Record and brief — Cannon v. Consolidated Rail Corp.

“WOWMad

ALEXANDER L. STEVAS.

IN THE CLERK

Supreme Court of the United States

October Term, 1981

THOMAS CANNON, ROBERT STILLWELL, DONALD

R. BREWER and DAVID L. PETERSON, on Behalf

of Themselves and all Other Similarly Situated “Fire-

men” and “Train Service Employees” Affected by

the Northeast Rail Service Act of 1981,

Petitioners,

v.

CONSOLIDATED RAIL CORPORATION and UNITED

STATES OF AMERICA,

Respondents.

Petition for a Writ of Certiorari to the United States

Special Court, Regional Rail Reorganization Act of

1973

Corne.ius D. Murray

Attorney for Petitioners

O’ConnELL anp Arnonowr17Tz, P.C.

(Txomas F. Gieason of Counsel)

100 State Street

Albany, NY 12207

(518) 462-5601

April, 1982

Questions Presented.

1, Whether Congress violated the Fifth Amendment’s

due process clause and the prohibition against the taking

of private property for public use without just compensa-

tion when, in order to ensure the profitability of a single

private for-profit corporation, it enacted legislation,

specifically applicable only to that corporation, man-

dating and authorizing it to breach previously negotiated

and legally binding collective bargaining agreements with

its employees.

(a) Whether Congress could require and

authorize the corporation to fire 4600 employees

whose jobs were protected by the agreements and

limit the amount of severance allowance to any

employee to $25,000 regardless of the number of

years of future service and earnings an employee

could otherwise reasonably expect.

(b) Whether Congress could require and

authorize the corporation not to fill an equivalent

number of job positions vacated by the severed

employees, despite provisions to the contrary in

said collective bargaining agreements.

2. Whether because the U.S. Government holds part of

a corporation’s stock, Congress can, without violating the

Fifth Amendment, authorize the corporation to breach

agreements that resulted from collective bargaining which

Congress had specifically mandated.

Table of Contents.

Page

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i) acces cin edieagustinaeeseks 2

ED hd 0-55 0% cobnincccesndceenudediaes 2

Constitutional and Statutory Frovisions Involved. . 2

an Cac bownessoseees esos 3

Reasons for Granting the Writ................... 9

POINT I. This case presents exceptional and im-

portant questions affecting national labor

policy, the reliability of collective bargaining

agreements (as well as other contracts), and

the power of Congress under the Commerce

Clause to set them aside without compensa-

DD Adele ababidsbidesecccegsceseceecs 9

POINT II. The lower court’s decision was er-

Bs oho Ceticoesc voccicsceaseecceonses “4

PN cbaudbbtnegeccncecesadsevdecséseyese 17

lS ete cog ce kee cde ekaed esate Al

Page

TABLE OF AUTHORITIES.

CASES.

Allied Structural Steel v. Spannaus, 438 U.S.

Te 10, 15

American Tobacco Company v. Patterson, ___

U.S. , 50 U.S. Law Week 4364 (April

i Liatce ce ceuwads oatdeeedesedenss 10

Brotherhood of Locomotive Engineers v. Chicago,

Rock Island & Pacific Railroad Co., 382 U.S.

Ns abd bb ebdhbh oocducudes oe 0s 14

Chicago & Northwestern R. Co. v. United Trans-

portation Union, 402 U.S. 570(1971)..... 12, 15

Humphrey v. Moore, 375 U.S. 335 (1964)......... Tae

Louisville & N.R.R. Co. v. Mottley, 219 U.S.

te ie cee cogdvénees Gube'e 14

Lynch v. United States, 292 U.S. 571 (1934).. 13, 14,17

Monongehela Navigation Co. ~. United States,

EE SE an cescctsbessesscoeus 16

New York Trust Co. v. New Jersey, 431 U.S. 1

SC? CeCe cide p ches eeceseovedes 13, 17

Norfolk & Western Railway Co. v. Nemitz,

404 U.S. 37 (1971), reh. den. 404 U.S. 1026

cnc dbcbndes cuvegeveveenee 12, 15

iv.

Page

Penn Central Transportation Company v. City of

New York, 438 U.S. 104(1978).......... 13, 16

Perry v. United States, 294 U.S. 338 (1925)...... 13, 17

Philadelphia, Baltimore and Washington R.R. v.

Schuber, 224 U.S. 603 (1912).............. 9

Trans World Airlines, Inc. v. Hardison, 432 U.S.

es Cekns beNON eet ede see ws 10

United States v. Darby, 312 U.S. 100 (1941)....... 14

United States v. General Motors Corp., 323 U.S.

Dia Bisééchatecs cbewnvetisaces's 12

United States v. Miller, 317 U.S. 369 (1943),

DM 9:64 6 wenbus ceseeeees 16

United States v. Willow River Power Co., 324 U.S.

Leeda ccuaees cee eedeaues eee 10, 15

CONSTITUTIONAL AND STATUTORY PROVISIONS:

United States Constitution:

sn cen veeasakb ean eeees 2, 7]

STATUTES:

29 U.S.C. §101 ef seg. (Norris-LaGuardia Act).... 10

45 U.S.C. §151 et seq. (Railway Labor Act)........ 10

pf oe | POTTTUTUTIT TTT TTT ier

Se Rie BTPEES 6c cer cceccceswececes 2, 4, 9, 12, 15

Northeast Rail Service Act of 1981, Pub. L. No.

RE ee re re

Northeast Rail Service Act of 1981, Pub. L. No.

97-35, §§ 1132(4) and 1133................

Northeast Rail Service Act of 1981, Pub. L. No.

es OS, c chvceccceeadueve

Regional Rail Reorganization Act of 1973, 45

Ss ET EE codsececnceedtaadeeese

Section 702 of Regional Rail Reorganization Act of

1973, as amended—Pub. L. No. 97-35,

Ne ede ican eanekaeeent

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1981.

«

THOMAS CANNON, ROBERT STILLWELL, DONALD R.

BREWER and DAVID L. PETERSON, on Behalf of

Themselves and all other Similarly Situated ‘‘Firemen”’

and ‘‘Train Service Employees’’ Affected by the North-

east Rail Service Act of 1981,

Petitioners,

Vv.

CONSOLIDATED RAIL CORPORATION and UNITED

STATES OF AMERICA,

Respondents.

Petition for a Writ of Certiorari.

The Petitioners, Thomas Cannon, Robert Stillwell,

Donald R. Brewer, David L. Peterson, on behalf of

themselves and other similarly situated ‘‘firemen’’ and

‘train service employees’’ affected by the Northeast Rail

Service Act of 1981, respectfully request that a writ of cer-

tiorari issue to review the decision dated March 31, 1982

and the judgment of the Special Court, Regional Rail

Reorganization Act of 1973 (hereinafter the ‘‘Special

Court’’), entered pursuant thereto in this proceeding on

April 7, 1982.

2

Opinion Below.

The opinion of the Special Court, dated March 31, 1982

is unreported and appears in the Appendix hereto at Al ef

seq.

Jurisdiction.

The Speciai Court possessed exclusive original jurisdic-

tion over this matter pursuant to section 1152 (a) of the

Northeast Rail Service Act of 1981 (Pub. L. No. 97-35, 95

Stat. 357, August 13, 1981). Pursuant to subdivision (b) of

that same section, a judgment of the Special Court is

reviewable by this court upon a petition for a writ of cer-

tiorari. Such review is exclusive (id.).

Constitutional and Statutory Provisions Involved.

The Fifth Amendment to the United States Constitution

provides in pertinent part:

No person .. . shall be deprived of life, liberty or

property without due process of iaw; nor shall

private property be taken for public use without

just compensation.

45 U.S.C. §741(%) provides in pertinent part:

The (Consolidated Rail) Corporation shall be a

for-profit corporation established under the laws of

a State and shall not be an agency or instrumental-

ity of the Federal Government. . .

45 U.S.C. §774(d) provides as follows:

New col.ective-bargaining agreement. Not later

than 60 days after the effective date of any con-

veyance pursuant to the provisions of this Act, the

3

representatives of the various classes of crafts of

the employees of a railroad in reorganization in-

volved in a conveyance and representatives of the

[Consolidated Rail] Corporation shall commence

negotiation of a new single collective-bargaining

agreement for each class and craft of employees

covering the rate of pay, rules, and working condi-

tions of employees who are employees of the Cor-

poration. Such collective-bargaining agreement

shall include appropriate provisions concerning

rates of pay, rules, and working conditions, but

shall not include any provisions for job stabiliza-

tion resulting from any transaction effected pur-

suant te this Act which may exceed or conflict with

those established herein. Negotiations with respect

to such single collective-bargaining agreement, and

any successor thereto, shall be conducted system-

wide.

Section 702 of the Regional Rail Reorganization Act of

1973 (45 U.S.C. 701 et seq.), as amended by the Northeast

Rail Service Act of 1981 (Pub. L. No., 97-35, §1143(a)) is

set forth in footnote 1 of the opinion of the court below

and appears in the Appendix at A28.

Statement of the Case.

Petitioners and the class they represent are employees of

Respondent Consolidated Rail Corporation (hereinafter

**Defendant’’ or ‘‘Conrail’’) a private for-profit corpora-

tion originally established by Congress pursuant to the

Regional Rail Reorganization Act of 1973 (45 U.S.C. §701

et seq., hereinafter ‘‘RRRA’’). Conrail is the successor to

several former bankrupt railroads which, prior to their

demise, had operated primarily in the northeastern and

midwestern part of the United States.

4

Although Congress provided federal subsidies to assist

Conrail get started, the legislation which established Con-

rail specifically provided that it was to be a private cor-

poration and “‘. . . not an agency or instrumentality of the

federal government.”’’ 45 U.S.C. §741(b).*

Simultaneously with its creation, Conrail was directed

by Congress to enter into collective bargaining with its

employees, many of whom were former employees of

Conrail’s legal predecessors. 45 U.S.C. §774(d). Among

the agreements entered into as a result of said collective

bargaining were the so-called ‘Manning Agreement’’**,

as amended, governing ‘‘firemen’’ (also known as ‘‘engine

service employees’’), and the so-called ‘‘Crew Consist’

Agreement,*** as amended, governing ‘“‘train service

employees’’ (also known as ‘“‘trainmen,’’ including

brakemen and conductors).

The effect of these agreements was to require Defend-

ant, under specified circumstances and based on certain

formulae, to make available a minimum number of jobs

on Operating trains or engines or in railroad yards, which

*Despite its ‘‘private’’ status, however, the United States is

presently by far the largest (over 90%) single stockholder of Conrail.

Transcript of proceedings below at 41.

**The Manning Agreement is not peculiar to Conrail; it is, in

fact, in force on every major railroad in this country xs a result of the

July 19, 1972 agreement between the United Transportation Union

and the National Carriers’ Conference Committee representing the

railroads, including, for example, the Delaware & Hudson Railway

Company and the Central Vermont Railway, Inc., both of which

operate in the same geographical area as Conrail.

***The Crew-Consist Agreement, while not as universally ap-

plicable as the Manning Agreement, is also common (with inconse-

quential variations) to many railroads and, in fact, many railroads

operate pursuant to agreements requi‘ing minimum crews larger than

the ones called for under Conrail’s Crew-Consist Agreement. This is

true of railroads specifically operating in the same geographical area

as Conrail.

5

jobs generally were awarded on the basis of seniority

rights within various operating seniority districts of Con-

rail.

The negotiations mandated by Congress pursuant to 45

U.S.C. §774(d) also ultimately resulted in wage conces-

sions and deferrals by these employees of over $200

million.

By 1981, Congress had become concerned about the

profitability of Conrail and, in order to bolster its finan-

cial posture, enacted the Northeast Rail Service Act of

1981 (Pub. L. No. 97-35, §§1131 et seq.), effective August

13, 1981. The Defendant admits that the Manning and

Crew-Consist agreements were already in effect when the

Act became law.* Under that law, §702** was added to

the RRRA requiring and permitting Conrail, notwith-

standing said agreements, to ‘‘terminate the employment

of certain employees,’’ specifically firemen and trainmen,

provided however, that such employees were to receive a

severance allowance not in excess of $25,000 (paid for out

of a fund established by Congress). The purpose of §702

was to enable Conrail to enhance its profits by cutting its

labor costs. Pub. L. No. 97-35, §§1132(4) and 1133.

The $25,000 ceiling was imposed regardless of the num-

ber of years of future service and earnings an employee

could otherwise have reasonably expected, and regardless

of the overtime hours and other conditions that substan-

tially affect the take-home pay of employees. In many

cases, the $25,000 does not even approach the amount of

compensation an employee could otherwise expect. There

is, therefore, no correlation between the ceiling and the

amount an employee would have earned but for the

severance.

*Paragraph ‘‘24’’ of Complaint and Defendant Conrail’s

Answer.

**Section 702 is set forth in full at A28 ef seq.

6

The number of employees to be severed under §702(b)

was to be determined unilaterally by Conrail. Employees

could volunteer for severance and accept the allowance,

but if an insufficient number of employees volunteered,

Conrail itself could sever involuntarily a sufficient further

number as it wished.

Involuntary severances authorized by the legislation

permit Defendant Conrail to fire men who by virtue of

their seniority would be entitled to work under the

aforementioned agreements and, who, but for such ter-

minations, would continue to exercise their contractual

rights to their jobs.

In addition to the employees actually severed, §702(e)

(1) required Defendant Conrail, in the case of firemen, to

refrain from filling (‘‘blank’’) a number of positions

equivalent to the number of firemen severed pursuant to

§702(a). Section 702(e) (2) also authorized Conrail to

blank as many brakemen positions as there were brakemen

severed under §702(a).

The blanking of positions authorized under §702(e) per-

mits Defendant to refuse to make available to firemen and

trainmen positions which it otherwise would have been re-

quired to make available under the terms of the aforesaid

Manning and Crew-Consist Agreements.*

Defendant has not acknowledged nor does the North-

east Rail Service Act provide that the extent of termina-

*Petitioners and Conrail have stipulated that but for §702, the

disputed terminations and blankings could not have occurred under

the Manning and Crew-Consist Agreements.This is also consistent

with the decision of the Court below.

+

tions and blankings it authorizes is circumscribed by the

Manning and Crew-Consist Agreements.*

Conrail has moved swiftly to implement the termina-

tions and blankings authorized by §762. When completed,

there will be 4600 terminations and an equal number of

blankings.**

Petitioners and the class they represent consist of

firemen and train service employees who are subject to the

terms of the Manning and Crew-Consist Agreements.

They initiated this action in the Special Court (Regional

Rail Reorganization Act of 1973) pursuant to Pub. L. No.

97-35, §1152(a) (1) demanding declaratory and permanent

injunctive relief and backpay on the grounds that the job

terminations and blankings authorized by §702 are an un-

constitutional taking of their contractual rights. They also

contend that a procedural due process deprivation occurs

by virtue of the failure to provide any procedures to ensure

adequate compensation in individual cases. Many of their

number are presently unemployed or working in less

*The enactment of §702 would otherwise have been unnecessary

since, in the absence of contractual or statutory restriction, Conrail

could presumably have undertaken the severances and blankings at

any time. See Opinion below in United Transportation Union v. Con-

solidated Rail Corporation (Civil Action No. 82-4), infra at A-10.

**Conrail determined that it would initially sever 3,633

employees, consisting of 1,303 firemen and 2,321 trainmen. On

December 7, it terminated 600 employees and blanked an equivalent

number of positions. On January 7, 1982, Conrail terminated an addi-

tional 1,660 employees at various locations throughout its system. As

of March 10, 1982, there remained 2,340 employees to terminate and

an equivalent aumber of positions to blank, which Conrail admits it

has every intention of doing.

desirable jobs for Conrail* than they otherwise would be

but for Conrail’s actions undertaken pursuant to §702.

The vast majority of these employees are the principal

wage-earners of working class families, who will be and

are being devastated by the actions of the Defendant Con-

rail. Many are in danger of losing their homes and are fac-

ing other serious and irreparable injuries resulting from

the loss of jobs.

After this action was commenced, the United States

intervened as a Defendant pursuant to 28 U.S.C. §2403(a)

on the grounds that the constitutionality of a federal

statute had been called into question.

Since there were no questions of material fact, Peti-

tioners moved for Summary Judgment. On March 31,

1982, the Court below issued its decision** rejecting Peti-

tioners’ constitutional claims and on April 7, 1982,

entered Judgment pursuant thereto.*** This Petition for

Certiorari ensued.

*When a position is blanked, a person previously on that job can

move down to a lower or less desirable position occupied by a junior

employee who must then vacate said position. This process is called

“‘bumping.’’ The bumped employee then may, in turn, bump other

employees in still lower positions. As the bumping process runs its

course, ultimately those employees occupying the least desirable posi-

tions lose their jobs altogether. There can be no doubt that the number

of positions blanked means that at least that number of people will

lose their jobs. Because the job positions operate on Saturdays and

Sundays also, it probably means that more men will lose jobs than the

actual number of positions blanked.

** Appendix A. That decision below was a unified opinion dispos-

ing of other cases argued simultaneously with Petitioners’. Specifi-

cally Part 3 of the Opinion below, entitled ‘‘Constitutionality: Due

Process and Equal Protection,"’ deals with the present case.

*** Appendix B.

9

REASONS FOR GRANTING THE PETITION.

POINT I.

This case presents exceptional and important questions

affecting national labor policy, the reliability of collective

bargaining agreements (as well as other contracts), and the

power of Congress under the commerce clause to set them

aside without compensation.

This case is one of first impression. It involves an

unusual collision between the competing interests of the

power of Congress under the Commerce Clause, on the

one hand, and individual rights protected by the Fifth

Amendment’s Due Process Clause and the prohibitions

against the taking of private property (contractual rights)

without just compensation, on the other. Never before has

Congress attempted nor has this Court sanctioned usage

of the Commerce Clause to enact legislation abrogating

the terms of a single contract between private parties for

the admitted purpose of ensuring the profitability of one

of the parties without compensating the other. Also un-

precedented is the uncompensated legislative extinguish-

ment of contractual rights which arose as a result of collec-

tive bargaining which Congress itself had specifically and

previously directed the parties to enter into. 45 U.S.C.

§774(d).

The challenged legislation is not the type which, as a

means of achieving a broad social or economic purpose,

may have incidentally impaired or negated contractual

rights that arose under various contracts. Philadelphia,

Baltimore and Washington R.R. v. Schubert, 224 U.S. 603

(1912). On the contrary, it is instead ad hoc, abrogating a

single contract between two private parties involving one

employer and one union. Since it does not affect the public

10

in general, but penalizes only a single party, it is most cer-

tainly constitutionally suspect. Allied Structural Steel v.

Spannaus, 438 U.S. 234, 250 (1978). United States v.

Willow River Power Co., 324 U.S. 499, 502 (1945). The

legislation leaves untouched identical or nearly identical

collective bargaining agreements between other employers

and employees in the same industry in the same region of

the country.

This case has catastrophic national implications for the

entire collective bargaining process, which has been the

underpinning of industrial-labor peace in this nation since

passage of the Railway Labor Act, 45 U.S.C. §151 ef seq.,

in 1926 and the Norris-LaGuardia Act, 29 U.S.C. §101 ef

seq., in 1932. This court has consistently recognized that

collective bargaining lies ‘‘. . . at the core of our national

labor policy . . .’”” American Tobacco Company v. Patter-

son, ~ U.S. _ ___, 50 U.S. Law Week 4364, 4368

(April 5, 1982); Trans World Airlines, Inc. v. Hardison,

432 U.S. 63 (1977). Nevertheless, the lower court’s deci-

sion stands for the proposition that if a private corpora-

tion engaged in interstate commerce has struck an un-

favorable deal with its employees at the bargaining table,

it can always be bailed out by legislation unilaterally an-

nihilating the contractual rights of employees without

compensating them. If this is so, why should labor ever

agree in the future to sit down at the bargaining table and

agree to terms? For exainple, in the present case, the

employees of Conrail, in order to obtain the job security

protections which the legislation and the lower court deci-

sion have now taken away, made other substantial conces-

sions at the bargaining table. They thought, however, they

were getting something (job security) in return. Now they

are losing that also. By permitting the blanking of posi-

tions, the decision below robs them of the opportunity to

exercise their seniority rights which this Court has only

recently held to be of ‘‘overriding importance.’’ American

11

Tobacco Co. v. Patterson, supra at 4368; Humphrey v.

Moore, 375 U.S. 335, 346 (1964).

The devision below, if allowed to stand, eliminates the

certainty that collective bargaining agreements will not be

disturbed by outside parties. Henceforth, there will be no

incentive left for either party to concede anything at the

bargaining table. The sine qua non of collective bargaining

has always been concession; now, however, the mutuality

of collective bargaining has been destroyed. This case is an

invitation to national labor strife.

During the past few months much national publicity has

attended the negotiations between the United Auto

Workers and this country’s two major domestic

automobile manufacturers. Both Ford Motor Co. and

General Motors employees have recently conceded or

given back substantial wage increases in return for job

security in order to help their employers out of their cur-

reat economic doldrums.* Now that these collective

bargaining agreements are in place, will Congress be able

to decide, if the profits of either company are, in its mind,

insufficient, that the hard-won contractual rights of

workers must be sacrificed for the general good (equated

with the profitability of Ford or GM)? The lower court’s

opinion in the case at bar says so. The decision below

could justify setting aside collective bargaining agreements

in other industries which are equally vital to the

economy—aerospace, chemical, steel, aviation, etc. How

far does the principle of the case extend? Can Congress

legislate that auto workers at Chrysler must now work for

half their previously negotiated wage rate?

It is not just the rights of workers that are threatened. It

is the right of all contracting parties. The principle could

*N.Y. Times, April 10, 1982 at Al.

12

operate just as perversely and unfairly against manage-

ment. Hereafter, Congress might decide that a collective

bargaining agreement affecting employees of a single com-

pany engaged in interstate commerce is so adverse to labor

as to be against a perceived national interest. That singie

contract could also be subject to ad hoc legislative revision

severely prejudicing the employer’s rights. Collective

bargaining agreements would thenceforth be worth no

more than the paper upon which they were written. They

would be subject to the whim and political idiosyncracies

of each succeeding Congress. This is clearly inconsistent

with the strong federal labor policy, as recognized by this

Court, against interference with the terms of collective

bargaining agreements. Chicago & Northwestern Railroad

Co. v. United Transportation Union, 402 U.S. 570, 579 n.

11 (1971). Norfolk and Western Railway Co. v. Nemitz,

404 U.S. 37 (1971), reh. den. 404 U.S. 1026 (1972).

Moreover, assuming arguendo that the profitability* of

Conrail serves an important national purpose, this does

not eliminate Fifth Amendment considerations. Even in

wartime, Government’s taking of private contractual

rights to meet a national emergency has required compen-

sation under the Fifth Amendment. United States v.

General Motors Corp., 323 U.S. 373 (1945).

The decision below also means that even where Con-

gress itself mandates, as here, that parties enter into collec-

tive bargaining, 45 U.S.C. §774(d), they will be unable to

rely on the agreements reached. Such a holding contradicts

*L. Stanley Crane, Conrail’s chairman of the Board, announced

that Conrail earned a profit of $13.8 million in the second quarter of

1981, and $34.9 million in the third quarter, even before the effective

date of the blankings and terminations authorized by §702. NY Times,

December 4, 1981 at D1. Crane is reported as saying that Conrail was

ready to turn a profit in any case in 1981 despite the ‘‘awful year for

the economy”’ Business Week, April 5, 1982 at 72. See also, The Con-

rail Inside Track, Vol. 4, No. 1 (publication of Consolidated Rail Cor-

poration, 1982).

13

this Court’s recent decisions to the effect that the Con-

stitution prohibits legislation directly and adversely affect-

ing the economic backed expectations of an individual’s

private property rights. New York Trust Co. v. New Jer-

sey, 431 U.S. 1 (1977); cf. Penn Central Transportation

Company v. City of New York, 438 U.S. 104, 125 (1978).

In the former case, this Court held that certain security

pledged to protect investors in a State’s bond obligations

could not be retroactively rescinded by legislation after the

investment was made. The Petitioners in the present case

made concessions as an investment to protect their jobs.

Their job security, however, apparently can be rescinded

retroactively. Are these workmen somehow to be treated

differently from wealthy bondholders?

Moreover, this Court has been hostile to Government’s

repudiation of its own obligations. New York Trust Co. v.

New Jersey, supra; Lynch v. United States, 292 U.S. 571,

579 (1934); and Perry v. United States, 294 U.S. 338, 348,

350-51 (1935). Yet here, Congress set up Conrail and the

United States holds much of its stock.* Congress ordered

Conrail to enter into the collective bargaining which

resulted in the agreements it now seeks to abrogate. 45

U.S.C. §774(d).

Finally, the importance of this case is demonstrated by

the very fact that Congress itself saw fit to take such an

unprecedented step in order to assist a single corporation.

That alone manifests the importance which Congress puts

on the profitability of Conrail. Whether it can legally do

so in such fashion will be a guide for Congress in the

future if, for example, Chrysler or any other major cor-

poration should be deemed insufficiently profitable and

Congress decides it is in the national interest to bolster it

*Although Conrail is supposedly private, 45 U.S.C. §741, the

Government, in fact, holds well over 90% of its stock. Transcript of

proceedings below at 41.

14

by similar means. A denial of certiorari here may well con-

vince Congress that such future actions will not invite this

Court’s scrutiny.

POINT Ol.

The lower court’s decision was erroneous.

The essence of the lower court’s opinion dealing with

this particular case* was that although contract rights are

“property” protected by the Fifth Amendment (Lynch v.

United States, 292 U.S. 571, 579 [1934]), a contract be-

tween private parties cannot stand in the way of Congress

acting in the national interest under the Commerce Clause.

This, however, was an over-simplification and missed the

point. It is certainly true that this Court has frequently

held that statutes designed to achieve a broad national

social or economic goal are no less valid because they may

incidentally impair or negate existing private contractual

rights. United States v. Darby, 312 U.S. 100 (1941);

Louisville & N.R.R. Co. v. Mottley, 219 U.S. 467, 482,

(1° °). Petitioners even concede that in appropriate cir-

cumstances Congress has the power under the Commerce

Clause to regulate the size of train crews. Brotherhood of

Locomotive Engineers v. Chicago, Rock Island & Pacific

Railroad Co., 382 U.S. 423 (1965). In both those cases,

and in all the other cases cited by the lower court in sup-

port of the power to set aside contracts, however, Con-

gress was not aiming at a single contract between two

private parties, leaving untouched all other identical or

nearly identica! contracts between other parties similarly

situated. The laws under scrutiny in those cases were ones

of general and uniform application which incidentally im-

paired contracts between various parties. Here, however,

Congress makes no pretense about general application.

*Appendix A, Part 3, ‘‘Constitutionality; Equal Protection and

Due Process,” infra at Al3, ef seq.

15

Not everyone with similar contract rights is affected; in-

deed only the Conrail employee suffers; his neighbor

across the street working for the Delaware & Hudson

Railway under a contract providing identical job security

continues to enjoy his rights.

Indeed, in other contexts this Court has held unconstitu-

tional legislation that attempted to single out only a few

contracts without achieving or effecting an overall social

or economic purpose. A/lied Structural Steel v. Spannaus,

438 U.S. 234 (1978).

The lower court in the present case also stated er-

roneously that the employees had no ‘‘settled expecta-

tions” that Congress would refrain from doing away with

their jobs. This is inaccurate. At the time Conrail was

formed, Congress had specifically directed Conrail and its

employees to enter into negotiations resulting in the

agreements which the legislation challenged herein now

sets aside. 45 U.S.C. §774(d). These agreements had the

force of law in back of them and the economic rights ac-

cruing to the employees thereunder could not thereafter be

invaded without compensation. United States v. Willow

River Power Co., 324 U.S. 499, 502 (1945). Given this na-

tion’s long history of supporting and this Court’s reluc-

tance to interfere with collective bargaining, especially in

the context of railroads, it can hardly be said that the

employees could have expected that Congress would

thereafter attempt to annul an agreement arising out of the

very negotiations Congress had itself ordered the par-

ties to engage in. Norfolk and Western Railway Company

v. Nemitz, 404 U.S. 37 (1971), reh. den. 404 U.S. 1026

(1972). Chicago & Northwestern Railroad Co. v. United

States Transportation Union, 402 U.S. 570, 579 n. 11

(1971).

16

The court below apparently held that since not all men

necessarily lost their jobs or were not terminated,* their

property was not taken. It relied on a dubious analogy to

those cases where the property in question was tangible

rather than intangible (contract right) and the physical

property retained some use to the original owner even

after the legislation challenged became effective. Penn

Central Transportation Co. v. New York City, 438 U.S.

104 (1978). Such analysis ignores the fact that the least

senior men in the present class action lose their jobs com-

pletely. Moreover, even as to those lucky enough to keep

less valuable jobs, they will earn substantially less than

before, and the specific jobs to which they were previously

entitled have been totally eliminated. In those cases where

there has been a complete taking of physical property, this

court has never held that such a taking was permissible

without compensation if, in return, the exercisor of emi-

nent domain gave the former property owner an admit-

tedly less valuable piece of property. Compensation must

be the full and perfect equivalent of the property taken.

United States v. Miller, 317 U.S. 369 (1943), reh. den. 318

U.S. 798; Monongehela Navigation Co. v. United States,

148 U.S. 312 (1893).

Finally, the court below seemed to justify the legislation

on the grounds it was in the national interest to see Conrail

profitable, which outweighed the Petitioners’ expectations

as to job security. The mere fact, however, that some ac-

tion may be in the national interest does not nullify the

prohibitions against the taking of private property without

just compensation. Otherwise, the Fifth Amendment

would make no sense. Moreover, the lower court did not

deal at all with the problems posed by the Government’s

own selfish motives in this case. The fact is that although

*Some senior employees could opt to be furloughed without com-

pensation in lieu of termination and they could bump another junior

employee. These men could receive no severance allowance.

17

Conrail is supposed to be a private corporation, the

United States owns most of the stock.* Does the fact that

the Government has invested heavily in Conrail and holds

its stock give it carte blanche to repudiate that corpora-

tion’s obligations? This Court has always viewed un-

favorably any attempt by Government to repudiate

legislatively its own obligations. New York Trust Co. v.

New Jersey, 431 U.S. 1 (1977); Lynch v. United States,

292 U.S. 571 (1934); and Perry v. United States, 294 U.S.

300 (1935).

The simple fact is that if Conrail is so vital to the na-

tional interest, then Congress should act forthrightly, na-

tionalize it, and compensate those whose vested contract

rights are impaired as a result. United States v. General

Motors Corp., 323 U.S. 373 (1945). The admitted purpose

of this legislation, however, is to make Conrail ‘‘prof-

itable’’ so that the United States can sell the shares of Con-

rail stock it owns to the public.** In order to do so, it is

seeking to have the corporation repudiate its own obliga-

tions to its employees. Viewed in this light, and stripped of

its veneer, the legislation challenged herein is nothing

more than a blatent attempt by the Government to circum-

vent its constitutional obligations under the Fifth Amend-

ment to pay for private property rights when it takes them

in order to achieve another governmental purpose. The de-

cision below upholding that legislation sets an extremely

dangerous precedent, undermining the security of con-

tracts and individual citizens’ protections against the tak-

ing of private property for public use without just com-

pensation; it simply should not be allowed to stand.

*The lower court acknowledged during oral argument that it was

aware of the fact that well over 90% of the stock of Conrail was, in

fact, owned by the Government. Transcript at 41.

**USRA, Conrail at the Crossroads: The Future of Rail Service

in the Northeast, at 51 (April, 1981).

1&

Conclusion.

A writ of certiorari should issue to review the opinion

and judgment of the Special Court, Regional Rail

Reorganization Act of 1973.

Respectfully submitted,

CORNELIUS D. MURRAY

O’CONNELL and ARONOWITZ, P.C.

100 State Street

Albany NY 12207

(518) 462-5601

THOMAS F. GLEASON,

of Counsel

Al

APPENDIX A.

Opinion of Friendly, P.J.

SPECIAL COURT

REGIONAL RAIL REORGANIZATION ACT OF 1973

UNITED TRANSPORTATION UNION,

Plaintiff,

v.

CONSOLIDATED RAIL CORPORATION,

Defendant,

Civil Action No. 82-4

and

CONSOLIDATED RAIL CORPORATION,

Plaintiff,

v.

UNITED TRANSPORTATION UNION, ef al.,

Defendants.

Civil Action No. 82-7

A2

THOMAS CANNON, ROBERT STILLWELL, DONALD R.

BREWER, and DAVID L. PETERSON, On Behalf of

Themselves and all Other Similarly Situated ‘‘Firemen’”’

and ‘‘Train Service Employees’’ Affected by the North-

east Rail Service Act of 1981,

Plaintiffs,

v.

CONSOLIDATED RAIL CORPORATION,

Defendant.

Civil Action No. 82-2

Norton N. Newborn, Esq. (Gaines & Stern Co., L.P.A.,

Cleveland, Ohio), for the United Transportation Union.

Harry A. Rissetto, Esq., E. Carl Uehlein, Jr., Esq.,

Thomas E. Reinert, Jr., Esq. and Donald L. Havermann,

Esq., Washington, D.C. and Dennis Alan Arouca, Esq.

and David S. Fortney, Esq., Philadelphia, PA (Morgan,

Lewis & Bockius, Washington, D.C., Of Counsel), for

Consolidated Rail Corporation.

Elizabeth A. Rodgers, Esq. (Doyle, Playter, Novick &

Berkin, Boston, MA), for UTU Local Committee of Ad-

justment No. 1473, Local Chairmen Connors, Maloof and

Casey.

Ronald L. Gilardi, Esq. and Richard D. Gilardi, Esq.

(Gilardi & Cooper, Pittsburgh, PA), for J. L. Arnold and

Local 1418.

Cornelius D. Murray, Esq. (O’Connell and Aronowitz,

P.C., Albany, N. Y., Thomas F. Gleason, Esq., of

Counsel), for Thomas Cannon, ef al.

A 3

J. Paul McGrath, Assistant Attorney General, Ray-

mond M. Larizza, Esq. and Christine Nicholson, Esq.,

Department of Justice, Washington, D.C. (John H.

Broadley, Chief Counsel and Grady C. Cothen, Jr., Esq.,

Federal Railroad Administration, Department of

Transportation, Washington, D. C., Of Counsel), for the

United States as Defendant-Intervenor.

FRIENDLY, Presiding Judge:

In this opinion we decide three cases, of which we have

jurisdiction under §1152(a) of the Northeast Rail Service

Act of 1281 (NRSA), Pub. L. No. 97-35, 95 Stat. 357,

relating to §702 which was added to the Regional Rail

Reorganization Act of 1973 (the RRR Act) by §1143(a) of

NRSA. We set forth the entire section in the margin. '

In No. 82-4, filed on February 4, 1982, United

Transportation Union (UTU) sought a judgment declaring

that Consolidated Rail Corporation (Conrail) may sever

employees pursuant to §702 and fail or refuse to fill vacan-

cies created by the severance of employees pursuant to

§702 only when such failure or refusal is not inconsistent

with collective bargaining agreements. The complaint

brought into question the interpretation of the statute and

raised no issue of unconstitutionality.

On February 22, 1982, Conrail brought No. 82-7 against

UTU; its president F. A. Hardin; 15 UTU General Com-

tittees for Adjustment; 19 UTU General Chairmen; 8

UTU Local Unions or Committees of Adjustment; 11

UTU Local Chairmen; and John Doe, a Conrail em-

ployee. Conrail sought to enjoin a strike allegedly

threatened by defendants or certain of them to enforce the

interpretation of §702 which constituted the basis for

UTU’s action, No. 82-4. Conrail contended that its ac-

tivities were authorized by §702; it argued alternatively

that defendants’ threatened conduct violated the Railway

Labor Act, 45 U.S.C. §151 ef seqg., a position no longer

A4

seriously pressed. Conrail requested a temporary restrain-

ing order and, after hearing, a preliminary injunction to

be made permanent on final hearing, and damages. At a

hearing on February 22, 1982, before Judge Thomsen,

after he had indicated his intention to issue a temporary

restraining order, it was agreed that a preliminary injunc-

tion should issue and that the case would be finally heard

on March 10, 1982, along with No. 82-4, with which it was

consolidated. The parties entered into stipulations of fact

in both cases. UTU moved for summary judgment on the

basis of these stipulations. Conrail moved for summary

judgment on the oasis of the stipulations and an affidavit

of R. E. Swert, its Vice President, Labor Relations, ac-

companied by numerous exhibits. The United States was

allowed to intervene in support of Conrail.

The third action, No. 82-2, Cannon et al. v. Con-

solidated Rail Corporation, was brought by two firemen

and two brakemen as a ciass action on behalf of the class

(or sub-class) of Conrail firemen and train service

employees whether presently working or furloughed. The

first count of the complaint alleged, as did UTU’s com-

plaint in No. 82-4, that §702 should not be interpreted as

permitting violations of the collective bargaining

agreements—a position abandoned by counsel at oral

argument (Transcript at 22-24.) The second count alleged

that the provisions of §702 authorizing Conrail to force

severance and to “‘blank’’ positions vacated thereby in

violation of collective bargaining agreements were un-

constitutional. The complaint sought declaratory and in-

junctive relief and backpay. This court having issued a cer-

tificate pursuant to 28 U.S.C. §2403(a) that the constitu-

tionality of an act of Congress had been drawn into ques-

tion, the United States sought and was granted leave to in-

tervene as a defendant. Both sides moved for summary

judgment. By agreement the case, although not con-

solidated, was heard along with Nos. 82-4 and 82-7 on

March 10, 1982.

A5

The facts are not in dispute: As required by §702(b) and

(c), Conrail moved swiftly to implement that section.

Although, as discussions before the legislative committees

had indicated,’ Conrail intended to use subsection (a) to

separate 4600 employees, consisting of 1300 engine service

employees and 3300 train service employees, it in fact

determined that it would initially terminate 3633 em-

ployees, consisting of 1303 engine service employees and

2321 train service employees, Attachment to Affidavit of

R.E. Swert, March 16, 1982, and gave the notices required

by §702(c) (1) and (2). See Joint Exhibit H in No. 82-4;

Stipulation of Facts D.6 in No. 82-4. On October 28, 1981,

Conrail sought applications for voluntary terminations of

300 engine service and 300 train service employees at 31

locations; 583 employees applied for the former and 1157

for the latter. (Stipulation of Facts D.11 in No. 82-4; Af-

fidavit of R.E. Swert, March 4, 1982, 435.) On or about

December 7 Conrail terminated the employment of the 600

employees and ‘‘blanked’’ their positions as mandated by

§702(e) (1) or permitted by §702(e) (2). On January 7,

1982, Conrail solicited applications for 1660 voluntary ter-

minations at 54 locations for engine service employees and

at 60 for train service employees. (Stipulation of Facts

D.13 in No. 82-4.) A sufficient number of applications

having been made, Conrail terminated that number of

employees on or about February 22, 1982. (Stipulation of

Facts D.17 in No. 82-4; Affidavit of R.E. Swert, March 4,

1982, 4441-42.) This leaves 2340 employees who may be

terminated and whose positions may be blanked, see foot-

note 1, last paragraph. Compulsory termination under

§702(d) became possible on March 10, 1982. The funds for

the allowance incident to these terminations were provided

to Conrail under a February 6, 1982 Grant Agreement

with the Federal Railroad Administration.

A6

DISCUSSION

1. The History of the Problem

The efforts of the nation’s railroads to rid themselves of

what they consider to be unnecessary firemen and second

and third brakemen in freight service have had a long his-

tory. See Chicago & N.W. R. Co. v. United Transporta-

tion Union, 402 U.S. 570, 573 (1971) (citing authorities).

This included the appointment of a Presidential Railroad

Commission in 1960° and of Emergency Board No. 154 in

1963, and the adoption of a Joint Resolution, 77 Stat. 132,

which established a seven-man tripartite board, Arbitra-

tion Board No. 282, which was to render a binding award

effective for two years.‘ Overmanning became an issue in

the Penn Central reorganization, resulting in an opinion

by the reorganization judge which recommended that

management set crew size unilaterally. Jn re Penn Central

Transportation Co., 347 F.Supp. 1356, 1367 (E.D. Pa.

1972). After having invoked the procedures of the Railway

Labor Act wiihout success, the Trustees in February,

1972, began the unilateral reduction of crews and UTU

responded by calling a systemwide strike. Congress stepped

in by enacting Public Law No. 93-5, 87 Stat. 5, which in

effect rescinded the Trustees’ reduction of crew size.

Neither the RRR Act of 1973 nor the RRRR Act of 1976

contained any provision dealing directly with the problem

of overmanning. In September, 1978, Conrail negotiated a

Crew Consist Agreement with UTU which allowed Con-

rail to reduce certain freight crews from one conductor

and two brakemen to one conductor and one brakeman;

however, Conrail could eliminate the second brakeman

position only in the absence of available trainmen with

seniority dates prior to the date of the agreement. The hir-

ing of firemen continued to be governed by the Fireman

Manning Agreement of July 19, 1972. This, in effect,

A7

allowed the carriers to dispense with ‘‘firemen-helpers”’ in

engines other than those in passenger, hostler and hostler-

helper service, keeping an adequate number in training to

provide engineers, but firemen having seniority on the

date of the agreement could exercise this with respect to

any position for which the use of firemen would have been

required under the National Diesel Agreement of 1950 as

in effect on January 24, 1964.

While attrition would have gradually eliminated the

**protected employees’’ under these agreements in time if

traffic had grown or even remained static, traffic declined

sharply.* By 1980 it had become apparent not only to Con-

rail but to the United States Railway Administration

(USRA) and the General Accounting Office that the pro-

jected savings were not being and would not be realized.°

Indeed, the overall decline in traffic resulted in an increase

in the number of trains on which Conrail has had to

employ firemen.’

Section 405 of the Staggers Rail Act of 1980, Pub. L.

No. 96-448, 94 Stat. 1895, authorized federal funding of a

Conrail workforce reduction program if this would result

in ‘‘substantial savings’’ to the United States. After study

Conrail concluded that a severance program for train and

engine service employees would be generally beneficial if,

but only if, Conrail also could eliminate one position for

every employee separated since otherwise the position

vacated would be filled by a protected employee’s exercis-

ing seniority rights. These conclusions were reported to the

OMB, the FRA, the ICC and the UTU in January, Febru-

ary, and March 1981.° In all these presentations Conrail

projected a surplus of 1300 firemen and 3300 brakemen.

On March 15, 1981, Conrail made a series of reports to

Congress as required by §703(c) of the Staggers Act, one

of these being ‘‘an analysis of the effects upon the cor-

poration and its employees of alternative changes in labor

agreements and related operational changes.’’ Conrail,

A8

Labor Report to Congress: Response to Staggers Act Sec-

tion 703(c), at 1 (March 15, 1981). The report noted that

Conrail’s freight labor cost ratio had been reduced from

66% in 1977 to 56% in 1981 but that this compared

adversely with a ratio of 48% for the industry excluding

Conrail, an annual difference to Conrail of more than

$300 million. Jd. Reduction of the ratio would require

heavy sacrifices by Conrail employees, which, however,

would be much less than what would result if Conrail failed

to become a viable carrier and were sold piecemeal to

other carriers. Jd. The labor contributions were to consist

partly of a $200 million deferral in wage increases in the

1981 round of collective bargaining and partly by ‘‘eli-

mination of about 10,000 employees and acceleration of

savings permitted by productivity agreements already

negotiated.”” Jd. (Emphasis in original; footnote

omitted.)’ The report stated that a portion of the 10,000

reduction in Conrail employees could come from surplus

train and engine employees but that:

current labor contracts, although recognizing that

firemen and second brakemen are not necessary for

safe operation, provide for elimination of these

employees only through attrition. It is clear that

normal attrition itself, particularly in the environ-

ment of a declining traffic base, will not reduce

Conrail’s work force at a rate necessary for it to

realize the benefits of these agreements in the near

term.

Early in 1981 negotiations occurred between Conrail

and the unions representing its employees including UTU.

These culminated in a Labor Contribution Agreement

dated May 5, 1981. This provided for changes in the na-

tional agreements with respect to wages estimated to pro-

duce savings of $200 million per annum, see, e.g., Senate

Hearing II, at 35-38 (testimony of James E. Burke, Vice

A9

President, United Transportation Union), 2-3 (testimony

of L. Stanley Crane, Chairman and Chief Executive Of-

ficer, Conrail), and a moratorium on the service or proc-

essing of notices under §6 of the Railway Labor Act. At

the same time representatives of Conrail and of UTU were

negotiating with respect to the elimination of firemen and

brakemen positions. According to Swert’s affidavit, 420,

this resulted in the joint submission to the House Commit-

tee on Energy and Commerce and the Senate Committee

on Commerce, Science and Transportation of a proposal

generally similar to §702 as enacted. '°

2. The Meaning of §702

UTU argues that §702, and particularly §702(d) and (e),

were not intended to allow Conrail to take action con-

travening the Fireman Manning Agreement and the Crew

Consist Agreement. While its making the argument is

understandable in light of the historic reluctance of both

labor and management to have Congress take unto itself

the resolution of labor disputes, we find the argument

wholly lacking in force. Indeed, the plaintiffs in No. 82-2

join with Conrail and the United States in the view that the

section was intended to supersede contrary agreements.

We look first at the words of the statute, Southeastern

Community College v. Davis, 442 U.S. 397, 405 (1979);

Sante Fe Industries, Inc. v. Green, 430 U.S. 462, 472

(1977), and it is hardly necessary to do more. The very first

sentence of §702 says that Conrail ‘‘may terminate the

employment of certain employees, in accordance with this

section’’, not that Conrail may do so if permitted by

agreement. Subsection (d) dealing with involuntary

separation says that Conrail ‘‘may, after 210 days after the

effective date of this title, designate for separation

employees in engine service or train service respectively in

inverse order of seniority’ etc. No qualification is made

on the score of existing agreements. The first reference to

A 10

representatives of employees comes in §703(e) (3), and this

for the very limited purpose there stated and with Conrail

having the right to decide if no agreement is reached.

Subsection 703(e) (4) retains Conrail’s contract rights to

refrain from filling positions but, significantly, says

nothing about the contract rights of employees. Section

§702(f) says that Conrail and employee representatives

‘‘may agree on procedures to implement this section, but

the absence of such agreement shall not interfere with im-

plementation of the separations authorized by this

section.’’ Finally, if there were need for further dotting of

i’s or crossing of t’s, §702(g) makes mandatory Conrail’s

separation of firemen in commuter service, which clearly

intends no restraint by existing agreements to the contrary.

The compelling force of the language is augmented by

other considerations discernible from the face of the

statute. One is UTU’s inability to suggest what purpose

the elaborate provisions of §702 would serve under its con-

struction. Conrail required no authorization from Con-

gress to do what existing agreements permitted or to

negotiate for changes in them. There can be no valid claim

that §702 was needed to insure that any actions taken by

Conrail of the sort therein specified would not run afoul

of state full crew laws; that office was already performed

by §711."'

A second consideration is that §702 must be read in the

light of Title IV which §1142 of NRSA added to the RRR

Act. Section 403 requires USRA to make profitability

determinations with respect to Conrail on June 1, 1983,

and again as soon after November 1, 1983, as the neces-

sary information is available. Failure of Conrail to pass

either test requires the Secretary of Transportation to in-

itiate discussions and negotiations under §405 for the

break-up of Conrail’s freight service, §§403(a) (B) and (b)

(B).'? It was in the interest of both Conrail and labor that

savings incident to the §702 program should begin as early

as possible—not await the result of lengthy and possibly

All

fruitless negotiations for amendment of the Fireman Man-

ning and Crew Consist Agreements. '’

With the language of §702 so clear and the necessity of a

literal reading in order to conform with the overall pur-

pose of the statute so manifest, it is scarcely necessary to

resort to legislative history. If we do, the answer given by

the reports of the Senate, House and Conference Commit-

tees is equally plain.

The House Report on H.R. 3559, a predecessor to

NRSA, said ‘‘this title also provides Conrail the oppor-

tunity to eliminate unnecessary jobs. Unneeded firemen

and brakemen are eliminated upon payment of a termina-

tion allowance, saving the Corporation more than $100

million.’’ H.R. Rep. No. 97-153, 97th Cong., Ist Sess., at

3 (1981). More specifically, the report described a section

of H.R. 3559, which was almost identical to §702 as

enacted, in the following terms:

Section 702 permits Conrail to accelerate the im-

plementation of the crew consist and firemen man-

ning agreements so that all excess firemen and all

second and third brakemen can be eliminated

before the end of calendar year 1982. The firemen

on the crews of trains operated in commuter service

must be included by the Corporation in the ter-

mination program.

Id. at 30.

The Senate Report described §413-1 of S.1377, a

forerunner of §702, in similar terms:

[Section 413-1] contains a ‘‘Special Termination

Allowance’’ allowing Conrail to ‘‘blank’’ the posi-

tions (eliminate the job with the man) vacated

under the program. Separations would be limited

to the numbers of excess firemen and second and

A 12

third brakemen (including passenger firemen)

presently employed by Conrail (but not necessarily

the individuals occupying those positions if more

senior personnel wish to be separated). About

4,600 positions are at issue, and their elimination

would make the properties more saleable. This was

addressed in the Conrail settlement after the DOT

bill was introduced.

The program would operate at the direction of

Conrail but mandatorily as to affected employees

(after voluntary separations were taken). The sec-

tion provides for payments at the rate of $200 per

month of active service with Conrail or a

predecessor, with a cap of $25,000 (i.e., 4 years, 2

months of service) [sic].

S. Rep. No. 97-139, 97th Cong., Ist Sess., at 332 (1981).

The House and Senate conferees took the same view, say-

ing ‘‘the purpose of this program is to eliminate 4,600

employee positions; 3,300 brakemen and 1,300 firemen. In

addition, all the firemen in commuter service are to be in-

cluded in this program. This will result in the elimination

of firemen positions in commuter service.’’ Explanatory

Statement, supra, at 127 Cong. Rec. S 9061 (daily ed. July

31, 1981); 127 Cong. Rec. H 5962 (daily ed. August 4,

1981).

In none of these statements is there any indication that

collective bargaining agreements were intended to limit the

operation of §702; indeed, the section was described as

allowing Conrail ‘‘to accelerate the implementation of the

crew consist and fireman manning agreements.’’ Likewise,

the principal concern reflected in the reports is ensuring

that Conrail actually is able to eliminate the excess posi-

tions in question prior to the end of 1982, an outcome that

UTU’s reading of the provision would be unlikely to per-

mit.

A 13

Both Conrail and UTU have referred to a multitude of

materials submitted to Congress in the course of the

deliberations leading to the enactment of §702. Conrail

regards these as showing knowledge by the committees of

Congress that the termination program would not be ef-

fective unless Conrail had the right to enforce it, including

the blanking of positions, irrespective of the assent of the

UTU. The latter finds solace in some references to

negotiation by Conrail representatives. We find it un-

necessary to pursue the subject. Our concern is not so

much with what Conrail sought as with what Congress

wrought. With respect to that, the language and evident

purpose of the statute and the committee reports leave no

room for even the smallest doubt. When the evidence

revealed by an excursion into materials simply forming a

part of the basis on which Congress acted is ‘‘sufficiently

ambiguous . . . to invite mutually destructive dialectic but

not strong enough either to strengthen or weaken the force

of what Congress has enacted,’’ a court should disregard

it. FCC v. Columbia Broadcasting System, 311 U.S. 132,

136-37 (1940).

3. Constitutionality:

Due Process and Equal Protection

Plaintiffs in No. 82-2 challenge the constitutionality of

§702 on a number of grounds. They contend that the com-

pulsory separation provisions of §702(d) and the ‘‘blank-

ing’’ provisions of §702(e) violate the Fifth Amendment’s

prohibitions of the deprivation of property without due

process of law and the taking of private property for

public use without just compensation. They contend also

that the concept of equal protection of the laws held to be

embodied in the due process clause of the Fifth Amend-

ment, see Bolling v. Sharpe 347 U.S. 497 (1954), is

violated by §702(a)’s $25,000 ceiling on termination

A 14

allowances and by the fact that §702 applies only to Con-

rail. For convenience we will refer to the two former con-

tentions as the due process contentions and to the last as

the equal protection contentions.

Before discussing the due process contentions it will be

useful to analyze what sacrifices §702 in fact imposes and

why Congress imposed them. Clearly the employees who

opt for voluntary termination have no constitutional

claim. By no means will every employee who may be sub-

jected to compulsory termination lose his employment; if

he has seniority, he may exercise this to transfer to another

location. Some, of course, will be terminated, but nor-

mally they will be employees with low seniority, whom

Conrail was free to furlough without benefit of §702 if

their services were not needed. Section §702(e) does not in

itself result in the loss of a job; it simply prevents an

employee from using seniority rights to bid for a superior

position formerly held by a terminated employee.

As against this Congress had reason to consider that

§702 would serve important public objectives. Its pur-

poses, NRSA §1133, so far as here relevant, were to pro-

vide for ‘‘(1) the removal by a date certain of the Federal

Government’s obligation to subsidize the freight opera-

tions of Conrail’ and ‘‘(3) an orderly return of Conrail

freight service to the private sector.’’ The preferred

method for accomplishing this was to make Conrail prof-

itable, thereby permitting its continued existence or its sale

as a single entity to private interests. Failure to achieve

profitability would have catastrophic consequences. Pro-

jected loss of employment from piecemeal sale was

estimated to exceed 45,000. See USRA, Conrail at the

Crossroads: The Future of Rail Service in the Northeast,

at 51 (April 1981) and note 12 supra. This would impair

the solvency of the Railroad Retirement System, see H.

Rep. No. 97-153, 97th Cong., Ist Sess., at 153 (1981); S.

Rep. No. 97-101, 97th Cong., Ist Sess., at 105 (1981),

recently the subject of legislative effort to restore its

A 15

soundness, see Pub. L. No. 97-34, §741. The new federally

funded employee protection program, which §1143(a) of

NRSA added as §701 of the RRR Act, would be

prematurely exhausted, as would the railroad unemploy-

ment insurance fund, see H. Rep. 97-153, supra, at 153.

While §702 alone could not assure profitability for Con-

rail, Congress reasonably expected it to make a significant

contribution to achieving that goal. Annual savings are

estimated at $70 million, for which the Government was

willing to supply an estimated $115 million in termination

allowances.'* As against this, achievement of the same

reduction in force under existing agreements would re-

quire twice as many terminations and produce savings of

only $9 million.'*

Our analysis of the due process contentions must begin

by recognizing that ‘‘[vjalid contracts are property,

whether the obligor be a private individual, a municipal-

ity, a State or the United States.’’ Lynch v. United States,

292 U.S. 571, 579 (1934). However, Congress has greater

freedom to deal with private contractural rights than with

obligations of the Federal Government. Contrast Norman

v. Baltimore & Ohio R.R., 294 U.S. 240, 306 (1935), with

Perry v. United States, 294 U.S. 330, 348, 350-51 (1935).

As the Court stated in Norman, 294 U.S. at 307-08:

Contracts, however express, cannot fetter the

constitutional authority of the Congress. Contracts

may create rights of property, but when contracts

deal with a subject matter which lies within the con-

trol of the Congress, they have a congenital infirm-

ity. Parties cannot remove their transactions from

the reach of dominant constitutional power by

making contracts about them.

The principle thus stated in Norman had been settled

long before. Louisville & N. R.R. Co. v. Mottley (II), 219

U.S. 467, 482 (1911), upheld the invalidation, by the 1906

A 16

amendments to the Interstate Commerce Act of 1887, of a

contract settling personal injury claims of Mr. and Mrs.

Mottley for passes during their respective lives. A un-

animous Court, speaking through the first Justice Harian,

said:

That the exercise of [the commerce] power may

be hampered or restricted to any extent by con-

tracts previously made between individuals or cor-

porations, is inconceivable. The framers of the

Constitution never intended any such state of

things to exist.

See also id. at 485-86. Relying on the Mottley decision, the

Court in Philadelphia, Baltimore & Washington R.R. v.

Schubert, 224 U.S. 603 (1912), upheld the constitutional-

ity of §5 of the Federal Employers’ Liability Act, 35 Stat.

65, which declared void any contract enabling a carrier to

exempt itself from liability under the Act. The Court said

through Justice Hughes, id. at 613-14:

The power of Congress, in its regulation of in-

terstate commerce, and of commerce in the District

of Columbia and in the Territories, to impose this

liability, was not fettered by the necessity of main-

taining existing arrangements and _ stipulations

which would conflict with the execution of its

policy. To subordinate the exercise of the Federal

authority to the continuing operation of previous

contracts, would be to place, to this extent, the

regulation of interstate commerce in the hands of

private individuals and to withdraw from the con-

trol of Congress so much of the field as they might

choose by prophetic discernment to bring within

the range of their agreements. The Constitution

recognizes no such limitation. It is of the essence of

the delegated power of regulation that, within its

A 17

sphere, Congress should be able to establish

uniform rules, immediately obligatory, which as to

future action should transcend all inconsistent pro-

visions. Prior arrangements were necessarily sub-

ject to this paramount authority.

Again, in Fleming v. Rhodes, 331 U.S. 100, 107 (1947),

the Court said:

So long as the Constitution authorizes the subse-

quently enacted legislation, the fact that its provi-

sions limit or interfere with previously acquired

rights does not condemn it.

More recently, the Court, in Penn Central Transporta-

tion Co. v. New York City, 438 U.S. 104, 124 (1978),

although indicating its inability ‘‘to develop any ‘set for-

mula’ for determining when’’ compensation is required

under the taking clause, identified several factors that

have had particular significance in its decisions on the

question. A number of considerations highlighted therein

reinforce our conclusion that §702 does not effect a taking

for which compensation is constitutionally required. One

is that ‘‘[a] ‘taking’ may more readily be found when the

interference with property can be characterized as a

physical invasion by government than when interference

arises from some public program adjusting the benefits

and burdens of economic life to promote the common

good.’ Jd. at 124 (citation omitted). Another is that

‘** ‘Taking’ jurisprudence does not divide a single parcel

into discrete segments and attempt to determine whether

rights in a particular segment have been entirely abrogated

. . . . [T]his Court focuses rather both on the character of

the action and on the nature and extent of the interference

with rights in the parcel as a whole... .”’ Jd. at 130-31.

Here, as we have pointed out, §702 by no means abrogates

A 18

all rights under the pertinent agreements. Section 702(d)

offers the options of a severance allowance, voluntary

furlough, or the exercise of seniority at another location.

Section 702(e) merely decreases the total number of jobs

available on the system and thus increases the likelihood

that at any given time particular employees, predomin-

antly those with low seniority, will be on furlough and

decreases the wages of employees working in less desirable

positions. A third consideration is the Court’s statement:

Legislation designed to promote the general

welfare commonly burdens some more than others.

The owners of the brickyard in Hadacheck [v.

Sebastian, 239 U.S 394 (1915)], of the cedar trees in

Miller v. Schoene, [276 U.S. 272 (1928),] and of the

gravel and sand mine in Goldblatt v. Hempstead,

[369 U.S. 590 (1962),] were uniquely burdened by

the legislation sustained in those cases. Similarly,

zoning laws often affect some property owners

more severely than others, but have not been held

to be invalid on that account.

Penn Central, 438 U.S. at 133-34 (footnote omitted). This

is useful in answering the claim that Congress’ action rises

to the level of a taking because affected workers bear a

disproportionate share of the burden of Congress’ scheme

to preserve rail service in the Northeast and Midwest. In

contrast to the Penn Central decision, in Kaiser Aetna v.

United States, 444 U.S. 164, 179-80 (1979), where the

Court concluded that a taking had occurred because the

federal government’s action extinguished the landowner’s

right to exclude, which is ‘‘so universally held to be a fun-

damental element of the property right’’, the Court was

careful to note that ‘‘the imposition of the navigational

servitude in this context will result in an actual physical in-

vasion of the privately owned marina... . And even if the

A 19

Government physically invades only an easement in prop-

erty, it must nonetheless pay just compensation.’’ /d.

(citations omitted).

As stated in Usery v. Turner Elkhorn Mining Co., 428

U.S. 1, 15 (1976), the Court has long ‘‘upheld against due

process attack the competence of Congress to allocate the

interlocking economic rights and duties of employers and

employees . . . regardless of contravening arrangements

between employer and employee.’’ Likewise, the Court

has held that legislation ‘‘readjusting rights and burdens”’

between employers and employees ‘‘is not unlawful solely

because it upsets otherwise settled expectations.’’ Jd. at

16. The statement applies here a@ fortiori. Railway labor

could hardly have had ‘‘settled expectations’’ that Con-

gress would forever refrain from doing away with jobs

which a presidential commission had found to be useless

twenty years ago and which the unions, in their collective

bargaining agreements, had in effect conceded to be. As

the Supreme Court has articulated the broad contours of

Congress’ power under the Commerce Clause, it has

become ever more clear that private arrangements will not

be permitted to stand in the way. If we assume there are

some limits beyond which Congressional action may not

go, certainly these were not exceeded here.

The equal protection arguments can be disposed of even

more readily. Application of the equal protection concept

to invalidate economic regulation is quite restricted. In the

absence of the existence of ‘‘fundamental rights’’ or in-

vidious discrimination, neither of which is present here,

**fijt is enough that there is an evil at hand for correction,

and that it might be thought that the particular legislative

measure was a rational way to correct it.’’ Williamson v.

Lee Optical Co., 348 U.S. 483, 488 (1955). ‘“‘[T]he

judiciary may not sit as a superlegislature to judge the

wisdom or desirability of legislative policy determinations

made in areas that neither affect fundamental rights nor

A 20

proceed along suspect lines . . . .’’ New Orleans v. Dukes,

427 U.S. 297, 303 (1976), citing Day-Brite Lighting, Inc. v.

Missouri, 342 U.S. 421, 423 (1952).

The attack on the $25,000 ceiling is that it is irrational to

apply the same maximum to an older worker with only a

few years of expectable service and to a younger worker

who might have anticipated many years of employment.'*

In fact, however, the younger worker’s expectations are

dependent on the success of the enterprise. If Conrail’s

traffic continues to decline or if it should be sold, par-

ticularly if it should be sold piecemeal, seniority rights

might make the older worker’s future longer than the

younger’s. In addition, a uniform ceiling is responsive to

the fact that younger workers who are separated

presumably are in a better position to find alternative

employment. Congress was not required to fine tune the

maximum separation allowance to the unpredictable

merits of each individual case.

In the area of economics and social welfare, a

State does not violate the Equal Protection Clause

merely because the classifications made by its laws

are imperfect. If the classification has some

‘reasonable basis,’’ it does not offend the Con-

stitution simply because the classification ‘‘is not

made with mathematical nicety or because in prac-

tice it results in some inequality.’’ Lindsley v.

Natural Carbonic Gas Co., 220 U.S. 61, 78.

Dandridge v. Williams, 397 U.S. 471, 485 (1970). See also

United States Railroad Retirement Board v. Fritz, 449

U.S. 166, 175-79 (1980). The desire to provide a simple,

workable maximum on termination allowances is reason

enough.

The equal protection argument based on the fact that

§702 applies only to Conrail is also unavailing. No other

A 21

railroad is similarly situated. Conrail had received sub-

sidies from the federal government in excess of $5 billion.

In NRSA itself Congress extended further subordination

of the $3.3 billion in federal debt to encourage the sale of

Conrail stock, §402 of the RRR Act added by §1142 of

NRSA; authorized an additional $262 million for the pur-

chase of Conrail securities, §217 of the RRR Act added by

§1140(a) of NRSA; and provided a federally funded labor

protection program, §§ 1143 and 1144 of NRSA. Congress

determined that in order to justify these expenditures Con-

rail must be freed from the provisions of the Fireman

Manning and Crew Consist Agreements which had

prevented its realizing essential savings by abolishing un-

needed positions. The notion of equal protection em-

bodied in the Fifth Amendment does not hobble Congress

to the choices of doing this for all railroads or for none.

**(RjJeform may take one step at a time, addressing itself to

the phase of the problem which seems most acute to the

legislative mind. . . . The legislature may select one phase

of the field and apply a remedy there, neglecting the

others. The prohibition of the Equal Protection Clause

goes no further than the invidious discrimination.”’

Williamson v. Lee Optical Co., supra, 348 U.S. at 489

(citations omitted). See also New Orleans v. Dukes, supra,

427 U.S. at 306, overruling Morey v. Doud, 354 U.S. 457

(1957).

4. Constitutionality:

The Bankruptcy Clause

At argument counsel for three UTU local chairmen who

are defendants in No. 82-7 contended, on. the authority of

the Supreme Court’s recent decision in Railroad Labor

Executives’ Ass’n v. Gibbons, 50 U.S.L.W. 4258 (March

2, 1982), that because §702 applies only to Conrail, it

violates Article 1, §8, clause 4 of the Constitution em-

powering Congress to ‘‘establish . . . uniform Laws on the

A 22

subject of Bankruptcies throughout the United States.’’

On its face §702, regulating the employment relations of a

non-bankrupt carrier has nothing to do with bankruptcy,

the ‘‘subject of the relations between an insolvent or non-

paying or fraudulent debtor and his creditors, extending to

his and their relief.’” Wright v. Union Central Ins. Co.,

304 U.S. 502, 513-14 (1938). The constitutional support

for §702, as indicated by the findings in §1132, especially

§1132(3), and the recitals of purposes in §1133 of NRSA,

is the commerce power, not the bankruptcy power.

The chairmen’s argument rests solely on the fact that

§702 is a part of Title VII which §1143(a) of NRSA added

to the RRR Act of 1973 as amended. The decision of Con-

gress, simply as a matter of convenient reference, to tack

Title VII, which has none of the characteristics of bank-

ruptcy legislation, onto the RRR Act did not implicate the

constitutional requirement of uniformity.

5. Injunctive Relief

Having concluded that Congress intended §702 to

operate without regard to the Fireman Manning Agree-

ment and the Crew Consist Agreement and that the section

as so construed is not unconstitutional, and that Conrail

has thus proceeded lawfully in implementing those provi-

sions, we must consider whether to make permanent the

preliminary injunction previously issued in No. 82-7 as

Conrail urges.

We have no doubt that the issue presented in No. 82-7 is

a “‘labor dispute’ within §13(c) of the Norris-LaGuardia

Act, 29 U.S.C. §113(c). It is also plain that §4 of that Act,

29 U.S.C. §104, would prohibit us from issuing the injunc-

tion if the Norris-LaGuardia Act is applicable to our func-

tioning under §1152 of NRSA.

We think it is not. Section 1152(c) provides that:

A 23

Notwithstanding any other provision of law, the

special court shall have original and exclusive juris-

diction over any civil action—(1) for injunctive, de-

claratory, or other relief relating to the enforce-

ment, Operation, execution, or interpretation of

any provision or amendment made by this subtitle.

It is true that this does not speak with the pristine clarity of

§10(h) of the National Labor Relations Act, 29 U.S.C.

§160(h), see Bakery Sales Drivers Local Union No. 33 v.

Wagshal, 333 U.S. 437, 442 (1948); Building and Con-

struction Trades Council v. Alpert, 302 F.2d 594 (1 Cir.

1962). The failure of Congress to make specific mention of

the Norris-LaGuardia Act in the ‘“‘notwithstanding’’ pro-

vision of §1152(c) could well have been due to the fact that

it wished as well to exclude the application of other laws,

e.g., the provision of 28 U.S.C. §1331 vesting the district

courts with jurisdiction over cases arising under laws of

the United States. Its omission of express reference is no

reason for failing to read its general words as meaning

what they unmistakably say. Here, as in the case of

*‘minor disputes’? under the Railway Labor Act, 45

U.S.C. §151 et seq., there must be an accommodation be-

tween the two statutes with the balance favoring the later

and more limited one. Virginian Ry. Co. v. System

Federation No. 40, 300 U.S. 515, 563 (1937); Brotherhood

of Railroad Trainmen v. Chicago River & Indiana R.R.

Co., 353 U.S. 30, 39-40 (1957); Chicago & N.W. Ry. Co.

vy. United Transportation Union, 402 U.S. 570, 582-83

n.18 (1971). The recital of the ‘‘public policy of the United

States’? in §2 of the Norris-LaGuardia Act, 29 U.S.C.

§102,'’ by which the courts are directed to be guided in in-

terpreting the act and determining their jurisdiction and

authority, shows how far removed the purpose of that

statute is from a case where Congress itself has set labor

policy for a single railroad with respect to a particular

A 24

labor problem and vested a special court of three judges

with authority to enforce the Congressional decision by

granting injunctive relief. Compare Boys Markets, Inc. v.

Retail Clerks Union, 398 U.S. 235, 250-53 (1970).

Although we thus conclude that the Norris-LaGuardia

Act does not bar the injunction sought by Conrail, an in-

junction should not issue unless there is ‘‘some cognizable

danger of recurrent violation’’. United States v. W.T.

Grant Co., 345 U.S. 629, 633 (1953). When the

preliminary injunction was issued in No. 82-7, such a

danger plainly existed. Conrail’s complaint alleged (Ap-

pendix B) that UTU’s president had authorized subor-

dinate UTU general committees to conduct strike votes in

connection with Conrail’s implementation of §702; that

certain such committees had conducted such votes; and

that they and certain UTU local officers had informed

Conrail and the general public that a work stoppage would

be conducted. Employees would report to work on Febru-

ary 22, 1982, and ascertain the crew or work assignments

which they had received. If a crew was scheduled to

operate with a position blanked under the §702 program,

it would refuse to work; if Conrail disciplined an employee

for such refusal, a general strike would ensue. The Af-

fidavits of Conrail’s Vice-President—Labor Relations,

R.E. Swert, and other Conrail officials in support of its

motion for a temporary restraining order elaborated upon

this and on the serious harm which a strike would cause to

Conrail and to the country. Counsel for UTU did not

challenge Conrail’s allegations. Indeed UTU later stipu-

lated that certain UTU general committees had voted to

take strike action against Conrail in support of UTU’s

view that §702 did not supersede existing agreements; that

UTU was prepared to grant strike authority to such com-

mittees unless enjoined by this court; and that if such

authority was issued some Conrail employees represented

by UTU would strike.

A 25

Before this court the defendants in No. 82-7 have con-

tended that there will be no need for an injunction once we

decide the legal issues. The brief for UTU states (p. 12):

Nevertheless, if this Court rules against the UTU

or any appropriate appeals decision is against the

UTU, the UTU would not sanction a strike. Thus,

the determination of the underlying dispute will, we

believe, moot the Norris-LaGuardia Act issue.

Counsel for UTU said at argument:

If you determine it against us, I think I indicated

in our pleadings, in our brief to the Court, that the

union is not going to defy the Court and order a

strike in violation of the Court’s ruling.

Transcript at 10; see also id. at 11. Counsel for local

chairmen, Casey, Connors and Maloof, who had expressed

the greatest opposition to Conrail’s actions, stated:

If you rule [against us] . . . then they won’t have

a right under Section 6 to go on strike. . . . As far as

I know, they won’t. But they have been completely

lawabiding up until this point, and there is no

reason for the Court to believe that they would not

continue to be so.

Transcript at 49-50. Counsel for Local 1418 who spoke

briefly was not asked about this question and did not ad-

dress it.

In view of these unequivocal representations, which we

expect to be fulfilled, we cannot find that the threat of a

strike is now so real or imminent as to warrant a perma-

nent injunction. It is important, however, not only that

there should be no strike that would directly frustrate the

A 26

will of Congress, but also that shippers should perceive

Conrail as being as free as possible from the likelihood of

such a strike. Otherwise the efforts of Congress to enable

Conrail to achieve profitability might be seriously

jeopardized. We therefore think it desirable to alert the

parties to our present inclination, in the event that an il-

legal strike should be actually threatened, to issue im-

mediately a temporary restraining order and then to pro-

vide Conrail with other appropriate relief. At this point

counsel have not suggested what new arguments could be

made, in the event of renewed threat of a strike, that

would lead us to deny a temporary restraining order or a

preliminary injunction. Our decision should thus not be

taken to reflect on the appropriateness of injunctive relief

when and if a proper showing has been made that a strike

is likely—an event we trust will not occur. We hold only

that at the present time a permanent injunction is not ap-

propriate.

A 27

Judgment will be entered in Nos. 82-4 and 82-7 declar-

ing that §702 added to the RRR Act by §1143(a) of NRSA

confers authority on Conrail to take the actions there

specified without regard to the Manning Agreement, the

Crew Consist Agreement or any other collective bargain-

ing agreement. Judgment will be entered in No. 82-7

vacating the injunction entered on February 22, 1982, and

denying Conrail’s motion for a permanent injunction.

Judgment will be entered in No. 82-2 rejecting all constitu-

tional challenges to §702. If Conrail desires a more de-

tailed form of judgment, it may submit one for settlement

on five days’ notice.

HENRY J. FRIENDLY

Presiding Judge

JOHN MINOR WISDOM

Judge

ROSZEL C. THOMSEN

Judge

Dated: March 31, 1982

A 28

FOOTNOTES.

'§702(a) GENERAL.—The Corporation may terminate the

employment of certain employees, in accordance with this section,

upor the payment of an allowance of $350 for each month of active

service with the Corporation or with a railroad in reorganization, but

in no event may any such termination allowance exceed $25,000.

(6) EMPLOYMENT NEEDS.—Within 90 days after the effec-

tive date of this title, the Corporation shall determine, for each loca-

tion, the number of employees that the Corporation intends to

separate under subsection (a) of this section.

(c) NOTIFICATION AND SEPARATION PROCEDURE.—

(1) Within 90 days after the effective date of this title, the Corporation

shall notify its employees of their rights and responsibilities under this

section.

(2) Within 90 days after the effective date of this title, the Cor-

poration shall notify each train and engine service employee eligible to

be separated under paragraph (3) that such employee may be entitled

to receive a separation payment under this section if such employee

files a written request to be separated. Such notice may be revised

from time to time.

(3) Ifthe number of employees who request to be separated pur-

suant to paragraph (2) of this subsection is greater, in engine service at

any location, than the number of excess firemen at the location, and in

train service at the location than the number of excess second and

third brakemen, as determined by the Corporation, the Corporation

shall separate the employees described in paragraph (2) of this subsec-

tion in order of seniority beginning with the most senior employee,

until the excess firemen and second and third brakemen positions at

that location, as determined by the Corporation, have been elimi-

nated.

(d) DESIGNATED SEPARATIONS.—If the number of

employees who are separated pursuant to subsection (c)\3) is less at

any location than the number of excess firemen in freight and com-

muter service and second and third brakemen in freight service at such

location, as determined by the Corporation, the corporation may,

after 210 days after the effective date of this title, designate for separa-

tion employees in engine service or train service respectively in inverse

order of seniority, beginning with the most junior employee in active

service at such location until the excess firemen in freight and com-

muter service and second and third brakemen in freight service, at that

location have been eliminated. An employee designated under this

subsection may choose (1) to furlough himself voluntarily, in which

case the next most junior employee protected under the fireman

manning or crew consist agreements or any other agreement or law, in

the same craft or class at such location may be separated instead and

receive the separation allowance, or (2) tc exercise his seniority to

A 29

another location, in which case the Corporation may separate, under

the provisions of this subsection, the next most junior protected

employee in active service at the location to which seniority ultimately

is exercised.

(ec) EFFECT ON POSITIONS.—(1) The corporation shall

refrain from filling one fireman position in freight service, or in com-

muter service where applicable, for each employee in engine service

separated in accordance with this section.

(2) The corporation may refrain from filling one brakeman

position in excess of one conductor and one brakeman on one crew in

freight service for each employee in train service who is separated in

accordance with this section.

(3) Positions permitted to be not filled under this subsection

shall be not filled in different types of freight service actually operated

at or from the location in a sequence to be agreed upon between the

Corporation and the general chairman representative of classes or

crafts of employees having jurisdiction over the positions to be not

filled. If no such agreement is reached, the Corporation may designate

the position to be not filled.

(4) Notwithstanding paragraphs (1) and (2) of this subsection,

the Corporation shall retain all rights it has under any provision of law

or agreement to refrain from filling any position of employment.

(f) PROCEDURES.—The Corporation and representatives of

the various classes and crafts of employees to be separated may agree

on procedures to implement this section, but the absence of such

agreement shall not interfere with implementation of the separations

authorized by this section.

(g) COMMUTER EMPLOYEES. —The provisions of this sec-

tion shall apply to the separation of firemen in commuter service, ex-

cept that with respect to such employees the Corporation is required to

make the separations authorized by this section.

Section 713 authorized $385,000,000 to be appropriated to carry

out the provisions of Title VII, entitled ‘‘Protection of Employees,”’

of which §702 formed a part. Not more than $115,000,000 was to be

available solely for termination allowances under §702. Assuming that

all terminated employees would qualify for the $25,000 maximum per-

mitted by §702(a), the $115,000,000 would provide for 4600 termina-

tions.

*Explanatory Statement of the House and Senate Conferees with

Respect to Subtitles E, F, and G of Title XI of the Omnibus Recon-

ciliation Bill (H.R. 3982) [hereafter Explanatory Statement], 127

Cong. Rec. S. 9056, 9060-61 (daily ed. July 31, 1981); Northeast Rail

Service Act of 1981, Hearing before the Subcommittee on Surface

Transportation of the Committee on Commerce, Science, and

Transportation, United States Senate, 97th Cong., Ist Sess. [hereafter

Senate Hearing II] 38, 41-43 (1981) (Comments of James E. Burke,

Vice President, United Transportation Union).

A 30

‘The Commission recommended that the parties agree to

eliminate the unnecessary positions through attrition, with job protec-

tion extended to present employees; the carriers accepted this proposal

but the unions rejected it.

‘Arbitration Board No. 282 found the fireman position obsolete

and authorized the elimination of all firemen positions subject to

restoration of up to 10% by union officers for engineer training pur-

poses. It remanded the train service crew consist dispute back to the

carriers and unions for local arbitration. This resulted in eliminating

some second brakemen positions but full implementation was im-

paired by state full crew laws.

*See, e.g., Conrail, Options for Conrail, Conrail’s Response to

Section 703(c) of the Staggers Rail Act of 1980, at 8-7, 8-A-7 (April 1,

1981); USRA, Conrail at the Crossroads: The Future of Rail Service

in the Northeast, at 10 (April 1981); United States Department of

Transportation, Federal Railroad Administration, Recommendations

for Northeast Rail Service, at C-2 to C-3 (1981).

*USRA, Cost and Productivity—Train and Engine Service, Con-

rail vs. Selected Other Carriers—1980, at 15-43 (1981); Report by the

Comptroller General of the United States, Conrail’s Attempts to Con-

trol Labor Costs and Improve Its Labor Productivity (1980).

"See authorities cited in note 5 supra.

"See Exhibits I, J, and K to Affidavit of R.E. Swert, March 4,

i982.

°A third element was “protection of Conrail against new labor

cost obligations resulting from statutory employee protection re-

quirements or from collective bargaining or transfer of function or

lines to others without the transfer of involved employees.’’ Conrail,

Labor Report to Congress: Response to Staggers Act Section 70%c),

at 2 (March 15, 1981).

'°Vice President Burke of UTU has submitted an affidavit deny-

ing that he or other union representatives agreed that UTU-Conrail

agreements were superseded by Congressional legislation. He does not

deny Swert’s assertion that the proposal was jointly submitted and

that Conrail understood it would supersede existing agreements.

Review of documents submitted by Conrail, notably a letter from

President Hardin of UTU to General Chairman Doar dated December

8, 1981, indicates to our mind UTU’s then understanding that §702

superseded pro tanto the Fireman Manning Agreement and the Crew

Consist Agreement. However, we do not rest our decision on this in

degree.

‘$711. No State may adopt or continue in force any law, rule,

regulation, order, or standard requiring the Corporation, the National

Railroad Passenger Corporation, or the Amtrak Commuter Services

Corporation to employ any specified number of persons to perform

any particular task, function, or operations, or requiring the Corpora-

tion to pay protective benefits to employees, and no State in the

Region may adopt or continue in force any such law, regulation,

order, or standard with respect to any railroad in the Region.

A 31

"Fred J. Kroll, Chairman of the Railway Labor Executives’

Association, testified that a sale of Conrail’s lines to other operators

would result in the loss of more than 40,000 jobs, over half of

Conrail’s freight employment. Consolidated Rail Corporation, Hear-

ings before the Subcommittee on Commerce, Transportation, and

Tourism of the Committee on Energy and Commerce, House of

Representatives, 97th Cong., Ist Sess., at 486-87 (1981); Conrail

Reauthorization, Hearings before the Subcommittee on Surface

Transportation of the Committee on Commerce, Science, and

Transporation, United States Senate, 97th Cong., Ist Sess., at 63, 66,

68 (1981).

'*The Supreme Court has characterized the Railway Labor Act’s

procedures regarding major disputes as ‘‘an almost interminable proc-

ess,’’ Detroit & Toledo Shore Line R.R. v. United Transportation

Union, 396 U.S. 142, 149 (1969).

'*This assumes that each terminated employee will receive the

maximum of $25,000. See Affidavit of R.E. Lindquist in support of

Conrail’s motion for summary judgment in Nos. 82-4 and 82-7,

March 9, 1982.

'SId.

‘The $25,000 maximum, of course, has no effect on employees

with less than six years of qualified service.

''§102. Public Policy in labor matters declared

In the interpretation of this chapter and in determining the

jurisdiction and authority of the courts of the United States,

as such jurisdiction and authority are defined and limited in

this chapter, the public policy of the United States is declared

as follows:

Whereas under prevailing economic conditions, developed

with the aid of governmental authority for owners of prop-

erty to organize in the corporate and other forms of owner-

ship association, the individual unorganized worker is com-

monly helpless to exercise actual liberty of contract and to

protect his freedom of labor, and thereby to obtain accept-

able terms and conditions of employment, wherefore, though

he should be free to decline to associate with his fellows, it is

necessary that he have full freedom of association, self-

organization, and designation of representatives of his own

choosing, to negotiate the terms and conditions of his

employment, and that he shall be free from the interference,

restraint, or coercion of employers of labor, or their agents,

in the designation of such representatives or in self-

organization or in other concerted activities for the purpose

of collective bargaining or other mutual aid or protection;

therefore, the following definitions of and limitations upon

the jurisidiction and authority of the courts of the United

States are enacted.

29 U.S.C. §102.

A 32

APPENDIX B.

Judgment Dated April 7, 1982.

SPECIAL COURT

REGIONAL RAIL REORGANIZATION ACT OF 1973

THOMAS CANNON, ROBERT STILLWELL, DONALD R.

BREWER, and DAVID L. PETERSON, On Behalf of

Themselves and All Other Similarly Situated ‘‘Fire-

men’”’ and ‘‘Train Service Employees’’ Affected by the

Northeast Rail Service Act of 1981,

Plaintiffs,

v.

CONSOLIDATED RAIL CORPORATION,

Defendant.

Civil Action No. 82-2

This action having come on for hearing on March 10,

1982, on cross motions for summary judgment, the issues

having been duly heard and the Court having filed its

opinion on March 31, 1982,

A 33

IT IS ORDERED AND ADJUDGED, in accordance with

that opinion, that Plaintiffs’ complaint challenging the

constitutionality of §702 of the Regional Rail Reorganiza-

tion Act of 1973, as amended by §1143(a) of the Northeast

Rail Service Act of 1981, is hereby dismissed on the merits.

April 7, 1982

HENRY J. FRIENDLY

Presiding Judge

- UonIsodd¢

Office - Supreme Court, U.S.

FILED

Nos. 81-1967

81-1992 MAY 28 1962

l. STEVAs,

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1981

THOMAS CANNON, ef ail.,

Petitioners,

_

CONSOLIDATED RAIL CoRPORATION and

UNITED STATES OF AMERICA,

Respondents.

UNITED TRANSPORTATION UNION,

Petitioner,

Vv.

CONSOLIDATED RAIL CorPORATION and

UNITED STATES OF AMERICA,

Respondents.

On Petition For A Writ Of Certiorari To The Special Court,

Regional Rail Reorganization Act Of 1973

BRIEF OF RESPONDENT CONSOLIDATED

RAIL CORPORATION IN OPPOSITION

DENNIS ALAN AROUCA Harry A. RISSETTO

CONSOLIDATED RAIL CORPORATION Counsel of Record

1138 Six Penn Center Plaza E. Cart UEHLEIN, JR.

Philadelphia, PA 19104 THOMAS E. REINERT, JR.

(215) 977-4998 Moraan, Lewis & Bockius

Counsel for Consolidated 1800 M Street, N.W.

Rail Corporation Washington, D.C. 20036

(202) 872-5000

May 28, 1982

A CORR A EG NR NRT EE NR Nr = a

PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C.

QUESTIONS PRESENTED

Whether the Special Court, Regional Rail

Reorganization Act of 1973, correctly interpreted

the Northeast Rail Service Act of 1981 to supersede

inconsistent collective bargaining agreements that

require Conrail to continue the employment of cer-

tain employees in excess positions that the Act per-

mits Conrail to eliminate.

Whether Congress violated the Taking and Due Proc-

ess clauses of the Fifth Amendment to the United

States Constitution by affecting the employment rela-

tionship between Conrail and its employees through

legislation allowing Conrail to separate certain em-

ployees and refrain from filling certain positions co-

vered by existing collective bargaining agreements.

TABLE OF CONTENTS

Page

TE I: 5 0 0's cesive 6040606054408 2

I ve idcdéscvksccvcesentearonaeeeee 2

STATUTORY AND CONSTITUTIONAL PROVISIONS INVOLVED ..... 2

ON GP TAG 00.00 0 veekcnssnsesaeuseese ee 2

REASONS FOR DENYING THE WRIT ..............20000000 6

1. THe Specia Court Correctty Hep THAT THE SEPARA-

TION PROCEDURE ESTABLISHED By SECTION 702 Or THe Act

SUPERSEDES COLLECTIVE BARGAINING AGREEMENTS .... 6

Il. THe Decision BELOW PROPERLY RECOGNIZED CONGRESS*

CONSTITUTIONAL AUTHORITY UNDER THE COMMERCE

CLause To Apsust Economic Expectations Or EmpLoy-

ERS AND EMPLOYEES ............cccccccccccceces )

A. Congress’ Public Policy Objectives Outweigh The

Adverse Effect On The Contractual Expectations Of

Weer INES «« cove csnceccstcsapacushnuees 10

B. The Petition Presents No New Issues For The

Court’s Consideration Under Either The Due Proc-

ess Or Taking Clauses Of The Fifth Amendment . 13

1. Section 702 Meets All Accepted Standards For

"SSN ok vcatcccseucaunsecanene 13

2. The Petitioners Have Neither Suffered A Loss

Of “Property” Nor A “Taking” Protected By

The Fifth Amendment .................. 14

CES no vk kc dave cbekatcieiess eee 16

TABLE OF AUTHORITIES

Cases: Page

Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) 14

Brooks-Scanlon Corp. v. United States, 265 U.S. 106 (1924) — 15

Chicago & Northwestern Ry. Co. vy. United Transportation

Union, 402 U.S. 570 (1971) ...... 2... e cence eee 3, 11

Detroit & Toledo Shore Line R. R. v. United Transportation

carcscveveuevecessces 13

Hodel v. Indiana, 452 U.S. 314 (1981)... 0... eee ee eee. 12

Home Building & Loan Association v. Blaisdell, 290 U.S. 398

RES er 14

Legal Tender Cases, 12 Wall. 457, 79 U.S. 287 (1871) ... 15

Locomotive Engineers v. Balt. & O. R. Co., 372 U.S. 284

eee cad chet echedne tené-geevesve 3

Locomotive Firemen & Enginemen v. Chicago, B. & O.R.Co.,

225 F. Supp. 11 (D.D.C.), aff'd 331 F.2d 1020(D.C. Cir.

LG adi k kw ha0edn0s¥ 6040408 3

Louisville & Nashville R.R. v. Mottley, 219 U.S. 467 (1911) 9

Lynch v. United States, 292 U.S. 571 (1934) ............ 15

Nachman v. Pension Benefit Guarantee Corporation, 592 F.2d

947 (7th Cir.) aff'd on other grounds, 446 U.S. 359

gg A OP ee 14, 15

Omnia Commercial Cu. v. United States, 261 U.S. 502(1922) 15

Penn Central Transportation Co., 347 F. Supp. 1356(E.D. Pa.

etre teeta deeewsskdsees ehevsseses 11

Penn Central Transportation Co. v. New York City, 438 U.S.

ee ee eae eee tt ebeeeneeeeses 15

Perry v. United States, 294 U.S. 330 (1935) ............ 15

Railroad Trainmen v. Atiantic Coast Line R. Co., 383 F.2d 225

(D.C. Cir. 1967), cert. denied, 389 U.S. 1047 (1968) . 3

Railway Labor Executives Association v. Gibbons, Trustee, et

al., U.S. , 002 S. Ce. 0069 (1SGZ) ........ 12

Regional Rail Reorganization Cases, 419 U.S. 102 (1974) . 3

Secretary of Agriculture v. Central Roig Refining Co., 338

ees alae pees eu esi gs vente 12

iV

Table of Authorities Continued

Page

United States v. General Motors Corp., 323 U.S. 373 (1943) 14

United States v. Willow River Power Co., 324 U.S. 499

Dn GicGsaugadbesesd beens secesesedbed aes te 14, 15

United Transportation Union v. Long Island Rail Road, ———

U.S. jp CPOE dincsccestneces 9, 12

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976) .11, 13

STATUTES:

Joint Resolution No. 59, Pub. L. No. 93-5, 87 Stat. 5

RIS On etre Sena 3, 11, 12

Joint Resolution No. 102, Pub. L. No. 88-108, 77 Stat. 132

Pn titi edh ope sieeelad eseeea cane eeens as 3, 11, 12

Northeast Rail Service Act of 1981, Subtitle E of Title XI of the

Omnibus Budget Reconciliation Act of 1981, Pub. L. No.

te ee I 5 vnc nsiccuduunean sus passim

Railway Labor Act of 1926, 44 Stat. 577, 45 U.S.C. § 151 et

Sh EE 6 tine dleakd4ucetcdnctos ¢uscdeaseuses passim

Railroad Revitalization and Regulatory Reform Act of 1976,

Pub. L. No. 94-210, 90 Stat. 31 (1976) ............ 8

Regional Rail Reorganization Act of 1973, Pub. L. No. 93-236,

87 Stat. 985, 45 U.S.C. § 701 et seq. (1976) ...... passim

Staggers Rail Act of 1980, Pub. L. No. 96-448, 94 Stat. 1895

SET £ ss 6% eChaedheueeceannetsGuniderebeduehs 3,8

MISCELLANEOUS:

Consolidated Rail Corporation: Hearings before the Subcomm.

on Commerce, Transportation, and Tourism of the House

Comm. on Energy and Commerce, 97th Cong., Ist Sess.

pre err rr rere rer eT Tet TTT re 10

Conrail Reauthorization: Hearings before the Subcomm. on

Surface Transportation of the Senate Comm. on Com-

merce, Science and Transportation, 97th Cong., Ist Sess...

EN Nkéabedubeduadenesinsees ceacebaueeassye 10

IN THE

Supreme Court of the United States

OCTOBER TERM, 1981

Nos. 81-1967

81-1992

THOMAS CANNON, ef al.,

Petitioners,

Vv.

CONSOLIDATED RA. CORPORATION and

UNITED STATES OF AMERICA,

Respondents.

UNITED TRANSPORTATION UNION,

Petitioner,

Vv.

CONSOLIDATED RAiL CORPORATION and

UNITED STATES OF AMERICA,

Respondents.

On Petition For A Writ Of Certiorari To The Special Court,

Regional Rail Reorganization Act Of 1973

BRIEF OF RESPONDENT CONSOLIDATED

RAIL CORPORATION IN OPPOSITION

Respondent, Consolidated Rail Corporation (hereinafter

“Conrail”) respectfully requests that the Petition for a Writ of

Certiorari of Petitioners Cannon, et al., and the Petition for a

Writ of Certiorari of Petitioner United Transportation Union

(hereinafter “UTU” or “Union”) to review the judgments of the

Special Court, Regional Rail Reorganization Act of 1973,

entered on April 7, 1982 in the consolidated Cases Nos. 82-2,

82-4, and 82-7, be denied.

5

OPINION BELOW

The opinion and judgments of the Special Court have been

reproduced as appendices to the Petitions in Case No. 81-1967

and Case No. 81-1992.

JURISDICTION

The Special Court possessed exclusive original jurisdiction

over the statutory and constitutional issues raised in the decision

below, pursuant to Section 1152(a) of the Northeast Rail Serv-

ice Act of 1981, Pub. L. No. 97-35, 95 Stat. 676 (1981). Under

Section 1152(b) of the Act, appellate review of the judgment of

the Special Court is within the exclusive jurisdiction of the

Court upon a petition for a writ of certiorari.

STATUTORY AND CONSTITUTIONAL PROVISIONS

INVOLVED

The relevant provisions of the Northeast Rail Service Act of

1981 and the Railway Labor Act have been reproduced in the

appendix to the Petition in Case No. 81-1992. The Petition in

Case No. 81-1967 raises issues under the Fifth Amendment to

the United States Constitution, portions of which are repro-

duced therein at 2.

STATEMENT OF THE CASE

Petitioners are Conrail employees, and their representative

labor organization, who challenge the carrier’s implementation

of Section 702 of the Regional Rail Reorganization Act of 1973

(hereinafter “3R Act”), 45 U.S.C. § 701 et seq., enacted in

Section 1143(a) of the Northeast Rail Service Act of 1981

(hereinafter “NRSA”), Pub. L. No. 97-35, 95 Stat. 662 (1981),

a provision intended to improve the financial viability of North-

east rail service by reducing the high labor costs attributable to

excess manning requirements. The probiem of unnecessary

firemen and second and third brakemen positions in the railroad

industry has been a persistent one requiring the attention of the

courts and Congress for more than twenty years.' Briefly

stated, carrier efforts to eliminate these obsolete and extraneous

positions have been resisted by labor, at a high cost to national

rail service. Certain collective bargaining agreements, known

as the Firemen Manning and Crew Consist Agreements, have

required the preservation of unneeded firemen and brakemen

positions, and have limited the carrier's workforce reduction

programs to those which can be accomplished through attrition.

In enacting the Northeast Rail Service Act of 1981, Congress

gave Conrail a final opportunity to achieve financial viability, a

goal which has eluded the carrier since it was established by

conveyance from the insolvent Northeastern railroads under the

3R Act. See Regional Rail Reorganization Cases, 419 U.S. 102

(1974). The alternative, which is still possible if Conrail fails

the profitability tests set forth by the Act, is a piecemeal sale of

'The controversy has been reviewed often by Congress and the courts.

See Chicago & Northwestern Ry. Co. v. United Transportation Union, 402

U.S. 570, 574 (1971); Locomotive Engineers v. Baltimore & O.R.Co., 372

U.S. 284, 285-88 (1963); Locomotive Firemen & Enginemen v. Chicago,

B. & O. R. Co., 225 F. Supp. 11, 14-17 (D.D.C.), aff'd 331 F.2d 1020

(D.C. Cir. 1964); Railroad Trainmen v. Akron & B. B. R. Co., 385 F.2d

581, 588-592 (D.C. Cir. 1967); Railroad Trainmen vy. Atlantic Coast Line

R. Co., 383 F.2d 225 (D.C. Cir. 1967), cert denied, 389 U.S. 1047 (1968).

In 1963, Congress temporarily resolved the dispute by requiring its sub-

mission to arbitration, but that arbitration ruling was subject to change after

two years, see Joint Resolution Nu. 102. Pub. L. No. 88-108, 77 Stat. 132

(1963). Congress later prevented the Penn Central Trustees from removing

excess firemen and brakemen by enacting Joint Resolution No. 59, Pub. L.

No. 93-5, 87 Stat. 5 (1973). In Section 405 of the Staggers Rail Act of 1980,

Pub. L. No. 96-448, 94 Stat. 1895, Congress authorized payment to severed

Conrail employees, including train and engine service employees, only if

the payments would achieve “substantial savings” for the United States.

Cannon Pet. App. at A7. In 1981, Congress addressed the excess manning

issue on Conrail by adding Section 702 to the 3R Act in Section 1143 of

NRSA.

4

Conrail assets, an action which has been estimated as potential-

ly resulting in the loss of 40,000 railroad jobs. °

Among other measures designed to improve Conrail’s pro-

fitability, the Northeast Rail Service Act through Section 702

authorized Conrail to eliminate unnecessary firemen and brake-

men positions. Conrail is empowered to determine the number

of excess positions at various locations throughout the system,

and then offer voluntary terminations to relevant employees by

location. Employees are chosen after bidding on the basis of

seniority and can receive up to $25,000 in severance payments.

Section 702 also permits Cenrail to designate less senior em-

ployees for involuntary termination if there are insufficient

numbers of employees volunteering at a particular location.

However, because to date the carrier has received more applica-

tions for voluntary terminations than slots available, involunta-

ry termination has been unnecessary. If involuntary termination

is implemented, designated employees will actually be able to

maintain their employment status through an exercise of senior-

ity and transfer of work location or by voluntarily accepting

furlough status. Conrail has implemented Section 702 in three

phases, in December 1981, February 1982, and May 1982.

Thus far, approximately 2700 employees have been terminated

voluntarily, and potentially 4600 employees will ultimately be

terminated.

Section 702 also authorizes Conrail to “blank,” i.e., refrain

from filling, one excess fireman or brakeman position for every

employee terminated. ‘ Thus, it is the blanking process which

enables the carrier to eliminate excess positions. The em-

ployees arguably adversely affected by Section 702, and those

? See n. 6, infra, p. 10.

‘ Congress also provided that elimination of excess positions would not be

hindered by operation of state full crew laws, which are preempted by

Section 711 of the Act.

5

Petitioners purportedly represent, are employees who, in the

absence of the Act, would have had an opportunity to bid into

the blanked positions.

The decision of the Special Court below arose from several

independent actions. Initially, Petitioners Cannon et ai., filed

Case No. 82-2, which posed a constitutional challenge to Sec-

tion 702. Subsequently, on February 4, 1982, Petitioner United

Transportation Union filed the action in Case No. 82-4, seeking

declaratory and injunctive relief that Conrail’s implementation

of Section 702 was inconsistent with existing agreements and

the statutory provisions. Despite the pendency of that litigation,

the UTU threatened an unlawful work stoppage against Con-

rail’s implementation of Section 702. Conrail was forced to

initiate Case No. 82-7, in which it sought and obtained on

February 22, 1981, preliminary injunctive relief against the

Union’s threatened strike. The Special Court consolidated for

purposes of argument Conrail’s request for permaner' injunc-

tive relief in Case No. 82-7, and the merits in Case Nos. 82-2,

82-4, in which the parties filed cross-motions for summary

judgment. After the hearing on March 10, the Special Court on

March 31, issued its decision and order, which granted Con-

rail’s motions for summary judgment in Cases Nos. 82-2, 82-4,

thus approving the carrier’s implementation of Section 702 and

upholding the provision’s constitutionality. The Special Court

declined to issue a permanent injunction in Case No. 82-7,

citing the assurances of union and employee counsel that further

job actions would not occur over the implementation of Section

702.

Petitioners in Case No. 81-1967 and Case No. 81-1992

present here, as they did below, inconsistent challenges to

Conrail’s implementation of Section 702. Petitioner United

Transportation Union asserts that Conrail has improperly in-

terpreted Section 702 as preempting inconsistent provisions of

operative labor agreements, and that the Special Court erred in

6

approving this construction. In contrast, Petitioners Cannon, ef

al., agree with Conrail and the Special Court in their interpreta-

tion of Section 702, but assert that by superseding inconsistent

provisions of collective bargaining agreements, the Act violates

the Fifth Amendment protections relating to due process, un-

compensated taking, and equal protest.

REASONS FOR DENYING THE WRIT

I. The Special Court Correctly Held That The Separation Proce-

dure Established By Section 702 Of The Act Supersedes Collec-

tive Bargaining Agreements.

The Special Court, Regional Rail Reorganization Act of

1973, was originally established by Congress to exercise ex-

clusive jurisdiction over certain specific matters arising out of

implementation of the 3R Act, as amended. The Special

Court’s continued responsibility for the adjudication of disputes

involving Conrail-re!ated legislation was provided for by Sec-

tion 1152 of the Northeast Rail Service Act, which states that:

The Special Court shall have original and exclusive

jurisdiction over any civil action—

1) for injunctive, declaratory or other relief relating to

the enforcement, operation, execution or interpretation of

any provision or amendment made by this subtitle or

administrative action taken thereunder to the extent such

action is subject to judicial review.

Pub. L. No. 97-35, § 1152, 95 Stat. 676 (1981). Thus, Con-

gress has established a single three-judge district court of the

United States and vested it with jurisdiction to resolve disputes

regarding interpretation of the Northeast Rail Service Act. *

* Subsection (b) of Section 1152 provides that judgments of the Special

Court, subject to one presently inapplicable exception, are reviewable only

upon petition for a writ of certiorari to the Supreme Court. Review by the

Supreme Court is exclusive and any petition must be filed within twenty

days after entry of the Special Court’s order or judgment.

The decision of the Special Court herein specifically addres-

sed and resolved the issues presented in vis Petition. The court

utilized traditional techniques of statutory interpretation: it

analyzed the words of the statutory provision and its legislative

history. The court’s conclusion, contrary to the arguments in

the Petition, is neither surprising nor far-reaching.

The wording of Section 702 of the Act and its legislative

history are mutually supportive. Together, they are an ex-

pression of a clear Congressional intent to provide for the

prompt implementation of a severance program targeted at

unnecessary positions and employees. It is indisputable that

both the purpose and intended effect of the UTU’s lawsuit and

concurrent strike threats were to delay implementation of this

procedure through the interposition of the very collective

bargaining agreement provisions that gave rise to the legisla-

tion. The urgent need for prompt implementation is apparent

from the two provisions in the Section 702 procedure that

permit union involvement in the program. Both Section

702(e)(3) and Section 702(f) provide opportunities for Conrail-

Union discussions with respect to the implementation of the

statute. But both provisions authorize unilateral implementa-

tion by Conrail if an agreement cannot be reached. The time-

sensitive character of the severance procedures is consistent

with the overall purposes of the Act: to provide viable rail

service in the Northeast, and to ensure the “removal by a date

certain of the federal Government's obligation to subsidize the

freight operation of Conrail,” Pub. L. No. 97-35, §§ 1132,

1133(1), 95 Stat. 644 (1981).

There are no special or important reasons supporting review

by the Court on a writ of certiorari. See Sup. Ct. R. 17.1.

Because the Special Court has original and exc! sive jurisdic-

tion over the dispute, its decision cannot and does not conflict

with the decision of another federal or state court. The in-

terpretation of a statutory provision contained in the Northeast

Rail Service Act, although of significance to the parties in this

litigation, does not involve an important question of federal law

which has not been but should be settled by this Court. Every

major piece of legislation addressing reorganization of the

Northeast rail system has affected the collective bargaining

relationship between Conrail and the unions representing its

employees. * The Special Court's interpretation of Section 702

is not “a radical departure in federal labor law,” but rather a

plain reading of Congress’ endeavor to solve a serious problem.

Finally, there is no representation in the Petition that the judicial

proceedings below call for the exercise of the Court's

supervisory responsibilities. Thus, the Petition fails to state

important reasons why the Court should grant the Petition and

review the Special Court’s decision interpreting Section 702 of

the 3R Act, as added by NRSA.

* The 3R Act of 1973 contained special provisions governing the transfer

of employees from bankrupt railroads to the newly created Conrail, includ-

ing provisions for an agreement to implement transfers, subsequent bargain-

ing between Conrail and the rail employee unions, job assignments, sub-

contracting of work, and the transfer of work, Pub. L. No. 93-236, $§ 503,

504, 87 Stat. 1004 (1979). The 3R Act also provided over $300 million in

payments to employees who were adversely affected, Pub. L. No. 93-236,

§ 505, 87 Stat. 1004 (1973).

The Railroad Revitalization and Regulatory Reform Act of 1976 intervened

in the collective bargaining between Conrail and its employees by creating a

special procedure for negotiation of transfer of Conrail employees to

Amtrak, as well as amending the employee protection provisions of the 3R

Act, Pub. L. No. 94-210, §§ 615, 616, 90 Stat. 31, 115 (1976).

The Staggers Rail Act of 1980 amended the 3R Act as it applied to displace-

ment allowances, system-wide bargaining, and protection payments, Pub.

L. No. 96-448, §§ 501, 502, 504(d), 506, 507, 94 Stat. 1948-53, 1956

(1980).

The Northeast Rail Service Act of 1981 intervenes in the collective bargain-

ing process by inter alia, regulating empioyee transfer agreements, Pub. L.

No. 97-35, § 1145, 95 Stat. 669 (1981), and amending the employee

protection payment provisions of Section 702 of the 3R Act at issue in this

case, Pub. L. No. 97-35, § 1143(a), 95 Stat. 662 (1981).

9

Il. The Decision Below Properly Recognized Congress’ Con-

stitutional Authority Under The Commerce Clause To Adjust

Economic Expectations Of Employers And Empioyees

Petitioners Cannon et al. in Case No. 81-1967 concede the

far-reaching authority of Congress to regulate interstate com-

merce. Cannon Petition at 14. Where such authority exists,

Congress is “unrestricted except by the limitations upon its

authority to be found in the Constitution.” Louisville & Nashvil-

le R.R. v. Mottley, 219 U.S. 467, 480 (1911). No such restric-

tions are evident in this litigation. To the contrary, Petitioners

fall within that class of persons who, having made an agreement

affecting interstate commerce, are obligated to recognize that

the agreement

must necessarily be regarded as having been miade subject

to the possibility that, at some future time, Congress might

so exert its whole constitutional power in regulating in-

terstate commerce as to render that agreement unenforce-

able or to impair its value. That the exercise of such power

may be hampered or restricted to any extent by contracts

previously made between individuals or corporations 1s

inconceivable. The framers of the Constitution never in-

tended any such state of things to exist.

Id., at 482.

When the subject matter of the agreement affects rail trans-

portation, the “possibility” identified in Mott/ey must be con-

sidered to rise to the level of a likelihood. “Railroads have been

subject to comprehensive federal regulation for nearly a centu-

ry” and federal intervention in relationships between employers

in the rail transportation industry and their employees has

existed for almost a similar period of time. United Transporta-

tion Union v. Long Island Rail Road Co., et al., U.S.

—___., 102 S.Ct. 1349, 1355 (1982) (footnote omitted).

The Cannon Petitioners are challenging the continued at-

tempt by Congress to complete the work it commenced with the

3R Act, to provide private rail freight service to the Northeast

10

and Midwest regions. They seek the issuance of a writ by

asserting certain Fifth Amendment limitations e= the Con-

gressional exercise of its commerce power in the Northeast Rail

Service Act. Petitioners argue that to ignore these limits would

allow Congress the unfettered right to abrogate the terms of

collective bargaining agreements in order to ensure the profita-

bility of private corporations at the expense of that organiza-

tion’s employees. This case simply does not present such a

broad issue.

A. Congress’ Public Policy Objectives Outweigh The Adverse Ef-

fect On The Contractual Expectations Of The Employees

The acknowledged purpose of NRSA as a whole, and Section

702 in particular, was to provide for the viability of rail service

in a major portion of the country without the need for a continu-

ing drain on the public treasury and, not incidentally, to im-

prove chances for long-term employment for Conrail’s

employees. ° To accomplish this, Congress focused, inter alia,

on reducing labor costs, by expediting a process of eliminating

excess positions that had been agreed upon by the parties to

collective bargaining agreements. Cannon Pet. App. at A6-A7.

In doing so, it neither “annihilated” nor set aside the collective

® The express purpose was to achieve “prefitability” so that Conrail may

be sold as a “going enterprise” rather than piecemeal. Piecemeal dispositions

of Conrail assets could result in the loss of over 40,000 jobs according to the

Chairman of the Railway Labor Executives’ Association. Consolidated Rail

Corporation: Hearings before the Subcomm. on Commerce, Transportation,

and Tourism of the House Comm. on Energy and Commerce, 97th Cong. ,

Ist Sess. at 486-87 (1981); Conrail Reauthorization: Hearings before the

Subcomm. on Surface Transportation of the Senate Comm. on Commerce,

Science and Transportation, 97th Cong., Ist Sess., at 63, 66, 68 (1981).

There is no indication in the legislative history that Congress’ purpose in

seeking to make Conrail profitable was to achieve a “gain” on the sale of

Conrail stock owned by the government. To the contrary, in NRSA Con-

gress extended further subordination of the $3.3 billion in federal debt to

encourage the sale of Conrail stock. Cannon Pet. App. at A-21.

bargaining agreements. Wages, hours, and working conditions

remain the same. Section 702 relies on seniority provisions of

collective bargaining agreements for the selection of employees

to be separated. Further, the relative relationships between

employees of Conrail based upon pertinent lengths of service

remain unaffected, and seniority may continue to be exercised

to fill available job vacancies or maintain an employment

relationship.

What Section 702 arguably does affect are two expectations,

neither of which is contractually guaranteed: first, continued

employment for a particular number of employees for an in-

definite period of time; and second, the availability of specific

job openings which might be filled by the exercise of seniority.

These expectations were both prospective and contingent upon

many uncontrollable factors, not the least of which was the

continued viability of Conrail. Therefore, Section 702 presents

a rational and reasonable manner for “readjusting rights and

burdens” between employers and employees to achieve a public

purpose. !/sery v. Turner Eikhorn Mining Co., 428 U.S. 1, 15

(1976).

The Special Court's decision below, contrary to Petitioners’

allegations, does not represent broad judicial approval of Con-

gressional annulment of rights under collective bargaining

agreements. Section 702 was intended to correct a longstanding

problem in an industry that has been traditionally the subject of

extensive Congressional intervention. Examining both the

legislative attempts to deal with the crew manning issue’ and

the judicial interest in the same subject, * it is clear that Petition-

ers’ asserted broad ranging implications of the decision below

’ See Joint Resolution No. 102, Pub. L. No. 83-108. 77 Stat. 132 (1963):

Joint Resolution No. 59, Pub. L. No. 93-5, 87 Stat. 5 (1973).

* See Chicago & Northwestern Ry. Co. v. United Transportation Union,

402 U.S. 570, 573 (1971) and Penn Central Transportation Co., 347 F.

Supp. 1356, 1367 (E.D. Pa. 1972).

12

do not exist. The problem and the Congressional reaction to it

are sui generis. The right of Congress to insert itself in the

collective bargaining process in the rail industry has long been

acknowledged and confirmed by this Court. United Transpor-

tation Union v. Long Island Rail Road, U.S. . 102

S.Ct. 1349, 1355 (1982) citing, inter alia, Railway Labor Act

of 1926, 44 Stat. 577, 45 U.S.C. 151 et. seq. (1976). The fact

that Congress is now asserting itself in the context of Conrail to

resolve the excess manning problem, instead of deferring the

issue” or abiding it'’ as it has in the past, does not provide a

basis for the Court to grant a writ of certiorari.

The fact that Section 702 affects only the relationship be-

tween a single carrier and its employees is of no significance.

As this Court has recently recognized, the Commerce Clause

does not require uniformity of legislation as to either geog-

raphical areas of the United States or as to two members of a

similarly situated class. Hodel v. Indiana, 452 U.S. 314, 331-

33 (1981), Secretary of Agriculture v. Central Roig Refining

Co., 338 U.S. 604, 616 (1950). See also Railway Labor Ex-

ecutives Association v. Gibbons, Trustees, et al., —_— U.S.

—___., 102 S.Ct. 1169, 1176 (1982). More importantly, the

facts amply demonstrate that there is no other entity in a similar

*In 1963, Congress adopted Joint Resolution No. 102, Pub. L. No.

88-108, 77 Stat. 132 which established an arbitration board to address the

issue, resulting in a temporary solution of two years’ duration, thus deferring

a final resolution.

In 1972, the Penn Central reorganization trustees began unilateral

reduction of crews after unsuccessfully bargaining with the UTU. Congress

responded by enacting Joint Resolution No. 59 Pub. L. No. 93-5, 87 Stat. 5,

“which in effect rescinded the Trustees’ reductions in crew size,” Cannon

Pet. App. at A6, and continued the status quo.

13

situation as Conrail, with its Congressionally-mandated history

of reorganization and oversight. ''

B. The Petition Presents No New Issues For The Court’s Con-

sideration Under Either The Due Process Or Taking Clauses Of

The Fifth Amendment

1. Section 702 Meets All Accepted Standards For “Due Proc-

ess”

Shorn of its alleged consequences to the collective bargain-

ing system in this country, the Cannon Petition is narrowed to

an attempt to establish that in “adjusting the burdens and bene-

fits of economic life . . . the legislature has acted in an arbitrary

and irrational way.” Usery v. Turner Elkhorn Mining Co..,

supra, 428 U.S. at 15. In this context, Petitioners present no

demonstrable evidence of arbitrary and irrational action by

Congress. "

The facts and argument above demonstrate that the action of

Congress in passing Section 702 clearly meets the traditional

' Certainly the Delaware & Hudson Railway Company and the Central

Vermont Railway, Inc., cited by Petitioners (Cannon Pet. at 4, n.**) lack a

significant federal-nexus and do not demonstrate that there are others

“similarly situated.” Thus the fallacy of Petitioners “singling out” argument

is clear. As the Court below recognized in rejecting Petitioners equal

protection argument, “no other railroad is similarly situated.” Cannon Peti-

tion, at A20-21.

"= The Petitioner's argument that collective bargaining was a viable alter-

native, leaving the Congressional choice of methods highly questionable.

Cannon Petition at 11, deserves little attention. The Ford and GM results

occurred in a wholly inapposite context and in a radically different industry.

The failure of the railroads and unions to solve the crew-manning issue in the

past is well-documented in legislation and judicial decisions. Even a Con-

gressional mandate to try once again could not possibly keep the Con-

gressional time-table for “profitability” by 1984 given the “interminable”

bargaining procedures established under the Railway Labor Act. Detroit &

Toledo Shore Line R.R. vy. United Transportation Union, 3960.8. 142, 149

(1969).

I4

framework for measuring Congressional action under the Due

Process requirements of the Fifth Amendment. See Nachman v.

Pension Benefit Guarantee Corporation, 592 F.2d 947 (7th

Cir.) aff'd on other grounds, 446 U.S. 359 (1980). See also

Home Building & Loan Association v. Blaisdell, 290 U.S. 398

(1934) (14th Amendment due process and Contract Clause

analysis); Allied Structural Steel Co. v. Spannaus, 438 U.S.

234 (1978) (Contract Clause analysis). The reliance interest of

those who arguably are adversely affected, the most junior

employees on the seniority list, is minimal. Cannon Pet. App.

at Al8. There is no doubt that labor relations in the railroad

industry and the crew-manning question have previously been

subjected to regulatory control. Further, it is not difficult to

judge the equities of the severance of 4600 employees (all of

whom, to date, have left voluntarily, payment in hand) against

the potential for the loss of more than 40,000 jobs and a

significant diminution in rail service in a major section of the

country. Finally, it is clear that Congress designed Section 702

to limit and moderate the impact of the burden, by providing

monetary payments and the alternatives of transfer or furlough.

2. The Petitioners Have Neither Suffered A Loss Of “Proper-

ty” Nor A “Taking” Protected By The Fifth Amendment

For the purpose of the Taking Clause, this Court has recog-

nized “property”

to denote the group of rights inherent in the citizens’

relation to the physical thing, as the right to possess, use

and dispose of it.

United States v. General Motors Corp., 323 U.S. 373, 378

(1943). Even where this Court has spoken of “economic rights”

backed by the force of law, United States v. Willow River

Power Co., 324 U.S. 499, 502 (1945), such rights for the

purposes of the Taking Clause accrue on the basis of a rela-

tionship to physical property. U.S. v. Willow River Power Co.,

i)

324 U.S. at 509-11. (No riparian rights affected and therefore

no property rights compensable under the Fifth Amendment. )

Rather, what the Court has before it are collective bargaining

agreements between private parties which, at most, arguably

have been impaired by the exercise of Congressional authority

under the Commerce Clause. ' There has been no cancellation

of a contract, cf. Lynch v. United States, 292 U.S. 571 (1934)

and Perry v. United States, 294 U.S. 330 (1935), nor any direct

appropriation of contract rights through the government's

replacement of itself as a party to a private agreement, see Legal

Tender Cases, 12 Wall. 457, 79 U.S. 287, 312 (1871); Brooks-

Scanlon Corp. v. United States, 265 U.S. 106 (1924); ef.

Omnia Commercial Co. v. United States, 261 U.S. 502, 510-

11 (1922).

It is recognized that government actions here may have

adversely affected economic expectations, but economic harm

without appropriation by the government is not sufficient in and

of itself to constitute a taking. Penn Central Transportation Co.

v. New York City, 438 U.S. 104, 124-25 (1978); United States

v. Willow River Power Co., 324 U.S. 499 (1945). Similarly, as

this Court has recognized

“Taking” jurisprudence does not divide a single parcel into

discrete segments and attempt to determine whether rights

in a particular segment have been entirely abrogated. . . .

|T}his court focuses rather both on the character of the

action and on the nature and extent of the interference with

rights in the parcel as a whole... .

Cannon Pet. App., at Al7, citing Penn Central Transportation

Co. v. New York City, 438 U.S. 104, 130-31 (1978).

'’ Because the Contract Clause is not applicable to the federal govern-

ment, such impairment is analyzed under the Fifth Amendment due process

requirement, as discussed supra. See Nachman v. Pension Benefit Guaran-

tee Corporation, 592 F.2d 947 (7th Cir.) aff'd on other grounds, 446 U.S.

359 (1980).

16

In the instant case, the collective bargaining agreements

remain. What has been affected are, at best, inchoate ex-

pectations arising out of those agreements. They do not rise to

the level of property protected under the Taking Clause, nor

present an important question of federal law warranting this

Court’s grant of review. Therefore, the Cannon Petitioners

reasons for granting the writ to review the Special Court's

interpretation of Section 702 of the 3R Act, as added by NRSA,

are unavailing.

CONCLUSION

For the foregoing reasons, Respondent, Consolidated Rail

Corporation, respectfully submits that the Petition for a Writ of

Certiorari to the Special Court, Regional Rail Reorganization

Act of 1973, should be denied.

Respectfully submitted,

Harry A. RISSETTO

Counsel of Record

E. CARL UEHLEIN, JR.

THOMAS E. REINERT, JR.

MorGan, Lewis & BOcKIUS

1800 M Street, N.W.

Washington, D.C. 20036

(202) 872-5000

Counsel for Consolidated

Rail Corporation

DENNIS ALAN AROUCA

CONSOLIDATED RAIL CORPORATION

1138 Six Penn Center Plaza

Philadelphia, PA 19104

(215) 977-4998

Office - Supreme Court, U.S.

FILED

ALEXANDER L. STEVAS,

— 4

Iu the Supreme Court of the Hnited States

OCTOBER TERM, 1981

Nos. 81-1967 and 81-1992

THOMAS CANNON, ET AL., PETITIONERS

Vv.

CONSOLIDATED RAIL CORPORATION AND

UNITED STATES OF AMERICA

u

UNITED TRANSPORTATION UNION, PETITIONER

Vv.

CONSOLIDATED RAIL CORPORATION AND

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO

THE SPECIAL COURT, REGIONAL RAIL

REORGANIZATION ACT OF 1973

BRIEF FOR THE UNITED STATES IN OPPOSITION

Rex E. Lee

Solicitor General

J. PAUL McGRATH

Assistant Attorney General

ANTHONY J. STEINMEYER

CHRISTINE NICHOLSON

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QUESTIONS PRESENTED

1. Whether the authority granted by Congress to the

Consclidated Rail Corporation to implement the work

force reduction program of Section 702 of the Regional

Rail Reorganization Act of 1973, as amended, to be codi-

fied at 45 U.S.C. 797a, supersedes existing collective bar-

gaining agreements between the railroad and the United

Transportation Union.

2. Whether the work force reduction program autho-

rized by Section 702 violates the Due Process Clause or Just

Compensation Clause of the Fifth Amendment to the Uni-

ted States Constitution.

TABLE OF CONTENTS

Page

DS Hic ddipeddabecdduvesesseuutaseeses l

EL db ebnedunesedededodéusdedecéeeces dene l

Statutory provision involved .............eeeeeeees 2

PEE nbdddctncreeséecqnecesesetoscedééecens 2

SEE ddd dedhédaeeceneesuds sendéunnsucedcces 5

ED Scdvencedescocencviessssendabendeoses 9

TABLE OF AUTHORITIES

Cases:

Dandridge v. Williams, 397 U.S. 471 ........... 8

Fleming v. Rhodes, 331 U.S. 100 .............. 7

Louisville & Nashville R.R. v. Mottley (11),

DE auddeneeustesdsddeanebeetecéce 7

Norman v. Baltimore & Ohio R.R.,

i coriisetsiswdes uae seboenses 7

Penn Central Transportation Co. v. New York

Ss OE Swédees dnt dee ccncesecenss x

Philadelphia, Baltimore, and Washington R.R. v.

Bememare, TBO UB. GD cccccccccsicccccceces 7

United States Railroad Retirement Board v.

Pe a Gs OUP Kab cedeccccescésdecesenes 8

Usery v. Turner Elkhorn Mining Co.,

ST Sth thtadedandendeccncesescenibvess 7

Williamson v. Lee Optical Co.,

PT : Sabebedbeneveebddedcsesciessscs 8

IV

Page

Constitution and statutes:

United States Constitution:

PD icc ccpeéosadsesassncees 3,8

Se PR GOD cccoceccvcesesccesec 3,7

Just Compensation Clause .............. 3,7

Northeast Rail Service Act of 1981

(“NRSA”), Pub. L. No. 97-35,

95 Stat. 643 et seq. (Omnibus

Budget Reconciliation Act of 1981,

PPT TTTTITTT TTT TT Tee 2

Section 1143(a), 95 Stat. 661 .........e000. 2

Section 1152(a)(1), 95 Stat. 676 ............ 4

Section 1152(a)(2), 95 Stat. 676 ............ 4

Regional Rail Reorganization Act of 1973,

as amendeu, 45 U.S.C. 701 et seq. :

Beation Bee. 4S U.S. TH ceccccccseveccess 4

Section 702, 95 Stat. 662, to be codified

One UBS. FEM ccccceces 2, 3, 4, 5, 6, 7,8

Section 702(e)(3), 95 Stat. 663, to be

codified at 45 U.S.C. 797a(e)(3) .......... 5

Section 702(e)(4), 95 Stat. 663, to be

codified at 45 U.S.C. 797a(e)(4) .......... 5

Section 702(f), 95 Stat. 663, to be codified

SE EE ENED ove eénedisennenccecs 5

Section 702(g), 95 Stat. 663, to be codified

CRG Wes FOTN nce decvccccvccesecse 5

BB UD. DEBT) co ccccvcccccccccdcscccccccscces 4

Page

Miscellaneous:

127 Cong. Rec. S. 9061 (daily ed.

PE ig HED BN 6UdbeCdcccsccsdduscesescees 7

S. Rep. No. 97-139, 97th Cong., Ist Sess.

GED Gh ddoceaceebesacudesnsecdsocsevocees 6

H.R. Rep. No. 97-153, 97th Cong., Ist Sess.

GOUED KU bce ceaeeesecdsdeccosscusccncans ses 6

Inu the Supreme Court of the Hnited States

OcTOBER TERM, 1981

No. 81-1967

THOMAS CANNON, ET AL., PETITIONERS

Vv.

CONSOLIDATED RAIL CORPORATION AND

UNITED STATES OF AMERICA

No. 81-1992

UNITED TRANSPORTATION UNION, PETITIONER

A

CONSOLIDATED RAIL CORPORATION AND

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI TO

THE SPECIAL COURT, REGIONAL RAIL

REORGANIZATION ACT OF 1973

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the Special Court, Regional Rail Reor-

ganization Act of 1973 (Pet. App. Sa-30a) is unreported. !

'Unless otherwise indicated, “Pet. App.” refers to the appendix io the

petition in No. 81-1992.

2

JURISDICTION

The judgments of the Special Court (Pet. App. la; 81-

1967 Pet. App. A32-A33) were entered on April 7, 1982.

The petition for a writ of certiorari in No. 81-1967 was filed

on April 26, 1982, and the petition in No. 81-1992 was filed

on April 27, 1982. The jurisdiction of this Court is invoked

pursuant to Section 1152(b) of the Northeast Rail Service

Act of 1981, 95 Stat. 676.

STATUTORY PROVISION INVOLVED

Section 702 of the Regional Rail Reorganization Act of

1973, as added by Section 1143(a) of the Northeast Rail

Service Act of 1981 (*“NRSA”), 95 Stat. 662, to be codified

at 45 U.S.C. 797a, is set forth in the opinion of the Special

Court (Pet. App. 6a-8a n.1).?

STATEMENT

1. Section 702 of the amended Regional Rail Reorgani-

zation Act of 1973 establishes a work force reduction pro-

gram that enables respondent Consolidated Rail Corpora-

tion (“Conrail”) to terminate employment of up to 4,600

train and engine service employees upon the payment of a

termination allowance of as much as $25,000, and to

“blank” (i.e., refrain from filling) the vacant positions on

train crews created by such terminations. An employee’s

options under the program are to exercise his seniority, if

sufficient, to transfer to a job at another location, to accept

voluntary furlough, or to accept the statutory termination

allowance.

Petitioner United Transportation Union (“UTU”), the

union representing train and engine employees of Conrail,

filed its suit, Civil Action No. 82-4, in the Special Court on

February 4, 1982. UTU sought a declaratory judgment that

2NRSA constitutes Sections 1131-1169 of the Omnibus Budget

Reconciliation Act of 1981, Pub. L. No. 97-35, 95 Stat. 357, 643-687.

3

Conrail may implement the Section 702 work force reduc-

tion program only when consistent with existing labor

agreements, known as the Fireman Manning Agreement

and the Crew Consist Agreement. The latter agreement,

negotiated in September 1978, allowed Conrail to reduce

certain freight crews from one conductor and two brake-

men to one conductor and one brakeman (Pet. App. | Ia).

Pursuant to that agreement, Conrail could eliminate the

second brakeman position only if a trainman with a senior-

ity date prior to the date of the agreement was not available.

The Fireman Manning Agreement, dated July 19, 1972,

allowed Conrail to eliminate certain firemen (id. at 12a).

However, firemen with seniority on the date of the agree-

ment could exercise their seniority with respect to any posi-

tion for which the use of firemen would have been required

under the National Diesel Agreement of 1950 as in effect on

January 24, 1964 (ibid.). The Special Court found that

given declining traffic on Conrail, the terms of the two

agreements had, prior to 1981, denied Conrail any relief

from overmanning (ibid.).>

Petitioners in No. 81-1967, two firemen and two brake-

men employed by Conrail, filed Civil Action No. 82-2, a

purported class action on behalf of Conrail firemen and

brakemen then working or furloughed, on January 20,

1982. However, petitioners did not file a motion to certify

the class and no class was certified. Petitioners alleged that

the compulsory separation and blanking provisions of Sec-

tion 702 violate the Due Process and Just Compensation

Clauses of the Fifth Amendment. Plaintiffs also alleged that

the $25,000 ceiling on termination allowances and the

‘In a separate action, No. 82-7, Conrail sought to enjoin a strike

allegedly threatened by the union that was intended to resist implemen-

tation of Section 702 as interpreted by Conrail. This suit was consoli-

dated with No. 82-4.

4

applicability of Section 702 only to Conrail employees

denied them the equal protection of the laws guaranteed by

the Due Process Clause (Pet. App. 19a).

The Special Court, created pursuant to Section 209 of the

Regional Rail Reorganization Act of 1973, 45 U.S.C. 719,

exercised original and exclusive jurisdiction pursuant to

Section 1 152(a)(1) and (2) of NRSA, 95 Stat. 676. After the

Special Court issued a certificate to the Attorney General

pursuant to 28 U.S.C. 2403(a), the United States sought and

was granted leave to intervene in Civil Action No. 82-2 to

defend the constitutionality of Section 702. The United

States also sought and was granted leave to intervene as a

defendant in Civil Action No. 82-4 to present its interpreta-

tion of Section 702.

2. The Special Court rejected the union’s interpretation

of Section 702 and upheld the statute so interpreted as

constitutional. The court recounted the history of the prob-

lem that Section 702 was designed to overcome: the sub-

stantial drain on Conrail’s resources produced by employ-

ment of substantial numbers of firemen and brakemen who

were unnecessary to efficient freight service, but who were

protected employees under existing collective bargaining

agreements (Pet. App. | la-14a). Based on the language and

legislative history of Section 702, the court concluded that

Congress intended Section 702 to operate without regard to

the Fireman Manning Agreement and the Crew Consist

Agreement (Pet. App. I15a-18a). In addition, the court con-

cluded that petitioners’ constitutional challenges were

unfounded (id. at 18a-26a).*

;

‘In No. 82-7 (see note 3, supra), the court declined to issue an

injunction even though the court concluded that it had jurisdiction to

do so, accepting instead the representations of union counsel that the

union would honor the court's decision.

5

ARGUMENT

The decision of the Special Court is correct and is con-

sistent with applicable decisions of this Court. The compre-

hensive opinion written by Judge Friendly, upon which we

rely, persuasively answers all of the contentions advanced

by petitioners. Further review is not warranted.

1. As the Special Court concluded, Section 702 unequiv-

ocally grants Conrail the authority to terminate the employ-

ment of certain employees without regard to contrary labor

agreements. The introductory sentence of Section 702 states

that Conrail “may terminate the employment of certain

employees, in accordance with this section.” All of the

program's procedures are established without reference to,

or qualification by, existing collective bargaining agree-

ments.°

Despite the clear language of the statute, petitioner UTU

maintains that, because Section 702 does not specifically

state that it supersedes existing labor agreements, the Spe-

cial Court's reading cannot stand (Pet. 9-10). This conten-

tion is unavailing because, as the petitioners in No. 81-1967

acknowledge (81-1967 Pet. 7 note *), Section 702 would

serve no purpose whatsoever if it did not override such

agreements. As the Special Court correctly observed, “Con-

rail required no authorization from Congress to do what

existing agreements permitted or to negotiate for changes in

them” (Pet. App. 15a).

5As the Special Court noted (Pet. App. | Sa), several other sections of

the NRSA support Conrail’s interpretation of Section 702: Sections

702(e)(3) and (f), which authorize labor and management to enter

agreements after the effective date of the statute to govern certain

details of implementation of the work force reduction plan; Section

702(e)4), which explicitly preserves Conrail's prerogatives under exist-

ing agreements, but which makes no mention of union prerogatives:

and Section 702(g), which makes work force reduction mandatory on

commuter lines, rather than simply authorizing Conrail to proceed.

6

Petitioner UTU also argues (Pet. 10) that the legislative

history does “not make any declaration that existing labor

agreements are in conflict with and superseded by[Section]

702.” This assertion is incorrect. The House Report de-

scribes a forerunner to Section 702, contained in the House

bill, that was nearly identical to the language enacted, as

follows:

Section 702 permits Conrail to accelerate the imple-

mentation of the crew consist and fireman manning

agreements so that all excess firemen and all second

and third brakemen can be eliminated before the end of

calendar year 1982. The firemen on the crews of trains

operated in commuter service must be included by the

Corporation in the termination program.

H.R. Rep. No. 97-153, 97th Cong., Ist Sess. 30 (1981).

Similarly, the Senate Report describes the predecessor to

Section 702 contained in the Senate bill in these terms:

This section contains a “Special Termination Allo-

wance” allowing Conrail to “blank” the positions

(eliminate the job with the man) vacated under the

program. Separations would be limited to the numbers

of excess firemen and second and third brakemen

(including passenger firemen) presently employed by

Conrail (but not necessarily the individuals occupying

those positions if more senior personnel wish to be

separated). About 4600 positions are at issue, and their

elimination would make the properties more saleable.

This was addressed in the Conrail settlement after the

DOT bill was introduced.

The program would operate at the discretion of

Conrail but mandatorily as to affected employees

(after voluntary separations were taken). The section

provides for payments at the rate of $200 per month of

7

active service with Conrail or a predecessor, with a cap

of $25,000 (i.e., 4 years, 2 months service).

S. Rep. No. 97-139, 97th Cong., Ist Sess. 332 (1981)

(emphasis added).

Finally, the Conference Committee explained (127 Cong.

Rec. S. 9061 (daily ed. July 31, 1981)):

The purpose of this program is to elimate [sic] 4,600

employee positions; 3,300 brakemen and 1,300 fire-

men. In addition, all the firemen in communter [sic]

service are to be included in this program. This will

result in the elimination of firemen positions in com-

muter service.

In view of the clarity of the statute and its legislative history,

there is no reason to reconsider the Special Court’s interpre-

tation of Section 702.

2. The work force reduction program authorized by Sec-

tion 702 does not violate the Due Process Clause or the Just

Compensation Ciause of the Fifth Amendment.

In analyzing the due process claims, the Special Court

correctly observed that although the collectively bargained

manning agreements, as contracts, are in some sense prop-

erty, they remain subject to the constitutional authority of

Congress under the Commerce Clause. See Usery v.

Turner Elkhorn Mining Co., 428 U.S. 1, 15-16 (1976);

Fleming v. Rhodes, 331 U.S. 100, 107 (1947); Nerman v.

Baltimore & Ohio R.R.,294 U.S. 240, 306 (1935); Philadel-

phia, Baltimore, and Washington R.R. v. Schubert, 224

- U.S. 603 (1912); Louisville & Nashville R.R. v. Mottley

(11), 219 U.S. 467, 482 (1911) (Pet. App. 20a-21a). And the

Special Court also correctly determined that Section 702

does not constitute a taking for which compensation is

constitutionally required. In reaching this conclusion, the

Special Court properly weighed the relevant factors, adduc-

ed by this Court in Penn Central Transportation Co. v.

New York City, 438 U.S. 104, 124 (1978) (Pet. App. 22a-

23a). The Special Court observed that the Section 702 work

force reduction program adjusted the benefits and burdens

of economic life to promote the common good, rather than

effecting a physical invasion of property (id. at 22a). Con-

sidering the nature and extent of the interference with

rights, the Special Court noted that “[{Section] 702 by no

means abrogates all rights under the pertinent agreements”

but offers several options to affected employees (ibid.).

The Special Court correctly disposed of the equal protec-

tion challenge to the termination allowance ceiling. Citing

Williamson v. Lee Optical Co., 348 U.S. 483, 488 (1955),

the Special Court concluded that the ceiling has a rational

basis, i.e., “[t]he desire to provide a simple, workable max-

imum on termination allowances.” As the court stated (Pet.

App. 24a): “Congress was not required to fine tune the

maximum separation allowance to the unpredictable merits

of each individual case.” See United States Railroad

Retirement Board vy. Fritz, 449 U.S. 166, 175-179 (1980):

Dandridge v. Williams, 397 U.S. 471, 485 (1970).

The Special Court also correctly rejected petitioners’

equal protection challenge based on the fact that Section

702 applies only to Conrail, noting that “[n]o other railroad

is similarly situated” (Pet. App. 24a-25a). As this Court

explained in Williamson vy. Lee Optical Co., supra, 348

U.S. at 489, the notion of equal! protection embodied in the

Fifth Amendment does not prevent Congress from address-,

ing one phase of a problem at a time.

9

CONCLUSION

The petitions for a writ of certiorari should be denied.

Resnectfully submitted.

Rex E. Lee

Solicitor General

J. PauL McGRATH

Assistant Attorney General

ANTHONY J. STEINMEYER

CHRISTINE NICHOLSON

Attorneys

May 1982

DOJ-1982-05

~ fallg Afdey

SAU0I lod

No. 8i—-1967

THOMAS CANNON, ROBERT STILLWELL, DONALD

R. BREWER and DAVID L. PETERSON, on Behalf

of Themselves and all Other Similarly Situated “Fire-

men” and “Train Service Employees” Affected by

the Northeast Rail Service Act of 1981,

Petitioners,

v.

CONSOLIDATED RAIL CORPORATION and UNITED

STATES OF AMERICA,

Respondents.

Petitioners’ Reply to Briefs in Opposition to Petition

for Certiorari

Cornetius D. Murray

Attorney for Petitioners

O’ConnNELL AnD AronowiTz, P.C.

(Tsomas F’. Grzason of Counsel)

100 State Street

Albany, NY 12207

(518) 462-5601

June, 1982

Table of Contents.

POINT I. The statute challenged differs

dramatically from past federal legislation af-

fecting railway labor....... keoueucesucevas

POINT II. Respondents distort the nature of Peti-

tioners’ contract rights................65:

POINT III. Respondents’ arguments are a

Machiavellian subversion of Fifth Amend-

CS BI sc cc ccccvccccccsccesees

a a ile

TABLE OF AUTHORITIES.

CASES:

Detroit and Toledo Shoreline R.R. v. United

Transportation Union, 396 U.S. 142, 149...

Louisville & Nashville R.R. v. Mottley, 219 U.S.

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National League of Cities v. Usery, 426 U.S. 833...

Penn Centra! Transportation Co. v. New York City,

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United States v. General Motors Corp., 323 U.S.

Dic evtctedssuekesdedeeddcusennsecesss

Page

Page

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 at

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Village of Euclid v. Ambler Realty Co., 272 U.S.

ME MERU READbSe4eWeds Godcadedéccnc«., 5

STATUTES:

Pub. L. No. 97-35, §1132(5)..................... 2

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IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1981.

THOMAS CANNON, ROBERT STILLWELL, DONALD R.

BREWER and DAVID L. PETERSON, on Behalf of

Themselves and all other Similarly Situated ‘‘Firemen’’

and ‘“‘Train Service Employees”’ Affected by the North-

east Rail Service Act of 1981,

Petitioners,

against

CONSOLIDATED RAIL CORPORATION and UNITED

STATES OF AMERICA,

Respondents.

e

Petitioners’ Reply to Briefs in Opposition to Petition for

Certiorari.

POINT I.

The statute challenged differs dramatically from past

federal legislation affecting railwey labor.

Respondent Conrail implies that Petitioners somehow

had no right to rely on their contractual rights simply

2

because history shows that Congress has frequently

legislated in the area of employer-employee relationships

in the railroad industry. Conrail Brief at 9. However,

recitation of past Congressional regulation of the field by

no means refutes Petitioners’ contention that §702, due to

the way it affects labor agreements, is qualitatively dif-

ferent from all previous railroad legislation.

In no legislation prior io §702 has Congress, after man-

dating collective bargaining pursuant to 45 U/S.C.

§774(d), and subsequent to an agreement’s having been

struck, moved to nullify specific bargained-for rights on

behalf of only one party to an agreement. In fact, the

enactment of 45 U.S.C. §774(d) gave Petitioners every

reason to expect that their agreement would be honored.

The particularized impact on existing contractual rights

of specific groups of individuals sets §702 apart from

other broad regulatory measures af fecting the railroad in-

dustry. This case, contrary to every case cited by the

Government, Conrail and the Court below, involves the

readjusting of only two contractual relationships and not a

generalized regulation. Thus, Petitioners could not have

reasonably foreseen the type of superseding of their con-

tractual rights as occurred under §702. See Brief of Con-

rail at page 9. No party to a contract negotiated under

direct congressional mandate can be said to have recog-

nized the likelihood of federal cancellation of the very

contract rights thereby created.

The avowed legislative purpose of §702 further sets it

apart from previous legislation. The stated intention to

secure the profitability of Conrail by reducing labor costs,

Pub. L. No. 97-35, §1132(5), constitutes an unprecedented

revision of vested contractual rights for the sole purpose

3

of meeting the “‘generalized need for funds” of one of the

parties to a labor agreement. Cf. Usery v. Turner Elkhorn

Mining Co., 428 U.S. 1 at 19 (1976).

This case also merits review because, contrary to Con-

rail’s assertion that §702 is directed towards a sui generis

problem, the principles embodied in §702 are not limited

in their application to the railroad industry. An overly

broad interpretation of the commerce power is necessary

to support the action taken under §702. While it is true

that the commerce power is extensive, Louisville &

Nashville R. R. v. Mottley, 219 U.S. 467, 480 (1911), Con-

rail seeks to denigrate the equally established principle that

other constitutional provisions limit what would otherwise

be the unrestrained use of that power. National League of

Cities v. Usery, 426 U.S. 833. The commerce clause must

be read in concert with the Fifth Amendment so that the

integrity of both is preserved.

Both Conrail and the Government nevertheless assert

that the profitability of Conrail presents unique and dif-

ficult problems that justify these impositions on Peti-

tioners. However, similar emergencies could be conjured

in other important industries as well, simply by equating

the public interest with survivability of a private corpora-

tion.

The implications for future collective bargaining in the

shadow of possible legislation like §702 render this case of

substantial import within as well as without the railroad

industry. This is the first opportunity for this court to ad-

dress this principle; it should be discredited or vindicated

now, so that employers, employees and legislators know

the extent to which congressional alteration of contract

rights will be pennitted.

4

POINT il.

Respondents distort the nature of Petitioners’ contract

rights.

Conrail grossly mischaracterizes Petitioners’ rights to

jobs which would be available but for the implementation

of §702. Petitioners’ rights cannot be only “prospective

and contingent,”’ in view of the fact that the Manning and

Crew Consist Agreements provide for availability of jobs

which are currently foreclosed from being filled, while

members of Petitioners’ class stand ready to fill them.

There is no doubt that members of Petitioners’ class are

not now working when, but for the implementation of

§702, they would otherwise be working. Moreover, if Peti-

tioners’ rights under these contracts are as ephemeral and

valueless as is suggested by Conrail and the Government,

one wonders why elimination of such contractual rights is

so essential to the preservation of the financial stability of

Conrail.

It is virtually certain that normal attrition rates would,

in the absence of §702, cause jobs to become available

continuously for both firemen and train service

employees. This natural attrition clearly was accelerated

by the buyout portion of the §702 program. Those persons

who were ready and who would be ready in the near future

to retire or step down from their jobs are removed under

the §702 system. Instead of normal attrition with subse-

quent availability of jobs based on seniority, each buyout

under §702 is followed by the ‘‘blanking”’ of a job which

Petitioners are then prevented from filling. Under this

buyout program, the system is divested of all persons

available for normal attrition. Since normal attrition was a

virtual certainty, and since the Manning and Crew Consist

5

Agreements would have provided guaranteed access to the

jobs thereby vacated, §702 was enacted for the avowed

purpose of quashing Petitioners’ ‘‘concrete”’ right to these

jobs.

It was clear from the initial legislative discussions of

§702 how and by how much the labor force would be

reduced. It defies logic and justice, when this impact was

so clearly designed and foreseen, to suggest that those

directly affected have lost nothing more than an ‘‘expec-

tancy.”’

In United States v. Willow River Power Co., 324 U.S.

499, this court set the standard for determining when

property interests are subject to Fifth Amendment protec-

tion. Such protection accrues so long as the right is in the

nature of an economic interest, which the contractual right

to a job clearly is, and so long as the right is legally en-

forceable. 324 U.S. at 503. Since, in the absence of §702,

Petitioners’ rights under the Manning and Crew Consist

Agreements could be protected under the Railway Labor

Act, 45 U.S.C. §151 et seq., the enforceability portion of

the test is also clearly met.

POINT If.

Respondents’ arguments are a Machiavellian subversion

of Fifth Amendment protections.

The arguments of Conrail and the Government that

§702 is within the regulatory power of Congress ignores

the difference between a general regulation and a condem-

nation of specific property rights. See Village of Euclid v.

Ambler Realty Co., 272 U.S. 365, 384. While the dif-

ference between the two may often blur, Penn Central

6

Transportation Co. v. New York City, 438 U.S. 104, the

direct nature of the taking there could hardly be more ap-

parent. The Government and Conrail attempt to justify

this taking on the theory that it is in the public interest.

This is merely an assertion that the end justifies the means;

that because the public will benefit from improved rail

service in the Northeast, Petitioners’ rights may be ap-

propriated without compensation. This justification is

clearly contrary to law. Even in times of national emer-

gency, or even in war, this Court has recognized that prop-

erty rights may not be appropriated for the public benefit

with

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