RF & P. RAILROAD v. TRANSP. COM. INTERN. UNION

• Decision Date: 01 November 1991
• Docket Number: Civ. No. 90-1649-A.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: RICHMOND, FREDERICKSBURG & POTOMAC RAILROAD COMPANY, Plaintiff, v. TRANSPORTATION COMMUNICATIONS INTERNATIONAL UNION, Defendant.

776 F. Supp. 1109

RICHMOND, FREDERICKSBURG & POTOMAC RAILROAD COMPANY, Plaintiff, v. TRANSPORTATION COMMUNICATIONS INTERNATIONAL UNION, Defendant.

Civ. No. 90-1649-A.

United States District Court, E.D. Virginia, Alexandria Division.

November 1, 1991.

Brooks, Timothy Paul Shea and Gardner, Washington, D.C., for plaintiff.

Dzialo, Michael Gerard, Guerrier, Edmond and James, Washington, D.C., for defendant.

MEMORANDUM OPINION

ELLIS, District Judge.

I. Introduction

This case grows out of a dispute between a carrier and a union over whether the carrier may unilaterally offer a lump-sum severance payment to senior employees represented by the union. This dispute was submitted to an arbitrator, who ruled in the union's favor. Presented here is the question whether the arbitrator has the power to preclude such unilateral offers based solely on his reading of the Railway Labor Act¹ ("RLA") and given that such offers are not prohibited by the parties' labor agreement.

More specifically, Richmond, Fredericksburg & Potomac Railroad Company ("RF & P") posted an offer of a lump-sum severance allowance for up to fifteen senior clerical employees in April 1990. The clerical union, Transportation Communications International Union ("TCU"), opposed the offer, claiming that RF & P must bargain with TCU and not directly with the individual employees. The parties agreed to submit the issue to arbitration. The arbitrator found the parties' labor agreement silent on whether RF & P could offer lump-sum severance allowances unilaterally and therefore that RF & P acted without contractual authority in offering the voluntary separation payments absent TCU's approval. RF & P petitioned the arbitrator for reconsideration, claiming that such lump-sum severance offers were valid where, as here, they violate no provision of the labor agreement. RF & P also argued that the arbitrator had exceeded the proper scope of his jurisdiction by reframing the issue submitted by the parties. The arbitrator denied RF & P's petition. RF & P then filed this complaint, seeking to set the award aside. The matter is now before this Court on RF & P's motion for summary judgment and TCU's cross-motion for summary judgment. While this motion was pending, the parties entered into a one year buyout agreement ("Buyout Agreement") for some protected employees, which TCU suggests moots the issue before the Court.

II. Background

In 1965, during a period of prosperity in the railroad industry, RF & P entered into a job protection agreement, the February 7, 1965 Job Stabilization Agreement ("Agreement"), with the clerks' union to avoid the threat of a strike and to protect certain clerical jobs threatened by new technologies. The Agreement provides that "protected employees," those employees who were in active service for the railroad in 1964, must be paid — whether they work or not — until they are removed from service by "natural attrition."² Among the ways in which natural attrition might occur is an employee's resignation. In that event coverage under the Agreement ceases.

Railroads continued to prosper through the 1960s and 1970s. During this period, the Potomac Yard, a railroad switching yard in Alexandria Virginia owned and operated by RF & P, was quite busy. This picture changed in the 1980s. In that decade, technological advances, coupled with a decline in heavy industries in the northeast and midwest, brought harder times for railroads and a decline in switching activity at the Potomac Yard. This, in turn, led to a marked reduction in the amount of work available there for certain clerical workers. To accommodate this situation, RF & P assigned senior employees to fill the available clerical positions at Potomac Yard while seventeen more junior employees, all of whom are "protected" under the Agreement, are paid by RF & P to sit idle at home.

Responding to these circumstances, RF & P posted an offer of a lump-sum severance allowance on April 27, 1990, for up to fifteen senior clerical employees covered by the Agreement. In return for the lump-sum severance payments, the employees must voluntarily resign from service with RF & P and thereby voluntarily give up their protected status. TCU opposed this offer on the grounds that it was too low and that RF & P must bargain with TCU and not deal directly with the employees. The parties agreed to submit the issue to a Public Law Board for arbitration. The Board consisted of representatives from RF & P and TCU, and a third neutral member (the "arbitrator"). The parties also confirmed in a letter dated May 16, 1990, that the agreed upon issue for arbitration would be "whether the RF & P could unilaterally separate employees without an agreement with TCU...." Pending the arbitration decision, the parties agreed that no individual voluntary separation arrangements would be concluded at Potomac Yard.

During the arbitration proceeding, RF & P addressed the issue of unilateral separation offers by arguing that the offer did not violate the terms of the parties' Agreement. RF & P also claimed that, in any event, its offer was supported by both (i) the Agreement, which expressly contemplates that employees may resign and give up their protected status, and (ii) the railroad's established practice of making similar offers to individual workers without TCU's participation or objection. For its part, TCU addressed the issue by arguing that RF & P did not have express or implied contractual authority to make lump-sum severance offers directly to protected employees. TCU also argued that no established past practice existed, absent TCU's participation.

In his proposed award of August 2, 1990, the arbitrator rejected RF & P's argument that past practice rising to the level of an implied agreement permitted RF & P to engage in direct dealing with the protected employees. The arbitrator also found no support for the lump-sum severance offers in the Agreement. In fact, he found the Agreement wholly "silent" on the issue. Given the Agreement's silence, the arbitrator concluded that RF & P had no contractual authority to offer the voluntary lump-sum separation allowances to clerks at Potomac Yard without TCU's approval. The arbitrator noted that he had carefully examined the Agreement between the parties before arriving at his award, yet the award's "Discussion" section included no analysis of the Agreement. Instead, the arbitrator dismissed arbitration precedent on the issue of "silent" labor agreements, and discussed his interpretation of "federal court directives concerning RF & P's obligations" under the RLA. In requiring RF & P to show express or implied contractual authority for its actions, the arbitrator placed special emphasis on judicial opinions involving the RLA that, in his view, had addressed the question of the destructive impact of employer direct dealing on collective bargaining.

RF & P sought reconsideration of the proposed arbitration award on or about August 23, 1990. Specifically, RF & P argued that the arbitrator exceeded the proper scope of his arbitral jurisdiction by requiring RF & P to show affirmative contractual authority. RF & P also pointed out that the arbitrator, in reaching his decision, ignored the consistent line of prior arbitration decisions holding such offers valid if they did not violate the labor agreement between the parties. In RF & P's view, the arbitrator exceeded his jurisdiction because he arrived at his decision by relying solely on his interpretation of the RLA. Finally, RF & P claimed that part of the authority on which the arbitrator had relied for his decision — two federal district court cases — had been completely undermined by later circuit and Supreme Court decisions.

On or about October 31, 1990, the arbitrator denied RF & P's petition for reconsideration. In his supplemental opinion, the arbitrator reaffirmed his formulation of the question presented and his proposed award. He specified that under his interpretation of the RLA, the burden of proof had been on RF & P to "establish a contractual basis for its proposed action." The arbitrator concluded that the voluntary lump-sum separation offer was a "non-contractual action" seeking to avoid "specific contractual obligations" of the Agreement. But significantly, the arbitrator did not find that the lump-sum severance offers violated the Agreement in any way.

RF & P filed this action on December 7, 1990, seeking to set aside the arbitration award. It agreed to refrain from offering voluntary lump-sum separation allowances to its clerical employees at Potomac Yard pending disposition of this matter. While the parties' cross-summary judgment motions were pending, they entered into a Buyout Agreement which, by its terms, is effective from October 1, 1991 to October 1, 1992. The Buyout Agreement allows RF & P to extend voluntary lump-sum separation offers to senior employees up to the number of protected employees who are furloughed on the date of the initial offer. If RF & P chooses to make voluntary lumpsum severance offers to protected employees beyond those furloughed, the Buyout Agreement specifies that RF & P must confer with TCU as to the number of employees to whom such offers may be extended. As an express condition to the Buyout Agreement, RF & P and TCU stated that "either party may propose to revise, retain or terminate the Agreement upon a thirty day written notice served prior to October 1, 1992." In addition, RF & P and TCU acknowledged, in writing, that the Buyout Agreement was without prejudice to their respective positions regarding unilateral lump-sum separation offers and the parties reserved their rights with respect to the rights arbitrated in this case.

III. Analysis

A. Mootness

The threshold issue is mootness. Well-settled principles determine whether a matter is moot. In essence, a case is moot "when the issues presented are no longer `live' or the parties lack a legally cognizable...