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Hannan v. Watt





Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.


Plaintiffs, both of whom are Republic Airlines (Republic) pilots, brought this action to enjoin the Chicago law firm of Cotton, Watt, Jones & King (Cotton Watt) from continuing to represent Northwest Orient Airlines (Northwest) pilots during the Airlines Pilots Association (ALPA) seniority list integration proceedings stemming from the merger of Northwest and Republic. Cotton Watt had formerly represented plaintiffs and other pilots, prior to their professional association with Republic, in similar seniority list integration proceedings and other matters allegedly related to their current representation of the Northwest pilots. Plaintiffs fear that such representation may lead to the disclosure of confidences reposed by them on Cotton Watt during the course of their previous attorney-client relationship and that this information could be used against them during the present proceedings.

Following a hearing on plaintiffs' petition for injunctive relief, the trial court expressly found that while plaintiffs had shown that the former and present proceedings were similar in nature, they had failed to establish that the information communicated to Cotton Watt during their past dealings was substantially related to the current representation of Northwest pilots. Plaintiffs' petition for preliminary injunction was thereby denied and their complaint dismissed. On appeal, plaintiffs argue that (1) the trial court's finding was contrary to the manifest weight of the evidence and an abuse of discretion; and (2) the trial court applied an erroneous legal standard in determining whether a substantial relationship existed between the prior and current representations.

We affirm.

On February 14, 1986, Cotton Watt was retained by Northwest pilots to represent them in seniority list integration proceedings relating to the impending merger of Northwest and Republic Airlines. These proceedings have as their purpose to combine the Northwest and Republic pilots' seniority lists into a single list for the newly merged airline. Seniority ranking is considered extremely important in the evolution of a pilot's professional career since it directly affects such rights as amount of compensation, kind of aircraft flown, home base, and the position on the aircraft (e.g., captain, first officer, etc.).

The integration process, governed by ALPA policy, requires the compilation and certification of certain specified employment data pertaining to the pilot groups. This information, which includes pilots' dates of hire, employment dates, seniority rankings, furlough times, and leaves of absences, is then exchanged between the pilot groups involved in the merger. Additional information regarding the companies' financial standing is extracted from pre-existing public sources, such as the airlines' annual reports and filings with the Securities Exchange Commission, the Civil Aeronautics Board, or the Department of Transportation. All of the data necessary to integrate pilot seniority lists of merging airlines is therefore either publicly available or required by ALPA policy to be produced in the proceedings.

Having gathered all pertinent information, the parties next enter a period of negotiation, mediation, and, if necessary, arbitration to resolve any disputes concerning the method and manner of integrating the seniority lists. During this process, exhibits and other evidence may be presented by the respective attorneys in support of their proposals. In their submitted proposals the attorneys advocate the method of integration that best serves their clients' interests, protects their expectations, and provides them with the most favorable seniority treatment. Since a direct correlation has been found to exist between an airlines' financial condition and its pilots' career expectations, the financial standing of the subject airlines typically provides the basis with which to determine the relative expectations of the respective pilot groups absent a merger. Based on this and other factors, each competing group thus attempts to persuade the arbitrator that their pilots' career expectations are higher than the expectations of pilots from the other merging airlines and that they should receive preferential ranking in the merged seniority list.

Once a merger is realized the new emerging company's financial standing and other data relevant to pilots' career expectations are certain to change dramatically. For this reason, any information in connection with an airlines' pilot seniority list resulting from a prior merger becomes inconsequential to the negotiations or arbitration process of a subsequent merger. The relevant financial history of an airline vis-a-vis its pilots' expectations, for purposes of these proceedings, therefore extends back only as far as the company in question has existed as an entity.

Republic Airlines came into existence as a result of two mergers. In early 1980, North Central Airlines and Southern Airways merged to form Republic. Thereafter, Republic acquired and merged with Air West. Air West was, in turn, the product of an earlier merger between Bonanza, West Coast, and Pacific Airlines.

Cotton Watt's professional relationship with plaintiffs, now Republic pilots, extends as far back at 1967. Plaintiff Lawlus was then a captain at Bonanza Airlines. That year, Bonanza pilots retained the law firm of Cotton Watt to represent them in seniority lists integration proceedings growing out of the merger of Bonanza Airlines, West Coast Airlines, and Pacific Airlines. As Lawlus was chairman of the Bonanza pilot merger committee, Cotton Watt worked closely with him and other pilots during the course of these proceedings. At that time, certain vital, though not confidential, information relating specifically to the three competing pilot groups was collected and analyzed for purposes of presenting it as evidence to the arbitrator. This information included financial data derived from such public sources as SEC filings, Civil Aeronautics Board traffic and financial statistics, newspapers, brokerage houses, and periodicals.

In 1972, Cotton Watt was retained by a group of Air West pilots to represent their interests and defend the 1968 arbitration award resulting from the Bonanza-West Coast-Pacific merger. The award was being challenged by another group of Air West pilots who were displeased with the final outcome of the integrated pilot seniority list. All data presented and reviewed during the course of this representation was relevant only to the airlines involved in the 1968 merger.

Sometime in the mid-1970's, Air West became Hughes Air West. In 1979, while plaintiff Lawlus was an employee of that company, certain Hughes Air West pilots retained the services of Cotton Watt to investigate the possibility of acquiring company stock through an employee stock ownership plan. While the acquisition contemplated by the pilots never materialized, Cotton Watt was exposed to certain financial information relating to Hughes Air West during the course of their representation. All of this information, however, was not confidential as it derived from publicly available sources.

In 1979, plaintiff Hannan was a pilot with North Central Airlines. Cotton Watt, who had been on retainer with that company since 1970, was called upon at that time to represent North Central pilots in the integration proceedings in connection with the merger between North Central and Southern Airways. Hannan served as merger representative for the North Central pilots. During the arbitration process evidence was presented on the relative financial strength of the companies, the pilots' comparative check-out times and other matters concerning the career expectations of the respective pilots absent a merger. All this information was gathered from various public sources and exchanged between the parties during the proceedings.

In 1985, plaintiff Lawlus contacted Cotton Watt to inquire about certain aspects of the termination of Republic pilots' retirement plan. Cotton Watt complied with this request for information by sending Lawlus a letter delineating his rights as a plan beneficiary. The firm also advised Lawlus that, in the event he was interested in pursuing a claim relating to the ...

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