Attendants, and the International Association of Machinists. The agreement expressly provided that it was "subject to ratification by members of the Association, which the Association agrees to promptly seek and recommend."

On Friday, July 6, 1984, the ALEA, acting pursuant to Article II(g) of the ALEA Bylaws submitted the agreement to the affected Republic employees for ratification.*fn4 That same day, a majority of the Republic Master Executive Council agreed to send a letter to the ALEA president, Victor Herbert, claiming that the ratification procedures violated Article II(h) of the ALEA Bylaws as the concessionary agreement had not been approved by the Master Executive Council.*fn5 A majority of the Master Executive Council also approved the calling of a special meeting of the ALEA Board of Directors, pursuant to Article IX, section 2 of the ALEA Bylaws, to adopt a clarification of the ALEA Bylaws that all contract modifications or amendments be approved by the Master Executive Council and its Negotiating Committee before submission to the affected ALEA membership for ratification.*fn6 The express purpose of the Board meeting was to retroactively apply the clarification to the July 1 agreement, and thereby invalidate the concessionary bargain reached between the ALEA and Republic Arlines.

The following Monday, July 9, 1984, the Master Executive Council, through its chairman Robert Haskin, sent a letter to president Herbert informing him that "Members of this and other MEC's comprising a majority of the Association's Board of Directors hereby call a special meeting" to be held July 17, 1984, in Memphis, Tennessee. In addition, chairman Haskin informed the ALEA Board members that "a majority [of the Board of Directors] has requested [a special meeting] by letter or telegram as required by [the ALEA] constitution and by-laws." An examination of the record reveals, however, that as of July 9, 1984, Haskin had, in fact, received written confirmation from only fifteen of the thirty-three Local Council chairmen. Haskin obtained written approval for the Board of Directors meeting from thirteen chairmen of Local Councils representing Republic employees (including all of the named plaintiffs) and the chairman of one Local Council representing employees of Aspen Airways. In addition, Haskin received a telex confirmation, in favor of the Board of Directors meeting, from one Local Council chairman of Frontier Airlines on July 8, 1984, subsequently revoked by telex two days later. These fifteen confirmations, as of July 9, 1984, clearly did not satisfy the ALEA Bylaw requirement that a majority of the thirty-three member ALEA Board of Directors approve the calling of a special Board meeting. Despite the lack of written approval from a majority of the ALEA Board of Directors, Haskin and the other named plaintiffs insisted that the Board meeting proceed as scheduled on July 17, 1984.

During the week of July 9, 1984, the ALEA initiated negotiations with the Master Executive Council to resolve the intra-union dispute over the July 1 concessionary agreement between the ALEA and Republic Airlines. The parties remained at an impasse and as of Friday, July 13, 1984, the plaintiffs stood firm in their position to proceed with the unauthorized Board of Directors' meeting scheduled for the following Tuesday, July 17, 1984. President Herbert realized, of course, that a majority of the ALEA Board members had not approved the July 1 special meeting, as required by Article IX, section 2 of the ALEA Bylaws. Moreover, president Herbert was aware of the fact that the intended purpose of the unauthorized Board meeting was to invalidate the July 1 agreement that was at that time, pending before the affected ALEA membership for ratification. In view of the plaintiffs' insistence to proceed with the unauthorized Board meeting, president Herbert believed that an emergency of sufficient importance existed to necessitate the exercise of his authority to place certain Local Councils into trusteeship, pursuant to Article I, section 13(a) of the ALEA Bylaws. Thus, on Friday afternoon, July 13, 1984, president Herbert imposed trusteeships upon the eleven Local Councils chaired by the named plaintiffs in this lawsuit. According to Article I, section 13(c) of the ALEA Bylaws, when a Local Council is placed in trusteeship, the functions of the chairman "shall terminate and such functions shall pass to the trustee."

Some five days later, on July 18, 1984, the plaintiffs filed an action under the Labor-Management Reporting and Disclosure Act, 29 U.S.C. ยง 401 et seq. (1982), in the United States District Court for the Northern District of Illinois, seeking, inter alia, a temporary restraining order and preliminary injunctive relief to dissolve the eleven trusteeships and impound the ratification ballots. The plaintiffs further requested that the court prohibit the ALEA from implementing the July 1 agreement until such time as it is ratified by the Master Executive Council. According to the plaintiffs, the ALEA was:

"depriving the plaintiffs and those Republic employees they represent of their right under the ALEA Bylaws to act through the ALEA Board of Directors to enforce the [Master Executive Council] ratification requirement of Article II(h) of the ALEA Bylaws, and of their right to participate fully and fairly in the political process of the membership ratification referendum which the [ALEA] initiated."

On July 19, 1984, the district court denied the plaintiffs' motion for a temporary restraining order and scheduled a status hearing for July 23, 1984, on the plaintiffs' motion for preliminary injunctive relief. Due to time constraints and the expedited nature of this case, the plaintiffs proceeded with their motion for preliminary injunctive relief on the limited issue of "whether a legitimate emergency existed which justified defendant [ALEA] in imposing without a prior hearing the union trusteeships here challenged by the plaintiffs." Following an evidentiary hearing, the district court found that "the Negotiating Committee absented themselves from the meeting of July 1st without good reason, that they had adequate notice, that they could have attended, and that the reasons advanced by [the plaintiffs] were merely an excuse for not participating." The district court further found that because the July 1 agreement was similar to the individual concessionary agreements entered into between Republic Airlines and the Air Line Pilots Association, the American Airways Supervisors Association, the Association of Flight Attendants, and the International Association of Machinists, "the July 1st agreement was a bona fide agreement, negotiated in good faith, and not a "sweetheart" contract." Additionally, the district court found that "at no time did plaintiff Haskin have written authorizations from a majority of the 33-member ALEA Board of Directors as required, and that, in stating to the ...


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