AIR LINE PILOTS v. O'NEILL

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Argument of Laurence E. Gold

Chief Justice Rehnquist: We'll hear argument first this morning in No. 89-1493, the Air Line Pilots Association, International v. Joseph O'Neill.

Mr. Gold.

Mr. Gold: Thank you, Mr. Chief Justice, and may it please the Court:

This case concerns the duty of fair representation this Court has implied from the Railway Labor Act and the National Labor Relations Act.

In particular it concerns the end of a long and bitter strike well-chronicled in the press between the Air Line Pilots Association and Continental Airlines and its Chief Executive, Mr. Lorenzo.

The strike began in '83 after... 1983 after Continental went into bankruptcy and abrogated the collective bargaining agreement between the parties.

And the events here concern the situation in August, September, and October of 1985.

At that point, the union was faced with the following facts of life.

One, despite substantial expense and unstinting effort, the union had failed to significantly affect Continental's business.

Secondly, Continental at that point had 1,600 working pilots, either permanent replacements or crossovers, and there were 1,000 strikers.

Third, Continental, in recognition of that, had withdrawn recognition of the union.

Fourth, Continental had put out what was called its 85-5 vacancy bid which would have tied up all the most desireable jobs in the air line, the captain and first officer jobs, for the foreseeable future.

And finally, insofar as strikers had bid for those jobs, Continental had sued to invalidate those bids as fraudulent.

Against that background, the union, after internal meetings and discussions, authorized the negotiation of the a settlement.

As matters turned out, given the difficulties to only be expected in such a bitter strike and with such a large company, the settlement proceeded under the auspices of the bankruptcy court, which had jurisdiction over Continental at that point.

After very intensive efforts, a long, complex document emerged called the Order and Award which is in the joint appendix.

Unknown Speaker: Call the what award?

The Order and--

Mr. Gold: Order and Award.

Yes.

It was issued as an order of the bankruptcy court.

It's undisputed that all but two of its terms were negotiated between the parties, but it was under the auspices of the court.

Court had attempted as part of the reorganization as far back as July to get the parties to settle this dispute, because it was an obstacle to reorganization.

And finally it was in this October period that the union came forward.

The court had also indicated that it wanted, if it was going to put its efforts into it, to have authorized representatives and to have a binding conclusion to the matter.

And that, too, was very much in the union's interest as the negotiators saw it, because of the grave distrust between the parties.

It was a substantial matter to the union that whatever was concluded would be enforceable, because, as I say, the level of distrust between Mr. Lorenzo and ALPA was substantial at the time.

In late October this agreement as embodied in the Order and Award was reached, and thereafter this lawsuit followed.

The lawsuit was brought by a class of striking pilots alleging that the union, in taking the course that it did, had violated the statutory duty of fair representation.

After 18 months of--

Unknown Speaker: --[inaudible] statutory.

Mr. Gold: --Yes.

And we acknowledge that and we acknowledge the bite of the duty in terms of its obligations of honesty and good faith.

Those... those aspects--

Unknown Speaker: But not arbitrariness?

Mr. Gold: --Not arbitrariness in the sense that the court of appeals understood arbitrariness.

The district court, after extensive discovery and on the union's motion for summary judgment, concluded that there's nothing to indicate that the union made any choice other than on the best deal that the union thought it could construct and on that view of the standard to be applied determined that summary judgment was appropriate.

On appeal, the court of appeals disagreed on two grounds.

First, the court of appeals took the position that the duty of fair representation goes not only to the union's bona fides, but also provides for judicial review of the substance of the union's action.

As the court put it, union actions must be based on relevant, permissible factors and must be a rational result of such factors, as rational was determined either by a judge or a jury.

And the court of appeals determined that a finder of fact could find that the agreement put members in a substantially worse position than if no settlement had been made and the strike had been abandoned and individuals had made unconditional offers to return.

In addition, the court--

Unknown Speaker: But would you think that that was within the district court's finding that the union got the best deal it could?

Mr. Gold: --Yes.

Unknown Speaker: Including no deal, in effect... just abandoning the strike?

Is that clear?

I'm not sure.

Mr. Gold: The... well, we believe that the court of appeals' opinions said that the union proceeded on an honest, good-faith determination that this was the best way to proceed and that that satisfied the standard.

The court of appeals, on the other hand as we understand it, and this is the line of demarkation, said that the court of... the trier of fact should have determined whether this deal was good enough when compared with what would have happened hypothetically in the event that the union had made an unconditional offer to return to work.

Unknown Speaker: The best way to proceed taking into account what?

Is there a wade into that, the damage to the power of the union that would have occurred from unconditionally giving in after a long strike and bitter strike?

Mr. Gold: The--

Unknown Speaker: Is that part of the factor that the union was allowed to take into account?

Mr. Gold: --As we understand the court of appeals' decision, the host of uncertainties and the nature of the factors that are to... I'm sorry, the role of the host of uncertainties that the union and the striking pilots faced and the calculus of factors that are to be taken into account are both disregarded.

We don't know from reading the court of appeals' opinion what goes into this calculus.

And that is one of our prime concerns.

Unknown Speaker: Well, what do you think for purposes of a good-faith test which you are urging?

Do you take into account for good faith the fact that the union was looking to its national power and how that would be eroded by losing a strike of this sort that had gone on for 2 years and was so bitter?

Or is good faith to be determined solely on the basis of what was good for the members of this bargaining unit?

Mr. Gold: Well, it seems to us that if we reach that point, and there does not seem in this case to be any evidence opposing that conundrum, that the union is entitled to take into account the... the total situation of the pilots.

After all, these are people following or calling with a skill, and we certainly would believe that if--

Unknown Speaker: To sacrifice the members of this bargaining--

Mr. Gold: --Well--

Unknown Speaker: --unit for the benefit of members of other bargaining units.

Mr. Gold: --With all deference, that isn't what I said.

Unknown Speaker: Well, no, I'm... well, it's the way I would put it.

Are they and--

Mr. Gold: No, I--

Unknown Speaker: --I mean, it's like the word sacrifice.

It's not necessarily a bad thing.

The union has the interest of many bargaining units nationally.

It might well intelligently decide that we could get a better deal from the employer of this bargaining unit by throwing in the towel on unconditionally giving up the strike, but that would impair our position nationwide and other bargaining units would be hurt.

Now, can they take into account other bargaining units in the deal that they make or must their... all their actions be for the best interest of the single bargaining unit at issue?

Mr. Gold: --I think the union can take into account the total labor market situation.

What I started to say is that if the union determines that tossing in the towel would undermine its situation... would undermine the total situation facing pilots overall, including the striking pilots, who have a calling, have a skill, and will only get on in the labor market for that calling and skill what the union is able to do, that would be a legitimate consideration.

Now where one would come out if the union was firmly of the view that it would advance the situation of A and B somewhere else while harming these people, I find a much more difficult question.

But I do think that, in a world in which you have competition in the product and service markets for the union be forced to look only at the situation of the particular unit, as if it was a discrete entity, when in fact it isn't, would be to... wouldn't be to further the notion the court of appeals had, mainly a rationality standard.

It would be to require the union to proceed in a way that is irrational.

I think we're very, very far from that on anything in this case.

The negotiators proceeded who were out of this system's board, this master executive counsel.

The Continental system appeared to proceed and took their view as they were trying to get the best deal that they could get, not the best deal for... in a different and wider perspective.

It's our view that the court of appeals erred in subjecting this agreement to this kind of substantive scrutiny.

We believe that the duty of fair representation, as the Court said in Steele, is a duty to act in behalf of all those for whom it acts without hostile, namely irrelevant or invidious, discrimination against them.

Unknown Speaker: Mr. Gold, the court of appeals used the word "arbitrary".

Do you say that the... that arbitrary has no place in the test or that they simply misunderstood the meaning of the word arbitrary?

Mr. Gold: We believe that they misunderstood the meaning of the word arbitrary.

As we detail in our brief starting on page 14, the court has used different formulations to delineate the scope of the duty of fair representation, and the court has used the word arbitrary in doing so.

We believe that the fairest reading of all the cases is that arbitrary in that sense means hostile action against an individual or a subgroup of the bargaining force.

In other words, the union generally processes grievances by doing certain preliminary steps.

An individual shows that without any justification, any reason, the union doesn't do those things for him and he is harmed.

We would think that that is arbitrary and that it adds something to the concept of discriminatory, because discrimination, certainly as it was used in Steele, has a notion of a class-based wrong.

So what we would suggest is that this test is a test of good faith and honesty of purpose as the Court said in Ford Motor and that what arbitrary means is that discrimination, which is either class based or is simply inexplicable and harmful, is a wrong.

Unknown Speaker: Well, Mr. Gold, that was going to be my question.

Suppose the union commits what in other circumstances, say, in the legal profession, would be malpractice.

It misses a grievance deadline.

But it's in very good faith.

It... now is there liability there?

Mr. Gold: No, the essence of our argument is that this duty doesn't create a liability for honest mistakes, so--

Unknown Speaker: So we're talking here about a standard that applies across the board, administration of the contract, grievances, routine procedures, as well as the more complex context of conducting bargaining?

Mr. Gold: --Well, we make three different arguments in support of our position that the court of appeals was wrong here.

The first is the one you've just stated.

The second is that at the very least this test of honesty and good purpose ought to apply in the most complex situations, namely the negotiation of agreements or the renegotiation of agreements even if it doesn't apply in what are arguably simpler cases involving grievance handling.

And third, we argue that the court of appeals was certainly wrong in terms of the way it understood whatever duty of adequate representation that exists, that instead of looking at the matter in terms of the practical and legal uncertainties at the time, looking at the situation that actually faced the union, and looking also at the fact that the ultimate agreement provided for benefits for the striking employees such as severance pay, recall in seniority order, and so on that were not legally required, that this was not an agreement which was... is challengeable even under a duty of care.

Unknown Speaker: Well, I... on duty of care, you'll recall from the Rawson case where the union allegedly negligently contributed to the death of mine workers, we said that the union could not be sued under State law.

And now you're saying there's a broad immunity based on a good-faith standard under Federal law.

I know of--

Mr. Gold: Well, basically--

Unknown Speaker: --I know of no parallel in all of the law, other than for sovereign immunity, which gives an immunity that tests... is that extensive.

Mr. Gold: --The... as we understand Rawson, Justice Kennedy, the Court also said that a negligence claim would not be actionable under the duty of fair representation.

It was not simply that it would not be... there would be an actionable State law claim.

So that the standard is certainly, from what we know from this Court's cases, higher than negligence.

But our--

Unknown Speaker: Mr. Gold, I had really thought that our cases had spoken in terms of a reasonableness component to the arbitrary standard here and that you would have us read that out of the standard and limit it to negotiations or actions taken in bad faith or with hostility.

Now, do you really find support in our case law for that kind of a limitation, or don't we find that the arbitrary component of Vaca against Sipes' standard imports some degree of reasonableness inquiry?

Mr. Gold: --Well, if I can, there are two things I'd like to say about that.

First of all, as we attempt to develop in our reply brief, the wide range of reasonableness language is in Ford Motor Company... this is at pages 2 to 4 of our reply brief.

And the context there was to determine whether a distinction between veterans or nonveterans was a distinction which was invidious and irrelevant or relevant to the union's task.

So the reasonableness was in setting up the classifications.

As we point out, the Court did not go on to see whether veterans got too much seniority or too little; and we certainly acknowledge that, in terms of drawing distinctions, there is a reasonableness component.

The second point I would like to make is that the Lockridge case which is the last case which fully explores the nature of this duty, like Steele, which was the first case, talks entirely in terms of honesty and good faith.

In terms of why there should be such a duty, if I could in... given Justice Kennedy's question, we believe that the answer is that this is a statutory duty, and it comes out of a statute whose overriding function was to take judges and juries out of the substance of labor relations and to put those tasks into the hands the parties.

We discuss and cite the H.K. Porter case and Senator Walsh's famous statement there that the act takes the parties to the negotiating table and leaves them there.

To have judges and juries saying this deal is not good enough, even though it was honest, even though it was based on a fair judgment of the circumstances and that you had to do it a different way is to get--

Unknown Speaker: You don't suggest that fairness has any part of it, do you?

Mr. Gold: --Well, fairness in the sense of--

Unknown Speaker: Is it [inaudible]--

Mr. Gold: --a duty of loyalty, fairness in the sense of--

Unknown Speaker: --I know, but you sounded like you were saying substantively it was fair.

Mr. Gold: --You mean--

Unknown Speaker: The terms agreed upon were fair.

Mr. Gold: --We believe that we can meet--

Unknown Speaker: I know, but you don't--

Mr. Gold: --that standard, but we're--

Unknown Speaker: --You mean judges are supposed to decide whether they were fair or not?

Mr. Gold: --Well, no.

We are arguing that that is precisely what labor relations is not about.

There are a lot of mean, unfair deals out there when you take into account that the company had the power and the union had less.

Unknown Speaker: Oh, it... you don't really... you've been living... the unions have been living with this Vaca standard for a long time, and I have noticed in all the cases that come around here that you've been really hurt very much by that element in it.

I had thought the judges thought about arbitrariness that no fool in his right mind would ever have agreed to this.

This is completely irrational.

Now, that's a... that's a... that isn't looking over the shoulders of the union or really second guessing you.

Mr. Gold: Well, that is... that is certainly not the view... the view you just stated is certainly not the view of Vaca that the Fifth Circuit in embraced in this case.

Unknown Speaker: That may be.

But haven't you been living with the arbitrariness standard interpreted in that way for a long time?

Mr. Gold: We have been living with a regime which is going to end with this case one way or another in which different courts have taken different views.

The Seventh Circuit, for example, has consistently taken the view that I have just outlined.

Other courts have been back and forth, some distinguishing between negotiation and some not.

I do want to emphasize that--

Unknown Speaker: Does the Seventh Circuit go right across the board with this test?

Mr. Gold: --It had up until the Thomas case, when it appeared to draw a distinction between negotiation and nonnegotiation.

Unknown Speaker: Well, that's the last case, isn't it?

Mr. Gold: I--

Unknown Speaker: In the Seventh Circuit?

Mr. Gold: --I believe there is subsequent case which could be fairly read to go back the other way, but I'm not positive.

I'd like to, if I could, save a moment or two for rebuttal.

Unknown Speaker: Very well, Mr. Gold.

Mr. Harper, we'll hear now from you.

Argument of Marty Harper

Mr. Harper: Mr. Chief Justice, and may it please the Court:

We are here on a court of appeals reversal of summary judgment, and in analyzing this case, we cannot overlook that fact.

The Fifth Circuit Court of Appeals, in reversing the district court, correctly applied the summary judgment standards of the Fifth Circuit and of this Court.

In addition, in analyzing the union's conduct, the Fifth Circuit court of appeals applied the three-prong standard set forth in Vaca v. Sipes, which has been around and the unions have been dealing with for 24 years.

What the union wants to do today is to convince the Court to change the law so that it can avoid liability to 1,400 striking pilots who remained out on strike for 2 years.

In essence, what the union wants is a standard of conduct that is based upon subjective hostility.

In other words, they want to be immune from having their substantive decisions reviewed at all.

It should not come as any surprise to the Court--

Unknown Speaker: What do you think the word "arbitrary" suggests to courts of appeals?

Is... are they supposed just to say, well, the union is guilty or is liable because we wouldn't have done what they did?

Mr. Harper: --Your Honor, I don't think it's that complicated at all.

Unknown Speaker: xxx not answering my question--

Mr. Harper: What arbitrary means I believe, Your Honor, is simply the question as to whether a reasoned decision was needed and whether a reasoned decision was made.

And in deciding that, what needs--

Unknown Speaker: --The court is permitted to say, well, we wouldn't have done it this way because we don't think it was reasonable?

Mr. Harper: --Absolutely not, Your Honor.

And second-guessing is not what the court--

Unknown Speaker: What are they... what should they say then?

Mr. Harper: --They should look at the decision, Your Honor, and try to find out and look at what the relevant factors were that the union officials considered in making a decision and then determine if the decision was based upon an in fact consideration of those factors.

And if in fact the judgment or conduct is not based upon a reasoned consideration of relevant union factors, then the conduct is arbitrary.

But this--

Unknown Speaker: How's that any different than negligence?

Mr. Harper: --It's a higher standard, Your Honor, than negligence.

Unknown Speaker: Well, you say so.

But how do you distinguish between a negligently conducted negotiation and an arbitrary one?

Mr. Harper: You have to look at the factors, Your Honor, that went into the conduct that the union followed and look at the actual circumstances that were taken into consideration which were going to be numerous, and then balance to see if the decision was made based upon a rational consideration of those factors.

Unknown Speaker: Because--

Mr. Harper: That's a higher standard than simply breaching the... breaching a duty or a negligence.

Unknown Speaker: --Well, it may not have a community standard of care component.

I suppose that's the only difference.

I find it very, very difficult to distinguish the two.

Mr. Harper: Those are difficult items to distinguish, Your Honor, and what we are dealing with is a continuum of arbitrariness, and there comes a point in time like in the Rawson case where this Court has decided that an allegation based upon pure negligence is not sufficient to staying a breach of duty of fair representation.

But an allegation based upon conduct that is more serious than that, not taking into consideration relevant factors, and then moving off and making the decision that's not based upon those factors, it's arbitrary, Your Honor.

Unknown Speaker: Mr. Harper, would you standard require detailed examination of how the union officials went about reaching this agreement?

You say it has to have... they have to must have considered all the factors.

That opens up, I presume, just, you know, what went on at the meetings of the officials who were given the responsibility for trying to settle the thing.

Mr. Harper: Mr. Chief Justice, it would require the plaintiffs in this type of situation to identify as best they can through discovery and the trial the factors that were actually in fact considered by the union negotiators or the union officials when they made a decision and then would have to go step further to demonstrate whether or not the decision was based upon a consideration of those factors.

In this case, what has happened, Your Honor, is many of the arguments that have been advanced here to justify what the union did are post hoc arguments of counsel.

Unknown Speaker: What if a court reviewing the union's conduct feels, yes, the union considers all... considered all the factors that it said it was going to consider.

But in the view of the court there was a factor that it should have considered but didn't.

Mr. Harper: Your Honor, the court does not substitute as judgment for that and if you go back to the case here, the O'Neill case, and look at the basis upon which the Fifth Circuit rendered its opinion, which is the Tedford opinion, you will find exactly that sort of analysis in the Tedford opinion.

In the Tedford opinion, there are a couple of judgments that the union officials could have made.

The court of appeals went out of its way to say we are not going to select whether or not it was correct for the union to do one or the other.

All we're going to do is to analyze that the decision that was made... to ensure it was based upon relevant factors and that the judgment was based upon relevant factors.

If it is, it would be arbitrary.

Unknown Speaker: And if a court says we see a factor we think the union should have considered.

The union didn't purport to consider it, it didn't consider it, that would allow it to set aside the decision?

Mr. Harper: Not necessarily, Your Honor.

Unknown Speaker: But it's a possibility?

Mr. Harper: The trier of fact may find that in the totality of the circumstances, the union didn't act rationally or reasonably in going about the decision that it made.

Take into consideration factors as evidence that the union officials might not have considered which would support the conclusion by the trier of fact that the conduct was arbitrary.

Unknown Speaker: But of course if you say the union didn't act reasonably, that isn't far from a negligence standard, is it?

Mr. Harper: Under some circumstances, Your Honor, in this area it... the line starts to fuzz.

Well, we do not believe--

Unknown Speaker: Well, you could... could you live with a standard that says that the court should ask if any rational union negotiator could possibly have come to this conclusion?

Mr. Harper: --We're not--

Unknown Speaker: Which is certainly more a... that's a... that gives them a lot more room than insisting that they have to be reasonable.

Mr. Harper: --Your Honor, all we are are... our position is that all we need to have is an obligation upon these union officials to consider relevant facts and make a decision based upon those.

Unknown Speaker: Well, if a union... if the court thinks a... that there are factors a union... they think the union didn't consider, shouldn't they also ask, well, would any rational person... could any rational person have put those factors aside?

Mr. Harper: That's a relevant consideration when you evaluate at the trial level the conduct of the union.

In this case, for example, the record does... shows or demonstrates that during the critical negotiation the individuals who made the decision did not consider an unconditional offer to return to work as a viable alternative before they decided to settle with Continental under the terms and conditions that they did.

That is evidence of arbitrary conduct, we [inaudible].

Unknown Speaker: Mr. Harper, the word arbitrary is not a... really a new one for us.

We've been using it for half a century to review agency action under the Administrative Procedure Act.

I think Mr. Gold has probably asked us to use it a number of times in that context... arbitrary, capricious, and abusive discretion, or otherwise not in according to the law.

Do you think that its meaning here in reviewing union action is about the same as its meaning in reviewing agency action under the Administrative Procedure Act?

Mr. Harper: I think it's very close to that, Your Honor.

In those types of considerations, you look at, if, for example, an agent... head of an agency has changed a policy and in order to have that act substantiated, there has to be some explanation, for example, as to why that policy was changed.

That's fundamentally the same sort of analysis that we think is appropriate here.

Unknown Speaker: And a court may think it's wrong but still not think that it's arbitrary.

Mr. Harper: Absolutely, Your Honor--

Unknown Speaker: I see.

Mr. Harper: --if in fact the decision has considered relevant factors.

It may be wrong.

It may be atrocious, as the district court said here.

It may be beyond what is reasonable as the chief negotiator said here.

It may have... if it's wrong and the process is intact, then the conduct would still be considered to be nonarbitrary, and as a result there's no liability associated with it.

Unknown Speaker: Do you think the Fifth Circuit was true to that position?

Mr. Harper: I think it absolutely was, Your Honor.

What they did was on summary judgment look at the record, which the trial court never did, and determine, based upon the review, that there were substantial facts in dispute--

Unknown Speaker: There was a triable issue of fact about arbitrariness.

Mr. Harper: --And--

Unknown Speaker: And about discrimination.

Mr. Harper: --And discriminatory.

And all they did is leave it for the trial court to decide, based upon an appropriate standard, whether the conduct by the union breached the duty of fair representation.

That's all the Fifth Circuit did.

Unknown Speaker: Whether there was enough evidence in the record that somebody could have concluded that it was arbitrary, defined in the right way.

Mr. Harper: That's correct and we haven't gotten there yet, Your Honor.

This is on summary judgment, and I think that the Fifth Circuit did exactly the right thing in leaving the ultimate issues as to whether or not this was a breach of the duty fair representation until trial.

Unknown Speaker: Mr. Harper, is there a genuine issue of material fact here as to whether the union acted in bad faith?

Mr. Harper: Your Evidence, there's evidence in the record and inferences that can be drawn from the evidence in the record at this particular time that in fact the union did act in bad faith.

And also that they acted in a discriminatory manner and in an arbitrary manner, and all of those items are included or--

Unknown Speaker: Did the Fifth Circuit review the evidence with an eye toward the bad-faith allegation?

Mr. Harper: --It does not appear from the record, Your Honor, that the court did that, but I don't think that the Fifth Circuit Court of Appeal purported to look at all of the items of conduct that this union engaged in and to make a conclusive decision on all elements at the summary judgment level.

Unknown Speaker: Mr. Harper, may I ask you two questions?

First, is it your position that if the record showed that the union did consider what... which would be better, the settlement or a surrender, an outright return to work, they considered it, but they came to an erroneous conclusion on the issue, you would lose?

Mr. Harper: If that was the only judgment, Your Honor, that was involved in this case, then the answer would be yes.

Unknown Speaker: So it's not critical for us to decide whether this was a worse deal than a return to--

Mr. Harper: Absolutely not.

Unknown Speaker: --But it is critical to decide whether they considered it.

And is it your position on that that the record is absolutely clear based on admissions by the union that they didn't or a total absence of evidence of any discussion of it?

Mr. Harper: Your Honor, based upon the record as we developed it through deposition testimony and through the gleaning of notes and records that the negotiators that we were entitled to depose, they did not consider at that critical point in time the unconditional offer to return to work.

I'd like to point out to the Court--

Unknown Speaker: But I'm asking you do you say that because there's a failure of... in absence of any evidence showing they did discuss it or is there evidence of an admission that they did not discuss it?

Which is it?

Mr. Harper: --There's evidence of the admission that they did not consider it at this point... at the point in time.

Unknown Speaker: I see.

Do you refer to that evidence in your brief?

Mr. Harper: Yes, we do, Your Honor, through the attachments, and it's probably set forth in a little bit more detail in connection with a motion for reconsideration.

Unknown Speaker: And I'd like to point out for the Justice that, you know, our discovery got stopped along the way.

So the discovery at this particular point in time is far from being completed.

We focused only on the pilot negotiators who made the decision or were involved in the decision at the end to settle the strike.

I thought the burden of the argument in your brief was that the settlement was much worse than a return to surrender, but you don't really rely on that?

Mr. Harper: No, we don't, Your Honor.

Unknown Speaker: I see.

Mr. Harper: But in fact it is.

And again it would be evidence at trial.

Unknown Speaker: But we don't have to resolve that in order to decide this case.

Mr. Harper: Not at this... not at this level, Your Honor.

Not at all.

Unknown Speaker: Mr. Harper, are you saying that in affirming the result below as you want us to do, we could do so consistently with your position and still repudiate the second of the factors which the court of appeals considered?

In other words, could you get where you want to go and in fact are you arguing that you should get where you want to go by having us hold that the court of appeals was correct in saying that a non-arbitrary decision must be based on relevant factors, but repudiate that second part of the test in which the court of appeals was saying that it must also be a rational result of considering those factors?

Do you want to jettison point 2 and still win?

Mr. Harper: We are not claiming and our position is that we have to focus on the result.

What our... what our argument is and it must be a rational consideration of those factors and the judgment based upon that--

Unknown Speaker: But if--

Mr. Harper: --and the result is only evidence, Your Honor, of the conduct that the union negotiators engaged in.

Unknown Speaker: --Well, then I guess I'm having the same trouble then that I think has been expressed earlier in this argument.

You apparently want us to go beyond or want courts to go beyond a finding that the appropriate factors were considered.

You want us... you want the courts to intrude to some degree into a... an assessment of the results achieved by considering those factors, don't you?

Mr. Harper: Yes, Your Honor.

Unknown Speaker: And are you satisfied... going back to Justice White's question, would you be satisfied if the Court stopped at saying this is one possible result within the realm of reasonableness so that if that test were satisfied, that would be the extent of the Court's scrutiny?

Mr. Harper: And if it's one possible result based upon a... the analysis that we have urged the Court, and if the... that determination then is that it's nonarbitrary because of the process that went through, then the results would be okay.

Unknown Speaker: But that involves more than just considering all the factors.

There are certain boundary beyond which your consideration, even if you've considered them all, your conclusion is just arbitrary.

I mean, a man comes up to you and puts a gun to your head and says, your money and... your money or your life, and you consider it very carefully and you say my life.

[Laughter]

I mean, that's... that's ridiculous, isn't it?

Just because you've considered that--

Mr. Harper: The two choice, Your Honor.

Unknown Speaker: --Yes.

Can't you reach a conclusion that is nonetheless arbitrary even if you've considered both?

Mr. Harper: That... you can, Your Honor, and that's why I think that there's more to it in the duty of fair representation, because there are... in contexts like this, there are a number of things that the union negotiators are going to take into consideration in arriving at the conclusion that they arrive at.

As long as those factors are relevant factors and the basis is... the decision is based on that.

Unknown Speaker: Can I ask you the same question I asked Mr. Gold?

Is one of the relevant union factors... are all the relevant union factors only factors that relate to this bargaining unit, or can the union in effect say, well, this result may be better for this bargaining unit but we have other fish to fry?

Mr. Harper: The union, Your Honor, has a duty to represent under the Railway Labor Act the members of this craft or class, and their conduct has to be a... on behalf and the benefit for the craft or class.

So for the most part--

Unknown Speaker: But that's not just the bargaining unit.

That craft or class in other bargaining units as well, no?

Mr. Harper: --In this case, Your Honor, the craft or class were the Continental pilots at Continental Air Lines.

Unknown Speaker: Not pilots at large in other airlines as well?

Mr. Harper: And what the problem is, Your Honor--

Unknown Speaker: Well, I--

Mr. Harper: --if you go beyond the class or craft, you're--

Unknown Speaker: --Let's make it clear what I'm asking you.

Suppose the union says it will be better for this bargaining unit, but we will just get clobbered in later negotiations with other airlines.

Our other pilots will be harmed if we simply, after a 2 years' worth of a bitter strike, throw in the towel.

Net... given all the pilots that we have to represent, it's better for all of them that this bargaining unit may not do as well, but we come to a negotiated end to the strike rather than simply abandoning it.

Is that... is that a reasonable decision?

Mr. Harper: --It may not be, Your Honor, because the problem with that is that that craft or class becomes a minority group within a larger class, and they run the risk, if they don't have this broad duty of fair representation, of being treated very badly in a discriminatory and arbitrary way by the union.

Unknown Speaker: So you say the reasonable factors that can be taken into account are only factors relating to the particular bargaining unit to which the negotiations pertain?

Mr. Harper: And what benefits them and what the union needs to do on their behalf in the context of that particular representation.

Unknown Speaker: The union cannot make a sort of command decision, saying we realize we're not doing very well by the Continental pilots and we could do better, but the long-run interest of the airline pilots we represent with all the other airlines would be served by this deal that doesn't do very well for Continental?

Mr. Harper: Those are considerations that the union might take into consideration, Your Honor, with respect to representing the craft or class--

Unknown Speaker: Well, but it's--

Mr. Harper: --but they can't override.

Unknown Speaker: --I think you can give a better... give a yes or no answer to something like that.

It seems to me you're quite nebulous on the point, unless you intend to be nebulous.

Mr. Harper: I don't intend to be nebulous at all, Mr. Chief Justice.

The... in this case the union should have taken into consideration only those factors that benefit this craft or class.

Unknown Speaker: Well, okay, but answer a hypothetical question.

The union decides that the proposed deal we're about to enter into with the... for the Continental pilots is not the best we could do for them, but if we don't take this, we are going to greatly harm pilots with American, United, all the other airlines we... so we're going to have to sacrifice a little bit of the interest of the Continental pilots in order to help all of the pilots we represent.

Can it do that?

Mr. Harper: Not to the detriment of the craft or class that they're representing, Your Honor.

Unknown Speaker: Well, but that doesn't... I think you could answer the question yes or no and then explain if you want to.

By hypothesis it is to the detriment of the Continental pilots.

Mr. Harper: And then that conduct, Your Honor, could be made.

It could be bad faith, it could be discriminatory, and it could be arbitrary in the way that they go about making that decision.

Because they're putting motives and events that are beyond what is on... in the best interest of the craft or class in these negotiations, and that is a breach of the duty of fair representation.

Unknown Speaker: You say it could be arbitrary, but is it as a matter of law arbitrary when they rely on the factors the Chief Justice described?

Mr. Harper: I would say no, Your Honor.

Unknown Speaker: It's not arbitrary?

Mr. Harper: Let me... it would... I'm sorry... if they put the national interest above?

Unknown Speaker: Yes.

Mr. Harper: It would be arbitrary conduct.

Unknown Speaker: As a matter of law in every case?

Mr. Harper: Uh--

Unknown Speaker: Counsel, do you... do you think the court of appeals applied the test they set down in the Tedford case?

Mr. Harper: --Yes, I do, Your Honor.

Unknown Speaker: Well, that test is a three-part test that says to be nonarbitrary the decision must be based upon relevant, permissible union factors; second, a rational result of the consideration of these factors; and three, and inclusive of a fair and impartial consideration of the interests of all employees.

So do you think that... you think a court has to get to the issue of fairness with respect to the various groups of employees?

Mr. Harper: In some regard they have to--

Unknown Speaker: Well, this is... what the Tedford test is, and that's what the court of appeals applied so they have a free wheeling... they can just decide whether it's fair or not, is that it?

Non-arbitrary?

Mr. Harper: --No.

It's part of the three-step procedure and analysis that the Tedford court requires, and in this case the results are evident, Your Honor, that the conduct was arbitrary because it was worse than an unconditional offer to return to work.

Unknown Speaker: Well, literally, this test means that the union... even if the union took... considered all relevant factors and gave rational consideration to it, nevertheless, they might be unfair, an unfair result.

Mr. Harper: In this case, the result... I don't know if it's unfair, Your Honor, but it has been characterized by the chief pilot negotiator as beyond what was reasonable, has been characterized by him as bastardizing forever the seniority system, and has been characterized by the district court as being atrocious.

Now if that's the same as being unfair, then those are the ways it has been characterized.

Unknown Speaker: I take it you have a right to jury trial under that Terry case?

Mr. Harper: Yes, Your Honor, as a result of the Terry opinion.

Unknown Speaker: Then reasoning backwards, I suppose it helps your position that we have to have a standard that manageable for the jury.

Mr. Harper: Absolutely.

There has to be a way--

Unknown Speaker: It's backwards reasoning, but I think perhaps we're compelled to engage in it.

Mr. Harper: --And that's all that... what happens, Your Honor, in cases like suits against fiduciaries, trustees, officers and directors of a corporation, or governmental agents, you have to be able to describe for the jury or the trier of fact where the conduct crosses the line.

And that's why I submit--

Unknown Speaker: I don't know that a jury could manageably consider an APA-type... Administrative Procedure Act-type of standard as to whether or not they... the unit acted rationally.

I don't know if the jury is capable of doing that.

Mr. Harper: --Justice Kennedy, the jury is capable though of making key decisions in antitrust, securities, breach of contract suits, and Justice Stevens has mentioned just last term that the reality of the employment relations are typical grist for a jury judgment.

So, in fact, it is our position that, given the correct instructions of law by the court, that it is perfectly... a jury is perfectly capable of judging the conduct engaged in by a union.

I'm getting close to the end.

One thing I would like to point out here that we have not talked about--

Unknown Speaker: Mr. Harper, before you do that, let me get... this relates to what the Chief Justice was asking you about.

All of your clients are union members in this case, isn't that right?

Mr. Harper: --That's correct, Your Honor.

Unknown Speaker: Now, I can understand why a nonunion member might have a cause for feeling aggrieved if the union didn't take it into account, exclusively the interest of his bargaining unit.

But all your union members join this union knowing it was an industrywide union that, you know, one for all and all for one.

They get some benefits from joining an industrywide union.

They could have had a union just for that shop, couldn't they?

Mr. Harper: That's correct.

Unknown Speaker: Just a special union for Continental.

But they chose to join ALPA in order to have the benefit of an industrywide union.

Now doesn't there go along with that the understanding that the union's going to bargain in the interest of the whole industry, not... not in the interest of just this bargaining unit?

Mr. Harper: They're going to bargain on behalf of the craft, Your Honor, and that the craft's interest has to come ahead of the national interest of the--

Unknown Speaker: But they have obligations... they have obligations to these other units as well, don't they?

Mr. Harper: --Absolutely.

Unknown Speaker: Can they settle this one to the detriment of the other ones?

Mr. Harper: No, Your Honor, they cannot do that.

Unknown Speaker: They can't do that and yet they can't take it into account either.

Mr. Harper: I'm sorry.

I misunderstood your... they can't settle it to the disadvantage of this particular craft, Your Honor.

Unknown Speaker: They could if they had a multiemployer bargaining unit, but they do not.

Mr. Harper: We do not have that here, Your Honor.

This is the master executive counsel for only the craft of pilots at Continental Air Lines.

And, Justice Scalia, one... I think what demonstrates where there is a real problem here with these pilots being represented by their union is in the superseniority aspects of it.

Because there the union did go beyond what was in the best interest of their pilots and they gave away to the non-striking pilots future vacancies to the detriment, the serious detriment, of the pilots who have been out on strike for 2 years.

And that's why we have to look at this thing as conduct that breaches the arbitrary standard, the discriminatory standard, and the bad-faith standard.

And that has been the standard that this Court has articulated for 24 years, and we think it ought to be the standard that applies here.

We ask this Court, with the Solicitor, to hold that the union leadership add full-scale responsibilities to its members.

We ask you to decide, as the Fifth Circuit did, that there was enough evidence in the record to show that the union defaulted on these responsibilities so that a trier of fact is entitled to pass upon that question.

We ask this Court to conclude that the... no union leadership is above the law, immune to the law, or should be permitted to be indifferent to the law.

The Air Line Pilots Association is not immune from its responsibilities which goes with that control.

Unknown Speaker: Could I ask you... do you read the court of appeals' opinion as saying that the... that there's evidence of discrimination as an independent reason for reversing the district court?

Mr. Harper: Absolutely, Your Honor.

Towards the end of the opinion, on the second or third page from the end, the court of appeals addresses that specifically and says that there's substantial evidence in the record to suggest that the union acted in a discriminatory way, and it's left up to the trial for... the point in time for the union is to answer why it did.

Unknown Speaker: What do you think discrimination means in that sense?

Is it... it's intentional discrimination?

Invidious discrimination or hostile or what is it?

Mr. Harper: It's conduct that is not based upon the best interest of the unit and disadvantages an individual or a group within the unit.

It can't be based upon irrelevant considerations like race, when the DFR first started back in Steele.

And we think that the decision here on the super-seniority issue to give up the future spaces to the non-strikers is a fundamental right that these strikers had upon the return to work, and without any justification, and if in fact justification is even permitted, these... this union acted discriminatorially towards these pilots by giving those away.

Thank you.

Unknown Speaker: Thank you, Mr. Harper.

Mr. Gold, do you have rebuttal?

You have 3 minutes.

Rebuttal of Laurence E. Gold

Mr. Gold: Thank you, Chief Justice.

It seems to me that the last point Mr. Harper made is very important in terms of understanding what the court of appeals did and what arbitrary means.

The whole discussion in the court of appeals and here is that the strikers were entitled to these so-called 85-5 bids.

There was no case law at the time on the status of vacancy bids and when a position is filled and when it isn't in the complexities of the bargaining unit.

The court of appeals made that decision as if the union knew what the law was.

The court of appeals made it for it after the fact at the point where the negotiators could not.

Unknown Speaker: Is this on the discrimination point?

Mr. Gold: It is on both the arbitrariness of the settlement and on the discrimination point.

With regard to the discrimination point, the court of appeals relied on a very expansive reading of Erie Resistor, which this Court later rejected in the IFA case just last year.

So, this would--

Unknown Speaker: What case last year, Mr. Gold?

Mr. Gold: --Trans World Air Lines v. Flight Attendants.

I think it's 489 U.S.--

Unknown Speaker: But what did the district court assume on that point?

Mustn't the district court have assumed that the union was uncertain as to what involved?

Mr. Gold: --Yes.

Unknown Speaker: Well, is it entitled to do that on a motion for summary judgment?

Mr. Gold: I don't think it assumed it.

There were 1,600 pages of deposition records or the motion for summary judgment showing that the union was proceeding on the basis that this wasn't locked up, that it was dealing with a hostile employer, and that making a deal was the best course.

That was his finding viewed that that was indisputed.

But--

Unknown Speaker: But that was controverted, wasn't it?

And wasn't... among the things controverted, wasn't the certainty of the law one of the controverted matters?

Mr. Gold: --But are we going to be in a position where the certainty of the law is to depend on whether a jury says that a single district court decision somewhere else makes the law certain?

I don't think that at all the court... the district court was right in terms of understanding that there was uncertainty, and the union was proceeding on the basis of uncertainty.

Unknown Speaker: Whether there's uncertainty is not the issue.

On your theory, the issue is whether the union itself was uncertain.

That... that's a good faith--

Mr. Gold: Well, that was not disputed.

The only dispute... the court of appeals decided that it was certain, not that the union was not uncertain.

By the same token, we're having a discussion here, and Mr. Harper insists on having a discussion, whether this deal was better or worse than an unconditional return to work.

The master executive counsel voted against an unconditional return to work before the negotiators went to negotiate.

And that's simply part of the problem of having--

Unknown Speaker: --I think you've answered the question Mr Gold.

Mr. Gold: --Okay.

Chief Justice Rehnquist: The case is submitted.

Print this transcript Transcript: 

Argument of Speaker

Mr. Speaker: The opinion of the Court in No. 89-1493, Airline Pilots Association International versus O'Neill will be announced by Justice Stevens.

Argument of Justice Stevens

Mr. Stevens: This case comes to us on a writ of certiorari from the United States Court of Appeals for the Fifth Circuit.

It arose out of a bitter labor dispute between Continental Airlines and the petitioner, Airline Pilots Association International, the Union that represented the Continental's pilots.

Respondents are a group of pilots who are dissatisfied with petitioner's settlement of the unsuccessful strike against Continental.

Contending that petitioner's settlement of the strike resulted in less favorable terms for striking pilots and the Union could have achieved by a unilateral decision simply to return to work.

Respondents sued petitioner for, among other things, breach of the Union's duty of fair representation.

Respondents argued that petitioner had breached that duty by arbitrarily settling the strike in an incompetent manner.

The District Court granted summary judgment to petitioner; the court ruled that there was no evidence that petitioner had acted in bad faith or had discriminated against any of its constituents.

The court held that the duty of fair representation does not protect Union members against inadequate representation so long as the Union has acted in good faith and not discriminated.

The Court of Appeals reversed.

It held that the duty of fair representation has three distinct components.

The Union breaches the duty if its conduct is either discriminatory, taken in bad faith, or arbitrary.

The court held that a jury could find that petitioner's conduct was arbitrary because it could find that the petitioner had settled the strikes on terms that were less favorable than could have achieved by simply terminating the strike.

We now reverse the Court of Appeals.

We hold that the court was correct in ruling that the Union breaches its duty if its actions whether made in the course of processing grievances or negotiating agreements are either arbitrary, discriminatory, or in bad faith.

We conclude, however, that the court committed error in its elaboration and application of the arbitrariness component of the fair representation duty.

The Union's actions are arbitrary only if in light of the factual and legal landscape at the time of the actions, the Union's behavior is so far outside a wide range of reasonableness that it can fairly be called irrational.

The mere fact that, in retrospect, petitioner's settlement of the strike proved less advantageous, and abandonment of the strike does not mean that the Union acted irrationally in securing the settlement.

The legal consequences of the unilateral return to work were not clearly established at the time of the settlement and the agreement avoided potentially lengthy and conceivably unsuccessful litigation.

Our opinion is unanimous.