Ruling Helps Unions Fight Member Suits : Labor: The Supreme Court says litigation alleging bad contracts may be won only if a union negotiated an “irrational or arbitrary” deal.

In a case involving Continental Airlines pilots, the Supreme Court on Tuesday made it easier for a union to defend itself against a lawsuit filed by members who claim unfair or inadequate representation.

In dismissing a suit by pilots who went on strike against Continental, the justices ruled unanimously that workers who contend that they were shortchanged in a labor settlement can win a suit against their union only by proving that it accepted a “wholly irrational or arbitrary” deal.

There is a “wide range of reasonableness within which unions may act without breaching their fair-representation duty,” Justice John Paul Stevens wrote for the court.

In evaluating whether striking workers were mistreated, he said, judges must be aware that the union may have been at such a bargaining disadvantage that it had to accept a contract favoring non-strikers.

The ruling is a victory for the Air Line Pilots Assn. and the Bush Administration, which urged the court to dismiss the suit against the union.

In other decisions, the court:

* Ruled 7-2 that railroads can ignore their union contracts when completing mergers approved by federal regulators.

* Said a federal law allowing winners in some lawsuits to have their lawyers’ fees paid by losers does not apply to expert-witness fees. The 6-3 decision barred such reimbursement for West Virginia University’s hospital even though it successfully sued the state of Pennsylvania over Medicaid payments.

In the Continental Airlines case, Stevens said even a bad strike settlement is not necessarily an unfair one to a union’s rank and file.

“A settlement is not irrational simply because it turns out in retrospect to have been a bad settlement,” he said.

The union may have correctly chosen to settle rather than go to court in a protracted, costly battle for a better deal for some members, he said.

“In labor disputes, as in other kinds of litigation, even a bad settlement may be more advantageous in the long run than a good lawsuit,” Stevens said.

The Administration had said a loss for the pilots union would open the way for judges to decide labor disputes that would be better left to unions, management and federal mediators to resolve.

The case began when Continental and its boss, Frank Lorenzo, filed for bankruptcy in 1983 after failing to win concessions from employees.

That led to a bitter two-year pilots strike that ended in 1985 while about 1,000 pilots were still on the picket line. More than 1,600 pilots either had stayed on the job or were hired to replace the strikers.

The union agreed to a settlement that gave striking pilots a chance to return to work on terms considerably less favorable than pilots who flew for Continental during the strike.

The striking pilots said they lost seniority rights. They accused their union of selling out to management in a deal that unfairly discriminated against them.

The strikers said they would have received better terms if the union simply had surrendered to Continental’s demands originally and returned to work.

A federal judge, conceding that the settlement was “atrocious in retrospect,” nonetheless threw out the striking pilots’ suit. The U.S. 5th Circuit Court of Appeals reinstated it in 1989, saying a jury should determine whether the union violated its duty to the strikers.

Tuesday’s decision said the 5th Circuit exceeded its power, in effect substituting its own view of what the union should have done for the actual bargain that the union’s negotiators apparently felt compelled to accept.