April 22, 2014 (Via email)

Mr. Sean BurtonPresidentBoard of Airport CommissionersLos Angeles World Airports1 World WayLos Angeles, CA 90045-5803

Dear President Burton:

RE: Establishing a formal process for reviewing proposed Amendments to the Certified Service Providers Program (CSPP)

On April 9, in conjunction with officials from the Mayor’s office, you presented Airlines for America (“A4A”) and the Airline Service Providers Association (“ASPA”) for the first time with a radical change to the LAWA Certified Service Provider Program (“CSSP”).

The CSPP was carefully negotiated and crafted over a four year period. During the course of those four years of discussions, proposals for labor provisions that would have required Airport Service Providers (“ASPs”) to sign agreements with labor organizations were advanced. However, the Labor Harmony provision (section 3.6) in the final CSPP did not contain any requirement for CSPs to sign agreements with labor organizations.

At a meeting of the LAWA Board of Commissioners on August 6, 2012, all the stakeholders offered support for the CSPP, and it was adopted by the LAWA Board of Airport Commissioners. Subsequently, LAWA commenced the application process for ASPs to be licensed as Certified Service Providers (“CSP”). The first group of CSPs was expected to be approved this month.

However, after apparently working with the Service Employees International Union-United Service Workers West (“SEIU-USWW”) alone for many months, and just as the CSPP was set to launch, the City of Los Angeles and LAWA are suddenly proposing amendments containing mandatory labor agreement requirements quite similar to those that were previously rejected. Adoption of the proposed amendments would upend the CSPP process, and effectively mandate that all ASPs sign agreements with unions – without the employees being permitted to vote on whether they want to be represented by that union.

While LAWA and the City apparently afforded the SEIU-USWW many months to work on the language of these amendments, we have been presented with just 16 days after

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our April 9 meeting, and given a deadline of April 25 for our comments. We believe that the matter will be brought to a vote at the next BoAC meeting on May 5, 2014.

This truncated and discriminatory timetable is fundamentally unfair and wholly inconsistent with the City of Los Angeles and LAWA’s claim of commitment to process, transparency and good government. Equally as important, such a provision, however, characterized, clearly violates federal labor law and will, as past efforts to interfere in private party labor relations have done, subject LAWA to significant financial liability. Other airports which have taken the time to examine similar proposals through a thoughtful process have come to this conclusion.

A4A has retained outside counsel to prepare an analysis of the legal implications of the proposed amendments. However, while the legal analysis is being prepared, A4A and the ASPA are respectfully requesting that:

• The deadline of April 25 for submissions be extended, and• LAWA initiate a formal comment process – similar to the process adopted by the

Minnesota Airports Commission (MAC) – so that all parties including unions, employees, ASPs, and airlines can fully brief the legal and operational implications of the amendments.

• At a minimum, the comment period should be not less than 90 days. Given the fact that the multi-party discussions of the CSPP terms lasted for almost 4 years, 90 days to evaluate amendments is not too much to ask and, in our view, is the minimum necessary to provide informative input.

• As explained below, it would be in the best financial interest of the City of Los Angeles and LAWA to have a comprehensive review of the legal and factual issues in order to avoid potential legal expenses. The City of Los Angeles previously incurred substantial legal liability (approximately $14 million in damages and legal fees) when – at the behest of a union – it intervened in a licensing process and added labor conditions for a taxi company license. (See attached 1989 and 1992 LA Times articles about the Golden State Transit case.)

LAWA has no “Proprietary Interest” in either Airplanes or Airline Contracts with AIRLINE Service Providers.

The SEIU’s reliance on the airport’s alleged “proprietary powers” to justify the labor harmony proposal completely misstates the extremely limited extent of the proprietary powers exception. It also exhibits a deep misconception of the terms “ownership” and “market participant.”

Specifically: ASPs are AIRLINE Service Providers…not AIRPORT Service Providers. They are servicing airplanes that the airlines own and operate, and passengers and

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cargo that are being transported by the airlines. Critically, the services of the ASPs are governed by contracts between the AIRLINES and the ASPs. ASPs provide no goods or services to LAWA.

Consequently, since LAWA does not contract with ASPs, it is not a market participant with regards to Airline Service Providers and cannot assert any proprietary powers. The proprietary powers exception to Airline Deregulation Act (“ADA”) preemption – which is limited to those rights and powers historically exercised by airports at the time the ADA was enacted – does not come into play. LAWA has no proprietary interest in the airlines’ contractual arrangements to transport their passengers and cargo, and it is not a market participant with regards to Airline Service Providers.

By contrast, to the extent that LAWA contracts with AIRPORT service providers to build, service or maintain AIRPORT facilities, LAWA is acting in its traditional capacity as the airport owner and may be in the position of a “market participant” for those services. Consequently, only the airlines are “market participants” as to the ASPs. LAWA, by contrast, licenses ASPs and in that role acts in a regulatory capacity. In its regulatory capacity, LAWA does not have the authority to intervene in employment and labor relations matters between airlines and their service providers.

By way of analogy, the City of Los Angeles paid for, built and maintains the streets and sidewalks of Los Angeles. The City issues permits or licenses for taxis, restaurants, and other businesses to perform their businesses on the streets and sidewalks of Los Angeles and serve their marketplace. But those permits do not make Los Angeles a “market participant” in the taxi or restaurant industries.

Consequently, neither the City nor LAWA have a legal basis to attach any kind of labor conditions to airline contracts with third parties.

A Public, Comprehensive and Transparent Review of the SEIU-USWW Labor Harmony Provisions is in the Best Interests of the City, Airlines and ASPs

A4A maintains that in the interests of “transparency” and “due process” – and to protect LAWA and the City from potential legal damages - LAWA must follow the example of the MAC. As discussed in greater detail below, the MAC conducted a six month public review of the SEIU’s LPA proposal before making a final determination.

A4A would submit that the rationale for a full and open review of the SEIU sponsored LPA and other proposals, is even more compelling at LAWA because of the below timeline of events:

• The current CSPP was the subject of 4 years of discussions before being approved by the BoAC in 2012.

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• After the CSPP had been adopted, but while ASPs were still going through the initial application process, a labor dispute arose between the SEIU-USWW and certain ASPs at LAX.

• The SEIU-USWW, in an effort to compel resolution of the labor dispute on its terms, drafted new LPA and other amendments, which were presented LAWA and the City at some point in the fall of 2013.

• At the April 9, 2014 meeting, A4A and ASPA were informed that discussions and exchange of documents regarding the LPA had transpired among the SEIU-USWW, City and LAWA for many months.

• By contrast, the proposed LPA and other amendments were only shared with the ASPs and airlines in late March and we were unable to question LAWA and the City about the substance of the amendments until the April 9 meeting.

• While the union has had months to present its arguments in favor of the amendments, the ASPs and airlines have been afforded just 16 days from the time of our meeting on April 9 to the April 25 deadline.

• By reopening the CSPP at the behest of just a union and adopting a union-sponsored proposal, LAWA and the city are intervening in a pending labor dispute and thereby exposing themselves to legal and financial liability.

• In similar circumstances in the 1980s, the City of Los Angeles intervened on the side of the Teamsters in a labor dispute involving a taxi company.

• As in the current matter, the City suddenly amended the existing license requirements by conditioning the issuance of an operating license on the taxi company signing an agreement with a labor organization.

• The matter twice went to the US Supreme Court which ruled that the City had violated the employer’s rights under federal labor laws and owed damages to the employer for denial of the license. Golden State Transit Co. v City of Los Angeles (Golden State II), 493 U.S. 103 (1989).

• The result was an award of damages and interest of $10.9 million that could have risen as high as $14 million with attorneys’ fees. The City ultimately settled for $12.75 million. (See attached LA Times article of January 8, 1992.)

• Among other things, it is noteworthy that the City of Los Angeles apparently failed to institute a public comment process or seek an independent legal opinion before deciding to amend the taxi licensing process and impose labor conditions.

• Instead, the City relied solely upon the opinion of its own staff attorneys, a decision that the City Attorneys’ office later publicly regretted after expending an additional $1.6 million in legal fees on top of the $12.75 million settlement. Quoting then Assistant City Attorney John Haggerty:

o “At the time, we did not feel the actions were illegal.” (See attached LA Times article of January 8, 1992.)

• Overall, as stated by Councilman Zev Yaroslavsky, the damages in Golden Terminal were “a lesson that labor-management relations are the business of labor and management.” (See attached LA Times article of January 8, 1992.)

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Further, the U.S. Supreme Court, in 1993, specifically reaffirmed its holding that the City of Los Angeles could not use the licensing process to impose labor conditions on contracts to which the City was not a party. The Supreme Court discussed its Golden State Transit reasoning in the case of Building Construction Trades Council v. Associated Builders, 507 U.S. 218 (1993), commonly known as Boston Harbor.

In the Boston Harbor case, a public entity -the Massachusetts Public Water Authority (MWPA) - was soliciting bids on a project to clean up the Boston Harbor. All bidders had to agree to Labor Peace Agreements/ Labor Project Agreements as a condition of getting the contract with MPWA.

The Supreme Court upheld the application of the LPA to contractors because the MWPA was directly hiring and paying the contractors and therefore acting as a market participant. In explaining the difference between 'regulating' and 'market participant', the Supreme Court reviewed its Golden State Transit Corp decision and specifically drew distinctions between what the City of Los Angeles could do when it was purchasing services from a company versus what it could not do when it was renewing an operating license for a company:

"[In Golden State] we refused to permit the city’s exercise of itsregulatory power of license nonrenewal to restrict Golden State’s right to use lawful economic weapons in its dispute with its union. See 475 U. S., at 615–619. As petitioners point out, a very different case would have been presented had the city of Los Angeles purchased taxi services from Golden State in order to transport city employees. Brief for Petitioners 35. In that situation, if the strike had produced serious interruptions in the services the city had purchased, the city would not necessarily have been pre-empted from advising Golden State that it would hire another company if the labor dispute were not resolved and services resumed by a specific deadline.”Boston Harbor, 507 U.S. at 227-28. (emphasis supplied)

In particular, it should be noted that the Court did not authorize the city to use the license process – under any circumstances - to require private parties to sign an agreement with a union. AT THE MOST, the Court said that the City might have been legally permitted to cancel its own contract with the taxi company unless the company signed a labor agreement. The Court made clear that Los Angeles could not use its regulatory authority to add labor agreement conditions to a private company’s operating license.

In sum, the Supreme Court on two different occasions has directly stated that the City of Los Angeles may not condition the issuance of an operating license to a private company on the company entering into a labor agreement with a union.

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Minnesota Airports Commission Process and Conclusion

While A4A’s forthcoming legal opinion letter will address the multiple legal objections to the LPA and other amendments, in the interim, it might be helpful if LAWA examined some of the voluminous documents developed by the MAC.

As noted above, A4A recommends that LAWA adopt the transparent and comprehensive approach taken by the MAC. Only after it had given the parties, the public - and its staff - almost 6 months did the MAC reach its ultimate conclusion: Imposition of LPAs on Airport Service Providers is preempted under federal labor law.

All of the proposals and papers produced in conjunction with the MAC’s comprehensive study of the LPA were made available to the public and posted to the MAC’s website in advance of the MAC’s January 21, 2014 meeting. All sides were allowed adequate time to read and rebut each other’s filings.

Below is the link to the entire 121 page document that accompanied the MAC agenda for their January 21 meeting: http://www.metroairports.org/docs/publicMeetings/FC_A_1289.pdf

However, rather than make you read the entire 121 pages, let me direct you to some highlights and provide you with the timetable that the MAC provided the parties:

• In May 2013, the SEIU submitted its proposed Labor Peace Agreement to the MAC.

• The LPA proposal at MAC was similar to the one pending at LAWA in that it required the ASP to enter into an agreement with any labor organization seeking to represent employees.

• In August 2013, the MAC provided the airlines and ASPs with the SEIU proposal along with the union’s legal opinion defending the LPA.

• In late September 2013, A4A, on behalf of the airlines, submitted our analysis of the LPA in late September.

• Simultaneously, the MAC retained an outside law firm – Briggs and Morgan – to review the preemption argument and possible legal exposure resulting from the adoption of the SEIU’s proposed LPA.

• The Briggs and Morgan memorandum concluding that applying an LPA to ASPs would be preempted under both the Railway Labor Act (RLA) and the National Labor Relations Act (NLRA). (Briggs memo appears at pages 46-66)

• The Briggs memo also concluded that the MAC would face civil liability under Section 1983, specifically citing the US Supreme Court decision in Golden State Transit Co. v. City of Los Angeles. (See page 66)

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• Prior to its October 7 meeting, the MAC provided all the opposing parties with each other’s documents as well as the Briggs Morgan analysis for review.

• On October 7, both A4A and the SEIU were permitted to testify to the full MAC about the proposals, and the airport’s attorney provided a verbal analysis.

• In November, the SEIU provided its rebuttal to the Briggs memo (pages 67-76).

After reviewing these multiple submissions, the MAC legal staff then surveyed 25 airports on the issue of existing Labor Peace and other labor provisions at those airports. Among other things, the MAC Survey (see pages 37-39 of MAC document) revealed that:

• With one exception (Boston’s Logan Airport), no airport has a Labor Peace Agreement that applies to Airline Service Providers. (See page 39.)

• The one exception – the LPA at Logan for ASPs:o Was adopted by the staff in September 2013 without prior

consultation with the airlines.o HAS NOT been approved by the Massport Authority.o ASPs – and subsequently airlines - only learned of the LPA

provisions months later during routine lease renewals.o The airlines are protesting the LPA amendment.

In regards to other California airports, the MAC Survey showed that neither San Francisco nor San Jose Airports apply their LPAs to ASPs. (See page 38). The MAC legal staff also prepared its own analysis of the legality of applying LPAs to Airline Service Providers, which concluded that:

• Since the airline service providers were contracting with the airlines…and not the airport…“it appears likely that MSP’s [LPA] requirement for airline service providers would be considered regulatory in nature and subject to preemption.” (emphasis supplied) (see page 39)

• By contrast, the MAC legal staff concluded that LPAs would be not be preempted where the airport was itself directly contracting for services (e.g. imposing an LPA on a construction company with whom the airport was contracting to build facilities). (see page 39)

The full report was presented to the MAC at its January21st meeting. Again, both A4A and the SEIU were afforded the opportunity to testify directly before the MAC. At its January 21 meeting, the MAC referred the issue to its Management and Operations (M&O) Committee for further review and a recommendation.

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At its February 3rd meeting, the M&O Committee “voted to eliminate from further consideration (1) labor peace , (5) employee quality standards, and (6) the transfer of cart and wheelchair services to MAC.” (emphasis supplied) See item # 3 on page 21 of the following link to the M&O Committee agenda for its April 7th meeting. http://www.metroairports.org/docs/publicMeetings/MO_A_1316.pdf

At its April 7 meeting, the M&O Committee reduced the proposals under consideration for ASPs to just one: Worker Retention. See page 33 of the following link to MAC Agenda: http://www.metroairports.org/docs/publicMeetings/FC_A_1326.pdf

My understanding is that at its April 21st meeting, the full MAC followed the M&O Committee’s recommendation and is no longer considering labor peace proposals. However, the MAC did direct the staff to perform additional research on the issues of Worker Retention, and Paid Time Off for ASP employees, as well as to review whether the airport could legally assume the responsibility for directly hiring ASPs to perform wheelchair/ cart driving functions inside the terminal. (Minutes of the April 21 meeting are not yet publicly available.)

Conclusion: A4A respectfully suggests that the airlines and the ASPs - which until recently had not been part of the discussion process – be given a full opportunity, for at least 90 days, to brief and meet with the LAWA and the City officials regarding these proposed amendments. In addition, we respectfully suggest that LAWA and the City seek an outside, independent review of the legal opinion regarding the validity of imposing LPAs on ASPs.

Thank you for considering our views. We look forward to your response to our request that the April 25 deadline be extended.

Regards,

Robert J. DeLuciaVice President, Labor and Employment, and Assistant General CounselAirlines for America We Connect the World 1301 Pennsylvania Ave, NW, Suite 1100Washington, DC 20004W : 202-626-4001Cell: 202-841-3097rdelucia@airlines.orgwww.airlines.org

cc: Gina Marie Lindsey

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Ray IlgunasSamson MengistuManav Kumar, Office of the MayorLen Sloper, Airline Service Providers Association

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