Subject:  AIR LINE PILOTS v. O'NEILL, Syllabus



 
    NOTE: Where it is feasible, a syllabus (headnote) will be released, as
is being done in connection with this case, at the time the opinion is
issued.  The syllabus constitutes no part of the opinion of the Court but
has been prepared by the Reporter of Decisions for the convenience of the
reader.  See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES


Syllabus



AIR LINE PILOTS ASSOCIATION, INTERNATIONAL v. O'NEILL et al.

certiorari to the united states court of appeals for the fifth circuit

No. 89-1493.  Argued January 14, 1991 -- Decided March 19, 1991

After Continental Airlines, Inc., filed a petition for reorganization under
Chapter 11 of the Bankruptcy Code, it repudiated its collectivebargaining
agreement with petitioner Air Line Pilots Association, International
(ALPA).  An acrimonious strike ensued, during which Continental hired
replacement pilots and reemployed several hundred crossover strikers.  Two
years into the strike, Continental announced in its "Supplementary Base
Vacancy Bid 1985-5" (85-5 bid) that it would fill a large number of
anticipated vacancies using a system that allows pilots to bid for
positions and that, in the past, had assigned positions by seniority.
Although ALPA authorized strikers to submit bids, Continental announced
that all of the positions had been awarded to working pilots.  ALPA and
Continental then agreed to end the strike, dispose of some related
litigation, and reallocate the positions covered by the 85-5 bid.  Striking
pilots were offered the option of settling all outstanding claims with
Continental and participating in the 85-5 bid positions' allocations,
electing not to return to work and receiving severance pay, or retaining
their individual claims against Continental and becoming eligible to return
to work only after all the settling pilots had been reinstated.  Thus,
striking pilots received some of the positions previously awarded to the
working pilots.  After the settlement, respondents, former striking pilots,
filed suit in the District Court against ALPA, charging, inter alia, that
the union had breached its duty of fair representation.  The court granted
ALPA's motion for summary judgment, but the Court of Appeals reversed.  It
rejected ALPA's argument that a union cannot breach the fair representation
duty without intentional misconduct, applying, instead, the rule announced
in Vaca v. Sipes, 386 U. S. 171, that a union violates the duty if its
actions are either "arbitrary, discriminatory, or in bad faith," id., at
190.  With respect to the test's first component, the court found that a
nonarbitrary decision must be (1) based upon relevant permissible union
factors, (2) a rational result of the consideration of those factors, and
(3) inclusive of a fair and impartial consideration of all employees'
interests.  Applying that test, the court concluded that a jury could find
that ALPA acted arbitrarily by negotiating a settlement less favorable than
the consequences of a complete surrender to Continental, which the court
believed would have left intact the striking pilots' seniority rights with
regard to the 85-5 bid positions.  It also found the existence of a
material issue of fact whether the favored treatment of working pilots in
the allocation of the 85-5 bid positions constituted discrimination against
the strikers.

Held:

    1. The tripartite standard announced in Vaca v. Sipes, supra, applies
to a union in its negotiating capacity.  See, e. g., Communications Workers
v. Beck, 487 U. S. 735, 743.  Thus, when acting in that capacity, the union
is not, as ALPA contends, required only to act in good faith and treat its
members equally and in a nondiscriminatory fashion.  Rather, it also has a
duty to act in a rational, nonarbitrary fashion to provide its members fair
and adequate representation.  See, e. g., Vaca v. Sipes, supra, at 177;
Steele v. Louisiana & Nashville R. Co., 323 U. S. 192, 202.  Pp. 7-11.

    2. The final product of the bargaining process may constitute evidence
of a breach of the fair representation duty only if, in light of the
factual and legal landscape, it can be fairly characterized as so far
outside of a "wide range of reasonableness," Ford Motor Co. v. Huffman, 345
U. S. 330, 338, that it is wholly "irrational" or "arbitrary."  The Court
of Appeals' refinement of the arbitrariness component authorizes more
judicial review of the substance of negotiated agreements than is
consistent with national labor policy.  Congress did not intend judicial
review of a union's performance to permit the court to substitute its own
view of the proper bargain for that reached by the union.  See, e. g., NLRB
v. Insurance Agents, 361 U. S. 477, 488.  Rather, Congress envisioned the
relationship between the courts and labor unions as similar to that between
the courts and the legislature.  See Steele, supra, at 198.  Any
substantive examination of a union's performance, therefore, must be highly
deferential, recognizing the wide latitude that negotiators need for the
effective performance of their bargaining responsibilities.  Cf., e. g.,
Day-Brite Lighting, Inc. v. Missouri, 342 U. S. 421, 423.  Pp. 11-12.

    3. The resolution of the dispute as to the 85-5 bid positions was well
within the "wide range of reasonableness" that a union is allowed in its
bargaining.  Assuming that the union made a bad settlement, it was by no
means irrational when viewed in light of the legal landscape at the time of
the settlement.  Given Continental's resistance during the strike, it would
have been rational for ALPA to recognize that a voluntary return to work
might have precipitated litigation over the strikers' right to the
positions, and that Continental might not have abandoned its bargaining
position without a settlement disposing of the pilots' individual claims.
Thus, it would have been rational to negotiate a settlement that produced
certain and prompt access to a share of the new jobs, avoided the costs and
risks associated with major litigation, and was more favorable than a
return to work for the significant number of pilots who chose severance.
Any discrimination between striking and working pilots in the allocation of
the 85-5 bid positions does not represent a breach of the duty, because, if
it is correct that ALPA's decision to accept a compromise was rational,
some form of allocation was inevitable.  Cf. Trans World Airlines, Inc. v.
Flight Attendants, 489 U. S. 426; NLRB v. Erie Resistor Corp., 373 U. S.
221, distinguished.  Pp. 12-15.

886 F. 2d 1438, reversed.

Stevens, J., delivered the opinion for a unanimous Court.

------------------------------------------------------------------------------




Subject: 89-1493 -- OPINION, AIR LINE PILOTS v. O'NEILL

 


NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


No. 89-1493




AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, PETITIONER v. JOSEPH E. O'NEILL
et al.

on writ of certiorari to the united states court of appeals for the fifth
circuit

[March 19, 1991]


    Justice Stevens delivered the opinion of the Court.
    We granted certiorari to clarify the standard that governs a claim that
a union has breached its duty of fair representation in its negotiation of
a back-to-work agreement terminating a strike.  We hold that the rule
announced in Vaca v. Sipes, 386 U. S. 171, 190 (1967) -- that a union
breaches its duty of fair representation if its actions are either
"arbitrary, discriminatory, or in bad faith" -- applies to all union
activity, including contract negotiation.  We further hold that a union's
actions are arbitrary only if, in light of the factual and legal landscape
at the time of the union's actions, the union's behavior is so far outside
a "wide range of reasonableness," Ford Motor Co. v. Huffman, 345 U. S. 330,
338 (1953), as to be irrational.
I
    This case arose out of a bitter confrontation between Continental
Airlines, Inc. (Continental) and the union representing its pilots, the Air
Line Pilots Association, International (ALPA).  On September 24, 1983,
Continental filed a petition for reorganization under Chapter 11 of the
Bankruptcy Code.  Immediately thereafter, with the approval of the
Bankruptcy Court, Continental repudiated its collective-bargaining
agreement with ALPA and unilaterally reduced its pilots' salaries and
benefits by more than half.  ALPA responded by calling a strike that lasted
for over two years.  See O'Neill v. Airline Pilots Assn., Int'l, 886 F. 2d
1438, 1440 (CA5 1989).
    Of the approximately 2,000 pilots employed by Continental, all but
about 200 supported the strike.  By the time the strike ended, about 400
strikers had "crossed over" and been accepted for reemployment in order of
reapplication.  App. to Brief of Continental Airlines, Inc., as Amicus
Curiae A11, and n. 8.  By trimming its operations and hiring about 1,000
replacements, Continental was able to continue in business.  By August
1985, there were 1,600 working pilots and only 1,000 strikers.  886 F. 2d,
at 1440.
    The strike was acrimonious, punctuated by incidents of violence, and
the filing of a variety of law suits, charges, and countercharges.  In
August 1985, Continental notified ALPA that it was withdrawing recognition
of ALPA as the collective-bargaining agent for its pilots.  ALPA responded
with a federal lawsuit alleging that Continental was unlawfully refusing to
continue negotiations for a new collectivebargaining agreement.  In this
adversary context, on September 9, 1985, Continental posted its
"Supplementary Base Vacancy Bid 1985-5" (85-5 bid) -- an act that
precipitated, not only an end to the strike, but also the litigation that
is now before us.  Ibid.
    For many years Continental had used a "system bid" procedure for
assigning pilots to new positions.  Bids were typically posted well in
advance in order to allow time for nec essary training without interfering
with current service.  When a group of vacancies was posted, any pilot
could submit a bid specifying his or her preferred position (Captain, First
Officer, or Second Officer), base of operations, and aircraft type.  Ibid.
In the past, vacant positions had been awarded on the basis of seniority,
determined by the date the pilot first flew for Continental.  The 85-5 bid
covered an unusually large number of anticipated vacancies -- 441 future
Captain and First Officer positions and an undetermined number of Second
Officer vacancies.  Pilots were given nine days -- until September 18, 1985
-- to submit their bids.  Id., at 1441.
    Fearing that this bid might effectively lock the striking pilots out of
jobs for the indefinite future, ALPA authorized the strikers to submit
bids.  Several hundred did so, as did several hundred working pilots.
Although Continental initially accepted bids from both groups, it soon
became concerned about the bona fides of the striking pilots' offer to
return to work at a future date.  It therefore challenged the strikers'
bids in court and announced that all of the 85-5 bid positions had been
awarded to working pilots.  Ibid.
    At this juncture, ALPA intensified its negotiations for a complete
settlement.  ALPA's negotiating committee and Continental reached an
agreement, which was entered as an order by the Bankruptcy Court on October
31, 1985.  See App. 7-41.  The agreement provided for an end to the strike,
the disposition of all pending litigation, and reallocation of the
positions covered by the 85-5 bid.  See id., at 10-34.
    The agreement offered the striking pilots three options.  Under the
first, pilots who settled all outstanding claims with Continental were
eligible to participate in the allocation of the 85-5 bid positions.  Under
the second option, pilots who elected not to return to work received
severance pay of $4,000 per year of service (or $2,000 if they had been
furloughed before the strike began). {1}  Under the third option, striking
pilots retained their individual claims against Continental and were
eligible to return to work only after all the first option pilots had been
reinstated.  See 886 F. 2d., at 1441-1442.
    Pilots who chose the first option were thus entitled to some of the
85-5 bid positions that, according to Continental, had previously been
awarded to working pilots.  The first 100 Captain positions were allocated
to working pilots and the next 70 Captain positions were awarded, in order
of seniority, to returning strikers who chose option one.  App. 13.
Thereafter, striking and nonstriking pilots were eligible for Captain
positions on a one-to-one ratio.  Id., at 13-14.  The initial base and
aircraft type for a returning striker was assigned by Continental, but the
assignments for working pilots were determined by their bids.  886 F. 2d,
at 1441.  After the initial assignment, future changes in bases and
equipment were determined by seniority, and striking pilots who were in
active service when the strike began received seniority credit for the
period of the strike.  See App. 22.
II
    Several months after the settlement, respondents, as representatives of
a class of former striking pilots, brought this action against ALPA.  See
App. 1.  In addition to raising other charges not before us, respondents
alleged that the union had breached its duty of fair representation in
negotiating and accepting the settlement. {2}   After extensive discovery,
ALPA filed a motion for summary judgment.  See Id., at 3.  Opposing that
motion, respondents identified four alleged breaches of duty, including the
claim that "ALPA negotiated an agreement that arbitrarily discriminated
against striking pilots."  {3}
    The District Court granted the motion, relying alternatively on the
fact that the Bankruptcy Court had approved the settlement and on its own
finding that, even if the October 31 settlement was merely a private
agreement, ALPA did not breach its duty of fair representation.  In his
oral explanation of his ruling, the District judge opined that "the
agreement that was achieved looks atrocious in retrospect, but it is not a
breach of fiduciary duty badly to settle the strike."  App. 75.
    The Court of Appeals reversed.  886 F. 2d 1438 (CA5 1989).  It first
rejected ALPA's argument that a union cannot breach its duty of fair
representation without intentional misconduct.  The court held that the
duty includes " `three distinct' " components.  Id., at 1444 (quoting
Tedford v. Peabody Coal Co., 533 F. 2d 952, 957, n. 6 (CA5 1976)).  A union
breaches the duty if its conduct is either " `arbitrary, discriminatory, or
in bad faith.' "  886 F. 2d, at 1444. (quoting Vaca v. Sipes, 386 U. S., at
190).  With respect to the arbitrariness component, the Court of Appeals
followed Fifth Circuit precedent, stating:
" `We think a decision to be non-arbitrary must be (1) based upon relevant,
permissible union factors which excludes the possibility of it being based
upon motivations such as personal animosity or political favoritism; (2) a
rational result of the consideration of these factors; and (3) inclusive of
a fair and impartial consideration of the interests of all employees.' "
886 F. 2d, at 1444.  (quoting Tedford, 533 F. 2d, at 957) (footnotes
omitted and emphasis added by the Court of Appeals).

    Applying this arbitrariness test to the facts of this case, the Court
of Appeals concluded that a jury could find that ALPA acted arbitrarily
because the jury could find that the settlement "left the striking pilots
worse off in a number of respects than complete surrender to
[Continental]."  886 F. 2d, at 1445.  That conclusion rested on the court's
opinion that the evidence suggested that, if ALPA had simply surrendered
and made an unconditional offer to return to work, the strikers would have
been entitled to complete priority on all the positions covered by the 85-5
bid. {4}  Relying on a District Court decision in litigation between ALPA
and another airline, {5} the court rejected ALPA's argument that the 85-5
bid positions were arguably not vacancies because they had already been
assigned to working pilots.  Id., at 1446.  In addition, the Court of
Appeals ruled that the evidence raised a genuine issue of material fact
whether the favored treatment of working pilots in the allocation of 85-5
bid positions constituted discrimination against those pilots who had
chosen to strike.  Id., at 1446-1447.
    The court held that respondents had raised a jury question whether ALPA
had violated its duty to refrain from "arbitrary" conduct, and the court
therefore remanded the case for trial.  Id., at 1448-1449.   Because it
reversed the District Court's grant of summary judgment on the
arbitrariness component, the Court of Appeals did not decide whether
summary judgment on the fair representation claim might be precluded by the
existence of other issues of fact. {6}
    We granted certiorari to review the Court of Appeals' statement of the
standard governing an alleged breach of a union's duty of fair
representation and the court's application of the standard in this case.
498 U. S. --- (1990).
III
    ALPA's central argument is that the duty of fair representation
requires only that a union act in good faith and treat its members equally
and in a nondiscriminatory fashion.  The duty, the union argues, does not
impose any obligation to provide adequate representation.  The District
Court found that there was no evidence that ALPA acted other than in good
faith and without discrimination. {7}  Because of its view of the limited
scope of the duty, ALPA contends that the District Court's finding, which
the Court of Appeals did not question, is sufficient to support summary
judgment.
    The union maintains, not without some merit, that its view that courts
are not authorized to review the rationality of good-faith,
nondiscriminatory union decisions is consonant with federal labor policy.
The Government has generally regulated only "the process of collective
bargaining," H. K. Porter Co. v. NLRB, 397 U. S. 99, 102 (1970) (emphasis
added), but relied on private negotiation between the parties to establish
"their own charter for the ordering of industrial relations," Teamsters v.
Oliver, 358 U. S. 283, 295 (1959).  As we stated in NLRB v. Insurance
Agents, 361 U. S. 477, 488 (1960), Congress "intended that the parties
should have wide latitude in their negotiations, unrestricted by any
governmental power to regulate the substantive solution of their
differences."  See also Carbon Fuel Co. v. Mine Workers, 444 U. S. 212, 219
(1979).
    There is, however, a critical difference between governmental
modification of the terms of a private agreement and an examination of
those terms in search for evidence that a union did not fairly and
adequately represent its constituency.  Our decisions have long recognized
that the need for such an examination proceeds directly from the union's
statutory role as exclusive bargaining agent.  "[T]he exercise of a granted
power to act in behalf of others involves the assumption toward them of a
duty to exercise the power in their interest and behalf."  Steele v.
Louisville & Nashville R. Co., 323 U. S. 192, 202 (1944).
    The duty of fair representation is thus akin to the duty owed by other
fiduciaries to their beneficiaries.  For example, some Members of the Court
have analogized the duty a union owes to the employees it represents to the
duty a trustee owes to trust beneficiaries.  See Teamsters v. Terry, 494 U.
S. ---, --- (1990); id., at --- (Kennedy, J., dissenting).  Others have
likened the relationship between union and employee to that between
attorney and client.  See id., at --- (Stevens, J., concurring in part and
concurring in judgment).  The fair representation duty also parallels the
responsibilities of corporate officers and directors toward shareholders.
Just as these fiduciaries owe their beneficiaries a duty of care as well as
a duty of loyalty, a union owes employees a duty to represent them
adequately as well as honestly and in good faith.  See, e. g., Restatement
(Second) of Trusts MDRV 174 (1959) (trustee's duty of care); Strickland v.
Washington, 466 U. S. 668, 686 (1984) (lawyer must render "adequate legal
assistance"); Hanson Trust PLC v. ML SCM Acquisition Inc., 781 F. 2d 264,
274 (CA2 1986) (directors owe duty of care as well as loyalty).
    ALPA suggests that a union need owe no enforceable duty of adequate
representation because employees are protected from inadequate
representation by the union political process.  ALPA argues, as has the
Seventh Circuit, that employees "do not need . . . protection against
representation that is inept but not invidious" because if a "union does an
incompetent job . . . its members can vote in new officers who will do a
better job or they can vote in another union."  Dober v. Roadway Express,
Inc., 707 F. 2d 292, 295 (CA7 1983).  In Steele, the case in which we first
recognized the duty of fair representation, we also analogized a union's
role to that of a legislature.  See 323 U. S., at 198.  Even legislatures,
however, are subject to some judicial review of the rationality of their
actions.  See, e. g., United States v. Carolene Products Co., 304 U. S. 144
(1938); United States Dept. of Agriculture v. Moreno, 413 U. S. 528
(1973).
    ALPA relies heavily on language in Ford Motor Co. v. Huffman, 345 U. S.
330 (1953), which, according to the union, suggests that no review of the
substantive terms of a settlement between labor and management is
permissible.  In particular, ALPA stresses our comment in the case that
"[a] wide range of reasonableness must be allowed a statutory bargaining
representative in serving the unit it represents, subject always to
complete good faith and honesty of purpose in the exercise of its
discretion."  Id., at 338.  Unlike ALPA, we do not read this passage to
limit review of a union's actions to "good faith and honesty of purpose,"
but rather to recognize that a union's conduct must also be within "[a]
wide range of reasonableness."
    Although there is admittedly some variation in the way in which our
opinions have described the unions' duty of fair representation, we have
repeatedly identified three components of the duty, including a prohibition
against "arbitrary" conduct.  Writing for the Court in the leading case in
this area of the law, Justice White explained:
"The statutory duty of fair representation was developed over 20 years ago
in a series of cases involving alleged racial discrimination by unions
certified as exclusive bargaining representatives under the Railway Labor
Act, see Steele v. Louisville & N. R. Co., 323 U. S. 192; Tunstall v.
Brotherhood of Locomotive Firemen, 323 U. S. 210, and was soon extended to
unions certified under the N. L. R. A., see Ford Motor Co. v. Huffman,
supra.  Under this doctrine, the exclusive agent's statutory authority to
represent all members of a designated unit includes a statutory obligation
to serve the interests of all members without hostility or discrimination
toward any, to exercise its discretion with complete good faith and
honesty, and to avoid arbitrary conduct.  Humphrey v. Moore, 375 U. S., at
342.  It is obvious that Owens' complaint alleged a breach by the Union of
a duty grounded in federal statutes, and that federal law therefore governs
his cause of action."  Vaca v. Sipes, 386 U. S., at 177.

This description of the "duty grounded in federal statutes" has been
accepted without question by Congress and in a line of our decisions
spanning almost a quarter of a century. {8}
    The union correctly points out, however, that virtually all of those
cases can be distinguished because they involved contract administration or
enforcement rather than contract negotiation.  ALPA argues that the policy
against substantive review of contract terms applies directly only in the
negotiation area.  Although this is a possible basis for distinction, none
of our opinions has suggested that the duty is governed by a double
standard.  Indeed, we have repeatedly noted that the Vaca v. Sipes standard
applies to "challenges leveled not only at a union's contract
administration and enforcement efforts but at its negotiation activities as
well."  Communications Workers v. Beck, 487 U. S. 735, 743 (1988) (internal
citation omitted); see also Electrical Workers v. Foust, 442 U. S. 42, 47
(1979); Vaca v. Sipes, 386 U. S., at 177.  We have also held that the duty
applies in other instances in which a union is acting in its representative
role, such as when the union operates a hiring hall.  See Brein inger v.
Sheet Metal Workers, 493 U. S. ---, --- (1989).
    We doubt, moreover, that a bright line could be drawn between contract
administration and contract negotiation.  Industrial grievances may
precipitate settlement negotiations leading to contract amendments, and
some strikes and strike settlement agreements may focus entirely on
questions of contract interpretation.  See Conley v. Gibson, 355 U. S. 41,
46 (1957); Steelworkers v. Warrior & Gulf Navigation Co., 363 U. S. 574,
581 (1960).  Finally, some union activities subject to the duty of fair
representation fall into neither category.  See Breininger, 493 U. S., at
---.
    We are, therefore, satisfied that the Court of Appeals correctly
concluded that the tripartite standard announced in Vaca v. Sipes applies
to a union in its negotiating capacity.  We are persuaded, however, that
the Court of Appeals' further refinement of the arbitrariness component of
the standard authorizes more judicial review of the substance of negotiated
agreements than is consistent with national labor policy.
    As we acknowledged above, Congress did not intend judicial review of a
union's performance to permit the court to substitute its own view of the
proper bargain for that reached by the union.  Rather, Congress envisioned
the relationship between the courts and labor unions as similar to that
between the courts and the legislature.  Any substantive examination of a
union's performance, therefore, must be highly deferential, recognizing the
wide latitude that negotiators need for the effective performance of their
bargaining responsibilities.  Cf. Day-Brite Lighting, Inc. v. Missouri, 342
U. S. 421, 423 (1952) (court does "not sit as a superlegis lature to weigh
the wisdom of legislation nor to decide whether the policy which it
expresses offends the public welfare"); United States v. Carolene Products,
304 U. S., at 154 (where "question is at least debatable," "decision was
for Congress").  For that reason, the final product of the bargaining
process may constitute evidence of a breach of duty only if it can be
fairly characterized as so far outside a "wide range of reasonableness,"
Ford Motor Co. v. Huffman, 345 U. S., at 338, that it is wholly
"irrational" or "arbitrary."
    The approach of the Court of Appeals is particularly flawed because it
fails to take into account either the strong policy favoring the peaceful
settlement of labor disputes, see, e. g., Groves v. Ring Screw Works,
Ferndale Fastener Div., 498 U. S. ---, --- (1990), or the importance of
evaluating the rationality of a union's decision in the light of both the
facts and the legal climate that confronted the negotiators at the time the
decision was made.  As we shall explain, these factors convince us that
ALPA's agreement to settle the strike was not arbitrary for either of the
reasons posited by the Court of Appeals.
IV
    The Court of Appeals placed great stress on the fact that the deal
struck by ALPA was worse than the result the union would have obtained by
unilateral termination of the strike.  Indeed, the court held that a jury
finding that the settlement was worse than surrender could alone support a
judgment that the union had acted arbitrarily and irrationally.  See 886 F.
2d, at 1445-1446.  This holding unduly constrains the "wide range of
reasonableness," 345 U. S., at 338, within which unions may act without
breaching their fair representation duty.
    For purposes of decision, we may assume that the Court of Appeals was
correct in its conclusion that, if ALPA had simply surrendered and
voluntarily terminated the strike, the striking pilots would have been
entitled to reemployment in the order of seniority.  Moreover, we may
assume that Continental would have responded to such action by rescinding
its assignment of all of the 85-5 bid positions to working pilots.  After
all, it did rescind about half of those assignments pursuant to the terms
of the settlement.  Thus, we assume that the union made a bad settlement --
one that was even worse than a unilateral termination of the strike.
    Nevertheless, the settlement was by no means irrational.  A settlement
is not irrational simply because it turns out in retrospect to have been a
bad settlement.  Viewed in light of the legal landscape at the time of the
settlement, ALPA's decision to settle rather than give up was certainly not
illogical.   At the time of the settlement, Continental had notified the
union that all of the 85-5 bid positions had been awarded to working pilots
and was maintaining that none of the strikers had any claim on any of those
jobs.
    A comparable position had been asserted by United Air Lines in
litigation in the Northern District of Illinois. {9}  Because the District
Court in that case had decided that such vacancies were not filled until
pilots were trained and actually working in their new assignments, the
Court of Appeals here concluded that the issue had been resolved in ALPA's
favor when it agreed to the settlement with Continental.  See 886 F. 2d, at
1446.  But this reasoning overlooks the fact that the validity of the
District Court's ruling in the other case was then being challenged on
appeal. {10}
    Moreover, even if the law had been clear that the 85-5 bid positions
were vacancies, the Court of Appeals erroneously assumed that the existing
law was also clarion that the striking pilots had a right to those
vacancies because they had more seniority than the cross-over and
replacement workers.  The court relied for the latter proposition solely on
our cases interpreting the National Labor Relations Act.  See 886 F. 2d, at
1445.  We have made clear, however, that National Labor Relations Act cases
are not necessarily controlling in situations, such as this one, which are
governed by the Railway Labor Act.  See Railroad Trainmen v. Jacksonville
Terminal Co., 394 U. S. 369, 383 (1969).
    Given the background of determined resistance by Continental at all
stages of this strike, it would certainly have been rational for ALPA to
recognize the possibility that an attempted voluntary return to work would
merely precipitate litigation over the right to the 85-5 bid positions.
Because such a return would not have disposed of any of the individual
claims of the pilots who ultimately elected option one or option two of the
settlement, there was certainly a realistic possibility that Continental
would not abandon its bargaining position without a complete settlement.
    At the very least, the settlement produced certain and prompt access to
a share of the new jobs and avoided the costs and risks associated with
major litigation.  Moreover, since almost a third of the striking pilots
chose the lump-sum severance payment rather than reinstatement, see n. 1,
supra, the settlement was presumably more advantageous than a surrender to
a significant number of striking pilots.  In labor disputes, as in other
kinds of litigation, even a bad settlement may be more advantageous in the
long run than a good lawsuit.  In all events, the resolution of the dispute
over the 85-5 bid vacancies was well within the "wide range of
reasonableness," 345 U. S., at 338, that a union is allowed in its
bargaining.
    The suggestion that the "discrimination" between striking and working
pilots represented a breach of the duty of fair representation also fails.
If we are correct in our conclusion that it was rational for ALPA to accept
a compromise between the claims of the two groups of pilots to the 85-5 bid
positions, some form of allocation was inevitable.  A rational compromise
on the initial allocation of the positions was not invidious
"discrimination" of the kind prohibited by the duty of fair representation.
Unlike the grant of "super seniority" to the cross-over and replacement
workers in NLRB v. Erie Resistor Corp., 373 U. S. 221 (1963), this
agreement preserved the seniority of the striking pilots after their
initial reinstatement.  In Erie, the grant of extra seniority enabled the
replacement workers to keep their jobs while more senior strikers lost
theirs during a layoff subsequent to the strike.  See id., at 223-224.  The
agreement here only provided the order and mechanism for the reintegration
of the returning strikers but did not permanently alter the seniority
system.  This case therefore more closely resembles our decision in Trans
World Airlines, Inc. v. Flight Attendants, 489 U. S. 426 (1989), in which
we held that an airline's refusal, after a strike, to displace crossover
workers with more senior strikers was not unlawful discrimination.
    The judgment of the Court of Appeals is reversed and the case is
remanded for further proceedings consistent with this opinion.
It is so ordered.
 
 
 
 
 
 

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1
    In its amicus curiae brief, Continental states that the 366 pilots who
elected Option 2 received $17.3 million, an average of over $47,000 per
pilot.  See Brief of Continental Airlines, Inc. as Amicus Curiae 9.

2
    The complaint included four counts: breach of the duty of fair
representation, violation of the Labor-Management Reporting and Disclosure
Act of 1959 (LMRDA), 29 U. S. C. MDRV 411 et seq., breach of fiduciary duty
in violation of the LMRDA, and breach of contract.  See App. 47-56.  The
District Court granted summary judgment for petitioners on all counts, id.,
at 72-77, but respondents appealed only on the first two counts, see 886 F.
2d 1438, 1442 (CA5 1989).  The Court of Appeals affirmed the summary
judgment on the LMRDA count, id., at 1448, and respondents did not seek our
review of this decision.  Therefore, only the fair representation claim is
before us.

3
    The Court of Appeals described respondents' claims as follows:

"The O'Neill Group asserted that the duty of fair representation had been
breached by ALPA and various ALPA officers because (1) ALPA failed to allow
ratification of the agreement and misrepresented the facts surrounding the
negotiations to avoid a ratification vote; (2) ALPA negotiated an agreement
that arbitrarily discriminated against striking pilots, including the
O'Neill Group; (3) ALPA and various ALPA officers misrepresented to retired
and resigned pilots that they would be included in any settlement; and (4)
defendants were compelled by motives of personal gain, namely self-interest
and political motivations."  Id., at 1442.

4
    "Accepting the pilots' evidence as true as we are required to do, a
jury could reasonably conclude that if ALPA had unconditionally offered to
return the pilots to duty, [Continental] likely would have returned
striking pilots to work according to seniority, and would have permitted
strikers to bid for vacancies according to [Continental]'s seniority-based
assignment procedures."  Id., at 1446.

5
    Air Line Pilots Assn. Int'l v. United Air Lines, Inc., 614 F. Supp.
1020 (ND Ill. 1985), aff'd in relevant part, Air Line Pilots Assn., Int'l
v. United Air Lines, Inc., 802 F. 2d 886 (CA7 1986), cert. denied, 480 U.
S. 946 (1987).

6
    Respondents also argued that a jury could find that ALPA acted in bad
faith.  See n. 3, supra.  Although we conclude below that the Court of
Appeals erred in reversing summary judgment on the arbitrariness component,
see Part IV, infra, we express no opinion on whether respondents have put
forth a triable issue concerning whether ALPA acted in bad faith.

7
    "There is nothing to indicate that the Union made any choices among the
Union members or the strikers who were not Union members other than on the
best deal that the Union thought it could construct; that the deal is
somewhat less than not particularly satisfactory is not relevant to the
issue of fair representation."  App. 74.

8
    See, e. g., Teamsters v. Terry, 494 U. S. ---, --- (1990); Electrical
Workers v. Foust, 442 U. S. 42, 47 (1979); Hines v. Anchor Motor Freight,
Inc., 424 U. S. 554, 564 (1976).

9
    Air Line Pilots Assn. Int'l v. United Air Lines, Inc., 614 F. Supp.
1020 (ND Ill. 1985).

10
    Even if the Seventh Circuit had already affirmed the District Court's
holding in the United Air Lines case, the Court of Appeals would have erred
in its conclusion that the law was so assuredly in ALPA's favor that the
settlement was irrational.  First, a Seventh Circuit case would not have
controlled the outcome in this dispute, which arose in the Fifth Circuit.
Second, even if the United Air Lines decision had been a Fifth Circuit
case, it was factually distinguishable and therefore might not have
dictated the outcome regarding the 85-5 bid positions.  In United Air
Lines, the Fifth Circuit affirmed on the basis of the District Court's
finding that the carrier's action was taken in bad faith, motivated by
antiunion animus.  802 F. 2d, at 898; 614 F. Supp., at 1046.  An equivalent
finding was by no means certain in this case.
