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Appeals Court Lifts Ban on Sale of Eastern Shuttle

June 7, 1988

WASHINGTON (AP) _ A federal appellate court on Tuesday lifted an injunction barring Eastern Airlines from selling its Northeast shuttle operation to another subsidiary of its parent company, Texas Air Corp.

The U.S. Circuit Court of Appeals here lifted a contempt citation issued against Eastern but gave a union challenging the shuttle deal 10 days to seek a temporary restraining order to stop it.

The three-judge panel directed a lower-court judge to conduct further hearings if the union continues the challenge to determine if an injunction barring the sale is warranted.

The court found no basis for U.S. District Judge John H. Pratt to cite Eastern for contempt of court on March 10 for taking steps to sell the Eastern Air Shuttle to the newly created Texas Air subsidiary.

Pratt, ruling on a suit by the International Association of Machinists and Aerospace Workers, said Eastern had flouted a July 1987 order he had issued barring the airline from transferring 6,000 ground crew workers to another subsidiary.

The appeals court held, however, that the proposed $225 million shuttle sale was not precluded by Pratt’s injunction. The three-judge panel also concluded unanimously that Pratt had made an incomplete factual finding when issueing a new injunction against selling the Boston-New York-Washington shuttle.

The Machinists union, which represents 13,000 Eastern employees, contends that Texas Air is trying to break up the airline’s various components to weaken the power of the unions at the financially troubled carrier.

″In issuing the March order, the district court did not weigh the traditional equitable criteria, nor did it make factual findings, necessary to support the issuance of a new or modified injunction,″ Circuit Judge Harry T. Edwards wrote in an opinion joined by Judges Stephen Williams and Louis Oberdorfer.

″We appreciate the district court’s concern that Eastern’s announcement of the shuttle deal may have suggested a disregard for the spirit of the July injunction,″ Edwards wrote. ″Nonetheless, this is an insufficient basis upon which to rest a finding of contempt where the district court has issued a new or modified injunction.″

Charles Bryan, president of Eastern’s Machinists local in Miami, called the appeals court ruling ″disappointing, because it’s going to be more costly, and it will entail more legal fees and litigation. But we have absolute confidence in our legal postion.″

Bryan emphasized that the appeals court based its dismissal of the injunction on procedural matters only, and now that the case has been remanded to Pratt, the temporary restraining order will be judged on its merits.

″It’s difficult to comprehend how a judge who has already held them in contempt will turn around and go and sell it,″ he added at a Miami news conference.

Eastern spokesman Robin Matell said, ″We are pleased with the decision and are studying its implications.″

The Machinists contend Texas Air is trying to spin off various components of the financially troubled carrier to undermine the power of unions.

The decision is the latest chapter in a series of bitter legal battles between Eastern and its unions. Texas Air, headed by Frank Lorenzo, acquired Eastern in 1986. It also operates Continental Airlines.

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