Parsons v. Norfolk & Western Railway Company

• Decision Date: 24 March 1970
• Docket Number: Civ. A. No. 1095.
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Joe E. PARSONS, Plaintiff, v. NORFOLK & WESTERN RAILWAY COMPANY, a corporation, Defendant.

310 F. Supp. 1197

Joe E. PARSONS, Plaintiff, v. NORFOLK & WESTERN RAILWAY COMPANY, a corporation, Defendant.

Civ. A. No. 1095.

United States District Court, S. D. West Virginia, Bluefield Division.

March 24, 1970.

W. A. Thornhill, III, (Thornhill, Kennedy & Vaughan), Beckley, W. Va., for plaintiff.

Joseph M. Sanders, (Sanders & Blue), Bluefield, W. Va., for defendant.

CHRISTIE, District Judge:

This is an action by a railroad employee against his employer, brought under the provisions of 49 U.S.C.A. § 5(2) (f) of the Interstate Commerce Act.

The factual background that gives rise to the action is mainly undisputed. Plaintiff is a railroad clerk and had been employed in this capacity for some years by the Virginian Railway Company, at its operations located at Elmore, West Virginia. He is presently employed in the same position and at the same location with the defendant. In the spring of 1959, the Virginian Railway Company and the Norfolk & Western Railway Company made a joint application to the Interstate Commerce Commission for permission to merge their operations.¹ In order to comply with the statutory requirement under which this action is maintained, the railroads and the Railway Labor Executive Association entered into an agreement, dated June 18, 1959 (Plaintiff's Exhibit 1), entitled "Agreement for Protection of Employees as Result of Merger of Norfolk & Western Railway Company and the Virginian Railway Company." Plaintiff, being a member in good standing (both at the time of the agreement and presently) of the Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees, is a third-party beneficiary of this agreement. The principals to the contract, after reciting the statute,² then mutually agreed as follows:

"1. The provisions of the Washington Job Protection Agreement of 1936, a copy of which is attached hereto, will be applied for the protection of all employees of both the Norfolk & Western and the Virginian who may be adversely affected with respect to their rates of pay, rules, or working conditions, or rights or privileges pertaining thereto upon approval and effectuation of the said merger and related transactions; provided, however, that in addition to the benefits provided by the said Washington Job Protection Agreement, it is further agreed as follows:

"(a) On the effective date of the said merger, the Norfolk & Western will take into its employment all employees of the Virginian who are willing to accept such employment, and none of the present employees of either of said carriers shall be deprived of employment or placed in a worse position with respect to compensation at any time during his employment because of the merger of said railroads or any program of economies undertaken by the Norfolk & Western because of the merger * * *."

* * * * * *

"(d) Section 13 of the Washington Job Protection agreement is deleted and the following provision inserted in lieu thereof:

"In the event any dispute or controversy arises with respect to the protection afforded by this agreement or by the Washington Job Protection Agreement (except as defined in Section 11 thereof) or in connection with any agreement entered into between the carrier parties hereto and the representatives of their employees relating to the said merger and related transactions as provided by the Washington Job Protection Agreement, including an interpretation, application, or enforcement of any of the provisions of said agreements, which cannot be settled by the carrier or carriers and the employee or his authorized representative within 30 days after the dispute arises, it may be referred by either party to an arbitration committee for consideration and determination. Upon notice in writing served by one party on the other of intent by that party to refer the dispute or controversy to an arbitration committee, each party shall, within 10 days, select one member of the arbitration committee and the two members thus chosen shall select a third member who shall serve as chairman. Should the two members be unable to agree upon the appointment of the third member within 10 days, either party may request the National Mediation Board to appoint the third member. The decision of the majority of the arbitration committee shall be final and conclusive. The salaries and expenses of the third member shall be borne equally by the parties to the proceeding and all other expenses shall be paid by the party incurring them." (Emphasis supplied).

Subsequent to this job protection agreement, the Interstate Commerce Commission approved the proposed merger and the merger became effective December 1, 1959. As noted above, plaintiff had been an employee of the Virginian for some years prior to the effective date of the merger and following that date, he elected to become an employee of the Norfolk & Western.

In its answer the defendant admitted that as a result of the merger and during a portion of the period from December 1, 1959 to February 28, 1965, plaintiff had been placed in a worse position with respect to compensation and that his compensation had been adversely affected. Plaintiff had made a complaint to his local chairman who proceeded to forward the complaint to the general chairman of plaintiff's Brotherhood. The general chairman filed a claim on plaintiff's behalf against the defendant. The general chairman conferred with defendant and they agreed that plaintiff's claim would be settled on the following basis: Since, during the 12-month period immediately preceding the merger, plaintiff earned an average of $448.78 per month, for the purpose of adversely affected pay adjustments to be made then and in the future this figure of $448.78 would be considered plaintiff's "average monthly compensation," and defendant would pay to plaintiff an amount representing the difference between what plaintiff earned in each month and his "average monthly compensation" and that such payments would be made so long as such difference existed.

Following the settlement of his claim, plaintiff wrote his general chairman, the Grand President of his union, and defendant, complaining about the settlement and contending that his "average monthly compensation" of $448.78 should be increased by the percentage of general wage increases granted by defendant subsequent to December 1, 1959, and that his adversely affected pay should be computed on this additional basis.

Thereafter, defendant paid plaintiff the entire amount of plaintiff's adversely affected pay, according to the agreement entered into by the plaintiff's general chairman and defendant, and plaintiff accepted such payment. If defendant's theory of the case is correct, then defendant is not indebted to the plaintiff in any amount whatever. However, if the plaintiff's theory of the case is correct, defendant was indebted to the plaintiff as of June 1969 in the sum of $3,054.09.

Guy H. Gilmer, Jr., defendant's Manager of Labor Relations, testified that the Merger Agreement had no specific provisions indicating "how matters of this nature would be settled," but that the Washington Job Agreement was a part of the Merger Agreement, and the Washington Job Agreement established a test period for computing an employee's adversely affected pay, and that the Washington Job Agreement was followed in the settlement of plaintiff's claim for adversely affected pay.

Besides a general denial of plaintiff's complaint, the defendant sets up in its answer certain affirmative defenses to the action. One of these is that this Court should dismiss the action because the plaintiff has not exhausted his remedies under the contract he sues upon, i. e., he has not submitted or attempted to submit his claim to the arbitration procedure provided for in the Merger Agreement (Plaintiff's Exhibit 1). We perceive our immediate task to be one of resolution of this assertion, for if we find that plaintiff is obligated to pursue contractual and administrative procedures to the ultimate degree, then his suit here is premature and the other questions he raised are mooted.

As a general rule, parties to an arbitration are those that have become so by virtue of a contract to arbitrate, and it necessarily follows that the submission of a controversy to decision by arbitration is, perforce, the agreement of the parties to arbitrate. At common law there was no right of arbitration, notwithstanding a prior agreement. Therefore, as a general rule, if a dispute is to be submitted for arbitration as a matter of right, it must be under a statute. 5 Am.Jur.2d, Arbitration and Award, Section 2, p. 519. Although at common law an agreement for arbitration may have created substantial rights, common law arbitration is a part of the law of remedies. However, this basic concept has been changed by statute and by this change arbitration has become a...