Topic category:  Government/Politics

What factors gave Europe to an advantage over the developing world, leading to the rise of the West? Some think it was the early development of guns and steel. Many think it was the rule of law, predicated upon the sanctity of contracts. Without an abiding respect for contracts, all the natural resources, disposable capital, available labor and technical prowess would be of little consequence. Without the certainty that—outside of bankruptcy—contracts will be respected, investors will not invest, banks will not lend, and the citizenry will not consume.

A storm of controversy hit when all-but-bankrupt AIG employed TARP money to pay out $165 million in bonuses to executives. “That’s the taxpayers’ money!” shouted television pundits, and The New York Times argued that a way must be found to deny the Wall Street lotus-eaters such undeserved largesse. But given the laws of the United States, there was no choice but to pay the bonuses. According to government officials, taxpayers had no recourse: “We are a country of law,” said White House economic adviser Lawrence H. Summers. “There are contracts. The government cannot just abrogate contracts.”

Right. Except, perhaps, when those contracts involve non-executives. Then, perhaps, contracts can be set aside by fiat and in the aid of established interests.

A case currently pending before the United States Court of Appeals for the Second Circuit suggests that this double standard exists. If the Second Circuit upholds a lower court ruling, Americans will have less reason to believe that contracts are inviolable—and that the rule of law is sacrosanct.

The case is Lindsay v. Association of Professional Flight Attendants et al., 08-civ-4122. Although begun nearly six years ago, it has many of the same ingredients and raises many of the same issues posed by the current economic crisis. It involves claims by a group of flight attendants against their employer, American Airlines, and their union for having improperly replaced a duly-negotiated and properly-ratified collective bargaining agreement ("CBA") with a hastily-struck pact with the union’s leadership. The union “approved” concessionary terms under which the flight attendants have been forced to give back $340 million/year in wages and benefits. While these give-backs have been in effect, the Airline is reported to have paid out at least $335 million in executive bonuses.

The flight attendants’ legal beef is not with the bonuses, but with the disregard or improper abrogation of their own contracts--two contracts in particular, their 2001 Collective Bargaining Agreement and their union’s Constitution. Consistent with this focus, their lawsuit seeks to have the substitute deal with the union declared invalid, their original CBA enforced, and the airline and union made to respond in damages. They demand damages from the Airline for failing to maintain the "status quo" under their CBA, in violation of the Railway Labor Act, and from the Union for violating its Constitution and representational responsibilities.

Whatever a jury may or may not ultimately decide about damages, the question at the heart of the case deserves to be answered in the affirmative--quickly, decisively and unconditionally. For until our courts recognize that the employment agreements of ordinary folk are as deserving of respect and enforcement as those of the highest-paid executive, the notion that we are a country that upholds the rule of law, and affords "equal protection" under it, rings hollow. Indeed, unless and until it becomes clear that contracts will be enforced and contractual expectations respected, without regard to who holds them, it would be hypocritical to ask those whose contracts have never been respected to join in bringing about an economic revival. Why would they join in if--as in Lindsay--they are going to continue to get squeezed to the same degree even after an economic turn-around?

At present, the experience of many working folk is that their contracts are routinely disregarded, disrespected or magically re-opened and rewritten. This is true even of collective bargaining agreements that took years to negotiate and run to hundreds of pages. They are often the first recourse of employers looking to cut costs. As a result, the already stark disparity between executive compensation and average pay has grown ever wider. In 1980, executives made 42 times what the average worker made; as of a few years ago, they made 364 times as much. When the statistics for 2008 and 2009 are in, the disparity will no doubt be even greater.

American Airlines and the union leadership in the Lindsay case spent nearly six years fighting the employees’ attempts to claim the benefit of the rule of law. In principal part, the Airline and Union did not choose to fight on the merits. Thus, they did not so much claim that the concessionary deal they struck was valid, as they claimed the employees had no standing to challenge it. They did not so much claim the Airline did not violate the Railway Labor Act as that the union was the only one that could sue it for damages and it had waived the right. Finally, they did not so much claim that the union’s Constitution has not been violated, as they claimed that employees are without a remedy for the violations. (Technically, they contend that a claim for breach of the union's constitution is a state-law claim that has been superseded by federal law. Under this view, the union’s constitution is a dead-letter rather than an enforceable agreement.) The flight attendants have disputed each of these claims on multiple grounds, asking the Second Circuit to reverse the summary judgment against them and send the case back for trial.

The efforts of the Airline and Union to deny the flight attendants the benefits of contract law is only half the story, however. The other half is the legal regime they would substitute in its stead. It is here that the Airline and Union reveal their true agenda: For its part, the Union effectively takes the position that it only has two obligations to those it represents—not to discriminate against them in an invidious fashion, and not to act "wholly irrationally." So long as it meets these very minimal tests, it says, it has no other legal obligations. Its constitution is completely displaced, it insists, by this two-pronged federal duty. (The federal duty, commonly known as the "duty of fair representation" or "DFR," actually has three prongs. The Union has combined two of them. It has also ignored Supreme Court decisions that say that the "DFR" is not the sum total of a union's obligations. It only establishes the floor.)

The Airline’s position is more radical still. In what may be a trial balloon, it attempts to use the Union as a shield against employee claims. It bases its claim to near-immunity on three wholly unsupported contentions. First, it contends that employees have no direct rights against the Airline, only against their union. Second, it agrees with the Union that their right against the union is limited to the right to sue for a DFR-breach. Third, it claims the only thing for which it can be sued, even indirectly, is having affirmatively “colluded” with the union in that breach. Put another way, it asserts that a hybrid DFR claim is the only claim an employee can make against an airline and union. That claim allegedly and magically displaces all other statutory and common law claims in the Airline's alternative universe.

The benefits to the Union and Airline of pursuing this radical strategy are obvious. The last major DFR case to succeed in the Second Circuit was fifteen years ago, in 1994. The state of the law in other Circuits is not very different. So, if the defendants' reductionist strategy succeeds, unions can expect to be held accountable to those they represent at most five or six times a century; companies, perhaps never. This would not only spell the end of labor law as we know it in this country, but also the end to any credible claim that we uphold the rule of law.

How on earth, you might ask, do the airline and union expect to put this radical agenda over on the Second Circuit? A good question. Here, too, the airline's and union's tactics are telling. Together, their briefs on appeal total 117 pages. Of this amount, 58 pages or nearly 50% are devoted to a recitation of the facts, with special emphasis on the state of the Airline's finances in 2003 and its repeated threats, at the time, to file for bankruptcy. The question is to what end? (Everyone agrees the Airline never filed.)

The flight attendants raised five issues on appeal, the first four of which are easily summarized: Whether claims for violation of the status quo accrue to employees or only to their unions? Whether the Railway Labor Act preempts certain state-law claims? Whether the DFR standard articulated by the Supreme Court represents a ceiling or only a threshold? And, whether the issue of class certification is moot or open? Facts regarding the Airline's finances and threats to file for bankruptcy have absolutely no relevance to any of these issues.

While it isn't as obvious, such facts also are not relevant on the final issue: whether the lower court erred in granting defendants summary judgment on the DFR claims. In deciding this issue, the Court must determine whether plaintiffs have presented sufficient evidence of bad faith to require the DFR claims to go to a jury. Since the test for bad faith is subjective, rather than objective, the point is not to judge the reasonableness of the union's actions against the factual landscape at the time. Rather, the focus must be on the evidence the flight attendants have presented and what a jury might conclude regarding the union's actual state of mind.

Obviously, if summary judgment on the DFR claims is reversed and the case remanded for trial, evidence regarding the Airline's finances and threats can be presented to a jury, but they are not relevant to the current appeal.

So what's the point? Why did the Airline and Union almost singularly dwell on such evidence? Were they trying to distract the Court from the very weighty legal issues in the case? Were they trying to intimidate it? Or have the Lindsay defendants, like our current President, confused the role of appellate court and jury? Asking a jury to be empathetic may be appropriate. We expect our appellate courts to adhere to the rule of law.

In this instance, adherence to the rule of law may well redound to the benefit of persons who have not previously been its beneficiaries. While we can applaud that, the flight attendants should prevail on this appeal, not out of largesse, but because statutory and common law require that result.

Full Discloure: One of plaintiffs’ lead counsel, Emily Maruja Bass, Esq., is my former law partner. We occupy opposite sides of the political spectrum, but agree on many fundamental principles. They include the rule of law and sanctity of contracts, and core belief that the laws must be applied evenhandedly. This case exemplifies those principles.

Indeed, in many ways, it reminds me of the Tasini case, although that case involved writers rather than flight attendants. There, the Second Circuit unanimously reversed an ill-founded grant of summary judgment [by Judge Sonia Sotomayor, President Obama's Supreme Court Justice nominee who also ruled against the white and Hispanic New Haven firefighters in the Ricci case now under review by the United States Supreme Court] in favor of powerful defendants. The United States Supreme Court then affirmed the Second Circuit by a margin of 7-to-2. Emily was named a “standout” attorney by the National Law Journal for her Second Circuit work in that case, and both that Court and the Supreme Court resoundingly upheld her legal analysis. In my opinion, the outcome in this case should be the same as in Tasini—the District Court should be unanimously reversed.

Michael J. Gaynor

Biography - Michael J. Gaynor

Michael J. Gaynor has been practicing law in New York since 1973. A former partner at Fulton, Duncombe & Rowe and Gaynor & Bass, he is a solo practitioner admitted to practice in New York state and federal courts and an Association of the Bar of the City of New York member.

Gaynor graduated magna cum laude, with Honors in Social Science, from Hofstra University's New College, and received his J.D. degree from St. John's Law School, where he won the American Jurisprudence Award in Evidence and served as an editor of the Law Review and the St. Thomas More Institute for Legal Research. He wrote on the Pentagon Papers case for the Review and obscenity law for The Catholic Lawyer and edited the Law Review's commentary on significant developments in New York law.

The day after graduating, Gaynor joined the Fulton firm, where he focused on litigation and corporate law. In 1997 Gaynor and Emily Bass formed Gaynor & Bass and then conducted a general legal practice, emphasizing litigation, and represented corporations, individuals and a New York City labor union. Notably, Gaynor & Bass prevailed in the Second Circuit in a seminal copyright infringement case, Tasini v. New York Times, against newspaper and magazine publishers and Lexis-Nexis. The U.S. Supreme Court affirmed, 7 to 2, holding that the copyrights of freelance writers had been infringed when their work was put online without permission or compensation.

Gaynor currently contributes regularly to www.MichNews.com, www.RenewAmerica.com, www.WebCommentary.com, www.PostChronicle.com and www.therealitycheck.org and has contributed to many other websites. He has written extensively on political and religious issues, notably the Terry Schiavo case, the Duke "no rape" case, ACORN and canon law, and appeared as a guest on television and radio. He was acknowledged in Until Proven Innocent, by Stuart Taylor and KC Johnson, and Culture of Corruption, by Michelle Malkin. He appeared on "Your World With Cavuto" to promote an eBay boycott that he initiated and "The World Over With Raymond Arroyo" (EWTN) to discuss the legal implications of the Schiavo case. On October 22, 2008, Gaynor was the first to report that The New York Times had killed an Obama/ACORN expose on which a Times reporter had been working with ACORN whistleblower Anita MonCrief.

Gaynor's email address is gaynormike@aol.com.