242 F.3d 458 (3rd Cir. 2001)
UNION RAILROAD COMPANY,
v.
UNITED STEELWORKERS OF AMERICA; UNITED STEELWORKERS OF AMERICA - DISTRICT 10; UNITED STEELWORKERS OF AMERICA - LOCAL 3263, APPELLANTS
UNITED STEELWORKERS OF AMERICA, AFL-CIO-CLC, PETITIONER
v.
UNITED STATES OF AMERICA; AND SURFACE TRANSPORTATION BOARD, RESPONDENTS
UNION RAILROAD COMPANY ("URR") AND BESSEMER AND LAKE ERIE RAILROAD COMPANY ("B&LE"), INTERVENORS
No. 97-3680, No. 98-6511
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
Argued January 25, 2000
Filed March 1, 2001
Appeal from the United States District Court for the Western District of Pennsylvania District Judge: Honorable Donetta W. Ambrose On Petition for Review of an Order of the Surface Transportation Board entered in STB Finance Docket No. 31363 (Sub-No. 3)Attorneys for Appellee/Intervenors: Jeffrey S. Berlin, Esquire (Argued) Mark E. Martin, Esquire Sidley & Austin 1722 Eye Street, N.W. Suite 300 Washington, DC 20006
Attorney for Appellants/Petitioner: David R. Jury (Argued) Assistant General Counsel United Steelworkers of America 5 Gateway Center Pittsburgh, PA 15222
Attorneys for Respondent: Robert J. Wiggers, Esquire John J. Powers, III, Esquire United States Department of Justice Antitrust Division, Room 10535 601 D Street, N.W. Patrick Henry Building Washington, DC 20530
Attorneys for Surface Transportation Board Respondent: Henri F. Rush General Counsel Theodore K. Kalick, Esquire (Argued) Surface Transportation Board Office of General Counsel 1925 K Street, N.W. Suite 600 Washington, DC 20423
Before: GREENBERG, Nygaard and Roth, Circuit Judges
OPINION OF THE COURT
Roth, Circuit Judge
These consolidated cases present the question whether a federal district court has subject matter jurisdiction to adjudicate challenges to changes to a collective bar gaining agreement, made in connection with a rail merger authorized by the Surface Transportation Board (STB). The District Court and the STB concluded that the latter has exclusive authority to resolve labor disputes arising out of STB-approved rail consolidations. For the reasons set out below, we will affirm the decision of the District Court and deny the petition for review of the decision of the STB.
I. Factual and Procedural History
In 1988, Transtar, Inc., a transportation holding company located in Monroeville, Pennsylvania, acquired control of the Union Railroad Company and the Bessemer and Lake Erie Railroad Company, along with five other rail carriers and one water carrier. This consolidation was achieved pursuant to an Interstate Commerce Commission (ICC) authorization (Control Order), which, under 49 U.S.C. § 10505, exempted the transaction from the prior approval requirements of 49 U.S.C. §§ 10746, 11321, and 11343. Blackstone Capital Partners, L.P., and USX Corporation --Exemption from 49 U.S.C. 10746, 11321 and 11343, Finance Docket No. 31363, served Dec. 23, 1988. The ICC found that exempting the transaction would "minimiz[e] administrative expense" and "foster sound economic conditions and encourage efficient management." Id. slip op. at 2. When the ICC authorized a merger, it was required by 49 U.S.C. § 11326 to impose labor protections for affected employees. Here, the ICC complied with § 11326 by applying the New York Dock employee protective conditions.
The New York Dock conditions are those adopted in New York Dock Ry. - Control - Brooklyn Eastern District Terminal, 360 I.C.C. 60, 84 (1979), aff'd. sub. nom. New York Dock Ry. v. United States, 609 F.2d 83 (2d Cir. 1979). Under New York Dock, changes related to authorized transactions are accomplished through implementing agreements negotiated between the rail carrier and representatives of the employees. If the parties cannot agree to the terms and conditions of the implementing agreement, either party may unilaterally invoke an arbitration proceeding to resolve the dispute.
Prior to the 1988 consolidation, the Union Railroad Company and the Bessemer and Lake Erie Railroad Company (collectively, the Railroad) had maintained separate accounting departments. The workers in each of these departments worked solely for their respective carriers and under separate collective bargaining agreements. The clerical workers employed by Union Railroad were members of the United Steelworkers of America (USWA); the clerical workers of Bessemer and Lake Erie were members of the Transportation Communications International Union.
As part of the implementation of the 1988 Control Order, the Railroad sought to coordinate certain clerical work by moving Union Railroad's accounting department to Bessemer and Lake Erie Railroad. As required by Article 1, S 4, of the New York Dock conditions, the Railroad notified the unions of its proposed coordination in a letter dated September 3, 1996. The notice stated that nine new positions would be established at Bessemer and Lake Erie Railroad to perform the consolidated work; nine positions at Union Railroad would thereby be eliminated. The notice also explained that the nine former Union Railroad employees would be incorporated into the existing Bessemer and Lake Erie Railroad clerical seniority roster according to their Union Railroad seniority rank.
The USWA, the Union Railroad clerical union, claimed that the proposed coordination of work would violate a scope rule contained in the United Railroad/USWA's collective bargaining agreement, which forbade non-Union Railroad employees from performing its accounting work.
The USWA maintained that changes to the scope rule must be made pursuant to the Railway Labor Act (RLA), 45 U.S.C. §§ 151 et seq. The USWA also argued that it was not a party to any other agreement, such as the Washington Job Protection Agreement of 1936, that would authorize the contemplated changes. Accordingly, the USWA asserted that it considered the Railroad's letter of September 3, 1996, detailing the planned coordination, as a notice of proposed changes in the collective bargaining agreement under § 6 of the RLA.
On October 26, 1996, the Railroad responded by providing formal notice that it was invoking arbitration under Article I, S 4, of New York Dock. The USWA countered in a letter dated November 1, 1996, that it could not be compelled to arbitrate because the RLA allows changes to existing collective bargaining agreements only if the changes are arbitrated with the mutual consent of both parties. 45 U.S.C. § 157. It would therefore consider the Railroad's invocation of arbitration under New York Dock as a termination of voluntary negotiations under § 6 of the RLA. The USWA further asserted that it would not aid in the selection of a New York Dock arbitrator. The Railroad subsequently requested the National Mediation Board (NMB) to appoint a neutral referee to arbitrate the dispute. The NMB appointed Arbitrator Witt.
On October 29, 1996, the USWA served the Railroad with an RLA § 6 bargaining proposal, asking for numerous changes to the collective bargaining agreement. The Railroad responded by filing this action, seeking declaratory and injunctive relief under the Declaratory Judgment Act, 28 U.S.C. § 2001, and the RLA, 45 U.S.C. § 151. The Railroad sought a declaration that the USWA's October 29, 1996, § 6 notice was premature because of a moratorium clause in the existing collective bargaining agreement and that self-help was not available.
The USWA filed its counterclaim on December 9, 1996, seeking declaratory and injunctive relief preventing the Railroad from carrying out its proposed coordination of clerical workers through the New York Dock arbitration procedure. Compelled arbitration of the dispute under this procedure, the USWA claimed, would violate its rights under the RLA. The USWA next filed a motion for summary judgment, with respect to both the Railroad's claim and its counterclaim. The Railroad, in turn, filed a motion to dismiss the counterclaim for lack of subject matter jurisdiction.
On November 24, 1997, the District Court found, inter alia, that it lacked subject matter jurisdiction over the USWA's counterclaim: "A review of the relevant case law persuades me that the propriety of the Railroad's invocation of the New York Dock process must be resolved by the STB, and by the Court of Appeals. I do not have jurisdiction over these matters." Union Railroad Company v. United Steelworkers of America, No. 96-2095, slip op. at 8 (WDPA, Nov. 1997). The USWA timely appealed the District Court's November 23, 1997, dismissal.
While the action was pending in the District Court, the New York Dock arbitration proceeded, with the USWA preserving its objections to the arbitrator's jurisdiction. On October 21, 1997, Arbitrator Witt issued her award (Witt Award), which imposed, with a few modifications, the implementing agreement that the Railroad had proposed. On November 10, 1997, the USWA petitioned the STB for an administrative review of the Witt Award, pursuant to 49 C.F.R. § 1115.8. By a decision dated December 16, 1998, the STB declined review of the Witt Award. Union Railroad Company and Bessemer and Lake Erie Railroad-Arbitration Review - United Steel Workers of America, STB Finance Docket No. 31363 (Sub-No. 3), served Dec, 16, 1998. The USWA filed a timely petition for review of the STB decision.
II. Jurisdiction
The District Court dismissed the USWA's counterclaim for lack of subject matter jurisdiction. We have jurisdiction under 28 U.S.C. § 1291 to review the final judgment of the District Court.
The STB had jurisdiction over the USWA's petition to review the arbitral decision under 49 U.S.C. §§ 10502, 11323, and 11326. Our jurisdiction over the USW A's petition to review the STB's decision is based on 28 U.S.C. §§ 2321(a), 2342(5), and 2344.
III. Standard of Review
We exercise plenary review over the District Court's dismissal of the USWA's counterclaim for lack of subject matter jurisdiction. See Erienet, Inc. v. Velocity Net, Inc., 156 F.3d 513, 514 (3d Cir. 1998).
We may not upset the decision of the STB unless we find that it is arbitrary, capricious, or in excess of its statutory authority. See National Small Shipments Traffic Conference, Inc., v. United States, 887 F.2d 443, 445 (3d Cir. 1989).
IV. Discussion
A. The District Court Decision
The jurisdictional question at issue here--whether the District Court had subject matter jurisdiction to adjudicate the USWA's challenge to the Railroad's implementation of its 1988 ICC-authorized consolidation--requires us to examine the relationship between the Railroad Labor Act and the Interstate Commerce Act. The USWA argues that the RLA and the ICA are "co-equal" and complementary statutory schemes and that, therefore, the District Court had general federal subject matter jurisdiction pursuant to 28 U.S.C. § 1331 to hear its counterclaim seeking enforcement of its rights under the RLA. The Railroad contends that the ICA is the exclusive statutory scheme for dealing with railroad consolidations and that accordingly the STB has exclusive jurisdiction to consider disputes concerning changes to labor agreements which are necessary to implement an STB-authorized consolidation. We agree with the Railroad.
The RLA was passed in 1926 to encourage collective bargaining between railroads and their employees, thereby preventing strikes and interruptions to interstate commerce. See Detroit and Toledo Shore Line Railroad Co. v. United Transportation Union, 396 U.S. 142, 148 (1969). To this end, the RLA establishes elaborate procedures for the negotiation, enforcement, and modification of collective bargaining agreements between railroad carriers and railroad labor unions. The RLA also imposes upon parties the obligation to engage in good-faith negotiations and to maintain status quo without resorting to self-help while the RLA's remedies are being exhausted. The exhaustion of the RLA's remedies is, however, "an almost interminable process." Id. at 149. "[T]he procedures of the Act are purposely long and drawn out, based on the hope that reason and practical considerations will provide in time an agreement that resolves the dispute." Brotherhood of Ry. & Steamship Clerks, etc. v. Florida East Coast Ry. Co., 384 U.S. 238, 246 (1966).
The ICA, on the other hand, gives substance to what has been, since the adoption of the Transportation Act of 1920, the nation's policy of pursuing railroad carrier consolidation as a means of promoting the health and efficiency of the railroad industry: "[C]onsolidation of the railroads of the country, in the interest of economy and efficiency, became an established national policy... so intimately related to the maintenance of an adequate and efficient rail transportation system that the `public interest' in the one cannot be disassociated from that in the other." United States v. Lowden, 308 U.S. 225, 232 (1939); see also, St. Joe Paper Co. v. Atlantic Coast Line R. Co., 347 U.S. 298, 315-321 (1954). The ICA grants the STB exclusive authority to approve mergers and acquisitions of transportation carriers within its jurisdiction. 49 U.S.C. § 11323(a). It also provides that STB-authorized consolidations are exempted from "the antitrust laws and from all other law, including State and municipal law, as necessary to let that rail carrier... carry out the transaction." 49 U.S.C. § 11341(a). The authorization may take one of two forms. The STB may, under 49 U.S.C. §§ 11323-11324, affirmatively approve a merger, acquisition of control, or other rail consolidation by determining that it is "consistent with the public interest." U.S.C. § 11324(c). Alternatively, 49 U.S.C. § 10505 allows the STB to authorize a consolidation by granting an exemption for the prior approval requirements of §§ 11323-11324. In either case, the STB is required to impose labor protective measures for affected employees as a condition of consolidation authorizations. 49 U.S.C. § 11326.
Our analysis of the relationship between the RLA and the ICA begins with the most recent Supreme Court decision on the subject, Norfolk and Western Ry. Co. v. American Train Dispatchers' Ass'n., 499 U.S. 117, 132 (1991). There, labor unions in two separate cases challenged ICC orders that relieved the railroad carriers from collective bargaining agreement obligations. The unions argued that § 11321(a), which confers to transactions necessary for the implementation of ICC-authorized consolidations immunity from "all other law," does not abrogate existing collective bargaining agreements. Modification of such agreements, the unions insisted, must be made pursuant to the RLA.
The Supreme Court disagreed: "RLA is a law that, under [§ 11321(a)], is superseded when an ICC-approved transaction requires abrogation of collective-bargaining obligations." Id. at 132 (citations omitted). This conclusion, the Supreme Court explained, is consistent with the ICA's overall statutory scheme. The ICA was designed to promote "economy and efficiency in interstate transportation by the removal of the burdens of excessive expenditure." Texas v. United States, 292 U.S. 522, 534-35 (1934). Recognizing that consolidations of carriers would result in employee dismissals, transfers and other changes detrimental to employees, the ICA mandated that the ICC impose safeguards, like the New York Dock employee protective conditions, to ensure that employee interests of the affected parties are protected. Section 11321(a), in turn, guaranteed that, once these interests are accounted for, the ICC would be free from requirements, such as provisions of the RLA, that might impede the consolidation. If the RLA were not superseded by the ICA, the Court observed, "rail carrier consolidations would be difficult, if not impossible, to achieve," because "[t]he resolution process for major disputes under the RLA would so delay the proposed transfer of operations that any efficiencies the carriers sought would be defeated." Dispatchers, 499 U.S. at 133 (citations omitted).
Although Dispatchers did not directly address the jurisdictional question at issue here, the Ninth and Fourth Circuit Courts of Appeals have interpreted Dispatchers, and the relationship between the RLA and the ICA that it envisions, as compelling the conclusion that the ICC (now the STB), not the district court, has the exclusive authority to resolve labor disputes that arise from implementing an ICC (or STB)-authorized transaction. Railway Labor Executives' Ass'n. v. Southern Pacific Transportation Co., 7 F.3d 902 (9th Cir. 1993); Norfolk & Western Ry. v. Brotherhood of Railroad Signalmen, 164 F.3d 847 (4th Cir. 1998).
In Southern Pacific, the ICC approved a merger of certain railroads pursuant to 49 U.S.C. § 11321(a) and, in compliance with 49 U.S.C. § 11326, imposed the New York Dock conditions to protect existing and future employees from the adverse effects of the merger. When time came for the merged railroad to coordinate work, it claimed, believing that the coordination was incident to the merger, that the changes should be implemented through the New York Dock procedures. The union there, like the USWA in the present case, countered that changes to the existing collective bargaining agreement could be made only through RLA procedures. The union brought suit, claiming that a New York Dock arbitration of its dispute without its consent would violate its RLA rights.
The Ninth Circuit affirmed the district court's ruling that it lacked subject matter jurisdiction over the suit. The court stated that the Supreme Court's Dispatchers decision, while not directly on point, was determinative:
First of all, Dispatchers reiterates the proposition that under the ICA, "the Interstate Commerce Commission [has] exclusive authority to examine, condition, and approve proposed mergers and consolidations of transportation carriers within its jurisdiction." Second, Dispatchers makes clear that under Section [11321(a)], the ICC has the effective power of exempting parties to a railroad merger from any provision of the RLA, by approving the merger. It follows from these propositions that where a railroad which has been a party to an ICC approved merger claims that certain proposed actions are incident to that merger and exempt from RLA procedures under section [11321(a)], the ICC has exclusive authority to resolve a challenge to these claims.
Southern Pacific, 7 F.3d at 906 (internal citations omitted). The court went on to state that the conclusion that jurisdiction belongs to the ICC and not the district court also comports with the policy objective underlying the ICA--the promotion of economy and efficiency of interstate transportation. See Dispatchers, 499 U.S. at 132; Texas v. United States, 292 U.S. at 134. Integral to meeting this objective is the authority vested in the ICC to substitute RLA procedures with the expedited dispute resolution prescribed by the New York Dock conditions. But, if parties were allowed to litigate in federal district court the propriety of invoking the New York Dock process, the ICC's ability to meet this stated objective of facilitating rail consolidations would be hindered: "We would invite a barrage of collateral challenges to the ICC's authority which would be likely to frustrate and delay the administration of mergers in a way that section [11321(a)] was clearly meant to avoid." Id. at 907.
The Fourth Circuit in Norfolk & Western Ry. v. Brotherhood of Railroad Signalmen, 164 F.3d 847 (4th Cir. 1998) reached the same conclusion. As in Southern Pacific and the present case, the unions in Signalmen sought a declaratory judgment in district court that changes to collective bargaining agreements in connection with the implementation of a STB-authorized rail consolidation must be made pursuant to RLA procedures. The district court dismissed the case for lack of subject matter jurisdiction. The court of appeals found that the dismissal was proper. Drawing on Dispatchers, the court held that within the context of an STB-authorized merger, "any effort to challenge changes in the collective bargaining agreements proposed... must be presented in the first instance to the STB under its exclusive jurisdiction and may not be negotiated under the RLA." Id. at 855.
The USWA argues that Dispatchers, Southern Pacific, and Signalmen are inapposite because the consolidations in those cases were authorized through the full approval process of § 11323 while the merger here was achieved through the abbreviated process of § 10502. This distinction is critical, according to the USWA, because the § 11321(a) exemption "from all other laws" applies only to § 11323 transactions. This argument is based on the language of § 11321(a), which provides that "[t]he authority of the Board under this subchapter is exclusive." (emphasis added). Section 10502 is not in the same subchapter as § 11321. See Railway Labor Executive Ass'n v. United States, 987 F.2d 806, 813 (D.C. Cir. 1993) ("That decision [Dispatchers] is not applicable here, however, because § [11321(a)] applies to transactions exempted under subchapter III, of which it is a part. The Commission exempted the transaction at issue here under § [10502], which is in subchapter I"). The USWA argues, therefore, that when the STB is not given the power of making exemptions--that is, when its actions are not taken pursuant to § 11321(a)--there is no basis for granting exclusive jurisdiction to the STB.
The USWA's argument misses the mark, confusing the STB's scope of exemption under § 11321(a) with its jurisdictional authority over disputes arising out of the implementation of railroad consolidations. Although § 11321(a) expressly can preempt the RLA, the STB's jurisdictional exclusivity does not depend alone on § 11321(a). Rather, the STB also finds jurisdictional authority in the overall statutory design of the ICA. Congress, in seeking to promote the economy and efficiency of the rail industry, has given the STB considerable authority over railroads, granting to it exclusive jurisdiction to authorize railroad mergers and consolidations. 49 U.S.C. § 11321(a). See Dispatchers, 499 U.S. at 119-20.
Among the matters which the ICA puts within the exclusive jurisdiction of the STB is the relationship between the railroad and its employees. Section 11324 mandates that the STB consider when approving a merger "the interest of the rail carrier employees affected by the transaction." 49 U.S.C. S 11324(b)(4). More importantly, § 11326 grants to the STB both the statutory authority and the mandate to impose on the rail carrier, as a condition of consolidation authorization, a "fair arrangement" that will protect the employees affected by the consolidation. All this demonstrates, as the Fourth Circuit noted in Signalmen, that "to the extent that a transaction subject to the STB's approval impacts collective bargaining agreements or the relationship between railroads and their employees, the STB has exclusive jurisdiction in the first instance to consider the issues." 164 F.3d at 855. Thus, the exclusive jurisdiction to resolve labor problems in a merger exists independently of the § 11321(a) exemption of such a merger from other laws.
The USWA contends, however, that interpreting the ICA as vesting the STB with exclusive jurisdiction to adjudicate all issues concerning railroad-employee relationships which arise as a result of approved mergers is too sweeping. For this argument, it relies on the Seventh Circuit's decision in Harris v. Union Pacific Railroad, 141 F.3d 740 (7th Cir. 1998). There the court considered whether the ICA takes away from the district court jurisdiction to consider civil rights claims brought by two union members against a railroad carrier. The ICC had approved Union Pacific's acquisition of another carrier pursuant to § 11321(a). Although the ICC imposed the New York Dock conditions, it also permitted labor and management to negotiate different conditions "in a labor agreement entered into prior to consolidation, in which case protection shall be at the negotiated level, subject to our review to assure fair and equitable treatment of affected employees." Id. at 741 (quoting ICC order). The parties then reached an alternative agreement for separation benefits. To qualify for the separation allowance, however, an employee on leave had to return to work within twenty days. Neither the union nor the management sought the ICC's review of the alternative agreement.
The two plaintiffs in Harris were on maternity leave at the time the labor agreement was posted; neither returned within twenty days. Their applications for separation benefits were denied. They then filed suit for sex discrimination in district court. The court dismissed the action for lack of subject matter jurisdiction. The Seventh Circuit reversed, holding that the civil rights laws did not put any obstacle in the way of the railroad merger at issue. None of the relief sought by the plaintiffs would be incompatible with the ICC's approval of the merger. It would be pointless, therefore, to deny jurisdiction to the district court in order to refer the civil rights issue to the STB.
The USWA urges us to follow Harris by requiring that the STB articulate in its approval of a merger the laws that are necessary to displace. We do not read this result into Harris. We conclude that a case involving civil rights issues, arising from the application of a non-STB approved agreement to two members of a class, is distinguishable from the situation here where New York Dock arbitration has authorized changes in the labor agreement, which changes are necessary to implement the transaction. For that reason, even if we were bound to follow the Seventh Circuit, we would find Harris to be distinguishable.
We conclude that the ICA--in its language and overall statutory design--reflects Congress's commitment to a national transportation policy that favors the consolidation of railroads. And Congress has decided that such a policy is best pursued by freeing rail consolidations from the burdensome delays and expenditures associated with RLA procedures. Thus, the ICA and the RLA are not complementary and co-equal statutory schemes, as the USWA proposes. The RLA must yield to the ICA when it impedes the implementation of a STB-approved consolidation. Moreover, the STB has the exclusive jurisdiction to adjudicate challenges to such an implementation. Accordingly, we will affirm the District Court's dismissal of the USWA's counter claim for lack of subject matter jurisdiction.
B. The STB Decision
We now turn to the USWA's petition for review of the STB decision of December 17, 1998. The standard the STB must apply in reviewing arbitration decisions is provided in Chicago & North Western Transportation Company, 3 I.C.C. 2d 729 (1987) ("Lace Curtain"), aff'd. sub. nom. International Brotherhood of Electrical Workers v. ICC, 862 F.2d 330 (D.C. Cir. 1988). 49 CFR 1115.8. Under Lace Curtain, the arbitrator's decision is given deference and the STB will review "issues of causation, calculation of benefits, or the resolution of factual questions" only if there is egregious error. Review is thus limited to "recurring or otherwise significant issues of general importance regarding the interpretation of our labor conditions." 3 I.C.C. at 735-36. Based on this, the STB declined to review and vacate the Witt Award: "We find no reason to disturb the arbitrator's award under the Lace Curtain standards. There is no issue of first impression; and any issues that are likely to recur have already been thoroughly resolved by us and the courts. [The USWA] has not shown egregious error or any other grounds requiring review of the arbitration award here." Union Railroad Company and Bessemer and Lake Erie Railroad -- Arbitration Review-- United Steel Workers of America, STB Finance Docket No. 31363 (Sub-No. 3), served Dec, 16, 1998, slip op. at 7-8.
The USWA presents in this appeal no challenges to the factual determinations made by the arbitrator, relying solely on the argument it made before the District Court that the STB does not have exclusive jurisdiction to adjudicate the USWA's RLA-based challenges to the implementation of the 1988 ICC-authorized consolidation. In light of our analysis in the previous section, we cannot say that the Board's conclusion that it has exclusive jurisdiction to consider whether the ICA preempts the RLA was arbitrary, capricious, or otherwise not in accordance with law. See National Small Shipments Traffic Conference, Inc. v. United States, 887 F.2d 443, 445 (1989). We will, therefore, deny the petition for review of the STB's decision not to review the Witt Award.
V. Conclusion
For the foregoing reasons, we will affirm the judgment of the District Court and we will deny the petition for review of the decision of the Surface Transportation Board.