Air Line Pilots Ass'n v. Continental Airlines, LPP (In Re Continental Airlines)

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit

8-29-1997

In Re: Continental Airlines
Precedential or Non-Precedential:

Docket
96-7028,96-7038

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Recommended Citation
"In Re: Continental Airlines" (1997). 1997 Decisions. Paper 213.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/213

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Filed August 29, 1997

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 96-7028 and 96-7038

IN RE: CONTINENTAL AIRLINES,

Debtor

AIR LINE PILOTS ASSOCIATION

v.

CONTINENTAL AIRLINES

LPP CLAIMANTS; EFFECTIVE DATE COMMITTEE,

Claimants

HONORABLE JOHN STONITSCH,

Trustee

LPP CLAIMANTS,

Appellant No. 96-7028

(Caption amended in accordance with
Clerk's Order dated 3/4/96)

IN RE: CONTINENTAL AIRLINES,

Debtor

AIR LINE PILOTS ASSOCIATION

v.

CONTINENTAL AIRLINES

LPP CLAIMANTS; EFFECTIVE DATE COMMITTEE,

Claimants

HONORABLE JOHN STONITSCH,

Trustee
CONTINENTAL AIRLINES, INC.,

Appellant No. 96-7038

(Caption amended in accordance with
Clerk's Order dated 3/4/96)

ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

(D.C. Civil No. 93-cv-00163)

ARGUED MARCH 13, 1997

BEFORE: MANSMANN, LEWIS and
MICHEL,* Circuit Judges.

(Filed August 29, 1997)
_________________________________________________________________

* Honorable Paul R. Michel, Circuit Judge for the United States Court of
Appeals for the Federal Circuit, sitting by designation.

2

Jon A. Geier (ARGUED)
Paul, Hastings, Janofsky & Walker
1299 Pennsylvania Avenue, N.W.
10th Floor
Washington, DC 20004

Laura D. Jones
Robert S. Brady
Young, Conaway, Stargatt & Taylor
Post Office Box 391
Rodney Square North, 11th Floor
Wilmington, DE 19899-0391

Attorneys for Continental Airlines

Michael J. Isaacs
Agostini, Levitsky & Isaacs
623 King Street
Post Office Box 2323
Wilmington, DE 19899

Myles J. Tralins (ARGUED)
Tralins & Associates
One Biscayne Tower
2 South Biscayne Boulevard
 Suite 3310
Miami, FL 33131

Attorneys for LPP Claimants

John A. McGuinn (ARGUED)
Schmeltzer, Aptaker & Shepard
2600 Virginia Avenue, N.W.
Suite 1000
Washington, DC 20037

Attorney for Eastern Pilots Merger
Committee

3

OPINION OF THE COURT

LEWIS, Circuit Judge.

In this appeal and cross-appeal, we are confronted with
a tension between bankruptcy law and labor law. The
dispute arose when the Air Line Pilots Association, Inc.
("ALPA"), collective bargaining agent for Eastern Air Lines'
("Eastern") pilots, filed proofs of claim in bankruptcy court
against Continental Airlines Holdings, Inc. and Continental
Airlines, Inc. ("Continental"). These claims were based on
alleged seniority integration rights stemming from a
pending labor arbitration dispute and were filed following
Continental's acquisition of Eastern and subsequent refusal
to bargain over the seniority integration of Eastern's pilots.

The bankruptcy court determined that the claims could
be satisfied by monetary awards in lieu of specific
performance and enjoined scheduled arbitration
proceedings to enforce the seniority rights under the
collective bargaining agreement. The district court affirmed
the bankruptcy court's determination relating to the claims,
but vacated the injunction. Two groups of former Eastern
pilots, the LPP Claimants and the Group of 31, both of
which are no longer represented by ALPA, appealed to this
court.1

Resolution of this dispute requires us to determine: (1)
whether the bankruptcy claims that the LPP Claimants and
the Group of 31 seek to enforce constitute "claims" within
the meaning of the bankruptcy code and thus are
satisfiable, in the alternative, by a monetary award; and (2)
whether the arbitration of a labor dispute that may give rise
_________________________________________________________________

1. "LPP Claimants" refers to a group of former Eastern pilots whose
claims in this appeal are based on certain "labor protective provisions"
(LPPs) contained in the collective bargaining agreement. The "Group of
31" is a group of former Eastern pilots, who originally were part of the
"LPP Claimants" group and who have retained separate counsel for
purposes of this appeal. See discussion infra Part I.D. While both groups
claims were filed in bankruptcy court by ALPA on their behalf, these two
groups are no longer represented by ALPA. See discussion infra note 5.

4

to the right to seniority integration under a collective
bargaining agreement can be enjoined, where the debtor
has not explicitly rejected the agreement. We conclude that
the rights to seniority integration do constitute "claims"
within the meaning of the bankruptcy code. Accordingly, we
find that the right to seniority integration gives rise to a
right of payment and that any equitable remedy recovered
against Continental via arbitration of the underlying labor
dispute may be satisfied through an award of monetary
damages. We further conclude that the district court
properly vacated the injunction barring arbitration of the
underlying labor dispute. Thus, we will affirm.

I.

A. The Underlying LPP Dispute

On February 23, 1986, following intense negotiations,
Eastern and its pilots' union, ALPA, ratified a collective
bargaining agreement. On February 24, 1986, the Texas Air
Corporation ("Texas Air"), parent corporation to
Continental, acquired Eastern. Believing that the
acquisition constituted a "merger" within the meaning of
certain "labor protective provisions" (LPPs) contained in the
collective bargaining agreement, ALPA requested a meeting
with Texas Air, Eastern, and Continental to discuss the
integration of Eastern's and Continental's seniority lists.
Under the LPPs, Eastern's pilots secured protection of their
seniority rights in the event of a merger between Eastern
and another airline carrier through the integration of
Eastern's seniority lists with the merging carrier's list.
Specifically, the LPP terms provide:

Section 2(a). The term "merger" as used herein means
joint action by the two carriers whereby they unify,
consolidate, merge, or pool in whole or in part their
separate airline facilities or any of the operations or
services previously performed by them through such
separate facilities.

* * *
 Section 3. Insofar as the merger affects the seniority
rights of the carriers' employees, provisions shall be

5

made for the integration of seniority lists in a fair and
equitable manner, including, where applicable,
agreement through collective bargaining between the
carriers and the representative of the employees
affected. In the event of failure to agree, the dispute
may be submitted by either party for adjustment in
accordance with section 13.

* * *

Section 13(a). In the event that any dispute or
controversy . . . arises with respect to the protections
provided herein, which cannot be settled by the parties
within 20 days after the controversy arises, it may be
referred by any party to an arbitrator selected from a
panel of seven names furnished by the National
Mediation Board for consideration and determination.

(Labor Protective Provisions, sections 2(a), 3, and 13(a)).2

Despite ALPA's requests, both Eastern and Continental
refused to bargain with ALPA about the integration of the
seniority lists. Consequently, ALPA requested the National
Mediation Board to proffer a list of seven arbitrators from
which a neutral arbitrator could be chosen to determine
whether an alleged merger occurred between Eastern and
Continental that triggered the LPP seniority integration
provision (LPP dispute). Eastern, however, filed for
bankruptcy in March, 1989, and refused to submit to
arbitration pursuant to the bankruptcy code's section 362
automatic stay provision. 11 U.S.C. S 362 (providing that
petitions filed pursuant to Chapter 11 operate as a stay of
the commencement or continuation of judicial,
administrative, or other actions or proceedings against the
debtor). In bankruptcy court, ALPA sought relief from the
automatic stay to compel Eastern to arbitrate the LPP
_________________________________________________________________

2. The LPPs were based on the standard Allegheny-Mohawk LPPs, which
were designed to provide "displacement and dismissal allowances to
employees adversely affected by [merger] transaction[s], the equitable
integration of seniority lists, and binding arbitration of disputes
relating
to the LPPs." (Decision of the Eastern Air Lines Pilots System Board of
Adjustment). See Air Line Pilots Ass'n v. Dept. of Transp., 838 F.2d 563,
565 (D.C. Cir. 1988) (citing Allegheny-Mohawk Merger Case, 59 C.A.B.
22 (1972)).
 6

dispute. The bankruptcy court denied ALPA's petition. After
much litigation, however, the Court of Appeals for the
Second Circuit held that the section 362 automatic stay
provision did not preclude arbitration in this instance. See
In re Ionosphere Clubs, Inc., 922 F.2d 984 (2d Cir. 1990).

ALPA and Eastern proceeded to arbitration in April,
1991, commencing with a pre-hearing conference before
Richard R. Kasher (Kasher Arbitration). In this proceeding,
ALPA sought prospective integration of seniority lists, back
pay from the effective date of the merger to the date of the
arbitration award, and front pay from the date of the
arbitration award to the date that the Eastern pilots would
complete training and begin flying for Continental. Prior to
the pre-hearing conference, Arbitrator Kasher solicited brief
statements of position from the parties to the dispute, and
from all potential parties. Eastern consistently maintained
that the LPP dispute was not properly within the
arbitrator's jurisdiction.3 Continental filed a statement
informing Arbitrator Kasher that it had filed a Chapter 11
petition for reorganization in December, 1990. Therefore, it
maintained that the arbitration pursued by ALPA was
stayed under section 362 of the bankruptcy code and could
not proceed without the express approval of the bankruptcy
court.

In August, 1992, Arbitrator Kasher issued a decision
concluding that he had jurisdiction over the LPP dispute,
and could render a determination of the appropriate
remedies under the circumstances. Kasher, relying on the
bankruptcy court's determination in In re Ionosphere Clubs,
Inc., 114 B.R. 379 (Bankr. S.D.N.Y. 1990), specifically
rejected Continental's suggestion that the arbitration was
barred by the automatic stay. Kasher scheduled hearings
on the merits of the dispute, to commence in February,
1993.
_________________________________________________________________

3. Eastern maintained that only the System Board of Adjustment had
jurisdiction to determine whether a merger occurred that triggered the
LPPs. On the merits, Eastern contended that if the arbitration proceeded,
the Arbitrator should conclude that no merger occurred.

7

B. The Bankruptcy Court Proceedings
In September, 1991, while the initial Kasher Arbitration
decision was pending, ALPA, on behalf of its members, filed
proofs of claim against Continental in Delaware Bankruptcy
Court. Their claims were based on the asserted right to
seniority integration under the LPPs and specified an
unliquidated amount as the debt for which Continental was
obligated. In response, Continental initiated an adversary
proceeding in bankruptcy court against ALPA, seeking
injunctive and declaratory relief relating to the proofs of
claim. In that action, Continental filed a Partial Objection
To Allowance of Claims and a Motion for Partial Summary
Judgment on its Partial Objection.4 In both motions,
Continental contended that the seniority integration that
the claimants sought was not feasible because it would be
detrimental to Continental's successful reorganization.
Thus, Continental sought a declaration that the claims
were, at best, "general, dischargeable, pre-petition,
unsecured claims," compensable by an award of monetary
damages.

ALPA and the LPP Claimants each filed a separate
response to Continental's Partial Objection and Motion for
Partial Summary Judgment.5 ALPA contended that,
contrary to Continental's argument, the claims pursued
were not general, unsecured pre-petition claims that could
be converted to a payment of money damages. ALPA also
argued that only an arbitrator had jurisdiction to determine
_________________________________________________________________

4. Prior to the Kasher Arbitration decision, Continental filed an initial
motion for partial summary judgment, seeking a preliminary injunction.
Continental argued that the arbitration should be enjoined to protect the
jurisdiction of the bankruptcy court over the administration of its
estate.
It also maintained that the automatic stay provision of the bankruptcy
code precluded the arbitration from proceeding. Finally, Continental
contended that it was not a party to the collective bargaining agreement
between Eastern and ALPA and that it could not be bound by the result
of any arbitration over the LPPs.

5. ALPA's representation of the LPP Claimants ceased after the LPP
Claimants instituted actions in federal court against ALPA. The actions
alleged causes of action for the breach of the duty of fair representation
and defamation arising out of the publication and dissemination of a
"blacklist" and for alleged violations of the civil provisions of RICO.

8

the appropriate remedy under the LPPs. The LPP Claimants
essentially maintained that an arbitration proceeding was
the appropriate forum to determine the issue of whether a
merger occurred that triggered the LPPs, and that the
proper remedy was integration of Eastern's seniority lists
with Continental's lists.

In February, 1993, the bankruptcy court judge, in two
orders, granted Continental's Partial Objection To
Allowance of Claims and its related motion for partial
summary judgment, determining that there was no genuine
issue for trial and that Continental was entitled to
judgment as a matter of law. In re Continental Airlines, Inc.,
et al., Nos. 90-932 through 90-984 (Bankr. D. Del. Feb. 11,
1993) (order granting motion for partial objection to
allowance of claims); In re Continental Airlines, Inc., et al.,
No. 91-153 (Bankr. D. Del. Feb. 11, 1993) (order granting
motion for partial summary judgment). Addressing the
jurisdictional argument asserted by ALPA, the bankruptcy
court concluded that the issue of whether any award
granted to ALPA would constitute general, unsecured, pre-
petition claims was a core matter under the bankruptcy
code. Thus, it concluded that it had jurisdiction to resolve
the matter. In re Continental Airlines, Inc., et al., Nos. 90-
932 through 90-984, slip op. at 1-2 (order granting motion
for partial objection to allowance of claims); In re
Continental Airlines, Inc., et al., No. 91-153, slip op. at 2
(order granting motion for partial summary judgment). The
court then determined that the equitable remedy of
seniority integration constituted a "claim" within the
meaning of S 101(5) of the bankruptcy code. Accordingly,
the court concluded that the remedy could be converted to
an award of money damages. In re Continental Airlines, Inc.,
et al., Nos. 90-932 through 90-984, slip op. at 3-4 (order
granting motion for partial objection to allowance of claims);
In re Continental Airlines, Inc., et al., No. 91-153, slip op. at
3-4 (order granting motion for partial summary judgment).
Finally, the court determined that any right of payment
asserted by ALPA was, at best, a general, dischargeable,
unsecured claim that was entitled to no administrative
priority. In re Continental Airlines, Inc., et al., Nos. 90-932
through 90-984, slip op. at 4-5 (order granting motion for
partial objection to allowance of claims); In re Continental

9

Airlines, Inc., et al., No. 91-153, slip op. at 5 (order granting
motion for partial summary judgment).

In April, 1993, Continental's Second Amended Joint Plan
of Reorganization was confirmed by the bankruptcy court.
The court's confirmation order incorporated its prior rulings
from the two orders issued in February, 1993. Essentially,
it clarified that any valid claims based on the LPPs would
give rise to a right of payment dischargeable in bankruptcy
and that no right to injunctive, equitable or other
prospective relief would flow from any valid claim based on
an award under the LPPs. In re Continental Airlines, Inc., et
al., Nos. 90-932 through 90-984 (Bankr. D. Del. April,
1993) (Findings of Fact, Conclusions of Law and Order
Confirming the Debtors' Revised Second Amended Joint
Plan of Reorganization). The court also enjoined the
arbitration of the LPP dispute. Continental's plan of
reorganization was consummated in late April, 1993.

C. The ALPA/Continental Settlement

ALPA and the LPP Claimants appealed the bankruptcy
court's February and April, 1993 orders to the district
court. While the appeals were pending, ALPA and
Continental settled the LPP dispute. The Settlement
Agreement, ultimately approved by the bankruptcy court,
finally resolved all of ALPA's claims including those pursued
in Continental's bankruptcy proceeding and those based on
the enforcement of the LPPs in the Kasher Arbitration.
Under the terms of the agreement, ALPA agreed to
withdraw its appeals to the district court. The Settlement
Agreement also provided an option to the "pilots formerly
employed by Eastern" who were no longer represented by
ALPA, and who had filed proofs of claim in the bankruptcy
proceeding, to participate in the settlement. Approximately
two-thirds of these pilots did so.

D. The District Court Proceedings

Prior to the ALPA/Continental settlement, Continental
filed a motion to dismiss ALPA's and the LPP Claimants'
appeals. Continental argued that the appeals from the
confirmation order were moot because: (1) the plan of
reorganization had been substantially consummated; (2) it
was not feasible for the plan to be undone; and (3) any

10

alteration to the plan's fundamental terms would be
inequitable. After the settlement, Continental filed a second
motion to dismiss the appeals as moot, contending that the
LPP Claimants had no individual right to maintain their
claims based on the LPPs because ALPA, as the exclusive
bargaining representative of the Eastern pilots, had full
authority to settle the LPP grievance. Thus, Continental
argued, the pilots were bound by the settlement agreement.

In a comprehensive memorandum opinion, the district
court addressed the issues appealed by ALPA and the LPP
Claimants and presented in Continental's motions to
dismiss.6 As to the first motion to dismiss, the court
concluded, inter alia, that ALPA's and the LPP Claimants'
appeals relating to the claim for administrative priority was
moot. In support of its conclusion, the court emphasized
the substantial consummation of the plan. Specifically, the
court noted that the investment leading to the
consummation of the plan was based on an overall limit on
administrative claims and a determination that ALPA and
the LPP Claimants were not entitled to equitable relief. In re
Continental Airlines, Inc., et al., No. 93-163 (D. Del. Nov. 29,
1995). As to Continental's second motion to dismiss as
moot, the court determined that it could not consider the
merits of whether the LPP Claimants had standing under
the LPPs to pursue seniority integration individually.
Specifically, the court concluded that this issue should be
determined by the arbitrator. Therefore, the court refused
to dismiss their claims based on their alleged lack of
standing to assert the contractual right. Id. at 22-25. The
court also rejected Continental's argument that the LPP
Claimants were bound by the ALPA/Continental settlement.
Id. at 23.

Turning to the merits of the appeals, the court affirmed
the orders of the bankruptcy court in all respects, except
for the bankruptcy court's injunction of the arbitration
proceedings. Id. at 26-45. Relating to the injunction, the
_________________________________________________________________

6. Although the ALPA/Continental settlement agreement provided that
ALPA would dismiss its appeal to the district court, ALPA failed to do so
prior to the district court's disposition. Ultimately, ALPA did withdraw
its
claims against Continental. ALPA is not a party to this appeal.

11

court concluded that the bankruptcy court's failure to
adequately set forth the reasons for the issuance of the
injunction and to describe the acts restrained in its order,
as mandated by Federal Rule of Civil Procedure 65(d), was
fatal to the validity of the injunction. Id. at 34-37. Although
it vacated the injunction, the district court refused to
remand the matter to the bankruptcy court with
instructions to strike the injunction. Rather, the court
concluded that under section 1113 of the bankruptcy code,
the bankruptcy court could not enjoin the arbitration even
if the requirements of Rule 65(d) were met. Id. at 37-40.7

The LPP Claimants appealed the district court's order.
Continental cross-appealed on the issues of the mootness
of the claims and the dissolution of the injunction. On
appeal, the Group of 31, a group of former Eastern pilots
who previously had been represented by counsel for the
LPP Claimants, have obtained substitute counsel, and have
filed a separate brief. For purposes of brevity, the Group of
31 and the LPP Claimants will be referred to collectively as
"the Claimants" where permissible.

The district court had jurisdiction under 28 U.S.C.
S 158(a). We exercise jurisdiction of the appeal and the
cross-appeal from the district court's order pursuant to 28
U.S.C. S 158(d).

II.

Our review of the district court's determination is
plenary. Brown v. Pennsylvania State Employees Credit
Union, 851 F.2d 81, 84 (3d Cir. 1988); see In re Ionosphere
Clubs, Inc., 922 F.2d 984, 988 (2d Cir. 1990). We exercise
the same review of the district court's decision as that
exercised by the district court. Brown, 851 F.2d at 84. The
bankruptcy court's findings of fact are reviewable only for
clear error. Id. Legal determinations are subject to plenary
review. Id.
_________________________________________________________________

7. The court reached this issue only after determining that in spite of
the
invalidity of the injunction under Rule 65(d), the statutory injunction
under 11 U.S.C. S 524, referenced by the bankruptcy court in its order,
survived. In re Continental Airlines, Inc., et al., No. 93-163, slip op.
at 37,
(D. Del. Nov. 29, 1995).

12

Before we reach the merits of the parties' claims, we
must address Continental's two challenges to the
Claimants' appeals contending that the appeals should be
dismissed. First, Continental maintains that the LPP
Claimants' notice of appeal is defective for lack of adequate
identification of the parties to the appeal under Federal
Rule of Appellate Procedure 3(c). Next, Continental argues
that the Claimants' lack standing to assert claims for
individual seniority integration under the LPPs and that the
appeals should be dismissed as moot.

A. Appellate Jurisdiction

Continental requests that the LPP Claimants' appeal be
dismissed pursuant to Federal Rule of Appellate Procedure
3(c) for failure of their notice of appeal to identify each
member of its group participating in this appeal. The notice
of appeal filed by the LPP Claimants simply identifies the
appellants as "the LPP Claimants." Continental argues that
this identification is insufficient, emphasizing that a
number of the LPP Claimants participated in the
Continental/ALPA settlement and, consequently, waived
their claims on appeal. Continental contends that the
notice of appeal did not specify those members who did not
waive their claims and who are appealing from the district
court's order. We reject this argument, and conclude that
the LPP Claimants notice of appeal adequately identifies the
appellants.

The requirements of Rule 3(c) are jurisdictional. Torres v.
Oakland Scavenger Co., 487 U.S. 312, 320-21, 108 S. Ct.
2405, 2411, 101 L.Ed.2d 285 (1988). In Torres, the
Supreme Court explained that permitting a court to
exercise jurisdiction over parties not named in a notice of
appeal would be equivalent to extending the time
prescribed to file a notice of appeal, a power not granted to
the court. Id. at 315. Thus, the failure of a notice of appeal
to name a party constitutes a jurisdictional bar to the
appeal, and thus a failure of that party to appeal. Dura
Systems, Inc. v. Rothbury Investments, Ltd., 886 F.2d 551,
554 (3d Cir. 1989).

Generally, rules of procedure should be liberally
construed. Torres, 487 U.S. at 316. In Torres, the Supreme

13

Court emphasized that, "mere technicalities should not
stand in the way of consideration of a case on its merits."
Id. (internal quotations omitted). Thus, in the context of
Rule 3(c), jurisdiction may be appropriate if a litigant's
actions are functionally equivalent to the requirements of
Rule 3(c). Masquerade Novelty v. Unique Industries, 912
F.2d 663, 665 (3d Cir. 1990). We have applied this
construction numerous times to support a finding of
jurisdiction in the absence of strict, technical compliance
with the requirements of Rule 3(c). See id. (where the
contents of documents filed within the time prescribed to
file a notice of appeal contain the information required by
Rule 3(c), the party will be deemed to have complied with
the rule and the case will not be dismissed for lack of
appellate jurisdiction); Dura Systems, Inc., 886 F.2d at 554-
55 (Consent Order filed by the appellants within the time
prescribed to file a notice of appeal served as the
"functional equivalent" of what Rule 3(c) required such that
the technical failure of the actual notice of appeal was not
a bar to jurisdiction); see also In re Bertoli, 812 F.2d 136
(3d Cir. 1987) (litigant's filing of a "Notice of Motion for
Certification of An Interlocutory Appeal" in the district court
within the thirty-day time period allowed to file a notice of
appeal was sufficient to satisfy Rule 3(c) where the litigant
failed to file an actual notice of appeal; the document
communicated an intention to appeal and identified the
judgment appealed from and the court to which the appeal
was taken).

The purpose of Rule 3(c)'s identification requirement is to
provide notice to the court and the opposing parties of the
identity of the appellants. Torres, 487 U.S. at 318; Dura
Systems, Inc., 886 F.2d at 555. Since ALPA and the LPP
Claimants filed their appeals in the district court, the LPP
Claimants have been identified as a group of former
Eastern pilots, no longer represented by ALPA, seeking to
enforce their seniority integration rights under the LPPs.
When ALPA settled its claims with Continental, both
Continental and ALPA, via the settlement agreement,
granted the LPP Claimants the opportunity to participate in
the settlement. Continental was well aware of the
individuals who elected to exercise this option. The
settlement agreement specifically required those pilots

14

electing to participate in the settlement to execute one of
two forms indicating an intent to participate in the
settlement and to return the form to Continental. Those
individuals who opted to settle their claims waived their
right to appeal. Thus, the group of LPP Claimants dwindled
to an identifiable, discrete entity made up of those
individual pilots who chose not to participate in the
settlement.

The term "LPP Claimants" has been subject to a common
understanding among all parties to this litigation relating to
the individuals comprising the group. Accordingly, we
conclude that the LPP Claimants' notice of appeal
sufficiently identifies the entity such that Continental, as
well as this Court, is adequately apprised of the identity of
the appellants such that appellate jurisdiction is proper. In
so doing, we follow the Supreme Court's directive to
construe Rule 3(c) liberally and to avoid a construction that
would permit "mere technicalities" to bar the consideration
of this case on the merits. Masquerade Novelty, 912 F.2d at
666 (quoting Dura Systems, 886 F.2d at 555).

B. Whether the Claimants' Appeals are Moot

Continental argues that the Claimants' appeals are moot,
relying on ALPA's settlement of its LPP dispute with
Continental. Essentially, Continental maintains that the
claim settled by ALPA was a "group" claim. Thus,
Continental argues, when ALPA settled the dispute, it
settled the claim on behalf of the entire group on whose
behalf it filed the bankruptcy claims, including the Group
of 31 and the LPP Claimants. According to Continental,
then the relevant question is whether "if [individual rights
to seniority integration arbitration under the LPPs] existed
at all, [those] rights survived ALPA's settlement of the group
grievance." In the district court, Continental challenged the
LPP Claimants' individual standing under the LPPs to
prosecute their rights to seniority integration. The district
court declined to consider the merits of this argument,
explaining that the issue constituted a "minor" dispute
under the Railway Labor Act, 45 U.S.C. SS 151-163, and
was subject to the jurisdiction of the arbitrator. We
conclude that because the Claimants' individual rights to
prosecute their claims for seniority integration have not

15

been established under the LPPs, we need not address
whether the Claimants' individual rights to seniority
integration survived ALPA's settlement of the dispute.

The right to seniority integration under the LPPs turns on
whether a "merger" between Eastern and Continental
occurred within the meaning of the LPPs. This
determination depends on the meaning, interpretation and
proper application of the LPPs. In turn, the issue of
standing to maintain an individual claim for seniority
integration under the LPPs is a "minor" dispute under the
Railway Labor Act, 45 U.S.C. SS 151-163. See Consolidated
Rail v. Labor Executives, 491 U.S. 299, 302 (1989) ("major
disputes seek to create contractual rights, minor disputes
to enforce them") (quoting Elgin, J & E. Ry. Co. v. Burley,
325 U.S. 711, 723, 65 S. Ct. 1282, 1289-90, 89 L.Ed. 1886
(1945) (minor disputes are those relating either to the
meaning or proper application of a particular provision with
reference to a specific situation)); Chicago & Northwestern
Transp. v. Local Union 214, 829 F.2d 1424, 1427 (7th Cir.
1987). Accordingly, the issue of standing is subject to the
exclusive jurisdiction of the arbitrator, and the district
court properly concluded that its role relating to this issue
was to protect the jurisdiction of the arbitration board.
Consolidated Rail, 491 U.S. at 304 ("the[National Railroad
Adjustment] Board . . . has exclusive jurisdiction over
minor disputes. Judicial review of the arbitral decision is
limited."); Chicago & Northwestern Transp., 829 F.2d at
1428.

Consistent with the federal courts' role relating to minor
disputes, i.e., to protect the jurisdiction of the arbitration
board, federal courts cannot inquire into the merits of an
underlying dispute except to the extent necessary to
determine its proper characterization as minor or major.
Chicago & Northwestern Transp., 829 F.2d at 1428. Nor
may the courts decide what remedy is appropriate if the
agreement is interpreted to require recovery of a remedy.
General Com of Adj., United Transp. Union v. CSX R.R., 893
F.2d 584, 592-93 (3d Cir. 1990). Thus, the district court
properly concluded that it could not consider the merits of
Continental's argument that the Claimants did not have
standing under the LPPs. As the Claimants' right to

16

prosecute their claims for seniority integration have not
been established under the LPPs, we find that we need not
address Continental's argument that their individual rights
did not survive ALPA's settlement of the LPP dispute.

C. Merits of the Appeal

1. Bankruptcy Court's Jurisdiction

Before we determine whether the bankruptcy court
properly determined the status of the Claimants' claims, we
must address the Claimants' contention that the
bankruptcy court did not have jurisdiction over the matter.
The Claimants maintain that because the LPP dispute arose
wholly outside the bankruptcy context, the matter is a
"non-core" dispute over which the bankruptcy court did not
have jurisdiction. The flaw in the Claimants' argument is
that they confuse the disposition of the merits of the
underlying LPP dispute with the treatment of their claims
in bankruptcy. The bankruptcy court had exclusive
jurisdiction over the latter.

A bankruptcy court has jurisdiction over all "core
proceedings arising under title 11, or arising in a case
under title 11." 28 U.S.C. S 157(b)(1) (1993); In re Wood,
825 F.2d 90, 95 (5th Cir. 1987). Section 157(b) does not
define "core proceedings." However, the phrase has been
interpreted to apply to those rights that are created by
federal bankruptcy law:

If the proceeding involves a right created by the federal
bankruptcy law, it is a core proceeding . . . If the
proceeding is one that would arise only in bankruptcy,
it is also a core proceeding; for example, the filing of a
proof of claim or an objection to the discharge of a
particular debt.

In re Wood, 825 F.2d at 97. See Beard v. Braunstein, 914
F.2d 434 (3d Cir. 1990) (acknowledging the standard for
"core proceedings" articulated in Wood).

There can be no dispute that the issue as to whether the
bankruptcy claim could be satisfied by a monetary award is
a "core bankruptcy matter." By filing a proof of claim
against Continental's estate in bankruptcy court, the
Claimants "invoke[d] the special rules of bankruptcy

17

concerning objections to the claim, [and] estimation of the
claim." Wood, 825 F.2d at 97. Further, the issue decided by
the bankruptcy court was how the claim would be treated
in bankruptcy. Thus, the bankruptcy court was well within
its authority to exercise jurisdiction over the issue of the
status of the bankruptcy claim. Our conclusion is
consistent with principles that govern the disposition of
issues when bankruptcy law and labor law intersect. See
L.O. Koven & Brothers, Inc. v. Local Union No. 5767, 381
F.2d 196, 205 (3d Cir. 1966) ("Questions involving an
interpretation of the Bankruptcy Act should be decided by
the court, while questions involving an interpretation of the
collective bargaining agreement should if feasible be
decided by the arbitrator."); see also Garland Coal & Mining
Co. v. United Mine Workers, 778 F.2d 1297, 1304 (8th Cir.
1985) ("Once the arbitrator has decided the liability issue,
the case should be returned to the bankruptcy court to
decide the questions of allowability and priority of claims.").
Accordingly, we conclude that the bankruptcy court had
jurisdiction to determine whether the Claimants' claims
could be satisfied by a monetary award in lieu of specific
performance.8
_________________________________________________________________

8. For the same reasons, we reject the Group of 31's efforts to invoke the
Norris-LaGuardia Act, 29 U.S.C. S 101, et seq., to implicate the
bankruptcy court's jurisdiction to determine how the claims will be
treated in bankruptcy. Section 1 of the Norris-LaGuardia Act provides:

No court of the United States as defined in this chapter, shall
have
jurisdiction to issue any restraining order or temporary or
permanent injunction in a case involving or growing out of a labor
dispute, except in a strict conformity with the provisions of this
chapter; nor shall any such restraining order or temporary or
permanent injunction be issued contrary to the public policy
declared in this chapter.

29 U.S.C. S 101.

The Group of 31 contends that despite the district court's order
vacating the injunction the ruling that the remedy in arbitration can be
"reduced" from full seniority integration to a claim for front pay "is as
clearly an injunction and interference with the Kasher arbitration as was
the bankruptcy court's blanket injunction against the continuation of the
arbitration." The conversion of the equitable remedy to front pay, upon
successful challenge at the arbitration proceedings, only affects the

18

2. Whether the Equitable Remedy Constitutes a Claim
Under the Bankruptcy Code

The LPP Claimants' and the Group of 31's primary
contention on appeal is that the right to the equitable
remedy of seniority integration under the LPPs cannot be
converted into a claim for money damages. The Claimants
emphasize that they seek specific performance under the
LPPs, and they vehemently argue that the payment of
money damages is not a viable alternative to the equitable
right to seniority integration.

The district court rejected the Claimants' argument,
holding that seniority integration under the LPPs gave rise
to a "right of payment" within the definition of a "claim"
under the bankruptcy code. In support of its conclusion,
the district court further determined that money damages
are a viable alternative to seniority integration.

The bankruptcy code defines "claim" as

(B) right to an equitable remedy for breach of
performance if such breach gives rise to a right to
_________________________________________________________________

administration of the claim in bankruptcy. It does not operate to enjoin
the arbitrator, nor does it dictate any particular remedy. Cf. Lukens, 989
F.2d at 677 (order directing an arbitrator not to preside over any newly
ordered arbitration and deeming prior arbitration ineffectual involved
operated as an injunction). Thus, we will not disturb the bankruptcy
court's exercise of jurisdiction over the matter.

Similarly we reject the Claimants' argument that the determination
whether the equitable remedy can be converted to a payment of money
damages is inconsistent with the district court's conclusion that the
individual right to seniority integration under the LPPs involves a
"minor" dispute, subject to the exclusive jurisdiction of the arbitrator.
See discussion, supra Part II.B. We discern no inconsistency between the
bankruptcy court's exercise of jurisdiction to determine the status of the
bankruptcy claim and the district court's characterization of the issue of
the Claimants' standing under the LPPs as a "minor" dispute. The
bankruptcy court's ruling related only to the manner in which the
Claimants' claims in bankruptcy would be treated if a right to seniority
integration is established. This ruling, unlike the standing issue, does
not turn on an interpretation of the LPPs. Thus, the bankruptcy court's
determination of the status of the claims and the district court's refusal
to consider the merits of the standing issue was not inconsistent.
 19

payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured,
or unsecured.

11 U.S.C. S 101(5). The term "claim" as defined in the
bankruptcy code is construed broadly to permit debtors to
meet all of their legal obligations in bankruptcy and to
enable holders of claims to participate in the bankruptcy
proceedings. See Ohio v. Kovacs, 469 U.S. 274, 279, 83
L.Ed.2d 649, 105 S. Ct. 705 (1985) ("Congress desired a
broad definition of claim."); see, e.g., Pennsylvania Dep't of
Public Welfare v. Davenport, 495 U.S. 552, 558 (1990)
(debtors' obligation to pay restitution as a condition of
probation which arose out of a criminal conviction for
welfare fraud constituted a "debt" within the meaning of the
bankruptcy code that gave rise to a "claim" under the code).

Under section 101(5), an equitable remedy can be
deemed a "claim" if that remedy "gives rise to a right of
payment." We are guided as to what constitutes a "right of
payment" under the bankruptcy code by the Supreme
Court's analysis in Ohio v. Kovacs. In Kovacs, the
petitioner, the State of Ohio, obtained an injunction
ordering the respondent, William Kovacs, to clean up a
hazardous waste site. After Kovacs failed to comply with the
injunction, the State obtained the appointment of a
receiver, who was directed to take possession of all of
Kovacs' assets and property and to clean up the waste site.
Subsequent to the appointment of the receiver, Kovacs filed
for bankruptcy. In response, the State filed a complaint in
bankruptcy seeking a declaration that Kovacs' obligation
under the injunction was not dischargeable in bankruptcy
because it was not a liability on a "claim" under the
bankruptcy code.

The Supreme Court held that the obligation imposed by
the injunction had been converted to an obligation to pay
money that was dischargeable in bankruptcy. Kovacs, 469
U.S. at 283. Critical to the Court's conclusion was its
determination that the appointment of a receiver had
dispossessed Kovacs of the property and therefore, had
removed Kovacs' ability to cooperate with the receiver and

20

remove the waste from the site in compliance with the
injunction. Specifically, the Court stated:

The injunction surely obliged Kovacs to clean up the
site. But when he failed to do so, rather than prosecute
Kovacs under the environmental laws or bring civil or
criminal contempt proceedings, the State secured the
appointment of a receiver, who was ordered to take
possession of all of Kovacs' nonexempt assets . . . and
to comply with the injunction . . . . As wise as this
course may have been, it dispossessed Kovacs,
removed his authority over the site, and divested him
of assets that might have been used by him to clean up
the property . . . Although Kovacs had been ordered to
"cooperate" with the receiver, he was disabled by the
receivership from personally taking charge of and
carrying out the removal of wastes from the property.
What the receiver wanted from Kovacs after
bankruptcy was the money to defray cleanup costs . ..
Had Kovacs furnished the necessary funds, either
before or after bankruptcy, there seems little doubt
that the receiver and the State would have been
satisfied.

Id. at 283. Thus, the Court concluded that under the
circumstances, the clean up order had been converted into
an obligation to pay money. Id. at 283.

In In re Torwico Electronics, Inc., 8 F.3d 146 (3d Cir.
1993), we addressed the issue whether a regulatory
obligation directing a Chapter 11 debtor to develop a plan
to ameliorate an ongoing environmental hazard could be
converted into a "claim" in bankruptcy. In that case,
Torwico Electronics, a manufacturing business, filed for
Chapter 11 bankruptcy and listed the New Jersey
Department of Environmental Protection and Energy (the
"Department") as a creditor with a disputed and
unliquidated claim. After Torwico filed its petition for
bankruptcy, the Department performed an on-site
inspection of Torwico's property and found hazardous
waste, for which it issued a notice of violation to Torwico.
Two months later, the deadline for filing proofs of claim in
Torwico's bankruptcy case passed. The Department had
failed to file any proof of claim by this deadline.

21

The Department, seeking to enforce Torwico's obligation
under state and federal environmental laws, issued an
Administrative Order requiring Torwico to submit a written
closure plan for the hazardous site and assessing a
monetary penalty for failure to take action under the earlier
notice of violation. The Order specifically stated: "All
obligations are imposed pursuant to the police powers of
the State of New Jersey, intended to protect the public
health, safety, welfare, and environment."

In bankruptcy court, both parties sought summary
judgment. Torwico maintained that the obligation
constituted a "claim" under the bankruptcy code and that
the State's failure to file a timely proof of claim was fatal to
the State's position that Torwico was responsible for the
obligation. The State, however, argued that the claims
involved were regulatory obligations, not bankruptcy
claims, and that Torwico was obligated to remedy the
violations addressed in the Order pursuant to state and
federal law.

Turning our attention to the Supreme Court's analysis in
Kovacs, we explicitly noted that this case was unlike
Kovacs in that the State was not demanding that Torwico
pay money to it, but rather was requesting it to take action
to ameliorate an ongoing hazard. Torwico Electronics, 8 F.3d
at 150. Next, we shifted our focus to the nature of the
obligation imposed by the Order and concluded that it was
not an order for breach of an obligation that gave rise to the
right of payment. Specifically, we noted:

The state here found that the seepage pit was a
continuing problem that was leaking hazardous
material into the surrounding environment. Thus, the
state is not asserting a "repackaged claim for
damages"; rather there is an ongoing and continuing
threat and . . . an obligation on the part of the debtor
to "ameliorate ongoing pollution emanating from
accumulated wastes" . . . The state has no "right to
payment" here. What it has is a right to force the
debtor to comply with applicable environmental laws by
remedying an existing hazard.

22

Id. (quoting In re Chateauguay, 944 F.2d 997, 1008 (2d Cir.
1991)).9

Kovacs indicates, and Torwico Electronics implies, that a
right of payment under the bankruptcy code is, essentially,
an obligation to pay money. Thus, the issue we must decide
is whether monetary payment is an alternative for the
equitable remedy of seniority integration. See Matter of
Udell, 18 F.3d 403, 407 (7th Cir. 1994) ("[an] example of a
`claim' is a right to an equitable remedy that can be
satisfied by an `alternative' right to payment"). The district
court answered this question affirmatively, and we agree.
We begin our analysis by noting that here, when ALPA
filed its proof of claim in bankruptcy court, it enumerated
the claim as one for money damages, in addition to specific
performance, arising out of the underlying LPP labor
arbitration dispute. Indeed, in its supplemental pre-hearing
statement filed at the arbitration, ALPA specifically noted
that it sought "damages in the form of back pay and front
pay against . . . Continental . . . in addition to integrated
pilot positions." This is not the end of our inquiry, however.
Consistent with the analyses in Kovacs and Torwico
Electronics, we are compelled to examine the nature of the
remedy sought and to ascertain whether it can give rise to
a right of payment. We conclude that it does.

Unlike the obligation at issue in Torwico Electronics,
seniority integration is not a remedy tailored to enforce
compliance with any federal or state laws or regulations.
_________________________________________________________________

9. In Torwico Electronics, we were persuaded by, and explicitly applied,
the approach adopted by the Court of Appeals for the Second Circuit in
In re Chateauguay, 944 F.2d 997 (2d Cir. 1990). In that case, the court
addressed the issue of what constituted a claim in the context of the
bankruptcy of an entity that operated hazardous waste sites. There, the
court stated:

Where an order imposes obligations distinct from any obligation to
stop or ameliorate ongoing pollution, the order presents a claim if
the government could have done the work itself and then sought
reimbursement; under such circumstances there is a breach of an
obligation that gives rise to a right of payment.

In re Chateauguay, 944 F.2d at 1008.

23

The source of the remedy is a provision contained in an
agreement. By its contractual nature, it is clear that the
remedy was not created to enforce compliance with any
particular mandate. Rather, by its terms, seniority
integration is a discrete remedy, specifically created to
protect a group of employees.10 Thus, the remedy is a
vehicle by which to provide a benefit or compensation to
individuals who are covered by the explicit terms of the
agreement and who, by the agreement's terms, are entitled
to enforce the remedy.

Although the collective bargaining agreement is silent as
to the remedy following a breach of the agreement, it is
reasonable to conclude that a "corollary right to payment of
liquidated damages" would flow from a breach giving rise to
the equitable remedy under the LPPs. See Matter of Udell,
18 F.3d at 408 (holding that a right to an equitable remedy
for breach of performance is a claim if the same breach also
gives rise to a right of payment with respect to the equitable
remedy or if the right to payment is an alternative to the
right to an equitable remedy). See generally Chauffeurs,
Teamsters, Etc. v. Terry, 494 U.S. 558, 108 L.Ed.2d 519,
110 S. Ct. 1339 (1990) (claim based on breach of a
collective bargaining agreement is comparable to a breach
of contract claim for which a legal award of money damages
in the form of back pay is permitted); Stewart v. KHD Deutz
of America Corp., 75 F.2d 1522 (11th Cir. 1996) (breach of
[collective bargaining claim] claim is most analogous to a
claim for breach of contract). The Court of Appeals for the
Ninth Circuit's opinion in Van Waters & Rogers, Inc. v. Int'l
Brotherhood of Teamsters, 913 F.2d 736 (9th Cir. 1990), is
instructive.

In that case, the court upheld an award of monetary
damages for breach of a contract mandating seniority
integration. There, Van Waters, a seller and distributor of
_________________________________________________________________

10. The LPPs specifically state:

Section 1. The fundamental scope and purpose of the conditions
hereinafter specified are to provide for compensatory allowances to
employees who may be affected by [a] proposed merger . . . .

(Labor Protective Provisions, section 1).

24

chemicals, purchased its competitor, McKesson. Pursuant
to the acquisition, Van Waters agreed to assume the terms
and conditions of a collective bargaining agreement that
existed between McKesson and its employees' union, Local
70. Although the collective bargaining agreement contained
a seniority integration clause triggered by a purchase or
sale of McKesson, Van Waters refused to honor the terms
of the clause after the purchase was complete. Accordingly,
Local 70 filed a grievance based on Van Waters' failure to
integrate the seniority of the former McKesson employees
with Van Waters' seniority list.

Arbitration of the dispute was complicated by two
additional factors. First, Van Waters maintained a collective
bargaining agreement with another union, Local 287.
Second, the collective bargaining agreement between Local
70 and McKesson/Van Waters contained a clause
precluding the arbitrator from determining any
jurisdictional dispute arising between Local 70 and any
other union. The effect of the latter factor was that any
ruling on a jurisdictional dispute would be outside of the
scope of the arbitrator's authority. As seniority integration
of Local 70's employees would affect the seniority of Van
Waters' employees and create a potential conflict between
the two unions, resolution of the dispute implicated the
arbitrator's authority to resolve the dispute.

At the arbitration hearing, the arbitrator granted Local
70's grievance demanding that the seniority of the former
McKesson employees be considered as integrated. However,
the arbitrator declined to enforce seniority integration to
avoid any jurisdictional dispute. Instead, the arbitrator
ruled that the employees would receive damages for any
wages and other benefits lost due to Van Waters' failure to
consider their seniority. In so ruling, the arbitrator noted
that the Local 70 agreement contained a provision that
permitted the recovery of damages by employees arising out
of an employer's failure to require a purchaser to assume
the obligations of the collective bargaining agreement. The
Ninth Circuit upheld the arbitrator's award, concluding that
the arbitrator properly fashioned a monetary award to the
former McKesson employees "for the breach of the terms of
Local 70's collective bargaining agreement." Id. at 742.

25

Van Waters illustrates that a monetary damage award
can be enforced as an alternative to, or can arise with
respect to, the equitable remedy of seniority integration.
The award is not cumulative, nor does it address a separate
remedial concern. Rather, it serves as a substitute for the
performance of an equitable remedy that cannot otherwise
be enforced. See Van Waters, 913 F.2d at 741 ("if violated,
[the seniority rights provided under the collective
bargaining agreement] could be remedied by an award of
damages rather than specific performance.").

We find support for the proposition that monetary awards
are a viable alternative to the equitable remedy of seniority
integration in wrongful discharge cases where we have
enforced awards of monetary damages in lieu of
reinstatement. Much like reinstatement, seniority
integration is a "make whole" remedy, the purpose of which
is to restore the employee to the economic status quo that
would exist but for the employer's conduct. See Franks v.
Bowman Trans. Co., 424 U.S. 747, 766 (1976).

Although we have recognized that reinstatement is the
preferred remedy to address cases of wrongful discharge,
we have enforced monetary awards as a viable alternative
where reinstatement is impractical. See Maxfield v. Sinclair
International, 766 F.2d 788 (3d Cir. 1985) (front pay is an
appropriate alternative to reinstatement where the
relationship between the parties may be so damaged by
animosity that reinstatement is impracticable and the
remedial purposes of the statute would be frustrated if
front pay were not available as an alternative remedy); Goss
v. Exxon Office Systems Co., 747 F.2d 885 (3d Cir. 1984)
(same); see also Ellis v. Ringgold School District, 832 F.2d
27 (3d Cir. 1987) (reinstatement may be denied when
animosity between the parties makes such remedy
impracticable). Cf. Squires v. Bonser, 54 F.3d 168 (3d Cir.
1994) (special circumstances indicating that tensions
between the parties exceed those which normally
accompany reinstatement or indicating "irreparable"
animosity among the parties involved justifies denial of
reinstatement).11 Similar to the conditions that can result
_________________________________________________________________

11. Squires is distinguishable. That case involved an employee who
challenged the district court's failure to direct reinstatement to his

26

from the enforcement of reinstatement, disruption to the
work environment, irreparable damage to work
relationships, and hostility and animosity are all very
probable conditions that can result from the enforcement of
seniority integration. Considering the similarity in purpose
between the two remedies, the rationale underlying the
enforcement of an alternative remedy to fulfill their
remedial purposes, and the similarity in the impracticality
of enforcing the remedies under particular circumstances,
we are certain that a money damage award is an
appropriate alternative to seniority integration.

Moreover, we are convinced that the particular
circumstances of this case might make the enforcement of
the equitable remedy of seniority integration impractical
such that an alternative money damage award would be
appropriate. The seniority integration sought by the LPP
Claimants and the Group of 31 could potentially result in
the displacement of many Continental pilots. Such
displacement has the potential to create an environment
rife with hostility and low employee morale, not to mention
a detrimental effect on employer-employee relations. 12 The
_________________________________________________________________

former position after a jury sustained a First Amendment constitutional
challenge to his employer's failure to reappoint him. Reversing the
district court's decision not to reinstate the employee, we stated, "[t]he
fact that reinstatement might have disturbing consequences, revive old
antagonisms, or breed difficult working conditions usually is not enough
to outweigh the important first amendment policies that reinstatement
serves [absent] probable adverse consequences[that] weigh so heavily
that they counsel the court against imposing this preferred remedy."
Squires, 54 F.3d at 175 (quoting Banks v. Burkich, 788 F.2d 1161, 1165
(6th Cir. 1988)). Thus, it is clear that our decision to remand with
instructions to reinstate the appellant was driven by the constitutional
nature of the claims and the compelling need to enforce reinstatement to
remedy the violation. As the claims here do not involve constitutional
concerns, we cannot conclude that any remedy short of seniority
integration will not suffice to remedy the alleged violation.

12. We note that nothing about the imposition of monetary damages as
a substitute for seniority integration frustrates the remedial purpose of
the LPPs. Cf. Franks, 424 U.S. at 771 (in a Title VII case, "the denial of
seniority relief to victims of illegal racial discrimination in hiring is
permissible `only for reasons which, if applied generally, would not

27

circumstances indicate that seniority integration would not
be a feasible remedy and that an alternative remedy of
monetary damages would be appropriate. Therefore, we
conclude that the right to seniority integration gives rise to
a "right of payment" such that the remedy constitutes a
"claim" dischargeable in bankruptcy.

We take care to note the boundaries of our holding. It is
not our purpose to suggest the award the arbitrator should
grant, if an award is warranted upon disposition of the LPP
dispute. Our holding is limited to how the claims should be
treated in bankruptcy. Simply put, we hold that any claim
based on an award of seniority integration arising out of the
resolution of the LPP dispute will be treated as a claim in
bankruptcy giving rise to a right of payment. As such, the
right to seniority integration is satisfiable by the payment of
money damages.

D. Arguments of Appellee/Cross-Appellant Continental

1. Dissolution of the Injunction

Continental challenges the district court's ruling vacating
the injunction against the continuation of the Kasher
Arbitration on two grounds. First, it argues that contrary to
the district court's conclusion, the permanent injunction,
imposed by the Plan of Confirmation, complied with the
mandate of Rule 65(d).13 Next, it contends that if the
_________________________________________________________________

frustrate the central statutory purposes of eradicating discrimination
throughout the economy and making persons whole for injuries suffered
through past discrimination.' "). Indeed, the LPPs set forth as its scope
and purpose "to provide for compensatory allowances to employees who
may be affected by the proposed merger of " the carriers. See discussion
supra note 2. An award of monetary damages is consistent with the
articulated scope and purpose, and is therefore appropriate.

13. Section 12.19 of the plan of reorganization provided:

12.19 Injunction Relating to Eastern Claims . This Joint Plan
permanently enjoins, and the Confirmation Order shall constitute
and provide for a permanent injunction against, any Person or
entity, including without limitation, (i) any present or former
employee of Eastern . . . (ii) any labor union or collective
bargaining
representative acting or purporting to act on behalf of any such

28

permanent injunction did not comply with Rule 65(d), the
statutory injunction referenced in the bankruptcy court's
confirmation order survived the permanent injunction and
is valid. We need not decide whether the permanent
injunction failed to comply with the mandate of Rule 65(d).
We conclude that even assuming that the statutory
injunction survived the permanent injunction and is not
subject to the requirements set forth in Rule 65(d),
Continental's failure to reject the collective bargaining
agreement consistent with the mandate of section 1113 of
the Code renders the injunction invalid.

The Confirmation Order issued by the bankruptcy court
specifically incorporated the statutory injunction prescribed
by the bankruptcy code. The order states:

In accordance with section 524 of the Bankruptcy Code
. . . this Order:

(ii) operates as an injunction against the
commencement or continuation of an action, the
employment of process, or an act, to collect, recover or
offset any such debt or Claim as a personal liability of
the Debtors . . . .

(Findings of Fact, Conclusions of Law and Order
Confirming The Debtors' Revised Second Amended Joint
Plan of Reorganization).
_________________________________________________________________

employees or former employees . . . from commencing, conducting or
continuing any suit, arbitration, action or other proceeding in any
place or forum against any Debtor, . . . This injunction shall
apply,
without limitation, to any suit, arbitration, action or proceeding.
(Debtors' Revised Second Amended Joint Plan of Reorganization,
S 12.19).

Federal Rule of Civil Procedure 65(d) states:

Every order granting an injunction and every restraining order
shall
set forth the reasons for its issuance; shall be specific in terms;
shall describe in reasonable detail, and not by reference to the
complaint or other document, the act or acts sought to be
restrained. . . .

Fed.R.Civ.P. 65(d).

29

Assuming, as the district court did and as Continental
argues, that the section 524 statutory injunction is not
subject to the requirements of Rule 65(d), we conclude that
the district court properly vacated the injunction against
the Kasher Arbitration. Section 1113 of the Code provides:

(a) The debtor in possession, or the trustee if one has
been appointed under the provisions of this chapter
. . . may assume or reject a collective bargaining
agreement only in accordance with the provisions of
this section.

11 U.S.C. S 1113(a). The provision outlines the procedure
that a debtor or appointed trustee must follow to
successfully reject a collective bargaining agreement,
including, but not limited to: (1) the submission of a
proposal to an authorized representative of the employees
affected by the terms of the agreement prior to thefiling of
an application to reject the agreement, 11 U.S.C.
S 524(b)(1)(A); and (2) good faith attempts to reach a
"mutually satisfactory modification" of the agreement, 11
U.S.C. S 524(b)(2).

The intent behind section 1113 is to preclude debtors or
trustees in bankruptcy from unilaterally terminating,
altering, or modifying the terms of a collective bargaining
agreement without following its strict mandate. In re
Ionosphere, 922 F.2d at 989-90. Moreover, the provision
operates to preclude the application of other bankruptcy
code provisions to the advantage of debtors and trustees to
permit them to escape the terms of a collective bargaining
agreement without complying with the requirements of
section 1113. See id.

Continental does not dispute that it did not follow the
requirements set forth in section 1113 to reject the
collective bargaining agreement. Instead, Continental
suggests that the imposition of the injunction was
consistent with the bankruptcy court's authority to
determine the administrative priority and status of the
bankruptcy claims. Thus, it argues, section 1113 cannot

30

divest the bankruptcy court of jurisdiction to exercise this
authority and impose the injunction. We disagree. 14

The injunction allowed Continental to avoid its obligation
to arbitrate the merger dispute under the LPPs. In In re
Ionosphere, the Court specifically held that the application
of the section 362 automatic stay provision to effectuate
this result in the absence of the debtor's compliance with
the requirements of section 1113 was impermissible, as "its
application would allow a debtor unilaterally to avoid its
obligation to arbitrate." In re Ionosphere, 922 F.2d at 993.
Here, the enforcement of the statutory injunction in the
face of Continental's failure to follow the requirements of
section 1113 is no different. As the enforcement of the
injunction would have the effect of permitting Continental
to escape its duty to arbitrate under the collective
bargaining agreement, we decline to enforce the statutory
injunction in the absence of Continental's compliance with
the requirements to reject the collective bargaining
agreement.15

2. Duty to Arbitrate

Finally, we reject Continental's argument that it has no
duty to arbitrate the LPP dispute. Throughout this
litigation, Continental has premised its arguments on the
_________________________________________________________________

14. We have not been required previously to address the applicability of
arbitration under collective bargaining agreements when the employer is
in bankruptcy, although the issue was raised in a case we decided last
year. See Antol v. Esposto, 100 F.3d 1111, 1121 n.4 (3d Cir. 1996) ("[W]e
need not decide that interesting issue here."). This case, however,
requires us to do so.

15. Despite our conclusion that failure to comply with section 1113 bars
an injunction of the arbitration, we reject the Claimants' contention that
the substitution of a monetary damage award, in lieu of seniority
integration, is not permitted under section 1113 because it alters or
modifies the terms of the collective bargaining agreement. The
bankruptcy court's determination of the administrative priority and
status of the claims was not based on an interpretation of the LPPs. Nor
did it predetermine the appropriate remedy warranted under the LPPs,
thus "nullifying" the agreement and infringing on the arbitrator's
jurisdiction. Substitution of the equitable remedy in no way amounts to
an alteration or termination of the terms of the collective bargaining
agreement.

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assumption that it is bound by the LPPs and has a duty to
arbitrate the LPP dispute. In so doing, Continental reaped
enormous benefits: (1) it was able to obtain a ruling that
the claim based on seniority integration could be treated as
a right to payment in bankruptcy, satisfiable by a monetary
award; and (2) in turn, it received backing from investors
for its plan of reorganization, which was critical to plan
confirmation by the bankruptcy court.16 Now, Continental
maintains that there has been no determination that it is
bound by the LPPs and that the case should be remanded
to the district court for a determination on the merits of its
duty to arbitrate the dispute.

In light of the overwhelming advantage that Continental
derived from maintaining the position that it was bound by
the collective bargaining agreement, and thus, had a duty
to arbitrate the LPP dispute, we refuse to allow Continental
to repudiate that representation and return to the district
court to litigate the issue whether it is bound by the
agreement. See EF Operating Corp. v. American Bldgs., 993
F.2d 1046, 1050 (3d Cir. 1993) ("one cannot casually cast
aside representations, oral or written, in the course of
litigation simply because it is convenient to do so . . . a
reviewing court may properly consider the representations
_________________________________________________________________

16. It is apparent that Continental assumed this position in efforts to
obtain judicial confirmation of its plan of reorganization. In its Motion
for
Partial Summary Judgment, Continental stated:

1. [Debtors] make this Motion For Partial Summary Judgment On
Their Partial Objection to Claims Based On Certain Alleged Labor
Protective Provisions Involving The Air Line Pilots Association,
International ("ALPA") And Eastern Air Lines, Inc. ("Eastern") in
order to ensure that they will be able to reorganize successfully
and,
more specifically, to satisfy a condition of the Investment
Agreement
dated November 9, 1992 ("Investment Agreement"), by and among
[the investors] and the Debtors. In addition to monetary damages,
these claims seek to require Continental to hire several thousand
Eastern Air Lines pilots, which if granted would necessitate the
displacement of an equal number of incumbent Continental pilots.
Debtors seek in this Motion a legal determination that the "LPP
Claims" . . . are, at best, dischargeable, prepetition general
 unsecured claims within the meaning of the Bankruptcy Code
Section 101(5).

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made in the appellate brief to be binding as a form of
judicial estoppel, and decline to address a new legal
argument based on a later repudiation of those
representations."). Accordingly, we conclude that
Continental is bound by its prior representations that it has
a duty to arbitrate the LPP dispute.

III.

For the foregoing reasons, we affirm the district court's
decision in all respects.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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