United Transp v. SC Public Railway

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED TRANSPORTATION UNION,

Plaintiff-Appellee,

v.

No. 97-1418

SOUTH CAROLINA PUBLIC RAILWAY

COMMISSION,

Defendant-Appellant.

Appeal from the United States District Court

for the District of South Carolina, at Charleston.

Patrick Michael Duffy, District Judge.

(CA-96-2501-2-23)

Argued: October 3, 1997

Decided: December 4, 1997

Before NIEMEYER and HAMILTON, Circuit Judges, and

BOYLE, Chief United States District Judge for the

Eastern District of North Carolina, sitting by designation.

_________________________________________________________________

Vacated and remanded by published opinion. Judge Hamilton wrote

the opinion, in which Judge Niemeyer and Chief Judge Boyle joined.

_________________________________________________________________

COUNSEL

ARGUED: Clinton Joseph Miller, III, General Counsel, UNITED

TRANSPORTATION UNION, Cleveland, Ohio, for Appellee. ON

BRIEF: Keating Lewis Simons, III, Derek Farrell Dean, LAW

OFFICES OF KEATING L. SIMONS, III, Charleston, South Caro-

lina, for Appellant.

OPINION

HAMILTON, Circuit Judge:

Under the Railway Labor Act (RLA), 45 U.S.C. §§ 151-188, fed-

eral district courts have subject-matter jurisdiction over "major dis-

putes" in railway labor relations, but lack jurisdiction over "minor

disputes." See Consolidated Rail Corp. v. Railway Labor Executives'

Ass'n, 491 U.S. 299, 303-04 (1989). Instead, minor disputes are sub-

ject to mandatory arbitration before the National Railroad Adjustment

Board. See id. See also 45 U.S.C. § 153. Generally, when a party to

a labor dispute is seeking to create contractual rights, the dispute is

a major dispute; however, if the parties are merely seeking to enforce

contractual rights, the dispute is minor. See Consolidated Rail, 491

U.S. at 302.

In this case, the South Carolina Public Railway Commission (Rail-

way Commission) asserts that the district court lacked subject-matter

jurisdiction to issue a preliminary injunction requiring the Railway

Commission to pay rate-of-pay increases, lump sum payments, and

health and welfare adjustments contained in a national collective bar-

gaining agreement, because its dispute with the United Transportation

Union (the Union) is a minor one. We agree with the Railway Com-

mission that its dispute with the Union is fundamentally a dispute

seeking to enforce contractual rights and is, therefore, a minor dispute

under the RLA. Consequently, we vacate the preliminary injunction

and remand the case with instructions to dismiss for lack of subject-

matter jurisdiction.

I.

A.

Collective bargaining in the railroad industry is conducted on both

the national and local levels. Local collective bargaining involves

negotiations between a single employer and an individual union,

whereas national collective bargaining (commonly referred to as "na-

tional handling") involves multiple employers and multiple unions.

Unions and employers typically participate in national bargaining by

2

conferring their bargaining authority to multi-union and multi-carrier

bargaining agents. These agents then negotiate a single national

agreement which is binding on all the parties. See United Transp.

Union v. Illinois Cent. R.R. Co., 731 F. Supp. 1332, 1333 (N.D. Ill.

1990).

Collective bargaining in the railroad industry, on both the national

and local levels, is covered by the RLA, 45 U.S.C.§ 151-188. In

Detroit & Toledo Shore Line R.R. v. United Transp. Union, 396 U.S.

142 (1969), the Supreme Court explained the objectives of the RLA:

The Railway Labor Act was passed in 1926 to encourage

collective bargaining by railroads and their employees in

order to prevent, if possible, wasteful strikes and interrup-

tions of interstate commerce. The problem of strikes was

considered to be particularly acute in the area of"major dis-

putes," those disputes involving the formation of collective

agreements and efforts to change them. Rather than rely

upon compulsory arbitration, to which both sides were bit-

terly opposed, the railroad and union representatives who

drafted the Act chose to leave the settlement of major dis-

putes entirely to the processes of noncompulsory adjust-

ment. To this end, the Act established rather elaborate

machinery for negotiation, mediation, voluntary arbitration,

and conciliation. It imposed upon the parties an obligation

to make every reasonable effort to negotiate a settlement

and to refrain from altering the status quo by resorting to

self-help while the Act's remedies were being exhausted.

Id. at 148-49 (internal quotations and citations omitted).

Another railroad-industry practice that influenced the RLA was

that of negotiating open-ended agreements. Railroad collective bar-

gaining agreements do not expire on a given date but remain in effect

until one party proposes modifications of the agreement, whereupon

a new round of negotiations takes place. When the parties conclude

an agreement on those issues, the contract is modified accordingly.

See Trans World Airlines v. Independent Fed'n of Flight Attendants,

640 F. Supp. 1108, 1113 (W.D. Mo. 1986), aff'd , 809 F.2d 483 (8th

Cir. 1987), aff'd, 485 U.S. 175 (1988) (quoting Beatrice M. Burgoon,

3

"Mediation Under the Railway Labor Act," in The Railway Labor Act

at Fifty, 71, 92 (1977)). This procedure of proposing and negotiating

contract modifications is incorporated into Section 6 of the RLA, 45

U.S.C. § 156.

Section 6 requires employers and unions to give the other party a

30-day notice of proposed changes in agreements affecting rates of

pay, rules, or working conditions. See id. The filing of a Section 6

notice commences a period of mandatory negotiation, during which

the existing rates of pay, rules and working conditions generally may

not be altered until the controversy is resolved. See id. If the parties

cannot agree between themselves, the negotiations then go to media-

tion, usually under the auspices of the National Mediation Board. See

45 U.S.C. § 155. Sometimes, it becomes necessary for the President

to appoint an Emergency Board to make a report and recommenda-

tions to resolve the dispute. See 45 U.S.C.§ 160. See also Detroit &

Toledo Shore Line, 396 U.S. at 145, 150-51.

In summary, neither party may change the status quo with respect

to existing agreements without first filing a Section 6 notice, and must

maintain the status quo until the collective bargaining process is com-

plete. See Detroit & Toledo Shore Line, 396 U.S. at 150. The goal of

this scheme is to prevent the unilateral imposition of new contractual

terms. See Consolidated Rail, 491 U.S. at 306. It "delay[s] the time

when the parties can resort to self-help[,] provides time for tempers

to cool, helps create an atmosphere in which rational bargaining can

occur, and permits the forces of public opinion to be mobilized in

favor of a settlement without a strike or lockout." Detroit & Toledo

Shore Line, 396 U.S. at 150.

B.

The Railway Commission is an agency of the State of South Caro-

lina which operates a railroad that transports goods in interstate com-

merce. The Railway Commission is therefore a rail"carrier" as

defined by the RLA. See 45 U.S.C. § 151 First. The Union is an unin-

corporated labor organization which represents railroad employees

throughout the United States and Canada. Consequently, the Union is

a "representative" under the RLA. See 45 U.S.C. § 151 Sixth. The

Union represents employees of the Railway Commission.

4

On July 2, 1973, the Union and Railway Commission completed

a round of local collective bargaining and signed into effect an

"Agreement Between The South Carolina Public Railways [sic] Com-

mission and its Yard Employees Represented by United Transporta-

tion Union" (the 1973 Agreement). (J.A. 24). Article 42 provides that

the agreement would "become effective as of July 2, 1973 and remain

in effect until changed in accordance with the provisions of the Rail-

way Labor Act, amended." (J.A. 27). Two other provisions of that

agreement are in dispute in this case:

Article 1. Rates of pay:

(a) Rates of pay will be governed by those agreed upon by

the national agreement.

....

Article 34. Health and welfare:

(a) The national Health and Welfare Agreement consum-

mated between the Carriers Conference Committee and the

United Transportation Union, subject to any extensions or

modifications by constituted authority of the United Trans-

portation Union, is part of this agreement.

(J.A. 25-26).

The two national agreements which Articles 1(a) and 34(a) incor-

porate had been previously negotiated and were in force at the time

the 1973 Agreement was enacted. However, in January 1977, August

1977, February 1981, and July 1988, the Union triggered new rounds

of national handling by serving Section 6 notices on"practically all

railroads in the United States," which notices expressed a desire to

change existing agreements. (See J.A. 28-31). In each instance, the

Railway Commission chose not to participate in the national handling.

Instead, the Railway Commission and the Union enacted local

"standby agreements" that adopted the terms of the national agree-

ments when they were finalized.1 All these standby agreements are

essentially identical in wording, and provide in their entirety:

_________________________________________________________________

1 In 1988, the Railway Commission first declined to enter into a

standby agreement with the Union, wishing instead to negotiate locally

5

In accordance with provisions of the Railway Labor Act, as

amended, a notice was served under date of [date differed

for each standby agreement], on practically all rail-roads in

the United States, including [the South Carolina Public Rail-

way Commission], by the accredited representative of

employees of such railroads who are represented by the

United Transportation Union, of a desire to change existing

agreements as set forth in an attachment made part of the

aforesaid notice.

The management of [the South Carolina Public Railway

Commission] has not authorized and will not authorize any

of the conference committees selected by the railroads to

represent it in the handling of these matters. Therefore, it is

hereby agreed between the SC Public Railways Comm. Rail-

road and the accredited representative of the employees

involved, signatories hereto, that any settlement or disposi-

tion of these matters reached through national handling

shall be adopted and applied by the said SC Public Rail-

ways Comm. Railroad and the employees involved in the

same manner and made effective as of the same date as it

is adopted and applied on the railroads, parties to such

national handling.

(J.A. 31) (emphasis added). In each case, when the Union served its

Section 6 notices on the Railway Commission regarding the national

handling, the Union enclosed a proposed standby agreement.

When the contract moratorium covered by the 1988 Standby

Agreement expired in 1995, the Union and the Railway Commission

served Section 6 notices on each other, requesting changes in various

aspects of compensation and working conditions. In its notice, the

Railway Commission stated it would not enter into another standby

_________________________________________________________________

rather than accept the national agreement. The Railway Commission later

changed its mind and entered into a standby agreement on August 9,

1988. The 1988 Standby Agreement incorporated the national agreement

that was finally completed in 1991.

6

agreement as it had previously. Instead, the Railway Commission pre-

ferred to negotiate wage and benefits locally.

On May 8, 1996, a new national agreement was finalized. As in the

case of all previous national handling, the Railway Commission was

not a party to the national agreement. In a letter dated May 22, 1996,

the Union requested that, pursuant to Articles 1(a) and 34(a) of the

1973 Agreement, the Railway Commission implement the rates of

pay, lump-sum payments and health and welfare benefits contained in

the 1996 national agreement. On June 11, 1996, the Railway Com-

mission responded that the existing rates of pay would remain

unchanged. The Railway Commission stated that its 1995 Section 6

notice served notice upon the Union that the compensation elements

were to be negotiated, and that the Railway Commission had not

agreed to be bound by the national agreement. After an additional

exchange of correspondence between the parties, the Union brought

this action seeking declaratory and injunctive relief under the RLA to

force the Railway Commission to apply the pay, health and welfare

provisions of the 1996 national agreement.

In the district court, the Union moved for a preliminary status quo

injunction against the Railway Commission, and the Railway Com-

mission moved to dismiss. The Railway Commission argued that the

dispute was a "minor dispute" under the RLA and subject to manda-

tory arbitration. Accordingly, the Railway Commission argued that

the district court lacked subject-matter jurisdiction to hear the dispute.

See Consolidated Rail, 491 U.S. at 303-04.

In considering the parties' motions, the district court assessed

whether the dispute was a "major dispute" or"minor dispute" under

the RLA. The district court rejected the Railway Commission's sug-

gestion that the parties' "past practice" of entering into standby agree-

ments was evidence that the 1973 Agreement was not intended to

incorporate the terms of all future national agreements. Instead, the

district court found the 1973 Agreement to unambiguously adopt the

terms of all national agreements. The district court concluded that the

Railway Commission's position was "not arguable" and, therefore,

the dispute was a "major dispute." See id. at 305-07. The district court

therefore granted the Union's motion to preliminarily enjoin the Rail-

way Commission from refusing to pay the rate of pay increases and

7

other adjustments contained in the 1996 national agreement. The Rail-

way Commission appealed that order to this court. 2

II.

A.

We review the grant of a preliminary injunction for abuse of dis-

cretion. See Manning v. Hunt, 119 F.3d 254, 263 (4th Cir. 1997).

However, a district court's action that is based on an error of law is

a per se abuse of discretion. See United States v. McHan, 101 F.3d

1027, 1040 (4th Cir. 1996) (citing Koon v. United States, 116 S. Ct.

2035, 2047 (1996)), cert. denied, 117 S. Ct. 2468 (1997). Whether a

dispute is "major" or "minor" under the RLA is a question of law

which we review de novo. See CSX Transp., Inc. v. United Transp.

Union, 879 F.2d 990, 995 (2d Cir. 1989); International Ass'n of

Machinists v. Soo Line R.R., 850 F.2d 368, 374 (8th Cir. 1988) (en

banc). Moreover, we review the exercise of subject matter jurisdiction

de novo. See Ahmed v. United States, 30 F.3d 514, 516 (4th Cir.

1994).

B.

The key question at issue in this appeal is whether the parties' dis-

pute is "major" or "minor" under the RLA. The answer to this ques-

tion determines whether the district court had subject-matter

jurisdiction to hear the case. See Consolidated Rail, 491 U.S. at 303-

04 (stating that the National Railroad Adjustment Board has exclusive

jurisdiction to review minor disputes) (citing 45 U.S.C. § 153 First).

Because we conclude that the dispute is a minor one under the RLA,

we hold that the district court lacked subject-matter jurisdiction to

issue the preliminary injunction.

The RLA does not explicitly use the terms "major dispute" or

"minor dispute." Rather, these are terms adopted by the courts from

the vocabulary of railroad management and labor as a shorthand

_________________________________________________________________

2 At oral argument, we granted the Railway Commission's motion for

a stay of the district court's injunction pending the outcome of this

appeal.

8

method of describing two classes of controversies Congress had dis-

tinguished in the RLA. As we will explain more fully below, "major

disputes" seek to create contractual rights, while "minor disputes"

seek to enforce those rights. See id. at 302.

The statutory basis of the major dispute category is found in § 2

Seventh and § 6 of the RLA, 45 U.S.C. § 152 Seventh and § 156. The

former states that "No carrier, its officers or agents shall change the

rates of pay, rules, or working conditions of its employees, as a class

as embodied in agreements except in the manner prescribed in such

agreements" or through the mediation procedures established in RLA

§ 6. See Consolidated Rail, 491 U.S. at 302. When a major dispute

arises, the RLA requires the parties to undergo a lengthy process of

bargaining and mediation. 45 U.S.C. §§ 155 and 156. Until they have

exhausted those procedures, the parties are obligated to maintain the

status quo, and the district courts have subject-matter jurisdiction to

enjoin a violation of the status quo pending the outcome of the proce-

dures. See Consolidated Rail, 491 U.S. at 302-03.

Minor disputes, on the other hand, are based on RLA§ 2 Sixth and

§ 3 First (i), 45 U.S.C. §§ 152 Sixth and 153 First (i). These sections

establish conference and compulsory arbitration procedures for dis-

putes arising out of "grievances or out of the interpretation or applica-

tion of agreements concerning rates of pay, rules, or working

conditions." Id. § 152 Sixth. See Consolidated Rail, 491 U.S. at 303.

See also Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 254-55

(1994) (holding that "grievances" is merely a synonym for disputes

involving the interpretation or application of collective bargaining

agreements). When a minor dispute arises, it is subject to compulsory

and binding arbitration, and the jurisdiction of the National Railroad

Adjustment Board is exclusive. See 45 U.S.C.§ 153. See also

Consolidated Rail, 491 U.S. at 303-04. As a consequence, district

courts lack subject-matter jurisdiction over minor disputes. See id.

The difficulty is, of course, determining whether any given dispute

is a major or minor one. In Consolidated Rail , the Supreme Court

addressed the standard for differentiating between the two, see id. at

300, explaining that major disputes are

disputes over the formation of collective agreements or

efforts to secure them. They arise where there is no such

9

agreement or where it is sought to change the terms of one,

and therefore the issue is not whether an existing agreement

controls the controversy. They look to the acquisition of

rights for the future, not to assertion of rights claimed to

have vested in the past.

Id. at 302 (quoting Elgin, Joliet & E. Ry. Co. v. Burley, 325 U.S. 711,

723 (1945)) (emphasis added). Minor disputes, on the other hand,

contemplate[ ] the existence of a collective agreement

already concluded or, at any rate, a situation in which no

effort is made to bring about a formal change in terms or to

create a new one. The dispute relates either to the meaning

or proper application of a particular provision . . . or to an

omitted case. . . . In either case the claim is to rights

accrued, not merely to have new ones created for the future.

Id. at 303 (quoting Burley, 325 U.S. at 723) (emphasis added).

The Supreme Court concluded that the demarcation between major

and minor disputes is, therefore, neither the importance of the issue

nor the likelihood one party would resort to self-help. Instead, the line

drawn is whether one of the parties asserts that the terms of an exist-

ing agreement either establishes or refutes the presence of a right to

take the disputed action. "The distinguishing feature of such a case is

that the dispute may be conclusively resolved by interpreting the exist-

ing agreement." Id. at 305 (emphasis added). In other words, "major

disputes seek to create contractual rights, [while] minor disputes

[seek] to enforce them." Id. at 302.

The test the Supreme Court therefore creates in Consolidated Rail

is that "[w]here [a party] asserts a contractual right to take the con-

tested action, the ensuing dispute is minor . . . ." Id. at 307. However,

to prevent that party's characterization of the dispute from undercut-

ting the RLA's prohibition against unilateral imposition of contractual

terms, the Supreme Court added that the party's action must be "argu-

ably justified by the terms of the parties' collective-bargaining agree-

ment. Where, in contrast, the employer's claims are frivolous or

obviously insubstantial, the dispute is major." Id. at 305-07.

10

The Supreme Court stated that the railroad has the burden of estab-

lishing the exclusive arbitral jurisdiction under the RLA (and, conse-

quently, the lack of jurisdiction in the district court), but added that

the railroad's burden is "relatively light." Id. at 307. Relying on this

light burden and the language of the test, this court has concluded that

the Consolidated Rail test is "deliberately tilted toward finding a dis-

pute minor." Railway Labor Executives Ass'n v. Chesapeake W. Ry.,

915 F.2d 116, 119 (4th Cir. 1990). Moreover,

[a] district court need not, indeed should not, assess the rela-

tive merits of the parties' competing interpretations of the

contract in order to find the dispute "minor." If the railroad's

assertion that the collective bargaining agreement controls

the dispute rises above the "frivolous or obviously insub-

stantial," then the court must dismiss the action for lack of

subject matter jurisdiction.

Id. Finally, as the Supreme Court noted in Consolidated Rail,

although the union's interpretation could conceivably carry the day in

arbitration, that does not mean that the railroad's contractual interpre-

tation is frivolous or insubstantial. See Consolidated Rail, 491 U.S. at

317.

C.

Applying the above rules to the facts of this case, we must decide

whether the Railway Commission's position is "arguably justified by

the terms of the parties' collective-bargaining agreement" or, rather,

"frivolous or obviously insubstantial." See Consolidated Rail, 491

U.S. at 305-07. The Railway Commission is, of course, trying to char-

acterize the dispute as minor, to avoid the imposition of the injunc-

tion. The Railway Commission asserts that the dispute turns on the

interpretation of the 1973 Agreement, particularly in light of the par-

ties' "past practice" of enacting standby agreements. The Union, on

the other hand, is trying to characterize the dispute as major, by

asserting it is about adding new terms (those of the new national

agreement) to the 1973 Agreement. At first blush, the Union's charac-

terization appears to have merit: if the Union's interpretation of the

1973 Agreement prevails, the terms of the 1996 national agreement

would be added to the parties' 1973 Agreement. Thus, the dispute

11

may appear to be about the creation of contractual rights and, there-

fore, may appear to be major. However, on more careful examination,

it becomes clear that such a result is necessarily founded on the inter-

pretation of the 1973 Agreement. Indeed, the crux of the Union's

position is that the 1973 Agreement incorporates the compensation,

health and welfare benefits of all future national agreements. Thus,

the Union is, in reality, seeking to enforce the 1973 Agreement.3

The Consolidated Rail Court held that "[t]he distinguishing feature

of [a minor dispute] is that the dispute may be conclusively resolved

by interpreting the existing agreement." Id. at 305. Such is the case

here. The obligations and benefits of the parties cannot be determined

without first determining whether the parties incorporated all national

agreements into the 1973 Agreement. Incidentally, this determination

would also determine what the status quo currently is. If the 1973

Agreement is interpreted for the Railway Commission, then the Rail-

way Commission has no duty to provide the new wage and health

benefits. If, however, the 1973 Agreement is interpreted for the

Union, the benefits from the 1996 national agreement would already

be a part of the 1973 Agreement. In either case, no formal changes

in the existing 1973 Agreement would be required. See id. at 303

(stating that minor disputes involve no efforts to bring about a formal

change in an agreement or to create a new one).

_________________________________________________________________

3 Counsel for the Union admitted at oral argument they are seeking to

enforce the existing contract, not to form a new agreement. However,

counsel still characterized the case as a major dispute because the Union

was seeking to maintain the status quo. In so arguing, counsel cited to

the Supreme Court's decision in Detroit & Toledo Shore Line, 396 U.S.

142.

The Union's argument merely begs the question. If the dispute is a

major dispute, then the parties are obligated to"preserve and maintain

unchanged those actual, objective working conditions and practices,

broadly conceived, which were in effect prior to the time the pending

dispute arose and which are involved in or related to that dispute." See

id. at 153. However, the Supreme Court has never recognized the obliga-

tion to maintain the status quo during a minor dispute. See Consolidated

Rail, 491 U.S. at 304. Thus, "maintaining the status quo" has no meaning

until the dispute has been classified as major or minor.

12

In reality, the district court's decision turned entirely on the inter-

pretation of the 1973 Agreement and standby agreements. The district

court examined the provisions of all these local agreements and the

parties' alleged past practices, and found that the Railway Commis-

sion's interpretation was not arguable. Consequently, the district court

concluded that the Railway Commission was attempting to unilater-

ally alter the terms of the 1973 Agreement, constituting a major dis-

pute. This demonstrates that even the district court implicitly

recognized that this dispute was fundamentally about contract inter-

pretation. However, we believe the district court erred in concluding

the Railway Commission's interpretation was not arguable.

Examining the facts of this case, we believe the Railway Commis-

sion's position is "arguably justifiable" in light of the 1973 Agree-

ment and the standby agreements and, therefore, the Railway

Commission has met its light burden of establishing exclusive arbitral

jurisdiction. See id. at 307. First, the 1973 Agreement was entered

into at a time when a national agreement was already in existence,

and the 1973 Agreement refers to "the national agreement." (J.A. 25).

Moreover, every standby agreement was entered into at a time when

a national agreement was being negotiated, and each states that "any

settlement . . . reached through national handling shall be adopted [by

the Railway Commission and Union]." (J.A. 28-31). It is reasonable

to assume the parties to these local agreements knew that the national

agreement under consideration at the time would not be the last;

future rounds of national handling would be inevitable. Therefore, the

natural inclination, if the parties meant to incorporate all future

national agreements in the 1973 Agreement, would have been to refer

to "national agreements."4 Likewise, in the standby agreements, the

parties would have been naturally inclined to state that "all

settlements . . . reached through national handling will be adopted" by

the parties. (Compare J.A. 28-31). Instead, because there was a partic-

_________________________________________________________________

4 In other words, we believe the parties would have more naturally

stated in Article 1(a) of 1973 Agreement words to the effect that "Rates

of pay will be governed by those agreed upon by national agreements."

(Compare J.A. 25). Furthermore, in Article 34(a) the parties would have

naturally stated that "National Health and Welfare Agreements to be con-

summated between the [parties] . . . are a part of this agreement."

(Compare J.A. 26).

13

ular national agreement in contemplation by the parties, their natural

inclination was to state "the national agreement" and imply that par-

ticular agreement. See Consolidated Rail, 491 U.S. at 311 (stating that

collective-bargaining agreements may include implied, as well as

express, terms). The district court should have considered the implied

meaning of "the national agreement" in context with the history of the

1973 Agreement and the standby agreements.

However, in response to questions at oral argument, counsel for the

Union maintained it was entirely proper for the 1973 Agreement to

refer to the national agreement. Counsel argued that, since collective

bargaining agreements under the RLA never expire but are modified

only after Section 6 notice and negotiations, there is in reality only

one national agreement. Although this argument could conceivably

carry the day in arbitration, it only serves to further emphasize that

the parties dispute the meaning of the 1973 Agreement. It does not,

however, do anything to convince us that it is "frivolous or obviously

insubstantial" for the Railway Commission to interpret "the national

agreement" as being a particular agreement in effect or under consid-

eration at the time. See id. at 317 (stating that although the union's

interpretation could conceivably carry the day in arbitration, that does

not mean that the railroad's contractual interpretation is frivolous or

insubstantial).

Moreover, the record clearly shows that the parties used standby

agreements for every subsequent round of national handling. If the

1973 Agreement truly incorporates all future national agreements,

each of these standby agreements would be superfluous. If, on the

other hand, the 1973 Agreement only incorporated the national agree-

ment in effect at the time, each subsequent standby agreement would

have been necessary in order to adopt subsequent national agree-

ments. The record clearly shows it was the Union that instigated

adoption of each standby agreement. Although not determinative,

these facts are evidence that the parties' past practice was to incorpo-

rate new national agreements only through standby agreements, rather

than automatic incorporation into the 1973 Agreement. See generally,

id. at 311-20 (permitting, in appropriate instances, past practices of

the parties to be used as implied terms of their agreement).

14

Next, the first paragraph and the first sentence of the second para-

graph of each standby agreement explains the purpose of the standby

agreement:

In accordance with provisions of the Railway Labor Act, as

amended, a notice was served under date of [date differed

for each Standby agreement], on practically all rail-roads in

the United States, including [the South Carolina Public Rail-

way Commission], by the accredited representative of

employees of such railroads who are represented by the

United Transportation Union, of a desire to change existing

agreements as set forth in an attachment made part of the

aforesaid notice.

The management of [the South Carolina Public Railway

Commission] has not authorized and will not authorize any

of the conference committees selected by the railroads to

represent it in the handling of these matters. Therefore, it is

hereby agreed [that the national agreement will be adopted

by the parties].

(J.A. 28-31). These provisions, contained in every standby agreement

(and entirely ignored by the district court in its order), clearly explain

that: (1) the Railway Commission was not a party to the national han-

dling; and (2) the Railway Commission did not merely acquiesce to

the results of the national handling, but specifically agreed to adopt

that particular national agreement. This is additional evidence of the

parties' past practice which the district court should have considered

in interpreting the terms of the parties' agreement. See Consolidated

Rail, 491 U.S. at 311-20.

Finally, the record shows that the Union has admitted the standby

agreements were the parties' usual practice. When the Union initiated

the process leading up to the 1988 Standby Agreement, the Union's

General Chairperson, John W. Coulter, stated in a letter to the Rail-

way Commission that "[t]he standby agreement has always been the

norm concerning our seniority, work rules and rates of pay." (J.A.

32). He went on to explain why that was the case:"This agreement

is in alignment with South Carolina State Law 54-3-210 which pro-

vides for our work rules and rates of pay to be`in force relative to

15

like employees of interstate railroads operating in the same territory

with the terminal railroads authorized hereby.'" (J.A. 32) (emphasis

added). In other words, instead of merely accepting the national

agreement, the parties left open the possibility of agreeing locally to

more regional rates and rules.

The district court, relying on United Transp. Union v. Gateway W.

Ry., No. 95-0908-CV-W-1, 1995 WL 842729 (W.D. Mo. Nov. 14,

1995), discounted the Union's admission in this letter by holding that

the Railway Commission could not establish past practice with a sin-

gle letter. However, the district court failed to consider the other evi-

dence of past practice mentioned above, the implied and express

terms and meaning of the parties' various local agreements, and the

circumstances surrounding the enactment of these agreements. In

light of the above, we believe the Railway Commission has an "argu-

ably justifiable" right under the 1973 Agreement not to adopt the

1996 national agreement, because the 1973 Agreement arguably does

not automatically incorporate the new national agreement. However,

it is ultimately the arbitrator's role to decide that question. We merely

hold that the Railway Commission has met its "relatively light bur-

den" of establishing exclusive arbitral jurisdiction, see Consolidated

Rail, 491 U.S. at 307, given that the Consolidated Rail test is "delib-

erately tilted toward finding a dispute minor." Railway Labor

Executives, 915 F.2d at 119.

This conclusion may well result in a delay of the bargaining pro-

cess between the Railway Commission and the Union until the arbi-

tration process has interpreted the 1973 Agreement and the standby

agreements. Nevertheless, the Supreme Court has explicitly allowed

such a consequence to occur. The Consolidated Rail Court stated:

The effect of this ruling, of course, will be to delay collec-

tive bargaining in some cases until the arbitration process is

exhausted. But we see no inconsistency between that result

and the policies of the RLA. In most cases where the Board

determines that the employer's conduct was not justified by

the contract, the Board will be able to fashion an appropriate

compensatory remedy which takes account of the delay.

16

Consolidated Rail, 491 U.S. at 310 and n.8. In the meantime, the Rail-

way Commission need not pay the increased wage and health benefits

pending resolution of this minor dispute. See id. at 304 (stating that

the Supreme Court has never recognized in a minor-dispute situation

a statutory obligation on the part of an employer to maintain the

alleged status quo pending the arbitration board's decision).5

III.

Because we conclude that the present dispute is a"minor dispute"

under the RLA, we hold that the district court abused its discretion in

issuing the preliminary injunction against the Railway Commission.

See McHan, 101 F.3d at 1040; Manning, 119 F.3d at 263. We there-

fore vacate the preliminary injunction and remand with instructions

to dismiss the Union's action for lack of subject-matter jurisdiction.

See Railway Labor Executives, 915 F.2d at 119 (stating that if the rail-

road's assertion rises above the "frivolous or obviously insubstantial,"

then the court must dismiss the action for lack of subject matter juris-

diction).

VACATED AND REMANDED

_________________________________________________________________

5 Because of our disposition of the case on this issue, we need not reach

the other issue the Railway Commission raises in its appeal, namely

whether the district court's injunction deprives the Railway Commission

of selecting its own bargaining representatives.

17