Opposition Brief — Rives v. Interstate Commerce Commission

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No. 91-1123

Iu the Supreme Court of the United States

OCTOBER TERM, 1991

CHARLES F. RIVES, II, ET AL., PETITIONERS

INTERSTATE COMMERCE COMMISSION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

KENNETH W. STARR

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 514-2217

ROBERT S. BURK

General Counsel

JOHN J. MCCARTHY, JR.

Associate General Counsel

LAURENCE H. SCHECKER

Attorney

Interstate Commerce Commission

Washington, D.C. 20428

QUESTION PRESENTED

Whether the Interstate Commerce Commission rea-

sonably determined that employees of a railroad’s

motor carrier subsidiary were not entitled to labor

protection benefits when they were laid off following

a railroad merger.

(1)

TABLE OF CONTENTS

Page

OS EEE COTTA 1

Jurisdiction .......... icaaanseraauann Gad aeahdunasliacsgrlencisemikealsdas uence 1

spleens LEPIOT ae tae 2

en cennscoasmummvnsandemerm nahaelesiniiss ces 7

ASSN ea aR ee nO eee aesasaiaaaee 13

TABLE OF AUTHORITIES

Cases:

American Buslines, Inc. v. United States, 253 F.

Supp. 481 (D.D.C.), aff’d mem. sub nom. Amal-

gamated Transit Union v. United States, 385

U.S. 38 (1966) __. SE TOES

Applications for Motor Carrier Operating Au-

thority by Railroads & Rail Affiliates, 182 M.C.C.

978 (1982), aff’d sub nom. American Trucking

Ass’ns V. ICC, 722 F.2d 1248 (5th Cir.), cert.

denied, 469 U.S. 930 (1984) . 12

Brotherhood of Ry. & Airline Clerks Vv. . Burling-

ton Northern, Inc., 671 F.2d 1085 (8th Cir.

RE MEIR ATSIC Ln eA pc, Se 6

Burlington Northern, Inc.—Control and Merger—

St. Louis-San Francisco Ry., ICC Docket No.

28583 (Sub-No. 26) (Apr. 19, 1991) z 11]

Chemical Mfrs. Ass’n Vv. Natural Resources De-

fense Council, Inc., 470 U.S. 116 (1985) _.... 5

Chevron U.S.A. Ine. v. Natural Resources De-

fense Council, Inc., 467 U.S. 837 (1984) . 5

Cosby v. ICC, 741 F.2d 1077 (8th Cir. 1984), cert.

denied, 471 U.S. 1110 (1985) __. 4,6,9, 10,11

Kansas City Southern Indus., Inc. v. ICC, 902 F.2d

423 (5th Cir. 1990) nL ORNS Sk eae or Boe 6,9

K Mart Corp. v. Cartier, Inc., 486 U.S. 281

(1988) 9

New York Dock Ry. ian ontrol—Brooklyn East ern

Dist., 360 I.C.C. 60 (1979), aff’d swb nom. New

York Dock Ry. v. United States, 609 F.2d 83

(2d Cir. 1979) 2

(IIT)

Cases—Continued:

Norfolk & Western R.R. v. American Train Dis-

patchers, 111 S. Ct. 1156 (1991) ..........00000....

Pauley v. Bethenergy Mines, Inc., 111 8. Ct. 2524

2) RSENS nit ech esmscinononrt RW UL ed SNe RE ney oe

Pennsylvania R.R.—Merger—N.Y. Central R.R.,

Se lls Ce CD i cicsrectitcepaccticeenenknteseeeerstenenns

Union Pac.—Control—Missouri Pac.; Western

Pac., 366 I.C.C. 462 (1982), aff’d sub nom.

Southern Pac. Transp. Co. v. ICC, 736 F.2d 708

(D.C. Cir. 1984), cert. denied, 469 U.S. 1208

CESSES ARE A AO Ser DR see PR

United States v. Rock Island Motor Transit Co.,

BE Mts, MED HEMI D(a cincsdscncosnesceasaseencrebiedseotiscnsaten

Statutes:

Act of Oct. 17, 1978, Pub. L. No. 95-473, 92 Stat.

SND Se is UE eerste niente inners des

Interstate Commerce Act, 49 U.S.C. 5(2) (f)

SUI ists eaiakecisees cas tceascamnbaspioc alinssasdnianeeincnghe eapmnigsiboes ies

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

Re I oso kecaacecccex cc penenaectdcadectaceaauee eres

ies RD aici.

I, SIE ercnchce cages. ascoiatevaaeneageommenieiiarss

ra FD ota clonina cats aceataicacccustescnvecuouseiansc

cana ccsoceckccdatenicsusentonaocensay ce seceikeaia

2,3

In the Supreme Court of the United States

OCTOBER TERM, 1991

No. 91-1123

CHARLES F. Rives, II, ET AL., PETITIONERS

INTERSTATE COMMERCE COMMISSION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF .PPEALS

FOR THE TENTH CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-

23a) is reported at 934 F.2d 1171. The initial deci-

sion of the Interstate Commerce Commission (Pet.

App. 26a-53a) and its decision on reopening (Pet.

App. 54a-78a) are unreported.

JURISDICTION

The judgment of the court of appeals was entered

on June 6, 1991. A petition for rehearing was denied

on August 20, 1991. Pet. App. 24a-25a. The peti-

tion for a writ of certiorari was filed on January 8,

(1)

1992.' The jurisdiction of this Court is invoked un-

der 28 U.S.C. 1254(1).

STATMENT

1. In 1982, the ICC gave its approval under 49

U.S.C. 11343 to the consolidation of the United Pa-

cific Railroad Company (UP), the Missouri Pacific

Railroad (MP), and the Western Pacific Railroad

(WP). Union Pac.—Control—Missouri Pac.; West-

ern Pac., 366 I.C.C. 462 (1982) [Union Pac.—

Control], aff'd sub nom. Southern Pac. Transp. Co. v.

ICC, 736 F.2d 708 (D.C. Cir. 1984), cert. denied, 469

U.S. 1208 (1985). In addition, the Commission ap-

proved UP’s proposed acquisition of control of the

motor carrier subsidiaries of MP and WP. The con-

solidated carrier continued to control the Union

Pacifie Motor Freight Company (UPMF), the motor

carrier subsidiary of the UP. Pet. App. 2a-3a.

Under the Interstate Commerce Act, the Commis-

sion is required to provide a substantial level of pro-

tection to railroad employees who are affected by a

rail carrier’s involvement in a consolidation transac-

tion requiring Commission approval. See 49 U.S.C.

11347. The protections provided by the ICC are

known as the New York Dock conditions.” In the

ease of UP’s consolidation with MP and WP, the

! Petitioners filed their petition on November 15, 1991, but

their appendix was rejected by the Clerk of this Court. The

appendix was refiled on January 8, 1992, and the petition was

docketed on that date.

*See New York Dock Ry.—Control—Brooklyn Eastern

Dist., 360 1.C.C. 60 (1979) (describing the ICC’s protective

conditions), aff’d sub nom. New York Dock Ry. v. United

States, 609 F.2d 83 (2d Cir. 1979); Pet. App. 91la-127a (set-

ting forth the New York Dock conditions).

Commission imposed New York Dock conditions for

the benefit of the railroad employees affected by the

consolidation. Union Pac.—Control, 366 I.C.C. at

618-622.

2.a. More than three years after the Commission

approved the UP/MP/WP consolidation, several

motor carrier employees of the UPMF who had been

furloughed wrote to the Commission claiming they

were entitied to benefits under the New York Dock

conditions.” The Commission reopened the Union

Pacific—Control proceeding to clarify whether the

motor carrier employees of UPMF were entitled to

labor protection. It concluded that none of the former

motor carrier employees were entitled to New York

Dock benefits. Pet. App. 26a-53a. The Commission

explained that under Section 11347 nonrailroad em-

ployees, such as the motor carrier employees in this

case, are not entitled to such benefits. /d. at 59a-63a.

The Commission relied on the language of Section

5(2)(f) of the Interstate Commerce Act (49 U.S.C.

(1976)) (the predecessor of Section 11347),' which

restricted mandatory labor protection to “railroad em-

ployees,” and long-standing administrative and judi-

* In addition to the petitioners in this proceeding, several

other furloughed employees of UPMF claimed New York:

Dock labor protection benefits. Those employees settled with

UPMF and withdrew their challenge to the ICC’s order. Pet.

App. 5a & n.2; see Pet. 11-14.

4 Jn 1978, Congress recodified the Interstate Commerce Act.

See Act of Oct. 17, 1978, Pub. L. No. 95-473, 92 Stat. 1337,

codified at scattered sections of 49 U.S.C. 10101 et seq. The

recodification “restate[s], without substantive change, laws

enacted before May 16, 1978 * * *. Those sections may not

be construed as making a substantive change in the laws

replaced.” Pub. L. No. 95-473, §3(a), 92 Stat. 1466. Cf.

Norfolk & Western R.R. v. American Train Dispatchers, 111

S. Ct. 1156, 1164 n.4 (1991).

cial precedent.” The Commission rejected the conten-

tion that Cosby v. ICC, 741 F.2d 1077 (8th Cir.

1984), cert. denied, 471 U.S. 1110 (1985), required

protection for petitioners. Pet. App. 4ta-51la.

b. UPMF sought reopening of the Commission’s

decision. By order served August 17, 1989, the Com-

mission reopened the proceeding to permit the filing

of further evidence on the issue of whether the em-

ployees were entitled to mandatory New York Dock

labor protection conditions. The Commission also

invited the employees to attempt to demonstrate that

labor protection conditions should be imposed for

their benefit as a matter of administrative discretion

under 49 U.S.C. 11344(c).° Pet. App. 22a, 56a-57a.

On reopening, the Commission again determined

that none of the UPMF employees were entitled to

mandatory labor protection under the New York

Dock conditions. The Commission reaffirmed that

only railroad employees are entitled to such manda-

tory protection. Pet. App. 54a-78a. In determining

which employees are railroad employees, the ICC in-

dicated that it would adhere to a test that looks to

the identity of the employer. Jd. at 4la-43a. Under

that test, petitioners, who were employed by motor

carrier subsidiaries, are not railroad employees and

do not receive mandatory labor protection. /d. at

42a. The ICC also found petitioners had submitted

no evidence that would justify exercise of the

5 See Pennsylvania R.R.—Merger—N.Y. Central R.R., 347

I.C.C. 536 (1974); American Buslines, Inc. v. United States,

253 F. Supp. 481 (D.D.C.), aff’d mem. sub nom. Amalgamated

Transit Union Vv. United States, 385 U.S. 38 (1966).

°49 U.S.C. 11344(c) states that the Commission “may im-

pose conditions governing” a merger or consolidation transac-

tion approved under that Section.

agency’s discretion to impose labor protection condi-

tions under 49 U.S.C. 11344(c). Pet. App. 38a, 43a.

3. Petitioners sought review of the ICC’s decision

in the court of appeals. The court denied the petition,

holding that the Commission’s conclusion that motor

carrier employees are not entitled to mandatory pro-

tection under Section 11347 was a permissible one,

and that petitioners had not properly presented to the

ICC the issue of whether the agency should have af-

forded discretionary labor protection in this case.

Pet. App. la-23a.

In reviewing the ICC’s construction of Section

11347, the court of appeals applied the analysis set

forth by this Court in Chevron U.S.A. Inc. vy. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984).

The court said that Section 11347 does ‘‘not unambig-

uously express[ | an intent that employees of a motor

carrier subsidiary are entitled to the mandatory pro-

tections afforded in § 11347,” nor does it unambig-

uously provide that they are not entitled to such man-

datory protection. Pet. App. 9a-12a. Accordingly,

the court asked whether the agency’s decision to re-

strict mandatory labor protection under Section

11347 to employees who work for a railroad is a

‘“nermissible” one. Pet. App. 13a-14a, citing Chev-

ron, 467 U.S. at 848, and Chemical Mfrs. Ass’n vy.

Natural Resources Defense Council, Inc., 470 U.S.

116, 125 (1985). The court then found that the

ICC’s interpretation was “a permissible and rational

construction of the statute.” Pet. App. 15a.

The court of appeals stated that the ICC had rea-

sonably taken into account the fact that the language

of the precodification version of Section 11347 re-

ferred only to “railroad employees.” Pet. App. 16a;

see note 4, supra. The court also observed that the

ICC’s approach is supported by the fact that it “pro-

vides certainty and a logical limit to the scope of the

employees protected by § 11347.” Pet. App. 16a.

“TA] reading as expansive as that petitioners re-

quest,” the court noted, “would render superfluous

the ICC’s use of discretionary authority * * * to give

labor protection for other employees affected by a

consolidation.” /d. at 16a-17a.'

The court noted that the Eighth Circuit in Cosby v.

ICC, supra, had found that certain motor carrier em-

ployees were entitled to labor protection in a consoli-

dation. The court found Cosby unpersuasive, how-

ever, because that decision adopted an interpretation

of the statute without considering whether deference

to the ICC was warranted under Chevron. Pet. App.

13a.*

‘The court of appeals also rejected petitioners’ claim that

the ICC’s interpretation of Section 11347 is inconsistent with

the agency’s “single system doctrine.” Pet. App. 17a n.4.

Under that doctrine, the Commission has found that the

acquisition of “a single, integrated transportation system

* * * made up of several separate corporations” (including

motor carriers) is the acquisition of “one carrier,” Brother-

hood of Ry. & Airline Clerks v. Burlington Northern, Inc.,

671 F.2d 1085, 1089 (8th Cir. 1982), for purposes of deter-

mining whether the transaction is subject to the requirement

of ICC approval under Section 11343(a) (4). That provision

governs “acquisition of control of at least 2 carriers by a

person that is not a carrier.” 49 U.S.C. 11343(a) (4). The

court of appeals noted that the ICC has never applied the

single system doctrine to hold that employees of motor carrier

subsidiaries of railroads are entitled to labor protection under

Section 11347. Pet. App. 17a n.4.

* The court of appeals also noted that in Kansas City South-

ern Indus., Inc. V. ICC, 902 F.2d 423, 435 (5th Cir. 1990), the

court had agreed with the ICC that certain motor carrier

employees were not entitled to mandatory labor protection

under Section 11347. The court pointed out that the motor

carrier in Kansas City Southern “was not restricted to auxili-

ary-to-rail services and received a majority of its revenues

from nonrail-related activities.” Pet. App. 12a-13a.

Finally, the court of appeals found that the ICC

reasonably denied discretionary labor protection to

petitioners in light of the fact that “petitioners failed

to present any supporting arguments at the reopen-

ing proceeding, despite being invited to do so.” Pet.

App. 20a. The court concluded that petitioners “had

the burden to present their case to the ICC for con-

sideration and their failure to properly present the

issue of discretionary protection to the ICC precludes

our review.” /d. at 23a

ARGUMENT

1. Petitioners contend (Pet. 32-36) that the

court of appeals erred in deferring to the ICC’s view

that 49 U.S.C. 11347 does not provide mandatory

iabor protection to employees of motor carriers. That

contention does not warrant this Court’s review.

Section 11347 provides that when the Commission

approves a consolidation transaction under Section

113438 involving a “rail carrier,” it shall “require the

carrier to provide a fair arrangement at least as pro-

tective of the interests of employees who are affected

by the transactions as the terms imposed under this

section before February 5, 1976, and the terms estab -

lished under section 405 of the Rail Pass

vice Act (45 U.S.C. 565).” 49 U.S.C. 11347. Prior

to the 1978 recodification of the Interstate Commerce

Act, the predecessor to Section 11347 used the term

railroad employees” to define the class of persons

entitled to mandatory labor protection. No substen-

tive change in meaning can attributed to the re-

eodification. Train Disnatchers, 111 S. Ct. at 1164

n.4. It follows that Section 11347 reflects 2 coneres-

ston:l intention to protect only “railroad employees,”

'.e., those directly emploved by a railroad. There is

no merit in petitioners’ claim (Pet. 36) that the stat-

ute unambiguously includes all employees who per-

form “rail work,” regardless of the identity of their

employer. The statute simply does not say that labor

protection applies to persons engaged in work that

might be thought to be characteristic of railroad em-

ployees, and it provides no guidance for applying

such a nebulous standard.

If there is any ambiguity in determining which

employees are covered by Section 11347, the court of

appeals was correct in holding that the ICC’s long-

standing view, see Pennsylvania R.R.—Merger—N.Y.

Central R.R., 347 L.C.C. 536 (1974), that mandatory

labor protection is afforded only employees of rail

carriers, is a permissible one. Pet. App. 10a. As the

ICC explained, the agency’s bright-line test relieves

the Commission (and those it regulates) of the bur-

den of having “to examine each job performed in a

non-rail subsidiary to determine whether it is the

type of work that strikes us as being railroad work.”

Id. at 65a; see id. at 62a-63a (noting the difficulty of

determining the “appropriate boundaries of ‘railroad’

work” that might entitle non-rail employees to man-

datory labor protection and questioning ‘whether

Congress intended such a flexible interpretation of

the statute, particularly when it has supplied no

guidelines for this task”). The ICC’s approach also

preserves room for the imposition of labor protection

conditions for the benefit of non-rail employees as a

matter of discretion, pursuant to 49 U.S.C. 11344(c).

In sustaining the ICC’s interpretation, the court

of appeals explained that the Commission’s “identity

of the employer” test, which limits coverage to those

directly employed by railroads, “provides certainty

and a logical limit to the scope of employees protected

by $ 11347” and avoids rendering “superfluous” the

discretionary use of Section 11344. Pet. App. 16a.

In light of the reasonableness of the ICC’s position,

and the consistency of its approach with express stat-

utory provisions, Chevron requires a court to defer to

the ICC’s interpretation of its governing statute. Se

Pauley v. Bethenergy Mines, Inc., 111 S. Ct. 2524,

2534 (1991); K Mart Corp. v. Cartier, Inc., 486 U.S.

281, 292 (1988).°

2. Petitioners also contend (Pet. 18-21, 29-32)

that review is warranted in order to resolve a conflict

between the holding in this case and the holding in

Cosby v. ICC, 741 F.2d 1077 (8th Cir. 1984), cert.

denied, 471 U.S. 1110 (1985). This case does not

present a conflict warranting resolution by this

Court. The Tenth and Fifth Circuits '’ have found

® Contrary to petitioners’ contention (Pet. 24-26), the court

of appeals correctly found that the “single system doctrine,”

used by the [CC to determine that certain acquisition trans-

actions are not covered by 49 U.S.C. 11343, has no relevance

in determining whether motor carrier employees are entitled

to labor protection under 49 U.S.C. 11347. Pet. App. 17a n.4.

The Commission views certain corporate affiliates as a single

entity for the purpose of determining that a transaction does

not require ICC approval at all; that logic does not mean that

when a transaction does require ICC approval, all employees

of all corporate affiliates must be treated identically for pur-

poses of providing labor protection. The Commission has

never applied the single system doctrine to require labor pro-

tection for employees of motor carrier subsidiaries of rail-

roads.

19 See Pet. App. la-23a; Kansas City Southern Indus., Inc.

Vv. 1CC, 902 F.2d 423, 435-438 (5th Cir. 1990). Petitioners

attempt to distinguish the Kansas City Southern decision

factually (Pet. 27-28), but ignore the Fifth Circuit’s direct

holding there that the ICC’s interpretation of Section 11347—

the same interpretation confirmed by the Tenth Circuit in this

case—should be sustained. 902 F.2d at 438.

that the ICC’s interpretation is permissible."’ While

the Kighth Circuit’s decision in Cosby took a different

approach, that decision does not squarely conflict with

this one, and the aberrant holding in Cosby does not

impede the ICC’s enforcement of the Act.

In Cosby, the court of appeals gave two alternative

grounds for requiring the ICC to afford labor protec-

tion under Section 11347 to employees of a motor

carrier subsidiary of a railroad involved in a con-

solidation. First, the court rejected the Commission’s

test of applying mandatory protection only to em-

ployees of railroad carriers, and instead held that

certain motor carrier subsidiary employees should “‘be

considered railroad employees” because their work

was “intimately tied to the railroad’s main transpor-

tation function.” 741 F.2d at 1080-1081. Alterna-

tively, the court assumed that the ICC had discretion

to grant or deny labor protection conditions to motor

carrier employees; the court then found an abuse of

discretion by focusing on specific record evidence of

job security assurances given to the motor carrier

employees in that proceeding. /d. at 1081-1084.

Even if Cosby were applied here, it would not aid

petitioners. Under the first of Cosby’s rationales, pe-

titioners would not qualify for labor protection, be-

cause, as the ICC stated, they “have not demonstrated

that the motor carriage performed by UPMF was

limited to transportation that is auxiliary to rail

‘The same result obtained in an early proceeding that

challenged the ICC’s policy. See American Buslines, Inc. Vv.

United States, 253 F. Supp. 481, 483 (D.D.C.) (“While Sec-

tion 5(2) (f) of the Act requires certain minimum financial

protection over a period of four years to railroad employees,

no such requirement has ever been enacted by the Congress

for motor carrier employees.”), aff’d mem. sub nom. Amal-

gamated Transit Union Vv. United States, 385 U.S. 38 (1966).

movements and so intimately connected to UP’s main

transportation system so as to transform [petition-

ers] into ‘railroad employees,’ as described in dicta

in Cosby, 741 F.2d at 1080-81.” Pet. App. 41a; see

also 7d. at 64a n.5 (restating the same conclusion af-

ter reopening the proceeding). Nor are petitioners

aided by the alternative rationale in Cosby, which,

as the court itself explained, turned on unique “facts

and circumstances” relating to representations by the

carrier. Cosby, 741 F.2d at 1081. When carriers

have made such representations, the Commission has

extended New York Dock labor protection to em-

ployees. Burlington Northern, Inc.—Control and

Merger—St. Louis-San Francisco Ry., ICC Docket

No. 28583 (Sub-No. 26) (Apr. 19, 1991) (1991 ICC

LEXIS &8). Petitioners, however, make no claim

that UP made representations that motor carrier em-

ployees would receive the benefits of mandatory labor

protection.” See Pet. App. 45a-51la.

Quite apart from petitioners’ failure to raise a

square conflict with Cosby, the issue presented in

this case is not of sufficient practical importance to

warrant this Court’s attention. Although petitioners

correctly note (Pet. 22-24) that the ICC has in the

past issued licenses for the operation of motor car-

riers to railroads or to rail affiliated motor carriers

'. Petitioners claim (Pet. 36-46) that the court of appeals

erred in holding that they were precluded from challenging

the ICC’s deniai of discretionary labor protection; the court

of appeals found such preclusion because petitioners pre-

sented no evidence on that issue. That factbound claim does

not merit review by this Court. In any event, the court of

appeals correctly held that all of the evidence presented by

petitioners went to applicability of Section 11347, and that

“fnjo separate evidence or argument was directed at the

availability of discretionary protection.” Pet. App. 22a-23a.

that were restricted to service that was “auxiliary to

or supplemental” to the railroad, see United States v.

Rock Island Motor Transit Co., 340 U.S. 419 (1951),

the Commission no longer issues such restricted li-

censes. Any such restrictions in a railroad or rail

affiliate’s motor carrier operating authority can be

removed from a motor carrier’s operating license on

application. Applications for Motor Carrier Oper-

ating Authority by Railroads & Rail Affiliates, 132

M.C.C. 978 (1982), aff'd sub nom. American Truck-

ing Ass’ns v. ICC, 722 F.2d 1243 (5th Cir.), cert.

denied, 469 U.S. 930 (1984). Thus, the first alter-

native holding of Cosby is of limited continuing sig-

nificance.

Moreover, the Commission’s administration of Sec-

tion 11347 has not been impeded by the Cosby hold-

ing. The issue in this case arises very rarely. Pe-

titioners point to no decision in the years since Cosby

that would have come out differently if the ICC had

applied the Cosby test rather than the agency’s test.

In light of Cosby’s narrow precedential significance

and the fact that other courts are in agreement with

the Commission’s interpretation of Section 11347, re-

view by this Court is not warranted.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.