) ) Plaintiff, ) ) v. ALPA ) hereby answers the Counterclaim (hereinafter CC ) filed by Defendant EMERY

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1 STEPHEN P. BERZON, State Bar No. 0 JEFFREY B. DEMAIN, State Bar No. Altshuler, Berzon, Nussbaum, Rubin & Demain Post Street, Suite 00 San Francisco, California Telephone: ( -1 Facsimile: ( -0 Attorneys for Plaintiff UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Plaintiff, v. EMERY WORLDWIDE AIRLINES, INC., a Nevada Corporation; EMERY AIR FREIGHT CORPORATION d/b/a EMERY WORLDWIDE a/k/a EMERY FREIGHT FORWARDING, INC. a/k/a MENLO WORLDWIDE, a Delaware Corporation, Defendants. Case No. C 0- JSW PLAINTIFF S ANSWER TO COUNTERCLAIM 1 Plaintiff AIR LINE PILOTS ASSOCIATION, INTERNATIONAL (hereinafter ALPA hereby answers the Counterclaim (hereinafter CC filed by Defendant EMERY WORLDWIDE AIRLINES, INC. (hereinafter EWA in the above-captioned action, as follows: 1. As to Paragraph 1 of the CC, no response is required because the paragraph contains no factual or legal allegations.. As to Paragraph of the CC, ALPA denies the allegations stated in this paragraph.. As to Paragraph of the CC, ALPA admits that venue is proper in this judicial district. /// Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW

2 1. As to Paragraph of the CC, ALPA admits that EWA is a corporation duly organized and existing under the laws of the State of Nevada, but denies that its principal place of business is currently in Dayton, Ohio.. As to Paragraph of the CC, ALPA admits that it is an unincorporated association and the exclusive bargaining representative of the craft or class of flight crewmembers formerly employed by EWA. ALPA admits that the Home Office of the Association is located in Washington, D.C. and in Herndon, Virginia. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA admits the allegations of this paragraph.. As to Paragraph of the CC, ALPA admits the allegations of this paragraph.. As to Paragraph of the CC, ALPA admits that on or about August, 01, EWA agreed to suspend its commercial flight operations after being advised by the FAA that the FAA would pursue an emergency revocation of EWA s operating certificate if EWA did not agree voluntarily to suspend its commercial flight operations. ALPA admits that on or about August, 01, EWA furloughed its flight crewmembers. ALPA further admits that it filed grievances asserting that the furlough of EWA s crewmembers as of August, 01 violated provisions of the EWA/ALPA collective bargaining agreement as well as a Letter of Agreement entitled Subcontracting entered into by ALPA, EWA and defendant EMERY AIR FREIGHT CORPORATION d/b/a EMERY WORLDWIDE a/k/a EMERY FREIGHT FORWARDING, INC. a/k/a MENLO WORLDWIDE (hereinafter EWW, which, like EWA, was a wholly owned subsidiary of CNF, Inc., and for which EWA provided air lift. ALPA also admits that grievances alleging violations of the EWA/ALPA collective bargaining agreement were submitted for determination to a System Board of Adjustment chaired by Arbitrator Robert O. Harris, that the grievances alleging violations of the Letter of Agreement were submitted for determination to Arbitrator Harris in his capacity as Permanent Umpire empowered by the Letter of Agreement to hear disputes arising thereunder, and that both sets of grievances those alleging violations of the collective bargaining agreement and those alleging violations of the Letter of Agreement were heard in a single proceeding that Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW

3 1 commenced on August, 01. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to paragraph of the CC, ALPA admits that on or about August, 01, representatives of EWA and ALPA met in Burlingame, California to discuss the grievances filed by ALPA concerning the furlough of all EWA flight crewmembers on August, 01. ALPA further admits that the discussions failed to resolve the grievances. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA admits that on or about September 1-, 01, representatives of EWA and ALPA met again, in Dayton, Ohio, in an effort to resolve the grievances filed by ALPA concerning the furlough of all EWA flight crewmembers on August, 01. ALPA further admits that the discussions failed to resolve the grievances. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA admits the allegations of this paragraph.. As to Paragraph of the CC, ALPA admits that at the direction of Arbitrator Harris, who had recessed the hearing on the grievances filed by ALPA, the parties participating in the hearing on those grievances agreed through their representatives to participate in mediation to try to resolve the grievances. ALPA further admits that the parties representatives met separately in Washington, D.C., on or about January -, 0, with Richard Kasher, whom the parties had accepted as a mediator at Mr. Harris suggestion. ALPA further admits that this meeting did not involve a substantive discussion of settlement options and therefore clearly did not result in a settlement. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA admits that representatives of the parties participating in the hearing of ALPA s grievances referred to in the preceding paragraphs met on or about February -, 0 with mediator Kasher in Dallas, Texas in an effort to settle those grievances. ALPA further admits that the parties were unable to reach agreement on a settlement. To the extent that Paragraph contains any different or additional allegations, they are denied. Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW

4 1. As to Paragraph of the CC, ALPA admits that Arbitrator Harris issued a final decision on or about December, 0, on the ALPA grievances pending before him as Permanent Umpire, and that on or about December, 0, the System Board, chaired by Arbitrator Harris, issued a decision on the ALPA grievances pending before it. ALPA further admits that Arbitrator Harris had previously issued a non-final draft of a proposed System Board decision. No response is necessary to the allegations in this paragraph describing or characterizing either Arbitrator Harris decision or the decision of the System Board, since these decisions are written documents that speak for themselves. To the extent that a response is necessary, ALPA refers to the text of the decisions, rather than the description and characterization set forth in Paragraph, for a full and accurate statement of the decisions. ALPA admits that, pursuant to the System Board decision, EWA paid the former EWA flight crewmembers two weeks pay totaling approximately $1. million. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA admits that subsequent to the decisions referred to in the previous paragraph, there were conversations between counsel for EWA and an ALPA representative in which the possibility of a settlement was mentioned in connection with a discussion relating to grievances filed by ALPA that remained pending and unresolved concerning the permanent shutdown of EWA s operations and the termination of EWA s flight crewmembers. ALPA further admits that in those conversations counsel for EWA stated that as part of any settlement his client would want a release and waiver of claims from individual flight crewmembers who participated in the settlement. ALPA also admits that its representative responded that ALPA was agreeable to individual releases and waivers as part of an overall settlement, but specifically denies that language or the specifics of any such release and waiver provisions were discussed. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA admits that in January 0, representatives of ALPA and EWA agreed to meet in San Francisco to attempt to settle the pending grievances referred to in the previous paragraph, and that the parties retained Magdelena Jacobsen, who Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW

5 1 was formerly Chair of the National Mediation Board, to serve as a mediator. ALPA further admits that, on February, 0, its representatives met with Ms. Jacobsen in preparation for the following day s discussions. ALPA is informed and believes, and on that basis admits, that Ms. Jacobsen also met with representatives of EWA for the same purpose on February, 0. ALPA is without knowledge as to whether or not Ms. Jacobsen met with representatives of EWW on February, 0, and on that basis denies the allegation. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA admits that on February, 0, Ms. Jacobsen met privately with representatives of ALPA, and, on information and belief, representatives of EWA. ALPA admits further that during the same day representatives of ALPA and representatives of EWA held a meeting at which Ms. Jacobsen was present, that one of EWA s representatives was Don Fausset, and that ALPA s representatives included Captain Howard Attarian and Captain Jeff Haddock. ALPA also admits that the parties tentatively agreed to some (but not all components of a settlement, that those components included a monetary payment of $. million by EWA for distribution to the former EWA flight crewmembers according to a distribution matrix to be proposed by ALPA and subject to further negotiations by the parties, that those components also required the execution of a waiver and release by each flight crewmember as a condition of participating in the settlement and which provided that any flight crewmember who refused to sign the waiver and release would not receive his or her portion of the monetary settlement proceedings (which would instead be retained by EWA, that EWA provided ALPA with a rough and incomplete draft of a written settlement proposal, that the ultimate settlement was subject to final approval by the parties as to all of its provisions and their embodiment in a complete written settlement document, and that the settlement and the written settlement language that was yet to be agreed upon were contingent upon the condition of subsequent review by and approval of attorneys for ALPA as to their legality a condition which was never satisfied. ALPA admits as well that it subsequently prepared and provided to EWA a proposed distribution of the $. million that was one of the terms tentatively agreed to, which proposed that each DC- captain would receive approximately Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW

6 1 $,000, with lesser amounts to be distributed to less senior flight crewmembers. ALPA additionally admits that it paid Ms. Jacobsen for its share of the bill for her services, and that counsel for EWA and counsel for ALPA separately notified Mr. Nicolau to cancel the hearing on ALPA s outstanding grievances that had been scheduled for March, 0. ALPA admits that David Grant, Esq. was present in San Francisco during the settlement negotiations, but ALPA is without sufficient knowledge or information to admit or deny who Mr. Grant was representing or the extent of his participation in those negotiations. To the extent that Paragraph contains any different or additional allegations, they are denied.. As to paragraph of the CC, ALPA admits that it was understood by the parties that a final settlement of ALPA s outstanding and unresolved grievances, if finally reached and approved, would entail the withdrawal of those grievances, and that once the grievances relating to the permanent shutdown of EWA s flight operations were resolved the ALPA/EWA collective bargaining agreement and Letter of Agreement referred to in Paragraph above would have no future force and effect, except, as stated in the next sentence, in the event EWA or a related corporation resumed flight operations. ALPA further admits that at the February, 0 mediation, one of the components upon which there was tentative agreement was that if EWA, CNF, or any CNF subsidiary established another Part 1 carrier prior to September 1, 0, such carrier would offer employment as flight crewmembers to EWA s former flight crewmembers and pursuant to the terms of the 00 ALPA/EWA collective bargaining agreement. To the extent that Paragraph contains any different or additional allegations, they are denied. 1. As to paragraph 1 of the CC, ALPA admits that its legal counsel advised counsel for EWA during the latter part February 0 or in early March 0 that ALPA was still in the process of formulating its proposal as to how the $. million payment offered by the EWA would be distributed pursuant to a final settlement. ALPA further admits that it advised counsel for EWA that, following legal review by ALPA s attorneys, it appeared that the waiver and release provision proposed by EWA and expressly made subject to further consideration by ALPA s counsel would not withstand legal challenge, because inter alia it required former Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW

7 1 EWA flight crewmembers on an individual basis either to accept the settlement and payment thereunder in exchange for abandoning all further claims or to reject the settlement and forego the payment thereunder as well as any claims they may have under the ALPA/EWA collective bargaining agreement and Letter of Agreement, in exchange for the right to pursue any statutory or other claims. ALPA also admits that it advised counsel for EWA that the waiver and release provision would expose the parties to a hybrid DFR lawsuit in which there was a substantial risk that ALPA would be found liable for breach of its duty of fair representation, the settlement agreement would be set aside, and EWA and EWW would be found liable for violations of the ALPA/EWA collective bargaining agreement and the Letter of Agreement, as well as additional legal liability. ALPA admits as well that on March, 0, it sent a written settlement offer to counsel for EWA which embodied the terms of the tentative settlement except for the waiver and release required of individual flight crewmembers that ALPA deemed illegal, that in lieu of such waiver and release ALPA offered that the settlement would be a complete and final and binding settlement of all pending grievances under the ALPA/EWA collective bargaining agreement and the Letter of Agreement, and that ALPA further offered to refrain from filing any further grievances and from supporting any new or additional grievances by individual former flight crewmembers. ALPA also admits that EWA rejected ALPA s settlement offer of March, 0. To the extent that Paragraph 1 contains any different or additional allegations, they are denied.. As to Paragraph of the CC, ALPA denies the allegations stated in this paragraph, except that ALPA admits that it is seeking to compel EWA and EWW to arbitrate ALPA s pending grievances asserting violations of the ALPA/EWA collective bargaining agreement and the Letter of Agreement arising from the permanent shutdown of EWA s flight operations and the termination of its flight crewmembers. ALPA further admits that it denies that a settlement was ever reached on February, 0 (or at any time thereafter, for that matter.. As to Paragraph of the CC, ALPA denies the allegations stated in this paragraph.. As to Paragraph of the CC, ALPA denies the allegations stated in this paragraph.. As to Paragraph of the CC, ALPA denies the allegations stated in this paragraph. Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW

8 1. The unenumerated and untitled prayer for relief that follows Paragraph of the CC does not require a response. To the extent that it states any factual allegations, ALPA denies those allegations. ALPA further denies that EWA is entitled to any of the relief it requests. AFFIRMATIVE DEFENSES 1. The CC is vague and uncertain, and as such does not identify or describe the underlying facts in sufficient detail for ALPA to determine fully what defenses to liability may exist. ALPA presently lacks sufficient information to determine all affirmative defenses that it may have to the allegations of the CC. ALPA therefore specifically reserves its rights to supplement or modify these affirmative defenses as it acquires additional information regarding EWA s allegations.. EWA s claims fail to state a claim on which relief can be granted.. This Court lacks subject matter jurisdiction over EWA s claims. WHEREFORE, ALPA prays that EWA s CC be dismissed with prejudice and that EWA take nothing by it, and for such other and further relief as may be appropriate under the circumstances, including costs and attorneys fees. Dated: May, 0. Respectfully submitted, STEPHEN P. BERZON JEFFREY B. DEMAIN Altshuler, Berzon, Nussbaum, Rubin & Demain By: /s/ Jeffrey B. Demain Jeffrey B. Demain Attorneys for Plaintiff Air Line Pilots Ass n, Int l v. Emery Worldwide Airlines, Inc., et al., N.D. Cal. Case No. C 0- JSW