American Airlines, Inc. v. Allied Pilots Ass'n

53 F. Supp. 2d 909, 161 L.R.R.M. (BNA) 2795, 1999 U.S. Dist. LEXIS 9895, 1999 WL 450897
District Court, N.D. Texas·Decided June 23, 1999·No. 1:99-cv-00025·Published·Cited by 6 cases

Opinion

MEMORANDUM OPINION (CONTAINING FINDINGS OF FACT AND CONCLUSIONS OF LAW) AND CONTEMPT AND DAMAGE ORDER

KENDALL, District Judge.

On February 13, 1999, the Court granted Plaintiff American Airlines, Inc.’s (“American”) motion for civil contempt of court 1 against Defendants Allied Pilots Association (“APA”), 2 Union president Richard LaVoy (“LaVoy”), and Union vice-president Brian Mayhew (“Mayhew”). 3 These Defendants were held in civil contempt of court, after an evidentiary hearing, for violating a Temporary Restraining Order entered on February 10, 1999 (the “TRO”). 4

As will be discussed more fully below, this Court has no choice but to hold Defendants APA, LaVoy, and Mayhew responsible for their contemptuous actions in violating this Court’s TRO and to hold them accountable for the financial loss their actions caused. By their deliberate and contemptuous actions, these Defendants inflicted millions of dollars in financial losses on Plaintiff American and needlessly disrupted the lives of hundreds of thousands of travelers. Many of these persons suffered financial losses as well, and none had anything to do with this dispute. Furthermore, they had no notice of this action so that they could make realistic alternative travel arrangements. 5

Under the facts and applicable law, this Court must award to American the compensatory damages which are attributable to these Defendants’ contemptuous actions. This Court therefore awards American $45,507,280.00 in such compensatory damages, and Defendants APA, LaVoy, and Mayhew are held jointly and severally liable for these damages. Appropriate post-judgment interest is also awarded to American.

*914 A. BRIEF BACKGROUND

This drama began with the acquisition of Reno Air, Inc. (“Reno”), a relatively small air carrier, by American. On or about November 19, 1998, American announced its intention to purchase the stock of Reno through a tender offer initiated by American’s wholly owned subsidiary, Bonanza Acquisitions. 6 On or about December 9, 1998, American received approval from the Department of Justice for the stock acquisition. 7 Thereafter, Bonanza Acquisitions acquired approximately 84.5% of the common stock and 99% of the preferred stock of Reno. 8 Following the Reno acquisition, American advised APA of its intent to operate Reno separately for a transition period because there were legal, operational, and business constraints that prevented integration instantaneously. 9 This proposed procedure was consistent with American’s acquisition of Air Cal in 1987, which entailed American operating Air Cal as a separate carrier for a transitional period during which American and APA successfully negotiated an agreement providing for the integration of the pilot workforces. 10 However, despite the parties’ prior course of dealing on this Air Cal acquisition, the APA did not agree with American’s plan of action with respect to Reno. Rather, the APA took the position that American’s operation of Reno with pilots not on American’s Pilot Seniority List, albeit on a temporary basis, was in direct violation of the Recognition and Scope Clause of Section 1 (the “Scope Clause”) 11 of the current collective bargaining agreement (the “CBA”) in effect between American and the APA. 12 The APA took this position even though the language of the Scope Clause of Section 1 of the CBA in effect now is substantially identical to the Recognition and Scope language which bound American and APA at the time of the Air Cal acquisition. 13 Although the parties conducted discussions about the issues raised by the merger, those discussions were not successful in reaching a resolution regarding a number of important items. 14 Despite American’s willingness to do so, the APA declined to adhere to their written agreement with regard to a remedy for an alleged violation of the Scope Clause and compel expedited binding arbitration under the CBA. 15 Section l.L. of the current CBA contains a procedure for expediting the arbitration of grievances arising under the Scope Clause of Section l. 16

*915 Instead of engaging American in binding arbitration over the Scope Clause dispute before a neutral arbitrator with experience in airline industry disputes as they agreed to do in their contract, a large number of APA’s pilot members began an unannounced sick-out of massive proportions. 17 Instigated by the APA and its current leadership, this sick-out entailed having pilots adding their names to the sick list in overwhelming numbers. 18 This illegal job action resulted in a tremendous number of flight cancellations due to lack of crew, 19 costing American millions of dollars in revenues, 20 and impacting hundreds of thousands of passengers throughout the country in the process. 21

The sick-out began on February 6, 1999, and from February 6-9, 1999, over 1600 American flights had been canceled due to lack of crew. 22 On February 10, 1999, American came to this Court and sought a Temporary Restraining Order to end the sick-out. 23 After spending the better part of a day hearing from both American and the Defendants on the pertinent issues, 24 this Court signed the TRO at approximately 4:00 p.m. on February 10, 1999. 25 As with most such disputes, the action of signing the TRO should have brought an end to the transportation disruption, but sadly it was only the beginning.

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American Airlines, Inc. v. Allied Pilots Ass'n, 53 F. Supp. 2d 909, 161 L.R.R.M. (BNA) 2795, 1999 U.S. Dist. LEXIS 9895, 1999 WL 450897 (N.D. Tex. 1999).

53 F. Supp. 2d 909 (American Airlines, Inc. v. Allied Pilots Ass'n) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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