Polich v. Burlington Northern, Inc.

• Decision Date: 26 August 1991
• Docket Number: No. 90-35327,90-35327
• Parties: 138 L.R.R.M. (BNA) 2624, 119 Lab.Cas. P 10,895 Victor J. POLICH, et al., Plaintiffs-Appellants, v. BURLINGTON NORTHERN, INC.; Burlington Northern Railroad Company, a Delaware Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1467

942 F.2d 1467

138 L.R.R.M. (BNA) 2624, 119 Lab.Cas. P 10,895

Victor J. POLICH, et al., Plaintiffs-Appellants, v. BURLINGTON NORTHERN, INC.; Burlington Northern Railroad Company, a Delaware Corporation, Defendants-Appellees.

No. 90-35327.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 4, 1990.

Decided Aug. 26, 1991.

Alexander (Zander) Blewett, III, Hoyt & Blewett, Great Falls, Mont., for plaintiffs-appellants.

Randy J. Cox, Boone, Karlberg & Haddon, Missoula, Mont., for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before WRIGHT, GOODWIN and NOONAN, Circuit Judges.

GOODWIN, Circuit Judge:

Following a series of mergers and reorganizations, the Burlington Northern Railroad Company closed its railroad operations in Livingston, Montana. Appellants, who include both former Livingston employees and spouses of former employees, sued the Burlington Northern Railroad Company and Burlington Northern, Inc. (collectively, BN) for damages arising out of the closure. They appeal the dismissal of the action for want of subject matter jurisdiction. We affirm in part and reverse in part.

The complaint alleged that BN breached its promise to employees and their spouses to keep its Livingston railroad facilities open and operational, and committed actual and constructive fraud in closing the facilities. The complaint alleged that BN made these promises during the course of two different corporate reorganizations.

The first incident allegedly occurred in 1970, when Burlington Northern, Inc. (the predecessor to the current BNRC) was created as a result of an Interstate Commerce Commission-approved merger among several railroads. The complaint alleged that at the time of this merger, railroad officials made public assurances that railroad facilities in Livingston would never close.

The second set of promises was allegedly made in 1980 and 1981. In 1980, BNI merged with the St. Louis-San Francisco Railway Company. In 1981, BNI changed its name to Burlington Northern Railroad Company (BNRC) and took control of all railroad operations and assets. BNI was reformed as a holding company, which now includes other businesses in addition to railroads. The complaint alleged that BNRC and BNI officials made public assurances that railroad operations in Livingston would not be adversely affected by either the St. Louis-San Francisco merger or the 1981 reorganization. The complaint further alleged that BN intended that the plaintiffs would rely on these promises and that the plaintiffs did so rely.

Defendants moved to dismiss, or for summary judgment, on the ground that plaintiffs' claims were preempted by the Interstate Commerce Act and the Railway Labor Act. Plaintiffs thereafter moved to file a third amended complaint, which included allegations that BN violated section 69-14-1002 of the Montana Code. This statute purports to require railroads to compensate workers when the value of their homes is destroyed by the closure of a railroad terminal or division point. The district court denied the motion and dismissed the action.

I. Railway Labor Act Preemption

Appellants contend that their state law claims were not preempted by the Railway Labor Act (RLA), 45 U.S.C. §§ 151-163 (1988). They argue that their state law claims neither involve nor implicate any collective bargaining agreement, and hence do not constitute a "minor dispute" which would be preempted by the RLA.

This court reviews de novo the district court's dismissal for lack of subject matter jurisdiction. FDIC v. Nichols, 885 F.2d 633, 635 (9th Cir.1989). We may affirm on any ground finding support in the record. See Smith v. Block, 784 F.2d 993, 996 n. 4

                (9th Cir.1986).   We may affirm even if the district court relied on the wrong grounds or the wrong reasoning.   See Bruce v. United States, 759 F.2d 755, 758 (9th Cir.1985);  Alcaraz v. Block, 746 F.2d 593, 602 (9th Cir.1984)
                

A. Employee Claims

Under the RLA, 45 U.S.C. §§ 152-153, employer-employee disputes classified as "minor disputes" are "subject to compulsory ... arbitration before the National Railroad Adjustment Board ... or before an adjustment board established by the employer and the unions representing the employees." Consolidated Rail Corp. v. Railway Labor Exec. Ass'n, 491 U.S. 299, 303-04, 109 S.Ct. 2477, 2480-81, 105 L.Ed.2d 250 (1989). The district court lacks subject matter jurisdiction over "minor disputes." Daniels v. Burlington Northern Railroad Co., 916 F.2d 568, 570 (9th Cir.1990).

The district court held that a claim was a "minor dispute" subject to the exclusive jurisdiction of the RLA if it was "founded on some incident of the employment relationship," whether or not the claim was covered by a collective bargaining agreement. Appellants argue that the district court applied the wrong standard, and that preemption is proper only if the dispute involves the application or interpretation of an existing collective bargaining agreement. This argument does not assist appellants' cause. Even if preemption occurs only when resolution of the dispute involves the interpretation of a collective bargaining agreement, we have concluded that the employee-appellants' claims are preempted.

Appellants argued that their claims were not preempted because appellants would seek to prove that the promises at issue were outside the scope of the collective bargaining agreement (CBA). However, in determining whether a dispute is preempted, the plaintiff's pleadings and offers of proof are not controlling. The claim is also preempted if the railroad seeks to defend its conduct on the ground that the conduct was justified by the terms of the CBA. See Consolidated Rail Corp. v. Railway Labor Executives' Ass'n, 491 U.S. 299, 305-07, 109 S.Ct. 2477, 2481-82, 105 L.Ed.2d 250 (1989).

We will not find preemption if the railroad's assertion regarding the CBA is "frivolous or obviously insubstantial." Id. at 307, 109 S.Ct. at 2482. But the railroad's burden in establishing preemption is "relatively light," and we will find preemption if the employer's conduct is "arguably justified" by the terms of the CBA. See id. BN stated that it intended to defend its actions on the ground that those actions were permitted by the CBA, and that based on that proposed defense, appellants' claims were preempted.

The district court had before it the affidavit of Maxine Timberman, BNRC Assistant Director of Labor Relations. Timberman's affidavit, which was never contradicted, states that all employee-plaintiffs were covered by labor protective or collective bargaining agreements. ¹ Each union had a separate agreement. Timberman attached one sample agreement, from 1964, which she swore contained provisions typical of each union's agreement. Timberman further swore that the closure of the Livingston facilities was conducted in accordance with those agreements.

Ms. Timberman attached copies of the letters notifying employee unions that work would be transferred from Livingston. She stated that "[t]he notices were issued in compliance with the Schedule Agreement and constituted the maximum notice required under the various protective arrangements for each of the involved crafts." She further swore that all unions with affected members negotiated with BN about matters such as "seniority, job protection, moving expenses and all matters The witness further swore that all of the collective bargaining agreements and protective agreements contained arbitration provisions. Appellants have never denied the existence or the coverage of the collective bargaining agreements, and the court had the right to accept the undisputed affidavit establishing that all employee-plaintiffs were covered by collective bargaining agreements.

relating to employment termination or transfer."

Based on our examination of the 1964 agreement, we hold that BN's conduct was "arguably justified" by the CBA. The 1964 agreement specified what protections would be afforded to employees in the event that facilities were abandoned. We do not need to decide whether the agreement did in fact justify BN's conduct. We hold only that appellees have made a non-frivolous argument that their conduct was so justified; under Consolidated Rail, this is sufficient to cause the employee-appellants' claims to be preempted by the RLA.

Appellants argue that at the time the promises were made, no collective bargaining agreements could have existed between the appellee corporations and the employee-appellants, because the appellee corporations did not exist. However, appellants also insist that under Montana law, the defendant corporations are liable for the promises of their predecessor corporations. Montana law provides that following a merger, the surviving corporation "possess all the rights, privileges, immunities, and franchises, as well of a public as of a private nature, of each of the merging or consolidating corporations." Mont.Code Ann. § 35-1-806(2)(d) (1989). In addition, the surviving corporation "shall thenceforth be responsible and liable for all the liabilities and obligations of each of the corporations so merged or consolidated." Id. § 35-1-806(2)(e). Thus, BNRC and BNI are responsible for promises made by their predecessors. In addition, they assume the rights stemming from any collective bargaining agreements made with their predecessors.

B. Spouse Claims

"Minor disputes" preempted by the RLA include " '[a]ll disputes between a carrier or carriers and its or their employees....' " Daniels, 916 F.2d at 570 (quoting 45 U.S.C. § 152 Second) (emphasis in original). Appellants contend that because RLA preemption applies only to employees, it does not apply to those appellants who are spouses of employees and are not employees themselves. Appellees argue that the spouses' claims are entirely derivative of the employees' claims, and so the spouses claims are also preempted.

The spouses...