Amicus Curiae Brief — Pittsburgh & Lake Erie R. Co. v. Railway Labor Executives' Assn.

~ Suprome Court, US,

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Nos. 87-1589 and 87-1888 NOV 7 1908

?

In the Supreme Court of the United States

OCTOBER TERM, 1988

PITTSBURGH & LAKE ERIE

RAILROAD COMPANY, PETITIONER

Vv.

RAILWAY LABOR EXECUTIVES’ ASSOCIATION

ON PETITIONS FOR WRITS OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE

CHARLES FRIED

Solicitor General

THOMAS W. MERRILL

Deputy Solicitor General

JEFFREY P. MINEAR

Assistant to the Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QUESTIONS PRESENTED

1. Whether the Interstate Commerce Commission’s

authorization of a rail line acquisition by a non-

carrier: (a) relieves the selling railroad of any ob-

ligation to bargain with its employees under the Rail-

way Labor Act concerning the sale; and (b) relieves

the courts of the provisions of the Norris-LaGuardia

Act prohibiting injunctions in cases involving labor

disputes.

2. Whether the Railway Labor Act requires a rail-

road to postpone a sale of its rail lines to a non-

carrier until the railroad has completed bargaining

with its unions concerning the unions’ proposed

changes in the existing collective bargaining agree-

ments that would address the effects of that sale.

3. Whether a court order requiring a railroad to

continue its operations while it is bargaining under

the Railway Labor Act violates the Fifth Amend-

ment’s prohibition against the taking of property

without just compensation.

TABLE OF CONTENTS

Page

ET Se 1

EEE EEE Re 6

ee 49

TABLE OF AUTHORITIES

Cases:

Air Line Pilots Ass’n Vv. Transamerica Airlines,

Inc., 817 F.2d 510 (9th Cir. 1987) ......................... 13

Boys Markets, Inc. v. Retail Clerks Union, 398

EE ER 18

Brotherhood of R.R. Trainmen Vv. Chicago River &

Ts 18

Brotherhood of R.R. Trainmen Vv. Jacksonville Ter-

minal Co., 394 U.S. 369 (1969) ............................. 11

Burlington N.R.R. v. United Transp. Union, 848

F.2d 856 (8th Cir. 1988), petition for cert.

a antunesanscoene 18, 19

Chicago & N.W. Transp. Co. v. Railway Labor Ex-

ecutives’ Ass’n, 855 F.2d 1277 (7th Cir. 1988),

petition for cert. pending, No. 88-464 ................... 16, 18

Class Exemption for the Acquisition and Operation

of Rail Lines Under 49 U.S.C. 10901,-Ex Parte

No. 392 (Sub-No. 1), 1 1.C.C.2d 810 (1985),

review denied mem. sub nom. Illinois Commerce

Comm’n V. ICC, 817 F.2d 145 (D.C. Cir. 1987)... 3-4, 7

Detroit & T.S.L.R.R. v. United Transp. Union, 396

a seusmsnonsueneces 16

FRVR Corp.—Exemption Acquisition and Opera-

tion—Certain Lines of Chicago and North West-

ern Transportation Co.—Petition for Clarifica-

tion, ICC Finance No. 31205 (Jan. 28, 1988),

review pending »ub nom. Railway Labor Execu-

tives’ Ass’n V. ICC, No. 88-1280 (8th Cir.) ........... 8

First Nat'l Maintenance Corp. v. NLRB, 452 U.S.

SS ESTA 12, 13, 14

ICC v. Brotherhood of Locomotive Engineers, No.

I I ._ ccscescumencnenscocs 9

IV Vv

Cases—Continued: Page Constitution, statutes and regulation—Continued : Page

International Ass’n of Machinists v. Northeast Air- Railway Labor Act, 45 U.S.C. 151 et seq.:

poy trp y+ —heaeabeaniiasiemna $8 1-14, 45 USC. W116 10

Order of R.R. Telegraphers v. Chicago & N.W. ; eg U.S.C. 152 (First) ...............- 10, 14

Ry., 362 U.S. 330 (1960)... pita Rtn 16-17 + gy th ete ar gggaa oe 10-11

Railway Labor Executives’ Ass’n Vv. Chicago & as enone 45 US Cc a psn 7 amcmienas cy

N.W. Transp. Co., 848 F.2d 102 (8th Cir. 1988), 85,45 U.S C 155 es ae ee ene 1

petition for cert. pending, No. 87-2049 ............... 8 § 6. 45 USC. Peat! 23 11.1214 15.17

Railway Labor Executives’ Ass’n V. City of Galves- | § 10 45 U S C 1 60 aerate ee ee eee ee at

ton, 849 F.2d 145 (5th Cir. 1988), petition for | § 201 45 USC a aan aa pes TS gaNE 10

OE 8 ' a ee ee ee

Railway Labor Executives’ Ass’n Vv. Pittsburgh & | Staggers Rail Act of 1980, Pub. L. No. 96-448,

Lake Erie R.R., No. 87-3853 (3d Cir. Oct. 14, sede nally aE Eee EEE

TERETE 8 her 2S ARE BA AER Se 5 ' Fraudulent Conveyance Act, Pa. Stat. Ann. tit. 39,

Textile Workers Union v. Darlington Mfg., 380 | §§ 351-363 (Purdon 1954) 2 eeceee eee 5

Be Bi CIN cisicdsccen canitinennicechovcidccieonstaianrtnakesdh 12 | EE CINE Daiichiticnsncntssiniitvadenndineesbininstisiniiitianbindoent 4

Constitution, statutes and regulation: Miscellaneous:

I ce es 17 GS Wed. Bag. GOG1 (19GB) nance 4

Interstate Commerce Act, 49 U.S.C. (& Supp. III)

10101 et seq.:

SERRE Sen A A tet SES eo 2

i ecaeeniaenieie 2

49 U.S.C. (& Supp. III) 10301 et seq............ 2

Tn coimennpemeeniaeceiieans 2

SER cee eee oe ee 2

Oa 3

4 RIERES EEE TSS Feat eh See co etm ne 7

EE aaa eer 2,3, 7,9

49 U.S.C. 10901 (c) (1) (A) (ii) -.................. 7

ee aaeaaeinanes 7

ESSE LE RIS SA Oe 2

EER reae Woe oe i ae 9

I eesti 9

i a iiccsscsscirnninnsiesmeaphdbatnentneeassennies 2

National Labor Relations Act, 29 U.S.C. (& Supp.

8 8 a 12

Norris-LaGuardia Act § 4, 29 U.S.C. 104......1, 4, 6, 17, 18 | ”

Iu the Supreme Court of the United States

OCTOBER TERM, 1988

Nos. 87-1589 and 87-1888

PITTSBURGH & LAKE ERIE

RAILROAD COMPANY, PETITIONER

Vv.

RAILWAY LABOR EXECUTIVES’ ASSOCIATION

ON PETITIONS FOR WRITS OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE

This brief is submitted in response to the Court’s

order inviting the Solicitor General to express the

views of the United States.

STATEMENT

The Pittsburgh & Lake Erie Railroad Company

(P&LE) petitions for writs of certiorari to review

two related court of appeals decisions arising from

P&LE’s dispute with its labor unions over the rail-

road’s proposed sale of its rail assets. The first peti-

tion, No. 87-1589, seeks review of a court of appeals

decision holding that Section 4 of the Norris-

LaGuardia Act, 29 U.S.C. 104, prohibits the courts

(1)

2

from enjoining a labor strike arising from the rail-

road’s sale of rail lines to another company in a trans-

action authorized by the Interstate Commerce Com-

mission (ICC). The second petition, No. 87-1888,

seeks review of a subsequent decision by the same

court of appeals holding that P&LE must first bar-

gain with its unions over the effects of the railroad’s

proposed sale of its rail lines, pursuant to the provi-

sions of the Railway Labor Act (RLA), 45 U.S.C.

151 et seq., before completing the sale.

1. P&LE is a small railroad that owns and oper-

ates 182 miles of rail line in western Pennsylvania

and eastern Ohio. P&LE has experienced financial

difficulties and, on July 8, 1987, it entered into an

agreement to sell its rail lines to P&LE Railco, Inc.

(Raileo), a newly formed company that intended to

operate those lines with a reduced contingent of em-

ployees. Railco’s acquisition of P&LE’s rail lines was

subject to the ICC’s approval in accordance with the

Interstate Commerce Act (ICA), 49 U.S.C. (& Supp.

III) 10101 et seg.’ See 87-1589 Pet. App. A2-A3;

87-1888 Pet. App. lla-13a.

When informed of the proposed sale, P&LE’s un-

ions requested the railroad to serve notices under Sec-

—_

'The ICA establishes a national transportation policy to

promote efficient, competitive carriage of goods and persons

(49 U.S.C. 10101, 10101a) and creates the ICC to implement

that policy (49 U.S.C. (& Su vp. III) 10301 et seq.). The ICA

grants the ICC broad jurisdiction over various forms of

transportation, including rail carriage (49 U.S.C. 10501), and

gives the ICC power to exempt carriers from ICA regulation

(49 U.S.C. 10505). The ICA specifically regulates, inter alia,

the construction and operation (49 U.S.C. 10901) or abandon-

ment (49 U.S.C. 10903) of rail lines and the combination (in-

cluding consolidation, merger and acquisition of control) of

rail carriers (49 U.S.C. 11341 et seq.).

3

tion 6 of the RLA, 45 U.S.C. 156, and to commence

collective bargaining with the unions over the effects

on labor of its decision to discontinue its railroad

business. P&LE responded that it had no duty to

bargain under the circumstances. The unions then

served Section 6 notices proposing changes to their

collective bargaining agreements to give the em-

ployees greater protection in the event of a sale. The

Railway Labor Executives’ Association (RLEA), on

behalf of P&LE’s unions, thereafter brought an ac-

tion in the United States District Court for the West-

ern District of Pennsylvania to enjoin the sale and to

force P&LE to bargain. On September 15, 1987, the

unions commenced a general strike of the PELE. See

87-1589 Pet. App. A3-A4; 87-1888 Pet. App. 1la-

14a.

On September 19, 1987, Railco filed a “notice of

exemption” with the ICC seeking exemption from the

ICA approval process under the ICC’s “non-carrier”’

exemption regulations. See Ex Parte No. 392 (Sub-

No. 1), Class Exemption for the Acquisition and Op-

eration of Rail Lines Under 49 U.S.C. 10901, 1

1.C.C.2d 810 (1985), review denied mem. sub nom.

Illinois Commerce Comm’n vy. ICC, 817 F.2d 145

(D.C. Cir. 1987).* Under Ex Parte No. 392, an ex-

? The ICA generally provides that a party may acquire a

rail line only if the party first obtains ICC approval. See 49

U.S.C. 10901. However, the ICC is empowered to exempt a

person, class of persons, or transaction from the Section 10901

approval process if it finds that ICC oversight is “not neces-

sary to carry out” the national rail transportation policy and

the transaction or service is of “limited scope” or the applica-

tion of the relevant statutory provisions is ‘“‘not needed to pro-

tect shippers from the abuse of market power” (49 U.S.C.

10505(a)). In 1985, the ICC established a blanket exemption

for Section 10901 acquisitions by “non-carriers’” (i.e., new

4

-emption becomes effective and the transaction may

be carried out seven days after the filing of a notice

by the acquiring entity unless a petition to revoke

the exemption has been filed and granted or the trans-

action is stayed by the ICC. See ibid.; 49 C.F.R. Pt.

1150... On September 25, 1987, the ICC denied

RLEA’s request for a stay, and on October 2, 1987,

RLEA filed a petition to revoke Railco’s exemption,

which remains pending before the agency. See 87-

1589 Pet. App. A4; 87-1888 Pet. App. 10a-14a.

Meanwhile, P&LE requested the district court to

enjoin the RLEA general strike on the ground that

the work stoppage was an illegal attempt to interfere

with the ICC’s exclusive jurisdiction over Railco’s

purchase of the rail line. The court ultimately agreed

and issued an injunction. See 87-1589 Pet. App. B1-

B10. The RLEA appealed, and the court of appeals

summarily reversed the district court’s decision. See

id. at Al-A13 (P&LE I). The court held that Sec-

tion 4 of the Norris-LaGuardia Act deprived the dis-

trict court of jurisdiction to issue the injunction, re-

jecting P&LE’s contention that the Norris-LaGuardia

Act must be accommodated to the ICA, and remanded

the case for a determination whether P&LE was obli-

- gated to comply with the RLA bargaining procedures.

P&LE then petitioned this Court, in No. 87-1589, for

a writ of certiorari to review that decision.

entrants into the railroad business), the so-called Ex Parte

No. 392 exemption. See 1 I.C.C.2d 810.

*On February 29, 1988, the ICC modified the Ex Parte No.

392 exemption procedures to extend the notice periods and

delay the effective date of the exemptions involving line sale

transactions that result in the creation of larger railroads.

53 Fed. Reg. 5981.

5

2. On remand, the district court held that P&LE

was obligated to bargain under the RLA concerning

the effects of the proposed sale on its employees and

enjoined the sale “to the extent that such sale does

not include provisions for the maintenance of the

status quo” (87-1888 Pet. App. 7la-85a). P&LE ap-

pealed, and the court of appeals affirmed the district

court’s decision. See id. at la-70a (P&LE II). The

court of appeals concluded that the RLA required

P&LE to bargain with its unions over the effects on

labor of the railroad’s proposed sale of assets and

that the RLA’s “status quo” provisions prohibited

P&LE from completing the sale and eliminating any

workers’ employment during the bargaining process

(id. at 16a-26a). The court rejected the contention

that the ICC’s exemption of P&LE’s proposed sale

from the requirements of the ICA relieved the rail-

road of its bargaining obligations (id. at 26a-57a).

Judge Hutchinson dissented, concluding that “the RLA

and the ICA are inherently contradictory in this re-

spect and that Congress intended the ICA to prevail”

(id. at 61a). P&LE petitioned this Court, in No. 87-

1888, for a writ of certiorari to review the court of

appeals’ decision.*

*The court of appeals recently entered yet another deci-

sion arising from the RLEA’s objections to P&LE’s proposed

sale of its rail assets. See Railway Labor Executives’ Ass’n

v. Pittsburgh & Lake Erie R.R., No. 87-3853 (3d Cir. Oct. 14,

1988) (P&LE III). The RLEA had brought a state court

action seeking to enjoin P&LE’s sale on the ground that it

violated the Pennsylvania Fraudulent Conveyance Act, Pa.

Stat. Ann. tit. 39, §§ 351-363 (Purdon 1954), and P&LE re-

moved the action to federal court. The court of appeals held

that removal was improper and instructed the district court

to remand the case to the state court. No issue regarding this

decision is presented by any of the petitions filed in this

Court.

6

DISCUSSION

The United States submits that P&LE’s petitions

for writs of certiorari provide an appropriate oppor-

tunity for this Court to determine several questions

of great importance to the railroad industry. The

petition in No. 87-1888 squarely presents the ques-

tion whether the ICC’s authorization of a non-carrier’s

acquisition of existing rail lines relieves the selling

railroad of any RLA obligation to bargain with its

employees concerning the sale.* That petition also

presents the question of the scope of the railroad’s

and the unions’ bargaining and status quo obliga-

tions, an issue that would be reached if the Court

determines that the ICC’s authorization does not re-

lieve the railroads of the RLA requirements. The

petition in No. 87-1589 presents another significant

related question; namely, whether, in the case of rail

line sales, the ICC’s authorization relieves the courts

of the Norris-LaGuardia Act’s prohibitions against

injunctions in cases involving labor disputes. The

determination of these issues, which have generated

substantial disagreement among the lower courts,

would provide significant assistance in resolving nu-

merous pending disputes between the railroads and

their unions over rail line sales.

° The ICC, which intervened through its own lawyers in the

second court of appeals proceeding, has also filed a petition

for a writ of certiorari seeking review of the court’s deter-

mination that the ICA does not supersede the RLA. See JCC

v. Pittsburgh & Lake Erie R.R., No. 88-217 (filed Aug. 5,

1988). The Solicitor General has filed a brief amicus curiae

expressing the United States’ view that the ICC’s petition

should be dismissed because the ICC lacked statutory au-

thority to participate in the court of appeals proceeding and

to file the petition for writ of certiorari. See U.S. Amicus

Br., ICC vy. Pittsburgh & Lake Erie R.R., No. 88-217.

i 7

1. Since the passage of the Staggers Rail Act of

1980, Pub. L. No. 96-448, 94 Stat. 1895, the ICC

has encouraged the nation’s railroads to sell, rather

than to abandon, less profitable regional rail lines.

The ICC has recognized that sale of these rail lines

in lieu of abandonment frequently provides busi-

ness opportunities for new, smaller, and more effi-

cient carriers while preserving local rail service and

related employment opportunities. An entity seeking

to acquire a rail line must obtain ICC approval pur-

suant to the ICA (49 U.S.C. 10901), and the ICC has

the discretion to condition its approval on the provi-

sion of measures to protect affected rail employees

(49 U.S.C. 10901(c) (1) (A) (ii), (e)). Since 1982,

the ICC generally has declined to provide such pro-

tection on the ground that it would effectively fore-

close the formeiation of new rail carriers and would

ultimately lead to further loss of jobs through the

abandonment and dismantling of marginal rail lines.

See 87-1888 Pet. App. 110a-1lla. .The ICC also has

encouraged the trend toward sale rather than aban-

donment of rail lines through the development of a

streamlined process—the Ex Parte No. 392 class ex-

emption—for prompt regulatory allowance of those

transactions. See note 2, supra.°

P&LE elected to sell, rather than to abandon, its

rail assets through a rail line transaction that would

be governed by the Ex Parte No. 392 class exemption.

P&LE, like a number of other railroads and the ICC

itself, maintains (87-1888 Pet. 11-17) that the ICC’s

grant of the class exemption to an acquiring company,

6In issuing Ex Parte No. 392, the ICC indicated that rail

labor could file a petition under 49 U.S.C. 10505(d) to revoke

the exemption in a particular transaction if exceptional cir-

cumstances justified labor protection. 1 I.C.C.2d 810, 815

(1986).

8

coupled with the ICC’s decision to forgo the imposi-

tion of labor protective conditions, relieves the selling

railroad of any obligations it might otherwise have

to bargain with affected employees pursuant to RLA.

The Third Circuit rejected that reasoning (87-1888

Pet. App. 26a-56a). The Fifth Circuit, in a similar

context, has rejected that contention as well. See

Railway Labor Executives’ Ass’n vy. City of Galveston,

849 F.2d 145, 149-152 (1988), petition for cert.

pending, No. 88-517 (filed Sept. 26, 1988). The

Eighth Circuit, however, has reached a contrary re-

sult. See Railway Labor Executives’ Ass’n v. Chicago

& N.W. Transp. Co., 848 F.2d 102 (1988), petition

for cert. pending, No. 87-2049 (filed June 14, 1988).

The United States has not endorsed the proposi-

tion, advocated by P&LE and supported by the ICC,

that the grant of an Ex Parte No. 392 exemption re-

lieves the selling railroad of any RLA obligations that

it might have toward employees affected by the ex-

empted transaction.’ We nevertheless agree that the

question is important, and that P&LE’s petition for

a writ of certiorari in No. 87-1888 provides an ap-

propriate opportunity for the Court to resolve the

conflict among the circuits on this question. The

Third Cireuit’s P&LE II decision provides a better

vehicle for review than the Fifth Circuit’s City of

7 The ICC has set forth its views on the general question

in its decision in FRVR Corp.—Exemption Acquisition and

Operation—Certain Lines of Chicago and North Western

Transportation Co.—Petition for Clarification, ICC Finance

No. 31205 (Jan. 28, 1988), review pending sub nom. Railway

Labor Executives’ Ass’n v. ICC, No. 88-1280 (8th Cir.),

which is reproduced in 87-1888 Pet. App. 109a-129a. The

United States will set forth its views on the merits of this

question through a brief amicus curiae if the petition in

this case is granted.

9

Galveston decision because the latter decision to a

large extent merely adopts by reference the reasoning

of the former. And the Third Circuit’s P&LE II de-

cision provides a better vehicle for review than the

Eighth Circuit’s decision in Chicago d& N.W. Transp.

Co. because the latter decision, unlike the decision

below, does not address the scope of the RLA bargain-

ing and status quo obligations. Thus, as we explain

in the following section, if the Court grants the peti-

tion in P&LE II and concludes that the grant of an

Ex Parte No. 892 exemption does not relieve the rail-

road of its RLA obligations, the Court can proceed to

address the scope of those obligations, rather than to

remand the case for further proceedings on that ques-

tion.*

*’ The United States disagrees with respondent RLEA’s

suggestion (87-1888 Br. in Opp. 4) that this Court should

resolve the issue through the grant of the petition for a writ

of certiorari in Railway Labor Executives’ Ass’n v. Guilford

Transp. Indus., Inc., No. 87-1911 (filed May 23, 1988). That

case involves a transaction governed by Section 11341 of the

ICA, which (unlike Section 10901) explicitly provides that

carriers participating in transactions approved or exempted

thereunder are “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 * * *” (49 U.S.C.

11341(a)). See generally ICC v. Brotherhood of Locomotive

Engineers, No. 85-792 (June 8, 1987), slip op. 9-17 (Stevens,

J., concurring). Thus, the principles that govern transac-

tions subject to Section 11341 are not necessarily applicable

to transactions subject to Section 10901 and the Ex Parte

No. 392 class exemption.

The United States also disagrees with respondent RLEA’s

suggestion (87-1888 Br. in Opp. 5) that this case may become

moot insofar as P&LE no longer intends to sell its assets to

Raileo and is presently seeking another purchaser. The court

of appeals concluded, based on P&LE’s continuing attempts

to find another buyer that would qualify for an Ex Parte No.

10

2. P&LE’s petition in No. 87-1888 also challenges

the court of appeals’ determination that the RLA it-

self requires the railroad to bargain with its unions

over the effects of its proposed transaction and that

the RLA’s status quo provisions prohibit effectuation

of the transaction during the bargaining process.

Those questions, which are not dispositively answered

by this Court’s past decisions, involve matters of

fundamental importance to labor-management rela-

tions in the railroad and airlines industries.’ The

United States suggests that if this Court has occasion

to reach those issues in this case, it should decide

them.

The Railway Labor Act establishes an elaborate

mechanism designed to encourage the peaceful resolu-

tion of labor disputes likely to disrupt interstate com-

merce. Section 2 (First) imposes a basic duty on

carriers and their employees “to exert every reason-

able effort to make and maintain agreements con-

cerning rates of pay, rules, and working conditions,

and to settle all disputes, whether arising out of the

application of such agreements or otherwise” in order

to avoid interruption to commerce or to carrier opera-

tions (45 U.S.C. 152 (First)). Section 2 (Seventh)

further provides that no carrier “shall change the

392 exemption and the ICC’s apparent willingness to grant

such an exemption, that “each party continues to retain a

‘legally cognizable interest in the outcome,’ thus iasuring a

‘sufficient functional adversity’ between the parties to justify

the invocation of our jurisdiction” (87-1888 Pet. App. 15a-

16a n.& (citation omitted)). Indeed, P&LE’s success in

finding an alternative purchaser may well turn on resolving

the legal uncertainty that has resulted from the Third Cir-

cuit’s P&LE IT decision.

® Both railroads and airlines are subject to the provisions

of the RLA. See 45 U.S.C. 151-163, 181.

11

rates of pay, rules, or working conditions of its em-

ployees, as a class, as embodied in agreements ex-

cept in the manner prescribed in such agreements or

in [Section 6 of the RLA]” (45 U.S.C. 152 (Sev-

enth) ).

Section 6 of the RLA provides that carriers and

employee representatives must “give at least thirty

days’ written notice of an intended change in agree-

ments affecting rates of pay, rules, or working con-

ditions” and must promptly agree to the time and

place for the beginning of conferences to bargain over

the proposed changes (45 U.S.C. 156). The parties

may invoke the services of the National Mediation

Board to assist in resolving their differences (45

U.S.C. 155). Once “such notice of intended change

has been given, or conferences are being held with

reference thereto, or the services of the Mediation

Board have been requested by either party, or said

Board has proffered its services, rates of pay, rules,

or working conditions shall not be altered by the

carrier’ (45 U.S.C. 156) until the negotiation, media-

tion, and cooling-off periods (including that asso-

ciated with a Presidential Emergency Board, if one

has been established) have expired (45 U.S.C. 155,

156, 160). See, e.g., Brotherhood of R.R. Trainmen

v. Jacksonville Terminal Co., 394 U.S. 369, 378

(1969).

The question in this case is how the RLA’s bargain-

ing and status quo obligations apply when a railroad

proposes to undertake a sale of assets that, in turn,

will lead to a reduction in its labor force require-

ments. The court of appeals rejected P&LE’s argu-

ment that the KLA imposes no bargaining obligations

at all when—as here—the sale of assets amounts to

a decision to go out of business (87-1888 Pet. App.

12

16a-26a). The court of appeals acknowledged that

P&LE is under no obligation to bargain with its

unions over its actual decision to sell the assets; the

RLA obligates a carrier to bargain, at most, over

the effects of its decision on rail labor (id. at 16a,

24a)."° Nevertheless, the court of appeals concluded

that Section 6’s command that a carrier shall not

alter “rates of pay, rules, or working conditions”

during the bargaining process prevents P&LE from

taking actions to complete the sale and reassign or

discharge employees, even if such actions are per-

missible under the existing collective bargaining

agreements (id. at 17a-18a, 25a-26a).

P&LE relies (87-1888 Pet. 17) on this Court’s de-

cision in Textile Workers Union v. Darlington Mfq..

380 U.S. 263 (1965), to support its contention

that that the RLA imposes no bargaining obligations

at all when a railroad elects to go out of business.

In Darlington, a case decided under the National

Labor Relations Act (NLRA), 29 U.S.C. (& Supp.

IV) 151 et seg., this Court held that when “an em-

ployer closes his entire business, even if the liquida-

tion is motivated by vindictiveness toward the union,

such action is not an unfair labor practice’ (380

U.S. at 274). P&LE urges that the principle recog-

nized in Darlington that the NLRA “does not com-

pel one to become or remain an employer” (id. at

271), applied in the present context, should relieve

the railroad of its RLA bargaining obligations.

1©*This dispute in this case is not about the decision to sell

the P&LE’s rail lines; it is about the effects of that decision

on the employees of the railroad” (87-1888 Pet. App. 16a

(footnote omitted)). “We agree, and the union apparently

concedes, that the railroad has no obligation to bargain over

the underlying decision itself, viz., to cease operating as a

railroad and to sell its rail assets” (id. at 24a (citing First

Nat'l Maintenance Corp. V. NLRB, 452 U.S. 666, 686 (1981) ).

13

We think it clear that Darlington’s reasoning

should extend to the issues presented in this case.

Although the mandatory scope of bargaining under

the RLA is “not coextensive with the National Labor

Relations Act and the Board’s jurisdiction over un-

fair labor practices” (First Nat’l Maintenance Corp.,

452 U.S. 666, 686-687 n.23 (1981) ), the basic policies

underlying Darlington should translate with equal or

greater force in the railway and airline labor con-

text. Indeed, because the ICC has the statutory au-

thority to approve any abandonment, merger, or

transfer of control of a rail line (see note 1, supra),

and because the ICC has the authority to condition

its approval of any such transaction by imposing ap-

propriate labor protection measures (see page 7,

supra), there is, if anything, less reason to require

a rail carrier to bargain over a decision to go out of

business than there is in the NLRA context.

The courts of appeals apparently have not given

careful consideration to or clear guidance on the

question whether and how the principles established

in Darlington apply to cases arising under the RLA.

Compare Air Line Pilots Ass’n v. Transamerica Air-

lines, Inc., 817 F.2d 510, 512 n.1 (9th Cir. 1987)

(stating that “effects bargaining may continue de-

spite the cessation of flight operations”) with Jnter-

national Ass’n of Machinists v. Northeast Airlines,

Inc., 473 F.2d 549, 558-559 (1st Cir.), cert. denied,

409 U.S. 845 (1972) (stating that “[w]here it is

clear, as in the case of a merger, that bargaining

about some effects of the decision would be ineffective

unless the company could be required to renegotiate

the merger, we believe that the duty to bargain

about those effects does not arise at all’). The Court

14

may therefore wish to take this opportunity to re-

solve this important question."

A matter of equally pressing practical concern

is the court of appeals’ interpretation of Section 6’s

status quo requirements. The court of appeals has

broadly held that if a rail labor union serves a Sec-

tion 6 notice that proposes changes in a collective

bargaining agreement, Section 6’s status quo re-

quirements prohibit the railroad from taking actions

adverse to labor even though such actions would be

permissible or authorized under the existing em-

ployer-employee relationship. That ruling is not

required by the RLA’s language or objectives, nor is

it compelled by this Court’s precedents.

As previously discussed, the RLA is concerned with

formation and maintenance of “agreements concern-

ing rates of pay, rules, and working conditions” (45

U.S.C. 152 (First) ). Section 6 accordingly requires a

carrier to bargain with a union concerning any pro-

posed change in agreements affecting those three

mandatory subjects of bargaining, and it further pro-

" Whatever the answer to that question, P&LE should not

be required to bargain over its actual decision to sell its

assets, a matter that is quintessentially a question of business

judgment. The court of appeals concluded (and the unions

apparently agreed) that P&LE is required to bargain only

concerning the effects on labor of the proposed transaction.

See note 10, supra. As this Court has explained in the

NLRA context, “the harm likely to be done to an employer’s

need to operate freely in deciding whether to shut down

part of its business purely for economic reasons outweighs

the incremental benefit that might be gained through the

union’s participation in making the decision.” First Nat'l

Maintenance Corp., 452 U.S. at 686. See also id. at 678-679

(footnote omitted) (“Management must be free from the

constraints of the bargaining process to the extent essential

for the running of a profitable business.”).

15

vides that the carrier must continue to honor its ex-

tant obligations with respect to those subjects through

the course of the bargaining process (45 U.S.C. 156).

But while Section 6 instructs the carrier to preserve

the “rates of pay, rules, or working conditions” (45

U.S.C. 156), it does not prevent the carrier from tak-

ing actions that are authorized under the existing

collective bargaining agreements. Thus, the filing of

a Section 6 notice need not prevent a railroad from

undertaking management initiatives that will affect

its work force, provided that those actions are taken

in accordance with the railroad’s present obligations

to its employees as reflected in the existing “rates of

pay, rules, or working conditions.”

A substantial argument can be made, therefore,

that the court of appeals erred in construing Section

6 as requiring the broad status quo obligation that

the court imposed in this case. The court rested its

decision in part on the premise that P&LE’s proposed

sale necessarily “would require a ‘change in agree-

ments affecting rates of pay, rules, or working condi-

tions’”’ (87-1888 Pet. App. 17a) or would “change

the nature of those agreements” (id. at 18a (empha-

sis in original)). But collective bargaining agree-

ments frequently recognize, explicitly or implicitly,

that an employer may make reductions in his work

force or go out of business completely and often pro-

vide labor protection—including reassignment oppor-

tunities and severance pay—when the employer exer-

cises that right.”

12 A question occasionally may arise whether a collective

bargaining agreement does or does not permit labor force

reductions in certain circumstances. The resolution of that

question, which turns on an interpretation of the agreement,

is a “minor dispute” that is subject to mandatory arbitration

by the National Railroad Adjustment Board (NRAB) or to its

16

Alternatively, the court reasoned that the union

had proposed a change in the collective bargaining

agreement, and that this proposal required P&LE to

preserve the “objective working conditions out of

which the dispute arose,” including “the very exist-

ence of its workers’ jobs” (Pet. App. 17a, 18a). As

support for this proposition, the court relied upon

Detroit & T.S.L.R.R. vy. United Transp. Union, 396

U.S. 142 (1969). That decision, however, need not

be read so broadly. Detroit may simply stand for the

proposition that rates of pay, rules, or working

conditions “need not be covered in an existing agree-

ment” if, for example, they have “occurred for a

sufficient period of time with the knowledge and ac-

quiescence of the employees to become in reality a

part of the actual working conditions.” Jd. at 153-

154. In any event, neither Detroit nor Order of

statutory alternatives. See 45 U.S.C. 153 ( (First), (Second) ).

The court of appeals did not address that question here (87-

1888 Pet. App. 16a-17a n.9). It is well settled (and not a

matter of dispute in this case) that “if the subject matter of

the parties’ dispute is ‘arguably comprehended’-within, and

potentially amenable to resolution by reference to, their exist-

ing collective bargaining agreements and the attendant estab-

lished past practices” the matter falls within the exclusive

jurisdiction of the NRAB. E.g., Chicago & N.W. Transp. Co.

V. Railway Labor Executives’ Ass'n, 855 F.2d 1277, 1284 (7th

Cir. 1988), petition for cert. pending, No. 88-464 (filed Sept.

16, 1988).

‘8 This resuit naturally follows from the recognition that an

employer-employee relationship frequently rests on implied

understandings. “It would be virtually impossible to include

all working conditions in a collective-bargaining agreement.

Where a condition is satisfactorily tcelerable to both sides, it

if often omitted from the agreement. and it has been sug-

gested [by the RLEA] that this practice is more frequent

in the railroad industry than in most others” (396 U.S. at 154-

17

R.R. Telegraphers v. Chicago & N.W. Ry., 362 U.S.

330 (1960), on which the court also relied, involved

a decision to go entirely out of business through a

sale of assets or otherwise.

In sum, the court’s construction of Section 6 would

allow the railroad’s employees to nullify their collec-

tive bargaining agreements unilaterally and freeze

the entire employer-employee relationship through the

simple expedient of serving a Section 6 notice. That

ruling may have far-reaching consequences for labor-

management relations in the railroad and airline in-

dustry and warrants this Court’s review."

3. P&LE further contends, in No. 87-1589, that

Section 4 of the Norris-LaGuardia Act, which pro-

vides inter alia that the courts shall have no jurisdic-

tion to enjoin a labor strike (29 U.S.C. 104), does not

deprive a federal district court of jurisdiction to en-

join a labor strike designed to block an ICC-approved

rail transaction. The court of appeals rejected that

contention, reasoning that Section 4, by its terms,

would apply in this case and that the relevant ICA

provisions give no indication that Congress intended

that the ICA would override Section 4’s arti-injunction

policy (87-1589 Pet. App. Al-A13). :

This question has practical importafice since it

typically is the first—and often the most pressing—

155 (footnote omitted) ). See also id. at 159-161 (Harlan, J.,

concurring in part and dissenting in part).

14 F&LE also contends that the imposition of a status quo

injunction in these circumstances amounts to a taking of

property without just compensation in violation of the Fifth

Amendment. See 87-1888 Pet. 26-27. The court of appeals

did not address that argument, which P&LE raised for the

first time in that court. The United States submits that this

novel question would not independently warrant this Court’s

review.

18

issue for the courts to decide in labor-management

disputes arising out of rail line sales. This Court in

other contexts has accommodated Section 4’s prohibi-

tion against federal court injunctions of labor strikes

with the terms and objectives of other statutes that

address labor relations. See Boys Markets, Inc. v.

Retail Clerks Union, 398 U.S. 235, 250-252 (1970)

(Labor Management Relations Act); Brotherhood of

R.R. Trainmen v. Chicago River & I.R.R., 353 U.S.

30, 41 (1957) (RLA). The question is whether there

is a need for similar accommodation here. The an-

swer depends, at least in part, on the answer to the

first question presented: whether the ICC’s approval

of a rail transaction relieves the carrier of its RLA

bargaining obligations. Obviously, it would make lit-

tle sense to imply an exception to Section 4’s prohibi-

tion in the case of an ICC-approved transaction if

the railroad must bargain irrespective of the ICC’s

approval. We also note that the Eighth Circuit,

which has concluded that the ICC’s approval of a

short-line transaction relieves the railroad of any

RLA bargaining obligations (Chicago d& N.W.

Transp. Co. v. Railway Labor Executives’ Ass’n, su-

pra), has nonetheless held that ICC approval does

not relieve the courts of Section 4’s prohibition of

labor strike injunctions. Burlington N.R.R. v. United

Transp. Union, 848 F.2d 856 (1988).*

There presently is no conflict among the circuits

on this question. Nevertheless, we would submit that

The court reasoned that there is “no inherent incompati-

bility between the recent deregulatory efforts of the Congress

and the ICC and the continued viability of Norris-LaGuardia

in the circumstances presented here” (848 F.2d ~t 864), stat-

ing that “implicit in the congressional vision cf a vigorous

free market is the realization that all major participants in

19

the matter is of a sufficient importance and close re-

lationship to the questions presented in No. 87-1888

to warrant this Court’s review.”

CONCLUSION

The petitions for writs of certiorari in No. 87-1589

and No. 87-1888 should be granted.

Respectfully submitted.

CHARLES FRIED

Solicitor General

THOMAS W. MERRILL

Deputy Solicitor General

JEFFREY P. MINEAR

Assistant to the Solicitor General

NOVEMBER 1988

the economy must be left free to exercise their economic

strength” (ibid.).

16 The ICC recently filed a petition for writ of certiorari in

the Burlington case. See ICC v. United Transp. Union, No.

88-711 (filed Oct. 28, 1988). There, as in this case, the ICC

lacked statutory authority to participate in the lower court

proceedings and lacks authority to petition this Court for

review. See note 5, supra.

WW UV. S. GOVERNMENT PRINTING OFFicE; 1988 241699 60742