International Brotherhood of Teamsters v. Republic Airways Inc .

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 24-1530
INTERNATIONAL BROTHERHOOD OF T EAMSTERS , et al.,
Plaintiffs-Appellants,
v.
R EPUBLIC AIRWAYS INC ., et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 23-cv-995 — Richard L. Young, Judge.
____________________
A RGUED OCTOBER 30, 2024 — D ECIDED J ANUARY 31, 2025
____________________
Before SCUDDER , ST . EVE , and KIRSCH, Circuit Judges.
S T . EVE , Circuit Judge. This appeal concerns a dispute be-
tween regional air carriers and their pilots’ unions over the
propriety of the carriers’ individual employment agreements
with pilots. Republic Airways Inc. and Hyannis Air Service,
Inc. contracted with pilot candidates to provide certain incen-
tives in exchange for commitments the candidates made to the
carriers. The International Brotherhood of Teamsters (“Team-
sters”), along with two of its local unions (together, the

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2 No. 24-1530
“Unions”), allege that these employment agreements violate
the Railway Labor Act (“RLA”), 45 U.S.C. §§ 151 et seq., be-
cause they were not bargained for and fall outside the scope
of the parties’ collective bargaining agreements (“CBAs”).
Under the RLA, we characterize the parties’ dispute as ei-
ther “minor,” mandating arbitration, or “major,” permitting
the suit to proceed in federal court. The district court deemed
this dispute minor because its resolution centered on interpre-
tation of the parties’ CBAs. It therefore dismissed the Unions’
complaint for lack of subject-matter jurisdiction. Recognizing
the RLA’s strong preference for arbitration, we agree, and af-
firm the judgment of the district court.
I. Background
Republic Airways Inc. (“Republic”) and Hyannis Air Ser-
vice, Inc. (“Hyannis”) provide regional passenger air service.
Republic and Hyannis (together, the “Carriers”) each main-
tain a CBA with Teamsters, which acts as the certified bargain-
ing representative for pilots employed by the Carriers. Each
of these CBAs contains a provision key to the resolution of
this case: Article 3.O of the CBA between Teamsters and Re-
public (the “Republic CBA”), dated October 14, 2022, and Sec-
tion 1.J of the CBA between Hyannis and Teamsters (the “Hy-
annis CBA”), dated April 1, 2020.
Article 3.O of the Republic CBA governs bonuses and in-
centives for Republic pilots. It grants Republic broad discre-
tion to determine the terms and conditions of the incentives
that it offers:
1. With respect to signing bonuses, stipends and other
new hire incentives, the Company has the discretion to
offer, and to increase or decrease, signing bonuses,

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No. 24-1530 3
stipends, and/or incentives in its recruitment efforts of
New Hire Pilots. The Company has the discretion to
determine the terms of the signing bonus, stipend,
and/or other incentives for New Hire Pilots including
but not limited to the timing of payments of such sign-
ing bonuses, stipends, and/or incentives.
…
3. The Company, in its discretion, may offer a bonus or
financial incentive at any time and of any type or form
to incentivize a qualified Pilot to complete Captain
qualification training. The Company has the discretion
to determine the terms of the bonuses, or other incen-
tives for Pilots, including but not limited to the timing
of payments of such bonuses and/or incentives.
4. Until the amendable date of this Agreement, the
Company, in its discretion, may offer a bonus or finan-
cial incentive at any time and of any type or form to
incentivize the retention of Pilots. The Company has
the discretion to determine the terms of the bonuses, or
other incentives for Pilots, including, but not limited
to, the timing of payments of such bonuses and/or in-
centives as well as terms specific to each Position.
Section 1.J of the Hyannis CBA, the “Management Rights”
clause, similarly imbues Hyannis with discretion. It provides:
[Hyannis] has and retains and the Union recognizes
the sole and exclusive right of the Company to exercise
all rights or functions of management except to the ex-
tent that such rights of management are limited by this
Agreement and so long as the exercise of such rights
does not conflict with the terms of this Agreement.

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4 No. 24-1530
In addition to the CBAs, the Carriers entered into employ-
ment agreements with individual pilots. This appeal concerns
two of these agreements, both of which involve pilots ascend-
ing to the position of captain at Republic. The Republic Air-
ways Career Advancement Program Pre-Hire Enrollment
Agreement (the “Pre-Hire Agreement”), entered into between
a pilot candidate and Republic, makes the pilot eligible for
$100,000 in incentive payments, paid according to when the
pilot completes different stages of training to become a cap-
tain. In exchange, the pilot commits to two years of employ-
ment as an active status captain at Republic. If the pilot loses
his or her position as captain, the pilot agrees to a five-year
commitment as a Republic pilot and becomes ineligible for fu-
ture incentive payments.
Failure to comply with any of the Pre-Hire Agreement’s
commitments constitutes a material breach and requires the
pilot to repay any already earned incentive payments. On top
of that, the pilot must pay damages—“not as a penalty, but as
liquidated damages representing the harm to Republic based
on the cost of training.” If the employment relationship termi-
nates prior to the pilot fulfilling the terms of the agreement,
the pilot cannot work for any competitor airline for a period
of one year.
The Republic Airways Captain Pathway Program Enroll-
ment Agreement (the “Pathway Agreement”) is a three-party
agreement between a pilot candidate, Hyannis, and Republic.
As its name suggests, the Pathway Agreement provides a
pathway for new Hyannis pilots to become captains at Repub-
lic. Like the Pre-Hire Agreement, the Pathway Agreement
provides for incentives in exchange for certain employment
commitments. When Hyannis hires the pilot candidate,

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No. 24-1530 5
Republic pays the pilot a $2,500 signing bonus. A pilot in the
Captain Pathway Program also receives either a monthly
housing stipend or housing accommodation arranged by Hy-
annis. Upon performing at least 720 hours of specific training
time at Hyannis, the pilot receives a guaranteed spot in Re-
public’s first officer trainee class. At this point, these pilots
must terminate their employment at Hyannis—forfeiting
their seniority rights and other privileges—and accept em-
ployment at Republic. Upon successful upgrade to the posi-
tion of captain at Republic, the pilot becomes eligible for an
incentive payment of up to $100,000.
In exchange for the incentive payment, the Captain Path-
way Program pilot agrees to a three-year employment com-
mitment, which includes two years as a Republic captain. As
with the Pre-Hire Agreement, the Pathway Agreement pro-
vides that in the event a pilot does not fulfill these obligations,
the pilot must repay the incentive payment to Republic in ad-
dition to liquidated damages. And if the employment rela-
tionship between the pilot and Republic ends, the pilot may
not work at any airline that competes with Republic for one
year.
The Unions challenge these agreements. In their first
amended complaint, the Unions allege that the Carriers, along
with Republic Airways Holdings, Inc. (“Holdings”), violated
the RLA.1 They also bring a state law claim alleging that the
1 Holdings wholly owns Republic and owns a shareholder interest in
Hyannis. Because the parties’ dispute belongs before an adjustment board
and not in federal court, we do not resolve the parties’ disagreement re-
garding whether Holdings is a proper defendant.

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6 No. 24-1530
non-compete provisions in the individual employment agree-
ments violate Indiana law on restrictive covenants.
The defendants moved to dismiss for lack of subject-mat-
ter jurisdiction under Rule 12(b)(1) and for failure to state a
claim under Rule 12(b)(6). The district court dismissed the
Unions’ claims for lack of subject-matter jurisdiction, holding
that the dispute belongs in arbitration before an adjustment
board, not in federal court.
The Unions now appeal. We review de novo the district
court’s dismissal for lack of subject-matter jurisdiction, ac-
cepting all of the Unions’ well-pleaded allegations as true.
Choice v. Kohn L. Firm, S.C., 77 F.4th 636, 638 (7th Cir. 2023).
II. Discussion
A. The Railway Labor Act
Congress enacted the RLA “to promote peaceful and effi-
cient resolution of [labor] disputes.” Union Pac. R.R. Co. v. Bhd.
of Locomotive Eng’rs & Trainmen Gen. Comm. of Adjustment,
Cent. Region, 558 U.S. 67, 72 (2009); see also Hawaiian Airlines,
Inc. v. Norris, 512 U.S. 246, 252 (1994). The RLA permits em-
ployers to modify the rates of pay, rules, or working condi-
tions of their employees in one of two ways: they may “act in
accordance with an[] existing agreement,” or “go through the
bargaining and negotiation procedures prescribed in the
RLA.” BLET GCA UP v. Union Pac. R.R. Co., 988 F.3d 409, 412
(7th Cir. 2021) (citing 45 U.S.C. § 152 Seventh); see also Bhd. of
Locomotive Eng’rs & Trainmen (Gen. Comm. of Adjustment, Cent.
Region) v. Union Pac. R.R. Co., 879 F.3d 754, 756 (7th Cir. 2017)
(hereinafter “Brotherhood 2017”).
Here, the parties dispute whether the Carriers acted in ac-
cordance with an existing agreement—their respective CBAs

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No. 24-1530 7
with the Unions. When a disagreement over the scope of a
CBA arises, the RLA distinguishes between two classes of dis-
putes: those “‘over the formation of [CBAs] or efforts to secure
them’”—so-called “major” disputes—“and those that ‘con-
template[] the existence of a [CBA]’”—so-called “minor” dis-
putes. BLET GCA UP, 988 F.3d at 412 (quoting Elgin, J. & E.
Ry. Co. v. Burley, 325 U.S. 711, 722–23 (1945)). The terms “ma-
jor” and “minor” do not connote the size or significance of a
dispute. They are terms of art. Major disputes arise over the
creation of contractual rights, while minor disputes concern
the interpretation or application of already existing agree-
ments. Consol. Rail Corp. v. Ry. Labor Execs.’ Ass’n, 491 U.S. 299,
302–03 (1989) (hereinafter “Conrail”); see also BLET GCA UP,
988 F.3d at 412.
Federal courts only have jurisdiction to hear major dis-
putes;2 minor disputes are resolved in arbitration. Brotherhood
2017, 879 F.3d at 757–58. In furtherance of the RLA’s goals to
avoid disruption in labor and to ensure that industry experts
interpret and enforce CBAs, the RLA reflects a “strong prefer-
ence” for arbitration. BLET GCA UP, 988 F.3d at 413; see also
Conrail, 491 U.S. at 310 (“Referring arbitrable matters … will
2 In this circuit, we have treated the RLA’s arbitration requirement as
jurisdictional without “consider[ing] the effect of the Supreme Court’s
modern understanding of the difference between ‘jurisdiction’ and other
kinds of rules.” Miller v. Sw. Airlines Co., 926 F.3d 898, 901 (7th Cir. 2019);
see also BLET GCA UP, 988 F.3d at 415; Brotherhood 2017, 879 F.3d at 756;
Carlson v. CSX Transportation, Inc., 758 F.3d 819, 831 (7th Cir. 2014) (recog-
nizing that this court has yet to consider whether the RLA’s arbitration
requirement is jurisdictional). We need not address this issue here, “for
either a substantive or a jurisdictional label ends the litigation between
these parties and forecloses its continuation” in federal court. Miller, 926
F.3d at 901.

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8 No. 24-1530
help to … assur[e] that collective-bargaining contracts are en-
forced by arbitrators who are experts in the common law of
[the] particular industry.” (internal quotations omitted)). An
employer’s burden to persuade a court that a dispute is “mi-
nor” (i.e., subject to arbitration) is therefore “relatively light.”
Conrail, 491 U.S. at 307 (internal quotations omitted); see also
Brotherhood 2017, 879 F.3d at 758 (an employer’s burden to es-
tablish a minor dispute “is quite low”). An employer need
only show that its CBA “arguably justifie[s]” its conduct. Con-
rail, 491 U.S. at 307. So long as the employer’s argument is
“‘neither obviously insubstantial or frivolous, nor made in
bad faith,’ the court lacks jurisdiction to do anything but dis-
miss the case and allow arbitration to go forward.” Brother-
hood 2017, 879 F.3d at 758 (quoting Conrail, 491 U.S. at 310).
“Plain and simple, ‘in making the choice between major
and minor, there is a large thumb on the scale in favor of mi-
nor, and hence arbitration.’” BLET GCA UP, 988 F.3d at 413
(quoting Brotherhood 2017, 879 F.3d at 758); see also Bhd. of Ry.,
Airline & S.S. Clerks, Freight Handlers, Exp. & Station Emps. v.
Atchison, Topeka & Santa Fe Ry. Co., 847 F.2d 403, 406 (7th Cir.
1988) (“[B]ecause a major dispute may escalate into a strike,
we resolve all doubts in favor of finding the dispute at issue
to be minor.”); Ry. Lab. Execs. Ass’n v. Norfolk & W. Ry. Co., 833
F.2d 700, 705 (7th Cir. 1987) (“[I]f there is any doubt as to
whether a dispute is major or minor a court will construe the
dispute to be minor.”).
With the law settled and agreed on by the parties, we turn
to the two challenged individual employment agreements.

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No. 24-1530 9
B. Pre-Hire Agreement
The Pre-Hire Agreement provides monetary incentives for
pilots who become Republic captains in exchange for certain
employment commitments. The Unions challenge the Pre-
Hire Agreement as both outside the scope of the Republic
CBA and a violation of it. But the Pre-Hire Agreement’s in-
centives and commitments are, at the very least, arguably jus-
tified by Article 3.O of the Republic CBA.
Article 3.O, entitled “Signing Bonuses, New Hire Incen-
tives, and Other Bonuses/Incentives,” grants Republic discre-
tion to determine the terms, timing, and form of incentives for
its pilots. The Carriers make a nonfrivolous argument that
such broad discretion permits Republic to recruit new pilots
by, among other things, incentivizing their ascension to the
position of captain.
This argument is reinforced by the expanded scope of Ar-
ticle 3.O in the operative CBA. The previous CBA between Re-
public and Teamsters made no mention of “other bonuses/in-
centives,” and, unlike the operative CBA, did not give Repub-
lic discretion to offer incentives “at any time and of any type
or form” for “qualified Pilot[s].” The expansion of Republic’s
discretion arguably supports its position that it bargained for
the ability to offer incentives to attract and retain pilots. See
Transp.-Commc’n Emps. Union v. Union Pac. R.R. Co., 385 U.S.
157, 161 (1966) (“In order to interpret [a CBA] it is necessary
to consider the scope of other related collective bargaining
agreements, as well as the practice, usage and custom pertain-
ing to all such agreements.”); see also Brotherhood 2017, 879
F.3d at 758 (considering evidence of the parties’ CBAs and his-
tory of dealings on a 12(b)(1) motion to dismiss). The Unions’
arguments to the contrary—including that subsection 3.O.3,

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10 No. 24-1530
the only subsection that mentions captain training or upgrade
bonuses, applies only to “qualified” pilots (i.e., not new
hires)—sound in contract interpretation. These arguments
“conceivably could carry the day in arbitration,” but “they do
not convince us that [the Carriers’] contractual arguments are
frivolous or insubstantial.” Conrail, 491 U.S. at 317.
This holds equally true with respect to the Carriers’ argu-
ments about the employment commitments (or, as termed by
the Unions, the post-employment restrictions). The Pre-Hire
Agreement provides that in exchange for Republic’s invest-
ment of time, resources, and money in hiring and training pi-
lots, the pilots will commit to working for Republic for a pe-
riod of two or five years, depending on that pilot’s level. If the
pilot fails to fulfill his or her commitment, the pilot may have
to pay back financial incentives and to pay liquidated dam-
ages.
Once again, Article 3.O arguably justifies the imposition of
these employment commitments. Subsection 3.O.3 authorizes
Republic, in its discretion, to “determine the terms” of any bo-
nuses or other incentives for “Pilots.” Subsection 3.O.4 simi-
larly authorizes Republic, in its discretion, to offer a “financial
incentive at any time and of any type or form to incentivize
the retention of Pilots.” It provides further that Republic has
the discretion to “determine the terms of the bonuses, or other
incentives for Pilots.” The commitment incentives or post-em-
ployment restrictions, by any name, could arguably fit as a
“term” within these subsections.
That Republic did not specifically raise the post-employ-
ment restrictions in negotiations does not render the Carriers’
position frivolous. “[E]ven in the absence of negotiation,
changes are permitted if authorized by contract.” Brotherhood

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No. 24-1530 11
2017, 879 F.3d at 757. Moreover, CBAs are intended to govern
situations “which the draftsmen cannot wholly anticipate.”
Conrail, 491 U.S. at 311–12 (internal quotations omitted). Alt-
hough silence in a CBA does not give an employer carte
blanche, the Republic CBA did not need to spell out every
conceivable term in order to justify an employment action. See
id. at 309 n.7 (explaining that “the general framework of a col-
lective-bargaining agreement leaves some play in the joints,
permitting management some range of flexibility in respond-
ing to changed conditions”).
An arbitrator may decide the incentives and post-employ-
ment restrictions in the Pre-Hire Agreement fall outside the
scope of Article 3.O. But the parties’ arguments amount to a
dispute over the proper interpretation of the CBA: does Arti-
cle 3.O justify the Pre-Hire Agreement? Regardless of how a
decisionmaker answers this question, because the Carriers’
position is not frivolous, an adjustment board, and not a fed-
eral judge, should make the decision. See, e.g., Bhd. of Locomo-
tive Eng’rs & Trainmen v. Union Pac. R.R. Co., 905 F.3d 537, 542
(7th Cir. 2018) (arbitral board “plainly has jurisdiction” to de-
termine “whether or not a term in a collective-bargaining
agreement applies”); Brotherhood 2017, 879 F.3d at 759 (federal
courts consider only whether the employer’s position is “bet-
ter than frivolous,” regardless of whether “it may or may not
prevail”).3
3 The Unions’ contention that the Pre-Hire Agreement conflicts with
Article 9.F, Article 1.C.1, and Article 11 of the Republic CBA—to the extent
they have preserved these arguments—fails to establish a major dispute.
The purported conflicts do not render the Carriers’ position frivolous or
obviously insubstantial. See Brotherhood 2017, 879 F.3d at 759 (dispute was

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12 No. 24-1530
C. The Pathway Agreement
Entered into by a pilot candidate, Hyannis, and Republic,
the Pathway Agreement provides for a signing bonus, living
expenses, incentive payments, and a pathway to the position
of captain at Republic in exchange for employment commit-
ments. Once again, the broad discretionary language in Arti-
cle 3.O of the Republic CBA, together with the broad manage-
ment discretion contained in Section 1.J of the Hyannis CBA,
arguably justifies these terms.
As to the Pathway Agreement’s bonuses—which the Un-
ions challenge as unjustified by either the parties’ practices or
the plain language of the Hyannis CBA—we accept as true the
Unions’ allegation that during negotiations, Hyannis
acknowledged that it lacked the authority to pay bonuses to
pilots without the Unions’ consent. But Hyannis does not pay
the bonuses, Republic does.4 And although Republic makes
the payments while Hyannis employs the pilots, the Pathway
Agreement contemplates that each of the Captain Pathway
Program pilots will eventually gain employment with Repub-
lic. The broad discretion afforded to Republic to incentivize
hiring and retention of pilots arguably justifies Republic’s
payment of bonuses under the Pathway Agreement.
So too does the management rights clause of the Hyannis
CBA, which permits Hyannis “to exercise all rights or func-
tions of management,” limited only by the terms of the CBA.
minor where railroad proffered “a non-frivolous argument for the com-
patibility of the two policies”).
4 The Unions waived their argument that Republic acts as Hyannis’s
agent in paying the pilot bonuses by raising it for the first time on appeal.
See Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir. 2012).

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No. 24-1530 13
This broad discretion at least arguably includes the right to
incentivize the hiring of its employees by permitting them to
receive bonuses. See United Steelworkers of Am. v. Warrior &
Gulf Nav. Co., 363 U.S. 574, 583 (1960) (characterizing the abil-
ity to “hire[] and fire[]” and “pay[] and promote[]” as man-
agement functions); Miller, 926 F.3d at 903 (whether a man-
agement rights clause “perhaps grant[ed]” airlines authority
to act was “a question for an adjustment board”). Even if these
arguments do not carry the day with an adjustment board,
“the fact that a contract interpretation is questionable, and
may be wrong, does not make it frivolous.” See Nat’l Ry. Lab.
Conf. v. Int’l Ass’n of Machinists & Aerospace Workers, 830 F.2d
741, 749 (7th Cir. 1987).
As to the Pathway Agreement’s post-employment re-
strictions, simply because Hyannis has not previously im-
posed such restrictions does not mean that the CBA prohibits
them. See Conrail, 491 U.S. at 315–18 (finding that the parties’
course of dealings arguably justified uniliteral imposition of
mandatory drug testing without cause, despite employer
never having done so in the past). To the contrary, the ability
to “exercise all rights or functions of management” could ar-
guably include determining conditions of employment.
The terms of the Hyannis CBA limit the management
rights clause, but nothing in the CBA clearly conflicts with the
Pathway Agreement so as to render the Carriers’ arguments
frivolous. Although Section 3 of the Hyannis CBA governs
compensation, for example, it does not preclude the financial
incentives provided for in the Pathway Agreement. See United
Steelworkers of Am., 363 U.S. at 583 (“A collective bargaining

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14 No. 24-1530
agreement may treat only with certain specific practices, leav-
ing the rest to management[.]”).5
* * *
”We are not resolving the merits” of the Unions’ chal-
lenges. BLET GCA UP, 988 F.3d at 414. The Unions can present
their arguments to an adjustment board, which may ulti-
mately decide that their position carries the day. Our task is
only to determine whether the Carriers made nonfrivolous ar-
guments that the CBAs justify their individual employment
agreements. They have. Accordingly, we find the parties’ dis-
pute minor and therefore subject to arbitration.6
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
5 To the extent not specifically addressed, we find the remainder of
the Unions’ arguments alleging conflicts between the CBAs and the indi-
vidual pilot employment agreements either without merit or waived. In-
cluding an allegation in a complaint without developing any supporting
arguments does not suffice to present it to the district court. See Puffer, 675
F.3d at 718.
6 With no surviving claims under federal law, we affirm the district
court’s decision to dismiss the Unions’ state law claim. Rivera v. Allstate
Ins. Co., 913 F.3d 603, 617–18 (7th Cir. 2018).

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