Air Line Pilots Ass'n, International v. Guilford Transportation Industries, Inc.

United States Court of Appeals
For the First Circuit

No. 04-2409

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL,

Plaintiff, Appellee,

v.

GUILFORD TRANSPORTATION INDUSTRIES, INC., ET AL.,

Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph A. DiClerico, Jr., U.S. District Judge]
[Hon. James R. Muirhead, U.S. Magistrate Judge]

Before

Boudin, Chief Judge,
Selya, Circuit Judge, and
Cyr, Senior Circuit Judge.

William G. Miossi, with whom Joseph E. Schuler, Eric L.
Hirschhorn, Winston & Strawn, R. Matthew Cairns, and Ransmeier &
Spellman were on brief, for appellants.
Marcus C. Migliore, with whom Julie P. Glass was on brief, for
appellee.

February 28, 2005
 SELYA, Circuit Judge. Plaintiff-appellee Air Line Pilots

Association (ALPA) brought this action under the Railway Labor Act

(RLA), 45 U.S.C. §§ 151-188, seeking to enjoin the defendants from

engaging in what ALPA described as "a brazen and apparently

successful effort to destroy a union," Appellee's Br. at 3, by

transferring work from a unionized firm to its non-unionized

corporate sibling. A magistrate judge found that a major dispute

existed as that term is used in the jurisprudence of the RLA and

further found that the defendants had engaged in prohibited

conduct. He therefore recommended the imposition of a preliminary

injunction. The district court concurred and issued the requested

injunction. Concluding, as we do, that the court did not apply the

correct legal standards, we vacate the injunction and remand for

further proceedings consistent with this opinion.

I. THE STATUTORY SCHEME

When Congress envisioned a need to create a separate

labor regime for railroads in order to mitigate the potential for

disruption of interstate travel and transportation of goods, it

conceived the RLA. See Detroit & Toledo Shore Line R.R. Co. v.

United Transp. Union, 396 U.S. 142, 148-49 (1969). It subsequently

extended this regime to the airline industry. See Act of April 10,

1936, 49 Stat. 1189. The RLA now regulates the relationship

between labor and management in both industries.

2
 The RLA evinces a strong preference for alternative

dispute resolution and sharply limits judicial involvement in labor

disputes. See Tex. & New Orleans R.R. Co. v. Bhd. of Ry. & S.S.

Clerks, 281 U.S. 548, 562-65 (1930). One manifestation of this

bias is that, to the extent any such dispute involves the

interpretation of an existing collective bargaining agreement

(CBA), it must be submitted to binding arbitration. See 45 U.S.C.

§ 184; see also Consol. Rail Corp. v. Ry. Labor Execs.' Ass'n, 491

U.S. 299, 303-04 (1989) (Conrail). Even when a dispute goes beyond

the parameters of the CBA, the RLA requires union and management to

engage in an elaborate set of mediation procedures. See 45 U.S.C.

§§ 155, 183. While this pavane is in progress, both parties must

maintain the status quo ante concerning rates of pay, working

conditions, and the like. Conrail, 491 U.S. at 302-03. Only at

the conclusion of the mediation process may the parties resort to

self-help. Id. at 303.

The Supreme Court has denominated disputes that touch

upon the proper interpretation of a CBA as "minor," and has made it

pellucid that courts have no jurisdiction in such cases. Elgin,

Joliet & E. Ry. Co. v. Burley, 325 U.S. 711, 723-24 (1945). A

dispute is considered minor whenever the challenged conduct is

"arguably justified" either by the text and negotiating history of

the CBA or by the past practices of the parties. Conrail, 491 U.S.

at 307. Disputes falling outside the purview of the CBA are termed

3
"major." Burley, 325 U.S. at 723-24. In such cases, a federal

court may enjoin the parties to maintain the status quo while the

RLA's mediation process is ongoing. Conrail, 491 U.S. at 303.

Once the mediation procedures have concluded, the court must vacate

any injunction. See id.

The RLA contemplates the existence of two other types of

disputes. A representational dispute involves a union's claim to

be the lawful representative of certain employees. Air Line Pilots

Ass'n, Int'l v. Tex. Int'l Airlines, Inc., 656 F.2d 16, 19 (2d Cir.

1981). In those cases, decisional authority is vested in the

National Mediation Board. 45 U.S.C. § 152, Ninth. Courts have no

jurisdiction to adjudicate representational disputes involving

railroads or airlines. See Tex. Int'l, 656 F.2d at 19.

Another type of dispute concerns allegations that an

employer's conduct interferes with employees' rights to organize

and designate an exclusive bargaining agent. Such organizational

disputes implicate 45 U.S.C. § 152, Third and Fourth. Those

provisions bar covered employers from meddling in, coercing, or

unduly influencing employees' representational choices and from

interfering with the right to unionize. Atlas Air, Inc. v. Air

Line Pilots Ass'n, 232 F.3d 218, 224 (D.C. Cir. 2000). In contrast

to other species of RLA cases, the courts have jurisdiction to

decide certain questions concerning these statutory rights. See,

e.g., Ry. Labor Execs.' Ass'n v. Boston & Me. Corp., 808 F.2d 150,

4
157 (1st Cir. 1986). If a court finds a statutory violation, it

may issue injunctive relief. See, e.g., id. at 158-59. Such

relief is appropriate primarily in precertification disputes

regarding employees' choice of union representatives and

participation in the collective bargaining process. See TWA, Inc.

v. Indep. Fed'n of Flight Attendants, 489 U.S. 426, 440-41 (1989).

We have, however, contemplated that postcertification relief may be

appropriate in extremely limited circumstances. See Wightman v.

Springfield Terminal Ry. Co., 100 F.3d 228, 234 (1st Cir. 1996)

(dictum).

II. THE CASE AT BAR

In 1999, Guilford Transportation Industries, Inc.

(Guilford) formed a wholly-owned subsidiary, Pan American Airlines,

Inc. (PAA), as a repository for the acquired assets of a bankrupt

airline. PAA placed those assets in a wholly-owned subsidiary, Pan

American Airways Corp. (Pan Am), which began offering commercial

airline service aboard a fleet of leased Boeing 727 jet aircraft.

Over time, Pan Am's service graduated from charter flights to

scheduled flights originating at airports on the East Coast and in

the Caribbean.

From the beginning, Pan Am's airplanes were flown by the

pilot force of its bankrupt predecessor. Pan Am and the pilots'

union — ALPA — entered into a CBA on November 15, 1999. At its

high point, Pan Am employed approximately ninety pilots. The skies

5
were not friendly, however, and by August of 2004 that number had

shrunk to thirty.

Finances explain this reduction in force. The record

shows that Pan Am lost tens of millions of dollars over

approximately five years. These losses took a toll, and Pan Am

informed federal regulators in June of 2004 that it would cease all

flight operations on October 31, 2004. Pan Am hewed to that line

and is now in the process of winding up its affairs.

There is, however, more to the story. In 1999, PAA

formed a second wholly-owned subsidiary, Boston-Maine Airways Corp.

(Boston-Maine). Boston-Maine, a commercial airline, employs only

non-union pilots. Initially, it operated a fleet of small aircraft

that included two CASA-212 turboprop cargo planes and ten Jetstream

3100 nineteen-seat passenger aircraft.

Boston-Maine had higher aspirations and, in 2002, it

applied to the United States Department of Transportation and the

Federal Aviation Administration (FAA) for permission to fly Boeing

727 aircraft. Despite ALPA's vigorous opposition, the federal

regulators approved the application. Boston-Maine began operating

727s in commercial service in the summer of 2004 and Pan Am

thereafter contracted with Boston-Maine to fly certain Pan Am

routes. That move triggered the commencement of the instant

6
action. In its complaint, filed on September 1, 2004,1 ALPA

alleged that Boston-Maine's development of the capacity to fly

727s, coupled with its subsequent contracting with Pan Am

(resulting in the transfer of certain work from Pan Am to Boston-

Maine), contravened both the CBA and the unionized pilots'

statutory rights.

Simultaneous with the filing of its complaint, ALPA moved

for temporary and preliminary injunctive relief seeking, inter

alia, to prohibit Boston-Maine from operating large aircraft

(including 727s) in commercial service while ALPA and Pan Am

negotiated changes to the CBA. The district court referred the

motion to a magistrate judge. See 28 U.S.C. § 636(b)(1)(B); Fed.

R. Civ. P. 72(b). Following a two-day evidentiary hearing, the

magistrate judge recommended that the court characterize the

dispute as major, reasoning that Pan Am and Boston-Maine should be

treated as a single entity and that the CBA could not plausibly be

interpreted to justify Pan Am's use of Boston-Maine to operate

flights that otherwise would be flown by ALPA-represented pilots.

The magistrate judge also recommended a finding that Pan Am and

Boston-Maine had violated the unionized pilots' statutory rights

because the attempted creation of a parallel 727 operation

constituted an effort to interfere with the statutorily protected

1
ALPA named Guilford, Boston-Maine, and Pan Am as defendants,
but not PAA. The omission is fribbling, and nothing turns on it.

7
right to union representation. See Air Line Pilots Ass'n, Int'l v.

Guilford Transp. Indus., Inc., No. 04-331, 2004 WL 2203570 (D.N.H.

Sept. 17, 2004).

The district court spurned the defendants' timely

objections and adopted the magistrate judge's report "in its

entirety."2 Air Line Pilots Ass'n, Int'l v. Guilford Transp.

Indus., Inc., No. 04-331, 2004 WL 2318478, at *12 (D.N.H. Oct. 13,

2004). On the same date, the court issued a preliminary injunction

ordering the defendants

1. To restore to the status quo rates
of pay, rules and working conditions of the
Pan Am flight crew members as they existed on
July 15, 2004, including but not limited to,
all those embodied in the collective
bargaining agreement between Pan Am and ALPA,
until all required bargaining, mediation and
dispute resolution procedures of the Railway
Labor Act are exhausted.

2. To refrain from using Boston-Maine,
or any other affiliated operation, to operate
[Boeing]-727s or any other large jet aircraft
in service traditionally performed by Pan Am
and that Pan Am is capable of performing.

3. To refrain from transferring to
Boston-Maine any aircraft from the Pan Am
certificate to the Boston-Maine certificate.

Two days later, the district court rebuffed the defendants' motion

for a stay.

2
Inasmuch as the district judge adopted the findings of the
magistrate judge, we take an institutional view and refer to those
findings as the findings of the district court.

8
 The defendants promptly brought this interlocutory

appeal, see 28 U.S.C. § 1292(a)(1), and requested an appellate

stay. We denied that request on October 22, 2004, but expedited

the appeal. Following briefing and oral argument, we took the

matter under advisement on December 7, 2004.

III. STANDARD OF REVIEW

We review the district court's issuance of a preliminary

injunction for abuse of discretion. Charlesbank Equity Fund II v.

Blinds to Go, Inc., 370 F.3d 151, 158 (1st Cir. 2004). In doing

so, we exercise de novo review as to the lower court's conclusions

of law, while accepting its findings of fact to the extent that

those findings are not clearly erroneous. Bl(a)ck Tea Soc'y v.

City of Boston, 378 F.3d 8, 11 (1st Cir. 2004).

Whether a preliminary injunction should issue usually

depends upon a medley of four factors:

(1) the likelihood of success on the merits;
(2) the potential for irreparable harm if the
injunction is denied; (3) the balance of
relevant impositions, i.e., the hardship to
the nonmovant if enjoined as contrasted with
the hardship to the movant if no injunction
issues; and (4) the effect (if any) of the
court's ruling on the public interest.

Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 15

(1st Cir. 1996). Although the district court must consider all

four factors, "[t]he sine qua non of this four-part inquiry is

likelihood of success on the merits; if the moving party cannot

demonstrate that he is likely to succeed in his quest, the

9
remaining factors become matters of idle curiosity." New Comm

Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir.

2002).

ALPA argues that this four-part inquiry does not apply in

full flower to disputes under the RLA and, specifically, that a

showing of irreparable harm is not a condition precedent to

preliminary injunctive relief in such cases. This argument rests

on Supreme Court dictum. See Conrail, 491 U.S. at 303 ("The

district courts have subject-matter jurisdiction to enjoin a

violation of the status quo pending completion of the required

procedures, without the customary showing of irreparable

injury.").3 Some courts have given full allegiance to this dictum.

See, e.g., CSX Transp., Inc. v. Bhd. of Maint. of Way Employees,

327 F.3d 1309, 1320 (11th Cir. 2003); United Transp. Union v.

Kansas City So. Ry. Co., 172 F.3d 582, 585 (8th Cir. 1999). This

court, however, has held, post-Conrail, that the Norris-LaGuardia

Act applies to injunctions issued under the RLA, Int'l Ass'n of

Machinists v. E. Airlines, Inc., 925 F.2d 6, 9 (1st Cir. 1991), and

that statute explicitly requires a showing of irreparable injury,

see 29 U.S.C. § 107 (limiting jurisdiction to issue injunctive

relief in cases growing out of labor disputes to those involving a

threat of "substantial and irreparable injury").

3
It is unclear whether the Court's dictum referred to all
injunctions issued under the RLA or merely to status quo
injunctions issued in the context of major disputes.

10
 We find it unnecessary to resolve this apparent tension

today. In the last analysis, this appeal turns on the likelihood

of success, so we leave for another time the extent to which a

showing of irreparable harm is a necessary precondition for

preliminary injunctive relief under the RLA.

IV. ANALYSIS

Although ALPA has lumped its grievances together, we

think it is useful to envision the challenged conduct as comprising

two practices: contracting out and diversion of business. By

contracting out, we mean Pan Am's contracting with Boston-Maine to

fly certain Pan Am flights after Boston-Maine had developed a large

aircraft service. By diversion of business, we mean Pan Am's

decision to cease all operations while Boston-Maine, having

developed a large aircraft service, continues to fly 727s over at

least some of Pan Am's wonted routes. We address these practices

sequentially. Before doing so, however, we pause to mention the

doctrine of corporate veil-piercing.

A. Veil-Piercing.

ALPA suggests that the corporate veils that separate

Guilford, Pan Am, and Boston-Maine should be pierced and the three

companies treated as a single entity. ALPA's effort to frame the

dispute in these terms stems from its overly expansive reading of

our decision in an earlier RLA case, namely, Brotherhood of

Locomotive Engineers v. Springfield Terminal Railway Co., 210 F.3d

11
18 (1st Cir. 2000). Although we deemed it prudent there to make a

veil-piercing inquiry, see id. at 25-33, such an inquiry will be

superfluous in many (perhaps most) RLA cases. We explain briefly.

If a company has two healthy subsidiaries — one unionized

and one not — an attempt to shift work from the former to the

latter could, depending upon the terms of the CBA, raise a contract

dispute susceptible to arbitration. Such a dispute would be beyond

the reach of our jurisdiction and, thus, no judicial inquiry —

veil-piercing or otherwise — would be necessary.

Of course, the diversion of work from a unionized

subsidiary to a non-union one also might constitute a major dispute

(if, say, the matter were not addressed by either the terms of the

CBA or prior custom and usage between the parties). In that case

the mediation processes of the RLA would come into play. This

scenario, like the first scenario, does not engender any need for

a veil-piercing analysis; the appropriate inquiry is simply a

matter of whether the two subsidiaries are commonly owned. See

Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263, 275-76

(1965); Burlington N. R.R. Co. v. United Transp. Union, 862 F.3d

1266, 1275 (7th Cir. 1988).

We do not wish to paint with too broad a brush. While a

separate veil-piercing analysis will prove unnecessary in many

cases, we recognize that, in certain situations, such an analysis

may be appropriate. That would include, for example, situations in

12
which an employer attempts to use a dummy corporation to avoid its

collectively bargained obligations. See, e.g., NLRB v. W. Dixie

Enters., Inc., 190 F.3d 1191, 1194 (11th Cir. 1999) (applying this

principle in a National Labor Relations Act (NLRA) case); NLRB v.

Hosp. San Rafael, Inc., 42 F.3d 45, 50-53 (1st Cir. 1994)

(similar).

Here, however, ALPA has made no allegation that either

Pan Am or Boston-Maine is a sham, and the facts in the record belie

any such possibility. Accordingly, we can eschew any detailed

veil-piercing discussion in this case. Instead, we emulate the

Supreme Court's approach and accept that Guilford, Pan Am, and

Boston-Maine are commonly controlled and that Pan Am may not use

its corporate affiliates as a means of evading its obligations

under either the CBA or the RLA. See Springfield Terminal, 210

F.3d at 29-30, 32 n.7.

B. Contracting Out.

With respect to contracting out, the first step in our

analysis is to determine what type of dispute is at issue. The

relevant facts are largely uncontroverted. By August of 2004, the

FAA had granted Boston-Maine authority to operate up to three large

aircraft. Pursuant to that authorization, Boston-Maine had begun

operating one Boeing 727 and Pan Am had begun contracting with

Boston-Maine to undertake some scheduled Pan Am flights. The

threshold question is whether the controversy that erupted over

13
these events constitutes a major or minor dispute as those terms

are used in the lexicon of the RLA.

The defendants maintain that the dispute is minor because

their position is arguably justified by the terms of the CBA. In

this regard, they emphasize the CBA's "scope" clause, CBA § 1.B,

which restricts the conduct of "all flying by and for the service

of the Company on aircraft owned or leased by and for the Company

and utilizing the authority granted under the Company's operating

certificate" to "pilots whose names appear on the Pilots' System

Seniority List."4 Noting that the scope clause further provides

that, with exceptions not pertinent here, "the Company retains all

authority and rights to manage its operations," the defendants

argue that both the conduct of parallel flight operations by Pan

Am's corporate sibling and the subsequent contracting out are

allowable.

The defendants find additional support for their position

in the bargaining that predated the CBA. They point out that,

during the negotiations, ALPA unsuccessfully proposed broad

language for the scope clause — language that, at least arguably,

would have prevented Pan Am's corporate affiliates from developing

parallel businesses. Because courts look to the parties'

bargaining history for help in determining whether a given dispute

is major or minor, see Transp.-Comm. Employees Union v. Union Pac.

4
"Company" is defined elsewhere in the CBA as meaning Pan Am.

14
R.R. Co., 385 U.S. 157, 160-61 (1966); Bhd. of Maint. of Way

Employees v. Atchison, Topeka & Santa Fe Ry. Co., 138 F.3d 635,

640-41 (7th Cir. 1997), the defendants view this track record as

strengthening their hand.

In addition to arguing that ALPA bargained away any

restriction on the defendants' right to engage in parallel service

through affiliated airlines, the defendants also assert that the

CBA explicitly authorizes Pan Am to contract with others to fly

scheduled Pan Am flights. This assertion rests primarily on

section 1.B.2 of the CBA, which provides that Pan Am "may enter

into aircraft interchange agreements with other carriers if such

interchange agreements do not result in the furlough of any of the

Company's pilots." The defendants claim that ALPA was aware of Pan

Am's interest in contracting with Boston-Maine prior to the

execution of the CBA; that this history informs the text of section

1.B.2 and makes meaningful the absence of any express prohibition

on contracting with corporate affiliates; and that, since the

contracting out did not result in furloughing any Pan Am pilots

(although the pilots were, of course, scheduled for fewer hours),

it was fully in accord with section 1.B.2.

Finally, the defendants conjoin the scope clause and

section 1.B.2 and asseverate that the combination amply satisfies

the company's modest burden of demonstrating that its

interpretation of the CBA is arguably justified. See Conrail, 491

15
U.S. at 307 (holding that the company's burden to establish

exclusive arbitral jurisdiction is "relatively light").

For its part, ALPA derides this focus on the language and

history of the CBA. It contends that, regardless of those

features, the RLA itself prohibits Boston-Maine from either

expanding into large aircraft service or entering into contracts to

operate any Pan Am flights. As a fallback, ALPA raises the decibel

level and declaims that the CBA, notwithstanding its language and

history, cannot in good conscience be interpreted to "authorize the

massive unilateral transfer of work to [a] non-union alter-ego,

resulting in the abrogation of all RLA rights of the Pan Am

pilots." Appellee's Br. at 10. We use ALPA's contentions to frame

the issue.

ALPA's statutory argument relies principally on our

decision in Springfield Terminal. ALPA reads that case to stand

for the proposition that — irrespective of either the language in

or the history behind a CBA — an employer subject to the RLA may

never use a commonly owned non-union affiliate to perform work of

the type traditionally performed by union members. See Springfield

Terminal, 210 F.3d at 33 ("[E]ven the loss of completely new

business, never performed by the unions, may be considered a change

in the working conditions if the unions traditionally performed

work of this type." (citation and internal quotation marks

omitted)). Clinging to this thesis, ALPA accuses the defendants of

16
contravening the RLA simply by expanding Boston-Maine's operations

to include 727 service (and, thus, performing work traditionally

done by Pan Am's unionized pilots).

We agree that an employer sometimes may create a major

dispute by transferring work the union already has been doing.

See, e.g., id. at 31-32. So too an employer sometimes may create

a major dispute by shifting new work to a corporate affiliate. Id.

at 33 (dictum). But "sometimes" is the operative word. The

essence of any dispute under the RLA derives from the particular

relationship of the parties, see Shore Line, 396 U.S. at 152-54;

Union Pac., 157 U.S. at 161, and Springfield Terminal did not lay

down a blanket rule applicable in every case or in all

circumstances. Context is of paramount importance: the transfer

of existing work or of new work opportunities gives rise to a major

dispute only if the union can be said to have had an exclusive

right to the work. See United Transp. Union v. Gateway W. Ry. Co.,

78 F.3d 1208, 1215-16 (7th Cir. 1996). ALPA makes no such claim.

The most that its brief suggests — and that reading is a stretch —

is that because Boston-Maine previously had limited itself to

flying smaller aircraft, ALPA reasonably expected that all large

aircraft would be operated by Pan Am.

At this stage of the proceedings, that expectation cannot

carry the day. Even if ALPA's construct is objectively reasonable

(a matter on which we take no view), it is not so irresistible that

17
it overwhelms the defendants' contrary and otherwise plausible

interpretation of the existing CBA. After all, if a dispute

involves two reasonable but competing interpretations of the

parties' rights under a CBA, the dispute is not major. See Me.

Cent. R.R. Co. v. United Transp. Union, 787 F.2d 780, 782 (1st Cir.

1986). In that event, both parties' positions are arguably

justified, so the dispute is minor. Conrail, 491 U.S. at 307.

ALPA also places Springfield Terminal at the head of a

line of RLA cases that found major disputes to exist when an

employer transferred work from a unionized company to a commonly

owned non-union affiliate. See, e.g., Springfield Terminal, 210

F.3d at 33; Burlington N., 862 F.2d at 1275-76; Butte, Anaconda &

Pac. Ry. Co. v. Bhd. of Locomotive Firemen, 268 F.2d 54, 59-60 (9th

Cir. 1959). Once again, context is critically important. While

each of those cases involved the transfer of union work to a

nonunionized subsidiary, none of them involved an allegation that

an existing CBA explicitly authorized the transfer. The RLA does

not categorically pretermit all transfers of union work to non-

union affiliates, and we believe that the parties to a CBA are free

to contract around any prohibition against the transfer of union

work to non-union affiliates. The defendants have made a colorable

argument that the parties in this case did just that.5

5
ALPA also contends that the defendants' interpretation of the
CBA is unreasonable (and, thus, not arguably justified) because it
would allow Pan Am to abrogate the pilots' entire panoply of RLA-

18
 To sum up, the defendants plausibly assert that the

parties authorized an arrangement, memorialized in the CBA, to

allow Pan Am's corporate affiliates to operate large aircraft

alongside Pan Am and, subject to certain carefully circumscribed

conditions, to contract with other airlines (including Boston-

Maine) to operate some of Pan Am's scheduled flights. Because such

an interpretation of the CBA is neither obviously insubstantial nor

barred by the RLA, the "contracting out" dispute between ALPA and

the defendants is minor. It follows inexorably that arbitration

affords ALPA's sole avenue for relief with respect to this

practice. See, e.g., Nat'l R.R. Passenger Corp. v. Int'l Ass'n of

Machinists, 915 F.2d 43, 49 (1st Cir. 1990). Consequently, the

district court erred in predicating injunctive relief on this

ground.6

C. Diversion of Business.

The second challenged practice concerns the defendants'

decision to close down Pan Am while continuing 727 service through

protected rights. But ALPA glosses over two points. First, the
CBA explicitly limits Pan Am's right to outsource work by providing
that such contracting is impermissible if it brings about the
furloughing of one or more union pilots. Thus, the feared across-
the-board usurpation of RLA-protected rights is wholly speculative.
Second, as to contracting out, ALPA has shown only that Boston-
Maine operated a few Pan Am flights during the time frame preceding
the issuance of the preliminary injunction.
6
Of course, we cannot — and do not — decide whether the CBA
actually permitted the defendants to engage in the challenged
conduct. As in any minor dispute under the RLA, that judgment is
for the arbitrator.

19
the instrumentality of Boston-Maine. Building on the commonality

of ownership that links Pan Am and Boston-Maine, ALPA alleges that

the common owners engaged in a scheme to release themselves

entirely from their collectively bargained obligations while still

retaining Pan Am's core business under the Boston-Maine label.

ALPA insists that, at a minimum, this conduct presents a major

dispute and that, alternatively, it violates the "organizational

rights" protections of the RLA, 45 U.S.C. § 152, Third and Fourth

(independent of any question of contractual breach).

We first consider whether a major dispute exists. Had

Pan Am remained in business but engaged in a wholesale transfer of

the work of its unionized pilots to Boston-Maine, that audacity

might well have fomented a major dispute. Although we found

plausible the defendants' argument that the CBA allowed Pan Am to

contract out some flights, see supra Part IV(B), we doubt that the

CBA reasonably can be interpreted to give Pan Am carte blanche to

contract out all flights.

Here, however, Pan Am has gone out of business. That

fact is crucial to the proper analysis of the issues before us.

The Supreme Court has held squarely that decisions to go out of

business are "so peculiarly matters of management prerogative that

they [will] never constitute violations" of the RLA. Pittsburgh &

Lake Erie R.R. Co. v. Ry. Labor Execs.' Ass'n, 491 U.S. 490, 507

20
(1989) (quoting Textile Workers, 380 U.S. at 269).7 Although such

decisions profoundly affect workers, companies cannot be forced to

stumble along on life support contrary to the interests of their

shareholders. Thus, the continued existence of a company is simply

not among the constellation of issues on which an employer is

obliged to bargain.8 Id. at 509.

In the instant case, there is a twist: although Pan Am

had announced its intention to go out of business prior to the

commencement of this suit (and has since done so), the defendants'

interlocked management decided that Boston-Maine should continue to

fly. Management apparently intends that Boston-Maine will take

over at least some of Pan Am's former business (the extent is

unclear, partially because the lower court's injunction precluded

any such activity). Thus, the question reduces to whether a non-

7
Our dissenting brother suggests that the defendants have
forfeited any argument based on Pittsburgh & Lake Erie by not
citing that case to the district court or in their opening brief on
appeal. He confuses the making of an argument with the citation of
a case. Although the defendants did not cite Pittsburgh & Lake
Erie until their reply brief, they have — from the beginning of
this case — made the argument that because Pan Am went out of
business entirely, no transfer of work took place. Therefore,
there is no procedural barrier to our consideration of this
argument.
8
That an employer has no obligation to bargain over the
decision to go out of business does not mean that it has no
obligation to bargain over the effects of that decision. To the
contrary, the RLA requires employers to bargain over those effects
if the union seasonably requests such bargaining. Pittsburgh &
Lake Erie, 491 U.S. at 512. The union may not, however, leverage
that obligation into a means of delaying or otherwise impeding
management's decision to shutter the shop. Id.

21
union corporate affiliate may, when a unionized carrier closes its

doors, assume portions of the latter's business portfolio without

either triggering a major dispute or violating the RLA.

ALPA seeks to avoid a direct answer to this question,

insisting that the rule of Pittsburgh & Lake Erie is inapplicable

to this case because the defendants shut down only part of their

aggregate business (i.e., they permanently grounded Pan Am but kept

Boston-Maine aloft). The union's position is incorrect. In

Textile Workers, an NLRA case heavily relied upon by the Pittsburgh

& Lake Erie Court, the defendant ran a number of manufacturing

operations as separate subsidiaries. After workers at one plant

voted to unionize, management liquidated that subsidiary while

allowing other subsidiaries in the same line of business to remain

active. Textile Workers, 380 U.S. at 265-67. Although the Court

left open the possibility that closing the unionized plant might be

considered an unfair labor practice if it were done for the primary

purpose of intimidating employees at other commonly owned

facilities, id. at 275-76, it never suggested that the right to

cease operations without first bargaining with the union depended

on management's willingness to halt similar operations in other

parts of the corporate empire. Similarly, the dissent's effort to

distinguish Pittsburgh & Lake Erie on the ground that the sale of

assets in that case was between unrelated corporations is

22
unavailing. Although the companies there were unrelated, the Court

never suggested that anything turned on that fact.

The case law reflects the ubiquity of the Pittsburgh &

Lake Erie doctrine and its applicability under the RLA. Numerous

cases hold that a railroad owning multiple lines may sell some and

keep others in operation without triggering bargaining obligations

under the RLA. See, e.g., Ry. Labor Execs.' Ass'n v. CSX Transp.,

Inc., 938 F.2d 224, 229 (D.C. Cir. 1991); Chi. & N.W. Transp. Co.

v. Ry. Labor Execs.' Ass'n, 908 F.2d 144, 152, 155 (7th Cir. 1990).

Thus, we find the teachings of Pittsburgh & Lake Erie fully

applicable to this case.

Pittsburgh & Lake Erie does not, however, address what —

if any — restrictions devolve upon surviving corporate affiliates

after a unionized carrier shuts its doors. We conclude that, as

long as the unionized company actually terminates operations and

would have done so regardless of the availability of a non-union

affiliate as a vehicle for picking up the pieces of its abandoned

business, the RLA itself creates no restrictions either on the

company that is going out of business or on the affiliate that is

seeking to salvage the defunct company's operations.

Our starting point remains the Supreme Court's holding

that a company may cease its operations for any reason or no reason

without triggering an obligation to bargain. That is, the

continued existence of the company — and by extension the union

23
members' jobs — simply is not guaranteed by the RLA. Pittsburgh &

Lake Erie, 491 U.S. at 509. And since closing is management's

prerogative, it would make little sense to condition the exercise

of that prerogative on management's commitment to refrain from

engaging in similar businesses in the future. For example, if Pan

Am closed and its owners subsequently decided to start a new

airline from scratch, we do not see how the RLA would preclude them

from the attempt. Conceptually, it should not ordinarily make a

difference that management is continuing to pursue similar

operations through existing, rather than new, businesses.

On balance, this rule serves the interests of all

concerned. If an airline is going under, it benefits no one to

prevent an affiliated corporation from assuming all or part of its

business. Rather than insisting that the baby be thrown out with

the bath water, it makes sense to allow affiliates to continue

those aspects of the closed corporation's business that they deem

viable, thereby maintaining some jobs, continuing services

beneficial to the public, and recouping some profit for the owners.

It might be feared that such a rule will create an

incentive for management to cut and run rather than trying to make

a go of a struggling business, and that, if this occurs, it will

lead to the loss of union jobs. For that argument to prevail,

however, it would be necessary for union members to have some right

under the RLA to insist that management try to make a go of a

24
unionized business. But as we have pointed out, union members have

no such right. See Pittsburgh & Lake Erie, 491 U.S. at 509

("Absent statutory direction to the contrary, the decision of a

railroad employer to go out of business and consequently to reduce

to zero the number of available jobs is not a change in the

conditions of employment . . . ."). Because employees have no

right to force a company to remain in business, they lose nothing

when, after the company fails, an affiliated company absorbs some

(or perhaps all) of the closed company's business operations.

Assuming that the CBA neither authorizes nor forbids the

transfer, an exception to this general rule might arise when the

company going out of business does so for the explicit purpose of

transferring its unionized operations to an affiliated corporation

without any union ties. Although there exists little law on the

issue and the Supreme Court has shown itself fairly hostile to

applying the RLA to run-of-the-mill business closures, we hold that

a union might have an arguable claim worthy of mediation if a

company that closes its doors would not have done so but for the

opportunity to transfer its unionized operations to a non-union

affiliate. Similarly, if a carrier is to avail itself of the rule

of Pittsburgh & Lake Erie, it may not engage in a shell game — a

series of paper transactions that have the effect of winding up the

business as a technical matter while management then resumes the

same business in a different corporate guise. For example, we

25
think it obvious that the owner of a unionized airline could not

form a new corporation, sell all the assets of the airline to the

new corporation, and continue to operate the airline unfettered by

the CBA. Cf. Southport Petroleum Co. v. NLRB, 315 U.S. 100, 105-06

(1942) (holding, in an NLRA case, that a company may not avoid its

obligations under a CBA by a paper liquidation and sale of assets

when the transaction is a sham and the owners retained control of

the business); J. Vallery Elec., Inc. v. NLRB, 337 F.3d 446, 450-51

(5th Cir. 2003) (similar). Indeed, such facts could well give rise

not only to a major dispute but also to a minor one.

Still, when an employer shuts down entirely but continues

similar business operations through a corporate affiliate, judicial

inquiry is quite limited. That inquiry is properly focused not on

whether the employer can in some sense be said to have transferred

union work to the surviving affiliate, but, rather, on whether the

employer itself went out of business so that its union work could

be transferred to its ununionized affiliate. If there is no

subterfuge, the closure is in fact legitimate and complete, and the

answer to this question is in the negative, then the decision to

close falls outside the ambit of bargainable disputes under the

RLA.9

9
We caution that in determining whether the unionized
employer's business justification is a sham and that it shut down
solely for the purpose of avoiding the CBA, evidence of generalized
union animus, though perhaps relevant, is insufficient to establish
an unlawful scheme. The union must show that the specific decision

26
 In this case, nothing in the record points to such an

artifice. The undisputed evidence is that Pan Am was losing money

hand over fist; that the company surrendered its operating

certificate to the FAA; that it is no longer serving customers; and

that it took many of these actions after the district court had

enjoined Boston-Maine from taking on Pan Am's routes. That Boston-

Maine still seeks to carry passengers over routes previously flown

by Pan Am does not change these facts. Accordingly, a finding of

a major dispute is not sustainable on the record as it now stands.

Though it seems a long shot, we think that the union should be

entitled to attempt to demonstrate, on remand, that Pan Am was shut

down only because it was possible to transfer its union-flown

routes to a non-union affiliate — and, if so, that a major dispute

was thereby created.

The dissent insists that the foregoing analysis is beside

the point because the CBA contains a provision expressly limiting

the defendants' rights in the event Pan Am closed. We disagree

that the CBA contains any such provision. The dissent relies on

the CBA section that authorized Pan Am, while it was in business,

to contract with other carriers to operate certain flights, as long

as that contracting did not result in the furlough of any union

pilots. Nothing in that section purports to limit the rights of

to close was taken for the purpose of repudiating the CBA and
avoiding its strictures.

27
affiliated companies to engage in large aircraft service should Pan

Am cease operations. Moreover, the CBA nowhere addresses the

company's or the union's right in the event of a business closure.

Given these facts the dissent's attempt to read into the CBA an

explicit limitation on Pan Am's right to cease operations is

plainly implausible. At the expense of carting coal to Newcastle,

we add that even if an argument could be made for the dissent's

interpretation, that argument would be far from conclusive and thus

would, at best, create a minor dispute under the RLA (in which case

no injunction would be appropriate). Conrail, 491 U.S. at 304.

Having established that ALPA has not met its burden of

showing the existence of a major dispute under the FLA, we turn

briefly to the union's argument that the defendants' actions

independently violated the pilots' organizational rights.

Generally speaking, 45 U.S.C. § 152, Third and Fourth prohibit

carriers from taking actions designed to interfere with employees'

rights to organize and bargain collectively. The Supreme Court

emphasized this point in TWA, in which it held that once a union is

certified, employees' rights under section 152, Third and Fourth

are narrowly circumscribed. 489 U.S. at 440-41. The reason for

this limitation is that once a union has been certified,

represented employees may avail themselves of the other dispute

resolution processes created by the RLA. Id. Moreover, because

judicial battles under section 152 are appropriately waged only in

28
rare circumstances, courts must be careful to restrict their role

lest they encroach on the alternative dispute resolution processes

that lie at the heart of the RLA. See id.; Wightman, 100 F.3d at

234.

Although employees' postcertification rights under

section 152 are quite limited, they are not nonexistent. In

Wightman, we held that, after a union has been certified, an

employer may violate section 152 in the rare circumstance when the

employer's actions constitute "a fundamental attack on the

collective bargaining process or . . . a direct attempt to destroy

a union." 100 F.3d at 234. In an effort to squeeze through this

jurisdictional aperture, ALPA argues that the defendants' scheme to

continue Pan Am's operations through the medium of Boston-Maine

constitutes a direct attempt to destroy the union. By this, we

take ALPA to mean that the defendants have wholly repudiated the

CBA and, thus, effectively "destroyed" the union.

ALPA misunderstands the reach of section 152. For a

company's conduct to be actionable under that provision, it must

somehow interfere with the employees' rights to organize or

bargain. TWA, 489 U.S. at 440-41. Thus, the Court in TWA,

considered whether the airline's practice of retaining workers who

had stayed on the job during a strike rather than replacing them

with more senior persons who had participated in the strike

violated the union's right under the RLA to engage in self-help.

29
Id. at 430-31. Although it ultimately ruled in favor of the

airline, the Court found this challenge to be justiciable because

it potentially affected the unionized employees' rights to engage

in collective self-help. See id. at 440-41. So too the court in

Dempsey v. Atchison, Topeka & Santa Fe Railway Co., 16 F.3d 832

(7th Cir. 1994), found that a union stated a claim under section

152, Third and Fourth, by alleging that a side letter to a CBA

interfered with employees' rights to organize by coercing them to

join one union rather than another. Id. at 840-41.

Such situations are to be contrasted with those involving

violations of a CBA or even the repudiation thereof; those

situations ordinarily will not come within the ambit of section

152, Third and Fourth. See Boston & Me. Corp., 808 F.2d at 159-60

(suggesting that when resolution of a dispute requires

interpretation of a CBA, the dispute cannot be adjudicated as a

violation of statutory rights, but must be resolved through the

RLA's other dispute resolution mechanisms). Were the rule

otherwise, almost any breach of a CBA could be recast as an affront

to the employees' rights to bargain collectively. That result

plainly would be at odds with the RLA. See TWA, 489 U.S. at 441.

Stripped of rhetorical flourishes, the union's only

substantial allegation in this case is that the defendants violated

the CBA by transferring (or plotting to transfer) covered work to

an affiliated corporation. There is nothing to suggest that the

30
defendants have somehow tried to prevent the pilots from organizing

or that they have erected obstacles to the pilots' ability to act

collectively.10 Nor is there any evidence of discrimination against

unionized employees such as might suggest an effort to intimidate

others into boycotting the union. Accordingly, ALPA has failed to

state an actionable claim under section 152, Third and Fourth. See

Bhd. of Locomotive Eng'rs v. Kansas City So. Ry. Co., 26 F.3d 787,

795-96 (8th Cir. 1994) (rejecting a claim under § 152, Third and

Fourth when the challenged action did not "overtly or inherently

discourage union activities or discriminate against those who

encourage such activities").

ALPA's reliance on the decision in Ruby v. Taca Int'l

Airlines, 439 F.2d 1359 (5th Cir. 1971), is mislaid. In that case,

an airline attempted to transfer unionized pilots from New Orleans

to El Salvador. The CBA would have been unenforceable in El

Salvador, so the transfer would have resulted in a total abnegation

of the pilots' collectively bargained rights. Id. at 1361. In

addition to finding a major dispute, the Fifth Circuit concluded

that section 152, Fourth prohibited the transfer. Id. at 1363-64.

The Ruby decision long predates the Supreme Court's

decision in TWA, and that chronology casts doubt upon its continued

10
To be sure, the record contains some testimony to the effect
that Pan Am had engaged in such activities in the past. But those
past actions are not the subject of ALPA's present challenge and
have no bearing on whether the conduct at issue here constitutes a
violation of the pilots' organizational rights.

31
vitality. In any event, there is a crucial distinction between

Ruby and this case. In Ruby, the airline's plan not only would

have rendered the CBA unenforceable but also would have prevented

the pilots from engaging in future collective action. Here,

however, the defendants' rearrangements would have no effect on the

pilots' ability to engage in collective action on a going-forward

basis.

ALPA nonetheless maintains that a dispute exists under

section 152, Third and Fourth because the union has no other

adequate remedy. Specifically, ALPA suggests a judicial forum is

necessary because "[o]nly the courts, rather than arbitrators or

administrative agencies, have jurisdiction and authority to protect

employees' 'statutory' RLA organizational rights." Appellee's Br.

at 48. This argument is question begging at its worst. While it

may be true that only courts have authority to adjudicate disputes

under section 152, Third and Fourth, see, e.g., Boston & Me. Corp.,

808 F.2d at 157, there must be a substantial dispute under those

provisions before a court may intervene. See Renneisen v. Am.

Airlines, Inc., 990 F.2d 918, 922-23 (7th Cir. 1993). ALPA has

failed to demonstrate the existence of such a dispute.

At any rate, the union's other remedies under the RLA are

fully adequate. If it is ultimately determined that a major

dispute exists, the union will be entitled to an injunction

requiring the defendants to maintain the status quo while the

32
parties undertake the extra-judicial processes limned in the RLA.

Conrail, 491 U.S. at 303. If mediation occurs and is unsuccessful,

the union will have a right to engage in self-help. Id.11 And

conversely, if no major dispute exists, then (at least in this

case) the union will have no contractual rights to vindicate. See

Pittsburgh & Lake Erie, 491 U.S. at 509. This is the dispute

resolution process fashioned by Congress and embodied in the RLA.

Courts do not have a roving writ to supplant it under the guise of

adjudicating "statutory rights." Accordingly, section 152, Third

and Fourth, cannot provide a foundation for the district court's

injunction.

The upshot is that the district court erred by

misconceiving the proper inquiry and thus erred in its

determination that ALPA was likely to succeed on the merits of its

claims. Because likelihood of success is a sine qua non to

preliminary injunctive relief, Bl(a)ck Tea, 378 F.3d at 15, this

error requires that we vacate the district court's decree. We do

so, however, without prejudice to further proceedings in that

court. Although it seems doubtful that the union can succeed on

the record as it now stands, further developments have occurred

11
We hasten to add that, under the RLA, a union may bargain for
terms that provide workers with a special prophylaxis in the event
that the employer goes out of business. The CBA in this case
contains no such terms. Additionally, a union may assert a right
to represent the employees who undertake transferred work and bring
any ensuing representational dispute before the National Mediation
Board. For whatever reason, ALPA thus far has eschewed that path.

33
(e.g., Pan Am's actual closing) and we think it just that the union

be given an opportunity, should it so choose, to adduce additional

evidence and attempt to make out a winning case.

D. The Bond Requirement.

There remains a loose end. Section 7 of the Norris-

LaGuardia Act, 29 U.S.C. § 107, applies in connection with

injunctions issued under the RLA. See E. Airlines, 925 F.2d at 9.

Under that statute, a party obtaining an injunction must post an

undertaking "sufficient to recompense those enjoined for any loss,

expense, or damage caused by the improvident or erroneous issuance

of such order or injunction, including all reasonable costs

(together with a reasonable attorney's fee) and expense of defense

against the order." 29 U.S.C. § 107.

Here, the nisi prius court, as part of its order for

preliminary injunctive relief, rejected the defendants' more

extravagant damage submissions and required ALPA to post only a

$50,000 bond. The defendants protest that the bond amount is too

low and invite us to increase the amount retroactively. We decline

the invitation.

We need not pass upon the adequacy of the bond amount.

Even if a $50,000 bond was plainly inadequate to compensate the

defendants for their anticipated damages and attorneys' fees — a

matter on which we take no view — we lack authority to modify the

district court's decision on the amount of the bond retroactively.

34
 Once a court determines the appropriate amount of an

injunction bond, the plaintiff is free to decide that it is better

to forgo the injunction than to post the bond and risk losing the

penal sum if the injunction is later deemed to have been

improvidently issued. Retroactively increasing the amount of a

bond would deprive the plaintiff of its right to make that decision

on an informed basis. Thus, it would be grossly unfair for us to

increase the penal sum retroactively.12

V. CONCLUSION

We need go no further. More than anything else, this

case illustrates that judicial remedies under the RLA are only

available in special circumstances. Whatever we may think of the

defendants' actions, our jurisdiction is severely limited, and the

parties must live with the bargain that they struck in the CBA. On

remand, ALPA will have an opportunity to demonstrate, consistent

with this opinion, that the defendants have tried to evade those

obligations in an impermissible manner. Failing that, the union

must take its grievances elsewhere.

Vacated and remanded for further proceedings consistent

with this opinion. Costs to appellants.

— Dissenting Opinion Follows —

12
Nor is there any need, at this stage of the proceedings, to
dwell on the bond on a going-forward basis. The vacation of the
injunction eliminates the need for continuing the bond in effect.

35
 CYR, Senior Circuit Judge (dissenting). Although the

majority opinion cogently presents its rationale for classifying

the ALPA claim as a “minor” dispute under the RLA, its rationale is

premised upon an interpretation of Pittsburgh & Lake Erie Railroad

Co. v. Railway Labor Executives’ Association, 491 U.S. 490 (1989)

(“P & LE”), which is both overbroad and fundamentally flawed.

Consequently, I respectfully dissent.

The appellants neither cited nor relied upon the P & LE

decision in the district court, nor have they done so on appeal.

Accordingly, their argument has been twice forfeited, and should

not be addressed sua sponte. See Plumley v. S. Container, Inc.,

303 F.3d 364, 372 n.7 (1st Cir. 2002).13 Further, it seems highly

13
The majority asseverates that the defendants adequately
preserved the legal theory propounded in P & LE merely by arguing
– in general terms – that, “because Pan Am went out of business
entirely, no transfer of work took place.” Besides the
implausibility of the notion that defendants could advance a legal
principle without citing the seminal Supreme Court case
establishing it, we repeatedly have refused to countenance the
majority’s generalized approach to issue preservation. See B&T
Masonry Constr. Co. v. Pub. Serv. Mutual Ins. Co., 382 F.3d 36, 41
(1st Cir. 2004) (“‘[A] party is not at liberty to articulate
specific arguments for the first time on appeal simply because the
general issue was before the district court.’”) (citation omitted);
Am. Cyanamid Co. v. Capuano, 381 F.3d 6, 18 (1st Cir. 2004) (“‘We
have steadfastly deemed waived issues raised on appeal in a
perfunctory manner, not accompanied by developed argumentation’”)
(citation omitted). Nowhere in their appellate brief did the
defendants even remotely allude to the P & LE legal theory – that
regardless whether their proposed interpretation of particular CBA
terms can be considered “arguably justified,” thus engendering only
a “minor dispute” – the RLA independently and implicitly afforded
them an absolute prerogative to close Pan Am for any reason and
with complete immunity from a status-quo injunction, an entirely
distinct legal theory, which, if meritorious, moots defendants’

36
probable that appellants refrained from citing P & LE due to the

fact that they considered it – as do I – inapposite to the facts in

this case, in at least two important respects.

First, unlike Pan Am, P & LE proposed to sell all its

operating assets to a company with which it had no apparent

corporate affiliation. See P & LE, 491 U.S. at 494-95 (noting that

“P & LE agreed to sell its assets . . . to a newly-formed

subsidiary, P & LE Rail Co., Inc. (Railco), of Chicago West Pullman

Transportation Corporation (CWP)”). P & LE and Railco were

entirely distinct entities, with no measure of common ownership or

control. In such an arm’s-length transaction, P & LE had nothing

to gain from Railco’s decision not to assume the CBA, and

accordingly would have had no motive, incentive, nor even the means

to utilize the closure to circumvent its obligations to unionized

employees as required by the CBA. Nor was it possible that the

closure constituted a manipulative effort to structure the

transaction among P & LE's affiliated companies for the sole

purpose of divesting itself of the union.

In contrast, the district court determined that Pan Am

and Boston-Maine were “part of the same corporate family,” and the

findings of fact upon which it premised its conclusion plainly are

not clearly erroneous. Air Line Pilots Ass’n, Int’l v. Guilford

Transp. Indus., No. 04-331-JD, 2004 WL 2203570, at 6 (D.N.H. 2004).

interpretive gloss on the CBA.

37
To by-pass the corporate veil-piercing inquiry, see supra Majority

Opinion, at Section IV.A., and then to construe P & LE as having

adopted a rule to the effect that any employer’s prerogative to

close its doors is per se immune from an RLA status-quo injunction,

would exalt form over substance by presumptively and artificially

treating a single employer’s (viz., Guilford’s) potentially unified

closure/diversion transaction as two distinct transactions, which

in turn would encourage employer manipulation of their intra-

“corporate” entities in a manner antithetical to the RLA’s

policies. In my view, P & LE is materially distinguishable because

the Court was presented with no evidence that the selling company’s

corporate veil should be pierced, but rather with an arm’s-length

transaction from which the selling company had no means of reaping

or sharing in the buying company’s post-sale benefit of the

bargain. Significantly, the majority opinion cites no decision,

during the sixteen-year period since P & LE was decided, which has

extended its holding to preempt an equitable veil-piercing

analysis.

Second, P & LE is inapposite because it did not involve

any CBA provision which would create rights in P & LE’s employees

in the event P & LE were to decide to cease all operations. See P

& LE, 491 U.S. at 503 (noting that none of the CBAs at issue “dealt

with the possibility of the sale of the company, sought to confer

any rights on P & LE’s employees in the event of the sale, or

38
guaranteed that jobs would continue to be available indefinitely”)

(emphasis added); Chi. & N. W. Transp. Co. v. Ry. Labor Executives’

Ass’n, 908 F.2d 144, 153 (7th Cir. 1990) (noting that P & LE rule

applies “because the sale does not violate the status quo as

defined by the collective bargaining agreement”).

In holding that P & LE’s employees could not enjoin the

sale pending bargaining over the effects of the sale, the Supreme

Court observed that the right to indefinite employment was not a

“condition of employment” over which P & LE was obligated to

bargain, and that it had unfettered discretion to terminate its

entire business “‘for any reason [it] pleases.’” P & LE, 491 U.S.

at 507 (citation omitted). This maxim applies even though the CBA

contains no provision which expressly authorizes a unilateral

closure decision, since the employer has certain managerial

prerogatives which are implied. Id. at 509; see Ry. Labor

Executives Ass’n v. City of Galveston, Tx., 897 F.2d 164, 169 (5th

Cir. 1990) (interpreting P & LE).

The Court did not suggest, however, that the same rule

should apply when the CBA at issue contains an express anti-

diversion provision which confers upon employees the contractual

right to prevent a closure. Here, the CBA negotiated by ALPA

contains just such an unambiguous provision, according Pan Am’s

pilots the right to bargain over any closure which permits Pan Am

to divert business to another company, but only as long as such

39
diversions “do not result in the furlough of any of the Company’s

pilots.” In context, the term “furlough” (viz., a mutually agreed

upon leave of absence) must be construed as the equivalent of “lay-

off.” The Pan Am pre-closure diversions of some 727 flights to

Boston-Maine neither implicated nor violated this CBA provision,

due to the fact – as the majority decision notes – that they

resulted in no lay-off of Pan Am pilots, but simply a diminution in

the pilots’ flight hours.

On the other hand, the permanent closure of Pan Am does

unmistakably implicate the pilots’ express rights, in that it has

resulted in the lay-off of all of the unionized Pan Am pilots.

Accordingly, the district court sensibly held that any other

proposed interpretation of the CBA provisions is not “arguably

justified.” See Air Line Pilots Ass’n, 2004 WL 2203570, at 7

(“[T]he Court finds it totally implausible that ALPA would agree to

a provision in the CBA stating that Pan Am could ‘create or acquire

an alter ego [completely] to avoid the terms and conditions of the

Agreement.’ . . . [and] such a provision . . . would be contrary to

law.”). Unlike P & LE’s employees, Pan Am’s pilots do not rely

upon the CBA’s “silence,” but upon a clause expressly purporting to

limit Pan Am’s implied prerogatives to close “for any reason.”14

14
Perhaps in acknowledgment of the harsh interpretation it
accorded P & LE, the majority opinion admirably attempts to engraft
upon the P & LE holding a limitation that an employer can exercise
its prerogative for only a legitimate business reason. See supra
Majority Opinion, at Section IV.C. Unfortunately, this dictum

40
Pan Am possesses implicit managerial prerogatives, but nothing in

either the RLA or P & LE suggests that it cannot waive those

prerogatives in CBA negotiations. See Chi. & N.W. Transp., 908

F.2d at 152 (“A matter of prerogative is one the carrier is not

required to bargain over and therefore is unlikely to surrender in

bargaining, though nothing in the [RLA] forbids it to do so. If

there has been no waiver of prerogative in the [CBA], then the

union cannot insist that the carrier bargain over prerogative

matters.”). Since the closure/diversion would require rescission

or reformation of an extant CBA clause, rather than its mere

interpretation, by definition it is a “major” dispute under the

RLA. See Bhd. of Locomotive Eng’rs v. Springfield Terminal Ry.

Co., 210 F.3d 18, 23 & n.3 (1st Cir. 2000).

For at least these two important reasons, the defendants

in this case prudently decided not to rely upon the inapposite P &

LE decision, either in the district court or on appeal. In all

events, the argument has been waived. As ALPA is entitled to

bargain (viz., negotiate and self-help) over both the Pan Am

closure and its effects, I would affirm the status-quo injunction

granted by the district court.

cannot be found anywhere in P & LE’s language. Moreover, it is
belied by the Court’s unqualified declaration that the closure may
be for “any reason [the employer] pleases,” even when the employer
is motivated by anti-union animus. P & LE, 491 U.S. at 507.

41