Petition for Writ of Certiorari — Norfolk & Western R. Co. v. Train Dispatchers

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) 89 - ] 0 z 7 Suprems Court, U.S.

PFiuLED

No. ae SEC 78 fs)

a IRe

IN THE CLERK

Supreme Court of the United States”

OCTOBER TERM, 1989

NORFOLK AND WESTERN RAILWAY COMPANY and

SOUTHERN RAILWAY COMPANY,

Petitioners,

Vv.

AMERICAN TRAIN DISPATCHERS ASSOCIATION,

INTERSTATE COMMERCE COMMISSION and

UNITED STATES OF AMERICA,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

JEFFREY S. BERLIN

(Counsel of Record)

MARK E. MARTIN

RICHARDSON, BERLIN & MORVILLO

2300 N Street, N.W.

Suite 625

Washington, D.C. 20037

(202) 663-8902

WILLIAM P. STALLSMITH, JR.

Three Commercial Place

Seventeenth Floor

Norfolk, Virginia 23510

(804) 629-2815

Attorneys for Petitioners

December 28, 1989

NN ee ee ce Na

PRESS OF BYRON 8S. ADAMS, WASHINGTON, D.C. (202) 347-8203

QUESTION PRESENTED

Does the exemption “from all other law” in the

Interstate Commerce Act, 49 U.S.C. § 11341(a), which

applies to a railroad participating in a transaction that

has been approved by the Interstate Commerce Com-

mission, extend to claims that are based on the rail-

road’s contracts and are asserted exclusively under

federal law?

LIST OF PARTIES

AND RULE 28.1 LIST

The names of the parties to the proceeding are

contained in the caption.'

The common stock of petitioners Southern Railway

Company and Norfolk and Western Railway Company

is wholly owned by Norfolk Southern Corporation.

The other subsidiaries and affiliates of petitioners are:

Southern Railway Company subsidiaries:

Airforce Pipeline, Inc.

Alabama Great Southern Railroad Company, The

oo and Charlotte Air Line Railway Company,

Atlantic and East Carolina Railway Company

Camp Lejeune Railroad Company

Central of Georgia Railroad Company

Charlotte-Southern Hotel Corporation

Chattanooga Station Company

Chattanooga Terminal Railway Company

Cincinnati New Orleans and Texas Pacific Railway

Company, The

' The decision of the Court of Appeals also covered the court’s

Case No. 88-1724, Brotherhood of Railway Carmen v. Interstate

Commerce Commission. The parties in Case No. 88-1724 were

petitioner Brotherhood of Railway Carmen, Division of Trans-

portation-Communications International Union; respondents In-

terstate Commerce Commission and United States of America;

and intervenor CSX Transportation, Inc. The two cases were

not formally consolidated—indeed, a motion for consolidation filed

by the labor union parties was denied—but they were argued

before the same panel on the same day. Petitioners Southern

Railway Company and Norfolk and Western Railway Company

understand that CSX Transportation, Inc. will also be filing a

petition for a writ of certiorari with respect to the D.C. Circuit

decision for which review is sought herein.

ili

Citico Realty Company

Elberton Southern Railway Company

Georgia Midland Railway Company, The

Georgia Northern Railway Company, The

Georgia Southern and Florida Railway Company

Highpoint, Randleman, Asheboro and Southern

Railroad Company

Interstate Railroad Company

Live Oak, Perry and South Georgia Railway

Company

Louisiana Southern Railway Company

Memphis and Charleston Railway Company

Mobile and Birmingham Railroad Company

National Investment Company, The

New Orleans Terminal Company

Norfolk and Portsmouth Belt Line Railroad

Company

North Carolina Midland Railroad Company, The

St. Johns River Terminal Company

South Western Rail Road Comapny, The

Southern Rail Terminals, Inc.

Southern Rail Terminals of Alabama, Inc.

Southern Rail Terminals of North Carolina, Inc.

Southern Railway-Carolina Division

Southern Region Coal Transport, Inc.

Southern Region Industrial Realty, Inc.

Southern Region Materials Supply, Inc.

Southern Region Motor Transport, Inc.

State University Railroad Company

Tennessee, Alabama & Georgia Railway Company

Tennessee Railway Company

Transylvania Railroad Company

Virginia and Southwestern Railway Company

Yadkin Railroad Company

iv ; Vv

Norfolk and Western Railway Company subsidiaries: TABLE OF CONTENTS

Chesapeake Western Railway

Fort Wayne Union Railway Company Page

Lake Erie Dock Company ;

Norfolk and Portsmouth Belt Line Railroad

Guaeame LIST OF PARTIES AND RULE 28.1 LIST .............. il

Scioto Valley an d New Englan d Railroad Company, I EEE oc cccccccvcccccccccceveccececsoccosees vil

The ia ciscccinccscicsocssconseosesssncsosessensee

Shenandoah-Virginia Corporation EE

Toledo Belt Railway Company, The

Wabash Railroad Company

Norfolk Southern Corporation subsidiaries (in addition

to Southern Railway Company and Norfolk and West- REASONS FOR GRANTING THE WRIT ...............-.. 10

ern Railway Company): es casecebucosece 26

Appendices:

Arrowood-Southern Corporation Company A. Decision, Brotherhood of Railway Carmen

; ‘ v.

Arrowood-Southern Executive Park, Inc.

Atlantic Investment Company

Charlotte-Southern Corporation

Lamberts Point Barge Company, Inc.

Interstate Commerce Commission, D.C. Cir.

No. 88-1724, and American Train Dispatch-

ers’ Association v. Interstate Commerce Com-

mission, D.C. Cir. No. 88-1694, July 25, 1989

Lamberts Point Docks, Inc. odcocesenséosenaasoossoocosescosessecese maeeiasinrenrcesnnenencccwces la

Nickel Plate Improvement Company, Inc. . Order, “saan of Railway Carmen v. In-

Norfolk Southern Industrial Development terstate Commerce Commission, D.C. Cir. No.

88-1724, and American Train Dispatchers

Corporation Association v. Interstate Commerce Commis-

Norfolk Southern Properties, Inc. sion, D.C. Cir. No. 88-1694, September 29,

North American Van Lines, Inc. 1989 (amending decision of July 25, 1989). 27a

NS Fiber Optics, Inc. . Decision, olk Southern Corp.—Control—

NS Transportation Brokerage Corporation Ne estern Ry. a outhern Ry.,

NW Equipment Corporation 24, 1988 | settenttnalnalaad 29a

Pocahontas Development Corporation . Order, Brotherhood of Railway Carmen v. In-

Pocahontas Land Corporation terstate Commerce Commission, D.C. Cir. No.

Sandusky Dock Corporation 88-1724, and American Train Dispatchers’

te ae see Be Ne ae ose

Meco ; , D.C. . No. : tember 29,

Virginia Holding Company 1989 (entering judgment) ......... . te 47a

E. Order, Brotherhood of Railway Carmen v. In-

terstate Commerce Commission, D.C. Cir. No.

88-1724, and American Train

Association v. Interstate Commerce Commis-

sion, D.C. Cir. No. 88-1694, September 29,

1989 (denying petitions for rehearing) sonesece

. Order, Brotherhood of Railway Carmen v. In-

terstate Commerce Commission, D.C. Cir. No.

88-1724, and American Train Dispatchers’

Association v. Interstate Commerce Commis-

sion, D.C. Cir. No. 88-1694, September 29,

1208 (denying suggestions of rehearing en

TOG) <eccecceconessceesesceenittlialaiaislinianananiaandisiitass

. Order, Brotherhood of Railway Carmen v. In-

terstate Commerce Commission, D.C. Cir. No.

88-1724, and American Train Dispatchers’

Association v. Interstate Commerce Commis-

sion, D.C. Cir. No. 88-1694, tember 29,

1989 (deferring consideration of ICC petition

FOP FORGRTEN) .occcccccccsesessserstobnnensssensaneauiants

49a

5la

Ewes! le

TABLE OF AUTHORITIES

Cases Page

Altman v. Central of Georgia Ry., 488 F.2d 1302

EET Se 13

American Airlines, Inc. v. CAB, 445 F.2d 891 (2d

Cir. 1971), cert. denied, 404 U.S. 1015

EE 18

Andrews v. Louisville & Nashville R.R., 406 U.S.

EEE EEE 15

Brotherhood of Locomotive Engineers v. Boston &

Maine C 788 F.2d 794. (1st Cir.), cert. de-

nied, 479 S. 829 EE 17

Brotherhood 0 os ary v. Chicago &

North 314 F.2d 424 (8th Cir.),

g 202 on an (S.D. Iowa 1962), cert. denied,

875 U.S. 81S 963) Seibidieienéddneseueccseeess 16, 17 22,20

Brotherhood of Locomotive Engineers v. ICC, 761

F.2d 714 (D.C. Cir. 1985), vacated, 482 U.S.

iii cicciccansorscscoscosescscossosoccoes 16

Bretherhood of Locomotive Engineers v. ICC, 885

F.2d 446 (8th Cir. 1989) ...........cccccsccceserreeeeees 24

Burlington Northern, Inc. v. American Railway Su-

pervisors Association, 503 F.2d 58 (7th. Cir.

1974) (per curiam), cert. denied, 421 U.S. 975

SIT IEiiasscsnccesnsnnsnssssonsoecoosoccooocsecs 17

California v. Taylor, 353 U.S. 553 (1957) ............. 15

Chicago & North Western Ry. v. United Transpor

tation Union, 402 U.S. %70 EE 15

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

Cir. 1977), cert. denied, 435 U.S. 950

aces Miccnssseszcccessscoccsccocssces 14

Detroit & its Stirs Line RE v. United Trans-

portation Union, 396 U.S. 142 (1969) ............ 15

viii

Table of Authorities Continued

International Association of Machinists v. Northeast

Airlines, Inc., 473 F.2d 549 (1st Cir.), cert.

denied, 409 U.S. 845 (1972) .............ceccceseeseeees 18

International Association of Machinists v. Northeast

Airlines, Inc., 586 F.2d 975 (ist Cir.), cert. de-

nied, 429 U.S. 961 (1976) ..........ccersereereereees 18

International Brotherhood of Electrical Workers v.

ICC, 862 F.2d 330 (D.C. Cir. 1988) ............... 6

Kent v. CAB, 204 F.2d 263 (2d Cir.), cert. denied,

ei & Fl Relea ere 18

McLean Trucking Co. v. United States, 321 U.S. 67

CRD GED ccnscascnsnscnivensteinisidiniesiiieassiibidsaiaaineicinaiiiidi dilantin 20

Missouri Pacific R.R. v. United Transportation

Union, 782 F.2d 107 (8th Cir. 1986), cert. de-

ted, 468 UB. GBT (1GBT) ..ccccccccssrccssesscesesccsees 16,17

Nemitz v. Norfolk & Western Ry., 436 F.2d 841

(6th Cir.), aff'd, 404 U.S. 87 (1971) ....ceseeeeee. 17

New York Dock Ry. v. United States, 609 F.2d 83

CBG Cir. TED ncocecnssaseenniescanbtiitensiemensciniitietinneie 4

Norfolk & Western Ry. v. Nemitz, 404 U.S. 37

(BOTT) .nccsacnenicnccnsennsnmnensiiniaiiasiinnitibliipinianaiies 22

Railway Labor Executives’ Association v. ICC, 883

F.2d 1079 (D.C. Cir. 1989) ...........ssccccssssssceees 24

Railway Labor Executives’ Association v. United

States, 389 U.S. 142 (1950) ............cccccsseeseees 22

Schwabacher v. United States, 334 U.S. e

LBB (2DEB). ....nccsccorssnccsspevcessosseccesseoes 10,11,12,13,14,16

Seaboard Airline R.R. v. Daniel, 333 U.S. 118

(2D GED : cnccocscnevninctsibesababtneinneciiaiiaiiaitaddiiniied

Snow v. Dizon, 362 N.E.2d 1052 (Ill.), cert. denied,

4346 UB. CR GRGED cecctecescecscescentetnnsniisinitinicte 13,14

St. Louis Southwestern Ry. v. City of Tyler, 422

S.W.2d 780 (Tex. Civ. App. eh eintintdiibieaienete 14

Texas v. United States, 292 U.S. 522 (1934) ......... 21

OG ee ee

Table of Authorities Continued

Page

United States v. Lowden, 308 U.S. 225 (1939) ...... 19,20

United Transportation Union v. Norfolk & Western

Ry., 822 F.2d 1114 (D.C. Cir. 1987), cert. de-

nied, 484 U.S. 1006 (1988) 2.0.0... cece cece 6

Decisions of the Interstate Commerce Commission

Brandywine Valley R.R.—Purchase—CSX Trans-

portation, Inc., 5 1.C.C.2d 764 (1988), appeal

docketed, No. 89-1503 (D.C. Cir. Aug. 21,

ES Ca 19

Denver & Rio Grande Western R.R.—Trackage

Rights—Missouri Pacific R.R., Finance Docket

No. 30,000 (Sub-No. 18), decision served Oc-

tober 25, 1983, a dismissed sub nom. ICC

v. Brotherhood of Locomotive Engineers, 482

SUPINE -ctuhsncsscoysonsnsstevenncccseseenccsescescess 18

Gulf, Mobile & Ohio R.R.—Abandonment, 282 1.C.C.

SITTIN iilasichdncusdubiesdsotersinueiscsccssccsvecevecccoescess 14

Missouri Pacific R.R.—Merger—Tezas & Pacific

Ry., 348 1.C.C. 414 (1976), rev’d sub nom. Cit

of Palestine v. United States, 558 F.2d 408 (5

ir. 1977), cert. denied, 435 U.S. 950 (1978) . 14

New York Dock Ry.—Contro!—Brooklyn Eastern

District Terminal, 360 1.C.C. 60, aff'd sub nom.

New York Dock Ry. v. United States, 609 F.2d

a 4

Norfolk & Western Ry.—Merger, 347 1.C.C. 506

SII ish icctdencdnenndsccedescosoonssscesoecoceesess 18,19

Norfolk Southern Corp.—Control—Norfolk & West-

ern Ry. and Southern Ry., 366 1.C.C. 173

STA bienccantisecsensssscoscssceccscocececccocscce~ 3

Pere Marquette Railway Merger, Etc., 267 1.C.C.

ITE saicccncssasesdsecsactccescseseccccseeccoces 13

Southern Ry.—Control—Central of Georgia Ry., 331

IID oo scnsascccsnccessossoscooossoscooess 18,19

el a i ee

Table of Authorities Continued :

Page

St. Louis Southwestern Ry. Lease, 290 I.C.C. 205

tS | ee ee 14

Constitutional and Statutory Provisions

U.S. Constitution, amendment V .............. fp 9

Emergency Railroad Transportation Act of 1933,

ch. 91, 48 Stat. 211:

Tithe 1, © MOGmh GB Gah, BD necccsthsiscccstsnssistioctam 21

Title II, § 202(15), 48 Stat. 219 ..........ccccccocccsesss 10,21

Interstate Commerce Act (former and recodified):

49 U.B.C. § GORD cccicccesccccscesssccosctsiesnestactuantasansal 22

40 UBC. BOD cccectsceccmntnsintionseaeeee 10,21

49 UBC... © GED) scccecscccesccciccoscsnietesecteuanieenann passim

49 U.B.C. 6 BEDBD ceccccccocsscccccsecsoscmnistsnnennaan 10,21

49 U.S.C. © TEBEMAD cccccssscussteucnndiael passim

49 U.B.C. © TRBEF. occ: cxcessscen eee 3,8,22

Michigan Statutes Anno. ed, § 22.234 .......cseee 13

Railway Labor Act, 45 U.S.C. §§ 151 et seg:

45 U.8.C. § 168 FReeD scccsccsscsssescinttinnnnnteninn 9

45 U.S.C. § 16GB Bawettthe ccccccssescscscsstecssvonsmeiececnns - 16

45 U.B.C. © 266 .ccccssestsstcccsssssstinsasseGananal 8

Transportation Act of 1920, ch. “91, § 407(8), 41

Stat. 456, GBB .ncccccerenccscosessisssentsinssinnnnamnna 10

Transportation Act of 1940, ch. 722, § 7(11); 54

2 eee, 11

Pub. L. No. 95-473, § 3(a), 92 Stat. 1466 ...... iatinips

28 U.S.C. § 1254(1) ........-2000 come

28 U.S.C. § 2321(a) ..........-000

Table of Authorities Continued

2B U.S.C. § 2BZB ..........cccecccccrcrccccrccceecssesssssessroesces

ZB UB.C. § BBL .........cccrccccccccccrscsccccresccesseccssseeenes

BB UBC. § BBEB .....2000.cccccrcccccrcsscccrcrecscccesecsosessoecess

BB U.S.C. § BBAB ........ccccccccrecccrccscrcccccccccccssccoesecseres

Rules

Fed. R. App. P. 15() ...........scccccsscserressserrssercecsees

D.C. Circuit General Rule 15(C) ............:cceceeeeeeeeeees

Legislative Materials

S. Rep. No. 606, 69th Cong., lst Sess. (1926), re-

printed in 1 Railway Labor Act + 1926, Leg-

a slative History (M. * Campbell & E. Brewer,

TI], ds. 1988) ........seseseeseesesessssesesessesnsnseneneneens

IN THE

Supreme Court of the United States

OcTOBER TERM, 1989

NORFOLK AND WESTERN RAILWAY COMPANY and

SOUTHERN RaILway COMPANY,

Petitioners,

Vv.

AMERICAN TRAIN DISPATCHERS ASSOCIATION,

INTERSTATE COMMERCE COMMISSION and

UNITED STATES OF AMERICA,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT Gr COLUMBIA CIRCUIT

Petitioners Norfolk and Western Railway Company

(“NW’’) and Southern Railway Company (‘‘Southern’’)

request that this Court issue a writ of certiorari to

review the judgment of the United States Court of

Appeals for the District of Columbia Circuit, which

on July 25, 1989, and amended on Sep-

OPINIONS BELOW

The July 25, 1989 decision of the Court of Appeals

is reported at 880 F.2d 562 and is reprinted in the

_ Appendix Petition (““App.”) at la. The Court

of Appeals’ order of September 29, 1989, amending

the decision, is not reported and is reprinted in the

Appendix at 27a. The decision of the Interstate Com-

merce Commission dated May 28, 1988, which was

the administrative decision under review in the Court

of Appeals, is not reported and is reprinted in the

Appendix at 29a.

JURISDICTION

The Court of Appeals entered its decision on July

25, 1989. NW and Southern filed a timely petition

for rehearing, which was denied in an order entered

on September 29, 1989. This petition is timely filed.

Jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATUTES INVOLVED

49 U.S.C. § 11841(a), a section of the Interstate

Commerce Act, provides:

The authority of the Interstate Commerce

Commission under this subchapter is exclu-

sive. A carrier or corporation participating in

or resulting from a transaction approved by

or exempted by the Commission under this

subchapter may carry out the transaction,

own and operate property, and exercise con-

trol or franchises acquired through the trans-

action without the approval of a State

authority. A carrier, corporation, or person

participating in that approved or exempted

transaction is exempt from the antitrust laws

and from all other law, including State and

municipal law, as necessary to let that person

carry out the transaction, hold, maintain, and

operate property, and exercise control or

franchises acquired through the transaction.

However, if a purchase and sale, a lease, or

a corporate consolidation or merger is in-

volved in the transaction, the carrier or cor-

poration may carry out the transaction only

with the assent of a majority, or the number

required under applicable State law, of the

votes of the holders of the capital stock of

that corporation entitled to vote. The vote

must occur at a regular meeting, or special

meeting called for that purpose, of those

stockholders and the notice of the meeting

must indicate its purpose.

STATEMENT OF THE CASE

In 1982, the Interstate Commerce Commission

(“ICC”) approved the coming together of NW and

Southern, petitioners here, under the common control

of Norfolk Southern Corporation (‘‘Norfolk South-

ern’’). Norfolk Southern Corp.—Control—Norfolk &

Western Ry. and Southern Ry., 366 1.C.C. 173 (1982)

(‘Norfolk Southern Control’’). The ICC authorized the

consolidation of facilities among the various Norfolk

Southern-controlled railroads in the interest of op-

erational efficiency, and directed, in accordance with

a provision of the Interstate Commerce Act, 49 U.S.C.

§ 11347, that employees affected by any such con-

solidations—including those not detailed in the origi-

nal Norfolk Southern operating scheme—were to

receive the extensive benefits (including wage pro-

tection for up to six years) prescribed in the ICC’s

‘““New York Dock” employee protective conditions.’ 366

1.C.C. at 230-31.

In 1986, as part of the ongoing process of consol-

idating their operational functions, NW and Southern

decided to consolidate at one location the function of

‘distribution of power’’—the assignment of locomo-

tives to particular trains and facilities. Until then,

power distribution on NW was performed in a facility

in Roanoke, Virginia (the System Operations Center,

or ‘“SOC’”’) by employees known as “SOC supervi-

sors,’ who were represented by respondent American

Train Dispatchers Association (““ATDA’’) and worked

under a labor agreement to which the parties were

NW and ATDA. In contrast, power distribution on

Southern was performed in Atlanta, Georgia, by com-

pany officers—nonunion management employees

known as Superintendents Transportation-Locomotive

(““STLs’’).

The railroads proposed that power distribution for

the entire Norfolk Southern system would now be

performed by Southern at its Atlanta facility. Because

this rearrangement was to be carried out under au-

thority of the ICC’s original Norfolk Southern Control

decision, the railroads recognized that the New York

Dock protective conditions would apply. Accordingly,

as required by Art. I, § 4 of the protective conditions,

the railroads notified ATDA of the proposal and of-

fered to negotiate an “implementing agreement’ to

cover the transaction.*s

2 These conditions were adopted by the ICC in New York Dock

Ry.—Control—Brooklyn Eastern District Terminal, 360 I.C.C.

60, affd sub nom. New York Dock Ry. v. United States, 609

F.2d 83 (2d Cir. 1979).

® Art. I, § 4 of the protective conditions requires the railroad

i es 2 ee

Negotiations failed. The railroads wanted Southern

to continue to handle power distribution using STLs,

and they proposed to offer all the NW SOC super-

visors management jobs as Southern STLs. This would

result in the employees’ receiving substantial in-

creases in wages and benefits, as well as the assur-

ance of six years’ wage protection under the New

York Dock conditions. ATDA maintained, however,

that the Railway Labor Act, 45 U.S.C. §§ 151 et seg.

(““RLA’’), and the SOC supervisors’ labor agreement

would not permit this result, and that the NW power

distribution work could be moved to Atlanta only if

it were performed there by NW’s SOC supervisors

working under the existing NW/ATDA labor agree-

ment.

The railroads invoked arbitration under Art. I, § 4

of the protective conditions, and, following a hearing,

the arbi rator issued an award in which he imposed

an implementing agreement.‘ He authorized the trans-

to give 90 days’ written notice of a transaction that ‘‘may cause

the dismissal or displacement of any employees, or rearrange-

ment of forces,” and, if requested, to negotiate an ‘‘agreement

with respect to application of” the protective conditions to the

transaction. The section also provides that “‘[ejach transaction

which may result in a dismissal or displacement of employees

or rearrangement of forces, shall provide for the selection of

forces from all employees involved on a basis accepted as ap-

propriate for application in the particular case and any assign-

ment of employees made necessary by the transaction shal] be

made on the basis of an agreement or decision under this section

4.” If the parties are unable to agree on the terms of this so-

called “implementing agreement,” either party may submit the

dispute to binding arbitration. 360 I.C.C. at 85.

* Norfolk & Western Ry. and Southern Ry. and ATDA, May

19, 1987 (Harris, Arb.). The arbitrator’s award was reproduced

fer of work from Roanoke to Atlanta as proposed by

the railroads. He also ruled that NW SOC supervisors

who accepted STL positions with Southern could not

carry their existing labor agreement with them to

Atlanta but would become Southern officers. The im-

plementing agreement he imposed provides, inter alia,

that ‘“[wJhere rules, other agreements and practices

conflict with this agreement, the provisions of this

agreement shall apply.” J.A. 168.°

ATDA sought review of the award by the ICC.®

The ICC affirmed the award in all respects, holding,

inter alia, that the arbitrator

correctly found . . . that the terms of [Norfolk

Southern Control] and specifically the com-

pulsory, binding arbitration required by Ar-

in the Joint Appendix (“J.A.’’) below at 139. Technically, the

award was rendered by a three-person “‘committee”’ or ‘“‘panel”

established by agreement of the parties; the panel consisted of

a neutral referee (the arbitrator), one member representing the

railroads, and one member representing the union. For this rea-

son, the ICC decision below refers to the award as the “‘panel’s”

decision. The railroad member of the panel concurred in the

arbitrator’s award and the union member dissented.

’ The transfer of power distribution work took place on June

6, 1987. Southern offered STL positions to all nine active and

all three furloughed NW SOC supervisors, and nine of the total

accepted and moved to Atlanta.

The ICC exercises the authority to review the awards of

arbitrators acting under the employee protective conditions. Jn-

ternational Brotherhood of Electrical Workers v. ICC, 862 F.2d

330 (D.C. Cir. 1988). See United Transportation Union v. Norfolk

& Western Ry., 822 F.2d 1114 (D.C. Cir. 1987) (arbitration award

is not reviewable under RLA but is exclusively subject to review

under Interstate Commerce Act), cert. denied, 484 U.S. 1006

(1988).

ee ee

ticle I, section 4 of New York Dock, took

precedence over RLA procedures whether as-

serted independently or based on existing col-

lective bargaining agreements. Moreover, an

action taken under our control authorization

is immunized from conflicting laws by section

11341(a). The proposed transfer, although not

specifically mentioned in Norfolk Southern

Control, is one of the future coordinations

and public benefits expected to flow from,

and is therefore part of, the control trans-

action that we approved.

App. 35a (citations omitted). On the merits of the

case, the ICC agreed with the arbitrator’s decision

not to impose the NW/ATDA labor agreement on

work in the consolidated Atlanta office—relief sought

by ATDA—finding that to impose that agreement

“would jeopardize the transaction because the work

rules it mandates are inconsistent with the carriers’

underlying purpose of integrating the power distri-

bution function.” App. 37a.

ATDA sought judicial review of the ICC’s decision

under 28 U.S.C. §§ 2321(a) and 2341 et seg.’ In the

Court of Appeals, ATDA’s principal contention was

that the ICC exceeded its jurisdiction by upholding

the arbitrator’s authority to allow the transfer of work

rather than remitting the parties to the RLA pro-

’ ATDA filed its petition for review in the United States Court

of Appeals for the Eleventh Circuit. NW and Southern obtained

leave to intervene in the review proceeding as of right, under

28 U.S.C. §§ 2323 and 2348 and Fed. R. App. P. 15(d). By order

of September 15, 1988, the Eleventh Circuit transferred the case

to the District of Columbia Circuit.

cedures for negotiating changes in agreements, 45

U.S.C. § 156.

In its July 25, 1989 decision covering this case and

the companion Brotherhood of Railway Carmen v.

ICC,8 the Court of Appeals analyzed the cases as pre-

senting three primary questions relating to the reach

of the ICC’s power under the Interstate Commerce

Act: (1) whether the § 11341(a) exemption “from all

other law’’ permits the ‘‘override” of labor agree-

ments; (2) whether that exemption permits the over-

ride of the RLA itself; and (3) whether the ICC has

authority under 49 U.S.C. § 11847, the provision re-

quiring imposition of employee protective conditions,

to displace employees’ RLA remedies. The court de-

cided only the first question. It held that § 11341(a)

“does not grant the ICC its claimed power to override

provisions of a [collective bargaining agreement],”’

App. 26a, and reversed the ICC on this point.

The court declined to decide whether 49 U.S.C.

§ 11341(a) ‘‘may operate to override provisions of the

RLA”’ itself, App. 19a, because, in light of its holding

that § 11341(a) does not reach agreements, “it is un-

clear what are the consequences, if any, of [the ICC’s]

rulings that the carriers need not comply with the

RLA,”’ App. 23a, and because the ICC’s holding on

the point supposedly departed from prior ICC deci-

sions without adequate explanation, App. 22a-23a. The

court also declined to address the ICC decision’s con-

clusion that the arbitration procedure in the New York

Dock conditions, adopted under § 11347, displaces

RLA-derived rights, because the ICC supposedly had

not relied on this ground on appeal. App. 25a-26a.

® See page ii, footnote 1, above.

The Court of Appeals remanded the case with respect

to the issues it had not addressed “‘in order that the

agency may determine whether further proceedings

are necessary.”’ App. 26a.°

NW and Southern petitioned for rehearing and filed

a suggestion of rehearing en banc. The petition and

suggestion were denied by orders issued on Septem-

ber 29, 1989. App. 49a, 5la.

The ICC also filed a document styled as a petition

for rehearing. But the ICC did not ask the Court of

Appeals to rehear the case immediately; rather, the

ICC represented that it intended to conduct a pro-

ceeding on remand as directed by the court, and it

asked the court “to refrain from ruling on this petition

for rehearing until the Commission’s decision on re-

mand is published.” ICC Pet. at 2. By order entered

on September 29, 1989, the Court of Appeals directed

“that consideration of the aforesaid petition is de-

ferred pending release of the ICC’s decision on re-

mand.” App. 54a. Also by separate orders entered on

the same date, the Court of Appeals entered its judg-

ment of remand, App. 47a, and amended its July 25,

1989 decision to specify that it was remanding only

the “records” and not the ‘‘cases’’ to the ICC. App.

27a-28a. The effect of thei amendment, under the

court’s local rule 15(c), was to make clear that the

court retained jurisdiction over the matter and that

it would not be necessary for a party aggrieved by

* The Court of Appeals did not address objections ATDA had

raised based on the Fifth Amendment and 45 U.S.C. § 152

Fourth.

the ICC’s eventual decision on remand to file a new

petition for review.”

REASONS FOR GRANTING THE WRIT

The Court of Appeals has misinterpreted the com-

mand of the Interstate Commerce Act, 49 U.S.C.

§ 11341(a), that a person participating in a transaction

approved by the Interstate Commerce Commission is

“exempt from the antitrust laws and from all other

law ... as necessary to let that person ... carry out

the transaction ....’’ The Court of Appeals has now

held that the reach of the § 11341(a) exemption does

not extend to claims asserted under labor agreements

governed by the Railway Labor Act That holding

conflicts with Schwabacher v. United States, 334 U.S.

182 (1948); it is inconsistent with decisions rendered

by other circuit courts since 1963; and it is contrary

to the repeatedly expressed intent of Congress.

The provision under review, § 11341(a), is a cor-

nerstone of the nation’s longstanding policy of fos-

tering railroad consolidations in the interest of

economy and efficiency. The exemption provision orig-

inated in the Transportation Act of 1920; was reen-

acted in the Emergency Railroad Transportation Act

of 1933;}2 was reenacted again in the Transportation

on remand. Written comments have been solicited from the par-

ties and interested persons, and oral argument is set for January

4. 1990.

" Transportation Act of 1920, ch. 91, § 407(8), 41 Stat. 456,

482, codified as 49 U.S.C. § 5(8) (“*§ 5(8)’’).

12 Emergency Railroad Transportation Act, ch. 91, § 202(15),

48 Stat. 211, 219, codified as 49 U.S.C. § 5(15) (““§ 5(15)”).

me ——

Act of 1940;* and was recodified in 1978, without

substantive change," as §11341(a). In each version,

the operative language has been similar and the

meaning has been the same: to immunize carriers

from collateral legal challenges to the carrying out of

ICC-approved transactions. The Court of Appeals’

mistaken holding denies the past and condemns the

railroad industry to a destabilized future.

THE DECISION OF THE COURT OF APPEALS

CONFLICTS WITH THE DECISION OF THIS COURT IN

SCHWABACHER v. UNITED STATES AND WITH

DECISIONS OF OTHER COURTS OF APPEALS.

1. The Court of Appeals erroneously held that the

§ 11341(a) exemption ‘‘from all other law’’ does not

reach contracts. App. 12a, 18a. No party to this case

made such an argument and the Court of Appeals

embraced it without benefit of briefing or oral -ar-

gument on the point. The Court of Appeals’ holding

is plainly contrary to Schwabacher v. United States,

334 U.S. 182 (1948).

Schwabacher held that former § 5(11) of the Inter-

state Commerce Act, the direct predecessor of

§ 11341(a), relieved carriers from private contractual

obligations, to the extent necessary to carry. out an

ICC-approved transaction. 334 U.S. at 185-89, 194-

95, 199-201. That holding forecloses the interpretation

of § 11341(a) that the Court of Appeals has adopted.

® Transportation Act of 1940, ch. 722, § 7(11), 54 Stat. 899,

908, codified as 49 U.S.C. § 5(11) (“§ 5(11)’”).

* Pub. L. 95-473, § 3(a), 92 Stat. 1466; JCC v. Brotherhood of

Locomotive Engineers, 482 U.S. 270, 299 n.12 (Stevens, J., con-

curring).

Schwabacher was a challenge to an ICC order ap-

proving the merger of the Pere Marquette Railway

Company with another carrier, brought by a group

of dissenting Pere Marquette preferred stockholders.

In the ICC approval proceeding, these stockholders

claimed that under the Pere Marquette charter, which

was enforceable under the laws of Michigan, they

were entitled to receive at least $172.50 per share of

stock; and they objected to the proposed merger plan

because it allocated them substantially less than this

amount and thereby deprived them ‘“‘of contract rights

under Michigan law ....” 334 U.S. at 188. The ICC

approved the proposed merger plan but left the stock-

holders to pursue their charter claims in state court.

Id.

This Court, relying on, inter alia, § 5(11), rejected

the ICC’s approach and held that once the ICC ap-

proved the merger, the surviving carrier was relieved

from any claims for additional payments based on

rights assertedly conferred by the Pere Marquette

charter. 334 U.S. at 194-95; 201-02.

Schwabacher contains many references to Michigan

or state law, but, contrary to the Court of Appeals

view (App. 21a), the decision does not involve any

state statute conferring a substantive right on the

preferred stockholders. The references to state law

relate to only two subjects: (1) the question whether,

as a matter of Michigan law, a ‘“‘winding up of Pere

Marquette was occurring, as it was this event that

would trigger rights under the express terms of the

charter; and (2) the availability of the state court sys-

tem to hear and decide the claims asserted by the

stockholders under their private contract with the

Pere Marquette.'* The sole source of the stockholders’

claimed right to receive $172.50 per share was the

promise made in the charter, and it was this con-

tractual promise that, by operation of § 5(11), was

abrogated.!*

Our understanding of Schwabacher is not new. The

Court of Appeals itself has previously agreed with it.

Altman v. Central of Georgia Ry., 488 F.2d 1302

(D.C. Cin. 1973) (claims for payment of dividends al-

legedly due under the terms of a railroad’s charter

and bylaws are barred). See also Snow v. Dixon, 362

** The Michigan merger statute provided that “the debts, li-

abilities and duties’ of the merged companies “shall thenceforth

attach to such new corporation, and be enforced against the

same, to the same extent, and in the same manner, as if such

debts, liabilities and duties had been originally incurred by it.”

Michigan Statutes Annotated, § 22.234, quoted in Schwabacher,

Brief for Appellants at 9.

ICC had concluded that “[wJhether dissenting stockholders, as

members of a class created by the merger, are entitled to better

treatment under their charter contract with the Pere Marquette,

is a question not within our province to decide.” Pere Marquette

Railway Merger, Etc., 267 1.C.C. 207, 248 (1947) (citation omit-

ted). In this Court, the ICC framed the question presented as:

Whether, in passing upon the agreement of merger

here involved, ... the Commission was required, as

a condition to its approval of the merger under the

provisions of Section 5 (2-13), and Section 20a (1-11)

of the Interstate Commerce Act, to adjudicate and

enforce the claimed contractual rights, arising under

State law, of dissenting stockholders as a separate

Schwabacher, Brief for Appellee ICC at 2. See also Brief for

Appellants at 2; Reply Brief for Appellants at 2.

N.E.2d 1052 (Ill.), cert. denied, 434 U.S. 939 (1977);

St. Louis Southwestern Ry. v. City of Tyler, 422

S.W.2d 780 (Tex. Civ. App. 1967). Since Schwabacher,

the ICC itself has long asserted its authority to over-

ride contractual obligations.”

The interpretation of the reach of the exemption

‘from all other law” adopted in Schwabacher certainly

applies here. In Schwabacher, the Court held that the

ICC had exclusive authority to determine the rights

of stockholders notwithstanding the provisions of their

private contract with the corporation, and that the

ICC decisionmaking process supplanted state court

remedies otherwise available to those stockholders.

Here, the contracts in question are creatures of the

RLA and have no meaning apart from the rights and

obligations the RLA bestows; the RLA prescribes the

procedures for creating agreements and the exclusive

17 E.g., Missouri Pacific R.R.—Merger—Texas & Pacific Ry.,

348 1.C.C. 414, 430 (1976), rev’d on other grounds sub nom. City

of Palestine v. United States, 559 F.2d 408 (5th Cir. 1977) (as-

suming arguendo that ICC has authority to abrogate contracts,

but concluding that ICC’s exercise of this power in the circum-

stances was incorrect), cert. denied, 435 U.S. 950 (1978); St.

Louis Southwestern Ry. Lease, 290 1.C.C. 205, 211-13 (1953).

The Court of Appeals incorrectly suggested, App. 13a, that

in Gulf, Mobile & Ohio R.R.—Abandonment, 282 1.C.C. 311 (1952),

the ICC disclaimed authority, under 49 U.S.C. § 5(11), the pred-

ecessor of § 11341(a), to abrogate contracts. The decision was

precisely to the contrary. Gulf, Mobile was an abandonment case;

§ 5(11) (like today’s § 11341(a)) applied to mergers and consoli-

dations, not abandonments. The ICC held that it could not ab-

rogate contracts in abandonment cases because it could do so

“only upon a clear grant of statutory authority similar to that

contained in section 11).’’ 282 I.C.C. at 335.

means of enforcing them.'* Because the statutory ex-

emption “from all other law’’ applies to purely private

contracts, it surely applies to contracts that are them-

selves constructs of federal law.’

Justices Stevens, Brennan, Marshall, and Black-

mun, concurring in the judgment in JCC v. Brother-

hood of Locomotive Engineers, 482 U.S. 270, 287

(1987) (Stevens, J., concurring) (“JCC v. BLE’’), have

already agreed that the power to modify or override

labor. agreements is encompassed in the § 11341(a)

exemption. In JCC v. BLE, as here, what was at stake

was the claim of certain employees that the “Railway

Labor Act ... and their collective bargaining agree-

ments’ gave them the right to perform certain work.

482 U.S. at 295 (Stevens, J., concurring). The con-

curring Justices would have rejected that claim be-

cause of the § 11341(a) exemption.”

1 Andrews v. Louisville & Nashville R.R., 406 U.S. 320 (1972)

(railroad labor agreements are not enforceable in state court);

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

Union, 396 U.S. 142, 156 (1969) (RLA, 45 U.S.C. § 152 Seventh,

“operates to give legal and binding effect to collective agree-

ments’); Chicago & North Western Ry. v. United Transportation

Union, 402 U.S. 570, 576-78 (1971) (obligation to “maintain”

agreements is founded on RLA); California v. Taylor, 353 U.S.

553, 561 (1957) (railroad labor agreements supersede state law).

The Court of Appeals did not think “‘contracts’’ were en-

compassed by the phrase “‘al] other law,” App. 12a, and went

on to express concern that if the ICC’s reading of § 11341(a)

were correct, the ICC “could set to naught, in order to facilitate

a merger, a carrier’s solemn undertaking, in a bond indenture

or a bank loan, to refrain from entering into any such trans-

action without the consent of its creditors,’’ App. 13a. In fact,

there has been no doubt since 1948 that the ICC does have

precisely that power, within the other confines of § 11341(a).

In ICC v. BLE, a majority of a panel of the District of

2. The holding of the Court of Appeals breaks with

a uniform line of circuit court decisions, beginning

with Brotherhood of Locomotive Engineers v. Chicago

& North Western Ry., 314 F.2d 424 (8th Cir. 1963),

affg 202 F. Supp. 277 (S.D. Iowa 1962), cert. denied,

375 U.S. 819 (1963) (“BLE v. C&NW’’), which have

concluded that the exemptive provision now found in

§ 11341(a) reaches all rights derived from the RLA,

including the right to assert claims based on labor

agreements.

In BLE v. C&NW, the Eighth Circuit decided, in

direct contradiction to the Court of Appeals here, that

former § 5(11) exempted a railroad carrying out an

ICC-approved transaction from the assertion against

it of rights claimed under the RLA, including rights

based on collective bargaining agreements. 314 F.2d

at 426, 431-33.2 Accord Missouri Pacific R.R. v.

Columbia Circuit had remanded ‘he case to = ICC, nate

the agency to make ific findings as to necessity of an

palin of RLA-derived rights, including rights assertedly based

on labor agreements, in the particular case. Brotherhood of Lo-

comotive Engineers v. ICC, 761 F.2d 714 (D.C. Cir. 1985). This

Court vacated the Court of Appeals’ decision on the ground that

the appeal of the ICC decision had been untimely and that the

Court of Appeals accordingly lacked jurisdiction. The four con-

curring Justices would have reached the merits of the case;

citing Schwabacher for its holding that the statutory exemption

“from all other law’ is self-executing, they — ~<

11341(a) does not require specific findings as the necessi

a an mot of RLA rights, including rights claimed to arise

under labor contracts. 482 U.S. at 298. See also, e.g., Missouri

Pacific R.R. v. United Transportation Union, 782 F.2d 107, 109,

111-12 (8th Cir. 1986), cert. denied, 482 U.S. 927 (1987).

21 In BLE v. C&NW, the union had argued that § 5(11) “only

purports to relieve the railroad of ‘restraints’ or ‘limitations’ or

‘prohibitions’ of law and does not purport to relieve the railroad

United Transportation Union, 782 F.2d 107, 111-12

(8th Cir. 1986), cert. denied, 482 U.S. 927 (1987). All

the other circuits to have considered the issue have

followed BLE v. C&NW in similarly concluding that

rights asserted under the RLA are subordinate to the

Interstate Commerce Act’s exemptive provision.

Brotherhood of Locomotive Engineers v. Boston &

Maine Corp., 788 F.2d 794, 801 (1st Cir.), cert. de-

nied, 479 U.S. 829 (1986); Burlington Northern, Inc.

v. American Railway Supervisors Association, 503

F.2d 58, 62-63 (7th Cir. 1974) (per curiam), cert. de-

nied, 421 U.S. 975 (1975); Nemitz v. Norfolk & West-

ern Ry., 436 F.2d 841, 845-46 (6th Cir.), aff'd on other

grounds, 404 U.S. 37 (1971). In so deciding, none of

these courts distinguished between rights claimed un-

der the RLA and those claimed under labor agree-

ments enforceable through that statute. To the

contrary, the courts treated these RLA-derived rights

as of a piece, never doubting that the exemption

“from all other law” immunizes a railroad against all

RLA-based challenges to the carrying out of an ICC-

approved transaction.”

of its contractual obligations”—there, the railroad’s asserted ob-

ligation to respect seniority rights arising by virtue of certain

labor contracts. 202 F. Supp. at 283. The district court, relying,

inter alia, on Schwabacher, rejected the union’s arguments. 202

F. Supp. at 284. The Eighth Circuit, though not mentioning

Schwabacher explicitly, affirmed the district court in all respects.

As the Eighth Circuit explained, to hold otherwise ‘would be

to disregard the plain language of § 5(11) conferring exclusive

and plenary jurisdiction upon the ICC to approve mergers and

relieving the carrier from all other restraints of federal law.”

314 F.2d at 431-32.

* The circuit courts have reached similar results in cases aris-

ing in the airline industry, which is subject to the RLA, even

The ICC has itself long shared in this settled ju-

dicial understanding of the reach of the § 11341(a)

exemption.”

though the statutory scheme governing consolidations in that

industry did not contain an exemption provision comparable to

§ 11341(a). Every court to consider the question held that the

RLA, and labor agreements entered into under it, must yield

to the Civil Aeronautics Board’s authorization of a transaction,

subject to employee protective conditions. International Asso-

ciation of Machinists v. Northeast Airlines, Inc., 536 F.2d 975,

977 (1st Cir.), cert. denied, 429 U.S. 961 (1976); International

Association of Machinists v. Northeast Airlines, Inc., 473 F.2d

549, 559-60 (1st Cir.), cert. denied, 409 U.S. 845 (1972); Amer-

ican Airlines, Inc. v. CAB, 445 F.2d 891, 896-97 (2d Cir. 1971),

cert. denied, 404 U.S. 1015 (1972); Kent v. CAB, 204 F.2d 263,

266 (2d Cir.) (“{a] private [labor] contract must yield to the

paramount power of the [CAB] to perform its duties under the

statute creating it to approve mergers ....”), cert. denied, 346

U.S. 826 (1953).

23 E.g., Denver & Rio Grande Western R.R.—Trackage Rights—

Missouri Pacific R.R., Finance Docket No. 30,000 (Sub-No. 18),

decision served October 25, 1983, slip op. at 6 (“[t}o the extent

that existing working conditions and collective bargaining agree-

ments conflict with a transaction which we have approved, those

conditions and agreements must give way to the implementation

of the transaction”) (“DRGW’”), appeal dismissed sub nom. ICC

v. BLE, 482 U.S. 270 (1987); see Norfolk & Western Ry.—Merger,

347 1.C.C. 506 (1974).

The Court of Appeals’ decision to remand the question whether

§ 11341(a) extends to rights asserted under the RLA for further

explanation is premised on a misreading of the ICC’s precedents.

The Court of Appeals mistakenly thought (App. 22a) that the

ICC first took the position that § 11341(a) applies to the RLA

in 1983, in DRGW, and that this position deviated without ex-

planation from the position the ICC had adopted in 1967 in

Southern Ry.—Control—Central of Georgia Ry., 331 L

(1967) (“Southern Control’’). But neither point is true. The ICC

stated unequivocally in 1974 that “(tJhe Railway Labor Act is

The result first reached by the Eighth Circuit, and

unquestioned until now, is exactly the one contem-

plated fifty years ago by this Court in United States

v. Lowden, 308 U.S. 225 (1939). Lowden upheld the

ICC’s implicit authority to impose labor protection,

prior to enactment of the first statutory requirement

for such protection, precisely because the Court rec-

ognized that the carrying out of a transaction under

authority of the Interstate Commerce Act can result

in employees’ losing rights they previously held under

existing labor agreements. 308 U.S. at 233.%

a Federal act and is thereby preempted by section 5(11) [now

§ 11341(a)].”” Norfolk & Western Ry.—Merger, 347 1.C.C. at 511.

Moreover, the Court of Appeals’ reading of Southern Control

ignores that the whole point of that decision was to explain that

employees could not invoke RLA rights in connection with the

carrying out of an approved transaction. 331 I.C.C. at 162-64,

171.

In a decision issued just after the Court of Appeals’ decision

in this case, the ICC professed to accept the Court of Appeals’

instruction that the § 11341(a) exemption does not reach labor

agreements. Brandywine Valley R.R.—Purchase—CSX Trans-

portation, Inc., 5 1.C.C.2d 764, 772 n.5 (1989), appeal docketed,

No. 89-1503 (D.C. Cir. Aug. 21, 1989). Because the Court of

Appeals was wrong, the ICC’s acquiescence in its holding has

no force.

* As the Lowden Court explained, protective arrangements

were justified in significant part because railroad consolidations

necessarily result in the abridgment of contract rights:

[T]he Commission has estimated in its report on uni-

fication of the railroads that 75% of the savings will

be at the expense of railroad labor. Not only must

unification result in wholesale dismissals and extensive

transfers, involving expense to transferred employees,

but in the loss of seniority rights which, by common

practice of the railroads are restricted in their oper-

Moreover, the conclusion that § 11341(a) extends to

all RLA-derived rights is precisely the one Congress

intended. The legislative record makes it clear that

Congress has always understood that the Interstate

Commerce Act’s exemption provision will cause both

the RLA and agreements negotiated under that stat-

ute to yield to the carrying out of an approved trans-

action. In our case, the Court of Appeals thought

there was no pertinent legislative history of the In-

terstate Commerce Act after the Transportation Act

of 1920, where the exemption provision originated,

and mistakenly ended its analysis with that Act. App.

18a-19a.2° In fact, developments since the 1920 Act

provide conclusive evidence that Congress expected

the exemption provision to reach labor agreements.

The Emergency Railroad Transportation Act of

1933 (“ERTA”’) is perhaps most revealing. Title I of

ation to those members of groups who are employed

at specified points or divisions. It is thus apparent

that the steps involved in carrying out the Congres-

sional policy of railroad consolidation in such manner

as to secure the desired economy and efficiency will

unavoidably subject railroad labor relations to serious

stress and its harsh consequences may so seriously

affect employee morale as to require their mitigation

308 U.S. at 233 (footnote omitted).

28 The Court of Appeals was clearly wrong in proceeding (App.

17a-18a) as though § 11341(a) is cabined by the particular cir-

cumstances that Congress confronted in 1920. See McLean

Trucking Co. v. United States, 321 U.S. 67, 78-79 (1944) (ex-

pansive language of § 11) refutes contention that, because mo-

tor carriers faced less severe economic circumstances in 1935

than did railroads in 1920, scope of § 5(11) is narrower for motor

carriers than for railroads).

ERTA was temporary legislation of ultimately three

years duration. Responding to the extraordinary cir-

cumstances created by the Depression, Congress ex-

pressly excluded the RLA and labor agreements from

the exemption provision found in Title 1.2 At the

same time, Congress did not carve out a special ex-

ception for the RLA or labor agreements from the

exemption provision contained in the permanent Title

II of ERTA, which was codified as 49 U.S.C. § 5(15),

a forerunner of § 11341(a). Differences between Title

I and Title II of ERTA “‘indicate an intentional dis-

tinction.” Texas v. United States, 292 U.S. 522, 534

(1934) (contrasting unqualified exemption provision in

§ 5(15) of Title II with provision in Title I expressly

guaranteeing that carriers would not be relieved from

contractual agreements to keep offices in particular

locations).

Congress reaffirmed its purpose in the Transpor-

tation Act of 1940, reenacting the exemption provi-

sion (as 49 U.S.C. § 5(11)) without any exception for

the RLA or labor agreements.”’ Section 5(11) was

6 Section 10(a) of ERTA Title I contained an exemption from

other law similar to that found in the Transportation Act of

1920 (then 49 U.S.C. § 5(8)), to which Congress added the fol-

lowing:

nothing herein shal] be construed to repeal, amend,

suspend, or modify any of the requirements of the

Railway Labor Act or the duties and obligations im-

posed thereunder or through contracts entered into in

accordance with the provisions of said Act.

48 Stat. at 215. Plainly, there would have been no need for this

specific limitation if the exemption provision, by its terms, did

not reach RLA-derived rights in the first place.

27 The 1940 Act also provided ‘additional proof’’ of Congress’

recodified in 1978 as § 11341(a), without substantive

change.

A similar purpose is found in the legislative history

of the employee protective conditions—in particular,

in Congress’ rejection, in enacting the predecessor to

49 U.S.C. § 11347 as part of the Transportation Act

of 1940, of a proposal known as the Harrington

amendment. That proposal would have permitted con-

solidations to occur only if all rights under the RLA

and labor agreements were preserved; it “threatened

to prevent all consolidations.” Railway Labor Exec-

utives’ Association v. United States, 339 U.S. 142,

151 (1950).% As the Eighth Circuit recognized in BLE

v. C&NW, to exclude RLA-derived rights from the

reach of the § 11341(a) exemption would produce the

intent to grant the ICC an adequate immunity power, by making

the ICC’s jurisdiction over transactions “exclusive and plenary.

Seaboard Airline R.R. v. Daniel, 333 U.S. 118, 125 (1948).

2* The Harrington amendment would have barred the ICC from

approving any transaction that would “result in unemployment

or displacement of employees of the carrier or carriers, or in

the impairment of existing employment rights of said employees.”

84 Cong. Rec. 9882 (1939) (emphasis added). Instead, Congress

enacted what became 49 U.S.C. § 5(2\f), the predecessor to

§ 11347, requiring the ICC, in approving a transaction, to pro-

vide a “fair and equitable arrangement to protect the interests

of the [affected] employees.” The defeat of the Harrington

amendment confirmed Congress’ intent to permit railroads to

carry out approved transactions that cause changes in existing

labor agreements, but to ensure that affected employees receive

fair compensation under the ICC’s protective conditions. See

Railway Labor Executives’ Association v. United States, 339 U.S.

142, 147-54 (1950); Norfolk & Western Ry. v. Nemitz, 404 U.S.

37, 42 (1971).

Sj ta eg 3 ee ee

very result Congress rejected in defeating the Har-

rington amendment. 314 F.2d at 430-31.”

The crabbed reading of § 11341(a) adopted by the

Court of Appeals wrongly and inexplicably leaves

transactions approved by the ICC vulnerable to defeat

* Here, the Court of Appeals not only ignored dispositive leg-

islative history, but misunderstood the legislative history it did

review. Thus, the court mistakenly relied on Congress’ rejection,

in 1926, of a proposed amendment to the bill that became the

RLA that would have permitted the ICC to suspend wage agree-

ments it believed were not in the public interest.

The Court of Appeals found in language quoted from a 1926

Senate Report—“‘ ‘there was a fundamental objection to making

changes of a substantive nature in the agreement which the

parties had reached’ ”"—specific evidence of congressional hos-

tility to ICC interference with negotiated wage agreements. App.

18a. But the quoted passage in fact did not address the proposed

amendment to the RLA bill. The “agreement” to which the

Senate Report referred was not a negotiated wage agreement

(or such agreements in general), but, rather, the overall agree-

ment between management and labor as to what the RLA as a

whole should say. The quoted passage simply affirmed that the

new RLA should ratify, and not change the terms of, the na-

tional legislative compact between management and labor. S.

Rep. No. 606, 69th Cong., 1st Sess. 6 (1926), reprinted in 1

Railway Labor Act of 1926, Legislative History at 100, 105 (M.

Campbell & E. Brewer, III, eds. 1988).

What the Senate Report actually said about the proposed

amendment to the RLA bill was that it would embroil the ICC

in a “field of controversy” and thereby impair the ICC’s effec-

tiveness. Jd. In any event, the proposed amendment was not

related to the ICC’s jurisdiction over transactions, but would

have given the ICC a roving commission to suspend wage agree-

ments generally. The amendment’s rejection provides no evi-

dence that Congress intended (either prior to or after 1926) to

withhold from the ICC the authority to change labor agreements

when necessary to the carrying out of an approved transaction.

through the assertion of RLA-derived rights, in direct

disregard of clear legislative intent and what, until

now, has been the uniform understanding of the

courts.

3. This Court should review and reverse the deci-

sion of the Court of Appeals now, without awaiting

the results of the ICC remand proceeding and further

action by the Court of Appeals. The holding of the

Court of Appeals is self-contained and plainly wrong.

It is already having an enormous adverse impact on

the railroad industry.

The decision’s erroneous holding as to the reach of

the § 11341(a) exemption is reverberating through the

courts of appeals. Another panel of the Court of

Appeals has cited the holding as a proper statement

of the law. Railway Labor Executives’ Association v.

ICC, 883 F.2d 1079, 1082 (D.C. Cir. 1989). More-

over, notwithstanding its own prior decisions holding

that the § 11341(a) exemption applies to RLA-derived

rights, including the right to assert claims based on

labor agreements, the Eighth Circuit has relied on

the Court of Appeals’ decision as authority for the

proposition that the ICC lacks the power to override

the provisions of a labor agreement. Brotherhood of

Locomotive Engineers v. ICC, 885 F.2d 446, 449-50

(8th Cir. 1989).

This Court’s eventual consideration of the Court of

Appeals’ July 25, 1989 decision will not be assisted

by the outcome of the remand proceeding that is now

in progress at the ICC. That proceeding, limited by

the “law of the case” established by the Court of

8 Under 28 U.S.C. § 2343, all ICC decisions may be reviewed

in the District of Columbia Circuit.

Appeals, offers at best the promise that the ICC will

articulate an artificially narrow conception of its In-

terstate Commerce Act powers. Although the ICC can

support its actions in our case without relying on the

§ 11341(a) exemption as the source of authority to

override agreements, it defies history, the uniform

case law, and decades of clear congressional intent

for the agency to have to do so; and the analysis

that the ICC must necessarily put forth in order to

do so will be incomplete. Moreover, this Court will

not benefit from the Court of Appeals’ own review

of the ICC’s remand decision, as that review will

necessarily be conducted on a foundation consisting

of the court’s already-established erroneous reading

of § 11341(a).*

The ICC itself has acquiesced in the Court of

Appeals’ § 11341(a) holding and is handling other

cases under the cloud of that acquiescence. See pages

18-19, n.23, above. If this Court does not reverse the

Court of Appeals now, the ICC will continue to im-

pose an incorrect, restrictive limitation on the reach

of its own power. Parties to pending and future rail-

road transactions will be forced to make innumerable

business decisions shaped by the knowledge that the

ICC is applying the incorrect rule. This problem is

severe; to the extent that the Court of Appeals’ de-

cision dictates unquestioned adherence to existing la-

bor agreements, it threatens to prevent future railroad

consolidations, in violation of the national transpor-

* This point is brought home by the Court of Appeals’ own

suggestion that its holding as to the reach of the § 11341(a)

exemption may leave little for the ICC to consider on remand.

App. 23a-25a.

tation policy and in derogation of the proper adju-

dicative role of the ICC.

Finally, the Court of Appeals’ decision destabilizes

ordinary day-to-day dealings between labor and man-

agement in the railroad industry. As happened in this

case, railroads frequently conduct coordinations of

work under authority of decisions previously rendered

in ICU merger and control proceedings, subject to the

protect've .onditions already imposed by the ICC in

those proceedings; in connection with such coordi-

nations, the railroads negotiate (and, when necessary,

arbitrate) implementing agreements with their unions

on an ongoing basis, without returning to the ICC at

all unless an arbitration award is appealed. Because

the Court of Appeals’ decision rejects the settled un-

derstanding of the working and effect of the ICC

approval process, it promises to stifle the continuing

implementation of already-approved railroad consoli-

dations.

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be granted.

December 28, 1989

Respectfully submitted,

JEFFREY S. BERLIN

(Counsel of Record)

MARK E. MARTIN

RICHARDSON, BERLIN & MORVILLO

2300 N Street, N.W.

Suite 625

Washington, D.C. 20037

(202) 663-8902

WILLIAM P. STALLSMITH, JR.

Three Commercial Place

Seventeenth Floor

Norfolk, Virginia 23510

(804) 629-2815

Attorneys for Petitioners

APPENDIX A

United States Court of Apprals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 25, 1989 Decided July 25, 1989

No. 88-1724

BROTHERHOOD OF RAILWAY CARMEN, et al., PETITIONERS

INTERSTATE COMMERCE COMMISSION AND

UNITED STATES OF AMERICA, RESPONDENTS

CSX TRANSPORTATION, INC., INTERVENOR

No. 88-1694

AMERICAN TRAIN DISPATCHERS’ ASSOCIATION, PETITIONER

Vv.

INTERSTATE COMMERCE COMMISSION and the

UNITED STATES OF AMERICA, RESPONDENTS

NORFOLK & WESTERN RAILWay Co. and

SOUTHERN RAILWAY CO., INTERVENORS

Petitions for Review of Orders of the

Interstate Commerce Commission

William G. Mahoney, with whom John O’B. Clarke,

Jr. was on the brief, for petitioners.

John J. McCarthy, Jr., General Counsel, Interstate

Commerce Commission, with whom Rotert S. Burk, Gen-

eral Counsel, and Henri F. Rush, Deputy General Coun-

sel, Interstate Commerce Commission, were on the brief,

for respondent. Robert J. Wiggers and John J. Powers,

lll, Attorneys, Department of Justice, also entered ap-

pearances for respondent.

James S. Whitehead, for intervenor in No. 88-1724.

Jeffrey S. Berlin, with whom Mark E. Martin, Amy R.

Doberman and William P. Stalismith, Jr., were on the

brief, for intervenors in No. 88-1694.

Before: WALD, Chief Judge, and Epwarps and D.H.

GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge D.H.

GINSBURG.

D.H. GinsBurG, Circuit Judge: The Brotherhood of

Railway Carmen and the American Train Dispatchers’

Association petition for review of orders of the Interstate

Commerce Commission issued in separate proceedings be-

fore that agency. We dispose of the two cases together

because they raise common issues with respect to the

ICC’s authority to exempt a party to a merger between

railway carriers subject to approval under § 11344 of

the Interstate Commerce Act, 49 U.S.C. § 10101, et seq.

(the Act), from the provisions of (1) a Collective Bar-

gaining Agreement (CBA); and (2) the Railway Labor

Act, 45 U.S.C. § 151, et seg.

Because we conclude that the ICC has misperceived,

in one important respect, the scope of its exemptive

power, we grant each petition for review in part, and

remand the cases to the ICC for further proceedings.

I. FACTUAL BACKGROUND

The operative facts of the two transactions here at

issue, and the background of the respective administra-

tive proceedings, are as follows:

A. The Carmen’s Case

In 1980, the ICC approved a proposal under which

CSX Corporation, a newly-formed holding company,

would acquire control of two other holding companies:

(1) the Chessie System, Inc., the principal railroad sub-

sidiaries of which were the Chesapeake and Ohio Railway

Company (C&O) and the Baltimore and Ohio Railroad

Company; and (2) Seaboard Coast Line Industries, Inc.,

the parent of the Seaboard Coast Line Railroad (Sea-

board) (later to become CSX Transportation, Inc., or

CSX). CSX Corporation—Control—Chessie System, Inc.,

and Seaboard Coast Line Industries, Inc., 363 I1.C.C. 521

(1980) (CSX Control).

In its order approving the transaction, the ICC im-

posed upon the parties a standard set of labor-protective

conditions, as required by § 11347 of the Act, 49 U.S.C.

§ 11347. CSX Control, 363 I.C.C. at 588-92, 604. As

usual in merger cases, the applicable conditions were

transplanted from the ICC’s decision in New York Dock,

360 1.C.C. 60, 84-90 (1979), aff'd, New York Dock Ry.

v. United States, 609 F.2d 83 (2d Cir. 1979). Section 4

of the New York Dock conditions establishes procedures

for the resolution—by means of negotiation and, failing

that, binding arbitration—of any labor dispute arising

from an ICC-approved railroad consolidation. Accord-

ingly, § 4 requires a “railroad contemplating a transac-

tion which . . . may cause the dismissal or displacement

of any employees, or rearrangement of forces [to] give

at least ninety .. . days written notice... .” Section 2

is a status quo provision:

The rates of pay, rules, working conditions and all

collective bargaining and other rights, privileges and

benefits . . . under applicable laws and/or existing

collective bargaining agreements or otherwise shall be

preserved unless changed by future collective bar-

gaining agreements.

In 1986, CSX, invoking §4 of the New York Dock

conditions, notified the labor organizations representing

its employees that it intended to close its freight car

repair shop at Waycross, Georgia, and to transfer the

work performed there to the C&O repair shop at Race-

land, Kentucky, and that the transfer would result in a

net decrease in available jobs at the two shops. The

Brotherhood then attempted, on behalf of certain CSX

employees who would be affected by the transfer, to nego-

tiate an agreement governing the labor-related changes

that the Waycross-Raceland consolidation would require.

Relations between the Brotherhood (and other unions)

and CSX were governed by a CBA—known as the

“Orange Book”—that they had negotiated in connection

with the 1967 merger that created Seaboard; CSX and

the Brotherhood continued to observe these terms after

the 1980 CSX Control transaction. The Orange Book

provides, with exceptions not here relevant, that the

carrier will employ each covered employee for the re-

mainder of his working life, and that no covered em-

ployee “shall be deprived of employment or placed in a

worse position with respect to compensation, rules, work-

ing conditions, fringe benefits or rights and privileges

pertaining thereto at any time during such employment.”

In consideration for this job protection, the Orange Book

gives the carrier the right “to transfer the work of the

employees protected [t]hereunder throughout the merged

or consolidated [i.e., Seaboard] system... .”

The negotiations between CSX and the Brotherhood

failed due to disagreements as to (1) whether displaced

Waycross employees would retain their Orange Book

right to lifetime income; and (2) whether (a) the Way-

cross-Raceland consolidation would result in a change in

working conditions, and, if so, (b) CSX would be re-

quired to comply with the terms of §6 of the RLA, 45

U.S.C. § 156, and thus to bargain before effecting the

change. The Brotherhood then invoked the mandatory

arbitration provision of the New York Dock conditions,

but shortly thereafter, reversed its position and claimed

that because the shop consolidation was not contemplated

by the CSX Control transaction, the New York Dock

conditions were not applicable at all. By then, however,

CSX had invoked arbitration under the New York Dock

conditions, and the matter came before a three-member

arbitration panel (the Carmen Committee), with the

Brotherhood participating under protest.

In the proceedings before the Committee, it became

clear that CSX sought not only to transfer work from

Waycross to Raceland and to reduce the total number of

positions, but also (1) to transfer certain Waycross

employees to employment by the C&O in Raceland and

(2) to remove them from the protection of the Orange

Book to coverage under the CBA between the C&O and

the Union, which apparently does not contain a lifetime

income clause. The Committee held that the Orange Book

prohibited CSX from transferring either work or em-

ployees outside the Seaboard system created by the 1967

merger. The ICC did not pass upon that determination,

but CSX, which has intervened in this appeal, does not

dispute it.

The Committee then held; however, that (1) it had the

power, “[a]Js a quasi-judicial extension of the ICC” to

abrogate provisions of a CBA, and to relieve CSX from

any requirement of the RLA, that stood in the way of

an operational change, such as the shop transfer, that

was “authorized or required” by—though not specifica!!y

referenced in—the CSX Control decision approving the

1980 merger; and (2) it would (a) abrogate the Orange

Book prohibition on the transfer of work, but not on the

transfer of employees, outside the old Seaboard system,

and (b) exempt CSX from the RLA insofar as it might

require the carrier to bargain before unilaterally chang-

ing the Orange Book with respect to the work transfer.

The ICC upheld the Committee in other respects, but

reversed the Committee’s decision not to abrogate the

Orange Book prohibition on the transfer of employees as

well as work. The ICC further held that, to the extent

that switching CSX employees from the Orange Book to

the CBA at Raceland would deprive them of their right

to income for life, that right would be abrogated. It did

not pass upon the question whether the Orange Book did

in fact prohibit the transfer of either work or employees

but assumed as much.

In its petition for review, the Brotherhood challenges

the ICC’s authority under the Act to override provisions

of the Orange Book and of the RLA. It also claims that

the ICC’s decision, insofar as it overrides the Orange

Book, violates the Compensation Clause of the Fifth

Amendment to the Constitution. Finally, it challenges

the standard of review that the ICC applied in reversing

the Committee’s ruling against employee transfers.

B. The Dispatchers’ Case

In March 1982, the ICC approved the application of

NWS Enterprises, Inc. (now Norfolk Southern, or NS),

a holding company, to acquire control of two previously

separate carriers—the Norfolk and Western Railway

Company (N&W) and the Southern Railway Company

(Southern). Norfolk Southern Corp.—Control—Norfolk

& Western Ry. Co., 366 I.C.C. 178 (1982) (NS Control).

As in The Carmen’s Case, the ICC imposed upon the

parties to the transaction the standard New York Dock

conditions. Jd. at 231.

The American Train Dispatchers’ Association was the

bargaining representative of certain N&W employees re-

sponsible for power distribution. In September 1986,

N&W and Southern informed the Association that they

intended “to coordinate certain [N&W] work performed

in the System Operations Center . . . in Roanoke, Vir-

ginia into the [Southern] Control Center in Atlanta,

Georgia,” and in so doing, to abolish several supervisory

positions at Roanoke. The carriers proposed an imple-

menting agreement whereby the affeeted N&W super-

visors would be “given consideration” for employment in

new positions as Superintendents in Atlanta. Superin-

tendents there were considered management employees,

however, and were not covered by any CBA.

Attempts to negotiate an implementing agreement

foundered over the Association’s contentions that (1)

the carriers’ proposal was subject to mandatory bar-

gaining under the RLA; (2) the carriers were re-

quired to preserve the right of the transferred em-

plovees to representation under RLA §2, Fourth, 45

U.S.C. §152, Fourth; and (8) the affected employees

were entitled to retain their rights, including their sen-

iority rights, under the CBA with N&W. The carriers

then asked the National Mediation Board to appoint an

arbitrator pursuant to the New York Dock conditions.

As in The Carmen’s Case, the dispute came before a

three-member arbitration committee (the Dispatchers’

Committee), which ruled in favor of the carriers on each

of the disputed issues.

- The rationale of the Dispatchers’ Committee with re-

spect to the CBA and the RLA was essentially the same

as that of the Carmen Committee. It concluded that (1)

it had the power to abrogate any CBA or RLA provision

that impeded implementation of the ICC-approved merger

of the N&W and the Southern; (2) the transfer of dis-

tribution functions, though not specifically considered in

the NS Control case, was part of the control transaction;

and (3) apparently because application of the N&W

CBA to Superintendents at Southern would impede the

transfer, transferred employees could not retain their

rights under that CBA.

On June 6, 1987, after the ICC had denied the Asso-

ciation’s application for a stay of the Committee’s award,

the carriers effected the work transfer authorized

thereby. On June 10, 1988, the ICC affirmed the Com-

mittee in all respects, stating, in particular, that the

Committee’s third ruling was supported by the record

insofar as “[i]mposition of the collective bargaining

agreement would jeopardize the transaction because the

work rules it mandates are inconsistent with the car-

riers’ underlying purpose of integrating the power dis-

tribution function.” The ICC also rejected the Associa-

tion’s claim that the transfer would deprive the em-

ployees of their right to representation under Section 2,

Fourth of the RLA, reasoning that “[the Association’s]

rights as an incumbent bargaining representative are for

determination by the National Mediation Board.”

In its petition for review, the Association maintains

that the ICC lacks authority under the Act to relieve

the carrier of its obligation under the RLA and its CBA,

and that its decision depriving the employees of their

rights under the CBA violates the Compensation Clause

of the Fifth Amendment.

II. LEGAL BACKGROUND

Before taking up the merits of this dispute, we discuss

briefly the relevant statutory framework, the agency’s

position below, and its claim to Chevron deference for

that position in this court.

A. Statutory Background

Sections 11341 and 11344 of the Act require that the

parties to certain transactions listed in § 11343, includ-

ing carriers proposing to merge, first get ICC approval.

49 U.S.C. §§11841, 11343, 11844(a), (ce). Under

§ 11344(c), the ICC must approve any such proposal

“when it finds the transaction is consistent with the

public interest.” As noted earlier, § 11347 requires that

it also impose upon the merging carriers certain labor

protective conditions; and it generally meets this require-

ment by imposing the New York Dock conditions de-

scribed above.

Section 11841(a) provides that upon ICC a -a]

a § 11343 transaction: , pproval of

A carrier . . - participating in that approved .. .

transaction is exempt from the antitrust laws and

from all other law, including State and municipal

law, as necessary to let that person carry out the

transaction, hold, maintain, and- operate property,

and exercise contro] or franchises acquired through

the transaction.

49 US.C. §11341(a). This is the so-called immunity

provision at the center of this case.

B. The Agency's Position

In its decisions in these cases, the ICC asserted that

it has the power, which devolves upon an arbitration

committee convened under §4 of the New York Dock

conditions, to relieve a party to a £11343 transaction

from any provision of a CBA or of the RLA that stands

in the way of implementing that transaction. Its ra-

tionale for this assertion was less than clear, however,

due largely to its failure to analyze separately the statu-

tory provisions upon which it relied and their relation

to the specific rights it purported to abrogate.

1. Collective Bargaining Agreements

The ICC appears to have relied upon two bases for its

claim that it may abrogate the provisions of a CBA.

First, it cited the immunity provision, § 11341(a), stat-

ing that it empowered an arbitrator appointed under the

New York Dock conditions “to override existing agree-

ments by requiring the work and employees to be

moved ... .” Carmen, Joint Appendix (J.A.) 204; id.

» 10a

at 207 (Committee correctly understood ICC’s view to be

that £11341(a) overcomes “all legal obstacles preventing

implementation” of an approved § 11343 transaction) ;

accord Dispatchers, J.A. 290-91. As both Committees

noted. the ICC had come to this position only recently, in

Denver and Rio Grande Western R.R. Co.—Trackage

Rights—Missouri Pacific R.R. Co., Finance Docket 30,000,

served Oct. 25, 1983 (DRGW), rev’d sub nom Brother-

hood of Locomotive Engineers v. ICC, 761 F.2d 714 (D.C.

Cir. 1985), rev'd on other grounds, 482 U.S. 270 (1987).

Cf. Southern Ry. Co.—Control—Central of Georgia Ry.

Co.. 331 L.C.C. 151, 170 (1967) (immunity provision does

not relieve carrier from CBA limitation on transfer of

employees).

In The Carmen’s Case, the ICC appeared also to rely

upon § 4 of the New York Dock conditions, which it read

as supporting the Committee’s ruling that it had “the

absolute authority . . . to effect changes in work and

employee assignments,” notwithstanding any CBA pro-

vision to the contrary. J.A. 207.

~ The ICC renews each of these theories on appeal.

2. The Railway Labor Act

The ICC also appears to have advanced two sources

for its power to override the RLA. First, it stated that

the immunity provision exempts the parties to an ap-

proved § 11343 transaction from any RLA procedure that

might impede the effectuation of the transaction. Carmen,

J.A. 204-05, 207 (recounting, and apparently approving,

the Committee’s conclusion “that, under the immunity

provisions of [§] 11341(a), implementation of transac-

tions that we authorize under [§] 11348, such as CSX

Control, supersede employee protections under the RLA”) ;

accord Dispatchers, J.A. 290. The ICC had reached sim-

ilar conclusions in DRG, supra, and in Union Pacific

Corp.; Union Pacific R.R. Co. and Missouri Pacific R.R.

Co.—Control—Missouri-Kansas-Texas R.R. Co., et al.,

lla

4 I1.C.C. 2d 409, 514 (1988), a petition for review of

which is currently pending before this court, see Rai/way

Labor Exccutives Ass’n v. ICC, No. 88-1391 (argued

April] 28, 1989).

Second, the ICC stated that “[t]he mandatory arbi-

tration provisions of New York Dock take precedevice

over the RLA dispute resolution procedures in transac-

tions approved by this Commission .. . .” Dispatchers

J.A. 289; accord Carmen, J.A. 204. As we read it, the

ICC’s position was that when Congress enacted the cur-

rent version of § 11347, which incorporates by reference

a set of dispute resolution procedures culminating in man-

datory arbitration, it intended those procedures to be ex-

clusive where they applied. Although it nowhere ex-

pressly abandons this theory, the ICC does not argue it

in this court; it relies solely upon its § 11341(a) theory.

C. Chevron Deference

The ICC argues that its interpretation of the relevant

provisions of the Act is entitled to deference under the

principles set forth in Chevron U.S.A. Inc. v. Natural Re-

sources Defense Council, Inc., 467 U.S. 837, 842-45 (1984),

and that we should therefore uphold that interpretation

as long as it is reasonable. We agree that Chevron ap-

plies to the ICC’s reading of the statute that it is charged

with implementing. Chevron establishes, however, two

steps for judicial review of an agency’s interpretation of

law: we do not proceed to the question whether the

agency’s interpretation is permissible, and thus entitled

to deference, unless we have first determined, based upon

the language of the statute and the “traditional tools of

statutory construction,” id. at 843 n.9, that Congress

has not “directly spoken to the precise question at is-

sue ...; for the court, as well as the agency, must give

effect to the unambiguously expressed intent of Con-

gress.” Id. at 842-43. We strike out first in search of

a te hd ie ie Oi i ee ek ee me =

12a

Congress’s intent in enacting the immunity provision of

the Act.

III. ANALYSIS

“In ascertaining the plain meaning of the statute, the

court must look to the particular statutory language at

issue, as well as the language and design of the statute

as a whole.” K-Mart Corp. v. Cartier, Inc., 108 S. Ct.

1811, 1817 (1988). We begin, as always, with the rele-

vant portion of the statute (§ 11341 (a) ):

.. . A carrier or corporation participating in or

resulting from a transaction approval by or exempted

by the Commission under this subchapter may carry

out the transaction, own and operate property, and

exercise control of franchises acquired through the

transaction without the approval of a State author-

ity. A carrier, corporation, or person participating

in that approved or exempted transaction is exempt

from the antitrust laws and from all other law, in-

cluding State and municipal law, as necessary to let

that person carry out the transaction, hold, main-

tain, and operate property, and exercise control or

franchises acquired through the transaction.

A. Collective Bargaining Agreements

We cannot sustain the ICC’s position that this provi-

sion empowers it_to override a CBA. First, and most im-

portant, the ICC’s position finds no support in the lan-

guage of the statute. By its terms, § 11341(a) contem-

plates exemption only from “the antitrust laws and

from all other law” to the extent necessary to carry out

the transaction. Nowhere does it say that the ICC may

also override contracts, nor has it ever, in any of the

various iterations since its initial enactment in 1920,

included even a general reference to “contracts,” much

less any specific reference to CBAs. Nor has the ICC

explained how we can read the term “other law,” as it

has done, to mean “all legal obstacle>.” Dispatchers, J.A.

207. None of the Supreme Court accisions, discussed

_—

13a

below, authorizing the ICC to abrogate an “other law”

even suggests that ‘the term means “all legal obstacles.”

The ICC itself, prior to its 1983 decision in DRGW,, rec-

ognized as much. Sce Gulf, Mobile & Ohio R.R. Co.—

Abandonment, 282 I.C.C. 311, 335 (1952) (“None of

the decisions in the [Supreme Court] cases . . . relates

to private contractual rights, but refers [sic] to State

laws which prohibit in some way the carrying out of the

transaction authorized.’’).

Moreover, the FCC’s proposed insertion of “all legal

obstacles” into the statutory language would lead to most

bizarre resu'ts. Uncer the ICC’s reading, it could set to

naught, in order to facilitate a merger, a carrier’s solemn

undertaking, in a bond indenture or a bank loan, to

refrain from entering into any such transaction without

the consent of its creditors. Cf. Gulf, Mobile & Ohio,

282 1.C.C. at 331-35 (declaring itself without power, in

an abandonment context, to relieve a carrier from its

“contractual obligations for the payment of rent”). We

do not think it likely that Congress would grant the ICC

a power with so much potential to destabilize the rail-

road industry; we are confident, however, that it would

not do so without so much as a word to that effect in the

statute itself. Never, either in its decisions here under

review or in prior cases, has the ICC offered any justi-

_ fication for this most unlikely reading of the Act.

Perhaps we could tolerate the ICC’s reading if it found

strong support in either the “design of the statute as a

whole,” K Mart, 108 S.Ct. at 1817, or in its legislative

history. We find noting there upon which to sustain it,

however; if anything, both tend to support the meaning

conveyed by the words of the statute itself.

Congress first introduced the immunity provision, in a

somewhat different form, in 1920. Transportation Act,

1920, 66th Cong., 41 Stat. 456, 482 (1920) (amending

§5 of the Act) (1920 Act) § 407. In the 1920 Act,

l4a

Congress deputized the ICC to design a master plan to

consolidate the nation’s railroads into a limited number

of strong systems; the plan was to be implemented by

voluntary action on the part of the carriers. 41 Stat. 481

(§§5(4), 5(6), See generally Schwabacher v. United

States, 334 U.S. 182, 191-93 (1948). It also, for the first

time, gave the ICC exclusive jurisdiction to approve rail-

road consolidations; the agency was directed to approve

any proposed consolidation that it found to be consistent

with (1) its master plan; and (2) the public interest.

(Congress removed the first criterion when, in 1940, it

discarded the idea of a master plan. See id. at 193.)

The immunity provision of the 1920 Act provided

that:

The carriers affected by any order made under the

foregoing provisions of this section and any corpo-

ration organized to effect a consolidation approved

and authorized in such order shall be, and they are

hereby, relieved from the operation of the “antitrust

laws,” . .. and of all other restraints or prohibi-

tions by law, State or Federal, in so far as may be

necessary to enable them to do anything authorized

or required by any order made under and pursuant

to the foregoing provisions of this section.

41 tat. 482 (§ 5(8) (emphasis added) ).

It is reasonably clear from the history of the 1920 Act

what Congress intended the immunity provision to ac-

complish. In 1917, President Wilson, in the exercise of

his wartime powers, had taken possession of the rail-

roads, in part :o consolidate them into a unified trans-

portation system in aid of the national defense. See

Priorities Act, 65th Cong., 40 Stat. 272 (1917); Federal

Control Act, 65th Cong., 40 Stat. 451 (1918). See gen-

erally 32d Annual Report of the Interstate Commerce

Commission (1918) (1918 Annual Report) at 1-2. Prior

to that time, the ICC’s authority over the railroads was

relatively limited; the States, on the other hand—through

15a

their ratemaking commissions, their corporation laws,

and their police powers—intensively regulated the car-

riers’ rates, finances, and operations. Whereas state reg-

ulation had at first severely hampered efforts to enlist

the railroads in the war efforts, Schwabacher, 334 U.S.

at 191, during the period of nationalization, neither state

nor federal law stood in the way of the Government’s

purpose to further the war effort.

In 1920, when the period of federal control was about

to end. Congress thought it imperative to the trans-

portation needs of the nation that a program of coordina-

tion and consolidation be continued; this it chose to

pursue, in part, by facilitating voluntary consolidations

in accordance with the master plan the ICC was to de-

velop. Jd. at 191-94. See H. Rep. No. 456, 66th Cong. at

6-7, 18-19 (1919); H. Rep. No. 650, 66th Cong. at 643-

64 (1920). See generally I.L. Sharfman, The Interstate

Commerce Commission 153-70, 183 (1931). The carriers’

return to private ownership, however, would bring with

it two complications.

First, they would be again subject to regulation by the

uncoordinated and often unfriendly state commissions

and legislatures. As the Supreme Court stated in Tran-

sit Commission v. United States, 289 U.S. 121, 127

(1933) :

. . . Prior to the Transportation Act, 1920, regula-

. tions coincidentally made by federal and state au-

thorities were frequently conflicting, and often the

enforcement of state measures interfered with, bur-

dened and destroyed interstate commerce. Multiple

control in respect of matters affecting such trans-

portation has been found detrimental to the public

interest as well as to the carriers. Dominant federal

action was imperatively called for.

See also Texas v. United States, 292 U.S. 522, 530-31,

534-35 (1933) (in order “to insure an adequate trans-

portation system” Congress gave the ICC power “to au-

16a

thorize consolidations, purchases, leases, operating con-

tracts, and acquisition of control,” to the exclusion of

state laws that would burden the ICC’s master plan).

Second, they would be newly subject to regulation by

the recently invigorated antitrust laws of the federal

Government itself; the Supreme Court had recently held

that §1 of the Sherman Act made unlawful any merger

between carriers that eliminated competition to even a

limited extent. See United States v. Union Pacific R.R.

Co., 226 U.S. 61, 88-89 (1912).

Congress addressed both of these problems with the

immunity provision of the 1920 Act. First, Congress

placed in the ICC, and removed from the antitrust courts,

the duty of considering the anticompetitive effects of any

merger proposed to it. 41 Stat. 481 (§5(4)) (ICC mas-

ter plant to preserve competition “as fully as possible”) ;

McLean Trucking Co. v. United States, 321 U.S. 67, 73-

78 (1944). Second, Congress continued its wartime pol-

icy to centralize supervision of the nation’s railroads and

to eliminate conflicting state authority; thus, for ex-

ample, ICC-approved consolidations could go forward,

gided by the immunity provision, free of interference by

the States. This general, centralizing sentiment was

echoed in other sections of the 1920 Act, which gave the

ICC authority, notwithstanding contrary state law, to

(1) approve any extension, construction, or abandon-

ment of tracks, see 41 Stat. 477-78 (§§ 1/18), 1/20));

Transit Commission, 289 U.S. at 126-28; (2) reject or

permit any proposed issuance of securities, 41 Stat. 494-

95 (£$ 20a(2), 20a(7)); and (3) adjust rates it deemed

unduly preferential or discriminatory, id. at 484 (§ 13

(4)).

The ICC applied the immunity provision of the 1920

Act to exempt merging carriers from a wide variety of

state law impediments. See, e.g., Clinchfield Ry. Lease,

90 LC.C. 113, 134 (1924) (constitutional bar to foreign

17a

corporation operating railroad in state): ; id

Operation of Louisiana & Arkansas C ney! ; C

477, 487 (1929) (law forbidding consolidation, stock

ownership, or lease of parallel or competing lines) ; Con-

trol of San Antonio & Arkansas Pass Ry. by Southern

Pacific Co., 94 I.C.C. 701, 704 (1925) (local corporate

headquarters requirement); Lease of Louisville. Hender-

son & St. Louis Ry. by Louisville & Nashville RR. Co

150 LC.C. 741, 743-44 (1929) (law giving minority

stockholders appraisal rights prior to sale of corporate

property). And the Supreme Court consistently upheld

its application. See, e.g., Seaboard Air Line R.R. Co. v

Daniel, 333 U.S. 118, 124-27 (1948) (local incorporation

law); Texas v. United States, 292 U.S. at 531-35 ( local

corporate headquarters).

Thus, in the 1920 Act, Congress “ma

ture,” Railroad Commission of Wiest . thie

Burlington & Quincy R.R. Co., 257 U.S. 563, 585 (1922).

pressing for consolidation of the nation’s railroads in a

legal environment that had long been hostile to such a

notion. | When, upon the recommendation of the ICC. see

Extension of Tenure of Government Control of the Rail.

roads: Hearings Before the Committee on Interstate

Commerce, United States Senate on the Extension of

Time for Relinquishment by the Government of Railroads

to Corporate Ownership and Control, 65th Cong. Vol. 1

at 231-305, 339-377 (1919) (remarks of ICC Commis.

sioner Edgar E. Clark); Return of the Railroads to

Private Control: Hearings Before the Committee on In-

terstate and Foreign Commerce of the House of Repre-

sentatives on H.R. 4378, 66th Cong. at 8-139, 2857-2966

(1919) (same), it enacted into law a voluntary consoli-

dation/immunity program—which the ICC had originally

advocated in 1917, see Report of the ICC to the Senate

and House of Representatives, 56 Cong. Rec. 45, 65th

Cong., H. Doc. 503 (Dec. 5, 1917) (reprinted in 1918

Annual Report at 5-7)—it clearly meant to change that

legal environment.

18a

From our review of this history, we are confident that

Congress did not intend, when it enacted the immunity

provision, to override contracts. First, Congress focused

nearly exclusively, in the hearings and debates on the

1920 Act, on specific types of laws it intended to elimi-

nate—all of which were positive enactments, not common

law rules of liability, as on a contract. Cf. Aszociation

of Flight Attendants v. Delta Air Lines, Inc., No. 87-

7040, slip op. at 23 (D.C. Cir. July 18, 1989). Indeed,

Commissioner Clark, who presented the immunity idea

to the House and Senate Commerce Committees in the

hearings cited above, did not once suggest, over the course

of several days and several hundred pages, that the pro-

posed immunity might relieve a carrier of its obligations

under negotiated agreements with third parties.

Moreover, in the legislative debates both on the 1920

Act and in 1926, when in the RLA it provided a frame-

work for the regulation and enforcement of CBAs in the

railroad industry, Congress exhibited a healthy respect

for privately negotiated contracts; it rejected, for ex-

ample, an amendment to the RLA that would have

granted the ICC the power to suspend excessively gen-

erous wage agreements between carriers and their em--—

ployees, in part on the ground that legislation abrogating

labor agreements would be unconstitutional, see 67 Cong.

Ree. 8884-86, 8892-93, 8896-97, 9190-91, 9196-97 (1926),

and in part on the grounds that “there was a fundamen-

tal objection to making changes of a substantive nature

in the agreement which the parties had reached,” and

that “[i]f agreement is to be resorted to [as a means of

resolving labor management disputes], . . . the agree-

ment should not be destroyed by placing in the act pro-

visions which would have that effect.” S. Rep. No. 696,

69th Cong. at 5-6 (1926). And never, on the several

occasions when Congress has revisited the immunity pro-

vision, has it either broadened that provision so as to

reach “all legal obstacles” to an ICC-approved transac-

tion, or acted more specifically to bring “contracts” or

19a

“collective bargaining agreements” within the reach of

the statute.

Against this history as background, we can not im-

pute to Congress the intention to make the bargained-

for provisions of a CBA contingent upon their not later

becoming inconvenient to the full realization of operating

economies that a merger might make possible. Cf. Asso-

ciation of Flight Attendants, supra, slip op. at 23. We

recognize that other forces may operate to abrogate a

CBA in the post-merger context, as, for example, when

the NMB, pursuant to its power under § 2, Ninth of

the RLA, 45 U.S.C. § 152, Ninth, decertifies a union

following an operational merger. See, e.g., International

Brotherhood of Teamsters v. Texas Int'l Airlines, Inc.,

717 F.2d 157, 161 (5th Cir. 1983). We simply do not

think that Congress has lodged any such power in the

ICC, particularly where, as in each of these cases, the

CBAs at issue survived the ICC-approved merger and

were not, apparently, questioned by the parties thereto

unti] the present disputes arose—several years after the

merger.

B. The Railway Labor Act.

At least one court of appeals has held that the im-

munity provision of the Act may operate to override pro-

visions of the RLA. Brotherhood of Locomotive Engi-

neers v. Chicago & Northwest Ry. Co., 314 F.2d 424, 431-

82 (8th Cir. 1963). We decline to address the question

here, however, for two reasons.

First. The Unions question whether the ICC has the

power to apply the immunity provision at all. They note

that §11341(a) is in terms “self-executing,” which we

take to mean that its effect is not to be determined by

the ICC when it passes upon a transaction, but rather

by the appropriate tribunal] for the resolution of a par-

ticular case in which it is invoked by a carrier as a de-

fense to the application of some “other law.” They draw

20a

support for this position from two footnotes in Justice

Stevens's concurring opinion in JCC v. Brotherhood of

Locomotive Eng'rs, 482 U.S. 270, 300 nn. 18 & 14 (1987),

in which the four Justices to reach the merits so opined.

It is true that the ICC has in the past itself taken

this position. See Chicago, St. Paul, Minneapolis &

Omaha Ry. Co, Lease, 295 1.C.C. 696, 702 (1958) (noth-

ing in the Act “authorizes us to determine and declare

the particular laws within the scope of [the immunity

provision] from which a carrier shall be relieved. The

terms of [the provision] are self-executing, and there is

no need for this Commission expressly to order or declare

that a carrier be relieved from certain restraints. It is

sufficient if we make clear what the carrier is authorized

to do, Congress has not conferred upon us the power

to determine the disputes which are subject to the Rail-

way Labor Act....”) (citation omitted).

The ICC’s statement in Chicago, St. Paul is correct to

the extent that it means that the Commission is not

required to determine what the effect of the immunity

provision will be; the Supreme Court has long so held.

New York Central Securities Corp, v. United States, 287

U.S. 12, 26-27 (1932) ; Claiborne-Annapolis Ferry Co. v.

United States, 285 U.S. 382, 891 (1922). The Court has

also held, however, contrary to the implication of the

first-quoted sentence from Chicago, St. Paul, that the

ICC is authorized to make a determination, in approving

a transaction, that laws standing in the way of its im-

plementation must give way. See Seaboard, 333 U.S. at

124-27; Texas v. United States, 292 U.S. at 531-35;

Schwabacher, 334 U.S. 182. See also Gulf, Mobile &

Ohio R.R. Co, Abandonment, 282 1.C.C. $11, 385 (1952)

(reading above cases as giving it the authority to set

aside “State laws which prohibit in some way the carry-

ing out of the transaction authorized”). Thus, we must

reject the Unions’ argument that the ICC lacks any power

to consider a question of exemption that is properly pre-

sented to it.

Although the ICC’s disclaimer of power in Chicago,

St. Pau! is overbroad insofar as it suggests that the ICC

never has the power to determine a particular question

of exemption, the result there can be reconciled with the

Supreme Court cases cited above. In each of those cases

the question of exemption arose before the consummation

of the approved transaction; the issue was whether the

ICC could, in the course of its approval of the transac-

tion, remove a state law barrier to its effectuation. Scc

Schwabacher, 334 U.S. at 200-01 (ICC may override

state law granting dissenting stockholders right to block

merger) ; Scaboard, 333 U.S. at 121; Texas v. United

States, 292 U.S. at 531-32. As the Unions correctly note,

Chicago, St. Paul—like the cases now before us—in-

volved a carrier's request, submitted well after the con-

summation of the ICC-approved transaction, for exemp-

tion from the RLA. The ICC declined the carrier’s re-

quest, saying:

It is apparent that the [RLA] has not prevented

the North Western from effectuating the transaction

authorized by the prior order. That order author-

ized the lease by North Western of the lines of rail-

road and other properties owned, used, or operated

by the Omaha, and this has been accomplished. The

order did not provide any particular method for in-

tegration of the physical operations involved, and,

except for the imposition of . . . conditions for the

protection of employees, did not deal with employer-

employee relationships.

295 LC.C. at 702.

The ICC’s broader disclaimer of any power to declare

a carrier exempt from a law can thus be understood in

the context in which it was presented; as the ICC inter-

preted the Act in 1958, it was without power to revisit

an approved and successfully consummated transaction

merely in order to relieve the merged carrier, after the

fact, from the burden of complying with the RLA.

22a

Even so understood, however, the ICC’s holding in

Chicago, St. Paul is still inconsistent with its current

position; the transactions here at issue had long since

been consummated when the ICC undertook to confer

upon the merged carriers immunity from the RLA be-

cause it affected the “particular method for integration

of the physical operations involved... .” 295 I.C.C. at

702.

An additional difficulty is presented by the ICC’s rul-

ing with respect to the RLA generally. The ICC’s inter-

pretation of the immunity provision, as of its 1958 de-

cision in Chicago, St. Paul, was that Congress had not

given it the power to override the RLA at all. It re-

affirmed that view in 1967 in Southern Railway Co.,

supra, when it stated that, in the absence of a stand-by

agreement among the affected carriers and unions that

would displace their existing CBAs in the event of a rail

merger, “section 6 of the [RLA] would seriously impede

mergers,” 331 I.C.C. at 170-71—a statement that would

not make sense if the agency thought it had the power

simply tu override § 6 “as necessary” to let an approved

transaction go forward.

The ICC’s current interpretation of the immunity pro-

vision departs from this view, but we have found no ex-

planation for the departure, save a citation in DRGW—

the 1983 case in which it adopted its current stance—

and decisions following it, to the Eighth Circuit’s 1963

decision in Chicago & North Western Ry., supra. Because

that case arose out of a dispute between a carrier and

the unions representing its employees, however—a dis-

pute to which the ICC was not a party—the court did

not have the beenfit of the agency’s (then presumably

contrary) views on the matter, nor did it cite any ICC

precedent in support of its conclusion (apparently be-

cause, as of that time, none existed). For the ICC now

to reverse its position solely on the basis of the court’s

holding is somewhat troubling, for three reasons. First,

23a

in 1967, in Southern Railway Co., the ICC was still of

the view, the Eight Circuit’s intervening decision not-

withstanding, that it lacked the authority to override

the RLA. Second, in light of the ICC’s close involve-

ment with the historical development of the Act, it is dis-

turbing that it would switch its position in unelaborated

reliance upon a court case, which raised the issue in a

different context and to which it was not a party, with-

out giving any independent consideration to the matter.

Third, the ICC has never related its current position to

the context of the 1920 Act in which the immunity pro-

visions first appeared; it has not, for example, related

the original immunity provision in the 1920 Act to the

comprehensive provisions of the same legislation gov-

erning labor-management relations, see 1920 Act, 41

Stat. 469-74—provisions that were, as we understand

the legislative sequence, the immediate precursor to the

RLA.

It may be that the ICC has made a conscious decisiun

simply to depart from its earlier precedent. The ICC

has not, however, said that it is doing so, much less

articulated its reasons. As we stated in Oil, Chemical

and Atomic Workers Int’l Union v. NLRB, 806 F.2d 269,

273-74 (D.C. Cir. 1986), “[wJe need hardly elaborate on

the settled principle that an agency may not depart from

its precedent without explaining and justifying its change

in position.”

Second. In light of our holding that §11341{a) does

not empower the ICC to override a CBA, it is unclear

what are the consequences, if any, of its rulings that the

carriers need not comply with the RLA. In The Car-

men’s Case, the heart of the dispute before the ICC was

whether either the Commission or, derivatively, the Com-

mittee, had the power to relieve CSX from the terms of

Orange Book that, as the Committee had interpreted

them, prohibited the proposed transfer of work and of

employees. The RLA was implicated, as we understand

24a

the dispute, only insofar as the Brotherhood argued that

CSX could not unilaterally depart from the Orange Book

without first complying with the procedures of the RLA.

Recause the ICC, in response, started from a premise

(that §11841/a) gave it the power to relieve CSX of

its contractual responsibilities) and reached a concit.sion

(that the RLA could not stand in the way of that power)

that we hold was in error, it appears that nothing turns

anv longer on its conclusion. We remand the case to the

ICC for reconsideration, however, in order to enable it

to assess the sit. ‘on in the first instance.

As for The Dispatchers’ Case, the ramifications of our

CRA ruling are somewhat less clear. There the CBA

issue was whether the ICC could, by means of the im-

munity provision, relieve the N&W of obligations under

its existing CBA in connection with the transfer of su-

pervisory positions from Roanoke to Atlanta; the ICC

caid that it could, and we have held that it erred on that

point. The RLA issues, as we understand them, were (1)

whether the carriers could effect the transfer without first

complying with the procedures of the RLA; and (2)

whether the transfer, insofar as it deprived employees of

rights under their CBA, violated the RLA. The second

iesye seems to drop out of this case for the same reason

as the RLA issue appears to have become irrelevant in

The Carmen's Case: because we hold that the ICC may

not relieve the carriers of obligations under the CBA, the

question whether it would violate the RLA to do so is

purely hypothetical.

The first issue, if we are correct in stating it—the rec-

ord on this point is less than erystal clear—may yet be

alive The ICC's opinion, however, gives us pause; it

states that the continuation of the old agreement will

‘jeopardize the transaction”—by which it means not the

merger but the transfer to Atlanta—“because the work

rules it mandates are inconsistent with the carriers’

underlving purpose of integrating the power distribu-

—=-_-——

25a

tion function.” J.A. 291. Similarly, the carriers, as

intervenors here, note that had the ICC not set aside the

Roanoke CBA, its continuation “would have prevented

the contolidation from going forward... ."’ Because we

hold that the ICC was without authority to set aside that

CBA, it is unclear how the carriers will proceed. They

may find it both impractical to adhere to the Roanoke

CBA in the Atlanta setting, because it would introduce

non-uniform work rules, and uneconomical to renegotiate

the Roanoke CBA in order to achieve such uniformity:

if so, they may determine simply to transfer the ern

plovees back to Roanoke. There would then he no issre

left, so far as we can tell, regarding their duty to comply

with the procedures of the RLA.

In light of this uncertainty as to the effects of our ru!

ing on the continued vitality of the disputes hefore us, we

think it best to remand them for the ICC to determine

whether there is any live RLA issue remaining. Should

the ICC determine that further proceedings are necessary

on the RLA issue, it should, on remand, either provide

an explanation for its new position on that issue, or

adhere to its prior position.

C. Other Issues

We decline to address either the ICC's theory that the

labor protective conditions required by § 11347 of the Act

are exclusive, or its related assertion, in The Diepatchere’

Case, that $4 of the New York Dock conditions gives the

arbitration committee the “absolute right’ to effectuate

the transfer of emplovees, and to override any contrary

provisions ef a CBA. As noted earlier, the IC has not

argued the first theory to us at all; indeed, in its brief it

took the position that the proceedings in Pitfehurgh &

Lake Erie R.R. Co. v. Railway Labor Ererutives Ase'r,

— § Ct , (No. 87-1589, slip op. June 21,

1989 }(P&LE|, which was then pending hefore the Su-

preme Court, were not relevant here, even though its ex-

26a

clusivity argument before the Supreme Court would ap-

pear also to encompass both the § 11347 theory and the

$4 rationale advanced in the decisions here under re-

view. We do not consider as a basis for affirming the

decisions a ground upon which the agency places no reli-

ance on appeal. Cf. SEC v. Chenery Corp., 318 U.S. 80

(1943). In any event, we think it best for the ICC, if it

‘has not abandoned its § 11347 and §4 rationales alto-

gether, to reconsider them in the first instance in light

of the Supreme Court’s intervening decision in P&LE

rejecting the ICC’s related position.

Because we hold that Congress did not, in enacting

§ 1134i(a), give the ICC the power to override pro-

visions of a CBA, we need not address either the Unions’

arguments that to do so would be unconstitutional or

their claim that, in amendments to the Act in 1976, Con-

gress specifically preserved employees’ contractual rights.

Our decision also makes it unnecessary to reach either

(1) the Brotherhood’s argument in The Carmen’s Case

that the ICC applied an improper standard when it re

versed the Committee’s ruling in favor of the Union; or

(2) the Association’s argument that the ICC, in its deci-

sion in The Dispatchers’ Case, deprived employees of

their rights under § 2, Fourth of the RLA.

IV. CONCLUSION

Because § 11341(a) of the Act does not grant the ICC

its claimed power to override provisions of a CBA be-

tween a carrier and its employees, we grant the peti-

tions for review in that respect and reverse the ICC’s

decision. We remand the cases respect to the ICC’s

RLA holdings in order that the may determine

whether further proceedings are necessary.

It is so ordered.

27a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 88-1724

September Term, 1989

Brotherhood of Railway Carmen, et al.,

Petitioner

Vv.

Interstate Commerce Commission & USA

Respondents

CSX Transportation, Inc.

Intervenor

No. 88-1694

American Train Dispatchers’ Association,

Petitioner

Interstate Commerce Commission and the

United States of America,

Respendents

Norfolk & Western Railway Co. and

Southern Railway Company,

Intervenor

United States Court of Appeals

For the District of Columbia Circuit

FILED SEP 29 1989

CONSTANCE L. DUPRE

CLERK :

he FORE: Wald. Chief Judge; Edwards and D. H. Gins-

burg, Circuit Judges

ORDER

It is ordered, by the Court, sua sponte, that the opinion

of the Court filed on July 25, 1989 is amended as follows:

At Page 2, last line

delete the word “cases” and insert in lieu,

thereof the word “records”

At Page 24, line 9

delete the word “case” and insert in lieu

thereof the word “record’’

At Page 26, last paragraph, line 5

delete the word “cases” and insert in lieu

thereof the word ‘“‘records”’

At Page 26, last paragraph

Add the following new text:

See General Rule 15(c).

Per Curiam

FOR THE COURT:

CONSTANCE L. DUPRE, CLERK

BY: Wendy Jemus

for Robert A. Bonner

Deputy Clerk

29a

APPENDIX C

INTERSTATE COMMERCE COMMISSION

DECISION

Finance Docket No. 29430 (Sub-No. 20)

NORFOLK SOUTHERN CORPORATION—CONTROL—

NORFOLK AND WESTERN RAILWAY COMPANY AND

SOUTHERN RAILWAY COMPANY

Decided: May 24, 1988

The American Train Dispatchers Association (ATDA) seeks

review of an arbitration panel’s decision and award in Nor-

folk and Western Railway Company, Southern Railway Com-

pany, and American Train Dispatchers Association, (Harris,

May 19, 1987) (“referee’s award”). Norfolk and Western

Railway Company (N&W) and Southern Railway Company

(Southern) filed a joint reply. ATDA invokes our jurisdiction

to review the referee’s award uncer the standards an-

nounced in Chicago & North Western Tptn. Co. - Abandon-

ent, 8 1LC.C.2d 729 (1987) (the so-called Lace Curtain

decision). The carriers agree that we have jurisdiction but

urge that the arbitration decision be affirmed.

We are accepting administrative review of this arbitration

decision because it involves a dispute under the labor pro-

tective conditions imposed in Norfolk Southern Corp.—Con-

trol—Norfolk & W. Ry. Co., 366 I.C.C. 173 (1982) (Norfolk

Southern Control), and raises significant issues of general

30a

importance regarding the interpretation of those conditions.’

See Lace Curtain, supra.

Lace Curtain essentially adopted the standard enunciated

by the Supreme Court in the so-called Steelworkers Trilogy.

In reviewing arbitral resolutions of disputes arising under

collective bargaining agreements, courts do not vacate

awards because of substantive mistake unless there is egre-

gious error, the award fails to draw its essence from the

collective bargaining agreement, or the arbitrator exceeds

the specific contract limits on his authority. Loveless v. East-

orn Airlines, Inc., 681 F.2d 1272, 1275-76 (11th Cir. 1982).

We adopted similar standards.

BACKGROUND

In 1982 in Norfolk Southern Control, this Commission

authorized Norfolk Southern Corporation (NS) to acquire

control of the separate railroad systems of N&W and South-

ern under 49 U.S.C. 11343, subject to the employee pro-

tective conditions in New York Dock Ry. - Control - Brooklyn

East. Dist., 360 I.C.C. 60 (1979) (New York Dock). On Sep-

On January 5, 1988, ATDA filed a so-called supplement to its earlier

petition to review the arbitration award. It submitted a corrected filing

ven if an adverse action has occurred, it is wholly to the

instant, Geaue. The proper procedure is for petitioners to submit such

additional disputes to arbitration, where they can be resolved on their

own merits on a complete record. Aya

Uni teelworkers v. American Mfg. Co., 363 U.S. :

wed y. Warrior & Gulf Navigation Co., 363 U.S. 574

(1960); and United Steelworkers v. Enterprise Wheel & Car Corp., 363

U.S. 593 (1960).

3la

tember 12, 1986, N&W and Southern notified ATDA that

they intended to coordinate N&W’s “distribution of power’’

work from an N&W facility in Roanoke, VA, to a Southern

facility in Atlanta, GA. Distribution of power refers to the

assignment of locomotives to particular locations and trains.

At N&W, the work had been performed by Systems Op-

erations Control (SOC) supervisors who are represented by

ATDA in a collective bargaining agreement with N&W.*

Under the carriers’ coordination plan, the N&W work would

be centralized into the Southern Railway Control Center,

which would be responsible for the distribution of power for

the entire combined N&W/Southern System. The work would

be performed by Southern’s Superintendents of Transpor-

tation (ST), who historically have been considered as man-

agement employees and as such would not be subject to a

collective bargaining agreement. In a proposed implementing

agreement, N&W and Southern offered the SOC supervisors

the opportunity to follow their work by granting them first

consideration for new ST positions to be created on the

Southern, which are higher paid than the SOC positions on

the N&W.

It is the intent of the carriers ultimately to distribute

locomotive power throughout the combined system without

regard to the historical territorial division, generally north-

south, between N&W and Southern. Instead, power distri-

bution functions would be aligned along an assertedly more

*In 1964, the former New York, Chicago, and St. Louis Railroad

Company (the Nickel Plate) was merged into N&W, which agreed to

assume all the Nickel Plate labor contracts including a 1951 agreement

with ATDA. On August 2, 1968, the Nationa] Rai] Adjustment Board

in Award No, 16556 sustained ATDA’s claim that the newly established

N&W position of “power supervisor’’ embraced work subject to the

agreement. Consequently, on Apri] 1, 1971, N&W and ATDA executed

a memorandum of agreement which recognized that the distribution of

power by SOC supervisors was to be subject to the collective bargaining

agreement between N&W and ATDA. The latest such agreement, ex-

ecuted in 1979, is still in force. It is not a part of the record in this

proceeding, but there is no dispute between the parties as to its terms.

32a

efficient east-west division of the combined system. This will

permit substantial cost savings because fewer locomotives

will be needed and the remaining locomotives can be used

more efficiently. Moreover, the technology and procedures

at Southern’s Railway Control Center differ from N&W’s

in that Southern ST’s have computer access to other divi-

sions whereas the N&W SOC supervisors produce internal

information that is displayed on a board located at the cen-

ter. Thus, while N&W’s SOC supervisors were given first

consideration for the new jobs, the carriers have been un-

willing to assign the transferred SOC supervisors the same

duties and territorial responsibility they had on the N&W.

Believing that the proposed work coordination was a part

of the Norfolk Scuthern Control transaction, the carriers

opened negotiations with ATDA under Article I, section 4

of New York Dock in an effort to reach a mutually ac-

ceptable implementing agreement. After negotiations proved

unsuccessful, the carriers invoked mandatory arbitration. A

3-member pane] was selected, and a hearing held before a

neutral referee. The referee’s award found (organization

member Mahoney dissenting) that: the transfer was au-

thorized by this Commission in Norfolk Southern Control;

the arbitral issue was the proper application of New York

Dock standards; and Article I, section 4 of New York Dock

empowers the arbitral panel to modify existing collective

bargaining agreements or to approve the transfer of work

from a location subject to an agreement to a location where

no agreement will apply. Accordingly, a revised implement-

ing agreement submitted by the carriers (which granted SOC

supervisors consideration, but no priority, for ST jobs) was

placed in effect.’

‘The neutral, Mr. Harris, was selected by the National Mediation

Board (NMB) when the two partisan members were unable to agree

on a neutral.

‘The carriers’ omginal proposed agreement and ATDA’s proposed

agreement were rejected as going beyond the terms of New York Dock,

33a

In a decisior served June 10, 1987, we denied ATDA’s

petition to stay the referee’s award. Subsequently, the car-

riers effected the coordination of work and offered Southern

ST positions to all nine active and three furloughed N&W

SOC supervisors. Nine of the twelve accepted and are now

so employed; two declined and one retired. There were no

displacements of other employees.

DISCUSSION AND CONCLUSIONS

Article I, wection 2 of New York Dock requires that col-

lective bargaining rights be preserved in a section 11343

transaction. Also, the Railway Labor Act (RLA) contains

extended dispute resolution procedures and prohibits any

unilateral change in rates of pay, rules, or working condi-

tions during pendency of those procedures. However, Article

I, section 4 of New York Dock provides for compulsory,

binding arbitration of disputes. It has long been the Com-

mission’s view that private collective bargaining agre®ments

and RLA provisions must give way to the Commission-man-

dated procedures of section 4 when parties are unable to

agree on changes in working conditions required to imple-

ment a transaction authorized by the Commission.’ Absent

such a resolution, the intent of Congress that Coanmission-

authorized transactions be consummated and fully imple-

mented might never be realized. Moreover, 49 U.S.C.

11341(a) exempts from other law a carrier participating in

a section 11343 transaction as necessary to carry out the

transaction.

ATDA argues first that: (1) the transfer of locomotive

distribution functions from Roanoke to Atlanta was in vi-

olation of the RLA, and the arbitration panel’s authorization

and the parties were thus given 14 days to negotiate revisions to the

adopted agreement.

* The pane! notes (p. 14) that the arbitration pane! was created under

the New York Dock conditions and then states, “‘{A]}s a creature of the

ICC, this panel is bound to the ICC view.” We agree.

34a

of the transfer was in excess of its jurisdiction; and (2) the

Commission's approval of NS’s control of N&W and South-

ern did not exempt the carriers from the RLA in regard

to the subject transfer because (a) the coordination of lo-

comotive distribution is not a transaction subject to approval

by the Commission, and (b) the transfer was not specifically

mentioned, and thus was not exempted, in the Commission’s

authorization in Norfolk Southern Control.

In our June 10th stay decision, we rejected this line of

argument. We found that the arbitration panel’s jurisdiction

over the transfet stems from the Commission’s jurisdiction

over the control transaction. The transfer is not subject to

the RLA because the Commission, in Norfolk Southern Con-

‘rol. authorized the coordination of N&W and Southern un-

der NS, subject to New York Dock. The mandatory

arbitration provisions of New York Dock take precedence

over the RLA dispute resolution procedures in transactions

approved by this Commission because, as we stated at pp.

7 in Finance Docket No. 30532, Maine Central R.R. Co.

et al - Exemption from 49 U.S.C. 11842 and 11843 (not

printed), served September 13, 1985 (Maine Central) (quoted

in the referee's award at 12):

It is the Commission order, not RLA or [the

Washington Job Protection Agreement of ~ Ro

that is to govern employee-management relations

in connection with the approved transaction. Such

a result is essential if transactions approved by us

are not to be subjected to the risk of non-consum-

mation as a result of the inability of the partes

parhes will arrive at agreement, there can be no

assumance that the approved transacuon will ever

be effected

35a

Similarly, there can be no assurance that post-consum-

mation coordinations contemplated as part of the transaction

could ever be accomplished if RLA dispute resolution mech-

anisms were followed. Thus, the panel correctly found (ref-

eree’s award at 12-14) that terms of the Commission’s order,

and specifically the compulsory, binding arbitration required

by Article I, section 4 of New York Dock, took precedence

over RLA procedures whether asserted independently or

based on existing collective bargaining agreements. Maine

Central, supra, at 6-7. Moreover, an action taken under our

control authorization is immunized from conflicting laws by

section 1134l(a). Brotherhood of Loc. Eng. v. Chicago &

North Western Ry., 314 F.2d 424 (8th Cir. 1963). The pro-

posed transfer, although not specifically mentioned in Nor-

folk Southern Control, is one of the future coordinations and

public benefits expected to flow from, and is therefore part

of, the contro] transaction that we approved. Indeed, the

arbitration panel found that coordination of locomotive power

is precisely the type of action that might reasonably be

expected to flow from the control transaction. See referee's

award at 10-11. The carriers do not disagree. The arbitration

panel, citing Maine Central, correctly exercised its jurisdic-

tion over the dispute arising from the transfer. See Broth-

erhood of Loc. Eng. v. Chicago & North Western Ry., supra;

compare United Transp. Union v. Norfolk & Western Ry.,

822 F.2d 1114 (D.C. Cir. 1987).

Nor does the collective bargaining agreement between

N&W and ATDA impair the panel’s jurisdiction to authorize

the transfer. See Maine Central, supra, at 6, 7 n.11 (re-

jecting argument that the preservation of collective bar-

gaining rights and agreements in Article I, Section 2 of

New York Dock somehow displaced the Article I, Section

4 mechanism for resolving disputes). See also, Brotherhood

of Locomotive Engineers v. ICC, 808 F.2d 1570, 1576-78

(D.C. Cir. 1987) (collective bargaining rights normally pre-

served pursuant to Commission-imposed labor protection

conditions must give way to permit consummation of a Com-

36a

mission-approved transaction despite unilateral management

change of working conditions.) Moreover, in Finance Docket

No. 30,000 (Sub-No. 18), Denver and R. G. W. R.R. Co.—

Trackage Rights—Missouri P. R.R. Co. Between Pueblo, CO

and Kansas City, MO, et al. (not printed), served October

25. 1983, rev'd sub nom. Brotherhood of Loc. Engineers v.

ICC, 761 F.2d 714 (D.C. Cir. 1985), rev’d on other grounds

___ US. __, 107 S.Ct. 2360 (June 8, 1987), cert. den.

__ US. __, 107 S.Ct. 3209 (June 15, 1987) (DRGW), we

found that:

As UTU notes, standard labor protection con-

ditions generally preserve working conditions and

collective bargaining agreements. The terms of

those conditions, however, must be read in con-

junction with our decision authorizing the involved

transaction and the underlying statutory scheme.

To the extent that existing working conditions and

collective bargaining agreements conflict with a

transaction which we have approved, those con-

ditions and agreements must give way to the im-

plementation of the transaction. The labor

conditions imposed under [49 U.S.C.] 11347 pre-

serve conditions and agreements in the context of

the authorized transaction.

ATDA further contends that, even if the arbitration pane]

had authority to override the collective bargaining agree-

ment and the RLA, it should not have done so. Assertedly,

the transfer of power distribution work to Atlanta could

have been effected pages more be ch ag a

collective bargaining contract ‘ .

tinuation of those rights would not create a “risk of non-

consummation.” See Maine Central, supra. The jobs could

simply be transferred subject to the collective bargaining

agreement. ATDA notes that the arbitration panel made no

factual finding that abrogation of the agreement was nec-

essary to the transfer, much less to the ultimate control

transaction. Rather, the referee’s award simply states (id.

e 37a

at 15): “It is clear that if the employees who are moved to

Atlanta are consolidated with the present Atlanta employ-

ees, the present collective bargaining agreement between

N&W and ATDA may not be carried along * * *.”

In reply, the carriers acknowledge that the referee’s award

did not recite the record evidence upon which the panel

based this conclusion. However, the carriers contend that,

under the Steelworkers Trilogy standards, an arbitrator need

not give his reason for an award and is entitled to deference

in his ultimate factual findings. In any event, they argue,

the record shows that the collective bargaining agreement

would be inconsistent with and wouid frustrate the purpose

of the coordination by preventing the carriers from realign-

ing SOC job responsibilities to officer status and thus cre-

ating an integrated systemwide facility without regard to

the historical N&W-Southern separation. In their view,

ATDA’s proposal would result in covered employees being

limited to the work previously performed in Roanoke by

SOC supervisors and to their work rules and lower salary

schedule.

In Lace Curtain, we stated that ‘“{w]e do not intend to

review arbitrators’ decisions on issues of causation, the cal-

culation of benefits, or the resolution of other factual ques-

tions.”” We believe that this is precisely the nature of the

review ATDA seeks. Petitioner does not contend that the

referees’ award contains egregious error, fails to ‘draw its

essence” from the New York Dock conditions, or exceeds

the panel’s authority under New York Dock. Instead, in

regard to this issue, it criticizes the panel’s judgment and

lack of detailed discussion. These alleged shortcomings are

not matters we would review under Lace Curtain.

In any event, the record supports the conclusio: of the

arbitration panel. Imposition of the collective bargaining

agreement would jeopardize the transaction because the work

rules it mandates are inconsistent with the carriers’ under-

lying purpose of integrating the power distribution function.

38a

Moreover, ATDA’s unsupported allegation that jobs can be

transferred subject to the agreement misconstrues the na-

ture of the transaction. It is the work function, not jobs,

that will be transferred, and new jobs will be created to

perform this and other functions.

The referee’s award is somewhat confusing on the related

issue of whether Southern must recognize ATDA as the

bargaining representative of the transferred SOC supervi-

sors. Representation is a collective bargaining “right” and,

as such, is protected by Article I, section 2 of New York

Dock. The panel suggests (id. at 15) that its award abrogates

not only the collective bargaining agreement but ATDA’s

representative status as well, yet it acknowledges (ibid.) that

ATDA’s rights as an incumbent bargaining representative

are for determination by the National Mediation Board

(NMB). It also acknowledges that the former SOC super-

visors may join with the Southern ST’s as a bargaining unit

and petition the NMB for the selection of a bargaining

representative.

We find that, under the circumstances present here, New

York Dock does not preempt any NMB determination as to

representation, as the panel seems clearly to have recog-

nized. To the extent the.award could be construed as sug-

gesting otherwise, that construction is erroneous. This is not

to say that ATDA may in fact retain its status. That, as

the panel recognized, is for the NMB to determine, and we

recognize that there are legal as well as practical obstacles

to such recognition.’

’ The policy of the NMB is to recognize systemwide bargaining units.

ATDA pen points out that exceptions have been made, but the

case it relies on, Burlington Northern, Inc. v. American Railway Su-

pervisors Ass'n, 503 F.2d 58 (7th Cir. 1974), is inapposite because its

recognition of a less-than-systemwide class was based on the common

law of contracts. It is unclear whether Southern’s status as a successor

employer mandates an exception to the NMB policy.

The courts have apparently not addressed this issue under the RLA.

il eS

39a

Finally, ATDA complains that the panel improperly im-

posed the carriers’ proposed implementing agreement and

not ATDA’s. ATDA’s proposed agreement provided for en-

hanced economic benefits, as well as continuation of its col-

lective bargaining agreement. The panel concluded that

ATDA’s proposed implementing agreement, and the car-

riers’ initial proposed agreement as well, could not be im-

posed because they went “beyond the terms of an

implementing agreement set forth in New York Dock.”

ATDA contends that the New York Dock conditions are

only a baseline, which the arbitrator may exceed. It contends

further that the panel mistakenly assumed that it must adopt

one of the proferred agreements in its entirety. We noted

in our June 10th stay decision that ATDA has raised an

interesting and perhaps significant issue concerning the au-

thority of the arbitration panel. As such, we will review the

panel’s determination as meeting the Lace Curtain criteria

for review.

We fashioned the New York Dock conditions to satisfy

the level of employee protection mandated by section 11347.

We have consistently recognized our authority to require a

greater level of protection in any given case. See Finance

Docket No. 30965, Delaware & Hudson Ry. Co. - Lease and

Trackage Rights Exemption - Springfield Terminal Ry. Co.,

et al., 4 1.C.C.2d (served February 25, 1988). It does

not follow, however, that, once we determine the appro-

priate level of protection, an arbitrator is free to impose a

higher level. On the contrary, the arbitration panel’s au-

Under the National Labor Relations Act, 29 U.S.C. 151 et seg., a

successor employer may in some circumstances be obligated to recognize

and bargain with the representative of its predecessor’s employees. See

John Wiley & Sons, Inc. v. Livingstone, 376 U.S. 543 (1964) and NLRB

v. Burns International Security Services Inc., 406 U.S. 272 (1972).

NLRA cases are not controlling but have been held to offer an analogy

in the solution of similar RLA problems. See Brotherhood of Railroad

Trainmen v. Jacksonville Terminal Co., 394 U.S. 369 (1969), reh. den.

394 U.S. 1024 (1969).

40a

thority is derived solely from the New York Dock conditions

themselves, and nothing in those conditions authorizes the

arbitrator to expand the basic benefit structure prescribed

by the Commission. Rather, it is the arbitrator’s task to

determine the appropriate application of conditions pre-

scribed by the Commission. The proper forum for employees

seeking a level of labor protection in excess of New York

Dock is thus not in the arbitration of individual disputes but

rather before this Commission where we consider the merits

of the section 11343 transaction. In fact, in Norfolk Southern

Control, labor interests sought a higher level of protection,

but we found that New York Dock was appropriate. 366

LC.C. at 229-31. In so doing, we did not delegate to an

arbitrator the authority to overturn this determination.

Of course, an arbitrator has discretion to fashion a remedy

within the limits of New York Dock. To this end, he may

combine specific proposals of the parties, may develop com-

promises, or may evea develop his own conditions, limited

only in each case by the Commission-mandated level of pro-

tection. Nothing in the referee’s award demonstrates a mis-

understanding of this principle. On the contrary, the referee’s

award expressly modifies the proposed implementing agree-

ment by adding a condition that the parties meet to consider

whether any mutually agreeable revisions could be imposed.

ATDA does not contend that the higher level of protection

it seeks is consonant with New York Dock. In fact, it tacitly

acknowledges that the implementing agreement adopted by

the panel provides the minimum economic benefits described

in Article I, section 9 of New York Dock. It follows that

the additional economic benefits ATDA proposed, i.e. prior-

ity consideration for ST positions,® transfer of accrued va-

* The proposal for } ‘ority consideration is moot in light of Southern’

hiring of all willing SOC supervisors. The record does not indicate

whether those who declined Southern positions would be eligible

the proposed displacement allowance.

4Ja

cation and sick leave, additional moving allowances,®

displacement allowances for cetiianes ahe choose <n

follow their jobs, exceed New York Dock and were properly

rejected. ’° As noted above, ATDA’s proposal that its col-

lective bargaining agreement be maintained (mischaracter-

ized in ATDA's petition as a proposal for continued

representation) was also properly rejected. In the circum-

re = is ay i area that the panel did not explain

w the implementin

porn: Beil al pan | g agreements it rejected ex-

The referee’s award will be affirmed. This decision wil

en ’ ]

not significantly affect the quality of the human environment

or energy conservation.

It is ordered:

1. - decision and award in Norfolk and Western Rail-

+ aa ompany, ~ ap cater mars aa and American

2. This decision is effective on the date served.

By the Commission, Chairman Gradison, Vice Chairman

Andre, Commissioners Sterrett, Simmons, and Lamboley.

Commissioner Lamboley dissented with a separate expres-

sion.

(SEAL)

Noreta R. McGee

Secretary

* The carriers state in this regard (reply, p. 20) that “(bly virtue

, p. ‘ of

being Southern Railway officers, the former SOC supervisors have al-

aa =" @ generous package of relocation benefits.” See also

” A particular benefit may ‘“‘draw its essence” from New York Dock

without being specifically enumerated there. ATDA has 7

oly made no such

42a

COMMISSIONER LAMBOLEY, dissenting:

The decision of the arbitration panel failed to appro-

priately accommodate the aspects of representation and

recognition under the RLA with the consolidation trans-

action under the ICA. In my view, the failure to do so

requires reversal and remand.’

The matter should be remanded to the arbitration panel

with instructions to reconcile the perceived RLA/ICA con-

flict and effect a balancing of interests necessary to achieve

transfer of SOC work activity from Roanoke to Atlanta

without termination of representation rights or other un-

necessary displacement of RLA rights. It should be rec-

ognized that Section 11341(a) does not operate in absolute

terms exempting application of other laws, rather only to

the extent necessary to carry out the proposed transaction.

Moreover, conditions imposed under Section 11347 operate

to preserve conditions and agreements in the context of

the authorized transaction, whenever possible. Thus, as-

suming the transaction at issue is proximally within the

scope of the approved transaction, the arbitaraion must

specifically determine whether, and to what extent,

(1) other laws need be necessarily displaced and (2) existing

: Because I find representation and recognition the central issues on

appeal, I do not address the disposition of other issues in this case.

Although causation is neither free from doubt nor necessarily clear

after reviewing the original consolidation case or the underlying panel

decision, I do assume the transfer transaction here at issue is one

reasonably contemplated or foreseeable as a consequence of the 1982

consolidation transaction approved in the NS-Control case. Conse-

quently, the transaction is properly subject to the NY Dock conditions

and dispute resolution procedures.

In short, while distant in time, it has not been satisfactorily estab-

lished on the record that transfer does not have a proximate nexus

with original consolidation. See Southern Railway Company - Control -

Central of Georgia Railway Company, 317 1.C.C. 729 (1963) aff'd sub.

nom. RLEA v. U.S. 266 F. Supp. 521 (E.D. Va 1964) vacated on other

grounds 379 U.S. 199 (1984). This is not to say on remand such a

showing could not be made in this case.

43a

working conditions and provisions of collective bargaining

agreements are in conflict with the transaction approved

by the Commission.?

For the Commission’s part, I believe the majority’s af-

firmation of the panel decision merely compounds the error

on appeal. The majority attempts, after a fashion, to ra-

tionalize a position affirming the arbitration award. The

reasoning is not altogether clear.

Representation rights accorded to employees, individ-

ually and as a group, under the RLA basically provide

that employees shall have the rights (1) to select a rep-

resentative chosen by the majority and (2) to have the

representative so chosen recognized by their employer for

the purposes of collective bargaining.’ It is from provisions

of the RLA, not the collective bargaining agreement, that

the right to representation and recognition derive. Indeed,

the contrary is true; it is the collective bargaining agree-

ment which is derived from the exercise of the rights of

representation and recognition.

In this case, ATDA has been selected as the employee

representative, and has been recognized as such by the

employer, initially the N&W,* and now, following the NS-

Control merger/consolidation, the NS.°

* See generally Schwabacher v. United States, 334 U.S. 182 (1948):

City of Palestine v. United States, 559 F.2d 408 (5th Cir. 1977) Cert

den. 435 U.S. 950 (1978); and Denver & R.G.W. R.R. Co. - Trackage

Rights - Missouri Pac. R.R. Co. Between Pueblo Co. and Kansas City,

MO (not printed), served October 25, 1983; revs’d sub. nom. BLE v.

1.C.C. 761 F.2d 714 (D.C. Cir. 1985) revs’d on other grounds ___ US

——(1987). Also Leavens v. Burlington Northern, 348 1.C.C. 962 (1977).

*45 U.S.C. §152.

‘This flows from the 1964 Nickel Plate merger, assumption of con-

tracts, the 1968 NRAB Award No. 16566, and the 1979 Agreement.

* If the employees, although subject to transfer, nonetheless remain

employees, their employer, i.e. the entity with ultimate employment

authority, is the NS. The NS-Control case confers such authority and

44a

In this instance then, the status of representation and

recognition may not be terminated by a transaction under

the ICA. Exclusive jurisdiction over representation issues

belongs to the National Mediation Board under the RLA.*

Both the arbitration panel and Commission majority ac-

knowledge that basic proposition, but nevertheless, proceed

to terminate RLA representation rights. The RLA rights

at issue here are not in conflict with the ICA. Although

in the absence of an agreement or an appropriate order,

the portability of the collective bargaining agreement may

be open to question,’ the portability of representation and

recognition rights are not so dubious. Indeed, such rights

and status are generally presumed to continue until the

contrary is shown.*®

The arbitration panel was in error in finding that “this

(transfer) does not change the rights of individual em-

ployees”’.* Such rights have surely been changed, both in-

dividually and collectively, despite their establishment and

protection under the RLA.

The panel was simply wrong when it asserted “what is

lost by the transfer is the incumbancy status of the ATDA,

status on NS. To conclude otherwise would deny NS the requisite

control authority to effect the transfer under the ICA, and the cor-

responding ICA jurisdictional considerations here. In another case, the

RLA alone would apply to changes here proposed if employer status

was confined to N&W. Indeed, Co ae ee ee geo i

ICA jurisdiction and NS-Control, both before the arbitration panel and

the Commission.

® See e.g., 1943 ““Switchman’s Union” Trilogy; Switchman’'s Union of

N.A. v. NMB, 320 U.S. 297; Gen. Comm. v. M-K-T R. Co., US.

323, Gen. Comm v. Southern Rac. Co., 320 U.S. 388

320

"See Burlington Northern, Inc. v. Am. Ry. Super. Assn., 503 F.2d

58 (7th Cir. 1974) Cf. Norfolk & wae 2 a ee ne

37 (1971); Laturner v. BN, Inc., 501 F.2d 593 (9th Cir. 1974) and

Miller v. Missouri Pac. Ry. Co., 372 F. Supp. 170 (W.D. LA 1974)

* See Dooley v. Lehigh Valley R. Co., 21 A2d 334 (NJ e.g. 1941).

* Award, p. 15.

45a

a status arrived at through recognition, not through elec-

tion.” Not only does this statement seemingly confuse

the status of recognition with the process by which em-

ployees select their representative, it is clear that the le-

gally protected status of recognition of an employee

representative is the same whether achieved through vol-

untary recognition by an employer or as a mandatory re-

sult of an election process. The panel’ s attempted

distinction is not only contrary to law," it is contrary to

fact.’

The panel, likewise, erred when it concluded that “‘the

protection afforded by New York Dock are to individual

employees, not their collective bargaining representa-

tives’’.!* First, as mentioned previously, the rights at issue

are those of the employee, individually, and collectively,

flowing from and protected by statute. The essence of

representation and recognition is the right of individual

employees to act collectively through a freely selected rep-

resentative. It is that employee right ATDA is here as-

serting as the employees’ representative, and for which

ATDA has an affirmative obligation and duty to do so."

The panel’s position suggests that employees themselves,

rather than their representatives are somehow the proper

and necessary parties to here claim representation and

recognition rights. This position I find wholly untenable.

Id.

" See Assn of Flight Attendants, et al. and TWA, N.M.B. No. 63

(1987); also Akkon, Canton & Y. R. Co. v. IBEW, 237 F. Supp. 343

(N.D. Ill. 1964).

* N&W’s Recognition of ATDA was initially voluntary, and later was

required by the Nationa] Rai] Adjustment Board in Award No. 16556

(1968).

* Award, p. 15.

“ The duty of fair representation is an evolutionary product of federal

common law with statutory origins. See e.g. 45 U.S.C. §152 (ninth),

Steele v. Lowisville & Nashville Railroad, 323 U.S. 192 (1944).

46a

_—

Without doubt, no tribunal established under the ICA

may claim authority to terminate representation rights.

The arbitration panel expressly acknowledges its jurisdic-

tional limitations,"* but nonetheless proceeds to effectively

terminate those rights. On appeal, the majority of the

Commission also acknowledges that the ICA cannot and

does not pre-empt RLA representation rights, yet in its

affirmation, exercises its authority to approve termination

of RLA rights. F:

In my view, this case should be remanded to the ar-

bitration panel for purposes of accommodating RLA rep-

resentation rights and/or seeking views of NMB regarding

construction of such rights in instances of transfer within

a commonly controlled, merged rail system.’* The latter

course may be particularly helpful since this admittedly is

a case of first impression, and the NMB has long been

recognized as being vested with exclusive authority over

representation issues.’’

* Award p. 15.

1* See comment on “employer” status of NS as successor employer

in context of merger. (Footnote 4). Obviously, an ICA control case does

met Mind the DOGS &s Coates ee purposes of the

47a

APPENDIX D

UNITED STATES GOURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 88-1724

September Term, 1989

Brotherhood of Railway Carmen, et al.,

Petitioner

Interstate Commerce Commission & USA

Respondents

Intervenor

CSX Transportation, Inc.

No. 88-1694

American Train Dispatchers’ Association,

Petitioner

Interstate Commerce Commission and the

United States of America,

Respondents

Norfolk & Western Railway Co. and

Southern Railway Company,

United States Court of Appeals

For the District of Columbia Circuit

Intervenor

FILED SEP 29 1989

CONSTANCE L. DUPRE

CLERK

BEFORE: Wald, Chief Judge; Edwards and D. H. Gins-

burg, Circuit Judges :

ORDER

These causes came on to be heard on the petitions for

review of orders of the Interstate Commerce Commission

and were argued by counsel. On consideration thereof, it

ORDERED AND ADJUDGED, by the Court, that the

petitions for review are granted in part and the records

herein are remanded to the Commission for further pro-

ceedings, in accordance with the Opinion of the Court filed

herein this date.

Per Curiam

FOR THE COURT:

CONSTANCE L. DUPRE, CLERK

BY: Wendy Jemus

for Robert A. Bonner

Deputy Clerk

Date: July 25, 1989

Opinion for the Court filed by Circuit Judge D. H. Gins-

burg.

49a

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 88-1724

September Term, 1989

Brotherhood of Railway Carmen, et al.,

Petitioner

Vv.

Interstate Commerce Commission & USA

Respondents

Intervenor

CSX Transportation, Inc.

No. 88-1694

American Train Dispatchers’ Association,

Petitioner

Interstate Commerce Commission and the

United States of America,

Respondents

Norfolk & Western Railway Co. and

Southern Railway Company,

United States Court of Appeals

For the District of Columbia Circuit

Intervenor

FILED SEP 29 1989

CONSTANCE L. DUPRE

50a 5la

CLERK APPENDIX F

BEFORE: Wald, Chief Judge; Edwards and D. H. Gins-

burg, Circuit Judges UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

ORDER

Upon consideration of the petitions for rehearing of In- No. 88-1724

tervenors CSX Transportation, Inc. and Norfolk and West- :

ern Railway Company and Southern Railway Company, it September Term, 1989

ORDERED, by the Court, that the petitions are denied.

Brotherhood of Railway Carmen, et al.,

Per Gustin a Petitioner

FOR THE COURT:

CONSTANCE L. DUPRE, CLERK Interstate Commerce Commission & USA

BY: Wendy Jemus Respondents

for Robert A. Bonner ee

lerk

Saey Sam No. 88-1694

American Train Dispatchers’ Association,

Petitioner

_ Interstate Commerce Commission and the

United States of America,

Respondents

Norfolk & Western Railway Co. and

Southern Railway Company,

| , oe United States Court of

| For the District of Columbia Circuit

Intervenor

- FILED SEP 29 1989

CONSTANCE L. DUPRE

52a 53a

BEFORE: Wald, Chief Judge; Mikva, Edwards, Ruth B. APPENDIX G

Ginsburg, Silberman, Buckley, Williams, D. H.

Ginsburg and Sentelle, Circuit Judges UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

ORDER

The Suggestions For Rehearing En Banc of Intervenors No. 88-1724

CSX Transportation, Inc. and Norfolk and Western Rail- 0.

way Company and Southern Railway Company have been September Term, 1989

circulated to the full Court. No member of the Court re-

quested the taking of a vote thereon. Upon consideration

of the foregoing it is Brotherhood of Railway Carmen, et al., .

ORDERED, by the court en banc, that the suggestion reitener

is denied. *

Interstate Commerce Commission & USA

Per Curiam Respondents

FOR THE COURT: CSX Transportation, Inc.

CONSTANCE L. DUPRE, CLERK Intervenor

BY: Wendy Jemus

for Robert A. Bonner

Deputy Clerk

No. 88-1694

American Train Dispatchers’ Association,

Petitioner

Interstate Commerce Commission and the

United States of America,

Respondents

Norfolk & Western Railway Co. and

Southern Railway Company,

United States Court of Appeals

For the District of Columbia

FILED SEP 29 1989

CONSTANCE L. DUPRE

Intervenor

CLERK

BEFORE: Wald, Chief Judge; Edwards and D. H. Gins-

burg, Circuit Judges

ORDER

Upon consideration of the petition for rehearing of the

Interstate Commerce Commission (ICC) and of the motion

of petitioners for leave to file a response thereto it is

ORDERED, by the Court, that the Clerk is directed to

file petitioners’ lodged response and it is

FURTHER ORDERED, by the Court, that considera-

tion of the aforesaid petition is deferred pending release

of the ICC’s decision on remand.

Per Curiam

FOR THE COURT:

CONSTANCE L. DUPRE, CLERK

BY: Wendy Jemus

for Robert A. Bonner

Deputy Clerk

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