Petition for Writ of Certiorari — Railway Labor Executives' Ass'n v. Guilford Transportation Industries, Inc.

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Supreme Court, U.S,

87-191] FILED

MAY 23 1¥o8

No. JOSEPH F. SPANIOL, UR.

pudenda,

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

RAILWAY LABOR EXECUTIVES’ ASSOCIATION, et al.,

Petitioners,

GUILFORD TRANSPORTATION INDUSTRIES, INC., et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

Date:

May 23, 1988

JOHN O’B. CLARKE, JR.

HIGHSAW & MAHONEY, P.C.

Suite 210

1050 17th Street, N.W.

Washington, D.C. 20036

(202) 296-8500

Attorneys for Petitioners

WILSON

Eres PRINTING CO.,

Inc

- 789-0096 - WASHINGTON, D.C. 20001

cae

> oc

QUESTIONS PRESENTED *

1. Do the United States District Courts have juris-

diction under 28 U.S.C. § 1337(a) to enforce the com-

mands of the Railway Labor Act, even though the rail

carrier, which is claimed to have violated the Railway

Labor Act, is participating in a transaction subject to

regulation by the Interstate Commerce Commission un-

der 49 U.S.C. § 11343(a)?

* The parties to the proceeding below are:

Appellants below and petitioners here:

Railway Labor Executives’ Association:

American Railway & Airway Supervisors Association

(Division of TCU):

American Train Dispatchers Association:

Brotherhood of Locomotive Engineers:

Brotherhood of Maintenance of Way Employes:

Brotherhood of Railroad Signalmen:

Brotherhood of Railway Carmen (Division of TCU

International Association of Machinists and

Aerospace Workers:

International Brotherhood of Boilermarkers and

Blacksmiths;

International Brotherhood of Electrical Workers:

International Brotherhood of Firemen & Oilers:

Railroad Yardmasters of America (Division of UTU) :

Sheet Metal Workers’ International Association:

Transportation ® Communications Union

(formerly BRAC);

United Transportation Union, and

International Federation of Professional and

Technical Engineers.

Appellees below and respondents here:

Guilford Transportation Industries, Inc.:

Boston and Maine Corporation;

Delaware & Hudson Railway Company;

Maine Central Railroad Company ;

Portland Terminal Company ; and

Springfield Terminal Railway Company.

(i)

BR. Petitioners’ Efforts To Ex rce The R '

Labor Act

REASONS FOR GRANTING THE WRIT

This Case Presents Important Issues Of Federal]

Law That Have Been Decided In A Manner Which

Conflicts With Applicable Decisions Of This Court

And Other Courts of Appeals, And With The In-

tent Of Congress. Moreover, Those Issues Have

Been Decided In A Manner That Needlessly Cre-

ates A Conflict Between Two Acts Of Congress

Which Regulate The Rail Industry

[. This Case Presents Issues That Are Important

To the Rail Industry And Need to Be Resoived

KE xpeditiously By This Court

Il. The Decision Below Was Decided In A Way

That Conflicts With Applicable Decisions Of

This Court

Ill. The Decision Below Ignores The Clear Lan-

guage Of The Interstate Commerce Act That

Rail Exemptions Under 49 U.S.C. § 10505 Do

Not Confer An Immunity On The Carriers Par-

ticipating In That Exempt Transaction

TABLE OF CONTENTS—Continued

IV. This Case Presents the Best Vehicle Of The

Pending Cases To Decide The Jurisdictional And

Substantive Issues Presented By The Railroads’

Use Of The Interstate Commerce Act to Obtain

Labor Relations Advantages

CONCLUSION

Page

TABLE OF AUTHORITIES

CASES: Page

Air Line Pilots Association v. Transamerica Air-

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

GEO, THR Tits GR CRED csciceistsecsetetsnctwccnn 13-14

Arbitration Between BLE and Union Pacific R.R.°

and Missouri Pacific R.R., ICC Finance Docket

No. 30,000, decided January 17, 1985 (Seiden-

I Te ic aaa 15

Atchison, Topeka & Santa Fe Ry. v. Railway Labor

Executives’ Association, N.D. Ill. Civil Action

Nos. 87 C 9847 and 87 C 9969 ............000.0..... ea. 17

Brotherhood of Locomotive Engineers v. Boston &

Maine Corporation, 788 F.2d 794 (1st Cir.),

cert. denied, 107 S. Ct. 111 (1986) _....0000 ee... passim

Brotherhood of Locomotive Engineers v. Burling-

ton Northern R.R., E.D. WA. Civil Action No.

ee FS 5 | eens Sto NON Ene RP ONE 17

Brotherhood of Locomotive Engineers v. Chicago

& North Western Ry., 314 F.2d 424 (8th Cir.),

cert. denied, 375 U.S. 819 (1968) .........000000020002.. 15, 20

Brotherhood of Railway Carmen v. CSX Transpor-

tation, Inc., 11th Cir. No. 87-8466 ......000200000000002... 17

Burlington Northern, Inc. v. ARSA, 503 F.2d 58

(7th Cir. 1974), cert. denied, 421 U.S. 975

IF WUD ® ccsnca cacicohnen achieves lideasacicskadiamiaieeaeancdnitana anaes 15

Burlington Northern, Inc.—Control Exemption,

ICC Docket No. MC-F-16248 served February

BE Be asic nate eee 21-22

Burlington Northern Railroad Co. v. Brotherhood

of Maintenance of Way Employes, 481 U.S. .

OR Ra, See en CO en irheareee es 8, 17

Burlington Northern R.R. v. United Transporta-

tion Union, N.D. Ill. Civil Action No. 88 C 2687.. 17

Burlington Northern R.R. v. United Transporta-

tion Union, Civil Action No. 86-5013-CV-SW-8,

appeal pending, 8th Cir. Nos. 87-2600WM and

ERE sashes dadeae ic ee 17

CSX Transportation, Inc. v. United Transportation

Union, W.D. N.Y. Civil Action No. 87-1391C...... 17

TABLE OF AUTHORITIES—Continued

Page

Chicago & North Western Transportation Co. v.

Railway Labor Executives’ Association, 7th Cir.

No, BB DEO4 ....ccccccccscccccesscsescocsssosesses 17

Chicago & North Western Ry. v. U nited Transpor-

tation Union, 402 U.S. 570 (1971) .... 13

Chicago, St. Paul, Minneapolis & Omaha Re—

Lease, 295 1.C.C. 696 (1958) ~....... 14

Delaware & Hudson—Lease and Trackage Rights

Exemption—Springfield Ter minal Railway Com-

pany, ICC Finance Docket No. 30965, et al.,

served February 19, 1988 a 5,8

Detroit & Toledo Shore Line R.R. v. U nited Trans-

portation Union, 396 U.S. 142 (1969) ae 13

Ex Parte No. 282 (Sub-No. 9) Railroad Consolida-

tion Procedures, 1 1.C.C.2d 270 (1985) 22, 23

Ex Parte No. 282 (Sub-No. 3) Railroad Consolida-

tion Procedures, 363 1.C.C. 200 (1980) .

FRVR Corporation—Exemption Acquisition And

Operation, ICC Finance Docket No. 31205, served

January 29, 1988, pet. for ret iew pending,

RLEA v. ICC, 8th Cir. No. 88-1280 ks 21

Guilford Transportation Industries, Inc.—Control

__Delaware & Hudson Ry., 366 1.C.C. 396

(1982) POPE I eee A Rn ae aa }

Iberia Airlines v. NMB, 472 F. Supp. 104 (S.D.

N.Y. 1979), aff’d, 636 F.2d 1201 (2d Cir. 1980),

cert. denied, 450 U.S. 999 (1981) - ee 4

Interstate Commerce Commission v. Brotherhood

of Locomotive Engineers, 482 U.S. 107

S. Ct. 2360, 96 L. Ed.2d 222 (1987) 12, 15, 18, 2

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

CHET cease 18, 19, 20

Mendocino Coast Ry. —Lease and Operate, 354

1.C.C. 732 (1978), as modified, 360 L.C.C. 653

(1980), ‘aff'd sub nom. RLEA v. United States,

675 F.2d 1248 (D.C. Cir. 1982) 8

New York Dock Ry.—Control, 360 1.C.C. 60, aff'd,

New York Dock Ry. v. United States, 609 F.2d

83 (2d Cir. 1979)

linia ieeeieeere teers

M 808 F.2d 150 (1s

1986), cert. denied, 108 S.Ct. 102 (1987)

EB f { f B

& M t 661 F. Supp. 6 DM

1OR7 )

J ' ’ \ ~

lid ‘ | , 2 TORR

. } ’ :

& } RP} \ 27 97

April &, LOSS .

( Nin 27.182 617.9

I S

j RP NT) ] ( \ \ . on

: lir Line R.R. v. D U.S. 118

(1918) 40 :

‘ fey ( f ( } ]

L.C.C. 151 (1967

. dD ¢ \ f j

B ] i76 U.S. 409 1OR6G ) .

St. S Ry Brot }

; 665 | 1 O87 | th Cir. 1981)

/ W B 7

‘ ‘ Wha »1 F.2d 18 “th Cir

1965) 14

I B Y

R.R., 672 F. S 1579 (D. Mont. 1987)

" hi ( r N QQ" ‘ Q o-

T tat ] 7 r] PR

155 U.S. 678 (198? 24

viii

TABLE OF AUTHORITIES—Continued

STATUTES AND OTHER MATERIALS: Page

Airline Deregulation Act of 1978, Pub. L. No. 95-

504, 92 Stat. 1706 ............................ 23

Bus Regulatory Reform Act, Pub. L. No. 97-261, 96

TS een 21, 22

Interstate Commerce Act, 49 U.S.C. § 10101, et

BOG. acanconcecenccssecsesssessssenssessocsssnecesesssscnsasssncassnonsesencesens passim

Section 10101a, 49 U.S.C. § 10101a ...............-.. 14

Section 10505, 49 U.S.C. § 10505 é passim

Section 10505 (a), 49 U.S.C. § 10505 (a) —.......... 14

Section 10505(g) (2), 49 U.S.C. § 10505(g)

| IPAS. see RRR eaonrre Pee OY

Section 11341(a), 49 U.S.C. § 11341 (a) 2 rae passim

Section 11343, 49 U.S.C. § 113 aiisaankiieaaaimadepnie 22

Section 11343(a), 49 U.S.C. § 11343(a) —.....-.. 3,7

Section 11343(a) (2), 49 U.S.C. § 113438(a)

ae ae nee | 14

Section 11343(e),49 U.S.C. § 11343 (e) RENEE 22

Section 11347, 49 U.S.C. § 11: 0 EES passim

former Section 5(8), 41 Stat. 482 (1920) —...... 21

Railway Labor Act, 45 U.S.C. 38 151, et seq. ............- passim

Section 2 First, 45 U.S.C. § 152 First .............. 2,18

Section 2 Seventh, 45 U S.C.§ § 152 Seventh ....... 2,13

Section 5 First, 45 U.S.C. § 155 First ..... 2, 4, 6, 13

ee Y @) ES Cok & | eee 2,4,13

Section 7 First, 45 U.S.C. § 157 First ................. 3

Rail Passenger Service Act of 1970, 45 U.S.C.

B GOL, Cl BOG. 2-.----2--nnncnen-nnnennense-acennorerecnnncescnncancenss 3

Section 405(b), 45 U. S.C. S © 565(b) i, 3, 23-24

3-2

H. Rpt. No. 97-780, 97th Cong., 2d Sess. (1982)... 22-23

Conference Report, H. Rpt. No. 95-1779, 95th

Cong., 2d Sess. (1978) . aE ae Meee 23

Pub. L. No. 99-451, 100 Stat. 987 (1987) . me 3

_ SIs Tee o, "1S ) pe ae 2

, pik Tok D . |!’ SRaam Recep Umuaoonessenne ons neeenenonnnrrene 3

28 U.S.C. $ 3101 (e) ............. ie | . 2

28 U.S.C. § 2321 (a) -....... sea ae ee ee At 20

ee i ii crncnsctettcrceanneennniensenellinnes 20

Poy oh A RG) ho | > | een 7

FP yeh Aw by OFT] 5) RR eCeeeeennnenene 7

49 C.F.R. § 1180.4(g) (1) (ii)

OO ao

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

RAILWAY LABOR EXECUTIVES’ ASSOCIATION, et al.,

Petitioners,

GUILFORD TRANSPORTATION INDUSTRIES, INC., et ai.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

Petitioners Railway Labor Executives’ Association

(hereinafter, “RLEA”]' and fifteen (15) individual la-

bor organizations* respectfully request that this Court

issue a writ of certiorari to the United States Court of

Appeals for the First Circuit to review the judgment of

that court in RLEA v. Guilford Transportation Indus-

tries, Inec., 1st Cir No. 87-1774, decided January 20,

1988.

1 RLEA is an unincorporated association of the chief executive

officers of nineteen labor organizations which collectively represent

virtually all organized rail employees in this country. A list of

RLEA’s member organizations is reproduced as Appendix F at

page 53a. All of the individual petitioning labor organizations,

except for the International Federation of Professional and Techni-

cal Engineers, are member organizations of RLEA.

* The individual petitioning labor organizations are listed at page

i, note *.

_ in

—

OPINIONS BELOW

m decision of the First Circuit is not re-

eproduced as Appendix A to this Petition

of the appellate court is

page 44a. The deci-

ited States District Court for the Distric

was affirmed by the First Circuit is re-

667 F. Supp. 29 and is reproduced hi rein as

pages sa-loa.

JURISDICTION

0, 1988, the United States Court of Ap-

Cireuit issued a per curiam, unpub-

o the judgment of the United

) t Court for the District of Maine dismissing

mplaint to enforce the Railway Labor Act,

S.| 151, et seg. Petitioners are seeking to invoke

isdiction under 28 U.S.C. § 1254(1) to

lmment. This petition 1S timely since 1U 1s

the time period provided by 28 U.S.C

Q() day pr ‘10d provided

\pril 19, 1988, but on April

; . ie a ta , ? :

| petitioners a thirty-day extension to

STATUTES INVOLVED

volves the relationship between two Acts of

wl regulate aspects of interstate commerce

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

Interstate Commerce Act, 49 U.S.C. § 10101, ef

1c lar, this case involves the impact of Sec-

10505 and 11347 of the Interstate Commerce Act, 49

10505 and 11347, on the obligations imposed

‘ers Dy Sections 2 First, 2 Seventh, 5 First,

6 of the Railway Labor Act, 45 U.S.C. $§ 152 First,

152 Seventh, 155 First and 156, and on the federal

courts’ jurisdiction to enforce those duties. Section 7

First of the Railway Labor Act, 45 U.S.C. § 157 First,

Sections 11341(a) and 11343(a) of the Interstate Com-

merce Act, 49 U.S.C. §§ 11841(a) and 11343(a), and

Section 405(b), of the Rail Passenger Service Act, 45

U.S.C. § 565(b), along with 28 U.S.C. § 1337(a), are

also relevant to this case. The relevant statutes are re-

produced as Appendix E at pages 45a-52a.

STATEMENT OF THE CASE

Respondents are a holding company, Guilford Trans-

portation Industries, Ine. [hereinafter, “GTI” or “Guil-

ford”|, four of its rail subsidiaries which are leasing

their rail lines,* and the GTI subsidiary which is leasing

those lines, the Springfield Terminal Railway Company

[hereinafter, “ST’”]. Formed in the early 1980’s to op-

erate a rail system in the Northeast region of this coun-

try, primarily in the New England area, the Guilford

rail system included almost 4,000 miles of rail lines in

early 1986, employing approximately 4,000 employees.

See, GTI—Control—D&H, 366 1.C.C. 396, 397 (1982).

In 1986, one of the petitioners, the Brotherhood of Main-

tenance of Way Employes [hereinafter, “BMWE”}, con-

ducted a work stoppage against respondents MEC and

PT, and within a few weeks, that strike resulted in ap-

proximately 98% of the Guilford rail system’s employees

withholding their labor from Guilford. See. RLEA v.

B&M, 808 F.2d 150, 153 (1st Cir. 1986), cert. denied,

98 L. Ed.2d 62 (1987). Several issues arising from that

strike eventually wound up being resolved by this Court

(Burlington Northern R.R. v. BMWE, 481 U.S. ——.

95 L. Ed.2d 381 (1987)) and by Congress. E..g., Pub.

L. No. 99-431, 100 Stat. 987 (1987).

* The leasing railroads are Boston and Maine Corporation, Dela-

ware & Hudson Railway, Maine Central Railroad. and Portland

Terminal Company [hereinafter, “B&M,” “D&H,” “MEC.” and “ri,

respectively |.

That strike and Guilford’s efforts to continue its oper-

ations despite the withdrawal from service by most of its

contract employees, led Guilford to take steps beginning

in May 1986 to eliminate both the collective bargaining

agreements between its main subsidiaries (i.e., the BEM,

D&H, MEC and PT) and rail labor, and the craft line

restrictions on the utilization of employees. RLEA v.

B&M, 664 F.Supp. 605 (D. Me. 1987). Guilford first

tried to use the collective bargaining process and the

ten (10) day “loop-hole” in Section 6 of the Railway

Labor Act, 45 U.S.C. § 156,* to promulgate its craftless

empleyment terms, but those efforts were stopped when

the unions invoked the mediatory jurisdiction of the

National Mediation Board [hereinafter, “NMB”] under

‘ection 5 First of the Railway Labor Act, 45 U.S.C.

155 First. RLEA v. B&M, supra, 664 F.Supp. at 609-

11.

A. Guilford’s Leases

Once its efforts to eliminate its existing collective bar-

gaining agreements in a short time frame were stymied,

Guilford — to lease various portions of its subsidi-

aries’ rail operations to another one of its subsidiaries,

respondent ST. Under those leases, the lessors leased

specific portions of their lines and facilities to the ST

for the ST to provide the lessors’ rail services. However,

those agreements provided that:

All traffic which originates or terminates on the

Leased Lines shall remain [the lessor’s] . . . traffic,

whether such traffic involves customers presently lo-

eated on or served by the Leased Lines or customers

which become located on or served by the Leased

Lines at any time during the term of this Lease

‘Section 6 of the Railway Labor Act requires the parties to a

major dispute to preserve the status quo “unless a period of ten

days has elapsed after termination of conferences, without request

for or proffer of the services of the Mediation Board.” 45 U.S.C

1979). uff’d 636 F.2d 1201 (2d Cir. 1980), cert. denied, 450 U.S.

999 (1981).

Agreement. ST shall handle cars on the Leased Lines

for the account of [the lessor] ..., and [the lessor]

... Shall be responsible for car hire and mileage pay-

ments in respect of such cars. [Lessor] .. . shall

have and retain the exclusive right to deal directly

with customers regarding traffic moving to or from

the Leased Lines and to solicit such traffic in its best

interest.

Lease Agreement at § 2.03, Joint Appendix in Ist Cir.

No. 87-1774 [hereinafter, “J.A.”] at 47. Respondent ST

was also made responsible for maintaining the tracks.

Id. at $3.01; J.A. at 48. In exchange for performing

those services, respondent ST is to be paid a set fee, gen-

erally $150.00, for each loaded car it moves for the lessor;

ST, however, does not pay any rent to the lessor. Id. at

$ 2.06; J.A. at 48. In short, the lease agreements gave

the ST the right to perform the labor for the lessors

which the lessors had previously agreed their contract

employees should perform.

Guilford began to enter into the ST lease arrangements

in October 1986, and by the end of 1987 had entered into

seventeen (17) different leases and one operating agree-

ment, which collectively will transfer all of the B&M,

D&H, and MEC operations and most of the PT’s opera-

tions to the ST. ICC Finance Docket No. 30965, et al.,

D&H—Lease and Trackage Rights Exemption—ST,

served February 19, 1988 (a copy of the corrected deci-

sion is attached as Appendix C at pages 17a-43a). As

Guilford informed the Interstate Commerce Commission

(hereinafter, “ICC” or “Commission’”], its subsidiaries

entered into those leases for the following reason:

The purpose of the transaction is to enable ST to

carry on the operations presently performed by [the

lessor] . . . on these lines. ST is a short line carrier

which has a lower cost structure than [the lessor]

. and other Class I carriers. It is anticipated that

the service which ST will provide to rail customers

will be more responsive and efficient than [the les-

sor] ... is providing at the present time. As a re-

sult of the lease, [the lessor] . . . will improve its

financial viability by eliminating operations which

are costly to perform in relation to the revenues

which are realized. With its lower cost structure, ST

should be able to perform such operations on a profit-

able basis.

Verified Notice of Exemption in Finance Docket No.

20966 at 6: J.A. at 33. Respondent ST has a lower cost

structure simply because prior to the GTI leases, it was

a small carrier that employed few employees (around

fifty (50) employees prior to January 1, 1987) and was

a party to a collective bargaining agreement with one

member of RLEA which provided for lower rates of pay

and, according to GTI, did not eontain craft line dis-

tinctions. Appendix C at 27a-28a.

Petitioners alleged in their Complaint in this case that

the leases were “a systematic and deliberate plan [by

respondents] to effect without bargaining the-changes in

rules and working conditions which they had proposed in

May 1986” and which were pending before the NMB for

mediation under Section 5 First of the Railway Labor

Act. E.g., Complaint at 113. Petitioners also alleged in

their Complaint that the leases and respondents’ use of

the ICC processes were being utilized “for the purpose of

eliminating various work rules and eliminating all craft

line distinctions without first exhausting the major dis-

pute resolution procedures of the Railway Labor Act.”

Complaint at $13. Petitioners further alleged that re-

spondents hoped to achieve their purposes by relying upon

the ICC’s belief that its orders, including rail exemptions

under 49 U.S.C. $ 10505, relieved carriers of their obli-

gations under the Railway Labor Act and under their

collective bargaining agreements and, thus, enabled Guil-

ford to transfer to the ST the right to perform the lessor

earrier’s labor under the ST’s rates of pay, rules and

working conditions without first bargaining with rail

labor over those proposed changes to the lessor’s existing

employment terms. Complaint at {| 15-16.

To effectuate its lease arrangements, GTI exercised a

class exemption which the ICC had granted under 49

U.S.C. § 10505 to all affiliated rail carriers from the

prior approval requirements of 49 U.S.C. § 11343(a) for

intracorporate family financial transactions “that do not

result in adverse changes in service levels, signficant

operational changes, or a change in the competitive bal-

ance with carriers outside the corporate family.” 49

C.F.R. § 1180.2(d) (3), promulgated by Ex Parte No.

282 (Sub-No. 3), Railroad Consolidation Procedures, 363

I.C.C. 200 (1980). In order to exercise that blanket

exemption, a rail carrier planning to participate in such

an exempt transaction need only file with the Commis-

sion “a verified notice of the transaction . . . at least

one week before the transaction is consummated ... .”

49 C.F.R. 1180.4(g) (1). Within thirty (30) days of

the filing of the verified notice, the Commission will

publish a description of the exempt transaction in the

Federal Register, but in the interim, the exemption is

effective and the carriers may implement their transac-

tion at any time more than seven (7) days after the no-

tice is filed with the ICC. 49 C.F.R. § 1180.4(g) (1) (11).°

Section 11347 of the Interstate Commerce Act, 49

U.S.C. § 11847, requires the ICC to condition all ap-

provals of Section 11343 rail transactions by imposing a

fair arrangement to protect the interests of rail employees

who may be affected by the implementation of the ap-

proved transaction. In this case, however, the leases

were not “approved” by the ICC, for the class exemption

which Guilford exercised exempted the lease transactions

from the prior approval requirements of Section 11343.°

5 This seven day time frame is modified by the advance notice

required by the employee protective conditions which Sections

10505(g)(2) and 11347 require be imposed.

6 Respondents assert that an exemption is an “approval;” this

dispute is relevant here because Section 11341(a)’s immunity ap-

plies to “approvals” under Section 11344, but, petitioners submit,

not to rail exemptions. See pages 21-23, infra.

—

Nevertheless, Section 10505(g) (2) of the Interstate Com-

merce Act prohibits the ICC from exempting a rail car-

rier from “its obligation to protect the interests of em-

ployees as required by” the Interstate Commerce Act.

49 U.S.C. § 10505( g) (2).

In this case, however, a question arose when Guilford

began to lease MEC and D&H operations to the ST as to

the appropriate level of employee protections to be im-

posed as required by Section 11347. Guilford asserted

that the appropriate levels of protection were those

known as the Mendocino Coast conditions which were

normally imposed in lease cases.’ Rail labor, however,

asserted that because of the relationship of the leases to

the earlier control cases and because of the circumstances

of this case, the appropriate levels of protection were

those provided by what are known as the New York Dock

conditions.* As relevant here, the primary difference be-

tween the two sets of conditions lies in the “implement-

ing agreement” requirements. According to the Commis-

sion, implementing agreements under the Mendocino

Coast conditions do not involve both carriers, whereas

New York Dock implementing agreements do. Appendix

C at 2la-22a n.4. And second, under the New York

Dock conditions, the carriers may not implement the

transaction until after an implementing agreement or

arbitrated arrangement is reached which provides the

basis on which the forces to perform the affected work

will be selected; the Mendocino Coast conditions allow

the implementing arrangement to be devised after the

transaction is effectuated. Jd. “—

7™The Mendocino Coast conditions are those employee protections

first promulgated in Mendocino Coast Ry.—Lease and Operate, 354

I.C.C. 732 (1978), as modified, 360 I1.C.C. 653 (1980), aff'd sub nom.

RLEA v. United States, 675 F.2d 1248 (D.C. Cir. 1982).

8 The New York Dock conditions are those employee protections

first promulgated in New York Dock Ry.—Control, 360 I.C.C. 60,

aff'd New York Dock Ry. v. United States, 609 F.2d 83 (2d Cir.

1979).

Because of this dispute as to the appropriate levels of

protection if the leases went forward, petitioner RLEA

asked the ICC to stay the effectiveness of the exemptions

until it decided what were the appropriate levels of pro-

tection required by Section 11347 in these lease proceed-

ings. Initially, however, the ICC denied rail labor’s re-

quests, stating that it was taking RLEA’s request for

the New York Dock conditions under advisement and

that in the interim, if the carriers consummated any

lease, they did so at their “own risk,” for “[s]hould the

Commission subsequently determine that a higher level

of protection is required, [the parties] . . . will be re-

quired to provide . . . employees with that greater pro-

tection.”” ICC Finance Docket No. 31015, served June 5,

1987 at 6; J.A. at 117.° In late October 1987, the ICC

stayed implementation of the unconsummated leases un-

til it resolved the employee protection issue. See, Ap-

pendix C at 23a-24a.

While the ICC was considering the appropriate level

of protection for employees affected by the leases, Guil-

ford consummated eleven (11) leases, transferring the

entire MEC operations, and most of the B&M and PT

operations to the ST. More than 2,000 employees were

affected by those leases, and while most obtained jobs

with the ST, employment with the ST was governed by

On May 18, 1987, the ICC issued an order setting the question

of the appropriate level of employee protection for a hearing on its

modified procedure basis—/.e., written submissions—and on Feb-

ruary 19, 1988 it issued a decision concluding that modifications to

the Mendocino Coast conditions implementing agreement require-

ments were needed, but that the New York Dock conditions were

not needed. Appendix C. Rail labor, on December 8, 1987, had

asked the ICC to revoke the exemptions because, rail labor asserted,

there was no independent transportation purpose for the leases

a which would justify their impact on the employees’ Railway Labor

Act and contractual rights. Although the ICC denied rail labor’s

petitions to revoke, it did not address that argument, and on March

10, 1988, petitioners asked the ICC to reopen that decision; that

petition is still pending.

ESSE

entirely new rates of pay, rules and working conditions.

Appendix C at 26a-28a."° However, hundreds of the

lessors’ employees did not take a job with the ST, and

on November 12, 1987, the ST employees struck that

carrier over what the employees claimed were unsafe

working conditions. That strike is still in progress, al-

though the parties are currently arbitrating whether

Guilford improperly refused the employees’ offer to re-

turn to service.

B. Petitioners’ Efforts To Enforce The Railway Labor Act

On January 28, 1987, petitioners filed a two count

complaint with the United States District Court for the

District of Maine, the first count to enforce the New York

Dock conditions which were imposed as a condition of

the 1982 control authorizations (see, GT]—Control—D&H,

supra), and the second count to enforce the Railway

Labor Act. On January 30, the district court tentatively

dismissed the first count of the complaint * and respond-

ents subsequently moved to dismiss the remaining count

for lack of subject matter jurisdiction. After that issue

was fully briefed, rail labor asked the district court to

issue a preliminary injunction to enforce the Railway

10 The issue of what employment terms will govern ST opera-

tions is still not settled, for on February 19, 1988, when the ICC

concluded that the Mendocino Coast’s implementing agreement pro-

visions were not adequate in this case, it required all of the Guilford

carriers to negotiate or arbitrate an implementing arrangement

with rail labor which will provide a basis on which employees of

the lessors will be able to follow their work to the ST. Appendix C.

The parties are presently arbitrating that arrangement and one of

the issues raised by GTI is whether the ST agreement should

govern its operations.

11 That tentative ruling was finalized on July 27, 1987, for the

court concluded that petitioners’ attempt to enforce the New York

Dock conditions was within the primary jurisdiction of the ICC

and that no justification existed to retain jurisdiction over the

claim pending the ICC’s determination of the claim. Appendix B

at lla-13a. Petitioners did not challenge that ruling on appeal

and are not asking this Court to review that ruling.

Labor Act by enjoining any further implementation of

the leases and by requiring respondents to rescind the

leases which they had previously implemented. On July

27, 1987, the district court issued its decision dismissing

the complaint for lack of jurisdiction.

Relying upon BLE v. B&M, 788 F.2d 794 (1st Cir.),

cert. denied, 107 S. Ct. 111 (1986), in which the First

Circuit had reached a similar result, the district court

concluded that Section 11341(a) of the Interstate Com-

merce Act, 49 U.S.C. §11341(a), relieved respondents

from all legal obstacles that would impede the transac-

tion, such as respondents’ obligations under the Railway

Labor Act. According to the district court, “Congress

has expressly provided, through its enactment of section

11341, that transactions deemed to be in the public in-

terest by the ICC override the rights and duties created

by Congress in the RLA.” Appendix B at 15a. As the

lower court explained (Jd.) :

Although [petitioners] . . . lose whatever their rights

would be under the RLA, [petitioners] . .. have not

lost all for they have a remedy—and are in fact

concurrently pursuing it—compensation for the loss

of their RLA rights. This remedy is provided by the

ICC. Therefore, the forum for raising these argu-

ments is the forum provided by that agency.

After concluding that the complaint had to be dis-

missed, the district court indicated that it was not oblivi-

ous to what was happening, for the court stated (Ap-

pendix B at 16a):

Over the course of this labor dispute, the parties

have been repeatedly successful in invoking the juris-

diction of this Court to enforce the mandates of the

RLA. [Respondents’| . .. goal in these proceedings

has not been hidden; they have sought and continue

to seek a streamlined work force and the implemen-

tation of their conception of a cost-efficient labor

agreement. [Respondents’] . . . efforts, however,

have been remarkably unsuccessful, due in part to

their failure to reach a meaningful agreement with

the unions involved and in part to the almost inter-

minable procedures of the RLA, procedures which

have been upheld by various decisions of this Court

and which have been supplemented by various actions

of both Congress and the President. Nevertheless,

[respondents] ... have now apparently discovered

an alternate method to achieve a similar goal. Al-

though the Court has examined the record presented

in this case and has considered with care the argu-

ments raised by [petitioners] ... , the Court finds

that |petitioners] ... have presented their request

for relief to the wrong forum. The relief they re-

quest is available only from the ICC and not from

this Court. ...

On August 3, 1987, petitioners noted an appeal from

the district court’s judgment dismissing their complaint,

and subsequently suggested that the United States Court

of Appeals for the First Circuit hear their appeal en banc

because that appeal was controlled by BLE v. B&M,

supra, which petitioners asserted was incorrectly de-

cided. That suggestion was denied and on January 20,

1988, the appellate court entered its ruling affirming the

judgment of the district court. Appendix A at la. Ac

cording to the appellate panel, “|clontrary (to [ petition-

er’s}] . . . argument, Justice Stevens’ opinion in ICC v.

Brotherhood of Locomotive Engineers, 107 S.Ct. 2360

92706 (1987) (Stevens, J., concurring), casts no large

shadow of doubt over our earlier decision in” BLE

B&M, supra. Appendix A at 2a. Moreover, the panel

concluded that: “Nor have any compelling reasons been

advanced which make us believe that reconsideration of

our recent precedent should be undertaken or recom-

mended by this panel.” /d.

REASONS FOR GRANTING THE WRIT

This Case Presents Important Issues Of Federal Law

That Have Been Decided In A Manner Which Conflicts

With Applicable Decisions Of This Court And Other

Courts Of Appeals, And With The Intent Of Congress.

Moreover, Those Issues Have Been Decided In A Manner

That Needlessly Creates A Conflict Between Two Acts

Of Congress Which Regulate The Rail Industry

I. This Case Presents Issues That Are Important To

The Rail Industry And Need To Be Resolved Expedi-

tiously By This Court

Under the statutory scheme that Congress has adopted

to regulate labor relations in the rail industry, a rail-

road may not “change the rates of pay, rules, or work-

ing conditions of its employees, as a class as embodied

in agreements except in the manner prescribed in such

agreements or in section 6” of the Railway Labor Act.

45 U.S.C. § 152 Seventh. Section 6 of the Act, 45 U.S.C.

$ 156, in turn requires thirty (30) days advance writ-

ten notice of the proposed change, and together with

Sections 2 First and 5 First of the Act, 45 U.S.C. §§ 152

First, 155 First, requires the carrier both to exert every

reasonable effort to reach an agreement on its proposed

change and to preserve the status quo pending ful] com-

pliance with its bargaining obligations under the labor

statute. Detroit & Toledo Shore Line R.R. v. UTU, 396

U.S. 142 (1969).

Applied to this case, the Railway Labor Act required

the Guilford carriers to give the notice mandated by Sec-

tion 6 of their intent to lease their operations to the ST

and to make every reasonable effort to negotiate an agree-

ment with rail labor about that plan and its impact on

employees. Moreover, the labor statute prohibited re-

spondents from changing the status quo by transferring

their operations to the ST until they had complied fully

with the Act’s bargaining obligations. E.g., Chicago &

North Western Ry. v. UTU, 402 U.S. 570 (1971); ALPA

--—

- > -

71 (1967). However, in 1983 the ICC, relying upon

the immunity from conflicting laws conferred by 49

U.S.C. § 11341(a),™ stated that its order in a merger

case had the effect of relieving the railroads participat-

ing in that approved transaction from obligations imposed

by the Railway Labor Act (see, ICC orders at issue in

ICC v. BLE, 482 U.S. ——, 96 L. Ed.2d 222 (1987) ), and

since that time the railroads have been using ICC ap-

proval orders and exemption orders to rid themselves of

collective bargaining obligations_without first bargaining

under the Railway Labor Act. See, Arbitration Between

BLE and Union Pacific R.R. and Missouri Pacific R.R.,

re ICC Finance Docket No. 30,000, decided January 17,

1985 (Seidenberg, Neutral) (a copy of that decision is

reproduced herein as Appendix G at pages 54a-63a).

Moreover, relying upon the collateral attack rule ex-

pressed in Venner v. Michigan Central R.R.. 271 U-S.

27, 130 (1926), and their belief that the ICC has been

given exclusive jurisdiction over labor disputes arising

'* In several cases, the lower courts have stated that if there wer

ich a conflict between the two statutes, the Interstate | ommerece

\ct would prevail over the commands of the Railway Labor Act

because of the express immunity granted by what is now Section

11341l(a) of the Interstate Commerc: Act, 49 U.S.A > 11341(a

€.g., Burlington Northern, Inc. v. ARSA, 503 F.2d 58. 62-68 (7th

Cir. 1974), cert. denied, 421 U.S. 975 (1975); in one case, BLE

Chicago & North Western Ry., 314 F.2d 424 (8th ( ir.), cert. denied,

375 U.S. 819 (1963), the appellate court held that Section 11341(a)'s

predecessor superseded the Railway Labor Act, but noted that ther

was no conflict between the two Acts in that case. 314 F.2d at 432

19 U.S.C. § 11341(a) provides in pertinent part, that:

A carrier participating in that approved or ex mpted

transaction (|t.¢., a “transaction approved by or exempted by

the Commission under this subchapter’—Sections 11341 to

11351) is exempt from the antitrust laws and from all other

law, including State and municipal law, as necessary to let

that person carry out the transaction, hold, maintain. and

operate property, and exercise control or franchises a quired

through the transaction.

rom ICC regulated transactions, the railroads and the

ICC have argued, often successfully, that rail labor may

ask the federal courts to enforce the Railway Labor

Even though the impact of ICC orders on rail employ-

es’ substantive and enforcement rights under both the

iway Labor Act and their collective bargaining agree-

abor and management during the past five years, that

on is still in dispute. Compare, BLE v. B&M, 788

‘2d 794 (1st Cir.), cert. denied, 107 S.Ct. 111 (1986),

RLEA v. Pittsburgh & Lake Erie R.R., 3rd Cir.

No. 87-3797, decided April 8, 1988, pet. for cert. pending.

Sup. Ct. No. 87-1888. Indeed, it is not even settled today

ether rail labor ean invoke the aid of the federal courts

letermine whether the Railway Labor Act is, or is not,

-seded. for the lower courts are divided on whether

suit is a collateral attack on the ICC’s order au-

ing or exempting the financial transactions. Com-

BLE v. B&M, supra, 788 F.2d at 801, and UTU v.

ton Northern R.R., 672 F. Supp. 1579 (D. Mont.

‘S7\, appeal pending, 9th Cir. No. 87-4386, with, RLEA

Pittsburgh & Lake Erie R.R., supra.

Petitioners respectfully submit that it is crucial to the

bility of the rail industry today that this Court settle

he current dispute over the relationship between the

inspertation and labor statutes. As may be expected,

he abrogation of contractual and statutory rights has

erely strained labor relations in the rail industry, and,

hen coupled with the lack of any meaningful forum to

nforee existing rights, has forced rail labor to exercise

ts economic powers to enforce those rights. To date,

‘here have been two strikes and the threat of five other

strikes because of the carriers’ belief that the Interstate

Commerce Act relieves them of their Railway Labor Act

and contractual obligations, and there is the possibility of

‘et another strike if the Burlington Northern Railroad

consummates an ICC exempted transfer of operations to

a wholly-owned subsidiary. See, Burlington Northern

R.R. v. UTU, N.D. ILL. Civil Action No. 88 C 2687. Be-

cause the underlying dispute between the parties is essen-

tially a legal one, a negotiated resolution is difficult and,

thus, any one of those strikes may lead to a nation-wide

curtailment of rail service. See, Burlington Northern

R.R. v. BMWE, 481 USS. , 95 L. Ed.2d 381 (1987).

At present, there are cases pending before five circuit

courts of appeals, at least four district courts,” and

this Court '® that raise some of the issues. However,

none of those cases, except for this case, presents all three

of the relevant issues which need to be resolved. Since

the frequency of the carriers’ use of the ICC’s putative

powers has increased in the past year, the rail industry

does not have the time to see if the lower appellate courts

can reconcile the widely divergent views on this issue.

More important, however, such a reconciliation is unlikely

because, when examined closely, the First Circuit’s ap-

proach is contrary to the Interstate Commerce Act and

to prior decisions by this Court.

14 RLEA v. City of Galveston, 5th Cir. No. 87-6169; Chicago &

North Western Transportation Co. v. RLEA, 7th Cir. No. 88-1504;

Burlington Northern R.R. v. UTU, 8th Cir. No. 87-2600WM; RLEA

v. Chicago & North Western Transportation Co., 8th Cir. No. 87-

5071 MN; UTU v. Burlington Northern R.R., 9th Cir. No. 87-

4386; Brotherhood of Railway Carmen v. CSX Transportation, Inc.,

11th Cir. No. 87-8466.

15CSX Transportation, Inc. v. UTU, W.D.N.Y. Civil Action No.

87-1391C; RLEA v. Soo Line R.R., N.D.IIll. Civil Action No. 87 C

5293; Atchison, Topeka & Sunta Fe Ry. v. RLEA, N.D.I. Civil

Action No. 87 C 9847; Burlington Northern R.R. v. UTU, N.D.II.

Civil Action No. 88 C 2687; Burlington Northern R.R. v. UTU,

W.D.Mo. Civil Action No. 86-5013-CV-SW-8; BLE v. Burlington

Northern R.R., E.D.Wa. Civil Action No, C-88-233-RJM.

16 Pittsburgh & Lake Erie R.R. v. RLEA, Sup. Ct. No. 87-1888

(filed May 17, 1988); Pittsburgh & Lake Erie R.R. v. RLEA, Sup.

Ct. No. 87-1589 (filed March 24, 1988).

In view of the extreme importance of these issues to

the orderly administration of the Railway Labor Act

and the Interstate Commerce Act, petitioners respect-

fully submit that this Court should conclude what it at-

tempted to do two years ago when it granted certiorari

in JCC v. BLE and determine whether there is in fact

a conflict between the two Acts of Congress, and if so,

which statute prevails.

Il. The Decision Below Was Decided In A Way That

Conflicts With Applicable Decisions Of This Court

In concluding that it lacks jurisdiction to consider pe-

titioners’ complaint to enforce the Railway Labor Act,

the district court noted that the ICC was, pursuant to

rail labor’s request, considering the impact of the leases

on the employees’ collective bargaining rights. Appendix

B at 15a. Since that inquiry was relevant to the levels

of employee protection which the Commission would even-

tually impose, the lower courts reasoned, the ICC, and

not the federal courts, had the exclusive jurisdiction

to determine exactly how rail labor’s rights will be

protected in this case. See, BLE v. B&M, supra, 788

F.2d at 801. That approach to the relationship between

the Interstate Commerce Act and the Railway Labor

Act, petitioners submit, is contrary to prior decisions of

this Court which have emphasized that the Commissior

does not have jurisdiction to enforce other laws and that

the tribunal called upon to enforce that “other law” is

to determine the impact of the ICC’s order on the rights

protected by the “other law”. E.g., Seaboard Air Line

R.R. v. Daniel, 333 U.S. 118, 122-23 (1948); McLean

Trucking Co. v. United States, 321 U.S. 67, 79-88

(1944); see also, ICC v. BLE, supra, 96 L. Ed.2d at

247 n.13 (Stevens J. concurring).

In McLean Trucking, this Court addressed the rela-

tionship between the Commission’s obligation to consider

the policies of overlapping, non-transportation laws and

the enforcement of those laws. In that case, which in-

: —<«<ooo™ e

volved the antitrust laws, this Court stated (321 U.S. at

79-80) :

. .. Congress has vested expert administrative bodies

such as the Interstate Commerce Commission with

broad discretion and has charged them with the duty

to execute stated and specific statutory policies. That

delegation does not necessarily include either the duty

or the authority to execute numerous other laws... .

But in executing those policies the Commission

may be faced with overlapping and at times incon-

sistent policies embodied in other legislation enacted

at different times and with different problems in

view. When this is true, it cannot, without more,

ignore the latter. The precise adjustments which it

must make, however, will vary from instance to in-

stance depending on the extent to which Congress

indicates a desire to have those policies leavened or

implemented in the enforcement of the various spe-

cific provisions of the legislation with which the Com-

mission is primarily and directly concerned. .. .

McLean Trucking’s teachings were amplified in Sea-

board when this Court raised sua sponte the question of

whether a State court called upon to decide the impact

of an ICC order on a State law had jurisdiction to enter-

tain that suit, or did the federal courts which had juris-

diction to review the ICC order have exclusive jurisdic-

tion over that question. 333 U.S. at 122. This Court

concluded that the State court had jurisdiction. In reach-

ing that conclusion, this Court stated (333 U.S. at 123):

[T]he state court .. . had power, because of the is-

sues raised by the complaint and because of the relief

requested, to determine whether the order, properly

interpreted, did exempt [the railroad] ... from com-

pliance with the state railroad corporation laws and,

if so, whether the Commission had transcended its

statutory authority in making the order.

When these principle are applied to this case, it be-

comes clear that the ICC, in discharging its duties under

the Interstate Commerce Act, has to consider the impact

of its orders on rail labor’s rights under other laws,

such as the Railway Labor Act.’ Petitioners fully rec-

ognize that the question of whether the ICC has dis-

charged that responsibility is reviewable solely in the

courts of appeals under 28 U.S.C. §§ 2321(a) and 2341,

et seg. However, that question is separate and distinct

from the issues of whether the ICC’s orders supersede

the Railway Labor Act and existing collective bargaining

agreements, and whether those non-ICC related rights are

enforceable. Those questions, according to Seaboard and

to four Justices of this Court, are to be decided by the

“tribunal that is faced with a claim that a party is vio-

lating’ the non-transportation statute. JCC v. BLE,

supra, 96 L. Ed.2d at 247 n.13; see also, BLE v. Chicago

& North Western Ry., supra, 314 F.2d at 428.

In this case, the lower courts refused to accept juris-

diction over rail labor’s complaint because they assumed

the ICC had the responsibility to enforce the public pol-

icies behind the Railway Labor Act. Appendix B at 1da.

But that assumption is contrary to this Court’s holding in

McLean Trucking and, in light of the ICC’s limited role

over labor issues, effectively means that those labor poli-

cies are being ignored.

III. The Decision Below Ignores The Clear Language Of

The Interstate Commerce Act That Rail Exemptions

Under 49 U.S.C. § 10505 Do Not Confer An Immunity

On The Carriers Participating In That Exempt Trans-

action

At the heart of the district court’s decision in this case

(7.€., a case involving a rail exemption) was the con-

clusion that “Congress has expressly provided, through

its enactment of section 11341, that transactions deemed

to be in the public interest by the ICC override the rights

and duties created by Congress in the RLA.” Appendix

17 Rail labor has asked the ICC to consider the impact of its

rulings on other laws. See, note 9, supra.

B at 15a. That conclusion, which is the same one reached

by the First Circuit in BLE v. B&M, supra, 788 F.2d at

800, is contrary to the language of the statute, to its

legislative history and to the interpretation of that statute

by the ICC in rail exemption, non-labor situations. Since

the First Circuit has refused to reconsider its holding in

BLE v. B&M even though rail labor pointed out the in-

applicability of Section 11341(a) to rail exemptions, and

since this issue is so important to the orderly administra-

tion of the two Act of Congress which are at issue here,

petitioners ask that this Court exercise its supervisory

powers and correct this clear misapplication of an im-

portant Act of Congress.

Between 1920 when it was first added to the Interstate

Commerce Act as Section 5/8), 41 Stat. 456, 482, until

1982 when it was amended by the Bus Regulatory Reform

Act, Pub. L. No. 97-261, 96 Stat. 1102 (1982), Section

11341(a) and its predecessors provided in substance that

its immunity extended to “a transaction approved by the

Commission under this subchapter... .” 92 Stat. 1434

(1978). The subchapter to which Section 11341(a) refers

is Subchapter III of Chapter 113, or Sections 11341 to

11351. Rail exemptions, on the other hand, are granted

under Section 10505 and the Commission has acknowl-

edged in non-labor cases that the immunity provided by

Section 11341(a) does not apply to transactions exempted

from regulation by Section 10505.1* ICC Finance Docket

No. MC-F-16248, Burlington Northern, Inc.—Control Ex-

emption, served February 13, 1986, op. at 6 (unpub-

18 The ICC, however, maintains that its orders operate to relieve

a rail carrier of its Railway Labor Act and contractual obligations,

but that position appears to be premised upon its view that it has

exclusive jurisdiction over labor issues arising from a financial

transaction subject to its regulation, and not upon an application

of Section 11341(a). See, ICC Finance Docket No. 31205, FRVR

Corporation—Exemption Acquisition And Operation, served Janu-

ary 29, 1988, pet for review pending, RLEA v. ICC, 8th Cir. No.

88-1280 (that decision is reproduced as Appendix B to the Brief for

the NLRC in Sup. Ct. No. 87-1589, Pittsburgh & Lake Erie R.R. v.

RLEA, filed April 19, 1988).

lished) (“transactions exempted under section 10505,

although exempted from the regulatory approval require-

ments of sections 11343 et seqg., would appear not to be

eligible for that antitrust immunity” co.*rred by

§ 11341(a) [emphasis in original] ).

In 1982, Congress enacted the Bus Regulatory Reform

Act and added to Section 11343 an exemption provision.

96 Stat. at 1122, adding 49 U.S.C. § 11343(e). That

provision gave the ICC the power to exempt motor car-

riers from the prior approval requirements of Section

11343, but it does not apply to pure rail transactions.

Burlington Northern, Inc.—Control, supra. That Act also

amended Section 11341(a) to provide that its immunity

provisions would apply to any “carrier. . . participating

in... a transaction approved by or exempted by the

Commission under this subchapter ... .” 49 U.S.C.

§ 11341(a) (words emphasized added by 96 Stat. at 1122).

But again, that immunity does not extend to rail exemp-

tions because those exemptions are not granted under

Subchapter III of Chapter 113. Ex Parte No. 282 (Sub-

No. 9), Railroad Consolidation Procedures—Trackage

Rights Exemption, 1 1.C.C.2d 270, 279 (1985). In its

recent decision in Ex Parte No. 282, the ICC stated as

follows (1 1.C.C.2d at 279):

The addition of ‘‘or exempted by” to section

11341(a) does not broaden the scope of section 11341

to reach transactions exempted under section 10505.

Section 11341(a) reaches only transactions exempted

“under this subchapter”, that is, subchapter III of

Chapter 113 of the Act. The exemption in this pro-

ceeding is under subchapter I of Chapter 105 of the

Act. Accordingly, section 11341(a) does not apply

to the transactions exempted in this proceeding.

Congress clearly intended to exclude rail exemptions

from the immunity granted by Section 11341(a), for it

stated in the reports accompanying the Bus Regulatory

Reform Act that the amendments to Chapter 113 were not

intended “in any way [to] affect the ICC’s jurisdiction

with regard to rail transactions under” Section 11343. H.

Rpt. No. 97-780, 97th Cong., 2d Sess. at 56 (1982). Con-

struing the amended Section 11341(a} as extending that

section’s antitrust and “other laws” immunity to rail

exemptions would clearly expand the ICC’s jurisdiction

over rail transactions and would be contrary to this

Court’s admonition that ‘exemptions from the antitrust

laws are strictly construed and strongly disfavored.”

Square D Co. v. Niagara Frontier Tariff Bureau, Inc.,

476 U.S. 409, 421 (1986). On the other hand, excluding

rail exemptions from the immunity granted by Section

11341(a) is not unique, for Congress has similarly limited

the grant of immunity in airline cases. Compare, 49

U.S.C. § 13884 (1976), with, $ 1384 as amended by Air-

line Deregulation Act of 1978, Pub. L. No. 95-504, 92

Stat. 1705; Conference Report, H. Rpt. No. 95-1779, 95th

Cong., 2d Sess. at 78 (1978).

Another problem with the lower courts’ conclusion that

Section 11341(a) evinces Congress’ intention ‘that trans-

actions deemed to be in the public interest . . . override

the rights and duties created by Congress in the RLA”

(Appendix B at 15a), is that, even if Section 11341 (a)

were applicable to this case, it would not override the

Railway Labor Act rights of the affected employees.'’ All

ICC approvals of rail transactions to which Section

11341(a) applies must be conditioned by an arrange-

ment that protects the interests of employees (49 U.S.C.

$ 11347), and that arrangement must contain provisions

“preserv[ing] . . . rights, privileges, and benefits .. .

to [the affected] . . . employees under existing collective-

bargaining agreements or otherwise; [and] .. . con-

tinuling] .. . collective bargaining rights.” 45 U.S.C.

19 Recently, the ICC has stated that: “Immunity under section

11341(a) . . . may not be a panacea. Immunity is limited ‘to the

scope of the issues we are charged to consider in providing our

approval’ to a transaction.” Ex Parte No. 282, supra, 1 I.C.C.2d at

279, quoting Norfolk & Western Ry.—Purchase, 363 I.C.C. 882, 892

(1981).

§ 565(b) (1) and (2), incorporated into 49 U.S.C. § 11347.

Since Section 11341(a) relieves a carrier participating in

a lease transaction from the requirements of other laws

only in so far “as necessary to let” that carrier carry out

the transaction as approved and conditioned by the Com-

mission, no rail carrier can be relieved of its obligations

under either the Railway Labor Act or its collective

bargaining agreements because Section 11347 requires

that those obligations be preserved and continued. Con-

sequently, Section 11347 eliminates the potential for a

conflict between the Interstate Commerce Act and the

Railway Labor Act to which Section 11341(a} could even

arguably apply.

Petitioners respectfully submit that the correct rela-

tionships between the transportation and labor statutes is

extremely important to the orderly administration of both

laws, especially since rail carriers are now using the

transportation statute to achieve labor costs reductions

which they did not obtain through collective bargaining.

Moreover, a final resolution of this issue deserves a full

consideration of all of the arguments and not just a blind

acceptance of the concept that surely the Interstate Com-

merce Act is supreme and prevails; that blind assumption,

petitioners submit, ignores the fact that the Railway

Labor Act, like the transportation statute, is an exercise of

Congress’ exclusive jurisdiction over interstate commerce.

E.g., UTU v. Long Island R.R., 455 U.S. 678, 688-89

(1982).

1V. This Case Presents The Best Vehicle Of The Pending

Cases To Decide The Jurisdictional And Substantive

Issues Presented By The Railroads’ Use Of The In-

terstate Commerce Act To Obtain Labor Relations

Advantages

This case, petitioners submit, presents in a very clear-

cut factual situation the major issues raised by the use

of the Interstate Commerce Act to override both the Rail-

way Labor Act and existing collective bargaining agree-

ments, for this case was decided on a motion to dismiss

with the factual allegations of the complaint having been

supplemented by extensive factual declarations. Indeed,

the relevant facts are essentially undisputed, but even if

disputed, must be viewed in the light most favorable to a

petitioners. Moreover, this case, unlike the RLEA v.

Pittsburgh & Lake Erie R.R. case (i.e., Sup. Ct. No. 87-

1888), which is currently before this Court on the rail-

road’s request for a writ of certiorari, involves a factual

setting in which the ICC imposed a form of employee

protective conditions. Thus, this case has the potential to

resolve the question of whether the presence of such

conditions, as the district court believed, represents “‘com-

pensation for the loss of ... RLA rights” (Appendix B

at 15a) and justifies the ICC’s belief that such protections

are the sole source of employees’ rights in dispute arising

from ICC exempted or regulated transactions. No em-

ployee protections were imposed by the ICC in the Pitts-

burgh & Lake Erie case.

In short, this case presents the best vehicle available

today to resolve the crucial issues which are placing an

intolerable strain on labor relations in the rail industry.

CONCLUSION

For the reasons set forth herein, petitioners respect-

fully request that this Court issue a writ of certiorari to

the United States Court of Appeals for the First Circuit

to review its judgment in RLEA v. GTI, supra.

Respectfully submitted,

JOHN O’B. CLARKE, JR.

HIGHSAW & MAHONEY, P.C.

Suite 210

1050 17th Street, N.W.

Washington, D.C. 20036

(202) 296-8500

Attorneys for Petitioners

Date: May 23, 1988

APPENDICES

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 87-1774

RAILWAY LABOR EXECUTIVES ’ASSOCIATION, et al.,

Plaintiffs, Appellants,

Vv.

GUILFORD TRANSPORTATION INDUSTRIES, INC., et al.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF MAINE

|Hon. Gene Carter, U.S. District Judge |

Before

Campbell, Chief Judge,

Torruella and Selya, Circuit Judges.

John O’B. Clarke, Jr., with whom Highsaw & Mahoney,

P.C., Craig J. Rancourt and Law Office of Craig J. Ran-

court were on brief for appellants.

Ralph J. Moore, Jr., with whom D. Eugenia Langan,

Jonathan T. Weinberg, Shea & Gardner, Charles S. Ein-

siedler, Jr.. and Pierce, Atwood, Scribner, Allen, Smith

& Lancaster were on brief for appellees.

January 20, 1988

iilcaceiaieitaeaeamaeaiealill

O-«

(aTe

Curiam. Counsel for appellants has conceded that

decision of this court in Brotherhood of Locomotive

| eers Vv. Boston & Maine Corp., 788 F.2d 794 (1st

Cir.), cert. denied, 107 S. Ct. 111 (1986), controls this

.ppeal. We have consistently held in such circumstances

the error-correcting function (if any error there

) should ordinarily be reserved to court en bane, not

ized by a suecessor panel. See Lacy v. Gardino, 791

F.2d 980. 985 (1st Cir.), cert. denied, 107 S. Ct. 284

1986). We see no reason to depart from that prudential

in this instance. Simply put such departure “de-

inds special justification”, Arizona v. Rumsey, 467

U.S. 203, 212 (1984), and there has been no such show-

ng here. Contrary to appellant’s argument, Justice

ens’ opinion in JCC v. Brotherhood of Locomotive

‘s, 107 S. Ct. 2360, 2370 (1987) (Stevens, J.,

meurring!, casts no large shadow of doubt over our

‘lier decision in Brotherhood of Locomotive Engineers

Boston & Maine Corp., supra. Nor have any com-

pelling reasons been advanced which make us believe

reconsideration of our recent precedent should be

lertaken or recommended by this panel.

Accordingly, we summarily affirm the district court’s

issal of this action on the basis of the panel opinion

Brother! od of Locomotive Engineers V. Boston &

Corp., supra. See First Circuit Local Rule 34.1.

38a

APPENDIX B

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

RAILWAY LABOR EXECUTIVES’ ASSOCIATION, et al.,

Plaintiffs

Lo :

GUILFORD TRANSPORTATION INDUSTRIES, INC., BOSTON

AND MAINE CORPORATION, DELAWARE & HUDSON RAIL-

WAY COMPANY, MAINE CENTRAL RAILROAD COMPANY,

PORTLAND TERMINAL COMPANY, and SPRINGFIELD TER-

MINAL COMPANY,

Defendants

Civil No. 87-0034-P

CARTER, District Judge

MEMORANDUM OF DECISION AND ORDER

Currently before the Court are the following motions:

Plaintiffs’ Motion for Reconsideration of the Court’s Or-

der of January 30, 1987; Defendants’ Motions to Dismiss

Complaint; ' and Plaintiffs’ Motion for Interlocutory In-

junctive Relief. For the reasons discussed fully below,

the Court finds that it lacks jurisdiction and dismisses

the action.

1 All defendants have joined in a Motion to Dismiss for lack of

subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1), (6). De-

fendant Guilford Transportation Industries, Inc. (Guilford) has

also filed a separate motion to dismiss. In its separate motion,

Guilford argues that if the Court retains jurisdiction over the ac-

tion, Guilford is not a proper party. Due to the Court’s disposition

of the action on jurisdictional grounds, the Court does not reach the

issue raised in Guilford’s separate motion.

See aaa.a.2.00

Plaintiffs Railway Labor Executives’ Association * have

brought this action for declaratory judgment and in-

junctive relief against Defendants Guilford Transporta-

tion Industries, Ine. (Guilford), Boston and Maine Cor-

poration (B&M), Delaware & Hudson Railway Com-

pany (D&H), Maine Central Railroad Company (MEC),

Portland Terminal Company (PT), and Springfield Ter-

minal Company (ST) in response to the pending imple-

mentation of a number of leases among the various De-

fendants.*

Plaintiffs allege that the present pattern of intracor-

porate leases is just yet another step in Defendants’ “sys-

tematie and deliberate plan to effect without bargaining

the changes in rules and working conditions” which De-

fendants have heretofore failed to accomplish within the

statutory requirements of the Railway Labor Act. Plain-

tiffs’ Complaint for Declaratory Judgment and Injunctive

* Plaintiffs include the Railway Labor Executives’ Association,

the International Federation of Professional and Technical Engi-

neers, and the following 14 member organizations of the Associa-

tion: American Railway and Airway Supervisors Association (Di-

vision of BRAC); American Train Dispatchers Association; Broth-

erhood of Locomotive Engineers; Brotherhood of Maintenance of

Way Employes; Brotherhood of Railroad Signalmen: Brotherhood

of Railway, Airline and Steamship Clerks, Freight Handlers, Ex-

press and Station Employes; Brotherhood Railway Carmen ( Divi-

sion of BRAC); International Association of Machinists and Aero-

space Workers; International Brotherhood of Boilermakers and

Blacksmiths, Iron Ship Builders, Blacksmiths, Forgers and Helpers;

International Brotherhood of Electrical Workers; International

Broherhood of Firemen and Oilers; Railroad Yardmasters of Amer-

ica (Division of UTU); Sheet Metal Workers’ International Asso-

ciation; and United Transportation Union

3 The leases challenged by this action include: leases between

B&M and ST, Finance Docket Nos. 30791, 30925,* 20951,* 30955,

50966," 30981,” 30993," 31003, 31015; leases between MEC and ST,

Finance Docket Nos. 30967,* 31002," 31023; and leases between

D&H and ST, Finance Docket Nos. 30965. 30972, 31003. The seven

docket numbers marked with an asterisk represent leases that have

been implemented.

Relief { 13, at 5. See Railway Labor Executives’ Ass’n v.

Boston & Maine Corp., No. 86-0273-P, slip op. at 2-3 n. 3

(D. Me. July 8, 1987) (‘citing cases detailing history of

labor dispute between parties). Count I alleges that De-

fendants are or will be in violation of a 1982 order of

the Interstate Commerce Commission (ICC), Finance

Docket No. 29720 (Sub-No. 1), by implementing the

leases. Count II alleges that Defendants have willfully

and deliberately violated various sections of the Railway

Labor Act, 45 U.S.C. §§ 151-163 (1982). Plaintiffs al-

lege that the Court has jurisdiction under 28 U.S.C.

§§ 1331, 1336(a), and 1337(a), and under 49 U.S.C.

§ 11705.

The underlying facts are not, at this juncture, com-

plex. In 1982, Guilford, which already owned MEC and

its subsidiary PT, obtained the approval of the ICC

under section 11343 of the Interstate Commerce Act, 49

U.S.C.-§ 11343 (1982) (the Act), to acquire control of

both D&H and B&M, including B&M’s subsidiary ST.

See ICC Finance Docket Nos. 29720 (Sub-No. 1) and

29772 (the 1982 orders). These acquisitions resulted

in the corporate affiliation of the Defendants now before

the Court. As part of its approval, the ICC imposed

arrangements for the protection of employee interests

known as the New York Dock * conditions.

Subsequent to the above acquisitions, Guilford sought

and received notices of exemption by the ICC under sec-

tion 10505 of the Act, 49 U.S.€. § 10505, which allow

Guilford to implement the leases challenged by this ac-

*The New York Dock conditions were developed in New York

Dock Ry.—Control—Brooklyn Eastern Dist., 360 I.C.C. 60 (1979).

These conditions are important to Plaintiffs because they require

that employees affected by any transaction receive at least 90 days

advance notice and that an implementing agreement be negotiated

between all parties to the transaction before the transaction is

consummated.

tion. See, e.g., Finance Docket Nos. 30965, 30967. On

December 30, 1986, MEC served a notice of the proposed

lease transaction on the affected unions; the next day,

Plaintiffs filed petitions with the ICC under the relevant

dockets requesting that the ICC determine that the appro-

priate employee protective provisions are the New York

Dock conditions imposed in the 1982 orders and not the

Mendocino Coast* conditions usually imposed on exempt

lease transactions. On January 14, 1987, the ICC re-

leased its decision acknowledging Plaintiffs’ petitions and

indicating that it would issue a ubsequent decision on

the issue raised therein. Finance Docket No. 30967. The

parties still await the ICC’s decision.* In the interim,

Defendants are apparently required to adhere to the

Mendocino Coast conditions in the implementation of the

MEC leases.

Plaintiff filed the present case in this Court on Jan-

uary 28, 1987; they sought a temporary restraining or-

der on January 29, just two days prior to the February

1st effective date of the challenged MEC lease. On Jan-

uary 30th, the Court denied the motion for temporary

relief and dismissed Count I of the Complaint for lack of

subject matter jurisdiction or, in the alternative, de-

clined jurisdiction as to Count I because the issue fell

within the primary jurisdiction of the ICC. Railway

5 Mendocino Coast conditions were developed in Mendocino Coast

Ry., Inc.—Lease and Operate, 254 1.C.C. 732 (1978), as modified at

360 I.C.C. 653 (1980), aff'd sub nom. Railway Labor Executives’

Ass'n v. United States, 675 F.2d 1248 (1982). Under Mendocino

Coast, employees affected by a transaction receive 20 days advance

notice, and the transaction may be consummated before an imple-

menting agreement is negotiated between the lessee and lessor

railroads and the affected labor interests.

® On May 12, 1987, the ICC released another decision which also

deferred resolution of the employee protection issue pending the

receipt of additional evidence and further investigation. Finance

Docket No. 30965 (also encompassing Finance Docket Nos. 30967,

30972, 30981, 30993, 31002, 31003).

i aeeerenenatinieaeiemnteaciiiiniianiiedmiiiel

Labor Executives’ Ass’n v. Guilford Transp. Indus., 653

F. Supp. 648, 645 (D. Me. 1987). The Court turns now

to the arguments presented by the parties with respect

to each count of the Complaint.

II. Count I

In seeking reconsideration of the Court’s prior order,

which dismissed Count I, Plaintiffs advance three sep-

arate requests. First, Plaintiffs ask the Court to retain

jurisdiction of Count I. Second, Plaintiffs renew their

request for injunctive relief pending the outcome of the

ICC petitions. Finally, Plaintiffs ask that the Court stay

further proceedings on Count I, including any referral

of the determinative factual question to the ICC, until

the ICC rules on Plaintiffs’ petitions in the lease cases.

A. Jurisdiction

In pressing their original request for temporary relief,

Plaintiffs did not address with specificity the issue of

the Court’s>jurisdiction, nor did Defendants raise the

issue in the brief time available for a response; neither

party mentioned the doctrine of primary jurisdiction. Be-

cause Count I sought enforcement of the 1982 orders,’

7 The enforcement powers of the Court derive from section 11705

of the Interstate Commerce Act, which provides in part:

(a) A person injured because a carrier providing transporta-

tion or service subject to the jurisdiction of the Interstate Com-

merce Commission under chapter 105 of this title does not obey

an order of the Commission, except an order for the payment

of money, may bring a civil action to enforce that order under

this subsection.

(b)(2) A common carrier providing transportation subject

to the jurisdietion of the Commission under subchapter I or

III of chapter 105 of this title is liable for damages sustained

by a person as a result of an act or omission of that carrier

in violation of this subtitle.

(c)(1) A person may file a complaint with the Commission

under section 11701(b) of this title or bring a civil action

the Court determined that Plaintiffs’ right to relief de-

pended on the resolution of the following factual ques-

tion within the primary jurisdiction of the ICC: whether

the challenged lease transactions fall within the scope of

the 1982 orders. Because the question was pending be-

fore the agency, the Court also determined that it lacked

subject matter jurisdiction. 7d. Plaintiffs now expressly

argue that under section 11705(a) of the Act® the

Court has jurisdiction to enforce the 1982 orders and

should retain jurisdiction while the ICC determines the

above-stated predicate factual issue, a determination

which Plaintiffs concede is within the primary jurisdic-

tion of the ICC. Defendants counter that the Court’s dis-

missal of the action is appropriate under the guidelines

articulated in Far East Conference v. United States, 342

U.S. 570 (1952). Having now had the benefit of full

briefing on the issue, particularly Plaintiffs’ position re-

garding the referral option, the Court determines that

no purpose would be served by retaining jurisdiction and

therefore reaffirms its prior dismissal of Count I, clarify-

ing any ambiguity that may have arisen from its prior

discussion of referral.

The Court’s reasoning rests on the unique relation-

ship between the case pending before it and the several

petitions pending before the ICC. Plaintiffs made an

initial strategic choice to pursue their challenges to the

present leases in the context of the exemption notices

before the ICC. The alternative would have been to

initiate an enforcement action of the 1982 orders, either

by filing an action in this Court under section 11705 (a)

or by seeking a declaratory order from the ICC under

under subsection (b)(1) or (2) of this section to enforce

liability against a common carrier providing transportation

subject to the jurisdiction of the Commission under subchapter

I or III of chapter 105 of this title. ...

49 U.S.C. § 11705(a), (b) (2), (ec) (1) (1982).

8 See supra note 7.

section 11701, 49 U.S.C. § 11701(b). Plaintiffs chose to

proceed in the exemption context because they perceived

that their petitions would afford them the most immediate

relief.” In their petitions before the ICC, Plaintiffs ex-

pressly raised the argument that the leases are trans-

actions within the meaning of the 1982 orders. See, e.g.,

Finance Docket No. 30967, 52 Fed. Reg. 2625 (1987).

When, however, the ICC deferred its decision as to

whether “the New York Dock conditions should also apply

to this lease transaction, because it is allegedly just an-

other transaction to further the control benefits attribu-

table to the original acquisition of MEC by [Guilford]’’),

id., Plaintiffs raised the same issue in the present enforce-

ment action in this Court.

In issuing the January 30 Order, the Court expressed

its concerns about ruling on an issue currently pending

before the ICC. One concern is, of course, that the ICC

action may moot the issue before this Court. This possi-

bility may, however, be easily addressed by the Court

staying any action until the ICC rules. Nevertheless,

another concern counterbalances the wisdom of issuing a

stay: if Plaintiffs have a right to have their claim re-

solved by this Court, the Court should not avoid its duty

to render the appropriate relief. This concern may coun-

sel immediate referral to the ICC of the determinative

factual question, directing the ICC to address the issue

and thus preserving Plaintiffs’ rights.'° But as the brief-

® See Plaintiffs’ Memorandum in Support of Motion for Recon-

sideration at 7: “[I|f the Commission did not impose the New York

Dock conditions in the lease cases, the notice and negotiation pro-

tections [provided by New York Dock| would be lost while the

applicability of those conditions to the lease transactions was liti-

gated.”

10 Tt is possible that the ICC may resolve the issues pending be-

fore it without reaching the factual question presented by Count I.

The Court notes that in a recent unpublished opinion, the ICC

indicated that it was deferring the resolution of the appropriate

level of employee protection for the challenged leases both in light

10a

ing has expanded in this case, it is now apparent that

the Court’s initial concern about its jurisdiction provides

the most significant justification for allowing the ICC

to act first on all issues.

By bringing an enforcement action in this Court while

the same issue is pending before the ICC in actions in-

volving essentially the same relief, it appears to the

Court that Plaintiffs have made a creative attempt to

avoid the requirement of section 11705 that they make an

election between the forums provided by the ICC and by

this Court. See, e.g., Louisville & N.R.R. v. Ohio Valley

Tie Co., 242 U.S. 288, 291 (1916) (requiring claimant

to elect between a complaint to the Commission and a

civil action; decided under former 49 U.S.C. § 9). Plain-

tiffs’ reluctance to have the issue referred to the ICC

for determination highlights the problems created by

their attempt to have both forums remain the forum of

first instance.

Plaintiffs have requested that the Court, if it were to

retain jurisdiction, “not refer [the determinative] issue

to the ICC at this time.” Plaintiffs’ Memorandum in

Support of Motion for Reconsideration at 7. Plaintiffs’

request rises from their desire to avoid jurisdictional

conflicts between this Court and the court of appeals, for

this Court would retain jurisdiction over the referred

question while the court of appeals would have jurisdic-

tion over any results flowing from the petitions before

of the status of these transactions under the 1982 orders and in

light of independent factual issues such as the number of similar

leases which exist in the Guilford corporate structure, whether

these leases have a cumulative effect different from that which

usually occurs in lease transactions, whether Guilford plans to ini-

tiate other leases in the near future, and the impact of the leases

on Defendants’ employees including a consideration of the manner

in which Guilford is implementing the leases. Finance Docket No.

30965 (May 12, 1987), Plaintiffs’ App. C.

lla

the ICC. 28 U.S.C. § 1836(b), 2321(a), and 2341." In

the Court’s view, it is precisely this type of conflict that

is avoided by the election requirement of section 11705.

Having initiated their fight before the ICC, Plaintiffs

cannot in fairness avoid having the ICC remain the

battlefield for all other initiai skirmishes. If, as a result

of the Court’s dismissal of Count I, Plaintiffs are re-

quired to bring an original action before the ICC, the

potential jurisdiction conflicts may be avoided, and Plain-

tiffs will have an opportunity to have their rights fully

vindicated. Thus, even if the statute did not require

an election between forums, the avoidance of forum shop-

ping and the difficulties that overlapping forums present

in light of the overall statutory scheme justify dismissal

in this case. See Montgomery Environmental Coalition

v. Washington Suburban Sanitary Comm’n, 607 F.2d

378, 382-83 (D.C. Cir. 1979) (finding dismissal proper

where retention of jurisdiction by district court would

conflict with appellate review of action by EPA).

Finaliy, even if the duplicity of forums were not de-

terminative of the issue, Plaintiffs have not demonstrated

that dismissal would be improper. In deciding whether

to stay the action pending referral or to dismiss, the

Court must determine whether dismissal will prejudice

any party. United States v. Michigan Nat’l Corp., 419

U.S. 1, 4-5 (1974); Far East Conf., 342 U.S. at 577.

Plaintiffs advance two arguments in support of the

11 Plaintiffs have also argued, however, that if the ICC decides,

in the context of the pending petitions, that the challenged leases

fall within the 1982 orders, Plaintiffs will ask the Court to enforce

the 1982 orders on the basis of the new decision. In effect, Plain-

tiffs would have an enforcement action pending in this Court while

the determinative questions are being resolved in a separate action

before the ICC. It appears to the Court, however, that any enforce-

ment action would flow from the new ICC orders. Although this

issue is not squarely before the Court at this juncture, it does high-

light the difficulties raised by the Plaintiffs’ invocation of multiple

forums.

12a

Court’s continued jurisdiction: one, Plaintiffs’ concurrent

request for injunctive relief bars dismissal; and two,

Count I is inextricably tied to Count II]. The Court ad-

dresses each in turn.

B. Request for Injunctive Relief

Plaintiffs’ first argument is curious for Plaintiffs do

not argue that they could not receive the same injunctive

relief in an action before the ICC. More importantly, it

appears from the record that Plaintiffs have requested

this relief from the ICC in at least some of their peti-

tions in the lease exemption notices. E.g., Finance Docket

No. 30965, at 2 n. 2 (May 12, 1987). The III has spe-

cifically rejected Plaintiffs’ argument that they would be

irreparably harmed if the lease transactions were con-

summated before the issue of employee protection condi-

tions is decided. The ICC noted that even under the

Mendocino Coast conditions, employees have a complete

remedy at law to be “made whole” if the implementations

proceed before the impiementing agreements are nego-

tiated. Jd. Having had this issue resolved against them

in the administrative context, Plaintiffs may not now

come to this Court and argue that jurisdiction must be

retained so that they might ask the Court for identical

relief.

C. The Relationship of Count I to Count II

Plaintiffs’ second argument centers on their allegation

that some unspecified prejudice may result from the dis-

missal of Count I while Count II is pending before the

Court. Because the Court finds, see infra Part III, that

it also lacks jurisdiction over Count II], Plaintiffs’ argu-

nent must fail on this ground.

The parties have not raised any additional claim of

prejudice.. Since it does not appear to the Court that

there is any impediment to the Plaintiffs’ initiating be-

fore the ICC the request for relief encompassed by Count

13a

I, if Plaintiffs have not already done so in their pending

petitions, the Court finds that dismissal for want of

jurisdiction is proper.

III. Count Il

In Count II of their Complaint, Plaintiffs allege that

Defendants have violated various sections of the Railway

Labor Act (RLA) by implementing the challenged leases.

The allegation rests on three grounds: one, because the

leases affect existing rates of pay, rules and working

conditions, Defendants must bargain with Plaintiffs over

these changes within the procedures provided by the

RLA:; two, in various agreements among the parties, De-

fendants have bargained away their right to lease their

properties '?; and three, Defendants have interfered with

the rights of their employees to be represented by the

labor organization of the employees’ choice by communi-

eating directly with their employees regarding the em-

ployment options under the leases.

Defendants argue that, regardless of whether Plain-

tiffs’ allegations state a claim under the RLA, any RLA

claim is preempted by the exemption found in section

11341(a) of the Act, 49 U.S.C. § 11341(a).” Plaintiffs

12 Paragraph 30 of the Plaintiffs’ Complaint alleges that various

agreements and practices between the parties prohibit Defendants

from transferring work which is being performed by their em-

ployees to others without prior notice and negotiation. Because the

motion before the Court is a motion to dismiss, the Court is re-

quired to construe the Complaint in the light most favorable to

Plaintiffs. see 5 C. Wright & A. Miller, Federal Practice & Procedure

§ 1357, at 594 (1969), and therefore construes the above allegation

as encompassing the argument advanced by Plaintiffs. By constru-

ing the Complaint liberally in favor of Plaintiffs, the Court does

not imply any position regarding whether this construction of the

allegation is supported by the as yet undeveloped facts of this case.

13 Section 11341 provides in pertinent part:

The authority of the Interstate Commerce Commission under

this subchapter is exclusive. A carrier or corporation partici-

———

l4a

have countered Defendant’s argument by presenting the

Court with a comprehensive analysis of the controlling

statutory provisions and their legislative history. Were

the Court writing on a clean slate, Plaintiffs’ arguments

would need to be commented upon in depth. Here, how-

ever, the Court finds that its decision is controlled by

Brotherhood of Locomotive Engineers v. Boston & Maine

Corp., 788 F.2d 794 (1st Cir.), cert. denied, 107 S. Ct.

111 (1986).

In Boston & Maine, the First Cireuit considered

whether section 11341 of the Act precluded a party who

was adversely affected by the implementation of a sec-

tion 10505-exempted lease from pursuing claims that

would otherwise fall within the jurisdiction of the federal

courts under the RLA. 7d. at 796-99. The Circuit held

that the exemption provided by section 11341 relieves the

participants from any legal obstacles that would impede

the transaction. Jd. at 800.

Plaintiffs have attempted to distinguish their claims

from the Boston & Maine case by emphasizing the follow-

ing three sets of facts: one, that in Boston & Maine, the

ICC had specifically considered the effect of the lease on

the parties’ rights in the underlying exemption proceed-

ing, where here Plaintiffs have raised these issues before

the Court; two, the present case includes an allegation

pating in or resulting from a transaction approved by or ex-

empted by the Commission under this subchapter may carry

out the transaction, own and operate property, and exercise

control or franchises acquired through the transaction without

the approval of a State authority. A carrier, corporation, or

person participating in that approved or exempted transaction

is exempt from the antitrust laws and from all other law, in-

cluding State and municipal law, as necessary to let that person

carry out the transaction, hold, maintain, and operate property,

and exercise control or franchises acquired through the trans-

action. ...

49 U.S.C. § 11341(a) (1982).

15a

that Defendants had no right to enter the leases; and

three, even under the section 11341 exemption, Defend-

ants have no right to deal directly with their employees

regarding the ICC-imposed employee protection condi-

tions. The Court, however, finds Boston & Maine to be

equally applicable to the present case and thus controlling

precedent.

First, in formulating the relevant employee protection

conditions to be applied to the challenged leases, the ICC

is currently contemplating the effect of the leases on the

collective bargaining rights of Defendants’ employees.

See Finance Docket No. 30965 (May 12, 1987) (unpub-

lished). Plaintiffs’ first argument thus loses much of its

force in light of the ICC’s contemporaneous considera-

tion of this issue and the discretion vested in the ICC to

“require the carrier to provide a fair arrangement” to

employees whose interests are affected by the exempted

transaction. 49 U.S.C. § 11347.

Second, the law of this Circuit is that Congress has

expressly provided, through its enactment of section

11341. that transactions deemed to be in the public in-

terest by the ICC override the rights, and duties created

by Congress in the RLA. Although Plaintiffs lose what-

ever their rights would be under the RLA, Plaintiffs have

not lost all for they have a remedy—and are in fact

concurrently pursuing it—compensation for the loss of

their RLA rights. This remedy is provided by the ICC.

Therefore. the forum for raising these arguments is the

forum provided by that agency.

Finally, the breadth of the exemption contained in sec-

tion 11347 [sic] also vitiates whatever force the remain-

ing factual distinctions raised by Plaintiffs may have.

Consequently, in accordance with the ruling of the First

Circuit, the Court finds that it is without jurisdiction to

consider claims ordinarily cognizable by this Court under

the RLA where the alleged claims arise directly out of

a lease transaction granted a statutory exemption by the

ICC under the controlling statute. Cf. Maine Cent. R.R.

16a

nt Man tenance oft Way Employee $. 65?

Supp. 40, 42 (D. Me. 1986) (finding that dispute con-

h nrotection he ne fits did not arise directly out

ipproved by the IC¢

[V.

Over the course of this labor di pute, the parties have

diy successful in invoking the jurisdiction

Court to enforce the mandates of the RLA. De-

’ goal in these proceedings has not been hidden:

sought and continue to seek a streamlined work

the implementation of their conception of a

eficient labor agreement. Defendants’ efforts. how-

have been remarkably unsuccessful, due in part to

ire to reach a meaningful agreement with the

olved and in part to the almost interminable

ires of the RLA, procedures which have been up-

rious decisions of this Court and which have

ipplemented by various actions of both Congr

the President. Nevertheless, Defendants have now

pparently discovered an alternate method to achieve a

goal. Although the Court has examined the rec

presented in this case and has considered with care

nents raised by Plaintiffs, the Court finds that

ffs have presented their request for relief to the

m. The relief they request is available only

the ICC and not from this Court. Accordingly, the

hereby GRANTS Defendants’ Motion to Dismi:

DENIES Plaintiffs’ Motion for Reconsideration. I)

) , ]

A\ a i >

S50 ORDERED.

(;sene Carter

GENE CARTER

United States District Jude

Portiand, Maine this 27th day of July, 1987.

l7a

APPENDIX C€

INTERSTATE COMMERCE COMMISSION

CORRECTED DECISION"

Finances Docket No 20965

DELAWARE AND HupsoN RAILWAY COMPANY—LEASE AND

TRACKAGE RIGHTS EXEMPTION—»SPRINGFIFI

NAT, RAILWAY COMPA!

De ed: Kel 17. 1988

~ } ? ' TORS

T’} 1 * ; vrafloet

‘ ryt 1 }

{ r? T

T) 67.M Central

Ra and ¢ | { iz, PR

( ) | r j [) na H fT

Railway Com? ] Rights |} tior wit

field Termi mis i ) a e Docket Ni O81, B aay,

Maine ¢ ' J . eld Ts nal Ra (

Finance Docket No Nels) R vd Mair (

( »nanu: Finance Docket No. 31002, Maine Central Railroad

tT ease and Trackage Rights Exemption—Spring field Te

Pail | vnu: Finance Docket No. 310038 Delaware and

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18a

INTRODUCTION

The investigation that the Commission has instituted

and recently concluded into the transactions that are the

subject of this proceeding clearly establishes that a series

of leases from four rail carrier subsidiaries of Guilford

Transportation Industries, Inc. (GTI), to a fifth carrier

subsidiary, the Springfield Terminal Railway Company

(ST), have, taken together, substantially injured GTI’s

employees. We are, therefore, imposing extraordinary

labor protective conditions on these transactions.

Our actions are taken to protect the interests of GTI’s

employees. We find that while GTI’s actions fall within

the letter of our regulations at 49 C.F.R. 1180.2(d) (3),

the manner in which GTI has proceeded in implementing

these intracorporate leases has undermined its credibility

and has contributed to a loss of confidence in its ability

to provide adequate and efficient rail service in New

England. Prompt good faith compliance with the terms

way Company; Finance Docket No. 31115, Boston and Maine Cor-

poration and Delaware and Hudson Railway Company—Lease and

Trackage Rights Exemption—Springfield Terminal Railway Com-

pany; Finance Docket No. 31125, Delaware and Hudson Railway

Company—Lease Exemption—Spring field Terminal Railway Com-

pany; and Finance Docket No. 31161, Delaware and Hudson Rail-

way Company—Operating Agreement and Assignment of Trackage

Rights—Spring field Terminal Railway Company.

In addition, the GTI carriers filed notices of exemption in Finance

Docket No. 30925, Boston and Maine Corporation—Lease and Track-

age Rights Exemption—Springfield Terminal Railway Company;

Finance Docket No. 30951, Boston and Maine Corporation—Lease

Exemption—Springfield Terminal Railway Company; and Finance

Docket No. 30966, Boston and Maine Corporation—Lease—Spring-

field Terminal Railway Company. Although the labor interests had

not previously asked that these notices be consolidated into this

proceeding, they have since filed petitions seeking revocation of the

exemptions for these notices. GTI filed a reply. Because the under-

lying transactions are closely related to the other GTI transactions,

we are including these notices in this proceeding.

of this order would constitute a significant first step

toward the restoration of that confidence.

Through a series of leases and trackage rights ar-

rangements, discussed in more detail below, GTI has in

effect restructured its operations so that one of its five

rail earrier subsidiaries will henceforth be conducting

all of its rail operations. While pursuing this course,

GTI has failed to keep its employees fairly apprised of

their rights and responsibilities under Commission-im-

posed labor protective conditions. Some of the informa-

tion given by GTI was misleading and some was wrong.

In other instances, GTI has appeared slow to provide the

protection to which its employees are entitled.

To remedy this situation, we will impose on the trans-

actions involved labor protective conditions that are dif-

ferent from those imposed in the usual lease and track-

age rights transactions. We will also require that the

parties engage in dispute resolution through negotiation

of an implementing agreement between all of the GTI

carriers and the employees of all the carriers, and, if

necessary, binding arbitration. By imposing these condi-

tions we will ensure that employees who were adversely

affected by the transactions or were victims of the con-

fusion about protective benefits receive the compensation

that would have been accorded had labor protection pro-

visions been properly administered by GTI under the

circumstances.

SUMMARY

These proceedings involve use of the notice of exemp-

tion procedures set forth at 49 CFR 1180.4(g) in con-

nection with transactions within a corporate family. See

49 CFR 1180.2(d) (3). The notices of exemption were

filed concerning lease and trackage rights transactions

involving the following wholly owned subsidiaries of

GTI: ST, Delaware and Hudson Railway Company

(D&H), Maine Central Railroad Company (MEC), Bos-

20a

ton and Maine Corporation (B&M), and Portland Ter-

minal Company (PT) (collectively referred to as “GTI”

or “the GTI carriers’). The earliest notice (Finance

Docket No. 30925) was filed on October 22, 1986, and

the most recent {Finance Docket No. 31161) on Novem-

ber 17, 1987.

The labor protective conditions typically imposed as

the minimum protection in lease and trackage rights

transactions as set forth in Mendocino Coast Ry. Inc.—

Lease and Operate, 354 I.C.C. 732 (1978) and 360 I.C.C.

653 (1980),? and Norfolk and Western Ry. Co.—Track-

age Rights—BN, 354 I.C.C. 605 (1978). as modified in

Mendocino Coast, supra, 360 I.C.C. 653 (1980), ade-

quately protect the interests of rail employees in normal

lease and trackage rights situations and have been found

to satisfy the statutory requirement of 49 U.S.C. 11347

that carriers involved in transactions under 49 U.S.C.

11344 provide fair arrangements for protection of their

employees. Here, however, the Railway Labor Execu-

tives’ Association (RLEA) and the Brotherhood of Loco-

motive Engineers (BLE) have sought revocation of the

exemptions, or a change in the conditions for exemption,

arguing that the labor protective conditions that were

imposed in all of the cases are inadequate, and they seek

a greater level of employee protection.*? They argue that

2 Aff’'d sub nom. Railway Labor Executives’ Association v. United

States, 675 F.2d 1248 (1982), See Finance Docket No. 30532, Maine

Central R.R., et al—Exemption (not printed), served September 138,

1985, aff'd sub nom. Railway Labor Executives’ Association v. ICC,

No. 85-1636 (D.C. Cir. March 16, 1987).

3 RLEA filed, between December 31, 1986 and December 8, 1987,

petitions for revocation of the exemption and/or petitions for relief

not otherwise covered in Finance Docket Nos. 30925, 30951, 30955,

30965, 30966, 30967, 30972, 30981, 30993, 31002, 31003, 31015,

31023, 31086, and 31103.

BLE filed, between February 1, 1987, and November 27, 1987,

petitions to reopen and for relief not otherwise covered in Finance

Docket Nos. 30981, 30993, 31003, 31015, 31103, 31125, and 31161.

RLEA filed its post-oral argument brief on December 8, 1987,

accompanied by separate motions “for leave to file brief, time for

2la

the labor protective conditions developed by the Commis-

sion in New York Dock Ry.—Control—Brooklyn Eastern

Dist., 360 I.C.C. 60 (1979), are more appropriate for

these transactions and should be imposed in lieu of the

Mendocino Coast and Norfolk and Western conditions.*

filing having expired,” and “for leave to file brief in excess of thirty

pages.” With its brief and motions, RLEA filed four separate peti-

tions “for revocation of the exemption” in Finance Docket No.

30965, et al., Finance Docket No. 30925, Finance Docket No. 30951,

and Finance Docket No. 30966.

In support of its motion to late-file its brief, RLEA notes that its

counsel was unable to file timely due to responsibilities in several

other legal matters, some of which involve RLEA. RLEA also ex-

plains that the arguments set forth in its brief extend to the four

simultaneously filed petitions for revocation, and that, therefore,

the length of its brief will conserve and consolidate its arguments

in these related matters. RLEA submits that the late filing and the

length of its brief will neither prejudice the parties nor unduly

delay the prompt resolution of this proceeding.

The limited delay resulting from RLEA’s late filing and the

excess length of its brief are insignificant when viewed in light of

the extensive record, the length of the proceedings, and the impor-

tance of the issues to be resolved here. We will therefore grant

RLEA’s motions for leave to late-file its brief and for leave to file

its brief in excess of the page limitation.

On August 18, 1987, GTI filed a motion to strike certain RLEA

reply materials, or, alternatively, to submit further evidence. In

view of our October 5th request that the parties submit further

evidence, GTI’s argument is mooted and its motion is denied.

On October 20, 1987, RLEA filed a motion to supplement a dec-

laration and to file executed copies of other declarations it had filed

on October 15, 1987. RLEA cited time constraints that prevented

filing of executed declarations by October 15th, and indicated that

the other declaration should be supplemented due to changes of

material fact. RLEA’s request will not delay the proceeding or

prejudice any party. The motion is granted.

*The substantive benefits under New York Dock are virtually

identical to those under Mendocino Coast and Norfolk and Western.

New York Dock, however, does provide labor certain procedural ad-

vantages. First, the transaction cannot be consummated unless an

implementing agreement between the carrier and the labor interest

is already in place. By contrast, under Mendocino Coast and Norfolk

22a

They argue in the alternative that the exemption is not

appropriate and should be revoked for these transactions.

The GTI carriers, on the other hand, believe that their

actions were correct and that the proper labor conditions

have already been imposed.°

Upon review of the record, we chose to fashion a rem-

edy appropriate to the circumstances, and provide the

opportunity for effective adjustment and resolution of

and Western if the transaction is consummated prior to the imple-

menting agreement, the substantive benefits are applied retroac-

tively. Second, employees who may be adversely affected by a trans-

action must receive at least 90 days prior notice under New York

Dock, while only a 20-day notice period is provided under Mendocino

Coast and Norfolk and Western. F:* ally, by custom and usage,

there is a difference as to the parties to the implementing agree-

ments required by the New York Dock labor protective conditions,

on the one hand, and the Mendocino Coast and Norfolk and Western

conditions, on the other. In the former, an implementing agreement

must be arrived at between all parties to the proposed consolidation

and the employees of all the parties. In the latter, implementing

agreements are required only between the lessor/grantor of trackage

rights and its employees, on the one hand, and between the lessee /

grantee of trackage rights and its employees, on the other.

5 The labor organizations’ responses to the GTI notices of exemp-

tion raised the issue of the appropriate level of labor protection for

these transactions. For example, in Finance Docket No. 30965,

served January 22, 1987, our notice imposed Mendocino Coast condi-

tions but advised the parties of RLEA’s petition requesting New

York Docket protective conditions and noted that “fal! separate

Commission decision will follow to consider which conditions should

be imposed.”

As the number of GTI filings increased, we alerted the railroads

to the possible consequences of their actions. For example, several

months later in Finance Docket No. 31115, served October 9, 1987,

our notice advised the parties that “[i]f, prior to the Commission’s

determination of the appropriate level of labor protection for these

GTI transactions, B&M and D&H consummate this transaction and

provide employees with Mendocino Coast protection, they do so at

their own risk. Should the Commission subsequently determine

that a higher level of protection is required, B&M ahd D&H will be

required to provide employees with that greater protection.”

23a

disputes in this unusual situation. Thus, we conclude

that imposition of extraordinary conditions, rather than

ordering revocation, would better ensure that rail em-

ployees and services are adequately protected in this par-

ticular instance.*®

Recognizing that various transactional activities have

transpired over the period of time since October, 1986,

we believe that ordering revocation at this time may be

counterproductive. Moreover, noting the substantive bene-

fits of conditions under New York Dock, Mendocino Coast

and Norfolk and Western, are virtually identical, albeit

with significant procedural distinctions,’ we find it possi-

ble to use elements of those substantive benefits and

tailor the procedures to fit the particular circumstances

of this case.®

We, therefore, direct that: (1) the process for formu-

lating an implementing agreement for all of the trans-

actions (and any arbitration process) will include as

participants ST, B&M, D&H, MEC, and PT, and the

employees (or their representatives) of all of these rail

carriers; (2) the parties will have 90 days to reach an

implementing agreement (if, after 20 days, no agree-

ment has been reached, any party may seek to submit

the controversy to binding arbitration); and (3) GTI

shall not implement the D&H and unconsummated B&M

6 Commission authority to do so can not be seriously doubted.

See e.g. New York Central Sec. Corp. v. United States, 287 U.S. 12

(1932) (The Commission is “not limited to the conditions proposed

or favored by the carriers”); Baltimore & Chio Railroad v. United

States, 386 U.S. 372, 430 (1967) (J. Brennan, concurring: “the

ICC is not the prisoner of the parties’ submissions” and must

“weigh alternatives and make its choice according to its judgment

how to best achieve and advance the goals of the NPT.’’)

7 See Footnote 4.

8 By doing so in this case, however, we specifically do not intend

to alter or modify in any way the existing precedent or customary

application, of New York Dock, Mendocino Coast or Norfolk &

Western conditions in any other case.

24a

transactions until the implementing agreement is reached

or the arbitration process has concluded. Any transac-

tions that have already been implemented will not have

to be undone pending formulation of the agreement or

conclusion of arbitration, but those transactions are to

be covered by the agreement or arbitration. We find

that these protective conditions, with the adjustments we

have made, provide a fair arrangement for the affected

rail employees.

The time frame for arbitration is that set forth in

Section 4 of Article I of the Mendocino Coast, Norfolk

and Western, and New York Dock conditions.

Orice either side has requested arbitration, the parties

have 5 days to select a neutral referee. If they are un-

able to agree on a selection within 5 days, then the Na-

tional Mediation Board shall immediately appoint a ref-

eree. A hearing on the dispute must then be commenced

within 20 days. Finally, the referee’s final binding de-

cision must be rendered within 30 days from the com-

mencement of the hearing.

The arrangement we are imposing in this decision will,

therefore, provide either a negotiated implementing

agreement or an arbitrated final binding implementing

agreement no later than 90 days from the service date

of this decision.

BACKGROUND

Under all the notices, D&@H, MEC, B&M, and PT lease

their rail lines to ST and assign to ST their trackage

rights over the lines of other rail carriers.’ It is now

clear that GTI is using the transactions to have ST pro-

vide service over the entire GTI system in lieu of the

other carriers. While the GTI scheme is not a merger,

the transactions, when viewed collectively, nevertheless

® At the early stages of this proceeding the GTI carriers con-

templated granting trackage rights to ST over some of their lines.

Since that time those trackage rights arrangements have been

superseded by leases.

rf .

25a

constitute a substantial undertaking that will have an

impact on all of the rail employees of the GTI carriers.

It is our responsibility as here pertinent and under 49

U.S.C. 11347 to provide for a fair arrangement for the

employees affected by the transactions.

These transactions fall under 49 U.S.C. 11343. The

GTI carriers are members of the same corporate family,

and the Commission has exempted, from the prior ap-

proval requirements of 49 U.S.C. 11343, transactions

within a corporate family that do not result in adverse

changes in service levels, significant operational changes,

or a change in the competitive balance with carriers out-

side the corporate family. 49 CFR 1180.2(d) (3). In-

stead of filing an application under 49 U.S.C. 11344, rail

carriers file under 49 CFR 1180.4(g) a verified notice

with the Commission at least one week before the trans-

action is to be consummated. The GTI carriers filed

notices of their transactions, and the exemptions be-

came effective pursuant to the regulations.

All of the MEC transactions and most of the B&M

transactions have been implemented. In a decision issued

in May 1987, GTI was notified that implementation of

these leases was specifically subject to our right to re-

consider the necessary level of labor protection. At the

request of the labor interests, in decisions served October

26 and December 18, 1987, the carriers were ordered

not to implement any D&H transactions and any unim-

plemented B&M transactions pending resolution of this

proceeding.

DISCUSSION AND CONCLUSIONS

1. EMPLOYEE PROTECTION

We find that imposition of appropriate labor protective

conditions, rather than ordering revocation, is warranted

in this case. Labor argues that the cumulative effect

of the series of transactions will be to substitute ST as

the operator of the entire GTI system. This, it is argued,

26a

would be the effective equivalent of a consolidation or an

acquisition by ST of the other GTI carriers, and, as such,

merits New York Dock protection for the affected em-

ployees.

The labor interests also note that over 2000 employees

will have been affected by the time all of the transactions

have been implemented. They contend that imposition

of the New York Dock conditions, which call for (among

other things) a 90-day notice period prior to implementa-

tion of a transaction, will result in a more orderly transi-

tion for the workforce of GTI and ST.

Labor also seeks total revocation of the exemptions

under which GTI has filed, claiming that the transactions

simply do not meet the criteria of 49 CFR 1180.2(d) (3).

GTI counters that each ST transaction is a typical

lease for which Mendocino Coast protection is appropri-

ate. In each instance, employees of the lessor carrier

(B&M, D&H, MEC, or PT) have stopped or will stop

performing work on the leased properties, and employees

of the lessee (ST) have taken or will take over those

responsibilities. GTI points out that operationally and

financially each lease has been designed to stand on its

own. In GTI’s view, the leases are related only to the

extent that they are all meant to further the GTI sys-

tem goal of providing more efficient service on a more

profitable basis.

GTI also argues that there is no need for New York

Dock protection here because the Mendocino Coast 20-day

notice period is sufficient. In support of its position, GTI

notes that between 1971 and 1977, when rail passenger

service was assumed by Amtrak, approximately 20,000

employee positions were affected with only a 20-day no-

tice period before consummation of each transaction.

GTI notes that the substantive benefits and eligibility

requirements are identical under both sets of conditions

and that the benefits must be afforded retroactively to

27a

the time that an employee is adversely affected. Because

employees can be made whole regardless of whether an

implementing agreement is reached prior to or subse-

quent to consummation of a transaction, GTI contends

that there is no need for the prior-to-consummation im-

plementing agreement of New York Dock, instead of the

post-consummation agreement of Mendocino Coast.

Upon review of the evidence, we are unable to conclude

that the transactions are the equivalent of a merger, con-

solidation or acquisition of control. Nevertheless, we are

persuaded that the impact of these transactions is very

close to that of a merger or consolidation. There are, for

example, a large number of employees who have been or

would be affected by related transactions consummated

within a short period of time. The transactions envision

three relatively large railroads (and the small PT),

operating over an extensive system of track throughout

the Northeast, in essence being replaced by ST, a carrier

heretofore operating only a few miles of track. (As of

early October 1986, ST’s operations were confined to

Woodland, ME, Voorheesville, NY, Worcester, MA,

Springfield, VT, Scotia, NY, and Chicopee, MA.) To

gether, BEM, MEC, and D&H had a combined workforce

of over 2000 employees, whereas, as recently as January

1987, ST had only 50 employees. After these transactions

are consummated, there would be no surviving work-

forces on BEM, MEC, D&H, and PT, while ST will have

greatly increased its workforce to meet its new operat-

ing responsibilities.

The workforces of B&M, MEC and D&H are aligned

along the traditional crafts of the railroad industry.

Employee members of the different crafts are represented

by various unions and have pay rates and work rules

established through collective bargaining with those

unions. ST’s workforce, on the other hand, consists of

one craft, the so-called “railroader.” ST’s railroaders

perform all of the various tasks that on other railroads

28a

are separated along craft lines. ST’s railroaders are

paid, on the average, less than are the employees of the

other GTI carriers. In addition, ST’s work rules are

more favorable to the carrier than are those of the other

carriers. Indeed, a major reason GTI is shifting its

operations to ST is to realize the economies afforded by

the railroader concept and the ST work rules.”

While assembling its workforce, ST has made offers

of employment to present and former employees of the

other GTI carriers. The record shows that GTI officials

have made confusing statements to labor officials and to

GTI employees regarding the effect of these offers. GTI

has informed some employees that employment offered by

ST must be accepted or the employees would forfeit all

or some of their protective benefits. They have also been

told that, if they accept an ST offer of employment with-

out exercising their seniority rights with their GTI em-

ployer, they also forfeit all or some of their benefits.

Under Commission-imposed labor conditions, a dis-

missed employee is entitled to a dismissal or separation

allowance unless he fails without good cause to accept

an offer of comparable employment. In the typical lease

or trackage rights situation, the offer of employment

would come from the railroad for which the employee

worked prior to the transaction. In this instance, an

'” The labor interests argue that with ST taking over all of the

GTI operations, the traditional crafts and unions will be eliminated

on the GTI system. They argue that the elimination of craft dis-

tinctions and removal of the various unions as representatives of

GTI employees (and resulting loss of dues-paying members) will

weaken those unions.

GTI contends that declining union membership is not relevant in

deciding whether any special circumstances warrant the imposition

of greater protection. GTI correctly notes that elimination of vari-

ous crafts often occurs in connection with transactions of this

nature. We note that to the extent there is a representation issue,

it is a matter to be resolved by the National Mediation Board under

the appropriate previsions of the Railway Labor Act.

29a

employee of the lessor (or assignor of trackage rights),

would in the usual case have to accept an offer of com-

parable employment made by the lessor to work for the

lessor, with whom the employee already has an employ-

ment relationship. Thus, the lessor’s employees would

normally have no right to expect an offer from the lessee

railroad. Moreover, they would be under no obligation to

accept such employment, even if it were offered, since

they had neither an employment relationship nor a bar-

gaining relationship with the lessee.

In the typical case of a consolidation or acquisition,

two or more railroads may combine their operations, with

either a surviving entity conducting all of the combined

operations or each carrier operating some portion of the

consolidated operations. Where operations will be com-

bined, the previously separate workforces need to be

coordinated. Offers of comparable employment normally

are made by the surviving operating entity to former

employees of both railroads before any offers are made

to outside parties. These offers must be accepted (if em-

ployees have exercised their seniority and have been dis-

missed), or the employees lose their protective benefits.

Here, GTI contends that ST is a carrier separate from

the other GTI carriers and that ST does not intend to

be a party to any implementing agreement or negotia-

tions involving the employees of the other GTI carriers.

GTI contends that those employees have no right to or

expectation of employment with ST, but, nevertheless, if

they are offered employment with ST, they must accept

it or lose their benefits from their GTI employer. We

find this approach contrary to established practice and we

do not approve it.

GTI would treat ST as the typical lessee carrier—-as if

it were a foreign system with no obligation to offer em-

ployment to the work force of the remainder of the GTI

family, and no obligation to negotiate over the merging

of seniority rosters. But, on the other hand, GTI seeks

i eeenenniinani le

30a

to avoid exposure to the payment of dismissal allowances

by claiming that an employee who declines comparable

employment with ST has forfeited rights under the Men-

docino Coast protection plan.

There is, in the typical case under New York Dock, an

obligation to take offers of comparable employment, but

those offers are not ripened until an implementing agree-

ment has been established and rights under the agree-

ment can be assessed. Consequently, employees have the

protection of a negotiated or arbitrated arrangement

establishing seniority and the basis on which the new

work would be performed. RLEA correctly notes (Post-

Hearing Brief, at 24) that these features of implement-

ing agreements have long been recognized by this agency

as crucial to employees,

Although each of the several ST leases may be de-

signed operationally and financially as independent trans-

actions, we cannot ignore the significant impact of the

series taken as a whole. Although we do not have a true

consolidation here, the transactions represent restructur-

ing of the GTI system with all of its operations to be

performed by ST. In the typical consolidation trans-

action, it is necessary to coordinate work forces of two

or more railroads. Here, to the extent that ST has of-

fered employment to many former employees of the other

GTI carriers, the outcome js similar in effect to a con-

solidation.

Thus, we are persuaded that employees affected by the

ST transactions should be provided more than the stand-

ard protections that accompany lease transactions. While

the Mendocino Coast protections have proven quite satis-

factory for the norma] case, it has always been under-

stood that they are minima—that additional] protections

could be provided in the exceptional case. Because of

the system-wide impact of the present arrangement and

the substantial impact on numerous rail employees, the

3la

need for an implementing agreement prior to any further

reorganization is established.

In order fairly to protect rail employees in these un-

usual circumstances, we will require an implementing

agreement (and binding arbitration, if necessary to

achieve that agreement) that includes ST, the surviving

operating entity, as a participant, along with B&M,

D&H, MEC, and PT, and the employees of ST, B&M,

D&H, MEC, and PT. This modification of the usual con-

ditions will provide a basis for the fair selection of a

workforce for the surviving entity.

Including ST and the representatives of the UTU on

the ST lines as participants will remedy two problems

identified by labor. First, inclusion of all concerned will

allow recognition and negotiation of seniority more fairly.

To date, and particularly with regard to the MEC em-

ployees affected by the early leases, the manner in which

GTI has proceeded is unacceptable. Secondly, inclusion of

all parties simultaneously will permit proper considera-

tion of the extent to which the ST can and should provide

for the respected practice that employees be permitted to

“follow their jobs.” This issue will be complicated be-

cause of the need to accommodate employment to the new

operational structure on the surviving ST line. However,

we are certain that these issues will be more fairly ad-

dressed by full-party negotiation or arbitration than they

have been to date.

It is further necessary to be clear on the scope of em-

ployee rights under the implementing agreement we are

requiring. Between the time that ST and GTI first im-

plemented one of their transactions and the date of this

decision, numerous employees in the GTI family have

been required to make employment choices on what ap-

pears to have been unsatisfactory information. RLEA

has argued that the “opportunity to know what. their

employment options are before they are required to exer-

82a

cise (them)” is the “essential-difference” for employees

between New York Dock conditions (the conditions that

labor has sought consistently throughout this proceeding)

and Mendocino Coast. (Post-Hearing Brief, at 28.) We

agree with this assessment, and we have decided that the

transactions undertaken by GTI cannot be fairly accom-

plished without respecting this essential difference. Con-

sequently, any implementing plan, agreed to or arrived

at through arbitration, shall provide that the employees

of the several GTI railroads as of the date of the first

such transaction under 49 USC 1180.2(d) (3) shall not

be deemed to have forfeited any rights or benefits as a

consequence of decisions made prior to the development

of such an implementing plan.

In order to cause as little disruption as possible, GTI

is ordered not to implement the D&H and unconsum-

mated B&M transaetions until an implementing agree-

ment is reached or the arbitration process has run its

course. GTI will not in the meantime be required to

“undo” any consummated transactions but those trans-

actions are subject to the conditions we are imposing

in this proceeding. The implementing agreement will ex-

tend to those transactions, and, when an agreement is

reached or arbitration is concluded, GTI will have to

make whatever adjustment to the consummated transac-

tions the implementing agreement or arbitration award

requires. We will review any appeals from arbitration

awards associated with arriving at an implementing

agreement.

Within this framework, we believe, both labor and

management have incentives to negotiate promptly and

in good faith. Because we are holding up consummation

of certain transactions pending an implementing agree-

ment or an arbitrated result, GTI would pursue a prompt

resolution. In order to clarify the status of employees or

former employees affected by already consummated trans-

actions, employees and their representatives would also

33a

favor a prompt resolution. These factors also provide

bargaining leverage to each side. We agree, for example,

with RLEA’s statement (Post-Hearing Brief, at 27) that

“employees have bargaining leverage flowing from the

carriers’ desire to consummate as quickly as possible

which encourages compromise, and thus an agreement.”

While RLEA made this statement in the context of argu-

ing for New York Dock conditions, the same bargaining

‘pressure would be present under the conditions we im-

pose here.

2. REVOCATION

As previously noted, we decline to revoke the exemp-

tion in favor of remedial conditions. Without an ex-

emption from the Commission’s authority, the transac-

tions would be subject to prior approval and authoriza-

tion by the Commission, for leases under 49 U.S.C.

11343(a) (2) and for trackage rights arrangements un-

der 49 U.S.C. 11343(a) (6). This would necessitate the

filing by GTI of applications under 49 U.S.C. 11344 and

49 CFR Part 1180. Under 49 U.S.C. 10505, however,

the Commission is directed to exempt a transaction from

these prior approval requirements when it finds that: (1)

application of those requirements is not necessary to

carry out the national rail transportation policy set forth

at 49 U.S.C. 10101a:; and (2) either (a) the transaction

is of limited scope, or (b) the Commission’s prior ap-

proval is not needed to protect shippers from the abuse

of market power.

Under our section 10505 exemption authority, we have

exempted from our review several classes of transactions

governed by section 11343, including the class exemption

at issue here, transactions within the same corporate

family. Railroad Consolidation Procedures, 363 1.C.C,

200 (1980) and 366 I.C.C. 75 (1982). Other section

11343 transactions exempted under section 10505 as a

class include acquisition or continuance in control of non-

34a

connecting carriers under certain specified conditions [49

CFR 1180.2(d)(2)] and renewal, or extension in time,

of leases [49 CFR 1180.2(d)(4)]. More recently, we

have exempted as a class the acquisition and renewal of

trackage rights by a rail carrier over lines owned or

operated by any other rail carrier or carriers that are

based on written agreements, and not filed or sought in

responsive applications in rail consolidation proceedings

[49 CFR 1180.2(d)(7)]. Railroad Consolidation Pro-

cedures—Trackage Rights Exemption, 1 I.C.C. 2d 270°

(1985), aff'd sub nom. Illinois Commerce Commission V.

ICC No. 86-1386 (D.C. Cir. May 19, 1987).

The labor interests contend that the corporate family

class exemption must be revoked with respect to the GTI

transactions in order to advance two of the enumerated

goals of the national rail transportation policy: encour-

agement of fair wages and safe and suitable working con-

ditions in the railroad industry [49 U.S.C. 10101a(12) ]

and operation of transportation facilities and equipment

without detriment to public health and safety [49 U.S.C.

10101a(8)]. They argue that these transactions should

be subjected to more scrutiny than is required by the

class exemption.

The exemption process is intended to reduce the regu-

latory burden on railroads of undertaking certain types

of transactions, and to minimize regulatory delay. The

vast majority of cases handled under the various class

exemptions are non-controversial and in the public in-

terest. This proceeding raised special, unusual issues

that caused us to go far beyond the class exemption pro-

cedure. This does not require a finding that the class

exemption is inappropriate. We have stated in the past

that while class exemptions permit the vast majority of

covered transactions to go forward without specific prior

approval, we stand ready to consider any necessary modi-

fications to a particular exempted transaction in excep-

tional circumstances such as those found here.

35a

In this proceeding we thus have required extensive evi-

dentiary presentations and legal argument in order to

provide an adequate evidentiary basis for our resolution

of the issues. The lengthy record we have developed has

allowed us to consider fully the multiple goals of the

national rail transportation policy. Given the length

and scope of the record, we have given scrutiny equiva-

lent to what would have been provided had the exemption

been revoked and GTI required to file a formal applica-

tion under 49 U.S.C. 11344 or an individual petition for

exemption under section 10505.

In the circumstances of this case, revocation of the ex-

emption has not been shown to be necessary in order to

encourage fair wages, safe and suitable working condi-

tions. Revocation of the exemption has not been shown

to be necessary in order to encourage fair wages and

suitable working conditions in the railroad industry.

Revocation would require the railroads either to file an

application under section 11343 or a petition for ex-

emption under section 10505. It would not, however,

automatically change the appropriate type of labor pro-

tective conditions for the CI transactions. Furthermore,

the adjustments that we have made here to the protective

conditions should encourage fair wages and _ suitable

working conditions. We conclude that the exemption need

not and should not be revoked (except to the extent nec-

essary to impose the appropriate labor protective condi-

tions on the transactions) .

The labor interests further contend that the GTI trans-

actions do not fit within the corporate family exemption

[49 CFR 1180.2(d) (3] because, it is alleged, they fall

within the stated exception to use of the exemption. That

is, they will result in adverse changes in service levels,

significant operational changes, or a change in the com-

petitive balance with carriers outside the corporate fam-

ily.

36a

GTI claims that the lease and trackage rights transac-

tions will improve service to shippers. From the record

in this case, we are unable to determine whether GTI’s

optimism will be borne out. However, absent labor con-

troversy, the transactions should not adversely affect

service levels or cause significant operational change that

would do damage to any shipper or to the pre-existing

balance of rail competition in the Mid-Atlantic States or

New England. Our focus is remedial. Because of the

incentives and opportunities provided by the increased

labor protection we are imposing in this decision, we be-

lieve that labor disputes can be promptly resolved by

those who have the most to gain from their resolution—

GTI’s management and GTI’s employees. Under the cir-

cumstances and as conditions here, the GTI transactions

qualify for the corporate family exemption.

In addition, the labor interests argue that the New

York Dock conditions are appropriate for these GTI

transactions because the transactions are merely steps to

further the control benefits attributable to the original

control and acquisition of D&H, B&M, and MEC by GTI.

The New York Dock conditions were imposed in those

GTI control and acquisition proceedings. See Guilford

Transp. Industries, Ine.—Control—B&M Corp., 366 I.C.C.

294 (1982) (Guilford—Control—B&M); and Guilford

Transp. Industries, Inc.—Control—D&H Ry. Co., 366

I.C.C. 396 (1982) (Guilford—Control—D&H). We con-

clude that the jease and trackage rights transactions are

separate and distinct from the original contro] transac-

tions as claimed by the GTI carriers.

The Commission approved GTI’s control and acquisi-

tion of the BEM and D&H (GTI at that time already

controlled MEC) in 1982 in Guilford—Control—B&M

and Guilford—Control—D&H subject to the labor pro-

tective conditions of New York Dock. The labor interests

contend that the recent leases and trackage rights ar-

rangements between ST and the other GTI carriers are

37a

actions taken to obtain the benefits of that control au-

thorization. They argue that the leases and trackage

rights grants are “transactions” within the meaning of

Article I, Section 1(a) of the New York Dock conditions

and that affected employees are therefore entitled to New

York Dock protection.

The labor interests further contend that the New York

Dock protective conditions do not apply merely to pro-

posed coordinations set forth in an applicant’s operating

plan filed with its control application (under sections

11344 and 11345), but, instead, to “any action taken

pursuant to authorization of this Commission on which

these provisions have been imposed” (Article 1, Section

1(a), New York Dock conditions)]. GTI says that the

leases and trackage rights were not even contemplated

in 1982 and, of course, were not approved by the Com-

mission at that time. GTI states that these later trans-

actions were formulated more than 5 years after the con-

trol applications in order to meet new and changing con-

ditions in the rail transportation market.

We are not persuaded that the ST lease and trackage

rights transactions were anticipated or result from the

D&H and B&M control transactions. On the contrary,

the lease and trackage rights transactions are a wholly

new development—one which is actually antithetical to

the original idea of control—and stem from intervening

events.

We find, therefore, that the recent GTI transactions

are not “transactions” as defined in New York Dock

taken pursuant to the earlier control authorizations, are

not part of those control transactions, and are not cov-

ered by the New York Dock conditions imposed on those

authorizations.

While we believe that the circumstances present in

this case require that we impose extraordinary labor pro-

tection, we conclude that the exemption should stand,

38a

subject to the partial revocation necessary to impose that

level of protection. Full revocation is not justified and,

in any event, return to the status quo ante at this time

would risk paralyzing the process of resolving an exceed-

ingly complex series of problems. Partial revocation as

ordered here, on the other hand, is consistent with the

public interest and will further national transportation

goals and policies by simultaneously promoting safe and

efficient rail transportation services and fair treatment

of employees in the railroad industry.

This action will not significantly affect either the

quality of the human environment or energy conserva-

tion.

We find:

The appropriate level of employee protection for these

intracorporate transactions is that set forth in Mendocino

Coast Ry., Ine.—Lease and Operate, 354 I.C.C. 732

(1978) and 360 I.C.C. 653 (1980), (with respect to the

lease transactions) and Norfolk and Western Ry. Co.—

Trackage Rights—BN, 354 I.C.C. 605 (1978), as modi-

fied in Mendocino Coast, supra, 360 I.C.C. 653 (1980)

(with respect to the trackage rights transactions), with

the following adjustments: (a) the process for formulat-

ing an implementing agreement for all of these transac-

tions will include as participants ST, B&M, D&H, MEC,

and PT, and the employees of all of these rail carriers;

(b) as discussed above, the parties will have 90 days

from the service date of this decision to reach an imple-

menting agreement (The parties are at any time after

the first 20 days free to submit these issues to arbitra-

tion. Arbitration proceedings, if any, are to be guided by

the rules in Article 1 Section 4 of the standard condi-

tions.) ; (c) GTI shall not implement the D&H and un-

consummated B&M transactions until the implementing

agreement is reached or the arbitration process has con-

cluded.

39a

It is ordered:

1. RLEA’s motion to late-file its brief and motion to

exceed the 30-page limit are granted.

2. RLEA’s motion to supplement and to file executed

copies is granted.

3. GTI’s motion to strike is denied.

4. Finance Docket Nos. 30925, 30951, and 30966 are

included in this proceeding.

5. The exemptions for these transactions are revoked

only to the extent necessary to impose the employee pro-

tective conditions we have found to be appropriate.

6. This decision is effective February 29, 1988.

By the Commission, Chairman Gradison, Vice Chair-

man Andre, Commissioners Sterrett, Simmons, and

Lamboley, Chairman Gradison, Commissioners Sterrett,

Simmons, and Lamboley commented with separate expres-

sion.

/s/ Noreta R. McGee

Secretary

(SEAL)

CHAIRMAN GRADISON, commenting:

In ordering increased protection for railroad employees

affected by these transactions, the Commission has chosen

a course of action which will lead to prompt and equitable

resolution of existing disputes. Having considered the

shippers’ need for high quality service, the carriers’ need

for efficiency and the employees’ need for a fair imple-

menting agreement as required by Commission imposed

protective conditions, this agency has directed labor and

management to negotiate or to have any continuing dis-

agreements regarding implementation resolved by an

arbitrator within 90 days.

40a

Under the arrangement which this Commission was

uniquely positioned to impose, Springfield Terminal will

have a workforce, employees will have clear choices based

on clear protective benefits, and shippers will have serv-

ice. While this resolution will cost the Guilford system

more than it might have originally planned, it is none-

theless in the long term best interests of all parties con-

cerned,

COMMISSIONER STERRETT, commenting:

In my view, the result reached in this decision, given

the circumstances presented, will resolve some of the

problems that have recently plagued rail service in the

Northeast. Nevertheless, in light of the regrettable situ-

ation that gave rise to this proceeding, I feel that an

additional comment would be appropriate here.

Guilford may have indeed acted within the legal pa-

rameters of our regulations. However, it has done so in

a manner which has resulted in a great disservice to its

employees, its connecting carriers, and, as has become

increasingly more evident, the shipping public. Guilford’s

actions have ever jeopardized the effectiveness of the

very administrative process it exploited.

During the time that I have served as a Commissioner.

this agency had consistently endeavored to fashion rules

and processes of administration that maximize the benefits

of our rail transportation system to all shippers and

minimize the burden of regulation. While advancement

of these goals has not been easy or without contention,

I am satisfied that the endeavor has resulted in a more

efficient and innovative rail industry that is clearly bet-

ter suited to meet the transportation needs of this coun-

try. The fact that the regulated community has most

often responded with restraint and intelligence to its new

opportunities has been a significant element in allowing

the process to go forward.

4la

Unfortunately, deregulation’s successes can easily be

undone by reckless abuse of privilege and thoughtless op-

portunism. The manner in which our rules have been

misused here is bound to provoke a reaction that is dam-

aging in the long run te the efforts to create a sound,

responsive transportation system. But for my concern

for the reinvigoration of rail service in the Northeast,

I would be tempted to revoke Guilford’s newly contrived

authorities altogether, as a clear signal to others to

avoid its folly. As it stands, however, the Commission’s

decision holds the best prospect for settlement of the

immediate dispute.

COMMISSIONER SIMMONS, commenting:

I am concerned about GTI’s violation of the spirit of

the class exemption for transactions within a corporate

family. I do not believe the majority adequately deals

with the possibility that in the future the procedure could

be violated in a similar manner. Therefore, I would have

reopened the class exemption proceeding on our own mo-

tion for revision to ensure that not only the letter but

the spirit of the exemption is carried out henceforth.

COMMISSIONER LAMBOLEY, commenting:

Effective dispute resolution in this case requires im-

position of protective conditions, the substance of which

is derived from virtually identical provisions in New

York Dock, Mendocino Coast, and Norfolk and Western,’

combined with procedures fashioned to provide a remedy

appropriate to the circumstances. Since our focus at this

1New York Dock Ry.—Contre!—Brooklyn Eastern Dist. 360

1.C.C. 60 (1979); Mendocino Coast Ry. Ine.—Lease and Operate

354 1.C.C. 732 (1976) and 360 LC.C. 653 (1960); and Norfolk &

Western Ry. Co.—Trackage Rights—BN 360 L.C.C. 653 (1978).

42a

juncture is necessarily remedial, revocation of exemption

could well prove choatie and counter-productive for em-

ployees and shippers alike.

However, a cursory review of authority? would have

demonstrated that the scope of the class exemption ex-

pressly did not include the series of transactions which

were designed to bypass negotiations, and systematically

effect transfer and consolidation of substantial opera-

tional activities of several GTI rail subsidiaries into one

subsidiary.

In other transactions properly utilizing the intracorpo-

rate exemption to effect consolidation of operations, New

York Dock conditions and procedures are routinely rec-

ognized as appropriate and applied without more.’ Here,

the GTI carriers attempted to structure and characterize

their transactions to avoid those obligations.

* See 49 CFR 1180.2(d)(3), Ex Parte No. 282 (Sub-No. 3) Rail-

road Consolidation Procedures (1) 363 I.C.C. 200 (1980), revised

and modified (II) 366 L.C.C. 75 (1982); Ex Parte No. 282 (Sub-No.

9) Railroad Consolidation Procedures—Trackage Rights Exemption

1 1.C.C. 2d 270 (1985).

% Ex Parte No. 282 (Sub-No. 3) Railroad Cons\iidation Proce-

dures (II) supra. (finding in part that Commission has no authority

to exempt transactions from statutory labor protection obligations,

and New York Dock conditions should be applicable. See also:

Finance Docket No. 31191, Missouri Pac. R.R. Co—Merger Exemp-

tion—The Weatherford Mineral Wells & N.W. R.R. Co., notice of

exemption served January 15, 1988; Finance Docket No. 31192,

Union Pac. R.R. Co— Merger Exemption—Oregon Short Line R.R.

Co., Oregon-Washington R.R. & Navigation Co.-Des Chutes R.R.

Co., Los Angeles & Salt Lake R.R. Co. & Spokane International

R.R. Co., notice of exemption served January 15, 1988: Finance

Docket No. 31193, Hampton & Branchville R.R. Co., Inc. & Colleton

County R.R. Co.—Merger Exemption, notice of exemption served

January 11, 1988; and Finance Docket No. 31201, Baltimore Belt

R.R. Co., et al. and CSX Transportation, Inc-—Merger Exemption,

notice of exemption served January 21, 1988.

48a

This case is instructional as an example of what car-

rier(s) ought not do. Unfortunately, it was done. Rail

employment and services have been adversely impacted.

Rights and interests of employees, shippers, and other

carriers have been compromised. Hopefully, the remedy

here crafted will provide the opportunity to ameliorate

and adjust those consequences.

44a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 87-1774

RAILWAY LABOR EXECUTIVES’ ASSOCIATION, ef al.,

Plaintiffs, appe llants,

GUILFORD TRANSPORTATION INDUSTRIES, INC., et al.,

Di f ¢ ndants, appt lle 5.

‘

JUDGMENT

Entered: January 20, 1988

This cause came on to be heard on appeal from the

[Tnited States District Court for the District of Maine,

d was argued by counsel.

['pon consideration whereof, It is now hereby ordered

idged and decreed as follows: the judgment of the

ict court is affirmed.

By the Court:

Francis P.

Clerk

Scigliano

Clarke and Moore|

45a

APPENDIX E

Statutes Relied Upon

I. Railway Labor Act, 45 U.S.C. § 151, et seq. (Excerpts)

A. Section 2 First

45 U.S.C. § 152 First

It shall be the duty of all carriers, their officers,

agents, and employees to exert every reasonable effort

to make and maintain agreements concerning rates of

pay, rules, and working conditions, and to settle all dis-

putes, whether arising out of the application of such

agreements or otherwise, in order to avoid any interrup-

tion to commerce or to the operation of any carrier

growing out of any dispute between the carrier and the

employees thereof.

B. Section 2 Seventh

45 U.S.C. § 152 Seventh

No carrier, its officers or agents shall change the rates

of pay, rules, or working conditions of its employees, as

a class as embodied in agreements except in the manner

prescribed in such agreements or in section 6 of this

Act.

C. Section 5 First

45 U.S.C. § 155 First

The parties, or either party, to a dispute between an

employee or group of employees and a carrier may in-

voke the services of the Mediation Board in any of the

following cases:

46a

(a) A dispute concerning changes in rates of pay,

rules, or working conditions not adjusted by the par-

ties in conference.

(b) Any other dispute not referable to the Na-

tional Railroad Adjustment Board and not adjusted

in conference between the parties or where confer-

ences are refused.

The Mediation Board may proffer its services in case

any labor emergency is found by it to exist at any time.

In either event the said Board shall promptly put it-

self in communication with the parties to such contro-

versy, and shall use its best efforts, by mediation, to

bring them to agreement. If such efforts to bring about

an amicable settlement through mediation shall be un-

successful, the said Board shall at once endeavor as its

final required action (except as provided in paragraph

third of this section and in section 10 of this Act to

induce the parties to submit their controversy to arbitra-

tion, in accordance with the provisions of this Act.

If arbitration at the request of the Board shall be

refused by one or both parties, the Board shall at once

notify both parties in writing that its mediatory efforts

have failed and for thirty days thereafter, unless in the

intervening period the parties agree to arbitration, or

an emergency board shall be created under section 10 of

this Act, 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,

D. Section 6

45 U.S.C, § 156

Carriers and representatives of the employees shall

give at least thirty days’ written notice of an intended

47a

change in agreements affecting rates of pay, rules, or

working conditions, and the time and place for the be-

ginning of conference between the representatives of the

parties interested in such intended changes shall be

agreed upon within ten days after the receipt of said

notice, and said time shal! be within the thirty days pro-

vided in the notice. In every case where such notice of

intended change has been given, or conferences are being

held with reference thereto, or the services of the Media-

tion Board have been rquested by either party, or said

Board has proffered its services, 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 section 5 of this Act, by the Mediation Board,

unless a period of ten days has elapsed after termination

of conferences without request for or proffer of the serv-

ices of the Mediation Board.

E. Section 7 First

45 U.S.C. § 157 First

Whenever a controversy shall arise between a carrier or

carriers and its or their employees which is not settled

either in conference between representatives of the par-

ties or by the appropriate adjustment board or through

mediation. in the manner provided in the preceding sec-

tions. such controversy may, by agreement of the parties

to such controversy, be submitted to the arbitration of

a board of three (or, if the parties to the controversy so

stipulate, of six) persons: Provided, however, That the

failure or refusal of either party to submit a controversy

to arbitration shall not be construed as a violation of

any legal obligation imposed upon such party by the

terms of this Act or otherwise.

48a

II. Rail Passenger Service Act, 45 U.S.C. § 501 et seq.

(Excerpts)

A. Section 405(b)

45 U.S.C. § 565 (b)

(b) Such protective arrangements shall include, with-

out being limited to, such provisions as may be necessary

for (1) the preservation of rights, privileges, and benefits

(including continuation of pension rights and benefits) to

such employees under existing collective-bargaining agree-

ments or otherwise; (2) the continuation of collective-

bargaining rights; (3) the protection of such individual

employees against a worsening of their positions with

respect to their employment; (4) assurances of priority

of reemployment of employees terminated or laid off :

and (5) paid training or retraining programs. Such

arrangements shall include provisions protecting individ-

ual employees against a worsening of their positions with

respect to their employment which shall in no event pro-

vide benefits less than those established pursuant to sec-

tion 5(2) (f) of the Interstate Commerce Act. Any con-

tract entered into pursuant to the provisions of this

title shall specify the terms and conditions of such pro-

tective arrangements. No contract under section 401

(a) (1) of this Act between a railroad and the Corpora-

tion may be made unless the Secretary of Labor has

certified to the Corporation that the labor protective pro-

visions of such contract afford affected employees fair

including affected terminal employees, and equitable pro-

tection by the railroad.

III. Interstate Commerce Act, 49 U.S.C. § 10101 et seq.

(i xcerpts)

A. Section 10505

49 U.S.C. § 10505

‘a) In a matter related to a rail carrier providing trans-

portation subject to the jurisdiction of the Interstate

49a

Commerce Commission under this subchapter, the Com-

mission shall exempt a person, class of persons, or a

transaction or service when the Commission finds that

the application of a provision of this subtitle—

(1) is not necessary to carry out the transportation pol-

icy of section 10101a of this title; and

(2) either (A) the transaction or services is of limited

scope; or (B) the application of a provision of this sub-

title is not needed to protect shippers from the abuse of

market power.

(b) The Commission may, where appropriate, begin a

proceeding under this section on its own initiative or on

application by the Secretary of Transportation or an

interested party.

(ec) The Commission may specify the period of time dur-

ing which an exemption granted under this section is

effective.

(d) The Commission may revoke an exemption, to the

extent it specifies, when it finds that application of a

provision of this subtitle to the person, class, or trans-

| portation is necessary to carry out the transportation

policy of section 10101a of this title.

(e) No exemption order issued pursuant to this section

shall operate to relieve any rail carrier from an obliga-

tion to provide contractual terms for liability and claims

which are consistent with the provisions of section 11707

of this title. Nothing in this subsection or section 11707

of this title shall prevent rail carriers from offering al-

ternative terms nor give the Commission the authority

to require any specific level of rates or services based

upon the provisions of section 11707 of this title.

(f) The Commission may exercise its authority under

this section to exempt transportation that is provided by

a rail carrier as a part of a continued intermodal move-

ment.

ieee eet eeeealel

50a

(g) The Commission may not exercise its authority

under this section (1) to authorize intermodal owner-

ship that is otherwise prohibited by this title, or (2) to

relieve a carrier of its obligation to protect the interests

of employees as required by this subtitle.

B. Section 11341(a)

49 U.S.C. § 11841 (a}

The authority of the Interstate Commerce Commission

under this subchapter is exclusive. A carrier or corpora-

tion participating in or resulting from a transaction ap-

provided by or exempted by the Commission under this

subchapter may carry out the transaction, own and op-

erate property, and exercise control or franchises ac-

quired through the transaction without the approval of a

State authority. A carrier, corporation, or person partici-

pating in that approved or exempted transaction is ex-

empt from the antitrust laws and from all other law,

including State and municipal law, as necessary to let

that person carry out the transaction, hold, maintain, and

operate property, and exercise control or franchises ac-

quired through the transaction. However, if a purchase

and sale, a lease, or a corporate consolidation or merger

is involved in the transaction, the carrier oF corporation

may carry out the transaction only with the assent of a

majority, or the number required under applicable State

law, of the votes of the holders of the capital stock of

that corporation entitled to vote. The vote must occur at

a regular meeting, or special meeting called for that

purpose, of those stockholders and the notice of the meet-

ing must indicate its purpose.

C. Section 11343 (a)

49 U.S.C. § 11843 (a)

(a) The following transactions involving carriers pro-

viding transportation subject to the jurisdiction of the

5la

Interstate Commerce Commission under subchapter I (ex-

cept a pipeline carrier), II, or III of chapter 105 of this

title may be carried out only with the approval and

authorization of the Commission:

(1) consolidation or merger of the property or fran-

chises of at least 2 carriers into one corporation for

the ownership, management, and operation of the

previously separately owned properties.

(2) a purchase, lease, or contract to operate prop-

erty of another carrier by any number of carriers.

(3) acquisition of control of a carrier by any num-

ber of carriers.

(4) acquisition of control of at least 2 carriers by

a person that is not a carrier.

(5) acquisition of control of a carrier by a person

that is not a carrier but that controls any number

of carriers.

(6) acquisition by a rail carrier of trackage rights

over, or joint ownership in or joint use of, a rail-

road line ‘and terminals incidental to it) owned or

operated by another rail carrier.

D. Section 11347

49 U.S.C. § 11347

When a rail carrier is involved in a transaction for

which approval is sought under sections 11344 and 11345

or section 11346 of this title, the Interstate Commerce

Commission shall require the carrier to provide a fair

arrangement at least as protective of the interests of

employees who are affected by the transaction as the

terms imposed under this section before February 5,

1976, and the terms established under section 565 of

title 45. Notwithstanding this subtitle, the arrangements

may be made by the rail carrier and the authorized rep-

52a

resentative of its employees. The arrangement and the

order approving the transaction must require that the

employees of the affected rail carrier will not be in a

worse position related to their employment as a result of

the transaction during the 4 years following the effective

date of the final action of the Commission (or if an

employee was employed for a lesser period of time by the

carrier before the action became effective, for that lesser

period).

IV. Title 28 (Excerpts

Section 1337(a)

28 U.S.C. § 1337(a)

The district courts shall have original jurisdiction of any

civil action or proceeding arising under any Act of Con-

gress regulating commerce or protecting trade and com-

merce against restraints and monopolies: Provided, how-

ever, That the district courts shall have original juris-

diction of an action brought under section 11707 of title

49, only if the matter in controversy for each receipt or

bill of lading exceeds $10,000, exclusive-of interest and

costs.

58a

APPENDIX F

Railway Labor Executives’ Association

Member Organizations

American Railway & Airway Supervisors’ Association

(Division of TCU) ;

American Train Dispatchers’ Association ;

Brotherhood of Locomotive Engineers;

Brotherhood of Maintenance of Way Employes;

Brotherhood of Railroad Signalmen;

Brotherhood of Railway Carmen (Division of TCU) ;

Hotel Employees and Restaurant Employees International

Union;

International Association of Machinists and Aerospace

Workers;

International Brotherhood of Boilermakers and

Blacksmiths;

International Brotherhood of Electrical Workers;

International Brotherhood of Firemen & Oilers;

International Longshoremen’s Association;

National Marine Engineers’ Beneficial Association;

Railroad Yardmasters of America ( Department of

UTU) ;

Seafarers’ International Union of North America;

Sheet Metal Workers’ International Association;

Transport Workers Union of America;

Transportation * Communications Union (TCU) ; and

United Transportation Union.

54a

APPENDIX G

IN THE MATTER OF ARBITRATION BETWEEN

;ROTHERHOOD OF LOCOMOTIVE ENGINEERS

AND

UNION PACIFIC RAILROAD COMPANY

MISSOURI PACIFIC RAILROAD COMPANY

DECISION

File:

Finance Docket No. 30,000

Arbitrator:

Jacob Seidenberg, Esquire

Hearing:

December 13, 1984

Appearances :

Brotherhood of Locomotive Engineers

W.H. Hirst—Vice President

E.E. Watson—Vice President

Carriers

R.D. Meredith—Director Labor Ralations-

Usior Pacific

K.P. Mitchell—Director Labor Relations

Missouri Pacific

Post Hearing Briefs Received:

December 29, 1984

Issues:

1). Does Arbitrator have jurisdiction under Section

1, Article I of the ICC imposed New York Dock

55a

Conditions to permit Carriers to transfer work

from Missouri Pacific RR to Union Pacific and

have transferred work performed under the oper-

ating rules and collective bargaining agreement

between the Union Pacific RR and the BLE?

2). Does the proposed transfer of work constitute a

fair and equitable basis for the selection and as-

signment of forces under a New York Dock trans-

action?

Background:

The instant dispute has been precipitated as a result

of the Interstate Commerce Commission approving on

October 20, 1982 the petitions of the Union Pacific RR,

the Missouri Pacific RR and the Western Pacific RR to

consolidate and create a new railway system.

In the course of effectuating this new railroad net-

work, the affected Carriers sought to achieve certain

“common point consolidations”. The parties to this dis-

pute reached agreement on seven common points, but

were unable, after six conferences, to reach agreement

at the following three common points: Salina, Kansas,

McPherson, Kansas; and Beloit, Kansas.

On October 30, 1984, the disputants agreed to submit

the matter to arbitration, as provided for by Article I

Section 4 of the New York Dock Conditions. These Con-

ditions had been imposed by the Interstate Commerce

Commission upon the Carriers as protections for the

employees of the three Carriers affected by the consolida-

tion.

The parties selected the Undersigned to hear and de-

cide the dispute.

On October 19, 1983, the ICC issued a Decision under

Finance Docket No. 30,000 (Sub-No. 18) in response to

petitions filed both by the BLE and UTU reiative to the

56a

Commission’s plenary jurisdiction over rail consolidation

vis a vis the requirements of the Railway Labor Act.

The substantive aspects of the dispute stem from

the notices served by the Carriers on the Organization

pertaining to the selection and assignment of forces at

the three common points, and counter proposals thereto.

However, before we can deal with the merits, we must

review a procedural objection which the Organization has

interposed to the Arbitrator’s jurisdiction to consider the

dispute.

Organization’s Position (Procedural)

The Organization notes that Article I, Section 2 of the

ICC prescribed New York Dock Conditions states:

“2. The rates of pay, rules, working conditions

and all! collective bargaining and other rights, priv-

ileges and benefits (including continuation of pen-

sion rights and benefits) of the railroad’s employees

under applicable laws and or existing collective bar-

gaining agreements or otherwise shall be preserved

unless changed by future collective bargaining agree-

ments or applicable statutes.”

The Organization maintains that the Carriers seek to

avoid their statutory obligation under the Railway Labor

Act, not to unilaterally change rates of pay or terms of

working conditions, except in accordance with the pro-

visions of Section 6 of the RLA. The Organization spe-

cifically protests the Carriers’ efforts to get rid of the

Local Agreement of August 10, 1946 in effect on the

Missouri Pacific as well as other working conditions. The

Organization stresses that at each of the three common

points the Carriers do not propose to abandon tracks or

facilities. It just seeks to substitute Union Pacific em-

ployees and Union Pacific rules for Missouri Pacific em-

ployees and Missouri Pacific rules without complying

with the RLA requirements.

57a

The Organization asserts the explicit language of Sec-

tion 2 of Article I, proscribed the Carriers from utilizing

Section 4 of Article I as a means to change existing

agreements, except by mutual .onsent. If further asserts

that it would be ironic to transmute the New York Dock

Conditions from a shield designed to protect employee

interests to a sword to deprive employees of their Rail-

way Labor Act protections.

The Organization alludes to several (6) arbitration

awards which have found that arbitrators acting under

the mandate of Section 4 lack the authority to modify

or vitiate existing collective bargaining agreements, in

light of the explicit provisions of Section 2. The Organi-

zation notes that the Carriers, despite all of the cited

awards, did not even request the ICC to overrule these

arbitration awards. The Carriers should not be _ per-

mitted jn the instant case to overrule these well reasoned

awards.

The Organization notes that the October 19, 1983 ICC

clarification has been appealed to the Federal Courts and

the appeal is still pending.

Carrier’s Position ( Procedural)

The Carrier states that since the ICC issued its Oc-

tober 19, 1983 Clarification, the jurisdictional question

raised by the Organization is moot and settled. The ICC

has held its authority over railroad consolidations is

exclusive and plenary, and its approval of a transaction

exempts such a transaction from the requirements of all

laws including the Railway Labor Act. The Carriers

note that the ICC Clarification states:

“If our approval of a transaction did not include

authority for the railroads to make necessary

changes in working conditions, subject to payments

of specified benefits, our jurisdiction to approve

transactions requiring changes in the working con-

58a

ditions of any employees would be substantially nul-

lified. Such a result would be clearly contrary to

congressional intent.”

The Carrier maintains that the arbitration awards

rendered prior to October 19, 1983, must be deemed to

have been superceded by the ICC’s Clarification Decision.

Since the ICC authored the New York Dock Conditions,

its holdings as to the intent and purpose of these Condi-

tions must be deemed superior to any arbitral decisions

interpreting the Conditions. The Carriers add the ICC

Clarification makes it patently clear that no existing

working conditions in a

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