Peter O. Shinevar, Bredhoff & Kaiser, Wash., D.C., for plaintiff-appellant.

Gilmore F. Dickmann, Jr., Bronson, Bronson & McKinnon, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before D.W. NELSON and TROTT, Circuit Judges, and TASHIMA,* District Judge.

Appellant (plaintiff) Independent Union of Flight Attendants (IUFA) brought this action to enforce an arbitration provision in its collective bargaining agreement (CBA) with appellees (defendants) Pan American World Airways, Inc. (Pan Am), and Pan Am Corporation. That agreement, effective June 4, 1986, provided that Pan Am would use IUFA flight attendants on the Pan Am Flight Service System Seniority List for all present or future flying. By a letter agreement, this scope clause was made equally applicable to the operations of the parent, Pan Am Corp. Pan Am has used IUFA flight attendants on intra-European routes for at least 13 years and has entered into other agreements under the Railway Labor Act (RLA) for such all-foreign routes with pilots and other flight attendants' unions.

In November 1987, Pan American Express, Inc., a subsidiary of Pan Am Corp., began offering intra-European service from a base in Berlin ("Berlin Express"). None of these flights take off from or land in, or overfly, any state, territory, or possession of the United States. Berlin Express chose to operate with foreign national flight attendants represented by a German union. On January 6, 1988, IUFA filed a grievance alleging that defendants' failure to use IUFA flight attendants constituted a violation of the scope clause of the CBA. Pan Am denied the grievance on February 9, 1988, on the ground that the issue was not one of contract interpretation but a representational dispute over which the arbitral body provided for in the contract has no jurisdiction.

On defendants' motion, the district court dismissed the action for lack of subject matter jurisdiction on the ground that the RLA does not apply extraterritorially. Plaintiff appealed1 and we affirm.

The sole issue on appeal is whether or not the district court had subject matter jurisdiction of this action.2

Plaintiff seeks to establish subject matter jurisdiction on the ground that this action "arises under" the RLA. 45 U.S.C. Secs. 151 et seq. & 181 et seq.; 28 U.S.C. Secs. 1331 & 1337. Section 204 of the RLA, 45 U.S.C. Sec. 184 (1982), requires contracting parties to establish system boards of adjustment to resolve "minor disputes"3 through arbitration. An action arises under federal law if either: (1) a federal statute creates the claim; or (2) a substantial question of federal law is a necessary element of the claim. E.g., Morongo Band of Mission Indians v. California State Bd. of Equalization, 858 F.2d 1376, 1383 (9th Cir.1988), cert. denied, 488 U.S. 1006, 109 S. Ct. 787, 102 L. Ed. 2d 779 (1989).

Federal district courts have "arising under" jurisdiction to enforce such required arbitration provisions in contracts entered into under the RLA. International Ass'n of Machinists v. Central Airlines, 372 U.S. 682, 692, 83 S. Ct. 956, 962, 10 L. Ed. 2d 67 (1963). Defendants argue, however, that their obligation to arbitrate this dispute cannot be enforced in federal court because the RLA does not extend to purely foreign flying. We first determine the scope of the RLA, and then consider whether the provision may be enforced in federal court.4

1. The presumption against extraterritoriality

The RLA does not expressly encompass or exclude purely foreign flying. On the "assumption that Congress is primarily concerned with domestic conditions," Foley Bros. v. Filardo, 336 U.S. 281, 285, 69 S. Ct. 575, 577, 93 L. Ed. 680 (1949), the Supreme Court has applied a presumption against extraterritoriality to federal statutes.

The canon of construction which teaches that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States, is a valid approach whereby unexpressed congressional intent may be ascertained.

Id.; see also Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 109 S. Ct. 683, 691, 102 L. Ed. 2d 818 (1989) (limiting Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. Sec. 1603(c), "waters" to within 3-mile territorial sea); Grunfeder v. Heckler, 748 F.2d 503, 509 (9th Cir.1984) (en banc) (German reparation payments not intended to affect SSI eligibility); McKeel v. Islamic Republic of Iran, 722 F.2d 582, 589 (9th Cir.1983) (limiting FSIA to territorial jurisdiction), cert. denied, 469 U.S. 880, 105 S. Ct. 243, 83 L. Ed. 2d 182 (1984). In Foley Bros., the Court held that the "Eight Hour Act" did not apply extraterritorially, since "nothing in the Act itself.... nor in the legislative history ... [led] to the belief that Congress entertained any intention other than the normal one." 336 U.S. at 285, 69 S.Ct. at 577.

This presumption has been attributed to the risk of "outright collisions between domestic and foreign law" which are "a potential source of friction between the United States and foreign countries...." Pfeiffer v. Wm. Wrigley Jr. Co., 755 F.2d 554, 557 (7th Cir.1985) (denying extraterritorial effect to the Age Discrimination in Employment Act [ADEA].5 It has also been attributed to the deference of courts to Congress. "It alone has the facilities necessary to make fairly such an important policy decision...." Benz v. Compania Naviera Hidalgo, S.A., 353 U.S. 138, 147, 77 S. Ct. 699, 704, 1 L. Ed. 2d 709 (1957) (denying extraterritorial effect to the NLRA).

This presumption creates a high threshold. In Benz, the Court considered whether the striking crew of a foreign vessel could invoke the protection of the Labor Management Relations Act (LMRA) while in United States waters. In denying extraterritorial effect to the Act, the Court held that "to run interference in such a delicate field of international relations there must be present the affirmative intention of the Congress clearly expressed." Id.; see also McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 21-22, 83 S. Ct. 671, 677-78, 9 L. Ed. 2d 547 (1963) (absent affirmative congressional intent, court cannot exercise jurisdiction despite preponderance of contacts with United States).6 In Foley Bros., the Court reasoned that Congress would not ordinarily apply domestic wage and hour provisions to aliens working abroad on United States public works projects and that the absence of a distinction in the Act between citizens and aliens was strong evidence of congressional intent not to do so. 336 U.S. at 286, 69 S.Ct. at 578. "An intention so to regulate labor conditions which are the primary concern of a foreign country should not be attributed to Congress in the absence of a clearly expressed purpose." Id.

Most courts of appeals have consistently required such a "clear expression" of congressional intent to apply legislation extraterritorially. E.g., CFTC v. Nahas, 738 F.2d 487, 493 n. 12 (D.C.Cir.1984) (clear evidence or unambiguous expression lacking; service of process statute not applied extraterritorially); Cleary v. United States Lines, Inc., 728 F.2d 607, 610 (3d Cir.1984) (affirmative evidence lacking; ADEA not applied extraterritorially); United States v. Mitchell, 553 F.2d 996, 1002 (5th Cir.1977) (denying extraterritorial effect to the Marine Mammal Protection Act). The Fifth Circuit applied this heightened standard in concluding that Congress did not intend extraterritorial application of Title VII of the Civil Rights Act of 1964. Boureslan v. ARAMCO, 857 F.2d 1014 (5th Cir.1988), aff'd en banc, 892 F.2d 1271 (5th Cir.1989), cert. granted, --- U.S. ----, 111 S. Ct. 40, 112 L. Ed. 2d 17 (1990).

The RLA does not expressly except purely foreign flying from its coverage. Nonetheless, virtually every court to consider the question has concluded that Congress did not intend the RLA to govern labor disputes in other countries. E.g., Air Line Dispatchers Ass'n v. National Mediation Bd., 189 F.2d 685, 690-91 (D.C.Cir.) (union applied to NMB to resolve representation dispute involving foreign dispatchers), cert. denied, 342 U.S. 849, 72 S. Ct. 77, 96 L. Ed. 641 (1951); Air Line Stewards & Stewardesses Ass'n v. Northwest Airlines, 267 F.2d 170 (8th Cir.) (union sued to overturn arbitration award precluding union representation of foreign national flight attendants on foreign flights), cert. denied, 361 U.S. 901, 80 S. Ct. 208, 4 L. Ed. 2d 156 (1959); Air Line Stewards & Stewardesses Ass'n v. Trans World Airlines, 273 F.2d 69 (2d Cir.1959) (per curiam) (action to compel TWA to bargain with union on behalf of foreign flight attendants on foreign flights), cert. denied, 362 U.S. 988, 80 S. Ct. 1075, 4 L. Ed. 2d 1021 (1960). None of these cases, however, concerned an attempt to enforce an agreement already entered into by the parties.7

Our starting point in analyzing the scope of the RLA is its definition of "commerce." The RLA was amended to cover common carriers by air in 1936. Act of April 10, 1936, ch. 166, 49 Stat. 1189 (codified at 45 U.S.C. Secs. 181, et seq.). Except for the omission of a national board of adjustment, Congress simply "extended to ... every common carrier by air engaged in interstate or foreign commerce" those provisions relating to carriers by rail. 45 U.S.C. Sec. 181 (1982) (referring to 45 U.S.C. Secs. 151-163). At the time of the amendment, a "carrier" for purposes of the RLA was one subject to the Interstate Commerce Act (ICA). 45 U.S.C. Sec. 151, First (1982). The ICA had been amended in 1920 to further circumscribe its territorial reach: the Act applied to transportation of persons or goods, or transmission of intelligence,

[f]rom one State or Territory of the United States, or the District of Columbia, to any other State or Territory of the United States or the District of Columbia, or from one place in a Territory to another place in the same Territory, or from any place in the United States through a foreign country to any other place in the United States, or from or to any place in the United States to or from a foreign country, but only in so far as such transportation or transmission takes place within the United States.

Transportation Act, 1920, Sec. 400(1), ch. 91, 41 Stat. 474 (originally codified at 49 U.S.C. Sec. 1(1)) (emphasis added). Most courts have concluded that Congress intended these limitations to apply to carriers by air as well. E.g., Air Line Dispatchers Ass'n, 189 F.2d at 690; Northwest Airlines, 267 F.2d at 173; Trans World Airlines, 273 F.2d at 71.

Congress also had amended the ICA to include definitions of "air commerce" and "interstate and foreign air commerce." Such commerce embraced transportation of passengers or property

between any State, Territory, or possession, or the District of Columbia, and any place outside thereof; or between points within the same State, Territory, or possession, or the District of Columbia, and any point within the same State, Territory, or possession, or the District of Columbia, but through the airspace over any place outside thereof; or wholly within the airspace over any Territory or possession or the District of Columbia.

Air Commerce Act of 1926, Sec. 1, ch. 344, 44 Stat. 568 (1926) (codified at 49 U.S.C. Sec. 171, repealed and reenacted with amendments at 49 U.S.C.App. Secs. 1301(4), (20)).8 While this language is less limiting than that pertaining to rail carriers, it does not include purely foreign flying. Cf. Cheng v. Boeing Co., 708 F.2d at 1412 (Federal Aviation Act inapplicable to foreign flying; therefore, court lacked federal question jurisdiction as to foreign defendant in wrongful death actions).

One searches the RLA and ICA in vain for any expression of congressional intent that the RLA applies to purely foreign flying. The presumption against extraterritoriality, in conjunction with Congress' careful and thorough definitions of commerce, compels the conclusion that the RLA does not prescribe substantive law with respect to flights which are not within its definitions of commerce.9

B. Federal Enforceability of Contract Regulating Foreign Flying

While a contract between private parties ordinarily does not provide a basis for federal question jurisdiction, the Supreme Court has concluded that a contract entered into under the RLA "is a federal contract and is therefore governed and enforceable by federal law, in the federal courts." Central Airlines, 372 U.S. at 692, 83 S.Ct. at 962. The breadth of this holding, however, does not exceed that of the rationale on which it rests. The Court read Sec. 204 of the RLA to impose on the parties a duty to establish boards of adjustment. Id. at 690, 83 S.Ct. at 961 (likening this duty to the duties to bargain and of fair representation). The substantial question arising under federal law therefore was "whether the contractual arrangements made by the parties are sufficient to discharge the mandate of Sec. 204 and are consistent with the Act and its purposes." Id. at 691, 83 S.Ct. at 961. Concern for compliance with the statutory mandate need not and should not extend beyond the scope of that mandate itself. Since, as we have seen, the RLA does not apply to purely foreign flying, no substantial question of federal law appears to be raised by an action to enforce an arbitration agreement with respect to such flying.

The parties' voluntary extension of RLA policies and procedures to purely foreign flying does not alter this conclusion. Cf. Morongo Band of Mission Indians, 858 F.2d at 1385-86 (breach of contract is a state law claim, although contract is entered into under the authority of (but not compelled by) federal law). An argument can be made that, as a matter of contract law, since the relevant terms do not differentiate on the basis of location, those terms have the same meaning and are enforceable to the same extent when applied to purely foreign flying as to flying covered by the RLA. It would follow that any interpretation of those terms raises a federal question because, regardless of location, the same issue is determined; that is, an interpretation with respect to purely foreign flying also constitutes an interpretation with respect to all other flying, and vice versa. Such an approach is consistent with the Supreme Court's observation that "[t]he needs of the subject matter manifestly call for uniformity." Central Airlines, 372 U.S. at 691-92, 83 S.Ct. at 961-62. Congress, however, did not seek to impose uniformity of interpretation beyond the boundaries of the RLA. Nor need courts assume jurisdiction of cases involving purely foreign flying to effectuate the purposes of the RLA; compliance with the statute can be fully assured by enforcing it in cases falling within the RLA's geographic scope.10

The judgment of the district court is AFFIRMED.

I respectfully dissent.

My disagreement with my colleagues is not about the interpretation of our jurisprudence regarding extraterritorial jurisdiction, or, even, about the extraterritorial scope of the RLA. Rather, it is about whether extraterritoriality has anything to do with this case in the first place.

Reduced to its core, the dispute can be summarized as follows:

(1) In April 1985 the IUFA, certified representative of Pan Am's flight attendants, and Pan Am entered an agreement in the United States concerning Pan Am's flights within German territory. The agreement provides protection for IUFA flight attendants serving such routes (for example, limiting the number of foreign national flight attendants or subjecting all disputes involving the interpretation of the agreement to binding arbitration);

(2) The IUFA alleges that Pan Am violated that agreement by refusing

(a) to assign flight attendants from the Pan Am seniority list to certain flights, and (b) to provide those flight attendants with wages, benefits, and terms and conditions of employment in accordance with the provisions of the agreement.

(3) The Railway Labor Act, as amended to cover air carriers, imposes upon employers and employees "the duty ... to exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions." 45 U.S.C. Sec. 152. The Act further specifies the manner in which carriers shall "change the rates of pay, rules, or working conditions of its employees, as a class as embodied in agreements." Id.

(4) The IUFA contends that the afore-mentioned agreement was breached contrary to the provisions of the RLA, that it constituted a unilateral change of employment conditions, and that Pan Am refused to follow customary procedure for solving such disputes. As a result, it filed an action in federal district court seeking to compel arbitration.

Given these facts, it appears to me that the district court had jurisdiction over this case, one that arose under a federal statute, the RLA. The "extraterritorial" character of the dispute is suggested only by the fact that the domestic agreement embraced employees of Pan Am's foreign flights. Without more, this cannot suffice to push the controversy beyond our jurisdictional reach.1

It is true that the few courts to have addressed the issue have concluded that the RLA does not apply outside our borders. In this, they have been guided by the well-established presumption against extraterritoriality to check the scope of our national laws. See supra at 680-82. But ruling that the district court had jurisdiction over this case would not conflict with such a conclusion. The critical difference is that here there is a pre-existing agreement between the parties. The RLA is not triggered directly by the employers' alleged behavior in Germany but indirectly by their alleged breach of the agreement signed in the United States.2 Because the hiring of foreign nationals might curtail jobs available for union members, because "the deprivation of a work opportunity involving the type of work traditionally performed by the Union is a change in work conditions," Local 553, TWU v. Eastern Air Lines, 544 F. Supp. 1315 (E.D.N.Y.), aff'd and modified, 695 F.2d 668 (2d Cir.1982), and because the agreement explicitly embraced intra-German flights, appellants have stated a claim under the RLA.

We are not asked to apply the RLA to intra-German flights of its own force. Rather, we are asked to apply the RLA to a routine agreement between a union and a carrier. It is not the RLA that must be stretched beyond our boundaries; it is the agreement that brings us there. In sum, that the dispute revolved around foreign flights is jurisdictionally irrelevant. The RLA may have no operation in another country; that does not mean, however, that the agreements which the RLA purports to guarantee are limited in any way by territorial or national boundaries.

Nor are we being asked to hold that subject-matter jurisdiction was born of a contractual agreement. That, of course, would be impermissible. See Stock West, Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221 (9th Cir.1989) (holding that "a party cannot waive by consent or contract a court's lack of subject matter jurisdiction"). Here, the contract's alleged breach, not its explicit terms, forms the basis for the court's subject-matter jurisdiction.

None of the cases cited by the majority addresses this issue. In Northwest Airlines, the Union argued that under the RLA it was required to represent all flight attendants, including those hired to perform on foreign flights. Because the foreign flight attendants were not covered by the Act, the court concluded that the Union was not their certified bargaining agent. 267 F.2d at 174. Similarly, in Trans World Airlines the Union sought an injunction against TWA under the RLA, requiring the company to bargain with it with respect to non-nationals. In both instances, the unions invoked the RLA of its own force to police conduct beyond our boundaries. Lacking from these cases was the independent, and wholly domestic "hook" on which to hang the controversy, namely the existence of an agreement between the two parties that neither party could unilaterally modify by virtue of the RLA.

I am also convinced that the factors generally cited to deny jurisdiction where foreign interests are involved are absent from this case. First, the dispute clearly has a "substantial, direct, and foreseeable effect upon or in the territory" of the United States. Restatement (Third) of Foreign Relations Law, Sec. 403(2)(a). Depriving U.S. citizens of employment opportunities, even abroad, will almost certainly have some effect within the United States.

Second, I disagree with the suggestion that an American exercise of jurisdiction would clash with another state's jurisdictional assertion. Enumerating the policy reasons justifying the presumption against extraterritoriality, the majority evokes "the risk of 'outright collisions between domestic and foreign law.' " Supra at 680 (quoting Pfeiffer, 755 F.2d at 557). But this belligerent scenario is far less likely to occur than the majority intimates. Courts of the United States have traditionally declined to apply our laws to foreign flag carriers, for "the law of the flag supercedes the territorial principle." Lauritzen, 345 U.S. at 585, 73 S.Ct. at 929; see also McCulloch, 372 U.S. at 21, 83 S.Ct. at 677 (U.S. labor laws do not apply to foreign seamen employed on vessels registered under a foreign flag). By the same token, regulation by Germany of the labor relations of a foreign carrier might well be unreasonable. Cf. Restatement (Third) of Foreign Relations Law Sec. 403, Comment c; Reporter's Note 4.3

A third concern expressed by courts is whether a country's decision to police a given conduct will interfere with justified expectations. See Restatement (Third) of Foreign Relations Law, Sec. 403(2)(d). Here, both appellant and appellees undeniably anticipated that the collective bargaining agreement would apply to international flights. For decades, Pan Am had routinely honored such agreements. Its breach today cannot undo the justified expectations born of the past.

In my view, the most troubling aspect of this case remains the fate of the foreign flight attendants whose work appellants claim for their own members. However, the potential harm they might suffer would result not from our intervention, but from the agreement reached by Pan Am and the IUFA. Our task, accordingly, is limited to ensuring that the agreement not be violated in contravention of the RLA.

The court has a responsibility to act in the face of an alleged breach that might cause serious injury, for "collective bargaining agreements are central to American labor law and are the essential threads of its fabric." Airline Pilots Ass'n., Etc. v. Taca Int'l Airlines, 748 F.2d 965, 968 (5th Cir.1984). Because I do not wish to approve of judicial passivity by way of extraterritorial escape, I must respectfully part company with my colleagues.