Petition for Writ of Certiorari — Zapp v. United Transportation Union
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IN THE
Supreme Court of the United States
OCTOBER TERM, 1989
LARRY ZAPP, et al.,
Petitioners
Vv.
UNITED TRANSPORTATION UNION,
Respondent
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
DEAN E. RICHARDS *
9000 Keystone Crossing
Suite 920
Indianapolis, IN 46249
(317) 848-4775
Attorney for Petitioners
* Counsel of Record
WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001
QUESTIONS PRESENTED FOR REVIEW
I. Was there a material issue of fact or law as to when
the statute of limitations began to run against Petition-
er’s duty of fair representation claim against Respondent,
which was brought six (6) years before Del Costello,
462 U.S. 151 (1983), 103 S. Ct. 2281, 76 L. Ed. 2d 476,
was decided by this Court and made retroactive by the
Seventh Circuit Court of Appeals in Landehl v. P.P.G.
Industries, Inc.?
II. Was there material issue of fact or law as to
whether the Doctrine of Equitable Estoppel and Equitable
Tolling should apply against Respondent’s defense of stat-
ute of limitation when it was admitted by the parties
hereto that when the December 18, 1975 Multiple Party
Railroad-Union Collective Bargaining Agreement was
signed, concerning the issue if the Petitioner’s employer,
Indianapolis Union Railway Co., an independent sub-
sidiary railroad of Penn Central, would even be included
in the collective bargaining terms and conditions and
Petitioners be thus affected by its terms and conditions.
III. Whether the Seventh Circuit Court of Appeals’
decision in this matter conflicts with an applicable decision
of this Court as to when the Del Costello’s retroactive six
(6) month statute of limitations began to run against
Petitioner’s fair representation claim against Respondent.
IV. Whether the Seventh Circuit Court of Appeals’
decision in this matter conflicts with the decision of an-
other Federal Circuit Court of Appeals on the same issue.
(i)
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED FOR REVIEY ................ i
ET iv
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IIL, Scrabchececcideitsstaahinneaniaiunnbinineiitntinsiniiennnsetanninennniin 2
ce ceeinsbn abet snaaianeinsnstions 2
STATEMENT OF THE CASE ......00w.o... eee 2
BASIS FOR FEDERAL JURISDICTION IN THE
UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF INDIANA _.. 8
REASONS FOR GRANTING WRIT .... nw... 8
Ta ald tn intennltechdinahannnaieninninettienitannisisannio 17
aici sila ensicckanstaianesnsnaaennennianivisiin la
(iii)
iv
TABLE OF AUTHORITIES
CASES Page
Atkinson v. International Union of Electrical
Radio and Machine Workers, 729 F.2d 330 (6th
Cir. 1985) .. x eneniieas 15
Cliff v. UAW, 818 F. 2d 623. (7th Cir. 1987) . iebiadiand 9
Del Costello v. International Brotherhood of Team-
eters, 462 U.S. 161 (1988) -..........................6, 9, 11, 16
Dement v. Richmond, Fredricksburg, & Pennsyl-
vania Railroad Company, 345 F.2d 451 (4th
SESTIGID secnndesicnewsseiatecacinsamaludsctimsidactinidiplatiedaialaa Uh aiaiioactiaetiael 14, 15
Gettes v. Chrysler Corporation, 608 F.2d 261 (6th
AN I a anaes 15
Glover v. St. Louis-San Francisco Railroad Com-
ates, SEB UTE. GHG CRBGB) on... -nccneneeveecec cna nies.. 15
Hayes v. Reynolds Metal Company, 769 F.2d 1520
I ldianen 15
Humphrey v. Moore, 375 U.S. 335 (1964) .............. 16
Landahl v. PPG Industries, Inc., 746 F.2d 1312
(7th Cir. 1984) -......... inpbiteadisanihcelaiiaciaaitiidcesh siidains Dataatied 9
United Transportation Union, Local 74 v. Consoli-
dated Rail Corporation and United Transporta-
tion Union, 881 F.2d 282 (1989) _..........000......... ; 15
Vaca v. Sipes, 386 U.S. 171 (1967) ......... coecraaeaens 16
Zapp v. UTU, et al., 727 F.2d 617 (1984) -.....0.2.... 6
STATUTES
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(lo: ° a" es RR MIP eae EAN 2,8
IN THE
Sipreme Court of the Wuited States
OCTOBER TERM, 1989
No. ——
LARRY ZAPP, et al.,
Petitioners
Vv.
UNITED TRANSPORTATION UNION,
Respondent
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
OPINIONS BELOW
The opinion of the United States Court of Appeals for
the Seventh Circuit is reported under 879 F.2d 1439, and
is printed in the Appendix hereto, infra, page la.
The Memorandum, Decision and Judgment of the
United States District Court for the Southern District of
Indiana, Indianapolis Division, is printed in the Appendix
hereto, infra, page 7a.
The decision of the Interstate Commerce Commission,
under Finance Docket No. 21989, and is printed in the
Appendix hereto, infra, page 54a. The previous decision
of the United States Court of Appeals for the Seventh
Circuit reported under 727 F.2d 617 is printed in the
Appendix hereto, infra, page 29a.
JURISDICTION
The Judgment of the United States Court of Appeals
of the Seventh Circuit was entered on July 7, 1989. A
timely Petition for Rehearing was denied on July 26,
1989. The jurisdiction of the Supreme Court is invoked
under 28 U.S.C, 1254(1).
STATUTES INVOLVED
Petitioner’s duty of fair representation claim was based
upon 45 U.S.C. 152 relating to railway labor disputes and
further, 49 U.S.C. 11347 which deals with employees pro-
tective arrangements and transactions involving rail car-
riers, and 28 U.S.C. 1336 which relates to an interstate
commerce commission order which Petitioner previously
requested the District Court to enforce.
STATEMENT OF THE CASE
When the Pennsylvania Railroad merged with the New
York Central Transportation Company there was an en-
tity created known as the Penn Central Transportation
Company. That the 145 Petitioners herein were all for-
mer employees of the Indianapolis Union Railway Com-
pany and on February 1, 1968 I.U.R.C. was a wholly
owned, though independently operated, subsidiary of the
Pennsylvania Railroad.
That prior to the Penn Central merger certain nego-
tiations took place to protect the seniority rights of af-
fected employees of the two (2) railway systems and
subsidiaries. These negotiations produced a Collective
Bargaining Agreement that granted most employees a
February 1, 1968 seniority date on the Penn Central
Track. That the Indianapolis Union Railway Company
employees, due to its independent status, was not a party
to the February 1, 1968 agreement. Thus, said employees,
while retaining their original date of hire of seniority on
track within the I.U. Territory, did not receive any
Se
3
seniority date on other Penn Central tracks, a fact that
was alleged to have produced inequitable results. Shortly
after the merger was effected the I.U. employees retained
the UTU as their exclusive bargaining representative.
During the mid 1970’s Congress created Conrail, a
corporation formed to acquire the assets of several bank-
rupt railroads, including the Penn Central. That on De-
cember 18, 1975 a Collective Bargaining Agreement was
signed that defined the seniority rights of employees af-
fected by the pending Conrail Acquisition. Essentially
the agreement preserved the seniority status quo for em-
ployees throughout the territory of the acquired railroad
while granting them a seniority date on other Conrail
tracks commensurate with the date of acquisition of their
former employer. That it is admitted by the Petitioners
and the Respondent, and the District Court, that when
the December 18, 1975 Collective Bargaining Agreement
was signed it had not yet been determined whether the
Petitioners’ employer, Indianapolis Union Railway Com-
pany, would be included in said December 18, 1975 Col-
lective Bargaining Agreement or remain an independent
subsidiary as before.
That on January 24, 1977 seniority rosters detailing the
status of former I.U. employees were posted and Peti-
tioners’ representative then immediately complained to
the Respondent about the inequitable results produced by
the Respondent’s interpretation of the December 18, 1975
Collective Bargaining Agreement terms, which apparently
did apply to Indianapolis Union Railway Company and
its employees.
That all of said Petitioners, except two, Rather and
Overstreet, all signed affidavits that they had no knowl-
edge that the December 18, 1975 Collective Bargaining
Agreement even applied to them or to the Indianapolis
Union Railway Company and further signed affidavits
that they had no knowledge of the Collective Bargaining
cen aeenarinaeeneeneatait stele
4
Agreement or its terms until the seniority roster was
posted in January of 1977.
That the Petitioners did, on or about January 24, 1977,
through their representative, complain to the Respondent
of the inequitable seniority status of said Indianapolis
Union Railway Employees and requested an administra-
tive hearing to obtain relief for the affected Petitioners
herein on January 24, 1977. That a request for internal
union relief from Petitioners’ representative was for-
warded by General Chairman, Overstreet, to Respondent’s
Vice President, Craigo, which forwarded said demand
on to Respondent’s Internationa! President, Chessar. That
on or about March 25, 1977 President, Chessar, directed
correspondence te the Petitioners’ attorney representative
that he disagreed with the Petitioners’ position concerning
the Respondent’s alleged breach of its duty to fairly rep-
resent Petitioners concerning their seniority rights, Ches-
sar aiso made reference to the disgruntled Petitioners
herein that the Respondent, Union, would defend them-
selves in a civil action if Petitioner brought an action
against Respondent. The Respondent did not refer the
matter to further union proceedings as required under
the Union.
That the Local Chairman, Charles 0. Baker, did file an
affidavit with the District Court stating that he was an
agent of Respondent and was not aware that Respondent
had negotiated and executed a December 18, 1975 Agree-
ment for engine, servicemen, and train employees, until
the later part of 1977. That further, General Chairman,
Rather, an agent of the Respondent, stated that based
upon President Chessar’s correspondence to Petitioners’
attorney representative, dated March 25, 1977 there was
no doubt in General Chairman Rather’s mind that UTU
had no intentions of fairly representing the I.U. em-
ployees’ interest with respect to seniority. That further
he swore that various Respondent officials, including
President Chessar and Vice President, Burke, had acted
in bad faith in dealing with Petitioners’ seniority rights
and further that Rather, as a General Chairman of said
Respondent, did not become aware of what the Union’s
position was as to the Petitioners’ seniority rights until
the actual consolidation of the I.U. facilities with the
Penn Central Track in the later part of January, 1977.
Further, Rather was not invited to the Respondent’s
meeting at which the Nespondent’s General Chairman
elected a committee of five (5) general chairmen to nego-
tiate a system wide seniority plan and further Rather’s
affidavit did verify when the 1975 Collective Bargaining
Agreement was entered into it was not determined yet
whether the Indianapolis Union Railway Company would
be included in said Collective Bargaining Agreement
term or remain independent as before.
Respondent’s General Chairman, Russell Overstreet,
also signed an affidavit that he represented all I.U. em-
ployees, including the Petitioners herein, and stated that
he did not know whether the Indianapolis Union Railway
employees, would be included in the 1975 Collective Bar-
gaining Agreement. Further, General Chairman, Over-
street, signed an affidavit in the District Court that the
Respondent purposely concealed information especially in
regard to the Interstate Commerce decision relative to
said merger and that he and other Respondent offic‘als
did act in bad faith in representing the Petitioners with
respect to their seniority rights choosing to favor former
New York and Pennsylvania employees of which the
Indianapolis Union Railway employees were only a small
minority in dealing with the larger, in numbers, New
York and Pennsylvania employees.
That after receiving Respondent’s President, Chessar’s,
letter of March 25, 1977, addressed to Petitioners’ repre-
sentative, the Petitioners, on July 12, 1977, did file its
claim against the Respondents herein, their duty of fair
representation claim in the United States District Court
for the Southern District of Indiana.
EEE
6
That the District Court did grant a 12(b) Motion to
Dismiss said proceedings after a delay of several years.
The Seventh Circuit Court of Appeals did remand the pro-
ceedings back to the United States District Court under
the decision Zapp v. UTU, et al., 727 F.2d 617 (1984),
stating that the Petitioners did have a cause of action
against Respondent and gave the Petitioners an election
to also seek relief from I.C.C. Declaration Order.
That after remand to the United States District Court
Petitioners did petition the Interstate Commerce Com-
mission for a decision for an Order of Clarification con-
cerning the Indianapolis Union Railway Company em-
ployees seniority rights under the Penn Central merger.
The Interstate Commerce Commission, under Finance
Docket No. 21989, issued an order on May 6, 1986 stating
that the Indianapolis Union Railway Company was wrong-
fully left out of the Penn Central merger and should have
been treated as a subsidiary of Pennsylvania Railroad
and the employees of Indianapolis Union Railway Com-
pany should have seniority rights in said Penn Central
merger labor agreements. That the Respondent then filed
their Motion for Summary Judgment and Petitioners filed
opposition thereto and the District Court, on July 20,
1988 entered an order dismissing litigation based upon
the Del Costello six (6) month statute of limitation doc-
trine.
On July 20, 1988 the District Court ruled that the
Petitioners action against the UTU is barred by the
statute of limitations in ruling that the Petitioners had
not met the burden necessary to avail themselves of a
“discovery” statute of limitations and furthermore the
District Court ruled that the undisputed facts indicate
that the Petitioners should have discovered the existence
of a seniority agreement more than six (6) months prior
to the filing of suit. Further, the District Court ruled
that the Petitioners had demonstrated no basis for the
7
tolling of the limitation and granted said Motion for
Summary Judgment.
That the United States Court of Appeals for the Sev-
enth Circuit on July 7, 1989 did affirm the decision of
the District Court. The Circuit Court stated that each
of the individual Petitioners were required to produce
evidence demonstrating that they had not discovered the
existence of the Collective Bargaining Agreement prior
to January 12, 1977, and ruled that none of the Peti-
tioners had produced enough evidence to satisfy the dis-
covery exception issue and affirm the District Court’s
ruling.
The Circuit Court found that Respondent had sent
copies of the Collective Bargaining Agreent to Petition-
ers’ representative by September 1, 1976.
The Circuit Court held that the affidavit was insuffi-
cient as submitted by Charles Baker, who was the local
chairman of the Respondent, Union. Baker did not
learn of the existence of the Collective Bargaining Agree-
ment until the early part of 1977 which the Court held
was not sufficient evidence to avoid Summary Judgment
on the discovery exception issue.
The Circuit Court stated that the existence of rumors
that the Respondent was not adequately representing the
interest of the I.U. employees and in view of these
rumors the Circuit Court stated that they could fail to
see why. a diligent employee, who was concerned about
his seniority status under Conrail, would not have asked
his representatives, who were in possession of the Col-
lective Bargaining Agreement, about the seniority mat-
ter. That further, the Circuit Court ruled that Peti-
tioners’ contention that statute of limitations was toll
due to the Respondent’s fraudulent concealment of the
existence of the Collective Bargaining Agreement was not
a valid argument since the Respondent had sent copies of
the Collective Bargaining Agreement to General Chair-
8
man Overstreet by September 1, 1977. That further, the
Circuit Court held that Petitioners limitation period was
not tolled while the Petitioners exhausted their inter-
union remedies. That Circuit Court finally held that
the Petitioners’ argument that the Respondent should be
estopped from asserting the statute of limitations as a
defense was not valid because there was not sufficient
facts to show that the Respondent had induced the Pe-
titioners from forebearing suit within the applicable lim-
itation period.
BASIS FOR FEDERAL JURISDICTION IN THE
UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF INDIANA
Jurisdiction rests with the United States District Court
for the Southern District of Indiana under 28 U.S.C.
1336, 45 U.S.C. 152, 28 U.S.C. 1331, and 49 U.S.C. 11347,
and the Petitioners were, at the time of the filing of the
original complaint in this action residents of the State
of Indiana or lived in or near Indianapolis, Indiana. All
of the Petitioners were either engineers or trainmen,
formerly or presently employed by Conrail. Further, all
Petitioners were, at all times pertinent, paying members
of, and in good standing, in the Respondent, Union.
REASONS FOR GRANTING WRIT
The Petitioners who are, or were former, employees of
the Indianapolis Union Railway Company, have since
1968 been denied any seniority rights relative to their
prior rights under the Penn Central Merger. That the
Petitioners have prior rights on the old Indiana Union
Railway Company tracks but do not have prior-prior
seniority rights under the Penn Central Collective Bar-
gaining Agreement, accord of February 1, 1968. This
results in former Pennsylvania and New York Central
employees who have prior-prior rights to out bid the
Petitioners and former Penn Central and have superior
seniority rights for jobs on the new Conrail seniority
districts.
a
9
Thus, the inequitable condition did, and does now,
exist, whereas, a former Penn Central employee has
seniority rights over an Indianapolis Union Railway Com-
pany employee who might have fifteen (15) years more
seniority within the system than the former Penn Central
employee and yet, while bidding under the new Conrail
seniority system the former Penn Central employee has
superior seniority rights to bid on jobs under the new
Conrail seniority system than the former Indianapolis
Union Railway employee who has been employed longer
than said former Penn Central employee.
The 145 Petitioners have literally lost millions of dol-
lars of lost wages and benefits by not being able to
compete with former Penn Central employees under the
old Penn Central Consolidated Seniority Rosters and
presently under the new Conrail Seniority Rosters which
only give the Petitioners prior seniority rights but not
prior-prior seniority rights as given to the Penn Central
employees.
That the Petitioners did file their cause of action
against the Respondent on July 12, 1977. That this
Court, in entering its decision in Del Costello v. Inter-
national Brotherhood of Teamsters, 462 U.S. 151 (1983),
did place the fair representation claims on a “fast track”’
by adopting a six (6) month statute of limitations retro-
active prior to 1983, but that Del Costello, supra, did
recognize the validity of tolling defenses such as equitable
estoppel or equitable tolling. That the Seventh Circuit
decision held that even though this action was com-
menced approximately six (6) years before Del Costello
was decided under Landahl v. PPG Industries, Inc., 746
F.2d 1312 (7th Cir. 1984), that the Del Costello ruling
was retoractive within the Seventh Circuit. That fur-
ther, the Seventh Circuit in Cliff v. UAW, 818 F.2d 623,
629 (7th Cir. 1987). It further held that they recognized
a narrow discovery exception in that in holding the six
(6) month statute of limitation period does not begin
10
to run until the aggrieved party discovers or with the
exercise of reasonable diligence could have discovered
the existence of the collective bargaining agreement. The
Seventh Circuit committed plain error is failing to fol-
low its own prior decisions.
It was conceded by the District Court’s opinion and
not even addressed by the Circuit Court (it is further con-
ceded by the Respondent), that when the December 18,
1975 Collective Bargaining Agreement was entered into
it had not yet been decided by the Respondent and Con-
rail whether the Indianapolis Union Railway Company
would be included in the Conrail Acquisition. That fur-
ther the facts are undisputed that neither Conrail or the
Respondent gave any individual Petitioner any type of
notice as to the rights under the former Penn Central
Seniority Contract and Implementation Agreement, nor
gave any individual Petitioner any type of notice as to
the rights relative to any Interstate Commerce decision,
more specifically its Sixth Supplemental Report. That
further, there is no evidence in the record throughout
these proceedings that the Respondent in any way advised
the Petitioners of the affect of the December 18, 1975
Collective Bargaining Agreement or even when said
Agreement would become effective or what affect it would
have upon the Petitioners herein. That as pled in the
District Court and as addressed by the Circuit Court, the
affidavits of General Chairman Overstreet of the Re-
spondent, Union, and the affidavits of General Chairman
Rather, did show not only that the Respondent did not
try to assert any of the rights of the Petitioners who
were the employees o fthe Indianapolis Union Railway
but, in fact, Respondents’ General Chairmans, Overstreet
and Rather, stated under oath that they did not know nor
could have learned of the status of the Petitioners senior-
ity rights during the year of 1976 until the January 24,
1977 seniority rosters were posted detailing the seniority
status of the former Indianapolis Union Railway employ-
a oe nell
11
ees. That further, the record is undisputed that as late
as October 8, 1976 that neither President Chessar of the
Respondent, Union, nor Vice President, Craigo, of the
Respondent, Union, nor General Chairman, Rather or
Overstreet, knew when and if Conrail would acquire
actual control and management of the Indianapolis Union
Railway and whether the Petitioners would receive their
seniority dates equivalent with former Pennsylvania, New
York, and/or Penn Central employees in the new con-
solidated seniority district.
The Petitioners argue that if the President of the Re-
spondent, Union, down through the Vice President, and
General Chairmans, and through the Local Chairman, did
not know or would not disclose any information concerning
the Petitioners’ seniority status relative to the Conrail
Acquisition, then how could the Petitioners (Indiaanpolis
Union Railway employees) know, or could possibly learn
of their seniority status or of the statute of limitations
or know that it was running against them and thus be
able to stop the tolling of the statute of_limitations by
bringing some action against the Union.
It is further undisputed that even the Local Chair-
man for the engine service employees, Baker, in the year
1976 and 77, was not aware that a December 18, 1975
Seniority Agreement for engine service and train service
employees had even been negotiated or signed and it was
not until January 1977 that he even learned of said
1977 bargaining agreement when they were read to him
by Attorney Richards, in late January, 1977.
That since the consolidated rosters were not posted
until January 24, 1977, and since the statute of limita-
tions would not run against Petitioners under the Del
Costello, supra, Doctrine until Petitioners knew or should
have known of their cause of action against Respondent
the statute would not have started running until after
January 24, 1977 and since their cause of action against
the Respondent was filed on January 12, 1977 then the
Petitioners did timely file their fair representation ac-
12
tion against the Respondent, Union, herein within 180
days as Required by DelCostello.
That further the Petitioners argue that the statute of
limitations was tolled until they discovered or in the
existence of reasonable diligence could have discovered
the acts constituting the alleged unfair labor representa-
tion violations. The Circuit Court did hold that knowl-
edge by a Respondent, Union, representative, namely a
General Chairman should be imputed to the general
membership of the Union, including the Petitioners
herein. The Petitioners argue this is plain error. How
can knowledge of the Respondent, United Transportation
Union’s, General Chairmen, Overstreet and Rather, and
the Local Chairman Baker, be imputed to its general
membership without some type of communication,
whether oral or written. It is conceded by the District
Court and Circuit Court (and by the Respondent herein),
that no such communication was ever made. It is illogi-
cal to hold that a general chairman or a local chairman
of a union should, or did have, knowledge of the exist-
ence of a Collective Bargaining Agreement, then that
knowledge or lack of knowledge would be binding on and
should be imputed to said union officials’ general member-
ship without some type of oral or written communication
to the membership including the Petitioners herein. Such
is the exact case in this present action.
As stated, said Union officials, General Chairmen,
Rather and Overstreet, and Union official Local Chair-
man, Baker, both signed affidavits that they did not have
any actual knowledge or any actual information that the
December 18, 1975 Agreement would directly pertain to
the Indianapolis Union Railway employees until January
24, 1977 when the new consolidated Conrail Seniority
Rosters were posted. Both of the General Chairmen
stated in the District Court that they made inquiry but
that any information was concealed from them by the
Respondent, President and Vice President. Thus, if the
General Chairmen of the Respondent, Union, made in-
a ee
13
quiry and could not learn of the existence of the status
of Petitioners’ seniority rights how could the alleged lack
of diligence by said Union official be imputed to the
general membership and to the Petitioners herein. The
Petitioners argue that manifest error has occurred in this
matter and that this Court should grant a Writ of Cer-
tiorari to correct said plain error.
That further, after learning that when the Consoli-
dated Seniority Rosters for the new Conrail seniority
district was “posted” and it clearly showed that former
Penn Central employees had superior seniority rights
over former I.U. Territories and did not give former
I.U. employees rights over former Penn Central Terri-
tory.. Former Penn Central employees were given Febru-
ary 1, 1968 seniority rights on all territory within said
seniority district while the Indianapolis Union Railway
employees only received seniority rights as of April 1,
1976 on said seniority territorial districts. That as stated
Petitioners were given prior rights, but no prior-prior
rights as given former Pennsylvania employees. As ad-
mitted in the District Court’s Judgment Entry on Page
13, Paragraph 2, the District Court stated:
“As stated before, the parties to this action were not
certain, at the time the seniority agreements were
signed (December 18, 1975), that I.U. (Indianapolis
Union Railway Employees) would become part of
Conrail.”
Thus, since none of the Petitioners nor the Respondent,
Union’s, Local Chairman or General Chairman, did not
participate in the negotiations of the December 18, 1975
Agreement how could the Petitioners know or have any
way of knowing as to whether they would have prior-
prior rights if it would be decided after December 18,
1975 that Indianapolis Union Railway Employees would
become part of the Conrail seniority districts.
The Petitioners further argue that even if they had
discovered the existence of the December 18, 1975 Col-
14 .
lective Bargaining Agreement, (and there is no proof
in the record, whatsoever, that they had) even the read-
ing of said December 18, 1975 Collective Bargaining
Agreement would not show what their seniority rights
were. That further, an argument can be stated that the
Collective Bargaining Agreement could very weil have
been interpreted differently by the Respondent and Con-
rail and the Petitioners could very well have received the
February 1, 1968 seniority rights from a literal reading
of the Collective Bargaining Agreement versus the lim-
ited rights that they did receive as of August 1, 1976
through the posting of the Conrail Consolidated Rosters
on January 24, 1977 since the agreement is vague and
Apparently the decision to not give Petitioners prior-prior
rights was not made until the posting of the January
24, 1977 consolidated Seniority Roster.
That the Petitioners further argue that the lower
court’s opinion statement that September 1, 1976 is the
target date that the Petitioners should have filed the law
suit within 180 days thereof is also without merit and
should be reversed because within 180 days of the Sep-
tember 1, 1976 artificial target date, set up by the lower
court that, in fact, the Petitioners attempted to exhaust
their inter union remedies which clearly tolled the stat-
ute. On January 24, 1977 the request for arbitration
was made by Petitiom.s for a hearing with the Union
concerning their senionty rights. It aws filed by Peti-
tioners’ legal representative to the General Chairmen,
Overstreet and Rather. That when Rather and Over-
street did not respond thereto a further request was
made by the Petitioners’ legal representative directly to
the President of the Union, Chessar, who basically wrote
back and denied that the Respondent had violated any of
the Petitioners’ rights and, in fact, said “sue us”.
In the case of Dement v. Richmond, Fredricksburg, &
Pennsylvania Railroad Company, 345 F.2d 451, 4th Cir.,
that Circuit did hold differently than the Seventh Circuit
concerning exhaustion of inter union remedies. The Court
15
held “generally speaking a cause of action for breach of
duty of fair representation accrues at the point where
the grievance has been exhausted or otherwise breaks
down to an employees disadvantage.” (Emphasis added).
“It is only at this point that an employee is cognigent of
any alleged breach of the duty owed him by the Union.”
That said Dement, supra, decision also cites Hayes v.
Reynolds Metal Company, 769 F.2d 1520 (llth Cir.
1985) (per curiam). That the Sixth Circuit held simul-
taneously in Atkinson v. International Union of Electri-
cal Radio and Machine Workers, 729 F.2d 330, 336 (6th
Cir. 1985).
That in a more recent decision, dated July 31, 1989,
in the case of United Transportation Union, Local 74 v.
Consolidated Rail Corporation and United Transporta-
tion Union, 881 F.2d 282 (1989). The Court held that
the issues had been examined in cases in which the De-
fendant, Union’s, duty of fair representation arose in
actions concerning both 301 Labor Management Rela-
tions Act and the Railroad Labor Act and held that
Courts have refused to distinguish between the two Acts
for purposes of fair representation suits and stated that
there is a conflict among the Circuits. Further the Sixth
Circuit held that employees need not resort to internal
union remedies if it would be futile to do so because the
position of the Union is clearly “hardened against them”.
Gettes v. Chrysler Corporation, 608 F.2d 261 (6th Cir.
1979). Furthermore, this Court has held that it is well
settled that futility is an excuse for failure to exhaust
internal union remdeies, Glover v. St. Louis-San Fran-
cisco Railroad Company, 393 U.S. 324 (1969).
Further, the Local 74, decision, supra, does clearly hold
opposite to the Seventh Circuit Court of Appeals’ decision
in this matter.
16
The Sixth Circuit held that:
“It is clear that Local 74 did not exhaust all avail-
able internal union remedies, for it could have ap-
pealed to the Union Board of Appeal, the October,
1981 decision by the UTU President not to merge
seniority rosters to establish yard equity, and his
subsequent refusal to alter this decision.”
“Local 74 contends that it should be excused from the
exhaustion requirements because UTU was clearly
hostile toward the position of the employees. We hold
that Local 74 presented sufficient evidence to preclude
a directed verdict on this issue.” Thus, there is a
direct conflict between the different Federal Circuits
on the same matter and respectfully request this
Court to grant Certiorari to resolve said conflicting
decisions.
In summary Del Costello, supra, this Court held that
the duty of fair representation is grounded in labor
organizations exclusive right to represent all unit em-
ployees in collective bargaining, thereby depriving indi-
viduals of ability to bargain individually or select a
minority union as their representative. That as held in
Vaca v. Sipes, 386 U.S. 171 (1967), it was stated that in
order to permit individual employees to protect their own
interest, the representative organization has a duty “to
serve the interest of all members without hostility or dis-
crimination towards any, to exercise its discretion with
complete good faith and honesty, and to avoid arbitrary
conduct”. The test of whether the duty to represent has
been upheld by the union seeking to accommodate two
(2) conflicting groups is whether a rational method was
used to resolve the conflict. Humphrey v. Moore, 375
U.S. 335 (1964).
The Seventh Circuit decision is plain error and is
conflicting with other circuits decision on the same facts
and issues.
17
CONCLUSION
For the foregoing reasons this Petition for a Writ of
Certiorari should be granted.
Respectfully submitted,
DEAN E. RICHARDs *
9000 Keystone Crossing
Suite 920
Indianapolis, IN 46240
(317) 848-4775
Atterney for Petitioners
* Counsel of Record
Dated: October 24, 1989
APPENDIX
APPENDIX TABLE OF CONTENTS
Opinion Below—Larry Zapp, et al. v. United Trans-
portation Union, decided: July 7, 1989, cited as 879
SU CN ak ce amen
Opinion of the United States District Court for the
Southern District of Indiana Cause No. IP 77-425-C,
RRR oe ee ene em EN
Larry Zapp, et al. v. United Transportation Union and
Consolidated Rail Corporation, 727 F.2d 617, de-
ma tS A ee
Interstate Commerce Commission decision Finance
Docket No. 21989, decided: May 6, 1986 .................
Page
la
Ta
29a
la
APPENDIX
IN THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
No. 88-2541
LARRY ZAPP, et al.,
Appeliants,
v.
UNITED TRANSPORTATION UNION,
Appellees.
On Appeal from the United States District Court
for the Southern District of Indiana,
Indianapolis Division
No. IP 77-425-C—Sarah Evans Barker, Judge
ARGUED MARCH 31, 1989—DEcIDED JULY 7, 1989
Before CUMMINGS, POSNER, and FLAUM, Circuit Judges.
FLAUM, Circuit Judge. This case comes before us for
the second time. See Zapp v. United Transportation
Union, 727 F.2d 617 (7th Cir. 1984). Plaintiffs, 145
former employees of the Indianapolis Union Railway
Company (IU), appeal from the district court’s entry of
summary judgment in favor of defendant United Trans-
portation Union (UTU). For the reasons discussed be-
low, we affirm.
2a
I.
On February 1, 1968, the Pennsylvania Railroad, of
which the IU was a wholly-owned though independently
operated subsidiary, merged with the New York Central
Transportation Company thereby creating an _ entity
known as the Penn Central Transportation Company.
Prior to the effectuation of the merger, negotiations de-
signed to protect the seniority rights of affected employees
took place. Those negotiations ultimately produced an
agreement that granted most employees a February 1,
1968 seniority date on Penn-Central track. Due to its
independent status, IU employees were not a party to
this agreement. Consequently, these employees, while re-
taining their original date of hire seniority on track
within IU territory, did not receive any seniority date on
other Penn-Central track, a fact that was alleged to
have produced inequitable results. Shortly after the
merger was effected, the IU employees retained the UTU
as their exclusive bargaining representative.
During the mid-1970’s Congress created Conrail, a
corporation formed to acquire the assets of several
bankrupt railroads including the Penn-Central. On De-
cember 18, 1975, a collective bargaining agreement was
signed that defined the seniority rights of employees af-
fected by the pending Conrail acquisitions. Essentially,
the agreement preserved the seniority status quo for em-
ployees throughout the territory of the acquired railroad
while granting them a seniority date on other Conrail
track commensurate with the date of acquisition of their
former employer. For IU employees, the agreement meant
that they retained their date of hire seniority on former
IU track while obtaining an April 1, 1976 seniority date
on all other Conrail track including track within the ter-
ritory of the defunct Penn-Central Transportation Com-
pany. Plaintiffs’ representatives received copies of the
collective bargaining agreement sometime before Septem-
ber 1, 1976.
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3a
On January 24, 1977, seniority rosters detailing the
status of former IU employees were posted. Shortly
thereafter, plaintiffs’ representatives complained to the
UTU about the inequitable result produced by the De-
cember 18, 1975 collective bargaining agreement. The
UTU’s response, however, failed to mollify the former
IU employees. As a result, on July 12, 1977, plaintiffs
filed this suit in the district court alleging that the UTU
breached its duty of fair representation by entering into
an unsatisfactory collective bargaining agreement. Spe-
cifically, the plaintiffs decried the fact that the UTU had
failed to obtain a February 1, 1968 seniority date on
former Penn-Central track for them. The complaint was
amended four times over an eleven year period before the
district court entered summary judgment in favor of the
defendants. The district court, in a comprehensive and
well-reasoned opinion, held that plaintiffs’ suit was not
filed within the applicable limitations period, i.e. six
months after the signing of the collective bargaining
agreement, see United Independent Flight Officers, Inc. v.
United Air Lines, 756 F.2d 1262, 1273 (7th Cir. 1984)
and rejected various arguments supporting a tolling of
the limitations period. Plaintiffs now appeal from the
district court’s decision.
II.
The problem presented by this case is determining when
plaintiffs’ claims accrued. In Ranieri v. United Transpor-
tation Union, 743 F.2d 598, 599 (7th Cir. 1984), this
court held that a suit by an employee alleging a breach
of the duty of fair representation is governed by the six
month statute of limitations held applicable to “hybrid”
fair representation/employer suits by the Supreme Court
in Del Costello v. International Brotherhood of Teamsters,
462 U.S. 151 (1983).1 Subsequently, in United Independ-
1 Although this action was commenced approximately six years
before Del-Costello was decided, we have held that that decision
applies retroactively. See Landahl v. PPG Industries, Inc., 746
F.2d 1312 (7th Cir. 1984).
4a
ent Flight Officers, Inc. v. United Air Lines, 756 F.2d
1272, 1273 (7th Cir. 1984), we enunciated the general
principle applicable to this case that causes of action based
on entry into collective bargaining agreements accrue
when the agreement is signed. In Clift v. UAW, 818 F.2d
623, 629 (7th Cir. 1987) (per curiam), we recognized a
narrow discovery exception to this principle holding that
the six-month statute of limitations period does not begin
to run until the aggrieved party discovers or with the
exercise of reasonable diligence could have discovered the
existence of the contract. We emphasized, however, that
the plaintiff has the burden of proving that he or she
falls within this exception. Jd. Moreover, we stated that
in_cases involving multiple plaintiffs which have not been
certified as class actions (such as the present case), each
individual plaintiff must adduce evidence demonstrating
that he or she fit within the discovery exception. Jd. at
630.
In the present case, each individual plaintiff was re-
quired to adduce evidence demonstrating that he or she
had not discovered the existence of the collective bargain-
ing agreement prior to January 12, 1977 and could
not have done so through the exercise of reasonable dili-
genee in order to come within the discovery exception to
the time-bar rules. In our view, none of the plaintiffs has
satisfied this exacting standard. The record contains three
items of evidence relevant to the discovery exception. The
first item is a stipulation of fact entered into by most of
the plaintiffs. This stipulation stated that the plaintiffs
had no idea when they first became aware of the collective
bargaining agreement. Obviously, a statement of this
nature does not provide this court with evidence that these
plaintiffs did not know of the existence of the collective
bargaining agreement prior to January 12, 1977.
The second item of evidence in the record is an affidavit
submitted by Russell Overstreet, one of plaintiffs’ repre-
5a
sentatives. In his affidavit, Overstreet stated that he re-
ceived a copy of the collective bargaining agreement in
the middle or latter part of 1976. (The district court
found no later than September 1, 1976). Obviously, this
is more than six months prior to July 12, 1977.
The final item of evidence is an affidavit submitted by
one Charles Baker. In his affidavit Mr. Baker stated that
he did not learn of the existence of the collective bargain-
ing agreement until the early part of 1977. Again, how-
ever, this submission is not sufficient to avoid summary
judgment on the discovery exception issue. “The early
part of 1977” could be a date in January prior to January
12—tthe precise date is crucial—and as we emphasized
above plaintiff bore the burden of proving that he came
within the discovery exception. Moreover, even if we
were to interpret this statement as alleging that Mr.
Baker did not actually know of the existence of the agree-
ment until the posting of the seniority rosters untii Janu-
ary 24, 1977, we would still conclude that Baker as well
as all other plaintiffs have failed to show that they could
not have reasonably discovered its existence much earlier.
Baker’s affidavit states that in the fall of 1976 rumors
that the UTU was not adequately representing the inter-
ests of IU employees were rampant on the IU track. In
view of these rumors, we fail to see why a diligent em-
ployee who was concerned about his seniority status under
Conrail would not have asked his representatives, who
were in possession of the collective bargaining agreement
at the time, about the matter.
In sum, we find that no plaintiff has adduced specific
facts demonstrating that he or she had not discovered the
existence of the collective bargaining agreement prior to
January 12, 1977 and could not have done so through the
exercise of reasonable diligence. Consequently, we affirm
6a
the district court’s entry of summary judgment in favor
of the UTU.?
AFFIRMED.
Clerk of the United States Court of
Appeals for the Seventh Circuit
2 Plaintiffs also raise several other arguments on appeal, none
of which have merit. First, plaintiffs contend that the statute of
limitations was tolled due to the UTU’s fraudulent concealment
of the existence of the collective bargaining agreement. See Bonds
v. Coca-Cola, 806 F.2d 1324 (7th Cir. 1986). This argument, how-
ever, strains credulity in view of the fact that the UTU had sent
copies of the collective bargaining agreement to plaintiffs’ represen-
tatives by September 1, 1976.
Second, plaintiffs claim that the limitations period was tolled
while the plaintiffs exhausted their intra-union remedies. See
Frandsen v. Brotherhood of Railwey, Airline and Steamship Clerks,
782 F.2d 674 (7th Cir. 1982). As the district court correctly
pointed out, however, the plaintiffs clearly did not exhaust their
intra-union remedies in this case.
Finally, plaintiffs argue that defendants should be estopped from
asserting the statute of limitations as a defense. In Bomba v.
Belvidere, Inc., 579 F.2d 1067, 1070 (7th Cir. 1978), we held that
a party who has induced another into forebearing suit within the
applicable limitations period will be estopped from arguing the stat-
ute of limitations. We emphasized, however, that on a motion for
summary judgment, the burden is on the plaintiff to present facts
. which if true would require a court as a matter of law to
estop the defendant from asserting the statute of limitations. /d.
at 1070-71 (quoting Burke v. Gateway, 441 F.2d 946, 948-49 (3d
Cir. 1971). The record in this case is devoid of any such facts.
ee ne eee
Ta
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
Cause No. IP 77-425-C
LARRY ZaPP, et al.,
Plaintiffs,
vs.
UNITED TRANSPORTATION UNION,
Defendant.
ENTRY
[Filed July 20, 1988]
This matter is before the court on the motion for
summary judgment filed by defendant United Transpor-
tation Union (“UTU”) on September 28, 1987. The
plaintiffs, one hundred forty-five individuals formerly
employed by the Indianapolis Union Railway Company
(“IU”), responded to the motion on December 8, 1977.
The defendant replied on December 17, 1987. The parties
have supplemented their submissions with affidavits, docu-
ments, deposition testimony, answers to interrogatories,
and stipulations of fact in accordance with Fed. R. Civ.
P. 56/e).1 The court’s ruling on the motion is set out
in the memorandum below.
1 These supplementary materials include the affidavits and at-
tached exhibits of Charles O. Baker, Clyde Rather, and Russell
H. Overstreet, excerpts from the deposition testimony of William
R. Imel and J. H. Palmer, the seniority agreements at issue, and
four sets of stipulated facts (including exhibits).
8a
Memorandum
Background
The long and complicated history of this case has been
fully chronicled on previous occasions * and need not be
repeated in great detail here. However, certain facts,
undisputed by the parties, warrant recitation as the basis
for the court’s analysis of the issues presented by UTU’s
summary jdgment motion.
The plaintiffs are former employees of the IU, an inter-
change railroad circling Indianapolis. Originally, the [U
was a wholly-owned subsidiary of the Pennsylvania Rail-
road but operated as a separate unit. On February 1,
1968, the New York Central Railroad was merged into
the Pennsylvania Railroad to become the Penn Central
Transportation Company (“Penn Central”).
At that time, the IU became a subsidiary of the Penn
Central by virtue of the change in name of its parent. As
a result of the merger, employees of the former Penn-
sylvania and New York Central railroads were given a
February 1, 1968 seniority date on Penn Central track.
The IU and its employees, however, were not repre-
sented by a union signatory to the employee protection
agreement executed in conjunction with that merger,
probably because the continued independent operation of
the IU lines was contemplated. IU employees therefore
were not expressly afforded any seniority date on Penn
Central track and merely kept their original date of hire
seniority on IU track.
Shortly following the Penn Central merger, the UTU
became the labor relations representative of the plain-
2 The facts and procedural history of the case prior to Judge
Dillin’s entry of judgment on December 18, 1981, are set out in
Zapp v. United Transportation Union, 727 F.2d 617 (7th Cir. 1984).
Subsequent developments are outlined in this court’s entry of
February 9, 1987.
tiffs. Also following the merger, the operations of the
Penn Central in relation to its subsidiaries changed in a
manner that had an adverse impact on the IU employees.
Specifically, Penn Central personnel (employees of the
former Pennsylvania and New York Central railroads)
began to take a greater role in the day-to-day operations
of the IU and therefore took over some of the positions
that had formerly been filled by IU employees.
After these adverse consequences to the IU employees
became apparent, the UTU in 1971 petitioned the Inter-
state Commerce Commission (“ICC”), seeking a ruling
that the merger protective conditions set out in the ICC’s
earlier order regarding the Penn Central merger (ICC
Order of April 6, 1966) should extend to subsidiaries of
the Penn Central like the IU.* The ICC issued its ruling
on the UTU petition, the “Sixth Supplemental Report,”
in October of 1974, and plaintiffs Clyde Rather and Rus-
sell Overstreet, then union general chairmen for the IU
employees, received copies of the report about three
weeks later.
During the pendency of the union petition, Congress
ereated the Consolidated Rail Corporation (“Conrail”)
to acouire the assets of a number of bankrupt railroads,
including the Penn Central. In conjunction with the
merger of the bankrupt railroads into Conrail, negotia-
tions aimed at protecting the prior seniority rights of
the emplovees of the railroads were conducted. Accord-
ing to Mr. Imel, an official of UTU, a meeting of union
general chairmen was held in Cleveland to elect a com-
mittee of five persons to negotiate seniority agreements
on behalf of the emplovees. Mr. Ime! has testified that
Mr. Rather, then a union general chairman and now a
plaintiff, was present at the meeting. Both Rather and
Overstreet maintain that they were not invited to this
* Actually, the unions involved with that petition sought exten-
sion of the merger protective conditions to the employees of a
number of railroads subsidiary to the Penn Central.
10a
meeting (and presumably did not attend) despite prior
expressions of interest in the matter and inquiries to
UTU officials on behalf of the IU employees they rep-
resented.
On December 18, 1975, Conrail officials and the five-
member UTU committee executed seniority agreements
to govern the seniority rights of the employees of the
merged railroads. One agreement applied to trainmen
and conductors, the other to engine service employees.
Essentially, the agreements provided that all employees
with standing on prior seniority district rosters would
retain their prior seniority date throughout the territory
of their prior seniority districts. They would also gain
new rights in other Conrail territories as of the date of
their railroad’s conveyance to Conrail.‘ Applied to IU
employees, these agreements provided for a seniority date
in the former IU territory based on their date of hire
and April 1, 1976 (the date of conveyance to Conrail)
seniority on all other track. Plaintiffs Rather and Over-
street received copies of these seniority agreements some-
time in 1976, apparently no later than September 1, 1976,
according to correspondence between Rather and UTU
official R.E. Swert. Fourth Stipulation of Fact, Exhibits
A and B.
The parties agree, however, that at the time the sen-
iority agreements were executed in December of 1975,
it was still unclear whether IU would be subsumed in the
Conrail merger. That uncertainty was resolved, at the
latest, on April 1, 1976, the date of IU’s conveyance to
Conrail.
Immediately following conveyance to Conrail, the oper-
ations of the IU and its employees apparently did not
change appreciably. In January of 1977, however, IU
facilities and jobs were consolidated with those of other
*A full explanation of this seniority scheme is set out in Zapp,
727 F.2d at 620-22.
lla
track under the jurisdiction of Conrail. The plaintiffs
maintain that
{with the posting of new selection order lists and
seniority rosters, it became apparent to the IU em-
ployees that they would receive only a 1976 Conrail
seniority date on all track other than former IU
track and that the inequitable seniority treatment
they had endured for many years would not be
changed.
Plaintiffs’ Response, p. 9 (citing Affidavits of Baker,
Overstreet, and Rather).
Subsequent to these postings, the lawyer who had been
retained by the plaintiffs, Mr. Richards, sent letters to Mr.
Overstreet and Mr. Rather complaining of the seniority
arrangement. On March 22, 1977, Mr. Richards also
directed a letter of similar content to A.H. Chesser, In-
ternational President of UTU. On March 25, 1977, Pres-
ident Chesser responded, in pertinent part:
I do not agree with your suggestion that the United
Transportation Union may not have filled its duty or
fair representation in regard to the seniority rights
of former Indianapolis Union Railway employees.
I also do not concur in your position that requesting
an “administrative meeting” with the undersigned
or other union official constitutes exhaustion of ad-
ministrative remedies. It is my understanding that
timely appeals must be made in accordance with the
procedures set forth in the union’s Constitution be
fore any claim of exhaustion of administrative reme-
dies may be sustained.
In regard to your threat to resort to the courts in
this matter I can only tell you that it is our practice
to defend ourselves to the fullest extent permitted
by law and I can assure you that we will do so in
this case.
12a
Third Set of Stipulations, Exhibit K.
On July 12, 1977, the plaintiffs filed this lawsuit, al-
leging, among other things, that UTU breached its duty
of fair representation. Count I of the complaint alleges
that UTU breached its duty of fair representation by en-
tering into collective bargaining agreements on Decem-
ber 18, 1975, which would not afford the plaintiffs senior-
ity equivalent to that of former Pennsylvania, New York,
or Penn Central employees. Count II alleges hostile dis-
crimination by UTU in agreeing to such a consolidation
plan and in “continuously, arbitrarily and capriciously”
refusing to attempt an alteration of the seniority system.
Analysis
With its summary judgment motion, UTU maintains
that it is entitled to judgment as a matter of law because
the plaintiffs’ claims are barred by the applicable six-
month statute of limitations.
In Del Costello v. International Brotherhood of Team-
sters, 462 U.S. 151 (1983), the Supreme Court resolved
the question of which statute of limitations should apply
to a suit by an employee against an employer under sec-
tion 301 of the Labor Management Relations Act joined
with an action against a union for breach of its duty of
fair representation (the “hybrid section 3801 claim’).
The Court held that the six-month limitation period of
section 10(b) of the National Labor Relations Act ap-
plies to both aspects of the hybrid action. /d. at 169-73.
This six-month limitation period also applies to fair rep-
resentation suits brought, like this one, under the Railway
Labor Act. United Independent Flight Officers, Inc. v.
United Air Lines, 756 F.2d 1262 (7th Cir. 1984). Fur-
thermore, the fact that this action now proceeds only
against the union does not present a reason for departure
from the Del Costello rule. See Flight Officers, 756 F.2d
at 1270. :
Q
3
:
4
4
j
13a
Additionally, the limitation period mandated by Del
Costello is retroactive, so it applies to this action even
though the events underlying this litigation occurred well
before Del Costello was decided. Bonds v. Coca-Cola Com-
pany, 806 F.2d 1324, 1326 (7th Cir. 1986) (citing Lan-
dahl v. PPG Industries, Inc., 746 F.2d 1312 (7th Cir.
1984) ).°
Finally, the Del Costello six-month limitation period ap-
plies to claims arising out of the negotiating process as
well as to claims based on the handling of employee griev-
ances. See Flight Officers, 756 F.2d at 1270-71.
The foregoing rules regarding the applicability of a
six-month statute of limitations to this action have not
been the subject of disagreement between the parties.
Rather, the parties disagree about when the limitations
period began to run and whether it was tolled by virtue
of circumstances preceding the filing of this lawsuit.
Generally speaking, causes of action based on entry
into collective bargaining agreements accrue, and the lim-
itations period begins to run, when the contract is signed.
Flight Officers, 756 F.2d at 1273 (citing Local Lodge No.
1424, International Association of Machinists v. NLRB,
362 U.S. 411 (1960)). In Clift v.§ UAW, 818 F.2d 623
(1987), the Seventh Circuit refined that rule somewhat
by stating that the plaintiffs’ claims accrue when the col-
lective bargaining agreement is entered into, unless the
existence of the new contract could not reasonably have
been discovered until later and was not actually discov-
ered by the plaintiffs until later. 7d. at 629. The court
pointed out, however, that the discovery rule is an excep-
tion to time-bar rules and each individual plaintiff bears
5 In Landahl, the Seventh Circuit found that retroactive applica-
tion was warranrted because Del Costello represented a clarification
of the law, not a “clean break” with past precedent. 746 F.2d at
1315.
l4a
the burden of proving that he or she personally met the
discovery exception. Id. at 629-30.
The seniority agreements, the negotiation of which the
plaintiffs claim constituted a breach of UTU’s duty of
fair representation, were signed on December 18, 1975.
The plaintiffs’ complaint was filed July 12, 1977, well be-
yond the six-month period. The plaintiffs claim, however,
that they “did not know and had no reason to know of the
Seniority Agreements’ provisions until long after Decem-
ber 18, 1975.” Furthermore, the plaintiffs maintain that
principles of equitable tolling or equitable estoppel de-
layed the running of the limitations period. Finally, they
contend that the limitations period was tolled while they
“exhausted their intra-union remedies.”
Although the plaintiffs’ arguments overlap somewhat
in terms of facts and legal authority, the court will, for
the sake of clarity, address each argument separately.
A. Discovery of Seniority Agreements
As articulated above, a claim for breach of the duty of
fair representation based on a union’s entry into a collec-
tive bargaining agreement accrues when the agreement
is entered into “unless the existence of the new contract
could not reasonably have been discovered until later and
was not actually discovered by plaintiffs until later.”
Clift, 8i8 F.2d at 629.° Significantly, each individual
® The plaintiffs have articulated the rule to be that the action
does not accrue until the claimant discovered or should have dis-
covered the acts constituting the alleged violations, citing Metz
v. Tootsie Roll Industries, Inc., 715 F.2d 299 (7th Cir. 1983), cert.
denied, 464 U.S. 1070 (1984). That formulation of the rule is
correct, of course, but is too imprecise in this context. The alleged
violation in Metz was based on the union’s failure to pursue a
grievance on behalf of the plaintiff; the court therefore focused on
the time at which the plaintiff should have discovered that par-
ticular failure. However, in Flight Officers and Clift, as in this
case, the asserted violation was predicated on the union’s entry
15a
plaintiff bears the burden of proving that he or she fell
within this “discovery” exception. Jd. at 629-30.
Initially, the court must note that the submissions of
the plaintiffs fall short of the standard necessary to en-
able the court to make the sort of individualized inquiry
contemplated by the Seventh Circuit in Clift. All of the
plaintiffs except Overstreet and Rather state, in answer
to the question when they first became aware of the
seniority agreements, that
I have no idea when I first became aware, if I be-
came aware at all, of the provisions of what this
Interrogatory refers to as “the Agreement between
Conrail and certain of its Employees represented by
the United Transportation Union, concerning the
seniority of Conductors and Trainmen.” My counsel,
Dean Richards, has referred to several agreements
and contracts during the course of this litigation,
but I do not honestly know if those references dealt
with this Agreement or other agreements.
Third Set of Stipulations of Fact, 9. These conclusory
statements do not reveal when the plaintiffs became aware
of the existence of the seniority agreements or of their
efforts made that would have led to the discovery of the
seniority agreements. These general assertions therefore
do not aid the court with regard to the relevant inquiry.
Instead, the court must look to other undisputed evi-
dence proffered by the parties. That evidence compels
the conclusion that the plaintiffs had discovered, or, with
the exercise of reasonable diligence, should have discov-
ered, the existence of the seniority agreements more than
six months prior to filing this lawsuit.
into a collective bargaining agreement that allegedly evidenced
discrimination against the plaintiffs. In this context, the Seventh
Circuit has pinpointed “the acts constituting the alleged violation”
as the time at which the collective bargaining agreement was
signed.
16a
The seniority agreements were signed December 18,
1975. Mr. Overstreet and Mr. Rather, local representa-
tives of the plaintiffs (and now plaintiffs themselves) re-
ceived copies of those agreements in 1976. Those agree-
ments essentially preserved for the IU employees what
they had before—date of hire seniority on IU track. The
agreements also created a seniority date on all other Con-
rail track as of the date of the railroad’s conveyance to
Conrail. The inequitable situation the plaintiffs were in
was born out of their previous lack of an express prior
-seniority date on Penn Central track. Presumably, the
plaintiffs’ claim is predicated on the argument that UTU
should have done something affirmatively in the Conrail
negotiations to improve this situation.? The provisions of
the agreements make clear that no such affirmative im-
provement was negotiated. For this reason, Mr. Over-
street was justifiably concerned when he received the
seniority agreements in the middle or latter part of 1976
because
the Seniority Agreements made a distinction between
former Pennsylvania, New York and IU track in the
proposed Conrail Seniority District “B’. While this
distinction was not in and of itself alarming, the pro-
visions of the agreements, when coupled with the un-
certainty of whether IU Employees would be treated
differently than other former Penn Central employ-
ees, could be, and eventually were, interpreted to
favor other Penn Central employees at the expense
of IU Employees.
Affidavit of Rusell H. Overstreet, § 10.
Mr. Overstreet and Mr. Rather, general chairmen of
the plaintiff IU employees, undisputably became aware
7 Prior to the ICC’s order of May 6, 1986, the gist of the plain-
tiffs’ claim against UTU was that it was “derelict in failing to
recognize plaintiffs’ entitlement to Pennsylvania employee status
at the time of the 1975 collective bargaining agreements.” Zapp,
727 F.2d at 625.
17a
of the collective bargaining agreements sometime prior to
September 1, 1976. Two uncertainties may have argu-
ably delayed the beginning of the limitations period be-
yond this point. The first uncertainty is easily disre-
garded. As stated before, the parties to this action were
not certain, at the time the seniority agreements were
signed, that [U would become part of Conrail. It might
therefore be inequitable to impute knowledge of the agree-
ments to them if the agreements may not have applied
to them. This uncertainty was resolved, however, by
April 1 of 1976 at the latest, when IU was conveyed to
Conrail, a date well before Mr. Overstreet and Mr.
Rather apparently received their copies of the agree-
ments.
The other uncertainty, to which Mr. Overstreet alluded
in his affidavit, was whether IU employees would be
treated differently from other Penn Central employees.
Obviously, the agreements’ provisions, coupled with a sen-
iority distinction between IU employees and other Penn
Central employees, would place the IU employees at the
disadvantage of which they now complain. Two years
before Mr. Overstreet and Mr. Rather received their
copies of the agreements, the distinction between the IU
employees (as well as the employees of other subsidiary
lines) and other Penn Central employees had been the
subject of the ICC’s Sixth Supplemental Report. Un-
fortunately, the Sixth Supplemental Report did not lay
the uncertainty regarding the differing treatment to rest.
Specifically, if did not unambiguously order that the
plaintiffs were entitled to February 1, 1968 seniority on
Penn Central track, an interpretation urged by the plain-
tiffs. See Zapp, 727 F.2d at 625. See also supra note 7.
This ambiguity caused the Seventh Circuit to determine
that the ICC should resolve the matter under the doctrine
of primary jurisdiction. 7d. The plaintiffs seem to be
arguing, then, that they could not have discovered the
acts constituting UTU’s breach of its fair representation
duty because they could not have ascertained at that
18a
time how the seniority agreements would operate in light
of the Merger Report of 1966 and the Sixth Supplemental
Report of 1974. This argument is unavailing for at least
two reasons. \
First, it ignores what was the current state of affairs
at the time Mr. Overstreet and Mr. Rather received the
seniority agreements. As the plaintiffs have emphasized
a number of times, the alleged inequitable treatment of
the plaintiffs had been ongoing for a number of years
following the merger of the Pennsylvania and New York
Central railroads. In other words, it was obvious in late
1976 that the plaintiffs were not being accorded Feb-
ruary 1, 1968 seniority on Penn Central track. The sen-
iority agreements, which clearly did nothing affirmatively
to change this situation, reasonably should have alerted
the plaintiffs to UTU’s alleged breach of its duty in the
negotiation of those agreements.
This argument is also unavailing because it improp-
erly focuses on the point at which the plaintiffs discovered
or could have discovered the deleterious effect the agree-
ments would have on their seniority rights. The proper
focus is simply on when the plaintiffs discovered or should
have discovered the existence of the agreements. See
Clift, 818 F.2d at 630. For this reason, the plaintiffs’
sole reliance upon the time when the new seniority ros-
ters were actually posted is also misplaced for purposes
of determining when they discovered the existence of the
agreements. The postings of the seniority rosters merely
reflected the implementation of the seniority agreements.
“The claim does not wait to accrue until the time at
which the contested provisions of the agreement are en-
forced.” Id. at 629.
The undisputed facts make clear, then, that plaintiffs
Rather and Overstreet had discovered the existence of
the seniority agreements sometime in 1976. (The court
also believes that they should even have discovered the ad-
verse impact of the agreements by that time.) The ques-
19a
tion remains, though, whether each of the other individual
plaintiffs discovered, or reasonably should have discov-
ered, the existence of the agreements. As the court
pointed out earlier, the plaintiffs’ submissions in this re-
gard do not satisfy the burden imposed on plaintiffs who
wish to avail themselves of a “discovery” accrual date.
Clift, 818 F.2d at 629-30. None of the plaintiffs un-
equivocally denies that he knew of the seniority agree-
ments more than six months prior to the filing of suit.
This leaves the court unable to conclude that the plain-
tiffs had not discovered the existence of the agreements.
Furthermore, the other plaintiffs do not indicate what
efforts on their behalf they undertook to discover the
existence of the agreements. Instead, all of the other
plaintiffs simply maintain that they “have no idea when”
they first became aware of the provisions of the agree-
ments. Third Set of Stipulations of Fact, §9 (emphasis
added) .°
The parties have not clearly addressed the effect of
Rather and Overstreet’s receipt of the seniority agree-
ments vis a vis the knowledge of the other plaintiffs. In
other words, it is not clear whether Rather and Over-
street’s actual knowledge of the agreements should be
imputed to the other plaintiffs. The court need not resolve
this issue, however, because the undisputed facts demon-
strate that all of the plaintiffs, through the exercise of
reasonable diligence, should have discovered the existence
of the seniority agreements. Their on-site representatives,
Mr. Rather and Mr. Overstreet, were in possession of
these agreements in 1976, a time during which the IU
workers, in light of the Conrail merger, undoubtedly were
concerned about their seniority status. Reasonable in-
quiries directed to Rather and Overstreet should have led
8 In his affidavit, Charles Baker does state more specifically that
he did not become aware of the seniority agreements until early
1977. 6. For the reasons cited infra, however, the court finds that
Mr. Baker should have discovered the existence of the agreements
more than six months before suit was filed.
20a
to discovery of the seniority agreements. This conclu-
sion, in addition to the plaintiffs’ failure to satisfy the
burden incumbent on parties asserting a discovery ac-
crual date, compels the court to find that the plaintiffs’
cause of action accrued more than six months prior to
their filing suit.
B. Equitable Tolling or Estoppel
The plaintiffs further argue that, even if the limita-
tions period began to run more than six months prior to
the filing of this action, equitable principles preclude the
application of the limitations bar. First, they contend,
equitable tolling of the limitations period is appropriate
because the plaintiffs’ ignorance of their cause of action
was a result of the defendant’s fraudulent concealment.
See Bonds v. Coca-Cola Co., 806 F.2d 1324 (7th Cir.
1986). Alternatively, the plaintiffs maintain that UTU
should be estopped from asserting the limitations defense
because it lulled the plaintiffs into a false sense of se-
curity and into a position they would not otherwise have
taken. See Bomba v. W.L. Belvidere, Iac., 579 F.2d 1067
(7th Cir. 1978). See also Bonds, 806 F.2d at 1330 (Swy-
gert, J., concurring in part and dissenting in part), for
an explication of the two principles.
In support of these arguments, the plaintiffs point to
inquiries made by Mr. Rather, Mr. Overstreet, and the
plaintiffs’ attorney to UTU officials regarding the plain-
tiffs’ seniority rights. These inquiries, the plaintiffs con-
tend, went for the most part unanswered until President
Chesser’s letter of March 25, 1977. With regard to the
plaintiffs’ allegation of fraudulent concealment of the
cause of action, their line of reasoning has two basic
flaws. First, none of the facts cited by the plaintiffs
supports the contention that UTU fraudulently concealed
the existence or the provisions of the seniority agree-
ments. Indeed, UTU sent copies of the agreements to
Rather and Overstreet, then union general chairman, in
|
|
3
:
2la 5
1976. According to the unrefuted testimony of Mr. Imel,
a UTU official, the normal practice of UTU was to send
such agreements to each general chairman, who would
then make copies for distribution to the members under
his individual jurisdiction. Ime! Dep., vol. II, p. 29. Sec-
ond, the plaintiffs’ argument muddles two distinct in-
quiries: the existence (and provisions) of the seniority
agreements and the plaintiffs’ rights as granted by the
Sixth Supplemental Report. As indicated previously, the
seniority agreements preserved whatever prior seniority
rights the plaintiffs had and granted April 1, 1976 sen-
iority on all other Conrail track. No ambiguity resided
in the provisions of those agreements. On the other hand,
both the UTU and the plaintiffs had looked to the Sixth
Supplemental Report to define the protective conditions
to which the plaintiffs were entitled. The impact of that
report was the focus of the plaintiffs’ inquiries.° Even if
the defendant’s alleged fraudulent concealment of the
impact of the seniority agreements in light of the Sixth
Supplemental Report were a relevant consideration, this
court could not charge the UTU with fraudulent conceal-
ment in 1976 for failing to explain an impact that was
not even clarified until the ICC’s order of May 6, 1986.
See Zapp, 727 F.2d at 627 n.14. Furthermore, UTU offi-
cial R.E. Swert unequivocally informed Mr. Rather by
letter on September 1, 1976, that the new seniority agree-
ments did not provide the plaintiffs with anything more
than their prior rights on IU track and April 1, 1976
seniority on all other track. Mr. Swert also stated the
® The muddling of these two concepts was noted in the Seventh
Circuit’s opinion. 727 F.2d at 624. As that court concluded, the
Sixth Supplemental Report provided that the plaintiffs were en-
titled to the merger protective conditions, which included preser-
vation of jobs, wages, and fringe benefits, it they were determined
through arbitration to be “affected” by the merger of the Pennsyl-
vania and New York Central railroads. The court further noted
that such protective conditions have little to do with seniority
directly, a matter determined by a collective bargaining agreement.
Id.
22a
UTU’s position that the Sixth Supplemental Report “does
not deal with the question of seniority.” Fourth Stipula-
tion of Fact, Exhibit B.
Unlike a fraudulent concealment of the defendant giv-
ing rise to an equitable tolling of the limitations period,
equitable estoppel applies when the plaintiff knew of the
existence of the cause of action, but the defendant's con-
duct caused him to delay bringing a lawsuit. “ ‘Estoppel
arises where one, by his conduct, lulls another into a
false security and into a position he would not take
[otherwise].’” Bonds v. Coca-Cola Co., 806 F.2d 1324,
1330 (Swygert, J., concurring in part and dissenting in
part) (quoting McWaters & Bartlett v. United States,
272 F.2d 291, 296 (10th Cir. 1959)). The plaintiffs ap-
parently rely on the same set of facts cited in support
of their fraudulent concealment contention as a basis for
their argument that UTU “lulled” them into forebear-
ing suit. It is difficult to see, however, how UTU’s con-
duct lulled the plaintiffs into a false security regarding
their seniority status. In general, the plaintiffs maintain
that their inquiries made to UTU officials regarding their
seniority rights went unanswered until President Ches-
ser’s letter of March 25, 1977. This silence does not dem-
onstrate the type of affirmative conduct that would cause
a reasonable person to be lulled into a false security; if
anything, it should have triggered a greater concern on
the part of the plaintiffs.
Furthermore, the court rejects the plaintiffs’ suggestion
that the UTU’s earlier efforts in petitioning the ICC on
behalf of the IU employees lulled the plaintiffs into be-
lieving the union was on their side. See Plaintiffs’ Re-
sponse, pp. 17, 20. A union cannot be forced to fulfill its
duty of fair representation at its peril. In other words,
the court cannot accept the assertion that a prior act of
the defendant for the plaintiffs’ advantage should be in-
terpreted later as conduct designed to lull the plaintiffs
into abandoning their cause of action. The plaintiffs’
23a
position on this matter, if the court is correctly appre-
hending it, is without legal or factual support.
In sum, the court finds no factual or legal basis for the
contention that the UTU fraudulently concealed the
plaintiffs’ cause of action or falsely caused the plaintiffs
to forebear in filing suit.
C. Exhaustion of Intra-Union Remedies
The Seventh Circuit has held that the six-month stat-
ute of limitations is tolled by the pursuit of internal
union remedies, even when those remedies are ultimately
determined to have been futile. Frandsen v. Brotherhood
of Railway, Airline and Steamship Clerks, 782 F.2d 674
(1986). The plaintiffs maintain that “to the extent they
knew that a problem existed with respect to UTU’s rep-
resentation,”” plaintiffs exhausted every available union
remedy in an effort to resolve this dispute.” As the
plaintiffs noted in their response, the Frandsen court
adopted a holding reflecting “an effort to encourage every
attempt of exhaustion.” Plaintiffs’ Response, p. 23.
In Frandsen, the Seventh Circuit was called upon to
reconcile Del Costello’s six-month limitations period with
the Supreme Court’s holding in Clayton v. UAW, 451
U.S. 679 (1981), generally requiring the exhaustion of
internal union remedies prior to filing suit unless such
exhaustion would be futile. Frandsen clearly reconciled
those “two Supreme Court doctrines in favor of exhaus-
tion of intra-union remedies.” 782 F.2d at 674. In so
doing, the Seventh Circuit held that the six-month lim-
itations period is tolled until intra-union procedures are
1 This assertion, of course, somewhat undermines the plaintiffs’
argument that they did not know of their cause of action against
the union prior to January of 1977. Some of the plaintiffs’ efforts
cited in support of their exhaustion argument (letters from Rather
and Overstreet to UTU officials) were undertaken long before
January of 1977.
24a
exhausted, even if those procedures were futile for the
employee. /d. at 681.
The problem with the plaintiffs’ invocation of the
Frandsen tolling principle is that the plaintiffs admittedly
did not exhaust their intra-union remedies. As President
Chesser’s letter of March 25, 1977, clearly pointed out,
the union’s constitution required a timely appeal from
his determination. That procedure, set out in Articles 90
and 28 of the UTU Constitution, provides for (and re-
quires) the filing of an appeal within ninety days with
the General Secretary and Treasurer of the Union, that
appeal to be heard by the Union’s Board of Directors.
First Set of Stipulations, Exhibit C.
The plaintiffs seek to be excused from the exhaustion
requirement on the ground that exhaustion would have
been futile. The plaintiffs fail, however, to offer concrete
evidence of futility; rather, they expect the court to ac-
cept their conclusory allegation that appeal would have
been futile and that the plaintiffs themselves were “ex-
hausted.” ™
Allowing the plaintiffs to avail themselves of the tolling
principle enunciated in Frandsen when they made no at-
tempt to exhaust their union remedy would result in a
subversion of the principle announced in that decision.
The plaintiffs’ assertion that holding their action time-
barred would impose a “ ‘Catch 22’ double standard upon
employees caught between the exhaustion requirement
and a short six month statute of limitations” entirely
misses the point. Exhaustion of their intra-union rem-
The only evidentiary support offered by the plaintiffs for
their futility contention is that they had been making fruitless
inquiries of the union “for years.” That assertion ignores the
undisputed efforts UTU had made on behalf of the plaintiffs in
petitioning the ICC. Furthermore, the basis for the plaintiffs’ fair
representation claim—the negotiation of the seniority agreements
—was not the subject of their communications with UTU until
the latter part of 1976.
25a
edies was the very avenue by which the plaintiffs could
have avoided the real “Catch 22” recognized by the
Frandsen court. 787 F.2d at 681.
The plaintiffs also cite footnote 8 of the Frandsen opin-
ion in support of their futility argument. In that foot-
note, the Seventh Circuit addressed the union’s argument
that tolling the limitation period in that case would have
postponed the litigation for up to four years because the
final appeal procedure occurred before a body that met
only every four years, The court faulted this argument
by pointing out that the union itself was responsible for
the excessive length of the appeal procedure. The court
additionally noted that “it would be blatently [sic] un-
reasonable to find that a union member did not exhaust
all intra-union procedures when he did not appeal to a
ruling board that meets only once every four years.” 782
F.2d at 682 n.8. Apparently, then, the court would have
been willing, in certain egregious circumstances, to ex-
cuse a failure to exhaust all remedies. The plaintiffs have
not urged, however, and this court does not find, that the
union’s appellate procedures in this case make exhaustion
‘blatantly unreasonable.”
For all of these reasons, then, the limitations period
was not tolled while the plaintiffs “exhausted” their intra-
union remedies.
Conclusion
For all of the foregoing reasons, the plaintiffs’ action
against UTU is barred by the statute of limitations. The
plaintiffs have not met the burden necessary to avail
themselves of a “discovery” statute of limitations; fur-
thermore, the undisputed facts indicate that the plaintiffs
discovered or should have discovered the existence of the
seniority agreements more than six months prior to filing
suit. Finally, the plaintiffs have demonstrated no basis
for the tolling of the limitations period,
a
26a
In light of the court’s ruling on the statute of limita-
tions defense, the other defenses raised in UTU’s motion
need not and will not be addressed.
The defendant’s motion for summary judgment is
GRANTED pursuant to Fed. R. Civ. P. 56(c). Judg-
ment is therefore entered accordingly in favor of the de-
fendant. The parties will bear their own costs.
It is ss ORDERED this 20th day of July, 1988.
/s/ Sarah Evans Barker
SARAH EVANS BARKER, Judge
United States District Court
Southern District of Indiana
Copies to:
Joseph H. Hogsett, Esquire
Wayne O. Adams, Esquire
BINGHAM, SUMMERS, WELSH & SPILMAN
2700 One Indiana Square
Indianapolis, Indiana 46204
Dean E. Richards, Esquire
9000 Keystone Crossing, Suite 920
Indianapolis, Indiana 46240
Andrew K. Light, Esquire
Lynne D. Lidke, Esquire
SCOPELITIS, GARVIN & WICKES
1301 Merchants Plaza, East Tower
Indianapolis, Indiana 46204
27a
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
Cause No. IP 77-425-C
LARRY ZAPP, et al.,
Plaintiffs,
vs.
UNITED TRANSPORTATION UNION,
Defendant.
FINAL JUDGMENT
The court, having considered the submissions of the
parties in this action, including defendant’s motion for
summary judgment and the briefs in support and in op-
position thereto, the supporting affidavit, documents, dep-
osition testimony, answers and stipulations, and being
fully advised in the premises, now enters its ruling on
the defendant’s motion for summary judgment as fol-
lows, to-wit:
(H.I.)
NOW. THEREFORE, IT IS ORDERED AND AD-
JUDGED the the defendant’s motion for summary judg-
ment is GRANTED pursuant to Fed. R. Civ. P. 56(c).
Final Judgment is hereby entered accordingly in favor
of the defendant. The parties will bear their own costs.
It is so ORDERED this 20th day of July, 1988.
/s/ Sarah Evans Barker
SARAH EVANS BARKER, Judge
United States District Court
Southern District of Indiana
7
28a
Copies to:
Joseph H. Hogsett, Esquire
Wayne O. Adams, Esquire
BINGHAM, SUMMERS, WELSH & SPILMAN
2700 One Indiana Square
Indianapolis, Indiana 46204
Dean E. Richards, Esquire
9000 Keystone Crossing, Suite 920
Indianapolis, Indiana 46240
Andrew K. Light, Esquire
Lynne D. Lidke, Esquire
SCOPELITIS, GARVIN & WICKES
1301 Merchants Plaza, East Tower
Indianapolis, Indiana 46204
29a
UNITED STATES COURT OF APPEALS
_ SEVENTH CIRCUIT
No. 81-3072
LARRY ZAPP, et al.,
Plaintiffs-Appellants,
Vv.
UNITED TRANSPORTATION UNION
and CONSOLIDATED RAIL CORPORATION,
Defendants-A ppellees.
Argued Dec. 3, 1982
Decided Feb. 6, 1984
Dean E. Richards, Indianapolis, Ind., for plaintiffs-
appellants.
John P. Price, Bingham, Summers, Welsh & Spilman,
William A. Wick, White, Raub, Wick & Riegner, Indian-
apolis, Ind., for defendants-appellees.
Before CUMMINGS, Chie Judge, CUDAHY, Circuit
Judge, and TIMBERS, Senior Circuit Judge.*
CUDAHY, Circuit Judge.
Plaintiffs appeal from the judgment of the district
court dismissing their Third Amended Complaint against
* The Honorable William H. Timbers, Senior Circuit Judge for
the Second Circuit, is sitting by designation.
30a
their Union, the United Transportation Union (the
“UTU”), and their employer, the Consolidated Rail Cor-
poration (“Conrail”). We affirm in part, reverse in part,
and remand for further proceedings consistent with this
opinion.
I. The Parties
Plaintiffs are 126 individual engineers and trainmen
(this is not a class action) formerly employed by the In-
dianapolis Union Railway Company (the “IU’’), a “belt-
line” industry and interchange railroad circling Indian-
apolis. The iU was originally a wholly-owned subsidiary
of the Pennsylvania Railroad. On February 1, 1968, the
New York Central Railroad was merged into the Penn-
sylvania to form the Penn Central Transportation Com-
pany (the “Penn Central”), and the IU became a sub-
sidiary of the Penn Central by virtue of the change in
name of the parent. The parties agree that, despite the
intercorporate ties, the IU at all times operated as a unit
separate from the Pennsylvania and the Penn Central.
Defendant Conrail, an entity created by the Regional Rail
Reorganization Act of 1973 (the “8R Act’), 45 U.S.C.
§ 701 et seg., was formed to acquire the assets of a num-
ber of bankrupt railroads. On April 1, 1976, the assets
of the Penn Central and the IU were conveyed to Conrail,
and empioyees of both railroads were offered employment
with Conrail.! Defendant UTU was formed in 1969 by
the merger of various craft unions, and thereafter rep-
resented ground service employees on the 1U; from 1969
to 1976 the Brotherhood of Locomotive Firemen and En-
gineers represented IU firemen and engineers, and, since
1976, the UTU has represented the firemen, while the
engineers have been represented by the Brotherhood of
Locomotive Engineers. The UTU denies any responsibil-
ity for plaintiffs who are locomotive engineers.
1 Other railroads were also acquired by Conrail, but only the
IU and the Penn Central are relevant to this litigation.
+a ere
sla
II. The Claims
Prior to the conveyance of the various rail properties
to Conrail, the UTU and Conrail signed a collective bar-
gaining agreement dated December 18, 1975, consolidat-
ing the seniority rosters of the various acquired railway
lines. Plaintiffs allege that as a result of this agreement,
they received a seniority date of April 1, 1976 (the date
of the conveyance to Conrail), while employees of the
former Penn Central received a February 1, 1968 senior-
itv date (the date of the merger of the New York Cen-
tral into the Pennsylvania). Plaintiffs further allege that
as a result of the disparity in seniority dates, former
IU employees are consistently bumped by formed Penn
Central employees with later dates of hire and are more
often furloughed or awarded less favorable job assign-
ments. Plaintiffs therefore seek to have the seniority
provisions of the collective bargaining agreement between
Conrail and the UTU reformed to give them February 1,
1968 seniority throughout their Conrail seniority district.
Plaintiffs assert three discrete complaints against the
Union:? (1) The Union violated a 1974 Interstate Com-
merce Commission (“ICC”) order protecting the rights
of employees of subsidiaries of railroads involved in the
Penn Central merger. (2) Section 504(b) of the 3R Act,
45 U.S.C. § 774(b), requires that local unions be involved
in negotiations relating to the seniority rights of em-
ployees affected by mergers, and this requirement was
not met. (3) The Union breached its duty of fair rep-
resentation by failing to protect the seniority rights of
2 Plaintiffs’ discursive complaint is not divided into counts, but,
according to plaintiffs’ brief on appeal, the district court was cor-
rect in concluding that these were plaintiffs’ distinct claims.
3It is unclear whether the claim against the UTU is that it
should have refrained from negotiating on plaintiffs’ behalf or
should have taken affirmative steps to include the IU locals in the
negotiations. Plaintiffs do not claim that Conrail was at fault in
negotiating with the wrong representatives.
32a
plaintiffs, who were employees of a small railroad and a
numerically small contingent within the UTU.
The district court dismissed the first claim on alterna-
tive grounds. First, if the claim is construed as a suit
to enforce an order of the ICC, the claim is jurisdiction-
ally defective on account of plaintiffs’ failure to join the
United States, a necessary party under the Urgent De-
ficiencies Act, 28 U.S.C. § 2321 et seg. Second, even if
the enforcement claim were properly in federal court, the
ICC order could not be enforced until plaintiffs’ rights
under the order are clarified, and that is a matter appro-
priately referred to the ICC under the doctrine of pri-
mary jurisdiction.
The claim under Section 504(b) of the 3R Act was
dismissed for failure to state a claim since neither the
statute nor the cases interpreting it provide support for
plaintiffs’ contention that local rather than system-wide
bargaining over seniority rights is required. The duty
of fair representation claim was dismissed on the ground
that plaintiffs had made only conclusory allegations of
discrimination.
Two claims were advanced against Conrail: (1) Con-
rail violated the 1974 ICC order in establishing the con-
solidated seniority rosters. (2) Conrail failed to follow
the requirements of Sections 4 and 5 of the 3R Act. In
addition there was a general allegation that Conrail had
acted “in concert with” the Union in negotiating senior-
itv. The first claim is essentially the same as the first
claim raised against the Union, and Judge Dillin dis-
missed it on the same alternative jurisdictional grounds.
The second claim was dismissed for vagueness; the 3R
Act contains no Section 4 or 5.‘
4 We approve the dismissal of this claim. It is conceivable that
plaintiffs meant to refer to some other sections of the 8R Act or to
Section 5 of the ICC Act; Section 5(2) (f) of the ICC Act contains
the labor protection provisions at issue in the 1974 ICC order.
However, even under the liberal requirements of notice pleading,
33a
On appeal, plaintiffs argue that the duty of fair rep-
resentation claim was improperly dismissed, that the
1974 ICC order may be enforced without clarification by
the ICC, that the United States either is not a necessary
party to an enforcement action or should have been joined
by the district court under Rule 19, FEp.R.CIv.P., and
that for purposes of a motion to dismiss, plaintiffs’ alle-
gations about the meaning of the ICC order and the 3R
Act must be taken as true. Plaintiffs also argue that the
district court should have converted defendants’ motion
to dismiss to a motion for summary judgment and that
the court improperly considered matters outside the plead-
ings in ruling on the motion to dismiss.®
Ill. Background
While there is at least a superficial appeal to plain-
tiffs’ claim that there is an obvious injustice in the dis-
parity between the February 1, 1968 and April 1, 1976
seniority dates, plaintiffs’ claims must be evaluated in
the context of twenty years of rail consolidations within
the Northeastern United States. In each successive mer-
ger or acquisition culminating in the formation of Con-
defendants should not have to guess about the statutory basis for
this lawsuit. Plaintiffs have had three opportunities to amend
their complaint, and this court ought not to speculate further about
the real nature of this claim.
5 The thrust of this contention is not entirely clear. Some of
plaintiffs’ claims were dismissed under Rule 12(b) (1) for lack of
subject matter jurisdiction, and some under Rule 12(b)(6) for
failure to state a claim upon which relief can be granted. A
12(b) (6) motion is to be treated as a motion for summary judg-
ment “when matters outside the pleadings are presented to and
not excluded by the court.” Rule 12(b), FEpD.R.Ctv.P. This pro-
vision by its terms is not applicable to a 12(b)(1) motion. The
only extraneous evidentiary material in the record is a deposition
extract included by plaintiffs in a memorandum in opposition to a
motion to dismiss. It is clear from the district court’s entry that
neither this nor any other factual material was considered by the
district court.
84a
rail, redundant lines and facilities—and, unfortunately,
jobs—have been eliminated. Such streamlining is fre-
quently an element of consolidation into a more economi-
eally viable unit, and the ICC is charged with determin-
ing when such consolidation, appropriately hedged with
labor protective conditions, is in the public interest. As
an integral part of these organizational changes, previ-
ously independent seniority rosters have been consoli-
dated.
Inevitably, at least some workers will be less well off
than they were prior to facility or seniority consolidation,
not because of legally cognizable wrongdoing, but because
they had the ill fortune to be part of a declining indus-
try. And, of course, a union cannot, in a situation of
job contraction, easily satisfy all its members. Plaintiffs
seem undoubtedly to be less well off than they were prior
to the acquisition by Conrail. But the question for us in
reviewing the dismissal of their complaint is whether
they have alleged cognizable injury (and whether they
have sued appropriate parties). Accordingly, some delv-
ing into the history of the ICC orders and the successive
rail and seniority consolidations is necessary in order to
determine whether plaintiffs have enforceable claims un-
der the ICC orders or have adequately alleged that the
UTU discriminated against them.
A. Seniority and Facility Consolidation
As we understand it, the present consolidated seniority
system is the end result of a succession of mergers and
acquisitions under which each employee retained seniority
rights on his prior seniority district and acquired new
seniority rights, as of the date of merger, throughout the
new consolidated seniority district formed.® Such a pro-
6 A consolidated seniority district might be composed of several
prior seniority districts belonging to each of the merging (or
acquired) lines. An individual trainman would thus retain “prior
35a
cedure for consolidating seniority rosters seems, on the
face of it, one acceptable approach to the problem.’
right” seniority in his original district and would acquire new
rights in seniority districts formerly belonging to another railroad
and in such other seniority districts of his own line as might be
assigned to the new district. Since “prior right” seniority is
specific to a particular section of track, prior rights are extin-
guished if the track is abandoned.
Seniority rights then held are typically guaranteed by the terms
of the collective bargaining agreement accompanying each merger
or acquisition. The legislation creating Conrail similarly provided
that the procedure for determining Conrail system seniority “shall,
to the extent possible, preserve [the employees’] prior seniority
rights. ...” 45 U.S.C. § 774(b) (4). Thus, an employee with a
lengthy employment history might, after a succession of such con-
solidations, have seniority throughout the most recently formed
district as of the date of its formation, “prior right” seniority
throughout a previously consolidated sub-area as of the date of
that consolidation, and “prior prior right” seniority as of his date
of hire on his original seniority district. In theory, with gradual
employee retirement, a seniority roster will eventually be deter-
mined only by the date of hire into the newest consolidated district.
7 This territory-specific system for consolidating seniority rosters
has been used in a number of railorad mergers. Another possibility
for seniority consolidation involves “dovetailing,” or the compiling
of a single roster with workers listed in the order of their dates
of hire; under this plan, no employee retains any superior right to
work on track within his prior seniority district. Another possible
system uses “work equity” seniority consolidation. This was the
system used in the merger that resulted in the formation of the
Burlington Northern; see Augspurger v. Brotherhood of Loco-
motive Engineers, 510 F.2d 853, 855-56 (8th Cir. 1975), for a
detailed description of variations on this theme. Under this ap-
proach, the total number of slots on the consolidated roster allo-
cated to each of the merging railroads (or to the various seniority
districts of any one railroad) reflects the relative amount of work
(typically measured by engine hours) brought into the new con-
solidated district from each prior district. No employee retains
any claim on work in his prior district. Individual employees ob-
tain work on the slots allocated to their prior district according
to their standing on their prior district rosters. We do not under-
stand plaintiffs to be complaining about the choice of a territory-
specific method of seniority consolidation for the Penn Central and
86a
An agreement dated December 21, 1966 between the
Pennsylvania and the New York Central Railroads and
their employees represented by the Order of Railway
Conductors and Brakemen and the Brotherhood of Rail-
way Trainmen provided for the establishment, in the
event of merger, of new Penn Central seniority districts,
to be arranged so that employees in the new districts
would retain prior rights to employment in their pre-
existing seniority districts. A November 16, 1967 Im-
plementing Agreement between the same parties specifi-
cally provided for the creation of Penn Central Seniority
District No. 2, Southwestern, which was to encompass
the Indianapolis Terminal Yards of the Pennsylvania
and New York Central Railroads (and three other Penn-
sylvania and fifteen other New York Central prior right
districts). Geographically, District No. 2 is roughly de-
scribed as a triangle with vertices at Indianapolis, Pe-
oria and Cairo, Illinois. The effect of this agreement was
to give former employees of the Pennsylvania and New
York Central Railroads seniority throughout Penn Cen-
tral Seniority District No. 2, effective as of the date of
merger, February 1, 1968, while such employees would
at the same time retain prior rights within their respec-
tive former seniority districts. Priority among the large
group of employees with the same Penn Central seniority
date who might be competing for jobs on track on which
none of them had prior right seniority would be deter-
mined by their earliest retained seniority date as a train-
“man (generally the employee’s date of hire). Plaintiffs
were not directly involved in the Penn Central merger,
hence, acquired no seniority in Penn Central Seniority
District No. 2. Conrail, not yet in existence, was of course
not a party to any of these agreements.
Conrail consolidations. Rather, plaintiffs apparently want only to
be assigned the same seniority date as former Penn Central em-
ployees.
37a
In advance of the conveyance of the Penn Central to
Conrail, a Single Implementing Agreement was entered
into on July 23, 1975 between Conrail and various craft
unions representing employees of the railroads in reor-
ganization. All employees of railroads acquired by Con-
rail would be offered employment with Conrail and would
not lose seniority rights then held. A December 18, 1975
collective bargaining agreement between defendants Con-
rail and the UTU provided for the creation of eight Con-
rail seniority districts, including District B, Southwest-
ern, which encompassed all of the former Penn Central
Seniority District No. 2 (four Pennsylvania road and
yard prior right districts and sixteen former New York
Central road and yard prior right districts) as well as
all of the territory of the former Indianapolis Union Rail-
way Company. This Agreement provided that all em-
ployees with standing on prior seniority district rosters
would retain their prior rights throughout the territory
encompassed by their prior seniority districts; in addi-
tion these employees would gain new rights in territories
which were previously separate and unrelated. This ap-
pears to be the same system used for Penn Central senior-
ity consolidation. Thus, former Pennsylvania and New
York Central employees who were in Penn Central Sen-
iority District No. 2 would acquire an effective April 1,
1976 seniority date in the prior Indianapolis Union sen-
iority district (where they previously had no rights),
and would retain February 1, 1968 seniority in Penn
Central District 2 territories (“prior” rights), as well
as whatever seniority they had on their old Pennsylvania
or New York Centra! districts (“prior prior” rights).
Former Indianapolis Union employees, on the other hand,
acquired April 1, 1976 seniority in all former Pennsyl-
vania and New York seniority districts encompassed by
former Penn Central Seniority District Noe. 2 (where they
previously had no rights) and retained their IU territory
seniority.
38a
A June 23, 1976 Agreement between the UTU and
Conrail provided for the consolidation of the Indianapolis
yard facilities of the former Penn Central and IU rail-
roads and for the allocation of jobs in accordance with a
selection order list designed to insure that overall, for-
mer Pennsylvania, New York Central, and IU employees
received a proportionate share (based on engine hours
worked) of the available jobs. The proportions appear to
be New York Central, 40%, and 30% each for the IU
and Pennsylvania.* Prior seniority rosters for each line
determine which individual IU employees are assigned
the jobs allocated to the IU. The Penn Central February
1, 1968 and Conrail April 1, 1976 seniority dates would
seem to play no role in establishing the selection ordcr
list.
In view of this history of seniority and facility consoli-
dation, the allegation that Indianapolis Union employees
have April 1, 1976 seniority and all other employees have
February 1, 1968 seniority seems to us to cover only part
of the story. If we are correct about the operation of the
various successor seniority districts, the picture is com-
plex. The resolution of any given seniority conflict in-
volving “road” or “track” jobs apparently depends pri-
marily on the origin of the track where the conflict arises.
Thus (for example) on a line near Indianapolis once
owned by the Pennsylvania Railroad, a former Indian-
apolis Union employee would have April 1, 1976 seniority,
a former New York Central employee February 1, 1968
seniority, and a former Pennsylvania Railroad employee
8 This “work equity” system (see n. 7 supra) is the system
typically used in consolidating yard facilities. In contrast io the
prior right system used in the Penn Central and Conrail track job
roster consolidations (in which prior rights are lost if the track
is abandoned), employees have no “prior right” to jobs on their
former yard facilities. However, even if a terminal yard formerly
owned by one of the merging carriers is completely abandoned,
employees from that prior seniority district are entitled to a pro-
portionate share of the remaining jobs.
39a
might have seniority back to his date of hire well before
February 1, 1968. In any conflict among three such hypo-
thetical employees, the Indianapolis Union worker loses.
On the other hand, if the track in question were previously
owned by the Indianapolis Union Railroad, the IU em-
ployee would have whatever seniority he had on the old
Indianapolis Union seniority roster, and the hypothetical
Pennsylvania and New York Central alumni would both
have only April 1, 1976 seniority. Under this latter hy-
pothetical scenario, it is the Indianapolis Union man who
should win. At oral argument, the Union asserted that
this would indeed be the case. If the seniority conflict in-
volves consolidated “yard” jobs, prior ownership of the
facility is apparently irrelevant and the amount of work
contributed by each carrier determines the number of
jobs allocated to that line’s employees. Employees from
a line which contributed little work would have fewer
slots on the selection list, and thus a trainman from that
line might have lower job priority than a former employee
of the more heavily used yard who had a later date of
hire. Even if, as seems to be the case in Indianapolis,
severa: merging lines contributed equal amounts of work,
and thus obtained equal numbers of slots, the distribu-
tion of dates of hire within each prior seniority roster
could lead to situations in which an employee on one line
with a later date of hire takes precedence over an em-
ployee from another line with an earlier date of hire.
Plaintiffs’ Amended Complaint lists several pages of
instances in which a former Indianapolis Union employee
is bumped by, or furloughed in favor of, a former Penn
Central employee with a later date of hire. These ex-
amples may apply to our first hypothetical—Indianapolis
Union employees seeking to compete for work on track
formerly owned by the Penn Central. The Complaint
gives us no information on this point, but at oral argu-
ment plaintiffs claimed, contrary to our hypothesis, that
all instances involved jobs on former [Indianapolis Union
40a
lines. It may well be that these are yard jobs. (No one
has explained to us what portion of the old Indianapolis
Union Railroad is “road” and how much “yard.”) The
Complaint also asserts that the desirable “long pool” jobs
(e.g., Indianapolis to St. Louis, a prior Penn Central
route) are awarded to Penn Central employees with later
dates of hire. Because IU employees would have no prior
right seniority on the track involved, this result is con-
sistent with a territory-specific system of prior right
seniority. At oral argument plaintiffs additionally claimed
that the IU lines have been removed from service (al-
though the date of this development has not been indi-
cated), so the sole seniority date applicable to former IU
employees is April 1, 1976. We presume this is a reference
to road jobs.
B. The ICC Orders
Section 5(2) (f) of the ICC Act, 49 U.S.C. § 5(2)f,
since amended and recodified at 49 U.S.C. § 11347 (1978),
provides that a rail merger will not be approved by the
ICC unless “a fair and equitable arrangement to protect
the interests of the railroad employees affected” (em-
phasis added) is made. Accordingly, labor protective con-
ditions were an important aspect of the planning begun
in the early 1960’s for the eventual merger of the New
York Central into the Pennsylvania.® A May 20, 1964
agreement negotiated by the two merger applicants and
23 unions representing 75% of their employees required
job retention without diminution or impairment of com-
pensation, working conditions, or fringe benefits (es-
sentially the conditions of the 1936 Washington Job Pro-
tection Agreement); further, the Penn Central would
have only limited freedom to reduce the work force, and,
® The formation of Conrail was not a merger pursuant to Sec-
tion 5(2) of the ICC Act. Rather, it was created by independent
legislation, the 3R Act. ICC orders geverning labor protective con-
ditions of the Penn Central merger are not applicable to Conrail.
4la
while the merged company could transfer work through-
out its system, it had to pay severance allowances to any
workers who chose not to move.
An ICC Order dated April 6, 1966, 327 I.C.C. 475,
which authorized the Penn Central merger (the “merger
report”), adopted these 1964 labor protective conditions *°
and made them applicable to Pennsylvania and New York
Central employees who had not been represented in the
1964 negotiations and to employees of other carriers which
the ICC might subsequently require to be included in the
merger. Plaintiffs, who were not involved in the Penn
Central merger, had of course not been represented. After
the February 1, 1968 merger, various labor organizations
sought to have the labor protective conditions extended
to employees of the subsidiaries of the Penn Central."
The case proceeded (despite the Penn Central’s 1970 pe-
tition for reorganization under section 77 of the Bank-
ruptey Act) and in 1971 an Administrative Law Judge
recommended that all the subsidiaries be covered by the
1964 merger protective conditions incorporated in the
merger report. Exceptions were filed by the trustees of
the Penn Central and by numerous labor organizations
(including the UTU) and subsidiaries (not including the
Indianapolis Union). On October 18, 1974 the ICC issued
10Tt should be noted that these labor protective conditions set
forth the rights of the employees vis-a-vis the railroad, not vis-a-vis
one another. While section 5(2) (f) has been held to require a fair
seniority consolidation system, see Anderson v. United Transpor-
tation Union, 557 F.2d 165 (8th Cir. 1977), relative position on
a consolidated seniority roster is primarily a problem of priority
among employees once the union and employer have determined
the total number and type of jobs available and is not directly
addressed by these labor protective orders.
11 The New York Central and the Pennsylvania each had a num-
ber of subsidiaries which, like the Indianapolis Union, had become
subsidiaries of the Penn Central. Conrail’s brief asserts that there
are 57 such subsidiaries.
42a
the Order, Finance Docket No. 21898, 347 I.C.C. 536,
that is the focus of plaintiffs’ lawsuit.
Two classes of subsidiaries were considered in the 1974
order: those which had become integral operating units
of the Penn Central system and those (including the
Indianapolis Union) that continued to operate as inde-
pendent railroads after the merger albeit under the legal
ownership of the Penn Central. There was general agree-
ment that the former group of subsidiaries, being involved
in and directly affected by the merger, were entitled to the
same job protections as New York Central and Pennsy]l-
vania employees; the only dispute concerned the “inde-
pendent” subsidiaries.
The order is clear enough in its statement of policy.
The Commission began with the premise that to be enti-
tled to the protections of 5(2) (f), an employee need only
meet two criteria: he must be an employee of some rail-
road engaged in common carriage, and must be affected
by the merger in question. Protection is not limited to em-
ployees of the carriers directly involved in the merger,
but applies to all railroad employees affected. Since there
is usually little difficulty determining whether or not an
individual is an employee of a common carrier, the only
real question is whether he has been “touched sufficiently”
by the transaction. 347 I.C.C. at 546, citing Railway
Labor Executives’ Association v. United States, 216 F.
Supp. 101 (1963). Under this standard, the employees
of the independent subsidiaries were eligible for 5(2) (f)
protection.
The order was considerably less clear about how this
statement of entitlement might translate into benefits for
individual employees. The order stated only that “retro-
active and prospective application of the merger report
conditions to some of the employees of the subsidiaries”
would be required. 347 I.C.C. at 551. Presumably this
is a reference to “affected” employees. The order pro-
43a
vided no guidelines for determining when an employee is
to be deemed sufficiently “affected.”
The trustees of the Penn Central promptly asked for
reconsideration, arguing that the labor protective condi-
tions were negotiated in the context of the Penn Central
merger and should not be read to require employment
guarantees and severance benefits for railroad workers
who were not operationally part of the Penn Central sys-
tem. The Commission responded, by order dated April
10, 1975, that the trustees had misunderstood the prior
order, which held that employees of the subsidiaries “are
entitled to benefits under the § 5(2) (f) labor conditions
. . only in those instances where they are shown to be
directly and adversely affected by the merger” of the
New York Central into the Pennsylvania, and that
whether an employee was indeed so affected was to be
determined by arbitration. This is apparently a reference
to compulsory arbitration before the National Railroad
Adjustment Board.
IV. The Merits
With this background in mind, we turn now to plain-
tiffs’ specific claims.
A. The ICC Enforcement Claim
At oral argument, members of the panel repeatedly
asked why plaintiffs thought that the arbitration require-
ment of the 1975 order did not apply to them. The
answer was that there was nothing to be determined
by arbitration because the 1974 order itseif, and of its
own force, gave plaintiffs the February 1, 1968 seniority
date they sought, and their only problem was in obtain-
ing enforcement of that 1974 order.
t appears to us that much of the confusion in this case
has arisen because the parties are concentrating on very
different aspects of the 1974 order (as modified by the
1975 order), and consequently neither side is really ad-
44a
dressing the arguments raised by the other. We con-
clude that the orders provide that, if plaintiffs are “af-
fected” by the merger of the New York Central into the
Pennsylvania (a matter to be determined by arbitration),
they are entitled to the protections specified in the 1966
merger report. This also is how defendants read the
orders. These section 5(2)(f) protections include the
preservation of jobs, wages, and fringe benefits that might
otherwise be lost in the course of a merger. However, as
we have already observed, supra n. 10, merger protective
conditions, which circumscribe the carrier’s ability to
reduce labor costs, have little to do with seniority directly;
that is a matter determined by a collective bargaining
agreement, which determines which employees are en-
titled to the available jobs.
Given that plaintiffs are interested only in seniority,
their lack of interest in arbitration proceedings des‘gned
to determine their right to 5(2) (f) protections makes a
certain amount of sense; they are not arguing about
merger protection, the ostensible subject matter of the
ICC orders. Rather, they have focused on the language
stating that employees of the subsidiaries are to be con-
sidered employees of the Pennsylvania, and they have
built their case for Pennsylvania seniority on this lan-
guage. Specifically, they argue that by referring to them
as Pennsylvania employees, the ICC ordered that plain-
tiffs were to be considered Pennsylvania employees for
purposes of collective bargaining over seniority rights.
That is, the 1974 order meant that in 1975 the IU em-
ployees should have been integrated into the Penn Central
seniority rosters (with Pennsylvania employee 1968 sen-
iority) before the Conrail seniority list was created.
Defendants were allegedly derelict in failing to recognize
plaintiffs’ entitlement to Pennsylvania employee status at
the time of the 1975 collective bargaining agreement.
We think this is a rather strong implication to be de-
rived from the use of the word “employee” in the 1974
45a
order. We have no idea whether the 1974 order can prop-
erly be construed in this fashion. We therefore cannot
act to enforce the 1974 order so construed until we know
unambiguously what rights the order accords plaintiffs
and whether the order has indeed heen violated. That is
the sort of determination (involving an extremely com-
plex ICC-supervised merger) classically committed to
agency discretion under the doctrine of primary jurisdic-
tion. See Far East Conference v. United States, 342 U.S.
570, 72 S.Ct. 492, 96 L.Ed. 576 (1952); Texas & Pacific
R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct.
350, 51 L.Ed. 553 (1907). We therefore approve the
district court’s decision to decline jurisdiction at this time
and to dismiss the complaint against both the Union and
Conrail insofar as the complaint is construed as a suit
for enforcement of the 1974 order interpreted as an auto-
matic award of February 1, 1968 seniority. To deter-
mine whether the 1974 order grants them the right to
Pennsylvania employee seniority status, plaintiffs may
petition the ICC for a declaratory order. After the ICC
has clarified plaintiffs’ rights, a suit in federal court to
enforce the order may be entirely proper.’*? The primary
jurisdiction doctrine simply defers court consideration
until the administrative agency has had an opportunity
to evaluate the claim.
In view of our holding that this lawsuit cannot prop-
erly be construed now as one for the enforcement of an
ICC order, we do not need to decide whether, for an ac-
tion predicated on 28 U.S.C. § 1336, the United States
must be a party by virtue of the Urgent Deficiencies Act
or whether, under our decision in Carothers v. Western
12 We note that the district court was not requested to, nor did
it elect to, follow the apparent option of referring the question to
the ICC for determination. In such cases, the district court re-
ferring the question then has exclusive jurisdiction over civil ac-
tions arising from the new ICC order. See 28 U.S.C. § 1336(b).
We express no opinion as to whether the jurisdictional posture
of the case would have brought § 1336 into play.
4Ca
Transportation Co., 554 F.2d 799, reh. denied, 563 F.2d
311 (7th Cir.1977), the United States need not be in-
volved. It is enough here to point out that the United
States is, of course, not a required party when the case,
under the doctrine of primary jurisdiction, is referred for
adjudication to an agency of the United States.
If plaintiffs do not wish to pursue their argument that
the 1974 order entitles them to February 1, 1968 senior-
ity, they may wish to determine what rights to merger
protection they do have under the 1974 and 1975 orders.
For this they must seek arbitration before the Adjust-
ment Board. It is not immediately obvious why the In-
dianapolis Union employees would be considered directly
affected by the Penn Central merger; if the Penn Central
had not collapsed, the IU would presumably have con-
tinued to operate independently, and plaintiffs would
have had no reason to seek relief under the 1974 ICC
order. Plaintiffs’ problems arise directly from the forma-
tion of Conrail, so it is only at one step removed that the
Penn Central merger can be said to be relevant to them;
“but for’ that merger and accompanying seniority con-
solidation, workers with whom plaintiffs now compete
would not have obtained February 1, 1968 seniority. It
is not even clear to us that plaintiffs have adequately
alleged “but for” causation. The real problem seems to
be that, while all employees gained Conrail seniority
(throughout their new consolidated seniority district)
effective April 1, 1976, prior right seniority is territory-
specific. Given that such a seniority consolidation plan
was adopted, any merger between the IU and a larger
railroad would have left the IU employees with a senior-
ity disadvantage throughout the majority of the lines in
the resulting system—unless the boundaries of the new
seniority district were carefully selected to encompass
equal amounts of territory from the larger and the
smaller railroad, and that, of course, is not the case here.
47a
It is conceivable that the Penn Central merger itself
did have an indirect effect on plaintiffs in that New York
Central and Pennsylvania employees, who retained “prior
prior right” seniority on their own lines thereby obtained
February 1, 1968 “prior right” seniority on each other’s
lines; the IU employees had no such opportunity to ex-
pand their seniority territory prior to the formation of
Conrail. We do not know whether such retrospective “but
for” causality amounts to the IU employees being “af-
fected” by the merger of the Penn Central within the
meaning of Section 5(2) (f) of the ICC Act and the 1974
and 1975 ICC orders, but plaintiffs are certainly entitled
to go to arbitration to find out.
B. The Duty of Fair Representation Claim
The duty of fair representation claim against the UTU
at least states a claim more amenable to resolution in
the first instance by a federal court. Plaintiffs have made
several different allegations that can collectively be char-
acterized as alleged breaches of the duty of fair repre-
sentation: Paragraph 28 of the Third Amended Com-
plaint refers to the Union’s failure “to act in good faith
as a collective bargaining agent” and failure to give
plaintiffs “fair representation in negotiating their senior-
ity rights with Defendant Conrail.” '* Paragraph 27 al-
13In addition. {28 alleges that Conrail “did not act in good
faith” because it failed to follow Sections 4 and 5 of the 3R Act
and the various ICC Orders. We have already approved the dis-
missal of the claim concerning the 3R Act, supra n. 4, and have
concluded, supra n. 9, that the labor protective provisicns of the
1974 ICC order are not applicable to Conrail. Insofar as the com-
plaint can be construed as alleging that Conrail has some common
law duty to act in good faith to protect plaintiffs’ interests, we
approve the dismissal of this claim. An employer’s duty in labor
negotiations is to protect its own interests (within the limits of
the law). Harrison v. United Transportation Union, 530 F.2d 558,
561 (4th Cir. 1975), cert. denied, 425 U.S. 958, 96 S.Ct. 1739, 48
L.Ed.2d 203 (1976). We similarly conclude that an allegation that
48a
leges that in giving IU employees April 1, 1976 seniority
and Penn Central employees February 1, 1968 seniority,
the Union was in violation of both the ICC Act and the
duty of fair representation. At oral argument, plaintiffs
asserted that the IU lines no longer exist, and this ap-
pears implicitly to state a claim that the Union acqui-
Conrail acted “in concert” with the Union fails to state a claim.
We believe that to be liable on a “concerted” denial of fair repre-
sentation theory, Conrail would have had knowingly to have assisted
the Union in a breach of its duty. This is not alleged. See O’Mara
v. Erie Lackawanna R. Co., 407 F.2d 674 (2d Cir. 1969), aff'd
sub nom. Czosek v. O’Mara, 397 U.S. 25, 90 S.Ct. 770, 25 L.Ed.2d
21 (1970) (because carrier was not alleged to be implicated in the
union’s breach of duty, the complaint against the carrier was
properly dismissed, and any recourse against carrier was before
National Railroad Adjustment Board).
Conrail also argues on appeal (the point was not dealt with by
the district court) that plaintiffs’ claim for reformation of the
seniority roster should be dismissed because the claim is a “minor
dispute” subject to the exclusive jurisdiction of the National Rail-
road Adjustment Board. See 45 U.S.C. §153(i). We disagree.
A minor dispute is one concerning the interpretation or application
of the terms of a collective bargaining agreement. See, e.g., United
Transportation Union v. Baker, 499 F.2d 727 (7th Cir.), cert.
denied, 419 U.S. 839, 95 S.Ct. 69, 42 L.Ed.2d 66 (1974) (whether
a computer print-out could be substituted for the “crewboard”
required by the collective bargaining agreement) ; Slagley v. Illinois
Central R. Co., 397 F.2d 546 (7th Cir. 1968) (whether injured
conductor was properly deprived of seniority rights upon transfer
to less arduous job). The case before us does not involve a dis-
pute over the meaning of the collective bargaining agreement
between the UTU and Conrail, it is perfectly clear to all concerned
that under the agreement, plaintiffs’ seniority throughout the
vast majority of the territory of Seniority District B is April 1,
1976, while former Pennsylvania and New York Central employees
have seniority at least as far back as February 1, 1968 throughout
the same territory. What plaintiffs object to is the fact that the
collective bargaining agreement establishes this result. (This “mi-
nor dispute” issue is somewhat academic in view of the fact that
we have already dismissed on other grounds all of the claims
against Conrail.)
tan deast,
49a
esced in wiping out plaintiffs’ only prior right seniority
territory.
A complaint should be dismissed on the pleadings only
if “it appears that plaintiff can prove no set of facts in
support of his claim which would entitle him to relief.”
Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-
102, 2 L.Ed.2d 80 (1957). As we noted above, we do not
know what seniority rights, if any, the 1974 ICC order
accords plaintiffs, and they have not gone to arbitration
to determine whether they are “affected” by the Penn
Central merger within the meaning of the 1974 and 1975
ICC orders. It necessarily follows that plaintiffs could
not at present state a claim for breach of the duty of fair
representation if the only allegation were that the Union
failed to apply the ICC orders as plaintiffs interpret
them."
It is, however, entirely possible that plaintiffs could
prove that the Union discriminated against them in agree-
ing to a seniority consolidation plan that left employees
of a very small railroad as low men on the resulting
totem pole or did not attempt to alter the seniority sys-
tem once the IU lines were abolished.” Plaintiffs have
adequately alleged hostile discrimination against them.
We accordingly disapprove this much of the district
14 If the ICC confirms plaintiffs’ interpretation of the 1974 order,
plaintiffs might still not have a duty of fair representation claim
based on application of the 1974 order; the Union would likely not
be liable for failing to give the order an interpretation that we are
unable to give the 1974 order on its face.
145On a motion to dismiss, the well-pleaded allegations of the
complaint are to be taken as true. Information mentioned in memo-
randa filed before the district court, and asserted before this court
for the first time at oral argument, is neither well-pleaded nor part
of the complaint. However, in the hopes of bringing this litigation
to a conclusion, and in the interests of making sense of this con-
fusing complaint, we will assume the truth of this allegation.
50a
court’s dismissal of the breach of duty of fair represen-
tation claim.
This decision does not, however, dispose of the question
of who should decide the duty of fair representation case.
The Eighth Circuit, in Augspurger v. Brotherhood of
Locomotive Engineers, 510 F.2d 853 (8th Cir.1975), was
faced with.a similar problem. Plaintiffs in that case were
members of one of the Northern Pacific seniority dis-
tricts involved in the Burlington Northern merger. They
alleged that their union had violated its duty of fair rep-
resentation by agreeing to a work equity seniority con-
solidation scheme. Their former district had had rela-
tively little traffic; they would have been better off under
a pure date of hire seniority integration plan. The dis-
trict court had dismissed the complaint, holding that the
fair representation doctrine does not apply to cases aris-
ing out of mergers. The Eighth Circuit rejected this
reasoning, concluding that a proper fair representation
case is an exception to the doctrine of primary jurisdic-
tion, even in merger cases."* However, since plaintiffs
had not adequately alleged intentional or hostile conduct
on the part of the union, the court concluded that the
claim really dealt only with the conditions of the merger
and affirmed the dismissal on primary jurisdiction
grounds.
Defendant UTU argues that Augspurger is exactly on
point and that the IU employees’ fair representation
claim should be dismissed on grounds of primary juris-
16 The court cited this circuit’s decision in Oling v. Airline Pilots
Association, 346 F.2d 270 (7th Cir. 1965), as holding that the
Seventh Circuit is unwilling to recognize a fair representation
exception to the primary jurisdiction doctrine in merger cases.
We do not consider that to be a fair reading of Oling. The only
issue on appeal there was whether plaintiffs, who did not appeal a
Civil Aeronautics Board decision consolidating seniority rosters,
could collaterally attack the C.A.B. decision by filing an independent
suit in federal district court.
5la
diction. We disagree. Plaintiffs complain that in negoti-
ating seniority rights, their union deliberately discrimi-
nated against employees of a small railroad in order to
benefit the larger Penn Central constituency. They also
allege that they have essentially no seniority standing
because of the abandonment of the Indianapolis track
and lack Conrail seniority sufficient to bid for long pool
jobs. These claims adequately (although inartfully) state
a fair representation claim.
We therefore remand this issue for further proceed-
ings.’ We do note, however, that the district court may
well determine that even this duty of fair representation
claim cannot be resolved without referring some or all
issues in the case to the ICC under the primary jurisdic-
tion doctrine. Plaintiffs’ allegations are so vague that it
may develop that all issues are inextricably entwined with
matters properly decided by the ICC."*
C. The Claim Under § 504(b) of the 8R Act
Plaintiffs argue that section 504(b) of the 8R Act, 45
U.S.C. § 774(b) (in effect at all times pertinent to this
litigation, although repealed August 18, 1981), required
that negotiations concerning seniority consolidation be
conducted with individual union locals. Conrail and the
UTU therefore allegedly erred in negotiating a single
system-wide implementing agreement (the December 18,
1975 Agreement) establishing the Conrail seniority dis-
tricts.
Plaintiffs’ sole support for this argument is an unre-
ported decision, Maloof v. United Transportation Union,
No. 78-3797 (E.D.Pa.1980), which dealt with § 504(d),
'’ On remand it will be necessary to determine whether all 126
plaintiffs were indeed represented by the UTU at the times in
question.
“In this event, the district court could appropriately enter an
order staying proceedings until the ICC reaches a determination.
52a
not §504(b) (the section relevant to seniority consolida-
tion). Maloof held that Section 504(d), which refers to
“collective bargaining agreements” for pay rates, work
rules and work conditions, did net require a single system-
wide agreement. In reaching this decision, the Maloof
court specifically contrasted the language of 504(d), and
its reference to “agreements” (plural), with the language
of 504(b), which requires a “single implementing agree-
ment.” Even assuming that Maloof is the last word on
the meaning of 504(d),’* Maloof is thus itself an argu-
ment against plaintiffs’ position on 504(b). In the ab-
sence of any case law supporting local seniority negotia-
tion or any suggestion as te how Conrail could operate
with a variety of seniority rosters that failed to mesh
throughout a consolidated district, we must reject plain-
tiffs’ argument. We approve the district court’s dismissal
of this count for failure to state a claim.
V. Conclusions
Plaintiffs will have to decide what they wish to do next
in light of the options set forth in this opinion. If they
want to pursue their interpretation of the 1974 ICC or-
der, they must go to the ICC under the primary jurisdic-
tion doctrine to obtain a clarification resulting in an en-
forceable order. If they want to determine their rights
as employees “affected” by the merger of the Penn Cen-
tral in accordance with the 1975 ICC order, they should
go to arbitration. If they want to litigate their fair rep-
resentation claim against the Union, they may do so on
remand.” Whatever course plaintiffs select, we strongly
19 By an Act of October 14, 1980, Congress amended 504(d) to
replace “collective bargaining agreements” with “single collective
bargaining agreement.”
20 We do note, however, that if plaintiffs do not raise ell of their
fair representation claims now, res judicata may bar a subsequent
suit raising additional such claims. Plaintiffs may therefore first
want a decision from the ICC in order to determine whether they
53a
suggest that they try a more coherent presentation of
their case; this court has struggled to fill the gaps in
plaintiffs’ arguments—an effort which should not be de-
manded of it. .
have a viable fair representation claim against the Union for fail-
ure to apply the 1974 ICC order as plaintiffs interpret it.
54a
[Service Date May 13, 1986]
INTERSTATE COMMERCE COMMISSION
DECISION
Finance Docket No. 21989
PENNSYLVANIA RALIROAD COMPAN Y—MERGER—
NEW YORK CENTRAL RAILROAD COMPANY
IN THE MATTER OF LARRY ZAPP, et al.—
PETITION FOR DECLARATORY ORDER
Decided: May 6, 1986
By petition filed November 23, 1984, Larry Zapp, et
al., 126 engineers and trainmen formerly employed by the
Indianapolis Union Railway Company (IU), a wholly-
owned subsidiary of the former Pennsylvania Railroad
Company (Pennsylvania), seek reopening and/or a de-
claratory order setting forth the rights of these IU em-
ployees arising out of the merger. Comments in reply
were submitted by Consolidated Rail Corporation (Con-
rail) and the United Transportation Union (UTU).
The petition was prompted by the decision in Zapp V.
United Transportation Union, 727 F.2d 617 (7th Cir.
1984) (Zapp). Based on the doctrine of primary juris-
diction, the court suggested that these parties seek a ce-
claratory ruling from this Commission to interpret the
55a
meaning of the sixth supplemental report issued by the
Commission in Pennsylvania R. Co.-Merger-New York
Central R. Co., 347 I.C.C. 536 (1974) (Sixth Supple-
mental Report), as it relates to the seniority rights of the
IU employees. ;
BACKGROUND
In Pennsylvania R. Co.-Merger-New York Central R.
Co., 327 I.C.C. 475 (1966) (Merger Report), we ap-
proved the merger of the New York Central Railroad
Company (Central) into the Pennsylvania under the pro-
visions of former section 5(2) of the Interstate Com-
merce Act. The resulting entity became known as the
Penn Central Transportation Company (Penn Central).
Consistent with the requirements of former section 5(2)
(f) ' to provide “a fair and equitable arrangement to
protect the interests of railroad employees affected,” we
conditioned our approval of the merger by, in effect,
adopting an agreement entered into on May 20, 1964, be-
tween the merger applicants and 23 labor organizations
representing approximately 75 percent of merger appli-
cants’ railway employees. The adopted agreement dealt
with the protection of those employees represented by the
labor signatories who might be adversely affected by the
merger. The agreement provided, inter alia, for the re-
tention of all employees willing to accept employment
without their “being placed in a worse position with re-
spect to compensation, rules, working conditions, fringe
benefits or rights and privileges pertaining thereto at
any time during employment.” * We also concluded that
affected employees not represented by a labor signatory
he afforded the same protection as that extended to em-
ployees covered by the agreement. Merger Report, supra,
545, 552. The transactions authorized in the Merger Re-
port were consummated on February 1, 1968.
1 Recodified at 49 U.S.C. 11347.
2 The subject of emplovee conditions was dealt with in the Merger
Report, supra, pp. 543-546.
56a
Implementing agreements dated December 21, 1966 and
November 16, 1967, governing the seniority rights of
Pennsylvania and Central employees after the date of the
merger, were entered by the merger applicants and labor
representatives. The effect of these agreements was to
establish Penn Central seniority districts arranged so that
employees in the new districts would retain prior rights
to employment on their former tracks. The area served
by IU was incorporated within Penn Central Seniority
District No. 2. Pennsylvania and Central employees
within Penn Central Seniority District No. 2 were also
granted a seniority date of February 1, 1968 throughout
this district, thus extending their job protection beyond
their former seniority district. Because IU was not
directly involved in the Penn Central merger, IU em-
ployees were not represented at the negotiations that pro-
duced the December 21, 1966 and November 16, 1967
agreements, and no provision for seniority rights in the
district was made for them. As a further consequence,
IU employees obtained no seniority rights for parts of
the Penn Central system not owned and operated by IU.
The applicability of the conditions for the protection of
employees imposed in the Merger Report to employees of
the railroad subsidiaries and affiliates of Penn Central
such as IU was the subject of the Sixth Supplemental
Report. In that decision, employees of the subsidiaries
were acknowledged by the Commission to be railroad em-
ployees entitled to the same protection as employees of the
parent railroads. The Commission concluded that “em-
3 The Sixth Supplemental Report was served November 6, 1974.
It was supplemented by a clarifying order served April 9, 1975,
issued in response to assertions contained in a complaint filed by
the Trustees of the Penn Central that the Commission had afforded
the benefits of the labor protective conditions to employees of the
subsidiaries without regard to whether these employees were
affected by the merger. The clarifying order indicated that the
Trustees had misunderstood our decision in this regard. We reit-
erated our previously-stated position that only employees actually
57a
ployees of the two merging carriers...are entitled, ab
initio, to the protection afforded by the conditions pre-
scribed in the merger report, regardless of whether the
employees were on the rolls of the involved systems or on
those of their re:pective subsidiaries.” The Commission
further stated that “[t]hese subsidiary employees have
. . . been entitled to the protection of the merger report
conditions since the merger . . . as unrepresented em-
ployees.” Sixth Supplemental Report, supra, 548-549.
No effort to consider the effect of the Sixth Supple-
mental Report on the earlier-negotiated implementing
agreements was undertaken by the involved railroads or
labor unions. As a result, the seniority status of the IU
employees with respect to other Penn Central employees
remained unchanged.
On April 1, 1976, as a consequence of the Penn Central
bankruptcy, most of the assets and operating responsi-
bilities of the Penn Central railroad system, including
the IU, were acquired by Conrail.‘ Prior to its acquisition
of Penn Central, Conrail entered into implementing agree-
ments dated July 23, 1975, and December 18, 1975, with
various Penn Central employee union representatives.®
Under these agreements, employees of the acquired lines
would be offered employment with Conrail and would
retain seniority rights then held.°
affected by the merger were entitled to protection, and in an effort
to avoid any future misunderstanding we directed that the Sixth
Supplemental Report be supplemented to provide specifically that
employees of the rail subsidiaries are entitled to the benefits of the
labor conditions only where they are shown to be directly and ad-
versely affected by the merger.
4 This acquisition was accomplished under implementing legisla-
tion contained in the Regional Rail Reorganization Act of 1973 and
the Railroad Revitalization and Regulatory Reform Act of 1976.
51IU employees were represented in the negotiations which pro-
duced these agreements.
® The effect of the implementing agreements with Conrail was to
provide to all employees of the lines acquired from the Penn Cen-
58a
As IU employees were never covered under the 1966
and 1967 implementing agreements when Central merged
into Pennsylvania, they were not given seniority dates
for determining seniority rights at that time. The 1975
implementing agreements executed prior to the Conrail
acquisition failed to recognize that IU employees had
never received the earlier seniority dates in connection
with the Penn-Central merger. This, allegedly, put IU
employees at a disadvantage compared to former Pennsyl-
vania and Central personnel directly employed by those
carriers.
Consequently, petitioners on July 12, 1977, instituted a
complaint action in the United States District Court for
the Southern District of Indiana (No. I.P. 77-425-C)
against the UTU and Conrail, alleging, inter alia, viola-
tion of the Sixth Supplemental Report in failing to pro-
tect the rights of employees of subsidiaries of railroads
involved in the Penn Central merger. The district court
dismissed petitioners’ claims, and a subsequent appeal
to the 7th Circuit was filed. The decision in Zapp, supra,
which affirmed in part, reversed in part, and remanded
the matter to the district court for further proceedings
was the result of that appeal. The court in Zapp stated
at 625:
We therefore approve the district court’s decision
to decline jurisdiction at this time and to dismiss the
complaint against both the union and Conrail insofar
as the complaint is construed as a suit for enforce-
tral system (including the IU employees) a basic seniority date
of April 1, 1976. The December 18, 1975 agreement provided for
the creation of a series of Conrail seniority districts, including
District B Southwestern, which encompassed all of former Penn
Central District No. 2. Within Conrail District B Southwestern,
former Pennsylvania and Central employees retained the February
1, 1968 seniority rights previously held by them in Penn Central
District No. 2 while former IU employees (who previously held no
seniority rights in Penn Central District No. 2) acquired only the
April 1, 1976 seniority date, except for IU track. Former IU
employees retained their prior seniority rights in IU territory.
59a
ment of the 1974 order interpreted as an automatic
award of February 1, 1968 seniority. To determine
whether the 1974 order grants them the right to
Pennsylvania employee seniority status, plaintiffs may
petition the ICC for a declaratory order. After the
ICC has clarified plaintiff’s rights, a suit in federal
court to enforce the order may be entirely proper.
PRELIMINARY MATTER
Because of the long history and complexity of this pro-
ceeding, petitioners request that the matter be set for
oral hearing to elaborate upon the issues and allow for
cross-examination. The subject petition was submitted to
the Commission at the suggestion of a court for the pur-
pose of securing a Commission interpretation of a rela-
tively narrow question involving the meaning of a prior
Commission decision. As there are no questions of fact
that cannot be resolved on this written record, no useful
purpose would be served for setting the matter for oral
hearing. The request for oral hearing is denied.
DISCUSSION AND CONCLUSIONS
Petitioners request reopening of the Penn Central mer-
ger and/or the issuance of a declaratory order. The peti-
tion for reopening must be denied. Other than the request
in the opening paragraph of the petition, no facts or argu-
ments were submitted to support reopening of the merger.
The transaction was consummated in 1968, and created a
rail carrier that no longer exists. Petitioners have not pre-
sented assertions of material error, new evidence, or sub-
stantially changed circumstances that are necessary to
support reopening an administratively final action of the
Commission. See 49 U.S.C. 10327(g) (1) and 49 C.F.R.
1115.4. More importantly, reopening is unnecessary to
resolve the question the court suggested should be an-
swered here.
60a
Turning to the declaratory order, petitioners request the
issuance of an order setting forth the rights acquired by
them in the Penn Central merger as well as specific find-
ings on certain contentions. The specific findings re-
quested are reproduced in the appendix. Consideration
of a petition for declaratory order is a matter solely
within the discretion of this Commission. Under 5 U.S.C.
554(e!, we are authorized to issue a declaratory order to
terminate a controversy or remove uncertainty.’ The
scope of the declaratory order sought by petitioners in
both specific and general terms far exceeds the extent of
the inquiry that the court in Zapp suggested and goes
beyond the role we assume in labor-management disputes.
In view of the uncertainty expressed by the court with
regard to whether the Sixth Supplemental Report granted
petitioners a specific right to Pennsylvania employee sen-
iority status, we will exercise our discretion and grant
the request for a declaratory order. The subject to be
considered, however, will be limited to that suggested for
our examination by the court in Zapp: the seniority status
to be accorded petitioners under the merger. This requires
only an analysis of the Commission’s intentions at the
time of the Merger Report and Sixth Supplemental Re-
port. Since no facts are in dispute, we can resolve this
matter without further submissions from the parties.
The Merger Report extended the benefits of the May
20, 1964 labor agreement to Pennsylvania and Central
employees who were neither parties to nor represented by
a signatory to the agreement. It contemplated the equi-
table consolidation and extension of seniority rosters and
seniority districts under negotiated implementing agree-
ments which made provision for the use of employees ard
7 Section 554(e), which is part of the Administrative Procedure
Act, states: “The agency, with like effect as in the case of other
orders, and in its sound discretion, may issue a declaratory order
to terminate a controversy or remove uncertainty.”
6la
the allocation and rearrangement of forces.* The method
by which this was to be accomplished was not set by Com-
mission directive, but rather through the collective bar-
gaining process.
Since the Sixth Supplemental Report confirmed that
the merger protections were applicable to the employees
of subsidiary carriers, IU employees, being employees of
a subsidiary carrier, were thus entitled to full and equal
benefits of the merger protective conditions. See Sixth
Supplemental Report, at 549, where the status of unrep-
resented employees is discussed, and at 553, where IU is
listed as a carrier controlled by the Pennsylvania Rail-
road Company. Implicitly, 1U employees were considered
protected employees.
Although the benefits conferred on IU employees in the
Sixth Supplemental Report included no specific directive
with regard to their seniority status, it was contemplated,
consistent with the Merger Report that the equitable con-
solidation and extension of seniority rosters and districts
would be acomplished through negotiated implementing
agreements. To date, this has not been done. However,
the Sixth Supplemental Report made no attempt to estab-
lish the seniority structure or assess seniority dates for
IU employees. Our role under former section 5(2) (f)
is to require a fair and equitable arrangement for af-
fected employees and to ensure that affected employees
not be “in a worse position with respect to their employ-
ment” for four years from the transaction. This respon-
8In describing the May 20, 1964 agreement, the Merger Report
noted:
The Company is free to transfer work throughout its system
and employees will have the opportunity to move to places
where new jobs are created; but transfer of employees across
seniority lines will be within their craft on the basis of imple-
menting agreements to be negotiated from time to time as
provided for in the basic agreement. Merger Report, supra,
543.
62a
sibility does not require nor has it been the intention of
this Commission to displace collective bargaining as the
appropriate vehicle for establishing seniority, or to dis-
place arbitration as the proper means for determining
whether an employee is affected by a transaction and the
specific benefits accruing from that status. See Zapp, 727
F.2d at 624, 625 and the April 9, 1975 order.
We find that the Sixth Supplemental Report, while con-
firming that petitioners were entitled to benefits of the
employee protective conditions imposed in the merger
proceeding, was not directed to and did not determine
petitioners’ seniority status.
This decision will not significantly affect either the
quality of the human environment or energy conservation.
It is ordered: oy
1. The petition of the IU employees to the extent it
seeks reopening of this proceeding is denied.
2. The petition of the IU employees for the issuance of
a declaratory order is granted and a declaratory order
proceeding is instituted under 5 U.S.C. 554(a) and the
exercise of this Commission’s sound discretion, for the
purpose of making the above finding.
3. The proceeding is discontinued.
4. This decision is effective on the date served.
By the Commission, Chairman Gradison, Vice Chair-
man Simmons, Commissioners Sterrett, Andre, and Lam-
boley.
JAMES H. BAYNE
Secretary
[SEAL }
63a
APPENDIX
Specific findings requested by Petitioners
1. That, in confirmation of the Commission’s previous
orders, the I.U. Employees, as a group, are Penn Central
employees directly and adversely affected by the merger
of the Pennsylvania and the New York Central and are
thus entitled to benefits under former 49 U.S.C. § 5(2)
(f) (“Section 5(2) (f)”) and the Protective Conditions
previously approved by the Commission in the Merger
Report.
2. That equitable preservation of seniority rights in a
railroad merger proceeding is a concern encompassed by
the Protective Conditions and Section 5(2) (f) and sub-
ject to Commission jurisdiction.
3. That the I.U. Employees are and were automatically
entitled by the Commission’s previous orders to a Penn
Central Seniority District No. 2 seniority date determined
in the same manner applied with respect to similarly sit-
uated former Pennsylvania and New York Central em-
ployees.
4, That the Penn Central failed to notify any I.U. Em-
ployee that he was or would be affected in his employment
as a result of the Penn Central merger.
5. That the I.U. Employee’s monthly compensation
guarantees with respect to the Penn Central merger have
been and continue to be abrogated.
6. That the extent of injury or damage, if any, suf-
fered by the individual I.U. Employees due to abrogation
of their rights, including seniority rights, under Section
5(2)(f), as established in this proceeding, shall be arbi-
trated by the parties involved, namely the I.U. Em-
ployees; the UTU and any other collective bargaining
representative that represented any I.U. Employee since
December 21, 1966; and Conrail as successor to Penn
64a
Central. Further, that the involved parties shall submit
a plan of arbitration within thirty (30) days of a final
Commission order in this matter, and if the parties are
unable to do so within that time, the Commission, upon
petition by any involved party, shall establish a method
of arbitration.
Richard D. Adams
Lynn Amick
James R. Andrews
John R. Bahr
Matt Bailey
Robert C. Bailey
Joseph W. Bailey
steven W. Bailey
Charles O. Baker
Donald R. Barnard
J. J, Bauerle
Charles F. Bear
John J. Beck
William R. Becker
Jeffery J. Bell
Homer L. Bennett, Jr.
Donald E. Black
W. L. Booker
William Bowen
Louis E. Bowman
William J. Breeden
Raymond D. Brown
Ronnie J. Buchanan
Daniel L. Bushey
Hal D. Butler
John D. Case
Daniel R. Chrisman
Richard E. Clark
Ralph Edward Cook
Ralph Elmo Cook
L. J. Cooper
Raymond P., Coulson
Wallace Craven
P. J. Cronnon
Roy Davis
William D. Davis
Clarence W. Deeren
George M. Dobson
L. Dorn
Clyde H. Downing
Charles E. Draper
Willis C. Dunlop
Jack L. Durham
James E. Durham
Leeman Durham
Robert J. Dye, Jr.
Theodore C. Edwards
Lawrence I. Eggers
William T. Ehret
65a
LIST OF PARTIES
Gene L. Geist
William H. George
Staniey R. Glass
kdward L. Grimes
i verrett K. Grogg
Loy Hacker
Basil R. Hadley
Daniel P. Ham
William E. Ham
James O. Harper
Cheodore S. Hatfield
M. R. Hatmaker
Wayne C. Hessong
Dwight Hinshaw
Monroe W. Hockman
Jesse House
Harry W. Irons
Robert J. Irvin
John M. Jaynes
Rtioy H. Jewell
George W. Joslin
Jimmy R. Jones
George Keller
Steve Kimbler
Albert D. Kingery
Glenn A. Lawson
John W. Lawson, Sr.
Robert Lawson
Richard M. Leslie
James K. Litzelman
Joseph P. Loney
Clifton A. Lyons
Donald J. Maris
Harry C. Masencale
Wayne McBurney
Billie Smith McCrady
John P. McGuire
’ Earl C. McKinney
Arvine G. Meadows
Scott L. Miller
Edward W. Miskowiec
John S. Miskowiec
Raymond Miskowiec
Darrell W. Mitchell
Danny L. Moore
James M. Moore
James W. Moore
Robert H. Morgan
Kenneth L. Morgwenthaler
Nevelyn D. Myers
k:lmer Napier
Ardell (George) Novak
James D. O’Connor
Carl Ogden
Gene E. Onstott
Russell H. Overstreet
Mick Parsons
Edward R. Ping
Frank W. Pluckebaum, Jr.
James W. Plummer
Phillip J. Price
Clyde Rather
T. J. Ray
Raymond Reddy
William J. Reddy
James W. Richardson, Jr.
James W. Richardson, Sr.
red H. Rohde
Joseph Sabo
Henry A. Sanford
James A. Sanford
Kenneth W. Scott
Morris H. Shelton
Paul M. Shields
Herbert W. Smith
Paul L. Smith
Charles E. Spears
Milton R. Spears
Earl Stewart
Eugene A. Tansel
Robert H. Tempke
William E. Thomas
Lanice D. Thompson
Vaso S. Todor
Lew A. Townsend
Walter J. Troutman
Tennyson T. Turner
Richard E. True
John M. Wagaman
Thomas K. Wallsmith
Joseph R. Wente
James D. Whitaker
Ivan E. Whitlow
J. Eddie Whitney
James D. Williams
Larry V. Zapp
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.