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

Supreme Court briefNov 17, 2022

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APPENDIX

TABLE OF CONTENTS

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

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

App. 1

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 21-40445

[Filed: July 22, 2022]

_____________________________________________

UNION PACIFIC RAILROAD COMPANY,

)

Plaintiff—Appellee,

)

versus

)

CITY OF PALESTINE, TEXAS;

COUNTY OF ANDERSON, TEXAS,

)

Defendants—Appellants. )

_____________________________________________)

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 6:19-cv-574

Before HIGGINBOTHAM, DENNIS, and GRAVES, Circuit

Judges. JAMES E. GRAVES, JR. Circuit Judge:

Union Pacific Railroad Company (“Union Pacific”)

seeks to end its operations in Palestine, Texas, but has

been unable to do so because a 1954 Agreement

between its predecessor and Defendants City of

Palestine (“Palestine”) and Anderson County, Texas

(“Anderson County”) has prevented it from leaving.

App. 2

Because the 1954 Agreement is preempted by the

Interstate Commerce Commission Termination Act

(“ICCTA”), Union Pacific is free to leave. We affirm.

The background of this case spans 150 years, and

we have discussed much of it in prior opinions. We

nonetheless recount it here to illuminate the

intersection between the parties’ purported contractual

agreements and increased federal regulation of the

railroad system.

A. The 1872 Original Agreement

In the 1870s, during the boom of westward railroad

expansion, small towns bid for railroad depots and

stops as essential parts of their continued economic

power and survival. One of these towns was Palestine,

Texas. Palestine was uniquely positioned to serve as

the crossroads between the International Railroad,

approaching Palestine from Hearne, Texas to the

southwest, and the Houston and Great Northern

Railroad Company (“HGNR”), approaching Palestine

from Houston to the south. See City of Palestine v.

United States, 559 F.2d 408, 410 (5th Cir. 1977). In

1872, Palestine and Anderson County orally agreed to

raise $150,000 in bonds from their citizens to finance

the railroad. Id. In turn, HGNR agreed to “run[] cars

regularly” to Palestine, construct a depot, and “locate

and establish and forever thereafter keep and

maintain” its “general offices, machine shops and

roundhouses” in Palestine. Id.

In 1873, HGNR merged with the International

Railroad to create the International & Great Northern

App. 3

Railroad (“IGNR”). Id. The Texas legislature approved

the merger so long as IGNR assumed “all acts done in

the name of either of the companies,” including

HGNR’s obligations in the 1872 Agreement with

Palestine. Id. Consideration included another $150,000

in bonds and Palestine’s commitment to construct

housing for the IGNR employees. Id.

B. The 1892 and 1911 Foreclosure Sales and the

1914 Judgment Granting Injunctive Relief

In 1892, IGNR’s assets were sold at a foreclosure

sale, but because the purchasers were trustees for

IGNR’s stockholders, Texas courts ultimately classified

this as a mortgage refinancing rather than a bona fide

sale. Int’l & Great N. Ry. Co. v. Anderson Cnty (“IGNR

IV”), 246 U.S. 424, 433 (1918). Thus, the 1872

Agreement remained in effect. Int’l & Great N. Ry. Co.

v. Anderson Cnty (“IGNR III”), 174 S.W. 305, 316 (Tex.

Civ. App. 1915), aff’d, 246 U.S. 424 (1918).

In 1911, IGNR again sold its assets at a foreclosure

sale, this time to outside investors who kept the name

of the company and listed Houston as the new

corporate office. City of Palestine, 559 F.2d at 410-11.

However, because IGNR planned to move its offices,

Palestine and Anderson County successfully sued for

an injunction under the 1872 Agreement to keep

IGNR’s “general offices, machine shops, and

roundhouses” in Palestine “forever.” IGNR III, 174

S.W. at 327. This 1914 Judgment was twice upheld by

both the Texas Court of Civil Appeals and the Supreme

Court. See id.; see also, IGNR IV, 246 U.S. at 434.

App. 4

In addressing the impact of the foreclosure, Texas

courts concluded that there was no “irregularity in the

foreclosure proceedings or in the organization of the

new company” that would impute the personal

obligations of the prior company onto the purchaser.

Int’l & Great N. Ry. Co. Anderson Cnty (“IGNR I”), 150

S.W. 239, 250 (Tex. Civ. App. 1912), aff’d, Int’l & Great

N. Ry. Co. v. Anderson Cnty (“IGNR II”), 156 S.W. 499

(Tex. 1913). Instead, the courts used the general rule

that “the purchaser of a railroad sold under”

foreclosure would take ownership “free from all

liability” for indebtedness and similar personal

obligations. IGNR I, 150 S.W. at 250. The obligation to

“maintain its offices, shops and roundhouses in

Palestine” was a “personal obligation that would not

have bound the new company.” City of Palestine, 559

F.2d at 411; see also IGNR I, 150 S.W. at 250 (noting

that the purchaser in a railroad foreclosure obtains

property “free from all mere personal obligations of the

former company,” including a contract “for the

establishment and permanent maintenance of a

depot”).

Even though personal contractual obligations

typically do not transfer to the purchaser in a

foreclosure sale, Texas state courts nonetheless

concluded that the Texas Office Shops Act changed this

calculus, and the purchaser was thus “liable to perform

the public duties imposed by law upon the old

corporation.” IGNR II, 156 S.W. at 503 (internal

quotations omitted). The Office Shops Act required a

railroad such as IGNR to “keep and maintain its

general offices at such place within this state where it

shall have contracted or agreed” and “said location

App. 5

shall not be changed” even during consolidation if the

railroad was “aided . . . by an issue of bonds in

consideration of such location.” City of Palestine, 559

F.2d at 411 (quoting TEX. REV. CIV. STAT. art. 6423

(1911)).

In short, the Texas courts held that the Office Shops

Act mandated the transfer of IGNR’s personal

obligation to remain in Palestine to the new purchaser.

IGNR I, 150 S.W. at 251 (noting that the requirement

was not “a mere personal obligation of that company,

but was an obligation or duty imposed by law” that

could not be disavowed in a foreclosure sale, even to a

bona fide purchaser). The Texas Court of Civil Appeals

stated that the 1914 Judgment was “entirely dependent

upon the statute, and not the enforcement of a private

contract as such, for its vitality.”IGNR III, 174 S.W. at

316.

IGNR appealed to the Supreme Court, arguing that

the Office Shops Act impermissibly burdened interstate

commerce and contractual obligations. IGNR IV, 246

U.S. at 428. The Supreme Court disagreed and noted

that the new IGNR “took out a charter under general

laws that expressly subjected it to the limitations

imposed by law.” Id. at 432.

C. The 1954 Agreement and 1955 Judgment

Modifying the 1914 Judgment

Later, in the 1920s, Missouri Pacific (“MoPac”)

purchased IGNR. City of Palestine, 559 F.2d at 412. In

the 1930s, MoPac filed for bankruptcy and requested

reorganization under the Bankruptcy Act. Id. As part

of its proposed reorganization, MoPac stated it would

App. 6

consolidate with its subsidiaries, including IGNR. Id.

But because the 1914 Judgment required IGNR to

maintain its general offices in Palestine, and MoPac’s

offices were located elsewhere, this posed a serious

problem. Id.

The Bankruptcy Act also included the following

requirement, which, in essence, required continued

enforcement of the 1914 Judgment:

No reorganization effected under this title and no

order of the court or Commission in connection

therewith shall relieve any carrier from the

obligation of any final judgment of any Federal

or State court rendered prior to January 1, 1929,

against such carrier or against one of its

predecessors in title, requiring the maintenance

of offices, shops, and roundhouses at any place,

where such judgment was rendered on account of

the making of a valid contract or contracts by

such carrier or one of its predecessors in title.

Id. (citing 11 U.S.C. § 205(n) (1970) (emphasis added)).

Given these difficulties, the bankruptcy court

requested that MoPac negotiate with Palestine and

Anderson County to modify the 1914 Judgment before

it would approve the reorganization. Id. As a result of

these negotiations, MoPac “agreed to forever maintain

in Palestine 4.5% of all of its employees in certain job

classifications,” but it did not have to “maintain its

general offices, shops and roundhouses in Palestine.”

Id. (the “1954 Agreement”). MoPac agreed that as long

as it or “any successor in interest or assign thereof

shall remain in the railroad business,” it would

App. 7

maintain “Office and Shop Employees” in Palestine. A

group of ten local citizens (the “Palestine Citizens

Committee”) signed the 1954 Agreement along with

MoPac, Palestine, and Anderson County.

In 1955, the District Court of Cherokee County,

Texas, entered a judgment (the “1955 Judgment”) that

modified the 1914 Judgment to align with the 1954

Agreement’s terms, and the bankruptcy court approved

the proposed reorganization. City of Palestine, 559 F.2d

at 412.

D. Union Pacific Acquires MoPac and Assumes

Operations in Palestine; Texas Repeals the

Office Shops Act

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. In 2007,

Texas repealed its Office Shops Act after determining

the ICCTA preempted it. See H.R. Rep. 80-3711, Reg.

Sess. at 1 (Tex. 2007).

With automatic adjustments from subsequent

mergers, Union Pacific must maintain 0.52% of its

“Office and Shop” employees in Palestine. Under the

1954 Agreement, these employees can be “Executives,

Officials and Staff Assistants; Professional, Clerical,

and General; Maintenance of Equipment and Stores;

Transportation (other than Train, Engine and Yard);

App. 8

Transportation (Yardmasters, Switch Tenders, and

Hostlers).” These employees fall into two categories:

(1) “the freight claims department, which investigates

and resolves claims arising out of shipments on Union

Pacific’s rail line,” and (2) “the car shop, which repairs

cars in Union Pacific’s fleet.”

E. Procedural History and District Court

Orders

In November 2019, Union Pacific filed suit seeking

declaratory relief that the ICCTA preempts the 1954

Agreement. Union Pacific also sought an injunction

preventing Palestine and Anderson County from

enforcing the Agreement. Id.

Palestine and Anderson County filed a motion to

dismiss and a motion for judgment on the pleadings.

The motions were based on the Anti-Injunction Act and

the failure to join the Palestine Citizens

Committee—the ten local citizens who had signed the

1954 Agreement. The district court denied these

motions.

Union Pacific filed a motion for summary judgment,

which the district court granted, 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.

After the district court entered judgment, Palestine

and Anderson County filed suit in Texas state court

seeking to enforce the 1955 Judgment which had

App. 9

approved the 1954 Agreement. The Texas court has

enjoined Union Pacific from reducing its workforce and

set the case for trial.

Defendants appeal the district court’s grant of

summary judgment for Union Pacific and the denials of

their motion to dismiss for failure to join a necessary

party, motion for judgment on the pleadings, and

cross-motion for summary judgment.

II.

“We review the grant of summary judgment de

novo, applying the same legal standards the district

court applied to determine whether summary judgment

was appropriate.” See Am. Intern. Specialty Lines Ins.

Co. Canal Indem. Co., 352 F.3d 254, 259-60 (5th Cir.

2003). A summary judgment motion is properly granted

only when, viewing the evidence in the light most

favorable to the nonmoving party, the record indicates

that there is “no genuine issue as to any material fact

and that the moving party is entitled to judgment as a

matter of law.” FED. R. CIV. P. 56(c); Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986). “On cross-motions for

summary judgment, we review each party’s motion

independently, viewing the evidence and inferences in

the light most favorable to the nonmoving party.”

Amerisure Ins. Co. v. Navigators Ins. Co., 611 F.3d 299,

304 (5th Cir. 2010) (citation omitted). Because the

district court granted summary judgment based on

federal preemption, both directly and as applied, we

must also review this determination. “The preemptive

effect of a federal statute is a question of law that we

review de novo.” Franks Inv. Co. LLC v. Union Pac R.

Co., 593 F.3d 404, 407 (5th Cir. 2010).

App. 10

“We review de novo a district court’s legal

determination of the applicability of the

Anti-Injunction Act.” See United States v. Billingsley,

615 F.3d 404, 410 (5th Cir. 2010). And we review de

novo a district court’s grant of a Rule 12(c) motion for

judgment on the pleadings. See Bosarge v. Miss.

Bureau of Narcotics, 796 F.3d 435, 439 (5th Cir. 2015).

“The standard for dismissal under Rule 12(c) is the

same as that for dismissal for failure to state a claim

under Rule 12(b)(6).” Johnson v. Johnson, 385 F.3d

503, 529 (5th Cir. 2004). “To survive a motion to

dismiss, a complaint must contain sufficient factual

matter, accepted as true, to state a claim to relief that

is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (internal quotation marks omitted).

Lastly, we review “a district court’s decision to

dismiss for failure to join an indispensable party [under

Rule 19] . . . under an abuse-of-discretion standard.”

HS Res., Inc. v. Wingate, 327 F.3d 432, 438 (5th Cir.

2003) (citation omitted). Similarly, we review a decision

to deny a motion to dismiss for failure to join a

necessary party under the same standard. Id.

III.

The district court granted summary judgment for

Union Pacific after determining that federal law

preempts the statutorily mandated contractual

agreements between the parties, both expressly and as

applied. We agree.

Any state law that conflicts with either a federal

law or the Constitution is “without effect.” Maryland v.

App. 11

Louisiana, 451 U.S. 725, 746 (1981). This framework,

known as preemption, applies in the railroad context

where a state law remedy “invokes laws that have the

effect of managing or governing, and not merely

incidentally affecting, rail transportation.” Franks, 593

F.3d at 411 (citation omitted). In determining whether

a state law or regulation is preempted, Congress’s

intent is the “ultimate touchstone.” Medtronic, Inc. v.

Lohr, 518 U.S. 470, 485 (1996). Congress can indicate

its preemptive intent either expressly, through a

statute’s plain language, or impliedly, through its

“structure and purpose.” Altria Group, Inc. v. Good,

555 U.S. 70, 76 (2008).

In 1995, Congress enacted key legislation known

as the ICCTA which abolished the Interstate

Commerce Commission and established the Surface

Transportation Board to have broad jurisdiction over

rail operations. See 49 U.S.C. § 10101, et seq.

The ICCTA essentially overhauled the railroad

industry, which was already historically intertwined

with the federal government: “[R]ailroad operations

[have] long been a traditionally federal endeavor, to

better establish uniformity in such operations and

expediency in commerce, and it appears manifest that

Congress intended the ICCTA to further that

exclusively federal effort, at least in the economic

realm.” Friberg v. Kan. City S. Ry. Co., 267 F.3d 439,

443 (5th Cir. 2001). In response to the ICCTA, in 2007,

the Texas legislature repealed the Office Shops Acts,

concluding it was “preempted by federal law.” H.R.

80-3711, Reg. Sess. at 1 (Tex. 2007).

App. 12

Section 10501(b) of the ICCTA evinces the explicit

preemptive intent of Congress, as it describes the STB’s

exclusive jurisdiction over a wide range of railroad

operations:

(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.

49 U.S.C. § 10501(b).

The Fifth Circuit has addressed preemption under

the ICCTA, holding that section 10501(b) expressly

preempts laws that seek to “manag[e] or govern[] rail

transportation” and that “[t]o the extent remedies are

provided under laws that have the effect of regulating

rail transportation, they are [expressly] preempted.”

App. 13

Franks, 593 F.3d at 410 (emphasis in original).

However, if a state law or regulation only has a “mere

remote or incidental effect on rail transportation,” it is

not expressly preempted. Elam v. Kan. City S. Ry. Co.,

635 F.3d 796, 805 (5th Cir. 2011) (internal quotations

omitted).

Rail “transportation” is broadly defined to include

“facilit[ies]” and “services” that are “related to the

movement of passengers or property, or both, by rail.”

49 U.S.C. § 10102(9). In short, because the 1954

Agreement manages and governs facilities or services

related to the movement of passengers or property by

rail, it is expressly preempted.

Turning to the specifics: The 1954 Agreement

requires Union Pacific to employ a certain percentage

of its “Office and Shop Employees” in Palestine. The car

shop employees repair empty freight cars, and the

freight claims office processes complaints and claims

for freight damage. Both categories include employees

who are engaged in “services related to” the “movement

[of] . . . property” by rail. 49 U.S.C. § 10102(9).

Defendants try to minimize these facts by arguing

that Union Pacific’s 0.52% employee requirement has

“no direct impact on the movement of freight” because

the employees work on railcars that are out of service

and the shipping claims employees deal with

complaints involving items that were previously moved

via rail. However, this argument asks us to read

language into the ICCTA. There is no requirement for

contemporaneous movement of property related to the

rails for the regulation to be preempted. If the facilities

or services—in any non-incidental way—relate to the

App. 14

movement of property by rail, they are preempted by

the ICCTA.

Here, the rail car repair shop employees work on

cars that were involved in and may later be involved in

the movement of items by rail. And the freight claims

office employees deal with problems that arose while

property traveled via rail. Thus, the 1954 Agreement—

which was premised upon now-preempted Texas law

and requires the continued employ of these

individuals—regulates Union Pacific’s use of railroad

facilities and services.

Further, the 1954 Agreement’s mandate that Union

Pacific cannot leave Palestine interferes with the STB’s

exclusive jurisdiction over “routes, services, and

facilities” and the “abandonment, or discontinuance

of . . . facilities.” 49 U.S.C. § 10501(b). The district court

correctly concluded that the 1954 Agreement is

expressly preempted.

In addition to express preemption, Union Pacific

argues that the 1954 Agreement is impliedly

preempted. This test is more fact-specific than express

preemption because we analyze whether state laws

“have the effect of unreasonably burdening or

interfering with rail transportation.” Franks, 593 F.3d

at 414. As the party asserting preemption, Union

Pacific must present “evidence of the specific burdens

imposed” and not just “general evidence or assertions”

that the state law “somehow affect[s] rail

transportation.” Guild v. Kan. City S. Ry. Co., 541 F.

App’x 362, 368 (5th Cir. 2013). For example, this court

App. 15

concluded that the ICCTA did not impliedly preempt a

state action that sought to prevent the closure of four

railroad crossings because the evidence presented

about potential burdens, including drainage issues,

increased maintenance costs, and slower train travel,

was not tied to the four specific crossings. Franks, 593

F.3d at 415.

For illustration purposes, we note that other courts

have held the following actions were preempted

because they imposed unreasonable burdens on rail

transportation: (1) requiring a railroad to engage in

“considerable redesign and construction work”;

(2) terminating an easement because it would “stop all

use of the tracks” in that specific area; and

(3) condemning an “actively used railroad property”

because it would impact the railroad’s “rights with

respect to [a] massive stretch of railroad property.” See,

e.g., Union Pac. R.R. Co. v. Taylor Truck Line, Inc., No.

15-CV-0074, 2018 WL 1750516, at *7–9 (W.D. La. Apr.

10, 2018); Wedemeyer v. CSX Transp., Inc., No.

2:13-CV-00440-LJM, 2015 WL 6440295, at *5 (S.D. Ind.

Oct. 20, 2015), aff’d, 850 F.3d 889 (7th Cir. 2017);

Union Pac. R.R. Co. Chicago Transit Auth., No.

07-CV-229, 2009 WL 448897, at *8–10 (N.D. Feb. 23,

2009), aff’d, 647 F.3d 675 (7th Cir. 2011).

Here, Union Pacific presents many undisputed facts

to support its argument that the 1954 Agreement

unreasonably burdens and interferes with rail

transportation. Palestine and Anderson County do not

dispute these facts but rather argue they are not

persuasive or appropriate considerations.

App. 16

Specifically, the 1954 Agreement’s mandate to stay

in Palestine imposes the following burdens on Union

Pacific: (1) Union Pacific no longer has a business need

for operations in Palestine, and it can conduct its work

more efficiently in other locations; (2) Routing cars to

Palestine for repair involves sending them thousands

of miles out of the way through congested Houston

railyards; and (3) The Palestine facilities are severely

outdated and in need of multi-million-dollar

improvements in the range of $67 to $93 million.

Our court has stated that economic burdens alone

likely do not evince unreasonable interference. See New

Orleans & Gulf Coast Ry. C. v. Barrois, 533 F.3d 321,

335 (5th Cir. 2008) (“We doubt whether increased

operating costs are alone sufficient to establish

‘unreasonable’ interference with railroad operations.”).

However, here, the combination of the economic burden

of spending tens of millions of dollars to renovate an

inefficient and expensive facility, designed originally to

repair steam locomotives, along with the logistical

burden of routing cars thousands of miles through an

urban bottleneck and providing facilities for the

employees who work in Palestine substantially

interferes with and burdens Union Pacific’s facilities

“related to the movement of passengers or property.” 49

U.S.C. § 10102(9). We conclude that the 1954

Agreement is impliedly preempted.

Defendants make one additional preemption attack

by asserting that the district court’s decision will allow

railroads to skirt their contractual obligations.

However, Union Pacific does not challenge the validity

App. 17

of voluntary contractual agreements, but instead

argues that the 1954 Agreement is involuntary because

its confines were dictated by then-existing state law.

The relevant timeline indicates that the parties’

predecessors, HGNR and International Railroad,

entered into a voluntary agreement in 1872. See City of

Palestine, 559 F.2d at 410. However, in the subsequent

foreclosure sales, the personal responsibilities of the

original contracting parties were transferred to the

purchasers as mandated by the Texas Office Shops Act.

And, but for this Act, the debtor’s “obligation to

maintain its offices, shops and roundhouses in

Palestine” was a “personal obligation that would not

have bound the new company” after foreclosure. Id. at

411. Thus, the 1914 Judgment entered after the

foreclosure sales contained obligations that were

“regulatory in nature, grounded in Texas statutory law,

and involuntary” rather than those which result from

the “the enforcement of a private contract.” IGNR III,

174 S.W. at 316.

Then in 1954, when MoPac attempted to reorganize

and merge with IGNR in bankruptcy proceedings, the

district court refused to allow bankruptcy

reorganization unless MoPac assumed IGNR’s

commitments under the 1914 Judgment to Palestine

and Anderson County. City of Palestine, 559 F.2d at

412. Otherwise, MoPac would have been unable to

proceed with the bankruptcy reorganization because

the law at that time mandated that reorganization

would not “relieve any carrier from the obligation of

any final judgment . . . requiring the maintenance of

offices, shops, and roundhouses at any place, where

App. 18

such judgment was rendered . . . .” Id. (citing 11 U.S.C.

§ 205(n) (1970)).

In other words, MoPac did not voluntarily enter into

the 1954 Agreement but was required to assume

responsibilities and negotiate within the confines of

federal and state laws regarding railroad operations

that have since been repealed. Alternatively, MoPac

could have (voluntarily) chosen financial ruin. These

facts do not support a finding that MoPac voluntarily

assumed the conditions of the 1914 Judgment in the

1954 Agreement.

There are further indications that the 1954

Agreement was a mere extension of the Texas Shop

Acts. See, e.g., TEX. REV. CIV. STAT. ANN. arts. 6275,

6277 (1926) (regulating the location of Texas-chartered

railroads offices, machine shops, and roundhouses like

the 1954 Agreement); H.R. Rep. 80-3711, Reg. Sess. at

1 (Tex. 2007) (repealing these laws). Importantly, the

1954 Agreement entitles Palestine and Anderson

County to reinstate the 1914 Judgment in the event of

a breach. We agree with the district court that this

remedy “looks and feels more like the kind of

state ‘regulation’ [or remedy] the ICCTA expressly

preempts.”

Our sister circuit has provided guidance that we

find helpful for determining when a railroad contract is

voluntary versus regulatory: “Voluntary agreements

between private parties [] are not presumptively

regulatory acts” where they are “not the sort of rail

regulation contemplated by the statute and . . . do[] not

unreasonably interfere with rail transportation.” PCS

Phosphate Co. v. Norfolk S. Corp., 559 F.3d 212, 214,

App. 19

218-19 (4th Cir. 2009) (citation omitted). Here, as

discussed above, the 1954 Agreement does

unreasonably interfere with rail transportation. Id. at

221 (citation omitted).

And given that the Texas Shops Act governs

the location of offices, machine shops, and

roundhouses—just like the 1954 Agreement—it is the

“sort of rail regulation contemplated by the statute.” Id.

at 214. The voluntary contract exception does not apply

because Union Pacific was prohibited from using its

own “determination and admission.” Id. at 221 (citation

omitted). The 1954 Agreement was not voluntary.

IV.

Next, Defendants argue that the Anti-Injunction

Act bars Union Pacific’s case. The district court

concluded that because there was no pending state

court action, the Anti-Injunction Act did not apply. See

B & A Pipeline Co. v. Dorney, 904 F.2d 996, 1001 n.15

(5th Cir. 1990) (noting that state court proceeding must

be currently “pending” for purposes of the AntiInjunction Act). While there was no pending state court

action when the district court made its ruling,

Defendants have since filed one and have received an

injunction to prevent Union Pacific from reducing its

workforce in Palestine. Regardless, these changed

circumstances do not warrant reversal.

According to the Anti-Injunction Act, “[a] court of

the United States may not grant an injunction to stay

proceedings in a State court except as expressly

authorized by Act of Congress, or where necessary in

aid of its jurisdiction, or to protect or effectuate its

App. 20

judgments.” 28 U.S.C. § 2283. Union Pacific merely

seeks declaratory relief about the validity of the 1954

Agreement and an injunction preventing Defendants

from enforcing the 1914 Judgment. It is uncontested

that Union Pacific does not seek to enjoin any pending

state court proceeding.

Further, this court has indicated that the

Anti-Injunction Act does not apply where a plaintiff is

seeking legal clarity or other legitimate relief instead

of attempting to nullify relief to the party who first

filed suit. See Travelers Ins. Co. v. La. Farm Bureau

Fed’n, Inc., 996 F.2d 774, 776-77 (5th Cir. 1993). Here,

Union Pacific filed first and sought declaratory relief to

avoid a breach of contract. In contrast, it is Defendants

who sought to block Union Pacific’s case by filing a

second suit in state court and seeking and obtaining

injunctive relief.

And to the extent collateral estoppel1 could impact

future litigation, this is insufficient to trigger the

Anti-Injunction Act’s prohibitions, particularly since

the purpose of the Declaratory Judgment Act—which

Union Pacific seeks relief under—is “to provide a

means to grant litigants judicial relief from legal

uncertainty in situations” so that they “would no longer

be put to the Hobson’s choice of foregoing their rights

or acting at their peril.” Tex. Emps.’ Ins. Ass’n v.

Jackson, 862 F.2d 491, 505 (5th Cir. 1988) (en banc)

In their briefs, Defendants seemingly conflate the Anti-Injunction

Act with the doctrine of collateral estoppel. We need not delve into

the merits of whether this case has collateral estoppel value, but

we do attempt to separate the two issues based on the legal issues

raised by the parties.

App. 21

(citation omitted). The district court properly

determined that the Anti-Injunction Act does not bar

Union Pacific from seeking declaratory relief.

Finally, Defendants challenge the district court’s

denial of their motion to dismiss for failure to join the

Palestine Citizens Committee as a necessary party.

Under Rule 19, a party must be joined if:

(A) in that person’s absence, the court cannot

accord complete relief among existing parties; or

(B) that person claims an interest relating to the

subject of the action and is so situated that

disposing of the action in the person’s absence

may:

(i) as a practical matter impair or impede

the person’s ability to protect the interest;

(ii) leave an existing party subject to a

substantial risk of incurring double,

multiple, or otherwise inconsistent

obligations because of the interest.

FED. R. CIV. P. 19(a)(1).

Defendants have presented no evidence that the

Palestine Citizens Committee still exists or that any of

its members are still living. It is unclear who these

individuals even are. There has been no showing that

disposing of this case in the absence of the Citizens

Committee would “impede the . . . ability to protect” its

App. 22

interests or otherwise prevent a court from providing

full relief. Id.

And, the Palestine Citizens Committee has no

enforcement rights under the 1954 Agreement. The

Agreement allows for Palestine and Anderson County

to seek specific performance or reinstatement of the

1914 Judgment. As the district court correctly

determined, without a protectable interest in the

litigation, joinder is not required under Rule 19. See

HS Res., Inc. v. Wingate, 327 F.3d 432, 439 (5th Cir.

2003) (citing Hilton v. Atlantic Refining Co.s, 327 F.2d

217, 219 (5th Cir. 1964) (concluding that joinder is “not

required unless the judgment ‘effectively precludes [the

nonparties] from enforcing their rights and they are

injuriously affected by the judgment.’”)).

Even assuming the Palestine Citizens Committee

had enforcement rights, Defendants can adequately

represent the interests of the citizens who signed the

Agreement, as they have the shared interest of

preventing Union Pacific from leaving Palestine. See

Staley v. Harris Cnty. Tex., 160 F. App’x 410, 413 (5th

Cir. 2005) (stating that “a government entity is

presumed to adequately represent the interests of . . .

its citizens”). The district court did not abuse its

discretion in denying relief for any alleged failure to

join a necessary party.

VI.

For these reasons, we AFFIRM.

App. 23

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 21-4 0445

[Filed July 22, 2022]

_____________________________________________

)

UNION PACIFIC RAILROAD COMPANY,

)

Plaintiff—Appellee,

)

versus

)

CITY OF PALESTINE, TEXAS;

)

COUNTY OF ANDERSON, TEXAS,

)

Defendants—Appellants.

)

_____________________________________________)

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 6:19-CV-574

Before HIGGINBOTHAM, DENNIS, and GRAVES, Circuit

Judges.

JUDGMENT

This cause was considered on the record on appeal

and was argued by counsel.

IT IS ORDERED and ADJUDGED that the

judgment of the District Court is AFFIRMED.

IT IS FURTHER ORDERED that appellants pay to

appellee the costs on appeal to be taxed by the Clerk of

this Court.

App. 24

[SEAL]

Certified as a true copy and issued

as the mandate on August 29, 2022

Attest: /s/ Lyle W. Cayce

Clerk, U.S. Court of Appeals,

Fifth Circuit

App. 25

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 21-40445

[Filed: August 19, 2022]

__________________________________________

UNION PACIFIC RAILROAD COMPANY,

)

Plaintiff—Appellee,

)

versus

)

CITY OF PALESTINE, TEXAS;

COUNTY OF ANDERSON, TEXAS,

)

Defendants—Appellants. )

__________________________________________)

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 6:19-CV-574

ON PETITION FOR REHEARING

AND REHEARING EN BANC

Before HIGGINBOTHAM, DENNIS, and GRAVES, Circuit

Judges.*

Judge Gregg Costa, did not participate in the consideration of the

rehearing en banc.

App. 26

PER CURIAM:

The petition for panel rehearing is DENIED.

Because no member of the panel or judge in regular

active service requested that the court be polled on

rehearing en banc (FED. R. APP. P. 35 and 5TH CIR. R.

35), the petition for rehearing en banc is DENIED.

App. 27

APPENDIX C

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 21-40445

[Filed: August 8, 2022]

_________________________________________

Union Pacific Railroad Company,

)

Plaintiff – Appellee

)

City of Palestine, Texas;

)

County of Anderson, Texas,

)

Defendants – Appellants

)

_________________________________________ )

On Appeal from the United States District

Court Eastern District of Texas, Tyler

Division Civil Action No. 6:19-CV-0574

The Honorable Jeremy D. Kernodle, Judge Presiding

PETITION FOR REHEARING EN BANC

App. 28

James P. Allison

SBN: 01090000

J. Eric Magee

SBN: 24007585

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

Counsel for Appellants

CERTIFICATE OF INTERESTED PERSONS

Appellants certify that the following listed persons

and entities as described in the fourth sentence of Rule

28.2.1 have an interest in the outcome of this case.

These representations are made in order that the

judges of this court may evaluate possible

disqualification or recusal.

Parties

The City of Palestine

and Anderson County,

Texas

Defendants – Appellants

Counsel

James P. Allison

j.allison@allison-bass.com

J. Eric Magee

e.magee@allison-bass.com

ALLISON, BASS &

MAGEE, L.L.P.

402 W. 12th Street

Austin, TX 78701

(512) 482-0701 telephone

(512) 480-0902 facsimile

App. 29

Additional Trial Court

Counsel:

D. Bryan Hughes

bryan@bryanhughes.com

Law Office of D. Bryan

Hughes

110 N. College Ave. Suite

207

Tyler, Texas 75702

(903) 581-1776 telephone

(903) 630-8794 facsimile

Union Pacific Railroad Co.

Plaintiff - Appellee

John W. Proctor

jproctor@brownproctor.com

BROWN, PROCTOR &

HOWELL, LLP

830 Taylor Street

Fort Worth, Texas 76102

(817) 332-1391 telephone

(817) 870-2427 facsimile

Afton D. Sands

asands@brownproctor.com

BROWN, PROCTOR &

HOWELL, LLP

5805 64th Street, Suite 6

Lubbock, Texas 79401

(432)413-5223 telephone

App. 30

James Scott Ballenger

jscottballenger@gmail.com

555 Eleventh Street NW,

Suite 1000

Washington, DC 20004

(202)701-4925 telephone

Additional Trial Court

Counsel:

Trey Yarbrough

trey@yw-lawfirm.com

YARBROUGH WILCOX,

PLLC

100 E. Ferguson, Suite

1015

Tyler, Texas 75702

(903) 595-3111 telephone

(903) 595-0191 facsimile

Riley T. Keenan

(Admitted Pro Hac Vice)

riley.keenan@lw.com

LATHAM & WATKINS

LLP

555 Eleventh Street NW,

Suite 1000

Washington, DC 20004

(202) 637-2331 telephone

/s/ James. P. Allison

James P. Allison

App. 31

STATEMENT FOR EN BANC CONSIDERATION

The Panel’s decision would mark the end of the line

for the bright expectations and commitments of a small

Texas town that staked its fortune on the promises of

a railroad. For over a century, the promises,

agreements and the City, County, and citizens’ vested

contractual rights have weathered legal scrutiny in the

highest courts in the land. Union Pacific voluntarily

assumed the Palestine assets and obligations decades

ago. Nevertheless, the Panel decision nullifies the

agreement and a century of legal precedent.

This proceeding involves two questions of first

impression in this Circuit and exceptional importance:

First, whether Congress intended for an agreement

entered decades before the enactment of the Interstate

Commerce Commission Termination Act (“ICCTA”) to

be retroactively preempted. The retroactive application

of the ICCTA to pre-existing contracts is a matter of

first impression for this Circuit. However, other

Circuits have considered and rejected the retroactive

application of ICCTA to contracts executed before the

enactment of the statute. With no evidence that

Congress intended a retroactive application of ICCTA

to contracts, the Panel decision will impermissibly

obviate the substantial rights bargained for and agreed

by the railroad and the City, County, and citizens

decades prior to contemplation of the ICCTA.

Second, whether 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. This Circuit has not applied federal

App. 32

preemption under the ICCTA to business and economic

development contracts between rail carriers and other

entities including local governments. The decision by

the panel 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. Such an extreme

departure from the established precedent in other

circuits merits the consideration of the full Court of

Appeals.

The panel decision conflicts with decisions of the

Eighth and Ninth Circuits1 in regard to the retroactive

application of the ICCTA and would establish

precedent in conflict with those circuits. On the second

point on voluntary assumptions, although the sole

authority cited by the Panel decision is a Fourth

Circuit case,2 this panel reaches a contrary result.

Consideration by the full court is therefore necessary to

secure and maintain uniformity of the Court’s decisions

and resolve a potential conflict with the decisions of

other circuits.

(Tables omitted in this appendix)

TO THE HONORABLE COURT OF APPEALS:

Defendants – Appellants Anderson County and the

City of Palestine file this Petition for Rehearing En

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

Cir.), infra, Arg. 1.

See discussion regarding PSC Phosphate, infra, Arg. 2

App. 33

Banc and, in support thereof, respectfully show the

following:

WHY REHEARING EN BANC IS WARRANTED

The Panel erred when it improperly upheld the trial

court’s grant of the motion for summary judgment filed

by Plaintiff-Appellee Union Pacific, granting their

Motion for Summary Judgment and denying

Appellants’ Motion for Summary Judgment and

Motions to Dismiss. Unless revised and corrected, the

Panel decision will erroneously establish precedent on

two important issues of first impression and will

contravene the precedents of other Circuits.

STATEMENT OF THE COURSE OF PROCEEDINGS

In November 2019, Union Pacific filed suit seeking

declaratory relief that the ICCTA preempts its

assumed obligations under a 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. Id.

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

App. 34

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

Pacific and the denials of their motion to dismiss,

motion for judgment on the pleadings, and cross-motion

for summary judgment. Upon appeal, this Honorable

Court conducts a de novo review of the decision below.

On July 22, 2022, in a published opinion, a panel

of this Honorable Court denied relief on Appellants’

issues, affirming the decision of the U.S. District Court

for the Eastern District of Texas.

On August 2nd, this Honorable Court granted an

extension of time to file this petition for consideration

en banc until August 15, 2022. Thus, Appellants timely

request that this matter be reheard en banc.

STATEMENT OF ANY FACTS NECESSARY TO THE

ARGUMENT OF THE ISSUES

For the purposes of this Petition, Appellants rely

particularly on facts established in the appellate record

as follows:

“UP acquired MoPac [Missouri Pacific] in the

early 1980s and formally merged with MoPac on

January 1, 1997. Docket Entry No. 1 p. 12 ¶ 30.

UP absorbed the obligations of the 1954

Agreement, as well as the assets at Palestine,

when it merged with MoPac. Exhibit 9,

Deposition of Cynthia Sanborn p. 16 ln. 2-5, p.

43 ln. 18 – p. 44 ln. 3, p. 45 ln. 21 – p. 46 ln. 10,

App. 35

p. 136 ln. 9-14. UP has no other obligations to

the City or the County. Id. p. 19 ln. 8-19. At the

time of the merger, both railroads had the same

right before the STB as MoPac had before the

ICC in 1977, that if the 1954 Agreement

interfered with the merger either carrier could

have requested an exemption from its legal

obligations under the 1954 Agreement. 49 U.S.C.

11321. UP, as the successor in the merger,

voluntarily took MoPac’s obligations to third

parties including its obligations to the City,

County and the citizens. See Exhibit 3

D-000007.”

ROA. 753-754.

SUMMARY OF THE ARGUMENTS MERITING EN BANC

CONSIDERATION

ISSUE 1: IN UPHOLDING THE U.S. D ISTRICT C OURT ’ S

GRANT OF SUMMARY JUDGMENT, THE PANEL ERRED IN

APPLYING THE ICCTA TO RETROACTIVELY PREEMPT

AGREEMENTS EXECUTED PRIOR TO ITS ENACTMENT.

ISSUE 2: THE PANEL ERRED IN ITS ANALYSIS OF THE

VOLUNTARY DECISION BY UNION PACIFIC TO ASSUME THE

OBLIGATIONS CONTAINED IN THE 1954 AGREEMENT.

ARGUMENT

Issue 1: In upholding the District Court’s grant of

summary judgment, the Panel erred in applying

the ICCTA to retroactively preempt agreements

executed prior to its enactment.

App. 36

The Panel 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 Court below and the Panel now

seek to divest the Appellants and the citizens of vested

contractual rights by imposing a retroactive application

of ICCTA which is unsupported by Fifth Circuit

precedent. Absent the retroactive application of ICCTA,

the Plaintiff-Appellee Union Pacific has no federal

cause of action and therefore lacks standing. Because

standing is an essential component of federal

subject-matter jurisdiction, the lack of standing can be

raised at any time by a party or by the court. See

Sample v. 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 Interstate

Commerce Commission Termination Act, “which

necessarily contains the best evidence of Congress’

App. 37

pre-emptive intent.” Franks, 593 F.3d at 408 (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)).

This issue of the Act’s retroactive effect 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 Eight 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

predating the statute’s enactment. First, a court

must determine if Congress has expressly

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

App. 38

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.

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

App. 39

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). The New Prime

Plaintiffs’ 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,

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

App. 40

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. 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).

This 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 Panel de novo decision

grants preemption of a 1954 Agreement executed over

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

Agreement was valid and enforceable at the time of its

execution and upheld by this Court in City of Palestine,

Tex. v. United States. 559 F.2d at 415 (1977). For many

years, the parties have relied upon the terms of the

App. 41

agreement and had the full opportunity to know the

law and conform their conduct accordingly. A

retroactive application of ICCTA to the 1954

Agreement will alter Appellants’ substantive rights,

relieve the railroad of its assumed obligations, and

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

enactment. The Panel’s decision in this case to

retroactively apply the preemption provisions of ICCTA

to preempt the 1954 Agreement, if affirmed by the full

Court, would undoubtedly create a split of authority

between the circuits. Thus, Appellants ask that en banc

consideration be given to this important issue.

Issue 2: The Panel erred in its analysis of Union

Pacific’s voluntary decision to assume of the

obligations contained in the 1954 agreement.

The Panel’s analysis of Union Pacific’s voluntary

decision3 to assume the 1954 Agreement erroneously

focused solely on the decisions of Union Pacific’s many

predecessors4 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 Panel briefly summarized a timeline

pertaining to these predecessor companies with little

mention of Union Pacific’s wholly voluntary

assumption of these contractual obligations, as follows,

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

Movant’s interpretation differs greatly as reflected in its earlier

briefing, but will not be rehashed here.

App. 42

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.

Memorandum Opinion, at 6. Like the trial court, the

Panel relies on the Texas Office Shops Act as being the

state regulation meriting preemption, holding that,

“[t]he voluntary contract exception does not apply

because Union Pacific was prohibited from using its

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

First, this reasoning is flawed because Union Pacific

admits that the Texas Office Shops Act was

unenforceable at the time it assumed the obligations of

the 1954 Agreement.5 Docket Entry No. 1 p. 12. But

more importantly, any regulatory scheme in place

when its predecessor International & Great Northern

(I&GN) signed this agreement and it was assumed by

Missouri Pacific has no bearing on 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,

And thus in 2007, Texas repealed its Office Shops Act after

determining the ICCTA preempted it. See H.R. Rep. 80-3711, Reg.

Sess. at 1 (Tex. 2007).

App. 43

knowingly acquiring the assets at Palestine and the

obligations of the 1954 Agreement in the process.

Union Pacific cites no regulation or statute

compelling this acquisition and its assumption of the

assets and obligations of MoPac. 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.6 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.7

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. See 49 U.S.C. 11321. Instead, Union

Pacific, as the successor in the merger, elected not to

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”).

Significantly, the impetus for the negotiation of the 1954

Agreement was a provision in the federal bankruptcy statute, not

the Texas Shops Act. Id.

App. 44

seek relief from the STB8 and voluntarily assumed

MoPac’s obligations to third 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.

While the City and County disagree with the

Panel’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 relieved it of all obligations to

maintain any facilities in Palestine, this finding is

ultimately not controlling. 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 Panel erred

and deviated from the proper determination of a

voluntary agreement.

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

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.

App. 45

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,

[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, it appears the Panel has misapplied its only

cited authority, PSC 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:

App. 46

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

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

above facts weigh even stronger against preemption.

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

App. 47

voluntarily-acquired contractual obligations, especially

in economic development agreements. The Fifth Circuit

has not 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 Panel 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 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 Panel 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 ICCTA

and merits the consideration of the full Court of

Appeals

PRAYER

Defendants – Appellants Anderson County and the

City of Palestine request that the Court grant

rehearing en banc and reverse the district court’s

grant of summary judgment for Union Pacific on its

claims of ICCTA preemption and enter a judgment of

dismissal.

App. 48

Respectfully submitted,

/s/ James P. Allison

James P. Allison

SBN: 01090000

j.allison@allison-bass.com

J. Eric Magee

SBN: 24007585

e.magee@allison-bass.com

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

(Certificates omitted in this appendix)

App. 49

APPENDIX D

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 21-40445

[Filed: August 8, 2022]

______________________________________

Union Pacific Railroad Company,

)

Plaintiff – Appellee

)

City of Palestine, Texas;

)

County of Anderson, Texas,

)

Defendants – Appellants

)

______________________________________ )

On Appeal from the United States District

Court Eastern District of Texas, Tyler

Division Civil Action No. 6:19-CV-0574

The Honorable Jeremy D. Kernodle, Judge Presiding

PETITION FOR PANEL REHEARING

App. 50

James P. Allison

SBN: 01090000

J. Eric Magee

SBN: 24007585

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

Counsel for Appellants

CERTIFICATE OF INTERESTED PERSONS

Appellants certify that the following listed persons

and entities as described in the fourth sentence of Rule

28.2.1 have an interest in the outcome of this case.

These representations are made in order that the

judges of this court may evaluate possible

disqualification or recusal.

Parties

The City of Palestine

and Anderson County,

Texas

Defendant – Appellants

Counsel

James P. Allison

j.allison@allison-bass.com

J. Eric Magee

e.magee@allison-bass.com

ALLISON, BASS

& MAGEE, L.L.P.

402 W. 12th Street

Austin, TX 78701

(512) 482-0701 telephone

(512) 480-0902 facsimile

App. 51

Additional Trial Court

Counsel:

D. Bryan Hughes

bryan@bryanhughes.com

Law Office of D. Bryan

Hughes

110 N. College Ave. Suite

207

Tyler, Texas 75702

(903)581-1776 telephone

(903) 630-8794 facsimile

Union Pacific Railroad Co.

Plaintiff - Appellee

John W. Proctor

jproctor@brownproctor.com

BROWN, PROCTOR &

HOWELL, LLP

830 Taylor Street

Fort Worth, Texas 76102

(817) 332-1391 telephone

(817) 870-2427 facsimile

Afton D. Sands

asands@brownproctor.com

BROWN, PROCTOR &

HOWELL, LLP

5805 64th Street, Suite 6

Lubbock, Texas 79401

(432)413-5223 telephone

App. 52

James Scott Ballenger

jscottballenger@gmail.com

555 Eleventh Street NW,

Suite 1000

Washington, DC 20004

(202) 701-4925 telephone

Additional Trial Court Counsel:

Trey Yarbrough

trey@yw-lawfirm.com

YARBROUGH WILCOX,

PLLC

100 E. Ferguson, Suite

1015

Tyler, Texas 75702

(903) 595-3111 telephone

(903) 595-0191 facsimile

Riley T. Keenan

(Admitted Pro Hac Vice)

riley.keenan@lw.com

LATHAM & WATKINS

LLP

555 Eleventh Street NW,

Suite 1000

Washington, DC 20004

(202) 637-2331 telephone

/s/ James. P. Allison

James P. Allison

App. 53

STATEMENT REGARDING ORAL ARGUMENT

Because the questions presented deal with issue s

of first impression in this Circuit and significant

importance that have not been fully considered, counsel

requests oral argument if rehearing is granted.

STATEMENT FOR PANEL REHEARING

This Panel’s decision would mark the end of the line

for the bright expectations and commitments of a small

Texas town that staked its fortune on the promises of

a railroad. For over a century, the promises,

agreements and the City, County, and citizens’ vested

contractual rights have weathered legal scrutiny in the

highest courts in the land. Union Pacific voluntarily

assumed the Palestine assets and obligations decades

ago. Nevertheless, the Panel decision nullifies the

agreement and a century of legal precedent.

The Panel decision in this proceeding involves two

questions of first impression in this Circuit and

exceptional importance that deserve full consideration:

First, whether Congress intended for an agreement

entered decades before the enactment of the Interstate

Commerce Commission Termination Act (“ICCTA”) to

be retroactively preempted. The retroactive application

of the ICCTA to pre-existing contracts is a matter of

first impression for this Circuit. However, other

Circuits have considered and rejected the retroactive

application of ICCTA to contracts executed before the

enactment of the statute. With no evidence that

Congress intended a retroactive application of ICCTA

to contracts, the Panel decision will impermissibly

obviate the substantial rights bargained for and agreed

App. 54

by the railroad and the City, County, and citizens

decades prior to contemplation of the ICCTA.

Second, whether 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. This Circuit has not 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 panel 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. Such an extreme

departure from the established precedent in other

circuits merits the Panel’s reconsideration

The panel decision conflicts with decisions of the

Eighth and Ninth Circuits1 in regard to the retroactive

application of the ICCTA and would establish

precedent in conflict with those circuits. On the second

point on voluntary assumptions, although the sole

authority cited by the Panel decision is a Fourth

Circuit case,2 this panel reaches a contrary result.

Reconsideration is therefore necessary to secure and

maintain uniformity of the Court’s decisions and

resolve a potential conflict with the decisions of other

circuits.

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

Cir.), infra, Arg. 1.

See discussion regarding PSC Phosphate, infra, Arg. 2

App. 55

(Tables omitted in this appendix)

TO THE HONORABLE COURT OF APPEALS:

Defendants – Appellants Anderson County and the

City of Palestine file this Petition for Panel Rehearing

and, in support thereof, respectfully show the following:

WHY PANEL REHEARING IS WARRANTED

The Panel erred when it improperly upheld the trial

court’s grant of the motion for summary judgment filed

by Plaintiff-Appellee Union Pacific, granting their

Motion for Summary Judgment and denying

Appellants’ Motion for Summary Judgment and

Motions to Dismiss. Unless revised and corrected, the

Panel decision will erroneously establish precedent on

two important issues of first impression and will

contravene the precedents of other Circuits.

STATEMENT OF THE COURSE OF PROCEEDINGS

In November 2019, Union Pacific filed suit seeking

declaratory relief that the ICCTA preempts its

assumed obligations under a 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. Id.

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

App. 56

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

Pacific and the denials of their motion to dismiss,

motion for judgment on the pleadings, and cross-motion

for summary judgment. Upon appeal, this Honorable

Court conducts a de novo review of the decision below.

On July 22, 2022, in a published opinion, the panel

opinion of this Honorable Court denied relief on

Appellants’ issues, affirming the decision of the U.S.

District Court for the Eastern District of Texas.

On August 2nd, this Honorable Court granted an

extension of time to file this petition for panel

rehearing until August 15, 2022. Thus, Appellants

timely request that this matter be reheard.

STATEMENT OF ANY FACTS NECESSARY TO THE

ARGUMENT OF THE ISSUES

For the purposes of this Petition, Appellants rely

particularly on facts established in the appellate record

as follows:

“UP acquired MoPac [Missouri Pacific] in the

early 1980s and formally merged with MoPac on

January 1, 1997. Docket Entry No. 1 p. 12 ¶ 30.

UP absorbed the obligations of the 1954

App. 57

Agreement, as well as the assets at Palestine,

when it merged with MoPac. Exhibit 9,

Deposition of Cynthia Sanborn p. 16 ln. 2-5, p.

43 ln. 18 – p. 44 ln. 3, p. 45 ln. 21 – p. 46 ln. 10,

p. 136 ln. 9-14. UP has no other obligations to

the City or the County. Id. p. 19 ln. 8-19. At the

time of the merger, both railroads had the same

right before the STB as MoPac had before the

ICC in 1977, that if the 1954 Agreement

interfered with the merger either carrier could

have requested an exemption from its legal

obligations under the 1954 Agreement. 49 U.S.C.

11321. UP, as the successor in the merger,

voluntarily took MoPac’s obligations to third

parties including its obligations to the City,

County and the citizens. See Exhibit 3

D-000007.”

ROA. 753-754.

SUMMARY OF THE ARGUMENTS MERITING PANEL

REHEARING

ISSUE 1: IN UPHOLDING THE U.S. D ISTRICT C OURT ’ S

GRANT OF SUMMARY JUDGMENT, THE PANEL ERRED IN

APPLYING THE ICCTA TO RETROACTIVELY PREEMPT

AGREEMENTS EXECUTED PRIOR TO ITS ENACTMENT.

ISSUE 2: THE PANEL ERRED IN ITS ANALYSIS OF THE

VOLUNTARY DECISION BY UNION PACIFIC TO ASSUME THE

OBLIGATIONS CONTAINED IN THE 1954 AGREEMENT.

ARGUMENT

Issue 1: In upholding the District Court’s grant of

summary judgment, the Panel erred in applying

App. 58

the ICCTA to retroactively preempt agreements

executed prior to its enactment.

The Panel 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 Court below and the Panel now

seek to divest the Appellants and the citizens of vested

contractual rights by imposing a retroactive application

of ICCTA which is unsupported by Fifth Circuit

precedent. Absent the retroactive application of ICCTA,

the Plaintiff-Appellee Union Pacific has no federal

cause of action and therefore lacks standing. Because

standing is an essential component of federal

subject-matter jurisdiction, the lack of standing can be

raised at any time by a party or by the court. See

Sample v. 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 Interstate

App. 59

Commerce Commission Termination Act, “which

necessarily contains the best evidence of Congress’

pre-emptive intent.” Franks, 593 F.3d at 408 (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)).

This issue of the Act’s retroactive effect 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 Eight 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

predating the statute’s enactment. First, a court

App. 60

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.

App. 61

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). The New Prime

Plaintiffs’ 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,

App. 62

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).

This 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 Panel de novo decision

grants preemption of a 1954 Agreement executed over

App. 63

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

Agreement was valid and enforceable at the time of its

execution and upheld by this Court in City of Palestine,

Tex. v. United States. 559 F.2d at 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 ICCTA to the 1954

Agreement will alter Appellants’ substantive rights,

relieve the railroad of its assumed obligations, and

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

enactment. The Panel’s decision in this case to

retroactively apply the preemption provisions of ICCTA

to preempt the 1954 Agreement, if affirmed by the full

Court, would undoubtedly create a split of authority

between the circuits. Thus, Appellants ask that the

Panel reconsider this important issue.

Issue 2: The Panel erred in its analysis of Union

Pacific’s voluntary decision to assume of the

obligations contained in the 1954 agreement.

The Panel’s analysis of Union Pacific’s voluntary

decision3 to assume the 1954 Agreement erroneously

focused solely on the decisions of Union Pacific’s many

predecessors4 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

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

Movant’s interpretation differs greatly as reflected in its earlier

briefing, but will not be rehashed here.

App. 64

voluntary, the Panel briefly summarized a timeline

pertaining to these predecessor companies with little

mention of Union Pacific’s wholly voluntary

assumption of these contractual obligations, as follows,

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.

Memorandum Opinion, at 6. Like the trial court, the

Panel relies on the Texas Office Shops Act as being the

state regulation meriting preemption, holding that,

“[t]he voluntary contract exception does not apply

because Union Pacific was prohibited from using its

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

First, this reasoning is flawed because Union Pacific

admits that the Texas Office Shops Act was

unenforceable at the time it assumed the obligations of

the 1954 Agreement.5 Docket Entry No. 1 p. 12. But

more importantly, any regulatory scheme in place

when its predecessor International & Great Northern

(I&GN) signed this agreement and it was assumed by

Missouri Pacific has no bearing on Union Pacific’s later

voluntary decision to assume it. In other words, though

And thus in 2007, Texas repealed its Office Shops Act after

determining the ICCTA preempted it. See H.R. Rep. 80-3711, Reg.

Sess. at 1 (Tex. 2007).

App. 65

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 the

obligations of the 1954 Agreement in the process.

Union Pacific cites no regulation or statute

compelling this acquisition and its assumption of the

assets and obligations of MoPac. 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.6 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.7

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

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”).

Significantly, the impetus for the negotiation of the 1954

Agreement was a provision in the federal bankruptcy statute, not

the Texas Shops Act. Id.

App. 66

exemption from its legal obligations under the 1954

Agreement. See 49 U.S.C. 11321. Instead, Union

Pacific, as the successor in the merger, elected not to

seek relief from the STB8 and voluntarily assumed

MoPac’s obligations to third 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.

While the City and County disagree with the

Panel’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 relieved it of all obligations to

maintain any facilities in Palestine, this finding is

ultimately not controlling. 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 Panel erred

and deviated from the proper determination of a

voluntary agreement.

Union Pacific’s assumption of the agreement and

later course of performance undoubtedly reflects the

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.

App. 67

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,

[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, it appears the Panel has misapplied its only

cited authority, PSC Phosphate (involving a perpetual

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

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

App. 68

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

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

above facts weigh even stronger against preemption.

Preemption under the ICCTA is designed to provide

a shield from local interference with railroad

App. 69

transportation. Congress did not intend for preemption

to act as a sword to release carriers from their own

voluntarily-acquired contractual obligations, especially

in economic development agreements. The Fifth Circuit

has not 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 Panel 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 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 Panel 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 ICCTA

and merits reconsideration by the Panel.

PRAYER

Defendants – Appellants Anderson County and the

City of Palestine request that the Court grant a

rehearing before the panel and reverse the district

court’s grant of summary judgment for Union Pacific on

its claims of ICCTA preemption and enter a judgment

of dismissal.

App. 70

Respectfully submitted,

/s/ James P. Allison

James P. Allison

SBN: 01090000

j.allison@allison-bass.com

J. Eric Magee

SBN: 24007585

e.magee@allison-bass.com

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

(Certificates omitted in this appendix)

App. 71

APPENDIX E

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

Case No. 6:19-cv-574-JDK

[Filed May 27, 2021]

_____________________________

UNION PACIFIC RAILROAD )

COMPANY,

)

Plaintiff,

)

CITY OF PALESTINE, et al., )

)

Defendants.

)

_____________________________ )

ORDER

On February 3, 2021, the Court granted Union

Pacific’s Motion for Summary Judgment (Docket No.

39) and denied the City of Palestine and Anderson

County’s Motion for Summary Judgment (Docket No.

42) and Motions to Dismiss (Docket Nos. 40, 41).

Docket No. 65. The Court also issued a Memorandum

Opinion (Docket No. 69), explaining that the Court’s

Opinion and Order Granting Union Pacific’s Motion for

Summary Judgment (Docket No. 65) warrants an

App. 72

award of declaratory and injunctive relief. Having

resolved all claims, the Court entered Final Judgment

(Docket No. 70) on March 25, 2021.

Now before the Court is Defendants’ Motion for New

Trial or [to] Alter or Amend Court’s Order and Final

Judgment. Docket No. 74. For the reasons discussed

below, the Court DENIES the motion.

I. Background

Union Pacific sued the City and County seeking

declaratory and injunctive relief regarding the parties’

long-standing relationship. Docket No. 1 at 16–17. In

cross motions for summary judgment, Union Pacific

argued that the Interstate Commerce Commission

Termination Act (ICCTA) preempted the parties’ 1954

Agreement, while Defendants maintained that the

ICCTA did not preempt the Agreement. Docket Nos. 39

at 15–21; 42 at 17–22. The Court, with the benefit of

the parties’ extensive briefing, concluded that the

ICCTA preempts the 1954 Agreement, both expressly

and impliedly (as applied). Docket No. 65 at 21, 31–32.

The Court then considered and awarded the

appropriate relief. In its Complaint, Union Pacific had

requested declaratory and injunctive relief related to

the 1954 Agreement, as well as declaratory and

injunctive relief related to a second document, the 1914

Decree. Docket No. 1 at 16–17. In express preemption

cases, “a finding with regard to likelihood of success

fulfills the remaining requirements” of injunctive relief.

Tex. Midstream Gas Servs., LLC v. City of Grand

Prairie, 608 F.3d 200, 206 (5th Cir. 2010). Having

found that the ICCTA expressly preempts the 1954

App. 73

Agreement, Docket No. 65 at 21, the Court granted

both declaratory and injunctive relief as to the 1954

Agreement. Docket No. 69 at 1. However, the Court

denied declaratory and injunctive relief as to the 1914

Decree because the Court found that “Union Pacific did

not plead, prove, or even argue (until its supplemental

brief) that the ICCTA preempts the 1914 Decree.” Id.

at 4. Thereafter, the Court entered Final Judgment.

Docket No. 70.

Defendants’ motion followed. Defendants ask the

Court to (1) amend the Final Judgment under Federal

Rule of Civil Procedure 59(e) and (2) vacate or revise

the permanent injunction. Id. at 2–3.

II. Rule 59(e) Motion

A. Legal Standard

Rule 59(e) provides for a “motion to alter or amend

a judgment.” Alteration or amendment is appropriate

“(1) where there has been an intervening change in the

controlling law; (2) where the movant presents newly

discovered evidence that was previously unavailable; or

(3) to correct a manifest error of law or fact.” Demahy

v. Schwarz Pharma, Inc., 702 F.3d 177, 181 (5th Cir.

2012); accord Berezowsky v. Rendon Ojeda, 652 F.

App’x 249, 251 (5th Cir. 2016) (per curiam). “‘Manifest

error’ is one that ‘is plain and indisputable, and that

amounts to a complete disregard of the controlling

law.’” Guy v. Crown Equip. Corp., 394 F.3d 320, 325

(5th Cir. 2004) (quoting Venegas–Hernandez v. Sonolux

Rec., 370 F.3d 183, 195 (1st Cir. 2004)); accord Wease

v. Ocwen Loan Servicing, L.L.C., No. 20-10476, 2021

App. 74

WL 1604694, at *2 (5th Cir. Apr. 23, 2021)

(unpublished).

Parties may not utilize a Rule 59(e) motion as a

“vehicle for rehashing evidence, legal theories, or

arguments that could have been offered or raised

before the entry of judgment.” Templet v. HydroChem

Inc., 367 F.3d 473, 478–79 (5th Cir. 2004) (citing Simon

v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990)).

The “extraordinary remedy” of amending a final

judgment should be used “sparingly.” Id. (citing Clancy

v. Emp. Health Ins. Co., 101 F. Supp. 2d 463, 465 (E.D.

La. 2000)).

B. Analysis

Defendants argue that the Court committed a

“manifest error of law” by holding that the ICCTA

expressly and impliedly preempts the 1954 Agreement.

Docket No. 75 at 3. But, as Plaintiff argues,

Defendants’ motion improperly rehashes arguments

the Court previously considered and rejected. Docket

No. 76 at 3–6.

First, Defendants assert that there is a material

question of fact as to whether the 1954 Agreement

manages or governs rail transportation, precluding

summary judgment on Union Pacific’s express

preemption claim. Docket No. 74 at 4–6. They argue

that, even if the 1954 Agreement regulates Union

Pacific’s operations and imposes a financial burden,

such a finding does not support the conclusion that the

Agreement regulates rail transportation. Id. at 6–7.

The Court previously rejected this argument, as stated

in its February 3 opinion:

App. 75

[T]he Agreement’s requirement to maintain

employees in Palestine necessarily requires

Union Pacific to provide facilities there. And

Union Pacific presents evidence that

maintaining its Palestine facilities disrupts the

railroad’s operations, undermines the company’s

business objective to maximize efficiency, and

requires an enormous financial outlay in the

coming years. Docket No. 39, Ex. 11 at 1 ¶ 3; Ex.

4 at 85:1–86:6; Ex. 14 at 1 ¶ 3. Defendants

introduce no evidence to the contrary. The Court

thus finds that the 1954 Agreement

unreasonably burdens and interferes with Union

Pacific’s railroad facilities.

Docket No. 65 at 30. By controlling the location,

number, and function of Union Pacific’s employees, the

1954 Agreement “necessarily regulates ‘facilities’ and

‘services’ related to the movement of people and

property by rail.” Id. at 24. Accordingly, the ICCTA

expressly preempts the 1954 Agreement. The Court

will not revisit this conclusion on the basis of

Defendants’ now-stale arguments. See Helena Labs.

Corp. v. Alpha Sci. Corp., 483 F. Supp. 2d 538, 540

(E.D. Tex. 2007), aff’d, 274 F. App’x 900 (Fed. Cir.

2008) (denying Rule 59(e) motion where the court had

previously “addressed this precise argument”).

Second, and similarly, Defendants argue that there

is no evidence of implied preemption. Defendants

characterize Union Pacific’s evidence as showing only

the 1954 Agreement’s prospective financial impact, not

any interference with interstate commerce. Docket No.

74 at 7–9. Again, this is a rerun of Defendants’

App. 76

argument, in which they previously stated: “as the

1954 Agreement has been applied to Union Pacific’s

current operations, it has had no effect on the

transportation of goods or people in interstate

commerce.” Docket No. 51 at 18. In considering

Defendants’ argument, the Court applied the Fifth

Circuit’s “fact-based test” for implied preemption.

Docket No. 65 at 26–32. Under this test, a regulation is

impliedly preempted if it has “the effect of

unreasonably burdening or interfering with rail

transportation.” Franks Inv. Co. LLC v. Union Pac. R.

Co., 593 F.3d 404, 414 (5th Cir. 2010). The Court

detailed the operational inefficiencies imposed by the

1954 Agreement, Docket No. 65 at 27–29, and found

they unreasonably burden Union Pacific’s railtransportation services. Id. at 30. In undertaking this

analysis, the Court recognized that the 1954

Agreement imposed a considerable financial burden on

Union Pacific and hindered Union Pacific’s crosscountry railroad operations. Id. So, having already

heard and rejected Defendants’ arguments against

implied preemption, the Court will not reconsider the

matter on a Rule 59(e) motion.

Third, Defendants resurrect their argument that

the 1954 Agreement is a contractual obligation that

cannot be preempted. Docket No. 74 at 9–10. Again, the

Court thoroughly rejected this argument in its

February 3 opinion:

[T]he 1954 Agreement is not a voluntary

contract between private parties. The

Agreement is with the City and County—both

acting in their roles as government entities to

App. 77

secure benefits for their citizens, not as market

participants. See Air Evac EMS, Inc. v.

Cheatham, 910 F.3d 751, 768-70 (4th Cir. 2018)

(“[W]hen the state acts as a market participant,

it is treated like a private party in the same

market; when the state acts as a regulator, it is

subject to the unique limits placed on states by

our federal system.”). And the 1954 Agreement

was not voluntary, but rather the product of a

federal bankruptcy proceeding in which state

and federal law constrained the railroad’s

negotiating power. Docket Nos. 39 at 6–8

¶¶ 7–10; 51 at 3 ¶ 3.

Docket No. 65 at 33. The Court sees no reason to revisit

the matter now.

In their Rule 59(e) motion, Defendants have not

presented any evidence, identified any legal theory, or

cited any authority that was not already analyzed by

the parties and the Court. “[D]istrict court opinions ‘are

not intended as mere first drafts, subject to revision

and reconsideration at a litigant’s pleasure.’” eTool

Dev., Inc. v. Nat’l Semiconductor Corp., 881 F. Supp. 2d

745, 749 (E.D. Tex. 2012) (quoting Verdin v. Fed. Nat’l

Mortg. Ass’n, No. 4:10–cv–590, 2012 WL 2803751, at *1

(E.D. Tex. July 10, 2012)). Defendants’ Rule 59(e)

motion is thus nothing more than a second bite at the

apple—and it fails on that basis alone.

III. Permanent Injunction

Defendants also argue that the Court’s injunction is

vague because they are unable to determine its effect

on a related state court judgment—specifically,

App. 78

whether Defendants are “enjoined from seeking

enforcement of the 1955 state court judgment.” Docket

No. 74 at 10–11. In response, Union Pacific concedes

that it “did not seek an injunction to bar the City and

County from filing any action they believe they might

have with respect to the 1955 Judgment in state court,

and this Court did not enter one.” Docket No. 75 at 8.

There is therefore no dispute on this point, and the

Court need not address it further. See United States v.

Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020) (“[A]s a

general rule, our system ‘is designed around the

premise that [parties represented by competent

counsel] know what is best for them, and are

responsible for advancing the facts and argument

entitling them to relief.’”) (quoting Castro v. United

States, 540 U.S. 375, 386 (2003) (Scalia, J., concurring

in part and concurring in judgment)); accord Gonzalez

v. CoreCivic, Inc., 986 F.3d 536, 540 (5th Cir. 2021)

(Ho, J., concurring).

IV. Conclusion

Based on the foregoing, the Court DENIES

Defendants’ Motion for New Trial or [to] Alter or

Amend the Court’s Order and Opinion (Docket No. 65),

Memorandum Opinion (Docket No. 69), and Final

Judgment (Docket No. 70). Docket No. 74.

So ORDERED and SIGNED this 27th day of May,

2021.

s/____________________________________

JEREMY D. KERNODLE

UNITED STATES DISTRICT JUDGE

App. 79

APPENDIX F

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

Case No. 6:19-cv-574-JDK

[Filed March 25, 2021]

_____________________________

UNION PACIFIC RAILROAD )

COMPANY,

)

Plaintiff,

)

CITY OF PALESTINE, et al., )

)

Defendants.

)

_____________________________ )

MEMORANDUM OPINION

Before the Court is the question of what relief to

award Plaintiff Union Pacific in light of the Court’s

February 3, 2021 Order granting Union Pacific’s

Motion for Summary Judgment and denying

Defendants City of Palestine and Anderson County’s

Motion for Summary Judgment. Docket No. 65. In its

Complaint, Union Pacific seeks declaratory and

injunctive relief related to the 1954 Agreement, as well

as declaratory and injunctive relief related to the 1914

App. 80

Decree. Docket No. 1 at 16–17. The Court will grant

relief as to the 1954 Agreement because, in express

preemption cases, “a finding with regard to likelihood

of success fulfills the remaining requirements” of

injunctive and declaratory relief See Tex. Midstream

Gas Servs., LLC v. City of Grand Prairie, 608 F.3d 200,

206 (5th Cir. 2010). But, for the reasons articulated

below, the Court will deny Union Pacific’s other

requested relief.

I. BACKGROUND

Union Pacific’s Motion for Summary Judgment

identified two dispositive issues: “Whether ICCTA

preempts the 1954 Agreement both categorically and as

applied” and “[w]hether Palestine’s defenses . . . fail as

a matter of law.” Docket No. 39 at 4. Likewise, the City

and County presented three issues related to the

ICCTA’s preemption of the 1954 Agreement, namely:

whether the 1954 Agreement is a voluntary contract, is

enforceable by a state law or regulation, or is an

unreasonable burden on or interference with interstate

commerce. Docket No. 42 at 10. Both parties presented

evidence and argument concerning the scope of the

ICCTA’s preemption as to the 1954 Agreement. Docket

Nos. 39, 42, 48, 51. Finding that the ICCTA explicitly

and impliedly preempts the 1954 Agreement, the Court

granted summary judgment in Union Pacific’s favor.

Docket No. 65 at 25, 31–32, 40–41.

The Parties did not argue—and the Court did not

consider—whether the ICCTA preempts the 1914

Decree. Even so, Union Pacific seeks declaratory and

injunctive relief as to the 1914 Decree. Docket Nos. 1 at

16–17, 39 at 30. The Court requested supplemental

App. 81

briefing, asking the parties to explain whether and how

the 1914 Decree’s preemption was argued as a part of

this case. With the benefit of the Parties’ supplemental

briefing (Docket Nos. 67–68) and for the reasons

explained below, the Court declines to award relief as

to the 1914 Decree.

II. LEGAL STANDARD

“[T]he scope of injunctive relief is dictated by the

extent of the violation established.” ODonnell v. Harris

Cnty., 892 F.3d 147, 163 (5th Cir. 2018) (quoting

Califano v. Yamasaki, 442 U.S. 682, 702 (1979)). The

Court must “narrowly tailor an injunction to remedy

the specific action which gives rise to the order.” John

Doe #1 v. Veneman, 380 F.3d 807, 818–19 (5th Cir.

2004) (citing Valley v. Rapides Parish Sch. Bd., 646

F.2d 925, 942 (5th Cir.1981)); accord Scott v. Schedler,

826 F.3d 207, 211 (5th Cir. 2016). By contrast, an

injunction is overbroad when “it exceeds the extent of

the violation established.” Id. (citing Califano, 442 U.S.

at 702); accord Green Valley Special Util. Dist. v. City

of Schertz, 969 F.3d 460, 478 n. 39 (5th Cir. 2020). An

overbroad injunction is subject to vacatur. ODonnell,

892 F.3d at 163 (citing John Doe #1, 380 F.3d at 818).

Likewise, a declaratory judgment is available only

where the underlying dispute gives rise to the remedy.

A declaratory judgment must both “serve a useful

purpose in clarifying and settling the legal relations in

issue” and “terminate and afford relief from the

uncertainty, insecurity, and controversy giving rise to

the proceeding.” Env’t Tex. Citizen Lobby, Inc. v.

ExxonMobil Corp., 824 F.3d 507, 523 (5th Cir. 2016)

(quoting Concise Oil & Gas P’ship v. La. Intrastate Gas

App. 82

Corp., 986 F.2d 1463, 1471 (5th Cir.1993)). Prayers for

declaratory relief “depend on an otherwise justiciable

case or controversy for their vitality.” Lawry v. Bank of

New York Mellon Tr. Co., N.A., 797 F. App’x 152, 156

(5th Cir. 2019) (per curiam) (citing Bauer v. Texas, 341

F.3d 352, 357–58 (5th Cir. 2003)).

III. ANALYSIS

Union Pacific characterizes its Complaint and

briefing as having “always treated the 1954 Agreement

and the 1914 Decree as two sides of the same coin.”

Docket No. 67 at 1. Union Pacific asserts that both its

Complaint and summary judgment motion emphasized

that, because the 1914 Decree was a precursor to the

1954 Agreement, the ICCTA preempts the 1914 Decree

for the same reasons that it preempts the 1954

Agreement. Id. at 2–3. Defendants respond that Union

Pacific has not offered any evidence that the ICCTA

preempts the 1914 Decree and that, under the RookerFeldman Doctrine and the Anti-Injunction Act, only

Texas state courts may amend the 1914 Decree. Docket

No. 68 at 2–4.

After carefully reviewing the record, the Court finds

that Union Pacific did not plead, prove, or even argue

(until its supplemental brief) that the ICCTA preempts

the 1914 Decree. Accordingly, the Court denies

declaratory and injunctive relief as to the 1914 Decree.

The Court must “narrowly tailor an injunction to

remedy the specific action which gives rise to the

order.” Veneman, 380 F.3d at 818. Here, Union Pacific’s

“specific action” consisted of one count: the ICCTA

expressly and impliedly preempts the 1954 Agreement.

App. 83

Docket No. 1 at ¶¶ 40–41. To resolve this action, Union

Pacific’s Motion for Summary Judgment argued two

dispositive issues: the ICCTA preempted the 1954

Agreement as a matter of law and the City and

County’s affirmative defenses regarding the Agreement

failed as a matter of law. Docket No. 39 at 4. The Court

considered the parties’ arguments and held that the

ICCTA expressly and impliedly preempted the

Agreement. Docket No. 65 at 21–32.

To be sure, as Union Pacific now argues, the Court’s

reasoning in analyzing the 1954 Agreement may also

apply to the 1914 Decree, Docket No. 67 at 3–4, but the

preemption of the 1914 Decree was not before the

Court. The Court has no discretion to award injunctive

relief “beyond the scope of the contract” in dispute—the

1954 Agreement. See U-Save Auto Rental of Am., Inc.

v. Moses, 80 F. App’x 929, 930 (5th Cir. 2003) (per

curiam). Because the ICCTA’s effect on the 1914

Decree is a separate question not at issue in this case,

the Court declines to award injunctive relief as to the

1914 Decree.1 See ODonnell, 892 F.3d at 163–64.

For many of the same reasons, the Court declines to

award declaratory relief as to the 1914 Decree. Union

Pacific requests a declaration that the 1914 Decree is

“null and void.” Docket Nos. 1 at 16, 39 at 30. As

explained above, however, the dispositive issue in this

case is whether the ICCTA preempted the 1954

Agreement. Accordingly, a declaration regarding the

Having declined to award injunctive relief as to the 1914 Decree,

the Court need not reach Defendants’ arguments as to the

availability of the disputed relief. See Docket No. 68 at 2–4.

App. 84

1914 Decree would not aid in “clarifying and settling

the legal relations in issue,” much less “terminate and

afford relief from the uncertainty, insecurity, and

controversy giving rise to the proceeding.” See Env’t

Tex. Citizen Lobby, 824 F.3d at 523. Because

declaratory relief would not clarify the parties’ legal

relationship, the Court declines to award such relief

here. See, e.g., Sanchez v. Bank of Am., N.A., No. 3:14cv-2571-B, 2015 WL 418084, at *8 (N.D. Tex. Jan. 30,

2015).

IV. CONCLUSION

In sum, the Court will grant Union Pacific’s

requested relief as to the 1954 Agreement but will deny

Union Pacific’s remaining requested relief. The Court

will separately enter Final Judgment in accordance

with this Opinion.

So ORDERED and SIGNED this 25th day of

March, 2021.

s/____________________________________

JEREMY D. KERNODLE

UNITED STATES DISTRICT JUDGE

App. 85

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

Case No. 6:19-cv-574-JDK

[Filed March 25, 2021]

_____________________________

UNION PACIFIC RAILROAD )

COMPANY,

)

Plaintiff,

)

CITY OF PALESTINE, et al., )

)

Defendants.

)

_____________________________ )

FINAL JUDGMENT

Pursuant to the Court’s Order Granting Summary

Judgment for Plaintiff Union Pacific (Docket No. 65),

entered on February 3, 2021, the Court hereby enters

FINAL JUDGMENT.

IT IS ORDERED that:

1. The 1954 Agreement is preempted by the ICCTA

and so is null and void;

2. Union Pacific is under no obligation to honor any

of the 1954 Agreement’s terms, including any

requirement that the railroad station any

App. 86

portion of its workforce or operations at

Palestine;

3. Neither Union Pacific or any of its successors

and assigns are required to maintain employees

or facilities in Palestine, Texas or Anderson

County, Texas;

4. City of Palestine and Anderson County are

enjoined from enforcing the 1954 Agreement

against Union Pacific nor any of its successors

and assigns.

All pending motions are DENIED as MOOT. All

expenses, costs, and attorneys’ fees are to be borne by

the party that incurred them. The Clerk of the Court is

instructed to close this case.

So ORDERED and SIGNED this 25th day of

March, 2021.

s/____________________________________

JEREMY D. KERNODLE

UNITED STATES DISTRICT JUDGE

App. 87

APPENDIX G

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

Case No. 6:19-cv-574-JDK

[Filed February 3, 2021]

_____________________________

UNION PACIFIC RAILROAD )

COMPANY,

)

Plaintiff,

)

CITY OF PALESTINE, et al., )

)

Defendants.

)

_____________________________ )

ORDER AND OPINION

This case has its origins in a nineteenth-century

relic—a “shop agreement” in which a railroad promised

to maintain shops and offices in a particular

municipality in exchange for government subsidies to

expand the rail line. Plaintiff Union Pacific Railroad

Company alleges that its agreement with the City of

Palestine and Anderson County, Texas, is preempted

by a federal statute, the Interstate Commerce

Commission Termination Act (ICCTA). Union Pacific

App. 88

seeks a declaration voiding the agreement and an

injunction prohibiting the City and County from

enforcing it.

Pending before the Court are two motions to dismiss

filed by the City and County and the Parties’ crossmotions for summary judgment. For the reasons

discussed below, the Court DENIES Defendants’

motions to dismiss (Docket Nos. 40 & 41), GRANTS

Plaintiff’s motion for summary judgment (Docket No.

39), and DENIES Defendants’ motion for summary

judgment (Docket No. 42).

I. BACKGROUND

Union Pacific’s contractual relationship with the

City of Palestine and Anderson County originated

nearly 150 years ago. In 1872, Union Pacific’s

predecessor in interest contracted with the City and

County to run its rail line to and through Palestine.

City of Palestine v. United States, 559 F.2d 408, 410

(5th Cir. 1977).1 At that time, the railroad promised to

“locate and establish and forever thereafter keep and

maintain” its “general offices, machine shops and

roundhouses” in Palestine. Id. And Palestine promised

to raise $150,000 in bonds for the railroad from the

citizens of Anderson County. Id.

The key facts in this case are undisputed. The Fifth Circuit

stated the relevant facts in a 1977 opinion, which adjudicated a

different dispute involving the same 1954 Agreement. See City of

Palestine, 559 F.2d at 408. That opinion construed and applied the

ICCTA’s predecessor statute, the Interstate Commerce Act (ICA).

Id.

App. 89

In 1873, the railroad company merged with a second

line. The Texas Legislature approved the merger on the

condition that the merged company assume “all acts

done in the name of either of the companies.” Id. The

new railroad therefore agreed to establish its “general

offices, machine shops and roundhouses” in Palestine.

Id. In 1875, the citizens paid an additional $150,000 in

bonds and agreed to “construct, at their own cost and

expense, housing for the officers and employees of the

company.” Id.

In 1911, the railroad’s creditors reorganized the

business into the new International & Great Northern

Railroad (I&GN), subject to all the predecessor

railroad’s rights and liabilities. Id. at 410–11. I&GN’s

corporate charter located the railroad’s offices in

Houston, Texas. Id. at 411. The City and County sued

I&GN, seeking an injunction to enforce the railroad’s

obligation to locate its “general offices, machine shops

and roundhouses” in Palestine. Id. The City and

County won, and the Cherokee County District Court

issued a decree (the 1914 Decree) forever binding

I&GN to maintain its general offices, machine shops,

and roundhouses in Palestine.2 Id. at 412.

The 1914 Decree complied with Texas’s “Shop Act,”

which statutorily required “a railroad company

chartered by the state without charter-designated office

location” to:

On appeal, the U.S. Supreme Court affirmed the decision. Int’l &

Great N. Ry. Cnty. v. Anderson County, 246 U.S. 424, 432–34

(1918) (“The [office and shops] requirement is perpetual until the

law is changed. When and how it may be changed is not before us

now.”).

App. 90

keep and maintain its general offices at such

place within this state where it shall have

contracted or agreed, or shall hereafter contract

or agree, to locate its general office for a

valuable consideration. . . . And such railroads

shall keep and maintain their machine shops

and roundhouses, or either, at such place or

places as they may have contracted to keep them

for a valuable consideration received; and, if said

general offices and shops and roundhouses, or

either, are located on the line of a railroad in a

county which has aided said railroad by an issue

of bonds in consideration of such location being

made, then said location shall not be changed;

and this shall apply as well to a railroad that

may have been consolidated with another as to

those which have maintained their original

organization.

Id. (quoting TEX. REV. CIV. STAT. art. 6423 (1911)).

Missouri Pacific (MoPac) subsequently acquired

I&GN as a subsidiary. Id. During the Great

Depression, MoPac filed for bankruptcy and requested

reorganization under Bankruptcy Act § 77. Id. In its

request, MoPac proposed to consolidate with its

subsidiaries, including I&GN. Id. But the 1914 Decree

required I&GN to maintain its offices in Palestine, and

MoPac’s offices were located elsewhere. Id. The

Bankruptcy Act, moreover, expressly required

enforcement of the 1914 Decree. Section 77(n) stated:

No reorganization effected under this title and

no order of the court or Commission in

connection therewith shall relieve any carrier

App. 91

from the obligation of any final judgment of any

Federal or State court rendered prior to January

1, 1929, against such carrier or against one of its

predecessors in title, requiring the maintenance

of offices, shops, and roundhouses at any place,

where such judgment was rendered on account

of the making of a valid contract or contracts by

such carrier or one of its predecessors in title.

Id. (quoting 11 U.S.C. § 205(n) (1970)).

At the request of the bankruptcy court, MoPac

negotiated with the City and County in 1954 to modify

the 1914 Decree. Id. Pursuant to the agreement (the

1954 Agreement), “MoPac agreed to forever maintain

in Palestine 4.5% of all of its employees in certain job

classifications” and was no longer required to

“maintain its general offices, shops and roundhouses in

Palestine.” Id. The percentage was subject to

fractionation if the railroad subsequently merged,

combined, or consolidated. Docket No. 39, Ex. 1 at

23–24. In 1955, the District Court of Cherokee County,

Texas, entered a judgment to modify the 1914 Decree

according to the 1954 Agreement. Id., Ex. 3. The

bankruptcy court approved the reorganization. City of

Palestine, 559 F.2d at 412.

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 and preempting state

and local laws that come within the Board’s

jurisdiction. Pub. L. No. 104-88, 109 Stat. 803 (1995);

Tex. Cent. Bus. Lines Corp. v. Midlothian, 669 F.3d

App. 92

525, 530 (5th Cir. 2012). In 1997, Union Pacific merged

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

2007, Texas repealed its Shop Act, concluding that it

was preempted by the ICCTA. H.R. 80-3711, Reg. Sess.

at 1 (Tex. 2007).

At present, Union Pacific must employ 0.52% of its

“Office and Shop Employees” in Palestine, Texas.

Docket No. 39, Ex. 4 at 31:7–17. The 1954 Agreement

defines “Office and Shop Employees” to include the

following classifications: Executives, Officials, and Staff

Assistants; Professional, Clerical, and General;

Maintenance of Equipment and Stores; Transportation

(other than Train, Engine and Yard); Transportation

(Yardmasters, Switch Tenders, and Hostlers). Docket

1, Ex. 1 at 3. In this lawsuit, Defendants do not assert

that Union Pacific has breached the 1954 Agreement.

See Docket No. 51 at 8 ¶ 17. Instead, Union Pacific

alleges that the ICCTA preempts the 1954 Agreement

and seeks a declaratory judgment and injunctive relief

to void its obligations under the Agreement.

II. DEFENDANTS’ MOTIONS TO DISMISS

The City and County have filed two motions to

dismiss. The first argues that Federal Rule of Civil

Procedure 12(b)(7) requires dismissal because a class of

Palestine and Anderson County citizens is necessary to

the suit under Federal Rule of Civil Procedure 19.

Docket No. 40. The second motion seeks dismissal

under Federal Rule of Civil Procedure Rule 12(c) on

three grounds: (1) the Court lacks subject matter

jurisdiction, (2) the Anti-Injunction Act bars this suit,

and (3) the limitations period has expired. The Court

DENIES both motions.

App. 93

A. DEFENDANTS’ MOTION TO DISMISS UNDER

RULE 12(B)(7) AND RULE 19

Under Rule 12(b)(7), a party may seek dismissal for

“failure to join a party under Rule 19.” Rule 19(a)(1)

provides that a party must be joined if:

(A) in that person’s absence, the court cannot

accord complete relief among existing parties; or

(B) that person claims an interest relating to the

subject of the action and is so situated that

disposing of the action in the person’s absence

may:

(i) as a practical matter impair or impede the

person’s ability to protect the interest; or

(ii) leave an existing party subject to a

substantial risk of incurring double,

multiple, or otherwise inconsistent

obligations because of the interest.

A Rule 19(a) analysis is subject to a burden-shifting

framework. The movant bears the “the initial burden of

demonstrating that a missing party is necessary.” Hood

ex rel. Miss. v. City of Memphis, 570 F.3d 625, 628 (5th

Cir. 2009). If “an initial appraisal of the facts indicates

that a possibly necessary party is absent,” then the

burden shifts to the opposing party to show that the

missing party is not necessary. Id. (quoting

Pulitzer–Polster v. Pulitzer, 784 F.2d 1305, 1309 (5th

Cir. 2006)). In making Rule 19 determinations,

“‘pragmatic concerns, especially the effect on the

parties and on the litigation,’ will control.” Tetra

Techs., Inc. v. La. Fruit Co., No. 06- CV-3736, 2007 WL

App. 94

54814, at *2 (E.D. La. Jan. 5, 2007), aff’d, 252 F. App’x

639 (5th Cir. 2007) (quoting Smith v. State Farm Fire

& Cas. Co., 633 F.2d 401, 405 (5th Cir. 1980)).3

Here, the City and County argue that the historic

Citizens Committee is a necessary party under Rule

19(a)(1)(A) and (B). The Citizens Committee was a

group of ten local citizens who signed the 1954

Agreement, along with representatives from the

railroad, the City of Palestine, and Anderson County.

Docket No. 39, Ex. 1 at 13. The Committee’s history is

unclear, but the entity is undisputedly inactive today,

and no member has sought to be a party in this case.

Docket No. 44 at 1. As explained below, Union Pacific

has demonstrated that the Court can accord complete

relief without the Committee and that the Committee

has no interest in the action. Accordingly, the Court

finds that the Citizens Committee is not a necessary

party under Rule 19(a) and denies the motion to

dismiss. See Nat’l Cas. Co., 637 F. App’x at 815.

1. Joinder is not required under Rule

19(a)(1)(A).

The City and County first argue that joinder is

required under Rule 19(a)(1)(A) because the Citizens

If a party is required to be joined under Rule 19(a), but joinder is

not feasible, Rule 19(b) provides that the Court must determine

“whether, in equity and good conscience, the action should proceed

among the existing parties or should be dismissed” based on a

variety of factors. If joinder is not required under Rule 19(a), “no

inquiry under Rule 19(b) is necessary.” Nat’l Cas. Co. v. Gonzalez,

637 F. App’x 812, 815 (5th Cir. 2016) (per curiam) (quoting Temple

v. Synthes Corp., 498 U.S. 5, 8 (1990)). Because the Court finds

that joinder is not required here, it will not address Rule 19(b).

App. 95

Committee was a party to the 1954 Agreement (and an

active participant in antecedent agreements) and that

the Court therefore “cannot accord complete relief”

without the Committee. Docket No. 40 at 2. Union

Pacific responds that the Committee does not have a

legally protectable interest in the 1954 Agreement, so

the Court can accord complete relief without the

Committee’s involvement. Docket No. 44 at 4.

Reviewing the 1954 Agreement, the Court agrees that

the Citizens Committee lacks a legal interest in its

enforcement, and thus the Court can accord complete

relief without joining the Committee.

To determine whether complete relief is available

without the absent party, “the Court looks to the relief

prayed for by the claimant.” Cain v. City of New

Orleans, 184 F. Supp. 3d 349, 358 (E.D. La. 2016).

Here, Union Pacific seeks declaratory and injunctive

relief against the City of Palestine and Anderson

County. Docket No. 1 at 16–17. The requested

declaratory relief would render null and unenforceable

the 1954 Agreement and its predicate, the 1914 Decree.

The Citizens Committee was a signatory to the 1954

Agreement, and a representative class of citizens was

a party to the litigation resulting in the 1914 Decree.

Docket No. 1, Ex. 1 at 13; Docket No. 40, Ex. 1 at 7.

“Generally, when interpretation of a contract is

necessary, the parties to the contract must be joined.”

Optimum Content Prot., LLC v. Microsoft Corp., No.

6:13-CV-741, 2014 WL 12452439, at *3 (E.D. Tex. Aug.

25, 2014), R. & R. adopted, No. 6:13-CV-741, 2014 WL

12324277 (E.D. Tex. Oct. 7, 2014).

App. 96

But here, the Citizens Committee has no right to

enforce the 1954 Agreement. Rather, the Agreement

assigns enforcement rights exclusively to the City and

County, providing that in the event of breach, only the

City and County may:

(a)

Require specific performance by the

RAILROAD of its obligations hereunder;

(b)

Notify the RAILROAD in writing of the

intention of the City and County to

rescind this new agreement . . . . the City

and County may apply to the proper court

for a hearing to determine whether any of

said defaults exist as claimed and

constitute unexcused breach of this

Agreement and the new judgment based

thereon . . . .

Docket No. 1, Ex. 1 at 9–10. Further, the City and

County may exercise or enforce any “right or remedy”

available to the citizens. As the Agreement provides:

“the City and County may either concurrently,

independently, or cumulative of the foregoing, exercise

or enforce any other right or remedy which may be

available to the City and County and their citizens

under the then existing circumstances.” Id. 1 at 10–11.

The Citizens Committee, then, has no contractual

interest in the 1954 Agreement’s enforcement.4

This determination moots the Parties’ dispute as to whether

Defendants’ Exhibits 2 & 3, Docket No. 40, constitute hearsay. See

Docket Nos. 44 at 4; 49 at 2.

App. 97

Though the Citizens Committee paid separate

consideration for the 1954 Agreement’s antecedent

contracts, the Committee does not have an enforcement

right in the 1954 Agreement. Like a predecessor in

interest, the Citizens Committee has “no remaining

rights in the subject properties or interest in the

outcome of this case.” Samson Contour Energy E & P,

LLC v. Fred Bowman, Inc., No. 11-CV-0247, 2011 WL

6157481, at *3 (W.D. La. May 11, 2011), R. & R.

adopted, No. 11-CV-0247, 2011 WL 2295022 (W.D. La.

June 9, 2011). Absent a “protectable interest that is the

subject of the case,” the nonparty’s joinder is not

required. Pearson’s Inc. v. Ackerman, No. 7:18-CV00013-BP, 2018 WL 5886608, at *3 (N.D. Tex. Nov. 9,

2018). While the citizens of Palestine and Anderson

County may have a general interest in the outcome of

the case, the 1954 Agreement renders that interest

non-protectable such that the Citizens Committee or an

equivalent group is not a required party. Cf. BroadStar

Wind Sys. Grp. Ltd. Liab. Co. v. Stephens, 459 Fed.

Appx. 351, 357 (5th Cir. 2012) (per curiam) (“While [the

absent party] certainly had interests in the outcome of

the suit, as a non-party to the contract which was the

sole basis for the declaratory judgment suit, [it] was

neither necessary nor indispensable.”).

2. Joinder is not required under Rule

19(a)(1)(B)(i).

Defendants next argue that joinder is required

under Rule 19(a)(1)(B)(i) because resolving this case

without the Citizens Committee would prejudice the

Committee’s rights under the 1954 Agreement. Union

Pacific contends that the Committee has no rights

App. 98

under the Agreement, and, even if it did, the joined

parties adequately represent the Committee’s interest

in the litigation, so joinder is not necessary. The Court

agrees with Union Pacific.

Rule 19(a)(1)(B)(i) requires joinder if a person

“claims an interest relating to the subject of the action

and is so situated that disposing of the action in the

person’s absence may: as a practical matter impair or

impede the person’s ability to protect the interest.”

This rule does not require joinder of the Citizens

Committee for at least three reasons.

First, no Committee member (or successor in

interest) has claimed a legal interest in this dispute.

“[T]he fact that an absent party does not seek joinder

by its own volition indicates that it lacks an interest

relating to the subject matter of the action.” Canal Ins.

Co. v. Xmex Transp. LLC, No. EP-13-CV-156-KC, 2013

WL 5740223, at *4 (W.D. Tex. Oct. 22, 2013).

Second, as discussed above, the Citizens

Committee’s interest in this litigation is not legally

protectable. Consequently, non-joinder of the

Committee does not “impair or impede” its ability to

protect a legal interest.

Third, in this case, the absent Committee has the

same interests as the joined parties such that its

“interests are protected by [the joined parties’] vigorous

litigation in the [] dispute.” Fed. Ins. Co. v. Singing

River Health Sys., 850 F.3d 187, 201 (5th Cir. 2017).

Defendants argue that their interest may differ from

the Citizen Committee, e.g., the Citizens Committee

may desire amendment of the 1954 Agreement. Docket

App. 99

No. 49 at 3. But this case does not—and could

not—contemplate amendment. Here, the ICCTA either

preempts the 1954 Agreement or it does not. Both sides

of this issue are represented by the present parties, so

any potential interest of the Citizens Committee is

protected by the existing parties’ “vigorous litigation.”

Singing River Health, 850 F.3d at 201.

3. Joinder is not required under Rule

19(a)(1)(B)(ii).

Finally, the City and County contend that joinder of

the Committee is required by Rule 19(a)(1)(B)(ii)

because the Committee may sue to enforce the 1954

Agreement even if an injunction bars the City and

County from enforcing it. Union Pacific argues that

this is a non-issue because the Committee has no

enforcement rights under the Agreement. Again, the

Court agrees with Union Pacific.

Joinder is required under Rule 19(a)(1)(B)(ii) if a

person “claims an interest relating to the subject of the

action and is so situated that disposing of the action in

the person’s absence may . . . leave an existing party

subject to a substantial risk of incurring double,

multiple, or otherwise inconsistent obligations because

of the interest.” Here, the Citizens Committee does not

have the power to enforce the 1954 Agreement, see

supra Part II.A.1., and thus has no legal “interest

relating to” it. In other words, because the Citizens

Committee lacks a mechanism to unilaterally enforce

the 1954 Agreement, there is no risk of inconsistent

obligations here.

App. 100

Because non-joinder of the Citizens Committee does

not preclude complete relief, “impair or impede” the

Committee’s ability to protect a legal interest, or risk

inconsistent obligations, the Citizens Committee is not

a required party under Rule 19(a). The Court therefore

DENIES Defendants’ Motion to Dismiss under Rule

12(b)(7) (Docket No. 40).

B. DEFENDANTS’ MOTION TO DISMISS UNDER

RULE 12(C)

Defendants next move for dismissal under Federal

Rule of Civil Procedure 12(c), arguing that the Court

lacks subject matter jurisdiction, that the AntiInjunction Act bars Union Pacific’s claim, and that the

governing limitations period has run. For the reasons

discussed below, the Court DENIES Defendants’

motion.

1. Legal Standard

Rule 12(c) permits a party to move for judgment on

the pleadings after the pleadings are closed but early

enough not to delay trial. The rule is designed to

“dispose of cases where the material facts are not in

dispute and a judgment on the merits can be rendered

by looking to the substance of the pleadings and any

judicially noticed facts.” Garza v. Escobar, 972 F.3d

721, 727 (5th Cir. 2020) (quoting Great Plains Tr. Co.

v. Morgan Stanley Dean Witter & Co., 313 F.3d 305,

312 (5th Cir. 2002)). “The standard for dismissal under

Rule 12(c) is the same as that under Rule 12(b)(6).” Id.

(quoting Hale v. Metrex Research Corp., 963 F.3d 424,

427 (5th Cir. 2020)).

App. 101

Under Rule 12(b)(6), a party may seek dismissal for

failure to state a claim upon which relief can be

granted. “Thus, claims may be dismissed under Rule

12(b)(6) ‘on the basis of a dispositive issue of law.’”

Walker v. Beaumont Indep. Sch. Dist., 938 F.3d 724,

734 (5th Cir. 2019) (quoting Neitzke v. Williams, 490

U.S. 319, 326 (1989)). In evaluating a Rule 12(b)(6)

motion, the Court must “accept as true all well pleaded

facts in the complaint.” Campbell v. Wells Fargo Bank,

N.A., 781 F.2d 440, 442 (5th. Cir. 1986). “All questions

of fact and any ambiguities in the current controlling

substantive law must be resolved in the plaintiff’s

favor.” Lewis v. Fresne, 252 F.3d 352, 357 (5th Cir.

2001).

2. The Court has subject matter jurisdiction.

The parties do not dispute that diversity jurisdiction

exists under 28 U.S.C. § 1332. Docket Nos. 45 at 1–2;

50 at 1. Indeed, Union Pacific is a citizen of Delaware

and Nebraska, and Defendants are citizens of Texas.

Docket No. 45 at 2. The City and County appear to

argue, however, that diversity jurisdiction is

insufficient to award the declaratory and injunctive

relief sought by Union Pacific based on its claim of

preemption. Docket No. 50 at 1–3.

The City and County are incorrect. A federal court

sitting in diversity may decide a declaratory judgment

action. E.g., Frye v. Anadarko Petroleum Corp., 953

F.3d 285, 293 (5th Cir. 2019); Farkas, 737 F.3d at 341.

And in this posture, the Court may resolve a plaintiff’s

preemption claim. Pharmacia LLC v. Grupo De

Inversiones Suramericana S.A., No. 2:15-CV-920-RWSRSP, 2016 WL 3460767, at *1 (E.D. Tex. Apr. 11, 2016),

App. 102

R. & R. adopted, No. 2:15-CV-920-RWS-RSP, 2016 WL

5387776, at *1 (E.D. Tex. Sept. 27, 2016). Further, as

the Fifth Circuit has observed: “We have reviewed

several cases in which diversity was alleged as the

jurisdictional ground for colorable state claims

preempted by federal law. In these cases, the courts,

rather than dismiss, have applied federal substantive

law.” Woodfork v. Marine Cooks & Stewards Union, 642

F.2d 966, 975–76 (5th Cir. 1981).

3. The Anti-Injunction Act does not bar

this suit.

The City and County also argue that the AntiInjunction Act, codified at 28 U.S.C. § 2283, bars Union

Pacific’s case because a federal court cannot enjoin the

City or County from enforcing the 1954 Agreement or

the state court 1914 Decree. Docket No. 41 at 14. Union

Pacific contends that the Act is inapplicable here

because there is no pending state court proceeding.

Docket No. 45 at 4. With no state action pending, the

Court agrees that the Anti-Injunction Act does not

apply.

The Anti-Injunction Act prohibits “an injunction to

stay proceedings in a State court except as expressly

authorized by Act of Congress, or where necessary in

aid of its jurisdiction, or to protect or effectuate its

judgments.” 28 U.S.C. § 2283. The Act may also bar a

declaratory judgment action that would interfere with

a state lawsuit. Travelers Ins. Co. v. La. Farm Bureau

Fed’n, Inc., 996 F.2d 774, 776 (5th Cir. 1993). Further,

“[i]t is well established that the Act applies only to

pending state court proceedings; the Act ‘does not

preclude injunctions against a lawyer’s filing of

App. 103

prospective state court actions.’” SEC v. Kaleta, 530 F.

App’x 360, 363 n.4 (5th Cir. 2013) (per curiam) (quoting

Newby v. Enron Corp., 302 F.3d 295, 301 (5th Cir.

2002)) (emphasis original). In the simplest terms, “the

Act ‘applies only to pending state court actions.’” Fed.

Ins. Co. v. Northfield Ins. Co., No. CV 4:14-00262, 2019

WL 1302295, at *4 (S.D. Tex. Mar. 21, 2019) (quoting

B&A Pipeline Co. v. Dorney, 904 F.2d 996, 1001 n.15

(5th Cir. 1990)).

Here, the City and County do not identify any

pending proceeding in a state court. The AntiInjunction Act therefore does not apply, and

Defendants’ argument for dismissal on this ground

fails.

4. The statute of limitations does not bar

this suit.

Finally, Defendants argue that Union Pacific’s claim

is untimely. Citing Texas’s four-year statute of

limitations governing contract claims, Defendants

argue that Union Pacific’s claim accrued when the

ICCTA became law in 1995 or, at the latest, when

Texas repealed the Shop Act in 2007. Docket No. 41 at

14–15 (citing TEX. CIV. PRAC. & REM. CODE § 16.004(1)).

Union Pacific argues that the substantive claim

underlying its request for declaratory relief is one for

breach of the 1954 Agreement, which has not occurred.

Docket No. 45 at 7–8.

In a declaratory judgment action, “[a] request for

declaratory relief is barred to the same extent that the

claim for substantive relief on which it is based would

be barred.” Mock v. St. David’s Healthcare P’ship, LP,

App. 104

LLP, No. A-19-CV-611-RP, 2020 WL 4434929, at *9

(W.D. Tex. July 31, 2020), R. & R. adopted, No. 1:19CV-611-RP, 2020 WL 5250641 (W.D. Tex. Sept. 2,

2020) (quoting Int’l Ass’n of Machinists & Aerospace

Workers v. Tenn. Valley Auth., 108 F.3d 658, 668 (6th

Cir. 1997)); see, e.g., Mayo v. Hartford Life Ins. Co., 354

F.3d 400, 409 (5th Cir. 2004). Here, the substantive

claim underlying Union Pacific’s declaratory judgment

action is a hypothetical claim for breach of the 1954

Agreement. Docket No. 45 at 8. But Defendants have

not alleged any breach by Union Pacific, and thus the

underlying substantive claim is not untimely. See

Cosgrove v. Cade, 468 S.W.3d 32, 39 (Tex. 2015) (A

“claim for breach of contract accrues when the contract

is breached.”); accord Western-Southern Life Assurance

Co. v. Kaleh, 879 F.3d 653, 663 (5th Cir. 2018).

The Court therefore holds that Union Pacific’s

declaratory judgment action is not barred by the

statute of limitations.

Having determined that the Court has subject

matter jurisdiction, that the Anti-Injunction Act does

not apply, and that the statute of limitations does not

bar Union Pacific’s claim, the Court DENIES

Defendants’ Motion to Dismiss under Rule 12(c).

III. UNION PACIFIC’S MOTION FOR

SUMMARY JUDGMENT

Union Pacific moves for summary judgment on its

claim of preemption (Docket No. 1 at 16 ¶¶ 39–41) and

on the City and County’s affirmative defenses (Docket

No. 24 at 8–12 ¶¶ 43–50). Docket No. 39 at 4. Union

App. 105

Pacific argues that the ICCTA expressly and impliedly

preempts the 1954 Agreement and that each of the City

and County’s affirmative defenses fails as a matter of

law. Id. at 15–29.

A. SUMMARY JUDGMENT STANDARD

Summary judgment is proper when the pleadings,

depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that

there is no genuine issue of material fact and that the

moving party is entitled to judgment as a matter of

law. FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477

U.S. 317, 323–25 (1986); Ragas v. Tenn. Gas Pipeline

Co., 136 F.3d 455, 458 (5th Cir. 1998). A fact is

material only if will affect the outcome of the case. See

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). A dispute is genuine only if the evidence could

lead a reasonable jury to find for the nonmoving party.

See id. In determining whether a genuine issue of

material fact exists, the Court views all inferences

drawn from the factual record in the light most

favorable to the nonmoving party. Id. at 255;

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 587 (1986).

After the moving party has made an initial showing

that there is no evidence to support the nonmoving

party’s claim, the nonmoving party must assert

competent summary judgment evidence to create a

genuine fact issue. Matsushita, 475 U.S. at 586. Mere

conclusory allegations, unsubstantiated assertions,

improbable inferences, and unsupported speculation

are not competent summary judgment evidence. See

Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996);

App. 106

Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir. 1994). The

nonmoving party must identify evidence in the record

and articulate how that evidence supports its claim.

Ragas, 136 F.3d at 458. Summary judgment must be

granted if the nonmoving party fails to make a showing

sufficient to establish the existence of an element

essential to its case and on which it will bear the

burden of proof at trial. Celotex, 477 U.S. at 322–23.

B. LEGAL FRAMEWORK

1. The Constitution’s Supremacy Clause

The preemption doctrine is rooted in the United

States’ federalist design. Under this system, “the

States possess sovereignty concurrent with that of the

Federal Government, subject only to limitations

imposed by the Supremacy Clause [of the U.S.

Constitution].” Tafflin v. Levitt, 493 U.S. 455, 458

(1990). The Supremacy Clause provides:

This Constitution, and the Laws of the United

States which shall be made in Pursuance

thereof; and all Treaties made, or which shall be

made, under the Authority of the United States,

shall be the supreme Law of the Land; and the

Judges in every State shall be bound thereby,

any Thing in the Constitution or Laws of any

State to the Contrary notwithstanding.

U.S. CONST., art. VI, cl. 2. Thus, any state law that

conflicts with the Constitution or a federal law is

preempted, or “without effect.” Maryland v. Louisiana,

451 U.S. 725, 746 (1981). “This is an extraordinary

power in a federalist system.” Gregory v. Ashcroft, 501

App. 107

U.S. 452, 460 (1991). “It is a power that we must

assume Congress does not exercise lightly.” Id.

2. The ICCTA

In 1995, Congress overhauled the regulation of the

railroad industry by enacting the ICCTA. The statute

repealed the Interstate Commerce Act, abolished the

Interstate Commerce Commission, and established the

Surface Transportation Board (STB). 49 U.S.C.

§ 10101, et seq.; see also Friberg v. Kan. City S. Ry. Co.,

267 F.3d 439, 442 (5th Cir. 2001). The Fifth Circuit

later explained that “[t]he regulation of railroad

operations has long been a traditionally federal

endeavor, to better establish uniformity in such

operations and expediency in commerce, and it appears

manifest that Congress intended the ICCTA to further

that exclusively federal effort, at least in the economic

realm.” Friberg, 267 F.3d at 443.

The ICCTA grants the STB exclusive jurisdiction

over a wide range of railroad operations. See 49 U.S.C.

§ 10501. Section 10501 states 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

App. 108

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.

49 U.S.C. § 10501(b). This text guides the Court’s

preemption analysis because it “necessarily contains

the best evidence of Congress’ pre-emptive intent.”

Franks Inv. Co. LLC v. Union Pac. R. Co., 593 F.3d

404, 408 (5th Cir. 2010) (quoting CSX Transp., Inc. v.

Easterwood, 507 U.S. 658, 664 (1993).

3. Framework for Preemption Analysis

“In determining the existence and reach of

preemption, Congress’s purpose is ‘the ultimate

touchstone’ to use.” Franks, 593 F.3d at 407 (quoting

Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)).

Congress may show its preemptive purpose in two

ways. First, the statute may contain “express

language.” Id. (quoting Altria Grp., Inc. v. Good, 555

U.S. 70, 76 (2008)). In addressing preemption under

the ICCTA, the Fifth Circuit has held that section

10501(b) expressly preempts laws attempting to

“manag[e] or govern[] rail transportation.” Id. at 410.

Further, “[t]o the extent remedies are provided under

laws that have the effect of regulating rail

transportation, they are [expressly] preempted.” Id.

Generally applicable state laws with a “mere ‘remote or

incidental effect on rail transportation’” are not

expressly preempted. Elam v. Kan. City S. Ry. Co., 635

App. 109

F.3d 796, 805 (5th Cir. 2011) (quoting Franks, 593 F.3d

at 410).

Second, a federal statute may impliedly preempt

state laws “if the scope of the statute indicates that

Congress intended federal law to occupy the legislative

field, or if there is an actual conflict between state and

federal law.” Franks, 593 F.3d at 407 (quoting Altria

Grp., 555 U.S. at 76–77). In the context of the ICCTA,

preemption by implication is sometimes equated with

“as-applied” preemption. See id. at 414. In addressing

implied preemption under the ICCTA, the Fifth Circuit

has held that “state law actions can be preempted as

applied if they have the effect of unreasonably

burdening or interfering with rail transportation.” Id.

This is a “fact-based test” requiring proof that the

specific state action at issue unreasonably burdened

rail transportation. Id.

C. EXPRESS PREEMPTION

Union Pacific first argues that the ICCTA expressly

preempts the 1954 Agreement because the Agreement

“implements a state law obligation that directly targets

‘the operations of rail transportation.’” Docket No. 39 at

17. The City and County contend that the Agreement

is a limited personnel requirement that does not

regulate “transportation.”5 Docket No. 51 at 15. Based

on the plain language of the ICCTA, the Court finds

that the 1954 Agreement is expressly preempted.

The City and County also argue that the 1954 Agreement is “not

subject to express preemption because it is not a state regulation,”

but instead a voluntary contract. The Court addresses this

argument infra Part III.E.

App. 110

The ICCTA’s preemption provision states: “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.” 49

U.S.C. § 10501(b).6 As noted above, the Fifth Circuit

has construed this provision to mean that laws having

“the effect of managing or governing rail transportation

will be expressly preempted” and that, “[t]o the extent

remedies are provided under laws that have the effect

of regulating rail transportation, they are preempted.”

Franks, 593 F.3d at 410 (emphasis original). Thus,

“[f]or a state court action to be expressly preempted

under the ICCTA, it must seek to regulate the

operations of rail transportation.” Id. at 413.

Rail “transportation,” in turn, is defined broadly by

statute to include, among other things, “facilities” and

“services” “related to the movement of passengers or

property by rail.” 49 U.S.C. § 10102(9). Section

10102(9) states:

(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

The Fifth Circuit held in Franks that “the relevant part of Section

10501(b) [for preemption purposes] is its second sentence.” 595

F.3d at 410. The first sentence of section 10501(b) “is defining the

authority of the STB in dealing with the fundamental aspects of

railroad regulation, and barring others from interfering with those

decisions by making the jurisdiction exclusive.” Id.

App. 111

property, or both, by rail, regardless of

ownership or an agreement concerning use; and

(B) services related to that movement,

including receipt, delivery, elevation, transfer in

transit, refrigeration, icing, ventilation, storage,

handling, and interchange of passengers and

property; []

49 U.S.C. § 10102(9).

Applying these provisions, the Fifth Circuit has held

that the ICCTA expressly preempted a state law

negligence action attempting to “mandate when trains

can use tracks and stop on them [because the action] is

attempting to manage or govern rail transportation in

a direct way.” Franks, 593 F.3d 411 (discussing

Friberg, 267 F.3d at 443). The ICCTA did not, however,

preempt a state law possessory action attempting to

“preserve a long-existing crossing over railroad tracks”

because the action was governed by “property laws and

rules of civil procedure that have nothing to do with

railroad crossings” and only incidentally regulated rail

transportation. Id. at 406, 411–13.

Turning to the 1954 Agreement, the Court finds

that it manages rail transportation in a direct way and

is therefore expressly preempted by the ICCTA. The

Agreement by its terms requires Union Pacific to

employ in Palestine a specific percentage of its “Office

and Shop Employees”—defined to include five classes

of executive, clerical, maintenance, and transportation

personnel. Docket 1, Ex. 1 at 3. To comply with this

requirement, Union Pacific maintains two departments

in Palestine: the car shop, which repairs cars in Union

App. 112

Pacific’s fleet, and the freight claims department,

which investigates and resolves claims arising out of

shipments on Union Pacific’s rail line. Docket No. 39,

Ex. 4 at 42:3–19, 115:6–9; Docket No. 42, Ex. 16 at

14:17–15:1.

Absent the Agreement, moreover, Union Pacific

would not maintain these facilities or services in

Palestine. Indeed, Union Pacific submitted

uncontroverted evidence that it would prefer to close its

car shop in Palestine in favor of more central locations

to maximize efficiencies, but the 1954 Agreement

stands in the way. Docket No. 39, Ex. 14 at 2 ¶ 7

(testifying that the car shops in Missouri and Illinois

“are more modern” and are “more conveniently located

on Union Pacific’s rail network”). And, although Union

Pacific would prefer to consolidate its freight claims

department at its main headquarters for a variety of

business reasons, the 1954 Agreement forecloses that

more cost-effective option. Docket No. 39, Ex. 4,

83:13–21. The 1954 Agreement thus compels Union

Pacific to keep a “facility . . . related to the movement

of passengers or property . . . by rail” in Palestine and

dictates where Union Pacific may provide certain

“services related to that movement”—easily satisfying

the definition of regulating rail transportation. 49

U.S.C. § 10102(9); see Franks, 593 F.3d at 410; Friberg,

267 F.3d at 443–44.

The City and County argue that the 1954

Agreement merely imposes a personnel requirement,

which is not a regulation of Union Pacific’s facilities

and services—and thus does not regulate rail

“transportation.” Docket No. 51 at 12. Defendants also

App. 113

repeatedly assert that Union Pacific’s operations in

Palestine “do not have any relation to the movement of

goods or people in interstate commerce.” Docket No. 51

at 14–15. But, as Union Pacific observes, the company

is a “one-trick pony” involved only in the business of

moving passengers and property by rail. Thus, any

requirement that Union Pacific maintain a certain

number of “Office and Shop” employees in a particular

location necessarily regulates “facilities” and “services”

related to the movement of people and property by rail.

49 U.S.C. § 10102(9); see, e.g., Burlington N. Santa Fe

Corp. v. Anderson, 959 F. Supp. 1288, 1296 (D. Mont.

1997) (holding that the ICCTA preempts a regulation

regarding “the closure, consolidation or centralization

of [ticketing] agencies” because the regulation “has a

direct and substantial effect on the field of economic

regulation of railroad transportation”); CSX Transp.,

Inc. v. Ga. Pub. Serv. Comm’n, 944 F. Supp. 1573,

1582–85 (N.D. Ga. 1996) (holding that the ICCTA

preempts “state regulatory authority over railroad

agency closings” because “the function of railroad

agencies overlaps substantially with the definition of

‘transportation by rail carriers’ . . . as including

‘storage, handling and interchange of passengers and

property’” and “[r]ailroad agencies also seem to fit

within any common understanding of ‘services’ of

railroads, over which the STB is given exclusive

jurisdiction”); see also Tex. Cent. Bus. Lines Corp. v.

City of Midlothian, 669 F.3d 525, 530 (5th Cir. 2012)

(holding that “transloading” constituted

“transportation” because “it concerns the ‘elevation’

and also the ‘storage, handling, and interchange of . . .

property’ involving the movement of a locomotive”).

App. 114

To be sure, the term “transportation” does not

encompass “everything touching on railroads.” Emerson

v. Kan. City S. Ry. Co., 503 F.3d 1126, 1129 (10th Cir.

2007). But the 1954 Agreement does not merely touch

on railroads. It directly regulates rail transportation by

prohibiting Union Pacific from abandoning or

discontinuing services and facilities in Palestine,

requiring the company to utilize facilities inefficiently,

preventing the consolidation of rail operations in more

cost-effective locations, and increasing the cost of

Union Pacific’s rail business. Docket No. 39, Ex. 4 at

83:13–21, 109:6–25; 118:14–19; Ex. 6 at 30:4–15; Ex. 11

at 1 ¶ 3; Ex. 14 at 2 ¶ 7. The 1954 Agreement thus has

the effect of managing or governing rail transportation

as acutely as the property action in Friberg, in which a

landowner sought to regulate the time a train could

occupy a rail crossing in a negligence action against the

railroad. 267 F.3d at 443–44. As the Fifth Circuit held

in that case, “the all-encompassing language of the

ICCTA’s preemption clause” plainly prohibits such

regulation. Id. at 444. So too here.

D. IMPLIED PREEMPTION

Union Pacific alternatively argues that the ICCTA

impliedly preempts the 1954 Agreement because the

Agreement has the effect of unreasonably burdening or

interfering with rail transportation. Docket No. 39 at

18. The City and County contend that the Agreement

at most creates additional costs on Union Pacific, which

the railroad could minimize, and does not impose any

requirements on the design, construction, maintenance,

or repair of rail lines. Docket No. 51 at 15. Having

concluded that the ICCTA expressly preempts the 1954

App. 115

Agreement, the Court need not reach this issue.

Nevertheless, based on the uncontroverted evidence

submitted by Union Pacific, the Court finds in the

alternative that the ICCTA impliedly preempts the

1954 Agreement as a matter of law.

The Fifth Circuit has adopted a test for determining

whether the ICCTA impliedly preempts state action.

See Franks, 593 F.3d at 414. “Under this fact-based

test, state law actions can be preempted as applied if

they have the effect of unreasonably burdening or

interfering with rail transportation.” Id. The party

arguing preemption bears the burden of proof and must

“come forward with evidence of the specific burdens

imposed.” Elam, 635 F.3d at 813. This burden cannot

be satisfied with “general evidence or assertions” that

the state action would “somehow affect rail

transportation.” Guild v. Kan. City S. Ry. Co., 541 F.

App’x 362, 368 (5th Cir. 2013). In Franks, the Fifth

Circuit held that the ICCTA did not impliedly preempt

a state law possessory action seeking to keep open four

railroad crossings because the railroad failed to present

evidence that the four crossings at issue affected rail

transportation. See id. at 415. Although the railroad

presented evidence that “private crossings like the ones

at issue here can affect drainage, increase track

maintenance costs, and cause trains to move at slower

speeds,” the railroad “did not tie any of these specific

problems to these four crossings.” Id.

Applying similar tests, other courts have held as a

matter of law that the ICCTA impliedly preempts a

variety of state action when the railroad presents

App. 116

undisputed evidence that the action unreasonably

burdens rail transportation. Preempted actions include:

• A state tort claim alleging that a railroad was

negligent in “constructing, repairing, or

maintaining the Crossing” because, if plaintiff

prevailed, the railroad would be required to

undertake “considerable redesign and

construction work,” amounting to approximately

$2 million. Union Pac. R.R. Co. v. Taylor Truck

Line, Inc., No. 15- CV-0074, 2018 WL 1750516,

at *7–9 (W.D. La. Apr. 10, 2018).

• A state law used to “to regulate (terminate) [the

railroad’s] use of the easement over

[landowners’] property” because there was no

question that an attempt “to stop all use of the

tracks on the relevant stretch” would effectively

prevent or unreasonably interfere with railroad

transportation. Wedemeyer v. CSX Transp., Inc.,

No. 2:13-CV-00440-LJM, 2015 WL 6440295, at

*5 (S.D. Ind. Oct. 20, 2015), aff’d, 850 F.3d 889

(7th Cir. 2017).

• A state condemnation action that would affect

“actively used railroad property” because the

taking constituted an unreasonable interference

with the railroad’s “rights with respect to [a]

massive stretch of railroad property.” Union Pac.

R.R. Co. v. Chicago Transit Auth., No. 07-CV229, 2009 WL 448897, at *8–10 (N.D. Ill. Feb.

23, 2009), aff’d, 647 F.3d 675 (7th Cir. 2011).

Here, Union Pacific has presented substantial,

undisputed evidence that the 1954 Agreement

App. 117

unreasonably burdens rail transportation.7 By

requiring the railroad perpetually to maintain Office

and Shop employees in Palestine—despite the

railroad’s need to adapt in a competitive and rapidly

changing market—the Agreement substantially

interferes with and burdens Union Pacific’s facilities

related to the movement of passengers or property.8 See

49 U.S.C. § 10102(9) (defining “transportation” as a

“facility . . . related to the movement of passengers or

property”). Indeed, almost fifty years ago, the ICC

ruled that the 1954 Agreement “impose[d] undue

burdens and obligations” on the railroad and was

“contrary to the public interest and the national

transportation policy.” Mo. Pac. R.R. Co., 348 I.C.C.

414, 430 (1976).9

The City and County object to certain of Union Pacific’s evidence

as not relevant and thus inadmissible. Docket No. 51 at 8–10

¶¶ 1–7. But the Fifth Circuit has held that a railroad asserting

implied preemption under the ICCTA must present specific

evidence regarding the particular action at issue—which is exactly

what Union Pacific has presented here. See Franks, 593 F.3d at

414–15. Union Pacific’s evidence therefore has a “tendency to make

a fact more or less probable than it would be without the evidence”

and is “of consequence in determining the action.” FED. R. CIV.

EVID. 401. Accordingly, the City and County’s objections are

overruled.

Union Pacific does not argue that the 1954 Agreement

unreasonably burdens its services. See Docket No. 39 at 25; Docket

No. 54 at 6–7.

In the mid-twentieth century, MoPac—Union Pacific’s

predecessor-in-interest—sought to merge with seven of its

subsidiaries, including I&GN. I&GN was subject to the 1954

Agreement. The ICCTA was not yet enacted, and the ICC still

approved voluntary mergers. In its merger request, MoPac

App. 118

And a lot has changed in the last fifty years,

rendering the Palestine facilities even more inefficient,

expensive, and burdensome. As Union Pacific

demonstrates, the declining demand for coal in favor of

natural gas dramatically reduced one of the most

important revenue streams for railroa

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