Petition for Writ of Certiorari — City of Palestine, Texas, et al., Petitioners v. Union Pacific Railroad Company

No. ______

In the

Supreme Court of the United States

__________________

CITY OF PALESTINE, TEXAS AND

COUNTY OF ANDERSON, TEXAS,

Petitioners,

v.

UNION PACIFIC RAILROAD COMPANY,

Respondent.

__________________

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

__________________

PETITION FOR WRIT OF CERTIORARI

__________________

JAMES P. ALLISON

Counsel of Record

J. ERIC MAGEE

ALLISON, BASS & MAGEE, L.L.P.

A.O. Watson House

402 W. 12th Street

Austin, Texas 78701

(512) 482-0701 telephone

(512) 480-0902 facsimile

j.allison@allison-bass.com

Counsel for Petitioners

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

QUESTIONS PRESENTED

Whether the Fifth Circuit erred in retroactively

applying the preemption provisions of the Interstate

Commerce Commission Termination Act (ICCTA) to a

railroad’s voluntarily assumed contractual obligations

to a city and county, in conflict with precedent from

other circuits.

Specifically:

Question 1: In upholding the District Court’s grant

of summary judgment de novo, did the Fifth Circuit err

in retroactively applying the preemption provisions of

the ICCTA in conflict with Eighth and Ninth Circuit

precedent?

Question 2: Did the Fifth Circuit err in its analysis

of Union Pacific’s voluntary decision to assume the

obligations contained in the 1954 agreement, in conflict

with Fourth Circuit precedent?

ii

PARTIES TO THE PROCEEDING

Petitioners City of Palestine, Texas and County of

Anderson, Texas were the Defendants in the District

Court and the Defendants – Appellants in the Court of

Appeals.

Respondent Union Pacific Railroad Company was

the Plaintiff – Appellee in the Court of Appeals.

The style of the case, listed above, correctly reflects

the parties to this proceeding.

iii

STATEMENT OF RELATED CASES

• Union Pacific Railroad Company v. City of

Palestine, Texas; County of Anderson, Texas, No.

21-40445 (5th Cir.) (opinion issued and

judgment entered July 22, 2022).

• Union Pacific Railroad Company v. City of

Palestine, et al., No. 6:19-cv-574-JDK (E.D. Tex.)

(opinion issued and final judgment entered

March 26, 2021).

Apart from the proceedings directly on review in

this case, there are no other directly related

proceedings in any court.

iv

TABLE OF CONTENTS

QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . i

PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . ii

STATEMENT OF RELATED PROCEEDINGS . . . iii

TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . vii

PETITION FOR WRIT OF CERTIORARI . . . . . . . . 1

OPINIONS BELOW. . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATUTORY PROVISIONS INVOLVED . . . . . . . . 1

INTRODUCTION AND STATEMENT OF

THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Factual Background . . . . . . . . . . . . . . . . . . . . . . . 3

Course of Proceedings. . . . . . . . . . . . . . . . . . . . . . 5

REASONS FOR GRANTING THE PETITION . . . . 6

SUMMARY OF THE ARGUMENTS MERITING

REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Issue 1: In its de novo decision upholding the

District Court’s grant of summary judgment, the

Fifth Circuit erred in applying the ICCTA to

retroactively preempt agreements executed prior

to its enactment . . . . . . . . . . . . . . . . . . . . . . . . . . 8

v

Issue 2: The Fifth Circuit erred in its analysis of

Union Pacific’s voluntary decision to assume the

obligations contained in the 1954 agreement . . 14

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

APPENDIX

Appendix A Opinion and Judgment of the United

States Court of Appeals for the Fifth

Circuit

(July 22, 2022). . . . . . . . . . . . . . . . App. 1

Appendix B Order Denying Petitions for Rehearing

En Banc and Rehearing in the United

States Court of Appeals for the Fifth

Circuit

(August 19, 2022) . . . . . . . . . . . . App. 25

Appendix C Petition for Rehearing En Banc in the

United States Court of Appeals for the

Fifth Circuit

(August 8, 2022) . . . . . . . . . . . . . App. 27

Appendix D Petition for Rehearing in the United

States Court of Appeals for the Fifth

Circuit

(August 8, 2022) . . . . . . . . . . . . . App. 49

Appendix E Order Denying Motion for New Trial

in the United States District Court for

the Eastern District of Texas, Tyler

Division

(May 27, 2021). . . . . . . . . . . . . . . App. 71

vi

Appendix F Memorandum and Order with Final

Judgment in the United States

District Court for the Eastern District

of Texas, Tyler Division (March 25,

2021) . . . . . . . . . . . . . . . . . . . . . . App. 79

Appendix G Order and Opinion in the United

States District Court for the Eastern

District of Texas, Tyler Division

(February 3, 2021) . . . . . . . . . . . App. 87

vii

TABLE OF AUTHORITIES

CASES

Altria Group, Inc. v. Good,

555 U.S. 70, 129 S.Ct. 538,

172 L.Ed.2d 398 (2008) . . . . . . . . . . . . . . . . . . . . . 9

Bender v. Williamsport Area Sch. Dist.,

475 U.S. 534, 106 S.Ct. 1326,

89 L.Ed.2d 501 (1986) . . . . . . . . . . . . . . . . . . . . . . 8

Bowen v. Georgetown Univ. Hosp.,

488 U.S. 204 (1988). . . . . . . . . . . . . . . . . . . . . . . 10

City of Palestine, Tex. v. United States,

559 F.2d 408 (1977). . . . . . . . . . . . . . . . . . . . 14, 16

CSX Transp., Inc. v. Easterwood,

507 U.S. 658, 113 S.Ct. 1732,

123 L.Ed.2d 387 (1993) . . . . . . . . . . . . . . . . . . . . . 9

Franks Investment Co. LLC v. Union Pacific

Railroad,

593 F.3d 404 (5th Cir. 2010). . . . . . . . . . . . . . . . . 9

Garrido-Morato v. Gonzales,

485 F.3d 319 (5th Cir. 2007). . . . . . . . . . . . . . . . 13

Int’l & G.N. Ry. Co. v. Anderson County,

150 S.W. 239 (Tex. Civ. App.—Galveston 1912),

aff’d, 106 Tex. 60, 156 S.W. 499 (1913) . . . . . . . . 4

Landgraf v. USI Film Prods.,

511 U.S. 244, 114 S.Ct. 1483,

128 L.Ed.2d 229 (1994) . . . . . . . . . . . . . . . . . . 9, 10

viii

Lieberman v. Cambridge Partners, LLC,

432 F.3d 482 (3d Cir. 2005) . . . . . . . . . . . . . . 9, 10

Missouri Pac. R. Co. v. City of Palestine, Tex.,

435 U.S. 950, 98 S. Ct. 1576,

55 L. Ed. 2d 800 (1978) . . . . . . . . . . . . . . . . . . . . . 3

NAACP v. City of Kyle, Tex.,

626 F.3d 233 (5th Cir.2010) . . . . . . . . . . . . . . . . . 8

Owner-Operator Indep. Drivers Ass’n, Inc. v.

New Prime, Inc.,

339 F.3d 1001 (8th Cir. 2003). . . . . . . . . 10, 11, 12

Owner-Operator Indep. Drivers Ass’n, Inc. v.

New Prime, Inc., 541 U.S. 973, 124 S. Ct. 1878,

158 L. Ed. 2d 467 (2004) . . . . . . . . . . . . . . . . . 6, 12

PCS Phosphate Co. v. Norfolk S. Corp.,

559 F.3d 212 (4th Cir. 2009). . . . . . . . 7, 17, 18, 19

Rivas v. Rail Delivery Serv., Inc.,

423 F.3d 1079 (9th Cir. 2005). . . . . . . . . . . . . 6, 13

Sample v. Morrison,

406 F.3d 310 (5th Cir. 2005). . . . . . . . . . . . . . . 8, 9

Sommers Drug Stores Co. Emp. Profit Sharing

Trust v. Corrigan,

883 F.2d 345 (5th Cir. 1989). . . . . . . . . . . . . . . . . 9

STATUTES

28 U.S.C. § 1254(1). . . . . . . . . . . . . . . . . . . . . . . . . . . 1

49 U.S.C. § 10102(9). . . . . . . . . . . . . . . . . . . . . . . . 1, 2

49 U.S.C. § 10501(b). . . . . . . . . . . . . . . . . . . . . . . . . . 2

ix

RULES

Fed.R.Civ.P. 12(h)(3) . . . . . . . . . . . . . . . . . . . . . . . . . 8

1

PETITION FOR WRIT OF CERTIORARI

The City of Palestine, Texas, and the County of

Anderson, Texas, petition for a writ of certiorari to

review the judgment of the United States Court of

Appeals for the Fifth Circuit in this case.

OPINIONS BELOW

The Fifth Circuit’s opinion is reported at and

reproduced at App. A. The Fifth Circuit’s denial of

petitioner’s motion for panel rehearing and motion for

en banc consideration is reproduced at App. B. The

opinions of the District Court for the Eastern District

of Texas – Tyler Division are reproduced at App. E and

F.

JURISDICTION

The Court of Appeals entered judgment on July 22,

2022. App. A. The court denied a timely petition for

rehearing en banc on August 19, 2022. App. B. This

Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

49 U.S. Code § 10102(9) provides in relevant part:

(9) “transportation” includes—

(A) a locomotive, car, vehicle, vessel,

warehouse, wharf, pier, dock, yard, property,

facility, instrumentality, or equipment of any

kind related to the movement of passengers

or property, or both, by rail, regardless of

ownership or an agreement concerning use;

and

2

(B) services related to that movement,

including receipt, delivery, elevation,

transfer in transit, refrigeration, icing,

ventilation, storage, handling, and

interchange of passengers and property; and

49 U.S. Code § 10501(b) provides in relevant part:

(b) The jurisdiction of the Board over—

(1)

transportation by rail carriers, and the

remedies provided in this part with respect

to rates, classifications, rules (including car

service, interchange, and other operating

rules), practices, routes, services, and

facilities of such carriers; and

(2)

the

construction,

acquisition,

operation, abandonment, or discontinuance

of spur, industrial, team, switching, or side

tracks, or facilities, even if the tracks are

located, or intended to be located, entirely in

one State, is exclusive. Except as otherwise

provided in this part, the remedies provided

under this part with respect to regulation of

rail transportation are exclusive and preempt

the remedies provided under Federal or State

law.

INTRODUCTION AND STATEMENT OF THE

CASE

Over a century ago, a small Texas town staked its

fortune on the promises of a railroad. In exchange, the

town and its citizens pledged money and land to the

railroad. For over a century, these vested contractual

3

rights have weathered legal scrutiny in the highest

courts in the land1. Union Pacific voluntarily assumed

the Palestine assets and obligations decades ago.

The Fifth Circuit’s decision nullifying the

agreement and a century of legal precedent is

significant and substantially important, and, if upheld,

will establish a genuine and current split of authority

clouding the issue of retroactive application of federal

preemption. The Fifth Circuit’s error, if left

uncorrected, will have widespread and immediate

impact on freely negotiated agreements with rail

carriers and other entities subject to preemptive

enactments under ICCTA and other federal statutes.

ICCTA created the Surface Transportation Board and

established the current regulatory system for rail

transportation, a vital national industry. The incorrect

construction of ICCTA by the Fifth Circuit,

retroactively applying the preemption provisions of

ICCTA and incorrectly interpreting the exception for

the voluntary assumption of contracts in direct conflict

with other circuits, will create confusion and

uncertainty among participants in contracts within the

transportation sector.

Factual Background

This contractual relationship arose in 1872 when

the Houston & Great Northern Railroad Company

(H&GN) contracted and agreed with the citizens of the

City of Palestine, Texas, to extend its rail line from

1

The 1954 Agreement was upheld by the Supreme Court in

Missouri Pac. R. Co. v. City of Palestine, Tex., 435 U.S. 950, 98

S. Ct. 1576, 55 L. Ed. 2d 800 (1978)(pet. denied).

4

Houston, north to Palestine intersecting with a line

owned by the International Railroad Company, to

establish a depot in Palestine, and thereafter keep and

maintain, the general offices, machine shops and round

houses of H&GN at the City of Palestine in

consideration of the promise and agreement by

Anderson County to issue interest bearing bonds and

transfer the proceeds to the railroad upon the

completion of the rail line, construction of the depot

and commencement of regular running of cars to the

depot. Int’l & G.N. Ry. Co. v. Anderson County, 150

S.W. 239, 241 (Tex. Civ. App.—Galveston 1912), aff’d,

106 Tex. 60, 156 S.W. 499 (1913).

Then in 1954, after the railroad’s successive

bankruptcies, reorganizations, and legal attacks on the

agreement, International and Great Northern Railroad

(I&GN), the City of Palestine, Anderson County, and

the committee representing the class of citizens of

Palestine and Anderson County executed an

Agreement (“The 1954 Agreement”) that replaced the

prior agreements, relieved the railroad from its

obligation to maintain its corporate headquarters in

Palestine and substituted a requirement that the

railroad employ a percentage of employees within

certain classifications at Palestine. Id.

Petitioners rely particularly on facts concisely

stated in district court opinion as follows:

Nearly thirty years passed, and then several key

events occurred. In 1982, Union Pacific acquired

MoPac. Id., Ex. 10 at 1 ¶ 4. In 1995, Congress

passed the ICCTA, establishing the Surface

Transportation Board to regulate rail carriers

5

and preempting state and local laws that come

within the Board’s jurisdiction. Pub. L.No. 10488, 109 Stat. 803 (1995); Tex. Cent. Bus. Lines

Corp. v. Midlothian, 669 F.3d 525, 530 (5th Cir.

2012). In 1997, Union Pacific merged into

MoPac. Docket No. 39, Ex. 10 at 1 ¶ 4.

App. G, pp.91-92.

Course of Proceedings

In November 2019, Union Pacific filed suit seeking

declaratory relief that the ICCTA preempts its

assumed obligations under the 1954 Agreement

between the International & Great Northern Railroad

and the City of Palestine, Anderson County, and a

citizens committee. Union Pacific also sought an

injunction preventing Palestine and Anderson County

from enforcing the Agreement.

Palestine and Anderson County filed a motion to

dismiss and a motion for judgment on the pleadings.

The district court denied these motions.

Union Pacific and Palestine and Anderson County

filed motions for summary judgment. The district court

granted the Union Pacific motion, holding that the

1954 Agreement was expressly and impliedly

preempted. It also concluded that the 1954 Agreement

did not meet the voluntary contract exception to

preemption. The district court enjoined Palestine and

Anderson County from enforcing the 1954 Agreement

against Union Pacific.

Palestine and Anderson County appealed the

district court’s grant of summary judgment for Union

6

Pacific and the denials of their motion to dismiss,

motion for judgment on the pleadings, and cross-motion

for summary judgment.

On July 22, 2022, in a de novo published opinion,

the Court of Appeals for the Fifth Circuit denied relief

on these issues, affirming the decision of the U.S.

District Court for the Eastern District of Texas. On

August 19, 2022, the court denied Petitioners’ request

for rehearing and for en banc consideration. Thus, this

Petition is timely if filed by November 17, 2022.

REASONS FOR GRANTING THE PETITION

If upheld, the Fifth Circuit opinion decided two

important questions of first impression within the Fifth

Circuit: First, whether Congress intended for an

agreement entered decades before the enactment of the

Interstate Commerce Commission Termination Act

(“ICCTA”) to be retroactively preempted. Other

Circuits have considered and rejected the retroactive

application of ICCTA to contracts executed before the

enactment of the statute. With no evidence or analysis

to support that Congress intended a retroactive

application of ICCTA to prior contracts, the Fifth

Circuit decision will impermissibly obviate the

substantial rights bargained for and agreed to by the

railroad and the City, County, and citizens decades

prior to contemplation of the ICCTA, and create a

substantial conflict with direct precedent in the Eighth

and Ninth Circuits2.

2

See discussions of New Prime (Eighth Cir.), and Rivas (Ninth

Cir.), infra, Arg. 1.

7

Second, the Fifth Circuit decision also determines

whether the ICCTA may be applied to relieve a railroad

of contractual obligations that it assumed knowingly

and voluntarily through a merger and under which the

parties thereto have substantially performed to the

present. The Fifth Circuit has not previously applied

federal preemption under the ICCTA to business and

economic development contracts between rail carriers

and other entities including local governments. The

decision by the Fifth Circuit in this case would allow

railroads to freely assume and then avoid their

voluntary contractual obligations, solely upon the basis

that more profitable opportunities have developed.

Although the sole authority cited by the Fifth Circuit

decision is a Fourth Circuit case3, the Fifth Circuit

reaches a contrary result. Such an extreme departure

from the established precedent in other circuits merits

the consideration of this Court to secure and maintain

uniformity of the Courts’ decisions and resolve a direct

conflict with the decisions of other circuits.

SUMMARY OF THE ARGUMENTS

MERITING REVIEW

Issue 1: In Its de novo decision upholding the U.S.

District Court’s grant of summary judgment, the Fifth

Circuit erred in applying the ICCTA to retroactively

preempt agreements executed prior to its enactment.

Issue 2: The Fifth Circuit erred in its analysis of the

voluntary decision by Union Pacific to assume the

obligations contained in the 1954 agreement.

3

See discussion regarding PCS Phosphate, infra, Arg. 2

8

ARGUMENT

Issue 1: In its de novo decision upholding the

District Court’s grant of summary judgment, the

Fifth Circuit erred in applying the ICCTA to

retroactively preempt agreements executed prior

to its enactment.

The Fifth Circuit decision holds that the ICCTA

retroactively preempted a pre-existing contract. This

holding is fundamental to federal jurisdiction in this

matter. The Court has an independent obligation to

examine its own jurisdiction and the district

court’s jurisdiction. See Fed.R.Civ.P. 12(h)(3); Bender

v. Williamsport Area Sch. Dist., 475 U.S. 534, 541, 106

S.Ct. 1326, 89 L.Ed.2d 501 (1986) (“[E]very federal

appellate court has a special obligation to satisfy itself

not only of its own jurisdiction, but also that of the

lower courts in a cause under review, even though the

parties are prepared to concede it.”) (internal quotation

marks omitted). Courts of Appeal review questions of

standing de novo. NAACP v. City of Kyle, Tex., 626

F.3d 233, 236 (5th Cir.2010).

The decisions by the Fifth Circuit and the District

Court divest the Petitioners and the citizens of

established contractual rights by imposing a

retroactive application of the ICCTA which is

unsupported by Fifth Circuit precedent and contrary to

other precedent. Absent the retroactive application of

ICCTA, Respondent Union Pacific has no federal cause

of action and therefore lacks standing. Because

standing is an essential component of federal subjectmatter jurisdiction, the lack of standing can be raised

at any time by a party or by the court. See Sample v.

9

Morrison, 406 F.3d 310, 312 (5th Cir. 2005) (citing

Sommers Drug Stores Co. Emp. Profit Sharing Trust v.

Corrigan, 883 F.2d 345, 348 (5th Cir. 1989)).

When reviewing a claim of federal preemption, a

court begins with the plain language of the ICCTA,

“which necessarily contains the best evidence of

Congress’ pre-emptive intent.” Franks Investment Co.

LLC v. Union Pacific Railroad, 593 F.3d 404, 408 (5th

Cir. 2010) (citing CSX Transp., Inc. v. Easterwood, 507

U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993).

There is a presumption against pre-emption in “areas

of law traditionally reserved to the states, like police

powers and property law…” Id. (quoting Altria Group,

Inc. v. Good, 555 U.S. 70, 129 S.Ct. 538, 543, 172

L.Ed.2d 398 (2008)).

The Fifth Circuit opinion provides no analysis or

basis justifying the retroactive application of the

ICCTA, and the record clearly reflects that the 1954

Agreement was executed long before the contemplation

of the ICCTA and Union Pacific’s acquisition of the

Palestine assets and obligations. “The Supreme Court

has frequently noted that there is a ‘presumption

against retroactive legislation [that] is deeply rooted in

our jurisprudence.”’ Lieberman v. Cambridge Partners,

LLC, 432 F.3d 482, 488 (3d Cir. 2005) (quoting

Landgraf v. USI Film Productions, 511 U.S. at 265).

“Elementary considerations of fairness dictate that

individuals should have an opportunity to know what

the law is and to conform their conduct according ... .”

Landgraf, 511 U.S. at 265. “Consequently,

‘congressional enactments will not be construed to have

retroactive effect unless their language requires this

10

result.”’ Lieberman, 432 F.3d at 488 (quoting Bowen

v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988)).

Courts should be reluctant to disrupt settled

expectations or alter the legal consequences of past

actions. Landgraf, 511 U.S. at 265-66. Cases involving

contract and property rights require predictability and

stability and are particularly inappropriate candidates

for statutory retroactivity. Id. at 270-72. Consequently,

the presumption against statutory retroactivity has

special force in the area of legislative interference with

property and contract rights. Id. at 272.

This issue of the potential retroactive effect of

ICCTA on contracts was explicitly decided soon after

its enactment in both the Eighth and Ninth Circuits,

which specifically held that there is no evidence that

Congress intended for the ICCTA to apply to pre–1996

contracts, and that this lack of standing deprived the

district courts of jurisdiction. First, the Eighth Circuit

ruled against retroactive application to pre-existing

contracts in Owner-Operator Indep. Drivers Ass’n, Inc.

v. New Prime, Inc., holding that:

[A] presumption against retroactive legislation

is deeply rooted in our jurisprudence.” Landgraf

v. USI Film Prods., 511 U.S. 244, 265, 114 S.Ct.

1483, 128 L.Ed.2d 229 (1994) (citation omitted).

The rationale for this presumption is that

“[e]lementary considerations of fairness dictate

that individuals should have an opportunity to

know what the law is and to conform their

conduct accordingly.” Id. As such, the Supreme

Court has provided a framework for determining

when a federal statute applies to conduct

11

predating the statute’s enactment. First, a court

must determine if Congress has expressly

prescribed the statute’s proper reach. Id. at 280,

114 S.Ct. 1483. If Congress has prescribed the

reach, “there is no need to resort to judicial

default rules.” Id. If not, a court must examine

whether the statute would have a retroactive

effect; i.e., “whether it would impair rights a

party possessed when he acted, increase a

party’s liability for past conduct, or impose new

duties with respect to transactions already

completed.” Id. If the statute would do any of

these things, the presumption is that the statute

does not govern, absent clear congressional

intent otherwise. Id.

With regard to the ICCTA, Congress has not

expressly prescribed the statute’s reach.

Therefore, we must proceed to the second step:

whether application of the statute in this case

would have a retroactive effect. We agree with

the district court that private rights of action for

damages based on the ICCTA are limited to

actions involving agreements executed after the

ICCTA’s effective date; otherwise, the statute

has a retroactive effect.

Prior to the ICCTA, only the ICC could bring

claims against motor carriers for failure to

comply with the applicable regulations. The

ICCTA shifts this power and permits individual

Owner–Operators to bring defendants directly

into court. We find that this creates an

impermissible retroactive effect.

12

This issue is analogous to the issue presented in

Hughes Aircraft Co. v. United States, 520 U.S.

939, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997), in

which the Supreme Court held that when a

statute expanded the class of plaintiffs who

could bring claims, the statute altered the

defendant’s substantive rights and therefore had

a retroactive effect. Id. at 950, 117 S.Ct. 1871

(“In permitting actions by an expanded universe

of plaintiffs with different incentives, the [new

statute] essentially creates a new cause of

action, not just an increased likelihood that an

existing cause of action will be pursued.”)

(citation omitted). Here, by permitting

Owner–Operators to bring their own actions

against motor carriers, the ICCTA expands the

class of plaintiffs who could bring claims,

thereby altering the motor carriers’ substantive

rights. But see Owner–Operator Indep. Drivers

Ass’n, Inc. v. Arctic Express, Inc., No.

97–CV–750, 2003 WL 21645754 (S.D.Ohio July

11, 2003).

339 F.3d 1001, 1006–07 (8th Cir. 2003). Consequently,

the New Prime Petitioners’ Petition for writ of

certiorari to the United States Supreme Court was

denied. See Owner-Operator Indep. Drivers Ass’n, Inc.

v. New Prime, Inc., 541 U.S. 973, 124 S. Ct. 1878, 158

L. Ed. 2d 467 (2004).

The Ninth Circuit then quickly followed this

precedent, also holding that the ICCTA could only

preempt contracts executed after its enactment,

reasoning that,

13

We find persuasive New Prime’s conclusion that

in this case, as in Hughes, retroactively

expanding the universe of potential plaintiffs

would have an impermissible retroactive effect.

Because application of the ICCTA to pre–1996

agreements would increase Defendants’

potential liability, the statute has a retroactive

effect. See New Prime, 339 F.3d at 1007. In the

absence of evidence of congressional intent to

create such an effect, we apply a presumption

that the statute does not operate

retroactively. See Landgraf, 511 U.S. at 280,

114 S.Ct. 1483. Because there is no evidence

that Congress intended for the ICCTA to apply

to pre–1996 contracts, we hold that ICCTA’s

private right of action for damages applies only

to contracts executed after its enactment.

Rivas v. Rail Delivery Serv., Inc., 423 F.3d 1079,

1084–85 (9th Cir. 2005).

The Fifth Circuit has held that, “[t]he standard for

finding a statute expressly retroactive is demanding ...

the Supreme Court has suggested that retroactivity

has only been found in “statutory language that was so

clear that it could sustain only one interpretation.”

(Internal citations omitted).

Garrido-Morato v.

Gonzales, 485 F.3d 319, 322 (5th Cir. 2007). Thus, the

dispositive question is whether Congress has expressed

its clear intent that the ICCTA apply retroactively to

contracts formed before its enactment.

Though it fails to identify any statutory language

suggesting Congress’ intent, the Fifth Circuit decision

grants preemption of a 1954 Agreement executed over

14

40 years prior to the existence of the ICCTA. The 1954

Agreement was valid and enforceable at the time of its

execution, and the Fifth Circuit upheld it in City of

Palestine, Tex. v. United States. 559 F.2d 408, 415

(1977). For many years, the parties have relied upon

the terms of the agreement and had the full

opportunity to know the law and conform their conduct

accordingly. A retroactive application of the ICCTA to

the 1954 Agreement will alter Petitioners’ substantive

rights, relieve the railroad of its assumed obligations,

and create a new cause of action that did not exist prior

to enactment. The Fifth Circuit’s decision in this case

to retroactively apply the preemption provisions of the

ICCTA to preempt the 1954 Agreement, if upheld by

this Court, would undoubtedly create a split of

authority between the circuits. Thus, this Court should

grant review to examine this issue and correct this

improper construction of the law.

Issue 2: The Fifth Circuit erred in its analysis of

Union Pacific’s voluntary decision to assume the

obligations contained in the 1954 agreement.

The Fifth Circuit’s analysis of Union Pacific’s

voluntary decision4 to assume the 1954 Agreement

erroneously focused solely on the decisions of Union

Pacific’s many predecessors in the years preceding its

1954 execution, rather than on Union Pacific’s

decision—much later—to assume these obligations

from Missouri Pacific. In holding that the Agreement

was not voluntary, the Fifth Circuit briefly

summarized a timeline pertaining to these predecessor

4

See Memorandum Opinion, III.(C), pp. 14-16.

15

companies with little mention of Union Pacific’s wholly

voluntary assumption of these contractual obligations:

Approximately three decades passed, and in

1982, Union Pacific acquired MoPac. Congress

passed the Interstate Commerce Commission

Termination Act (“ICCTA”) which established

the Surface Transportation Board (“STB”) to

regulate rail carriers and preempted various

state and local laws that were within the STB’s

jurisdiction. 49 U.S.C. § 10501(b). In 1997,

Union Pacific merged with MoPac.

App. A, p. 7. The Fifth Circuit erroneously relies on the

repealed Texas Office Shops Act as being the state

regulation meriting preemption. Without any analysis

of the actions by Union Pacific, the Opinion concludes

that “[t]he voluntary contract exception does not apply

because Union Pacific was prohibited from using its

own “determination and admission.” Id, p.16.

This reasoning is flawed because any regulatory

scheme in place when International & Great Northern

(I&GN) signed this agreement and when it was

assumed by Missouri Pacific cannot negate Union

Pacific’s later voluntary decision to assume it. In other

words, though state law may have influenced its

predecessors’ business decisions to continue Palestine

operations through the decades, Union Pacific cannot

escape the fact that it freely and voluntarily merged

with MoPac, knowingly acquiring the assets at

Palestine and assuming the obligations of the 1954

Agreement in the process.

16

The Fifth Circuit cites no regulation or statute

compelling this acquisition and the assumption of the

assets and obligations of MoPac by Union Pacific. The

merger took place over several years between large,

sophisticated corporations acutely aware of the

Palestine obligations, the issue having been litigated

multiple times at various forums.5 Nevertheless, Union

Pacific elected to consummate the merger, assume the

obligations of the 1954 Agreement and substantially

comply with the agreement until the present litigation.

Thus, there is no evidence that state law thrust these

obligations upon Union Pacific.6

In fact, at the time of their merger in 1997, both

railroads had the same right before the Surface

Transportation Board as MoPac had before the ICC in

1977, which was that if the 1954 Agreement interfered

with the merger, either could have requested an

exemption from its legal obligations under the 1954

Agreement. Instead, Union Pacific, as the successor in

the merger, elected not to seek relief from the STB7 and

voluntarily assumed MoPac’s obligations to third

5

See City of Palestine, Tex. v. United States, 559 F.2d at 415

(1977), FN 1. (Overturning ICC’s ruling that the contractual

obligations in Palestine were preempted, finding that the

“[a]greement provides for a downward adjustment of the

percentage of people employed in Palestine in the case of merger”).

6

Significantly, the impetus for the negotiation of the 1954

Agreement was a provision in the federal bankruptcy statute, not

the Texas Shops Act. Id.

7

Presumably due to UP’s calculation that a favorable ruling from

the STB would be similarly struck down by the Fifth Circuit based

on its then-recent precedent in City of Palestine.

17

parties including its obligations to the City, County and

the citizens. It is undisputed that Union Pacific freely

and voluntarily accepted the obligations of the 1954

Agreement to obtain the benefit of the assets held by

MoPac, including the lucrative line through Palestine.

The Fifth Circuit’s finding regarding the

voluntariness of International & Great Northern’s

decision to modify and vacate the 1914 Judgment and

enter into the 1954 Agreement allowing I&GN to move

its headquarters from Palestine and relieving it of all

obligations to maintain any facilities in Palestine is not

controlling or relevant on the issue of voluntary

assumption by Union Pacific. The gravamen of the

analysis lies in Union Pacific’s later decision to

voluntarily consummate the merger with MoPac (the

successor to I&GN) and their subsequent election not

to request relief from the STB. In failing to consider the

voluntary nature of Union Pacific’s 1997 assumption of

the obligations in the 1954 Agreement, the Fifth

Circuit erred and deviated from the proper

determination of a voluntary agreement under the

ICCTA.

Union Pacific’s assumption of the agreement and

later course of performance undoubtedly reflects the

carrier’s “own determination and admission that the

agreement would not unreasonably interfere with

interstate commerce”, as even the STB itself has

recognized on similar facts. See PCS Phosphate Co. v.

Norfolk S. Corp. 559 F.3d 212, 221 (4th Cir. 2009). In

upholding the STB’s ruling, the Fourth Court of

Appeals held that,

18

[t]his is not to say that a voluntary agreement

could never constitute an “unreasonable

interference” with rail transportation, but the

facts of this case indicate that any interference

is not unreasonable—the parties contemplated

delayed enforcement of the agreements, Norfolk

Southern received the benefit of the agreements

for over 40 years, and the agreements explicitly

stated that the “relocation will not affect the

ability of [Old NS] to comply with its legal

obligation to serve any existing customer then

on its line.” In this instance, therefore, Norfolk

Southern cannot use the ICCTA to “shield[] it

from its own commitments.” See Township of

Woodbridge, 2000 WL 1771044, at *3.

Id. at 221-22. It is difficult to imagine a clearer

representation of a carrier’s “determination and

admission” than Union Pacific’s pattern of unilateral

voluntary decisions before and after its acquisition of

the assets and obligations at Palestine.

Thus, the Fifth Circuit has misapplied its only cited

authority, PCS Phosphate (involving a perpetual

covenant of easement that, so long as “used for railroad

purposes…shall not be abandoned”. Id.). In finding

against preemption, the Fourth Circuit Court provided

the proper analysis:

Voluntary agreements between private parties,

however, are not presumptively regulatory acts,

and we are doubtful that most private contracts

constitute the sort of “regulation” expressly

preempted by the statute. If contracts were by

definition “regulation,” then enforcement of

19

every contract with “rail transportation” as its

subject would be preempted as a state law

remedy “with respect to regulation of rail

transportation.” 49 U.S.C. § 10501(b). Given the

statutory definition of “transportation,” this

would include all voluntary agreements about

“equipment of any kind related to the movement

of passengers or property, or both, by

rail.” See 49 U.S.C. § 10102(9) (defining

“transportation”). If enforcement of these

agreements were preempted, the contracting

parties’ only recourse would be the “exclusive”

ICCTA remedies. But the ICCTA does not

include a general contract remedy [footnote

omitted]. Such a broad reading of the

preemption clause would make it virtually

impossible to conduct business, and Congress

surely would have spoken more clearly, and not

used the word “regulation,” if it intended that

result.

Id. 218–19. Here, because Union Pacific voluntarily

assumed the obligations of the 1954 Agreement, the

undisputed facts weigh even stronger against

preemption. The erroneous construction of voluntary

assumption applied by the Fifth Circuit will enable

contractual parties, such as Union Pacific, to

unilaterally renege on voluntary commitments

following decades of reliance and performance.

Preemption under the ICCTA is designed to provide

a shield from local interference with railroad

transportation. Congress did not intend for preemption

to act as a sword to release carriers from their own

20

voluntarily-acquired contractual obligations, especially

in economic development agreements. The Fifth Circuit

has not previously applied federal preemption under

the ICCTA to business and economic development

contracts between rail carriers and other entities

including local governments. The decision by the Fifth

Circuit in this case would establish a precedent to

allow railroads to assume and then freely avoid their

voluntary contractual obligations, solely upon the basis

that more profitable opportunities may have developed.

At least for purposes of summary judgment,

uncontradicted evidence of the voluntary nature of the

assumption of such obligations by Union Pacific

presents an issue of material fact and warrants a full

evidentiary hearing. The Fifth Circuit decision

affirming summary judgment on the issue of the

voluntary assumption of the obligations of the 1954

Agreement is a significant error in the proper

construction of the ICCTA and merits the consideration

of this Court.

The Supreme Court should therefore grant this

petition for writ of certiorari, resolve the conflict

between the circuits on these issues, correct the Fifth

Circuit’s erroneous holding in this case and remand for

a proper construction of the federal statutes.

CONCLUSION

For the foregoing reasons, the Court should grant a

writ of certiorari.

21

Respectfully submitted,

JAMES P. ALLISON

Counsel of Record

J. ERIC MAGEE

ALLISON, BASS & MAGEE, L.L.P.

A.O. Watson House

402 W. 12th Street

Austin, Texas 78701

(512) 482-0701 telephone

(512) 480-0902 facsimile

j.allison@allison-bass.com

e.magee@allison-bass.com

Counsel for Petitioners

November 17, 2022