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

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

THE PITTSBURGH & LAKE ERIE RAILROAD COMPANY,

Petitioner,

RAILWAY LABOR EXECUTIVES’ ASSOCIATION, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

BRIEF OF THE AMERICAN FEDERATION OF LABOR

AND CONGRESS OF INDUSTRIAL ORGANIZATIONS

AS AMICUS CURIAE

DAVID SILBERMAN

LAURENCE GOLD

(Counsel of Record)

815 16th Street, N.W.

Washington, D.C. 20006

(202) 637-5390

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20004

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JOSEPH F. SPANIOL, SR.

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p EN tee

TABLE OF CONTENTS

SEE a a

Introduction and Summary .................-.--..----------2---00---

) I. The Railway Labor Act Provides, As A Matter

of Law, That Collective Bargaining Agreements

Survive Corporate Reorganizations Such As The

One Here And Bind The Corporate Entity That

Emerges From The Reorganization ....................

II. Where A Union, Pursuant To RLA § 6, Initiates

Bargaining Over The Effects Of A Corporate

Reorganization On Incumbent Employees, The

Employer Must Preserve The “Objective Work-

ing Conditions” Of The Employees Until The

Act’s Mandated Negotiation Process Is Con-

EEL a ea

TABLE OF AUTHORITIES

CASES Page

Air Cargo, Inc. v. Local Union 851, 733 F.2d 241

(C.B. B, BBBE) —nnnnncececesccccesscessnsenseenneenennnne 26

Chicago & N.W.R.Co. v. Transportation Union, 402

is Sb: y |) 20

First National Maintenance Corp. v. NLRB, 452

is 8) | ee 2, 21, 22

Howard Johnson Co. v. Hotel Employees, 417 U.S.

BED (2GGE) eececeeecscencenietnncncsmmesmaaa 8-9, 10, 14

John Wiley & Sons, Inc. v. Livingston, 376 U.S.

> Tt | | eer 6, 7

McGuire v. Humble Oil & Refining Co., 355 F.2d

SEB (CA. BR, WOGB) annncnccecccesstercnscetne 7

NLRB v. Bildisco & Bildisco, 465 U.S. 513 (1984).. 18

NLRB v. Burns Security Services, 406 U.S. 272

(1972) .. mA - ...7, 10, 11

Railroad Trainmen + v. . Terminal Co., “394 U. s. 369

(BBG nnneecececcoecnsscesnessnnsenensemnstennnne 5, 12, 19

Railway Clerks v. Florida East Coast R. Co., 384

18 Se th | ee 12, 13, 14

Shore Line v. Transportation Union, 396 U.S. 142

(BBG) a nnneecencesnccecewcsecssascnsnicesemnnnnesnnen passim

TWA Ince. v. Flight Attendants, —— U.S. ——

1 5, 6

Telegraphers v. Chicago N. W.R. Co., 362 U.S. 330

(EN 4, 20-21

Textile Workers v. Darlington Co., 380 U.S. 263

CR) nnn anenecenceteeceene encase 27

STATUTES

Bankruptcy Act, 47 Stat. 1467

hy | (| En passim

Emergency Railroad Transportation Act, 48 Stat.

UE te 7 7 pf

ili

TABLE OF AUTHORITIES—Continued

Page

National Labor Relations Act, as amended by the

Labor Management Relations Act, 29 U.S.C.

cc cceconens passim

TE 7,8

EE 21, 22

CD 6, 8

Railway Labor Act, 45 U.S.C. §§ 151 et seq. ............ passim

Tee ceenseczcnsoncees 19, 22

a cicrtrrsntpesencevereererecesceuee 12, 19

aa LS 22

SE passim

Nee ccccnevenceceeces 22

MISCELLANEOUS

Hearings Before the House Committee on Inter-

state and Foreign Commerce on H.R. 7560, 73rd

Cong. 2d Sess. (1934) 000... ecc ce cccecceccceeeeeeeeeee 17

Hearings Before the House Committee on Inter-

state and Foreign Commerce on H.R. 5500, 73rd

Cong. ist Sess. (1983) .......................................... 16

Hearings Before the Senate Committee on Inter-

state Commerce on S. 1580, 73rd Cong. 1st Sess.

Se 16

H.R. Rep. 95-595, 85th Cong. 1st Sess. st 123

sans cecsnseceencceres 18

76 Cong. Rec. 2927 (Rep. LaGuardia) .................... 15

77 Cong. Rec. 4256 (Senator Dill) _...... 16

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

No. 87-1589

THE PITTSBURGH & LAKE ERIE RAILROAD COMPANY,

. Petitioner,

RAILWAY LABOR EXECUTIVES’ ASSOCIATION, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

BRIEF OF THE AMERICAN FEDERATION OF LABOR

AND CONGRESS OF INDUSTRIAL ORGANIZATIONS

AS AMICUS CURIAE

The American Federation of Labor and Congress of

Industrial Organizations, a federation of 87 labor unions

representing approximately 13,500,000 working men and

women, submits this brief amicus curiae with the consent

of the parties as provided for by the Rules of this Court.

ARGUMENT

Introduction and Summary

This case poses a question that is arising with in-

creasing frequency and urgency in today’s economy:

when a business entity goes through a reorganization

which results in operations previously performed by a

“predecessor” firm being performed by a “successor”

firm, to what extent can the predecessor’s employees,

through collective bargaining and collective bargaining

agreements, protect their jobs and their labor standards?

We pose the question in these terms to emphasize at

the very outset what is not at issue in this case. That is

especially important here because the briefs on the other

side are to a very large extent devoted to arguing hypo-

thetical questions that are not posed by this proceeding.

First, this case does not present any question as to

the right of the petitioner Pittsburgh & Lake Erie Rail-

road Company (“P&LE’’) to decide to sell its assets to

some other entity, and to so decide without bargaining

with the exclusive representatives of the P&LE employ-

ees. As the court below aptly stated, “The dispute in this

ease is not about the decision to sell the P&LE’s rail

lines; it is about the effects of that decision on the em-

ployees of the railroad.” 845 F.2d at 428. In other

words, this case is not a variation on the cases such as

First National Maintenance Corp. v. NLRB, 452 USS.

666 (1981), in which this Court has confronted the ques-

tion of whether an employer that intends to close an

operation—or transfer the operation to a third person—

has an obligation to bargain in good faith with the repre-

sentative of the affected employees over that business

decision itself. See id. at 677 & n.15, 681-682 (discussing

the established distinction between such “decision” bar-

gaining and “effects” bargaining).

Second, this case does not, moreover, present any con-

tract interpretation question. P&LE does not have even

a colorable claim that its employees’ unions have agreed

—explicitly or implicitly, in general terms through a

management rights clause or in specific terms through

a clause dealing directly with the rights of a successor

employer, in direct bargaining or by acquiescence in an

established past practice—to a reorganization in which a

successor employer would be free to continue the P&LE

operations, in whole or in part, with a new workforce

paid lower wages and accorded lesser working conditions.

Third, this case likewise does not present any question

as to the right of the P&LE, or of its successor, to dis-

continue certain operations—as opposed to shifting the

performance of those operations from one business entity

to another—and to furlough the employees whose work

is eliminated as the result of the discontinuance. Under

its collective bargaining agreements, P&LE is authorized

to make furloughs where work is eliminated and P&LE

has, in fact, from time to time, exercised that right. And,

on any view of this case, P&LE’s would-be successor—

P&LE Railco—likewise would assume that right. To put

this point in concrete terms, it is uncontested that were

the transaction between P&LE and P&LE Railco to be

consummated, Railco would be free, without the need to

engage in a new round of collective bargaining, to oper-

ate with the number of employees commensurate to the

size and nature of Railco’s operations and not the num-

ber commensurate to the size and nature of P&LE’s pres-

ent operations.

What is at issue here is whether P&LE Railco also

would be free—without securing a new collective bar-

gaining agreement and, indeed, without engaging in col-

lective bargaining—to both continue the P&LE opera-

tions and hire an entirely new workforce to do the work

under newly-established wages and working conditions.

It is our submission that permitting P&LE Railco to do

so would be fundamentally inconsistent with the policies

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

(“RLA”).

In arguing for that conclusion, our analysis diverges

to some extent from the reasoning of the decision below.

That decision rests on the premise that, if P&LE were to

consummate the sale of its assets to P&LE Railco, the

successor would not be bound by the current collective

bargaining agreements, at least absent an express provi-

sion in the agreements which binds successors. 845 F.2d

at 422. On that premise, in these circumstances, the

successor would be free to disturb the status quo—spe-

cifically to hire new employees and establish new wages

and working conditions—without exhausting the RLA’s

procedures for amending or modifying such agreements.

Thus, the appellate court understood this case to turn on

the extent of the P&LE duty to bargain over “the ef-

fects on the employees of the sale,” in response to a notice

by the representatives of its employees under § 6 of the

RLA, 45 U.S.C. § 156, seeking such bargaining and the

extent of P&LE’s further duty to maintain the status

quo pending the conclusion of the RLA’s mandated bar-

gaining process. See 845 F.2d at 422.

In Part I we show that this , mise of the decision

below is unsound. Under the RLA, where a corporate re-

organization results in a successor which continues the

predecessor’s operations (in whole or in part), the RLA

treats the business as ongoing and as a matter of law

requires both the successor and the union to abide by the

current collective bargaining agreement until modified

through bargaining. In this respect, the RLA differs

from the National Labor Relations Act, as amended by

the Labor Management Relations Act, 29 U.S.C. §§ 141

et seg. ‘“NLRA”), which ordinarily frees a successor

employer from a predecessor’s labor contracts and frees

the employees affected by the corporate transaction to

exercise economic leverage to preserve or improve their

labor standards in successorship situations.

In Part II we accept arguendo the premise of the deci-

sion below, and address P&LE’s bargaining and status

quo obligations under the RLA. As we show, at the very

least, the RLA precludes P&LE from reorganizing in a

manner that would alter the “objective working condi-

tions” of P&LE’s employees for so long as the Company

and its employees’ exclusive representatives are involved

in the process of negotiations and mediation over the

effects of the reorganization on those employees man-

dated by RLA § 6. The issues raised by that notice were,

under this Court’s decision in Telegraphers v. Chicago

N.W.R. Co., 362 U.S. 330 (1960), bargainable issues.

That being so, § 6 requires P&LE to preserve the “actual,

objective working conditions and practices, broadly con-

ceived, which were in effect prior to the time the pending

dispute arose and which are involved in or related to that

dispute.” Shore Line v. Transportation Union, 396 U.S.

142, 153 (1969). By taking action—not expressly au-

thorized by the extant collective bargaining agreement

or by settled past practice—to terminate the employment

of P&LE’s employees and to provide for the hiring of a

new workforce of one-third the present size paid at re-

duced wages, P&LE would violate its obligation under

$6 to preserve the preexisting “objective working con-

ditions.” For this reason, too, the court below properly

issued an injunction to preserve the status quo.

I. The Railway Labor Act Provides, As A Matter of Law.

That Collective Bargaining Agreements Survive Cor-

porate Reorganizations Such As The One Here And

Bind The Corporate Entity That Emerges From The

Reorganization

A. The threshold question raised by this case concerns

the rules the RLA establishes for determining the status

of a collective bargaining agreement over a corporate

reorganization. That is a question of first impression in

this Court. In contrast, however, this Court has faced

the comparable question in a trilogy of NLRA “successor-

ship” cases.

This Court has repeatedly “emphasized that the NLRA

‘cannot be imported wholesale into the railway labor

arena. Even rough analogies must be drawn circum-

spectly with due regard for the many differences between

the statutory schemes.’” TWA Ine. v. Flight Attendants,

US. (Feb. 28, 1989), Sl. Op. p. 11 quoting

Railroad Trainmen v. Terminal Co., 394 U.S. 369, 383

(1969). At the same time, the Court has recognized that

carefully drawn analogies from the federal common labor

law developed under the NLRA may be helpful in decid-

ing cases under the RLA. TWA, Sl. Op. at p. 5. We

therefore begin our analysis with a discussion of the

NLRA successorship decisions in this Court.

In John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543

(1964), the predecessor, Interscience, was acquired by,

and merged into, the successor, Wiley, which hired vir-

tually all of Interscience’s employees. The Union repre-

senting Interscience’s employees sued under § 301 of the

Labor Management Relations Act, 29 U.S.C. § 185, to en-

force the extant collective bargaining agreement against

Wiley. In particular, the union sought to compel Wiley

to abide by the arbitration provision in the agreement.

The Court ruled for the union stating:

We hold that the disappearance by merger of a cor-

porate employer which has entered into a collective

bargaining agreement with a union does not auto-

maticaily terminate all rights of the employees cov-

ered by the agreement, and that, in appropriate cir-

cumstances . . . the successor employer may be re-

quired to arbitrate with the union under the agree-

ment. [376 U.S. at 548.]

The Court explained that the “objectives of national

labor policy . . . require that the rightful prerogative of

owners independently to rearrange their businesses and

even eliminate themselves as employers be balanced by

some protection to the employees from a sudden change

in the employment relationship.” Jd. at 549. And while

recognizing that “the principles of law governing ordi-

nary contracts would not bind to a contract an uncon-

senting successor to a contracting party,” id. at 550, the

Court concluded that “a collective bargaining agreement

is not an ordinary contract”:

Central to the peculiar status and function of a col-

lective bargaining agreement is the fact... that it

is not in any real sense the simple product of a

consensual relationship. . . . This case cannot read-

ily be assimilated to the category of those in which

there is no contract whatever, or none which is

reasonably related to the party sought to be obli-

gated. There was a contract, and Interscience

Wiley’s predecessor, was party to it. [Id.]

Thus, at least so long as there is “substantial continuity

of identity in the business enterprise” so that a duty to

arbitrate can “reasonably be found in the particular bar-

gaining agreement and the acts of the parties involved,”

id. at 551, the “preference of national labor policy for

arbitration as a substitute for tests of strength between

contending forces” during the term of a collective bar-

gaining agreement dictates binding the successor to the

preexisting agreement, id. at 549."

In NLRB v. Burns Security Services, 406° U.S. 272

( 1972), the Court returned to the competing interests in

industrial peace and in the freedom of collective bargain-

ing addressed in Wiley, albeit in a rather different con-

text. The question in that case was whether Burns—which

had successfully bid on and taken over a contract to pro-

vide plant security protection and had hired the prede-

cessor’s employees to perform the underlying work—had

violated the bargaining obligation stated in NLRA

§ 8(a) (5), 29 U.S.C. § 158(a) (5), by refusing to as-

. sume the extant collective bargaining agreement and by

unilaterally fixing the initial terms on which Burns

1 The Wiley rules does not. apply where the transaction integrates

the predecessor’s operations and workforce into a larger successor’s

operations and workforce and the latter group of employees is

already represented by a certified representative and covered by a

collective bargaining agreement. See, e.g.. McGuire v. Humble Oil

& Refining Co., 355 F.2d 352 (C.A. 2, 1966).

In the instant case, of course, the putative successor is a new

entity which prior to the transaction had no employees of its own.

Thus, this case does not raise any of the questions which arise

from transactions which result in the integration of two work-

forces or the respective rights of competing labor organizations

during and after such a transaction. We therefore do not address

that complex of issues in this brief.

would hire its p.edecessor’s employees. The Court an-

swered that question in the negative.

Distinguishing Wiley, the Burns Court concluded that

although Burns was obligated’ by § 8(a) (5) to bargain

with the union which represented the predecessor’s em-

ployees, that section does not require a successor em-

ployer to assume the predecessor’s labor contract. The

Court concluded that it is the policy of the NLRA in

such successorship situations “to enable the parties to

negotiate for any protection either deems appropriate,

but to allow the balance of bargaining advantage to be

set by economic power realities.” 406 U.S. at 288. The

opposite conclusion, the Court stated, could “inhibit the

transfer of capital,” by limiting the successor’s ability

to “make changes in corporate structure, composition of

the labor force, work locations, task assignments, and na-

ture of supervision. /d. at 287-288.

Two years after deciding Burns, the Court again con-

fronted the successorship issue in Howard Johnson Co.

v. Hotel Employees 41% 1.8. 249 (1974). Like Wiley,

and unlike Burns. Howard Johnson was a § 301 action

to enforce a colleci’ve barganing agreement. Unlike both

Wiley and Burns, »owever, the successor in Howard

Johnson had acquired certain of the predecessor’s opera-

tions in an asset sale and had hired a new workforce

rather than retaining the incumbent employees. And,

unlike Wiley, the predecessor firm in Howard Johnson

continued in business albeit in different locations. The

Court concluded that in the context of the kind of trans-

action involved in Howard Johnson, it was “improper to

hold [the successor] to the substantive terms of a collec-

tive bargaining agreement which it had neither expressly

nor impliedly assumed.” 417 U.S. at 255.

In reaching this conclusion the Howard Johnson Court

distinguished Wiley on two grounds. To begin with, the

Court observed, Wiley “involved a merger, as a result of

which the initial employing entity completely disap-

peared. In contrast, this case involves only a sale of some

assets, and the initial employers remain in existence as

viable corporate entities.” 417 U.S. at 257. Further-

more, in Wiley, “the surviving corporation hired all of

the employees of the disappearing corporation,” whereas

Howard Johnson exercised what the Court termed “the

new employer’s right to operate the enterprise with his

own independent labor force,” id. at 258, 264 (emphasis

in original.) ” “

B. Read together, Wiley, Burns, and Howard Johnson

teach, first of all, that under the NLRA, “[i]n light of

the difficulty of the successorship question, the myriad

factual circumstances and legal contexts in which it can

arise, and the absence of congressional guidance as to its

resolution, emphasis on the facts of each case as it arises

is especially appropriate.” Howard Johnson, 417 U.S. at

456.

On the facts in Wiley, in which the contracting em-

ployer “disappear[ed]” into another “by merger,” fol-

lowed by the “wholesale transfer of [the predecessor’s]

employees,” 376 U.S. at 548, 551, the Court found that

the interest in avoiding “industrial strife” outweighed

“the rightful prerogative of owners independently to re-

arrange their businesses,” id., at 549.°

? The Howard Johnson Court acknowledged that its holding cut

off the union’s ability to enforce the provision of its extant collec-

tive bargaining agreement, which stated that the agreement was

binding on successors, against the successor and indicated that

the union’s only option was to seek enforcement against the prede-

cessor. 417 U.S. at 258 & n.3.

The Court intimated, moreover, that where a predecessor and

Successor do not abide by such a provision a union might “enjoin

the sale . . . on the ground that this was a breach by the [predeces-

sor] of the successorship clauses in the collective bargaining agree-

ments,” Jd.

* There may be other situations as well in which it is “within

the reasonable expectations of the parties,” Howurd Johnson, 417

U.S. at 257, that a collective agreement will survive a corporate re-

organization, and in which the successor will be deemed to have

In contrast, in the contracting out situation involved in

Burns and in the type of asset sale involved in Howard

Johnson, the Court found that the interest in “freedom

of collective bargaining” and in the “free transfer of

capital” predominates over the interest in industrial

peace, Howard Johnson, 417 U.S. at 254-255.

We hasten to add—for it is absolutely central to the

decisions—that the employer freedoms recognized in

Burns and in Howard Johnson are not absolute; the

Court has recognized that the affected employees, too,

are free to advance and protect their interests. The

NLRA leaves the determination of the respective rights

of the parties to “‘“the relative strength . . . of the

contending forces,”’” Howard Johnson, 417 U.S. at 264,

and to “economic power realities,” Burns, 406 U.S. at

288. The affected employees have the right to apply

economic pressure against the predecessor-employer to

require that employer to protect the employees over a

transition. And, if the successor elects to hire the prede-

cessor’s employees and thereby assumes a bargaining ob-

ligation, the employees have the right to apply economic

pressure against the successor as well. In either event

“lt)he congressional policy manifest in the [NLRA] is

to enable the parties to negotiate for any protection either

deems appropriate.” 7d.

C. The foregoing summary of the NLRA successor-

ship law is sufficient to demonstrate that this Court has

made one salient point so plain as to be beyond any dispute:

the NLRA would not permit the result that P&LE seeks

here.* According to P&LE, the Company may consum-

“assumed the obligations under the old contract,” Burns, 406 U.S.

at 291.

‘There is, of course, much that remains unsettled under the

NLRA regarding successorship. Indeed, it is far from certain how

this case would come out under the NLRA.

On the one hand, the transaction between P&LE and P&LE

Railco is, in form, an asset sale like the sale in Howard Johnson;

mate the sale to P&LE Raileo and Railco is free to hire

a new workforce and to establish new wages and work-

ing conditions without regard to P&LE’s collective bar-

gaining agreements, yet P&LE’s employees are not free

to respond by using their economic leverage to protect

their jobs and their wages. As P&LE puts its contention

in its brief, the Company is free to act to rearrange

its affairs without going through the RLA bargaining

process and without any ado but its “unions were free

to strike only after having exhausted the RLA’s major

dispute procedures. Their strike prior to the exhaustion

of those procedures violated the RLA.” Pet. Br. at 65.

The regime P&LE champions is anathema to the

NLRA. Burns could not be clearer in this regard:

Preventing industrial strife is an important aim of

federal labor legislation but Congress has not chosen

to make the bargaining freedom of employers and

unions totally subordinate to this goal. When a bar-

gaining impasse is reached, strikes and lockouts may

occur. This bargaining freedom means both that

parties need not make any concessions as a result

of Government compulsion and that they are free

from having provisions imposed upon them against

their will. [407 U.S. at 287.]

And the Burns’ opinion continues:

The congressional! policy manifest in the Act is to

enable the parties to negotiate for any ~protection

either deems appropriate, but to allow the balance of

so viewed, the collective bargaining agreement would not survive

this transaction in an NLRA case.

On the other hand, under P&LE’s version of this transaction, what

the Company is seeking to do is to “go out of business,” Pet. Br. at

14, 18, 21, 22, 25, and to be succeeded by P&LE Railco which is

prepared to “give preference to P&LE employees in establishing its

workforce,” Pet. Br. at 4. Such a transaction is, in its substance,

quite similar to the transaction at issue in Wiley and thus one in

which it would follow from Wiley that the extant collective bar-

gaining agreement would survive.

bargaining advantage to be set by economic power

realities.” Under the NLRA the “price” of “bar-

gaining freedom” is that “strikes and lockouts may

occur.” [Jd. at 288.]

D. The imbalanced system P&LE urges—one in which

employers can act but employees cannot react—is equally

at war with the RLA’s premises. Like the NLRA, the

RLA protects “the ultimate right of the disputants to

resort to self-help,” including “[o]n the side of labor

. . . the cherished right to strike.” Railroad Trainmen,

supra, 394 U.S. at 378, 384. Indeed, “[p]eaceful pri-

mary strikes and picketing incident thereto lie within

the core of protected self-help under the Railway Labor

Act.” Jd. at 386. And like the NLRA, the RLA provides

for a balanced system which “let[s] loose the full eco-

nomic power of each [party]” when “the machinery of

industrial peace fails.” Jd. at 384.

Railway Clerks v. Florida East Coast R. Co., 384 U.S.

238 (1966), is illustrative in this regard. There this

Court rejected a union’s attempt to prevent an employer

from altering the status quo once the union had com-

menced a strike; the Court reasoned that “[i]f [the

status quo concept in] § 2, Seventh is applicable after a

lawful strike has been called and after lawful self-help

has been invoked by the carrier, the right of self-help

might become unilateral to the workers alone and denied

the carrier.” Id. at 246 (emphasis added).

Conversely, in Shore Line v. Transportation Union,

396 U.S. 142 (1969), the Court prevented an employer

from acting unilaterally even though in that case the

contract did not prohibit the particular action the car-

rier sought to take. The Court explained that “If the

railroad is free to . . . resort to self-help” during the

RLA’s bargaining process “the union cannot be expected

to hold back its own economic weapons, including the

strike. Only if both sides are equally restrained can the

Act’s remedies work effectively.” Jd. at 155 (emphasis

added).

Thus, P&LE’s argument for a rule under which em-

ployers may take unilateral action but the affected em-

ployees are barred for reacting must be rejected as in-

compatible with the structure and policies of the RLA.

E. The question posed here thus reduces to whether

in this case, as in Wiley, the extant collective bargain-

ing agreement should be held, as a matter of law, to con-

tinue over the corporate reorganization, or whether, as

in Burns and in Howard Johnson, the relationships be-

tween P&LE, P&LE Railco and P&LE’s employees should

be settled by “‘ “the relative strength of the contending

forces.”’” The former conclusion would obligate P&LE

Raileo to continue employing those P&LE employees for

whom work remains under the wages, rules and working

conditions provided for in P&LE’s collective bargaining

agreements. The latter conclusion would free Railco to

hire a new workforce under new working conditions and

would also free the P&LE employees to exercise their

economic leverage to protect their jobs and labor stand-

ards.

Before turning to the legislative materials bearing

directly on the choice that is posed, one threshold point

is in order. As just explained, the RLA, like the

NLRA, accords an equal and balanced right to each of

the parties to a labor dispute to engage in economic

self-help. The two labor laws diverge, however, in that

the RLA much more strongly than the NLRA disfavors

such economic warfare. The RLA rests on the premise

that in rail and air disputes, “‘more is involved than

the settlement of a private controversy without appre-

ciable consequences to the public’”; “[i]n our complex

society, metropolitan areas in particular might suffer

a calamity if rail service for freight or for passengers

were stopped.” Florida East Coast, 384 U.S. at 244. Thus

the RLA’s “primary objective [is] the prevention of

strikes.” Shore Line, 396 U.S. at 154 (emphasis added).

It is for this reason that the RLA creates “an almost

interminable process” of “negotiation, mediation, volun-

tary arbitration and conciliation,” and contains a set of

status quo provisions designed “to prevent the union

from striking and management from doing anything that

would justify a strike.” 396 U.S. at 149-51. As the

Court has stated, “ ‘the procedures of the Act are pur-

posely long and drawn out, based on the hope that rea-

son and practical considerations will provide in time an

agreement that resolves the dispute.’” Jd. at 149, quot-

ing Florida East Coast, 384 U.S. at 246.

It would be fundamentally inconsistent with this stat-

utory scheme to hold that corporate reorganizations, ac-

complished through an asset sale, in which the successor

corporations continues the predecessors operations in whole

or in part, create a new occassion for economic warfare.

It is not surprising, then, that whereas under the NLRA

there is an “absence of congressional guidance,’”’ Howard

Johnson, 417 U.S. at 456, as to the status of extant col-

lective bargaining agreements in such successorship situa-

tions, Congress has specifically focused on that question

in the RLA context. As we now show, in so doing Con-

gress has concluded that, as a matter of law, collective

bargaining agreements should be held to continue across

such corporate reorganizations.

(1) Congress first addressed this issue in 1933 in en-

acting a set of amendments to the Bankruptcy Code. See

47 Stat. 1467. Those amendments, inter alia, created for

the first time a procedure by which the railroads could

invoke the protection of the bankruptcy courts. (Prior to

the 1933 amendments, railroads were subject to equity

receiverships at the behest of creditors but could not

avail themselves of the bankruptcy procedure.) Signifi-

cantly, in extending to railroads the right to invoke bank-

ruptey, Congress mandated in § 77(0) of the 1933 Bank-

ruptey Act that

No judge or trustee acting under this Act shall

change the wages or working conditions of railroad

employees, except in the manner prescribed in the

Railway Labor Act. . .

Ae eee

The legislative history makes clear that Congress

adopted this provision because “in some instances equity

receivers have disregarded the provisions of the railway

labor act and have arbitrarily reduced the wage scale.”

76 Cong. Rec. 2927 (Rep. LaGuardia). Congress thus

sought to “keep effective the machinery under which rail-

roads in- their ordinary operations change their wage

scale, and so forth, as between themselves and their em-

ployees.” Jd. at 53855 (Rep. Summers, Chairman of the

House Judiciary Committee) (emphasis added). See also

id. at 5118-22.

Thus, Congress determined that not even the exigencies

of the transition over a bankruptcy reorganization jus-

tify freeing the successor from extant RLA collective

bargaining agreements.

(2) Several months after enacting the Bankruptcy

Amendments, Congress considered a related aspect of the

same problem in connection with the enactment of the

Emergency Railroad Transportation Act, 48 Stat. 211

(“ERTA”). That law created for up to two years a

“Federal Coordinator of Transportation” whose task it

was to facilitate the consolidation of railroads in order

to “avoid unnecessary duplication of services,” ERTA

§$ 4(a); towards that end, ERTA suspended the operation

of the antitrust laws and “all other restraints or pro-

hibitions of law, State or Federal, other than such as

are for the protection of the public health or safety,”

ERTA §10(a). ERTA specifically 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 obliga-

tions imposed thereunder or through contracts en-

tered into in accordance with the provisions of said

Act [Id.; emphasis added ]

And ERTA further provided that

Carriers, whether under control of a judge, trustee,

receiver, or private management, shall be required

to comply with the provisions of the Railway labor

Act and with the provisions of section 77... of

the [1933 Bankruptcy] Act [ERTA, § 7(e) ]

This latter provision was one of several amendments

to the original bill that the rail unions, through their

Railway Labor Executives Association (“RLEA”’), pre-

sented to the Senate and House Committees in 1933.”

Indeed, on the floor of both the House and the Senate

the sponsors of ERTA made a large point of noting that

the bill was supported by the RLEA and incorporated,

in substance, the RLEA’s suggestions. See 77 Cong. Rec.

4256 (Senator Dill) ; 4870 (Representative Cooper).

In presenting its amendments to the Senate and House

Committees, the RLEA, through its legal counsel, Donald

Richberg, explained that

In the desire to create economies and the necessity

of economy during the depression, we have had sim-

ple disregard of the requirements of the law and the

arbitrary changing of working conditions for men

all over the country, as part of these consolidations.

[1933 Senate Hearings, supra, at 101 (emphasis

added) .]

Richberg went on to argue that since the Bankruptcy

Amendments had prohibited judges and trustees from

altering collective agreements over the transition of a

bankruptcy reorganization “it seemed appropriate that

a similar provision should be written into this law gov-

erning the carriers under private management.” Id.

at 106; see also 1933 House Hearings, supra, at 108.

With that understanding, the RLEA proposal was in-

cluded in the bills recommend by both the House and

Senate Committees and passed by the Congress.

5 See Hearings Before the Senate Committee on Interstate Com-

merce on S. 1580, 73rd Cong. Ist Sess. 85 (1933); Hearings Before

the House Committee on Interstate and Foreign Commerce on H.R.

5500, 73rd Cong. 1st Sess. 72 (1933).

Thus, Congress determined that not even the general

financial collapse of the railroad industry justified free-

ing the successor firms that emerged from consolidations

and other reorganizations arranged by the Government

from extant RLA collective bargaining agreements.

(3) One year after the enactment of ERTA, Congress

amended the RLA. One of the purposes of those amend-

ments was, as Joseph Eastman, the Federal Coordinator

of Transportation and principal author of the 1934 bill

testified, to “put in the permanent law [viz. the RLA]

. . . the provisions which the Congress has felt it neces-

sary to apply to railroads both in the Bankruptcy Act

and the Emergency Railroad Transportation Act.”* Mr.

Eastman explained:

[T]he principle [of the amendments] was spelled

out in definite prohibitions in the Bankruptcy Act,

so far as bankrupt carriers are concerned, and that

measure is a part of the permanent law. These same

definite prohibitions, which were inserted in the

Bankruptcy Act, were made applicable to every car-

rier in [ERTA], but that is a temporary measure.

It seems plain that these provisions belong in the

permanent law, and the Railway Labor Act is

clearly the place for them. That is the reason for

section 2 in the proposed bill.’

At the time of the 1934 amendments, the RLA already

included, in § 6, a prohibition on changes in wages and

working conditions while bargaining is underway. But

the RLA of 1926 did not include an analogue to the 1933

Bankruptcy Act or to ERTA requiring that RLA collec-

tive bargaining agreements would continue over corpora-

tion transitions.

® Hearings Before the House Committee on Interstate and For-

eign Commerce on H.R. 7560, 73rd Cong., 2d Sess. at 28 (1934),

reprinted in 3 ABA Section on Labor and Employment Law, The

Railway Labor Act: A Legislative History §3 (1988).

7 Id. at 43.

Congress therefore added § 2, Seventh to the RLA, 45

U.S.C. § 152, Seventh to fill this void by prohibiting

“chang[es] in the rates of pay, rules and working condi-

tions of its employees, as a class, as embodied in agree-

ments, except in the manner prescribed in such agreements

or in section 6.” As this Court has stated, “the purpose of

§ 2, Seventh is two-fold: it operates to give legal and

binding effect to collective agreements, and it lays down

the requirement that collective agreements can be changed

we Ang the statutory procedures.” Shore Line, 396 U.S.

at 156.

Thus, Congress determined that the rule continuing

extant RLA collective bargaining agreements over bank-

ruptcy reorganizations and emergency consolidations

should be made generally applicable to corporate restruc-

turings covered by the RLA.

(4) Finally, it is noteworthy that in 1978, when Con-

gress comprehensively overhauled the Bankruptcy Code,

Congress rejected proposals to permit trustees and debtors-

in-possession to modif collective bargaining agreements

in the rail industry without exhausting the RLA’s bar-

gaining procedures. Instead, “[rJeflective of the long-

standing special treatment afforded railway labor,”

NLRB v. Bildisco & Bildisco, 465 U.S. 513, 522-23 n.8

(1984), Congress reaffirmed and reenacted the limitation

on changes in railroad labor contracts as originally in-

corporated in the 1933 Bankruptcy Act. The House Ju-

diciary Committee explained:

The subject of railway labor is too delicate and has

too long a history for this code to upset established

relationship. The balance has been struck over the

years. This provision continues the balance un-

changed. [H.R. Rep. 95-595, 85th Cong. Ist Sess.

at 423 (1977) ]

The sum of the matter is this: since 1933, Congress

has on several different occasions mandated a legal re-

quirement that RLA collective bargaining agreements be

deemed to continue over various forms of corporate re-

organizations, such as bankruptcies and consolidations.

The office of RLA § 2, Seventh is to state that man-

date in general terms as part of the permanent railroad

labor law.

Given these congressional actions, it follows that the

instant case is properly resolved by holding that, as a

matter of law, upon acquiring and continuing to operate

P&LE’s railroad assets, P&LE Raileo is bound by the

P&LE collective bargaining agreements as P&LE’s suc-

cessor until such agreements are modified through the

processes of the RLA.

II. Where A Union, Pursuant To RLA § 6, Initiates Bar-

gaining Over The Effects Of A Corporate Reorganiza-

tion On Incumbent Employees, The Employer Must

Preserve The “Objective Working Conditions” Of The

Employees Until The Act’s Mandated Negotiation

Process Is Concluded

Our showing in Part I establishes that the RLA pro-

vides, as a matter of law, that the extant P&LE collec-

tive bargaining agreements survive a corporate reorgani-

zation in which the successor entity continues P&LE’s

operations. We now show that even if that were not true,

the RLA would preclude P&LE from reorganizing in a

manner that would alter the “objective working condi-

tions” of P&LE’s employees for so long as the Company

and its employees’ exclusive representatives are involved

in the process of negotiations and mediation over the ef-

fects of the reorganization on those employees mandated

by RLA § 6.

A. Analysis properly begins with RLA § 2, First, 45

U.S.C. § 152, First, which imposes on unions and carriers

alike “the duty . . . to exert every reasonable effort to

make and maintain agreements concerning rates of pay,

rules and working conditions.” As this Court has stated,

the duty created by § 2, First lies at “|t]he heart of the

Railway Labor Act,” Railroad Trainmen, supra, 394 U.S.

ac 377, and “is central to the effective working” of that

Act, Chicago & N.W.R.Co. v. Transportation Union, 402

U.S. 570, 578 (1971).

-_RLA § 6, in turn, provides the framework for imple-

menting this duty to bargain. That section provides, in

pertinent part, that

Carriers and representatives of the employees

shall give at least thirty days’ written notice of an

intended change in agreements affecting rates of

pay, rules or working conditions and the time and

place for the beginning of conference between the

representatives of the parties interested in such in-

tended changes shall be agreed upon within ten days

after the receipt of said notice. . .

In this case, the unions sought to invoke § 6 by serv-

ing a notice on the carriers stating the unions’ desire

to negotiate over “the effects of P&LE’s proposed re-

organization on P&LE’s employees.” That notice set

forth the text of several new provisions the unions sought

to have added to the extant collective bargaining agree-

ments in order to afford P&LE’s employees enhanced job

security in the event of a sale of P&LE’s assets.

It is beyond dispute that the unions’ proposal consti-

tutes a proper $6 netice. The unions clearly sought a

“change” in the existing “agreements.” And the changes

the unions sought unmistakably “affect/ed| rates of pay,

rules or working conditions,” and hence were subject to

mandatory bargaining; the unions’ proposal, if agreed

to, would determine both the “rules” to be followed by

any successor employer in staffing its jobs and the

“rates of pay” and “working conditions” of the employees

of the successor employer.

This Court’s decision in Telegraphers v. Chicago

N.W.R. Co., 362 U.S. 330 (1960), confirms this reading of’

s 6. In that case a union, in response to a carriers’ plan

to consolidate operations and eliminate jobs, served a

notice on the carriers stating the union’s desire to nego-

tiate a contractual provision prohibiting the elimination of

a a

es)

any jobs. The carrier contended that the union’s notice

“did not raise a bargainable issue.” Jd. at 332. This

Court disagreed, reasoning as follows:

Plainly, the controversy here relates to an effort

on the part of the union to change the “terms” of

an existing collective bargaining agreement. The

change desired just as plainly referred to “condi-

tions of employment” of the railroad’s employees

who are represented by the union. The employment

of many of these station agents inescapably hangs

on the number of railroad stations that will be either

completely abandoned or consolidated with other sta-

tions. And in the collective bargaining world today,

there is nothing strange about agreements that af-

fect the permanency of employment. [362 U.S. at

336. ]

Thus Telegraphers—at the very least—establishes that

proposals relating to the effects of a corporate reorgani-

zation on the corporation’s employees do “raise a bar-

gainable issue.” *

8 Indeed, as the passage from Telegraphers quoted in text indi-

cates, Telegraphers appears to go further and to require bargain-

ing over decisions which affect jobs, such as consolidations of

operations and not only over the decisions’ effects.

That reading of Telegraphers is buttressed by First National

Maintenance, supra, 452 U.S. at 687 n.23 in which the Court,

while holding that the NLRA does not require bargaining over

a closing decision, suggested that the RLA may well be different

because “the mandatory scope for bargaining” under the two laws

is “not coextensive.” See also Telegraphers, 362 U.S. at 338 (“In

an effort to prevent a disruption and stoppage of interstate com-

merce, the trend of legislation affecting railroads and railroad

employees has been to broaden, not narrow, the scope of sub-

jects about which workers and railroads may or must negotiate

and bargain collectively” ).

Against this background, the suggestion of P&LE and several

of its amici curiae that the NLRA provides for a broader scope of

bargaining than the RLA is both erroneous and beside the point in

this case. P&LE bases that argument entirely on the fact that in

crafting NLRA § 8(d), 29 U.S.C. § 158(d), the phrase “terms and

conditions of employment” rather than the phrase “working condi-

B. Having thus properly invoked RLA § 6’s “major

dispute” procedures, the unions’ notice necessarily trig-

gered the Act’s “status quo” obligation as set forth in

that section, in § 5, 45 U.S.C. § 155 and in § 10, 45 U.S.C.

$ 160. Section 6 states the general ruie:

In every case where such notice of intended change

has been given .. . rates of pay, rules, or working

conditions shall not be altered by the carrier until

the controversy has been finally acted upon, as re-

quired by $5 of this title, by the Mediation

Board...

Section 5, in turn, provides tht even after the Mediation

Board has “finally actéd,” for a period of “thirty days

thereafter . . . no change shall be made in the rates of

pay, rules, or working conditions or established practices

in effect prior to the time the dispute arose.” And if,

during that 30-day period, a presidential emergency

board is appointed, § 10 of the Act provides that “for

thirty days after such board has made its report to the

President, no change, except by agreement, shall be made

by the parties to the controversy in the conditions out of

which the dispute arose.”

tions” was chosen to delimit the scope of bargaining and that this

choice was made because the 1947 Congress viewed the former

phrase as broader than the latter. See Pet. Br. at 24-25 & nn.8-9.

But RLA § 2, First, requires bargaining over “rules and working _

conditions’”—and not over “working conditions” alone—and there

is nothing in the legislative history of NLRA §8(d) which sug-

gests that the 1947 Congress viewed RLA § 2, First in its entirety

as narrower than NLRA §8(d) in its entirety.

It is of at least equal moment that there is nothing in the legisla-

tive history of RLA § 2, First—which was enacted in 1926 not in

1947—to suggest that the 1926 Congress had a narrow scope in

mind for the phrase “rules and working conditions.”

Thus, the materials on which P&LE relies do not impeach First

National Maintenance’s suggestion that the RLA provides a broader

scope for bargaining than the NLRA, and those materials surely do

not impeach the holding of Telegraphers that issues of the type

raised here are bargainable under the RLA.

In the instant case, P&LE proposes to make the most

profound changes in the status quo while § 6’s negotia-

tion and mediation procedures are underway. At the

time the §6 notice was served, there were 500 P&LE

employees covered by the extant collective bargaining

agreements who were paid agreed-upon wages and bene-

fits and who worked under agreed-upon conditions.

P&LE desires to take actions which would terminate

their employment, which would provide for the hiring of

a new workforce of one-third the present size, and which

would reduce the compensation and fringe benefits of that

new workforce. Such action would plainly constitute an

“alter{ation]” of “rates of pay, rules, or working con-

ditions” within the ordinary and common-sense meaning

of those terms.

P&LE and its amici curiae argue, however, that § 6’s

prohibition on such alterations of the status’ quo while

negotiation and mediation are proceeding should not be

read in its ordinary sense. According to P&LE and its

amici curiae, the words of §6 are terms of art which

maintain nothing more than “the existing provisions, if

any, in the parties’ collective bargaining agreements

which address the effects of corporate transactions.” Br.

of Airline Industrial Relations Conference at 13. Thus

because (in P&LE’s view) the Company’s proposed ac-

tions “would not ‘change’ the agreements in any respect,”

those actions are permitted by $6. See Pet. Br. at 29

(emphasis added). This argument is contrary to both

the plain language of the statute and its authoritative

construction by this Court.

To begin with, P&LE’s argument cannot be squared

with the statutory text. According to its terms, § 6 is

invoked by a notice “of an intended change in agreements

affecting rates of pay, rules or working conditions.” But

once § 6 is invoked, what must be preserved is, according

to the second sentence of § 6, the “rates of pay, rules or

working conditions” then in force. While Congress did

add the phrase “in agreements” to the first sentence of

$6 and Congress could have added the same phrase to

the second sentence thereby requiring preservation of

only the terms of agreements, the fact is that Congress

did not do the latter.

Indeed, the argument that P&LE and its amici curiae

make here is precisely the argument that was made and

rejected in Shore Line. That case arose out of a carrier’s

attempt to change the place of assignment of various of its

employees. The union first grieved that proposed change

but a Special Board of Adjustment rejected that griev-

ance, finding “nothing in the rules of agreement which

precludes this carrier from establishing an outside as-

signment.” 396 U.S. at 146 n.9. The union then filed

a notice under $6 seeking to change the parties’ agree-

ment to prohibit the carrier from varying the employees’

place of assignment. While the §6 procedures were

underway, the union sought to prevent the carrier from

exercising its contractual privilege to vary the assign-

ments.

Before this Court, the carrier argued that “the status

quo which the Act equires be maintained consists only of

the working conditions specifically covered in the parties’

existing collective-bargaining agreement.” 396 U.S. at

143. The Court emphatically rejected that contention.

The Shore Line Court began (as we did above) by trac-

ing § 6’s language and by noting “that the language of

$6 simply does not say what the railroad would have it

say. Instead, the section speaks plainly of ‘rates of pay,

rules, or working conditions’ without any limitation to

those obligations already embodied in collective agree-

ments.” 396 U.S. at 148.

The Court went on to conclude that the “railroad’s

interpretation of [$6] is sharply at variance with_the

overall design and purpose of the Railway Labor Act,”

396 U.S. at 248, explaining:

It would be virtually impossible to include all work-

ing conditions in a collective-bargaining agreement.

ey —

Where a condition is satisfactorily tolerable to both

sides, it is often omitted from the agreement, and it

has been suggested that this practice is more fre-

quent in the railroad industry than in most others.

When the union moves to bring such a previously

uncovered condition within the agreement, it is

absolutely essential that the status quo provisions

of the Act apply to that working condition if the

purpose of the Act is to be fulfilled. If the railroad

is free at this stage to take advantage of the agree-

ment’s silence and resort to self-help, the union can-

not be expected to hold back its own economic weap-

ons, including the strike. Only if both sides are

equally restrained can the Act’s remedies work ef-

fectively. [396 U.S. at 154-55.)

Based on this reasoning (ic Court held that § 6 is prop-

“erly read to require carriers “to preserve and maintain

unchanged those actual, objective working conditions and

practices, broadly conceived, which were in effect prior

to the time the pending dispute arose and which are in-

volved in or related to that dispute.” Id. at 153 (empha-

sis added). Applying that test, the Court concluded that

the carrier in Shore Line could not shift the point of

assignments during the status quo period even though

there was no contractual prohibition on so doing:

We have stressed that the status quo extends to

those actual, objective working conditions out of

which the dispute arose, and clearly these conditions

need not be covered in an existing agreement... .

Here . . . the dispute over the railroad’s establish-

ment of the Trenton assignments arose at a time

when actual working conditions did not include such

assignments. It was therefore incumbent upon the

railroad by virtue of $6 to refrain from making

outlying assignments at Trenton or any other place

in which there had previously been none, regard-

less of the fact that the railroad was not precluded

from making these assignments under the existing

agreement. (396 U.S. at 153-54 (emphasis added) .|

Shore Line controls this case. Here, “the dispute .. .

arose at a time when actual working conditions” included

the collectively-bargained wage rates, benefits, rules, and

standards. Thus here, as in Shore Line, “it was... in-

cumbent upon the railroad by virtue of §6 to refrain

from” altering those conditions pending the outcome of

negotiation and mediation.

C. The foregoing is not to say that under Shore Line

a $6 notice invariably freezes the precise situation as it

exists at the instant the § 6 notice is served. A collective

bargaining agreement’s express authorization to act in

a particular manner is itself part of what we understand

the “objective working conditions” to be. Thus the con-

tinuing exercise of such an authority according to its

terms and in conformity with the prior understandings

of the parties after $6 is invoked would not, in our

view, offend that section. By the same token, a carrier

may have exercised a particular prerogative in a par-

ticular way under particular circumstances with suffi-

cient regularity that the prerogative, too, becomes part

of the “objective working conditions”; in that event, the

carrier could, during the status-quo period, continue to

exercise that prerogative—in the same way and under

the same circumstances—without violating §6. Shore

Line makes this point explicit:

(T}he mere fact that the collective agreement before

us does not expressly prohibit outlying assignments

would not have barred the railroad from ordering

the assignments that gave rise to the present dispute

if, apart from the agreement, such assignments had

occurred for _a sufficient period of time with the

knowledge and acquiescence of the employees to be-

come in reality a part of the actual working condi-

tions. [396 U.S. at 153-154.]

Section 6 does not, in other words, trump either party’s

hand by nullifying their settled expectations firmly

grounded in their actual experience under their collec-

tive bargaining agreement. Compare, Air Cargo, Inc.

v. Local Union 851, 733 F.2d 241, 246 (C.A. 2, 1984).

a oF

In this case, however, P&LE does not even claim any

express contractual authorization to terminate its em-

ployees where a corporate reorganization results in the

transfer of P&LE operations to another corporate entity.

Nor does P&LE claim that its proposed action is of a

piece with a well-established past practice. Rather, as

we have not seen, P&LE’s sole claim is that the action

“would not ‘change the agreements in any respect.” P.

23 supra. And as we have also seen, § 6, as authorita-

tively construed in Shore Line, leaves no room for that

argument.

D. P&LE protests the “practical effect” of the statu-

tory interpretation set forth above “is to eliminate the

managerial prerogatives of RLA employers.” Pet. Br. at

21. Whether in the railroad industry, “go[ing] out of a

business is a fundamental managerial prerogative,” Pet.

Br. at 18, is itself open to serious question. After all,

this industry—unlike most other, industries (such as

those considered in Textile Workers v. Darlington Co.,

380 U.S. 263 (1965))—has been so heavily regulated

that governmental permission has been required before

an enterprise can begin operating as a carrier, and,

equally to the point, permission has been required before

a certified carrier may end its operations or even reduce

its services.

We do not pursue P&LE’s complaint further, however,

because in any event, P&LE’s cla’m that interpreting § 6

in the manner set forth above would “eliminate manage-

rial prerogatives” is simply wrong. P&LE has been free

at all times to negotiate as part vj its labor contracts a

clause expressly authorizing P&LE to take the type of

action contemplated here. As we have seen, had P&LE

done 30, that authorization would have become part of

the apvlicable “objective working conditions” and P&LE’s

exercise of that authority fo.’owing receipt of a § 6 notice

would not havé violated that section. Thus the dilemma

P&LE now faces is entirely of its own making as the

result of its failure to negotiate an express authoriza-

tion of the course of action on which the company now

seeks to embark.

It is, of course, true that given that failure, P&LE

now faces substantial pressure to succumb to the unions’

demands on the effects issues if P&LE wishes to consum-

mate a sale without waiting for a prolonged process of

negotiation and mediation. But that pressure is an in-

trinsic part of the RLA’s statutory scheme; as the Court

emphasized in Shore Line:

[S]ince disputes usually arise when one party wants

to change the status quo without undue delay, the

power which the Act gives the other party to pre-

serve the status quo for a prolonged period will

frequently make it worthwhile for the moving party

to compromise with the interests of the other side

and thus reach agreement without interruption to

commerce. [396 U.S. at 150]

Indeed, by seeking to escape that pressure and to be

free to act forthwith, P&LE threatens the RLA’s fun-

damental policies. For if the P&LE were free to “resort

to self-help, the union cannot be expected to hold back

its own economic weapons, including the strike. Only if

both sides are equally restrained can the Act’s remedies

work effectively.” Id. (emphasis added).

CONCLUSION

For the above stated reasons, the decision below should

be affirmed.

Respectfully submitted,