On May 12, 1971, Northeast Airlines, Inc., (NE) entered into a provisional agreement to merge into Delta Air Lines, Inc. (Delta). This was the fifth attempt by NE to merge with another line. Whatever may have motivated the others, all of which failed for one reason or another, NE’s substantial and continuing deficits seem clearly to have impelled this one. Indeed, it asserts without contradiction that this is its last chance for survival.
NE has collective bargaining agreements, one with its mechanics, which expired December 31, 1971 subject to being continued in force by virtue of section 6 of the Railway Labor Act, 45 U.S.C. § 156, and one with its supervisors, which will expire on June 1, 1972. In both instances the union involved is the International Ass’n of Machinists and Aerospace Workers and its District 147, plaintiffs appellants, hereinafter, collectively, the Union. Both of these agreements and their predecessors going back to 1949, have contained what is now Article 3(B), as follows.
“It is further understood and agreed that all provisions of this Agreement shall be binding upon the successors or assigns of the Company for the duration of this Agreement. In case of a consolidation or merger, representatives of the Company and Union will meet without delay and negotiate for proper provisions for the protection of employee’s seniority and other rights.”
Since the agreement provided for automatic renewal and nо change in the contract terms could be made without notice served on or before October 31, 1971, NE on October 28 sent the Union an appropriate section 6 notice of intended termination of the Mechanics’ agreement, proposing that the agreement be extended only for “a few months.” On October 31 the Union sent its own notice, saying that it wanted the agreement to run a full term, and enclosing a list of further proposals. The enclosure, some six pages long, requested, inter alia, changes in Article 3(B), to provide procedures for premerger negotiations. On November 11, the first meeting resulting from this correspondence, the Union announced that its first request was not for the cоntract changes it had proposed, but for negotiations for specific postmerger protective provisions, relating to seniority, employment, and other conditions. The company asked time to consider this request. After several further meetings, at which the position of the parties might be said to have hardened, on December 31, the Union stated that this subject was all it would negotiate, and the company said it was willing to “discuss,” and go to the National Mediation Board or System Board of Adjustment, but that the matter was one which it had no obligation to negotiate
The Union seeks to compel the company to negotiate, and to include in the merger agreement whatever should be the product of the negotiations. It requested a preliminary injunction, in alternative terms.
“(a) Consummating any merger with the Delta Air Lines, Inc. until the Company has negotiated and bargained in good faith with the Plaintiffs about the proper provisions for the seniority, employment and other rights of the employees of Northeast Air Lines Inc. [sic] represented by Plaintiffs.”
“(b) In any manner refusing to negotiate or bargain in good faith with the Plaintiffs about the seniority, employment and other rights of the employees represented by the Plaintiffs.”
This question was heard on the pleadings and affidavits by the district court which, on February 3, with a comprehensive opinion, denied relief. D.C.,
The district court rested its decision upon a finding that the right of NE’s management to decide the company’s future outweighed whatever interest plaintiff had in protecting its members. It left unclear to what extent it was relying on particular facts to justify a finding that it would be inequitable to grant the injunction, and to what extent on a broader conclusion that because of the general interests of management and labor the statutory duty did not require bargaining. While we agree that it is appropriate, especially whеn both parties faee^irreparable^injury, to weigh the competing-' interests, we find it useful to speak in terms of the traditional tests of
The district court regarded with seriousness, as do we, the possible plight of the Union’s membership if their employer is taken over and merged into another whose employees outnumber them twenty to one, which might well discontinue certain NE services, either absolutely, or as duplicative, and which does not, according to the Union, promise certain seniority and other rights that would accrue to its members had NE continued its operations.^ However, a court of equity must be ''concerned not only with possible injury to the plaintiff but also with whether an injunction would cause irreparable harm to the defendant, for it is obliged to choose the course likely to cause the least injury. See Eutectic Welding Alloys Corp. v. Zeisel, D.N.J., 1950,
With these preliminaries we turn to consider the likelihood that an injunction would interfere with the merger. We note first that the Union’s conduct has itself enhanced the danger. Its demand to negotiate did not take place until November 11, although the merger agreement was executed in May, and was known to be in the making for some time before then. In July the agreement had been presented to the Board examiner; the Union, we understood in oral argument, had presented its own views, and the exáminer had filed a report recommending certain provisions for the protection of the merged employees. For the Uniоn now to seek to negotiate is not only late in the game, but would, if productive from Union’s standpoint to the extent of requiring changes in the terms of the merger agreement, require going back to the Board. The merger cannot go through unless the Board decides that its terms, including the provisions for the employees, are in the public interest. 49 U.S.C. § 1378. See Kent v. CAB, 2 Cir., 1953,
Since, as the district court properly found, an injunction, even to require NE to negotiate, let alone to postpone the merger, threatens damages to NE all out of proportion to those faced by the Union, we must place upon the Union the burden of showing a compelling probability of success on the merits.
The first of the Union’s contentions is that Article 3(B) is itself an agreement to conduct premerger negotiations. Insofar as the court’s denial of the injunction was based upon a rejection of that interpretation, we believe the court exceeded its jurisdiction. The Railway Labor Act provides specific procedures fоr the settlement of disputes. Disputes concerning matters about which the parties have a statutory duty to bargain under 45 U.S.C. § 152 First are denominated major disputes and are left to the statutory collective bargaining procedures for settlement. Disputes requiring the interpretation of the terms of a collective bargaining agreement are minor disputes. See Elgin, J. & E. Ry. v. Burley, 1945,
The courts have no greater power to interpret a contract when the dispute is between a union and an employer than when it is between an individual employee and the company. See Slocum v. Delaware, L. & W. R. R., 1950,
Nevertheless, we affirm the district court’s holding that an injunctiоn should not issue on the basis of Article 3(B). The Union Has not placea tne matter before the System Adjustment Board. Since the purpose of an injunction is to preserve the jurisdiction of the Board, this is an inappropriate case to grant such relief.
Alternatively, the Union contends that section 2 First of the Railway Labor Act, 45 U.S.C. § 152 First, imposes on NE a statutory duty to negotiate with it about the protection to be accorded employees in the event the merger takes place. At the outset, NE argues that the federal courts are without jurisdiction to grant the relief asked in this case because the Union has refused to submit the dispute to the Na
NE suggests further that since the Union has raised a minor dispute as to whether the collective bargaining agreement requires negotiations about the merger, it cannot simultaneously take the position that there is also a major dispute arising from the merger because, regardless of the contract, there is a statutory duty to bargain. Cf. Rut-land Ry. v. Brotherhood of Locomotive Eng’rs, ante. We might agree if the clause were one, as in Rutland Railway, that could arguably be construed as a clear waiver of a statutоry right to bargain, but we find no merit in the company’s position when the contract may, instead, impose an additional bargaining obligation, and certainly could not be read as an intentional relinquishment of any statutory rights.
We turn, then, to the merits of the statutory argument. Though it does not ask to participate in the decision whether to merge, the Union urges that the court’s holding that it cannot bargain about the effects of the merger rests on the faulty premise that the merger itself is non-negotiable. In making this argument, it relies on Fibreboard Paper Products Corp. v. NLRB, 1964,
There are a number of reasons why we believe Fibreboard should not be extended to guarantee a union participation in a decision to merge. A merger is initially only a change in the ownership of the company. The impact of such a decision on jobs is not nearly so direct or immediate as the decision to subcontract work. While the change may eventually affect job security, such
“Decisions concerning the commitment of investment caрital and the basic scope of the enterprise are not in themselves primarily about conditions of employment, though the effect of the decision may be necessarily to terminate employment. . ■ . [T]hose management decisions which are fundamental to the basic direction of a corporate enterprise or which impinge only indirectly upon employment security should be excluded from that area [subject to collective bargaining].”
See, e. g., NLRB v. Drapery Mfg. Co., ante n. 9; NLRB v. Royal Plating & Polishing Co., ante n. 9; NLRB v. Transmarine Navigation Corp., 9 Cir., 1967,
To require an employer to include the union, in some cases possibly many unions, in discussions concerning a possible sale of the business would infringe greatly upon his control over his investment. Moreover, the nature of the decision itself makes it excessively burdensome to bring the union into the decision-making process. See General Motors Corp., ante. Unlike a proposed subcontract, merger negotiations require a secrecy, flexibility and quickness antithetical to collective bargaining. Nor are the employees in a position to judge the complex financial considerations often involved. The economic necessity for a merger cannot be eliminated by bargaining in the same way as could Fibreboard’s need to subcontract its maintenance work. We find no error in the district court’s conclusion that the NE merger need not be made the subject of cоllective bargaining. See NLRB v. Transmarine Navigation Co., ante; Pennsylvania R. R. v. Transport Workers Union, E.D.Pa., 1962,
This, however, does not end the matter, for the Union asks to bargain about the impact of the merger on employment conditions rather than about the merger itself. Initially, it can be agreed that employment security falls within the ambit of “rates of pay, rules and working conditions,” 45 U.S.C. § 152 First; see Walker v. Pennsylvania-Reading Shore Lines, 1948, 142 N.J.Eq. 588,
While a merger, too, affects employment security, it does so in a manner somewhat different from that of these other shifts in the corporate enterprise. A merger, unlike a decision to relocate, to shut down a plant, or to terminate operations altogether, does not immediately and directly eliminate jobs. What it does, instead, is substitute a new employer who may not be bound by all the terms of the present collective bargaining agreement,
These distinctions make it inappropriate to impose on a company about to be acquired by another in a merger an unlimited duty to bargain about the effects of th'e acquisition on employment security. Since the merger itself is not the proximate cause of job displacement, which will occur only as a result of management decisions subsequently made by the surviving company, any negotiations between the company being absorbed, in this case NE, and its union about what protection the employees should have against such displacement would be recklessly speculative, unless that company has knowledge of and control over the acquirer’s plans. See Martin Marietta Corp., 159 N.L.R.B. No. 59, 1966 CCH NLRB ¶ 20,559; cf. NLRB v. Transmarine Navigation Corp., ante. The only way NE could regulate the postmerger management decisions of Delta would be to renegotiate the merger. Even were the bargaining to focus entirely on the impact of the merger itself on employment security, renegotiation of the mеrger would be the likely result. Ignoring the matter of the delay pending bargaining, see ante, renegotiation might be necessary if Delta balked at any highly restrictive employment security terms NE might be forced to agree to.
We do not share the Union’s equanimity at this prospect. To allow the Union to force a company to bargain about the effects of its management decisions to the extent of forcing it to forego the proposed change in operations would be in effect to take away from it the freedom to make the decision in the first place. We have no doubt but that an employer, bargaining about the effect of a relocation on employment conditions, could refuse to discuss as unreasonable any labor protective terms that would make it prohibitively expensive to move. See generally Cox, The Duty to Bargain in Good Faith, 71 Harv.L.Rev. 1401, 1416 (1958). Where it is clear, as in the case of a merger, that bargaining about some effects of the decision would be ineffectual unless the company could be required to renegotiate the merger, we be-
Our discussion of the duty to bargain about the effects of a merger on employment conditions has so far been general. We have deferred until now the question of whether the regulation of the airline industry by the Civil Aeronautics Board in any way alters the scope of the duty. As we have pointed out, the Civil Aeronautics Act permits only those airline mergers which are found by the CAB to be not inconsistent with the public interest. 49 U.S.C. § 1378. The Board, in executing its responsibility, may condition approval of the merger on certain changes in and integration of the operations of the combining airlines. While this strengthens the proximity between the merger and its employment effects, that alone does not require that we expand the scope of bargaining to include postmerger working Conditions, The effects of the NE-Delta merger still depend on changes the nature of which are not at present known, because the CAB has not yet issued its order. Indeed, since the merger cannot рroceed without CAB approval, requiring NE to bargain over its effects in this casé would be even more likely to deprive NE of control over the decision to merge than it would an unregulated company. In an unregulated industry, if highly restrictive labor protective provisions in a collective bargaining agreement make unfeasible certain planned postmerger operating changes, the acquiring corporation may still be willing to proceed with the acquisition, foregoing the originally planned changes. This option is not available in an airline merger where the parties may not subsequently decide not to make changes on the proposals of which the CAB may have relied in aрproving the merger. In such circumstances, the bargaining might either be ineffectual, if the Board order displaces the collective bargaining agreement even to this extent, cf. Kent v. CAB, ante, or might interfere with the decision to merge. This latter effect, in addition to being contrary to our conclusion that an employer generally may not be required to bargain about the merger itself, would be inconsistent with the design of the economic regulation of the airline industry. The Civil Aeronautics Act authorizes the CAB to condition approval of airline mergers on the acceptance by the parties of labor protective provisions designed to protect the employees of the mergеd airlines from any adverse impact the merger may have on conditions of employment, see Kent v. CAB, ante
We conclude, therefore, that NE cannot be required to bargain about the protection to be accorded its employees in the event of particular postmerger operating changes to be mandated by the CAB or to be made by Delta, nor about the employment rights of NE employees vis-avis Delta employees.
Since NE had no obligation to bargain generally about the merger and its effects, the district court properly exercised its discretion not only in refusing to order NE to bargain, but also in declining to enjoin the merger pending completion of negotiations. There is no statutory command that the merger be enjoined. Section 6 of the Railway Labor Act, 45 U.S.C. § 156, barring any changes in working conditions during the course of bargaining, does not apply because, as we have already held, the merger itself is not a change in working conditions. Sincе an injunction, in part because of the Union’s conduct, would be potentially disastrous, see ante, it would be inequitable to issue one simply to guarantee the Union an opportunity to bargain as to incidental matters. Affirmed.
Notes
. To document its plight, NE presented testimony that it had suffered losses in 1969 of $28,843,000, and in 1970 of $10,721,000, and that as of May 31, 1971, it had a negative net worth of $36,616,000. NE further avers that it anticipates continuing substantial losses in 1971 and 1972, and that Storer Broadcasting Company, which has been its major source of financial support, has resolved to provide no further cash advances beyond what is necessary to prosecute the NE-Delta merger.
. Since the Mediation Board does not have exclusive jurisdiction to define the subjects about which an employer has a statutory duty to bargain, see Pan American World Airways v. International Bhd. of Teamsters, S.D.N.Y., 1967,
. In point of fact, as will be evident, there is little to choose between the two, so far as consequences are concerned.
. The parties did not develop with us what benefits the employees would receive from a defunct and bankrupt company.
. In Burns, there may have been no clause in the collective bargaining agreement making it binding on successors and assigns. Several recent arbitration cases have held that where there is such a clause and the successor has notice of it, he is bound by the contract. See, e. g., Wheeler Bros., 1963, 41 Lab.Arb. 844, 850; Lake States Leasing Corp., 1966, 46 Lab.Arb. 935. See generally Shaw & Carter, Sales, Mergers & Union Contract Relations, 19 N.Y.U. 19th Annual Conf. on Labor 357, 373 (1967). In any event, the successor in Burns did not purchase his predecessor’s company, but simply won a particular contract away from him and retained most of his employees to perform it. That is significantly different from a merger in which the law is generally that the surviving company is bound by the contracts of the one which disappears. See 15 Fletcher, Private Corporations (1961 rev. ed.) § 7123.. In the present case Delta in the merger agreement expressly assumes the duties of NE.
Even if Delta is not bound by all the terms of the union contract, it may well be obligated by Article 3(B) to bargain with the union about the effects of the merger. The employees’ rights under Article 3(B) could be said to vest at the time of the merger and to impose a duty on the employer which must be discharged even after the collective bargaining agreement expires. Under the rule of John Wiley & Sons, Inc. v. Livingston, 1964,
. We do not believe, or even suspect, that the Union wants the merger to fail. Rather, our suspicion is that realizing how strongly other persons desire the merger, the Union feels it may havе the leverage to obtain something additional for itself. We do not say that this is wrong. On the other hand, the Union is not possessed with fireside equities.
. Although it has long been held that strikes could be enjoined pending resolution of contract disputes by the Adjustment Board, see Brotherhood of Railroad Trainmen v. Chicago R. & I. R. R., 1957,
. There is no occasion for us to pursue some quite different arguments that occur to us that might militate against an injunction if the matter were before the Board.
. See Textile Workers Union v. Darlington Mfg. Co., 1965,
. In the ease at bar there is no allegation that the notice given the Union of the merger was insufficient.
. See also Morrison Cafeterias Consol., Inc. v. NLRB, ante n. 9 (partial closing) ; NLRB v. Drapery Mfg. Co., ante n. 9 (complete closing).
. See note 5, ante. The danger that a successor employer will not be bound by the specific terms of a collective bargaining agreement one of its constituent corporations had with its employees depends in part on whether the successor integrates the operations of the constituent firms, see McGuire v. Humble Oil & Refining Co., 2 Cir., 1966,
. See page 7, ante.
. See notes 5 and 12, ante.
. While the legislative history of the Civil Aeronautics Act is silent on this point, the scheme of the economic regulation of the airline industry is borrowed in large part from the regulation of the rail industry by the Interstate Commerce Act, 49 U.S.C. § 1 et seq. The history of that Act does evidence a concern that labor disputes arising from rail consolidations be subject to authoritative resolution in order that economically desirable mergers nоt be obstructed. See Brotherhood of Locomotive Eng’rs v. Chicago & N. W. Ry., 8 Cir., 1963,
. A private agreement supplementing the Board’s order may be enforceable, see Arnold v. Louisville & N. R. R., M.D. Tenn., 1960,
. We express no opinion at this time as to whether Delta may be required to negotiate separately with NE workers about any of the changes when they occur. See Overnite Transportation Co. v. NLRB, 4 Cir., 1967,
. Although NE'expressed some willingness to bargain about incidental matters, the Union, by refusing apparently to negotiate about anything until NE agreed to various demands, including, most strikingly, a consolidated seniority list comprehending the employees of both companies, which we have held to be outside the scope of any duty to bargain, made it impossible to know the extent of NE’s willingness. We would be flying blind were we to try now to define the scope of the duty to negotiate incidental matters.