# Record and brief — Cannon v. Consolidated Rail Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Record and brief
- **Published:** January 1, 1982
- **Citation:** 457 U.S. 1133

## Text

“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 exerci

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385008_1627%3A0. Public record. Not legal advice.