Liquidating 1113 collective bargaining
On February 24, 1986, Texas Air Corporation (Texas Air), Continental's parent, acquired Eastern.
Believing that the acquisition constituted a "merger" within the meaning of the LPPs, ALPA requested a meeting with Texas Air, Eastern and Continental to discuss the integration of Eastern's and Continental's seniority lists.
In holding as we do, we are not drawing a mere semantical distinction.
Eastern's obligation to satisfy in full the vacation pay claims remains unchanged.
The district court's reasoning, which the Third Circuit adopted, was that because Continental was bound by the Eastern CBA and had never sought to reject the Eastern CBA pursuant to ' 1113 of the Code, enjoining arbitration of the LPP dispute would result in a unilateral alteration of a term of the Eastern CBA in derogation of ' 1113. On or about October 23, 1998, Continental Airlines was sued in a class action in the federal district court in New Jersey by 300 former Eastern Airlines pilots for damages totaling more than $1 billion based upon the alleged breach of the Eastern Airlines CBA.
In affirming the district court's reversal of the bankruptcy court on that issue, the Third Circuit stated: 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 . The plaintiffs contend that Continental is bound by the CBA which was in effect between ALPA and Eastern Airlines when Texas Air purchased Eastern in 1986.
The orders of the bankruptcy court were affirmed in part and reversed in part by the district court.
The Second Circuit affirmed the district court in to the facts of this case, we hold that application of the priority scheme of 507 will not allow Eastern unilaterally to modify or terminate its obligations under the CBAs.
The assumption of such agreements is governed by Section 365 of the Code, which generally governs the assumption and rejection of collective bargaining agreements.
The recent opinions adopting that view include the Fourth Circuit's decision in , the Fourth Circuit announced another decision which may be controversial and have potentially significant consequences if it is followed.
The collective bargaining agreement is respected, but the financial obligations issuing from it are accorded priority consistent with the Bankruptcy Code." Moreover, application of the priority scheme does not conflict with the purpose of 1113., 140 L. While Continental initially contended that it was not a party to the Eastern CBA and was not otherwise bound by it, the courts eventually determined that Continental was liable for the claims held by the ALPA claimants predicated on the Eastern CBA.
The Third Circuit affirmed the holdings of the lower courts that the union members' seniority integration rights gave rise to "rights to payment" which were "claims" dischargeable in bankruptcy. Notwithstanding the district court's affirmance of the bankruptcy court's holding that the seniority integration rights were rights to payment dischargeable in bankruptcy, the district court reversed an injunction which the bankruptcy court had issued to prevent further arbitration of the LPP dispute. Accordingly, we conclude that Continental is bound by its prior representations that it has a duty to arbitrate the LPP dispute.6.
Continental and Eastern refused to bargain with ALPA about integration of the seniority lists.