# Respondents Brief — CSX Transportation, Inc. v. Brotherhood of Railway Carmen (Nos. 89-1028, 89-1027)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Respondents Brief
- **Published:** January 1, 1989

## Text

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DISPATCHERS ASSOCIATION, ET AL.

Boreiianoon oF RAILWAY CARMEN, ET AL.

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| SQN WRITS OF CERTIORARI
By 9 The ynITED ATES COURT OF APPEALS

OF COLUMBIA CIRCUIT

QUESTION PRESENTED

Whether, under 49 U.S.C. 11341(a), a party that has
entered into a merger approved by the Interstate Com-
merce Commission is exempt from the legal obligations
imposed by a collective bargaining agreement, to the ex-
tent such an exemption is necessary in order to implement
the merger.

— i— =

Statement ..

TABLE OF CONTENTS

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Argument:

Under 49 U.S.C. 11341(a), a party that has entered
into a merger approved by the Commission is ex-
empt from any legal obligation imposed by a collec-
tive bargaining agreement, to the extent such an ex-
emption is necessary to implement the merger .... .

A.

The text of Section 11341(a) makes clear
that participants in an ICC-approved
merger are exempt from all legal
obstacles, including obligations under
collective bargaining agreements, that
may jeopardize the implementation of the

The legislative history of Section 11341(a)
confirms that 1CC-approved mergers are
exempt from all legal obstacles, including
collective bargaining agreements, that
may jeopardize the implementation of the
EEE SENSES OTT OTTTEe
1. The Transportation Act of 1920 ....
2. The Emergency Railroad Transporta-

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(111)

21

22

Ss

IV

Page

3. The Transportation Act of 1940.... 35
C. The court of appeals’ decision cannot be

squared with the purpose of the ICA con-
’ solidation provisions ..............5+. 39
D. The court of appeals erroneously declined

to defer to the Commission’s construction

of Gestinm BEDSEED oc tacccteccccccce. 42

Cities, . ..g cic cdnensessesdedsndedscbedeoocecs 44

TABLE OF AUTHORITIES

Cases:
Aaron v. SEC, 446 U.S. 680 (1980) ...........55. 23
Brotherhood of Locomotive Eng’rs v. Boston &
Maine Corp., 788 F.2d 794 (ist Cir.), cert.
denied, 479 U.S. 829 (1986) .... 0... eee ee 25

Brotherhood of Locomotive Eng’rs v. Chicago &
N.W. Ry., 314 F.2d 424 (8th Cir.), cert. denied,

375 U.S. 819 (1963) ..........65565- 19, 20, 25, 26, 41
Brotherhood of Maintenance of Way Employes v.

United States, 366 U.S. 169 (1961) ............ 38
Brotherhood of R.R. Trainmen v. Jacksonville

Terminal Co., 394 U.S. 369 (1969) ............ 6, 41
Bundy v. Penn Cent. Co., 455 F.2d 277 (6th Cir.

"EIRENE DAP Oe, 26

Burlington Northern Inc. v. American Ry. Super-
visors Ass'n, 503 F.2d 58 (7th Cir. 1974), cert.
denied, 421 U.S. 975 (1975) .. 0... ee eee. 26
Burlington Northern R.R. v. Brotherhood of
Maintenance of Way Employes, 481 U.S. 429
GREED cvcocecccescescescesesneseecesoscces 20, 41
CSX Corp. — Control —Chessie Sys., Inc., & Sea-
board Coast Line Indus., Inc., Finance No.

28905:
(Sub-No. 1), 363 1.C.C. 521 (1980) .......... 11, 12
(Sub-No. 22) (Aug. 31, 1989) ............... 17

V
Cases — Continued: Page
California ¥. Taylor, 353 U.S. 553 (1957) ........ 25
Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984) ............ 14-15,
21, 42, 43
Consolidated Rail Corp. v. Railway Labor Execu-
tives’ Ass’n, 109 S. Ct. 2477 (1989) ............ 20, 41
Consumer Prod. Safety Comm'n v. GTE Sylvania,
EE ee 23
Detroit & Toledo Shore Line’ R.R. vy. United
Transp. Union, 396 U.S. 142 (1969) ........... 20, 41
Elgin, J. & E. Ry. v. Burley, 325 U.S. 711 (1945),
BE e 6, 41
Erie R.R. v. Tompkins, 304 U.S. 64 (1938) ....... 27
Farmers & Mechants Bank v. Federal Reserve
Bank, 262 U.S. 649 (1923) ................... 24
Fedorenko v. United States, 449 U.S. 490 (1981)... 34
Fox v. Standard Oil Co., 294 U.S. 87 (1935) ...... 38
Greyhound Corp. v. Mt. Hood Stages, Inc., 437
SS 23
Hendrickson v. Apperson, 245 U.S. 105 (1917) ... 24
ICC v. Brotherhood of Locomotive Eng’rs, 482
RN, Coes cn ose ccdbcséuces 35

INS v. Cardoza-Fonseca, 480 U.S. 421 (1987) ..23, 33, 38
Kissinger v. Reporters Comm. for Freedom of the

FREE, SED UB, CRB CIGD 6 occ ccccccccccccecs 33
Lawrence County v. Lead-Deadwood School Dist.

No. 40-1, 469 U.S. 256 (1985) ............"... 34
Lehman v. Nakshian, 453 U.S. 156 (1981) ........ 34
Local 24, Int'l Brotherhood of Teamsters v. Oliver,

aC Ea a a 24
Louisiana v. New Orleans, 102 U.S. 203 (1880) ... 24
McLean Trucking Co. v. United States, 321 U.S.

CASE tind ncn dsdudidinementbcides 27, 39

Missouri Pac. R.R. v. United Transp. Union, 782
F.2d 107 (8th Cir. 1986), cert. denied, 482 U.S.
idee wece ene TETT TTT eee 26

Vi
Cases — Continued:
Nemitz v. Norfolk & W. Ry., 436 F.2d 841 (6th
Cir.), aff'd, 404 U.S. 37 (1971) .. 2. eee
New York Dock Ry. —Control— Brooklyn Eastern
Dist. Terminal, 360 1.C.C. 60, aff'd sub nom.
New York Dock Ry. v. United States, 609 F.2d
|] [- 3S Pe, ce Cee
Norfolk Southern Corp.—Control—Norfolk &
W. Ry., and Southern Ry., Finance No. 29430
(Sub-No. 1), 366 1.C.C. 173 (1982) ............
Ogden v. Saunders, 25 U.S. (12 Wheat.) 212
CREED io cbcccudddedevéedebecdeddbede duces
Pittsburgh & Lake Erie R.R. v. Railway Labor
Executives’ Ass'n, 109 S. Ct. 2584 (1989) .....,.
Pittston Coal Group v. Sebben, 109 S. Ct. 414
ED cnduteenccesectusdsnGsbedeee es 60 ccces
Railway Employes’ Dep't v. Hanson, 351 U.S. 225
Dh
comply with the Railway Labor Act before effecting such
a change. CSX invoked arbitration under the New York
Dock conditions, and the matter came before a three-
member arbitration panel. Pet. App. 4a-Sa.

The arbitration panel concluded that the Orange Book
prohibited the proposed transfer of work and employees.
89-1028 Pet. App. 82a-83a. The panel stated, however,
that as a “quasi-judicial extension of the ICC” (id. at 80a),
it had the authority to override any Orange Book or RLA
provision that impeded the transfer decision. The panel
then held that (1) it would override the Orange Book pro-
hibition on the transfer of work, but not on the transfer of
employees, and (2) it would exempt CSX from the RLA
insofar as the statute might require the carrier to bargain
before unilaterally changing the Orange Book with respect
to the transfer. Pet. App. Sa-6a.''

b. By a divided vote, the Commission affirmed in part
and reversed in part. 89-1028 Pet. App. 33a-52a. The
Commission agreed that the arbitrators were “empowered
to override collective bargaining rights, such as those in
the Orange Book, and RLA rights in formulating the im-
plementing agreement ” /d. at 43a. But it rejected the
panel’s refusal to permit the transfer of employees to
Raceland. The Commission reasoned that if, as the panel
had found, the Orange Book prohibits such a transfer of
employees, then to enforce the Orange Book in this setting

'! The arbitrators also found that although the proposed consolida-
tion of freight car repair facilities “was not expressly and specifically
presented to the Commission during administrative proceedings
culminating in approval of the control application,” the transaction
was nevertheless an “action taken pursuant to authorizations of th{e]
Commission,” within the meaning of New York Dock. 89-1028 Pet.
App. 78a.

14

would “serve[ ] as an impediment to implementation of a
transaction authorized by the Commission.” /d. at 44a.
The Commission also found that, in light of the positions
available at Raceland and the number of Waycross
employees eligible for those positions, “[iJmposition of an
Orange Book employee exception would effectively pre-
vent implementation of the proposed transaction.” /d. at
45a.'2, The Commission accordingly reversed the ar-
bitrators’ decision “to the extent it holds that CSX may not
require transfer of [Seaboard] employees as well as work
from Waycross to Raceland.” Jd. at 44a.'?

3. The Court of Appeals’ Decision

The court of appeals considered the two cases together
and reversed and remanded. Pet. App. la-26a. The court
held that Section 11341(a) of the Act does not authorize
the Commission to relieve a party to a Section 11343 trans-
action of contractual obligations that impede implementa-
tion of <he transaction.'* The court explained that the

'2 In particular, the Commission noted that CSX “propose[d] to
establish a total of 107 positions at Raceland, including 86 carmen
positions. ©f the 86 Waycross carmen who are eligible for those posi-
tions, 57 are entitled to Orange Book protection.” If the arbitrators’
decision prevailed, the Commission ovserved, “those 57 Waycross
employees (over 55 percent of the proposed Raceland work force)
[could] refuse to accept positions at Raceland.” 89-1028 Pet. App.
44a-4Sa.

13 Commissioner } amboley dissented. 89-1028 Pet. App. 46a-52a.
He expressed “substantial doubt” that the proposed transfer of work
and employees was a transaction authorized by the Commission’s
prior approval of the control by CSX of Chessie and Seaboard. /d. at
46a. He also rejected the proposition that “any conflict, regardless of
origin or degree, is an impediment pre-empted by [Interstate Com-
merce Act} provisions.” /d. at 49a.

'4 The court of appeals acknowledged that the rule of deference ar-
ticulated in Chevron U.S.A. Inc. v. Natural Resources Defense Coun-

15

Statute does not expressly state that the ICC may 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
[collective bargaining agreements].” Pet. App. 12a. The
court stated that the Commission’s contrary view found
“no support in the language of the statute,” explaining that
the phrase “all other law” in Section 11341(a) cannot be
read to include “all legal obstacles.” Pet. App. 12a.

~The court also found no evidence in the legislative
history to support the Commission’s construction of Sec-
tion 11341(a). Pet. App. 13a-19a. Looking solely to the
Transportation Act of 1920, ch. 91, § 407, 41 Stat. 482,
the court stated that Congress had “focused nearly ex-
clusively *** on specific types of laws it intended to
eliminate—all of which were positive enactments, not
common law rules of liability, as on a contract.” Pet. App.
18a. The court also discerned in the legislative history “a
healthy respect for privately negotiated contracts.” /bid.
“And never, on the several occasions when Congress has
revisited the immunity provision, has it either broadened
that provision so as to reach ‘all legal obstacles’ to an ICC-
approved transaction, or acted more specifically to bring
‘contracts’ or ‘collective bargaining agreements’ within the
reach of the statute.” Jd. at 18a-19a.

The court next “decline[d] to address the question” (Pet.
App. 19a) whether Section 11341(a) may operate to over-
ride provisions of the RLA. Observing that the Commis-
sion’s present position with respect to the RLA “depart[s]}

cil, Inc., 467 U.S. 837 (1984), “applies to the 1CC’s reading of the
statute that it is charged with implementing.” Pet. App. Ila. The
court stated, however, that deference may be afforded only where a
court determines, “based upon the language of the statute and the
‘traditional tools of statutory construction,’ * * * that Congress has
not ‘directly spoken to the precise question at issue.’ ” /bid.

16

from its earlier precedent” (Pet. App. 23a), the court
directed the agency on remand either to “provide an ex-
planation for its new position on that issue, or adhere to
its prior position.” Jd. at 25a. The court also explained
that, “fiJn light of [its] holding that § 11341(a) does not
empower the ICC to override a [collective bargaining
agreement], it is unclear what are the consequences, if any,
of its rulings that the carriers need not comply with the
RLA.” Jd. at 23a. Because of the “uncertainty as to the ef-
fects of [the] ruling on the continued vitality of the
disputes,” the court devided to remand the RLA issue to
the Commission “to determine whether there is any live
RLA issue remaining.” Jd. at 25a.

Finally, the court “decline[d] to address either the ICC’s
theory that the labor protective conditions required by
§ 11347 of the Act are exclusive, or its related assertion
* * * that § 4 of the New York Dock conditions gives the
arbitration committee the ‘absolute right’ to effectuate the
transfer of employees, and to override any contrary provi-
sions of a [collective bargaining agreement].” Pet. App.
25a. Inthe eourt’s view, the Commission had not raised
those claims in its court of appeals’ brief. “In any event,”
the court concluded (id. at 26a), it is “best for the ICC, if it
has not abandoned its § 11347 and §4 rationales
altogether, to reconsider them in the first instance in light
of” this Court’s intervening decision in Pittsburgh & Lake
Erie R.R. v. Railway Labor Executives’ Ass’n, 109 S. Ct.
2584 (1989).

4. Petitioners filed petitions for rehearing in the court
of appeals. The Commission also filed a “limited” petition
for rehearing. In it, the agency advised the court of its “in-
tention to reopen these proceedings and to promptly issue
a comprehensive decision on remand addressing issues [the
agency] believe[s] the court directed [it] to reconsider and
those left open for resolution in further proceedings.” The

17

Commission accordingly “requested that the court refrain
from ruling on [the agency’s} petition for rehearing until
{the agency has] issued [its] decision on remand.” CSX
Corp. —Control—Chessie Sys., Inc. & Seaboard Coast
Line Indus., Inc., 1CC Finance No. 28905 (Sub-No. 22)
(Aug. 31, 1989) (hereafter, ICC Finance No. 28905].

By order served September 20, 1989, the Commission
“reopen(ed] the[ ] proceedings so that [it] could address
and explain in detail [its] views on the issue specifically
remanded; i.e., whether the provisions of 49 U.S.C.
11341(a) operate to override the provisions of the Railway
Labor Act (RLA), as well as on the general issues raised in
these proceedings, particularly the impact of our approval
of a transaction under 49 U.S.C. 11343 et seg. and imposi-
tion of our standard labor conditions upon the parties’
rights and remedies under the RLA and with respect to ex-
isting collective bargaining agreements.” ICC Finance No.
28905. The Commission added that “{i]n light of the im-
portance of the legal issues involved and [its] intention to
conduct a comprehensive examination of [its] authority
under 49 U.S.C. 11341, 11343, and 11347, etc., and the
labor conditions [it] ha[s] customarily imposed in approv-
ing railroad consolidations,” the agency was therefore
“seeking further comment by che parties to these pro-
ceedings as well as any other interested parties.” bid.

On September 29, 1989, the court of appeals denied
petitioners’ petitions for rehearing (Pet. App. 50a) and
issued an order stating that the Commission’s petition
would be “deferred pending release of the ICC’s decision
on remand.” Pet. App. 53a-54a. Moreover, the court
amended its decision to remand only the “records,” thus
retaining jurisdiction over the case. Briefs by interested
parties have now been filed with the Commission, and the
agency entertained oral argument on January 4, 1990.

SUMMARY OF ARGUMENT

The Interstate Commerce Act gives the Interstate Com-
merce Commission broad authority to approve proposed
railroad consolidations that the Commission finds, after
appropriate proceedings, to be consistent with the public
interest. When such a transaction has been approved, the
ICA exempts each participating carrier from “all other
law, including State and municipal law, as necessary to let
that person carry out the transaction.” 49 U.S.C.
11341(a). Construing Section 11341(a) in the present case,
the Commission determined that petitioners could proceed
with their proposed transactions, notwithstanding any
conflicting obligations under collective bargaining agree-
ments executed with the private respondents.

The court of appeals reversed, holding that the phrase
“all other law” in Section 11341(a) refers only to “positive
enactments, not common law rules of liability, as on a
contract.” Pet. App. 18a. It is that ruling, and only that
ruling, that is before the Court at this point, since all other
questions remain for consideration by the Commission
and any later judicial review.

With respect to that ruling —involving the applic~ bility
of Section 11341 to legal obligations under a collective
bargaining agreement —the text, history, and purpose of
Section 11341(a) confirm the broader construction
adopted by the Commission. Since the Commission is the
agency charged with the enforcement of the ICA, its
reasonable interpretation of the statute should have been
upheld.

A. The text is dispositive. Section 11341(a) exempts a
covered carrier from “all other law * * * as necessary to let
that person carry out the transaction.” The exemption
from “all other law” is easily sufficient to embrace those
laws governing the obligations of parties to contracts in

19

general, and to collective bargaining agreements in par-
ticular. Contracts are creatures of law, and they are
rendered enforceable through a regime of state and federal
common and statute law. Indeed, this Court in
Schwabacher v. United States, 334 U.S. 182 (1948),
recognized that the “law” referred to in Section 11341 in-
cludes the law under which contractual obligations are en-
forced.

The contracts involved in this case —collective bargain-
ing agreements in the railroad industry —are enforceable
under the Railway Labor Act, 45 U.S.C. 151 ef seq.,
which “[{u}nquestionably * * * is a federal law” within the
meaning of Section 11341(a) (Brotherhood of Locomotive
Eng’rs v. Chicago & N.W. Ry., 314 F.2d 424, 432 (8th
Cir.), cert. denied 375 U.S. 819 (1963)). Thus the long-
Standing and widespread recognition by the lower courts
that Section 11341(a) immunizes ICC-approved transac-
tions from the operation of the RLA where necessary to
implement the transaction is both correct and dispositive
of the question presented here.

B. The legislative history of Section 11341(a), and of
the consolidation provisions generally, confirms the mean-
ing of the text. Section 11341(a) derives from a provision
contained in the Transportation Act of 1920, which was
intended to foster railroad mergers generally, and which
therefore broadly exempted carriers from “all other
restraints or prohibitions by law.” § 407, 41 Stat. 482.
What is more, on two occasions—in 1933, and again in
1940 -- Congress expressly refused to narrow the scope of
the ICC’s consolidation authority by carving out a special
exception for obligaticns arising from labor agreements.

C. The court of appeals’ conclusion—according to
which collective bargaining agreements are fully en-
forceable under the RLA, even When they are in conflict
with the terms of an ICC-approved consolidation — cannot

20

be squared with the evident purpose of the consolidation
provisions: to foster the merger process while accom-
modating, to the fullest extent possible, the competing
claims of affected employees. If, as the court of appeals
supposed, employees may enforce conflicting contractual
rights under the RLA, ICC-approved transactions would
“be subjected to the risk of non-consummation.” Pet.
App. 34a. By proposing a change in the existing collective
bargaining agreement, the transaction would thereby pro-
voke a “major” dispute under the RLA. See Consolidated
Rail Corp. v. Railway Labor Executives’ Ass'n, 109 S. Ct.
2477, 2480 (1989). Where such a dispute is involved, the
parties must maintain the status quo while engaging in a
lengthy process of negotiation, mediation, and possibly
review by a Presidential Emergency Board. Detroit &
Toledo Shore Line R.R. v. United Transp. Union, 396
U.S. 142 (1969). If that process fails to produce an agree-
ment, each side is free to resort to strikes, lock-outs, or
other forms of economic self-help calculated to achieve
the desired objectives. See 45 U.S.C. 152 Second and
Seventh, 155 First, 156, 157, 160; Burlington Northern
R.R. v. Brotherhood of Maintenance of Way Employes,
481 U.S. 429, 444-445 n.10 (1987). And “[s]ince there is no
mechanism * * * for insuring that the parties will arrive at
agreement, there can be no assurance that the approved
transaction will ever be effected.” Pet. App. 34a. If ap-
plicable, the procedures for modifying collective
agreements under the RLA would therefore “threaten to
prevent many consolidations.” Brotherhood of
Locomotive Eng’rs v. Chicago & N.W. Ry., 314 F.2d at
431.

D. “An agency’s construction of a statute it is charged
with enforcing is entitled to deference if it is reasonable
and not in conflict with the expressed intent of Congress.”
United States v. Riverside Bayview Homes, Inc., 474 U.S.

eee! RS Ot es em OE

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21

121, 131 (1985). In light of the iext, history, and purpose
of Section 11341(a), the Commission’s conclusion —that
“all other law” includes the law governing the enforcement
of collective bargaining agreements—is entitled to
deference and should be upheld.

The court of appeals acknowledged those principies
(Pet. App. 11a), but declined to defer to the Commission’s
construction of the statute. Yet even accepting the court’s
view (as we do not)—that Congress did not directly ad-
dress the precise question at issue—the court should have
asked only whether the Commission’s construction of the
statute was “a reasonable one.” Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837,
843-845 (1984). In our view, the Commission’s judgment is
plainly reasonable, and the court of appeals erred in
“substitut[ing] its own construction of a statutory provi-
sion for a reasonable interpretation * * * of an agency”
(id. at 844).

ARGUMENT

UNDER 49 U.S.C. 11341(a), A PARTY THAT HAS ENTERED

INTO A MERGER APPROVED BY THE COMMISSION IS

EXEMPT FROM ANY LEGAL OBLIGATION IMPOSED BY

A COLLECTIVE BARGAINING AGREEMENT, TO THE EX-

TENT SUCH AN EXEMPTION IS NECESSARY TO IMPLE-
_ MENT THE MERGER

The broad ruling of the court of appeals —that the ex-
emptions provided by Section 11341(a) do not apply to
those laws governing the enforcement of contractual
obligations —raises only one importani but limited ques-
tion for review. If this Court determines, as we believe it
should, that this broad ruling was in error, the judgment
below should be reversed and the case remanded for con-
sideration of any remaining questions, including those

22

that are now pending before the Commission and that may
be raised in subsequent proceedings for judicial review.'*

In reaching its conclusion, the court of appeals, in our
view, attempted to separate the inseparable — holding that
contracts are not included among the laws referred to in
Section 11341(a), but at the same time “declin[ing] to ad-
dress” the question whether Section 11341(a) may operate
to override provisions of the RLA. Pet. App. 19a. Con-
-tracts derive their effectiveness and enforceability from a
regime of state and federal common and statute law, and
the collective bargaining agreements at issue here depend
for their effectiveness 2nd enforceability on the RLA. Just
as this Court held in Schwabacher v. United States, 334
U.S. 182 (1948), that contractual obligations enforceable
under state law are subject to the exemption conferred by
Section 11341(a), so the Court should hold in this case that
contractual obligations enforceable under the RLA are
subject to the same exemption. This result, we submit, is
compelled by the text and history of Section 11341(a) and
of related provisions.

A. The Text of Section 11341(q4) Makes Clear That Participants In
An ICC-approved Merger Are Exempt From All Legal
Obstacles, Including Obligations Under Collective Bargaining
Agreements, That May Jeopardize The Implementation of The
Merger

1. As this Court has explained many times, “the start-
ing point for interpreting a statute is the language of the
statute itself. Absent a clearly expressed legislative inten-
tion to the contrary, that language must ordinarily be

'S These questions may include whether the overriding of contrac-
tual obligations was “necessary” to the implementation of the transac-
tion within the meaning of Section 11341(a), and whether and to what
extent the Commission’s decision was authorized by the labor protec-
tive conditions associated with Section 11347.

OE ee

23

regarded as conclusive.” Consumer Prod. Safety Comm’n
v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). Accord
INS v. Cardoza-Fonseca, 480 U.S. 421, 432 n.12 (1987);
Aaron v. SEC., 446 U.S. 680 (1980); Greyhound Corp. v.
Mt. Hood Stages, Inc., 437 U.S. 322, 330 (1978). The text
of the ICA consolidation provisions, and of Section
11341(a) in particular, leaves no doubt that participants in
an ICC-approved merger are exempt from obligations
under a collective bargaining agreement that may jeopar-
dize the implementation of the merger.

The statutory language is both clear and straightfor-
ward. Section 11344(c) provides that “[t}he Commission
shall approve and authorize a transaction under this sec-
tion when it finds the transaction is consistent with the
public interest.” 49 U.S.C. 11344(c). Section 11341(a) pro-
vides (49 U.S.C. 11341(a)):

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.

As the statutory language indicates, the Commission must
determine whether a proposed consolidation is consistent
with the public interest. That determination is made on the
record, after hearing the views of interested persons. See
49 U.S.C. 11344 (1982 & Supp. V 1987). It is guided by
specific statutory criteria (49 U.S.C. 11344(b))—including
criteria requiring specific labor protections (49 U.S.C.
11344(b)(1)(D))—and is, of course, subject to judicial
review (28 U.S.C. 2342). But once the proposed transac-
tion is approved, Section 11341(a) confers an exemption
from “all other law” —an exemption of sufficient breadth

24

to permit the exempted party to “carry out the
transaction,” notwithstanding any legal obstacle.

The exemption from “all other law” is easily sufficient
to embrace those laws governing the enforceability of con-
tracts in general, and of collective bargaining agreements
in particular. Contracts are voluntarily entered into, but
depend for their effectiveness and enforcement on a
regime of state and federal common and statute law. “The
obligation of a contract,” this Court has explained, “is the
law which binds the parties to perform their agreement.”
Hendrickson v. Apperson, 245 U.S. 105, 112 (1917).'®
And the “[l]Jaws which subsist at the time and place of the
making of a contract, and where it is to be performed,
enter into and form part of it, as fully as if they had been
expressly referred to or incorporated in its terms” —a prin-
ciple which “embraces alike those laws which affect its
construction and those which affect its enforcement and
discharge.” Farmers & Merchants Bank v. Federal Reserve
Bank, 262 U.S. 649, 660 (1923).'’

Those principles apply with special force to collective
bargaining agreements. “Federal law * * * create[s] the
duty upon the parties to bargain collectively; Congress has
provided for a system of federal law applicable to the
agreement the parties ma[k]Je in response to that duty
* * *. and federal law sets some outside limits * * * on
what their agreement may provide.” Local 24, Int'l
Brotherhood of Teamsters v. Oliver, 358 U.S. 283, 296
(1959). And collective bargaining agreements in the

'6 Accord Louisiana v. New Orleans, 102 U.S. 203, 206 (1880);
Walker v. Whitehead, 83 U.S. (16 Wall.) 314, 318 (1873); Von Hoff-
man v. City of Quincy, 71 U.S. (4 Wall.) 535, 552 (1867).

'? Accord Hendrickson, 245 U.S. at 112; Walker, 83 U.S. (16
Wall.) at 317; Von Hoffman, 71 U.S. (4 Wall.) at 550; Ogden v.
Saunders, 25 U.S. (12 Wheat.) 212, 231 (1827).

tee RT Oo ES Se

ee

25

railroad industry are uniquely “legal” instruments: their
formation, construction, and enforcement are regulated
by a detailed statutory framework —the Railway Labor
Act.

For example, the Railway Labor Act requires the parties
to “make and maintain agreements” (45 U.S.C. 152 First)
and to refrain from making changes in existing agree-
ments, except according to the procedures established by
the Act (45 U.S.C. 152 Seventh, 156). The Act “extends
both to disputes concerning the making of collective
agreements and to grievances arising under existing
agreements.” Slocum v. Delaware, L. & W. R.R., 339
U.S. 239, 242 (1950). The Act also “sets up machinery for
conciliation, mediation, arbitration and adjustment of
disputes, to be invoked if negotiations fail.” /bid. “[T]he
federal statute is the source of the power and authority” of
collective bargaining agreements, and “[a] union agree-
ment made pursuant to the Railway Labor Act has, there-
fore, the imprimatur of the federal law upon it.” Rai/wev
Employes’ Dep’t v. Hanson, 351 U.S. 225, 232 (1956). Ac-
cord California v. Taylor, 353 U.S. 553, 561 (1957).

Thus, the law that renders collective bargaining agree-
ments in the railroad industry binding and enforceable,
and that specifies the procedures for changing such
agreements, is, in essence, the RLA, an Act that
“(uJnquestionably * * * is a federal law” within the mean-
ing of Section 11341(a) (Brotherhood of Locomotive
Eneg’rs v. Chicago & N.W. Ry., 314 F.2d 424, 432 (8th
Cir.), cert. denied, 375 U.S. 819 (1963)). As the First Cir-
cuit recently noted, Section 11341(a) “extends to any of the
Statutory provisions regulating railroads, including the
RLA.” Brotherhood of Locomotive Eng’rs v. Boston &
Maine Corp., 788 F.2d 794, 800, cert. denied, 479 U.S.
829 (1986). “[T]o hold otherwise would be to disregard the
plain language of [the statute] conferring exclusive and

26

plenary jurisdiction upon the ICC to approve mergers and
relieving the carrier from all other restraints of federal
law.” Brotherhood of Locomotive Eng’rs v. Chicago &
N.W. Ry., 314 F.2d at 431-432. Accord Missouri Pac.
R.R. v. United Transp. Union, 782 F.2d 107, 111-112 (8th
Cir. 1986), cert. denied, 482 U.S. 927 (1987); Bundy v.
Penn Cent. Co., 455 F.2d 277, 279 (6th Cir. 1972); Nemitz
v. Norfolk & W. Ry., 436 F.2d 841, 845 (6th Cir.), aff'd
without reaching the issue, 404 U.S. 37 (1971).'®

In short, a contractual provision has legal force only by
virtue of law—in this case, the RLA. And the RLA, like
any other law, is within the scope of Section 11341(a).

2. The court of appeals attempted to read Section
11341(a) more narrowly. “[Djeclin{ing] to address” the
question whether Section 11341(a) applies to the RLA
(Pet. App. 19a), the court sought to abstract collective
agreements from their federal statutory context, and pro-
ceeded to exclude contracts generally from the scope of the
Section. In the court’s view, “all other law” refers only to
“positive enactments, not common law rules of liability”
(Pet. App. 18a). As a general proposition, that is surely
mistaken; “law” is conventionally understood to include

'8 See also Texas & N. O. R.R. v. Brotherhood of R.R. Trainmen,
307 F.2d 151, 158-162 (Sth Cir. 1962) (holding that the predecessor to
Section 11341(a) does not preempt the Norris-LaGuardia Act, 29
U.S.C. 101 ef seq., or a prior collective bargaining agreement, but
recognizing that under the predecessor provision the Commission has
jurisdiction “to find whether certain of the union [contractual]
demands are contrary to the public interest in the effectuation of the
transaction” and “thereafter to prevent the enforcement” of those
demands), cert. denied, 371 U.S. 952 (1963). Cf. Burlington North-
ern, Inc. v. American Ry. Supervisors Ass'n, 503 F.2d 58, 62-63 (7th
Cir. 1974) (labor-protective conditions imposed as part of ICC ap-
proval of a consclidation override conflicting provisions of the RLA),

“cert. denied, 421 U.S. 975 (1975).

27

common law, as well as statutes. See Erie R.R. v.
Tompkins, 304 U.S. 64, 79 (1938). Relying on scattered
portions of legislative history, however, the court below
concluded that Congress had “focused nearly exclusively”
on “specific types of laws it intended to eliminate” —all of
which were statutes, not common law. Pet. App. 18a. As
we have already shown, that inference could not sustain
the result reached below, since the “iaw” in point here is a
federal statute (the RLA). And as we show below, the
court of appeals misread the legislative history. But in any
event, as this Court has recently explained, “[iJt is not the
law that a statute can have no effects which are not ex-
plicitly mentioned in its legislative hic’ory.” Pittston Coal
Group v. Sebben, 109 S. Ct. 414, 420-421 (1988). See
also Regan v. Wald, 468 U.S. 222, 236-237 (1984);
Volkswagenwerk Aktiengesellschaft v. Federal Maritime
Comm’n, 390 U.S. 261, 275 (1968). Like the statute at
issue in Pittston Coal, Section 11341(a), with its reference
to “all other law,” “plainly embraces criteria of more
general application.” 109 S. Ct at 421. Cf. McLean Truck-
ing Co. v. United States, 321 U.S. 67, 79 (1944) (broad
language of predecessor of Section 11341(a) does “not ad-
mit of nullification by reference to the varying conditions
under which different types of carriers were brought
within the statute’s operation”).

The court of appeals also surmised that to accept the
Commission’s construction of Section 11341(a) “would
lead to most bizarre results.” Pet. App. 13a. In particular,
the court stated, “[uJnder 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.” /bid. But there is nothing
“bizarre” about the Commission’s reading of the statute.
Indeed, that is precisely the reading this Court gave the

28

Act in Schwabacher v. United States, 334 U.S. 182 (1948).
In that case, the ICC had approved a merger of two
railroad companies, over the objection of certain pre-
ferred stockholders of one of the companies. Those stock-
holders claimed that the terms of the merger deprived
them of the full measure of their rights to compensation
under the corporate charter—rights that were theirs as
owners of the preferred stock and that were recognized
under state law. In reaching its determination, the Com-
mission disclaimed jurisdiction to resolve the shareholders’
complaint, ruling that after the merger was finally ap-
proved the dissenting claimants could file an action in
state court to assert their rights as stockholders. This
Court rejected the Commission’s approach. Relying on the
consolidation provisions of the ICA (41 Stat. 482)—
including Section 5(11) (Transportation Act of 1940, ch.
722, § 7, 54 Stat. 905, 908-909), the immediate precursor
of Section 11341(a) (see p. 35, infra)—the Court held that
the Commission “was given complete control of the capital
structure to result from a merger.” 334 U.S. at 195. Ac-
cordingly, the Court explained, before approving the
merger the Commission was required to consider the
claims of the minority shareholders. Jd. at 197-198. But
once the Commission had done so, and had approved the
final transaction as “just and reasonable” (id. at 194), the
dissenting shareholders were not entitled to attack that
decision collaterally, regardless of their rights under state
law as owners of the shares. Jd. at 201.'°

'* There is, of course, no question that the state law rights of the
dissenting shareholders — rights superseded by Section 11341(a)— were
contractual! in nature, since they arose out of the corporate charter
and the terms under which the preferred stock was offered for sale.

In Texas & N.O. R.R. v. Brotherhood of R.R. Trainmen, supra, the
Fifth Circuit, relying on Schwabacher, recognized the Commission's
jurisdiction to “prevent the enforcement” of union contractual

ed ae

ee RS ly EN Be i, IR

29

B. The Legislative History Of Section 11341(a) Confirms That
ICC-approved Mergers Are Exempt From All Legal Obstacles,
Including Collective Bargaining Agreements, That May
Jeopardize The Implemen‘ation Of The Merger

The legislative history of Section 11341(a), and of the

consolidation provisions generally, confirms the meaning
of the text: once approved by the ICC after a plenary
public interest proceeding, a merger is immunized from all
legal obstacles—including those posed by obligations
under collective bargaining agreements —that threaten the
implementation of the approved transaction. Indeed,
Congress on two occasions—in 1933, and again in
1940 — expressly refused to narrow the scope of the ICC’s
consolidation authority by carving out a special exception
for obligations arising from labor agreements.

1. The Transportation Act of 1920

The language of the present Section 11341(a) finds its
origin in the Transportation Act of 1920, ch. 91, 41 Stat.
456. See generally St. Joe Paper Co. v. Atlantic Coast
Line R.R., 347 U.S. 298, 315-321 (1954) (appendix to
opinion of the Court). Sections 407 and 408 of the 1920
Act, 41 Stat. 480, 482, amended Section 5 of the Interstate
Commerce Act of 1887, ch. 104, 24 Stat. 380, specifically
to encourage railroad consolidation. See St. Joe Paper Co.
v. Atlantic Coast Line R.R., 347 U.S. at 315-316. Follow-
ing a period of governmental ownership during World
War I, “many of the railroads were in very weak condition
and their continued survival was in jeopardy.” /d. at 315.
The 1920 Act therefore directed the Commission, “as soon
as practicable,” to “prepare and adopt a plan for the con-
solidation of the railway properties of the continental

demands found to jeopardize effectuation of an approved transac-
tion. 307 F.2d at 161-162.

30

United States into a limited number of systems.” § 407, 41
Stat. 481 (§ 5(4)). “As a result of the enactment of the
Transportation Act of 1920, consolidation of the railroads
of the country, in the interest of economy and efficiency,
became an established national policy * * * so intimately
related to the maintenance of an adequate and efficient
rail transportation system that the ‘public interest’ in the
one cannot be dissociated from that in the other.” United
States v. Lowden, 308 U.S. 225, 232 (1939).

To facilitate the consolidation process, the 1920 Act
added Section 5(8), exempting participants in
Commission-approved consolidations from federal and
state legal obstacles. 41 Stat. 482. Section 5(8) stated (41
Stat. 482 (emphasis added)):

The carriers affected by any order made under the
foregoing provisions of this section * * * shall be, and
they are hereby, relieved from the operation of the
“antitrust laws,” * * * and of all other restraints or
prohibitions by law, State or Federal, in so far as may
be necessary to enable them to do anything author-
ized or required by any order made under and pur-
suant to the foregoing provisions of this section.

Consistent with the overall purpose to effectuate con-
solidation, this broad statutory language targeted all legal
“restraints or prohibitions” that might otherwise impede
the covered carrier from accomplishing “anything
authorized” by the Commission pursuant to the consolida-

tion provisions.

2. The Emergency Railroad Transportation Act of 1933

In the years following the enactment of the 1920 Act,
there was a continuing decline in railway revenues and
traffic. L. Lecht, Experience Under Railway Labor
Legislation 105 (1955). Many railroads went bankrupt,

31

while others borrowed large sums of money from the
Reconstruction Finance Corporation to fund continuing
operations. S. Rep. No. 87, 73d Cong., Ist Sess. 1 (1933).
To meet the resulting interest charges, many railroads
deferred maintenance. H.R. Rep. No. 193, 73d Cong., Ist
Sess. 9 (1933). Railroad employment dropped from
1,750,000 to 1,000,000. /bid. Responding to the crisis,
Congress enacted the Emergency Railroad Transportation
Act of 1933 (ERTA), ch. 91, 48 Stat. 211.

Title | of ERTA was temporary legislation — ultimately
of three years duration ?°—that was intended to help the
railroads become financially stable. See S. Rep. No. 87,
supra, at 1. It established “emergency powers to be exer-
cised through a railroad coordinator,” whose task was “to
compel the elimination of unnecessary expenses and the
duplication of services and other economy measures” in
order “to stabilize the value of railroad securities and
make unnecessary a continued drain on Reconstruction
Finance Corporation funds.” /d. at 1-2. The coordinator
did not, however, have explicit authority to compel con-
solidations. See 77 Cong. Rec. 4859 (1933) (Rep. Rayburn)
(“The coordinator has nothing whatever to do with con-
solidations. * * * [T]he question of consolidation * * * is
left where it has been since 1920, with the Interstate Com-
merce Commission and not with any coordinator”). See
also St. Joe Paper Co v. Atlantic Coast Line R.R., 347
U.S. 298, 317 (1954).

Section 10(a) of Title | of ERTA (48 Stat. 215) con-
tained an immunity provision with language that generally
paralleled Section 5(8) of the Transportation Act of 1920

© Originally enacted for one year, Title | was extended for an addi-
tional year by Presidential proclamation, Proclamation No. 2081, 48
Stat. 1740 (1934), and then for a third year, until June 17, 1936, by

Congress. S.J. Res. 112, 74th Cong., Ist Sess.; 79 Cong. Rec. 9346
(1935).

32

(41 Stat. 482), the earliest precursor of Section 11341(a).
Significantly, however, in response to concerns raised by
labor representatives, Congress added an explicit excep-
tion from Section 10(a) for the requiremenis of the RLA
and for duties and obligations under collective bargaining
agreements entered into pursuant to that Act. Section
10(a) therefore provided in pertinent part (48 Stat. 215):
The carriers or subsidiaries subject to the Interstate
Commerce Act, as amended, affected by any order of
the Coordinator or Commission made pursuant to
this title shall, so long as such order is in effect, be,
and they are hereby, relieved from the operation of
the antitrust laws, * * * and of all other restraints or
prohibitions by law, State or Federal, other than such
as are for the protection of the public health or safety,
in so far as may be necesssary to enable them to do
anything authorized or required by such order made
pursuant to this title: Provided, however, That
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 im-
posed thereunder or through contracts entered into in
accordance with the provisions of said Act.[?']

At the same time, in Title Il of ERTA—which, unlike
Title 1, was permanent legislation, see S. Rep. No. 87,

2! Title | also contained an additional labor protection, ensuring
that, allowing for normal attrition, no action taken by the Coor-
dinator could reduce the number of railroad employees below the
number in service during May 1933, and providing further that no
employee then in service shall “be deprived of employment such as he
had during said month of May or be in a worse position with respect
to his compensation for such employment, by reason of any action
taken pursuant to the authority conferred by this title.” § 7(b), 48

Stat. 214.

33

supra, at 1—Congress amended the consolidation provi-
sions of the Interstate Commerce Act, principally to “give
the Commission control over holding companies that ac-
quire stocks of railroads, and thereby effect consolida-
tions without approval of the commission.” /bid. In Sec-
tion 202(15) of Title Il, Congress reenacted the immunity
provision—Section 5(8) of the 1920 Act—adding
somewhat broader language in the process. See 48 Stat.
219. Congress did not, however, carve out an exception
for the Railway Labor Act or for obligations under
agreements made pursuant to that statute. Section 202(15)
provided in pertinent part (48 Stat. 219):

The carriers and any corporations affected by any
order made under the foregoing provisions of this sec-
tion shall be, and they are hereby, velieved from the
operation of the antitrust laws * * * and of all other
restraints or prohibitions by or imposed under
authority of law, State or Federal, insofar as may be
necessary to enable them to do anything authorized or
required by such order.

The striking difference between Title | of ERTA (tem-
porary legislation, containing an explicit exception for col-
lective bargaining agreements) and Title II of the statute (a
precursor of Section 11341(a), containing no exception for
collective bargaining agreements) cannot be considered ac-
cidental. “[W)here Congress includes particular language
in one section of a statute but omits it in another section of
the same Act, it is generally presumed that Congress acts
intentionally and purposely in the disparate inclusion or
exclusion.” Russello v. United States, 464 U.S. 16, 23
(1983).?? Indeed, this Court made that very point in con-

22 Accord INS v. Cardoza-Fonseca, 480 U.S. 421, 432 (1987). See
also Aissinger v. Reporters Comm. for Freedom of the Press, 445 U.S.

136, 148-149 (1980); Transamerica Mortgage Advisors, Inc |
444 U.S. 11, 19-20 (1979). » Inc. v. Lewis,

34

nection with a related provision of ERTA. In Texas v.
United States, 292 U.S. $22 (1934), the ICC had approved
a control transaction, over a State’s objection that the
terms of the transaction would improperly permit the par-
ties to relinquish certain offices within the State. In this
Court, the State contended that the transaction violated
Section 11 of Title | of ERTA, which withheld from car-
riers the authority to abandon offices and shops. 48 Stat.
215. The Court rejected that contention. Section 11, the
Court explained, was contained in Title I, which dealt only
with the “ ‘emergency powers’ * * * of the Federal Coor-
dinator of Transportation and kindred matters.” 292 U.S.
at $33. As such, the Court added, Section 11 did “not by
its terms apply to the provisions of Title II of the Act, in
which are found the amendments of § 5 of the Interstate
Commerce Act with respect to the approval and authoriza-
tion by the Interstate Commerce Commission of con-
solidations, purchases and leases.” 292 U.S. at 533. “The
insertion of the provision in Title I, * * * and the omission
of a similar provision from Title II, indicate an intentional
distinction.” Jd. at 534.

So, too, with respect to the exception for collective
bargaining agreements: in structuring Titles I and Il as it
did, Congress “demonstrated that it knew how to provide
[for an exception for collective bargaining agreements}
when it wished to do so elsewhere in the very ‘legislation
cited.’ ” Lehman v. Nakshian, 453 U.S. 156, 162 (1981).
“Under traditional principles of statutory construction,”
the difference between the two sections must therefore be
seen as intentional. Fedorenko v. United States, 449 U.S.
490, $12 (1981). See Lawrence County v. Lead-Deadwood
School Dist. No. 40-1, 469 U.S. 256, 267 (1985); United
States v. Erika, Inc., 456 U.S. 201, 208 (1982).

35

3. The Transportation Act of 1940

Section 7 of the Transportation Act of 1940, ch. 722, 54
Stat. 905, amended and recodified Section 5 of the ICA
but left the provisions relevant here substantially intact. In
particular, Section 5(8) of the 1920 Act, as amended, was
subsumed within revised Section 5(11) (54 Stat. 908-909),
and remained essentially unchanged. Section 5(11) pro-
vided in pertinent part (54 Stat. 908-909):

any carriers or other corporations, and their officers
and employees and any other persons, participating in
a transaction approved or authorized under the provi-
sions of this section shall be and they are hereby
relieved from the operation of the antitrust laws and
of all other restraints, limitations, and prohibitions of
law, Federal, State, or municipal, insofar as may be
necessary to enable them to carry into effect the tran-
saction so approved or provided for in accordance

with the terms and conditions, if any, imposed by the
Commission * * *,

When Congress recodified this language in the present
Section 11341(a) of the ICA, it effected no substantive
change. Act of Oct. 17, 1978, Pub. L. No. 95-473, § 3(a),
92 Stat. 1466; Trailer Marine Transp. Corp v. FMC, 602
F.2d 379, 383 n.18 (D.C. Cir. 1979). See H.R. Rep. No.
1395, ysth Cong., 2d Sess. 158-160 (1978). See also JCC v.
Brotherhood of Locomotive Eng’rs, 482 U.S. 270, 299
n.12 (1987) (Stevens, J., concurring in the judgment).
During the legislative process culminating in the 1940
Act, there was “a widespread awareness in the railroad in-
dustry that many of the economies to be gained from con-
solidations or abandonments could be realized only at the
expense of displaced railroad labor.” Railway Labor Ex-
ecutives’ Ass'n v. United States, 339 U.S. 142, 147 (1950).
Reflecting that concern, Congress enacted, in Section

36

§(2)(f) of the Act, 54 Stat. 906-907, a labor protective pro-
vision for employees affected by ICC-approved consolida-
tions.??

Prior to the enactment of Section 5(2)(f), however,
Representative Harrington offered an amendment to the
provision, designed to protect affected employees against
any displacement or other interference with contractual
rights:

Provided, however, That no such transaction shall be
approved by the Commission if such transaction will
result in unemployment or displacement of employees

2

a

Section 5(2)(f) provided as follows (54 Stat. 906-907):

As a condition of its approval, under this paragraph (2), of any
transaction involving a carrier or carriers by railroad subject to
the provisions of this part, the Commission shall require a fair
and equitable arrangement to protect the interests of the railroad
employees affected. In its order of approval the Commission
shall include terms and conditions providing that during the
period of four years from the effective date of such order such
transaction will not result in employees of the carrier or carriers
by railroad affected by such order being in a worse position with
respect to their employment, except that the protection afforded
to any employee pursuant to this sentence shall not be required to
continue for a longer period, following the effective date of such
order, than the period during which such employee was in the
employ of such carrier or carriers prior to the effective date of
such order. Notwithstanding any other provision of this Act, an
agreement pertaining to the protection of the interests of said
employees may hereafter be entered into by any carrier or carriers
by railroad and the duly authorized representative or represen-
tatives of its or their employees.

Transportation Act of 1940, ch. 722, § 7, 54 Stat. 906-907 (§ 5(2)(f)).
The current version of this provision is 49 U.S.C. 11347 (Supp. V

1987). See p. 40, infra.

37

of the carrier or carriers, or in the impairment of ex-
isting employment rights of said employees.

84 Cong. Rec. 9882 (1939). The proposed amendment
posed a significant obstacle to the prospects of future con-
solidations. As this Court observed in Railway Labor Ex-
ecutives’ Ass'n v. United States, 339 U.S. at 151, until the
Harrington Amendment was offered, “there had been
substantial agreement on the need for consolidations,
together with a recognition that employees could and
should be fairly and equitably protected. This amend-
ment, however, threatened to prevent all consolidations to
which it related.”

Not surprisingly, therefore, the Harrington Amendment
encountered intense opposition. In a January 29, 1940 let-
ter to the Chairman of the Senate and House Committees
on Interstate Commerce, the Interstate Commerce Com-
mission stated:

As for the [Harrington Amendment], the object of
unifications is to save expense, usually by the saving
of labor. * * * The proviso, by prohibiting any dis-
placement of employees, goes much too far, and in
the long run will do more harm than good to the
employees. In these days of intense competition from
other forms of transportation, the railroads must, if
they are to thrive and grow, conduct their operations
with the utmost possible economy and efficiency. If
they are prevented from doing this, further shrinkage
of operations and continuing loss of employment are
inevitable.

Staff of House Legislative Comm. On Interstate Com-
merce Commission, 76th Cong., 3d Sess., Omnibus
Transportation Legislation 67 (House Comm. Print 1940).
After a lengthy conference, on April 26, 1940, the con-
ferees agreed on a bill that followed the form of the House

38

Amendment but did not contain the Harrington Amend-
ment. See H.R. Conf. Rep. No. 2016, 76th Cong., 3d
Sess. 16 (1940); 86 Cong. Rec. 5879-5880 (1940). The
House voted to recommit the bill with instructions to its
conferees to insist on a modified version of the Harrington
Amendment. 86 Cong. Rec. 5886 (1940). After further
consideration, the conferees then reported out the bill a
second time without the Harrington Amendment. That
bill became the Transportation Act of 1940.74
The defeat of the Harrington Amendment confirms
Congress’s intent to allow carriers to implement ICC-
approved consolidations — notwithstanding the “impair-
ment of existing employment rights of ***
employees” — as long as those employees are compensated
and otherwise fairly protected under the Commission's
labor protective conditions. Accord Brotherhood of
Maintenance of Way Employes v. United States, 366 U.S.
169 (1961). The court of appeals’ decision in the present
case overlooks the point, construing Section | 1341 (a) as if
the Harrington Amendment had become law and indeed
had been rewritten to extend to all contractual obligations.
But the amendment was rejected; and “[f]ew principles of
- statutory construction are more compelling than the prop-
osition that Congress does not intend sub silentio to enact
statutory language that it has earlier discarded in favor of
other language.” JNS v. Cardoza-Fonseca, 480 U.S. 421,
442-443 (1987). See generally Fox v. Standard Oil Co.,

294 U.S. 87, 96 (1935).

24 The bill was passed by the House on August 12, 1940, 86 Cong.
Rec. 10,194, and by the Senate on September 9, 1940, 86 Cong. Rec.
11,766. It was signed by the President on September 18, 1940, 86

Cong. Rec. 12,290.

39

C . The Court of Appeals’ Decision Cannot Be Squared With The
Purpose Of The ICA Consolidation Provisions

The scope of Section 11341(a) must also be “measured
by the purpose which Congress had in view” —in this case,
“the promotion of economy and efficiency in interstate
transportation by the removal of the burdens of excessive
expenditure” (Texas v. United States, 292 U.S. 522,
534-535 (1934)). The court of appeals’ conclusion —ac-
cording to which collective bargaining agreements are
fully enforceable even when they are in conflict with the
terms of an ICC-approved consolidation—cannot be
squared with that evident purpose.

The consolidation provisions foster the merger process,
while at the same time accommodating, to the fullest ex-
tent possible, the competing claims of employees and
other persons who may be adversely affected by the pro-
posed transaction. The statute accomplishes that goal by
providing interested parties — including labor unions —ex-
tensive Opportunities to participate in the Commission’s
consolidation review proceedings and to voice their objec-
tions during the “public interest” inquiry. Parties may ob-
ject, in whole or in part, to approval of a transaction, on
the ground that such approval will undermine the policies
expressed in other federal statutes. The Commission must
take account of these objections, in determining whether
the merger is “consistent with the public interest.” 49
U.S.C. 11344(c). See, e.g., McLean Trucking Co. v.
United States, 321 U.S. 67, 79-80 (1944) (antitrust objec-
tions to motor carrier consolidation).

The consolidation provisions are particularly solicitous
of employees who may be adversely affected by a transac-
tion. Recognizing that consolidations necessarily “result in
wholesale dismissals and extensive transfers, involving ex-
pense to transferred employees,” as well as “the loss of
seniority rights” (United States v. Lowden, 308 U.S. 225,

40

233 (1939)), the statute imposes a variety of labor protec-
tive requirements. Before it may give its approval, the
Commission must consider “the interest of carrier
employees affected by the proposed transaction.” 49
U.S.C. 11344(b)(1)(D). Moreover, as part of any ap-
proved transaction, the Commission must impose certain
“employee protective arrangements,” including a
guarantee generally ensuring that “the employees of the af-
fected rail carrier will not be in a worse position related to
their employment as a result of the transaction during the
4 years following the effective date of the final action of
the Commission.” 49 U.S.C. 11347 (Supp V 1987). And
pursuant to Section 11347, the Commission has tradi-
tionally imposed the so-called New York Dock conditions,
which generally entitle an affected employee to receive, for
a period of years, the equivalent of the wages he received
prior to displacement. See New York Dock Ry. —Con-
trol—Brooklyn Eastern Dist. Terminal, 360 1.C.C. 60,
84-90, aff'd sub nom. New York Dock Ry. v. United
States, 609 F.2d 83 (2d Cir. 1979).

In this manner, the consolidation provisions ensure that
all affected parties have a voice in the approval process,
and are accommodated as fully as possible in the approved
transaction. At the same time, Section 11341(a) ensures
that once the approval has been granted, an exemption
from “all other law” takes immediate effect. The statute
does not permit employees, who have already received the
protections afforded by Section 11347, to impede im-
plementation of the merger by insisting on conflicting col-
lective. bargaining rights under the RLA.

Were resort to the RLA necessary, approved transac-
tions would “be subjected to the risk of non-
consummation” (Pet. App. 34a). By proposing a change in
the existing collective bargaining agreement, the transac-
tion would thereby provoke a “major” dispute under the

41

RLA. See Consolidated Rail Corp. v. Railway Labor Ex-
ecutives’ Ass'n, 109 S. Ct. 2477, 2480 (1989); Elgin, J. & E
Ry v. Burley, 325 U.S. 711, 723 (1945), aff'd on reh’g, 327
U.S. 661 (1946). In any such dispute, the parties must
maintain the status quo while engaging in a lengthy proc-
ess of negotiation, mediation, and possibly review by a
Presidential Emergency Board. Detroit & Toledo Shore
Line R.R. v. United Transp. Union, 396 U.S. 142 (1969).
If that process fails to produce an agreement, each side is
free to Tesort to strikes, lock-outs, or other forms of
economic self-help calculated to achieve the desired objec-
tives. See 45 U.S.C. 152 Second and Seventh, 155 First
156, 157, 160; Burlington Northern R.R. v. Brotherhood
of Maintenance of Way Employes, 481 U.S. 429, 444-445
n.10 (1987); Brotherhood of R.R. Trainmen v. Jackson-
ville Terminal Co., 394 U.S. 369, 378 (1969).

Although that “virtually endless” process may well be
suited to prevent the kind of “labor unrest” that gave rise
to the RLA (Burlington Northern R.R. v. Brotherhood of
Maintenance of Way Employes, 481 U.S. at 444), it poses
severe difficulties for approved consolidations. “[U}nder
the Railway Labor Act provisions, it is possible for either
party to completely block any change in working condi-
tions by refusing to agree to a change and by refusing to
arbitrate.” Brotherhood of Locomotive Eng’rs v. Chicago
& N.W. Ry., 314 F.2d at 431. As the Commission has
noted, “[s]ince there is no mechanism * * * for insuring
that the parties will arrive at agreement, there can be no
assurance that the approved transaction will ever be ef-
fected.” Pet. App. 34a. If applicable, the RLA would
therefore “threaten to prevent many consolidations.”
Brotherhood of Locomotive Eng’rs v. Chicago & N.W.
Ry., 314 F.2d at 431. Such an outcome cannot be squared
with the evident purpose of the consolidation provisions
and Section 11341(a) in particular: to provide an exemp-

42

tion “as necessary to let [the participant] carry out the
transaction” (49 U.S.C. 11341(a)).

D. The Court Of Appeals Erroneously Declined To Defer To The
Commission's Construction Of Section 11341(a)

This Court has “long recognized that considerable
weight should be accorded to an executive department's
construction of a statutory scheme it is entrusted to ad-
minister.” Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 844 (1984). “An
agency’s construction of a statute it is charged with enforc-
ing is entitled to deference if it is reasonable and not in
conflict with the expressed intent of Congress.” United
States v. Riverside Bayview Homes, Inc., 474 U.S. 121,
131 (1985). In light of the text, history, and purpose of
Section 11341(a), the Commission’s conclusion —that the
Section applies to legal obligations under collective
bargaining agreements—is entitled to deference and
should be upheld.

The court of appeals acknowledged those principles
(Pet. App. 11a), but declined to defer to the Commission’s
construction of the statute. The court observed that
deference is appropriate only when a court determines,
“based upon the language of the statute and the ‘tradi-
tional tools of statutory construction,’ * * * that Congress
has not ‘directly spoken to the precise question at issue’ ”
(ibid.). The court therefore elected to “strike out * * * in
search of Congress’s inient in enacting the immunity pro-
vision of the Act.” /d. at 1la-12a.

The results of the court’s “search” did not justify the
panel’s refusal to defer to the Commission. After canvass-
ing the text and history of the statute, all the court could
determine —on its view of the case — was (1) that Section
11341(a) does not express/y refer to “contracts” (Pet. App.
12a): (2) that Section 11341(a) was intended principaily to

43

protect against “unfriendly state commissions and
legislatures” (Pet. App. 15a) and “recently invigorated an-
titrust laws of the federal Government” (id. at 16a); (3)
that in enacting Section 11341(a) Congress had “focused
nearly exclusively” on “positive enactments, not common
law rules of liability” (Pet. App. 18a); and (4) that in the
eer. —— on the 1920 Act, Congress had “ex-

ibit a thy res for iv
contracts” (ibid.). ype ee

Even under the court of appeals’ view (which we vigor-
ously dispute), that evidence does not justify a refusal to
defer to the Commission. Assuming that Congress did not
directly address the precise question at issue, the question
before the court was whether the Commission’s construc-
tion of the statute “in the context of this particular pro-
gram is a reasonable one.” Chevron U.S.A. Inc., 467 U.S.
at 843-845. Here, the Commission’s judgment is plainly
reasonable. Thus, even were the case a close one on the
merits — and we do not think it is—the court of appeals er-
red in “substitut[ing] its Own construction of a statutory
provision for a reasonable interpretation * * * of an agen-
cy” (Chevron U.S.A. Inc. 467 U.S. at 844).

44

CONCLUSION

The judgment of the court of appeals should be re-
versed.

Respectfully submitted.

JOHN G. ROBERTS, JR.
Acting Solicitor General*
DAVID L. SHAPIRO
Deputy Solicitor General
LAWRENCE S. ROBBINS
Assisteru to the Solicitor General
ROBERT S. BURK
General Counsel
HENRI F. RUSH
Deputy General Counsel
JOHN J. MCCARTHY, JR.
Deputy Associate General Counsel
Interstate Commerce Commission

May 1990

* The Solicitor General is disqualified in this case.

US GOVERNMENT PRINTING OFFICE 1990—262.203/00902

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0697%3A12. Public record. Not legal advice.