Seda-Cog Joint Rail Auth v. Carload Express

Supreme Court of Pennsylvania·Decided October 1, 2020·No. 12 MAP 2019·Published

Opinion

[J-9-2020]

IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

SEDA-COG JOINT RAIL AUTHORITY, : No. 12 MAP 2019 :

Appellant : Appeal from the Order of the : Commonwealth Court dated May 3, : 2018, Reargument denied June 28, v. : 2018, at No. 617 CD 2017 Reversing : the Order of the Clinton County Court : of Common Pleas, Civil Division, CARLOAD EXPRESS, INC., : dated May 11, 2017 at No. 2015-CV- SUSQUEHANNA UNION RAILROAD : 933 and Remanding for entry of COMPANY, AND NORTHERN PLAINS : summary judgment RAILROAD, INC., :

: ARGUED: March 11, 2020 Appellees :

OPINION

JUSTICE DONOHUE DECIDED: October 1, 2020 This case involves the interpretation of the majority vote standard set forth in

Section 5610(e) of the Pennsylvania Municipality Authorities Act, 53 Pa.C.S. §§ 5601- 5623 (“MAA”), and the interplay between the MAA and the common law rule that only a majority of members present and voting is required to take action. Section 5610(e) provides in relevant part as follows:

(e) Quorum.--A majority of the members shall constitute a quorum of the board for the purpose of organizing and conducting the business of the authority and for all other purposes, and all action may be taken by vote of a majority of the members present unless the bylaws shall require a larger number. …

53 Pa.C.S. § 5610(e). Here, the question is whether Section 5610(e) mandates that six present but recused Board members of a sixteen-member Board count in the calculation of the total number of Board members required for a majority. Stated otherwise, are nine votes (a majority of the sixteen members) required to take action, or conversely, are seven of the ten votes actually cast sufficient for approval of the action. This Court granted discretionary appeal to determine whether Section 5610(e) of the MAA’s use of the phrase “members present” abrogates the common law rule that a simple majority (a majority vote of the voting members who make up the quorum of a municipal authority) carries a vote. Because we conclude, for the reasons that follow, that it does not, we affirm the order of the Commonwealth Court.

I. Factual and Procedural Background Appellant SEDA-COG Joint Rail Authority (the “JRA”) is a joint authority formed in 1983, pursuant to the MAA, to protect rail customers throughout central Pennsylvania and to promote industrial and economic development throughout the region. The JRA is governed by a sixteen member Board, with each of the eight member counties (Centre, Clinton, Columbia, Lycoming, Mifflin, Montour, Northumberland, and Union) appointing two members to the Board. In addition to the MAA, the Board’s operations are governed by the JRA’s bylaws and a code of conduct. The JRA is the owner of approximately 200 miles of rail lines and various facilities, which are operated via its private-public partnership with a third-party operator. The most recent third-party operator, acting pursuant to an operating agreement dated January 1, 2007, was appellee Susquehanna Union Railroad Company (“SURC”). Because its operating agreement with the JRA was

set to expire on June 30, 2017, the JRA initiated the process to award a new operating agreement.

The request for proposal process involved two phases. During Phase One, JRA Board members were tasked with reviewing and scoring the qualifications of those operators submitting proposals, with the top three candidates proceeding to Phase Two, at which time the Board would vote to select which entity would be awarded the new operating agreement. At the outset of this process, the Board accepted the voluntary recusals of six Board members, each of whom indicated that they would not participate in the selection process in order to avoid any appearance of bias and reduce the likelihood of potential litigation.1 The remaining ten members of the Board were tasked with reviewing, evaluating, and scoring the proposals submitted by the interested parties. At the end of Phase One, the ten voting members, by a count of seven-to-three, voted to invite the four highest scoring proposers to Phase Two.2 When this vote took place, general counsel for the JRA questioned whether seven votes were sufficient to take action, and it was agreed that the Board would consider the issue at a subsequent meeting. Id. at 14.

At the October 8, 2014 Board meeting, the JRA’s counsel announced because the Board had sixteen members, a nine-vote majority was required for the Board to act. The

1 Five of the six abstaining members had employment ties to shippers on JRA-owned lines, and the sixth had a small ownership stake in a non-operating railroad that connected to the lines. SEDA-COG JRA Meeting Minutes, 8/13/2014, at 13. 2 Due to a tie for third place, four proposers initially proceeded to Phase Two.

ten voting members, in order to ratify the Phase One action, voted unanimously to do so.3 Moving on to Phase Two, the participating Board members evaluated detailed proposals by the top four proposers. At the end of the analysis, Carload received twenty-four points, SURC received twenty-three, and Northern Plains Railroad received thirteen.4 A roll call vote was taken on the motion to award the contract to Carload and, of the ten voting Board members, seven voted in favor and three against. When certain Board members questioned the nine vote requirement for action, the Board voted unanimously to table the decision to award the operating agreement to Carload pending further review of the JRA’s bylaws and the applicable law.

After the meeting, Carload submitted its position in writing to the JRA, arguing that it had been awarded the operating agreement based upon the seven-to-three vote. The JRA responded on September 23, 2015 by filing an action for declaratory judgment requesting a declaration upholding its use of the nine vote requirement.5 Carload filed an

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