Reply Brief — Norfolk & Western R. Co. v. Train Dispatchers

©

No. 89-1027

IN THE

Supreme Court of the United States

OCTOBER TERM, 1990

NORFOLK AND WESTERN RAILWAY COMPANY, et al.,

Petitioners,

V.

AMERICAN TRAIN DISPATCHERS ASSOCIATION, et all.,

Respondents.

——_—_—

On Writ Of Certiorari To The

United States Court Of Appeals

For The District Of Columbia Circuit

REPLY BRIEF FOR PETITIONERS

NORFOLK AND WESTERN RAILWAY COMPANY

AND SOUTHERN RAILWAY COMPANY

JEFFREY S. BERLIN

(Counsel of Record)

MARK E. MARTIN

RICHARDSON, BERLIN & MORVILLO

801 Pennsylvania Avenue N.W.

Suite 650

Washington, D.C. 20064

(202) 508-4502

WILLIAM P. STALLSMITH, JR.

Three Commercial Place

Seventeenth Floor

Norfolk, Virginia 23510

(804) 629-2815

Attorneys for Petitioners Norfolk

and Western Railway Company and

Southern Railway Company

November, 1990

a sssssssssssssnsassnnnsnnnnnnnnann

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

2in

TABLE OF CONTENTS 7

Page

TABLE OF AUTHORITIES. ..........c:cc.-csccssessesceseesss.-. ii

ARGUMENT ..........000+. A OTE Sa TT 2

I. This Case Is Controlled By The Plain Lan-

guage Of The Exemption Statute And By

is Court’s Decision In Schwabacher v.

CPR CI Niaticsdtrecottslinaiitciepitdiisecnaccseccceees 2

II. Congress Has Not Limited The ICC’s Au-

thority Over Railroad Consolidations In Any

Way That Changes The Operation Of The

I i. 5

III. The Straightforward Question Of Statutory

Interpretation Presented By This Case Is Not

— By Any Fifth Amendment

DUNDEE Ghbsdsavipcesnccnstnecscnceaevensdaianmiinctediesesssornceyes 16

TABLE OF AUTHORITIES

Page

Cases

Atkins v. Parker, 472 U.S. 115 (1985) .................. 20

Bowen v. Gilliard, 483 U.S. 587 (1987) ................. 17

Brotherhood of Locomotive Engineers v. Chi

North Redes ee 314 2d 424 (th ay

cert. denied, 375 'S. 819 Ee 11

Carnation Co. v. Pacific Westbound Conference, 383

TEE. FRB Ce ‘surtentertestecacetiabtibionansiienaiiicins 6

—— v. Pension Guaranty Corp., 475

1 ERE Ee ree 17,19

Consolidated Rail Corp. v. Metro-North Commuter

R.R., 638 F. Supp. 350 (Special Ct., Regional

Re Re na 18

Florida East Coast Ry. v. United States, 259 F.

Supp. 993 (M.D. 1966), affd in part and

appeal dismissed as moot in part, 386 U.S. 544

(TID UD cinccsistatintncstnncisienninicnsitidniniennibalmmmbiinn 14

ICC v. Brotherhood of Locomotive Engineers, 482

UB. TEU CREO D wccevccnestnicnnsninndcsnctsinsamabsitiaailiage §,11,16

Logan v. Zimmerman Brush Co., 455 U.S. 422

CRD ctcccseccsenesvecseneinenin teniieniiiisahaiiiamaiaiiaiaiiin, tinea 20

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

CIGD ccccccecsssssecesstssenssnssteneiceaamnaniiaaetds 6

Louisville & Nashville R.R. v. Mottley, 219 U.S. 467

CREED connscscssonccsenseessciionseniginiiieasianmiamenniaaaines 17

Missouri Pacific R.R. v. United Transportation

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

ted, GER UB. SEU CRG G) cccccssesenssctctiticimnntinees 11

National R.R. Passenger Corp. v. Atchison, Topeka

& Santa Fe Ry., 470 U.S. 451 (19885) ............ 18,19

Norman v. Baltimore & Ohio R.R., 294 U.S. 240

CETTE cccsacocessastnsccnssnniesestnennnsennensainaaaaaa 17

li

Table of Authorities Continued

Pennaylvania RR. v. United States Railroad seer

card, 261 U.S. 72 (1928) ote iiaaiinesasbinssenss

Pennaylvania RR, System & Allied Lines Federa

fees.” dl FERREYWONS HR. 267 U.S, 208

Pension Benefit C R.A, Gra

Co,, 467 U.S, ea , hes

(A088) w eteeee SSCCHH CRE C Cee eee EHH HERR eee eee Ree eee eee eee eee eee eee eee

United States v, aenden ‘908 U.S, 228 (1989) . _—

nies svensportetion Union v, Conssridetes Rail

corm, 535 F, Supp, 697 (Special Ct,, Regional

Rall Reo rg. Act)’ ert. denied, 457 use 1183

U v. Turner Elkhorn Mining Co., 428 U.S. 1

ee

Decisions of the Interstate Commerce Commission

Cniengs , St, Paul, Minneapolis & Omaha Ry. Lease,

B 1C.C, 606 (1968) ....sssersssereerenvsees : aveee 08 ,

CSX Corp,—Control—Chessie System, Inc. and Sea-

net onan Line Industries, Ine., 6 1.C.C.2d

Page

s

17,20

iv

Table of Authorities Continued

CSX Corp, wy ry aan Ine, and Sea

board Coast Line Finance

ches No, 3 28905 (Sub-No, 22), pe served

CSX Corp Ste eee eee eeeeeeeeeeeeeeeee n fre. and Sea

board Coast Line Finance

Docket No, 28905 (sb No 22), deciles served

October 29, 1990 SHCA CSSA SFT e AAP ee eee eee AAA e ee eee

Great Northern Lines, Ine. = os

M , Rte,

Rhy RR. =Abandonment, 282 1.C.C,

& Western Ry, Merger, Btc., Virginian Ry.,

807 1.0.0, 401 (1959) secre rvinian Ry,

Norfolk & Weatern Ry, and New York, Chicago &

aan R.R. Merger, Ete, 824 Koko it 1

Norfolk & Western Ry, and New York, Chicago &

ava RR. lerger, BRte,, 847 1.0.0,

Norfolk Southern C ~Control— Nor, & Weat.

ern Ry. and s Ry., 866 1.C,C, 178

Oregon Short Line R.R.—Abandonment Portion

Goshen Branch, 854 1L.C.C, 76 (1977) vnc

Pennaylvania R.R.—Merger—New York Central

R., 827 1.C.C, 475 (1! ERR

Southern Ry.—Control—Central of Georgia Ry 831

LC. Ry = aise dlah ea bt

Constitutional And Statutory Provisions

U.S, Constitution, Amendment Vo...

Eme “and Railroad Transportation Act of 1988,

| freee

12,18

ll

16

18,14

12

v

Table of Authorities Continued

Page

Interstate Commerce Act (former and recodified);

49 U.S.C, § BQQKL) vrrccssccecservereeeereeees sovennencsesceeee 16

Oe ies eeettsceteenenes —_ 7

EE a 12

49 U.S.C, § LIBAN (AM) vrrcccccerserseerees penceneesosens one Paaaim

49 U.S.C, §LIBA4(DKIND) coccccccccccccsececeees eseeee 6

Le passim

hablar Act, 29 U.S.C, §§ 101-116 ......... 12

0 t

“et ae fii ie ta

Omnibus B

97-86, vet Reciaion A “we > vn 16

Rail

organ aga tr

MAGEE et ctthen le rena 10

Railway Labor Act, 45 U.S.C, $4151 et seg. vores PARRIM

Regional Rail Reo

a oe

Transportation Act of 1920, ch. 91, 41 Stat, 456:

CeeD Tey GE BRIE, GOD ceccccccceccecoccecccccceececccceees: 7

i 7

PUY TIE TIT TIT ds scnconccscssiceesecedbneecesmenenenes 7

ID Wr TIS GUO cicccecccocsceccceenseccensnsecnsaiees 7,8

PY Ge MII TTD ccccccccocccceuecsecnenneenensnnmmnens |

Lo § 4g RE Seen 7

In THE

Supreme Court of the United States

OcToBeER TERM, 1990

No, 89-1027

NORFOLK AND WeeTern RatLway Company, et al,,

Petitioners,

Vv.

AMERICAN TRAIN DispaTCHERS AssociaTION, et al.,

Reapondents.

On Writ Of Certiorari To The

United States Court Of Appeals

For The District Of Columbia Circuit

REPLY BRIEF FOR PETITIONERS

NORFOLK AND WESTERN RAILWAY COMPANY

AND SOUTHERN RAILWAY COMPANY

Implicitly coens Oe the judgment of the

Court of Appeals cannot be sustained on the court's

own terms, the Union Respondents have abandoned

the court's reasoning and now advance a new set of

arguments, To present their case, however, the Union

Respondents have to re the plain of the

exemption statute, 49 U.S.C, § 11841(a), the

holding of Schwabacher v, United States, 884 U.S, 182

(1948), and impute to Congress an intent that is con-

tradicted by express legislative actions over the dec-

ades, Moreover, even on its own terms, the Union

Respondents’ approach fails, point by point,

ARGUMENT

I, This Case Is Controlled By The Plain Language Of

The E Statute And By This Court's Decision

In Sch v. United States,

The Court of Appeals held that railroads ng

out ICC-approved consolidations are not exempt from

claims based on labor agreements because (1) the ex-

emption “from all other law” applies only to positive

statutory enactments; (2) private contracts are not

such enactments; and (8) labor agreements are private

contracts, That holding obviously conflicts with

Schwabacher, in which Court gave effect to the

plain language of the exem statute, holding that

the exemption ‘from all law” applies to claims

based on private contracts,

The Union Respondents do not defend the Court

of Appeals’ reasoning, Instead, they contend that

claims based on labor agreements are outside the ex:

emption not because they are contractual in nature,

but because they pertain to labor relations, Thus, all

the Union Respondents say about Schwabacher is that

it does not apply here because it did not involve labor

relations, Union Br, at 43 n.57,

For the Union Respondents to prevail here, the

Court would have to hold that the statutory phrase

‘all other law" must be read to mean ‘all other law

except the law pertaining to labor agreements,"’ We

have already shown, in our opening brief, why this

reading is foreclosed, In Part I], below, we show why

the specific contentions presented by the Union

Respondents in support of their proposed rephrasing

of the exemption statute should be rejected on their

own merits, Preliminarily, we should explain why

much of what the Union Respondents have said in

their brief is simply beside the point in connection

with this Court's consideration of the question on

by

of Appeals, Although the Union Respondents devote

10C vomand pressotingn, autiingrtes hae tegen

re , t

in those proceedings is pertinent to the of

the reach of the § 11841(a) exemption, The ICC has

made clear that ite June 20, 1990 Remand Decision,

CSX Corp.—Control—Cheasie System, Ine, and Sea-

board Coast Line Industries, Inc., 6 1.C.C.2d 715

(1990),' was confined by the Court of Appeals’ narrow

reading of the exemption, which the ICC regards as

establishing the law of the case pending this Court's

decision here, Jd, at 722, 745, 760, 766 n.84. Of

course, the decision here will the further pro-

ceedings on remand, for it will matter, in the appli-

cation of the ICC's authority to administer employee

protective conditions under 49 U.S.C, § 11847,

whether the railroads are already exempt from the

Railway Labor Act, 45 U.S.C, §§ 161 et seg. (“RLA"),

and labor agreements to the extent necessary to per-

mit them to out the ed consolidation; for

this reason, the ICC has clear that it will have

to reconsider the Remand Decision if this Court agrees

'The ICC has denied the railroads’ petitions to re wen and

reconsider or clarify the Remand Decision. CSX Corp. ontrol—

Cheasie System, Ine, and Seaboard Coast Line Industries, Inc.,

Finance Docket No, 28906 (Sub-No. 22), decision served October

20, 1900,

with petitioners and the Federal Respondents as to

the extent of the § 11341(a) exemption. But the re-

verse is not true; the ICC’s interpretation of its

§ 11347 powers, undertaken in the shadow of the

Court of Appeals’ ruling, does not assist in resolving

the problem of statutory construction now presented

to this Court.?

Moreover, this case is not about the use of arbi-

tration in supposed tension with the commands of the

RLA, as the Union Respondents suggest (Br. at 33-

34, 42, 44). Of course, the original ICC decision in

this case (89-1027 Pet. App. at 29a) was rendered on

review of an arbitration award (Joint App. at JA-8)

which resolved a dispute between ATDA and these

petitioners under the ICC’s protective conditions. The

ICC concluded, inter alia, that its arbitrator had

framed his award on the basis of a correct under-

standing of the scope of the § 11341(a) exemption.

But the exemption does not depend on arbitration,

or any other specific form of dispute resolution, for

its existence; it is self-executing and does not imply

issuance of an ICC order of any kind beyond the

2The ICC set forth its position in its decision denying the

railroads’ petitions for a stay of the Remand Decision. CSX

Corp.—Control—Chessie System, Inc. and Seaboard Coast Line

Industries, Inc., Finance Docket No. 28905 (Sub-No. 22), decision

served July 20, 1990. See Appendix to Petitioner’s Supplemental

Response To Motion To Dismiss, filed by petitioner CSX Trans-

portation, Inc. in Case No. 89-1028 on September 28, 1990 (‘‘Pet.

Supp. Resp. App. (89-1028)”) at 10a. The ICC also made clear

that it would have to reconsider any suggestion in the Remand

Decision that the reach of § 11341(a) is merely coextensive with

the ICC’s authority under § 11347, see 6 I.C.C.2d at 754, if this

Court were to reverse the Court of Appeals’ decision. Pet Supp.

Resp. App. (89-1028) at 10a n.9.

original consolidation approval decision, JCC v. Broth-

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

298 (1987) (Stevens, J., concurring) (citing Schwa-

bacher). Limitations on the use of compulsory arbi-

tration under the RLA are plainly irrelevant to the

decision whether that statute is, in the first instance,

encompassed within “‘all other law’’ from which rail-

roads carrying out an approved consolidation are ex-

empt.

Questions involving the particular ways in which

the protective conditions are applied, including ques-

tions regarding interpretation of the language of the

conditions themselves as adopted by the ICC in ac-

cordance with its § 11347 mandate, are for another

day. However, the orderly administration of the pro-

tective conditions, including judicial review of ICC

decisions in the lower courts, will be assisted im-

measurably by a determination now that the

§ 11341(a) exemption does extend to claims that are

based on a railroad’s contracts and are asserted ex-

clusively under federal law.

II. Congress Has Not Limited The ICC’s Authority Over

Railroad Consolidations In Any Way That Changes

The Operation Of The Exemption Statute.

Distilled, the Union Respondents’ argument is that

because Congress has not given the ICC general re-

sponsibility “‘to authorize new rates of pay, rules, or

working conditions’ (Union Br. at 40), § 11341(a) is

ineffective to bar enforcement of RLA labor agree-

ments that would prevent a railroad from carrying

out a transaction the ICC had approved as in the

public interest. In advancing this proposition, the

Union Respondents simply cast ordinary principles of

statutory construction adrift. The Union Respondents

make no attempt to explain why it matters whether

or not the ICC has ‘‘complete control” over railroad

labor relations (Union Br. at 43 n.57), and it clearly

does not matter. By its terms, § 11341(a) vests the

ICC with “‘exclusive’’ jurisdiction over consolidations

and mergers and exempts railroads from “all other

law” as necessary to permit them to carry out an

approved transaction. There has been no congres-

sional action withdrawing railroad labor relations from

the operation of § 11341(a).‘

’ This Court has long recognized that the exemption provision

relieves carriers from the antitrust laws even though the ICC

does not have “either the duty or the authority to execute’’ or

“to enforce” those laws. McLean Trucking Co. v. United States,

321 U.S. 67, 79 (1944). The ICC is, of course, to take account

of the policies underlying the antitrust laws when deciding where

the public interest lies, id. at 85-87, but the ICC is “not to

measure proposals for all-rail consolidations . . . by the standards

of the anti-trust laws,” id. at 85. Congress has similarly directed

that the ICC consider “‘the interests of carrier employees af-

fected by the proposed transaction,” 49 U.S.C. § 11344(bX1\D),

when passing on a proposed consolidation and, beyond that, has,

in § 11347, mandated employee protective conditions to com-

pensate employees who are adversely affected by the consoli-

dation. Nothing in this suggests that § 11341(a) is ineffective in

the face of the RLA (and labor agreements) because the ICC

does not have the authority to execute and enforce that law.

‘The Union Respondents assert (Union Br. at 24, 43) that

§ 11341(a) is an implied repeal statute, hoping by this to obtain

the benefit of the doctrine that repeals by implication will be

found to have occurred only when it is impossible to give effect

to the competing statutes. But that doctrine has nothing to do

with this case. Section 11341(a) does not implicitly repeal the

RLA or any other statute; it creates an express exemption from

“all other law,” intended to permit railroads to carry out an

approved transaction. See generally Carnation Co. v. Pacific

Westbound Conference, 383 U.S. 213, 217-18 (1966) (contrasting

The Union Respondents, to be sure, assert that

such a limitation was built into the exemption pro-

vision at the time of its first enactment, as 49 U.S.C.

§ 5(8), in the Transportation Act of 1920.5 Their only

support for this contention, however, is the fact that

in Title III of the 1920 Act, ch. 91, 41 Stat. 456,

469, Congress created a Railroad Labor Board. Union

Br. at 36. That fact plainly does not support the

claimed limitation on the exemption provision, as we

have previously explained (NW Br. at 31 n.33). There

simply is no evidence that Congress intended the all-

encompassing language of the exemption provision—

“all other restraints or prohibitions by law, State or

Federal ... .”—to exclude Title III, a federal law.

There certainly is no inconsistency between the es-

tablishment in Title III of an administrative structure

intended to facilitate the voluntary resolution of day-

to-day labor disputes and the simultaneous grant to

the ICC of exclusive authority over mergers, backed

by an exemption of sufficient breadth to relieve rail-

roads, when necessary to the carrying out of such

transactions, of any expectation that they would sub-

mit to the Title III dispute resolution scheme.*®

Shipping Act’s express antitrust exemption for certain rate-

making activity with argument that overall structure of the act

impliedly repeals application of antitrust laws to the shipping

industry as a whole). It is the Union Respondents who would

have this Court fail to give effect to § 11341(a).

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

482, codified as 49 U.S.C. § 5(8).

* Title III provided for the voluntary creation of adjustment

boards to arbitrate disputes concerning “grievances, rules, or

working conditions,” Transportation Act of 1920, § 303, 41 Stat.

469-70; see id. §302, 41 Stat. 469, subject to appeal to the

Railroad Labor Board, id. § 307(a), 41 Stat. 470; and for direct

The Union Respondents necessarily must find the

labor relations exclusion to have been established in

the 1920 Act, because they rely on it in their effort

to avoid the obvious implication of Congress’ handling

of the issue in the next pertinent enactment,’ the

Emergency Railroad rtation Act of 1933

(“ERTA”), ch. 91, 48 Stat. 211. The Union Re-

spondents contend (Union Br. at 36-38) that the rea-

son the exemption provision in the temporary ERTA

Title I contained a savings clause for the RLA and

labor agreements, while the one in the permanent

ERTA Title II did not, is that the Federal Railroad

Coordinator’s powers exceeded those of the ICC and

Congress wanted to ensure that the Coordinator’s or-

ders did not infringe upon RLA rights.* In so arguing,

the Union Respondents necessarily concede that the

plain language of the ERTA Title IJ exemption, a

forerunner of § 11341(a), sweeps the RLA (and labor

agreements) within its scope, for it would have been

pointless for Congress to include a savings clause in

submission of such disputes to the Labor Board where no ad-

justment board was created, id. Disputes over wages were to

be presented directly to the Labor Board. Jd. § 307(b), 41 Stat.

471. Decisions of the adjustment boards and the Labor Board

were not legally enforceable. Pennsylvania R.R. System & Allied

Lines Federation No. 90 v. Pennsylvania R.R., 267 U.S. 203,

215-16 (1925); Pennsylvania R.R. v. United States Railroad La-

bor Board, 261 U.S. 72, 84-85 (1923).

7 The Union Respondents do not endorse the Court of Appeals’

view that the enactment of the RLA in 1926 manifested a

congressional intent to exclude labor agreements from the reach

of the exemption provision. See NW Br. at 33 n.34.

® Thus, the Union Respondents assert, without reference to

authority, that Congress ‘“‘specifically limited’ the ERTA Title

I exemption provision “because [the Coordinator’s] orders were

mandatory ....’’ Union Br. at 36 (emphasis added).

ERTA Title I if the exemptive language, which was

substantially the same in both ERTA titles, did not

otherwise reach the RLA and labor agreements. The

Union Respondents would hope to avoid this obvious

conclusion by contending that the same words in the

two ERTA titles really mean different things—that,

in Title I, the words “restraints ... by law, State or

Federal’’ include the RLA, while in Title II they do

not. But all the Union Respondents have to offer in

defense of this innovative approach to plain language

is the deus ex machina that the ICC lacks jurisdiction

over labor relations. Union Br. at 38.°

The significance of ERTA is that the statute dem-

onstrates clearly that Congress knows how to carve

out special protection for the RLA and labor agree-

ments when it chooses. Congress did so for a three-

year period where it thought this appropriate, but did

not do so in its general grant of authority to the ICC

over consolidations, from which §1134l(a) is de-

scended. .

As for the failed Harrington amendment to the 1940

Act, the Union Respondents have virtually nothing to

say (Union Br. at 39). This Court has explained that

the Harrington amendment—whose language is es-

sentially what the Union Respondents contend has-

somehow been in the law from the start—‘“‘introduced

a new problem” as it “threatened to prevent all con-

solidations to which it related.”” Railway Labor Ex-

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

*It was held long ago that the exemptive language in ERTA

Titles I and II has a single meaning. Texas v. United States, 6

F. Supp. 63, 65 (W.D. Mo.) (three-judge court) (per curiam), aff'd,

292 U.S. 522 (1934).

10

151 (1950). Congress rejected the Harrington amend-

ment for this reason, id. at 147-54, and neither the

amendment’s language nor its functional equivalent

has been made part of the Interstate Commerce Act.

In this connection, we have already shown (NW Br.

at 43-48) that the 1976 amendment of the predecessor

to 49 U.S.C. § 11347" did not enact, sub silentio, the

Harrington amendment by removing the RLA and

labor agreements from the scope of the § 11341(a)

exemption. We anticipated and answered all of the

Union Respondents’ arguments (Union Br. at 45-47)

relating to the/1976 statutory amendment.

ae

The Union Respondents also suggest, in passing,

that § 11341(a) perhaps does not apply here at all

because the transfer of work at issue in this case did

not ‘carry out” the Norfolk Southern railroad control

transaction that the ICC approved. Union Br. at 25-

26. The control transaction, they would say, was fully

“carried out’? when Norfolk Southern Corporation ex-

changed its stock certificates for the stock certificates

evidencing separate ownership of NW and Southern.

The Union Respondents of course cite no authority

in support of this proposition, which ignores the ob-

vious meaning of the statutory words, and the prop-

osition is insupportable. Texas v. United States, 292

U.S. 522, 583-35 (1934)." The courts have routinely

1© Railroad Revitalization and Regulatory Reform Act of 1976,

Pub. L. No. 94-210, § 402(a), 90 Stat. 31, 62.

In Texas v. United States, the Court, holding the statutory

exemption then in effect (ERTA Title II) applicable to the ICC’s

approval of a lease providing for the removal of offices from

Texas in disregard of state law restrictions, said:

The scope of the immunity must be measured by the

1}

found that the § 11841(a) exemption applies to op-

erational changes that constitute the implementation

of ICC-approved rail transactions. E.g., Missouri Pa-

cific R.R. v, United Transportation Union, 782 F.2d

107, 111-12 (8th Cir, 1986) (per curiam) (operation of

trains using trackage rights authorized by the ICC in

connection with a rail merger held exempt from RLA

challenge), cert, denied, 482 U.S. 927 (1987); Broth-

erhood of Locomotive Engineers v. Chicago & North

Western Ry., 814 F.2d 424, 427, 481 (8th Cir.) (post-

merger coordination of rail yards held exempt from

RLA), cert. denied, 875 U.S, 819 (1963). See generally

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

at 287 (Stevens, J., concurring).”

Lacking any support for their reading of § 11841(a)

in the actions of Congress, the Union Respondents

turn instead to the actions of the ICC and of the

railroads themselves. But no support for the Union

Respondents’ position is to be found in either place,"

purpose which Congress had in view and had consti-

tutional power to accomplish. As that purpose involved

the promotion of economy and efficiency in interstate

transportation by the removal of the burdens of ex-

cessive expenditure, the removal of such burdens when

imposed by state requirements was an essential part

of the plan.

292 U.S. at 584-35,

“There is no significance to the fact (Union Br. at 8) that

when NW and Southern filed their primary ICC contro! appli-

cation, they also filed, as statutorily required, four companion

applications for approval of the construction of connecting tracks

and two for approval of line abandonments, NV. Southern

Corp.—Control—Norfolk & Western Ry. and S Ry., 366

LC.C, 178, 245-47 (1982),

“The Union Respondents also cite to Texas & New Orleans

12

The ICC decisions cited by the Union Respondents

(Union Br, at 28-82) belie the contention that, before

1988, the ICC took the position that transactions it

had approved as in the public interest remained vul-

nerable to defeat through the assertion of RLA-de-

rived rights. In Chicago, St. Paul, Mi is &

Omaha Ry. Lease, 295 1.C.C, 696 (1958), ICC

merely held that there was no need for it specifically

to declare whether a carrier should be relieved from

the RLA because the exemption provision was self-

executing. Jd. at 702." The whole point of Southern

Ry.—Control—Central of Georgia Ry., 881 1.C.C, 151

(1967), was to make clear that employees could not

invoke RLA rights in connection with the carrying

out of an approved transaction, id. at 162-64, as the

assertion of such rights ‘would seriously impede

mergers,” id, at 171. And in Norfolk & Western Ry.

R.R. v. Brotherhood of Railroad Trainmen, 807 F.2d 151 (5th

Cir, 1982), cert. denied, 371 U.S, 952 (1963), in su of their

position that the ICC's “exclusive jurisdiction” § 11841(a)

is really of “limited nature."’ Union Br, at 41, But Texas & New

Orleans stands for no such proposition. In that case, the Fifth

Cireuit held only that, in the circumstances presented, 49 U.S.C.

§ 5(11) (the predecessor to § 11841(a)) did not operate to over:

come the withdrawal of federal court jurisdiction to enjoin a

strike accomplished in the Norris-LaGuardia Act, 29 U.S.C.

$4 101-115. The Fifth Circuit, however, went on to make clear

that if the ICC's jurisdiction over transactions was “being frus-

trated by application of Norris-LaGuardia to the present suit,

we w have to conclude that Norris-LaGuardia was preempted

by section 5(11), even though section 5 is not labor legislation.”

807 F.2d at 158.

“The ICC also observed, on the facts of the case, that the

RLA had not been shown to have been a barrier to the carrying

out of the particular lease transaction involved, 295 L.C.C, at

702.

18

and New York, Chicago & St. Lowis R.R.—Merger,

Ete,, 847 1.C,C, 606, 511-12 (1974), the ICC expressly

stated that the exemption provision applies to RLA-

derived rights. That position has long been and re-

mains a cornerstone of ICC regulation of mergers and

consolidations."

Nor is there anything in the railroads’ own behavior

over the years that would suggest that the railroads

thought themselves subject to labor agreement claims

that could defeat the carrying out of approved merg-

ers. The Union Respondents contend (Union Br, at

17, 27) that the railroads must have had such an

understanding because otherwise the railroads would

not have entered into supposedly costly agreements

in connection with several significant mergers, mostly

in the 1960s, which provided employees with guar-

antees of lifetime ey47 (so-called attrition pro-

tection agreements), No such inference is pe le.

In case after case, the record makes clear that the

railroads of that era considered the cost of attrition

protection to be slight~in some instances even less

than the cost of compliance with the employee pro-

tective conditions that would otherwise have been im-

posed by the ICC under the predecessor to § 11347,

44 Pennsylvania R.R.—Merger—New York Central

R.R., 827 L.C.C, 475, 544 (1966) (carriers calculated

that cost of attrition protection would be $5 million

less than cost of ICC’s protective conditions); Norfolk

Gulf, Mobile & Ohio R.R.—Abandonment, LC.C, $11,

335 (1952), evidences not a disavowal (Union Br. at 21 n.87)

but a recognition of the ICC's authority to abrogate private

contracts in the case of transactions, unlike the one involved in

Gulf, Mobile itself, to which the exem provision ied,

See NW Br. at 20 n.23. oan -”

14

& Western Ry. and New York, Chicago & St, Lowis

R.R.—Merger, Ete., 824 LC.C, 1, 89 (1964) (antici-

pated gain in number of jobs available on the merged

system would counterbalance the costs of protecting

existing emplo against loss of jobs); Norfolk &

Western Ry. Merger, Etc., Virginian Ry., 807 L.C.C.

401, 489 (1959) (same),

Moreover, the railroads considered the costs asso-

ciated with providing attrition protection to be far

outweighed by the the railroads obtained in the

bargains they struck with the unions. Typically, the

railroads obtained the contractual right to transfer

employees and work throughout the merged systems,

without rd to Me ogee ph 4 por nnen were nec:

e to carrying out ! mergers—

= eee beyond what the railroads could obtain

by virtue of the statutory exemption.” And in ex-

change for attrition protection, the railroads also ob-

tained the unions’ agreement to drop their opposition

to the mergers.””

* B.g., Pennsylvania R.R.—Merger—New York Central R.R.,

827 1.C.C, at 685; Norfolk & Western Ry. and New York, Chicago

& St. Lowis R.R.—Merger, Btc., 824 1.C.C, at 89; Great Northern

Pacific & Burlington Lines, Inc.—Merger, Etc.—Great Northern

Ry., 881 LC.C, 228, 278 (1967), aff'd sub nom, United States v,

ICC, 296 F. Supp. 853 (D.D.C, 1968) (three-judge court), aff'd,

896 U.S. 491 (1970),

" For example, as a result of the Orange Book agreement

involved in Case No, 89-1028, labor ended its challenge to the

ICC's approval of the consolidation of the Atlantic Coast Line

Railroad and the Seaboard Air Line Railroad, See Florida East

Coast Ry. v. United States, 259 F. . 998, 1017-19 (M.D.

Fla. 1966) (three-judge court) (RLEA “bitterly attacks as in-

adequate" the employee protective conditions imposed by ICC),

aff'd in part and appeal of RLEA dismissed as moot per curiam,

886 U.S, 544, 545 (1967).

15

J y ~ — Respondents seer oa to find comfort

partisan support for etime protective

benefits that Congress wrote into Title V of the 8R

Act, which created Conrail." According to the Union

Respondents (Union Br, at 27-28), the railroad in-

dustry's rt for those generous employee benefits

somehow a that the railroads did not believe that

the ICC’s approval of an ordinary rail merger under

the Interstate Commerce Act carried with it any ex-

emption from the restrictions of existing labor agree-

ments, But the Union Respondents ignore that the

conveyance of bankrupt railroad properties to Conrail

was not an ordinary merger under the Interstate

Commerce Act; that Title V labor protection was

largely to be funded by the government, not the rail-

roads; that employees of the former Penn Central—

the principal predecessor to Conrail—already enjoyed

lifetime wage protection and the 8R Act therefore did

not expand but merely continued in effect an existing

level of benefits; and that, as part of the package,

Conrail was given the right to transfer work and

employees throughout its system without regard to

whether the transfer was causally related to the

transaction authorized by the 8R Act.’

Regional Rail Reorganization Act of 1978, Pub. L. No, 93-

236, 87 Stat. 985,

Tite V was repealed in 1981 by the Omnibus Budget Ree-

oneciliation Act, Pub. L. No, 97-85, 95 Stat. 669, largely because

it proved too expensive, Northeast Rail Service Act of 1981, 95

Stat, 644, 45 U.S.C. § 1101(4). Moreover, the ICC itself has made

clear that Title V represented “a development outside

the mainstream of employee labor protection under 5(2\f)

of the [Interstate Commerce] act."’ Oregon Short Line R.R.—

Abandonment Portion Goshen Branch, 364 1.C.C, 76, 84 (1977).

16

Point by point, there simply is no substance to any

of the contentions advanced by the Union Re-

spondents, This is hardly surprising. More than fifty

years ago, this Court recognized that employees inev-

itably would lose fundamental contract rights as a

consequence of DOC eogreved seston . United

States v. Lowden, U.S. 225, 288 (1989). It was

precisely because of the need to redress such loss that

the ICC was authorized to impose compensatory em-

ployee protective conditions even absent a specific

statutory directive. Jd. at 233-84 (‘‘just and reasonable

treatment of railroad employees in mitigation of the

hardship imposed on them in carrying out the national

transportation policy of railroad consolidation” fur-

thers the of that policy), Fi-

nally, the question whether § 11341(a) reaches labor

agreements governed by the RLA was addressed, and

answered in the affirmative, by the four Justices con-

curring in the judgment in JCC v. Brotherhood of Lo-

comotive Engineers, 482 U.S. at 295, 28, an opinion

the Union Respondents have elected not to mention.

, 8 tforward Question Of Sta Inter-

~ ton Presented By This Case Is Not 1 uenced

By Any Fifth Amendment Issue.

Although the Union Respondents do not squarely

unas Ge Ue ale te Oe coe eee

a “taking” of property or deprived them of due proc-

ess within the meaning of the Fifth Amendment, they

contend that the Court should read § 11841(a) their

way in order to avoid creating a ble constitu-

tional difficulty. Union Br, at 47-49. The invitation

should be declined not only because the Union

Respondents’ statutory interpretation is plainly in-

17

correct, but also because the supposed constitutional

problem is nonexistent,

The purported “taking” claim fails the analysis of

Connolly v. Pension Benefit Guaranty Corp., 475 U.S.

211 (1986), There, the Court stated that whether a

given governmental action constitutes a Fifth Amend-

ment taking should be determined on the dasis of an

ad hoc factual analysis of three factors of “

significance”: the economic impact of the regulation

on the claimant; the extent to which the tion

has interfered with distinct investment-backed expec-

tations; and the character of the governmental action.

Id. at 225; accord Bowen v, Gilliard, 483 U.S. 587

(1987),

The enforceability of contracts that relate to the

railroad industry has always been contingent on the

federal government's tive and regulatory initi-

atives. E.g., Lowisville & Nashville R.R. v. Mottley,

219 U.S, 467, 482 (1911) (statute forbidding free

passes for travel by rail that deprived plaintiffs of

their lifetime passes did not effect a taking because

regulation of the industry was foreseeable). The NW

employees represented by ATDA in this case could

not reasonably have their contracts to be

immune from federal regulation. See United Trans.

portation Union v. Consolidated Rail Corp., 635 F.

Supp. 697, 705-08 (Special Ct., Regional Rail Reorg.

Act) (Friendly, J.) (no taking where statute extin-

guished contract rights of railroad employees and sub-

jected some em ~ ag to termination), cert. denied,

457 U.S. 1183 iv 2); Norman v. Baltimore & Ohio

R.R., 294 U.S, 240, 307-08 (1935) (“Contracts may

create rights of property, but when contracts deal

with a subject matter which lies within the control

18

of the Congress, they have a congenital infirmity.

Parties cannot remove their transactions from the

reach of dominant constitutional power by making

contracts about them.’’).”°

The ICC’s routine imposition of employee protective

conditions in railroad consolidation cases, in accord-

ance with the Interstate Commerce Act, reconciles

the interests of railroads and their employees. All the

NW employees whose interests are involved in this

case have received the full benefit of the protective

conditions, including wage protection for up to six

years. In addition, these employees benefitted from

having the opportunity to be hired by Southern as

officers, on better terms and at higher pay than they

had previously enjoyed.”

20 “Perhaps no industry has a longer history of pervasive fed-

eral regulation than the railroad industry.” Consolidated Rav

Corp. v. Metro-North Commuter R.R., 638 F. Supp. 350, 357

(Special Ct., Regional Rail Reorg. Act 1986) (citing National

R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry., 470

U.S. 451, 469 (1985), and holding that statute relieving congres-

sionally created rail corporation of its contractual obligations to

provide commuter services did not effect a taking despite fi-

nancial loss caused to the other contracting parties).

21 The Union Respondents acknowledge that employees receive

compensation through the mechanism of the ICC’s protective

conditions but they find the compensation insufficient, saying

that the conditions “protect an employee’s compensation but,

because they are premised on the assumption that contract rights

will be preserved, do not compensate employees for lost contract

rights.” Union Br. at 49 (emphasis in original). The extent to

which the protective conditions contemplate the preservation of

existing contracts is a subject of dispute, but the resolution of

that dispute does not bear on the question presented on

certiorari. Our view is that the protective conditions safeguard

existing contract arrangements to the extent that the ICC, in

19

Here, the ICC did not appropriate any assets for

public use, but merely presided over a legitimate ad-

justment of the “benefits and burdens of economic

life to promote the common good,”’ Connolly v. Pen-

- fron yaa. — 475 U.S. at 225. There

| . “~

. y .4 g for which compensation

There is, similarly, no reason to entertain the Union

Respondents’ supposed due process complaint. A fed-

eral statute alleged to impair a private contract is

subject to “especially limited,” “minimal” judicial

scrutiny. National R.R. Passenger Corp. v. Atchison,

Topeka & Santa Fe Ry., 470 U.S. 451, 472 (1985).

The party asserting a Fifth Amendment due process

violation must overcome a presumption of constitu-

tionality and ‘ “establish that the legislature has acted

in an arbitrary and irrational way.”’” Id. (quoting

Pension Benefit Guaranty Corp. v. R.A. Gray & Co.,

467 U.S. 717, 729 (1984), quoting Usery v. Turner

Elkhorn Mining Co., 428 U.S. 1, 15 (1976)).4 No such

showing could conceivably be made here. See Usery

v. Turner Elkhorn Mining Co., 428 U.S. at 15 (Court

has long “upheld against due process attack the com-

petence of Congress to allocate the interlocking eco-

oe its 49 U.S.C. § 11347 authority, has decided such

on 1s appropriate. No claim of constitutional magnitude i

precipitated by the ICC’s decision. hs

22 The Union Respondents could not press a taking claim in

any event until they had sought compensation through the pre-

sumptively available Tucker Act remedy. See, e.g., Preseault v.

ICC, 110 S. Ct. 914, 921-22 (1990).

* Even this minimal scrutiny is not reached unless the im-

pairment of private contract is proved “substantial.” National

R.R. Passenger Corp., 470 U.S. at 472.

20

nomic rights and duties of employers and employees

... regardless of contravening arrangements between

employer and employee’); Atkins v. Parker, 472 U.S.

115, 129-30 (1985) (Where federal legislation adjusts

economic benefits and burdens, “ ‘the legislative de-

termination provides all the process that is due.’ ”’)

(quoting Logan v. Zimmerman Brush Co., 455 U.S.

422, 433 (1982)); United Transportation Union v. Con-

solidated Rail Corp., 535 F. Supp. at 705-08.

CONCLUSION

The judgment of the Court of Appeals should be

reversed.

Respectfully submitted,

JEFFREY S. BERLIN

(Counsel of Record)

MARK E. MARTIN

RICHARDSON, BERLIN & MORVILLO

801 Pennsylvania Avenue, N.W.

Suite 650

Washington, D.C. 20004

(202) 508-4502

WILLIAM P. STALLSMITH, JR.

Three Commercial Place

Seventeenth Floor

Norfolk, Virginia 23510

(804) 629-2815

Attorneys for Petitioners Norfolk

and Western Railway Company and

Southern Railway Company

November, 1990