AIRLINE UNIONS CONTEST NORWEGIAN AIR INTERNATIONAL PERMIT IN D.C. CIRCUIT
March 6, 2018
On February 23, 2018, oral argument was held in the D.C. Circuit for Air Line Pilots Association International et al. v. Elaine L. Chao, a case concerning DOT’s 2016 grant of a foreign air carrier permit to Norwegian Air Shuttle ASA’s Irish subsidiary, Norwegian Air International Limited (NAI). Attorneys for the group of airline unions filing suit, the Air Line Pilots Association, the Association of Flight Attendants-CWA, the Allied Pilots Association and the Southwest Airlines Pilots’ Association, urged the D.C. Circuit panel to reverse DOT’s grant of a permit to NAI and argued that the only requirement for standing in the suit is market entry by a competitor that allegedly will undercut labor standards.
At issue is DOT’s December 2016 decision to award a foreign air carrier permit to NAI after a lengthy three-year review that was characterized by strong resistance from labor groups, politicians and others who argued the airline’s cost-cutting employment practices give it an unfair competitive edge in the industry.
An attorney for the unions pushed back in oral argument against the D.C. Circuit panel’s assertions that the unions lack standing because they are not in “direct competition” with NAI. The unions’ attorney instead argued that NAI’s trans-Atlantic service threatens the labor provision of the U.S.-European Union Air Transport Agreement (including Iceland and Norway). In particular, the unions’ opposition to the permit stems from concerns over which nation’s laws govern the employment contracts of NAI employees, specifically contracts governed by the laws of Singapore and Thailand versus U.S. or EU law.
An attorney with the U.S. Department of Justice, which is representing DOT in the case, argued that D.C. Circuit precedent for standing requires a showing of a “virtual certainty” of economic harm. DOT further argued that NAI has had another affiliate operating in the U.S. since 2014 under the allegedly harmful labor practices, yet there has been “no actual evidence” of harm from the labor agreements.
Judge David Tatel told DOT’s attorney that he was initially skeptical of the unions’ standing, but had found a case that held standing based on increased competition and downward pay pressure from Mexican truck drivers allowed to work in the United States under a pilot program, with standing based on “the laws of economics.” DOT’s attorney argued in response that the Mexican drivers would not have been able to work in the U.S. absent the pilot program, while there is no reason to believe the NAI crews would not have the same employment opportunities as U.S. union crews absent NAI’s permit.
Judge Tatel also challenged the unions’ public interest argument against DOT’s grant of the permit, noting the two different avenues DOT is granted under statute to approve permits: 1) via designation by an applicant’s government through an international agreement, as occurred with NAI, or 2) if a permit is in the public interest. According to Judge Tatel, if there has been a designation by an applicant’s government through an international agreement, the matter does not continue to the public interest analysis the unions argue that DOT should’ve weighed when granting the permit.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).
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