Atchison, Topeka, and Santa Fe Ry. Co. v. National R.R. Passenger Corp., 82-3057

Citation723 F.2d 1298
Decision Date13 December 1983
Docket NumberNo. 82-3057,82-3057
PartiesATCHISON, TOPEKA, AND SANTA FE RAILWAY COMPANY, Burlington Northern Inc., Chesapeake and Ohio Railway Company, Baltimore and Ohio Railroad Company, and Union Pacific Railroad Company, Plaintiffs-Appellants, v. NATIONAL RAILROAD PASSENGER CORPORATION, Defendant-Appellee, and The United States of America, Intervenor-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

George A. Platz, Sidley & Austin, Chicago, Ill., for plaintiffs-appellants.

Paul F. Mickey, Jr., Washington, D.C., for defendant-appellee.

Thomas H. Peebles, Civil Div., Dept. of Justice, Washington, D.C., for intervenor-appellee.

Before PELL and COFFEY, Circuit Judges, and NEAHER, Senior District Judge. *

NEAHER, Senior District Judge.

Plaintiffs, Atchison, Topeka, and Santa Fe Railway Company, Burlington Northern Inc., Chesapeake & Ohio Railway Company, Baltimore and Ohio Railroad Company, and the Union Pacific Railroad Company (railroads), appeal the District Court's entry of summary judgment in favor of defendant National Railroad Passenger Corporation (Amtrak). Because the suit challenged the constitutionality of a statute, the United States intervened below and submitted a brief on appeal. We affirm the District Court's judgment in part and reverse it in part.

I.

In 1971, when Congress created Amtrak (the Rail Passenger Service Act, 45 U.S.C. Sec. 501 et seq.), it did not explicitly decide who should pay for the time-honored custom (dating back to the 1880's) of providing railroad employees with free passes. That deficiency and its subsequent definitive solution have generated this controversy.

Pursuant to 45 U.S.C. Sec. 561, 1 Amtrak negotiated a "Basic Agreement" with each plaintiff containing the following relevant language:

"Section 2.1 Relief from Responsibility

"From and after May 1, 1971, Railroad shall be relieved of its entire responsibility for the provision of Intercity Rail Passenger Service.

* * *

* * *

"Section 7.5 Transportation Privileges

"Transportation privileges, if any, with respect to business and personal travel of Railroad personnel shall be as determined by [Amtrak]."

When Amtrak assumed the railroads' intercity passenger operations, it initially decided to reduce employee pass privileges. An ongoing dispute arose, and Congress eventually settled the issue with Public Law 92-316, 45 U.S.C. Sec. 565(f), which expressly restored employees' pass privileges on terms similar to those available on April 30, 1971. The statute also required the railroads to reimburse Amtrak for costs incurred in furnishing the passes.

After hearing evidence, the Interstate Commerce Commission set the rate of reimbursement at .00079 cents per passenger mile. The I.C.C. also found that these costs should be offset by the sums collected from employees paying half fare. As it turned out, the revenues from the half fares exceeded the variable costs and, consequently, Amtrak collected only administrative expenses amounting to about $500,000 per year from 1972 to 1979.

In 1979 Congress enacted the Amtrak Reorganization Act, Public Law 96-73, 95 Stat. 547, which amended section 565(f). Beginning October 1, 1979 and for two years thereafter, Amtrak was to be reimbursed "at the rate of 25 percent of system wide average monthly yield per revenue passenger mile." Amtrak billed the railroads at rates from .02067 cents to .02343 cents per passenger mile. 2 The two-year limitation upon the new method of computing costs was subsequently eliminated. Public Law 97-35, 95 Stat. 697.

II.

At the outset, the railroads present three theories by which they urge the Court to find that they possess vested contractual rights against the United States. Having established this contract, they make two contentions: Both the original (1972) version of section 565(f) and the 1979 amendment impair those rights in a constitutionally impermissible manner.

Amtrak, which was authorized to negotiate the basic agreement and was the only defendant sued, is not an agency or establishment of the United States. 45 U.S.C. Sec. 541. Nevertheless, we need not consider the source of the railroads' asserted rights because the terms of the basic agreement, while somewhat more specific, parallel the statute which authorized them. Thus, the railroads have no more contractual rights under the terms of the statute than they have under the terms of the basic agreement. Further, whatever the source of the railroads' rights, we conclude first, that Congress did not act unconstitutionally in requiring the railroads to reimburse Amtrak for employee pass privileges, but second, that the method chosen for reimbursement in the 1979 amendment does impermissibly impair the terms of the basic agreement. We turn first to the railroads' claim that reimbursement impairs their rights.

III.

The railroads read sections 2.1 and 7.5 (quoted above) of the basic agreement together to contend that they have been relieved of any financial responsibility for employee pass privileges. We do not agree.

The parties disagree over the meaning to be accorded the language of section 2.1 of the basic agreement. 3 As such, the Court is required to interpret a contract governed by the law of the District of Columbia. 45 U.S.C. Sec. 546(d). The applicable rules in the District of Columbia are as follows:

" 'As we turn to the authorities, we may note that the theory of "objective law" of contracts has been almost universally adopted by this time. The written language embodying the terms of an agreement will govern the rights of the parties, irrespective of the intent of the parties at the time they entered into the contract, unless there is fraud, duress or mutual mistake.' " Minmar Buildings, Inc. v. Beltway Excavators, Inc., 246 A.2d 784, 786 (D.C.App.1968) (citations omitted).

"Whether or not a contract or its provisions is ambiguous is a question of law first to be determined by the court. A contract is not ambiguous merely because the parties to a contract later disagree on its meaning.

"Under the law of the District of Columbia, a contract is ambiguous when it is reasonably susceptible of different constructions or interpretations, or of two or more different meanings. As the District of Columbia Court of Appeals has said:

'[A] contract is ambiguous when, and only when, it is, or the provisions in controversy are, reasonably or fairly susceptible of different constructions or interpretations, or of two or more different meanings, and it is not ambiguous where the court can determine its meaning without any other guide than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends....' "

Kass v. William Norwitz Co., 509 F.Supp. 618, 623-24 (D.C.1980) (citations omitted).

We find no ambiguity in section 2.1 of the basic agreement. In its order, the District Court correctly concluded that the provision of employee pass privileges was never a "responsibility" of the railroads in providing intercity passenger service. 4 It was a totally gratuitous undertaking which never became part of any contract or collective bargaining agreement. The creating statute specifically required a railroad to make arrangements as necessary to preserve "rights, privileges, and benefits ... under existing collective bargaining agreements or otherwise." 45 U.S.C. Sec. 565(b). Moreover, if the railroads had ever terminated the program, their employees would have had no legal recourse. 5

At the inception, when Amtrak proposed a reduction in pass privileges, railroad employees threatened to strike, Congress appeased them with the enactment of 45 U.S.C. Sec. 565(f), and the railroads operated for seven years apparently content to pay the administrative costs of the pass privilege program. The railroads were motivated into litigation in December 1980 only after Congress had adopted a method of reimbursement based upon the value of the service furnished. As we explain below, this method impairs rights created by the basic agreement.

IV.

In approaching the railroads' arguments concerning the 1979 method of reimbursement, the government ignores the effect of the language of the basic agreement. The government argues that Congress chose a rational method of spreading the costs, Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 19, 96 S.Ct. 2882, 2894, 49 L.Ed.2d 752 (1976), and therefore, the railroads ask this Court to reweigh the evidence and substitute its judgment for that of Congress contrary to the admonition of Kleppe v. New Mexico, 426 U.S. 529, 541 n. 10, 96 S.Ct. 2285, 2292 n. 10, 49 L.Ed.2d 34 (1976). Congress was not legislating on a clean slate, however.

Each side posits its own motivations for Congress' action derived from the legislative history. We need not engage in speculation about motives, although it would be reasonable to conclude from the record that the financial debacle of Amtrak's first eight years contributed to the new method of cost spreading. We also need not weigh evidence nor determine the legislative power of Congress. The issue is whether Amtrak may bill the railroads at the statutorily authorized rate in light of the basic agreement and not whether the statute itself is valid.

Amtrak was created to "provide intercity passenger rail service." 45 U.S.C. Sec. 541. Congress specifically found the need for such service and the need for federal intervention to provide it. 45 U.S.C. Sec. 501. Congress also bestowed power and authority on Amtrak to enable it to accomplish the intended legislative end. 45 U.S.C. Sec. 545. As a consequence, any revenue Amtrak collects, unless earmarked for a specific purpose, is available to finance intercity rail passenger service, the provision of which, under the basic agreement, is no longer the railroads' responsibility.

Although we have found that employee pass privileges were not a responsibility of the railroads, the statute at...

To continue reading

Request your trial
2 cases

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT