ALI-ABA Course of Study Airline and Railroad Labor and Employment Law: A Comprehensive Analysis June 9-11, 2011 Washington, D.C.
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1 2295 ALI-ABA Course of Study Airline and Railroad Labor and Employment Law: A Comprehensive Analysis June 9-11, 2011 Washington, D.C. Single Carrier Determinations: Two Paradigms and Doctrinal Tension-supplemental material By Edgar N. James Darin Dalmat Robert Holt James & Hoffman, P.C. Washington, D.C.
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3 2297 I. INTRODUCTION SINGLE CARRIER DETERMINATIONS: TWO PARADIGMS AND DOCTRINAL TENSION EDGAR JAMES, DARIN DALMAT and ROBERT HOLT James & Hoffman, P.C. April 27, 2011 Single carrier, or single transportation, system cases arise in two quite different contexts. The first, and most common, arises out of a merger. It triggers a more formal analysis of the extent to which the carriers have combined operations and are holding themselves out as a single transportation system. The second situation arises when one company, whether or not a carrier, controls more than one carrier and operates them as separate, or nominally separate, entities, usually for labor relations, rather than purely operational, purposes. The second situation requires a functional analysis in which a demonstration of control, and most importantly labor relations control, is central. The doctrinal confusion exists because the NMB case law was principally developed in the merger context where the analysis focuses more on the degree of operational integration and how the carriers hold themselves out to the public. It is thus more of a formal than a functional analysis, although in fairness to the NMB, it has stated that it may pierce the corporate veil in the appropriate case. Delta/Western 14 NMB 291, 301 n.3 (1987), citing Republic Airlines/Hughes Air Corp., 8 NMB 49 (1980). In either case, a single carrier finding by the National Mediation Board defines a "craft or class" comprising previously separate employee groups of nominally distinct carriers. Those employees may then elect a single representative. See Flagship/Executive/Wings West/Simmons/AMR Eagle/AMR Corp./ American, 22 NMB 331, 430 (1995); Precision Valley/Valley Flying Serv. (Northeast Express), 20 NMB 619, (1993); Guilford Rail Div. (Maine Cent./Portland Terminal/Boston & Maine/Springfield Terminal), 18 NMB 413 (1991) (finding merger over management objection when three wholly-owned subsidiaries leased lines to fourth to avoid labor agreements); Seaboard System-Clinchfield Line, 11 NMB 217 (1984) (finding single carrier based on common ICC reporting, common management of labor relations and common payroll, despite employer objection, separate seniority rosters and separate labor agreements); see also Fox Valley & Western Ltd., 21 NMB 112 (1994) (finding single "merged" carrier with continuing certifications where carrier argued that NMB should dismiss union premerger application as premature and that it was a "new" carrier not subject to previous certifications); British Airways/British Caledonian Airways, 16 NMB 17, (1988) (finding that BCA employees were employees of BA for representation purposes on date of merger, and not following carrier-advocated "transition period"); Midway, 14 NMB 447 (1987) (finding merger pursuant to AFA petition one month prior to date advocated by carrier); but see Allegheny/Piedmont/Potomac Air/PSA, 29 NMB 160 (2002) (finding insufficient evidence of operational integration). A single transportation finding does not fully unify labor relations in the second type of case where the carriers are operated separately, as existing contracts remain in place. It does, however, result in a single employee representative and thus curtail the ability of management to leverage one carrier s craft against the other carrier s. 1
4 2298 II. SINGLE CARRIER DOCTRINE The Board adopted standards forming the basis of its current single carrier analysis in Republic Airlines/Hughes Air, 8 NMB 49 (1980). Noting the numerous parent-subsidiary and brother-sister relationships among separate carriers in the rail industry, the Board recognized that the resulting pattern of representation had "led to uneven representation, duplication of effort, and confusion.... In the absence of compelling facts, judged in each instance on a case-by-case consideration of the situation presented, the Board does not intend to foster a similar pattern of representation in the airline industry." Republic, 8 NMB at In Trans World Airlines/Ozark, 14 NMB 218, (1987), the Board set out in detail the factors that it has applied in subsequent single carrier proceedings, making "more specific investigation" as required by the facts of each case. Representation Manual, (listing factors as some indicia of a single transportation system ). The TWA/Ozark factors are: Are the two systems held out to the public as a single carrier? Is a combined schedule published? How does the carrier advertise its services? Are reservation systems combined? Are tickets issued on one carriers' stock? Do signs, logos and other publicly visible indicate one carrier or more? Are personnel with public contact held out as employees of a single carrier? Are there indications of separate existence on planes and equipment? Have carriers combined their operations from a managerial and labor relations perspective? Are labor relations and personnel functions handled by one carrier? Are there common management, common corporate officers and interlocking Board of Directors? Is there a combined workforce? Are separate identities maintained for corporate and other purposes? The NMB routinely applies these factors giving different weight to the factors depending on the circumstances. See, e.g., US Airways/America West Airlines, 33 NMB 339 (2006); Burlington Northern Santa Fe, 32 NMB 163 (2005); Maryland & Pennsylvania R.R./Yorkrail/York Ry. Co., 29 NMB 444, (2002); Allegheny/Piedmont/Potomac/PSA Airlines, 29 NMB at 160; Mountain Air Express/Air Wis. Airlines Corp., 26 NMB 185 (1999); AirTran Airways/AirTran Airlines, 25 NMB 429, (1998); Flagship/Executive/Wings West/Simmons/AMR Eagle/AMR Corp./ American, 22 NMB at 424; Precision Valley/Valley Flying Serv. (Northeast Express), 20 NMB 619 (1993); USAir/USAir Shuttle, 19 NMB 388 (1992); Allegheny/ Pennsylvania, 19 NMB 362 (1992); SAHSA/TAN, 19 NMB 17 (1991); Command Airways/Nashville Eagle, 18 NMB 372 (1991); Air Wisconsin/Aspen Airways, 18 NMB 336 (1991); Metroflight/Chaparral, 18 NMB 56 (1990); USAir/Piedmont Aviation, 16 NMB 412 (1989); Federal Express/Flying Tigers, 16 NMB 433 (1989); British Airways/British Caledonian Airways, 16 NMB 17 (1988); Alaska/Jet America, 15 NMB 42 (1987); American/AirCal, 14 NMB 379 (1987); Delta/Western, 14 NMB 291 (1987). 2
5 2299 A. Formalism in the Merger Case In most cases the NMB focuses on whether the airlines hold themselves out either to the public, the government, or both as single airlines. Northwest Airlines/Delta Air Lines, 37 NMB 88, 100 (2009); US Airways/America West Airlines, 35 NMB 65, 77 (2008); Freedom Airlines, 30 NMB 263 (2003); AirTran Airlines/AirTran Airways, 25 NMB 429, (1998); and Allegheny/Piedmont, 19 NMB 362, 369 (1992). In conducting this type of analysis, the TWA/Ozark factors often concern the aesthetic or marketing choices made by management at the various airlines involved. In Northwest Airlines/Delta, 37 NMB 88, 100 (2009), the NMB devoted considerable attention to the operational integration of the two airlines. In determining at what point the merging carriers became a single transportation system, the Board considered that Delta had announced one new brand for the combined Carrier s club rooms and launched a new monthly in-flight magazine for placement on the combined Delta and Northwest fleet, and went through a variety of other formal factors such as common signage and common uniforms. The "holding out" factors predominate in the TWA/Ozark criteria, even though the transition in livery and signage frequently follows the operational integration. See American Airlines/TWA, 29 NMB at 210 (livery not scheduled to be converted for over a month following the ruling); American Airlines/Reno Air, 26 NMB at 467 (1999); AirTran Airlines/AirTran Airways, 25 NMB at 433 (livery not scheduled to be "conformed" for several months following date of operational merger); USAir/Piedmont, 16 NMB at 421 (livery not scheduled for change for years after date that it became a single employer and pilot uniforms were scheduled for replacement "on an attrition replacement basis ). In these analytically formal cases, the Board finds a single transportation system only when there is substantial integration of operations[.] Northwest Airlines/Delta, 37 NMB at 99; American Airlines/Reno Air, 26 NMB 467, (1999). Recently, the Board has frequently used the formulation: "a single transportation system only [exists] when there is substantial integration of operations, financial control, and labor and personnel functions." Northwest Airlines/Delta Air Lines, 37 NMB 88, 99 (2009); US Airways/America West Airlines, 35 NMB 65, 76 (2008); Florida N. R.R., 34 NMB 142 (2007); GoJet Airlines, LLC/ Trans States Airlines, Inc., 33 NMB 24 (2005); Allegheny/Piedmont, 31 NMB 528, 537 (2004); Maryland & Pennsylvania R.R./Yorkrail/York Ry. Co., 29 NMB 444, 452 (2002); Portland & Western R.R., 31 NMB at 78; Mesa/CCAIR/Air Midwest, 29 NMB at 359, 377 (2002); American Airlines/TWA, 29 NMB 201, 211 (2002); American Airlines/TWA, 29 NMB 223, 234 (2002); Allegheny/Piedmont/Potomac Air/PSA, 29 NMB at 171. But "substantial integration" does not require a combined workforce. USAir/USAir Shuttle, 19 NMB at (the two groups of employees remained completely separate); SAPADO I, 19 NMB 198 (1992); Guilford Rail Div. (Maine Cent./ Portland Terminal/ Boston & Maine/ Springfield Terminal), 18 NMB 413 (1991); Missouri Pac. R.R. (Union Pac.), 15 NMB 95 (1988); Seaboard System-Clinchfield Line, 11 NMB 217 (1984). Even in the context of a completed merger, the employees are frequently fenced and work separately for significant periods of time. See, e.g., USAir/Piedmont Aviation, 16 NMB at 417; USAir/PSA, 15 NMB at ; Alaska Airlines/Jet America, 15 NMB at 46-48; Delta Airlines/Western Airlines, 14 3
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