NEW YORK ( TheStreet) --The US Airline Pilots Association, chastened by an unfavorable U.S. Appeals Court ruling, said its merger committee will withdraw from negotiations intended to create a pilot seniority list at American Airlines (AAL) - Get Report.

The 2-1 ruling Friday by a panel of the Ninth Circuit U.S. Appeals Court determined that USAPA violated its duty of fair representation to former America West pilots. The ruling said that to participate in seniority negotiations, USAPA would have to back a controversial 2007 seniority list compiled by arbitrator George Nicolau, even though the primary basis for USAPA's creation was to ensure the list was never implemented.

In his dissent to the appeals court ruling, U.S. District Court Judge A. Wallace Tashima called the Appeals Court requirement "erroneous and an abuse of discretion."

In a letter to the three arbitrators who will oversee pilot seniority integration at American, William Wilder, an attorney representing USAPA, wrote Monday that because of the ruling, the USAPA merger committee "cannot be an adequate representative of US Airways (East) pilots and must withdraw from this proceeding."

Wilder indicated the withdrawal creates a situation that seems to violate the federally mandated McCaskill-Bond protocols that define the seniority integration process that applies following the 2013 merger of American and US Airways.

US Airways east pilots "have a statutory right as 'covered employees' under the McCaskill-Bond Amendment to a representative who is free to formulate a position that is in {their} best interest," Wilder wrote. The two other employee groups -- American pilots and pilots from the former America West -- have representatives "who are unrestricted in the positions they are permitted to take," he wrote.

Yet the ruling written by Appeals Court Judge Jay Bybee would deny representation to those former east pilots.

In a puzzling twist, USAPA President Steve Bradford wrote that although the USAPA merger committee "unilaterally submitted" a letter regarding its position, "USAPA disavows any representations made in the letter that was submitted and the USAPA merger counsel has no authority to bind the association or make any further representations on its behalf."

Since taking office as USAPA president in April, Bradford has declined repeated requests to publicly comment.

The pilot seniority integration problem has been brewing since the 2005 merger between US Airways and America West. Nicolau's 2007 seniority ruling, which resulted from binding arbitration agreed to by both pilot groups, was so favorable to the America West pilots that east pilots left the Air Line Pilots Association after 50 years and created a new union.

The America West pilots, who made up about a third of USAPA's roughly 5,000 members, were reluctantly dragged into USAPA. But a 2013 merger between American and US Airways enabled the Allied Pilots Association, which represents American pilots, to take over as representative of all the pilots.

It was widely thought that APA could resolve the conflict between a commitment to binding arbitration, on the one hand, and a seniority ruling that seemed to many to defy logic, on the other. APA got off to a conciliatory start, agreeing to allow both USAPA and the America West pilots to be represented by merger committees.

In a letter sent to its members late Monday, APA said remaining parties to the seniority integration -- including the west merger committee, the American pilots merger committee, American Airlines and the arbitrators -- will meet Tuesday "to review and determine future hearing plans."

APA stated that "as part of the merger, a seniority integration protocol agreement was entered into by and between APA, USAPA, American Airlines and US Airways. The protocol agreement set forth the agreed-upon seniority integration process and was agreed by all parties to be consistent with McCaskill-Bond."

Now an appeals court has knocked out one of the parties.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.