Binding Arbitration Risky for Delta, Pilots

One is a California labor attorney. Another is a former law professor who has been a consultant for the government of Bermuda. The last sided with the Philadelphia Eagles as arbitrator of their decision to bench star receiver Terrell Owens.

Delta Air Lines Inc. and its pilots union have tapped Fredric Horowitz, Robert Harris and Richard Bloch to sit on a panel that will seek to end their stalemate if the two sides can't reach a comprehensive deal on pay and benefit cuts by March.

The binding arbitration process would pose risks for the nation's third-largest carrier and the Air Line Pilots Association, which represents Atlanta-based Delta's 6,000 pilots.

For example, a term sheet filed Tuesday in U.S. Bankruptcy Court in New York says the panel's decision would be final and binding on both sides, subject to limited rights to appeal. The union, however, believes it could still strike if the panel were to reject its contract.

Another risk is both sides have agreed to bear the costs of employing the arbitration panel, which could additionally award damages to Delta if it were to throw out the pilots contract, the term sheet says.

For Delta, the risk would be that the arbitration panel will be less friendly than the bankruptcy court, which has often sided with other airlines in their disputes with labor unions.

Delta had asked the court to reject the pilot contract so the airline could impose $325 million in concessions on its pilots. A tentative agreement on temporary pay cuts worth more than $152 million a year that the sides worked out Sunday has prompted Delta and the union to ask the court to suspend the contract rejection request.

The tentative agreement includes a 14 percent across-the-board wage cut for pilots and reductions in other pilot pay and cost items equal to an additional 1 percent hourly wage reduction.

The company and union will now spend the next several months trying to hammer out a comprehensive, permanent agreement. If they can't, they have agreed to turn the matter over to the arbitration panel, rather than go back to court.

Horowitz is a labor attorney in Santa Monica, Calif., and a member of the National Academy of Arbitrators. He previously worked as corporate counsel and human resource director for a public company that manufactures electronic components and was in-house counsel for a national labor organization, according to his bio on the American Bar Association Web site.

Harris is former chairman of the National Mediation Board. He has been a consultant to the government of Bermuda and a member and chairman of prior presidential emergency boards. Harris also has been an adjunct law professor at the Washington College of Law.

Bloch is a former president of the National Academy of Arbitrators. He has arbitrated past labor disputes between Delta and its pilots, and in November he was an arbitrator in the dispute between the Eagles and Owens. He said the team's decision to bench Owens for the season over his off-the-field conduct was supported by the labor agreement between the league and the NFL Players Association.

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