cgull

Kind of reminds me of Bid 14-02.


https://bulk.resource.org/courts.gov...5.89-1493.html

Syllabus
After Continental Airlines, Inc., filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, it repudiated its collective-bargaining agreement with petitioner Air Line Pilots Association, International (ALPA). An acrimonious strike ensued, during which Continental hired replacement pilots and reemployed several hundred crossover strikers. Two years into the strike, Continental announced in its "Supplementary Base Vacancy Bid 1985-5" (85-5 bid) that it would fill a large number of anticipated vacancies using a system that allows pilots to bid for positions and that, in the past, had assigned positions by seniority. Although ALPA authorized strikers to submit bids, Continental announced that all of the positions had been awarded to working pilots. ALPA and Continental then agreed to end the strike, dispose of some related litigation, and reallocate the positions covered by the 85-5 bid. Striking pilots were offered the option of settling all outstanding claims with Continental and participating in the 85-5 bid positions' allocations, electing not to return to work and receiving severance pay, or retaining their individual claims against Continental and becoming eligible to return to work only after all the settling pilots had been reinstated. Thus, striking pilots received some of the positions previously awarded to the working pilots. After the settlement, respondents, former striking pilots, filed suit in the District Court against ALPA, charging, inter alia, that the union had breached its duty of fair representation. The court granted ALPA's motion for summary judgment, but the Court of Appeals reversed. It rejected ALPA's argument that a union cannot breach the fair representation duty without intentional misconduct, applying, instead, the rule announced in Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 that a union violates the duty if its actions are "arbitrary, discriminatory, or in bad faith," id., at 190, 87 S.Ct., at 916. With respect to the test's first component, the court found that a nonarbitrary decision must be (1) based upon relevant permissible union factors, (2) a rational result of the consideration of those factors, and (3) inclusive of a fair and impartial consideration of all employees' interests. Applying that test, the court concluded that a jury could find that ALPA acted arbitrarily by negotiating a settlement less favorable than the consequences of a complete surrender to Continental, which the court believed would have left intact the striking pilots' seniority rights with regard to the 85-5 bid positions. It also found the existence of a material issue of fact whether the favored treatment of working pilots in the allocation of the 85-5 bid positions constituted discrimination against the strikers.
Held:
1. The tripartite standard announced in Vaca v. Sipes, supra, applies to a union in its negotiating capacity. See, e.g., Communications Workers v. Beck, 487 U.S. 735, 743, 108 S.Ct. 2641, 2647, 101 L.Ed.2d 634. Thus, when acting in that capacity, the union is not, as ALPA contends, required only to act in good faith and treat its members equally and in a nondiscriminatory fashion. Rather, it also has a duty to act in a rational, nonarbitrary fashion to provide its members fair and adequate representation. See, e.g., Vaca v. Sipes, supra, 386 U.S., at 177, 87 S.Ct., at 909; Steele v. Louisville & Nashville R. Co., 323 U.S. 192, 202, 65 S.Ct. 226, 231, 89 L.Ed. 173. Pp. 73-77.
2. The final product of the bargaining process may constitute evidence of a breach of the fair representation duty only if, in light of the factual and legal landscape, it can be fairly characterized as so far outside of a "wide range of reasonableness," Ford Motor Co. v. Huffman, 345 U.S. 330, 338, 73 S.Ct. 681, 686, 97 L.Ed. 1048, that it is wholly "irrational" or "arbitrary." The Court of Appeals' refinement of the arbitrariness component authorizes more judicial review of the substance of negotiated agreements than is consistent with national labor policy. Congress did not intend judicial review of a union's performance to permit the court to substitute its own view of the proper bargain for that reached by the union. See, e.g., NLRB v. Insurance Agents, 361 U.S. 477, 488, 80 S.Ct. 419, 426, 4 L.Ed.2d 454. Rather, Congress envisioned the relationship between the courts and labor unions as similar to that between the courts and the legislature. See Steele, supra, 323 U.S., at 198, 65 S.Ct., at 230. Any substantive examination of a union's performance, therefore, must be highly deferential, recognizing the wide latitude that negotiators need for the effective performance of their bargaining responsibilities. Cf., e.g., Day-Brite Lighting, Inc. v. Missouri, 342 U.S. 421, 423, 72 S.Ct. 405, 407, 96 L.Ed. 469. P.78.
3. The resolution of the dispute as to the 85-5 bid positions was well within the "wide range of reasonableness" that a union is allowed in its bargaining. Assuming that the union made a bad settlement, it was by no means irrational when viewed in light of the legal landscape at the time of the settlement. Given Continental's resistance during the strike, it would have been rational for ALPA to recognize that a voluntary return to work might have precipitated litigation over the strikers' right to the positions, and that Continental might not have abandoned its bargaining position without a settlement disposing of the pilots' individual claims. Thus, it would have been rational to negotiate a settlement that produced certain and prompt access to a share of the new jobs, avoided the costs and risks associated with major litigation, and was more favorable than a return to work for the significant number of pilots who chose severance. Any discrimination between striking and working pilots in the allocation of the 85-5 bid positions does not represent a breach of the duty, because, if it is correct that ALPA's decision to accept a compromise was rational, some form of allocation was inevitable. Cf. Trans World Airlines, Inc. v. Flight Attendants, 489 U.S. 426, 109 S.Ct. 1225, 103 L.Ed.2d 456; NLRB v. Erie Resistor Corp., 373 U.S. 221, 83 S.Ct. 1139, 10 L.Ed.2d 308, distinguished. Pp. 78-81.
886 F.2d 1438 (CA5 1985), reversed.
STEVENS, J., delivered the opinion for a unanimous Court.
Laurence Gold, Washington, D.C., for petitioner.
Marty Harper, Phoenix, Ariz., for respondents.
Justice STEVENS delivered the opinion of the Court.

1 We granted certiorari to clarify the standard that governs a claim that a union has breached its duty of fair representation in its negotiation of a back-to-work agreement terminating a strike. We hold that the rule announced in Vaca v. Sipes, 386 U.S. 171, 190, 87 S.Ct. 903, 916, 17 L.Ed.2d 842 (1967)—that a union breaches its duty of fair representation if its actions are either "arbitrary, discriminatory, or in bad faith"—applies to all union activity, including contract negotiation. We further hold that a union's actions are arbitrary only if, in light of the factual and legal landscape at the time of the union's actions, the union's behavior is so far outside a "wide range of reasonableness," Ford Motor Co. v. Huffman, 345 U.S. 330, 338, 73 S.Ct. 681, 686, 97 L.Ed. 1048 (1953), as to be irrational.

2 * This case arose out of a bitter confrontation between Continental Airlines, Inc. (Continental), and the union representing its pilots, the Air Line Pilots Association, International (ALPA). On September 24, 1983, Continental filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. Immediately thereafter, with the approval of the Bankruptcy Court, Continental repudiated its collective-bargaining agreement with ALPA and unilaterally reduced its pilots' salaries and benefits by more than half. ALPA responded by calling a strike that lasted for over two years. See 886 F.2d 1438, 1440 (CA5 1989).

3 Of the approximately 2,000 pilots employed by Continental, all but about 200 supported the strike. By the time the strike ended, about 400 strikers had "crossed over" and been accepted for reemployment in order of reapplication. App. to Brief for Continental Airlines, Inc., as Amicus Curiae A11, and n. 8. By trimming its operations and hiring about 1,000 replacements, Continental was able to continue in business. By August 1985, there were 1,600 working pilots and only 1,000 strikers. 886 F.2d, at 1440.

4 The strike was acrimonious, punctuated by incidents of violence and the filing of a variety of law suits, charges, and countercharges. In August 1985, Continental notified ALPA that it was withdrawing recognition of ALPA as the collective-bargaining agent for its pilots. ALPA responded with a federal lawsuit alleging that Continental was unlawfully refusing to continue negotiations for a new collective-bargaining agreement. In this adversary context, on September 9, 1985, Continental posted its "Supplementary Base Vacancy Bid 1985-5" (85-5 bid)—an act that precipitated not only an end to the strike, but also the litigation that is now before us. Ibid.

5 For many years Continental had used a "system bid" procedure for assigning pilots to new positions. Bids were typically posted well in advance in order to allow time for necessary training without interfering with current service. When a group of vacancies was posted, any pilot could submit a bid specifying his or her preferred position (captain, first officer, or second officer), base of operations, and aircraft type. Ibid. In the past, vacant positions had been awarded on the basis of seniority, determined by the date the pilot first flew for Continental. The 85-5 bid covered an unusually large number of anticipated vacancies—441 future captain and first officer positions and an undetermined number of second officer vacancies. Pilots were given nine days—until September 18, 1985—to submit their bids. Id., at 1441.

6 Fearing that this bid might effectively lock the striking pilots out of jobs for the indefinite future, ALPA authorized the strikers to submit bids. Several hundred did so, as did several hundred working pilots. Although Continental initially accepted bids from both groups, it soon became concerned about the bona fides of the striking pilots' offers to return to work at a future date. It therefore challenged the strikers' bids in court and announced that all of the 85-5 bid positions had been awarded to working pilots. Ibid.

7 At this juncture, ALPA intensified its negotiations for a complete settlement. ALPA's negotiating committee and Continental reached an agreement, which was entered as an order by the Bankruptcy Court on October 31, 1985. See App. 7-41. The agreement provided for an end to the strike, the disposition of all pending litigation, and reallocation of the positions covered by the 85-5 bid. See id., at 10-34.

8 The agreement offered the striking pilots three options. Under the first, pilots who settled all outstanding claims with Continental were eligible to participate in the allocation of the 85-5 bid positions. Under the second option, pilots who elected not to return to work received severance pay of $4,000 per year of service (or $2,000 if they had beenfur loughed before the strike began).1 Under the third option, striking pilots retained their individual claims against Continental and were eligible to return to work only after all the first option pilots had been reinstated. See 886 F.2d., at 1441-1442.

9 Pilots who chose the first option were thus entitled to some of the 85-5 bid positions that, according to Continental, had previously been awarded to working pilots. The first 100 captain positions were allocated to working pilots and the next 70 captain positions were awarded, in order of seniority, to returning strikers who chose option one. App. 13. Thereafter, striking and nonstriking pilots were eligible for captain positions on a 1-to-1 ratio. Id., at 13-14. The initial base and aircraft type for a returning striker was assigned by Continental, but the assignments for working pilots were determined by their bids. 886 F.2d, at 1441. After the initial assignment, future changes in bases and equipment were determined by seniority, and striking pilots who were in active service when the strike began received seniority credit for the period of the strike. See App. 22.

II
10 Several months after the settlement, respondents, as representatives of a class of former striking pilots, brought this action against ALPA. See App. 1. In addition to raising other charges not before us, respondents alleged that the union had breached its duty of fair representation in negotiating and accepting the settlement.2 After extensive discovery, ALPA filed a motion for summary judgment. See id., at 3. Opposing that motion, respondents identified four alleged breaches of duty, including the claim that "ALPA negotiated an agreement that arbitrarily discriminated against striking pilots."3

11 The District Court granted the motion, relying alternatively on the fact that the Bankruptcy Court had approved the settlement and on its own finding that, even if the October 31 settlement was merely a private agreement, ALPA did not breach its duty of fair representation. In his oral explanation of his ruling, the District Judge opined that "the agreement that was achieved looks atrocious in retrospect, but it is not a breach of fiduciary duty badly to settle the strike." App. 75.

12 The Court of Appeals reversed. 886 F.2d 1438 (CA5 1989). It first rejected ALPA's argument that a union cannot breach its duty of fair representation without intentional misconduct. The court held that the duty includes " 'three distinct' " components. Id., at 1444 (quoting Tedford v. Peabody Coal Co., 533 F.2d 952, 957, n. 6 (CA5 1976)). A union breaches the duty if its conduct is " 'arbitrary, discriminatory, or in bad faith.' " 886 F.2d, at 1444 (quoting Vaca v. Sipes, 386 U.S., at 190, 87 S.Ct., at 916). With respect to the arbitrariness component, the Court of Appeals followed Fifth Circuit precedent, stating:

13 " 'We think a decision to be non-arbitrary must be (1) based upon relevant, permissible union factors which excludes the possibility of it being based upon motivations such as personal animosity or political favoritism; (2) a rational result of the consideration of these factors; and (3) inclusive of a fair and impartial consideration of the interests of all employees.' " 886 F.2d, at 1444 (quoting Tedford, 533 F.2d, at 957) (footnotes omitted and emphasis added by the Court of Appeals).

14 Applying this arbitrariness test to the facts of this case, the Court of Appeals concluded that a jury could find that ALPA acted arbitrarily because the jury could find that the settlement "left the striking pilots worse off in a number of respects than complete surrender to [Continental]." 886 F.2d, at 1445. That conclusion rested on the court's opinion that the evidence suggested that, if ALPA had simply surrendered and made an unconditional offer to return to work, the strikers would have been entitled to complete priority on all the positions covered by the 85-5 bid.4 Relying on a District Court decision in litigation between ALPA and another airline,5 the court rejected ALPA's argument that the 85-5 bid positions were arguably not vacancies because they had already been assigned to working pilots. Id., at 1446. In addition, the Court of Appeals ruled that the evidence raised a genuine issue of material fact whether the favored treatment of working pilots in the allocation of 85-5 bid positions constituted discrimination against those pilots who had chosen to strike. Id., at 1446-1447.

15 The court held that respondents had raised a jury question whether ALPA had violated its duty to refrain from "arbitrary" conduct, and the court therefore remanded the case for trial. Id., at 1448-1449. Because it reversed the District Court's grant of summary judgment on the arbitrariness component, the Court of Appeals did not decide whether summary judgment on the fair representation claim might be precluded by the existence of other issues of fact.6

16 We granted certiorari to review the Court of Appeals' statement of the standard governing an alleged breach of a union's duty of fair representation and the court's application of the standard in this case. 498 U.S. 806, 111 S.Ct. 37, 112 L.Ed.2d 14 (1990).

III
17 ALPA's central argument is that the duty of fair representation requires only that a union act in good faith and treat its members equally and in a nondiscriminatory fashion. The duty, the union argues, does not impose any obligation to provide adequate representation. The District Court found that there was no evidence that ALPA acted other than in good faith and without discrimination.7 Because of its view of the limited scope of the duty, ALPA contends that the District Court's finding, which the Court of Appeals did not question, is sufficient to support summary judgment.

18 The union maintains, not without some merit, that its view that courts are not authorized to review the rationality of good-faith, nondiscriminatory union decisions is consonant with federal labor policy. The Government has generally regulated only "the process of collective bargaining," H.K. Porter Co. v. NLRB, 397 U.S. 99, 102, 90 S.Ct. 821, 823, 25 L.Ed.2d 146 (1970) (emphasis added), but relied on private negotiation between the parties to establish "their own charter for the ordering of industrial relations," Teamsters v. Oliver, 358 U.S. 283, 295, 79 S.Ct. 297, 304, 3 L.Ed.2d 312 (1959). As we stated in NLRB v. Insurance Agents, 361 U.S. 477, 488, 80 S.Ct. 419, 426, 4 L.Ed.2d 454 (1960), Congress "intended that the parties should have wide latitude in their negotiations, unrestricted by any governmental power to regulate the substantive solution of their differences." See also Carbon Fuel Co. v. Mine Workers, 444 U.S. 212, 219, 100 S.Ct. 410, 419, 62 L.Ed.2d 394 (1979).

19 There is, however, a critical difference between governmental modification of the terms of a private agreement and an examination of those terms in search for evidence that a union did not fairly and adequately represent its constituency. Our decisions have long recognized that the need for such an examination proceeds directly from the union's statutory role as exclusive bargaining agent. "[T]he exercise of a granted power to act in behalf of others involves the assumption toward them of a duty to exercise the power in their interest and behalf." Steele v. Louisville & Nashville R. Co., 323 U.S. 192, 202, 65 S.Ct. 226, 232, 89 L.Ed. 173 (1944).

20 The duty of fair representation is thus akin to the duty owed by other fiduciaries to their beneficiaries. For example, some Members of the Court have analogized the duty a union owes to the employees it represents to the duty a trustee owes to trust beneficiaries. See Teamsters v. Terry, 494 U.S. 558, 567-568, 110 S.Ct. 1339, 1346, 108 L.Ed.2d 519 (1990); id., at 584-588, 110 S.Ct., at 1355-1357 (KENNEDY, J., dissenting). Others have likened the relationship between union and employee to that between attorney and client. See id., at 582, 110 S.Ct., at 1353-1354 (STEVENS, J., concurring in part and concurring in judgment). The fair representation duty also parallels the responsibilities of corporate officers and directors toward shareholders. Just as these fiduciaries owe their beneficiaries a duty of care as well as a duty of loyalty, a union owes employees a duty to represent them adequately as well as honestly and in good faith. See, e.g., Restatement (Second) of Trusts § 174 (1959) (trustee's duty of care); Strickland v. Washington, 466 U.S. 668, 686, 104 S.Ct. 2052, 2063, 80 L.Ed.2d 674 (1984) (lawyer must render "adequate legal assistance"); Hanson Trust PLC v. ML SCM Acquisition Inc., 781 F.2d 264, 274 (CA2 1986) (directors owe duty of care as well as loyalty).

21 ALPA suggests that a union need owe no enforceable duty of adequate representation because employees are protected from inadequate representation by the union political process. ALPA argues, as has the Seventh Circuit, that employees "do not need . . . protection against representation that is inept but not invidious" because if a "union does an incompetent job . . . its members can vote in new officers who will do a better job or they can vote in another union." Dober v. Roadway Express, Inc., 707 F.2d 292, 295 (CA7 1983). In Steele, the case in which we first recognized the duty of fair representation, we also analogized a union's role to that of a legislature. See 323 U.S., at 198, 65 S.Ct., at 230. Even legislatures, however, are subject to some judicial review of the rationality of their actions. See, e.g., United States v. Carolene Products Co., 304 U.S. 144, 58 S.Ct. 778, 82 L.Ed. 1234 (1938); Department of Agriculture v. Moreno, 413 U.S. 528, 93 S.Ct. 2821, 37 L.Ed.2d 782 (1973).

22 ALPA relies heavily on language in Ford Motor Co. v. Huffman, 345 U.S. 330, 73 S.Ct. 681, 97 L.Ed. 1048 (1953), which, according to the union, suggests that no review of the substantive terms of a settlement between labor and management is permissible. In particular, ALPA stresses our comment in the case that "[a] wide range of reasonableness must be allowed a statutory bargaining representative in serving the unit it represents, subject always to complete good faith and honesty of purpose in the exercise of its discretion." Id., at 338, 73 S.Ct., at 686. Unlike ALPA, we do not read this passage to limit review of a union's actions to "good faith and honesty of purpose," but rather to recognize that a union's conduct must also be within "[a] wide range of reasonableness."

23 Although there is admittedly some variation in the way in which our opinions have described the unions' duty of fair representation, we have repeatedly identified three components of the duty, including a prohibition against "arbitrary" conduct. Writing for the Court in the leading case in this area of the law, Justice White explained: