Sunday, December 22, 2013

Damages: Collective remedies, lost opportunity, unjust enrichment

In March of 2013, Arbitrator Mathew Franckiewicz determined that Southwest Airlines breached its cba with the Airline Mechanics Fraternal Association when it delayed the start of a fourth line for heavy maintenance of aircraft following its merger with AirTran. Since the arbitration was bifurcated between liability and damages, the parties then proceeded to discuss the remedy for this breach. Their initial positions differed by over 14 million dollars. While the gap was subsequently reduced, they were unable to agree and Arbitrator Franckiewicz was called upon to resolve the issue. Because of the parties' dramatically different approaches to the issue, the Arbitrator limited his opinion to resolving the proper approach to the calculation of damages, leaving it to the parties to then attempt to calculate precise amounts.

The area of greatest dispute was Southwest's potential liability for back pay for the period the start of the fourth line was delayed. Arbitrator Franckiewicz noted initially that the Union was not seeking back pay for the delayed hires, but sought instead a "collective remedy" for individuals on roll when the FAA issued a "single operating certificate". The Union maintained that there had been a collective injury to the bargaining unit and that a collective remedy was therefore appropriate. It relied in part on prior awards in cases involving claims of improper subcontracting, in which damages were paid to the Union for distribution to employees without an individual showing of proof of loss. It maintained further that such a remedy was warranted because the delay undermined job security, damaged the Union's standing and unjustly enriched Southwest, which had continued AirTran's practice of outsourcing maintenance during the period of the delay. The Union sought payment for those individuals who suffered delayed promotions and for the loss of Union dues.

Arbitrator Franckiewicz essentially rejected the Union's claim for a "collective remedy". In doing so he noted that the individuals for whom the Union was seeking relief suffered no harm from the delayed implementation of the fourth line. Observing that "[t]he goal in this case, in any labor arbitration make whole remedy case, is to restore all those affected to the economic position in which they would have been, but for the contract violation", the Arbitrator concluded:

Had the fourth line been implemented as of March 1, 2012, the additional work would not have been performed by experienced Southwest employees on an overtime bases, but by new hires. Thus the class of those injured is not the erstwhile members of the bargaining unit, but those who were outside the bargaining unit as of March 1, 2012. This is a critical distinction between the current case, and the subcontracting cases cited by the Union.
Under the Union’s approach, some 80 percent of the total payout would be occasioned by wages in respect of additional bodies — new hires — but this money would not be paid to them but to “old” employees, whose earnings, in most cases would not have increased, and did not increase, as a result of the fourth line implementation, whether earlier or later.

He also found no evidence to support the Union's claim of "lost opportunity" for bargaining unit members, and, while employees may have felt some insecurity, no employee was laid off or suffered economic harm. Finding the Union's request for damages for lost job security or lost opportunity "comparable to damages in tort for pain and suffering or emotional distress"  the Arbitrator concluded that "these are not customarily redressed in labor arbitration." He similarly rejected the Union's claim of unjust enrichment, finding "what the Company gained is immaterial. The question is instead what did the Union or the bargaining unit lose ...."

However, the Arbitrator did find merit in the Union's claim for lost Union dues, and for back pay for individuals who would have been promoted to lead positions but for the delay in implementation of the fourth line.

AMFA Local 11 discussed the award, Membership Update: 4th Line Damages, and links to the full text here. 

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