Amicus Curiae Brief — Norfolk & Western R. Co. v. Train Dispatchers

Supreme Bourt, US,

FILED

09) eo FFB 28 1990

Nos. 89-1027 and 89-1028 | josepn F. SPANIQL, JR.

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.

CSX TRANSPORTATION, INC., Petitioner,

V.

BROTHERHOOD OF RAILWAY CARMEN, DIVISION OF

TRANSPORTATION-COMMUNICATIONS INTERNATIONAL

UNION, INTERSTATE COMMERCE COMMISSION, AND

UNITED STATES OF AMERICA, Respondents.

On Petitions For Writs Of Certiorari

To The United States Court Of Appeals

For The District Of Columbia Circuit

BRIEF AMICUS CURIAE OF CONSOLIDATED

RAIL CORPORATION IN SUPPORT OF THE

PETITIONS FOR WRITS OF CERTIORARI

Bruce B. WiLson A. RAYMOND RANDOLPH

CONSTANCE L. ABRAMS Counsel of Record

JOHN B. Rossi, JR. PauL A. CUNNINGHAM

CONSOLIDATED RAIL CORPORATION DENNIS A. AROUCA

1138 Six Penn Center Plaza James A. MEYERS

Philadelphia, PA 19103 Peprer, HAMILTON & SCHEETZ

felephone: (215) 977-4041 1300 Nineteenth Street, N.W.

Washington, D.C. 20036

Telephone: (202) 828-1200

Attorneys for

Dated: February 28, 1990 Consolidated Rail Corporation

SS

PRESS OF RAM PRINTING, HYATTSVILLE, MD 20781 (301) 864-6662

i

TABLE OF CONTENTS

pO SE

INTEREST OF AMICUS CURIAE.........cccccccccceees

ARGUMENT.

CONCLUSION

‘i

TABLE OF AUTHORITIES

CASEs: Page

ery Louisville & Nashville R.R., 406 U.S. 320

(rr es

Brotherhood of Locomotive Engineers v. Boston & Maine

Corp., 788 F.2d 794 (1st Cir.), cert. denied, 479 U.S.

GED CHBGED. 2 cc ccccccccceccccscscuguausenneunes * §,12

Brotherhood of Locomotive Engineers v. Chi & North

Western Ry., 314 F.2d 424 (8th Cir.), cert. denied, 375

U.S. SRO GERD . ov occccccccccceccvsswebebsetense 12

Brotherhood of Locomotive Engineers v. ICC, 761 F.2d

714 (D.C. Cir. 1985), rev’d, 482 U.S. 270 (1987).... 5

Brotherhood of Ry. & Steamship Clerks v. Florida East

Coast Ry., 384 U.S. 238 (1966) .............-+45- 13

Burlington Northern, Inc. v. American Ry. Supervisors

Ass’n, 503 F.2d 58 (7th Cir. 1974) (per curiam), cert.

dented, Gi UB. GE GREED ccccccccccstececosces 12

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837

CBDR. .. oc 0c.c0ceeededuseenesceeebenenaees 3, 5, 6

— & North Western Transp. Co. v. Kalo Brick &

we Co., GO UB. SER GHD c cesccctvicccssceces 4

Connolly v. PBGC, 475 U.S. 211 (1986) .............. 4

County of Marin v. United States, 356 U.S. 412 (1958). 9

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

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

Erie R.R. v. Tompkins, 304 U.S. 64 (1938). ........... 4

ICC v. Brotherhood of Locomotive Engineers, 482 U.S.

STO CIBBA). « o vccccccccncnceasensumenuenneenenes 11

Missouri Pac. R.R. v. United Transp. Union, 782 F.2d

107 (8th Cir. 1986), cert. denied, U.S. 927 (1987) 12

Munn v. Illinois, 94 U.S. 113 (1877) ..............4..-- 4

Nemitz v. Norfolk & Western Ry., 436 F.2d 841 (6th Cir.),

Gd, 4 U.S. ST CTE) 2 o vccccccccccascuscesacs

Norman v. Baltimore & O. R.R., 294 U.S. 240 (1995)... 94

Pittsburgh & Lake Erie R.R. v. Railway Labor Execu-

tives’ Ass’n, 109 S. Ct. 2584 (1989). ............-. 9, 10

San Diego Building Trades Council v. Garmon, 359 U.S.

SRO CIED s a vc cccccccesesésugnsnenepesaneneenes 4

Schwabacher v. United States, 334 U.S. 182

CRBGED. « oc ccccccucccecuncecenenenee 2,9, 10, 11

Texas & Pac. Ry. v. Abilene Cotton Oil Co., 204 U.S. 426

CRBOT) . occ ccccccncunsuusésugneaeeneneeee 4

Table of Authorities Continued

Texas v. United States, 292 U.S. 522 (1934) ........... 7

United States v. Lowden, 308 U.S. 225 (1939) ......... 10

STATUTES AND RULES:

Interstate Commerce Act,

Former § 5(11), 49 U.S.C. § 5(11)................... 3

Ee passim

Ee 2,7

Er 7,10

Neg. ccc cc cccces 10

Railway Labor Act, §2, 45 U.S.C. §152.............. 4

Rules of Decision Act, 28 U.S.C. § 1652 .............. 4

I os coc cccccccccccccccccsees 2

LEGISLATIVE ENACTMENTS:

Act < My 13, 1978, Pub. L. No. 95-473, § 3(a), 92 Stat.

ES 3

Emergency Railroad Transportation Act, 1933, ch. 91, 48

Ne cccccccecce 7

Transportation Act, 1920, ch. 91, 41 Stat. 456.... .... 7

LEGISLATIVE HIstTory:

H.R. Rep. No. 95-1395, 95th Cong., 2d Sess. 158 (1978) 3

S. Mep. No. 1182, 76th Cong., 3d Sess. Pt. 1,1(1940).. 9

AGENCY PROCEEDINGS:

Brandywine Valley R.R.—Purchase—CSX Transp.,

eee 8

Denver & Rio Grande Western R.R.—Trackage Rights—

Missouri Pac. R.R., Finance Docket No. $0,000

(Sub-No. 18) (decision served Oct. 25, 1983), vacated

sub nom. Brotherhood of Locomotive Engineers v.

ICC, 761 F.2d 714 (D.C. Cir. 1985), rev'd, 482 U.S.

EME heScCSbebeeecnceccercacccccece 5

i Ohio R.R.—Abandonment, 282 1.C.C. 311

PMEMERDGRDRORERGEdn ewes cawcccescccccce 8

Maine Central R.R.—Exemption from 49 U.S.C. 11342

and 11343, Finance Docket No. 30,532 (decision

served Sept. 16, 1985), aff'd mem. sub nom. Railwa

Labor Executives’ Ass’n v. ICC, 812 F.2d 1443 (D.C.

2 a 5

iv

Table of Authorities Continued

Transcri~t of Voting Conference, CSX Corp.—Control—

Chessie System. Inc., Finance Docket No. 28,905

(Sub-No. 22) (Feb. 9, 1990).........+2e eee eeeees 14

MISCELLANEOUS: PO eS nti +

Sealia, Judicial Deference to Administrative nterpreta-

tions of Law, es Duke L.J. 511 (1989)..........- x

IN THE

Supreme Court of the Anited States

OcTOBER TERM, 1989

Nos. 89-1027 and 89-1028

NORFOLK AND WESTERN RAILWAY COMPANY AND

SOUTHERN RaILway ComPANY, Petitioners,

Vv.

AMERICAN TRAIN DISPATCHERS ASSOCIATION,

INTERSTATE COMMERCE COMMISSION and

UNITED STATES OF AMERICA, Respondents.

CSX TRANSPORTATION, INC., Petitioner,

v.

BROTHERHOOD OF RAILWAY CARMEN, DIVISION OF

TRANSPORTATION-COMMUNICATIONS INTERNATIONAL

UNION, INTERSTATE COMMERCE COMMISSION, AND

UNITED STATES OF AMERICA, Respondents.

On Petitions For Writs Of Certiorari

To The United States Court Of Appeals

For The District Of Columbia Circuit

BRIEF AMICUS CURIAE OF CONSOLIDATED

RAIL CORPORATION IN SUPPORT OF THE

PETITIONS FOR WRITS OF CERTIORARI

INTEREST OF AMICUS CURIAE

Consolidated Rail Corporation (“Conrail”) is a rail car-

rier headquartered in Philadelphia, Pennsylvania. It

primarily offers freight service in the northeast and mid-

west corridors over more than 28,000 miles of track. Con-

rail’s 1988 year-end operating revenues exceeded $3.4

2

billion and its total assets as of the end of 1988 exceeded $7

billion. !

After nearly 20 years of efforts to restructure the

northeast and sibel rail systems, Conrail has emerged

as a publicly owned, self-sustaining corporation. Like all

rail carriers, Conrail faces the constant challenge of

remaining competitive in an increasingly deregulated

transportation market. This challenge may require Con-

rail to enter into “control” transactions? that must be

approved by the Interstate Commerce Commission

(“Commission” or “ICC”). The court of appeals decided

that the Commission's approval of a control transaction

does not permit participating rail carriers to —s

the approved transaction when it conflicts with the

requirements of private contracts (including, for exam-

ple, collective bargaining agreements). That decision is

therefore of great significance to Conrail and threatens to

have an immediate and deleterious impact upon its corpo-

rate planning and the efficiency of its operations.

ARGUMENT

e decision below is wrong. It conflicts with the deci-

eau this Court in Schwabacher v. United States, 334

U.S. 182 (1948), and with the decisions of every other

court of appeals that has considered the issue. The court

of appeals rejected the Commission's interpretation of the

statute it administers and did so on a basis that dis-

1 This brief is filed pursuant to Rule 37.2 of the Rules of this Court,

accompanied by the written consent of all parties.

2 Control transactions include mergers, consolidations, purchases,

leases, contracts to operate property of another carrier, acquisitions

of trackage rights and other acquisitions of control. 49 U.S.C.

§ 11343(a).

3

regarded the standards of Chevron U.S.A. Inc. v.

NRDC, 467 U.S. 837 (1984).

The decision below has enormous consequences for

Conrail and other rail carriers and disregards the protec-

tion for railroad employees Congress deemed appropri-

ate. Contrary to the assertion of the federal respondents,

proceedings on remand will not obviate the need for

review of the question presented. Delaying such review

would cause significant disruption in corporate planning

decisions and create uncertainty that will adversely affect

the public interest. For these reasons, which we discuss

below, review now is warranted.

1. The court of appeals held that Section 11341(a) of

the Interstate Commerce Act (“ICA”), 49 U.S.C.

§ 11341(a), does not permit carriers participating in an

ICC-approved control transaction to implement the

transaction when it conflicts with the requirements of a

collective bargaining agreement. Pet. App. No. 89-1027

at 12a, 19a. Section 11341(a) provides that a carrier par-

ticipating in an approved control 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 . . ..” (Emphasis added. )

In the court of appeals’ view, “all other law” compre-

hends only “positive enactments, not common law rules of

liability, as on a contract.” Pet. App. No. 89-1027 at 18.3

%The previous version of § 11341(a), former §5(11) of the ICA,

immunized participants “from the operation of the antitrust laws and

of all other restraints, limitations, and prohibitions of law, Federal,

State, or municipal,” taus making clear that the immunity encom-

passes not only positive enactments, but all restraints, limitations

and prohibitions of law. The 1978 recodification of this provision as

§ 11341(a) did not effect any substantive change. Act of Oct. 13, 1978,

Pub. L. No. 95-473, § 3(a), 92 Stat. 1337, 1466. See also H.R. Rep. No.

95-1395, 95th Cong., 2d Sess. 158-68 (1978).

4

This narrow interpretation of the meaning of “law” harks

back to another case involving a railroad decided gi

than half a century ago. The issue in Ere R.R. v.

Tompkins, 304 U.S. 64 (1938), was whether the phrase

“laws of the several states” as used in the Rules of —

Act, 28 U.S.C. § 1652, meant only statutory a —

included common law. This Court held, of course,

“laws” meant both.

Section 11341(a) therefore does not support the mean-

ing the court of appeals gave it. To be gt poem

11341(a) does not expressly refer to eee Ss a

tracts can impede control transactions because d

the force of law behind them—that is, because they are

legally enforceable.5 Thus, prior decisions had recognized

4See also Munn v. Illinois, 94 U.S. 113, 125-26, aye oh

(power to regulate commerce is superior to the pover privat

citizens to create rights at common law where the subject mattér 's

affected with a Gen 0 U.S. Bil (881) (ICA abandonment

; Brick & Tile Co., 450 U.S. ndon

aa : va preempt state tort eo based — = of

mmon law); San Diego Building Trades 3 om,

369 U.S. 236, 246-47 (1959) (Supremacy Clause preempts = y

mon law rights that interfere with federal policies); Texas : —

v. Abilene Cotton Oil Co., 204 U.S. 426 (1907) (ICA cmon

common law action by shipper for allegedly unreasonab

Similarly this Court has long held that the federal government

acting lawfully under the Commerce Clause may modify pri

contracts concerning matters within the government's wy ry

powers without violating the Fifth Amendme nt. Connolly ma + 5

475 U.S. 211, 225 (1986); Norman v. Baltimore & 0. R.R., 3.

240, 306 (1935). i

5 Moreover, the law giving effect to collective a 4 one

ments is not the common law, but a “positive enactment, ‘Ul ve ewe

Labor Act (“RLA”), see 45 U.S.C. § 152 Seventh. err —

Shore Line R.R. v. United Transp. Union, 396 ote. a.

(§ 152 Seventh of RLA “operates to give legal and > oe

collective agreements”); Andrews v. Louisville & Nas ies

5

that Section 11341(a) immunizes participants from all

legal obstacles, not simply from positive enactments.

Brotherhood of Locomotive Engineers v. Boston & Maine

Corp., 788 F.2d 794, 800 (1st Cir. 1986), cert. denied, 479

U.S. 829 (1987); Brotherhood of Locomotive Engineers v.

ICC, 761 F.2d 714, 717, 723 (D.C. Cir. 1985), rev’d on other

grounds, 482 U.S. 270 (1987).

2. This was also the Commission’s interpretation of

Section 11341(a) and, under Chevron, supra, the court of

appeals was bound to respect it. The Commission clearly

and succinctly stated its interpretation of Section 11341(a)

in two recent rail cases before this Court.®

406 U.S. 320 (1972) (rail labor agreements not enforceable in state

court). Thus, even assuming the court of appeals’ distinction between

common law and positive enactments were correct, its holding is

nevertheless clearly erroneous and should be reversed.

®In its Petition for a Writ of Certiorari at 14-15, JCC v. Broth-

erhood of Locomotive Engineers, No. 85-792, Oct. Term, 1985, the

Commission stated that, under § 11341(a), “the Commission's power

to approve consolidations includes the power to approve transactions

which require the negotiation of changes in working conditions and to

establish the means by which negotiation of such changes shall be

effected” and that “if the Commission does so, RLA processes for

resolving labor problems arising directly out of the approved transac-

tions are overridden by virtue of. . . Section 11341(a).” “Such a result

is necessary because no activity by any party can be allowed to

frustrate consummation of the transaction authorized by the Com-

mission and the public interest in that transaction which the Commis-

sion’s approval entails.” Brief for the Interstate Commerce

Commission at 20, Pittsburgh & Lake Erie R.R. v. Railway Labor

Execs’ Ass'n, No. 87-1589, Oct. Term, 1988.

The Commission has routinely applied this interpretation in its

jurisprudence. E.g., Maine Central R.R.—Exemption from 49

U.S.C. 11342 and 11343, Fin. Docket No. 30,532 (decision served

Sept. 16, 1985), aff'd mem. sub nom. Railway Labor Execs’ Ass’n v.

ICC, 812 F.2d 1443 (D.C. Cir. 1987); Denver & Rio Grande Western

6

Early in its opinion, the court correctly cited Chevron

for the proposition that judicial deference is inappropriate

if “Congress has directly spoken to the precise question at

issue” (Chevron, 467 U.S. at 842-43). Pet. App. No.

89-1027 at 1la. The court then proceeded to “strike out” in

search of Congress’ intent. Jd. The court's search, how-

ever, revealed no “unambiguously expressed intent of

Congress” (Chevron, 467 U.S. at 843) to exclude collective

bargaining agreements from the scope of Section 11341(a)

immunity. Pet. App. No. 89-1027 at 12a-19a. The most the

court could say on this score was that Congress had never

directly faced the question. Jd. at 18a.7

Under Chevron, the court was then required to

advance to the second step of analysis—namely, to deter-

mine whether the Commission's interpretation of Section

11341(a) was permissible. Chevron, 467 U.S. at 843.

L Fin. Docket No.

R.R.—Trackage Rights—Missouri Pac. R.R.,

30,000 (Sub-No. 18) (decision served Oct. 25, 1983), vacated on other

grounds sub nom. Brotherhood of Locomotive Engineers v. ICC, 761

F.2d 714 (D.C. Cir. 1985), rev’d, 482 U.S. 270 (1987). i,

The United States hes interpreted § 11341(a) the same way. Brie

for the Interstate Commerce Commission and the United con of

America at 24, ICC v. Brotherhood of Locomotive Engineers, 0.

85-792, Oct. Term, 1985 (“Section 11341(a) automatically confers an

exemption of sufficient breadth to permit implementation of the

authorized transaction”); Brief for the United States: as Amicus

Curiae at 9 n.8, Pittsburgh & Lake Erie R.R. v. Railway Labor

Execs’ Ass’n, No. 87-1589, Oct. Term, 1988.

7 We submit that the court of appeals erred when it concluded that

Congress had not spoken directly to the issue in enacting § 11341(a).

the statute is

As we have shown (see supra at 3-5), the language of

clear, and it is equally clear that Congress intended to immunize

carriers not merely from positive enactments, but from all restraints,

limitations and prohibitions of law.

7

Instead of doing so, however, the court simply supplied its

judgment regarding the meaning of Section 11341(a).8

* Further, contrary to the court of appeals’ belief, the legislative

history of the Transportation Act of 1920 does not support its inter-

pretation of § 11341(a). While Congress was undoubtedly concerned

with protecting carriers from the Clayton Act and certain state

statutes, it chose immunity language broadly covering “all restraints,

limitations, and prohibitions of law.” See supra n.3. Moreover, Title

III of the 1920 Act provided for comprehensive regulation of collec-

tive bargaining for the rail industry, and Congress did not exempt

that Title from the 1920 Act's public interest regulation or its immu-

nity provision. The lack of such exemption is especially significant

because Congress expressly provided that at least two other sections

of the 1920 Act were exempt from these provisions. See § 400 of the

Transportation Act of 1920, ch. 91, 41 Stat. 456, 474-75 (amending § 1

of the ICA so as not to apply to interstate activities and certain water

carrier activities); § 402 of the Transportation Act of 1920, ch. 91, 41

Stat. 456, 476-78 (amending § 1 of the ICA so as not to apply to spur

and industrial tracks).

Moreover, when Congress enacted the RLA in 1926, it did not

exempt labor matters from the ICC's delegated powers under current

$§ 11343 and 11344 and the immunity from all other law under cur-

rent §11341(a). Finally, in 1983 Congress enacted the Emergency

Railroad Transportation Act (“ERTA”), ch. 91, 48 Stat. 211. Title I of

ERTA was temporary legislation limited to a one-year period, and

contained a savings clause for RLA rights and labor contracts:

“nothing herein shall be construed to repeal, amend, suspend, or

modify any of the requirements of the Railway Labor Act or the

duties and obligations imposed thereunder or through contracts

entered into in accordance with the provisions of said Act.” 48 Stat. at

215. Title II of ERTA restated current § 11344 of the ICA, with the

same public interest standard for approval of control transactions,

and continued current § 11341(a) immunity. Unlike Title I, however,

Title II contained no RLA or collective bargaining agreement sav-

ings clause. If Congress had intended to remove the RLA and collec-

tive bargaining agreements from §§ 11343 and 11344 public interest

regulation and § 11341(a) immunity, it would have extended the Title

I savings clause to Title II. Its decision not to do so reflects “an

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

(1934).

8

While the court of appeals did not specifically explain its

refusal to address the second part of the Chevron test, it

suggested that deference was not warranted because it

believed the Commission had previously interpreted the

statute differently. Pet. App. No. 89-1027 at 13a (citing

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

311, 335 (1952)); id. at 22a-23a. But as Justice Scalia

recently explained, “there is no apparent justification for

holding the agency to its first answer, or penalizing it for a

change of mind. *** [TJhere seems to me no reason to

value a new interpretation less than an old one.” Scalia,

Judicial Deference to Administrative Interpretations of

Law, 1989 Duke L.J. 511, 517, 518 (1989). Moreover, the

court of appeals was not correct that the Commission had

changed its mind. The Gulf, Mobile case was a line aban-

donment case, not a control transaction, and Section

11341(a) was therefore not at issue.

At all events, the Commission's interpretation of Sec-

tion 11341(a) was permissible and thus entitled to defer-

ence.!° In addition to the plain language of the statute

9If anything, Gulf, Mobile is consistent with the Commission's

longstanding interpretation of Section 11341(a). The Commission

held that it could not override contracts in abandonment cases absent

“a clear grant of statutory authority similar to that contained in

[§ 11341(a)].” 282 I.C.C. at 335.

10 Despite its longstanding interpretation of § 11341(a), the Com-

mission has stated that it does not “dispute the validity” of the court of

appeals’ decision. Brandywine Valley R.R.—Purchase—CSX

Transp., Inc., 5 I.C.C.2d 764, 772 n.5 (1989). We assume that this

statement simply reflects the Commission's intent to comply, as it

must, with the court of appeals’ decision on the basis of law of the case

and stare decisis principles, and does not reflect Commission

approval of the court of appeals’ interpretation of § 11341(a).

The Commission's present position in no way moots the issue in

these cases. Indeed, the Commission's apparent acquiescence is itself

9

(and its predecessor version), the numerous decisions of

this Court holding that the ICA preempts state common

law and private rights based on common law support the

Commission's interpretation of Section 11341(a).

Moreover, the primary goal of the ICA since enactment

of the Transportation Act of 1920 has been to encourage

and facilitate control transactions in order to promote

efficiency and strengthen the railroad economy. S. Rep.

No. 1182, 76th Cong., 3d Sess. Pt. 1, 1 (1940) (Transpor-

tation Act of 1920 was designed to “encourage[] mergers

and consolidations of railroad companies, under the

supervision of the Interstate Commerce Commission, in

the hope of bringing about a stronger national railroad

economy”); County of Marin v. United States, 356 U.S.

412, 416 ( 1958) (Transportation Act of 1940 was designed

“to facilitate merger and consolidation in the national

transportation system”); Pittsburgh & Lake Erie R.R. v.

Railway Labor Executives’ Ass’n, 109 S. Ct. 2584,

2596-97 (1989) (Railroad Revitalization and Regulatory

Reform Act of 1976 and Staggers Act of 1980 were “aimed

at reversing the rail industry’s decline through

deregulatory efforts, above all by streamlining pro-

cedures to effectuate economically efficient transac-

tions”). The Commission’s interpretation of Section

11341(a) is consistent with and promotes this goal.

Finally, Congress has given the Commission exclusive

and plenary jurisdiction over control transactions. Sec-

tion 11341(a) states that the ICC’s power over control

transactions “is exclusive.” The enacted version of Section

a compelling reason for this Court to review the decision below: if the

ICC is allowed to acquiesce, the decision below will become the law of

the land, thus “overruling” this Court's decision in Schwabacher,

supra.

10

11341(a), which was recodified without substantive

change (see supra n.3), stated that the ICC’s power over

such transactions “shall be exclusive and plenary.” This

Court has recognized that the ICC has “plenary authority

over rail transportation” (Pittsburgh & Lake Erie R.R.,

supra, 109 S. Ct. at 2596) and that Congress has dele-

gated to the ICC the power to accommodate public and

private interests in control transactions (U nited States v.

Lowden, 308 U.S. 225, 234-38 (1939)). The Commission’s

exclusive and plenary jurisdiction in this area is a compel-

ling reason to defer to its interpretation.

3. Congress has ensured that the interests of railroad

employees remain fully protected notwithstanding Sec-

tion 11341(a). Since this Court’s decision in Lowden,

supra, it is clear that the Commission must consider

employee interests as part of its public interest deter-

mination in control transactions. See also 49 U.S.C.

§ 11344(b)(1). Moreover, under Section 11347 of the ICA,

49 U.S.C. § 11347, the Commission is required to impose

minimum conditions in favor of railroad employees in

every control transaction. The Commission must require

the carriers to provide employees with a “fair arrange-

ment” adequately protecting their interests. The mini-

mum conditions the ICC must impose include six years of

wage and benefit guarantees and seniority adjustment

procedures. The Commission, of course, may impose

additional conditions in favor of employees. Finally,

immunity is accorded only when necessary to enable the

participating carriers to carry out the transaction as

approved by the ICC.

4. The court of appeals’ decision is contrary to this

Court’s decision in Schwabacher, supra. Schwabacher

involved the merger of the Pere Marquette Railway with

another carrier. A group of dissenting Pere Marquette

ll

shareholders claimed that under the Pere Mar

charter, a contract enforceable under Michigan ~~ tee

were entitled to receive a certain amount for each share of

stock; they challenged the merger because it provided

them substantially less than that amount and thereby

deprived them “of contract rights undé#Michigan law.”

Schwabacher, 334 U.S. at 188. The ICC approved the

proposed merger, but stated that the dissenting share-

we could pursue their contract claim in state court.

This Court rejected the ICC’s approach

Section 11341(a), the Court held that once Fe, tm dog

sion approved the merger, the new entity was relieved of

any claims based on contract rights allegedly conferred

by the Pere Marquette charter. Jd. at 194-95, 201-02.11

See also ICC v. Brotherhood of Locomotive Engineers

482 U.S. 270, 298 (1987) (Stevens, Brennan, Marshall and

Blackmun, JJ., concurring) (“[t]he breadth of the [Section

11341(a) immunity ] is defined by the scope of the approved

transaction”). Following Schwabacher, every court of

appeals that has addressed the issue (except for the court

below) has held that the immunity provision at issue in

these cases immunizes carriers participating in an ICC-

approved transaction from any obligations they would

‘! According to the court of appeals, Schwabac

the proposition that the “ICC may override eo Bhan oa

senting shareholders [the] right to block [a] merger.” Pet. App. No

89-1027 at 21a. Schwabacher is not so limited. Michigan law did not

give shareholders any substantive rights. Rather, those rights were

provided contractually by the Pere Marquette charter. Michigan law

simply provided that, in the case of a merger, any preexisting obliga-

tions of the merging companies (e.g., contractual obligations)

oe against the new corporation. See Pet. No. 89-1027 at 12-13 &

12

otherwise have under the RLA or collective bargaining

agreements, when such immunity was necessary to let

them carry out the transaction.

5. These cases are of great importance to the rail

industry. Rail carriers face vigorous competition, not only

from each other but also from other modes of transporta-

tion. To meet that competition, rail carriers have con-

tinually strived to make themselves more competitive—

and their services more attractive to consumers—

through control transactions, which enable them to

improve efficiency by eliminating duplicative facilities.

Rail carriers have planned and undertaken their activities

and investments on the assumption, grounded in the ICA

and relevant case law, that if efficiency and the public

interest require control transactions, Section 11341(a)

immunity would allow them to implement and achieve the

efficiencies and other public interest benefits envisioned

by the ICC when it approves the transaction, free from

the impediments imposed by legal obstacles (including

collective bargaining agreements) when such immunity is

necessary.

Under the decision below, however, rail carriers may, in

effect, first have to obtain the consent of railway labor

before engaging in control transactions that could affect

collective bargaining agreements. Unless the Section

12 Brotherhood of Locomotive Engineers v. Chicago & North West-

ern Ry., 314 F.2d 424, 431-32 (8th Cir.), cert. denied, 375 U.S. 819

(1963); Boston & Maine Corp., supra, 788 F.2d at 800; Nemitz v.

Norfolk & Western Ry., 436 F.2d 841, 845 (6th Cir.), aff'd on other

grounds, 404 U.S. 37 (1971); Missouri Pac. R.R. v. United Transp.

Union, 782 F.2d 107, 111-12 (8th Cir. 1986), cert. denied, 482 U.S. 927

(1987); Burlington Northern, Inc. v. American Ry. Supervisors

Ass’n, 503 F.2d 58, 62-63 (7th Cir. 1974) (per curiam), cert. denied,

421 U.S. 975 (1975).

—

ite ee a ae -

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Al a AOD AG A a i el ela ee red

13

11341(4) immunity encompasses all legal obstacles as nec-

essary to carry out approved control transactions, railway

labor will have veto power over control transactions that

the ICC has found to be in the public interest but that

might affect collective bargaining agreements. !3 The

Commission itself has recognized this danger. !4

The decision of the court of appeals thus threatens to

frustrate achievement of the public interest benefits of

approved control transactions and deter future control

transactions designed to make rail transportation even

more competitive and beneficial to the consumer: rail

carriers are far less likely to enter into control transac-

tions if railway labor need merely assert collective bar-

gaining rights to prevent the very changes motivating the

transactions and making them in the public interest. In

short, the decision below may chill a broad range of effi-

ciency-enhancing control transactions, thereby inhibiting

13 Absent § 11341(a), if railway labor does not consent to an imple-

menting change, the matter proceeds to negotiation pursuant to the

procedures of the RLA. But, as this Court has recognized, the RLA

procedures “are purposely long and drawn out” (Brotherhood of Ry.

& Steamship Clerks v. Florida East Coast Ry., 384 U.S. 238, 246

(1966)), and thus effectively preclude carriers from carrying out the

transaction if labor does not consent at the outset.

'4 Brief for the Interstate Commerce Commission at 34, Pittsburgh

& Lake Erie R.R. v. Railway Labor Execs’ Ass’n, No. 87-1589, Oct.

Term, 1988:

Any determination by the Commission that labor protections are

not appropriate to a rail transaction becomes purely advisory if

the transaction is subject to the RLA. Any rail transaction is

henceforth subject to a rail labor veto with the invocation of the

RLA. The Commission's determination about the public interest

with respect to the transaction which is required to take into

account among other things the interests of rail employees

becomes a nullity.

14

rail carriers ability to compete, all to the ultimate detri-

ment of the consumer.

6. Despite their longstanding interpretation of Sec-

tion 11341(a) and the Commission’s numerous decisions

giving effect to that interpretation (see supra n.6), the

federal respondents urge the Court to deny as “pre-

mature” the petitions for writs of certiorari in these cases.

Brief for the Federal Respondents in Opposition at 11.

The federal respondents assert that “the Commission is

presently exploring a variety of alternative bases. . . for

allowing approved consolidations to go forward without

resort to the extended bargaining procedures required by

the RLA” and that “[i]t is entirely possible that the Com-

mission will adopt a position on one or more of these

alternatives that may obviate the difficulties entailed by

the court of appeals’ decision. *** Thus, the Commission’s

ultimate disposition of the case on remand may not be

affected by the court of appeals’ present decision.” Id. at

11-12.

Contrary to the assertion of the federal respondents,

the Commission’s proceedings on remand will not obviate

the need for review of the question presented. In a Febru-

ary 9, 1990 voting conference in this matter, the Commis-

sion made clear that it does not intend to dispute or

challenge the court of appeals’ interpretation of Section

11341(a) in its decision on remand. Transcript of Voting

Conference at 14-15, 63-65, 74-75, CSX Corp.—Control—

Chessie System, Inc., Finance Docket No. 28,905 (Sub-

No. 22) (Feb. 9, 1990). Proceedings on remand will there-

fore add nothing to the existing record with regard to the

question presented by the instant petitions.

Moreover, the Commission’s decision on remand will

address issues relating only to labor. Jd. But the court of

~~

Re ee ee Se

15

appeals’ decision may be applied not only to collective

bargaining agreements, but also to other private con-

tracts. The Commission’s decision on remand will not

affect this important aspect of the decision below.

Thus, the question presented by these petitions is now

ripe. Nothing can be gained from further delay. Without

prompt review of the judgment, corporate planning deci-

sions will be significantly disrupted and the resulting

uncertainty will adversely affect the public interest. See

supra at 2, 12-14.15

CONCLUSION

For the foregoing reasons, the petitions for writs of

certiorari should be granted.

Respectfully submitted,

Bruce B. WILSON

CONSTANCE L. ABRAMS

A. RAYMOND RANDOLPH

Counsel of Record

JOHN B. Rossi, JR. PauL A. CUNNINGHAM

CONSOLIDATED RAIL CORPORATION DeNNIs A. AROUCA

1138 Six Penn Center Plaza James A. MEYERS

Philadelphia, PA 19103

PEPPER, HAMILTON & Sc

Telephone: (215) 977-4041 c=

1300 Nineteenth Street, N.W.

Washington, D.C. 20036

Telephone: (202) 828-1200

Attorneys for

Dated: February 28, 1990 Consolidated Rail Corporation

‘8 We submit that, even if this Court were to accept the federal

respondents invitation to wait until completion of the proceedings on

remand (along with appellate review of such proceedings), it should

not deny the petitions in these cases. Rather, it should defer their

consideration so that it may consider the question they present at the

same-time it considers the issues presented by the remand proceed-

ing.