CHARLOTTE, N.C. ( TheStreet) -- A federal appeals court ruling last week would free the U.S. Airline Pilots Association to negotiate a new contract with US Airways ( LCC), but the pilots who lost the case are expected to file this week for a rehearing before the full appeals court.

"Our position has been vindicated, and we are free to collectively bargain," said Mike Cleary, president of the two-year-old union. "We're going to move forward and accomplish a contract with this company that protects all pilots."

Referring to former America West pilots who lost on appeal, Cleary said: "We have an obligation under fair representation to protect them, and we are very cognizant of our responsibilities; I want the west pilots to know that this union is built for everybody, and we are going to continue to do everything we can to represent everybody."
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But Marty Harper, attorney for the America West pilots and managing partner in the Phoenix office of Polsinelli Shughart, said he expects his clients will choose to ask the 11-member court to rehear the case, decided by a 2-1 vote of a three-member panel.

An option would be to allow USAPA to negotiate a contract and then appeal if west pilots are not protected. "I'm not sure there is necessarily a preferred route, but with the dissent, we think the better approach is to file the petition for a rehearing and give the ninth circuit the opportunity, if it chooses, to have a group of more than three decide this issue," Harper said.
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Court Backs US Airways Pilots on Seniority

In its ruling on Friday, the Ninth Circuit Court of Appeals in San Francisco backed USAPA and overturned a May 2009 ruling in U.S. District Court in Phoenix, when a jury concluded that the year-old union breached its duty to represent the six America West pilots who were the plaintiffs in the case.

Until US Airways pilots approve a new contract that includes a controversial seniority list, it is impossible to determine whether the plaintiffs have been harmed, said the appeals court ruling.

In 2008, US Airways pilots voted to replace the Air Line Pilots Association with USAPA because a seniority ruling by arbitrator George Nicolau appeared to favor pilots from America West over pilots from the pre-merger US Airways. The latter group was larger and easily dominated in the union representation election.

The appeals court said the reprsentation matter is not "ripe," a legal term meaning it is not ready to be adjudicated because so far it has not caused harm to the plaintiffs. The appeals court remanded the case back to the Phoenix court with directions to dismiss.

Significantly, the appeals court appeared to suggest that the Nicolau award might not ever be implemented, if USAPA can design a contract with alternative protections for west pilots.

"Even under the district court's injunction mandating USAPA to pursue the Nicolau Award, it is uncertain that the west pilots' preferred seniority system ever would be effectuated," the ruling said. It is possible that USAPA will eventually implement a contract "that does not work the disadvantages plaintiffs fear, even if that proposal is not the Nicolau Award," the appeals court said.

In the dissent, Judge Jay Bybee said the issue is indeed ripe. "When USAPA took the reins as the west pilots' union and refused to pursue the Nicolau Award, USAPA's promise moved from abstract disagreement to adjudicable legal controversy," he wrote.

Bybee said the impasse in reaching a new contract is not evidence that America West pilots are so far unharmed, but rather "is itself evidence of USAPA's intractability on behalf of the east pilots." Because USAPA's reason for being is to deny implementation of the Nicolau award, west pilots need not "await the consummation of threatened injury to obtain preventive relief," Bybee said.

Clary said the appeals court majority "recognizes that something very onerous like the Nicolau award can't happen because it can't get ratified." In fact, the legal question involves which should prevail, a seniority ruling reached in binding arbitration, or the right of a union's members to vote on their contract terms.

While the appeals court panel's ruling recognized the importance of the contractual process, it left open the possibility that west pilots could return to court if they are not treated fairly. That appears to put a heavy burden on USAPA to ensure fair treatment -- a burden Cleary said the union is ready to accept.

"When I see somebody walk through my door with an issue, it doesn't process that he or she is an east or west pilot," Cleary said. Fences, which protect pilots' careers by guaranteeing their continued right to flying they already perform or may perform, are "absolutely a possibility" as a means of protecting west pilots' futures, he said, and in fact are already included in an existing USAPA bargaining proposal.

Cleary said USAPA has already spent more than $1 million fighting the seniority battle in court and he assumes that west pilots, whose court battle is funded by donations, have spent a similar amount.

"Many other airlines have a history of pounding their merger partners, but all that does is to promote acrimony," Cleary said. "I'm not interested in that. We are going resolve this issue, and we are going to resolve it in a fair way."

-- Written by Ted Reed in Charlotte, N.C.

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