Allied Pilots Ass'n v. AMR Corp. (In Re AMR Corp.)

471 B.R. 51, 2012 WL 1495343, 2012 Bankr. LEXIS 1945, 56 Bankr. Ct. Dec. (CRR) 102
United States Bankruptcy Court, S.D. New York·Decided April 20, 2012·No. 13-36919·Published·Cited by 2 cases

Opinion

MEMORANDUM OF DECISION

SEAN H. LANE, Bankruptcy Judge.

In the above-captioned adversary proceeding, the Allied Pilots Association (the “APA” or “Plaintiff’) seeks a declaratory judgment that its most recent collective bargaining agreement (the “CBA”) with debtor American Airlines, Inc. (“American”) expired by its terms on May 1, 2008. The APA argues, therefore, that this expired contract cannot be rejected under Section 1113 of the Bankruptcy Code, which permits a debtor to reject a collective bargaining agreement under certain circumstances. American disagrees. It contends that the parties’ CBA did not expire but rather became “amendable” by virtue of the Railway Labor Act, 45 U.S.C. § 151, et seq. (the “RLA”), which leaves the central terms of the parties’ last agreement in place while they pursue the extensive negotiating path contemplated by the statute. Consistent with these “status quo” provisions of the RLA, the parties here have, in fact, continued their relationship under the terms of their most recent CBA.

American filed a motion to dismiss the adversary compliant. The APA opposed the motion and simultaneously moved for summary judgment. The parties agree that there are no material facts in dispute and that the current issue before the Court is a purely legal one. Following the reasoning of the Second Circuit and the vast majority of other circuit courts, the Court finds that the parties’ CBA has not expired but rather became amendable under the RLA. Accordingly, the Court concludes that the CBA here is subject to Section 1113. The Court, therefore, denies the APA’s motion for summary judgment and grants American’s motion to dismiss.

BACKGROUND

On November 29, 2011, AMR Corporation (“AMR Corp.”), American (together *54 with AMR Corp., the “Debtors” or “Defendants”) and certain of their subsidiaries filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code.

On February 28, 2012, the APA, the collective bargaining representative of approximately 10,000 American pilots, filed a complaint (the “Complaint”) seeking entry of a declaratory judgment against the Debtors pursuant to 28 U.S.C. § 2201. The Complaint alleges that the CBA between American and the APA, effective May 1, 2003, expired pre-petition on May 1, 2008 pursuant to a duration clause in the agreement. That clause provides:

This Agreement shall become effective May 1, 2003, except as otherwise dated herein, and shall continue in full force and effect until May 1, 2008, and shall renew itself without change until each succeeding May 1 thereafter, unless written notice of intended change is served in accordance with Section 6, Title 1, of the Railway Labor Act, as amended, by either party hereto at least sixty (60) days prior to May 1, 2008, or May 1 of any subsequent year.

Section 26.C of the CBA, Ex. 1 to Plaintiffs Statement of Material Facts as to Which There is No Genuine Issue [ECF No. 15] (“Plaintiffs Statement of Material Facts”); Complaint ¶ 9. The APA’s Complaint seeks a declaration that (1) there is no binding collective bargaining agreement to “reject” under Section 1113(c) of the Bankruptcy Code; and (2) the Debtors may not “reject” or change any of the APA pilots’ employment conditions that arise out of this expired CBA.

The parties agree that a notice of intended change, as contemplated by Section 26. C of the CBA, was properly served under Section 6 of the RLA. More specifically, American issued a letter on July 21, 2006, stating that it wished to exercise its right to “commence negotiations to make changes in rates of pay, rules and working conditions for flight deck crewmembers covered by the current Agreement.” Deck of Neil Roghair ¶ 9, Ex. 1, Plaintiffs Statement of Material Facts as to Which There is No Genuine Issue [ECF No. 15] (“Roghair Decl.”); see also Complaint ¶ 10.

The parties also do not dispute that, after the Section 6 notice was served, they entered into negotiations for a successor agreement pursuant to Section 26.D of the CBA. Section 26.D of the CBA states that “[a]t any time following May 1, 2006, but prior to May 1, 2008, with sixty (60) days prior written notice by either party, the parties will commence negotiations in accordance with Section 6, Title I of the Railway Labor Act, as amended.” Complaint ¶ 9.

Pursuant to Section 5 (First) of the RLA, the parties have mediated their labor dispute before the National Mediation Board (“NMB”) and that process is ongoing. See Complaint ¶ 11; Roghair Deck ¶ 18 (stating that the NMB mediation “continues to date”); Debtors’ Counter-statement ¶ 20 (noting that the NMB is “continuing to mediate in negotiations” concerning the CBA). 1 On March 8, 2012, the APA sent formal written notice to the NMB of their intention to accept a proffer of final and binding arbitration for settlement of a new agreement and to request that the NMB make such proffer of arbitration promptly. See Ex. 4 to the Ro-ghair Deck; 45 U.S.C. § 60 (when NMB mediation fails to resolve a labor dispute under the RLA, parties may elect either *55 binding arbitration or to seek resolution before the President of the United States who may establish a board to, among other things, “investigate promptly the facts as to the dispute and make a report thereon to the President.”). Section 5 (First) of the RLA states that the NMB, as part of its efforts to “bring about an amicable settlement through mediation,” may, as a last resort, “endeavor as its final required action ... to induce the parties to submit their controversy to arbitration.” 45 U.S.C. § 155. The NMB, however, has yet to complete this “final required action” by making a proffer of arbitration. Complaint ¶ 11.

As the parties here remain in negotiations, the terms of the CBA remain in place consistent with Section 6 of the RLA, which provides that the “rates of pay, rules or working conditions” shall not be altered by the carrier until the controversy has been “finally acted upon ... by the [NMB].” 45 U.S.C. § 156.

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Allied Pilots Ass'n v. AMR Corp. (In Re AMR Corp.), 471 B.R. 51, 2012 WL 1495343, 2012 Bankr. LEXIS 1945, 56 Bankr. Ct. Dec. (CRR) 102 (N.Y. 2012).

471 B.R. 51 (Allied Pilots Ass'n v. AMR Corp. (In Re AMR Corp.)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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